Professional Documents
Culture Documents
L-48645 January 7, 1987 ordered the individual complainants to disaffiliate from the
complainant union; and that management dismissed the
"BROTHERHOOD" LABOR UNITY MOVEMENT OF THE individual complainants when they insisted on their union
PHILIPPINES, ANTONIO CASBADILLO, PROSPERO membership.
TABLADA, ERNESTO BENGSON, PATRICIO SERRANO,
ANTONIO B. BOBIAS, VIRGILIO ECHAS, DOMINGO On their part, respondents moved for the dismissal of the
PARINAS, NORBERTO GALANG, JUANITO NAVARRO, complaint on the grounds that the complainants are not and
NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO have never been employees of respondent company but
L. EGUIA, CARLOS SUMOYAN, LAMBERTO RONQUILLO, employees of the independent contractor; that respondent
ANGELITO AMANCIO, DANILO B. MATIAR, ET company has never had control over the means and methods
AL., petitioners, followed by the independent contractor who enjoyed full
vs. authority to hire and control said employees; and that the
HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT individual complainants are barred by estoppel from
FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, HON. asserting that they are employees of respondent company.
AMADO G. INCIONG, UNDERSECRETARY OF LABOR,
SAN MIGUEL CORPORATION, GENARO OLIVES, ENRIQUE While pending with the Court of Industrial Relations CIR
CAMAHORT, FEDERICO OATE, ERNESTO VILLANUEVA, pleadings and testimonial and documentary evidences were
ANTONIO BOCALING and GODOFREDO duly presented, although the actual hearing was delayed by
CUETO, respondents. several postponements. The dispute was taken over by the
National Labor Relations Commission (NLRC) with the
GUTIERREZ, JR., J.: decreed abolition of the CIR and the hearing of the case
intransferably commenced on September 8, 1975.
The elemental question in labor law of whether or not an
employer-employee relationship exists between petitioners- On February 9, 1976, Labor Arbiter Nestor C. Lim found for
members of the "Brotherhood Labor Unit Movement of the complainants which was concurred in by the NLRC in a
Philippines" (BLUM) and respondent San Miguel Corporation, decision dated June 28, 1976. The amount of backwages
is the main issue in this petition. The disputed decision of awarded, however, was reduced by NLRC to the equivalent of
public respondent Ronaldo Zamora, Presidential Assistant for one (1) year salary.
legal Affairs, contains a brief summary of the facts involved:
On appeal, the Secretary in a decision dated June 1, 1977,
1. The records disclose that on July 11, 1969, BLUM filed a set aside the NLRC ruling, stressing the absence of an
complaint with the now defunct Court of Industrial Relations, employer-mployee relationship as borne out by the records of
charging San Miguel Corporation, and the following officers: the case. ...
Enrique Camahort, Federico Ofiate Feliciano Arceo, Melencio
Eugenia Jr., Ernesto Villanueva, Antonio Bocaling and The petitioners strongly argue that there exists an employer-
Godofredo Cueto of unfair labor practice as set forth in employee relationship between them and the respondent
Section 4 (a), sub-sections (1) and (4) of Republic Act No. 875 company and that they were dismissed for unionism, an act
and of Legal dismissal. It was alleged that respondents
constituting unfair labor practice "for which respondents Petitioners were paid every ten (10) days on a piece rate
must be made to answer." basis, that is, according to the number of cartons and
wooden shells they were able to load, unload, or pile. The
Unrebutted evidence and testimony on record establish that group leader notes down the number or volume of work that
the petitioners are workers who have been employed at the each individual worker has accomplished. This is then made
San Miguel Parola Glass Factory since 1961, averaging about the basis of a report or statement which is compared with the
seven (7) years of service at the time of their termination. notes of the checker and warehousemen as to whether or not
They worked as "cargadores" or "pahinante" at the SMC Plant they tally. Final approval of report is by officer-in-charge
loading, unloading, piling or palleting empty bottles and Camahort. The pay check is given to the group leaders for
woosen shells to and from company trucks and warehouses. encashment, distribution, and payment to the petitioners in
At times, they accompanied the company trucks on their accordance with payrolls prepared by said leaders. From the
delivery routes. total earnings of the group, the group leader gets a
The petitioners first reported for work to Superintendent-in- participation or share of ten (10%) percent plus an additional
Charge Camahort. They were issued gate passes signed by amount from the earnings of each individual.
Camahort and were provided by the respondent company The petitioners worked exclusive at the SMC plant, never
with the tools, equipment and paraphernalia used in the having been assigned to other companies or departments of
loading, unloading, piling and hauling operation. SMC plant, even when the volume of work was at its
Job orders emanated from Camahort. The orders are then minimum. When any of the glass furnaces suffered a
transmitted to an assistant-officer-in-charge. In turn, the breakdown, making a shutdown necessary, the petitioners
assistant informs the warehousemen and checkers regarding work was temporarily suspended. Thereafter, the petitioners
the same. The latter, thereafter, relays said orders to the would return to work at the glass plant.
capatazes or group leaders who then give orders to the Sometime in January, 1969, the petitioner workers
workers as to where, when and what to load, unload, pile, numbering one hundred and forty (140) organized and
pallet or clean. affiliated themselves with the petitioner union and engaged
Work in the glass factory was neither regular nor continuous, in union activities. Believing themselves entitled to overtime
depending wholly on the volume of bottles manufactured to and holiday pay, the petitioners pressed management, airing
be loaded and unloaded, as well as the business activity of other grievances such as being paid below the minimum
the company. Work did not necessarily mean a full eight (8) wage law, inhuman treatment, being forced to borrow at
hour day for the petitioners. However, work,at times, usurious rates of interest and to buy raffle tickets, coerced by
exceeded the eight (8) hour day and necessitated work on withholding their salaries, and salary deductions made
Sundays and holidays. For this, they were neither paid without their consent. However, their gripes and grievances
overtime nor compensation for work on Sundays and were not heeded by the respondents.
holidays. On February 6, 1969, the petitioner union filed a notice of
strike with the Bureau of Labor Relations in connection with
the dismissal of some of its members who were allegedly dismissal; and (d) the employer's power to control the
castigated for their union membership and warned that employee with respect to the means and methods by which
should they persist in continuing with their union activities the work is to be accomplished. It. is the called "control test"
they would be dismissed from their jobs. Several conciliation that is the most important element (Investment Planning
conferences were scheduled in order to thresh out their Corp. of the Phils. v. The Social Security System, 21 SCRA
differences, On February 12, 1969, union member Rogelio 924; Mafinco Trading Corp. v. Ople, supra,and Rosario
Dipad was dismissed from work. At the scheduled conference Brothers, Inc. v. Ople, 131 SCRA 72).
on February 19, 1969, the complainant union through its
officers headed by National President Artemio Portugal Sr., Applying the above criteria, the evidence strongly indicates
presented a letter to the respondent company containing the existence of an employer-employee relationship between
proposals and/or labor demands together with a request for petitioner workers and respondent San Miguel Corporation.
recognition and collective bargaining. The respondent asserts that the petitioners are employees of
the Guaranteed Labor Contractor, an independent labor
San Miguel refused to bargain with the petitioner union contracting firm.
alleging that the workers are not their employees.
The facts and evidence on record negate respondent SMC's
On February 20, 1969, all the petitioners were dismissed claim.
from their jobs and, thereafter, denied entrance to
respondent company's glass factory despite their regularly The existence of an independent contractor relationship is
reporting for work. A complaint for illegal dismissal and unfair generally established by the following criteria: "whether or
labor practice was filed by the petitioners. not the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term
The case reaches us now with the same issues to be resolved and duration of the relationship; the right to assign the
as when it had begun. performance of a specified piece of work; the control and
supervision of the work to another; the employer's power
The question of whether an employer-employee relationship with respect to the hiring, firing and payment of the
exists in a certain situation continues to bedevil the courts. contractor's workers; the control of the premises; the duty to
Some businessmen try to avoid the bringing about of an supply the premises tools, appliances, materials and labor;
employer-employee relationship in their enterprises because and the mode, manner and terms of payment" (56 CJS
that judicial relation spawns obligations connected with Master and Servant, Sec. 3(2), 46; See also 27 AM. Jur.
workmen's compensation, social security, medicare, Independent Contractor, Sec. 5, 485 and Annex 75 ALR
minimum wage, termination pay, and unionism. (Mafinco 7260727)
Trading Corporation v. Ople, 70 SCRA 139).
None of the above criteria exists in the case at bar.
In determining the existence of an employer-employee
relationship, the elements that are generally considered are Highly unusual and suspect is the absence of a written
the following: (a) the selection and engagement of the contract to specify the performance of a specified piece of
employee; (b) the payment of wages; (c) the power of work, the nature and extent of the work and the term and
duration of the relationship. The records fail to show that a employment of complainants a regular one, in the sense that
large commercial outfit, such as the San Miguel Corporation, it does not depend on any specific project or seasonable
entered into mere oral agreements of employment or labor activity. (NLRC Decision, p. 94, Rollo).lwphl@it
contracting where the same would involve considerable
expenses and dealings with a large number of workers over a so as it with petitioners in the case at bar. In fact, despite
long period of time. Despite respondent company's past shutdowns of the glass plant for repairs, the petitioners,
allegations not an iota of evidence was offered to prove the thereafter, promptly returned to their jobs, never having
same or its particulars. Such failure makes respondent SMC's been replaced, or assigned elsewhere until the present
stand subject to serious doubts. controversy arose. The term of the petitioners' employment
appears indefinite. The continuity and habituality of
Uncontroverted is the fact that for an average of seven (7) petitioners' work bolsters their claim of employee status vis-
years, each of the petitioners had worked continuously and a-vis respondent company,
exclusively for the respondent company's shipping and
warehousing department. Considering the length of time that Even under the assumption that a contract of employment
the petitioners have worked with the respondent company, had indeed been executed between respondent SMC and the
there is justification to conclude that they were engaged to alleged labor contractor, respondent's case will,
perform activities necessary or desirable in the usual nevertheless, fail.
business or trade of the respondent, and the petitioners are, Section 8, Rule VIII, Book III of the Implementing Rules of the
therefore regular employees (Phil. Fishing Boat Officers and Labor Code provides:
Engineers Union v. Court of Industrial Relations, 112 SCRA
159 and RJL Martinez Fishing Corporation v. National Labor Job contracting. There is job contracting permissible under
Relations Commission, 127 SCRA 454). the Code if the following conditions are met:
As we have found in RJL Martinez Fishing Corporation v. (1) The contractor carries on an independent business and
National Labor Relations Commission (supra): undertakes the contract work on his own account under his
own responsibility according to his own manner and method,
... [T]he employer-employee relationship between the parties free from the control and direction of his employer or
herein is not coterminous with each loading and unloading principal in all matters connected with the performance of
job. As earlier shown, respondents are engaged in the the work except as to the results thereof; and
business of fishing. For this purpose, they have a fleet of
fishing vessels. Under this situation, respondents' activity of (2) The contractor has substantial capital or investment in
catching fish is a continuous process and could hardly be the form of tools, equipment, machineries, work premises,
considered as seasonal in nature. So that the activities and other materials which are necessary in the conduct of his
performed by herein complainants, i.e. unloading the catch of business.
tuna fish from respondents' vessels and then loading the
same to refrigerated vans, are necessary or desirable in the We find that Guaranteed and Reliable Labor contractors have
business of respondents. This circumstance makes the neither substantial capital nor investment to qualify as an
independent contractor under the law. The premises, tools,
equipment and paraphernalia used by the petitioners in their independent contractor considers no business expenses or
jobs are admittedly all supplied by respondent company. It is capital outlay of the latter. Nor is the profit or gain of the
only the manpower or labor force which the alleged alleged contractor in the conduct of its business provided for
contractors supply, suggesting the existence of a "labor only" as an amount over and above the workers' wages. Instead,
contracting scheme prohibited by law (Article 106, 109 of the the alleged contractor receives a percentage from the total
Labor Code; Section 9(b), Rule VIII, Book III, Implementing earnings of all the workers plus an additional amount
Rules and Regulations of the Labor Code). In fact, even the corresponding to a percentage of the earnings of each
alleged contractor's office, which consists of a space at individual worker, which, perhaps, accounts for the
respondent company's warehouse, table, chair, typewriter petitioners' charge of unauthorized deductions from their
and cabinet, are provided for by respondent SMC. It is salaries by the respondents.
therefore clear that the alleged contractors have no capital
outlay involved in the conduct of its business, in the Anent the argument that the petitioners are not employees
maintenance thereof or in the payment of its workers' as they worked on piece basis, we merely have to cite our
salaries. rulings in Dy Keh Beng v. International Labor and Marine
Union of the Philippines (90 SCRA 161), as follows:
The payment of the workers' wages is a critical factor in
determining the actuality of an employer-employee "[C]ircumstances must be construed to determine indeed if
relationship whether between respondent company and payment by the piece is just a method of compensation and
petitioners or between the alleged independent contractor does not define the essence of the relation. Units of time . . .
and petitioners. It is important to emphasize that in a truly and units of work are in establishments like respondent (sic)
independent contractor-contractee relationship, the fees are just yardsticks whereby to determine rate of compensation,
paid directly to the manpower agency in lump sum without to be applied whenever agreed upon. We cannot construe
indicating or implying that the basis of such lump sum is the payment by the piece where work is done in such an
salary per worker multiplied by the number of workers establishment so as to put the worker completely at liberty to
assigned to the company. This is the rule inSocial Security turn him out and take in another at pleasure."
System v. Court of Appeals (39 SCRA 629, 635). Article 106 of the Labor Code provides the legal effect of a
The alleged independent contractors in the case at bar were labor only contracting scheme, to wit:
paid a lump sum representing only the salaries the workers ... the person or intermediary shall be considered merely as
were entitled to, arrived at by adding the salaries of each an agent of the employer who shall be responsible to the
worker which depend on the volume of work they. had workers in the same manner and extent as if the latter were
accomplished individually. These are based on payrolls, directly employed by him.
reports or statements prepared by the workers' group leader,
warehousemen and checkers, where they note down the Firmly establishing respondent SMC's role as employer is the
number of cartons, wooden shells and bottles each worker control exercised by it over the petitioners that is, control in
was able to load, unload, pile or pallet and see whether they the means and methods/manner by which petitioners are to
tally. The amount paid by respondent company to the alleged
go about their work, as well as in disciplinary measures that the closure of respondent's warehouse was merely a
imposed by it. ploy to get rid of the petitioners, who were then agitating the
respondent company for benefits, reforms and collective
Because of the nature of the petitioners' work as cargadores bargaining as a union. There is no showing that petitioners
or pahinantes, supervision as to the means and manner of had been remiss in their obligations and inefficient in their
performing the same is practically nil. For, how many ways jobs to warrant their separation.
are there to load and unload bottles and wooden shells? The
mere concern of both respondent SMC and the alleged As to the charge of unfair labor practice because of SMC's
contractor is that the job of having the bottles and wooden refusal to bargain with the petitioners, it is clear that the
shells brought to and from the warehouse be done. More respondent company had an existing collective bargaining
evident and pronounced is respondent company's right to agreement with the IBM union which is the recognized
control in the discipline of petitioners. Documentary evidence collective bargaining representative at the respondent's glass
presented by the petitioners establish respondent SMC's right plant.
to impose disciplinary measures for violations or infractions
of its rules and regulations as well as its right to recommend There being a recognized bargaining representative of all
transfers and dismissals of the piece workers. The inter-office employees at the company's glass plant, the petitioners
memoranda submitted in evidence prove the company's cannot merely form a union and demand bargaining. The
control over the petitioners. That respondent SMC has the Labor Code provides the proper procedure for the recognition
power to recommend penalties or dismissal of the piece of unions as sole bargaining representatives. This must be
workers, even as to Abner Bungay who is alleged by SMC to followed.
be a representative of the alleged labor contractor, is the WHEREFORE, IN VIEW OF THE FOREGOING, the petition is
strongest indication of respondent company's right of control GRANTED. The San Miguel Corporation is hereby ordered to
over the petitioners as direct employer. There is no evidence REINSTATE petitioners, with three (3) years backwages.
to show that the alleged labor contractor had such right of However, where reinstatement is no longer possible, the
control or much less had been there to supervise or deal with respondent SMC is ordered to pay the petitioners separation
the petitioners. pay equivalent to one (1) month pay for every year of
The petitioners were dismissed allegedly because of the service.
shutdown of the glass manufacturing plant. Respondent SO ORDERED.
company would have us believe that this was a case of
retrenchment due to the closure or cessation of operations of
the establishment or undertaking. But such is not the case
here. The respondent's shutdown was merely temporary, one
of its furnaces needing repair. Operations continued after
such repairs, but the petitioners had already been refused
entry to the premises and dismissed from respondent's
service. New workers manned their positions. It is apparent
G.R. No. 87700 June 13, 1990
MELENCIO-HERRERA, J.:
Reyes moved for reconsideration on August 29, 1989, but No other appointments were thereafter extended to
when no action was allegedly taken thereon, he instituted the Encarnacion and Dulay. Lucas was however offered the
action at bar, G.R. No. 90044. Sagmit was afterwards granted position of Assistant Regional Director by Secretary Drilon
leave to intervene in the action. and then by Acting Secretary Dionisio de la Serna (by letter
dated January 9, 1990 which referred to his appointment as
G.R. No. 91547: Ceferino Dulay, Rosario G. Encarnacion, and such Assistant Regional Director supposedly "issued by the
Daniel M. Lucas President on November 8, 1989"). Lucas declined the offer,
Petitioners Rosario G. Encarnacion and Daniel M. Lucas, Jr. believing it imported a demotion.
were appointed National Labor Relations Commissioners on They all pray that their removal be pronounced
October 20, 1986, after the Commission was reorganized unconstitutional and void and they be declared
pursuant to Executive Order No. 47 of President Aquino. Commissioners lawfully in office, or, alternatively, that they
be paid all salaries, benefits and emoluments accruing to No. 161 dated November 18, 1989, issued by Labor Secretary
them for the unexpired portions of their six-year terms and Drilon.
allowed to enjoy retirement benefits under applicable laws
(pursuant to R.A. 910 and the Resolution re Judge Mario Ortiz, G.R. No. 94518: Rolando D. Gambito
G. R. No. 78951, June 28, 1988). Rolando Gambito passed the bar examinations in 1971,
Of the incumbent Commissioners as of the effectivity of R.A. joined the Government service in 1974, serving for sixteen
6715, six (6) were reappointed, namely: (1) Hon. Edna Bonto years in the Department of Health, and as Labor Arbiter in
Perez (as Presiding Commissioner, Second Division NCR]), (2) the Department of Labor and Employment from October,
Domingo H. Zapanta (Associate Commissioner, Second 1986. He was not included in the list of newly appointed
Division), (3) Lourdes C. Javier (Presiding Commissioner, Third Labor Arbiters released on March 8, 1990; and his attempt to
Division [Luzon except NCR]), (4) Ernesto G. Ladrido III obtain a recosideration of his exclusion therefrom and bring
(Presiding Commissioner, Fourth Division [Visayas]), (5) about his reinstatement as Labor Arbiter was unavailing.
Musib M. Buat (Presiding Commissioner, Fifth Division The Basic Issue
[Mindanao]), and (6) Oscar N. Abella (Associate
Commissioner, Fifth Division). Other members appointed to A number of issues have been raised and ventilated by the
the reorganized Commission were Vicente S.E. Veloso III, petitioners in their separate pleadings. They may all be
Romeo B. Putong, Rustico L. Diokno, Ireneo B. Bernardo, reduced to one basic question, relating to the
Rogelio I. Rayala, Irenea E. Ceniza, Bernabe S. Batuhan, and constitutionality of the provisions of Republic Act No. 6715
Leon G. Gonzaga, Jr. Appointed Chairman was Hon. DECLARING VACANT "all positions of the Commissioners,
Bartolome Carale, quondam Dean of the College of Law of Executive Labor Arbiters and Labor Arbiters of the present
the University of the Philippines. National Labor Relations Commission," 3 according to which
the public respondents
G.R. No. 91730: Conrado Maglaya
1) considered as effectively separated from the service inter
Petitioner Conrado Maglaya alleges that he has been "a alia, all holders of said positions at the time of the effectivity
member of the Philippine Bar for thirty-six (36) years of which of said Republic Act No. 6715, including the positions
31 years . . . (had been) devoted to public service, the last 24 of Executive Director and Deputy Executive Director of the
years in the field of labor relations law;" that he was Commission, and
appointed Labor Arbiter on May 30, 1975 and "was retained
in such position despite the reorganization under the 2) consequently, thereafter caused the appointment of other
Freedom Constitution of 1986 . . . (and) later promoted to persons to the new positions specified in said statute: of
and appointed by the President as Commissioner of the . . . Chairman Commissioners, Executive Clerk, Deputy Executive
(NLRC) First Division on October 23, 1986." He complains that Clerk, and Labor Arbiters of the reorganized National Labor
he was effectively removed from his position as a result of Relations Commission. The old positions were declared
the designation of the full complement of Commissioners in vacant because, as the statute states, of "the need to
and to all Five Divisions of the NLRC by Administrative Order professionalize the higher levels of officialdom invested with
adjudicatory powers and functions, and to upgrade their security of tenure, and will have to be struck down on that
qualifications, ranks, and salaries or emoluments." account. It can not be justified by the professed "need to
professionalize the higher levels of officialdom invested with
As everyone knows, security of tenure is a protected right adjudicatory powers and functions, and to upgrade their
under the Constitution. The right is secured to all employees qualifications, ranks, and salaries or emoluments."
in privates as well as in public employment. "No officer or
employee in the civil service," the Constitution declares, The Constitution does not, of course, ordain the abolition of
"shall be removed or suspended except for cause provided by the petitioners' positions of their removal from their offices;
law." 4 There can scarcely be any doubt that each of the and there is no claim that the petitioners' separation from the
petitioners commissioner, administrative officer, or labor service is due to a cause other than RA 6715. The inquiry
arbiter falls within the concept of an "officer or employee therefore should be whether or not RA 6715 has worked such
in the civil service" since the civil service "embraces all an abolition of the petitioners' offices, expressly or impliedly.
branches, subdivisions, instrumentalities, and agencies of the This is the only mode by which, under the circumstances, the
Government, including governmentowned or controlled petitioners' removal from their positions may be defended
corporations with original charters." 5 The Commissioners and sustained.
thus had the right to remain of office until the expiration of
the terms for which they had been appointed, unless sooner It is immediately apparent that there is no express abolition
removed "for cause provided by law." So, too, the Executive in RA 6715 of the petitioners' positions. So, justification must
Director and Deputy Executive Director, and the Labor be sought, if at all, in an implied abolition thereof; i.e., that
Arbiters had the right to retain their positions until the age of resulting from an irreconcilable inconsistency between the
compulsory retirement, unless sooner removed "for cause nature, duties and functions of the petitioners' offices under
provided by law." None of them could be deemed to be the old rules and those corresponding thereof under the new
serving at the pleasure of the President. law. An examination of the relevant provisions of RA 6715,
with a view to discovering the changes thereby effected on
Now, a recognized cause for several or termination of the nature, composition, powers, duties and functions of the
employment of a Government officer or employee is the Commission and the Commissioners, the Executive Director,
abolition by law of his office as a result of reorganization the Deputy Executive Director, and the labor Arbiters under
carried out by reason of economy or to remove redundancy the prior legislation, fails to disclose such essential
of functions, or clear and explicit constitutional mandate for inconsistencies.
such termination of employment. 6Abolition of an office is
obviously not the same as the declaration that that office is 1. Amendments as Regards the NLRC and the Commissioners
vacant. While it is undoubtedly a prerogative of the First, as regards the National Labor Relations Commissioners.
legislature to abolish certain offices, it can not be conceded
the power to simply pronounce those offices vacant and A. Nature and Composition of the Commission, Generally
thereby effectively remove the occupants or holders thereof
from the civil service. Such an act would constitute, on its 1. Prior to its amendment by RA 6715, Article 213 of the
face, an infringement of the constitutional guarantee of Labor Code envisaged the NLRC as being an integral part of
the Department of labor and Employment. "There shall," it banc and those by a division were determined by rules laid
said, "be a National Labor Relations Commissionin the down by the Commission with the approval of the ex officio,
Department of Labor and Employment . . . ." RA 6715 would Chairman (the Secretary of labor) said Commission, in
appear to have made the Commission somewhat more other words, then exerciseboth administrative and
autonomous. Article 213 now declares that, "There shall be a adjudicatory powers the law now, as amended by RA 6715,
National labor Relations Commission which shall be attached provides that
to the Department of labor and Employment for program
coordination only . . . ." 1) the Commission "shall sit en banc only for purposes of
promulgating rules and regulations governing the hearing
2. Tripartite representation was to a certain extent restored in and disposition of cases before any of its divisions and
the Commission. The same Section 213, as amended, now regional branches and formulating policies affecting its
provides that the Chairman and fourteen (14) members administration and operations;" but
composing the NLRC shall be chosen from the workers',
employers' and the public sectors, as follows: 2) it "shall exercise its adjudicatory and all other powers,
functions and duties through its divisions."
Five (5) members each shall be chosen from among the
nominees of the workers and employers organization, C. Official Stations, and Appellate Jurisdiction over Fixed
respectively. The Chairman and the four (4) remaining Territory
members shall come from the public sector, with the latter to Other changes related to the official station of the
be chosen from among the recommendees of the Secretary Commission and its divisions, and the territory over which
of Labor and Employment. the divisions could exercise exclusive appellate jurisdiction.
However, once they assume office," the members nominated 1. Under the old law, the Commission en banc and its
by the workers and employers organizations shall divest divisions had their main office in Metropolitan Manila; and
themselves of any affiliations with or interest in the appeals could be taken to them from decisions of Labor
federation or association to which they belong." Arbiters regardless of the regional office whence the case
B. Allocation of Powers Between NLRC En Banc and its originated.
Divisions 2. Under the law now, the First and Second Divisions have
Another amendment was made in respect of the allocation of their official station in Metropolitan Manila and "handle cases
powers and functions between the Commission en banc, on coming from the National Capital Region;" the Third Division
the one hand, and its divisions, on the other. Both under the has its main office also in Metropolitan Manila but would have
old and the amended law, the Commission was vested with appellate jurisdiction over "cases from other parts of Luzon;"
rule-making and administrative authority, as well as and the Fourth and Fifth Divisions have their main offices in
adjudicatory and other powers, functions and duties, and Cebu and Cagayan de Oro City, and exercise jurisdiction over
could sit en banc or in divisions of three (3) members each. cases "from the Visayas and Mindanao," respectively; and the
But whereas under the old law, the cases to be decided en
appellate authority of the divisions is exclusive "within their The old law declared that Executive Labor Arbiters and Labor
respective territorial jurisdiction." Arbiters should be members of the Bar, with at least two (2)
years experience in the field of labor management relations.
D. Qualifications and Tenure of Commissioners They were appointed by the President upon recommendation
Revisions were also made by RA 6715 with respect to the of the Chairman, and were "subject to the Civil Service Law,
qualifications and tenure of the National Labor Relations rules and regulations."
Commissioners. On the other hand, RA 6715 requires that the "Executive
Prescribed by the old law as qualifications for commissioners Labor Arbiters and Labor Arbiters shall likewise be members
appointed for a term of six (6) years were that they (a) of the Philippine Bar," but in addition "must have been in the
by members of the Philippine bar, and (b) have at least five practice of law in the Philippines for at least seven (7) years,
years' experience in handling labor-management relations. 7 with at least three (3) years experience or exposure in the
field of labor-management relations." For "purposes of
RA 6715, on the other hand, requires (a) membership in the reappointment," however, "incumbent Executive Labor
bar, (b) engagement in the practice of law for at least 15 Arbiters and Labor Arbiters who have been engaged in the
years, (c) at least five years' experience or exposure in the practice of law for at least five (5) years may be considered
field of labor-management relations, and (d) preferably, as already qualified." They are appointed by the President, on
residence in the region where the commissioner is to hold recommendation of the Secretary of Labor and Employment,
office. The commissioners appointed shall hold office during and are subject to the Civil Service Law, rules and
good behavior until they reach the age of sixty-five (65) regulations.
years, unless they are sooner removed for cause as provided
by law or become incapacited to discharge the duties of their B. Exclusive Original Jurisdiction
office. Before the effectivity of RA 6715, the exclusive original
2. Amendments Regarding Executive Labor Arbiters and jurisdiction of labor arbiters comprehended the following
Labor Arbiters cases involving all workers, whether agricultural or non-
agricultural:
A. Qualifications
(1) Unfair labor practice cases;
The old provided for one hundred fifty (150) labor arbiters
assigned to the different regional offices or branches of the (2) Those that workers may file involving wages, hours of
Department of Labor and Employment (including sub- work and other terms and conditions of employment;
regional branches or provincial extension units), each (3) All money claims of workers, including those based on
regional branch being headed by an Executive Labor Arbiter. non-payment or underpayment of wages, overtime
RA 6715 does not specify any fixed number of labor arbiters, compensation, separation pay and other benefits provided by
but simply provides that there shall be as many labor arbiters law or appropriate agreement, except claims for employees'
as may be necessary for the effective and efficient operation
of the Commission.
compensation, social security, medicare and maternity to decide the case, without extension, except that the
benefits; present statute stresses that "even in the absence of
stenographic notes," the period to decide is still thirty days,
(4) Cases involving household services; and without extension.
(5) Cases arising from any violation of Article 265 of this Furthermore, RA 6715 provides that "Cases arising from the
Code, including questions involving the legality of strikes and interpretation or implementation of collective bargaining
lockouts. agreements and those arising from the interpretation or
Some changes were introduced by RA 6715, indicated by enforcement of company personnel policies shall be disposed
italics in the enumeration which shortly follows. The of by the Labor Arbiter by referring the same to the
exclusive, original jurisdiction of Labor Arbiters now grievance machinery and voluntary arbitration as may be
embraces the following involving all workers, whether provided in said agreements."
agricultural or non-agricultural: 3. Amendments as Regards the Executive Director and
(1) Unfair labor practice cases; Deputy Executive Director
(2) Termination disputes; Prior to RA 6715, there was, as earlier stated, an Executive
Director, assisted by a Deputy Executive Director, who was
(3) If accompanies with a claim for reinstatement, those charged with the "exercise (of) the administrative functions
cases that workers may file involving wages, rates of pay, of the Commission." 9 More particularly, his chief functions
hours of work and other terms and conditions of were "to take charge of all administrative matters of the
employment; Commission and to have direct supervision over all units and
personnel assigned to perform administrative
(4) Claims for actual, moral, exemplary and other forms of 10
tasks." Although not so stated in the law, in the
damages arising from the employer-employee relations;8 performance of their functions, the Executive Director and
the Deputy Executive Director were obviously themselves
(5) Cases arising from any violation of Article 264 of this
subject to the supervision and control of the head of office,
Code, including questions involving the legality of strikes and
the ex officio Chairman of the National Labor Relations
lockouts;
Commission (the Secretary of Labor), or the Commission
(6) Except claims for employees compensation, social itself.
security, medicare and maternity benefits, all other claims
Under RA 6715, the Secretary of Labor is no longer ex
arising from employer-employee relations, including those of
officio Chairman of the Commission. There has been created
persons in domestic or household service, involving an
the office of Chairman, who "shall have the administrative
amount exceeding five thousand pesos (P5,000.00), whether
supervision over the Commission and its regional branches
or not accompanies with a claim for reinstatement.
and all its personnel, including the Executive Labor Arbiters
Now, as before, the Labor Arbiters are given thirty (30) and Labor Arbiters." In this function, the law says, he shall be
calendar days after the submission of the case by the parties "aided by the Executive Clerk of the Commission."
The Executive Clerk appears to be the officer who used to be 2. Similar considerations yield the same conclusion as far as
known under the old law as the Executive Director. The office the positions of Labor Arbiters are concerned, there being no
of Executive Director is nowhere mentioned in RA 6715. Said essential inconsistency on that score between Republic Act
Executive Clerk is given the additional responsibility of No. 6715 and the old law. The Labor Arbiters continue to
assisting the Commission en banc and the First Division, in exercise the same basic power and function: the
performing "such similar or equivalent functions and duties adjudication, in the first instance, of certain classes of labor
as are discharged by the Clerk of Court . . . of the Court of disputes. Their original and exclusive jurisdiction remains
Appeals." The position of Deputy Executive Clerks have also substantially the same under both the old law and the new.
been created whose main role is to assist the other divisions Again, their incumbents' constitutionally guaranteed security
of the Commission (the second, third, fourth and fifth) "in the of tenure cannot be defeated by the provision for higher or
performance of such similar or equivalent functions and other qualifications than were prescribed under the old law;
duties as are discharged by the . . . Deputy Clerk(s) of the said provision can only operate prospectively and as to new
Court of Appeals." appointees to positions regularly vacated; and there is,
besides, also no showing that the petitioning Arbiters do not
Summing up qualify under the new law.
1. Republic Act No. 6715 did not abolish the NLRC, or change 3. The position titles of "Executive Clerk" and "Deputy
its essential character as a supervisory and adjudicatory Executive Clerk(s)" provided for in RA 6715 are obviously not
body. Under said Act, as under the former law, the NLRC those of newly-created offices, but new appellations or
continues to act collegially, whether it performs designations given to the existing positions of Executive
administrative or rule-making functions or exercises Director and Deputy Executive Director. There is no essential
appellate jurisdiction to review decisions and final orders of change from the prescribed and basically administrative
the Labor Arbiters. The provisions conferring a somewhat duties of these positions and, at the same time, no mention
greater measure of autonomy; requiring that its membership in the Act of the former titles, from which the logical
be drawn from tripartite sectors (workers, employees and the conclusion is that what was intended was merely a change in
public sector); changing the official stations of the nomenclature, not an express or implied abolition. Neither
Commission's divisions, and even those prescribing higher or does the Act specify the qualifications for Executive Clerk and
other qualifications for the positions of Commissioner which, Deputy Executive Clerks. There is no reason to suppose that
if at all, should operate only prospectively, not to mention the these could be higher than those for Executive Director and
fact that the petitioners (in G.R. No. 91547) have asserted Deputy Executive Director, or that anything inheres in these
without dispute that they possess the new qualifications positions that would preclude their incumbents from being
none of these can be said to work so essential or radical a named Executive Clerk and Deputy Executive Clerks.
revision of the nature, powers and duties of the NLRC as to
justify a conclusion that the Act in truth did not merely WHEREFORE, the petitions are, as they must be, GRANTED ,
declare vacant but actually abolished the offices of and the following specific dispositions are hereby RENDERED:
commissioners and created others in their place.
1. In G.R. No. 91547, and G.R. No. 91730, the removal of No pronouncement as to costs.
petitioners Rosario G. Encarnacion, Daniel M. Lucas, Jr.,
Ceferino E. Dulay, and Conrado Maglaya as Commissioners of SO ORDERED.
the NLRC is ruled unconstitutional and void; however, to
avoid displacement of any of the incumbent Commissioners
now serving, it not appearing that any of them is unfit or has
given cause for removal, and conformably to the alternative
prayer of the petitioners themselves, it is ORDERED that said
petitioners be paid all salaries, benefits and emoluments
accruing to them for the unexpired portions of their six-year
terms and allowed to enjoy retirement benefits under
applicable laws, pursuant to RA No. 910 and this Court's
Resolution in Ortiz vs. Commission on Elections, G.R. No. G.R. No. 91636 April 23, 1992
79857, 161 SCRA 812;
PETER JOHN D. CALDERON, petitioner,
This disposition does not involve or apply to respondent Hon. vs.
Bartolome Carale, who replaced the Secretary of Labor as ex BARTOLOME CARALE, in his capacity as Chairman of
officio Chairman of the NLRC pursuant to RA 6715, none of the National Labor Relations Commission, EDNA
the petitioners having been affected or in any manner BONTO PEREZ, LOURDES C. JAVIER, ERNESTO G.
prejudiced by his appointment and incumbency as such; LADRIDO III, MUSIB M. BUAT, DOMINGO H. ZAPANTA,
VICENTE S.E. VELOSO III, IRENEO B. BERNARDO,
2. In G.R. No. 90044, the removal of petitioner Pascual Y. IRENEA E. CENIZA, LEON G. GONZAGA, JR., ROMEO B.
Reyes and petitioner-in-intervention Eugenio L. Sagmit, Jr. as PUTONG, ROGELIO I. RAYALA, RUSTICO L. DIOKNO,
NLRC Executive Director and Deputy Executive Director, BERNABE S. BATUHAN and OSCAR N. ABELLA, in their
respectively, is likewise declared unconstitutional and void, capacity as Commissioners of the National Labor
and they are ordered reinstated as Executive Clerk and Relations Commission, and GUILLERMO CARAGUE, in
Deputy Executive Clerk, respectively, unless they opt for his capacity as Secretary of Budget and
retirement, in either case with full back salaries, emoluments Management, respondents.
and benefits from the date of their removal to that of their
reinstatement; and
As interpreted by this Honorable Court in the Mison case, Three points should be noted regarding sub-section 3 of
confirmation by the Commission on Appointments is required Section 10 of Article VII of the 1935 Constitution and in the
exclusively for the heads of executive departments, original text of Section 16 of Article VII of the present
ambassadors, public ministers, consuls, officers of the armed Constitution as proposed in Resolution No. 517.
forces from the rank of colonel or naval captain, and other
officers whose appointments are vested in the President by
First, in both of them, the appointments of heads of bureaus appointments require confirmation by the Commission on
were required to be confirmed by the Commission on Appointments.
Appointments.
To resolve the issue, we go back to Mison where the Court
Second, in both of them, the appointments of other officers, stated:
"whose appointments are not otherwise provided for by law
to appoint" are expressly made subject to confirmation by . . . there are four (4) groups of officers whom the President
the Commission on Appointments. However, in the final shall appoint. These four (4) groups, to which we will
version of Resolution No. 517, as embodied in Section 16 of hereafter refer from time to time, are:
Article VII of the present Constitution, the appointment of the First, the heads of the executive departments, ambassadors,
above mentioned officers (heads of bureaus; other officers other public ministers and consuls, officers of the armed
whose appointments are not provided for by law; and those forces from the rank of colonel or naval captain, and other
whom he may be authorized by law to appoint) are excluded officers whose appointments are vested in him in this
from the list of those officers whose appointments are to be Constitution;
confirmed by the Commission on Appointments. This
amendment, reflected in Section 16 of Article VII of the Second, all other officers of the Government whose
Constitution, clearly shows the intent of the framers to appointments are not otherwise provided for by law;
exclude such appointments from the requirement of
confirmation by the Commission on Appointments. Third, those whom the president may be authorized by law to
appoint;
Third, under the 1935 Constitution the word "nominate"
qualifies the entire Subsection 3 of Section 10 of Article VII Fourth, officers lower in rank whose appointments the
thereof. Congress may by law vest in the President alone. 7
Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Bidin, Grio- CRUZ, J., dissenting:
Aquino, Medialdea, Regalado, Davide, Jr., Romero and Nocon,
JJ., concur. I dissent on the basis of my dissent in Sarmiento v. Mison,
which I believe should be re-examined instead of being
Bellosillo, J., took no part. automatically re-affirmed simply because of its original
adoption. I do not believe we should persist in error on the
ground merely of adherence to judicial precedent, however
unsound.
Separate Opinion
BIDIN, J.:
Sec. 9. In addition to the benefits granted by the Minimum On August 27, 1990, Ramon Jison, one of the respondents
Wage Law, the proceeds of any increase in participation impleaded in the amended complaint, filed a "Motion to
granted to planters under this Act and above their present Dismiss and/or to Include Necessary Parties," praying for the
share shall be divided between the planter and his laborers inclusion as co-respondents of the Asociacion de Hacenderos
in the following proportions; de Silan-Saravia, Inc. and the Associate Planters of Silay-
Saravia, Inc.
Sixty per centum of the increase participation for the laborers
and forty per centum for the planters. The distribution of the On June 29, 1992, public respondent promulgated the
share corresponding to the laborers shall be made under the assailed Order denying petitioner's Motion to Dismiss and
supervision of the Department of Labor. Supplemental Motion to Dismiss.
(Emphasis supplied.) Petitioner reasserts the two lesson earlier raised in its Motion
to Dismiss which public respondent unfavorably resolved in
On July 31, 1989, petitioner filed a "Motion to Dismiss," the assailed Order.
followed by a "Supplemental Motion to Dismiss" on
September 19, 1989. Petitioner contended that public These two issues are first, whether public respondent Labor
respondent Labor Arbiter has no jurisdiction to entertain and Arbiter has jurisdiction to hear and decide the case against
resolve the case, and that respondent union has no cause of petitioner; and the second, whether respondent union and/or
action against petitioner. the farm workers represented by it have a cause of action
against petitioner.
On August 23, 1989, respondent union filed an "Opposition to
Motion to Dismiss." Petitioner contends that the complaint filed against it cannot
be categorized under any of the cases falling within the
jurisdiction of the Labor Arbiter as enumerated in Article 217 In support of the contention that the Labor Arbiter has no
of the Labor Code, as amended, considering that no jurisdiction to hear and decide the case against petitioner,
employer-employee relationship exists between petitioner the latter cites the ruling in San Miguel Corporation
milling company and the farm workers represented by vs. NLRC, 161 SCRA 719 [1988], wherein it was held that a
respondent union. Article 217 of the Labor Code provides: single unifying element runs through the cases and disputes
falling under the jurisdiction of the Labor Arbiter and that is
Art. 217. Jurisdiction of Labor Arbiters and the Commission. that all the enumerated cases and disputes arise out of or
(a) Except as otherwise provided under this Code, the are in connection with an employer-employee relationship, or
Labor Arbiters shall have original and exclusive jurisdiction to some aspect or incident of such relationship. Likewise,
hear and decide, within thirty (30) calendar days after the in Federation of Free Farmers vs. Court of Appeals, 107 SCRA
submission of the case by the parties for decision without 411 [1981], this Court held that:
extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or . . . . From the beginning of the sugar industry, the centrals
non-agricultural: have never had any privity with the plantation laborers, since
they had their own laborers to take care of. . . . Nowhere in
1. Unfair labor practice cases; Republic Act 809 (the Sugar Act of 1952) can we find
2. Termination disputes; anything that creates any relationship between the laborers
of the planters and the centrals. . . .
3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay, hours of . . . Under no principle of law or equity can we impose on the
work and other terms and conditions of employment; central . . . any liability to the plantation laborers. . . .
(Emphasis supplied)
4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations; On the strength of the aforecited authorities, petitioner
contends that it is not a proper party and has no involvement
5. Cases arising from any violation of Article 264 of this Code, in the case filed by respondent union as it is not the
including questions involving the legality of strikes and employer of the respondent sugar workers.
lockouts; and
Furthermore, to bolster its contention, petitioner cites the
6. Except claims for employees' compensation, social Rules and Regulations Implementing RA 809 issued by the
security, medicare from maternity benefits, all other claims then Wage Administration Service pursuant to the
arising from employer-employee relations, including those of Administrative Order of the Labor Secretary dated October 1,
persons in domestic or household service, involving an 1952. Section 1 thereof states:
amount exceeding Five Thousand Pesos (P5,000.00), whether
or not accompanied with a claim for reinstatement. Sec. 1. The payment of the proceeds derived from the
(Emphasis supplies) sixty per centum of any increase in the participation due the
laborers shall be directly paid to the individual
laborer concerned at the end of each milling season by his
respective planter under the Supervision of the Secretary of whether an employer-employee relationship indeed exists
Labor or his duly authorized representative by means of between petitioner milling company and the sugar workers.
payrolls prepared by said planter. (Emphasis supplied) He did not categorically rule thereon but instead relied on the
observation that when petitioner delivered to its planters the
In addition, under Letter of Instruction No. 854 dated May 1, quedans representing its share, petitioner did not first
1979, it is provided: ascertain whether the shares of all workers or claimants were
1. Payment subject to supervision. The workers' share shall fully paid/covered pursuant to LOI No. 854, and that
be paid directly by the planter concerned to the workers or petitioner did not have the necessary certification from the
claimants entitled thereto subject to the supervision of the Department of Labor attesting to such fact of delivery. In
Minister of Labor or his duly designated representative. view of these observations, public respondent subscribed to
the possibility that petitioner may still have a liability vis-a-
The responsibility for the payment of the sugar workers' vis the workers' share. Consequently, in order that the
benefits under R.A. 809 was categorically ruled upon in workers would not have to litigate their claim separately,
the Federation of Free Farmers case, supra., to wit: which would be tantamount to tolerating the splitting of a
cause of action, public respondent held that petitioner should
. . . the matter of paying the plantation laborers of the still be included in this case as an indispensable party
respective planters becomes exclusively the concern of the without which a full determination of this case would not be
planters, the laborers and the Department of Labor. Under no obtained.
principle of law or equity can we impose on the Central
here VICTORIAS any liability to the respective plantation We find for petitioner.
laborers, should any of their respective planters-employers
fail to pay their legal share. After all, since under the law it is The Solicitor General, in its adverse Comment, correctly
the Department of Labor which is the office directly called agreed with petitioner's contention that while the jurisdiction
upon to supervise such payment, it is but reasonable to over controversies involving agricultural workers has been
maintain that if any blame is to be fixed for the unfortunate transferred from the Court of Agrarian Relations to the Labor
situation of the unpaid laborers, the same should principally Arbiters under the Labor Code as amended, the said
be laid on the planters and secondarily on the Department of transferred jurisdiction is however, not without limitations.
Labor, but surely never on the central. The dispute or controversy must still fall under one of the
cases enumerated under Article 217 of the Labor Code,
Whatever liability there exists between favor of the which cases, as ruled in San Miguel, supra., arise out of or
plantation laborers should be pinned on the PLANTERS, their are in connection with an employer-employee relationship.
respective employers. (Emphasis supplied)
In the case at bar, it is clear that there is no employer-
On the other hand, public respondent and respondent union employee relationship between petitioner milling company
maintain the position that privity exists between petitioner and respondent union and/or its members-workers, a fact
and the sugar workers. Actually, public respondent, in which, the Solicitor General notes, public respondent did not
resolving petitioner's Motion to Dismiss, skirted the issue of dispute or was silent about. Absent the jurisdictional requisite
of an employer-employee relationship between petitioner and In the case at bar, it is disputed that petitioner milling
private respondent, the inevitable conclusion is that public company has already distributed to its planters their
respondent is without jurisdiction to hear and decide the case respective shares. Consequently, petitioner has fulfilled its
with respect to petitioner. part and has nothing more to do with the subsequent
distribution by the planters of the workers' share.
Anent the issue of whether respondent union and/or its
members-workers have a cause of action against petitioner, Public respondent's contention that petitioner is an
the same must be resolved in the negative. To have a cause indispensable party is not supported by the applicable
of action, the claimant must show that he has a legal right provisions of the Rules of Court. Under Section 7, Rule 3
and the respondent a correlative duty in respect thereof, thereof, indispensable parties are "parties in interest" without
which the latter violated by some wrongful act or omission whom no final determination of the action can be obtained. In
(Marquez vs. Varela, 92 Phil. 373 [1952]). In the instant case, this case, petitioner cannot be deemed as a party in interest
a simple reading of Section 9 of R.A. 809 and Section 1 of LOI since there is no privity or legal obligation linking it to
845 as aforequoted, would show that the payment of the respondent union and/or its members-workers.
workers' share is a liability of the planters-employers, and not
of the milling company/sugar central. We thus reiterate Our In order to further justify petitioner's compulsory joinder as a
ruling on this matter, as enunciated in Federation of Free party to this case, public respondent relies on petitioners'
Farmers, supra., to wit: lack of certification from the Department of Labor of its
delivery of the planters' shares as evidence of an alleged
. . . . Nowhere in Republic Act No. 809 can we find anything "conspicuous display of concerted conspiracy between the
that creates any relationship between the laborers of the respondent sugar central (petitioner) and its adherent
planters and the centrals. Under the terms of said Act, the planters to deprive the workers or claimants of their shares in
old practice of the centrals issuing the quedans to the the increase in participation of the adherent planters." (Rollo,
respective PLANTERS for their share of the proceeds of milled p. 56)
sugar per their milling contracts has not been altered or
modified. In other words, the language of the Act does not in The assertion is based on factual conclusions which have yet
any manner make the central the insurer on behalf of the to be proved. And even assuming for the sake of argument
plantation laborers that the latter's respective employers- that public respondent's conclusions are true, respondent
planters would pay them their share. . . . union's and/or its workers' recourse lies with the Secretary of
Labor, upon whom authority is vested under RA 809 to
. . . . Accordingly, the only obligation of the centrals (under supervise the payment of the workers' shares. Any act or
Section 9 of the Act), like VICTORIAS, is to give to the omission involving the legal right of the workers to said
respective planters, like PLANTERS herein, the planters' share shares may be acted upon by the Labor Secretary
in the proportion stipulated in the milling contract which either motu proprio or at the instance of the workers. In this
would necessarily include the portion of 60% pertaining to case however, no such action has been brought by the
the laborers. Once this has been done, the central is already subject workers, thereby raising the presumption that no
out of the picture. . . . (Emphasis supplied) actionable violation has been committed.
Public respondent is concerned that the respondent planters
may easily put up the defense that the workers' share is with
petitioner milling company, giving rise to multiplicity of suits.
The Solicitor General correctly postulates that the planters
cannot legally set up the said defense since the payment of
the workers' share is a direct obligation of the planters to
their workers that cannot be shifted to the miller/central.
Furthermore, the Solicitor General notes that there is nothing
in RA 809 which suggests directly or indirectly that the
obligation of the planter to pay the workers' share is
dependent upon his receipt from the miller of his own share.
If indeed the planter did not receive his just and due share
from the miller, he is not without legal remedies to enforce
his rights. The proper recourse against a reneging miller or
central is for the planter to implead the former not as an
indispensable party but as a third party defendant under
Section 12, Rule 6 of the Rules of Court. In such case, herein
petitioner milling company would be a proper third party
dependent because it is directly liable to the planters (the
original defendants) for all or part of the workers' claim.
However, the planters involved in this controversy have not
filed any complaint of such a nature against petitioner,
thereby lending credence to the conclusion that petitioner
has fulfilled its part vis-a-vis its obligation under RA 809.
SO ORDERED.
On January 30, 1993, William Dayag asked for permission to
go to Manila to attend to family matters. He was allowed to
G.R. No. 124193 March 6, 1998 do so but was not paid for the period January 23-30, 1993,
WILLIAM DAYAG, EDUARDO CORTON, EDGARDO allegedly due to his accountability for the loss of certain
CORTON, LEOPOLDO NAGMA, ALOY FLORES, ROMEO construction tools. Eduardo Corton had earlier left on January
PUNAY and EDWIN DAYAG, petitioners, 16, 1993, purportedly due to harassment by Young. In
vs. February 1993, Edgardo Corton, Aloy Flores and Edwin Dayag
HON. POTENCIANO S. CANIZARES, JR., NATIONAL also left Cebu for Manila, allegedly for the same reason.
LABOR RELATIONS COMMISSION and YOUNG'S Thereafter, petitioners banded together and filed the
CONSTRUCTION CORPORATION, respondents. complaint previously mentioned.
Likewise, petitioners harp on Young's so-called "waiver" of his Similarly, petitioners' reliance on Nestle 9 and Cruzvale 10 is
right to contest the venue of the instant case. They argue likewise misplaced. While Nestle ruled that Rule IV of the New
that Young is estopped from questioning the venue herein as Rules of Procedure of the NLRC does not constitute a
his motion to transfer venue was actually a position paper, a complete rule on venue in cases cognizable by labor arbiters,
close scrutiny of the same purportedly showing that he Section 2, Rule 4 of the Rules of Court 11 having suppletory
admitted and denied certain allegations found in petitioners' effect, it also held that the foregoing provision of the Rules of
complaint. Court applies only where the petitioners are labor unions or
where a single act of an employer gives rise to a cause of
Petitioners' contention rings hollow. Even if the questioned action common to many of its employees working in different
motion was at the same time a position paper, Section 1(c) of branches or workplaces of the former. It is not denied that
Rule IV provides: "(w)hen improper venue is not objected to petitioners herein are not represented by a union; nor were
before or at the time of the filing of position papers, such they assigned to different workplaces by Young.
question shall be deemed waived" (Emphasis supplied). Likewise, Cruzvale is inapplicable to the case at bar, the issue
Consequently, there is no waiver of improper venue if a party involved therein being the propriety of the DOLE Region IV
questions venue simultaneously with the filing of a position Office's taking cognizance of a petition for certification
paper. Moreover, nowhere in the New Rules of Procedure of election when the company's place of business was in Cubao,
the NLRC is there a requirement that a party must Quezon City, while the workplace of the petitioning union was
object solely to venue, on penalty of waiving the same. In elsewhere. The instant case does not involve any certification
fact, Section 1(d) provides that: election; nor are the workplace of the employees and place
The venue of an action may be changed or transferred to a of business of the employer different.
different Regional Arbitration Branch other than where the Young cannot, however, derive comfort from the foregoing,
complaint was filed by written agreement of the parties or this petition having been overtaken by events. In the recent
when the Commission or Labor Arbiter before whom the case case of Sulpicio Lines, Inc. vs. NLRC 12 this Court held that the
is pending so orders, upon motion by the proper party in question of venue essentially pertains to the trial and relates
meritorious cases (Emphasis supplied). more to the convenience of the parties rather than upon the
Young's acts are in consonance with this provision, for he substance and merits of the case. It underscored the fact
seasonably made representations to transfer the venue of that the permissive rules underlying provisions on venue are
the action in the proper motion. intended to assure convenience for the plaintiff and his
witnesses and to promote the ends of justice. With more action at all. The condition will thus defeat, instead of
reason does the principle find applicability in cases involving enhance, the ends of justice. Upon the other hand, petitioner
labor and management because of the doctrine well- had branches or offices in the respective ports of call of the
entrenched in our jurisdiction that the State shall afford full vessels and could afford to litigate in any of these places.
protection to labor. The Court held that Section 1(a), Rule IV Hence, the filing of the suit in the CFI of Misamis Oriental, as
of the NLRC Rules of Procedure on Venue was merely was done in the instant case will not cause inconvenience to,
permissive. In its words: much less prejudice petitioner.
This provision is obviously permissive, for the said section In the case at hand, the ruling specifying the National Capital
uses the word "may," allowing a different venue when the Region Arbitration Branch as the venue of the present action
interests of substantial justice demand a different one. In any cannot be considered oppressive to Young. His residence in
case, as stated earlier, the Constitutional protection accorded Corinthian Gardens also serves as his correspondent office.
to labor is a paramount and compelling factor, provided the Certainly, the filing of the suit in the National Capital Region
venue chosen is not altogether oppressive to the employer. Arbitration Branch in Manila will not cause him as much
inconvenience as it would the petitioners, who are now
The rationale for the rule is obvious. The worker, being the residents of Metro Manila, if the same was heard in Cebu.
economically-disadvantaged partywhether as Hearing the case in Manila would clearly expedite
complainant/petitioner or as respondent, as the case may be, proceedings and bring about the speedy resolution of instant
the nearest governmental machinery to settle the dispute case.
must be placed at his immediate disposal, and the other
party is not to be given the choice of another competent WHEREFORE, premises considered, the resolution of February
agency sitting in another place as this will unduly burden the 12, 1996, of public respondent NLRC, transferring the instant
former. 13 In fact, even in cases where venue has been case to the Seventh Regional Arbitration Branch, Cebu City, is
stipulated by the parties, this Court has not hesitated to set SET ASIDE. Instead, its resolution dated August 25, 1995,
aside the same if it would lead to a situation so grossly remanding the case to the Arbitration Branch of Origin, is
inconvenient to one party as to virtually negate his claim. hereby REINSTATED and AFFIRMED.
Again, in Sulpicio Lines, this Court, citing Sweet
14
Lines vs. Teves, held that: SO ORDERED.
SARMIENTO, J.:
51. In entering in to such arrangement for the termination of 55. All the other defendants have actively cooperated with
the CURRENT CBA, and the consequent destruction to and abetted the CBTC and its defendant officers in
existing rights, interests and benefits thereunder,CBTC is negotiating, contriving and effecting the above arrangements
liable for wilful injury to the contract and property rights for the attainment of its dishonest purpose, for abuse of its
thereunder as provided in Article 2220 of the Civil Code of rights, and for taking undue advantage of its very own
the Philippines; employees, through the secret sale and scheduled merger;
the collective participation therein evinces machination,
52. By arranging for the termination of the CURRENT CBA in deceit, wanton attitude, bad faith, and oppressive intent,
the manner above described, CBTC committed breach of said wilfully causing loss or injury to plaintiffs in a manner that is
contract in bad faith, in that CBTC had taken undue contrary to law, morals, good customs and public policy, in
advantage of its own employees, by concealing and hiding violation of Articles 21 and 28 of the Civil Code; 1
the negotiations towards an agreement on the sales and
merger, when it was under a statutory duty to disclose and xxx xxx xxx
bargain on the effects thereof, according to law;
Predictably, the private respondents moved for the dismissal
xxx xxx xxx of the case on the ground, essentially, of lack of jurisdiction
of the court.
On November 26, 1980, the respondent Judge issued an The civil implications thereof do not defeat its nature as a
order, dismissing the case for lack of jurisdiction. According fundamental labor offense.
to the court, the complaint partook of an unfair labor practice
dispute notwithstanding the incidental claim for damages, As we stated, the damages (allegedly) suffered by the
jurisdiction over which is vested in the labor arbiter. This petitioners only form part of the civil component of the injury
order, as well as a subsequent one denying reconsideration, arising from the unfair labor practice. Under Article 247 of
is now alleged as having been issued 'in excess of his the Code, "the civil aspects of all cases involving unfair labor
jurisdiction amounting to a grave abuse of discretion." practices, which may include claims for damages and other
affirmative relief, shall be under the jurisdiction of the labor
We sustain the dismissal of the case, which is, as correctly arbiters. 4
held by the respondent court, an unfair labor practice
controversy within the original and exclusive jurisdiction of The petitioners' claimed injury as a consequence of the tort
the labor arbiters and the exclusive appellate jurisdiction of allegedly committed by the private respondents, specifically,
the National Labor Relations Commission. The claim against the Bank of the Philippine Islands, under Article 1314 of the
the Bank of Philippine Islands the principal respondent Civil Code, 5 does not necessarily give the courts jurisdiction
according to the petitioners for allegedly inducing the to try the damage suit. Jurisdiction is conferred by law 6 and
Commercial Bank and Trust Company to violate the existing not necessarily by the nature of the action. Civil
collective bargaining agreement in the process of re- controversies are not the exclusive domain of the courts. In
negotiation, consists mainly of the civil aspect of the unfair the case at bar, Presidential Decree No. 442, as amended by
labor practice charge referred to under Article 247 2 of the Batas Blg. 70, has vested such a jurisdiction upon the labor
Labor Code. arbiters, a jurisdiction the courts may not assume.
xxx xxx xxx Neither does the fact that the Bank of the Philippine Islands
"was not an employer at the time the act was committed'
abate a recourse to the labor arbiter. It should be noted
indeed that the Bank of the Philippine Islands assumed "all
the assets and liabilities" 16 of the Commercial Bank and Trust
Company. Moreover, under the Corporation Code:
NARVASA, J.: In his complaint and position paper, Vailoces asserted that
Lorenzo Dy, after obtaining control of the majority stock of
Petitioners assail in this Court the resolution of the National the bank by buying the shares of Marcelino Maximo, called
Labor Relations Commission (NLRC) dismissing their appeal an illegal stockholders' meeting and elected a Board of
from the decision of the Executive Labor Arbiter 1 in Cebu Directors controlled by him; that after its illegal constitution,
City which found private respondent to have been illegally said Board convened on July 2, 1983 and passed a resolution
dismissed by them. dismissing him as manager, without giving him the
opportunity to be heard first; that his dismissal was
Said private respondent, Carlito H. Vailoces, was the manager motivated by Lorenzo Dy's desire to take over the
of the Rural Bank of Ayungon (Negros Oriental), a banking management and control of the bank, not to mention the fact
institution duly organized under Philippine laws. He was also that he (Dy) harbored ill feelings against Vailoces on account
a director and stockholder of the bank. of the latter's filing of a complaint for violation of the
corporation code against him and another complaint for
On June 4, 1983, a special stockholders' meeting was called
compulsory recognition of natural child with damages against
for the purpose of electing the members of the bank's Board
Zosimo Dy, Sr. 4
of Directors. Immediately after the election the new Board
proceeded to elect the bank's executive officers. In their answer, Lorenzo Dy, et al. denied the charge of illegal
dismissal. They pointed out that Vailoces' position was an
Pursuant to Article IV of the bank's by-laws, 2 providing for
elective one, and he was not re-elected as bank manager
the election by the entire membership of the Board of the
because of the Board's loss of confidence in him brought
executive officers of the bank, i.e., the president, vice-
about by his absenteeism and negligence in the performance
president, secretary, cashier and bank manager, in that
of his duties; and that the Board's action was taken to protect
board meeting of June 4, 1983, petitioners Lorenzo Dy,
the interest of the bank and was "designed as an internal
William Ibero and Ricardo Garcia were elected president,
vice-president and corporate secretary, respectively. Vailoces
control measure to secure the check and balance of authority received a copy of the minutes of said meeting while he was
within the organization." 5 still the bank manager (his removal was to take effect only on
August 15, 1983), instead of which he simply abandoned the
The Executive Labor Arbiter found that Vailoces was: work he was supposed to perform up to the effective date of
(a) Illegally dismissed, first not because of absenteeism and his relief; and that the matter of his relief was within the
negligence, but of the resentment of petitioners against adjudicatory powers of the Securities and Exchange
Vailoces which arose from the latter's filing of the cases for Commission. 7
recognition as natural child against Zosimo Dy, Sr. and for The NLRC, however bypassed the issues raised and simply
violation of the corporation code against Lorenzo Dy; and dismissed the appeal for having been filed late. It ruled that:
second, because he was not afforded the due process of law
when he was dismissed during the Board meeting of July 2, The record shows that a copy of the decision sent by
1983 the validity of which is seriously doubted; registered mail to respondents' counsel, Atty. Edmund Tubio,
was received on January 11, 1984 by a certain Atty. Ramon
(b) Not paid his cost of living allowance; and Elesteria, a law office partner of Atty. Tubio. ... This fact is
(c) Underpaid with only P500 monthly salary, corroborated by the certification issued by the Postmaster of
Dumaguete City... Moreover, the same is admitted by no less
and consequently ordered the individual petitioners than Atty. Ramon Elesteria himself in his affidavit. It further
Lorenzo Dy and Zosimo Dy-but not the Bank itself, to: appears in the record that on January 30, 1984 a certain Atty.
Francisco Zerna, a new lawyer engaged by the respondents
(a) Pay Vailoces jointly and severally, the sum of P111,480.60 for the appeal, received a copy of the decision in this case as
representing his salary differentials, cost of living allowances, certified by Julia Pepito in an affidavit subscribed before the
back wages from date of dismissal up to the date of the Senior Labor Arbitration Specialist. The appeal was filed only
decision (November 29, 1983), moral and exemplary on February 17, 1984.
damages, and attorney's fees; and
Considering that it was a law partner of the respondents'
(b) Reinstate Vailoces to his position as bank manager, with counsel who received on January 11, 1984 the registered
additional backwages from December 1, 1983 on the letter, his actual receipt thereof completes the service. ...
adjusted salary rate of P620.00 r month until he is actually And even assuming that such was not a valid service, since
reinstated, plus cost-of-living allowance. 6 the respondents received another copy of the decision on
January 30, 1984, through their newly engaged counsel, it is
Lorenzo Dy, et al. appealed to the NLRC, assigning error to
therefore our opinion that the appeal herein was filed out of
the decision of the Labor Arbiter on various grounds, among
time, whether the time is reckoned from the receipt by Atty.
them: that Vailoces was not entitled to notice of the Board
Elesteria or Atty. Zerna, and, for this reason, we can not give
meeting of July 2, 1983 which decreed his relief because he
due course to his appeal. 8
was no longer a member of the Board on said date; that he
nonetheless had the opportunity to refute the charges In this Court, petitioners assail said ruling as an arbitrary
against him and seek a formal investigation because he deprivation of their right to appeal through unreasonable
adherence to procedural technicality. They argue that they the organizational meeting of November 17, 1979. 10 He lost
should not be bound by the service of the Labor Arbiter's that position because the Board that was elected in the
decision by Atty. Elesteria on January 11, 1984 or by Atty. special stockholders' meeting of June 4, 1983 did not re-elect
Zerna on January 30, 1984, because neither lawyer was him. And when Vailoces, in his position paper submitted to
authorized to accept service for their counsel Atty. Tubio, and the Labor Arbiter, impugned said stockholders' meeting as
that their 10 day period of appeal should be counted from illegally convoked and the Board of Directors thereby elected
February 10, 1984 when they actually received the copy of as illegally constituted, 11 he made it clear that at the heart
the decision from Atty. Zerna. On the merits, they assert that of the matter was the validity of the directors' meeting of
the Arbiter's finding of illegal dismissal was without June 4, 1983 which, by not re-electing him to the position of
evidentiary basis, that it was error to impose the obligation to manager, in effect caused termination of his services.
pay damages upon the individual petitioners, instead of the
Rural Bank of Ayungon, which was Vailoces' real employer, The case thus falls squarely within the purview of Section 5,
and that the damages awarded are exorbitant and par. (c), No. 902-A just cited. In PSBA vs. Leao, 12 this Court,
oppressive. confronted with a similar controversy, ruled that the
Securities and Exchange Commission, not the NLRC, has
While the comment of Vailoces traverses the averments of jurisdiction:
the petition, that of the Solicitor General on behalf of public
respondents perceives the matter as an intracorporate It was at a Board regular monthly meeting held on August 1,
controversy of the class described in Section 5, par. (c), of 1981, that three directors were elected to fill vacancies. And,
Presidential Decree No. 902-A, namely: it was at the regular Board meeting of September 5, 1981
that all corporate positions were declared vacant in order to
(c) Controversies in the election or appointments of directors, effect a reorganization, and at the ensuing election of
trustees, officers or managers of such corporations, officers, Tan was not re-elected as Executive Vice-President.
partnerships or associations.
Basically, therefore, the question is whether the election of
explicitly declared to be within the original and exclusive directors on August 1, 1981 and the election of officers on
jurisdiction of the Securities and Exchange Commission, and September 5, 1981, which resulted in Tan's failure to be re-
recommends that the questioned resolution of the NLRC as elected, were validly held. This is the crux of the question
well as the decision of the Labor Arbiter be set aside as null that Tan has raised before the SEC. Even in his position paper
and void. 9 before the NLRC, Tan alleged that the election on August 1,
1981 of the three directors was in contravention of the PSBA
In truth, the issue of jurisdiction is decisive and renders By-Laws providing that any vacancy in the Board shall be
unnecessary consideration of the other questions raised. filled by a majority vote of the stockholders at a meeting
There is no dispute that the position from which private specially called for the purpose. Thus, he concludes, the
respondent Vailoces claims to have been illegally dismissed Board meeting on September 5, 1981 was tainted with
is an elective corporate office. He himself acquired that irregularity on account of the presence of illegally elected
position through election by the bank's Board of Directors at directors without whom the results could have been different.
Tan invoked the same allegations in his complaint filed with corporation, partnership or association and the state insofar
the SEC. So much so, that on December 17, 1981, the SEC as it concerns their individual franchise or right to exist as
(Case No. 2145) rendered a Partial Decision annulling the such entity;
election of the three directors and ordered the convening of a
stockholders' meeting for the purpose of electing new c) Controversies in the election or appointments of directors,
members of the Board. The correctness of d conclusion is not trustees, officers or managers of such corporations,
for us to pass upon in this case. Tan was present at said partnership or associations.
meeting and again sought the issuance of injunctive relief This is not a case of dismissal. The situation is that of
from the SEC. a corporate office having been declared vacant, and of Tan's
The foregoing indubitably show that, fundamentally, the not having been elected thereafter. The matter of whom to
controversy is intra-corporate in nature. It revolves around elect is a prerogative that belongs to the Board, and involves
the election of directors, officers or managers of the PSBA, the exercise of deliberate choice and the faculty of
the relation between and among its stockholders, and discriminative selection. Generally speaking, the relationship
between them and the corporation. Private respondent also of a person to corporation, whether as officer or as agent or
contends that his "ouster" was a scheme to intimidate him employee, is not determined by the nature of the services
into selling his shares and to deprive him of his just and fair performed, but by the incidents of the relationship as they
return on his investment as a stockholder received through actually exist.
his salary and allowances as Executive Vice-President. Vis-a- Respondent Vailoces' invocation of estoppel as against
vis the NLRC, these matters fall within the jurisdiction of the petitioners with respect to the issue of jurisdiction is
SEC. Presidential Decree No. 902-A vests in the Securities unavailing. In the first place, it is not quite correct to state
and Exchange Commission: that petitioners did not raise the point in the lower tribunal.
... Original and exclusive jurisdiction to hear and decide cases Although rather off handedly, in their appeal to the NLRC
involving: they called attention to the Labor Arbiter's lack of jurisdiction
to rule on the validity of the meeting of July 2, 1983, but the
a) Devices or schemes employed by or any acts, of the board dismissal of the appeal for alleged tardiness effectively
of directors, business associates, its officers or partners, precluded consideration of that or any other question raised
amounting to fraud and misrepresentation) which may be in the appeal. More importantly, estoppel cannot be invoked
detrimental to the interest of the public and/or of the to prevent this Court from taking up the question of
stockholders, partners, members of associations or jurisdiction, which has been apparent on the face of the
organizations registered with the Commission. pleadings since the start of litigation before the Labor Arbiter.
It is well settled that the decision of a tribunal not vested
b) Controversies arising out of intracorporate or partnership with appropriate jurisdiction is null and void. Thus,
relations, between and among stockholders, members or in Calimlim vs. Ramirez, 13 this Court held:
associates; between any of all of them and the corporation,
partnership or association of which they are stockholders, A rule that had been settled by unquestioned acceptance and
members or associates, respectively; and between such upheld in decisions so numerous to cite is that the
jurisdiction of a court over the subject matter of the action is at once be deemed sufficient basis of estoppel. It could have
a matter of law and may not be conferred by consent or been the result of an honest mistake or of divergent
agreement of the parties. The lack of jurisdiction of a court interpretation of doubtful legal provisions. If any fault is to be
may be raised at any stage of the proceedings, even on imputed to a party taking such course of action, part of the
appeal. This doctrine has been qualified by recent blame should be placed on the court which shall entertain
pronouncements which stemmed principally from the ruling the suit, thereby lulling the parties into believing that they
in the cited case of Sibonghanoy. It is to be regretted, pursued their remedies in the correct forum. Under the rules,
however, that the holding in said case had been applied to it is the duty of the court to dismiss an action 'whenever it
situations which were obviously not contemplated therein. appears that court has no jurisdiction over the subject
The exceptional circumstances involved matter.' (Section 2, Rule 9, Rules of Court) Should the Court
in Sibonghanoy which justified the departure from the render a judgment without jurisdiction, such judgment may
accepted concept of non-waivability of objection to be impeached or annulled for lack of jurisdiction (Sec. 30,
jurisdiction has been ignored and, instead a blanket doctrine Rule 132, Ibid), within ten (10) years from the finality of the
had been repeatedly upheld that rendered the supposed same (Art. 1144, par. 3, Civil Code).
ruling in Sibonghanoy not as the exception, but rather the
general rule, virtually overthrowing altogether the time- To be sure, petitioners failed to raise the issue of jurisdiction
honored principle that the issue of jurisdiction is not lost by in their petition before this Court. But this, too, is no
waiver or by estoppel. hindrance to the Court's considering said issue.
xxx xxx xxx The failure of the appellees to invoke anew the
aforementioned solid ground of want of jurisdiction of the
It is neither fair nor legal to bind a party by the result of a lower court in this appeal should not prevent this Tribunal to
suit or proceeding which was taken cognizance of in a court take up that issue as the lack of jurisdiction of the lower court
which lacks jurisdiction over the same irrespective of the is apparent upon the face of the record and it is fundamental
attendant circumstances. The equitable defense of estoppel that a court of justice could only validly act upon a cause of
requires knowledge or consciousness of the facts upon which action or subject matter of a case over which it has
it is based . The same thing is true with estoppel by conduct jurisdiction and said jurisdiction is one conferred only by law;
which may be asserted only when it is shown, among others, and cannot be acquired through, or waived by, any act or
that the representation must have been made with omission of the parties (Lagman vs. CA, 44 SCRA 234
knowledge of the facts and that the party to whom it was [1972]); hence may be considered by this court motu proprio
made is ignorant of the truth of the matter (De Castro vs. (Gov't. vs. American Surety Co., 11 Phil. 203 [1908])... 14
Gineta, 27 SCRA 623). The filing of an action or suit in a court
that does not possess jurisdiction to entertain the same may These considerations make inevitable the conclusion that the
not be presumed to be deliberate and intended to secure a judgment of the Labor Arbiter and the resolution of the NLRC
ruling which could later be annulled if not favorable to the are void for lack of cause of jurisdiction, and this Court must
party who filed such suit or proceeding in a court that lacks set matters aright in the exercise of its judicial power. It is of
jurisdiction to take cognizance of the same, such act may not no moment that Vailoces, in his amended complaint, seeks
other relief which would seemingly fan under the jurisdiction
of the Labor Arbiter, because a closer look at these-
underpayment of salary and non-payment of living
allowance-shows that they are actually part of the perquisites
of his elective position, hence, intimately linked with his
relations with the corporation. The question of remuneration,
involving as it does, a person who is not a mere employee
but a stockholder and officer, an integral part, it might be
said, of the corporation, is not a simple labor problem but a
matter that comes within the area of corporate affairs and
management, and is in fact a corporate controversy in
contemplation of the Corporation Code.
G.R. No. 79762 January 24, 1991
WHEREFORE, the questioned decision of the Labor Arbiter
and the Resolution of the NLRC dismissing petitioners' appeal FORTUNE CEMENT CORPORATION, petitioner,
from said decision are hereby set aside because rendered vs.
without jurisdiction. The amended complaint for illegal NATIONAL LABOR RELATIONS COMMISSION (First
dismissal, etc., basis of said decision and Resolution, is Division) and ANTONIO M. LAGDAMEO, respondents.
ordered dismissed, without prejudice to private respondent's
De Leon, Diokno & Associates Law Offices for petitioner.
seeking recourse in the appropriate forum.
Romarie G. Villonco and George C. Nograles for private
SO ORDERED.
respondent.
GRIO-AQUINO, J.:p
On June 21, 1983, Lagdameo filed with the National Labor a) Devices and schemes employed by or any acts, of the
Relations Commission (NLRC), National Capital Region, a board of directors, business associates, its officers or
complaint for illegal dismissal against FCC (NLRC-NCR Case partners, amounting to fraud and misrepresentation which
No. 1-228-85) alleging that his dismissal was done without a may be detrimental to the interest of the public and/or
formal hearing and investigation and, therefore, without due stockholders, partners, members of associations or
process (p. 63, Rollo). organization registered with the Commission;
On August 5, 1985, FCC moved to dismiss Lagdameo's b) Controversies arising out of intra-corporate or partnership
complaint on the ground that his dismiss as a corporate relations, between and among stockholders, members, or
officer is a purely intra-corporate controversy over which the associates; between any or all of them and the corporation,
Securities and Exchange Commission (SEC) has original and partnership or association of which they are stockholders,
exclusive jurisdiction. members or associates, respectively; and between such
corporation, partnership or association and the state insofar
The Labor Arbiter granted the motion to dismiss (p. as it concerns their individual franchise or right to exist as
22, Rollo). On appeal, however, the NLRC set aside the Labor such entity;
Arbiter's order and remanded the case to the Arbitration
Branch "for appropriate proceedings" (NLRC Resolution dated c) Controversies in the election or appointments of directors,
April 30, 1987). The NLRC denied FCC's motion for trustees, officers or managers of such corporations,
reconsideration (p. 5, Rollo). Dissatisfied, FCC filed this partnership or associations." (Section 5, P.D. 902-A; Emphasis
petition for certiorari. supplied.)
In reversing the decision of Labor Arbiter Porfirio E. And it must be, not only because it is a practice observed in
Villanueva, respondent NLRC held: petitioner Fortune Cement Corporation, but more so, because
of an express mandate of law. (p. 65, Rollo.)
. . . . It is not disputed that complainant Lagdameo was an
employee of respondent Fortune Cement Corporation, being The Solicitor General pointed out that "a corporate officer's
then the Executive Vice-President. For having been dismissed dismissal is always a corporate act and/or intra-corporate
for alleged loss of trust and confidence, complainant controversy and that nature is not altered by the reason or
questioned his dismissal on such ground and the manner in wisdom which the Board of Directors may have in taking such
which he was dismissed, claiming that no investigation was action." The dispute between petitioner and Lagdameo is of
conducted, hence, there was and is denial of due process. the class described in Section 5, par. (c) of Presidential
Predicated on the above facts, it is clear to Us that a labor Decree No. 902-A, hence, within the original and exclusive
dispute had arisen between the appellant and the respondent jurisdiction of the SEC. The Solicitor General recommended
corporation, a dispute which falls within the original and that the petition be granted and NLRC-NCR Case No. 1-228-
exclusive jurisdiction of the NLRC. A labor dispute as defined 85 be dismissed by respondent NLRC for lack of jurisdiction
in the Labor Code includes any controversy or matter (p. 95, Rollo).
concerning terms or conditions of employment or the
association or representation of persons in negotiating, In PSBA vs. Leao (127 SCRA 778), this Court, confronted
fixing, maintaining, changing or arranging the terms and with a similar controversy, ruled that the SEC, not the NLRC,
conditions of employment regardless of whether or not the has jurisdiction:
disputants stand in the proximate relations of employers and This is not a case of dismissal. The situation is that of a
employees." (pp. 16-17, Rollo). corporate office having been declared vacant, and of Tan's
The Solicitor General, declining to defend public respondent not having been elected thereafter. The matter of whom to
in its pleading entitled "Manifestation in Lieu of Comment," elect is a prerogative that belongs to the Board, and involves
aptly observed: the exercise of deliberate choice and the faculty of
discriminative selection. Generally speaking, the relationship
The position of "Executive Vice-President," from which private of a person to a corporation, whether as officer or as agent or
respondent Lagdameo claims to have been illegally employee is not determined by the nature of the services
dismissed, is an elective corporate office. He himself performed, but by the incidents of the relationship as they
acquired that position through election by the corporation's actually exist.
Board of Directors, although he also lost the same as a
consequence of the latter's resolution. Lagdameo claims that his dismissal was wrongful, illegal, and
arbitrary, because the "irregularities" charged against him
Indeed the election, appointment and/or removal of an were not investigated (p. 85, Rollo); that the case of PSBA
executive vice-president is a prerogative vested upon a vs. Leao (supra) cited by the Labor Arbiter finds no
corporate board. application to his case because it is not a matter of corporate
office having been declared vacant but one where a
corporate officer was dismissed without legal and factual
basis and without due process; that the power of dismissal
should not be confused with the manner of exercising the
same; that even a corporate officer enjoys security of tenure
regardless of his rank (p. 97, Rollo); and that the SEC is
without power to grant the reliefs prayed for in his complaint
(p. 106, Rollo).
Records show that Ernesto Movilla, who was a Certified Public 5. Unpaid 13th month pay (remaining balance for 1990). 4
Accountant during his lifetime, was hired as such by Mainland
On the basis of this finding, petitioner corporation was
ordered by DOLE to pay to its thirteen employees, which
included Movilla, the total amount of P309,435.89, Corporation v. NLRC, et al., G.R. No. 79762, January 24,
representing their salaries, holiday pay, service incentive 1991). 5
leave pay differentials, unpaid wages and 13th month pay.
Aggrieved by this decision, respondents appealed to the
All the employees listed in the DOLE's order were paid by National Labor Relations Commission (NLRC). The NLRC ruled
petitioner corporation, except Ernesto Movilla. that the issue in the case was one which involved a labor
dispute between an employee and petitioner corporation
On October 8, 1991, Ernesto Movilla filed a case against and, thus, the NLRC had jurisdiction to resolve the case. The
petitioner corporation and/or Lucita, Robert, and Ellen, all dispositive portion of the NLRC decision reads:
surnamed Carabuena, for unpaid wages, separation pay and
attorney's fees, with the Department of Labor and WHEREFORE, the assailed decision is Reversed and Set
Employment, Regional Arbitration, Branch XI, Davao City. Aside. Respondents are ordered to pay the heirs of
complainant the following:
On February 29, 1992, Ernesto Movilla died while the case
was being tried by the Labor Arbiter and was promptly 1. Unpaid salaries from January 1989 to September 1991 in
substituted by his heirs, private respondents herein, with the the sum of P155,100.00;
consent of the Labor Arbiter.
2. Separation pay in the sum of P65,800.00;
The Labor Arbiter rendered judgment on June 26, 1992,
dismissing the complaint on the ground of lack of jurisdiction. 3. Moral damages in the sum of P10,000.00;
Specifically, the Labor Arbiter made the following 4. Indemnity in the sum of P3,000.00; and,
ratiocination:
5. Attorney's fees equivalent to 10% of the total award. 6
It is clear that in the case at bar, the controversy presented
by complainant is intra-corporate in nature and is within the The pivotal issue in this case is which of the two agencies of
jurisdiction of the Securities and Exchange Commission, the government the NLRC or the SEC has jurisdiction
pursuant to P.D. 902-A (Phil. School of Business over the controversy.
Administration, et al. v. Leano, G.R. No. L-58468, February 24,
1984; Dy et al. v. NLRC, et al., G.R. No. L-68544, October 27, As we stated earlier, it is of course the contention of
1986). What Movilla is claiming against respondents are his petitioners that the NLRC committed grave abuse of
alleged unpaid salaries and separation pay as Administrative discretion when it nullified the decision of the Labor Arbiter
Manager of the corporation for which position he was which dismissed the complaint of Movilla for unpaid wages,
appointed by the Board of Directors. His claims therefore fall separation pay and attorney's fees on the ground of lack of
under the jurisdiction of the Securities and Exchange jurisdiction. Petitioners take the position that, since Ernesto
Commission because this is not a simple labor problem; but a Movilla was a corporate officer, the controversy as to his
matter that comes within the area of corporate affairs and compensation is within the jurisdiction of the SEC as
management, and is in fact a corporate controversy in mandated by P.D. 902-A and not with the NLRC.
contemplation of the Corporation Code. (Fortune Cement
We find for the respondents, it appearing that petitioners' Directors. What comes to the fore is whether there was a
contention is bereft of merit. change in the nature of his functions and not merely the
nomenclature or title given to his job.
In order that the SEC can take cognizance of a case, the
controversy must pertain to any of the following Indeed, Ernesto Movilla worked as an administrative officer of
relationships: a) between the corporation, partnership or the company for several years and was given a fixed salary
association and the public; b) between the corporation, every month. To further sustain this assertion Movilla also
partnership or association and its stockholders, partners, submitted a joint affidavit executed by Juanito S. Malubay
members or officers; and Delia S. Luciano, Project Engineer and Personnel-In-
c) between the corporation, partnership or association and Charge, respectively, of petitioner corporation, attesting that
the State as far as its franchise, permit or license to operate they personally knew Movilla and that he was employed in
is concerned; and d) among the stockholders, partners or the company. A Premium Certification issued by an
associates themselves. 7 The fact that the parties involved in authorized representative of petitioners was also presented
the controversy are all stockholders or that the parties to show his actual monthly earnings as well as his monthly
involved are the stockholders and the corporation does not contributions to the SSS, Medicare and ECC. 10 Movilla's
necessarily place the dispute within the ambit of the registration in the SSS by petitioner corporation added
jurisdiction of SEC. The better policy to be followed in strength to the conclusion that he was petitioner
determining jurisdiction over a case should be to consider corporation's employee as coverage by the said law is
concurrent factors such as the status or relationship of the predicated on the existence of an employer-employee
parties or the nature of the question that is the subject of relationship. 11 Furthermore, petitioner corporation failed to
their controversy. 8 In the absence of any one of these present evidence which showed that, after his election as
factors, the SEC will not have jurisdiction. Furthermore, it Administrative Manager, he was excluded from the coverage
does not necessarily follow that every conflict between the of the SSS, Medicare and ECC.
corporation and its stockholders would involve such
corporate matters as only the SEC can resolve in the exercise He also presented, appearing to be relevant to the issue, the
of its adjudicatory or quasi-judicial powers. 9 result of the investigation conducted by DOLE which found
that petitioner corporation has transgressed several labor
In the case at bench, the claim for unpaid wages and standard laws against its employees.
separation pay filed by the complainant against petitioner
corporation involves a labor dispute. It does not involve an As correctly ruled by the NLRC:
intra-corporate matter, even when it is between a The claims for unpaid salaries/monetary benefits and
stockholder and a corporation. It relates to an employer- separation pay, are not a corporate conflict as respondents
employee relationship which is distinct from the corporate presented them to be. If complainant is not an employee,
relationship of one with the other. Moreover, there was no respondent should have contested the DOLE inspection
showing of any change in the duties being performed by report, What they did was to exclude complainant from the
complainant as an Administrative Officer and as an order of payment . . . and worse, he was not both given
Administrative Manager after his election by the Board of responsibilities and paid his salaries for the succeeding
months . . . . This is a clear case of constructive dismissal REGALADO, J.:
without due process . . . 12
This is a petition for certiorari which seeks to annul the
The existence of an employer-employee relationship is a resolution of the National Labor Relations Commission
factual question and public respondent's findings are (NLRC), dated June 26, 1995, affirming in toto the order of
accorded great weight and respect as the same are the labor arbiter, dated April 26, 1994, which dismissed
supported by substantial evidence. 13 Hence, we uphold the petitioner's complaint for illegal dismissal with money claims
conclusion of public respondent that Ernesto Movilla was an for lack of jurisdiction.
employee of petitioner corporation.
The records show that petitioner Purificacion Tabang was a
It is pertinent to note that petitioner corporation is not founding member, a member of the Board of Trustees, and
prohibited from hiring its corporate officers to perform the corporate secretary of private respondent Pamana
services under a circumstance which will make him an Golden Care Medical Center Foundation, Inc., a non-stock
employee. 14 Moreover, although a director of a corporation is corporation engaged in extending medical and surgical
not, merely by virtue of his position, its employee, said services.
director may act as an employee or accept duties that make
him also an employee. 15 On October 30, 1990, the Board of Trustees issued a
memorandum appointing petitioner as Medical Director and
Since Ernesto Movilla's complaint involves a labor dispute, it Hospital Administrator of private respondent's Pamana
is the NLRC, under Article 217 of the Labor Code of the Golden Care Medical Center in Calamba, Laguna.
Philippines, which has jurisdiction over the case at bench.
Although the memorandum was silent as to the amount of
WHEREFORE, the petition is DISMISSED for lack of showing of remuneration for the position, petitioner claims that she
any grave abuse of discretion on the part of public received a monthly retainer fee of five thousand pesos
respondent NLRC. The assailed decision of public respondent (P5,000.00) from private respondent, but the payment
is thus AFFIRMED. thereof was allegedly stopped in November, 1991.
KAPUNAN, J.:
g) Complainant, however, deliberately withheld Atty. Magno's 2. You tried to influence the decision of Atty. Pablo P. Magno,
advice from her superior, the Senior Vice-President, Mr. Bank legal counsel, by asking him to do something allegedly
Renato Santos and falsely informed the latter that Atty . upon instructions of a Senior Vice President of the Bank or
Magno advised that a demand letter be sent instead, thereby else lose his job when in truth and in fact no such instructions
further delaying the collection of the HSBC checks. was given; and
h) On 10 July 1990, the HSBC checks were finally sent for 3. You deliberately withheld from Mr. Santos, Senior Vice
collection, but were returned on 16 July 1990 for the reason President, the advice given by the legal counsel of the Bank
'account closed' (Exhibits 2-A and 3-A).' which Mr. Santos had asked you to seek. As a matter of fact,
you even relayed a false advice which delayed further the
After a review of the Committee's findings, the Board of sending of the two checks for collection. Likewise, you
Directors of the Bank resolved not to re-elect complainant refused to heed the advice of the Bank's legal counsel to
any longer to the position of assistant president pursuant to send the checks for collection.
the Bank's By-laws.
These findings have given rise to the Bank's loss of trust and
On July 19, 1991, complainant was informed of her confidence in you, the same being acts of serious misconduct
termination of employment from the Bank by Senior Vice in the performance of your duties resulting in monetary loss
President Benedicto L. Santos, in a letter the text of which is to the Bank. In view thereof, the Board has resolved not to re-
quoted in full: elect you to the position of Assistant Vice President of the
'Dear Mrs. Reyes: Bank. Accordingly, your services are terminated effective
immediately. In relation thereto, your monetary and
After a thorough investigation and appreciation of the retirement benefits are forfeited except those that have
charges against you as contained in the Memorandum of the vested in you.'
President dated March 8, 1991, the Fact Finding Committee
which was created to investigate the commission and/or In her position paper, complainant alleged that the real
omission of the acts alluded therein, has found the following: reason for her dismissal was her filing of the criminal cases
against the bank president, the vice president and the
1. You have deliberately held the clearing of Checks Nos. auditors of the Bank, such filing not being a valid ground for
11728 and 11730 of Hongkong and Shanghai Banking her dismissal. Furthermore, she alleged that it would be self-
Corporation in the total amount of US$224,650.00 by giving serving for the respondent to state that she was found guilty
instructions to the collection clerk not to send the checks for of gross misconduct in deliberately withholding the clearing
collection. In view thereof, when the said checks were finally of the two dollar checks. She further alleged that she was not
sent to clearing after the lapse of 15 months from receipt of afforded due process as she was not given the chance to
said checks, they were returned for the reason 'Account
refute the charges mentioned in the letter of dismissal. 20 JULY 1995 OF LABOR ARBITER CORNELIO L. LINSANGAN,
Hence, she was illegally dismissed. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED, IN
VIEW OF THE FOLLOWING:
On the other hand, respondent argues that there were
substantial bases for the bank to lose its trust and confidence I.
on the complainant and, accordingly, had just cause for
terminating her services. Moreover, for filing the clearly IT IS THE SEC (NOW THE REGIONAL TRIAL COURT) AND NOT
unfounded suit against the respondent's officers, THE NLRC WHICH HAS ORIGINAL AND EXCLUSIVE
complainant is liable to pay moral and exemplary damages JURISDICTION OVER CASES INVOLVING THE REMOVAL FROM
and attorney's fees."7 OFFICE OF CORPORATE OFFICERS.
The Court of Appeals found that the NLRC committed grave II.
abuse of discretion in ruling that the dismissal of Reyes is EVEN ASSUMING ARGUENDO THAT THE NLRC HAS
valid. In effect, the Court of Appeals reinstated the judgment JURISDICTION, THERE WAS SUBSTANTIAL EVIDENCE OF
of the labor arbiter with modification as follows: RESPONDENT'S MISCONDUCT JUSTIFYING THE BANK'S LOSS
"WHEREFORE, in the light of the foregoing, the decision OF TRUST AND CONFIDENCE ON (sic) HER.
appealed from is hereby REVERSED and SET ASIDE. In lieu III.
thereof, judgment is hereby rendered ordering respondent
Bank as follows: EVEN ASSUMING ARGUENDO THAT RESPONDENT WAS
ENTITLED TO BACKWAGES, THE HONORABLE COURT OF
1. To pay petitioner full backwages and other benefits from APPEALS ERRED IN AWARDING UNLIMITED AND UNQUALIFIED
July 19, 1991 up to the finality of this judgment; BACKWAGES THEREBY GOING FAR BEYOND THE LABOR
2. To pay petitioner separation pay equivalent to one (1) ARBITER'S DECISION LIMITING THE SAME TO THREE YEARS,
month salary for every year of service in lieu of WHICH DECISION RESPONDENT HERSELF SOUGHT TO
reinstatement; and EXECUTE."9
3. To pay attorney's fee equivalent to ten (10%) percent of In sum, the resolution of this petition hinges on (1) whether
the total award. the NLRC has jurisdiction over the complaint for illegal
dismissal; (2) whether complainant Reyes was illegally
SO ORDERED."8 dismissed; and (3) whether the amount of back wages
awarded was proper.
Hence, the Bank's recourse to this Court contending in its
memorandum that: On the first issue, petitioner seeks refuge behind the
argument that the dispute is an intra-corporate controversy
"IN SETTING ASIDE THE DECISION DATED 24 MARCH 1997 concerning as it does the non-election of private respondent
AND THE RESOLUTION DATED 28 JULY 1998 OF THE NLRC to the position of Assistant Vice-President of the Bank which
AND REINSTATING WITH MODIFICATION THE DECISION DATED falls under the exclusive and original, jurisdiction of the
Securities and Exchange Commission (now the Regional Trial consistently asserted in all its pleadings at all stages of the
Court) under Section 5 of Presidential Decree No. 902-A. More proceedings that respondent held the position of Assistant
specifically, petitioner contends that complainant is a Vice President, an elective position which she held by virtue
corporate officer, an elective position under the corporate by- of her having been elected as such by the Board of
laws and her non-election is an intra-corporate controversy Directors." As far as the records before this Court reveal
cognizable by the SEC invoking lengthily a number of this however, such an assertion was made only in the appeal to
Court's decisions.10 the NLRC and raised again before the Court of Appeals, not
for purposes of questioning jurisdiction but to establish that
Petitioner Bank can no longer raise the issue of jurisdiction private respondent's tenure was subject to the discretion of
under the principle of estoppel. The Bank participated in the the Board of Directors and that her non-reelection was a
proceedings from start to finish. It filed its position paper with mere expiration of her term. The Bank insists that private
the Labor Arbiter. When the decision of the Labor Arbiter was respondent was elected Assistant Vice President sometime in
adverse to it, the Bank appealed to the NLRC. When the NLRC 1990 to serve as such for only one year. This argument will
decided in its favor, the bank said nothing about jurisdiction. not do either and must be rejected.
Even before the Court of Appeals, it never questioned the
proceedings on the ground of lack of jurisdiction. It was only It appears that private respondent was appointed Accounting
when the Court of Appeals ruled in favor of private Clerk by the Bank on July 14, 1963. From that position she
respondent did it raise the issue of jurisdiction. The Bank rose to become supervisor. Then in 1982, she was appointed
actively participated in the proceedings before the Labor Assistant Vice-President which she occupied until her illegal
Arbiter, the NLRC and the Court of Appeals. While it is true dismissal on July 19, 1991. The bank's contention that she
that jurisdiction over the subject matter of a case may be merely holds an elective position and that in effect she is not
raised at any time of the proceedings, this rule presupposes a regular employee is belied by the nature of her work and
that laches or estoppel has not supervened. In this her length of service with the Bank. As earlier stated, she
regard, Baaga vs. Commission on the Settlement of Land rose from the ranks and has been employed with the Bank
Problems,11 is most enlightening. The Court therein stated: since 1963 until the termination of her employment in 1991.
As Assistant Vice President of the foreign department of the
"This Court has time and again frowned upon the undesirable Bank, she is tasked, among others, to collect checks drawn
practice of a party submitting his case for decision and then against overseas banks payable in foreign currency and to
accepting the judgment, only if favorable, and attacking it for ensure the collection of foreign bills or checks purchased,
lack of jurisdiction when adverse. Here, the principle of including the signing of transmittal letters covering the same.
estoppel lies. Hence, a party may be estopped or barred from It has been stated that "the primary standard of determining
raising the question of jurisdiction for the first time in a regular employment is the reasonable connection between
petition before the Supreme Court when it failed to do so in the particular activity performed by the employee in relation
the early stages of the proceedings." to the usual trade or business of the employer. 12 Additionally,
Undeterred, the Bank also contends that estoppel cannot lie "an employee is regular because of the nature of work and
considering that "from the beginning, petitioner Bank has the length of service, not because of the mode or even the
reason for hiring them."13 As Assistant Vice-President of the
Foreign Department of the Bank she performs tasks integral basis for such loss of confidence, is not absolute. The right of
to the operations of the bank and her length of service with an employer to dismiss employees on the ground that it has
the bank totaling 28 years speaks volumes of her status as a lost its trust and confidence in him must not be exercised
regular employee of the bank. In fine, as a regular employee, arbitrarily and without just cause. For loss of trust and
she is entitled to security of tenure; that is, her services may confidence to be valid ground for an employee's dismissal, it
be terminated only for a just or authorized cause. 14 This must be substantial and not arbitrary, and must be founded
being in truth a case of illegal dismissal, it is no wonder then on clearly established facts sufficient to warrant the
that the Bank endeavored to the very end to establish loss of employee's separation from work (Labor vs. NLRC, 248 SCRA
trust and confidence and serious misconduct on the part of 183).
private respondent but, as will be discussed later, to no avail.
SECOND. Respondent Bank's charge of deliberate withholding
This brings us to the second issue wherein the Bank insists of the two dollar checks finds no support in the testimony of
that it has presented substantial evidence to prove the Atty. Jocson, Chairman of the Investigating Committee. On
breach of trust on the part of private respondent warranting cross examination, Atty. Jocson testified that the documents
her dismissal. On this point, the Court of Appeals disagreed themselves do not show any direct withholding (pp. 186-187,
and set aside the findings of the NLRC that Reyes Rollo). There being conflict in the statement of witnesses, the
deliberately withheld the release of the two dollar checks; court must adopt the testimony which it believes to be true
that she is guilty of conflict of interest that she waived her (U.S. vs. Losada, 18 Phil. 90).
right to due process for not attending the hearing; and that
she was dismissed based on loss of trust and confidence. We THIRD. Settled is the rule that when the conclusions of the
quote pertinent portions of the decision, to wit: Labor Arbiter are sufficiently substantiated by the evidence
on record, the same should be respected by appellate
"FIRST: Respondent Bank heavily relied on the testimony and tribunals since he is in a better position to assess and
affidavit of Remittance Clerk Joven' in trying to establish loss evaluate the credibility of the contending parties (Ala Mode
of confidence. However, Joven's allegation that petitioner Garments, Inc. vs. NLRC, 268 SCRA 497). In this regard, the
instructed her to hold the subject two dollar checks Court quotes with approval the following disquisition of Labor
amounting to $224,650.00 falls short of the requisite proof to Arbiter Linsangan, thus:
warrant petitioner's dismissal. Except for Joven's bare
assertion to withhold the dollar checks per petitioner's This Office has repeatedly gone over the records of the case
instruction, respondent Bank failed to adduce convincing and painstakingly examined the testimonies of respondent
evidence to prove bad faith and malice. It bears emphasizing bank's witnesses. One thing was clearly established: that the
that respondent Bank's witnesses merely corroborate Joven's legality of complainant's dismissal based on the first ground
testimony. stated in respondent's letter of termination (exh. 25-J, supra)
will rise or fall on the credibility of Miss Joven who
Upon this point, the rule that proof beyond reasonable doubt undisputedly is the star witness for the bank. It will be
is not required to terminate an employee on the charge of observed that the testimonies of the bank's other witnesses,
loss of confidence and that it is sufficient that there is some Analiza Castillo, Dante Castor and Antonio Ragasa pertaining
to the non-release of the dollar checks and their accompanied by driver Celestino Banito, went to her
corresponding transmittal letters were all anchored on what residence and confronted her regarding the non-release of
was told them by Ms. Joven, that is: she was instructed by the dollar checks. It took Ms. Joven eighteen (18) months
complainant to hold the release of subject checks. In a before she explained her side on the controversy. As to what
nutshell, therefore, the issue boils down to who between prompted her to make her letter of explanation was not even
complainant and Ms. Joven is more credible. mentioned.
After painstakingly examining the testimonies of Ms. Joven On the other hand, the actions taken by the complainant
and respondent's other witnesses' this Office finds the were spontaneous. When complainant was informed by Mr.
evidence still wanting in proof of complainant's guilt. This Castor and Ms. Castillo regarding the non-release of the
Office had closely observed the demeanor of Ms. Joven while checks sometime in November, 1989 she immediately
testifying on the witness stand and was not impressed by her reported the matter to Vice President Santos, Head of the
assertions. The allegation of Ms. Joven in that her non-release Foreign Department. And as earlier mentioned, complainant
of the dollar checks was upon the instruction of complainant went to the residence of Ms. Joven to confront her. In this
Reyes is extremely doubtful. In the first place, the said regard, Celestino Bonito, complainant's driver, stated in his
instruction constitutes a gross violation of the bank's affidavit, thus:
standard operating procedure. Moreover, Ms. Joven was fully
aware that the instruction, if carried out, will greatly '1. Sometime on November 15, 1989 at about 7:00 o'clock in
prejudice her employer bank. It was incumbent upon Ms. the evening, Mrs. Clarita Tan Reyes and I were in the
Joven not only to disobey the instruction but even to report residence of one Ms. Cecille Joven, then a Processing Clerk in
the matter to management, if same was really given to her the Foreign Department of Prudential Bank;
by complainant. 2. Ms. Cecille Joven, her mother, myself, and Mrs. Clarita Tan
Our doubt on the veracity of Ms. Joven's allegation even Reyes were seated in the sala when the latter asked the
deepens as we consider the fact that when the non-release of former, Ms. Cecille Joven, how it came about that the two
the checks was discovered by Ms. Castillo the former dollar checks which she was then holding with the transmittal
contented herself by continuously not taking any action on letters, were found in a plastic envelope kept day-to-day by
the two dollar checks. Worse, Ms. Joven even impliedly told the former;
by Ms. Castillo (sic) to ignore the two checks and just 3. Hesitatingly, Cecille Joven said: "Eh, Mother (Mrs. Tan
withhold their release. In her affidavit Ms. Castillo said: Reyes had been intimately called Mother in the Bank) akala
'4. When I asked Cecille Joven what I was supposed to do with ko bouncing checks yon mga yon.
those checks, she said the same should be held as per 4. Mrs. Clarita Tan Reyes, upon hearing those words, was
instruction of Mrs. Reyes.' (Exh. "14", supra). surprised and she said: "Ano, papaano mong alam na
The evidence shows that it was only on 16 May 1990 that Ms. bouncing na hindi mo pa pinadadala:
Joven broke her silence on the matter despite the fact that on 5. Mrs. Cecille Joven turned pale and was not able to answer.'
15 November 1989, at about 8:00 p.m. the complainant,
There are other factors that constrain this Office to doubt We uphold the findings of the Court of Appeals that the
even more the legality of complainant's dismissal based on dismissal of private respondent on the ground of loss of trust
the first ground stated in the letter of dismissal. The non- and confidence was without basis. The charge was
release of the dollar checks was reported to top management predicated on the testimony of Ms. Joven and we defer to the
sometime on 15 November 1989 when complainant, findings of the Labor Arbiter as confirmed and adopted by the
accompanied by Supervisor Dante Castor and Analiza Court of Appeals on the credibility of said witness. This Court
Castillo, reported the matter to Vice President Santos. And is not a trier of facts and will not weigh anew the evidence
yet, it was only on 08 March 1991, after a lapse of sixteen already passed upon by the Court of Appeals. 16
(16) months from the time the non-release of the checks was
reported to the Vice President, that complainant was issued a On the third issue, the Bank questions the award of full
memorandum directing her to submit an explanation. And it backwages and other benefits from July 19, 1991 up to the
took the bank another four (4) months before it dismissed finality of this judgment; separation pay equivalent to one (1)
complainant. month salary for every year of service in lieu of
reinstatement; and attorney's fees equivalent to ten (10%)
The delayed action taken by respondent against complainant percent of the total award. The Bank argues, in the main,
lends credence to the assertion of the latter that her that private respondent is not entitled to full backwages in
dismissal was a mere retaliation to the criminal complaints view of the fact that she did not bother to appeal that portion
she filed against the bank's top officials. of the labor arbiter's judgment awarding back wages limited
to three years. It must be stressed that private respondent
It clearly appears from the foregoing that the complainant filed a special civil action for certiorari to review the decision
herein has no knowledge of, much less participation in, the of the NLRC17 and not an ordinary appeal. An ordinary appeal
non-release of the dollar checks under discussion. Ms. Joven is distinguished from the remedy of certiorari under Rule 65
is solely responsible for the same. Incidentally, she was not of the Revised Rules of Court in that in ordinary appeals it is
even reprimanded by the bank. settled that a party who did not appeal cannot seek
FOURTH. Respondent Bank having failed to furnish petitioner affirmative relief other than the ones granted in the decision
necessary documents imputing loss of confidence, petitioner of the court below. 18 On the other hand, resort to a judicial
was not amply afforded opportunity to prepare an intelligent review of the decisions of the National Labor Relations
answer. The Court finds nothing confidential in the auditor's Commission in a petition for certiorari under Rule 65 of Rules
report and the affidavit of Transmittal Clerk Joven. Due of Court is confined to issues of want or excess of jurisdiction
process dictates that management accord the employees and grave abuse of discretion. 19 In the instant case, the Court
every kind of assistance to enable him to prepare adequately of Appeals found that the NLRC gravely abused its discretion
for his defense, including legal representation. in finding that the private respondent's dismissal was valid
and so reversed the same. Corollary to the foregoing, the
The issue of conflict of interest not having been covered by appellate court awarded backwages in accordance with
the investigation, the Court finds it irrelevant to the current jurisprudence.
charge."15
Indeed, jurisprudence is clear on the amount of backwages
recoverable in cases of illegal dismissal. Employees illegally
dismissed prior to the effectivity of Republic Act No. 6715 on
March 21, 1989 are entitled to backwages up to three (3)
years without deduction or qualification, while those illegally
dismissed after are granted full backwages inclusive of
allowances and other benefits or their monetary equivalent
from the time their actual compensation was withheld from
them up to the time of their actual
20
reinstatement. Considering that private respondent was
terminated on July 19, 1991, she is entitled to full backwages
from the time her actual compensation was withheld from
her (which, as a rule, is from the time of her illegal dismissal)
up to the finality of this judgment (instead of reinstatement)
considering that reinstatement is no longer feasible as
correctly pointed out by the Court of Appeals on account of
the strained relations brought about by the litigation in this
case. Since reinstatement is no longer viable, she is also
entitled to separation pay equivalent to one (1) month salary
for every year of service.21 Lastly, since private respondent
was compelled to file an action for illegal dismissal with the
labor arbiter, she is likewise entitled to attorney's fees 22 at
the rate above-mentioned. There is no room to argue, as the
Bank does here, that its liability should be mitigated on
account of its good faith and that private respondent is not
entirely blameless. There is no showing that private
respondent is partly at fault or that the Bank acted in good
faith in terminating an employee of twenty-eight years. In
any event, Article 279 of Republic Act No. 671523 clearly and
plainly provides for "full backwages" to illegally dismissed
employees.1wphi1.nt
SO ORDERED.
complaint averred inter alia that Tumala was a salesman of
the company in Davao City from 1977 up to August 21, 1980;
that in the annual "Sumakwel" contest conducted by the
company in 1979, Tumala was declared winner of the "Lapu-
Lapu Award" for his performance as top salesman of the
year, an award which entitled him to a prize of a house and
lot; and that petitioners, despite demands, have unjustly
refused to deliver said prize Under the second cause of
action, it was alleged that on August 21, 1980, petitioners,
"in a manner oppressive to labor" and "without prior
clearance from the Ministry of Labor", "arbitrarily and
ilegally" terminated his employment. He prayed that
G.R. No. L-58877 March 15, 1982 petitioners be ordered, jointly and severally, to deliver his
prize of house and lot or its cash equivalent, and to pay his
PEPSI-COLA BOTTLING COMPANY, COSME DE ABOITIZ,
back salaries and separation benefits, plus moral and
and ALBERTO M. DACUYCUY, petitioners,
exemplary damages, attorney's fees and litigation expenses.
vs.
He did not ask for reinstatement.
HON. JUDGE ANTONIO M. MARTINEZ, in his official
capacity, and ABRAHAM TUMALA, JR., respondents. Petitioners moved to dismiss the complaint on grounds of
lack of jurisdiction and cause of action. Petitioners further
alleged that Tumala was not entitled to the "Sumakwel" prize
ESCOLIN, J.: for having misled the company into declaring him top
salesman for 1979 through various deceitful and fraudulent
This petition for certiorari, prohibition and mandamus raises manipulations and machinations in the performance of his
anew the legal question often brought to this Court: Which duties as salesman and depot in-charge of the bottling
tribunal has exclusive jurisdiction over an action filed by an company in Davao City, which manipulations consisted of
employee against his employer for recovery of unpaid "unremitted cash collections, fictitious collections of trade
salaries, separation benefits and damages the court of accounts, fictitious loaned empties, fictitious product deals,
general jurisdiction or the Labor Arbiter of the National Labor uncollected loaned empties, advance sales confirmed as
Relations Commission [NLRC]? fictitious, and route shortages which resulted to the damage
and prejudice of the bottling company in the amount of
The facts that gave rise to this petition are as follows:
P381,851.76." The alleged commission of these fraudulent
On September 19, 1980, respondent Abraham Tumala, Jr. acts was also advanced by petitioners to justify Tumala's
filed a complaint in the Court of First Instance of Davao, dismissal.
docketed as Civil Case No. 13494, against petitioners Pepsi-
Cola Bottling Co., Inc., its president Cosme de Aboitiz and
other company officers. Under the first cause of action, the
The court below, sustaining its jurisdiction over the case, compensation, social security, medicare and maternity
denied the motion for reconsideration. Hence the present benefits;
recourse.
4. Cases involving household services; and
We rule that the Labor Arbiter has exclusive jurisdiction over
the case. 5. All other claims arising from employer-employee relations,
unless expressly excluded by this Code.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which organizes the Under paragraphs 3 and 5 of the above Presidential Decree,
court; and it is given only by law. 1 Jurisdiction is never the case is exclusively cognizable by the Labor Arbiters of the
presumed; it must be conferred by law in words that do not National Labor Relations Commission.
admit of doubt. 2 It is to be noted that P.D. 1691 is an exact reproduction of
Since the jurisdiction of courts and judicial tribunals is Article 217 of the Labor Code (P.D. 442), which took effect on
derived exclusively from the statutes of the forum, the issue May 1, 1974. In Garcia vs. Martinez 3, an action filed on
efore Us should be resolved on the basis of the law or statute August 2, 1976 in the Court of First Instance of Davao by a
now in force. We find that law in Presidential Decree 1691 dismissed employee against his employer for actual, moral
which took effect on May 1, 1980, Section 3 of which reads as and exemplary damages, We held that under Article 217 of
follows: the Labor Code, the law then in force, the case was within
the exclusive jurisdiction of the Labor Arbiters and the
SEC. 3. Article 217, 222 and 262 of Book V of the Labor Code National Labor Relations Commission [NLRC]. This Court, per
are hereby amended to read as follows: Justice Aquino, rational this holding thus:
Article 217. Jurisdiction of Labor Arbiters and the The provisions of paragraph 3 and 5 of Article 217 are broad
Commission. The Labor Arbiters shall have the original and and comprehensive enough to cover Velasco's [employee's]
exclusive jurisdiction to hear and decide the following cases claim for damages allegedly arising from his unjustified
involving all workers, whether agricultural or non-agricultural: dismissal by Garcia [employer]. His claim was a consequence
of the termination of their employer-employee relations
1. Unfair labor practice cases; [Compare with Ruby Industrial Corporation vs. Court of First
2. Unresolved issues in collective bargaining, including those Instance of Manila, L- 38893, August 31, 1977, 78 SCRA 499].
that involve waged hours of work and other terms and Article 217 of the Labor Code words amended by P.D. 1367,
conditions of employment; which was promulgated on May 1, 1978, the full text of which
3. All money claims of workers, including those based on non- is quoted as follows:
payment or underpayment of wages, overtime SECTION 1. Paragraph [a] of Art, 217 of the Labor Code as
compensation, separation pay and other benefits provided by amended is hereby further amended to read as follows:
law or appropriate agreement, except claims for employees'
[a] The Labor Arbiters shall have exclusive jurisdiction hear damages was beyond the periphery of the jurisdictional
and decide the following cases involving all workers, whether competence of the Labor Arbiters. Our ruling in Calderon,
agricultural or non-agricultural: however, no longer applaies to this case because P.D. 1367,
upon which said decision was based, had already been
1] Unfair labor practice cases; superceded by P.D. 1691. As heretofore stated, P.D. 1691
2] Unresolved issues in collective bargaining, including those restored to the Labor Arbiters their exlcusive jurisdiction over
which involve wages, hours of work, and other terms said classes of claims.
conditions of employment; and Respondent Tumala maintains that his action for delivery of
3] All other cases arising from employer-employee relations the house and lot, his prize as top salesman of the company
duly indorsed by the Regional Directors in accordance with for 1979, is a civil controversy triable exclusively by the court
the provisions of this Code. of the general jurisdiction. We do not share this view. The
claim for said prize unquestionably arose from an employer-
Provided, that the Regional Directors shall not indorse and employee relation and, therefore, falls within the coverage of
Labor Arbiters shall not entertain claims for moral or other par. 5 of P.D. 1691, which speaks of "all claims arising from
forms of damages. employer-employee relations, unless expressly excluded by
this Code." Indeed, Tumala would not have qualitfied for the
It will be noted that paragraphs 3 and 5 of Article 217 were content, much less won the prize, if he was not an employee
deleted from the text of the above decree and a new of the company at the time of the holding of the contest.
provision incorporated therein, to wit: "Provided that the Besides, the cause advanced by petitioners to justify their
Regional Directors shall not indorse and Labor Arbiters shall refusal to deliver the prizethe alleged fraudulent
not en certain claims for moral or other forms of damages." manipulations committed by Tumala in connection with his
This amendatory act thus divested the Labor Arbiters of their duties as salesman of the companyinvolves an inquiry into
competence to pass upon claims for damages by employees his actuations as an employee.
against their employers.
Besides, to hold that Tumala's claim for the prize should be
However, on May 1, 1980, Article 217, as amended by P.D. passed upon by the regular court of justice, independently
1367, was amended anew by P.D. 1691. This last decree, and separately from his claim for back salaries, retirement
which is a verbatim reproduction of the original test of Article benefits and damages, would be to sanction split juridiction
217 of the Labor Code, restored to the Labor Arbiters of the and multiplicity of suits which are prejudicial to the orderly
NLRC exclusive jurisdiction over claims, money or otherwise, administration of justice.
arising from employer-employee relations, except those
expressly excluded therefrom. One last point. Petitioners content that Tumala has no cause
of action to as for back salaries and damages because his
In sustaining its jurisdiction over the case at bar, the dimissal was authorized by the Regional Director of the
respondent court relied on Calderon vs. Court of Appeals 4 , MInistry of Labor. This question calls for the presentaiton of
where We ruled that an employee's action for unpaid evidence and the same may well be entilated before the
salaries, alowances and other reimbursable expenses and
labor Arbiter who has jurisdiction over the case. Besides, the
issue raised is not for Us to determine in this certiorari
proceeding. The extraordinary remedy of certiorari
proceeding. The extraordinary remedy of certiorari offers G.R. No. 80774 May 31, 1988
only a limited form of review and its principal function is to
keep an inferior tribunal within its jurisdiction. 5 SAN MIGUEL CORPORATION, petitioner,
vs.
WHEREFORE, the petition is granted, and respondent judge is NATIONAL LABOR RELATIONS COMMISSION and
hereby directed to dismiss Civil Case No. 13494, without RUSTICO VEGA, respondents.
prejudice to the right of respondent Tumala to refile the same
with the Labor Arbiter. No costs. Siguion Reyna, Montecillo & Ongsiako Law Offices for
petitioner.
SO ORDERED.
The Solicitor General for public respondent.
FELICIANO, J.:
Title of Proposal
GUTIERREZ, JR., J.: 5. That sometime in May, 1976, the complainant received a
verbal notice from the new Branch Manager, Mr. Vicente
The petitioner, with himself as his own counsel, filed this Casino, that the respondent's Head Office approved only a
petition for review of the decision of the National Labor 30-day leave of absence without pay but that Mr. Guilatco,
Relations Commission (NLRC) which denied his claim for then assigned in Head Office as Vice President, advised him
damages arising from an alleged illegal dismissal. In addition (Casino) to inform the complainant to just avail of the 30-day
to the separation pay already awarded to him, the petitioner leave of absence first and then proceed to Manila for the
asks for P9,995.00 actual damages, P300,000.00 moral review since the request would be ultimately granted;
damages, P200,000.00 exemplary damages, and attorney's
fees to be determined by the Court.
6. That complainant never suspected that his application the Personnel Manager promised to take up the matter with
would be disapproved, much less any bad faith on the part of Mr. Alberto Villa Abrille;
the respondent bank to discriminate union member (sic),
since it has been the policy of the respondent bank to grant 10. That during the first week of August, 1976, the
request of this nature as shown in the case of four (4) former complainant received a letter from the Asst.
employees who were all granted leave of absence without Manager/Cashier, Mr. Douglas E. Aurelio, ordering the
pay. Copies of the affidavits of Judge Juan Montejo and Atty. complainant to report back for work since the complainant's
Bienvenido Banez and xerox copies of the payroll of Jose request was allegedly disapproved and that failure to report
Ledesma and Antonio Tan are hereto attached as ANNEXES back for work would be a conclusive proof that the
'A', 'B', 'C', and 'D' and made an integral part hereof; complainant is no longer interested to continue working and
therefore considered resigned. ...
7. That on May 10, 1976, the complainant wrote a formal
letter to the President of the respondent bank, Mr. Alberto 11. That upon receipt of the letter, complainant's review was
Villa Abrille, asking for a formal reconsideration and caused unduly interrupted since sleepless nights were spent in order
the same to be received by Mr. Vicente Casino but the latter to arrive at the proper decision and that the complainant has
advised instead the complainant to address to him (Casino) a decided not to report back because of the considerable
letter of mild tenor since any reconsideration should be expenses already incurred in Manila after he has been led to
coursed through the proper channel; and that Mr. Casino believe that the request would ultimately be granted;
advised the complainant to just file his 30-day leave of 12. That during the last week of August, 1976, the
absence without pay as approved and then proceed to Manila complainant received another letter from Douglas E. Aurelio,
since the request would ultimately be granted. A Xerox copy attaching a xerox copy of the application for a Clearance to
of the said letter is hereto attached as ANNEX 'E' to be made terminate on the ground of resignation/ or abandonment. ...
an integral part hereof;
13. That the complainant failed to file his opposition since as
8. That acting on the said advice of Vicente Casino, the above averred to, he was already in Manila taking up the
complainant, with utmost good faith, wrote a letter review and was then very busy since the bar examination
addressed to Mr. Casino aid at the same time, filed a 30-day was only two months shy;
leave of absence. Copies of the letter and Application for
Leave of Absence are hereto attached as ANNEXES 'F' and 'G' 14. That sometime during the first week of December, 1976,
to be made an integral part hereof, the complainant went to the respondent bank but was
verbally informed that he was already dismissed;
9. That on May 17, 1976, the complainant proceeded to
Manila for the pre-bar review and even went to the extent of 15. That on December 13, 1976, the complainant formally
going to the respondent's Head Office to seek an audience wrote a letter to the respondent bank requesting for a written
with the Personnel Manager with an alternative of working and formal advise as to his real status and that on December
with any of the Metro Manila Branches of the respondent 14, 1976, the respondent bank replied that the matter was
bank if and when the request would not be granted and that still referred to the Personnel Department at Head Office
leading again the complainant to believe that his case was The petitioner alleges that the public respondent committed
not yet hopeless. ... the following:
In a long line of cases, we have consistently ruled that in the WHEREFORE, the petition is hereby DISMISSED for lack of
absence of a wrongful act or omission or of fraud or bad faith, merit.
moral damages cannot be awarded and that the adverse SO ORDERED.
result of an action does not per se make the action wrongful
and subject the actor to have payment of damages, for the
law could not have meant to impose a penalty on the right to
litigate. ... (p. 516) G.R. No. 157010 June 21, 2005
It is incumbent upon the petitioner to prove that there was PHILIPPINE NATIONAL BANK, petitioner,
malice or bad faith on the part of the private respondents in vs.
terminating him On the contrary, the records of this petition FLORENCE O. CABANSAG, respondent.
show that the private respondent acted in accordance with
DECISION
law before effecting the dismissal. The records also show that
there was a prior application with the Ministry of Labor to PANGANIBAN, J.:
terminate the petitioner's employment. A copy of said
application was furnished to the petitioner. The petitioner,
The Court reiterates the basic policy that all Filipino workers, employment as Branch Credit Officer, at a total monthly
whether employed locally or overseas, enjoy the protective package of $SG4,500.00, effective upon assumption of duties
mantle of Philippine labor and social legislations. Our labor after approval. Ruben C. Tobias found her eminently qualified
statutes may not be rendered ineffective by laws or and wrote on October 26, 1998, a letter to the President of
judgments promulgated, or stipulations agreed upon, in a the Bank in Manila, recommending the appointment of
foreign country. Florence O. Cabansag, for the position.
Before us is a Petition for Review on Certiorari1 under Rule 45 "The President of the Bank was impressed with the
of the Rules of Court, seeking to reverse and set aside the credentials of Florence O. Cabansag that he approved the
July 16, 2002 Decision2 and the January 29, 2003 recommendation of Ruben C. Tobias. She then filed an
Resolution3 of the Court of Appeals (CA) in CA-GR SP No. Application, with the Ministry of Manpower of the
68403. The assailed Decision dismissed the CA Petition (filed Government of Singapore, for the issuance of an
by herein petitioner), which had sought to reverse the Employment Pass as an employee of the Singapore PNB
National Labor Relations Commission (NLRC)s June 29, 2001 Branch. Her application was approved for a period of two (2)
Resolution,4 affirming Labor Arbiter Joel S. Lustrias January years.
18, 2000 Decision.5
"On December 7, 1998, Ruben C. Tobias wrote a letter to
The assailed CA Resolution denied herein petitioners Motion Florence O. Cabansag offering her a temporary appointment,
for Reconsideration. as Credit Officer, at a basic salary of Singapore Dollars
4,500.00, a month and, upon her successful completion of
The Facts her probation to be determined solely, by the Bank, she may
The facts are narrated by the Court of Appeals as follows: be extended at the discretion of the Bank, a permanent
appointment and that her temporary appointment was
"In late 1998, [herein Respondent Florence Cabansag] arrived subject to the following terms and conditions:
in Singapore as a tourist. She applied for employment, with
the Singapore Branch of the Philippine National Bank, a 1. You will be on probation for a period of three (3)
private banking corporation organized and existing under the consecutive months from the date of your assumption of
laws of the Philippines, with principal offices at the PNB duty.
Financial Center, Roxas Boulevard, Manila. At the time, the 2. You will observe the Banks rules and regulations and
Singapore PNB Branch was under the helm of Ruben C. those that may be adopted from time to time.
Tobias, a lawyer, as General Manager, with the rank of Vice-
President of the Bank. At the time, too, the Branch Office had 3. You will keep in strictest confidence all matters related to
two (2) types of employees: (a) expatriates or the regular transactions between the Bank and its clients.
employees, hired in Manila and assigned abroad including
Singapore, and (b) locally (direct) hired. She applied for 4. You will devote your full time during business hours in
promoting the business and interest of the Bank.
5. You will not, without prior written consent of the Bank, be Ruben C. Tobias, likewise, told Florence O. Cabansag that the
employed in anyway for any purpose whatsoever outside PNB Singapore Branch will be sold or transformed into a
business hours by any person, firm or company. remittance office and that, in either way, Florence O.
Cabansag had to resign from her employment. The more
6. Termination of your employment with the Bank may be Florence O. Cabansag was perplexed. She then asked Ruben
made by either party after notice of one (1) day in writing C. Tobias that she be furnished with a Formal Advice from
during probation, one month notice upon confirmation or the the PNB Head Office in Manila. However, Ruben C. Tobias
equivalent of one (1) days or months salary in lieu of flatly refused. Florence O. Cabansag did not submit any letter
notice. of resignation.
"Florence O. Cabansag accepted the position and assumed "On April 16, 1999, Ruben C. Tobias again summoned
office. In the meantime, the Philippine Embassy in Singapore Florence O. Cabansag to his office and demanded that she
processed the employment contract of Florence O. Cabansag submit her letter of resignation, with the pretext that he
and, on March 8, 1999, she was issued by the Philippine needed a Chinese-speaking Credit Officer to penetrate the
Overseas Employment Administration, an Overseas local market, with the information that a Chinese-speaking
Employment Certificate, certifying that she was a bona fide Credit Officer had already been hired and will be reporting for
contract worker for Singapore. work soon. She was warned that, unless she submitted her
xxxxxxxxx letter of resignation, her employment record will be
blemished with the notation DISMISSED spread thereon.
"Barely three (3) months in office, Florence O. Cabansag Without giving any definitive answer, Florence O. Cabansag
submitted to Ruben C. Tobias, on March 9, 1999, her initial asked Ruben C. Tobias that she be given sufficient time to
Performance Report. Ruben C. Tobias was so impressed with look for another job. Ruben C. Tobias told her that she should
the Report that he made a notation and, on said Report: be out of her employment by May 15, 1999.
GOOD WORK. However, in the evening of April 14, 1999,
while Florence O. Cabansag was in the flat, which she and "However, on April 19, 1999, Ruben C. Tobias again
Cecilia Aquino, the Assistant Vice-President and Deputy summoned Florence O. Cabansag and adamantly ordered her
General Manager of the Branch and Rosanna Sarmiento, the to submit her letter of resignation. She refused. On April 20,
Chief Dealer of the said Branch, rented, she was told by the 1999, she received a letter from Ruben C. Tobias terminating
two (2) that Ruben C. Tobias has asked them to tell Florence her employment with the Bank.
O. Cabansag to resign from her job. Florence O. Cabansag xxxxxxxxx
was perplexed at the sudden turn of events and the runabout
way Ruben C. Tobias procured her resignation from the Bank. "On January 18, 2000, the Labor Arbiter rendered judgment
The next day, Florence O. Cabansag talked to Ruben C. Tobias in favor of the Complainant and against the Respondents, the
and inquired if what Cecilia Aquino and Rosanna Sarmiento decretal portion of which reads as follows:
had told her was true. Ruben C. Tobias confirmed the veracity
of the information, with the explanation that her resignation
was imperative as a cost-cutting measure of the Bank.
WHEREFORE, considering the foregoing premises, judgment Currency at the time of payment, and moral damages in the
is hereby rendered finding respondents guilty of Illegal amount of PhP 200,000.00, exemplary damages in the
dismissal and devoid of due process, and are hereby ordered: amount of PhP 100,000.00;
1. To reinstate complainant to her former or substantially 4. To pay complainant the amount of SGD 5,039.81 or its
equivalent position without loss of seniority rights, benefits equivalent in Philippine Currency at the time of payment,
and privileges; representing attorneys fees.
6
2. Solidarily liable to pay complainant as follows: SO ORDERED." [Emphasis in the original.]
a) To pay complainant her backwages from 16 April 1999 up PNB appealed the labor arbiters Decision to the NLRC. In a
to her actual reinstatement. Her backwages as of the date of Resolution dated June 29, 2001, the Commission affirmed
the promulgation of this decision amounted to SGD that Decision, but reduced the moral damages to P100,000
40,500.00 or its equivalent in Philippine Currency at the time and the exemplary damages to P50,000. In a subsequent
of payment; Resolution, the NLRC denied PNBs Motion for
Reconsideration.
b) Mid-year bonus in the amount of SGD 2,250.00 or its
equivalent in Philippine Currency at the time of payment; Ruling of the Court of Appeals
c) Allowance for Sunday banking in the amount of SGD In disposing of the Petition for Certiorari, the CA noted that
120.00 or its equivalent in Philippine Currency at the time of petitioner bank had failed to adduce in evidence the
payment; Singaporean law supposedly governing the latters
employment Contract with respondent. The appellate court
d) Monetary equivalent of leave credits earned on Sunday found that the Contract had actually been processed by the
banking in the amount of SGD 1,557.67 or its equivalent in Philippine Embassy in Singapore and approved by the
Philippine Currency at the time of payment; Philippine Overseas Employment Administration (POEA),
e) Monetary equivalent of unused sick leave benefits in the which then used that Contract as a basis for issuing an
amount of SGD 1,150.60 or its equivalent in Philippine Overseas Employment Certificate in favor of respondent.
Currency at the time of payment. According to the CA, even though respondent secured an
f) Monetary equivalent of unused vacation leave benefits in employment pass from the Singapore Ministry of
the amount of SGD 319.85 or its equivalent in Philippine Employment, she did not thereby waive Philippine labor laws,
Currency at the time of payment. or the jurisdiction of the labor arbiter or the NLRC over her
Complaint for illegal dismissal. In so doing, neither did she
g) 13th month pay in the amount of SGD 4,500.00 or its submit herself solely to the Ministry of Manpower of
equivalent in Philippine Currency at the time of payment; Singapores jurisdiction over disputes arising from her
employment. The appellate court further noted that a cursory
3. Solidarily to pay complainant actual damages in the
amount of SGD 1,978.00 or its equivalent in Philippine
reading of the Ministrys letter will readily show that no such for certiorari. Thus, in observance of the doctrine on the
waiver or submission is stated or implied. hierarchy of courts, these petitions should be initially filed
with the CA.11
Finally, the CA held that petitioner had failed to establish a
just cause for the dismissal of respondent. The bank had also Rightly, the bank elevated the NLRC Resolution to the CA by
failed to give her sufficient notice and an opportunity to be way of a Petition for Certiorari. In seeking a review by this
heard and to defend herself. The CA ruled that she was Court of the CA Decision -- on questions of jurisdiction, venue
consequently entitled to reinstatement and back wages, and validity of employment termination -- petitioner is
computed from the time of her dismissal up to the time of likewise correct in invoking Rule 45.12
her reinstatement.
It is true, however, that in a petition for review on certiorari,
7
Hence, this Petition. the scope of the Supreme Courts judicial review of decisions
of the Court of Appeals is generally confined only to errors of
Issues law. It does not extend to questions of fact. This doctrine
Petitioner submits the following issues for our consideration: applies with greater force in labor cases. Factual questions
are for the labor tribunals to resolve. 13In the present case,
"1. Whether or not the arbitration branch of the NLRC in the the labor arbiter and the NLRC have already determined the
National Capital Region has jurisdiction over the instant factual issues. Their findings, which are supported by
controversy; substantial evidence, were affirmed by the CA. Thus, they are
entitled to great respect and are rendered conclusive upon
"2. Whether or not the arbitration of the NLRC in the National this Court, absent a clear showing of palpable error or
Capital Region is the most convenient venue or forum to hear arbitrary disregard of evidence.14
and decide the instant controversy; and
The Courts Ruling
"3. Whether or not the respondent was illegally dismissed,
and therefore, entitled to recover moral and exemplary The Petition has no merit.
damages and attorneys fees."8
First Issue:
9
In addition, respondent assails, in her Comment, the
propriety of Rule 45 as the procedural mode for seeking a Jurisdiction
review of the CA Decision affirming the NLRC Resolution. The jurisdiction of labor arbiters and the NLRC is specified in
Such issue deserves scant consideration. Respondent Article 217 of the Labor Code as follows:
miscomprehends the Courts discourse in St. Martin Funeral
Home v. NLRC,10 which has indeed affirmed that the proper "ART. 217. Jurisdiction of Labor Arbiters and the Commission.
mode of review of NLRC decisions, resolutions or orders is by (a) Except as otherwise provided under this Code the Labor
a special civil action for certiorari under Rule 65 of the Rules Arbiters shall have original and exclusive jurisdiction to hear
of Court. The Supreme Court and the Court of Appeals and decide, within thirty (30) calendar days after the
have concurrent original jurisdiction over such petitions submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the virtue of any law or contract involving Filipino workers for
following cases involving all workers, whether agricultural or overseas deployment including claims for actual, moral,
non-agricultural: exemplary and other forms of damages.
In any event, we recall the following policy pronouncement of "For purposes of venue, workplace shall be understood as the
the Court in Royal Crown Internationale v. NLRC:20 place or locality where the employee is regularly assigned
when the cause of action arose. It shall include the place
"x x x. Whether employed locally or overseas, all Filipino where the employee is supposed to report back after a
workers enjoy the protective mantle of Philippine labor and temporary detail, assignment or travel. In the case of field
social legislation, contract stipulations to the contrary employees, as well as ambulant or itinerant workers, their
notwithstanding. This pronouncement is in keeping with the workplace is where they are regularly assigned, or where
basic public policy of the State to afford protection to labor, they are supposed to regularly receive their salaries/wages or
promote full employment, ensure equal work opportunities work instructions from, and report the results of their
regardless of sex, race or creed, and regulate the relations assignment to their employers."
between workers and employers.1awphi1.net For the State
assures the basic rights of all workers to self-organization, Under the "Migrant Workers and Overseas Filipinos Act of
collective bargaining, security of tenure, and just and 1995" (RA 8042), a migrant worker "refers to a person who is
humane conditions of work [Article 3 of the Labor Code of the to be engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a without due process of law. The twin requirements of notice
legal resident; to be used interchangeably with overseas and hearing constitute the essential elements of procedural
Filipino worker."21 Undeniably, respondent was employed by due process, and neither of these elements can be
petitioner in its branch office in Singapore. Admittedly, she is eliminated without running afoul of the constitutional
a Filipino and not a legal resident of that state. She thus falls guarantee.22
within the category of "migrant worker" or "overseas Filipino
worker." In dismissing employees, the employer must furnish them
two written notices: 1) one to apprise them of the particular
As such, it is her option to choose the venue of her Complaint acts or omissions for which their dismissal is sought; and 2)
against petitioner for illegal dismissal. The law gives her two the other to inform them of the decision to dismiss them. As
choices: (1) at the Regional Arbitration Branch (RAB) where to the requirement of a hearing, its essence lies simply in the
she resides or (2) at the RAB where the principal office of her opportunity to be heard.23
employer is situated. Since her dismissal by petitioner,
respondent has returned to the Philippines -- specifically to The evidence in this case is crystal-clear. Respondent was not
her residence at Filinvest II, Quezon City. Thus, in filing her notified of the specific act or omission for which her dismissal
Complaint before the RAB office in Quezon City, she has was being sought. Neither was she given any chance to be
made a valid choice of proper venue. heard, as required by law. At any rate, even if she were given
the opportunity to be heard, she could not have defended
Third Issue: herself effectively, for she knew no cause to answer to.
Illegal Dismissal All that petitioner tendered to respondent was a notice of her
employment termination effective the very same day,
The appellate court was correct in holding that respondent together with the equivalent of a one-month pay. This Court
was already a regular employee at the time of her dismissal, has already held that nothing in the law gives an employer
because her three-month probationary period of employment the option to substitute the required prior notice and
had already ended. This ruling is in accordance with Article opportunity to be heard with the mere payment of 30 days
281 of the Labor Code: "An employee who is allowed to work salary.24
after a probationary period shall be considered a regular
employee." Indeed, petitioner recognized respondent as such Well-settled is the rule that the employer shall be sanctioned
at the time it dismissed her, by giving her one months salary for noncompliance with the requirements of, or for failure to
in lieu of a one-month notice, consistent with provision No. 6 observe, due process that must be observed in dismissing an
of her employment Contract. employee.25
Notice and Hearing Not Complied With No Valid Cause for Dismissal
As a regular employee, respondent was entitled to all rights, Moreover, Articles 282,26 28327 and 28428 of the Labor Code
benefits and privileges provided under our labor laws. One of provide the valid grounds or causes for an employees
her fundamental rights is that she may not be dismissed dismissal. The employer has the burden of proving that it was
done for any of those just or authorized causes. The failure to Awards for Damages Justified
discharge this burden means that the dismissal was not
justified, and that the employee is entitled to reinstatement Finally, moral damages are recoverable when the dismissal of
and back wages.29 an employee is attended by bad faith or constitutes an act
oppressive to labor or is done in a manner contrary to
Notably, petitioner has not asserted any of the grounds morals, good customs or public policy. 34 Awards for moral and
provided by law as a valid reason for terminating the exemplary damages would be proper if the employee was
employment of respondent. It merely insists that her harassed and arbitrarily dismissed by the employer. 35
dismissal was validly effected pursuant to the provisions of
her employment Contract, which she had voluntarily agreed In affirming the awards of moral and exemplary damages, we
to be bound to. quote with approval the following ratiocination of the labor
arbiter:
Truly, the contracting parties may establish such stipulations,
clauses, terms and conditions as they want, and their "The records also show that [respondents] dismissal was
agreement would have the force of law between them. effected by [petitioners] capricious and high-handed
However, petitioner overlooks the qualification that those manner, anti-social and oppressive, fraudulent and in bad
terms and conditions agreed upon must not be contrary to faith, and contrary to morals, good customs and public policy.
law, morals, customs, public policy or public order. 30 As Bad faith and fraud are shown in the acts committed by
explained earlier, the employment Contract between [petitioners] before, during and after [respondents] dismissal
petitioner and respondent is governed by Philippine labor in addition to the manner by which she was dismissed. First,
laws. Hence, the stipulations, clauses, and terms and [respondent] was pressured to resign for two different and
conditions of the Contract must not contravene our labor law contradictory reasons, namely, cost-cutting and the need for
provisions. a Chinese[-]speaking credit officer, for which no written
advice was given despite complainants request. Such
Moreover, a contract of employment is imbued with public wavering stance or vacillating position indicates bad faith
interest. The Court has time and time again reminded parties and a dishonest purpose. Second, she was employed on
that they "are not at liberty to insulate themselves and their account of her qualifications, experience and readiness for
relationships from the impact of labor laws and regulations the position of credit officer and pressured to resign a month
by simply contracting with each other." 31 Also, while a after she was commended for her good work. Third, the
contract is the law between the parties, the provisions of demand for [respondents] instant resignation on 19 April
positive law that regulate such contracts are deemed 1999 to give way to her replacement who was allegedly
included and shall limit and govern the relations between the reporting soonest, is whimsical, fraudulent and in bad faith,
parties.32 because on 16 April 1999 she was given a period of [sic] until
15 May 1999 within which to leave. Fourth, the pressures
Basic in our jurisprudence is the principle that when there is made on her to resign were highly oppressive, anti-social and
no showing of any clear, valid, and legal cause for the caused her absolute torture, as [petitioners] disregarded her
termination of employment, the law considers the matter a situation as an overseas worker away from home and family,
case of illegal dismissal.33
with no prospect for another job. She was not even provided SO ORDERED.
with a return trip fare. Fifth, the notice of termination is an
utter manifestation of bad faith and whim as it totally
disregards [respondents] right to security of tenure and due
process. Such notice together with the demands for
[respondents] resignation contravenes the fundamental
guarantee and public policy of the Philippine government on
security of tenure.
xxxxxxxxx
On 18 July 1991, the Labor Arbiter issued a writ of 2. Meantime, petitioner is ordered and directed to source for
execution. 5 commanding the City Sheriff to enforce and funds within the period above-stated and to deposit the sums
execute the judgment against the property of the two of money equivalent to the aggregate amount. it has been
respondents. Forthwith, or on 19 July 1991, the City Sheriff adjudged to pay jointly and severally with respondent Sultan
levied on execution the motor vehicles of the petitioner, i.e. Security Agency with the Regional Arbitration Branch X,
one (1) unit Toyota Hi-Ace, one (1) unit Toyota Mini Cruiser, Cagayan de Oro City within the same period for proper
and one (1) unit Toyota Crown. 6 These units were put under dispositions;
the custody of Zacharias Roa, the property custodian of the
petitioner, pending their sale at public auction or the final 3. In order to ensure compliance with this order, petitioner is
settlement of the case, whichever would come first. likewise directed to put up and post
sufficient surety and supersedeas bond equivalent to at least
A petition for injunction, prohibition and mandamus, with to fifty (50%) percent of the total monetary award issued by
prayer for preliminary writ of injunction was filed by the a reputable bonding company duly accredited by the
petitioner with the National Labor Relations Commission Supreme Court or by the Regional Trial Court of Misamis
(NLRC), Cagayan de Oro, alleging, inter alia, that the writ Oriental to answer for the satisfaction of the money claims in
issued was effected without the Labor Arbiter having duly case of failure or default on the part of petitioner to satisfy
acquired jurisdiction over the petitioner, and that, therefore, the money claims;
the decision of the Labor Arbiter was null and void and all
actions pursuant thereto should be deemed equally invalid 4. The City Sheriff is ordered to immediately release the
and of no legal, effect. The petitioner also pointed out that properties of petitioner levied on execution within ten (10)
the attachment or seizure of its property would hamper and days from notice of the posting of sufficient surety or
jeopardize petitioner's governmental functions to the supersedeas bond as specified above. In the meanwhile,
prejudice of the public good. petitioner is assessed to pay the costs and/or expenses
incurred by the City Sheriff, if any, in connection with the
On 27 November 1991, the NLRC promulgated its assailed execution of the judgments in the above-stated cases upon
resolution; viz: presentation of the appropriate claims or vouchers and
receipts by the city Sheriff, subject to the conditions specified
WHEREFORE, premises considered, the following orders are in the NLRC Sheriff, subject to the conditions specified in the
issued: NLRC Manual of Instructions for Sheriffs;
1. The enforcement and execution of the judgments against 5. The right of any of the judgment debtors to claim
petitioner in NLRC RABX Cases Nos. 10-10-00455-90; 10-10- reimbursement against each other for any payments made in
0481-90 and 10-10-00519-90 are temporarily suspended for connection with the satisfaction of the judgments herein is
a period of two (2) months, more or less, but not extending hereby recognized pursuant to the ruling in the Eagle
beyond the last quarter of calendar year 1991 to enable Security case, (supra). In case of dispute between the
judgment debtors, the Executive Labor Arbiter of the Branch not because of any formal conception or obsolete theory, but
of origin may upon proper petition by any of the parties on the logical and practical ground that there can be no legal
conduct arbitration proceedings for the purpose and thereby right as against the authority that makes the law on which
render his decision after due notice and hearings; the right depends. 9 True, the doctrine, not too infrequently,
is derisively called "the royal prerogative of dishonesty"
7. Finally, the petition for injunction is Dismissed for lack of because it grants the state the prerogative to defeat any
basis. The writ of preliminary injunction previously issued legitimate claim against it by simply invoking its non-
is Lifted and Set Aside and in lieu thereof, a Temporary Stay suability. 10 We have had occasion, to explain in its defense,
of Execution is issued for a period of two (2) months but not however, that a continued adherence to the doctrine of non-
extending beyond the last quarter of calendar year 1991, suability cannot be deplored, for the loss of governmental
conditioned upon the posting of a surety or supersedeas efficiency and the obstacle to the performance of its
bond by petitioner within ten (10) days from notice pursuant multifarious functions would be far greater in severity than
to paragraph 3 of this disposition. The motion to admit the the inconvenience that may be caused private parties, if such
complaint in intervention isDenied for lack of merit while the fundamental principle is to be abandoned and the availability
motion to dismiss the petition filed by Duty Sheriff is Noted of judicial remedy is not to be accordingly restricted. 11
SO ORDERED. The rule, in any case, is not really absolute for it does not say
In this petition for certiorari, the petitioner charges the NLRC that the state may not be sued under any circumstances. On
with grave abuse of discretion for refusing to quash the writ the contrary, as correctly phrased, the doctrine only conveys,
of execution. The petitioner faults the NLRC for assuming "the state may not be sued without its consent;" its clear
jurisdiction over a money claim against the Department, import then is that the State may at times be sued. 12 The
which, it claims, falls under the exclusive jurisdiction of the States' consent may be given expressly or impliedly. Express
Commission on Audit. More importantly, the petitioner consent may be made through a general law 13 or a special
asserts, the NLRC has disregarded the cardinal rule on the law. 14 In this jurisdiction, the general law waiving the
non-suability of the State. immunity of the state from suit is found in Act No. 3083,
where the Philippine government "consents and submits to
The private respondents, on the other hand, argue that the be sued upon any money claims involving liability arising
petitioner has impliedly waived its immunity from suit by from contract, express or implied, which could serve as a
concluding a service contract with Sultan Security Agency. basis of civil action between private parties." 15 Implied
consent, on the other hand, is conceded when the State itself
The basic postulate enshrined in the constitution that "(t)he commences litigation, thus opening itself to a
State may not be sued without its consent," 7 reflects nothing 16
counterclaim or when it enters into a contract. 17
In this
less than a recognition of the sovereign character of the situation, the government is deemed to have descended to
State and an express affirmation of the unwritten rule the level of the other contracting party and to have divested
effectively insulating it from the jurisdiction of courts. 8 It is itself of its sovereign immunity. This rule, relied upon by the
based on the very essence of sovereignty. As has been aptly NLRC and the private respondents, is not, however, without
observed, by Justice Holmes, a sovereign is exempt from suit, qualification. Not all contracts entered into by the
government operate as a waiver of its non-suability; In the instant case, the Department of Agriculture has not
distinction must still be made between one which is executed pretended to have assumed a capacity apart from its being a
in the exercise of its sovereign function and another which is governmental entity when it entered into the questioned
done in its proprietary capacity. 18 contract; nor that it could have, in fact, performed any act
proprietary in character.
In the Unites States of America vs. Ruiz, 19 where the
questioned transaction dealt with improvements on the But, be that as it may, the claims of private respondents, i.e.
wharves in the naval installation at Subic Bay, we held: for underpayment of wages, holiday pay, overtime pay and
similar other items, arising from the Contract for Service,
The traditional rule of immunity exempts a State from being clearly constitute money claims. Act No. 3083, aforecited,
sued in the courts of another State without its consent or gives the consent of the State to be "sued upon any
waiver. This rule is a necessary consequence of the principles moneyed claim involving liability arising from contract,
of independence and equality of States. However, the rules express or implied, . . . Pursuant, however, to Commonwealth
of International Law are not petrified; they are constantly Act ("C.A.") No. 327, as amended by Presidential Decree
developing and evolving. And because the activities of states ("P.D.") No. 1145, the money claim first be brought to the
have multiplied, it has been necessary to distinguish them Commission on Audit. Thus, inCarabao, Inc., vs. Agricultural
between sovereign and governmental acts ( jure imperii) and Productivity Commission, 20 we ruled:
private, commercial and proprietary act ( jure gestionisis).
The result is that State immunity now extends only to (C)laimants have to prosecute their money claims against the
acts jure imperii. The restrictive application of State Government under Commonwealth Act 327, stating that Act
immunity is now the rule in the United States, the United 3083 stands now merely as the general law waiving the
Kingdom and other states in Western Europe. State's immunity from suit, subject to the general limitation
expressed in Section 7 thereof that "no execution shall issue
xxx xxx xxx upon any judgment rendered by any Court against the
The restrictive application of State immunity is proper only Government of the (Philippines), and that the conditions
when the proceedings arise out of commercial transactions of provided in Commonwealth Act 327 for filing money claims
the foreign sovereign, its commercial activities or economic against the Government must be strictly observed."
affairs. Stated differently, a state may be said to have We fail to see any substantial conflict or inconsistency
descended to the level of an individual and can this be between the provisions of C.A. No. 327 and the Labor Code
deemed to have actually given its consent to be sued only with respect to money claims against the State. The Labor
when it enters into business contracts. It does not apply code, in relation to Act No. 3083, provides the legal basis for
where the contracts relates to the exercise of its sovereign the State liability but the prosecution, enforcement or
functions. In this case the projects are an integral part of the satisfaction thereof must still be pursued in accordance with
naval base which is devoted to the defense of both the the rules and procedures laid down in C.A. No. 327, as
United States and the Philippines, indisputably a function of amended by P.D. 1445.
the government of the highest order; they are not utilized for
not dedicated to commercial or business purposes.
When the state gives its consent to be sued, it does thereby
necessarily consent to unrestrained execution against it.
tersely put, when the State waives its immunity, all it does, in
effect, is to give the other party an opportunity to prove, if it
can, that the State has a liability. 21 In Republic vs.
Villasor 22 this Court, in nullifying the issuance of an alias writ
of execution directed against the funds of the Armed Forces
of the Philippines to satisfy a final and executory judgment,
has explained, thus
The universal rule that where the State gives its consent to
be sued by private parties either by general or special law, it
may limit the claimant's action "only up to the completion of
proceedings anterior to the stage of execution" and that the
power of the Courts ends when the judgment is rendered,
since government funds and properties may not be seized
under writs or execution or garnishment to satisfy such
judgments, is based on obvious considerations of public
policy. Disbursements of public funds must be covered by the
correspondent appropriation as required by law. The
functions and public services rendered by the State cannot
be allowed to be paralyzed or disrupted by the diversion of
public funds from their legitimate and specific objects, as
appropriated by law. 23
SO ORDERED.
DAVIDE, JR., J.:p
The novel issue that confronts us in this case is whether the Records disclose that Andres Pondoc was employed by
Fifth Division of the National Labor Relations Commission Eulalio Pondoc as a laborer from October 1990 up to
(NLRC) can validly defeat a final judgment of the Labor December 1991, receiving a wage rate of P20.00 per day. He
Arbiter in favor of the complainant in a labor case by: (a) was required to work twelve (12) hours a day from 7:00 AM
entertaining a petition for injunction and damages, and an to 8:00 PM, Monday to Sunday. Despite working on his rest
appeal from the Labor Arbiter's denial of a claim for set-off days and holidays, he was not paid his premium pay as
based on an alleged indebtedness of the laborer and order of required by law (Ibid).
execution of the final judgment; and, (b) thereafter, by
receiving evidence and adjudging recovery on such Consequently, on May 14, 1992, Natividad Pondoc, on behalf
indebtedness and authorizing it to offset the Labor Arbiter's of her husband, filed a complaint for salary differential,
final award. overtime pay, 13th month pay, holiday pay and other money
claims before the Sub-Regional Arbitration Branch No. 9 of
The petitioner takes the negative view. In its Manifestation the NLRC, docketed as Sub-RAB Case No. 09-05-10102-92
and Motion in Lieu of Comment, 1 the Office of the Solicitor (Records, p.1).
General joins her in her plea, hence we required the NLRC to
file its own comment. In his position paper, private respondent questioned, among
others, the existence of [an] employer-employee relationship
We resolved to give due course to the petition after the filing between them. He further averred that Melleonor General
by the NLRC and the private respondent of their separate Merchandise and Hardware Supply is a fictitious
comments. establishment (Records, pp. 64-68).
Petitioner Natividad Pondoc was the legitimate wife of Andres On June 17, 1993, Labor Arbiter Esteban Abecia rendered a
Pondoc. Atter her death on 5 December 1994, she was Decision finding the existence of [an] employer-employee
substituted by Hipolito Pondoc, her only legitimate son. 2 relationship between the parties. The dispositive portion of
the Decision reads:
The Office of the Solicitor General summarized the factual
antecedents of this case in its Manifestation and Motion in WHEREFORE, judgment is hereby rendered: (a) ordering
Lieu of Comment: respondent Eulalio Pondoc to pay complainant the following
claims:
Private respondent Eulalio Pondoc is the owner-proprietor of
Melleonor General Merchandise and Hardware Supply located (1) Salary differential for
at Poblacion, Sindangan, Zamboanga del Norte. Respondent reason of underpayment P35,776.00;
is engaged, among others, in the business of buying and
selling copra, rice, corn, "binangkol," junk iron and empty
bottles. He has in his employ more than twenty (20) regular (2) Regular holiday and
workers (Records, pp. 9-11) premium pay for holiday services 902.00;
(3) Premium pay for rest day Accordingly, respondent Eulalio Pondoc is hereby directed to
services 3,840.00; pay complainant Natividad Pondoc the amount of P3,066.65.
3
SO ORDERED (Annex "D" of Petition).
or the total amount of FORTY-FOUR [sic] THOUSAND AND
ONE HUNDRED EIGHTEEN PESOS (P44,118.00). Her motion for reconsideration of the judgment having been
denied by the NLRC, the petitioner instituted this special civil
Other claims are denied for lack of merit. action for certiorari under Rule 65 of the Rules of Court
wherein she prays this Court annul the challenged decision of
SO ORDERED (Records, pp. 323-324). the NLRC, Fifth Division (Cagayan de Oro City), in NLRC Case
On his last day to perfect an appeal, private respondent filed No. IC No. M-000065, and direct the enforcement of the writ
a Manifestation before the Labor Arbiter praying that his of execution in NLRC Case No. SRAB-09-05-10102-92, on the
liabilities be set-off against petitioner's alleged indebtedness ground that the NLRC, Fifth Division, acted without or in
to him (Records, pp. 325-327). The Labor Arbiter denied, excess of jurisdiction or with grave abuse of discretion when
however, the compensation, and, instead, issued a writ of it proceeded to determine the alleged indebtedness of the
execution as prayed for by petitioner (Records, p. 328). petitioner and set-off the same against the liabilities of the
private respondent. The petitioner asserts that the decision
Before the execution order could be implemented, however, of the Labor Arbiter in NLRC Case No. SRAB-09-05-10102-92
private respondent was able to obtain a restraining order was already final and executory when the private respondent
from the NLRC, where he filed a Petition for "Injunction and tried to defeat the judgment by asserting an alleged
Damages," docketed as NLRC Case No. ICM-000065. indebtedness of Andres Pondoc as a set-off, a claim not
pleaded before the Labor Arbiter at any time before
On February 28, 1994, public respondent NLRC allowed judgment, hence deemed waived. Moreover the
compensation between petitioner's monetary award and her indebtedness "did not evolve out [sic] employer-employee
alleged indebtedness to private respondent. It disposed: relationship, hence, purely civil in aspect."
WHEREFORE, the appealed order is hereby vacated and set The Office of the Solicitor General agreed with the petitioner
aside. A new one is entered declaring the setting-off of and stressed further that the asserted indebtedness was
complainant's indebtedness which allegedly amounted to never proven to have arisen out of or in connection with the
P41,051.35 against the complainant's monetary award in the employer-employee relationship between the private
amount of P44,118.00. The additional amount of P5,000.00 respondent and the late Andres Pondoc, or to have any
which complainant allegedly got from respondent on 10 July causal connection thereto. Accordingly, both the Labor
1993 could not be credited in view of appellant's failure to Arbiter and the NLRC did not have jurisdiction over the
submit evidence to prove that complainant was really paid private respondent's claim.
P5,000.00.
As expected, the private respondent and the NLRC prayed for pendency of the case, but excluding labor disputes involving
the dismissal of this case. strike or lockout. (emphasis supplied).
We rule for the petitioner. Hence, a petition or motion for preliminary injunction should
have been filed in the appeal interposed by the private
The proceedings before the NLRC were fatally flawed. respondent, i.e., in NLRC Case No. SRAB-09-05-10102-92.
In the first place, the NLRC should not have entertained the This matter, however, became academic when the NLRC
private respondent's separate or independent petition for consolidated the two cases as shown by the captions in its
"Injunction and Damages" (NLRC IC No. M-000065). It was challenged decision of 28 February 1994 and resolution of 6
obvious that the petition was a scheme to defeat or obstruct May 1994.
the enforcement of the judgment in NLRC Case No. SRAB-09- Secondly, the appeal of the private respondent in NLRC Case
05-10102-92 where, in fact, a writ of execution had been No. SRAB-09-05-10102-92 was not from the decision therein,
issued. Article 218(e) of the Labor Code does not provide but from the order of the Labor Arbiter denying the set-off
blanket authority to the NLRC or any of its divisions to issue insisted upon by the private respondent and directing the
writs of injunction, while Rule XI of the New Rules of execution of the judgment. Therefore, the private respondent
Procedure of the NLRC makes injunction only an ancillary admitted the final and executory character of the judgment.
remedy in ordinary labor disputes such as the one brought by
the petitioner in NLRC Case No. SRAB-09-05-10102-92. This is The Labor Arbiter, in denying the set-off, reasoned "[i]t could
clear from Section 1 of the said Rule which pertinently have been considered if it was presented before the decision
provides as follows: of this case." 4 While this is correct, there are stronger
reasons why the set-off should, indeed, be denied. As
Sec. 1. Injunction in Ordinary Labor Disputed. A correctly contended by the Office of the Solicitor General,
preliminary injunction or a restraining order may be granted there is a complete want of evidence that the indebtedness
by the Commission through its divisions pursuant to the asserted by the private respondent against Andres Pondoc
provisions of paragraph (e) of Article 218 of the Labor Code, arose out of or was incurred in connection with the employer-
as amended, when it is established on the bases of the sworn employee relationship between them. The Labor Arbiter did
allegations in the petition that the acts complained not then have jurisdiction over the claim as under paragraph
of, involving or arising from any labor dispute before the (a) of Article 217 of the Labor Code, Labor Arbiters have
Commission, which, if not restrained or performed forthwith, exclusive and original jurisdiction only in the following cases:
may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party. 1. Unfair labor practice cases;
2. Termination disputes;
xxx xxx xxx 3. If accompanied with a claim for reinstatement, those cases
The foregoing ancillary power may be exercised by the Labor that workers may file involving wages, rates of pay, hours of
Arbiters only as an incident to the cases pending before them work and other terms and conditions of employment;
in order to preserve the rights of the parties during the 4. Claim for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, waived 5 and counterclaims not set up in the answer are
including questions involving the legality of strikes and barred. 6 Set-off or compensation is one of the modes of
lockouts; and extinguishing obligations 7 and extinguishment is an
8
6. Except claims for Employees Compensation, Social affirmative defense and a ground for a motion to dismiss.
Security, Medicare and maternity benefits, all other claims,
arising from employer-employee relations, including those We do not then hesitate to rule that the NLRC acted without
of persons in domestic or household service, involving an jurisdiction or with grave abuse of discretion in entertaining
amount exceeding five thousand pesos (P5,000.00) an independent action for injunction and damages (NLRC IC
regardless of whether accompanies with a claim for No. M-000065), in receiving evidence and rendering
reinstatement. judgment on the alleged indebtedness of Andres Pondoc, and
in ordering such judgment to offset the final award of the
On the other hand, under paragraph (b) thereof, the NLRC Labor Arbiter in NLRC Case No. SRAB-09-05-10102-92.
has exclusive appellate jurisdiction over all cases decided by
the Labor Arbiters. This simply means that the NLRC does not WHEREFORE, the instant petition is GRANTED and the
have original jurisdiction over the cases enumerated in challenged decision of 28 February 1994 and resolution of 6
paragraph (a) and that if a claim does not fall within the May 1994 of the National Labor Relations Commission in
exclusive original jurisdiction of the Labor Arbiter, the NLRC NLRC Case No. IC No. M-000065 and NLRC Case No. SRAB-09-
cannot have appellate jurisdiction thereon. 05-10102-92 are ANNULLED and SET ASIDE. The judgment of
the Labor Arbiter in NLRC Case No. SRAB-09-05-10102-92
The conclusion then is inevitable that the NLRC was without should forthwith be enforced without any further delay, the
jurisdiction, either original or appellate, to receive evidence award therein bearing interest at the rate of twelve per
on the alleged indebtedness, render judgment thereon, and centum (12%) per annum from the finality of such judgment
direct that its award be set-off against the final judgment of until it shall have been fully paid.
the Labor Arbiter.
Costs against the private respondent.
Finally, even assuming arguendo that the claim for the
alleged indebtedness fell within the exclusive original SO ORDERED.
jurisdiction of the Labor Arbiter, it was deemed waived for
not having been pleaded as an affirmative defense or barred
for not having been set up as a counterclaim before the
Labor Arbiter at any appropriate time prior to the rendition of
the decision in NLRC Case No. SRAB-09-05-10102-92. Under
the Rules of Court, which is applicable in a suppletory
character in labor cases before the Labor Arbiters or the
NLRC pursuant to Section 3, Rule I of the New Rules of
Procedure of the NLRC, defenses which are not raised either
in a motion to dismiss or in the answer are deemed
petitioner to reinstate the private respondents to their
previous positions?
MARTINEZ, J.: III. After hearing, that the writ of preliminary injunction as to
the reliefs sought for be made permanent, that petitioners be
Can the National Labor Relations Commission (NLRC), even awarded full backwages, moral damages of PHP 500,000.00
without a complaint for illegal dismissal tiled before the labor each and exemplary damages of PHP 500,000.00 each,
arbiter, entertain an action for injunction and issue such writ attorney's fees equivalent to ten percent of whatever amount
enjoining petitioner Philippine Airlines, inc. from enforcing its is awarded, and the costs of suit.
Orders of dismissal against private respondents, and ordering
On April 3, 1995, the NLRC issued a temporary mandatory petitioners from any participation or from being the owners
injunction 2 enjoining petitioner to cease and desist from of the currencies, and at which hearing Mr. Joseph Abaca
enforcing its February 22, 1995 Memorandum of dismissal. In volunteered the information that the real owner of said
granting the writ, the NLRC considered the following facts, to money was one who frequented his headquarters in
wit: Hongkong to which information, the Disciplinary Board
Chairman, Mr. Ismael Khan," opined "for the need for another
. . . that almost two (2) years ago, i.e. on April 15, 1993, the hearing to go to the bottom of the incident"; that from said
petitioners were instructed to attend an investigation by statement, it appeared "that Mr. Joseph Abaca was the
respondent's "Security and Fraud Prevention Sub- courier, and had another mechanic in Manila who hid the
Department" regarding an April 3, 1993 incident in Hongkong currency at the plane's skybed for Abaca to retrieve in
at which Joseph Abaca, respondent's Avionics Mechanic in Hongkong, which findings of how the money was found was
Hongkong "was intercepted by the Hongkong Airport Police at previously confirmed by Mr. Joseph Abaca himself when he
Gate 05 . . . the ramp area of the Kai Tak International Airport was first investigated by the Hongkong authorities"; that just
while . . . about to exit said gate carrying a . . . bag said to as petitioners "thought that they were already fully cleared of
contain some 2.5 million pesos in Philippine Currencies. That the charges, as they no longer received any
at the Police Station. Mr. Abaca claimed that he just found summons/notices on the intended "additional hearings"
said plastic bag at the Skybed Section of the arrival flight mandated by the Disciplinary Board," they were surprised to
PR300/03 April 93," where petitioners served as flight receive "on February 23, 1995. . . a Memorandum dated
stewards of said flight PR300; . . the petitioners sought "a February 22, 1995" terminating their services for alleged
more detailed account of what this HKG incident is all about"; violation of respondent's Code of Discipline "effective
but instead, the petitioners were administratively charged, "a immediately"; that sometime . . . first week of March, 1995,
hearing" on which "did petitioner Pineda received another Memorandum from
not push through" until almost two (2) years after, i.e, "on respondent Mr. Juan Paraiso, advising him of his termination
January 20, 1995 . . . where a confrontation between Mr. effective February 3, 1995, likewise for violation of
Abaca and petitioners herein was compulsorily arranged by respondent's Code of Discipline; . . .
the respondent's disciplinary board" at which hearing, Abaca
was made to identify petitioners as co-conspirators; that In support of the issuance of the writ of temporary injunction,
despite the fact that the procedure of identification adopted the NLRC adapted the view that: (1) private respondents
by respondent's Disciplinary Board was anomalous "as there cannot be validly dismissed on the strength of petitioner's
was no one else in the line-up (which could not be called one) Code of Discipline which was declared illegal by this Court in
but petitioners . . . Joseph Abaca still had difficulty in the ease at PAL, Inc. vs. NLRC, (G.R. No. 85985), promulgated
identifying petitioner Pineda as his co-conspirator, and as to August 13, 1993, for the reason that it was formulated by the
petitioner Cabling, he was implicated and pointed by Abaca petitioner without the participation of its employees as
only after respondent's Atty. Cabatuando pressed the former required in R.A. 6715, amending Article 211 of the Labor
to identify petitioner Cabling as co-conspirator"; that with the Code; (2) the whimsical, baseless and premature dismissals
hearing reset to January 25, 1995, "Mr. Joseph Abaca finally of private respondents which "caused them grave and
gave exculpating statements to the board in that he cleared irreparable injury" is enjoinable as private respondents are
left "with no speedy and adequate remedy at law" except the 6. . . . in issuing the temporary injunction in the absence of
issuance of a temporary mandatory injunction; (3) the NLRC any irreparable or substantial injury to both private
is empowered under Article 218 (e) of the Labor Code not respondents.
only to restrain any actual or threatened commission of any
or all prohibited or unlawful acts but also to require the On May 31, 1995, the NLRC denied petitioner's motion for
performance of a particular act in any labor dispute, which, if reconsideration, ruling:
not restrained or performed forthwith, may cause grave or "The respondent (now petitioner), for one, cannot validly
irreparable damage to any party; and (4) the temporary claim that we cannot exercise our injunctive power under
power of the NLRC was recognized by this Court in the case Article 218 (e) of the Labor Code on the pretext that what we
of Chemo-Technische Mfg., Inc.Employees Union, DFA, have here is not a labor dispute as long as it concedes that
et. al. vs. Chemo-Technische Mfg., Inc. [G.R. No. 107031, as defined by law, a" (l) "Labor Dispute" includes any
January 25, 1993]. controversy or matter concerning terms or conditions of
On May 4, 1995, petitioner moved for employment." If security of tenure, which has been breached
reconsideration 3 arguing that the NLRC erred: by respondent and which, precisely, is sought to be protected
by our temporary mandatory injunction (the core of
1. . . . in granting a temporary injunction order when it has no controversy in this case) is not a "term or condition of
jurisdiction to issue an injunction or restraining order since employment", what then is?
this may be issued only under Article 218 of the Labor Code if
the case involves or arises from labor disputes; xxx xxx xxx
2. . . . in granting a temporary injunction order when the Anent respondent's second argument . . . . Article 218 (e) of
termination of private respondents have long been carried the Labor Code . . . empowered the Commission not only to
out; issue a prohibitory injunction, but a mandatory ("to require
the performance") one as well. Besides, as earlier discussed,
3. . . . in ordering the reinstatement of private respondents we already exercised (on August 23, 1991) this temporary
on the basis of their mere allegations, in violation of PAL's mandatory injunctive power in the case of "Chemo-
right to due process: Technische Mfg., Inc. Employees Union-DFA et. al. vs. Chemo-
Technische Mfg., Inc., et. al." (supra) and effectively enjoined
4. . . . in arrogating unto itself management prerogative to one (1) month old dismissals by Chemo-Technische and that
discipline its employees and divesting the labor arbiter of its our aforesaid mandatory exercise of injunctive power, when
original and exclusive jurisdiction over illegal dismissal cases; questioned through a petition for certiorari, was sustained by
5. . . . in suspending the effects of termination when such the Third Division of the Supreme court per its Resolution
action is exclusively within the jurisdiction of the Secretary of dated January 25, 1993.
Labor; xxx xxx xxx
Respondent's fourth argument that petitioner's remedy for But just the same, we have to stress that Article 279 does not
their dismissals is "to file an illegal dismissal case against PAL speak alone of backwages as an obtainable relief for illegal
which cases are within the original and exclusive jurisdiction dismissal; that reinstatement as well is the concern of said
of the Labor Arbiter' is ignorant. In requiring as a condition law, enforceable when necessary, through Article 218 (e) of
for the issuance of a "temporary or permanent injunction" the Labor Code (without need of an illegal dismissal suit
"(4) That complainant has no adequate remedy at law;" under Article 217 (a) of the Code) if such whimsical and
Article 218 (e) of the Labor Code clearly capricious act of illegal dismissal will "cause grave or
envisioned adequacy, and not plain availability of a remedy irreparable injury to a party". . . . . 4
at law as an alternative bar to the issuance of an injunction.
An illegal dismissal suit (which takes, on its expeditious side, Hence, the present recourse.
three (3) years before it can be disposed of) while available Generally, injunction is a preservative remedy for the
as a remedy under Article 217 (a) of the Labor Code, is protection of one's substantive rights or interest. It is not a
certainly not an "adequate; remedy at law, Ergo, it cannot as cause of action in itself but merely a provisional remedy, an
an alternative remedy, bar our exercise of that injunctive adjunct to a main suit. It is resorted to only when there is a
power given us by Article 218 (e) of the Code. pressing necessity to avoid injurious consequences which
xxx xxx xxx cannot be remedied under any standard of compensation.
The application of the injunctive writ rests upon the existence
Thus, Article 218 (e), as earlier discussed [which empowers of an emergency or of a special reason before the main case
this Commission "to require the performance of a particular be regularly heard. The essential conditions for granting such
act" (such as our requiring respondent "to cease and desist temporary injunctive relief are that the complaint alleges
from enforcing" its whimsical memoranda of dismissals and facts which appear to be sufficient to constitute a proper
"instead to reinstate petitioners to their respective position basis for injunction and that on the entire showing from the
held prior to their subject dismissals") in "any labor dispute contending parties, the injunction is reasonably necessary to
which, if not . . . performed forthwith, may cause grave and protect the legal rights of the plaintiff pending the
irreparable damage to any party"] stands as the sole litigation. 5 Injunction is also a special equitable relief granted
"adequate remedy at law" for petitioners here. only in cases where there is no plain, adequate and complete
remedy at law. 6
Finally, the respondent, in its sixth argument claims that
even if its acts of dismissing petitioners "may be great, still In labor cases, Article 218 of the Labor Code empowers the
the same is capable of compensation", and that NLRC
consequently, "injunction need not be issued where adequate
compensation at law could be obtained". Actually, (e) To enjoin or restrain any actual or threatened commission
what respondent PAL argues here is that we need not of any or all prohibited or unlawful acts or to require the
interfere in its whimsical dismissals of petitioners as, after all, performance of a particular act in any labor dispute which, if
it can pay the latter its backwages. . . . not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any
decision in favor of such party; . . ." (Emphasis Ours)
Complementing the above-quoted provision, Sec. 1, Rule XI The term "controversy" is likewise defined as "a litigated
of the New Rules of Procedure of the NLRC, pertinently question; adversary proceeding in a court of law; a civil
provides as follows: action or suit, either at law or in equity; a justiciable
dispute." 9
Sec. 1. Injunction in Ordinary Labor Dispute. A preliminary
injunction or a restraining order may be granted by the A "justiciable controversy" is "one involving an active
Commission through its divisions pursuant to the provisions antagonistic assertion of a legal right on one side and a
of paragraph (e) of Article 218 of the Labor Code, as denial thereof on the other concerning a real, and not a mere
amended, when it is established on the bases of the sworn theoretical question or issue." 10
allegations in the petition that the acts complained
of, involving or arising from any labor dispute before the Taking into account the foregoing definitions, it is an essential
Commission, which, if not restrained or performed forthwith, requirement that there must first be a labor dispute between
may cause grave or irreparable damage to any party or the contending parties before the labor arbiter. In the present
render ineffectual any decision in favor of such party. case, there is no labor dispute between the petitioner and
private respondents as there has yet been no complaint for
xxx xxx xxx illegal dismissal filed with the labor arbiter by the private
respondents against the petitioner.
The foregoing ancillary power may be exercised by the Labor
Arbiters only as an incident to the cases pending before them The petition for injunction directly filed before the NLRC is in
in order to preserve the rights of the parties during the reality an action for illegal dismissal. This is clear from the
pendency of the case, but excluding labor disputes involving allegations in the petition which prays for; reinstatement of
strikes or lockout. 7 (Emphasis Ours) private respondents; award of full backwages, moral and
exemplary damages; and attorney's fees. As such, the
From the foregoing provisions of law, the power of the NLRC petition should have been filed with the labor arbiter who has
to issue an injunctive writ originates from "any labor dispute" the original and exclusive jurisdiction to hear and decide the
upon application by a party thereof, which application if not following cases involving all workers, whether agricultural or
granted "may cause grave or irreparable damage to any non-agricultural:
party or render ineffectual any decision in favor of such
party." (1) Unfair labor practice;
The term "labor dispute" is defined as "any controversy or (2) Termination disputes;
matter concerning terms and conditions of employment or
the association or representation of persons in negotiating, (3) If accompanied with a claim for reinstatement, those
fixing. maintaining, changing, or arranging the terms and cases that workers may file involving wages, rates of pay,
conditions of employment regardless of whether or not the hours of work and other terms and conditions of
disputants stand in the proximate relation of employers and employment;
employees." 8 (4) Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
(5) Cases arising from any violation of Article 264 of this provision as well as with such orders as he may issue to
Code, including questions involving the legality of strikes and enforce the same.
lockouts; and
On the other hand, the NLRC shall have
(6) Except claims for employees compensation, social exclusive appellate jurisdiction over all cases decided by
security, medicare and maternity benefits, all other claims labor arbiters as provided in Article 217(b) of the Labor Code.
arising from employer- employee relations, including those of In short, the jurisdiction of the NLRC in illegal dismissal cases
persons in domestic or household service, involving an is appellate in nature and, therefore, it cannot entertain the
amount exceeding five thousand pesos (P5,000.00), whether private respondents' petition for injunction which challenges
or not accompanied with a claim for reinstatement. 11 the dismissal orders of petitioner. Article 218(e) of the Labor
Code does not provide blanket authority to the NLRC or any
The jurisdiction conferred by the foregoing legal provision to of its divisions to issue writs of injunction, considering that
the labor arbiter is both original and exclusive, meaning, no Section 1 of Rule XI of the New Rules of Procedure of the
other officer or tribunal can take cognizance of, hear and NLRC makes injunction only an ancillary remedy in ordinary
decide any of the cases therein enumerated. The only labor disputes." 12
exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory Thus, the NLRC exceeded its jurisdiction when it issued the
arbitration, or the parties agree to submit the matter to assailed Order granting private respondents' petition for
voluntary arbitration pursuant to Article 263 (g) of the Labor injunction and ordering the petitioner to reinstate private
Code, the pertinent portions of which reads: respondents.
(g) When, in his opinion, there exists a labor dispute causing The argument of the NLRC in its assailed Order that to file an
or likely to cause a strike or lockout in an industry illegal dismissal suit with the labor arbiter is not an
indispensable to the national interest, the Secretary of Labor "adequate" remedy since it takes three (3) years before it
and Employment may assume jurisdiction over the dispute can be disposed of, is patently erroneous. An "adequate"
and decide it or certify the same to the Commission for remedy at law has been defined as one "that affords relief
compulsory arbitration. Such assumption or certification shall with reference to the matter in controversy, and which is
have the effect of automatically enjoining the intended or appropriate to the particular circumstances of the case." 13 It
impending strike or lockout as specified in the assumption or is a remedy which is equally, beneficial, speedy and sufficient
certification order. If one has already taken place at the time which will promptly relieve the petitioner from the injurious
of assumption or certification, all striking or locked out effects of the acts complained of.14
employees shall immediately resume operations and readmit
all workers under the same terms and conditions prevailing Under the Labor Code, the ordinary and proper recourse of
before the strike or lockout. The Secretary of Labor and an illegally dismissed employee is to file a complaint for
Employment or the Commission may seek the assistance of illegal dismissal with the labor arbiter. 15 In the case at bar,
law enforcement agencies to ensure compliance with this private respondents disregarded this rule and directly went to
the NLRC through a petition for injunction praying that
petitioner be enjoined from enforcing its dismissal orders.
In Lamb vs. Phipps, 16 we ruled that if the remedy is The ruling of the NLRC that the Supreme Court upheld its
specifically provided by law, it is presumed to be adequate. power to issue temporary mandatory injunction orders in the
Moreover, the preliminary mandatory injunction prayed for case of Chemo-Technische Mfg., Inc. Employees Union-DFA,
by the private respondents in their petition before the NLRC et. al. vs. Chemo-Technische Mfg., Inc. et. al., docketed as
can also be entertained by the labor arbiter who, as shown G.R. No. 107031, is misleading. As correctly argued by the
earlier, has the ancillary power to issue preliminary petitioner, no such pronouncement was made by this Court in
injunctions or restraining orders as an incident in the cases said case. On January 25, 1993, we issued a Minute
pending before him in order to preserve the rights of the Resolution in the subject case stating as follows:
parties during the pendency of the case. 17
Considering the allegations contained, the issues raised and
Furthermore, an examination of private respondents' petition the arguments adduced in the petition for certiorari, as well
for injunction reveals that it has no basis since there is no as the comments of both public and private respondents
showing of any urgency or irreparable injury which the thereon, and the reply of the petitioners to private
private respondents might suffer. An injury is considered respondent's motion to dismiss the petition, the Court
irreparable if it is of such constant and frequent recurrence Resolved to DENY the same for being premature.
that no fair and reasonable redress can be had therefor in a
court of law, 18 or where there is no standard by which their It is clear from the above resolution that we did not in
amount can be measured with reasonable accuracy, that is, it anyway sustain the action of the NLRC in issuing such
is not susceptible of mathematical computation. It is temporary mandatory injunction but rather we dismissed the
considered irreparable injury when it cannot be adequately petition as the NLRC had yet to rule upon the motion for
compensated in damages due to the nature of the injury reconsideration filed by petitioner. Thus, the minute
itself or the nature of the right or property injured or when resolution denying the petition for being prematurely filed.
there exists no certain pecuniary standard for the Finally, an injunction, as an extraordinary remedy, is not
measurement of damages. 19 favored in labor law considering that it generally has not
In the case at bar, the alleged injury which private proved to be an effective means of settling labor
respondents stand to suffer by reason of their alleged illegal disputes. 20 It has been the policy of the State to encourage
dismissal can be adequately compensated and therefore, the parties to use the non-judicial process of negotiation and
there exists no "irreparable injury," as defined above which compromise, mediation and arbitration. 21 Thus, injunctions
would necessitate the issuance of the injunction sought for. may be issued only in cases of extreme necessity based on
Article 279 of the Labor Code provides that an employee who legal grounds clearly established, after due consultations or
is unjustly dismissed from employment shall be entitled to hearing and when all efforts at conciliation are exhausted
reinstatement, without loss of seniority rights and other which factors, however, are clearly absent in the present
privileges, and to the payment of full backwages, inclusive of case.
allowances, and to other benefits or their monetary WHEREFORE, the petition is hereby GRANTED. The assailed
equivalent computed from the time his compensation was Orders dated April 3, 1995 and May 31, 1995, issued by the
withheld from him up to the time of his actual reinstatement.
National Labor Relations Commission (First Division), in NLRC determinada, termina o bien por voluntad de cualquiera de
NCR IC No. 000563-95, are hereby REVERSED and SET ASIDE. las partes o cada vez que ilega el plazo fijado para el pago de
los salarios segun costumbre en la localidad o cunado se
SO ORDERED. termine la obra;
LAUREL, J.: 1. That Toribio Teodoro's claim that on September 26, 1938,
there was shortage of leather soles in ANG TIBAY making it
The Solicitor-General in behalf of the respondent Court of necessary for him to temporarily lay off the members of the
Industrial Relations in the above-entitled case has filed a National Labor Union Inc., is entirely false and unsupported
motion for reconsideration and moves that, for the reasons by the records of the Bureau of Customs and the Books of
stated in his motion, we reconsider the following legal Accounts of native dealers in leather.
conclusions of the majority opinion of this Court:
2. That the supposed lack of leather materials claimed by
1. Que un contrato de trabajo, asi individual como colectivo, Toribio Teodoro was but a scheme to systematically prevent
sin termino fijo de duracion o que no sea para una
the forfeiture of this bond despite the breach of his necessarily mean the modification and reversal of the
CONTRACT with the Philippine Army. judgment rendered herein.
3. That Toribio Teodoro's letter to the Philippine Army dated The petitioner, Ang Tibay, has filed an opposition both to the
September 29, 1938, (re supposed delay of leather soles motion for reconsideration of the respondent National Labor
from the States) was but a scheme to systematically prevent Union, Inc.
the forfeiture of this bond despite the breach of his
CONTRACT with the Philippine Army. In view of the conclusion reached by us and to be herein after
stead with reference to the motion for a new trial of the
4. That the National Worker's Brotherhood of ANG TIBAY is a respondent National Labor Union, Inc., we are of the opinion
company or employer union dominated by Toribio Teodoro, that it is not necessary to pass upon the motion for
the existence and functions of which are illegal. (281 U.S., reconsideration of the Solicitor-General. We shall proceed to
548, petitioner's printed memorandum, p. 25.) dispose of the motion for new trial of the respondent labor
union. Before doing this, however, we deem it necessary, in
5. That in the exercise by the laborers of their rights to the interest of orderly procedure in cases of this nature, in
collective bargaining, majority rule and elective interest of orderly procedure in cases of this nature, to make
representation are highly essential and indispensable. several observations regarding the nature of the powers of
(Sections 2 and 5, Commonwealth Act No. 213.) the Court of Industrial Relations and emphasize certain
6. That the century provisions of the Civil Code which had guiding principles which should be observed in the trial of
been (the) principal source of dissensions and continuous cases brought before it. We have re-examined the entire
civil war in Spain cannot and should not be made applicable record of the proceedings had before the Court of Industrial
in interpreting and applying the salutary provisions of a Relations in this case, and we have found no substantial
modern labor legislation of American origin where the evidence that the exclusion of the 89 laborers here was due
industrial peace has always been the rule. to their union affiliation or activity. The whole transcript taken
contains what transpired during the hearing and is more of a
7. That the employer Toribio Teodoro was guilty of unfair record of contradictory and conflicting statements of
labor practice for discriminating against the National Labor opposing counsel, with sporadic conclusion drawn to suit
Union, Inc., and unjustly favoring the National Workers' their own views. It is evident that these statements and
Brotherhood. expressions of views of counsel have no evidentiary value.
8. That the exhibits hereto attached are so inaccessible to The Court of Industrial Relations is a special court whose
the respondents that even with the exercise of due diligence functions are specifically stated in the law of its creation
they could not be expected to have obtained them and (Commonwealth Act No. 103). It is more an administrative
offered as evidence in the Court of Industrial Relations. than a part of the integrated judicial system of the nation. It
is not intended to be a mere receptive organ of the
9. That the attached documents and exhibits are of such far- Government. Unlike a court of justice which is essentially
reaching importance and effect that their admission would passive, acting only when its jurisdiction is invoked and
deciding only cases that are presented to it by the parties to be paid by the "inquilinos" or tenants or less to
litigant, the function of the Court of Industrial Relations, as landowners. (Section 5, ibid.) In fine, it may appeal to
will appear from perusal of its organic law, is more active, voluntary arbitration in the settlement of industrial disputes;
affirmative and dynamic. It not only exercises judicial or may employ mediation or conciliation for that purpose, or
quasi-judicial functions in the determination of disputes recur to the more effective system of official investigation
between employers and employees but its functions in the and compulsory arbitration in order to determine specific
determination of disputes between employers and employees controversies between labor and capital industry and in
but its functions are far more comprehensive and expensive. agriculture. There is in reality here a mingling of executive
It has jurisdiction over the entire Philippines, to consider, and judicial functions, which is a departure from the rigid
investigate, decide, and settle any question, matter doctrine of the separation of governmental powers.
controversy or dispute arising between, and/or affecting
employers and employees or laborers, and regulate the In the case of Goseco vs. Court of Industrial Relations et al.,
relations between them, subject to, and in accordance with, G.R. No. 46673, promulgated September 13, 1939, we had
the provisions of Commonwealth Act No. 103 (section 1). It occasion to joint out that the Court of Industrial Relations et
shall take cognizance or purposes of prevention, arbitration, al., G. R. No. 46673, promulgated September 13, 1939, we
decision and settlement, of any industrial or agricultural had occasion to point out that the Court of Industrial
dispute causing or likely to cause a strike or lockout, arising Relations is not narrowly constrained by technical rules of
from differences as regards wages, shares or compensation, procedure, and the Act requires it to "act according to justice
hours of labor or conditions of tenancy or employment, and equity and substantial merits of the case, without regard
between landlords and tenants or farm-laborers, provided to technicalities or legal forms and shall not be bound by any
that the number of employees, laborers or tenants of farm- technicalities or legal forms and shall not be bound by any
laborers involved exceeds thirty, and such industrial or technical rules of legal evidence but may inform its mind in
agricultural dispute is submitted to the Court by the such manner as it may deem just and equitable." (Section
Secretary of Labor or by any or both of the parties to the 20, Commonwealth Act No. 103.) It shall not be restricted to
controversy and certified by the Secretary of labor as existing the specific relief claimed or demands made by the parties to
and proper to be by the Secretary of Labor as existing and the industrial or agricultural dispute, but may include in the
proper to be dealth with by the Court for the sake of public award, order or decision any matter or determination which
interest. (Section 4, ibid.) It shall, before hearing the dispute may be deemed necessary or expedient for the purpose of
and in the course of such hearing, endeavor to reconcile the settling the dispute or of preventing further industrial or
parties and induce them to settle the dispute by amicable agricultural disputes. (section 13, ibid.) And in the light of
agreement. (Paragraph 2, section 4, ibid.) When directed by this legislative policy, appeals to this Court have been
the President of the Philippines, it shall investigate and study especially regulated by the rules recently promulgated by the
all industries established in a designated locality, with a view rules recently promulgated by this Court to carry into the
to determinating the necessity and fairness of fixing and effect the avowed legislative purpose. The fact, however,
adopting for such industry or locality a minimum wage or that the Court of Industrial Relations may be said to be free
share of laborers or tenants, or a maximum "canon" or rental from the rigidity of certain procedural requirements does not
mean that it can, in justifiable cases before it, entirely ignore
or disregard the fundamental and essential requirements of and Maryland Coach Co. v. national labor Relations Board,
due process in trials and investigations of an administrative 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It
character. There are primary rights which must be respected means such relevant evidence as a reasonable mind accept
even in proceedings of this character: as adequate to support a conclusion." (Appalachian Electric
Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985,
(1) The first of these rights is the right to a hearing, which 989; National Labor Relations Board v. Thompson Products, 6
includes the right of the party interested or affected to Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v.
present his own case and submit evidence in support thereof. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . .
In the language of Chief Hughes, in Morgan v. U.S., 304 U.S. The statute provides that "the rules of evidence prevailing in
1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and courts of law and equity shall not be controlling.' The obvious
property of the citizen shall be protected by the rudimentary purpose of this and similar provisions is to free administrative
requirements of fair play. boards from the compulsion of technical rules so that the
(2) Not only must the party be given an opportunity to mere admission of matter which would be deemed
present his case and to adduce evidence tending to establish incompetent inn judicial proceedings would not invalidate the
the rights which he asserts but the tribunal must consider the administrative order. (Interstate Commerce Commission v.
evidence presented. (Chief Justice Hughes in Morgan v. U.S. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860;
298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the Interstate Commerce Commission v. Louisville and Nashville
language of this court inEdwards vs. McCoy, 22 Phil., 598, R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431;
"the right to adduce evidence, without the corresponding United States v. Abilene and Southern Ry. Co. S. Ct. 220, 225,
duty on the part of the board to consider it, is vain. Such 74 Law. ed. 624.) But this assurance of a desirable flexibility
right is conspicuously futile if the person or persons to whom in administrative procedure does not go far as to justify
the evidence is presented can thrust it aside without notice orders without a basis in evidence having rational probative
or consideration." force. Mere uncorroborated hearsay or rumor does not
constitute substantial evidence. (Consolidated Edison Co. v.
(3) "While the duty to deliberate does not impose the National Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No.
obligation to decide right, it does imply a necessity which 4, Adv. Op., p. 131.)"
cannot be disregarded, namely, that of having something to
support it is a nullity, a place when directly attached." (5) The decision must be rendered on the evidence presented
(Edwards vs. McCoy, supra.) This principle emanates from the at the hearing, or at least contained in the record and
more fundamental is contrary to the vesting of unlimited disclosed to the parties affected. (Interstate Commence
power anywhere. Law is both a grant and a limitation upon Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57
power. Law. ed. 431.) Only by confining the administrative tribunal
to the evidence disclosed to the parties, can the latter be
(4) Not only must there be some evidence to support a protected in their right to know and meet the case against
finding or conclusion (City of Manila vs. Agustin, G.R. No. them. It should not, however, detract from their duty actively
45844, promulgated November 29, 1937, XXXVI O. G. 1335), to see that the law is enforced, and for that purpose, to use
but the evidence must be "substantial." (Washington, Virginia the authorized legal methods of securing evidence and
informing itself of facts material and relevant to the Brotherhood (appendix A), the record is barren and does not
controversy. Boards of inquiry may be appointed for the satisfy the thirst for a factual basis upon which to predicate,
purpose of investigating and determining the facts in any in a national way, a conclusion of law.
given case, but their report and decision are only advisory.
(Section 9, Commonwealth Act No. 103.) The Court of This result, however, does not now preclude the concession
Industrial Relations may refer any industrial or agricultural of a new trial prayed for the by respondent National Labor
dispute or any matter under its consideration or advisement Union, Inc., it is alleged that "the supposed lack of material
to a local board of inquiry, a provincial fiscal. a justice of the claimed by Toribio Teodoro was but a scheme adopted to
peace or any public official in any part of the Philippines for systematically discharged all the members of the National
investigation, report and recommendation, and may delegate Labor Union Inc., from work" and this avernment is desired to
to such board or public official such powers and functions as be proved by the petitioner with the "records of the Bureau of
the said Court of Industrial Relations may deem necessary, Customs and the Books of Accounts of native dealers in
but such delegation shall not affect the exercise of the Court leather"; that "the National Workers Brotherhood Union of
itself of any of its powers. (Section 10, ibid.) Ang Tibay is a company or employer union dominated by
Toribio Teodoro, the existence and functions of which are
(6) The Court of Industrial Relations or any of its judges, illegal." Petitioner further alleges under oath that the exhibits
therefore, must act on its or his own independent attached to the petition to prove his substantial avernments"
consideration of the law and facts of the controversy, and not are so inaccessible to the respondents that even within the
simply accept the views of a subordinate in arriving at a exercise of due diligence they could not be expected to have
decision. It may be that the volume of work is such that it is obtained them and offered as evidence in the Court of
literally Relations personally to decide all controversies Industrial Relations", and that the documents attached to the
coming before them. In the United States the difficulty is petition "are of such far reaching importance and effect that
solved with the enactment of statutory authority authorizing their admission would necessarily mean the modification and
examiners or other subordinates to render final decision, with reversal of the judgment rendered herein." We have
the right to appeal to board or commission, but in our case considered the reply of Ang Tibay and its arguments against
there is no such statutory authority. the petition. By and large, after considerable discussions, we
have come to the conclusion that the interest of justice would
(7) The Court of Industrial Relations should, in all be better served if the movant is given opportunity to
controversial questions, render its decision in such a manner present at the hearing the documents referred to in his
that the parties to the proceeding can know the various motion and such other evidence as may be relevant to the
issues involved, and the reasons for the decision rendered. main issue involved. The legislation which created the Court
The performance of this duty is inseparable from the of Industrial Relations and under which it acts is new. The
authority conferred upon it. failure to grasp the fundamental issue involved is not entirely
In the right of the foregoing fundamental principles, it is attributable to the parties adversely affected by the result.
sufficient to observe here that, except as to the alleged Accordingly, the motion for a new trial should be and the
agreement between the Ang Tibay and the National Worker's same is hereby granted, and the entire record of this case
shall be remanded to the Court of Industrial Relations, with
instruction that it reopen the case, receive all such evidence
as may be relevant and otherwise proceed in accordance
with the requirements set forth hereinabove. So ordered.
DECISION
PUNO, J.:
This is a petition for certiorari to reverse and set aside the
Decision issued by the Court of Appeals (CA) 1 in CA-G.R. SP
No. 68642, entitled "Rolando Adana, Wenefredo Loveres, et. 9. Lourdes Camigla Cashier
al. vs. National Labor Relations Commission (NLRC), Mayon 10. Chona Bumalay Cashier
Hotel & Restaurant/Pacita O. Po, et al.," and the
Resolution2 denying petitioners' motion for reconsideration. 11. Jose Atractivo Technician
The assailed CA decision reversed the NLRC Decision which
had dismissed all of respondents' complaints, 3 and reinstated 12. Amado Alamares Dishwasher and Kitchen
the Joint Decision of the Labor Arbiter 4 which ruled that Helper
respondents were illegally dismissed and entitled to their 13. Roger Burce Cook
money claims.
14. Rolando Adana Waiter
The facts, culled from the records, are as follows: 5
15. Miguel Torrefranca Cook
Petitioner Mayon Hotel & Restaurant is a single proprietor
business registered in the name of petitioner Pacita O. 16. Edgardo Torrefranca Cook
Po,6 whose mother, petitioner Josefa Po Lam, manages the
Due to the expiration and non-renewal of the lease contract
establishment.7 The hotel and restaurant employed about
for the rented space occupied by the said hotel and
sixteen (16) employees.
restaurant at Rizal Street, the hotel operations of the
Records show that on various dates starting in 1981, business were suspended on March 31, 1997. 9 The operation
petitioner hotel and restaurant hired the following people, all of the restaurant was continued in its new location at
respondents in this case, with the following jobs: 8 Elizondo Street, Legazpi City, while waiting for the
construction of a new Mayon Hotel & Restaurant at
1. Wenefredo Loveres Accountant and Officer-in- Pearanda Street, Legazpi City. 10 Only nine (9) of the sixteen
charge (16) employees continued working in the Mayon Restaurant
at its new site.11
2. Paterno Llarena Front Desk Clerk
On various dates of April and May 1997, the 16 employees
3. Gregorio Nicerio Supervisory Waiter
filed complaints for underpayment of wages and other
4. Amado Macandog Roomboy money claims against petitioners, as follows:12
5. Luis Guades Utility/Maintenance Worker Wenefredo Loveres, Luis Guades, Amado Macandog and Jose
Atractivo for illegal dismissal, underpayment of wages,
6. Santos Broola Roomboy nonpayment of holiday and rest day pay; service incentive
leave pay (SILP) and claims for separation pay plus damages;
7. Teodoro Laurenaria Waiter
3. Are respondents entitled to their money claims due to The CA, therefore, did not err in reviewing the records to
underpayment of wages, and nonpayment of holiday pay, determine which opinion was supported by substantial
rest day premium, SILP, COLA, overtime pay, and night shift evidence.
differential pay? Moreover, it is explicit in Castillo v. NLRC21 that factual
It is petitioners' contention that the above issues have findings of administrative bodies like the NLRC are
already been threshed out sufficiently and definitively by the affirmed only if they are supported by substantial
NLRC. They therefore assail the CA's reversal of the NLRC evidence that is manifest in the decision and on the
decision, claiming that based on the ruling in Castillo v. records. As stated in Castillo:
NLRC,15 it is non sequitur that the CA should re-examine the [A]buse of discretion does not necessarily follow from a
factual findings of both the NLRC and the Labor Arbiter, reversal by the NLRC of a decision of a Labor Arbiter. Mere
especially as in this case the NLRC's findings are allegedly variance in evidentiary assessment between the NLRC and
supported by substantial evidence. the Labor Arbiter does not automatically call for a full review
We do not agree. of the facts by this Court. The NLRC's decision, so long as it is
not bereft of substantial support from the records, deserves
There is no denying that it is within the NLRC's competence, respect from this Court. As a rule, the original and exclusive
as an appellate agency reviewing decisions of Labor Arbiters, jurisdiction to review a decision or resolution of respondent
to disagree with and set aside the latter's findings. 16 But it NLRC in a petition for certiorari under Rule 65 of the Rules of
stands to reason that the NLRC should state an acceptable Court does not include a correction of its evaluation of the
cause therefore, otherwise it would be a whimsical, evidence but is confined to issues of jurisdiction or grave
capricious, oppressive, illogical, unreasonable exercise of abuse of discretion. Thus, the NLRC's factual findings, if
quasi-judicial prerogative, subject to invalidation by the supported by substantial evidence, are entitled to great
extraordinary writ of certiorari.17 And when the factual respect and even finality, unless petitioner is able to show
findings of the Labor Arbiter and the NLRC are diametrically that it simply and arbitrarily disregarded the evidence before
opposed and this disparity of findings is called into question, it or had misappreciated the evidence to such an extent as to
compel a contrary conclusion if such evidence had been that the evidence[,] if produced, would operate to his
properly appreciated. (citations omitted)22 prejudice, and support the case of his adversary.
After careful review, we find that the reversal of the NLRC's Furthermore, in ruling that Josefa Po Lam is the real owner of
decision was in order precisely because it was not supported the hotel and restaurant, the labor arbiter relied also on the
by substantial evidence. testimonies of the witnesses, during the hearing of the
instant case. When the conclusions of the labor arbiter are
1. Ownership by Josefa Po Lam sufficiently corroborated by evidence on record, the same
The Labor Arbiter ruled that as regards the claims of the should be respected by appellate tribunals, since he is in a
employees, petitioner Josefa Po Lam is, in fact, the owner of better position to assess and evaluate the credibility of the
Mayon Hotel & Restaurant. Although the NLRC reversed this contending parties.23 (citations omitted)
decision, the CA, on review, agreed with the Labor Arbiter Petitioners insist that it was error for the Labor Arbiter and
that notwithstanding the certificate of registration in the the CA to have ruled that petitioner Josefa Po Lam is the
name of Pacita Po, it is Josefa Po Lam who is the owner of Mayon Hotel & Restaurant. They allege that the
owner/proprietor of Mayon Hotel & Restaurant, and the documents they submitted to the Labor Arbiter sufficiently
proper respondent in the complaints filed by the employees. and clearly establish the fact of ownership by petitioner
The CA decision states in part: Pacita Po, and not her mother, petitioner Josefa Po Lam. They
[Despite] the existence of the Certificate of Registration in contend that petitioner Josefa Po Lam's participation was
the name of Pacita Po, we cannot fault the labor arbiter in limited to merely (a) being the overseer; (b) receiving the
ruling that Josefa Po Lam is the owner of the subject hotel month-to-month and/or year-to-year financial reports
and restaurant. There were conflicting documents submitted prepared and submitted by respondent Loveres; and (c)
by Josefa herself. She was ordered to submit additional visitation of the premises.24 They also put emphasis on the
documents to clearly establish ownership of the hotel and admission of the respondents in their position paper
restaurant, considering the testimonies given by the submitted to the Labor Arbiter, identifying petitioner Josefa
[respondents] and the non-appearance and failure to submit Po Lam as the manager, and Pacita Po as the owner. 25 This,
her own position paper by Pacita Po. But Josefa did not they claim, is a judicial admission and is binding on
comply with the directive of the Labor Arbiter. The ruling of respondents. They protest the reliance the Labor Arbiter and
the Supreme Court in Metropolitan Bank and Trust Company the CA placed on their failure to submit additional documents
v. Court of Appeals applies to Josefa Po Lam which is stated in to clearly establish ownership of the hotel and restaurant,
this wise: claiming that there was no need for petitioner Josefa Po Lam
to submit additional documents considering that the
When the evidence tends to prove a material fact which Certificate of Registration is the best and primary evidence of
imposes a liability on a party, and he has it in his power to ownership.
produce evidence which from its very nature must overthrow
the case made against him if it is not founded on fact, and he
refuses to produce such evidence, the presumption arises
We disagree with petitioners. We have scrutinized the records and interest in the business as merely to help and assist her
and find the claim that petitioner Josefa Po Lam is merely the daughter as the hotel and restaurant was near the former's
overseer is not borne out by the evidence. store, the testimonies of [respondents] and Josefa as well as
her demeanor during the trial in these cases proves (sic) that
First. It is significant that only Josefa Po Lam appeared in the Josefa Po Lam owns Mayon Hotel and Restaurant.
proceedings with the Labor Arbiter. Despite receipt of the [Respondents] testified that it was Josefa who exercises all
Labor Arbiter's notice and summons, other notices and the acts and manifestation of ownership of the hotel and
Orders, petitioner Pacita Po failed to appear in any of the restaurant like transferring employees from the Greatwall
proceedings with the Labor Arbiter in these cases, nor file her Palace Restaurant which she and her husband Roy Po Lam
position paper.26 It was only on appeal with the NLRC that previously owned; it is Josefa to whom the employees
Pacita Po signed the pleadings.27 The apathy shown by submits (sic) reports, draws money for payment of payables
petitioner Pacita Po is contrary to human experience as one and for marketing, attending (sic) to Labor Inspectors during
would think that the owner of an establishment would ocular inspections. Except for documents whereby Pacita Po
naturally be concerned when all her employees file appears as the owner of Mayon Hotel and Restaurant,
complaints against her. nothing in the record shows any circumstance or
Second. The records of the case belie petitioner Josefa Po manifestation that Pacita Po is the owner of Mayon Hotel and
Lam's claim that she is merely an overseer. The findings of Restaurant. The least that can be said is that it is absurd for a
the Labor Arbiter on this question were based on credible, person to purchase a hotel and restaurant in the very heart
competent and substantial evidence. We again quote the of the City of Legazpi verbally. Assuming this to be true,
Joint Decision on this matter: when [petitioners], particularly Josefa, was directed to submit
evidence as to the ownership of Pacita of the hotel and
Mayon Hotel and Restaurant is a [business name] of an restaurant, considering the testimonies of [respondents], the
enterprise. While [petitioner] Josefa Po Lam claims that it is former should [have] submitted the lease contract between
her daughter, Pacita Po, who owns the hotel and restaurant the owner of the building where Mayon Hotel and Restaurant
when the latter purchased the same from one Palanos in was located at Rizal St., Legazpi City and Pacita Po to clearly
1981, Josefa failed to submit the document of sale from said establish ownership by the latter of said enterprise. Josefa
Palanos to Pacita as allegedly the sale was only verbal failed. We are not surprised why some employers employ
although the license to operate said hotel and restaurant is in schemes to mislead Us in order to evade liabilities. We
the name of Pacita which, despite our Order to Josefa to therefore consider and hold Josefa Po Lam as the
present the same, she failed to comply (p. 38, tsn. August 13, owner/proprietor of Mayon Hotel and Restaurant and the
1998). While several documentary evidences were submitted proper respondent in these cases. 28
by Josefa wherein Pacita was named therein as owner of the
hotel and restaurant (pp. 64, 65, 67 to 69; vol. I, rollo)[,] Petitioners' reliance on the rules of evidence, i.e., the
there were documentary evidences also that were submitted certificate of registration being the best proof of ownership,
by Josefa showing her ownership of said enterprise (pp. 468 is misplaced. Notwithstanding the certificate of registration,
to 469; vol. II, rollo). While Josefa explained her participation doubts were cast as to the true nature of petitioner Josefa Po
Lam's involvement in the enterprise, and the Labor Arbiter
had the authority to resolve this issue. It was therefore within opportunity to be heard. 35 Obviously, the choice not to
his jurisdiction to require the additional documents to present evidence was made by petitioners themselves. 36
ascertain who was the real owner of petitioner Mayon Hotel &
Restaurant. But more significantly, we sustain the Labor Arbiter and the
CA because even when the case was on appeal with the
Article 221 of the Labor Code is clear: technical rules are not NLRC, nothing was submitted to negate the Labor Arbiter's
binding, and the application of technical rules of procedure finding that Pacita Po is not the real owner of the subject
may be relaxed in labor cases to serve the demand of hotel and restaurant. Indeed, no such evidence was
substantial justice.29 The rule of evidence prevailing in court submitted in the proceedings with the CA nor with this Court.
of law or equity shall not be controlling in labor cases and it Considering that petitioners vehemently deny ownership by
is the spirit and intention of the Labor Code that the Labor petitioner Josefa Po Lam, it is most telling that they continue
Arbiter shall use every and all reasonable means to ascertain to withhold evidence which would shed more light on this
the facts in each case speedily and objectively and without issue. We therefore agree with the CA that the failure to
regard to technicalities of law or procedure, all in the interest submit could only mean that if produced, it would have been
of due process.30 Labor laws mandate the speedy adverse to petitioners' case.37
administration of justice, with least attention to technicalities
but without sacrificing the fundamental requisites of due Thus, we find that there is substantial evidence to rule that
process.31 petitioner Josefa Po Lam is the owner of petitioner Mayon
Hotel & Restaurant.
Similarly, the fact that the respondents' complaints contained
no allegation that petitioner Josefa Po Lam is the owner is of 2. Illegal Dismissal: claim for separation pay
no moment. To apply the concept of judicial admissions to Of the sixteen employees, only the following filed a case for
respondents who are but lowly employees - would be to illegal dismissal: respondents Loveres, Llarena, Nicerio,
exact compliance with technicalities of law that is contrary to Macandog, Guades, Atractivo and Broola. 38
the demands of substantial justice. Moreover, the issue of
ownership was an issue that arose only during the course of The Labor Arbiter found that there was illegal dismissal, and
the proceedings with the Labor Arbiter, as an incident of granted separation pay to respondents Loveres, Macandog
determining respondents' claims, and was well within his and Llarena. As respondents Guades, Nicerio and Alamares
jurisdiction.32 were already 79, 66 and 65 years old respectively at the time
of the dismissal, the Labor Arbiter granted retirement
Petitioners were also not denied due process, as they were benefits pursuant to Article 287 of the Labor Code as
given sufficient opportunity to be heard on the issue of amended.39 The Labor Arbiter ruled that respondent Atractivo
ownership.33 The essence of due process in administrative was not entitled to separation pay because he had been
proceedings is simply an opportunity to explain one's side or transferred to work in the restaurant operations in Elizondo
an opportunity to seek reconsideration of the action or ruling Street, but awarded him damages. Respondents Loveres,
complained of.34 And there is nothing in the records which Llarena, Nicerio, Macandog and Guades were also awarded
would suggest that petitioners had absolute lack of damages.40
The NLRC reversed the Labor Arbiter, finding that "no clear [F]rom the records, more than six months had lapsed without
act of termination is attendant in the case at bar" and that [petitioner] having resumed operation of the hotel. After
respondents "did not submit any evidence to that effect, but more than one year from the temporary closure of Mayon
the finding and conclusion of the Labor Arbiter [are] merely Hotel and the temporary transfer to another site of Mayon
based on his own surmises and conjectures." 41 In turn, the Restaurant, the building which [petitioner] Josefa allege[d]
NLRC was reversed by the CA. w[h]ere the hotel and restaurant will be transferred has been
finally constructed and the same is operated as a hotel with
It is petitioners contention that the CA should have sustained bar and restaurant nevertheless, none of [respondents]
the NLRC finding that none of the above-named respondents herein who were employed at Mayon Hotel and Restaurant
were illegally dismissed, or entitled to separation or which was also closed on April 30, 1998 was/were recalled by
retirement pay. According to petitioners, even the Labor [petitioner] to continue their services...
Arbiter and the CA admit that when the illegal dismissal case
was filed by respondents on April 1997, they had as yet no Parenthetically, the Labor Arbiter did not grant separation
cause of action. Petitioners therefore conclude that the filing pay to the other respondents as they had not filed an
by respondents of the illegal dismissal case was premature amended complaint to question the cessation of their
and should have been dismissed outright by the Labor employment after the closure of Mayon Hotel & Restaurant
Arbiter.42 Petitioners also claim that since the validity of on March 31, 1997.45
respondents' dismissal is a factual question, it is not for the
reviewing court to weigh the conflicting evidence. 43 The above factual finding of the Labor Arbiter was never
refuted by petitioners in their appeal with the NLRC. It
We do not agree. Whether respondents are still working for confounds us, therefore, how the NLRC could have so
petitioners is a factual question. And the records are cavalierly treated this uncontroverted factual finding by
unequivocal that since April 1997, when petitioner Mayon ruling that respondents have not introduced any evidence to
Hotel & Restaurant suspended its hotel operations and show that they were illegally dismissed, and that the Labor
transferred its restaurant operations in Elizondo Street, Arbiter's finding was based on conjecture. 46 It was a serious
respondents Loveres, Macandog, Llarena, Guades and Nicerio error that the NLRC did not inquire as to thelegality of the
have not been permitted to work for petitioners. Respondent cessation of employment. Article 286 of the Labor Code is
Alamares, on the other hand, was also laid-off when the clear there is termination of employment when an
Elizondo Street operations closed, as were all the other otherwise bona fide suspension of work exceeds six (6)
respondents. Since then, respondents have not been months.47 The cessation of employment for more than six
permitted to work nor recalled, even after the construction of months was patent and the employer has the burden of
the new premises at Pearanda Street and the reopening of proving that the termination was for a just or authorized
the hotel operations with the restaurant in this new site. As cause.48
stated by the Joint Decision of the Labor Arbiter on July 2000,
or more than three (3) years after the complaint was filed: 44 Moreover, we are not impressed by any of petitioners'
attempts to exculpate themselves from the charges. First, in
the proceedings with the Labor Arbiter, they claimed that it
could not be illegal dismissal because the lay-off was merely It is confounding how petitioners have fashioned their
temporary (and due to the expiration of the lease contract arguments. After having admitted, in effect, that respondents
over the old premises of the hotel). Theyspecifically invoked have been laid-off since April 1997, they would have this
Article 286 of the Labor Code to argue that the claim for Court excuse their refusal to reinstate respondents or grant
separation pay was premature and without legal and factual them separation pay because these same respondents
basis.49 Then, because the Labor Arbiter had ruled that there purportedly have not proven the illegality of their dismissal.
was already illegal dismissal when the lay-off had exceeded
the six-month period provided for in Article 286, petitioners Petitioners' arguments reflect their lack of candor and the
raise this novel argument, to wit: blatant attempt to use technicalities to muddle the issues
and defeat the lawful claims of their employees. First,
It is the firm but respectful submission of petitioners that petitioners admit that since April 1997, when hotel
reliance on Article 286 of the Labor Code is misplaced, operations were suspended due to the termination of the
considering that the reason why private respondents were lease of the old premises, respondents Loveres, Macandog,
out of work was not due to the fault of petitioners. The failure Llarena, Nicerio and Guades have not been permitted to
of petitioners to reinstate the private respondents to their work. Second, even after six monthsof what should have
former positions should not likewise be attributable to said been just a temporary lay-off, the same respondents
petitioners as the private respondents did not submit any were still not recalled to work. As a matter of fact, the
evidence to prove their alleged illegal dismissal. The Labor Arbiter even found that as of the time when he
petitioners cannot discern why they should be made liable to rendered his Joint Decision on July 2000 or more than three
the private respondents for their failure to be reinstated (3) years after the supposed "temporary lay-off," the
considering that the fact that they were out of work was not employment of all of the respondents with petitioners
due to the fault of petitioners but due to circumstances had ceased, notwithstanding that the new premises had
beyond the control of petitioners, which are the termination been completed and the same operated as a hotel with bar
and non-renewal of the lease contract over the subject and restaurant. This is clearly dismissal or the permanent
premises. Private respondents, however, argue in their severance or complete separation of the worker from the
Comment that petitioners themselves sought the application service on the initiative of the employer regardless of the
of Article 286 of the Labor Code in their case in their Position reasons therefor.51
Paper filed before the Labor Arbiter. In refutation, petitioners
humbly submit that even if they invoke Article 286 of the On this point, we note that the Labor Arbiter and the CA are
Labor Code, still the fact remains, and this bears stress and in accord that at the time of the filing of the complaint,
emphasis, that the temporary suspension of the operations of respondents had no cause of action to file the case for illegal
the establishment arising from the non-renewal of the lease dismissal. According to the CA and the Labor Arbiter, the lay-
contract did not result in the termination of employment of off of the respondents was merely temporary, pending
private respondents and, therefore, the petitioners cannot be construction of the new building at Pearanda Street. 52
faulted if said private respondents were out of work, and While the closure of the hotel operations in April of 1997
consequently, they are not entitled to their money claims may have been temporary, we hold that the evidence on
against the petitioners.50
record belie any claim of petitioners that the lay-of of confidence.55 Even the petition filed in this court made
respondents on that same date was merely temporary. On reference to the separation of the respondents due to
the contrary, we find substantial evidence that petitioners "severe financial losses and reverses," again imputing it to
intended the termination to be permanent. First, respondents' mismanagement.56 The vehemence of
respondents Loveres, Macandog, Llarena, Guades, Nicerio petitioners' accusation of mismanagement against
and Alamares filed the complaint for illegal respondents, especially against Loveres, is inconsistent with
dismissalimmediately after the closure of the hotel the desire to recall them to work. Fourth, petitioners'
operations in Rizal Street, notwithstanding the alleged memorandum on appeal also averred that the case was filed
temporary nature of the closure of the hotel operations, and "not because of the business being operated by them or that
petitioners' allegations that the employees assigned to the they were supposedly not receiving benefits from the Labor
hotel operations knew about this beforehand. Second, in Code which is true, but because of the fact that the source
their position paper submitted to the Labor Arbiter, of their livelihood, whether legal or immoral, was
petitioners invoked Article 286 of the Labor Code to assert stopped on March 31, 1997, when the owner of the
that the employer-employee relationship was merely building terminated the Lease Contract." 57Fifth, petitioners
suspended, and therefore the claim for separation pay was had inconsistencies in their pleadings (with the NLRC, CA and
premature and without legal or factual basis.53 But they with this Court) in referring to the closure, 58 i.e., in the
made no mention of any intent to recall these petition filed with this court, they assert that there is no
respondents to work upon completion of the new illegal dismissal because there was "only a temporary
premises. Third,the various pleadings on record show that cessation or suspension of operations of the hotel and
petitioners held respondents, particularly Loveres, as restaurant due to circumstances beyond the control of
responsible for mismanagement of the establishment and for petitioners, and that is, the non-renewal of the lease
abuse of trust and confidence. Petitioner Josefa Po Lam's contract..."59 And yet, in the same petition, they also assert
affidavit on July 21, 1998, for example, squarely blamed that: (a) the separation of respondents was due to severe
respondents, specifically Loveres, Bumalay and Camigla, for financial losses and reverses leading to the closure of the
abusing her leniency and causing petitioner Mayon Hotel & business; and (b) petitioner Pacita Po had to close
Restaurant to sustain "continuous losses until it is closed." shop and was bankrupt and has no liquidity to put up her
She then asserts that respondents "are not entitled to own building to house Mayon Hotel & Restaurant. 60 Sixth,
separation pay for they were not terminated and if ever the and finally, the uncontroverted finding of the Labor Arbiter
business ceased to operate it was because of that petitioners terminated all the other respondents, by not
54
losses." Again, petitioners make the same allegation in their employing them when the Hotel and Restaurant transferred
memorandum on appeal with the NLRC, where they alleged to its new site on Pearanda Street. 61 Indeed, in this same
that three (3) years prior to the expiration of the lease in memorandum, petitioners referred to all respondents as
1997, the operation of the Hotel had been sustaining "former employees of Mayon Hotel & Restaurant." 62
consistent losses, and these were solely attributed to
respondents, but most especially due to Loveres's These factors may be inconclusive individually, but when
mismanagement and abuse of petitioners' trust and taken together, they lead us to conclude that petitioners
really intended to dismiss all respondents and merely used
the termination of the lease (on Rizal Street premises) as a While we recognize the right of the employer to terminate
means by which they could terminate their employees. the services of an employee for a just or authorized cause,
the dismissal of employees must be made within the
Moreover, even assuming arguendo that the cessation of parameters of law and pursuant to the tenets of fair
employment on April 1997 was merely temporary, play.66 And in termination disputes, the burden of proof is
itbecame dismissal by operation of law when petitioners always on the employer to prove that the dismissal was for a
failed to reinstate respondents after the lapse of six (6) just or authorized cause. 67 Where there is no showing of a
months, pursuant to Article 286 of the Labor Code. clear, valid and legal cause for termination of employment,
We are not impressed by petitioners' claim that severe the law considers the case a matter of illegal dismissal. 68
business losses justified their failure to reinstate Under these circumstances, the award of damages was
respondents. The evidence to prove this fact is inconclusive. proper. As a rule, moral damages are recoverable where the
But more important, serious business losses do not excuse dismissal of the employee was attended by bad faith or fraud
the employer from complying with the clearance or report or constituted an act oppressive to labor, or was done in a
required under Article 283 of the Labor Code and its manner contrary to morals, good customs or public
implementing rules before terminating the employment of its policy.69 We believe that the dismissal of the respondents was
workers.63 In the absence of justifying circumstances, the attended with bad faith and meant to evade the lawful
failure of petitioners to observe the procedural requirements obligations imposed upon an employer.
set out under Article 284, taints their actuations with bad
faith, especially since they claimed that they have been To rule otherwise would lead to the anomaly of respondents
experiencing losses in the three years before 1997. To say being terminated from employment in 1997 as a matter of
the least, if it were true that the lay-off was temporary but fact, but without legal redress. This runs counter to notions of
then serious business losses prevented the reinstatement of fair play, substantial justice and the constitutional mandate
respondents, then petitioners should have complied with the that labor rights should be respected. If doubts exist between
requirements of written notice. The requirement of law the evidence presented by the employer and the employee,
mandating the giving of notices was intended not only to the scales of justice must be tilted in favor of the latter the
enable the employees to look for another employment and employer must affirmatively show rationally adequate
therefore ease the impact of the loss of their jobs and the evidence that the dismissal was for a justifiable cause. 70 It is
corresponding income, but more importantly, to give the a time-honored rule that in controversies between a laborer
Department of Labor and Employment (DOLE) the and his master, doubts reasonably arising from the evidence,
opportunity to ascertain the verity of the alleged authorized or in the interpretation of agreements and writing should be
cause of termination.64 resolved in the former's favor. 71 The policy is to extend the
doctrine to a greater number of employees who can avail of
And even assuming that the closure was due to a reason the benefits under the law, which is in consonance with the
beyond the control of the employer, it still has to accord its avowed policy of the State to give maximum aid and
employees some relief in the form of severance pay. 65 protection of labor.72
We therefore reinstate the Labor Arbiter's decision with the claims. One who pleads payment has the burden of proving
following modifications: it, and even where the employees must allege nonpayment,
the general rule is that the burden rests on the defendant to
(a) Separation pay for the illegal dismissal of respondents prove nonpayment, rather than on the plaintiff to prove non
Loveres, Macandog and Llarena; (Santos Broola cannot be payment.75 This petitioners failed to do.
granted separation pay as he made no such claim);
We also agree with the Labor Arbiter and the CA that the
(b) Retirement pay for respondents Guades, Nicerio, and documents petitioners submitted, i.e., affidavits executed by
Alamares, who at the time of dismissal were entitled to their some of respondents during an ocular inspection conducted
retirement benefits pursuant to Article 287 of the Labor Code by an inspector of the DOLE; notices of inspection result and
as amended;73 and Facility Evaluation Orders issued by DOLE, are not sufficient
(c) Damages for respondents Loveres, Macandog, Llarena, to prove payment.76 Despite repeated orders from the Labor
Guades, Nicerio, Atractivo, and Broola. Arbiter,77 petitioners failed to submit the pertinent employee
files, payrolls, records, remittances and other similar
3. Money claims documents which would show that respondents rendered
work entitling them to payment for overtime work, night shift
The CA held that contrary to the NLRC's ruling, petitioners differential, premium pay for work on holidays and rest day,
had not discharged the burden of proving that the monetary and payment of these as well as the COLA and the SILP
claims of the respondents have been paid. 74 The CA thus documents which are not in respondents' possession but in
reinstated the Labor Arbiter's grant of respondents' monetary the custody and absolute control of petitioners. 78 By choosing
claims, including damages. not to fully and completely disclose information and present
the necessary documents to prove payment of labor standard
Petitioners assail this ruling by repeating their long and
benefits due to respondents, petitioners failed to discharge
convoluted argument that as there was no illegal dismissal,
the burden of proof. 79 Indeed, petitioners' failure to submit
then respondents are not entitled to their monetary claims or
the necessary documents which as employers are in their
separation pay and damages. Petitioners' arguments are not
possession, inspite of orders to do so, gives rise to the
only tiring, repetitive and unconvincing, but confusing and
presumption that their presentation is prejudicial to its
confused entitlement to labor standard benefits is a
cause.80 As aptly quoted by the CA:
separate and distinct concept from payment of separation
pay arising from illegal dismissal, and are governed by [W]hen the evidence tends to prove a material fact which
different provisions of the Labor Code. imposes a liability on a party, and he has it in his power to
produce evidence which from its very nature must overthrow
We agree with the CA and the Labor Arbiter. Respondents
the case made against him if it is not founded on fact, and he
have set out with particularity in their complaint, position
refuses to produce such evidence, the presumption arises
paper, affidavits and other documents the labor standard
that the evidence, if produced, would operate to his
benefits they are entitled to, and which they alleged that
prejudice, and support the case of his adversary. 81
petitioners have failed to pay them. It was therefore
petitioners' burden to prove that they have paid these money
Petitioners next claim that the cost of the food and snacks were not what were provided for in the Orders and that it was
provided to respondents as facilities should have been only when they filed these cases that they came to know
included in reckoning the payment of respondents' wages. about said Facility Evaluation Orders (pp. 100; 379[,] vol.
They state that although on the surface respondents II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa
appeared to receive minimal wages, petitioners had granted herself, who applied for evaluation of the facility (food) given
respondents other benefits which are considered part and to [respondents], testified that she did not inform
parcel of their wages and are allowed under existing [respondents] concerning said Facility Evaluation Orders (p.
laws.82 They claim that these benefits make up for whatever 34, tsn[,] August 13, 1998).
inadequacies there may be in compensation. 83 Specifically,
they invoked Sections 5 and 6, Rule VII-A, which allow the Even granting that meals and snacks were provided and
deduction of facilities provided by the employer through an indeed constituted facilities, such facilities could not be
appropriate Facility Evaluation Order issued by the Regional deducted without compliance with certain legal
87
Director of the DOLE.84 Petitioners also aver that they give requirements. As stated in Mabeza v. NLRC, the employer
five (5) percent of the gross income each month as simply cannot deduct the value from the employee's wages
incentives. As proof of compliance of payment of minimum without satisfying the following: (a) proof that such facilities
wages, petitioners submitted the Notice of Inspection Results are customarily furnished by the trade; (b) the provision of
issued in 1995 and 1997 by the DOLE Regional Office. 85 deductible facilities is voluntarily accepted in writing by the
employee; and (c) the facilities are charged at fair and
The cost of meals and snacks purportedly provided to reasonable value. The records are clear that petitioners failed
respondents cannot be deducted as part of respondents' to comply with these requirements. There was no proof of
minimum wage. As stated in the Labor Arbiter's decision: 86 respondents' written authorization. Indeed, the Labor Arbiter
found that while the respondents admitted that they were
While [petitioners] submitted Facility Evaluation Orders (pp. given meals and merienda, the quality of food served to
468, 469; vol. II, rollo) issued by the DOLE Regional Office them was not what was provided for in the Facility Evaluation
whereby the cost of meals given by [petitioners] to Orders and it was only when they filed the cases that they
[respondents] were specified for purposes of considering the came to know of this supposed Facility Evaluation
same as part of their wages, We cannot consider the cost of Orders.88 Petitioner Josefa Po Lam herself admitted that she
meals in the Orders as applicable to [respondents]. did not inform the respondents of the facilities she had
[Respondents] were not interviewed by the DOLE as to the applied for.89
quality and quantity of food appearing in the applications of
[petitioners] for facility evaluation prior to its approval to Considering the failure to comply with the above-mentioned
determine whether or not [respondents] were indeed given legal requirements, the Labor Arbiter therefore erred when he
such kind and quantity of food. Also, there was no evidence ruled that the cost of the meals actually provided to
that the quality and quantity of food in the Orders were respondents should be deducted as part of their salaries, on
voluntarily accepted by [respondents]. On the contrary; while the ground that respondents have availed themselves of the
some [of the respondents] admitted that they were given food given by petitioners.90 The law is clear that mere
meals and merienda, the quality of food serve[d] to them
availment is not sufficient to allow deductions from prior to their employment. Further, how can the amounts
employees' wages. receive[d] by [respondents] be considered as profit share
when the same [are] based on the gross receipt of the
More important, we note the uncontroverted testimony of hotel[?] No profit can as yet be determined out of the gross
respondents on record that they were required to eat in the receipt of an enterprise. Profits are realized after expenses
hotel and restaurant so that they will not go home and there are deducted from the gross income.
is no interruption in the services of Mayon Hotel &
Restaurant. As ruled in Mabeza, food or snacks or other On the issue of the proper minimum wage applicable to
convenience provided by the employers are deemed as respondents, we sustain the Labor Arbiter. We note that
supplements if they are granted for the convenience of the petitioners themselves have admitted that the establishment
employer. The criterion in making a distinction between a employs "more or less sixteen (16) employees,"93therefore
supplement and a facility does not so much lie in the kind they are estopped from claiming that the applicable
(food, lodging) but the purpose. 91 Considering, therefore, that minimum wage should be for service establishments
hotel workers are required to work different shifts and are employing 15 employees or less.
expected to be available at various odd hours, their ready
availability is a necessary matter in the operations of a small As for petitioners repeated invocation of serious business
hotel, such as petitioners' business. 92 The deduction of the losses, suffice to say that this is not a defense to payment of
cost of meals from respondents' wages, therefore, should be labor standard benefits. The employer cannot exempt himself
removed. from liability to pay minimum wages because of poor
financial condition of the company. The payment of minimum
We also do not agree with petitioners that the five (5) percent wages is not dependent on the employer's ability to pay. 94
of the gross income of the establishment can be considered
as part of the respondents' wages. We quote with approval Thus, we reinstate the award of monetary claims granted by
the Labor Arbiter on this matter, to wit: the Labor Arbiter.
Nevertheless, we cannot agree with the Labor Arbiter in (3) Removing the deductions for food facility from the
granting exemplary damages of P10,000.00 each to all amounts due to all respondents;
respondents. While it is true that other forms of damages
under the Civil Code may be awarded to illegally dismissed (4) Awarding moral damages of P20,000.00 each for
employees,97 any award of moral damages by the Labor respondents Loveres, Macandog, Llarena, Guades, Nicerio,
Arbiter cannot be based on the Labor Code but should be Atractivo, and Broola;
grounded on the Civil Code.98 And the law is clear that (5) Deleting the award of exemplary damages of P10,000.00
exemplary damages can only be awarded if plaintiff shows from all respondents except Loveres, Macandog, Llarena,
proof that he is entitled to moral, temperate or compensatory Guades, Nicerio, Atractivo, and Broola; and
damages.99
(6) Granting attorney's fees of P10,000.00 each to all
As only respondents Loveres, Guades, Macandog, Llarena, respondents.
Nicerio, Atractivo and Broola specifically claimed damages
from petitioners, then only they are entitled to exemplary The case is REMANDED to the Labor Arbiter for the
damages.sjgs1 RECOMPUTATION of the total monetary benefits awarded and
due to the employees concerned in accordance with the
Finally, we rule that attorney's fees in the amount decision. The Labor Arbiter is ORDERED to submit his
to P10,000.00 should be granted to each respondent. It is compliance thereon within thirty (30) days from notice of this
settled that in actions for recovery of wages or where an decision, with copies furnished to the parties.
employee was forced to litigate and incur expenses to
protect his rights and interest, he is entitled to an award of SO ORDERED.
attorney's fees.100 This case undoubtedly falls within this rule.
RESOLUTION
FELICIANO, J.:
On 26 December 1984, Wage Order No. 6 was issued, This agreement was subsequently ratified on 30 July 1985 in
increasing the statutory minimum wage rate (by P2.00) and a document entitled "Sama-samang Kapasyahan sa
the mandatory cost of living allowance (by P3.00 for non- Pagpapatibay ng Return-to-Work Agreement" 4 by some two
agricultural workers) in the private sector, to take effect on 1 hundred and sixty-eight (268) members of respondent union,
November 1984, Petitioner General Rubber and Footwear each member signing individually the instrument of
Corporation applied to the National Wages Council ("Council") ratification.
for exemption from the provisions of Wage Order No. 6. The
Council, in an Order dated 4 March 1985, denied petitioner's Before the ratification of the Agreement, petitioner filed, on 5
application, stating in part that: June 1985, a Motion with the Council withdrawing its pending
Motion for Reconsideration of the Council's Order of 4 March
[Y]ou are hereby ordered to pay your covered employees the 1985. By a letter dated 13 June 1985, the Council allowed the
daily increase in statutory minimum wage rate of P 2.00 and withdrawal of petitioner's Motion for Reconsideration, which
living allowance of P3.00 effective November 1, 1984. ... letter in part stated:
1
This decision is final. (Emphasis supplied) In view of your compliance with Wage Order No. 6 effective
May 30, 1985 pursuant to the Return to Work Agreement ... ,
Petitioner filed a Motion for Reconsideration of this Order on this Council interposes no objection to your Motion to
27 May 1985. Withdraw ... 5 (Emphasis supplied)
On 25 May 1985, some members of respondent General Meanwhile, there were some one hundred (100) members of
Rubber Workers' Union-NATU, led by one Leopoldo Sto. the union who were unhappy over the Agreement, who took
Domingo, declared a strike against petitioner. 2 Three (3) the view that the Council's Order of 4 March 1985 bad
days later, on 28 May 1985, petitioner and Sto. Domingo, the become final and executory upon the withdrawal of
latter purporting to represent the striking workers, entered petitioner's Motion for Reconsideration and who would not
into a Return-to-Work Agreement ("Agreement"), Article 4 of sign the instrument ratifying the Agreement. On 10 July
which provided: 1985, these minority union members with respondent union
4. The COMPANY agrees to implement in full Wage Order No. acting on their behalf, applied for a writ of execution of the
6 effective May 30, 1985, and agrees to withdraw the Motion Council's Order. 6
for Reconsideration which it filed with the National Wages Petitioner opposed the Motion for a writ of execution,
Council in connection with the Application for Exemption. In contending that the Council's approval of its deferred
consideration, the UNION, its officers and members, agrees compliance with the implementation of the Wage
not to demand or ask from the COMPANY the corresponding Order, 7 together with the majority ratification of the
differential pay from November 1, 1984 to May 29 Agreement by the individual workers, 8 bound the non-
ratifying union members represented by respondent union.
Respondent union countered that the Agreement despite Accordingly, the benefits under Wage Order No. 6 due them
the majority ratification was not binding on the union by virtue of the final and executory Order of the National
members who had not consented thereto, upon the ground Wages Council dated March 4, 1985 subsists in their favor
that ratification or non-ratification of the Agreement, and can be subject for execution.
involving as it did money claims, was a personal right under
the doctrine of "Kaisahan ng Manggagawa sa La Campana v. xxx xxx xxx
Honorable Judge Ulpiano Sarmiento and La Campana." 9 The writ of execution dated September 20, 1985 ... was
Finding for the Union members represented by respondent clearly based on the final Order of the National Wages
union, the then Ministry (now Department) of Labor and Council sought to be enforced in a Motion for Execution filed
Employment, in an order dated 20 September 1985 issued by by the union. While the Return-to-Work Agreement was
National Capital Region Director Severo M. Pucan, directed mentioned in the writ, the respondent allegedly failing 'to
the issuance of a writ of execution and required petitioner to comply with the above-stated Agreement which had become
pay the minority members of respondent union their claims final and executory,' we find the Agreement indeed not the
for differential pay under Wage Order No. 6, which totalled basis for the issuance of the writ.
P90,090.00. 10 WHEREFORE, the Order of the Director dated January 15,
Petitioner then moved to quash the writ of execution upon 1986 is hereby set aside. Let a writ of execution be issued
the ground that the Council's order could not be the subject immediately to enforce the payment of the differential pay
of a writ of execution, having been superseded by the under Wage Order No. 6 from November 1, 1984 to May 29,
Agreement. 11 In another Order dated 15 January 1986. 1985 of the 100 workers who did not sign any waiver, in
Director Pucan, reversed his previous order and sustained compliance with the final Order of the National Wages
petitioner's contention that the minority union members Council. The entire record is hereby remanded to the
represented by respondent union were bound by the majority Regional Director, National Capital Region for this purpose.
ratification, holding that the Council's 20 September 1985 SO ORDERED . 13
(Emphasis supplied)
Order sought to be enforced by writ of execution should not
have been issued. 12 Not pleased with the adverse decision of the Minister,
petitioner filed the instant Petition for Certiorari.
Respondent union filed a Motion for Reconsideration, which
was treated as an appeal to the Minister of Labor. In a Petitioner argues once again that the National Wages
decision dated 19 December 1986, the Minister of Labor set Council's Order of 4 March 1985 did not become final and
aside the appealed Order of Director Pucan. The Minister's executory because it had been superseded by the Return-to-
decision held that: Work Agreement signed by petitioner corporation and the
union. At the same time, petitioner also argues that the
It is undisputed that the 100 numbers did not sign and ratify Return-to-Work Agreement could not be enforced by a writ of
the Return-to-Work Agreement and therefore they cannot be execution, because it was a contractual document and not
bound by the waiver of benefits therein. This, in essence, is the final and executory award of a public official or agency.
the ruling of the High Tribunal in the La Campana case.
Petitioner's contention is more clever than substantial. The authority to compromise cannot lightly be presumed and
core issue is whether or not Article 4 of the Return-to-Work should be duly established by evidence. (Esso Philippine, Inc.
Agreement quoted above, could be deemed as binding upon v. MME, 75 SCRA 91).
all members of the union, without regard to whether such
members had or had not in fact individually signed and As aptly held by the Secretary of Labor, the records are
ratified such Agreement. Article 4 of that Agreement bereft of showing that the individual members consented to
provided for, apparently, a quid pro quo arrangement: the said agreement. Now were the members informed of the
petitioner agreed to implement in full Wage Order No. filing of the civil case before the Court of First Instance. If the
6 starting 30 May 1985 (and not 1 November 1984, as parties to said agreement acted in good faith, why did they
provided by the terms of Wage Order No. 6) and to withdraw not furnish the Office of the president with a copy of the
its previously filed Motion for Reconsideration with the agreement when they knew all the while that the labor case
National Wages Council; in turn, the union and its members was then pending appeal therein? Undoubtedly, the
would refrain from requiring the company to pay the compromise agreement was executed to the prejudice of the
differential pay (increase in pay) due under Wage Order No. 6 complainants who never consented thereto, hence, it is null
corresponding to the preceding seven-month period from 1 and void. The judgment based on such agreement does not
November 1984 to 29 May 1985. bind the individual members or complainants who are not
parties thereto nor signatories therein.
Thus, Kaisahan ng Mangagawa sa La Campana v. Sarmiento,
(supra) is practically on all fours with the instant case. In La Money claims due to laborers cannot be the object of
Campana, what was at stake was the validity of a settlement or compromise effected by a union or counsel
compromise agreement entered into between the union and without the specific individual consent of each laborer
the company. In that compromise agreement, the union concerned. The beneficiaries are the individual complainants
undertook to dismiss and withdraw the case it had filed with themselves. The union to which they belong can only assist
the then Court of Industrial Relations, and waived its right to them but cannot decide for them.Awards in favor of laborers
execute any final judgment rendered in that case. The CIR after long years of litigation must be attended to with mutual
had in that case, rendered a judgment directing openness and in the best of faith. (Danao Development Corp.
reinstatement of dismissed workers and payment of ten (10) v. NLRC, 81 SCRA 487-505). Only thus can we really give
years backwages. The Secretary of Labor held that that meaning to the constitutional mandate of giving laborers
compromise agreement was void for lack of ratification by maximum protection and security. It is about time that the
the individual members of the union. The Supreme Court judgment in Case No. 584-V(7) be fully implemented
upheld the decision of the Secretary of Labor, stating among considering the unreasonable delay in the satisfaction
other things that: thereof. This unfortunate incident may only weaken the
workingmen's faith in the judiciary's capacity to give them
Generally, a judgment on a compromise agreement puts an justice when due. 14
end to a litigation and is immediately executory. However,
the Rules [of Court] require a special authority before an xxx xxx xxx
attorney can compromise the litigation of [his] clients. The (Emphasis supplied)
In the instant case, there is no dispute that private requiring petitioner to comply with Wage Order No. 6 from 1
respondents had not ratified the Return-to-Work Agreement. November 1984 onward must be regarded as having become
It follows, and we so hold, that private respondents cannot be final and executory insofar as the non-consenting union
held bound by the Return-to-Work Agreement. The waiver of members were concerned. Enforcement by writ of execution
money claims, which in this case were accrued money of that Order was, therefore, proper. It follows further that the
claims, by workers and employees must be regarded as a decision of 19 December 1986 of the respondent Minister of
personal right, that is, a right that must be personally Labor, far from constituting a grave abuse of discretion or an
exercised. For a waiver thereof to be legally effective, the act without or in excess of jurisdiction, was fully in
individual consent or ratification of the workers or employees accordance with law as laid down in La Campana and here
involved must be shown. Neither the officers nor the majority reiterated.
of the union had any authority to waive the accrued rights
pertaining to the dissenting minority members, even under a WHEREFORE, the Court Resolved to DISMISS the Petition
collective bargaining agreement which provided for a "union for certiorari for lack of merit. Costs against petitioner.
shop." The same considerations of public policy which
impelled the Court to reach the conclusion it did in La
Campana, are equally compelling in the present case. The
members of the union need the protective shield of this
doctrine not only vis-a-vis their employer but also, at
times, vis-a-vis the management of their own union, and at
other times even against their own imprudence or
impecuniousness.
Under the NLRC Rules of Procedure, summons on the Engineer Estacio's appearance before the labor arbiters and
respondent shall be served personally or by registered mail his promise to settle the claims of private respondents is
on the party himself. If the party is represented by counsel or another matter.
any other authorized representative or agent, summons shall
be served on such person. The general rule is that only lawyers are allowed to appear
before the labor arbiter and respondent Commission in cases
It has been established that petitioner is a private domestic before them. The Labor Code and the New Rules of Procedure
corporation with principal address in Quezon City. The of the NLRC, nonetheless, lists three (3) exceptions to the
complaints against petitioner were filed in Iligan City and rule, viz:
summonses therefor served on Engineer Estacio in Iligan City.
The question now is whether Engineer Estacio was an agent Sec. 6. Appearances. . . . .
and authorized representative of petitioner. A non-lawyer may appear before the Commission or any
To determine the scope or meaning of the term "authorized Labor Arbiter only if:
representative" or "agent" of parties on whom summons may (a) he represents himself as party to the case;
be served, the provisions of the Revised Rules of Court may
be resorted to. 6 (b) he represents the organization or its members, provided
that he shall be made to present written proof that he is
Under the Revised Rules of Court, 7 service upon a private properly authorized; or
domestic corporation or partnership must be made upon its
officers, such as the president, manager, secretary, cashier, (c) he is a duly-accredited member of any legal aid office
agent, or any of its directors. These persons are deemed so duly recognized by the Department of Justice or the
integrated with the corporation that they know their Integrated Bar of the Philippines in cases referred thereto by
responsibilities and immediately discern what to do with any the latter. . . . 10
legal papers served on them. 8
A non-lawyer may appear before the labor arbiters and the
In the case at bar, Engineer Estacio, assisted by Engineer NLRC only if: (a) he represents himself as a party to the case;
Dulatre, managed and supervised the construction (b) he represents an organization or its members, with
project. 9 According to the Solicitor General and private written authorization from them: or (c) he is a duly-accredited
respondents, Engineer Estacio attended to the project in member of any legal aid office duly recognized by the
Iligan City and supervised the work of the employees thereat. Department of Justice or the Integrated Bar of the Philippines
As manager, he had sufficient responsibility and discretion to in cases referred to by the latter. 11
realize the importance of the legal papers served on him and
to relay the same to the president or other responsible officer Engineers Estacio and Dulatre were not lawyers. Neither were
they duly-accredited members of a legal aid office. Their
appearance before the labor arbiters in their capacity as special power of attorney or express consent, enter into a
parties to the cases was authorized under the first exception compromise agreement with the opposing party in full or
to the rule. However, their appearance on behalf of petitioner partial discharge of a client's claim.
required written proof of authorization. It was incumbent
upon the arbiters to ascertain this authority especially since The promise to pay allegedly made by Engineer Estacio was
both engineers were named co-respondents in the cases made at the preliminary conference and constituted an offer
before the arbiters. Absent this authority, whatever to settle the case amicably. The promise to pay could not be
statements and declarations Engineer Estacio made before presumed to be a single unilateral act, contrary to the claim
the arbiters could not bind petitioner. of the Solicitor General. 14 A defendant's promise to pay and
settle the plaintiff's claims ordinarily requires a reciprocal
The appearance of Atty. Arthur Abundiente in the cases obligation from the plaintiff to withdraw the complaint and
appealed to respondent Commission did not cure Engineer discharge the defendant from liability. 15 In effect, the offer to
Estacio's representation. Atty. Abundiente, in the first place, pay was an offer to compromise the cases.
had no authority to appear before the respondent
Commission. The appellants' brief he filed was verified by In civil cases, an offer to compromise is not an admission of
him, not by petitioner. 12 Moreover, respondent Commission any liability, and is not admissible in evidence against the
did not delve into the merits of Atty. Abundiente's appeal and offeror. 16 If this rule were otherwise, no attempt to settle
determine whether Engineer Estacio was duly authorized to litigation could safely be made. 17 Settlement of disputes by
make such promise. It dismissed the appeal on the ground way of compromise is an accepted and desirable practice in
that notices were served on petitioner and that the latter was courts of law and administrative tribunals.18 In fact, the Labor
estopped from denying its promise to pay. Code mandates the labor arbiter to exert all efforts to enable
the parties to arrive at an amicable settlement of the dispute
Nevertheless, even assuming that Engineer Estacio and Atty. within his jurisdiction on or before the first hearing. 19
Abundiente were authorized to appear as representatives of
petitioner, they could bind the latter only in procedural Clearly, respondent Commission gravely abused its discretion
matters before the arbiters and respondent Commission. in affirming the decisions of the labor arbiters which were not
Petitioner's liability arose from Engineer Estacio's alleged only based on unauthorized representations, but were also
promise to pay. A promise to pay amounts to an offer to made in violation of petitioner's right to due process.
compromise and requires a special power of attorney or the Section 3 of Rule V of the NLRC Rules of Procedure provides:
express consent of petitioner. The authority to compromise
cannot be lightly presumed and should be duly established Sec. 3. Submission of Position Papers/Memorandum.
by evidence.13 This is explicit from Section 7 of Rule III of the Should the parties fail to agree upon an amicable settlement,
NLRC Rules of Procedure, viz: in whole or in part, during the conferences, the Labor Arbiter
shall issue an order stating therein the matters taken up and
Sec. 7. Authority to bind party. Attorneys and other agreed upon during the conferences and directing the parties
representatives of parties shall have authority to bind their to simultaneously file their respective verified position papers
clients in all matters of procedure; but they cannot, without a
xxx xxx xxx Division, is annulled and set aside and the case is remanded
to the Regional Arbitration Branch, Iligan City for further
After petitioner's alleged representative failed to pay the proceedings.
workers' claims as promised, Labor Arbiters Siao and
Palangan did not order the parties to file their respective SO ORDERED.
position papers. The arbiters forthwith rendered a decision on
the merits without at least requiring private respondents to
substantiate their complaints. The parties may have earlier
waived their right to file position papers but petitioner's
waiver was made by Engineer Estacio on the premise that
petitioner shall have paid and settled the claims of private
respondents at the scheduled conference. Since petitioner
reneged on its "promise," there was a failure to settle the
case amicably. This should have prompted the arbiters to
order the parties to file their position papers.
Indeed, the labor arbiters and the NLRC must not, at the
expense of due process, be the first to arbitrarily disregard
G.R. No. 116568. September 3, 1999]
specific provisions of the Rules which are precisely intended
to assist the parties in obtaining the just, expeditious and DELFIN GARCIA, doing business under the name
inexpensive settlement of labor disputes. 22 NAPCO-LUZMART, Inc., petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and CARLITO
IN VIEW WHEREOF, the petition for certiorari is granted. The
LACSON, respondents.
decision of the National Labor Relations Commission, Fifth
DECISION memorandum order. Complainant filed a complaint for illegal
dismissal and other monetary claims but the same was
GONZAGA-REYES, J.: dismissed without prejudice. On September 1, 1993, the
Before us is a Petition for Certiorari under Rule 65 of the complainant refiled this case.[2]
Rules of Court to annul and set aside the decision of the The Labor Arbiter[3] ruled in favor of the respondent Carlito
National Labor Relations Commission[1] in NLRC CA No. L- Lacson (LACSON). Petitioner NAPCO-Luzmart (LUZMART)
001268 dated April 12, 1994 which affirmed the decision of appealed to the NLRC which affirmed the decision of the
the Sub-Regional Arbitration Branch No. I in Dagupan City Labor Arbiter after finding that the Labor Arbiter did not
finding that the private respondent Carlito Lacson was commit any reversible error. The NLRC however deleted the
constructively dismissed by the petitioner Delfin Garcia doing award of attorneys fees in favor of LACSON. Its decision,
business under the name NAPCO-LUZMART, Inc. and which adopted the conclusions of the Labor Arbiter, reads:
awarding respondent backwages and separation pay.
In finding for the complainant, the Labor Arbiter ruled:
The following facts as adopted by the National Labor
Relations Commission (NLRC) are uncontroverted: The issues to be resolved in this case are: (1) whether or
not the complainant was dismissed from his employment; (2)
Complainant Carlito Lacson was employed on March 5, 1987 whether or not he is entitled to his claim for overtime
as boiler operator technician by Northwest Agro-Marine services, separation pay, 13th month pay, premium pay for
Products Corporation (NAPCO). On December 12, 1990 working on holidays and rest days, separation pay,
respondent Luzmart, Inc., acquired NAPCO in a foreclosure 13th month pay and service incentive leave pay; and, (3)
sale. Both companies were managed by respondent Delfin whether or not the complainant is considered an employee of
Garcia. the respondents since March 1987.
On January 28, 1993, there was a mauling incident which The first issue: Respondent Delfin Garcia insists that he did
involved the complainant and Julius Z. Viray, his immediate not dismiss the complainant and that he can return to his
supervisor and allegedly a friend and compadre of work after his one month suspension, (affidavit of respondent
respondent Garcia. As complainant suffered injuries as a Garcia, marked as Annex H of his position paper). On the
result thereof he reported the matter to police authorities other hand, complainant Lacson maintains that he reported
and he sought treatment at the Teofilo Sison Memorial for work several times but respondent Garcia refused to take
Provincial Hospital. Both the complainant and Viray were him back and that the former told him to look for another job.
asked to explain their sides. After the submission of the
written explanations, Delfin Garcia suspended both of them Let us scrutinize the evidence. The incident involving the
from work for a period of one month effective April 15, complainant and Julius Viray, also an employee of the
1993. In the same suspension order, complainant was respondents, wherein Viray allegedly mauled the
further directed to explain in writing why he should not be complainant, happened on January 28, 1993. On February
dealt with disciplinary action or terminated for his continued 1993, the complainant submitted his handwritten explanation
absences from February 15, 1993 up to the date of the blaming Viray as the aggressor. According to the
complainant, Viray was drunk at the time of the incident and he was paid accordingly. Is he entitled to his claim for
although he avoided Viray, the latter armed with a lead pipe, 13th monthpay, service incentive leave pay, vacation in sick
followed him and wanted to kill him (Annex C leave pay and separation pay? Respondents maintain that
complainant). Viray also submitted his handwritten since the complainant was employed by them only on
explanation on February 2, 1993 (see Annex E-1 of February 1, 1991, he has no right to claim benefits that arose
respondents position paper). Viray only stated that a before his employment with them. That since he was not
heated argument transpired. On March 31, 1993, dismissed from his employment, he is not also entitled to his
respondent Garcia issued a Memorandum suspending both claim for separation pay. (The resolution of this issue will
the complainant and Viray for one (1) month effective April also resolve the second issue)
15, 1993 and at the same time required the complainant to
explain why he should not be terminated for being absent Respondents argue that the services of the complainant with
from Feb. 15, 1993, (Annex F, respondents). The question NAPCO since March 1987, cannot be credited or counted to
is, why did it take respondent Delfin Garcia one (1) month or his length of service with LUZMART because his subsequent
more to decide and issue an order suspending the employment with LUZMART is a new employment as shown in
complainant and Viray? Why did he not suspend the two his employment contract (Annex D respondents) with
immediately after the incident? This leads credence to the LUZMART.
complainants allegation that he reported for work after In the case of MDII Supervisors and Confidential Employees
submitting his explanation but respondent Garcia refused to Association (FFW) vs. Presidential Assistant on Legal Affairs,
admit him back and told him to take a vacation or to look for 79 SCRA 40 (1977), the Supreme Court ruled that:
another work, hence he decided to file a complaint against
him on Feb. 4, 1993, which was later dismissed without xxx And there is no law which requires the purchaser to
prejudice, the reason for the dismissal of which was not absorb the employees of the selling corporation.
explained to us by the complainant. Moreover, it is true that
the complainant failed to report for work since Feb. 15, 1993, As there is no such law, the most that the purchasing
why did respondent Garcia not issue an order or company may do, for purposes of public policy and social
memorandum after the complainant failed to report for a justice, is to give preference to the qualified separated
number of days and directing the complainant to report employees of the selling company, who in their judgment are
immediately otherwise his employment will be necessary in the continued operation of the business
terminated? We also agree with the complainants argument establishment. This RCAM did. It required private
that the respondents should not have asked him to explain respondents to reapply as new employees as a condition for
his alleged failure to report for work since Feb. 15, 1993, rehiring subject to the usual probationary status, the latters
because he has already filed a complaint against Garcia past services with the petitioners, transferors not recognized
earlier. (San Felipe Neri School of Mandaluyong, Inc., et. Al. Vs. NLRC,
Roman Catholic Archbishop of Manila (RCAM), et. al., G.R. No.
The second issue; Annexes G, G-1 to G-14 of the 78350, Sept. 11, 1991.).
respondents, which are samples of respondents payroll, show
that whenever the complainant rendered overtime services,
Except for his bare allegation that LUZMART was only LUZMARTs motion for reconsideration [5] was denied hence,
organized by the controlling stockholders of NAPCO to this petition wherein LUZMART claims that the NLRC
acquire or gain control of the latter, the complainant did not committed grave abuse of discretion in holding that LACSON
present sufficient evidence to prove his allegation, LUZMART was illegally dismissed.
is an entirely new corporation or entity with a distinct
personality from NAPCO, and is not an alter ego of In support of its petition, LUZMART claims that LACSON was
NAPCO. Therefore, LUZMART is not under obligation to not dismissed but was merely suspended as shown by the
absorb the workers of NAPCO or to absorb the length of March 31, 1993 memorandum.[6] His suspension was a
service earned by its employees. consequence of the imposition of disciplinary measures on
him as fighting within the company premises constitutes
The respondents are therefore correct in their assertion that serious misconduct and disorderly behavior. The fact that
they should not be answerable for the complainants claim LUZMART did not immediately suspend him after the fighting
for benefits that may be due him before January 1, 1991. incident does not establish that he was dismissed from his
employment as there is no law which requires an employer to
As we have discussed earlier, the complainant herein was immediately rule on any infraction under investigation after
constructively dismissed from his employment by respondent the filing of the explanation of the person under
Delfin Garcia because of the latters refusal to admit him investigation. Neither is LACSON entitled to backwages nor
back to work inspite of the complainants insistence to separation pay as these are only granted to employees who
resume his work after he has given his explanation. have been illegally dismissed from work and not to
On appeal, respondent contends that the Labor Arbiter erred employees like LACSON who abandoned his employment as
in awarding backwages to the complainant from February 1, he failed to report to work from February 15, 1993 to March
1993 up to the date of the promulgation of the decision, and 31, 1993.[7]
in awarding separation pay of one month pay for every year We resolve to affirm the judgment of the NLRC.
of service.
LUZMARTs claim that LACSON was merely suspended and
We are in full accord with the Labor Arbiters conclusion that was still employed by LUZMART does not convince us that
the complainant was constructively dismissed by the LACSON was not dismissed from his employment. Said claim
respondent Delfin Garcia when he refused to admit the was a mere afterthought to preempt or thwart the impending
complainant despite his insistence to go back to work. illegal dismissal case filed by LACSON against LUZMART. As
However, we delete the award of attorneys fees as this is not found by the labor arbiter, LACSONs failure to report to work
a case of unlawful withholding of wages. was due to LUZMARTs refusal to admit him back. In fact,
LUZMART told him to go on vacation or to look for other work.
[8]
WHEREFORE, premises considered, the appealed decision is
modified by deleting the award of attorneys fees. In all
other respect, the same is affirmed. LACSONs dismissal is clearly established by the following
chronology of events: The mauling incident occurred on
SO ORDERED.[4] January 28, 1993. LACSON submitted his written explanation
of the event on February 1, 1993. On February 4, 1993, acts from which an employee may be deduced as having no
LACSON attempted to report for work but LUZMART refused more intention to work.[16] Such intent to discontinue the
to admit him. On February 11, 1993, LACSON filed an action employment must be shown by clear proof that it was
for illegal dismissal with the NLRC. [9] On April 13, 1993, deliberate and unjustified.[17]
LUZMART sent LACSON the memorandum ordering LACSONs
suspension dated on March 31, 1993. By this time, LUZMART LACSONs absence from work was not without a valid
already knew of the pending illegal dismissal case against it reason. It was petitioner who did not allow him to work and
as it was already directed by the NLRC to submit its position in fact told him to go on vacation or to look for other
paper on April 5, 1993. LUZMARTs reliance on the March 31, work. This is tantamount to a constructive dismissal which is
1993 memorandum[10] and the February 1-15, 1993 defined as a quitting because continued employment is
payroll[11] to prove that LACSON was merely suspended is rendered impossible, unreasonable or unlikely; as an offer
therefore unavailing. The March 31, 1993 memorandum is at involving a demotion in rank and diminution in pay [18] Since
most self-serving; a ploy to cover up the dismissal of LACSON LACSON was denied entry into his workplace, it was
since this was issued after LUZMART had knowledge of the impossible for him to return to work. It would be unjust to
illegal dismissal case filed against it by LACSON on February allow herein petitioners to claim as a ground for
11, 1993. Likewise, the veracity of the February 1-15, 1993 abandonment a situation which they themselves had brought
payroll that purportedly shows that LACSON was included in about.[19] Moreover, LACSONs filing of the complaint for
LUZMARTs payroll is of doubtful probative value. First of all, illegal dismissal on February 11, 1993, or seven days after his
it does not contain a certification by Charito Fernandez at its alleged abandonment, negates said charge. It is highly
back page, unlike the other payrolls [12] attached as annexes illogical for an employee to abandon his employment and
to LUZMARTs petition. Secondly, said payroll does not thereafter file a complaint for illegal dismissal. [20]
contain the signatures of the other employees as proof that We also do not agree with LUZMART that LACSON gave just
they received their salaries for the said period. Given these cause for the imposition of disciplinary measures upon
circumstances, both documents appear to have been him. Although fighting within company premises may
prepared in contemplation of the pending illegal dismissal constitute serious misconduct under Article 282 [21] of the
case filed against LUZMART. Labor Code and may be a just cause to terminate ones
The contention that LACSON abandoned his employment is employment[22], every fight within company premises in
also without merit. Mere absence or failure to report for which an employee is involved would not warrant his
work, after notice to return, is not enough to amount to such dismissal. This is especially true when the employee
abandonment.[13] For a valid finding of abandonment, two concerned did not instigate the fight and was in fact the
factors must be present, viz; (1) the failure to report for work victim who was constrained to defend himself. In the present
or absence without valid or justifiable reason; and (2) a clear case, it appears that LACSON was assaulted by Julius Viray
intention to sever the employer-employee relationship, (VIRAY), a co-employee, after they were questioned about
[14]
with the second element as the more determinative factor missing diesel fuel. LACSON attempted to avoid the conflict
being manifested by some overt acts. [15] There must be since VIRAY was intoxicated but VIRAY followed him and after
a concurrence of the intention to abandon and some overt an exchange of words, VIRAY punched him while saying
Papatayin Kita (I will kill you). After being punched a An illegally dismissed employee is entitled to 1) either
second time, LACSON punched back. He thereafter ran reinstatement or separation pay if reinstatement is no longer
towards the dressing plant after his companion, a certain viable, and 2) backwages.[25] In the present case, LACSON is
DANNY, told him to run. VIRAY was persistent and followed entitled to be reinstated, as there is no evidence to show that
LACSON and continued delivering punches at him. LACSON reinstatement is no longer possible considering LUZMARTs
ran away for a second time but VIRAY still pursued him and position in this appeal is that LACSON was never dismissed
even armed himself with a lead pipe. LACSON sustained but merely suspended. He is also entitled to backwages
wounds on his head and forehead due to VIRAYs use of the computed from the time of illegal dismissal, in this case on
lead pipe. The Medico-Legal Certificate[23] issued by the Gov. February 4, 1993[26] (not February 1, 1993 as found by the
Teofilo Sison Memorial Hospital corroborates LACSONs NLRC) up to the time of actual reinstatement, without
injuries. Given the above circumstances, it is not difficult to qualification or deduction[27]
understand why LACSON had to defend himself.
WHEREFORE, the assailed decision of the NLRC is
Even assuming that there was just cause to dismiss LACSON, AFFIRMED and the instant petition is hereby DISMISSED with
strict compliance by the employer with the demands of both the MODIFICATION that LUZMART reinstate LACSON to his
procedural and substantive due process is a condition sine former position and pay him backwages computed from the
qua non for the termination to be declared valid. The law date of illegal dismissal on February 4, 1993 up to the time of
requires that the employer must furnish the worker sought to actual reinstatement.
be dismissed with two written notices before termination of
employment can be legally effected: No pronouncement as to costs.
CRUZ, J.:p
In the case at bar, the petitioners claim that they were forced
to sign their respective releases in favor of their employer,
the herein private respondent, by reason of their dire
necessity. The latter, for its part, insists that the petitioner
entered into the compromise agreement freely and with open
eyes and should not now be permitted to reject their solemn
commitments.
Accordingly, the officers of the union, to wit: 1. The following officers of the Union Norma Jocson-President
Narciso Sinag-Vice President; Gloria Gavis-Treasurer;
xxx xxx xxx
Luzviminda Guspid-Secretary; and Apolinario Sta. Ana-PRO 3. The Company shall also pay to the members of the Union
are hereby declared to have lost their employment; mentioned in item No. 3 of the Decision, namely those who
should be allowed to work, financial assistance in the amount
2. The Union Board Members and Shop Stewards may be of Two Thousand (P2,000.00) Pesos.
dismissed by respondent-appellee subject to the payment of
separation pay equivalent to one-half month for every year of xxx xxx xxx
service; and
Out of a total of 114 affected employees, 90 of them availed
3. The mere union members are directed to report for work of the benefits provided for under the Compromise
within ten (10) days from receipt of this Decision and Agreement (Rollo, pp. 16-19).
management is ordered to accept them to their former or
equivalent position. (Rollo, p. 15) On May 15, 1991, 24 of the affected employees moved for
the execution of the May 31, 1990 Decision of NLRC (Rollo, p.
Again, the aggrieved officers and members of the Union filed 19).
a motion for reconsideration while petitioner filed a
Manifestation/Motion for Clarification (Rollo, p. 15). Petitioner filed an opposition, citing the Compromise
Agreement, which had been availed of by 90 of the affected
Pending resolution of the two motions by NLRC, both parties employees (Rollo, p. 19)
agreed to negotiate a settlement and to defer the
enforcement of the decision. On September 12, 1991, Labor Arbiter Salimathar Nambi
issued an order, denying the motion for execution (Rollo, p.
On July 30, 1990, the two motions were dismissed by the 19). In the meantime, 12 of the 24 affected employees also
NLRC (Rollo, p. 15). availed of the benefits under the Compromise Agreement.
The remaining 12 employees appealed to NLRC from the
On October 23, 1990, a compromise agreement was denial of their motion for execution. On February 26, 1992,
executed and signed by petitioner and the Union represented NLRC set aside the order of Labor Arbiter Nambi and directed
by its officers (Rollo, pp. 16-18). The parties agreed that: petitioner to accept the union members to their former or
1. The Company shall pay to the officers and members of the equivalent position with back wages from July 30, 1990 until
Union named in the aforesaid decision separation pay they were reinstated (Rollo, p. 40).
equivalent to one-half (1/2) month basic pay for every year of A motion for reconsideration was filed by petitioner but this
service. was denied on April 22, 1992 (Rollo, p. 42).
2. Additionally, the Company shall pay to the officers of the On May 19, 1992, petitioner filed with this Court a petition
Union mentioned in item No. 2 of the Decision, namely the for certiorari with prayer for issuance of a restraining order
Union Board members, and Shop Stewards financial and/or writ of preliminary injunction docketed as G.R. No.
assistance in the amount of One Thousand (P1,000.00) 105184. However, the petition was dismissed by the First
Pesos. Division in a resolution dated May 27, 1992 for failure to
comply with the Revised Rules of Court and Circular Nos. 1- "Settlement of disputes by way of compromise whereby the
88 and 28-91 (G.R. No. 105184, Rollo, p. 35). parties, by making reciprocal concessions, avoid a litigation
or put an end to one already commenced, is an accepted,
On June 19, 1992, petitioner filed a motion for leave to refile nay desirable practice encouraged by the courts of law and
its petition for certiorari (G.R. No. 105710). In a resolution administrative tribunals" (Santiago v. De Guzman, 177 SCRA
dated June 29, 1992, the Third Division of this Court granted 344 [1989]).
the petition and resolved to issue a temporary restraining
order (Rollo, p. 44). The case was reassigned to the First The authority of attorneys to bind their clients is governed by
Division. Section 7, Rule IV of the New Rules of Procedure of the
National Labor Relations Commission, which provides:
II
Authority to bind party. Attorneys and other
The main issue to be resolved is whether or not the representatives of parties shall have authority to bind their
Compromise Agreement entered into by petitioner and the clients in all matters of procedure; but they cannot, without a
Union is binding upon private respondents. special power of attorney or express consent, enter into a
Petitioner contends that the Compromise Agreement was compromise agreement with the opposing party in full or
deemed ratified by the union members considering that 102 partial discharge of a client's claim (Emphasis supplied).
out of the 114 affected employees already availed of and It will be noted that the Compromise Agreement provides in
received the benefits under the said agreement and that paragraphs 2 and 3 thereof that:
private respondents were represented in all stages of the
proceedings without them questioning the authority of their 2. The union Board Members and Shop Stewards may be
union officers and their counsel. It cites the case of Betting dismissed by respondent-appellee subject to the payment of
Ushers Union (PLUM) v. Jai-alai, 101 Phil. 822 (1957) wherein separation pay equivalent to one-half month for every year of
we ruled that the "will of the majority should prevail over the service; and
minority" and which ruling was reiterated in Dionela v. Court
of Industrial Relations, 8 SCRA 832 (1963) and Chua 3. The mere union members are directed to report for work
v. National Labor Relations Commison, 190 SCRA 558 (1990). within 10 days from receipt of this Decision and management
is ordered to accept them to their former or equivalent
On the other hand, private respondents allege that for a position (Rollo, pp. 16-17).
compromise agreement to be binding upon them, a special
power of attorney or their express consent was necessary for The Decision dated May 8, 1990 ordered the reinstatement of
what was being waived or surrendered under the agreement the union members to their former or equivalent position
was their right to an employment. Such right is protected while in the case of the Union board members and shop
under the security of tenure provision of the Labor Code of stewards, petitioner was given the option to dismiss them
the Philippines and cannot be lost without due process of law subject to the payment of separation pay. However, in the
(Rollo, p. 62). Compromise Agreement, not only the union officers, board
members and shop stewards were considered dismissed from
the service but also the union members subject to the The Compromise Agreement does not apply to private
payment of separation pay and financial assistance. respondents who did not sign the Compromise Agreement,
nor avail of its benefits.
The waiver of reinstatement, like waivers of money claims,
must be regarded as a personal right which must be However, while respondents Domingo Namia and Rizalde
exercised personally by the workers themselves. "For a Flores are not bound by the terms of the Compromise
waiver thereof to be legally effective, the individual consent Agreement, they are bound by the amended decision of NLRC
or ratification of the workers or employees involved must be rendered on May 3, 1990 which provides that members of
shown. Neither the officers nor the majority of the union had the board of directors of the union may be dismissed by
any authority to waive the accrued rights pertaining to the petitioner subject to the payment of separation pay. The two
dissenting minority members, . . . . The members of the respondents did not appeal the amended decision after the
union need the protective shield of this doctrine not only vis- denial by NLRC of their motion for reconsideration thereof.
a-vis their employer but also, at times,vis-a-vis the
management of their own union, and at other times even WHEREFORE, the Decision dated February 26, 1992 of the
against their own imprudence or impecuniousaess" (General NLRC is AFFIRMED with the modification stated above with
Rubber and Footwear Corporation v. Drilon, 169 SCRA 808 respect to respondents Domingo Namia and Rizalde Flores.
[1989]). The temporary restraining order is lifted except with respect
to aforementioned respondents.
We have ruled that ". . . when it comes to individual benefits
accruing to members of a union from a favorable final SO ORDERED.
judgment of any court, the members themselves become the
real parties in interest and it is for them, rather than for the
union, to accept or reject individually the fruits of litigation"
(Esso Philippines, Inc. v. Malayang Manggagawa sa Esso
(MME), 75 SCRA 73 [1977]).
1. DECLARING petitioners to have been illegally dismissed by G.R. No. 85393 September 5, 1991
private respondents, thus entitled to full back wages and
ALBA PATIO DE MAKATI, ANASTACIO ALBA and
other privileges, and separation pay in lieu of reinstatement
CLAUDIO OLABARRIETA, petitioners,
at the rate of one month's salary for every year of service
vs.
with a fraction of six months of service considered as one
NATIONAL LABOR RELATIONS COMMISSION, ALBA
year;
PATIO DE MAKATI EMPLOYEES ASSOCIATION,
2. REMANDING the records of this case to the National Labor HERMOGENES CAGANO, LUCIO CAGANO, RUPERTO
Relations Commission for its determination of the back wages CRUZ and BONIFACIO ACIADO respondents.
and other benefits and separation pay, taking into account
Justo & Magpale Law Offices for petitioners.
the foregoing observations; and
Felipe P. Fuentes, Jr. for private respondents.
3. DIRECTING the National Labor Relations Commission to
resolve the referred issues within sixty (60) days from its
Hermogenes Cagano, Ruperto Cruz, Lucio Cagano, and
Bonifacio Aclado, respondents, G.R. No. L-37922." 3
PADILLA, J.:p
On 16 March 1984, this Court rendered a decision in the
This is a petition for certiorari with prayer for the issuance of above-mentioned case, dismissing the petition for review and
a writ of preliminary injunction, seeking to set aside or affirming the decision and resolution of the CIR.
modify the Order of the respondent National Labor Relations
Commission (NLRC), dated 6 September 1988, which set Thereafter, the National Labor Relations Commission (which
aside the order of the Labor Arbiter dated 31 October 1984. 1 had succeeded the Court of Industrial Relations), through
Labor Arbiter Antonio Tria Tirona directed the Chief of the
On 5 December 1988, a temporary restraining order was Research and Information Division of the NLRC to have the
issued by this Court enjoining the respondents from enforcing award due the complainants computed. The pertinent part of
the questioned NLRC Order until further orders from the the "Report of Examiner" submitted stated that the total
Court. 2 money value of the backwages and service charges due
The antecedent facts of the case are as follows: herein private respondents amounts to P196,270.84, and that
the herein petitioners had not as of the date of the report
On 30 April 1973, the Court of Industrial Relations (CIR) reinstated the private respondents.
rendered a decision in Case No. 5478-ULP, entitled "Alba
Patio de Makati Employees Association, et al, complainants, With the submission of the Report of Examiner, private
vs. Alba Patio de Makati, et al., respondents," the dispositive respondents moved for the issuance of a writ of execution.
part of which reads as follows: Petitioners opposed the motion, contending, among other
things, that the computation of back wages should be limited
WHEREFORE, respondents are hereby declared guilty of to three (3) years without qualification or deduction, in
unfair labor practices as charged and are ordered to cease accordance with the rulings of this Court on the matter, and
and desist from further committing said acts, to reinstate the that if complainants would insist on payment based on the
herein four (4) individual complainants with full back wages "Report of Examiner", they should then render an accounting
and to pay them their respective shares in the service of their income realized elsewhere from 1 May 1970 up to 15
charges for May 1 to 15, 1970 and for the rest of that month August 1984.
until their forced resignation.
The Report and the petitioners' opposition to the motions
A motion for reconsideration of the said decision filed by were set for hearing on 29 October 1984. At the said hearing,
respondents (herein petitioners) was denied on 6 November Lucio Cagano, for himself and as the alleged attorney-in-fact
1973. of the other complainants, filed a document entitled
"Satisfaction of Judgment, Release and Quit-claim" which
Petitioners then sought a review by this Court of the CIR's declares inter alia that complainants have received the sum
decision and resolution. The case was docketed as "Alba of P54,000.00 from the Alba Patio de Makati, which amount
Patio de Makati, Anastacio Alba and Claudio Olabarrieta, corresponds to three (3) years back wages, including
petitioners, vs. Alba Patio de Makati Employees Association, attorney's fees, in full and complete satisfaction of the
judgment and releasing the petitioners from any further Lucio Cagano as his attorney-in-fact. 7 Petitioners filed an
liability in connection with their claims against Omnibus Motion 8 alleging, among other things, that the
petitioners. 4 Filed with the above-said document were the Labor Arbiter/ NLRC had already lost jurisdiction over the
respective special powers of attorney purportedly executed case by reason of the satisfaction of the judgment and that
by Bonifacio Aclado, Ruperto Cruz, and Esteban Cagano, any question as to the validity of the "Satisfaction of
father of deceased Hermogenes Cagano, appointing Lucio Judgment, Release and Quit-claim" which is in the nature of a
Cagano as their attorney-in-fact. 5Said documents were compromise agreement must be brought before the regular
notarized by Atty. Eugenio Tumulak, counsel for Lucio courts.
Cagano.
On 6 September 1988, the NLRC promulgated the questioned
Acting on the foregoing documents, Labor Arbiter Tirona Order, annulling and setting aside the order of Labor Arbiter
issued the order of 31 October 1984. the dispositive part of Antonio Tria Tirona dated 31 October 1984 and directing the
which reads: immediate enforcement of the decision of the Court of
Industrial Relations dated 30 April 1973 as affirmed by this
Finding said "Satisfaction of Judgment, Release and Quit- Court. It held:
claim" to be in order and it appearing thereon that
complainants have already received P54,000.00 for and in Resolving this issue, we rule that the special power of
consideration thereof, the instant case is hereby considered attorney executed by Esteban Cagano in behalf of his
CLOSED and TERMINATED. 6 deceased son, Hermogenes Cagano, one of the complainants
in this case, who have (sic) children but still minors and the
On 10 December 1985, private co-respondent Bonifacio mother of said children (alleged common law wife of the
Aclado wrote his counsel Atty. Felipe P. Fuentes, Jr., informing deceased), and in favor of Lucio Cagano as attorney-in-fact is
the latter that as of said date, he had not been reinstated patently null and void since Esteban Cagano had no legal
and paid his back wages by the petitioners. The following authority to execute a special power of attorney in behalf of a
day, or on 11 December 1985, Atty. Fuentes filed before the deceased person or represent the minor children of the
NLRC a motion for the immediate execution of the CIR deceased complainant. If an agency is extinguished by death
decision. Petitioners opposed the motion, alleging that the of the principal, with more reason that an agency cannot be
case was already considered closed and terminated as per constituted for and in behalf of a deceased person or the
order of 31 October 1.984 and that the said order was issued latter's minor children unless duly authorized by the Court. A
pursuant to the "Satisfaction of Judgment, Release and Quit- cursory reading of these (sic) special power of attorney
claim" which had been executed by Lucio Cagano as the shows that the attorney-in-fact was practically granted
attorney-in-fact of complainant (private co-respondent) blanket authority to negotiate with respondent any amount of
Bonifacio Aclado. back wages due the complainants. However, such back
Thereafter, on 3 March 1986, other private co-respondent wages awarded to them and which the attorney-in-fact is
Ruperto Cruz filed a similar motion for execution and to annul allowed to negotiate or receive in their behalf under the
and set aside the order dated 31 October 1984, alleging that special power of attorney is an 'amount (shall) be due in
he had not executed any specific power of attorney naming accordance with law.'A fortiori, We should carefully scrutinize
and determine in what manner and to what extent was this aforesaid document, petitioners allege, is in the nature of a
express authority exercised and whether or not the compromise agreement which has, upon the parties, the
settlement arrived at by the complainants through their effect of res judicata; that the allegations in the private
attorney-in-fact and respondents is in accordance with the respondents' subsequent motions set forth a cause of action
terms of the special power of attorney and that the same is that does not involve a question arising out of employer
not contrary to law, morals, good customs, public order, or employee relations but the validity and enforceability of a
public policy. compromise agreement between petitioners and private
respondents, for which reason, the matter should properly be
To Us, the settlement of the computed award of P196,270.84 raised before the regular courts.
for only a minuscule sum of P54,000.00 is grossly
disproportionate, unconscionable and inequitable. We cannot On the other hand, the Solicitor General maintains that
therefore give imprimatur to such settlement, release and petitioners, having submitted themselves to the jurisdiction
quitclaim for being clearly contrary to the authority granted of the NLRC, should not be snowed, for reasons of public
to the attorney-in-fact and also violative of law and public policy, to repudiate the very same jurisdiction they had
policy. We cannot allow this miscarriage of justice. invoked to seek affirmative relief, citing in support of his
Accordingly, the approval of the settlement constitutes a submission the case of Tijam vs. Sibonghanoy, 23 SCRA 29.
reversible error. Labor justice may not be thwarted or
frustrated by strait-jacketed technicalities by denying this In addition, private respondents insist that they had not
Commission its jurisdiction to pass upon these issues. For Us executed any special power of attorney in favor of their co-
to refer this matter to another forum would necessarily make complainant Lucio Cagano; that they have not received their
the complainants who are affected thereby to undergo their backwages and have not been reinstated to their former
calvary twice after so many long years of litigation. respective positions by petitioners pursuant to the CIR
decision as affirmed by this Court.
Hence, the present petition for certiorari filed by petitioners
with prayer for the issuance of a writ of preliminary The petition is bereft of merit.
injunction. Time and again, this Court has set aside technicalities in the
The only issue to be resolved in this case is whether or not interest of substantial justice. In the present case, the
the NLRC still had jurisdiction to issue the resolution or order judgment of the Court of Industrial Relations had long
of 6 September 1988, setting aside the Labor Arbiter's order become final and executory. A final and executory judgment
of 31 October 1984. can no longer be altered. As we held in a recent case, 9 "(t)he
judgment may no longer be modified in any respect, even if
Petitioners claim that the jurisdiction of the National Labor the modification is meant to correct what is perceived to be
Relations Commission over the case had already been lost by an erroneous conclusion of fact or law, and regardless of
virtue of the order dated 31 October 1984, wherein the Labor whether the modification is attempted to be made by the
Arbiter declared the case closed and terminated in view of court rendering it or by the highest court of the land."
the document filed by the private respondents entitled Moreover, a final and executory judgment cannot be
"Satisfaction of Judgment, Release and Quit-claim"; that the negotiated, hence, any act to subvert it is contemptuous. 10
The NLRC was correct in setting aside the order of the Labor jurisdiction simply because they have failed to obtain a
Arbiter dated 31 October 1984, as the same was void. It favorable decision.
rendered the very decision of this Court meaningless, and
showed disrespect for the administration of justice. 11 This This case has been pending for almost eighteen (18) years
should not be sanctioned. since the order of the CIR was rendered on 30 April 1973. The
private respondents have already suffered for a long time. To
It was incumbent upon the counsel for the complainant (now further prolong the proceedings in this case would be
respondent) Lucio Cagano to have seen to it that the interest tantamount to a denial of justice to private respondents. It is
of an complainants (now private respondents) was protected. about time that the decision of the Court of Industrial
The quitclaim and release in the preparation of which he Relations of 30 April 1973, as affirmed by this Court, be fully
assisted clearly worked to the grave disadvantage of the and finally implemented.
complainants (private respondents). As we have stated
earlier, to render the decision of this Court meaningless by WHEREFORE, the petition is DISMISSED, and the temporary
paying the backwages of the affected employees in a much restraining order LIFTED. Costs against petitioners.
lesser amount clearly manifested a disregard of the authority SO ORDERED.
of this Court as the final arbiter of cases brought to it. 12
The public respondent separately resolved the above On October 28, 1986, the public respondent through Director
motions. On June 26, 1986, an order was issued denying the Pura Ferrer-Calleja denied the petitioners' motion for
petitioners' motion for reconsideration. On August 19, 1986, reconsideration stating that Article XIII, Section 5 of the
the public respondent modified its decision dated April 17, union's constitution and by-laws does not require a special
1986 and its aforestated order as follows: fund so that all union members similarly situated as the
private respondent must be entitled to the same right and
Considering that complainant Pili is similarly situated as privilege regarding the grant of financial aid as therein
Jerwin Taguba coupled with the need to obviate any provided.
discriminating treatment to the former, it is only just and
appropriate that our Decision dated 17 April 1986 be On December 18, 1986, a writ of execution was issued by the
modified in such a manner that respondents immediately pay public respondent in the following tenor:
the complainant the sum of P0.75/ week per union member
to be computed from the time of his dismissal from the NOW THEREFORE, you are hereby directed to proceed to the
company, without prejudice to refund of the amount that premises of Johnson and Johnson (FFW) located at Edison
shall be paid to Pili in the event the pending case is finally Road, Bo. Ibayo, Paranaque, Metro Manila to collect from the
resolved against him. said union through its Treasurer, Myrna Oloveja or to any
responsible officer of the union the amount of Twenty compulsory under the said provision in the amount of
Thousand Five Hundred Twenty Pesos (P20,520.00), more or seventy-five centavos due weekly from each union member.
less representing financial assistance to complainant under The nature of the said contributions being compulsory and
the union's constitution and by-laws. In case you fail to the fact that the purpose as stated is for financial aid clearly
collect said amount in cash, you are to cause the satisfaction indicate that individual payroll authorizations of the union
of the same on the union's movable or immovable properties members are not necessary. The petitioner-union's
not exempt from execution. You are to return this writ within constitution and by-laws govern the relationship between and
fifteen (15) days from your compliance hereby together with among its members. As in the interpretation of contracts, if
your report thereon. You may collect your legal fees from the the terms are clear and leave no doubt as to the intention of
respondent union. (p. 55, Rollo) the parties, the literal meaning of the stipulations shall
control. (See Government Service Insurance System v. Court
On December 24, 1986, the instant petition was filed with of Appeals, 145 SCRA 311 [1986]). Section 5, Article XIII of
prayer for a preliminary injunction. The temporary restraining the said constitution and by-laws is in line with the petitioner-
order issued by the Chief Justice on December 24, 1986 was union's aims and purposes which under Sec. 2, Article II
confirmed in our resolution dated January 7, 1987. include
The grounds relied upon by the petitioners are as follows: To promote, establish and devise schemes of mutual
A. THAT THE DECISION/ORDER IN QUESTION IS CONTRARY TO assistance among the members in labor disputes.
LAW. Thus, there is no doubt that the petitioner-union can be
B. THAT RESPONDENT OFFICIAL ACTED WITH GRAVE ABUSE ordered to release its funds intended for the promotion of
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION. mutual assistance in favor of the private respondent.
C. THAT WITH RESPECT TO PETITIONING MEMBERS, THEY We likewise find untenable the argument of the petitioners
HAVE BEEN DEPRIVED OF THEIR CONSTITUTIONAL RIGHT TO that the public respondent, in granting financial aid to the
DUE PROCESS OF LAW. (P. 13, Rollo) private respondent, in effect, substituted the decision of the
petitioner-union to do otherwise and that in so doing, the
We find unmeritorious the contention of the petitioners that public respondent gravely abused its discretion amounting to
the questioned decision and order are contrary to law for lack of jurisdiction. The union constitution is a covenant
being tantamount to compelling the union to disburse it between the union and its members and among the
funds without the authority of the general membership and members. There is nothing in their constitution which leaves
to collect from its members without the benefit of individual the legal interpretation of its terms unilaterally to the union
payroll authorization. or its officers or even the general membership. It is
noteworthy to quote the ruling made by the public
Section 5, Article XIII of the petitioner-union's constitution respondent in this respect, to wit:
and by-laws earlier aforequoted is self-executory. The
financial aid extended to any suspended or terminated union The union constitution and by-laws clearly show that any
member is realized from the contributions declared to be member who is suspended or terminated from employment
without reasonable cause is entitled to financial assistance does not have to be brought against each individual member,
from the union and its members. The problem, however, is especially where several thousand members form the
that the constitution does not indicate which body has the membership. If there is any violation of the right to due
power to determine whether a suspension or dismissal is for process in the case at bar it is as regards the private
reasonable cause or not. To our mind, the constitution's respondent since the petitioners-union has dispensed with
silence on this matter is a clear recognition of the labor due process in deciding not to extend financial aid to the
arbiter's exclusive jurisdiction over dismissal cases. After all, private respondent in the absence yet of a ruling by the labor
the union's constitution and by-laws is valid only insofar as it arbiter on whether his dismissal was for a reasonable cause
is not inconsistent with existing laws. ... . (BLR decision, p. 2; or not.
p. 115, Records)
The remedy of the petitioners is to strike out or amend the
An aggrieved member has to resort to a government agency objectionable features of their constitution. They cannot
or tribunal. Considering that quasi-judicial agencies like the expect the public respondent to assist them in its non-
public respondent's office have acquired expertise since their enforcement or violation.
jurisdiction is confined to specific matter, their findings of
fact in connection with their rulings are generally accorded WHEREFORE, PREMISES CONSIDERED, the instant petition is
not only respect but at times even finality if supported by hereby DISMISSED in the absence of a showing of grave
substantial evidence. (See Manila Mandarin Employees Union abuse of discretion on the part of the public respondent. The
v. National Labor Relations Commission, 154 SCRA 368 decision of the public respondent dated April 17, 1986 as
[1987]) Riker v. Ople, 155 SCRA 85 [1987]; and Palencia v. modified in a resolution dated August 17, 1986 is AFFIRMED.
National Labor Relations Commission, 153 SCRA 247 [1987]. The temporary restraining order issued by the Court on
We note from the records that the petitioners have conflicting December 24,1986 is SET ASIDE.
interpretations of the same disputed provision one in favor of SO ORDERED.
Jerwin Taguba and another against the private respondent.
RESOLUTION
GRIO-AQUINO, J.:
SO ORDERED.
G.R. No. L-25246 September 12, 1974
ZALDIVAR, J.:p
3. In further support of its contention that Republic Act No. In Aglipay v. Ruiz 39 , this Court had occasion to state that the
3350 is unconstitutional, appellant Union averred that said government should not be precluded from pursuing valid
Act discriminates in favor of members of said religious sects objectives secular in character even if the incidental result
in violation of Section 1 (7) of Article Ill of the 1935 would be favorable to a religion or sect. It has likewise been
Constitution, and which is now Section 8 of Article IV of the held that the statute, in order to withstand the strictures of
1973 Constitution, which provides: constitutional prohibition, must have a secular legislative
purpose and a primary effect that neither advances nor
No law shall be made respecting an establishment of religion, inhibits religion. 40 Assessed by these criteria, Republic Act
or prohibiting the free exercise thereof, and the free exercise No. 3350 cannot be said to violate the constitutional
and enjoyment of religious profession and worship, without inhibition of the "no-establishment" (of religion) clause of the
discrimination and preference, shall forever be allowed. No Constitution.
religious test shall be required for the exercise of civil or
political rights. The purpose of Republic Act No. 3350 is secular, worldly, and
temporal, not spiritual or religious or holy and eternal. It was
The constitutional provision into only prohibits legislation for intended to serve the secular purpose of advancing the
the support of any religious tenets or the modes of worship of constitutional right to the free exercise of religion, by
any sect, thus forestalling compulsion by law of the averting that certain persons be refused work, or be
acceptance of any creed or the practice of any form of dismissed from work, or be dispossessed of their right to
worship, 35 but also assures the free exercise of one's chosen work and of being impeded to pursue a modest means of
form of religion within limits of utmost amplitude. It has been livelihood, by reason of union security agreements. To help its
said that the religion clauses of the Constitution are all citizens to find gainful employment whereby they can make a
designed to protect the broadest possible liberty of living to support themselves and their families is a valid
conscience, to allow each man to believe as his conscience objective of the state. In fact, the state is enjoined, in the
directs, to profess his beliefs, and to live as he believes he 1935 Constitution, to afford protection to labor, and regulate
ought to live, consistent with the liberty of others and with the relations between labor and capital and industry. 41 More
the common good. 36 Any legislation whose effect or purpose so now in the 1973 Constitution where it is mandated that
is to impede the observance of one or all religions, or to "the State shall afford protection to labor, promote full
discriminate invidiously between the religions, is invalid, employment and equality in employment, ensure equal work
even though the burden may be characterized as being only opportunities regardless of sex, race or creed and regulate
indirect. 37 But if the stage regulates conduct by enacting, the relation between workers and employers. 42
within its power, a general law which has for its purpose and
effect to advance the state's secular goals, the statute is The primary effects of the exemption from closed shop
valid despite its indirect burden on religious observance, agreements in favor of members of religious sects that
prohibit their members from affiliating with a labor
organization, is the protection of said employees against the purpose of Republic Act No. 3350 was not to grant rights to
aggregate force of the collective bargaining agreement, and labor unions. The rights of labor unions are amply provided
relieving certain citizens of a burden on their religious beliefs; for in Republic Act No. 875 and the new Labor Code. As to the
and by eliminating to a certain extent economic insecurity lamented silence of the Act regarding the rights and
due to unemployment, which is a serious menace to the protection of labor unions, suffice it to say, first, that the
health, morals, and welfare of the people of the State, the validity of a statute is determined by its provisions, not by its
Act also promotes the well-being of society. It is our view that silence 46 ; and, second, the fact that the law may work
the exemption from the effects of closed shop agreement hardship does not render it unconstitutional. 47
does not directly advance, or diminish, the interests of any
particular religion. Although the exemption may benefit those It would not be amiss to state, regarding this matter, that to
who are members of religious sects that prohibit their compel persons to join and remain members of a union to
members from joining labor unions, the benefit upon the keep their jobs in violation of their religious scrupples, would
religious sects is merely incidental and indirect. The hurt, rather than help, labor unions, Congress has seen it fit
"establishment clause" (of religion) does not ban regulation to exempt religious objectors lest their resistance spread to
on conduct whose reason or effect merely happens to other workers, for religious objections have contagious
coincide or harmonize with the tenets of some or all potentialities more than political and philosophic objections.
religions. 43 The free exercise clause of the Constitution has Furthermore, let it be noted that coerced unity and loyalty
been interpreted to require that religious exercise be even to the country, and a fortiori to a labor union
preferentially aided. 44 assuming that such unity and loyalty can be attained through
We believe that in enacting Republic Act No. 3350, Congress coercion is not a goal that is constitutionally obtainable at
acted consistently with the spirit of the constitutional the expense of religious liberty. 48 A desirable end cannot be
provision. It acted merely to relieve the exercise of religion, promoted by prohibited means.
by certain persons, of a burden that is imposed by union 4. Appellants' fourth contention, that Republic Act No. 3350
security agreements. It was Congress itself that imposed that violates the constitutional prohibition against requiring a
burden when it enacted the Industrial Peace Act (Republic Act religious test for the exercise of a civil right or a political
875), and, certainly, Congress, if it so deems advisable, could right, is not well taken. The Act does not require as a
take away the same burden. It is certain that not every qualification, or condition, for joining any lawful association
conscience can be accommodated by all the laws of the land; membership in any particular religion or in any religious sect;
but when general laws conflict with scrupples of conscience, neither does the Act require affiliation with a religious sect
exemptions ought to be granted unless some "compelling that prohibits its members from joining a labor union as a
state interest" intervenes.45 In the instant case, We see no condition or qualification for withdrawing from a labor union.
such compelling state interest to withhold exemption. Joining or withdrawing from a labor union requires a positive
Appellant bewails that while Republic Act No. 3350 protects act. Republic Act No. 3350 only exempts members with such
members of certain religious sects, it leaves no right to, and religious affiliation from the coverage of closed shop
is silent as to the protection of, labor organizations. The agreements. So, under this Act, a religious objector is not
required to do a positive act to exercise the right to join or prohibit legislation which is limited either in the object to
to resign from the union. He is exempted ipso jure without which it is directed or by the territory within which it is to
need of any positive act on his part. A conscientious religious operate.
objector need not perform a positive act or exercise the right
of resigning from the labor union he is exempted from the The equal protection of the laws clause of the Constitution
coverage of any closed shop agreement that a labor union allows classification. Classification in law, as in the other
may have entered into. How then can there be a religious departments of knowledge or practice, is the grouping of
test required for the exercise of a right when no right need be things in speculation or practice because they agree with one
exercised? another in certain particulars. A law is not invalid because of
simple inequality. 52 The very idea of classification is that of
We have said that it was within the police power of the State inequality, so that it goes without saying that the mere fact
to enact Republic Act No. 3350, and that its purpose was of inequality in no manner determines the matter of
legal and in consonance with the Constitution. It is never an constitutionality. 53 All that is required of a valid classification
illegal evasion of a constitutional provision or prohibition to is that it be reasonable, which means that the classification
accomplish a desired result, which is lawful in itself, by should be based on substantial distinctions which make for
discovering or following a legal way to do it. 49 real differences; that it must be germane to the purpose of
the law; that it must not be limited to existing conditions
5. Appellant avers as its fifth ground that Republic Act No. only; and that it must apply equally to each member of the
3350 is a discriminatory legislation, inasmuch as it grants to class. 54 This Court has held that the standard is satisfied if
the members of certain religious sects undue advantages the classification or distinction is based on a reasonable
over other workers, thus violating Section 1 of Article III of foundation or rational basis and is not palpably arbitrary. 55
the 1935 Constitution which forbids the denial to any person
of the equal protection of the laws. 50 In the exercise of its power to make classifications for the
purpose of enacting laws over matters within its jurisdiction,
The guaranty of equal protection of the laws is not a the state is recognized as enjoying a wide range of
guaranty of equality in the application of the laws upon all discretion. 56 It is not necessary that the classification be
citizens of the state. It is not, therefore, a requirement, in based on scientific or marked differences of things or in their
order to avoid the constitutional prohibition against relation. 57 Neither is it necessary that the classification be
inequality, that every man, woman and child should be made with mathematical nicety. 58 Hence legislative
affected alike by a statute. Equality of operation of statutes classification may in many cases properly rest on narrow
does not mean indiscriminate operation on persons merely distinctions, 59 for the equal protection guaranty does not
as such, but on persons according to the circumstances preclude the legislature from recognizing degrees of evil or
surrounding them. It guarantees equality, not identity of harm, and legislation is addressed to evils as they may
rights. The Constitution does not require that things which appear.
are different in fact be treated in law as though they were the
same. The equal protection clause does not forbid We believe that Republic Act No. 3350 satisfies the
discrimination as to things that are different. 51 It does not aforementioned requirements. The Act classifies employees
and workers, as to the effect and coverage of union shop beliefs people, like the martyrs, became resigned to the
security agreements, into those who by reason of their inevitable and accepted cheerfully even the most painful and
religious beliefs and convictions cannot sign up with a labor excruciating pains. Because of differences in religious beliefs,
union, and those whose religion does not prohibit the world has witnessed turmoil, civil strife, persecution,
membership in labor unions. Tile classification rests on real or hatred, bloodshed and war, generated to a large extent by
substantial, not merely imaginary or whimsical, distinctions. members of sects who were intolerant of other religious
There is such real distinction in the beliefs, feelings and beliefs. The classification, introduced by Republic Act No.
sentiments of employees. Employees do not believe in the 3350, therefore, rests on substantial distinctions.
same religious faith and different religions differ in their
dogmas and cannons. Religious beliefs, manifestations and The classification introduced by said Act is also germane to
practices, though they are found in all places, and in all its purpose. The purpose of the law is precisely to avoid
times, take so many varied forms as to be almost beyond those who cannot, because of their religious belief, join labor
imagination. There are many views that comprise the broad unions, from being deprived of their right to work and from
spectrum of religious beliefs among the people. There are being dismissed from their work because of union shop
diverse manners in which beliefs, equally paramount in the security agreements.
lives of their possessors, may be articulated. Today the Republic Act No. 3350, furthermore, is not limited in its
country is far more heterogenous in religion than before, application to conditions existing at the time of its
differences in religion do exist, and these differences are enactment. The law does not provide that it is to be effective
important and should not be ignored. for a certain period of time only. It is intended to apply for all
Even from the phychological point of view, the classification times as long as the conditions to which the law is applicable
is based on real and important differences. Religious beliefs exist. As long as there are closed shop agreements between
are not mere beliefs, mere ideas existing only in the mind, for an employer and a labor union, and there are employees who
they carry with them practical consequences and are the are prohibited by their religion from affiliating with labor
motives of certain rules. of human conduct and the unions, their exemption from the coverage of said
justification of certain acts. 60 Religious sentiment makes a agreements continues.
man view things and events in their relation to his God. It Finally, the Act applies equally to all members of said
gives to human life its distinctive character, its tone, its religious sects; this is evident from its provision. The fact that
happiness or unhappiness its enjoyment or irksomeness. the law grants a privilege to members of said religious sects
Usually, a strong and passionate desire is involved in a cannot by itself render the Act unconstitutional, for as We
religious belief. To certain persons, no single factor of their have adverted to, the Act only restores to them their freedom
experience is more important to them than their religion, or of association which closed shop agreements have taken
their not having any religion. Because of differences in away, and puts them in the same plane as the other workers
religious belief and sentiments, a very poor person may who are not prohibited by their religion from joining labor
consider himself better than the rich, and the man who even unions. The circumstance, that the other employees, because
lacks the necessities of life may be more cheerful than the they are differently situated, are not granted the same
one who has all possible luxuries. Due to their religious
privilege, does not render the law unconstitutional, for every component elements of society, for it insures security in their
classification allowed by the Constitution by its nature employment, notwithstanding their failure to join a labor
involves inequality. union having a closed shop agreement with the employer.
The Act also advances the proper economic and social
The mere fact that the legislative classification may result in equilibrium between labor unions and employees who cannot
actual inequality is not violative of the right to equal join labor unions, for it exempts the latter from the
protection, for every classification of persons or things for compelling necessity of joining labor unions that have closed
regulation by law produces inequality in some degree, but shop agreements and equalizes, in so far as opportunity to
the law is not thereby rendered invalid. A classification work is concerned, those whose religion prohibits
otherwise reasonable does not offend the constitution simply membership in labor unions with those whose religion does
because in practice it results in some inequality. 61 Anent this not prohibit said membership. Social justice does not imply
matter, it has been said that whenever it is apparent from social equality, because social inequality will always exist as
the scope of the law that its object is for the benefit of the long as social relations depend on personal or subjective
public and the means by which the benefit is to be obtained proclivities. Social justice does not require legal equality
are of public character, the law will be upheld even though because legal equality, being a relative term, is necessarily
incidental advantage may occur to individuals beyond those premised on differentiations based on personal or natural
enjoyed by the general public. 62 conditions. 65 Social justice guarantees equality of
66
6. Appellant's further contention that Republic Act No. 3350 opportunity , and this is precisely what Republic Act No.
violates the constitutional provision on social justice is also 3350 proposes to accomplish it gives laborers, irrespective
baseless. Social justice is intended to promote the welfare of of their religious scrupples, equal opportunity for work.
all the people. 63 Republic Act No. 3350 promotes that welfare 7. As its last ground, appellant contends that the amendment
insofar as it looks after the welfare of those who, because of introduced by Republic Act No. 3350 is not called for in
their religious belief, cannot join labor unions; the Act other words, the Act is not proper, necessary or desirable.
prevents their being deprived of work and of the means of Anent this matter, it has been held that a statute which is not
livelihood. In determining whether any particular measure is necessary is not, for that reason, unconstitutional; that in
for public advantage, it is not necessary that the entire state determining the constitutional validity of legislation, the
be directly benefited it is sufficient that a portion of the courts are unconcerned with issues as to the necessity for
state be benefited thereby. the enactment of the legislation in question. 67 Courts do
Social justice also means the adoption by the Government of inquire into the wisdom of laws. 68 Moreover, legislatures,
measures calculated to insure economic stability of all being chosen by the people, are presumed to understand and
component elements of society, through the maintenance of correctly appreciate the needs of the people, and it may
a proper economic and social equilibrium in the inter- change the laws accordingly. 69 The fear is entertained by
relations of the members of the community. 64 Republic Act appellant that unless the Act is declared unconstitutional,
No. 3350 insures economic stability to the members of a employers will prefer employing members of religious sects
religious sect, like the Iglesia ni Cristo, who are also that prohibit their members from joining labor unions, and
thus be a fatal blow to unionism. We do not agree. The threat
to unionism will depend on the number of employees who are No suit, action or other proceedings shall be maintainable in
members of the religious sects that control the demands of any court against a labor organization or any officer or
the labor market. But there is really no occasion now to go member thereof for any act done by or on behalf of such
further and anticipate problems We cannot judge with the organization in furtherance of an industrial dispute to which it
material now before Us. At any rate, the validity of a statute is a party, on the ground only that such act induces some
is to be determined from its general purpose and its efficacy other person to break a contract of employment or that it is
to accomplish the end desired, not from its effects on a in restraint of trade or interferes with the trade, business or
particular case. 70 The essential basis for the exercise of employment of some other person or with the right of some
power, and not a mere incidental result arising from its other person to dispose of his capital or labor. (Emphasis
exertion, is the criterion by which the validity of a statute is supplied)
to be measured. 71
That there was a labor dispute in the instant case cannot be
II. We now pass on the second assignment of error, in support disputed for appellant sought the discharge of respondent by
of which the Union argued that the decision of the trial court virtue of the closed shop agreement and under Section 2 (j)
ordering the Union to pay P500 for attorney's fees directly of Republic Act No. 875 a question involving tenure of
contravenes Section 24 of Republic Act No. 875, for the employment is included in the term "labor dispute". 74 The
instant action involves an industrial dispute wherein the discharge or the act of seeking it is the labor dispute itself. It
Union was a party, and said Union merely acted in the being the labor dispute itself, that very same act of the Union
exercise of its rights under the union shop provision of its in asking the employer to dismiss Appellee cannot be "an act
existing collective bargaining contract with the Company; done ... in furtherance of an industrial dispute". The mere
that said order also contravenes Article 2208 of the Civil fact that appellant is a labor union does not necessarily mean
Code; that, furthermore, Appellee was never actually that all its acts are in furtherance of an industrial
dismissed by the defendant Company and did not therefore dispute. 75 Appellant Union, therefore, cannot invoke in its
suffer any damage at all . 72 favor Section 24 of Republic Act No. 875. This case is not
intertwined with any unfair labor practice case existing at the
In refuting appellant Union's arguments, Appellee claimed time when Appellee filed his complaint before the lower
that in the instant case there was really no industrial dispute court.
involved in the attempt to compel Appellee to maintain its
membership in the union under pain of dismissal, and that Neither does Article 2208 of the Civil Code, invoked by the
the Union, by its act, inflicted intentional harm on Appellee; Union, serve as its shield. The article provides that attorney's
that since Appellee was compelled to institute an action to fees and expenses of litigation may be awarded "when the
protect his right to work, appellant could legally be ordered defendant's act or omission has compelled the plaintiff ... to
to pay attorney's fees under Articles 1704 and 2208 of the incur expenses to protect his interest"; and "in any other
Civil Code. 73 case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be
The second paragraph of Section 24 of Republic Act No. 875 recovered". In the instant case, it cannot be gainsaid that
which is relied upon by appellant provides that: appellant Union's act in demanding Appellee's dismissal
caused Appellee to incur expenses to prevent his being 1. Religious freedom is identified with the liberty every
dismissed from his job. Costs according to Section 1, Rule individual possesses to worship or not a Supreme Being, and
142, of the Rules of Court, shall be allowed as a matter of if a devotee of any sect, to act in accordance with its creed.
course to the prevailing party. Thus is constitutionally safeguarded, according to Justice
Laurel, that "profession of faith to an active power that binds
WHEREFORE, the instant appeal is dismissed, and the and elevates man to his Creator ...." 3 The choice of what a
decision, dated August 26, 1965, of the Court of First man wishes to believe in is his and his alone. That is a
Instance of Manila, in its Civil Case No. 58894, appealed from domain left untouched, where intrusion is not allowed, a
is affirmed, with costs against appellant Union. It is so citadel to which the law is denied entry, whatever be his
ordered. thoughts or hopes. In that sphere, what he wills reigns
Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, supreme. The doctrine to which he pays fealty may for some
Antonio, Esguerra, Muoz Palma and Aquino, JJ., concur. be unsupported by evidence, devoid of rational foundation.
No matter. There is no requirement as to its conformity to
what has found acceptance. It suffices that for him such a
concept holds undisputed sway. That is a recognition of
Separate Opinions man's freedom. That for him is one of the ways of self-
realization. It would be to disregard the dignity that attaches
to every human being to deprive him of such an attribute.
FERNANDO, J, concurring: The "fixed star on our constitutional constellation," to borrow
the felicitous phrase of Justice Jackson, is that no official, not
The decision arrived at unanimously by this Court that excluding the highest, has it in his power to prescribe what
Republic Act No. 3350 is free from the constitutional shall be orthodox in matters of conscience or to mundane
infirmities imputed to it was demonstrated in a manner affairs, for that matter.
wellnigh conclusive in the learned, scholarly, and
comprehensive opinion so typical of the efforts of Gerona v. Secretary of Education 4 speaks similarly. In the
the ponente, Justice Zaldivar. Like the rest of my brethren, I language of its ponente, Justice Montemayor: "The realm of
concur fully. Considering moreover, the detailed attention belief and creed is infinite and limitless bounded only by
paid to each and every objection raised as to its validity and one's imagination and thought. So is the freedom of belief,
the clarity and persuasiveness with which it was shown to be including religious belief, limitless and without bounds. One
devoid of support in authoritative doctrines, it would appear may believe in most anything, however strange, bizarre and
that the last word has been written on this particular subject. unreasonable the same may appear to others, even heretical
Nonetheless, I deem it proper to submit this brief expression when weighed in the scales of orthodoxy or doctrinal
of my views on the transcendent character of religious standards." 5 There was this qualification though: "But
freedom 1 and its primacy even as against the claims of between the freedom of belief and the exercise of said belief,
protection to labor, 2 also one of the fundamental principles there is quite a stretch of road to travel. If the exercise of
of the Constitution. said religious belief clashes with the established institutions
of society and with the law, then the former must yield and
give way to the latter. The Government steps in and either belief collides with the power of the state, the latter is
restrains said exercise or even prosecutes the one exercising supreme within its sphere and submission or punishment
it." 6 It was on that basis that the daily compulsory flag follows. But, in the forum of conscience, duty to a moral
ceremony in accordance with a statute 7 was found free from power higher than the state has always been maintained.
the constitutional objection on the part of a religious sect, the The reservation of that supreme obligation, as a matter of
Jehovah's Witnesses, whose members alleged that their principle, would unquestionably be made by many of our
participation would be offensive to their religious beliefs. In a conscientious and law-abiding citizens. The essence of
case not dissimilar, West Virginia State Board of Education v. religion is belief in a relation to God involving duties superior
Barnette, 8 the American Supreme Court reached a contrary to those arising from any human relation." 10 The American
conclusion. Justice Jackson's eloquent opinion is, for this Chief Justice spoke in dissent, it is true, but with him in
writer, highly persuasive. Thus: "The case is made difficult agreement were three of the foremost jurists who ever sat in
not because the principles of its decision are obscure but that Tribunal, Justices Holmes, Brandeis, and Stone.
because the flag involved is our own. Nevertheless, we apply
the limitations of the Constitution with no fear that freedom 2. As I view Justice Zaldivar's opinion in that light, my
to be intellectually and spiritually diverse or even contrary concurrence, as set forth earlier, is wholehearted and entire.
will disintegrate the social organization. To believe that With such a cardinal postulate as the basis of our polity, it
patriotism will not flourish if patriotic ceremonies are has a message that cannot be misread. Thus is intoned with
voluntary and spontaneous instead of a compulsory routine is a reverberating clang, to paraphrase Cardozo, a fundamental
to make an unflattering estimate of the appeal of our principle that drowns all weaker sounds. The labored effort to
institutions to free minds. We can have intellectual cast doubt on the validity of the statutory provision in
individualism and the rich cultural diversities that we owe to question is far from persuasive. It is attended by futility. It is
exceptional minds only at the price of occasional eccentricity not for this Court, as I conceive of the judicial function, to
and abnormal attitudes. When they are so harmless to others restrict the scope of a preferred freedom.
or to the State as those we deal with here, the price is not 3. There is, however, the question of whether such an
too great. But freedom to differ is not limited to things that exception possesses an implication that lessens the
do not matter much. That would be a mere shadow of effectiveness of state efforts to protect labor, likewise, as
freedom. The test of its substance is the right to differ as to noted, constitutionally ordained. Such a view, on the surface,
things that touch the heart of the existing order." 9 may not be lacking in plausibility, but upon closer analysis, it
There is moreover this ringing affirmation by Chief Justice cannot stand scrutiny. Thought must be given to the freedom
Hughes of the primacy of religious freedom in the forum of of association, likewise an aspect of intellectual liberty. For
conscience even as against the command of the State itself: the late Professor Howe a constitutionalist and in his lifetime
"Much has been said of the paramount duty to the state, a the biographer of the great Holmes, it even partakes of the
duty to be recognized, it is urged, even though it conflicts political theory of pluralistic sovereignty. So great is the
with convictions of duty to God. Undoubtedly that duty to the respect for the autonomy accorded voluntary
state exists within the domain of power, for government may societies. 11 Such a right implies at the very least that one
enforce obedience to laws regardless of scruples. When one's can determine for himself whether or not he should join or
refrain from joining a labor organization, an institutional Laurel, that "profession of faith to an active power that binds
device for promoting the welfare of the working man. A and elevates man to his Creator ...." 3 The choice of what a
closed shop, on the other hand, is inherently coercive. That is man wishes to believe in is his and his alone. That is a
why, as is unmistakably reflected in our decisions, the latest domain left untouched, where intrusion is not allowed, a
of which isGuijarno v. Court of Industrial Relations, 12 it is far citadel to which the law is denied entry, whatever be his
from being a favorite of the law. For a statutory provision thoughts or hopes. In that sphere, what he wills reigns
then to further curtail its operation, is precisely to follow the supreme. The doctrine to which he pays fealty may for some
dictates of sound public policy. be unsupported by evidence, devoid of rational foundation.
No matter. There is no requirement as to its conformity to
The exhaustive and well-researched opinion of Justice what has found acceptance. It suffices that for him such a
Zaldivar thus is in the mainstream of constitutional tradition. concept holds undisputed sway. That is a recognition of
That, for me, is the channel to follow. man's freedom. That for him is one of the ways of self-
Separate Opinions realization. It would be to disregard the dignity that attaches
to every human being to deprive him of such an attribute.
FERNANDO, J, concurring: The "fixed star on our constitutional constellation," to borrow
the felicitous phrase of Justice Jackson, is that no official, not
The decision arrived at unanimously by this Court that excluding the highest, has it in his power to prescribe what
Republic Act No. 3350 is free from the constitutional shall be orthodox in matters of conscience or to mundane
infirmities imputed to it was demonstrated in a manner affairs, for that matter.
wellnigh conclusive in the learned, scholarly, and
comprehensive opinion so typical of the efforts of Gerona v. Secretary of Education 4 speaks similarly. In the
the ponente, Justice Zaldivar. Like the rest of my brethren, I language of its ponente, Justice Montemayor: "The realm of
concur fully. Considering moreover, the detailed attention belief and creed is infinite and limitless bounded only by
paid to each and every objection raised as to its validity and one's imagination and thought. So is the freedom of belief,
the clarity and persuasiveness with which it was shown to be including religious belief, limitless and without bounds. One
devoid of support in authoritative doctrines, it would appear may believe in most anything, however strange, bizarre and
that the last word has been written on this particular subject. unreasonable the same may appear to others, even heretical
Nonetheless, I deem it proper to submit this brief expression when weighed in the scales of orthodoxy or doctrinal
of my views on the transcendent character of religious standards." 5 There was this qualification though: "But
freedom 1 and its primacy even as against the claims of between the freedom of belief and the exercise of said belief,
protection to labor, 2 also one of the fundamental principles there is quite a stretch of road to travel. If the exercise of
of the Constitution. said religious belief clashes with the established institutions
of society and with the law, then the former must yield and
1. Religious freedom is identified with the liberty every give way to the latter. The Government steps in and either
individual possesses to worship or not a Supreme Being, and restrains said exercise or even prosecutes the one exercising
if a devotee of any sect, to act in accordance with its creed. it." 6 It was on that basis that the daily compulsory flag
Thus is constitutionally safeguarded, according to Justice ceremony in accordance with a statute 7 was found free from
the constitutional objection on the part of a religious sect, the The reservation of that supreme obligation, as a matter of
Jehovah's Witnesses, whose members alleged that their principle, would unquestionably be made by many of our
participation would be offensive to their religious beliefs. In a conscientious and law-abiding citizens. The essence of
case not dissimilar, West Virginia State Board of Education v. religion is belief in a relation to God involving duties superior
Barnette, 8 the American Supreme Court reached a contrary to those arising from any human relation." 10 The American
conclusion. Justice Jackson's eloquent opinion is, for this Chief Justice spoke in dissent, it is true, but with him in
writer, highly persuasive. Thus: "The case is made difficult agreement were three of the foremost jurists who ever sat in
not because the principles of its decision are obscure but that Tribunal, Justices Holmes, Brandeis, and Stone.
because the flag involved is our own. Nevertheless, we apply
the limitations of the Constitution with no fear that freedom 2. As I view Justice Zaldivar's opinion in that light, my
to be intellectually and spiritually diverse or even contrary concurrence, as set forth earlier, is wholehearted and entire.
will disintegrate the social organization. To believe that With such a cardinal postulate as the basis of our polity, it
patriotism will not flourish if patriotic ceremonies are has a message that cannot be misread. Thus is intoned with
voluntary and spontaneous instead of a compulsory routine is a reverberating clang, to paraphrase Cardozo, a fundamental
to make an unflattering estimate of the appeal of our principle that drowns all weaker sounds. The labored effort to
institutions to free minds. We can have intellectual cast doubt on the validity of the statutory provision in
individualism and the rich cultural diversities that we owe to question is far from persuasive. It is attended by futility. It is
exceptional minds only at the price of occasional eccentricity not for this Court, as I conceive of the judicial function, to
and abnormal attitudes. When they are so harmless to others restrict the scope of a preferred freedom.
or to the State as those we deal with here, the price is not 3. There is, however, the question of whether such an
too great. But freedom to differ is not limited to things that exception possesses an implication that lessens the
do not matter much. That would be a mere shadow of effectiveness of state efforts to protect labor, likewise, as
freedom. The test of its substance is the right to differ as to noted, constitutionally ordained. Such a view, on the surface,
things that touch the heart of the existing order." 9 may not be lacking in plausibility, but upon closer analysis, it
There is moreover this ringing affirmation by Chief Justice cannot stand scrutiny. Thought must be given to the freedom
Hughes of the primacy of religious freedom in the forum of of association, likewise an aspect of intellectual liberty. For
conscience even as against the command of the State itself: the late Professor Howe a constitutionalist and in his lifetime
"Much has been said of the paramount duty to the state, a the biographer of the great Holmes, it even partakes of the
duty to be recognized, it is urged, even though it conflicts political theory of pluralistic sovereignty. So great is the
with convictions of duty to God. Undoubtedly that duty to the respect for the autonomy accorded voluntary
11
state exists within the domain of power, for government may societies. Such a right implies at the very least that one
enforce obedience to laws regardless of scruples. When one's can determine for himself whether or not he should join or
belief collides with the power of the state, the latter is refrain from joining a labor organization, an institutional
supreme within its sphere and submission or punishment device for promoting the welfare of the working man. A
follows. But, in the forum of conscience, duty to a moral closed shop, on the other hand, is inherently coercive. That is
power higher than the state has always been maintained. why, as is unmistakably reflected in our decisions, the latest
of which isGuijarno v. Court of Industrial Relations, 12 it is far
from being a favorite of the law. For a statutory provision
then to further curtail its operation, is precisely to follow the
dictates of sound public policy.
Similar provisions were found in R.A. No. 2260, the Civil PD 442, The Labor Code
Service Act of 1959. This Act declared that the "Philippine
Civil Service ... (embraced) all branches, subdivisions and The Labor Code of the Philippines, Presidential Decree No.
instrumentalities of the government including government- 442, enacted within a year from effectivity of the 1973
owned and controlled corporations." 14 Constitution, 20 incorporated the proposition that the "terms
and conditions of employment of all government employees,
It prohibited such civil service employees who were including employees of government-owned and controlled
"employed in governmental functions" to belong to any labor corporations ... (are) governed by the Civil Service Law, rules
organization which imposed on their members "the obligation and regulations." 21 It incorporated, too, the constitutional
to strike or to join strikes." And one of the first issuances of mandate that the salaries of said employees "shall be
the President after the proclamation of martial law in standardized by the National Assembly."
September, 1972, was General Order No. 5
which inter alia banned strikes in vital industries," as well as The Labor Code, 22 however "exempted" government
'all rallies, demonstrations and other forms of group employees from the right to self-organization for purposes of
actions." 15 collective bargaining. While the Code contained provisions
acknowledging the right of "all persons employed in engage in strikes and other concerted activities in an attempt
commercial, industrial and agricultural enterprises, including to bring about changes in the conditions of their work. They
religious, medical or educational institutions operating for could not however do so under the Labor Code and its
profit" to "self-organization and to form, join or assist labor Implementing Rules and Regulations; these provided that
organizations for purposes of collective bargaining," they "government employees, including employees of
"exempted from the foregoing provisions: government-owned and/or controlled corporations," without
distinction as to function, were "exempted" (excluded is the
a) security guards; better term) from "the right to self-organization and to form,
b) government employees, including employees of join or assist labor organizations for purposes of collective
government government-owned and/ or controlled bargaining," and by implication, excluded as well from the
corporations; right to engage in concerted activities, such as strikes, as
coercive measures against their employers.
c) managerial employees; and
Members of supervisory unions who were not managerial
d) employees of religious, charitable, medical and employees, were declared by the Labor Code to be "eligible
educational institutions not operating for profit, provided the to join or assist the rank and file labor organization, and if
latter do not have existing collective agreements or none exists, to form or assist in the forming of such rank and
recognized unions at the time of the effectivity of the code or file organization " 24 Managerial employees, on the other
have voluntarily waived their exemption." 23 hand, were pronounced as 'not eligible to join, assist or form
any labor organization." 25 A "managerial employee" was
The reason for denying to government employees the right to defined as one vested with power or prerogatives to lay down
"self-organization and to form, join or assist labor and execute management policies and/or to hire, transfer,
organizations for purposes of collective bargaining" is suspend, lay-off, recall, discharge, assign or discipline
presumably the same as that under the Industrial Peace Act, employees, or to effectively recommend such managerial
i.e., that the terms and conditions of government actions." 26
employment are fixed by law and not by collective
bargaining. Presidential Decree No. 807
Some inconsistency appears to have arisen between the Clarification of the matter seems to have been very shortly
Labor Code and the Civil Service Act of 1959. Under the Civil attempted by the Civil Service Decree of the Philippines,
Service Act, persons "employed in proprietary functions of Presidential Decree No. 807 (eff., Oct. 6,1975) which
the government including, but not limited to, governmental superseded the Civil Service Law of 1959 (RA 2260) 27 and
corporations'-not being within "the policy of the Government repealed or modified "all laws, rules and regulations or parts
that the employees therein shall not strike for the purpose of thereof inconsistent with the provisions" thereof. The Decree
securing changes in their terms and conditions of categorically described the scope and coverage of the "Civil
employment"-could legitimately bargain with their respective Service" as embracing 44 every branch, agency, subdivision,
employers through their labor organizations, and corollarily and instrumentality of the government, including every
government owned or controlled corporation whether bargaining and negotiations, and peaceful concerted
performing governmental or propriety function. 28 The effect activities, including the right to strike in accordance with
was seemingly to prohibit government employees (including law;" and that said workers "shall be entitled to security of
those "employed in proprietary functions of the tenure, humane conditions of work, and a living wage, ...
Government") to "strike for the purpose of securing changes (and) also participate in policy and decision-making
of their terms and conditions of employment," 29 something processes affecting their rights and benefits as may be
which, as aforestated, they were allowed to do under the Civil provided by law. 34
Service Act of 1959. 30
CSC Memorandum Circular No. 6
Be this as it may it seems clear that PD 807 (the Civil Service
Decree) did not modify the declared ineligibility of Memorandum Circular No. 6 of the Civil Service Commission,
"managerial employees" from joining, assisting or issued on April 21, 1987 enjoined strikes by government
forming any labor organization. officials and employees, to wit: 35
Executive Order No. 111 ... Prior to the enactment by Congress of applicable laws
concerning strike by government employees, and considering
Executive Order No. 111, issued by President Corazon C. that there are existing laws which prohibit government
Aquino on December 24, 1986 in the exercise of legislative officials and employees from resorting to strike, the
powers under the Freedom Constitution, modified the general Commission enjoins, under pain of administrative sanctions,
disqualification above mentioned of 'government employees, all government officers and employees from staging strikes,
including employees of government-owned and/or controlled demonstrations, mass leaves, walk-outs and other forms of
corporations" from "the right to self-organization and to form, mass action which will result in temporary stoppage or
join or assist labor organizations for purposes of collective disruption of public services. To allow otherwise is to
bargaining.' It granted to employees "of government undermine or prejudice the government system.
corporations established under the Corporation Code x x the
right to organize and to bargain collectively with their Executive Order No. 180
respective employers." 31 To all 'other employees in the civil The scope of the constitutional right to self-organization of
service, ... (it granted merely) the right to form associations "government employees" above mentioned, was defined and
for purposes not contrary to law," 32 not for "purposes of delineated in Executive Order No. 180 (eff. June 1, 1987).
collective bargaining." According to this Executive Order, the right of self-
The 1987 Constitution organization does indeed pertain to all "employees of all
branches, subdivisions, instrumentalities and agencies of the
The provisions of the present Constitution on the matter Government, including government-owned or controlled
appear to be somewhat more extensive. They declare that corporations with original charters;" 36such employees "shall
the "right to self organization shall not be denied to not be discriminated against in respect of their employment
government employees;" 33 that the State "shall guarantee by reason of their membership in employees' organizations
the rights of all workers to self-organization, collective or participation in the normal activities of their organization x
x (and their) employment shall not be subject to the activities, but to "Civil Service Law and labor laws and
condition that they shall not join or shall relinquish their procedures whenever applicable;" and that in case "any
membership in the employees' organizations. 37 dispute remains unresolved after exhausting all available
remedies under existing laws and procedures, the parties
However, the concept of the government employees' right of may jointly refer the dispute to the (Public Sector Labor-
self-organization differs significantly from that of employees Management) Council for appropriate action." 41 What is
in the private sector. The latter's right of self-organization, more, the Rules and Regulations implementing Executive
i.e., "to form, join or assist labor organizations for purposes Order No. 180 explicitly provide that since the "terms and
of collective bargaining," admittedly includes the right to conditions of employment in the government, including any
deal and negotiate with their respective employers in order political subdivision or instrumentality thereof and
to fix the terms and conditions of employment and also, to government-owned and controlled corporations with original
engage in concerted activities for the attainment of their charters are governed by law, the employees therein shall
objectives, such as strikes, picketing, boycotts. But the right not strike for the purpose of securing changes thereof. 42
of government employees to "form, join or assist employees
organizations of their own choosing" under Executive Order On the matter of limitations on membership in labor unions
No. 180 is not regarded as existing or available for "purposes of government employees, Executive Order No. 180 declares
of collective bargaining," but simply "for the furtherance and that "high level employees whose functions are normally
protection of their interests." 38 considered as policy making or managerial, or whose duties
are of a highly confidential nature shall not be eligible to join
In other words, the right of Government employees to deal the organization of rank-and-file government employees. 43 A
and negotiate with their respective employers is not quite as "high level employee" is one "whose functions are normally
extensive as that of private employees. Excluded from considered policy determining, managerial or one whose
negotiation by government employees are the "terms and duties are highly confidential in nature. A managerial
conditions of employment ... that are fixed by law," it being function refers to the exercise of powers such as: 1. To
only those terms and conditions not otherwise fixed by law effectively recommend such managerial actions; 2. To
that "may be subject of negotiation between the duly formulate or execute management policies and decisions; or
recognized employees' organizations and appropriate 3. To hire, transfer, suspend, lay off, recall, dismiss, assign or
government authorities," 39 And while EO No. 180 concedes discipline employees. 44
to government employees, like their counterparts in the
private sector, the right to engage in concerted Republic Act No. 6715
activities, including the right to strike, the executive order is
quick to add that those activities must be exercised in The rule regarding membership in labor organizations of
accordance with law, i.e. are subject both to "Civil Service managerial and supervisory employees just adverted to, was
Law and rules" and "any legislation that may be enacted by clarified and refined by Republic Act No. 6715, effective on
Congress," 40 that "the resolution of complaints, grievances March 21, 1989, further amending the Labor Code.
and cases involving government employees" is not ordinarily Under RA 6715 labor unions are regarded as organized either
left to collective bargaining or other related concerted (a) "for purposes of negotiation," or (b) "for furtherance and
protection"of the members' rights. Membership in unions business that "is not inherently or exclusively a governmental
organized "for purposes of negotiation" is open only to rank- function, ... (but) is on the contrary, in essence and practice,
and-file employees. "Supervisory employees" are ineligible of a private nature and interest." 52
"for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor 1. The petitioners contend that the right of self-organization
organizations of their own," i.e., one organized "for and collectivebargaining had been withdrawn by the Labor
furtherance and protection" of their rights and interests. Code from government employees including those in
However, according to the Rules implementing RA 6715, government-owned and controlled corporations- chiefly for
"supervisory employees who are included in an existing rank- the reason that the terms and conditions of government
and- file bargaining unit, upon the effectivity of Republic Act employment, all embraced in civil service, may not be
No. 6715 shall remain in that unit ..." Supervisory employees modified by collective bargaining because set by law. It is
are "those who, in the interest of the employer, effectively therefore immaterial, they say, whether supervisors are
recommend such managerial actions 45 if the exercise of such members of rank-and-file unions or not; after all, the
authority is not merely routinary or clerical in nature but possibility of the employer's control of the members of the
requires the use of independent judgment. 46 union thru supervisors thus rendering collective bargaining
illusory, which is the main reason for the prohibition, is no
Membership in employees' organizations formed for purposes longer of any consequence.
of negotiation are open to rank-and-file employees only, as
above mentioned, and not to high level employees. 47 Indeed, This was true, for a time. As already discussed, both under
"managerial employees" or "high level employees" are, to the Labor Code and PD 807, government employees,
repeat, "not eligible to join, assist or form any labor including those in government-owned or controlled
organization" at all. 48 A managerialemployee is defined as corporations, were indeed precluded from bargaining as
"one who is vested with powers or prerogatives to lay down regards terms and conditions of employment because these
and execute, management policies and/or to hire, transfer, were set by law and hence could not possibly be altered by
suspend, lay-off, recall, discharge, assign or discipline negotiation.
employees." 49 But EO 111 restored the right to organize and to negotiate
This is how the law now stands, particularly with respect to and bargain of employees of "government corporations
supervisory employees vis a vis labor organizations of established under the Corporation Code." And EO 180, and
employees under them. apparently RA 6715, too, granted to all government
employees the right of collective bargaining or negotiation
Now, the GSIS performs proprietary functions. It is a non- except as regards those terms of their employment which
stock corporation, managed by a Board of Trustees exercising were fixed by law; and as to said terms fixed by law, they
the "usual corporate powers." 50 In other words, it exercises were prohibited to strike to obtain changes thereof.
all the powers of a corporation under the Corporation Law in
so far as they are not otherwise inconsistent with other 2. The petitioners appear to be correct in their view of the
applicable law. 51 It is engaged essentially in insurance, a disappearance from the law of the prohibition on supervisors
being members of labor organizations composed of
employees under their supervision. The Labor Code (PD 442) xxx xxx xxx
allowed supervisors (if not managerial) to join rank-and-file
unions. And under the Implementing Rules of RA 6715, Recovery of civil liability in the administrative proceedings
supervisors who were members of existing labor shall bar recovery under the Civil Code.
organizations on the effectivity of said RA 6715 were No criminal prosecution under this title may be instituted
explicitly authorized to "remain therein." without a final judgment, finding that an unfair labor practice
3. The correctness of the petitioners' theory that unfair labor was committed having been first obtained in the preceding
practices ceased to be crimes and were deemed merely paragraph. ...
administrative offenses in virtue of the Labor Code, cannot The decisive consideration is that at present, supervisors who
be gainsaid. Article 250 of the Labor Code did provide as were already members of a rank-and-file labor organization
follows: at the time of the effectivity of R.A. No. 6715, are authorized
ART. 250. Concept of unfair labor practice.-The concept of to "remain therein." It seems plain, in other words, that the
unfair labor practice is hereby modified. Henceforth, it shall maintenance by supervisors of membership in a rank-and-file
be considered merely as an administrative offense rather labor organization even after the enactment of a statute
than a criminal offense. Unfair labor practice complaints imposing a prohibition on such membership, is not only not a
shall, therefore, be processed like any ordinary labor crime, but is explicitly allowed, under present law.
disputes. Now, in a case decided as early as 1935, People v.
But unfair labor practices were declared to be crimes again Tamayo, 53 where the appellants had appealed from a
by later amendments of the Labor Code effected by Batas judgment convicting them of a violation of a municipal
Pambansa Blg. 70, approved on May 1, 1980. As thus -ordinance, and while their appeal was pending, the
amended, the Code now pertinently reads as follows: ordinance was repealed such that the act complained of
ceased to be a criminal act but became legal, this Court
ART. 248. Concept of unfair labor practice and procedure for dismissed the criminal proceedings, pronouncing the effects
prosecution thereof. Unfair labor practices violate the right of the repeal to be as follows:
of workers and employees to self organization, are inimical to
the legitimate interests of both labor and management In the leading case of the United States vs. Cuna (12 Phil.
including their right to bargain collectively and otherwise 241), and Wing vs. United States (218 U.S. 272), the doctrine
deal with each other in an atmosphere of freedom and was clearly established that in the Philippines repeal of a
mutual respect, and hinder the promotion of healthy and criminal act by its reenactment, even without a saving clause
stable labor management relations. Consequently, unfair would not destroy criminal liability. But not a single sentence
labor practices are not only violations of the civil rights of in either derision indicates that there was any desire to hold
both labor and management but are also offenses against that a person could be prosecuted convicted, and punished
the State which shall be subject to prosecution and for acts no longer criminal.
punishment as herein provided.
There is no question that at common law and in America a which is the basis for penalizing clandestine pre-reaping and
much more favorable attitude towards the accused exists pre-threshing.
relative to statutes that have been repealed than has been
adopted here. Our rule is more in conformity with the Spanish xxx xxx xxx
doctrine, but even in Spain, where the offense ceased to be As held in the Adillo case, 55 the act of pre-reaping and pre-
criminal, petition cannot be had (1 Pacheco, Commentaries, threshing without notice to the landlord, which is an offense
296). under the Agricultural Tenancy Law, had ceased to be an
The repeal here was absolute and not a reenactment and offense under the subsequent law, the Code of Agrarian
repeal by implication. Nor was there any saving clause. The Reforms. To prosecute it as an offense when the Code of
legislative intent as shown by the action of the municipal is Agrarian Reforms is already in force would be repugnant or
that such conduct, formerly denounced, is no longer deemed abhorrent to the policy and spirit of that Code and would
criminal, and it would be illogical for this court to attempt to subvert the manifest legislative intent not to punish anymore
sentence appellant for the offense that no longer exists. pre-reaping and pre-threshing without notice to the
landholder.
We are therefore of the opinion that the proceedings against
appellant must be dismissed. xxx xxx xxx
To the same effect and in even more unmistakable language The repeal of a penal law deprives the courts of jurisdiction
is People v. Almuete 54 where the defendants-appellees were to punish persons charged with a violation of the old penal
charged under section 39 of Republic Act No. 1199, as law prior to its repeal (People vs. Tamayo, 61 Phil. 225;
amended (the Agricultural Land Tenancy Law of 1954) which People vs. Sindiong and Pastor, 77 Phil. 1000; People vs.
penalized pre-threshing by either agricultural tenant or his Binuya, 61 Phil. 208; U.S. vs. Reyes, 10 Phil. 423; U.S. vs.
landlord. They sought and secured a dismissal on the ground, Academia, 10 Phil. 431. See dissent in Lagrimas vs. Director
among others, that there was no law punishing the act of Prisons, 57 Phil. 247, 252, 254).
charged-a reference to the fact that Republic Act No. 1199 The foregoing precedents dictate absolution of the appellants
had already been superseded by the Agricultural Land of the offenses imputed to them.
Reform Code of 1963 which instituted the leasehold system
and abolished share tenancy subject to certain conditions. On WHEREFORE, the judgments of conviction in CA-G.R. No.
appeal by the Government, this Court upheld the dismissal, 14724-CR and CA-G.R. No. 14856-CR, subject of the appeal,
saying: as well as those in Crim. Case No. 5275-R and Crim. Case No.
4130-R rendered by the Trial Court, are REVERSED and the
The legislative intent not to punish anymore the tenant's act accused-appellants ACQUITTED of the charges against them,
of pre-reaping and pre-threshing without notice to the with costs de officio.
landlord is inferable from the fact that, as already noted, the
Code of Agrarian Reforms did not reenact section 39 of the SO ORDERED.
Agricultural Tenancy Law and that it abolished share tenancy
taken a position not contrary to that of petitioner and, in fact,
has manifested . . that he is not opposing the petition . . ." 2
In this special civil action of certiorari the University of the For its part, the University, through its General
Philippines seeks the nullification of the Order dated October Counsel, 6 made of record its view that there should be two
30, 1990 of Director Pura Ferrer-Calleja of the Bureau of (2) unions: one for academic, the other for non-academic or
Labor Relations holding that "professors, associate professors administrative, personnel considering the dichotomy of
and assistant professors (of the University of the Philippines) interests, conditions and rules governing these employee
are . . rank-and-file employees . . ;" consequently, they groups.
should, together with the so-called non-academic, non-
Director Calleja ruled on the matter on August 7, 1990. 7 She
teaching, and all other employees of the University, be
declared that "the appropriate organizational unit . . should
represented by only one labor organization. 1 The University
embrace all the regular rank-and-file employees, teaching
is joined in this undertaking by the Solicitor General who "has
and non-teaching, of the University of the Philippines,
including all its branches" and that there was no sufficient and that management appear and bring copies of the
evidence "to justify the grouping of the non-academic or corresponding payrolls for January, June, and July, 1990 at
administrative personnel into an organization unit apart and the "usual pre-election conference . . ."
distinct from that of the academic or teaching personnel."
Director Calleja adverted to Section 9 of Executive Order No. At the pre-election conference held on March 22, 1990 at the
180, viz.: Labor Organizational Division of the DOLE, 8 the University
sought further clarification of the coverage of the term,
Sec. 9. The appropriate organizational unit shall be the "rank-and-file" personnel, asserting that not every employee
employer unit consisting of rank-and-file employees, unless could properly be embraced within both teaching and non-
circumstances otherwise require. teaching categories since there are those whose positions are
in truth managerial and policy-determining, and hence,
and Section 1, Rule IV of the Rules Implementing said EO 180 excluded by law.
(as amended by SEC. 2, Resolution of Public Sector Labor
Management Council dated May 14, 1989, viz.: At a subsequent hearing (on October 4, 1990), the University
filed a Manifestation seeking the exclusion from the
xxx xxx xxx organizational unit of those employees holding supervisory
For purposes of registration, an appropriate organizational positions among non-academic personnel, and those in
unit may refer to: teaching staff with the rank of Assistant Professor or higher,
submitting the following as grounds therefor:
xxx xxx xxx
1) Certain "high-level employees" with policy-making,
d. State universities or colleges, government-owned or managerial, or confidential functions, are ineligible to join
controlled corporations with original charters. rank-and-file employee organizations under Section 3, EO
180:
She went on to say that the general intent of EO 180 was
"not to fragmentize the employer unit, as "can be gleaned Sec. 3. High-level employees whose functions are normally
from the definition of the term "accredited employees' considered as policy-making or managerial or whose duties
organization," which refers to: are of a highly confidential nature shall not be eligible to join
the organization of rank-and file government employees;
. . a registered organization of the rank-and-file employees as
defined in these rules recognized to negotiate for the 2) In the University hierarchy, not all teaching and non-
employees in an organizational unit headed by an officer with teaching personnel belong the rank-and file: just as there are
sufficient authority to bind the agency, such as . . . . . . state those occupying managerial positions within the non-
colleges and universities. teaching roster, there is also a dichotomy between various
levels of the teaching or academic staff;
The Director thus commanded that a certification election be
"conducted among rank-and-file employees, teaching and 3) Among the non-teaching employees composed of
non-teaching" in all four autonomous campuses of the UP, Administrative Staff and Research personnel, only those
holding positions below Grade 18 should be regarded as 2. To formulate or execute management policies and
rank-and-file, considering that those holding higher grade decisions; or
positions, like Chiefs of Sections, perform supervisory
functions including that of effectively recommending 3. To hire, transfer, suspend, lay-off, recall, dismiss, assign or
termination of appointments or initiating appointments and discipline employees.
promotions; and The Director adjudged that said teachers are rank-and-file
4) Not all teaching personnel may be deemed included in the employees "qualified to join unions and vote in certification
term, "rank-and-file;" only those holding appointments at the elections." According to her
instructor level may be so considered, because those holding A careful perusal of the University Code . . shows that the
appointments from Assistant Professor to Associate Professor policy-making powers of the Council are limited to academic
to full Professor take part, as members of the University matters, namely, prescribing courses of study and rules of
Council, a policy-making body, in the initiation of policies and discipline, fixing student admission and graduation
rules with respect to faculty tenure and promotion. 9 requirements, recommending to the Board of Regents the
The ONAPUP quite categorically made of record its position; conferment of degrees, and disciplinary power over students.
that it was not opposing the University's proferred The policy-determining functions contemplated in the
classification of rank-and file employees. On the other hand, definition of a high-level employee pertain to managerial,
the "All UP Workers' Union" opposed the University's view, in executive, or organization policies, such as hiring, firing, and
a Position Paper presented by it under date of October 18, disciplining of employees, salaries, teaching/working hours,
1990. other monetary and non-monetary benefits, and other terms
and conditions of employment. They are the usual issues in
Director Calleja subsequently promulgated an Order dated collective bargaining negotiations so that whoever wields
October 30, 1990, resolving the "sole issue" of "whether or these powers would be placed in a situation of conflicting
not professors, associate professors and assistant professors interests if he were allowed to join the union of rank-and-file
are included in the definition of high-level employee(s)" in employees.
light of Rule I, Section (1) of the Implementing Guidelines of
Executive Order No. 180, defining "high level employee" as The University seasonably moved for reconsideration,
follows: seeking to make the following points, to wit:
1. High Level Employee is one whose functions are 1) UP professors do "wield the most potent managerial
normally considered policy determining, managerial or one powers: the power to rule on tenure, on the creation of new
whose duties are highly confidential in nature. A managerial programs and new jobs, and conversely, the abolition of old
function refers to the exercise of powers such as: programs and the attendant re-assignment of employees.
1. To effectively recommend such managerial actions; 2) To say that the Council is "limited to (acting on) academic
matters" is error, since academic decisions "are the most
important decisions made in a University . . (being, as it dichotomy of interests, conditions and rules existing between
were) the heart, the core of the University as a workplace. them.
3) Considering that the law regards as a "high level" As regards the first issue, the Court is satisfied that it has
employee, one who performs either policy-determining, been correctly resolved by the respondent Director of Bureau
managerial, or confidential functions, the Director erred in Relations. In light of Executive Order No. 180 and its
applying only the "managerial functions" test, ignoring the implementing rules, as well as the University's charter and
"policy-determining functions" test. relevant regulations, the professors, associate professors and
assistant professors (hereafter simply referred to as
4) The Director's interpretation of the law would lead to professors) cannot be considered as exercising such
absurd results, e.g.: "an administrative officer of the College managerial or highly confidential functions as would justify
of Law is a high level employee, while a full Professor who their being categorized as "high-level employees" of the
has published several treatises and who has distinguished institution.
himself in argument before the Supreme Court is a mere
rank-and-file employee. A dormitory manager is classified as The Academic Personnel Committees, through which the
a high level employee, while a full Professor or Political professors supposedly exercise managerial functions, were
Science with a Ph. D. and several Honorary doctorates is constituted "in order to foster greater involvement of the
classified as rank-and-file." 10 faculty and other academic personnel in appointments,
promotions, and other personnel matters that directly affect
The motion for reconsideration was denied by Director them." 14 Academic Personnel Committees at the
Calleja, by Order dated November 20, 1990. departmental and college levels were organized "consistent
The University would now have this Court declare void the with, and demonstrative of the very idea of consulting the
Director's Order of October 30, 1990 as well as that of faculty and other academic personnel on matters directly
November 20, 1990. 11 A temporary restraining order was affecting them" and to allow "flexibility in the determination
issued by the Court, by Resolution dated December 5, 1990 of guidelines peculiar to a particular department or
conformably to the University's application therefor. college." 15
Two issues arise from these undisputed facts. One is whether Personnel actions affecting the faculty and other academic
or not professors, associate professors and assistant personnel should, however, "be considered under uniform
professors are "high-level employees" "whose functions are guidelines and consistent with the Resolution of the Board (of
normally considered policy determining, managerial or . . Regents) adopted during its 789th Meeting (11-26-69)
highly confidential in nature." The other is whether or not, creating the University Academic Personnel Board." 16 Thus,
they, and other employees performing academic the Departmental Academic Personnel Committee is given
12
functions, should comprise a collective bargaining unit the function of "assist(ing) in the review of the
distinct and different from that consisting of the non- recommendations initiated by the Department Chairman with
academic employees of the University, 13 considering the regard to recruitment, selection, performance evaluation,
tenure and staff development, in accordance with the general
guidelines formulated by the University Academic Personnel 4. Assist the Chancellor in the review of recommendations on
Board and the implementing details laid down by the College academic promotions and on other matters affecting faculty
Academic Personnel Committee;" 17 while the College status and welfare.
Academic Personnel Committee is entrusted with the
following functions: 18 From the foregoing, it is evident that it is the University
Academic Personnel Committee, composed of deans, the
1. Assist the Dean in setting up the details for the assistant for academic affairs and the chief of personnel,
implementation of policies, rules, standards or general which formulates the policies, rules and standards respecting
guidelines as formulated by the University Academic selection, compensation and promotion of members of the
Personnel Board; academic staff. The departmental and college academic
personnel committees' functions are purely recommendatory
2. Review the recommendation submitted by the DAPCs with in nature, subject to review and evaluation by the University
regard to recruitment, selection, performance evaluation, Academic Personnel Board. In Franklin Baker Company of the
tenure, staff development, and promotion of the faculty and Philippines vs. Trajano,20 this Court reiterated the principle
other academic personnel of the College; laid down in National Merchandising Corp. vs. Court of
3. Establish departmental priorities in the allocation of Industrial Relations, 21that the power to recommend, in order
available funds for promotion; to qualify an employee as a supervisor or managerial
employee "must not only be effective but the exercise of
4. Act on cases of disagreement between the Chairman and such authority should not be merely of a routinary or clerical
the members of the DAPC particularly on personnel matters nature but should require the use of independent judgment."
covered by this Order; Where such recommendatory powers, as in the case at bar,
are subject to evaluation, review and final action by the
5. Act on complaints and/or protests against personnel department heads and other higher executives of the
actions made by the Department Chairman and/or the DAPC. company, the same, although present, are not effective and
not an exercise of independent judgment as required by law.
The University Academic Personnel Board, on the other hand,
performs the following functions: 19 Significantly, the personnel actions that may be
recommended by the departmental and college academic
1. Assist the Chancellor in the review of the
personnel committees must conform with the general
recommendations of the CAPC'S.
guidelines drawn up by the university personnel academic
2. Act on cases of disagreement between the Dean and the committee. This being the case, the members of the
CAPC. departmental and college academic personnel committees
are not unlike the chiefs of divisions and sections of the
3. Formulate policies, rules, and standards with respect to the National Waterworks and Sewerage Authority whom this
selection, compensation, and promotion of members of the Court considered as rank-and-file employees in National
academic staff. Waterworks & Sewerage Authority vs. NWSA Consolidated
Unions, 22 because "given ready policies to execute and
standard practices to observe for their execution, . . . they Sec. 3. Number of Members. In addition to the Chairman,
have little freedom of action, as their main function is merely in the case of a department, and the Dean in the case of a
to carry out the company's orders, plans and policies." college, there shall be such number of members representing
the faculty and academic personnel as will afford a fairly
The power or prerogative pertaining to a high-level employee representative, deliberative and manageable group that can
"to effectively recommend such managerial actions, to handle evaluation of personnel actions.
formulate or execute management policies or decisions
and/or to hire, transfer, suspend, lay-off, recall, dismiss, Neither can membership in the University Council elevate the
assign or discipline employees" 23 is exercised to a certain professors to the status of high-level employees. Section 6 (f)
degree by the university academic personnel and 9 of the UP Charter respectively provide: 26
board/committees and ultimately by the Board of Regents in
accordance with Section 6 of the University Sec. 6. The Board of Regents shall have the following powers
24
Charter, thus: and duties . . . ;
(e) To appoint, on the recommendation of the President of the xxx xxx xxx
University, professors, instructors, lecturers and other (f) To approve the courses of study and rules of discipline
employees of the University; to fix their compensation, hours drawn up by the University Council as hereinafter
of service, and such other duties and conditions as it may provided; . . .
deem proper; to grant them in its discretion leave of absence
under such regulations as it may promulgate, any other Sec. 9. There shall be a University Council consisting of the
provision of law to the contrary notwithstanding, and to President of the University and of all instructors in the
remove them for cause after investigation and hearing shall university holding the rank of professor, associate professor,
have been had. or assistant professor. The Council shall have the power to
prescribe the courses of study and rules of discipline, subject
Another factor that militates against petitioner's espousal of to the approval of the Board of Regents. It shall fix the
managerial employment status for all its professors through requirements for admission to any college of the university,
membership in the departmental and college academic as well as for graduation and the receiving of a degree. The
personnel committees is that not all professors are members Council alone shall have the power to recommend students
thereof. Membership and the number of members in the or others to be recipients of degrees. Through its president or
committees are provided as follows: 25 committees, it shall have disciplinary power over the
Sec. 2. Membership in Committees. Membership in students within the limits prescribed by the rules of discipline
committees may be made either through appointment, approved by the Board of Regents. The powers and duties of
election, or by some other means as may be determined by the President of the University, in addition to those
the faculty and other academic personnel of a particular specifically provided in this Act shall be those usually
department or college. pertaining to the office of president of a university.
It is readily apparent that the policy-determining functions of Be that as it may, does it follow, as public respondent would
the University Council are subject to review, evaluation and propose, that all rank-and-file employees of the university are
final approval by the Board of Regents. The Council's power to be organized into a single collective bargaining unit?
of discipline is likewise circumscribed by the limits imposed
by the Board of Regents. What has been said about the A "bargaining unit" has been defined as a group of
recommendatory powers of the departmental and college employees of a given employer, comprised of all or less than
academic personnel committees applies with equal force to all of the entire body of employees, which the collective
the alleged policy-determining functions of the University interest of all the employees, consistent with equity to the
Council. employer, indicate to be the best suited to serve the
reciprocal rights and duties of the parties under the collective
Even assuming arguendo that UP professors discharge policy- bargaining provisions of the law. 28
determining functions through the University Council, still
such exercise would not qualify them as high-level Our labor laws do not however provide the criteria for
employees within the context of E.O. 180. As correctly determining the proper collective bargaining unit. Section 12
observed by private respondent, "Executive Order No. 180 is of the old law, Republic Act No. 875 otherwise known as the
a law concerning public sector unionism. It must therefore be Industrial Peace Act, simply reads as follows: 29
construed within that context. Within that context, the Sec. 12. Exclusive Collective Bargaining Representation for
University of the Philippines represents the government as an Labor Organizations. The labor organization designated or
employer. 'Policy-determining' refers to policy-determination selected for the purpose of collective bargaining by the
in university mattes that affect those same matters that may majority of the employees in an appropriate collective
be the subject of negotiation between public sector bargaining unit shall be the exclusive representative of all the
management and labor. The reason why 'policy-determining' employees in such unit for the purpose of collective
has been laid down as a test in segregating rank-and-file bargaining in respect to rates of pay, wages, hours of
from management is to ensure that those who lay down employment, or other conditions of employment; Provided,
policies in areas that are still negotiable in public sector That any individual employee or group of employees shall
collective bargaining do not themselves become part of those have the right at any time to present grievances to their
employees who seek to change these policies for their employer.
collective welfare." 27
Although said Section 12 of the Industrial Peace Act was
The policy-determining functions of the University Council subsequently incorporated into the Labor Code with minor
refer to academic matters, i.e. those governing the changes, no guidelines were included in said Code for
relationship between the University and its students, and not determination of an appropriate bargaining unit in a given
the University as an employer and the professors as case. 30 Thus, apart from the single descriptive word
employees. It is thus evident that no conflict of interest "appropriate," no specific guide for determining the proper
results in the professors being members of the University collective bargaining unit can be found in the statutes.
Council and being classified as rank-and-file employees.
Even Executive Order No. 180 already adverted to is not An enlightening appraisal of the problem of defining an
much help. All it says, in its Section 9, is that "(t)he appropriate bargaining unit is given in the 10th Annual
appropriate organizational unit shall be the employer unit Report of the National Labor Relations Board wherein it is
consisting of rank-and-file employees, unless circumstances emphasized that the factors which said board may consider
otherwise require." Case law fortunately furnishes some and weigh in fixing appropriate units are: the history, extent
guidelines. and type of organization of employees; the history of their
collective bargaining; the history, extent and type of
When first confronted with the task of determining the proper organization of employees in other plants of the same
collective bargaining unit in a particular controversy, the employer, or other employers in the same industry; the skill,
Court had perforce to rely on American jurisprudence. wages, work, and working conditions of the employees; the
In Democratic Labor Association vs. Cebu Stevedoring desires of the employees; the eligibility of the employees for
Company, Inc., decided on February 28, 1958, 31 the Court membership in the union or unions involved; and the
observed that "the issue of how to determine the proper relationship between the unit or units proposed and the
collective bargaining unit and what unit would be appropriate employer's organization, management, and operation. . . .
to be the collective bargaining
agency" . . . "is novel in this jurisdiction; however, American . . In said report, it is likewise emphasized that the basic test
precedents on the matter abound . . (to which resort may be in determining the appropriate bargaining unit is that a unit,
had) considering that our present Magna Carta has been to be appropriate, must affect a grouping of employees who
patterned after the American law on the subject." Said the have substantial, mutual interests in wages, hours, working
Court: conditions and other subjects of collective bargaining (citing
Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162). .
. . . Under these precedents, there are various factors which ..
must be satisfied and considered in determining the proper
constituency of a bargaining unit. No one particular factor is The Court further explained that "(t)he test of the grouping is
itself decisive of the determination. The weight accorded to community or mutuality of interests. And this is so because
any particular factor varies in accordance with the particular 'the basic test of an asserted bargaining unit's acceptability
question or questions that may arise in a given case. What is whether or not it is fundamentally the combination which
are these factors? Rothenberg mentions a good number, but will best assure to all employees the exercise of their
the most pertinent to our case are: (1) will of the employees collective bargaining rights' (Rothenberg on Labor Relations,
(Globe Doctrine); (2) affinity and unit of employees' interest, 490)." Hence, in that case, the Court upheld the trial court's
such as substantial similarity of work and duties, or similarity conclusion that two separate bargaining units should be
of compensation and working conditions; (3) prior collective formed, one consisting of regular and permanent employees
bargaining history; and (4) employment status, such as and another consisting of casual laborers or stevedores.
temporary, seasonal probationary employees. . . .
Since then, the "community or mutuality of interests"
xxx xxx xxx test has provided the standard in determining the proper
constituency of a collective bargaining unit. In Alhambra
Cigar & Cigarette Manufacturing Company, et al. vs. classes: one, the group composed of employees whose
Alhambra Employees' Association (PAFLU), 107 Phil. 23, the functions are non-academic, i.e., janitors, messengers,
Court, noting that the employees in the administrative, sales typists, clerks, receptionists, carpenters, electricians,
and dispensary departments of a cigar and cigarette grounds-keepers, chauffeurs, mechanics,
32
manufacturing firm perform work which have nothing to do plumbers; and two, the group made up of those performing
with production and maintenance, unlike those in the raw academic functions, i.e., full professors, associate professors,
lead (malalasi), cigar, cigarette, packing (precintera) and assistant professors, instructors who may be judges or
engineering and garage departments, authorized the government executives and research, extension and
formation of the former set of employees into a separate professorial staff. 33 Not much reflection is needed to
collective bargaining unit. The ruling in the Democratic Labor perceive that the community or mutuality of interests which
Association case, supra, was reiterated in Philippine Land-Air- justifies the formation of a single collective bargaining unit is
Sea Labor Unit vs. Court of Industrial Relations, 110 Phil. 176, wanting between the academic and non-academic personnel
where casual employees were barred from joining the union of the university. It would seem obvious that teachers would
of the permanent and regular employees. find very little in common with the University clerks and
other non-academic employees as regards responsibilities
Applying the same "community or mutuality of interests" and functions, working conditions, compensation rates, social
test, but resulting in the formation of only one collective life and interests, skills and intellectual pursuits, cultural
bargaining units is the case of National Association of Free activities, etc. On the contrary, the dichotomy of interests,
Trade Unions vs. Mainit Lumber Development Company the dissimilarity in the nature of the work and duties as well
Workers Union-United Lumber and General Workers of the as in the compensation and working conditions of the
Phils., G.R. No. 79526, December 21, 1990, 192 SCRA 598. In academic and non-academic personnel dictate the separation
said case, the Court ordered the formation of a single of these two categories of employees for purposes of
bargaining unit consisting of the Sawmill Division in Butuan collective bargaining. The formation of two separate
City and the Logging Division in Zapanta Valley, Kitcharao, bargaining units, the first consisting of the rank-and-file non-
Agusan Norte of the Mainit Lumber Development Company. academic personnel, and the second, of the rank-and-file
The Court reasoned: academic employees, is the set-up that will best assure to all
Certainly, there is a mutuality of interest among the the employees the exercise of their collective bargaining
employees of the Sawmill Division and the Logging Division. rights. These special circumstances, i.e., the dichotomy of
Their functions mesh with one another. One group needs the interests and concerns as well as the dissimilarity in the
other in the same way that the company needs them both. nature and conditions of work, wages and compensation
There may be difference as to the nature of their individual between the academic and non-academic personnel, bring
assignments but the distinctions are not enough to warrant the case at bar within the exception contemplated in Section
the formation of a separate bargaining unit. 9 of Executive Order No. 180. It was grave abuse of
discretion on the part of the Labor Relations Director to have
In the case at bar, the University employees may, as already ruled otherwise, ignoring plain and patent realities.
suggested, quite easily be categorized into two general
WHEREFORE, the assailed Order of October 30, 1990 is LITHOGRAPHIC SERVICES, INC. SUPERVISORY,
hereby AFFIRMED in so far as it declares the professors, ADMINISTRATIVE, PERSONNEL, PRODUCTION,
associate professors and assistant professors of the ACCOUNTING AND CONFIDENTIAL EMPLOYEES
University of the Philippines as rank-and-file employees. The ASSOCIATION-KAISAHAN NG MANGGAWANG PILIPINO
Order of August 7, 1990 is MODIFIED in the sense that the (KAMPIL-KATIPUNAN), respondents.
non-academic rank-and-file employees of the University of
the Philippines shall constitute a bargaining unit to the Romero, Lagman, Valdecantos & Arreza Law Offices for
exclusion of the academic employees of the institution i.e., petitioner.
full professors, associate professors, assistant professors, Esteban M. Mendoza for private respondent.
instructors, and the research, extension and professorial
staff, who may, if so minded, organize themselves into a
separate collective bargaining unit; and that, therefore, only
said non-academic rank-and-file personnel of the University GUTIERREZ, JR., J.:p
of the Philippines in Diliman, Manila, Los Baos and the
This is a petition for certiorari under Rule 65 of the Rules of
Visayas are to participate in the certification election.
Court seeking the modification of the Order dated 14
SO ORDERED. December 1990 and the Resolution dated 21 November 1990
issued by the public respondents.
In reply to Sen. Guingona's query whether "supervisors" are Sec. 3 Employees' Right to Self Organization. Employees
included in the term "employee", Sen. Herrera stated that shall have the right to self-organization and to form, join or
while they are considered as rank-and-file employees, they assist labor organizations of their own choosing for the
cannot join the union and they would have to form their own purpose of collective bargaining through representatives of
supervisors' union pursuant to Rep. Act 875. (supra, p. 2288) their own choosing and to engage in concerted activities for
the purpose of collective bargaining and other mutual aid or
The peculiar role of supervisors is such that while they are protection. Individuals employed as supervisors shall not be
not managers, when they recommend action implementing eligible for membership in a labor organization of employees
management policy or ask for the discipline or dismissal of under their supervision but may form separate organizations
subordinates, they identify with the interests of the employer of their own (Emphasis supplied).
and may act contrary to the interests of the rank-and-file.
This was not the consideration in the Adamson case because
We agree with the petitioner's contention that a conflict of as mentioned earlier, the rank-and-file employees in
interest may arise in the areas of discipline, collective the Adamson case were not under the supervision of the
bargaining and strikes. supervisors involved.
Members of the supervisory union might refuse to carry out Meanwhile, Article 245 of the Labor Code as amended by
disciplinary measures against their co-member rank-and-file Rep. Act No. 6715 provides:
employees.
Art. 245. Ineligibility of managerial employees to join any
In the area of bargaining, their interests cannot be labor organization: right of supervisory employees.
considered identical. The needs of one are different from Managerial employees are not eligible to join, assist or form
those of the other. Moreover, in the event of a strike, the any labor organization. Supervisory employees shall not be
national federation might influence the supervisors' union to eligible for membership in a labor organization of the rank-
conduct a sympathy strike on the sole basis of affiliation. and-file employees but may join, assist or form separate
More important, the factual issues in the Adamson case are labor organizations of their own.
different from the present case. First, the rank-and-file The Court construes Article 245 to mean that, as in Section 3
employees in the Adamson case are not directly under the of the Industrial Peace Act, supervisors shall not be given an
supervisors who comprise the supervisors' union. In the case occasion to bargain together with the rank-and-file against
at bar, the rank-and file employees are directly under the the interests of the employer regarding terms and conditions
supervisors organized by one and the same federation. of work
The contemplation of the law in Sec. 3 of the Industrial Peace Second, the national union in the Adamson case did not
Act is to prohibit supervisors from joining a labor organization actively represent its local chapters. In the present case, the
local union is actively represented by the national federation. while another would bring about equity, justice, and the
In fact, it was the national federation, theKAMPIL-KATIPUNAN, promotion of labor peace, there can be no doubt as to what
which initially filed a petition for certification in behalf of the interpretation shall prevail.
respondent union.
Finally, the respondent contends that the law prohibits the
Thus, if the intent of the law is to avoid a situation where employer from interfering with the employees' right to self-
supervisors would merge with the rank and-file or where the organization.
supervisors' labor organization would represent conflicting
interests, then a local supervisors' union should not be There is no question about this intendment of the law. There
allowed to affiliate with the national federation of union of is, however, in the present case, no violation of such a
rank-and-file employees where that federation actively guarantee to the employee. Supervisors are not prohibited
participates in union activity in the company. from forming their own union. What the law prohibits is their
membership in a labor organization of rank-and-file
The petitioner further contends that the term labor employees (Art. 245, Labor Code) or their joining a national
organization includes a federation considering that Art. 212 federation of rank-and-file employees that includes the very
(g) mentions "any union or association of employees." local union which they are not allowed to directly join.
The respondent, however, argues that the phrase refers to a In a motion dated November 15, 1991 it appears that the
local union only in which case, the prohibition in Art. 245 is petitioner has knuckled under to the respondents' pressures
inapplicable to the case at bar. and agreed to let the national federation KAMPIL-KATIPUNAN
represent its supervisors in negotiating a collective
The prohibition against a supervisors' union joining a local bargaining agreement. Against the advise of its own counsel
union of rank-and-file is replete with jurisprudence. The Court and on the basis of alleged "industrial peace", the petitioner
emphasizes that the limitation is not confined to a case of expressed a loss of interest in pursuing this action. The
supervisors wanting to join a rank-and-file local union. The petitioner is, of course, free to grant whatever concessions it
prohibition extends to a supervisors' local union applying for wishes to give to its employees unilaterally or through
membership in a national federation the members of which negotiations but we cannot allow the resulting validation of
include local unions of rank-and-file employees. The intent of an erroneous ruling and policy of the Department of Labor
the law is clear especially where, as in the case at bar, the and Employment (DOLE) to remain on the basis of the
supervisors will be co-mingling with those employees whom petitioner's loss of interest. The December 14, 1990 order
they directly supervise in their own bargaining unit. and the November 21, 1990 resolution of DOLE are contrary
Technicalities should not be allowed to stand in the way of to law and must be declared as such.
equitably and completely resolving the rights and obligations WHEREFORE, the petition is hereby GRANTED. The private
of the parties. (Rapid Manpower Consultants, Inc. v. NLRC, respondent is disqualified from affiliating with a national
190 SCRA 747 [1990]) What should be paramount is the federation of labor organizations which includes the
intent behind the law, not its literal construction. Where one petitioner's rank-and-file employees.
interpretation would result in mischievous consequences
SO ORDERED.
Private respondent FTI moved to dismiss the complaint on Hence this Petition for Certiorari.
the ground of lack of jurisdiction. It argued that being a The only question raised in the present Petition is whether or
government-owned and controlled corporation, its employees not a labor law claim against a government-owned and
are governed by the Civil Service Law not by the Labor Code, controlled corporation, such as private respondent FTI, falls
and that claims arising from employment fall within the within the jurisdiction of the Department of Labor and
jurisdiction of the Civil Service Commission and not the Employment.
Department of Labor and Employment.
In refusing to take cognizance of petitioners' complaint
The petitioners opposed the Motion to Dismiss contending against private respondent, the Labor Arbiter and the
that although FTI is a corporation owned and controlled by National Labor Relations Commission relied chiefly on this
the government, it has still the marks of a private Court's ruling in National Housing Authority v. Juco, 2which
held that "there should no longer be any question at this time It is the 1987 Constitution, and not the case law embodied
that employees of government-owned or controlled in Juco, 5 which applies in the case at bar, under the principle
corporations are governed by the civil service law and civil that jurisdiction is determined as of the time of the filing of
service rules and regulations. the complaint. 6 At the time the complaint against private
respondent FTI was filed (i.e., 20 March 1987), and at the
Juco was decided under the 1973 Constitution, Article II-B, time the decisions of the respondent Labor Arbiter and
Section 1 (1) of which provided: National Labor Relations Commission were rendered (i.e., 31
The civil service embraces every branch, agency, August 1987 and 18 March 1988, respectively), the 1987
subdivision, and instrumentality of the Government, including Constitution had already come into effect. latter of
every government-owned or controlled corporation. Instruction No. 1013, dated 19 April 1980, included Food
Terminal, Inc. in the category of "government-owned or
The 1987 Constitution which took effect on 2 February 1987, controlled corporations." 7 Since then, FTI served as the
has on this point a notably different provision which reads: marketing arm of the National Grains Authority (now known
as the National Food Authority). The pleadings show that FTI
The civil service embraces all branches, subdivisions, was previously a privately owned enterprise, created and
instrumentalities, and agencies of the Government, including organized under the general incorporation law, with the
government-owned or controlled corporations with original corporate name "Greater Manila Food Terminal Market,
charter. (Article IX-B, Section 2 [1]). Inc." 8 The record does not indicate the precise amount of the
capital stock of FM that is owned by the government; the
The Court, in National Service Corporation (NASECO) v.
petitioners' claim, and this has not been disputed, that FTl is
National Labor Relations Commission, G.R. No. 69870,
not hundred percent (100%) government-owned and that it
promulgated on 29 November 1988, 3 quoting extensively
has some private shareholders.
from the deliberations 4 of the 1986 Constitutional
Commission in respect of the intent and meaning of the new We conclude that because respondent FTI is government-
phrase "with original charter," in effect held that owned and controlled corporation without original charter, it
government-owned and controlled corporations with original is the Department of Labor and Employment, and not the
charter refer to corporations chartered by special lawas Civil Service Commission, which has jurisdiction over the
distinguished from corporations organized under our general dispute arising from employment of the petitioners with
incorporation statute-the Corporation Code. InNASECO, the private respondent FTI, and that consequently, the terms and
company involved had been organized under the general conditions of such employment are governed by the Labor
incorporation statute and was a subsidiary of the National Code and not by the Civil Service Rules and Regulations.
Investment Development Corporation (NIDC) which in turn
was a subsidiary of the Philippine National Bank, a bank Public respondent National Labor Relations Commission acted
chartered by a special statute. Thus, government-owned or without or in excess of its jurisdiction in dismissing
controlled corporations like NASECO are effectively excluded petitioners complaint.
from the scope of the Civil Service.
ACCORDINGLY, the Petition for certiorari is hereby GRANTED writ of preliminary injunction against petitioners, alleging
and the Decision of public respondent Labor Arbiter dated 31 that on June 9, 1987, the officers and members of SSSEA
August 1987 and the Decision of public respondent staged an illegal strike and baricaded the entrances to the
Commission dated 18 March 1988, both in NLRC-NCR Case SSS Building, preventing non-striking employees from
No. 00-03-01035-87 are hereby SET ASIDE. The case is reporting for work and SSS members from transacting
hereby REMANDED to the Labor Arbiter for further business with the SSS; that the strike was reported to the
appropriate proceedings. Public Sector Labor - Management Council, which ordered the
strikers to return to work; that the strikers refused to return
to work; and that the SSS suffered damages as a result of the
G.R. No. 85279 July 28, 1989 strike. The complaint prayed that a writ of preliminary
injunction be issued to enjoin the strike and that the strikers
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION be ordered to return to work; that the defendants (petitioners
(SSSEA), DIONISION T. BAYLON, RAMON MODESTO, herein) be ordered to pay damages; and that the strike be
JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE declared illegal.
ALDAY, SERGIO ARANETA, PLACIDO AGUSTIN, VIRGILIO
MAGPAYO, petitioner, It appears that the SSSEA went on strike after the SSS failed
vs. to act on the union's demands, which included:
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM implementation of the provisions of the old SSS-SSSEA
(SSS), HON. CEZAR C. PERALEJO, RTC, BRANCH 98, collective bargaining agreement (CBA) on check-off of union
QUEZON CITY, respondents. dues; payment of accrued overtime pay, night differential
pay and holiday pay; conversion of temporary or contractual
Vicente T. Ocampo & Associates for petitioners. employees with six (6) months or more of service into regular
and permanent employees and their entitlement to the same
salaries, allowances and benefits given to other regular
employees of the SSS; and payment of the children's
CORTES, J:
allowance of P30.00, and after the SSS deducted certain
Primarily, the issue raised in this petition is whether or not amounts from the salaries of the employees and allegedly
the Regional Trial Court can enjoin the Social Security System committed acts of discrimination and unfair labor practices
Employees Association (SSSEA) from striking and order the [Rollo, pp. 21-241].
striking employees to return to work. Collaterally, it is
The court a quo, on June 11, 1987, issued a temporary
whether or not employees of the Social Security System
restraining order pending resolution of the application for a
(SSS) have the right to strike.
writ of preliminary injunction [Rollo, p. 71.] In the meantime,
The antecedents are as follows: petitioners filed a motion to dismiss alleging the trial court's
lack of jurisdiction over the subject matter [Rollo, pp. 72-82.]
On June 11, 1987, the SSS filed with the Regional Trial Court To this motion, the SSS filed an opposition, reiterating its
of Quezon City a complaint for damages with a prayer for a prayer for the issuance of a writ of injunction [Rollo, pp. 209-
222]. On July 22,1987, in a four-page order, the court a quo and Employment or the National Labor Relations
denied the motion to dismiss and converted the restraining Commission, since the case involves a labor dispute.
order into an injunction upon posting of a bond, after finding
that the strike was illegal [Rollo, pp. 83- 86]. As petitioners' On the other hand, the SSS advances the contrary view, on
motion for the reconsideration of the aforesaid order was also the ground that the employees of the SSS are covered by
denied on August 14, 1988 [Rollo, p. 94], petitioners filed a civil service laws and rules and regulations, not the Labor
petition for certiorari and prohibition with preliminary Code, therefore they do not have the right to strike. Since
injunction before this Court. Their petition was docketed as neither the DOLE nor the NLRC has jurisdiction over the
G.R. No. 79577. In a resolution dated October 21, 1987, the dispute, the Regional Trial Court may enjoin the employees
Court, through the Third Division, resolved to refer the case from striking.
to the Court of Appeals. Petitioners filed a motion for In dismissing the petition for certiorari and prohibition with
reconsideration thereof, but during its pendency the Court of preliminary injunction filed by petitioners, the Court of
Appeals on March 9,1988 promulgated its decision on the Appeals held that since the employees of the SSS, are
referred case [Rollo, pp. 130-137]. Petitioners moved to recall government employees, they are not allowed to strike, and
the Court of Appeals' decision. In the meantime, the Court on may be enjoined by the Regional Trial Court, which had
June 29,1988 denied the motion for reconsideration in G.R. jurisdiction over the SSS' complaint for damages, from
No. 97577 for being moot and academic. Petitioners' motion continuing with their strike.
to recall the decision of the Court of Appeals was also denied
in view of this Court's denial of the motion for reconsideration Thus, the sequential questions to be resolved by the Court in
[Rollo, pp. 141- 143]. Hence, the instant petition to review deciding whether or not the Court of Appeals erred in finding
the decision of the Court of Appeals [Rollo, pp. 12-37]. that the Regional Trial Court did not act without or in excess
of jurisdiction when it took cognizance of the case and
Upon motion of the SSS on February 6,1989, the Court issued enjoined the strike are as follows:
a temporary restraining order enjoining the petitioners from
staging another strike or from pursuing the notice of strike 1. Do the employees of the SSS have the right to strike?
they filed with the Department of Labor and Employment on
January 25, 1989 and to maintain the status quo [Rollo, pp. 2. Does the Regional Trial Court have jurisdiction to hear the
151-152]. case initiated by the SSS and to enjoin the strikers from
continuing with the strike and to order them to return to
The Court, taking the comment as answer, and noting the work?
reply and supplemental reply filed by petitioners, considered
the issues joined and the case submitted for decision. These shall be discussed and resolved seriatim
SO ORDERED.
The key issue in this case is whether the petitioner, National Meanwhile, the Rizal Park Supervisory Employees
Parks Development Committee (NPDC), is a government Association, consisting of employees holding supervisory
agency, or a private corporation, for on this issue depends positions in the different areas of the parks, was organized
the right of its employees to strike. and it affiliated with the Trade Union of the Philippines and
Allied Services (TUPAS) under Certificate No. 1206.
This issue came about because although the NPDC was
originally created in 1963 under Executive Order No. 30, as On June 15, 1987, two collective bargaining agreements were
the Executive Committee for the development of the Quezon entered into between NPDC and NPDCEA (TUPAS local
Memorial, Luneta and other national parks, and later Chapter No. 967) and NPDC and NPDCSA (TUPAS Chapter No.
renamed as the National Parks Development Committee 1206), for a period of two years or until June 30, 1989.
under Executive Order No. 68, on September 21, 1967, it was On March 20, 1988, these unions staged a stake at the Rizal
registered in the Securities and Exchange Commission (SEC) Park, Fort Santiago, Paco Park, and Pook ni Mariang Makiling
as a non-stock and non-profit corporation, known as "The at Los Banos, Laguna, alleging unfair labor practices by
National Parks Development Committee, Inc." NPDC.
However, in August, 1987, the NPDC was ordered by the SEC On March 21, 1988, NPDC filed in the Regional Trial Court in
to show cause why its Certificate of Registration should not Manila, Branch III, a complaint against the union to declare
be suspended for: (a) failure to submit the General the strike illegal and to restrain it on the ground that the
Information Sheet from 1981 to 1987; (b) failure to submit its strikers, being government employees, have no right to strike
Financial Statements from 1981 to 1986; (c) failure to although they may form a union.
register its Corporate Books; and (d) failure to operate for a
continuous period of at least five (5) years since September On March 24, 1988, the lower court dismissed the complaint
27, 1967. and lifted the restraining order for lack of jurisdiction. It held
that the case "properly falls under the jurisdiction of the 1966, Mrs. Imelda R. Marcos and Teodoro F. Valencia were
Department of Labor," because "there exists an employer- designated Chairman and Vice- Chairman respectively (E.O.
employee relationship" between NPDC and the strikers, and No. 3). Despite an attempt to transfer it to the Bureau of
"that the acts complained of in the complaint, and which Forest Development, Department of Natural Resources, on
plaintiff seeks to enjoin in this action, fall under paragraph 5 December 1, 1975 (Letter of Implementation No. 39, issued
of Article 217 of the Labor Code, ..., in relation to Art. 265 of pursuant to PD No. 830, dated November 27, 1975), the
the same Code, hence, jurisdiction over said acts does not NPDC has remained under the Office of the President (E.O.
belong to this Court but to the Labor Arbiters of the No. 709, dated July 27, 1981).
Department of Labor." (p. 142, Rollo.).
Since 1977 to 1981, the annual appropriations decrees listed
Petitioner went to the Court of Appeals on certiorari (CA-G.R. NPDC as a regular government agency under the Office of
SP No. 14204). On March 31, 1989, the Court of appeals the President and allotments for its maintenance and
affirmed the order of the trial court, hence, this petition for operating expenses were issued direct to NPDC (Exh. 10-A
review. The petitioner alleges that the Court of Appeals erred: Perlas, Item No. 2, 3). (Italics ours.)
1) in not holding that the NPDC employees are covered by Since NPDC is a government agency, its employees are
the Civil Service Law; and covered by civil service rules and regulations (Sec. 2, Article
IX, 1987 Constitution). Its employees are civil service
2) in ruling that petitioner's labor dispute with its employees employees (Sec. 14, Executive Order No. 180).
is cognizable by the Department of Labor.
While NPDC employees are allowed under the 1987
We have considered the petition filed by the Solicitor General Constitution to organize and join unions of their choice, there
on behalf of NPDC and the comments thereto and are is as yet no law permitting them to strike. In case of a labor
persuaded that it is meritorious. dispute between the employees and the government, Section
In Jesus P. Perlas, Jr. vs. People of the Philippines, G.R. Nos. 15 of Executive Order No. 180 dated June 1, 1987 provides
84637-39, August 2, 1989, we ruled that the NPDC is an that the Public Sector Labor- Management Council, not the
agency of the government, not a government-owned or Department of Labor and Employment, shall hear the
controlled corporation, hence, the Sandiganbayan had dispute. Clearly, the Court of Appeals and the lower court
jurisdiction over its acting director who committed estafa. We erred in holding that the labor dispute between the NPDC and
held thus: the members of the NPDSA is cognizable by the Department
of Labor and Employment.
The National Parks Development Committee was created
originally as an Executive Committee on January 14,1963, for WHEREFORE, the petition for review is granted. The decision
the development of the Quezon Memorial, Luneta and other of the Court of Appeals in CA-G.R. SP No. 14204 is hereby set
national parks (Executive Order No. 30). It was later aside. The private respondents' complaint should be filed in
designated as the National Parks Development Committee the Public Sector Labor-Management Council as provided in
(NPDC) on February 7, 1974 (E.O. No. 69). On January 9, Section 15 of Executive Order No. 180. Costs against the
private respondents.
SO ORDERED. The facts are as follows:
Felipe Gojar for STEAM-PCWF. The petition was premised on the exclusion/disqualification of
certain MERALCO employees pursuant to Art. I, Secs. 2 and 3
Wakay & Wakay Legal Services for First Line Association of of the existing MEWA CBA as follows:
Meralco Supervisory Employees.
ARTICLE I
SCOPE
MEDIALDEA, J.:p
xxx xxx xxx
This petition seeks to review the Resolution of respondent
Secretary of Labor and Employment Franklin M. Drilon dated Sec. 2. Excluded from the appropriate bargaining unit and
November 3, 1989 which affirmed an Order of Med-Arbiter therefore outside the scope of this Agreement are:
Renato P. Parungo (Case No. NCR-O-D-M-1-70), directing the
(a) Employees in Patrol Division;
holding of a certification election among certain employees
of petitioner Manila Electric Company (hereafter "MERALCO") (b) Employees in Treasury Security Services Section;
as well as the Order dated January 16, 1990 which denied the
Motion for Reconsideration of MERALCO. (c) Managerial Employees; and
(d) Secretaries. (p. 19, Rollo)
Any member of the Union who may now or hereafter be MERALCO moved for the dismissal of the petition on the
assigned or transferred to Patrol Division or Treasury Security following grounds:
Services Section, or becomes Managerial Employee or a
Secretary, shall be considered automatically removed from I
the bargaining unit and excluded from the coverage of this The employees sought to be represented by petitioner are
agreement. He shall thereby likewise be deemed either 1) managerial who are prohibited by law from forming
automatically to have ceased to be member of the union, and or joining supervisory union; 2) security services personnel
shall desist from further engaging in union activity of any who are prohibited from joining or assisting the rank-and-file
kind. union; 3) secretaries who do not consent to the petitioner's
Sec. 3. Regular rank-and-file employees in the organization representation and whom petitioner can not represent; and
elements herein below listed shall be covered within the 4) rank-and-file employees represented by the certified or
bargaining unit, but shall be automatically disqualified from duly recognized bargaining representative of the only rank-
becoming union members: and-file bargaining unit in the company, the Meralco
Employees Workers Association (MEWA), in accordance with
1. Office of the Corporate Secretary the existing Collective Bargaining Agreement with the latter.
3. Managerial Payroll Office The petition for certification election will disturb the
administration of the existing Collective Bargaining
4. Legal Service Department Agreement in violation of Art. 232 of the Labor Code.
5. Labor Relations Division III
6. Personnel Administration Division The petition itself shows that it is not supported by the
7. Manpower Planning & Research Division written consent of at least twenty percent (20%) of the
alleged 2,500 employees sought to be represented.
8. Computer Services Department (Resolution, Sec. of Labor, pp. 223-224, Rollo)
9. Financial Planning & Control Department Before Med-Arbiter R. Parungo, MERALCO contended that
employees from Pay Grades VII and above are classified as
10. Treasury Department, except Cash Section managerial employees who, under the law, are prohibited
from forming, joining or assisting a labor organization of the
11. General Accounting Section
rank and file. As regards those in the Patrol Division and
xxx xxx xxx Treasury Security Service Section, MERALCO maintains that
since these employees are tasked with providing security to
the company, they are not eligible to join the rank and file the holding of a certification election would allow them to
bargaining unit, pursuant to Sec. 2(c), Rule V, Book V of the fully translate their sentiment on the matter, and thus
then Implementing Rules and Regulations of the Labor Code directed the holding of a certification election. The dispositive
(1988) which reads as follows: portion of the Resolution provides as follows:
Sec. 2. Who may file petition. The employer or any WHEREFORE, premises considered, a certification election is
legitimate labor organization may file the petition. hereby ordered conducted among the regular rank-and-file
employees of MERALCO to wit:
The petition, when filed by a legitimate labor organization,
shall contain, among others: 1. Non-managerial employees with Pay Grades VII and above;
On May 4, 1989, STEAM-PCWF opposed the appeal-in- MERALCO's motion for reconsideration was denied on January
intervention. 16, 1990.
With the enactment of RA 6715 and the rules and regulations On February 9, 1990, MERALCO filed this petition, premised
implementing the same, STEAM-PCWF renounced its on the following ground:
representation of the employees in Patrol Division, Treasury
Security Services Section and rank-and-file employees in Pay RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF
Grades I-VI. DISCRETION AND/OR IN EXCESS OF JURISDICTION
AMOUNTING TO LACK OF JURISDICTION IN RULING THAT:
On September 13, 1989, the First Line Association of Meralco
I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE
Supervisory Employees. (hereafter FLAMES) filed a similar ESTABLISHED INDEPENDENT, DISTINCT AND SEPARATE FROM
petition (NCR-OD-M-9-731-89) seeking to represent those THE EXISTING RANK-AND-FILE BARGAINING UNIT.
employees with Pay Grades VII to XIV, since "there is no other
supervisory union at MERALCO." (p. 266,Rollo). The petition II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE
was consolidated with that of STEAM-PCWF. RANK-AND-FILE EMPLOYEES.
On November 3, 1989, the Secretary of Labor affirmed with III. THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED
modification, the assailed order of the Med-Arbiter, disposing TOGETHER WITH THE RANK-AND-FILE UNION AND/OR THE
as follows: SUPERVISORY UNION. (p. 8, Rollo)
WHEREFORE, premises considered, the Order appealed from On February 26, 1990, We issued a temporary restraining
is hereby affirmed but modified as far as the employees order (TRO) against the implementation of the disputed
covered by Section 3, Article I of the exist CBA in the resolution.
Company are concerned. Said employees shall remain in the In its petition, MERALCO has relented and recognized
unit of the rank-and-file already existing and may exercise respondents STEAM-PCWF and FLAMES' desired
their right to self organization as above enunciated. representation of supervisory employees from Grades VII up.
Further, the First Line Association of Meralco Supervisory However, it believes that all that the Secretary of Labor has
Employees (FLAMES) is included as among the choices in the to do is to establish a demarcation line between supervisory
certification election. and managerial rank, and not to classify outright the group of
employees represented by STEAM-PCWF and FLAMES as rank
and file employees.
In questioning the Secretary of Labor's directive allowing Division, Treasury Security Service Section and rank and file
security guards (Treasury/Patrol Services Section) to be employees in Pay Grades I-VI" (p. 6, Rollo); while FLAMES, on
represented by respondents, MERALCO contends that this the other hand, had limited its representation to employees
contravenes the provisions of the recently passed RA 6715 belonging to Pay Grades VII-XIV,generally accepted as
and its implementing rules (specifically par. 2, Sec. 1, Rule II, supervisory employees, as follows:
Book V) which disqualifies supervisory employees and
security guards from membership in a labor organization of It must be emphasized that private respondent First Line
the rank and file (p. 11, Rollo). Association of Meralco Supervisory Employees seeks to
represent only the Supervisory Employees with Pay Grades
The Secretary of Labor's Resolution was obviously premised VII to XIV.
on the provisions of Art. 212, then par. (k), of the 1988 Labor
Code defining "managerial" and "rank and file" employees, Supervisory Employees with Pay Grades VII to XIV are not
the law then in force when the complaint was filed. At the managerial employees. In fact the petition itself of petitioner
time, only two groups of employees were recognized, the Manila Electric Company on page 9, paragraph 3 of the
managerial and rank and file. This explains the absence of petition stated as follows, to wit:
evidence on job descriptions on who would be classified There was no need for petitioner to prove that these
managerial employees. It is perhaps also for this reason why employees are not rank-and-file. As adverted to above, the
the Secretary of Labor limited his classification of the Meralco private respondents admit that these are not the rank-and-
employees belonging to Pay Grades VII and up, to only two file but the supervisory employees, whom they seek to
groups, the managerial and rank and file. represent. What needs to be established is the rank where
However, pursuant to the Department of Labor's goal of supervisory ends and managerial begins.
strenghthening the constitutional right of workers to self- and First Line Association of Meralco Supervisory Employees
organization, RA 6715 was subsequently passed which herein states that Pay Grades VII to XIV are not managerial
reorganized the employee-ranks by including a third group, employees. In fact, although employees with Pay Grade XV
or the supervisory employees, and laying down the carry the Rank of Department Managers, these employees
distinction between supervisory employees and those of only enjoys (sic) the Rank Manager but their
managerial ranks in Art. 212, renumbered par. [m], recommendatory powers are subject to evaluation, review
depending on whether the employee concerned has the and final action by the department heads and other higher
power to lay down and execute management policies, in the executives of the company. (FLAMES' Memorandum, p.
case of managerial employees, or merely to recommend 305, Rollo)
them, in case of supervisory employees.
Based on the foregoing, it is clear that the employees from
In this petition, MERALCO has admitted that the employees Pay Grades VII and up have been recognized and accepted as
belonging to Pay Grades VII and up are supervisory (p. supervisory. On the other hand, those employees who have
10, Rollo). The records also show that STEAM-PCWF had been automatically disqualified have been directed by the
"renounced its representation of the employees in Patrol Secretary of Labor to remain in the existing labor
organization for the rank and file, (the condition in the CBA . . . Thus, the determinative factor in classifying an employee
deemed as not having been written into the contract, as as managerial, supervisory or rank-and-file is the nature of
unduly restrictive of an employee's exercise of the right to the work of the employee concerned.
self-organization). We shall discuss the rights of the excluded
employees (or those covered by Sec. 2, Art. I, MEWA-CBA In National Waterworks and Sewerage Authority vs. National
later. Waterworks and Sewerage Authority Consolidated Unions (11
SCRA 766) the Supreme Court had the occasion to come out
Anent the instant petition therefore, STEAM-PCWF, and with an enlightening dissertation of the nature of the work of
FLAMES would therefore represent supervisory employees a managerial employees as follows:
only. In this regard, the authority given by the Secretary of
Labor for the establishment of two labor organizations for the . . . that the employee's primary duty consists of the
rank and file will have to be disregarded since We hereby management of the establishment or of a customarily
uphold certification elections only for supervisory employees recognized department or subdivision thereof, that he
from Pay Grade VII and up, with STEAM-PCWF and FLAMES as customarily and regularly directs the work of other
choices. employees therein, that he has the authority to hire or
discharge other employees or that his suggestions and
As to the alleged failure of the Secretary of Labor to establish recommendations as to the hiring and discharging and or to
a demarcation line for purposes of segregating the the advancement and promotion or any other change of
supervisory from the managerial employees, the required status of other employees are given particular weight, that
parameter is really not necessary since the law itself, Art. he customarily and regularly exercises discretionary
212-m, (as amended by Sec. 4 of RA 6715) has already laid powers . . . (56 CJS, pp. 666-668. (p. 226, Rollo)
down the corresponding guidelines:
We shall now discuss the rights of the security guards to self-
Art. 212. Definitions. . . . organize. MERALCO has questioned the legality of allowing
them to join either the rank and file or the supervisory union,
(m) "Managerial employee" is one who is vested with powers claiming that this is a violation of par. 2, Sec. 1, Rule II, Book
or prerogatives to lay down and execute management V of the Implementing Rules of RA 6715, which states as
policies and/or to hire, transfer, suspend, lay-off, recall, follows:
discharge, assign or discipline employees. Supervisory
employees are those who, in the interest of the employer, Sec 1. Who may join unions. . . .
effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical xxx xxx xxx
in nature but requires the use of independent judgment. All Supervisory employees and security guards shall not be
employees not falling within any of the above definitions are eligible for membership in a labor organization of the rank-
considered rank-and-file employees for purposes of to Book. and-file employees but may join, assist or form separate
In his resolution, the Secretary of Labor further elaborated: labor organizations of their own; . . .
SO ORDERED.
MENDOZA, J.:
Two questions are presented by the petition: (1) whether the Operating
route managers at Pepsi-Cola Products Philippines, Inc. are Employees
managerial employees and (2) whether Art. 245, insofar as it
prohibits managerial employees from forming, joining or FIRST-LINE MANAGERS The lowest level in an organization
assisting labor unions, violates Art. III, 8 of the Constitution. at which individuals are responsible for the work of others is
called first-line or first-level management. First-line managers
In resolving these issues it would be useful to begin by direct operating employees only; they do not supervise other
defining who are "managerial employees" and considering managers. Examples of first-line managers are the "foreman"
the types of "managerial employees." or production supervisor in a manufacturing plant, the
Types of Managerial Employees technical supervisor in a research department, and the
clerical supervisor in a large office. First-level managers are
The term "manager" generally refers to "anyone who is often called supervisors.
responsible for subordinates and other organizational
resources." 1 As a class, managers constitute three levels of a MIDDLE MANAGERS The term middle management can
pyramid: refer to more than one level in an organization. Middle
managers direct the activities of other managers and
Top management sometimes also those of operating employees. Middle
managers' principal responsibilities are to direct the activities
that implement their organizations' policies and to balance
Middle the demands of their superiors with the capacities of their
subordinates. A plant manager in an electronics firm is an
Management example of a middle manager.
As a Route Manager, your purpose is to meet the sales plan; 1.1.9 Study from time to time individual route coverage and
and you achieve this objective through the skillful productivity for possible adjustments to maximize utilization
MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF of resources.
YOUR PEOPLE.
1.2 Administration
These then are your functions as Pepsi-Cola Route Manager.
1.2.1 Ensure the proper loading of route trucks before check-
Within these functions managing your job and managing
out and the proper sorting of bottles before check-in.
your people you are accountable to your District Manager
for the execution and completion of various tasks and
1.2.2 Ensure the upkeep of all route sales reports and all distinction is evident in the work of the route managers
other related reports and forms required on an accurate and which sets them apart from supervisors in general. Unlike
timely basis. supervisors who basically merely direct operating employees
in line with set tasks assigned to them, route managers are
1.2.3 Ensure proper implementation of the various company responsible for the success of the company's main line of
policies and procedures incl. but not limited to shakedown; business through management of their respective sales
route shortage; progressive discipline; sorting; spoilages; teams. Such management necessarily involves the planning,
credit/collection; accident; attendance. direction, operation and evaluation of their individual teams
1.2.4 Ensure collection of receivables and delinquent and areas which the work of supervisors does not entail.
accounts. The route managers cannot thus possibly be classified as
2.0 MANAGING YOUR PEOPLE mere supervisors because their work does not only involve,
but goes far beyond, the simple direction or supervision of
The Route Manager is accountable for the following: operating employees to accomplish objectives set by those
above them. They are not mere functionaries with simple
2.1 Route Sales Team Development oversight functions but business administrators in their own
right. An idea of the role of route managers as managers per
2.1.2 Conduct route rides to train, evaluate and develop all
se can be gotten from a memo sent by the director of metro
assigned route salesmen and helpers at least 3 days a week,
sales operations of respondent company to one of the route
to be supported by required route ride documents/reports &
managers. It reads: 13
back check/spot check at least 2 days a week to be
supported by required documents/reports. 03 April 1995
2.1.2 Conduct sales meetings and morning huddles. Training To : CESAR T . REOLADA
should focus on the enhancement of effective sales and
merchandizing [sic] techniques of the salesmen and helpers. From : REGGIE M. SANTOS
Conduct group training at least 1 hour each week on a
designated day and of specific topic. Subj : SALARY INCREASE
2.2 Code of Conduct Effective 01 April 1995, your basic monthly salary of P11,710
will be increased to P12,881 or an increase of 10%. This
2.2.1 Maintain the company's reputation through strict represents the added managerial responsibilities you will
adherence to PCPPI's code of conduct and the universal assume due to the recent restructuring and streamlining of
standards of unquestioned business Metro Sales Operations brought about by the continuous
ethics. 12
losses for the last nine (9) months.
Earlier in this opinion, reference was made to the distinction Let me remind you that for our operations to be profitable,
between managers per se (top managers and middle we have to sustain the intensity and momentum that your
managers) and supervisors (first-line managers). That group and yourself have shown last March. You just have
to deliver the desired volume targets, better negotiated exercise of such authority is not merely routinary or clerical
concessions, rationalized sustaining deals, eliminate or in nature but requires the use of independent judgment."
reduced overdues, improved collections, more cash Thus, their only power is to recommend. Certainly, the route
accounts, controlled operating expenses, etc. Also, based on managers in this case more than merely recommend
the agreed set targets, your monthly performance will be effective management action. They perform operational,
closely monitored. human resource, financial and marketing functions for the
company, all of which involve the laying down of operating
You have proven in the past that your capable of achieving policies for themselves and their teams. For example, with
your targets thru better planning, managing your group as a respect to marketing, route managers, in accordance with
fighting team, and thru aggressive selling. I am looking B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are
forward to your success and I expect that you just have to charged, among other things, with expanding the dealership
exert your doubly best in turning around our operations from base of their respective sales areas, maintaining the goodwill
a losing to a profitable one! of current dealers, and distributing the company's various
Happy Selling!! promotional items as they see fit. It is difficult to see how
supervisors can be given such responsibility when this
(Sgd.) R.M. SANTOS involves not just the routine supervision of operating
employees but the protection and expansion of the
The plasticized card given to route managers, quoted in the company's business vis-a-vis its competitors.
separate opinion of Justice Vitug, although entitled "RM's Job
Description," is only a summary of performance standards. It While route managers do not appear to have the power to
does not show whether route managers are managers per hire and fire people (the evidence shows that they only
se or supervisors. Obviously, these performance standards "recommended" or "endorsed" the taking of disciplinary
have to be related to the specific tasks given to route action against certain employees), this is because this
managers in the four-page "Route Manager Position is a function of the Human Resources or Personnel
Description," and, when this is done, the managerial nature Department of the company. 14 And neither should it be
of their jobs is fully revealed. Indeed, if any, the card presumed that just because they are given set benchmarks
indicates the great latitude and discretion given to route to observe, they are ipso facto supervisors. Adequate control
managers from servicing and enhancing company goodwill methods (as embodied in such concepts as "Management by
to supervising and auditing accounts, from trade (new Objectives [MBO]" and "performance appraisals") which
business) development to the discipline, training and require a delineation of the functions and responsibilities of
monitoring of performance of their respective sales teams, managers by means of ready reference cards as here, have
and so forth, if they are to fulfill the company's long been recognized in management as effective tools for
expectations in the "key result areas." keeping businesses competitive.
Article 212(m) says that "supervisory employees are those This brings us to the second question, whether the first
who, in the interest of the employer, sentence of Art. 245 of the Labor Code, prohibiting
effectivelyrecommend such managerial actions if the managerial employees from forming, assisting or joining any
labor organization, is constitutional in light of Art. III, 8 of is not of a merely routinary or clerical nature but requires the
the Constitution which provides: use of independent judgment. 16
The right of the people, including those employed in the The right of supervisors to form their own organizations was
public and private sectors, to form unions, associations, or affirmed:
societies for purposes not contrary to law shall not be
abridged. Sec. 3. Employees' Right to Self-Organization. Employees
shall have the right to self-organization and to form, join or
As already stated, whether they belong to the first category assist labor organizations of their own choosing for the
(managers per se) or the second category (supervisors), purpose of collective bargaining through representatives of
managers are employees. Nonetheless, in the United States, their own choosing and to engage in concerted activities for
as Justice Puno's separate opinion notes, supervisors have no the purpose of collective bargaining and other mutual aid
right to form unions. They are excluded from the definition of and protection. Individuals employed as supervisors shall not
the term "employee" in 2(3) of the Labor-Management be eligible for membership in a labor organization of
Relations Act of 1947. 15 In the Philippines, the question employees under their supervision but may form separate
whether managerial employees have a right of self- organizations of their own. 17
organization has arisen with respect to first-level managers
or supervisors, as shown by a review of the course of labor For its part, the Supreme Court upheld in several of its
legislation in this country. decisions the right of supervisors to organize for purposes of
labor relations. 18
Right of Self-Organization of Managerial
Employees under Pre-Labor Code Laws Although it had a definition of the term "supervisor," the
Industrial Peace Act did not define the term "manager." But,
Before the promulgation of the Labor Code in 1974, the field using the commonly-understood concept of "manager," as
of labor relations was governed by the Industrial Peace Act above stated, it is apparent that the law used the term
(R.A. No. 875). "supervisors" to refer to the sub-group of "managerial
employees" known as front-line managers. The other sub-
In accordance with the general definition above, this law group of "managerial employees," known as managers per
defined "supervisor" as follows: se, was not covered.
Sec. 2. . . . However, in Caltex Filipino Managers and Supervisors
(k) "Supervisor" means any person having authority in the Association v. Court of Industrial Relations, 19 the right of all
interest of an employer, to hire, transfer, suspend, lay-off, managerial employees to self-organization was upheld as a
recall, discharge, assign, recommend, or discipline other general proposition, thus:
employees, or responsibly to direct them, and to adjust their It would be going too far to dismiss summarily the point
grievances, or effectively to recommend such acts, if, in raised by respondent Company that of the alleged identity
connection with the foregoing, the exercise of such authority of interest between the managerial staff and the employing
firm. That should ordinarily be the case, especially so where CAFIMSA members holding the following Supervisory Payroll
the dispute is between management and the rank and file. It Position Title are Recognized by the Company
does not necessarily follow though that what binds the
managerial staff to the corporation forecloses the possibility Payroll Position Title
of conflict between them. There could be a real difference Assistant to Mgr. National Acct. Sales
between what the welfare of such group requires and the
concessions the firm is willing to grant. Their needs might Jr. Sales Engineer
not be attended to then in the absence of any organization of
their own. Nor is this to indulge in empty theorizing. The Retail Development Asst.
record of respondent Company, even the very case cited by
Staff Asst. 0 Marketing
it, is proof enough of their uneasy and troubled relationship.
Certainly the impression is difficult to erase that an alien firm Sales Supervisor
failed to manifest sympathy for the claims of its Filipino
executives. To predicate under such circumstances that Supervisory Assistant
agreement inevitably marks their relationship, ignoring that
Jr. Supervisory Assistant
discord would not be unusual, is to fly in the face of reality.
Credit Assistant
. . . The basic question is whether the managerial personnel
can organize. What respondent Company failed to take into Lab. Supvr. Pandacan
account is that the right to self-organization is not merely a
statutory creation. It is fortified by our Constitution. All are Jr. Sales Engineer B
free to exercise such right unless their purpose is contrary to
Operations Assistant B
law. Certainly it would be to attach unorthodoxy to, not to
say an emasculation of, the concept of law if managers as Field Engineer
such were precluded from organizing. Having done so and
having been duly registered, as did occur in this case, their Sr. Opers. Supvr. MIA A/S
union is entitled to all the rights under Republic Act No. 875.
Purchasing Assistant
Considering what is denominated as unfair labor practice
under Section 4 of such Act and the facts set forth in our Jr. Construction Engineer
decision, there can be only one answer to the objection
raised that no unfair labor practice could be committed by Sr. Sales Supervisor
respondent Company insofar as managerial personnel is
Deport Supervisor A
concerned. It is, as is quite obvious, in the negative. 20
Terminal Accountant B
Actually, the case involved front-line managers or
supervisors only, as the plantilla of employees, quoted in the Merchandiser
main opinion, 21 clearly indicates:
Dist. Sales Prom. Supvr. Right of Self-Organization of Managerial
Employees under the Labor Code
Instr. Merchandising
Thus, the dictum in the Caltex case which allowed at least for
Asst. Dist. Accountant B the theoretical unionization of top and middle managers by
Sr. Opers. Supervisor assimilating them with the supervisory group under the
broad phrase "managerial personnel," provided the lynchpin
Jr. Sales Engineer A for later laws denying the right of self-organization not only
to top and middle management employees but to front line
Asst. Bulk Ter. Supt. managers or supervisors as well. Following the Caltex case,
the Labor Code, promulgated in 1974 under martial law,
Sr. Opers. Supvr.
dropped the distinction between the first and second sub-
Credit Supervisor A groups of managerial employees. Instead of treating the
terms "supervisor" and "manager" separately, the law
Asst. Stores Supvr. A lumped them together and called them "managerial
employees," as follows:
Ref. Supervisory Draftsman
Art. 212. Definitions . . . .
Refinery Shift Supvr. B
(k) "Managerial Employee" is one who is vested with powers
Asst. Supvr. A Operations (Refinery)
or prerogatives to lay down and execute management
Refinery Shift Supvr. B policies and/or to hire, transfer, suspend, lay off, recall,
discharge, assign or discipline employees, or to effectively
Asst. Lab. Supvr. A (Refinery) recommend such managerial actions. All employees not
falling within this definition are considered rank and file
St. Process Engineer B (Refinery)
employees for purposes of this Book. 22
Asst. Supvr. A Maintenance (Refinery)
The definition shows that it is actually a combination of the
Asst. Supvr. B Maintenance (Refinery) commonly understood definitions of both groups of
managerial employees, grammatically joined by the phrase
Supervisory Accountant (Refinery) "and/or."
Communications Supervisor (Refinery) This general definition was perhaps legally necessary at that
time for two reasons. First, the 1974 Code denied supervisors
Finally, also deemed included are all other employees
their right to self-organize as theretofore guaranteed to them
excluded from the rank and file unions but not classified as
by the Industrial Peace Act. Second, it stood the dictum in
managerial or otherwise excludable by law or applicable
the Caltex case on its head by prohibiting all types of
judicial precedents.
managers from forming unions. The explicit general
prohibition was contained in the then Art. 246 of the Labor because no such unions of top and middle managers really
Code. then existed.
The practical effect of this synthesis of legal concepts was Real Intent of the 1986 Constitutional Commission
made apparent in the Omnibus Rules Implementing the
Labor Code which the Department of Labor promulgated on This was the law as it stood at the time the Constitutional
January 19, 1975. Book V, Rule II, 11 of the Rules provided: Commission considered the draft of Art. III, 8. Commissioner
Lerum sought to amend the draft of what was later to
Supervisory unions and unions of security guards to cease become Art. III, 8 of the present Constitution:
operation. All existing supervisory unions and unions of
security guards shall, upon the effectivity of the Code, cease MR. LERUM. My amendment is on Section 7, page 2, line 19,
to operate as such and their registration certificates shall be which is to insert between the words "people" and "to" the
deemed automatically canceled. However, existing collective following: WHETHER EMPLOYED BY THE STATE OR PRIVATE
agreements with such unions, the life of which extends ESTABLISHMENTS. In other words, the section will now read
beyond the date of effectivity of the Code, shall be respected as follows: "The right of the people WHETHER EMPLOYED BY
until their expiry date insofar as the economic benefits THE STATE OR PRIVATE ESTABLISHMENTS to form
granted therein are concerned. associations, unions, or societies for purposes not contrary to
law shall not be abridged." 23
Members of supervisory unions who do not fall within the
definition of managerial employees shall become eligible to Explaining his proposed amendment, he stated:
join or assist the rank and file labor organization, and if none MR. LERUM. Under the 1935 Bill of Rights, the right to form
exists, to form or assist in the forming of such rank and file associations is granted to all persons whether or not they are
organization. The determination of who are managerial employed in the government. Under that provision, we allow
employees and who are not shall be the subject of unions in the government, in government-owned and
negotiation between representatives of the supervisory controlled corporations and in other industries in the private
union and the employer. If no agreement is reached between sector, such as the Philippine Government Employees'
the parties, either or both of them may bring the issue to the Association, unions in the GSIS, the SSS, the DBP and other
nearest Regional Office for determination. government-owned and controlled corporations. Also, we
The Department of Labor continued to use the term have unions of supervisory employees and of security
"supervisory unions" despite the demise of the legal guards. But what is tragic about this is that after the 1973
definition of "supervisor" apparently because these were the Constitution was approved and in spite of an express
unions of front line managers which were then allowed as a recognition of the right to organize in P.D. No. 442, known as
result of the statutory grant of the right of self-organization the Labor Code, the right of government workers,
under the Industrial Peace Act. Had the Department of Labor supervisory employees and security guards to form unions
seen fit to similarly ban unions of top and middle managers was abolished.
which may have been formed following the dictum in Caltex,
it obviously would have done so. Yet it did not, apparently
And we have been fighting against this abolition. In every guards, who had the right to organize under the Industrial
tripartite conference attended by the government, Peace Act, had been denied this right by the Labor Code, and
management and workers, we have always been insisting on (2) there was a need to reinstate the right of these
the return of these rights. However, both the government employees. In consonance with his objective to reinstate the
and employers opposed our proposal, so nothing came out of right of government, security, and supervisory employees to
this until this week when we approved a provision which organize, Lerum then made his proposal:
states:
MR. LERUM. Mr. Presiding Officer, after a consultation with
Notwithstanding any provision of this article, the right to self- several Members of this Commission, my amendment will
organization shall not be denied to government employees. now read as follows: "The right of the people INCLUDING
THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS to
We are afraid that without any corresponding provision form associations, unions, or societies for purposes not
covering the private sector, the security guards, the contrary to law shall not be abridged. In proposing that
supervisory employees or majority employees [sic] will still amendment I ask to make of record that I want the following
be excluded, and that is the purpose of this amendment. provisions of the Labor Code to be automatically abolished,
I will be very glad to accept any kind of wording as long as it which read:
will amount to absolute recognition of private sector Art. 245. Security guards and other personnel employed for
employees, without exception, to organize. the protection and security of the person, properties and
THE PRESIDENT. What does the Committee say? premises of the employers shall not be eligible for
membership in a labor organization.
FR. BERNAS. Certainly, the sense is very acceptable, but the
point raised by Commissioner Rodrigo is well-taken. Perhaps, Art. 246. Managerial employees are not eligible to join,
we can lengthen this a little bit more to read: "The right of assist, and form any labor organization.
the people WHETHER UNEMPLOYED OR EMPLOYED BY STATE THE PRESIDING OFFICER (Mr. Bengzon). What does the
OR PRIVATE ESTABLISHMENTS. Committee say?
I want to avoid also the possibility of having this interpreted FR. BERNAS. The Committee accepts.
as applicable only to the employed.
THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has
MR. DE LOS REYES. Will the proponent accept an amendment accepted the amendment, as amended.
to the amendment, Madam President?
Is there any objection? (Silence) The Chair hears none; the
MR. LERUM. Yes, as long as it will carry the idea that the right amendment, as amended, is approved. 25
of the employees in the private sector is recognized. 24
The question is what Commissioner Lerum meant in seeking
Lerum thus anchored his proposal on the fact that (1) to "automatically abolish" the then Art. 246 of the Labor
government employees, supervisory employees, and security Code. Did he simply want "any kind of wording as long as it
will amount to absolute recognition of private sector the Caltex statement sustaining the right to organize to top
employees, without exception, to organize"? 26 Or, did he and middle managers, then the more should his repeated
instead intend to have his words taken in the context of the use of the term "supervisory employees" be taken at face
cause which moved him to propose the amendment in the value, as it had been defined in the then Industrial Peace Act.
first place, namely, the denial of the right of supervisory
employees to organize, because he said, "We are afraid that At all events, that the rest of the Commissioners understood
without any corresponding provision covering the private his proposal to refer solely to supervisors and not to other
sector, security guards, supervisory employees or majority managerial employees is clear from the following account of
[of] employees will still be excluded, and that is the purpose Commissioner Joaquin G. Bernas, who writes:
of this amendment"? 27 In presenting the modification on the 1935 and 1973 texts,
It would seem that Commissioner Lerum simply meant to Commissioner Eulogio R. Lerum explained that the
restore the right of supervisory employees to organize. For modification included three categories of workers: (1)
even though he spoke of the need to "abolish" Art. 246 of the government employees, (2) supervisory employees, and (3)
Labor Code which, as already stated, prohibited "managerial security guards. Lerum made of record the explicit intent to
employees" in general from forming unions, the fact was that repeal provisions of P.D. 442, the Labor Code. The provisions
in explaining his proposal, he repeatedly referred to referred to were:
"supervisory employees" whose right under the Industrial Art. 245. Security guards and other personnel employed for
Peace Act to organize had been taken away by Art. 246. It is the protection and security of the person, properties and
noteworthy that Commissioner Lerum never referred to the premises of the employers shall not be eligible for
then definition of "managerial employees" in Art. 212(m) of membership in a labor organization.
the Labor Code which put together, under the broad phrase
"managerial employees," top and middle managers and Art. 246. Managerial employees are not eligible to join,
supervisors. Instead, his repeated use of the term assist, and form any labor organization. 28
"supervisory employees," when such term then was no
longer in the statute books, suggests a frame of mind that Implications of the Lerum Proposal
remained grounded in the language of the Industrial Peace
In sum, Lerum's proposal to amend Art. III, 8 of the draft
Act.
Constitution by including labor unions in the guarantee of
Nor did Lerum ever refer to the dictum in Caltex recognizing organizational right should be taken in the context of
the right of all managerial employees to organize, despite statements that his aim was the removal of the statutory ban
the fact that the Industrial Peace Act did not expressly against security guards and supervisory employees joining
provide for the right of top and middle managers to organize. labor organizations. The approval by the Constitutional
If Lerum was aware of the Caltex dictum, then his insistence Commission of his proposal can only mean, therefore, that
on the use of the term "supervisory employees" could only the Commission intended the absolute right to organize of
mean that he was excluding other managerial employees government workers, supervisory employees, and security
from his proposal. If, on the other hand, he was not aware of guards to be constitutionally guaranteed. By implication, no
similar absolute constitutional right to organize for labor employees not falling within any of the above definitions are
purposes should be deemed to have been granted to top- considered rank-and-file employees for purposes of this
level and middle managers. As to them the right of self- Book.
organization may be regulated and even abridged
conformably to Art. III, 8. Although the definition of "supervisory employees" seems to
have been unduly restricted to the last phrase of the
Constitutionality of Art. 245 definition in the Industrial Peace Act, the legal significance
given to the phrase "effectively recommends" remains the
Finally, the question is whether the present ban against same. In fact, the distinction between top and middle
managerial employees, as embodied in Art. 245 (which managers, who set management policy, and front-line
superseded Art. 246) of the Labor Code, is valid. This supervisors, who are merely responsible for ensuring that
provision reads: such policies are carried out by the rank and file, is
Art. 245. Ineligibility of managerial employees to join any articulated in the present definition. 30 When read in relation
labor organization; right of supervisory employees. to this definition in Art. 212(m), it will be seen that Art. 245
Managerial employees are not eligible to join, assist or form faithfully carries out the intent of the Constitutional
any labor organization. Supervisory employees shall not be Commission in framing Art. III, 8 of the fundamental law.
eligible for membership in a labor organization of the rank- Nor is the guarantee of organizational right in Art. III, 8
and-file employees but may join, assist or form separate infringed by a ban against managerial employees forming a
labor organizations of their own. 29 union. The right guaranteed in Art. III, 8 is subject to the
This provision is the result of the amendment of the Labor condition that its exercise should be for purposes "not
Code in 1989 by R.A. No. 6715, otherwise known as the contrary to law." In the case of Art. 245, there is a rational
Herrera-Veloso Law. Unlike the Industrial Peace Act or the basis for prohibiting managerial employees from forming or
provisions of the Labor Code which it superseded, R.A. No. joining labor organizations. As Justice Davide, Jr., himself a
6715 provides separate definitions of the terms "managerial" constitutional commissioner, said in his ponencia inPhilips
and "supervisory employees," as follows: Industrial Development, Inc. v. NLRC: 31
Art. 212. Definitions. . . . In the first place, all these employees, with the exception of
the service engineers and the sales force personnel, are
(m) "managerial employee" is one who is vested with powers confidential employees. Their classification as such is not
or prerogatives to lay down and execute management seriously disputed by PEO-FFW; the five (5) previous CBAs
policies and/or to hire transfer, suspend, lay off, recall, between PIDI and PEO-FFW explicitly considered them as
discharge, assign or discipline employees. Supervisory confidential employees. By the very nature of their functions,
employees are those who, in the interest of the employer, they assist and act in a confidential capacity to, or have
effectively recommend such managerial actions if the access to confidential matters of, persons who exercise
exercise of such authority is not merely routinary or clerical managerial functions in the field of labor relations. As such,
in nature but requires the use of independent judgment. All
the rationale behind the ineligibility of managerial employees
to form, assist or joint a labor union equally applies to them.
DAVIDE, JR., J., concurring and dissenting;
In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this
Court elaborated on this rationale, thus: I concur with the majority that the "route managers" of
private respondent Pepsi-Cola Products Philippines, Inc.
. . . The rationale for this inhibition has been stated to be, are managerial employees. However, I respectfully submit
because if these managerial employees would belong to or that contrary to the majority's holding, Article 245 of the
be affiliated with a Union, the latter might not be assured of Labor Code is unconstitutional, as it abridges Section 8,
their loyalty to the Union in view of evident conflict of Article III of the Constitution.
interests. The Union can also become company-dominated
with the presence of managerial employees in Union Section 8, Article III of the 1987 Constitution was taken from
membership. 32 Section 7, Article IV of the 1973 Constitution which, in turn,
was lifted from Section 6, Article III of the 1935 Constitution.
To be sure, the Court in Philips Industrial was dealing with the Section 7 of the 1973 Constitution provided as follows:
right of confidential employees to organize. But the same
reason for denying them the right to organize justifies even Sec. 7. The right to form associations or societies for purpose
more the ban on managerial employees from forming unions. not contrary to law shall not be abridged.
After all, those who qualify as top or middle managers are This Section was adopted in Section 7 of Proposed Resolution
executives who receive from their employers information No. 486 of the 1986 Constitutional Commission, entitled
that not only is confidential but also is not generally available Resolution to Incorporate in the New Constitution an Article
to the public, or to their competitors, or to other employees. on the Bill of Rights, 1 submitted by the Committee on
It is hardly necessary to point out that to say that the first Citizenship, Bill of Rights, Political Rights and Obligations,
sentence of Art. 245 is unconstitutional would be to and Human Rights, with a modification, however, consisting
contradict the decision in that case. of the insertion of the word union between the words
WHEREFORE, the petition is DISMISSED. "associations" and "societies." Thus the proposed Section 7
provided as follows:
SO ORDERED.
Sec. 7. The right of the people to form associations, unions,
Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez and or societies for purposes not contrary to law shall not be
Purisima, JJ., concur. abridged (emphasis supplied).
Separate Opinions
Section 7 preserves the old provision not because it is strictly Art. 245. Security guards and other personnel employed for
needed but because its removal might be subject to the protection and security of the person, properties and
misinterpretation. It reads: premises of the employers shall not be eligible for
membership in a labor organization.
xxx xxx xxx
Art. 246. Managerial employees are not eligible to join,
It strictly does not prepare the old provision because it adds assist, and form any labor organization.
the word UNION, and in the explanation we received from
Commissioner Lerum, the term envisions not just unions in THE PRESIDING OFFICER (Mr. Bengzon):
private corporations but also in the government. This
preserves our link with the Malolos Constitution as far as the What does the Committee say?
right to form associations or societies for purposes not FR. BERNAS: The Committee accepts.
contrary to law is concerned. 2
THE PRESIDING OFFICER (Mr. Bengzon):
During the period of individual amendments, Commissioner
Lerum introduced an amendment to the proposed section The Committee has accepted the amendment, as amended.
consisting of the insertion of the clause "WHETHER
EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS, Is there any objection? (Silence) The Chair hears none; the
which, after consulting other Commissioners, he modified his amendment, as amended, is approved. 3
proposed amendment to read: "INCLUDING THOSE
The Committee on Style then recommended that commas be
EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At that
placed after the words people and sectors, while
time, the section read:
Commissioner Lerum likewise moved to place the word
Sec. 7. The right of the people including those employed in unions before the word associations. 4 Section 7, which was
the public and private sectors to form associations, unions or subsequently renumbered as Section 8 as presently
societies for purposes not contrary to law shall not be appearing in the text ratified in the plebiscite of 2 February
abridged. 1987, then read as follows:
Pertinently to this dispute Commissioner Lerum's intention The right of the people, including those employed in the
that the amendment "automatically abolish" Articles 245 and public and private sectors, to form unions, associations, or
246 of the Labor Code. The Committee accepted the societies for purposes not contrary to law shall not be
amendment, and there having been no objection from the abridged.
floor, the Lerum amendment was approved, thus:
It is then indubitably clear from the foregoing that the intent
MR. LERUM: . . . In proposing that amendment I ask to make of the Constitutional Commission was to abrogate the law
of record that I want the following provisions of the Labor prohibiting managerial employees from joining, assisting, or
Code to be automatically abolished, which read: forming unions or labor organizations. In this regard, there is
absolutely no need to decipher the intent of the framers of
the 1987 Constitution vis-a-vis Article 245 (originally 246) of
the Labor Code, there being no ambiguity or vagueness in interests of management in view of the inherent nature of
the wording of the present Section 8, Article III of the 1987 their functions, duties and responsibilities managerial
Constitution. The provision is clear and written in simple employees may only be eligible to join, assist or form unions
language; neither were there any confusing debates thereon. or labor organizations of their own rank, and not those of the
More importantly, the purpose of Commissioner Lerum's supervisory employees nor the rank-and-file employees.
amendments was unequivocal: he did not merely intend an
implied repeal, but an express repeal of the offending article In the instant case, the petitioner's name United Pepsi-
of the Labor Code. The approval of the amendments left no Cola Supervisory Union (UPSU) indubitably attests that it is
doubt whatsoever, as faithfully disclosed in the Records of a union of supervisory employees. In light of the earlier
the Constitutional Commission, that all employees meaning discussion, the route managers who aremanagerial
rank-and-file, supervisory and managerial whether from employees, cannot join or assist UPSU. Accordingly, the Med-
the public or the private sectors, have the right to form Arbiter and public respondent Laguesma committed no error
unions for purposes not contrary to law. in denying the petition for direct certification or for
certification election.
The Labor Code referred to by Commissioner Lerum was P.D.
No. 442, promulgated on 1 May 1974. With the repeal of I thus vote to GRANT, IN PART, the instant petition. That
Article 239 by Executive Order No. 111 issued on 24 portion of the challenged resolution of public respondent
December 1986, 5 Article 246 (as mentioned by holding that since the route managers of private respondent
Commissioner Lerum) became Article 245. Thereafter, R.A. Pepsi-Cola Products Philippines, Inc., are managerial
No. 6715 6 amended the new Article 245 (originally Article employees, they are "not eligible to assist, join or form a
246) to read, as follows: union or any other organization" should be SET ASIDE for
being violative of Section 8 of Article III of the Constitution,
Sec. 245. Ineligibility of managerial employees to join any while that portion thereof denying petitioner's appeal from
labor organization; right of supervisory employees. the Med-Arbiter's decision dismissing the petition for direct
Managerial employees are not eligible to join, assist or form certification or for a certification election should be
any labor organization. Supervisory employees shall not be AFFIRMED.
eligible for membership in a labor organization of the rank-
and-file employees but may join, assist or form separate PUNO, J., separate concurring;
labor organizations of their own. 7 With due respect, it is my submission that Article 245 of the
With the abrogation of the former Article 246 of the Labor Labor Code was not repealed by section 8, Article III of the
Code, 8 and the constitutional prohibition against any law 1987 Constitution for reasons discussed below.
prohibiting managerial employees from joining, assisting or A. Types of Employees.
forming unions or labor organizations, the first sentence then
of the present Article 245 of the Labor Code must be struck For purposes of applying the law on labor relations, the Labor
down as unconstitutional. 9 However, due to an obvious Code in Article 212 (m) defines three (3) categories of
conflict of interest being closely identified with the
employees. They are managerial, supervisory and rank-and- other mutual aid and protection. 3 The NLRA established the
file, thus: right of employees to organize, required employers to
bargain with employees collectively through employee-
Art. 212 (m). "Managerial Employee" is one who is vested elected representatives, gave employees the right to engage
with powers or prerogatives to lay down and execute in concerted activities for collective bargaining purposes or
management policies and/or to hire, transfer, suspend, lay- other mutual aid or protection, and created the National
off, recall, discharge, assign or discipline employees. Labor Relations Board (NLRB) as the regulatory agency in
"Supervisory employees" are those who, in the interest of the labor-management matters. 4
employer, effectively recommended such managerial actions
if the exercise of such authority is not merely routinary or The NLRA was amended in 1947 by the Labor Management
clerical in nature but requires the use of independent Relations Act (LMRA), also known as the Taft-Hartley Act. This
judgment. All employees not falling within any of the above Act sought to lessen industrial disputes and placed
definitions are considered rank-and-file employees for employers in a more nearly equal position with unions in
purposes of this Book. bargaining and labor relations procedures. 5
The test of "managerial" or "supervisory" status depends on The NLRA did not make any special provision for "managerial
whether a person possesses authority to act in the interest of employees." 6 The privileges and benefits of the Act were
his employer and whether such authority is not routinary or conferred on "employees." Labor organizations thus
clerical in nature but requires the use of independent clamored for the inclusion of supervisory personnel in the
judgment. 1 The rank-and-file employee performs work that is coverage of the Act on the ground that supervisors were also
routinary and clerical in nature. The distinction between employees. Although traditionally, supervisors were regarded
these employees is significant because supervisory and rank- as part of management, the NLRB was constrained to
and-file employees may form, join or assist labor recognize supervisors as employees under the coverage of
organizations. Managerial employees cannot. the law. Supervisors were then granted collective bargaining
rights. 7 Nonetheless, the NLRB refused to consider managers
B. The Exclusion of Managerial Employees: Its Historical as covered by the law. 8
Roots in the United States.
The LMRA took away the collective bargaining rights of
The National Labor Relations Act (NLRA), also known as the supervisors. The sponsors of the amendment feared that
Wagner Act, enacted by the U.S. Congress in 1935, was the their unionization would break down industrial discipline as it
first law that regulated labor relations in the United States would blur the traditional distinction between management
and embodied its national labor policy. 2 The purpose of the and labor. They felt it necessary to deny supervisory
NLRA was to eliminate obstructions to the free flow of personnel the right of collective bargaining to preserve their
commerce through the practice of collective bargaining. The loyalty to the interests of their employers. 9
NLRA also sought to protect the workers' full freedoms of
association, self-organization, and designation of Several amendments were later made on the NLRA but the
representatives of their own choosing, for the purpose of exclusion of managers and supervisors from its coverage
negotiating the terms and conditions of their employment or was preserved. Until now managers and supervisors are
excluded from the law. 10 Their exclusion hinges on the Significantly, the Industrial Peace Act did not define a
theory that the employer is entitled to the full loyalty of manager or managerial employee. It defined a "supervisor"
those whom it chooses for positions of responsibility, but not a "manager." Thus:
entailing action on the employers' behalf. A supervisor's and
manager's ability to control the work of others would be Sec. 2. . . .
compromised by his sharing of employee status with them. 11 (k) "Supervisor" means any person having authority in the
C. Historical Development in the Philippines. interest of an employer, to hire, transfer, suspend, lay-off,
recall, discharge, assign, recommend, or discipline other
Labor-management relations in the Philippines were first employees, or responsibly to direct them, and to adjust their
regulated under the Industrial Peace Act 12 which took effect grievances, or effectively to recommend such acts, if, in
in 1953. Hailed as the Magna Carta of Labor, it was modelled connection with the foregoing, the exercise of such authority
after the NLRA and LMRA of the United States. 13 Most of the is not of a merely routinary or clerical nature but requires the
basic principles of the NLRA have been carried over to the use of independent judgment.
Industrial Peace Act and the Labor Code. 14 This is significant
because we have ruled that where our labor statutes are In 1972, we interpreted Section 3 of the Industrial Peace Act
based on statutes in foreign jurisdiction, the decisions of the to give supervisors the right to join and form labor
high courts in those jurisdictions construing and interpreting organizations of their own. 16 Soon we grappled with the right
the Act are given persuasive effects in the application of of managers to organize. In a case involving Caltex
Philippine law. 15 managers, we recognized their right to organize, viz:
The Industrial Peace Act did not carry any provision It would be going too far to dismiss summarily the point
prohibiting managerial employees from joining labor raised by respondent company, that of the alleged identity of
organizations. Section 3 of said law merely provided: interest between the managerial staff and the employing
firm. That should ordinarily be the case, especially so where
Sec. 3. Employees' Right to Self-Organization. Employees the dispute is between management and the rank-and-file. It
shall have the right to self-organization and to form, join or does not necessarily follow though that what binds the
assist labor organizations of their own choosing for the managerial staff to the corporation forecloses the possibility
purpose of collective bargaining through representatives of of conflict between them. There could be a real difference
their own choosing and to engage in concerted activities for between what the welfare of such group requires and the
the purpose of collective bargaining and other mutual aid concessions the firm is willing to grant. Their needs might
and protection. Individuals employed as supervisors shall not not be attended to then in the absence of any organization of
be eligible for membership in a labor organization of their own. Nor is this to indulge in empty theorizing. The
employees under their supervision but may form separate records of respondent company, even the very case cited by
organizations of their own. it, is proof enough of their uneasy and troubled relationship.
Certainly the impression is difficult to erase that an alien firm
failed to manifest sympathy for the claims of its Filipino
executives. 17
The Industrial Peace Act was repealed in 1975 by P.D. 442, employees to join labor organizations. The express
the Labor Code of the Philippines. The Labor Code changed prohibition in Article 246 remained. However, as an
existing jurisprudence when it prohibited supervisory and addendum to this same Article, R.A. 6715 restored to
managerial employees from joining labor supervisory employees the right to join labor organizations of
organizations. Supervisory unions were no longer recognized their own. 22 Article 246 now reads:
nor allowed to exist and operate as such. 18 We affirmed this
statutory change in Bulletin Publishing Art. 246. Ineligibility of managerial employees to join any
19
Corp. v. Sanchez. Similarly, Article 246 of the Labor Code labor organization; right of supervisory employees.
expressly prohibited managerial employees from forming, Managerial employees are not eligible to join, assist or form
assisting and joining labor organizations, to wit: any labor organization. Supervisory employees shall not be
eligible for membership in a labor organization of the rank-
Art. 246. Ineligibility of managerial employees to join any and-file employees but may join, assist or form separate
labor organization. Managerial employees are not eligible labor organizations of their own.
to join, assist or form any labor organization.
Article 246 became Article 245 after then Article 244 was
In the same Bulletin case, the Court applied Article 246 and repealed by E.O. 111. Article 246 is presently Article 245 of
held that managerial employees are the very type of the Labor Code.
employees who, by the nature of their positions and
functions, have been decreed disqualified from bargaining Indeed, Article 245 of the Labor Code prohibiting managerial
with management. This prohibition is based on the rationale employees from joining labor organizations has a social and
that if managerial employees were to belong or be affiliated historical significance in our labor relations law. This
with a union, the union might not be assured of their loyalty significance should be considered in deciphering the intent of
in view of evident conflict of interest or that the union can be the framers of the 1987 Constitution vis-a-vis the said Article.
company-dominated with the presence of managerial With due respect, I do not subscribe to the view that section
employees in the union membership. 20 In the collective 8, Article III of the Constitution abrogated Article 245 of the
bargaining process, managerial employees are supposed to Labor Code. A textual analysis of section 8, Article III of the
be on the side of the employer, to act as its representative, Constitution will not justify this conclusion. With due respect,
and to see to it that its interests are well protected. The the resort by Mr. Justice Davide to the deliberations of the
employer is not assured of such protection if these Constitutional Commission does not suffice. It is generally
employees themselves become union members. 21 recognized that debates and other proceedings in a
The prohibition on managerial employees to join, assist or constitutional convention are of limited value and are an
form labor organizations was retained in the Labor Code unsafe guide to the intent of the people. 23 Judge Cooley has
despite substantial amendments made in 1989 by R.A. 6715, stated that:
the Herrera-Veloso Law. R.A. 6715 was passed after the When the inquiry is directed to ascertaining the mischief
effectivity of the 1987 Constitution and this law did not designed to be remedied, or the purpose sought to be
abrogate, much less amend the prohibition on managerial accomplished by a particular provision, it may be proper to
examine the proceedings of the convention which framed the representatives. 26 The proper interpretation of constitutional
instrument. Where the proceedings clearly point out the provisions depends more on how it was understood by the
purpose of the provision, the aid will be valuable and people adopting it than in the framers' understanding
satisfactory; but where the question is one of abstract thereof. 27
meaning, it will be difficult to derive from this source much
reliable assistance in interpretation. Every member of such a Thus, debates and proceedings of the constitutional
convention acts upon such motives and reasons as influence convention are never of binding force. They may be valuable
him personally, and the motions and debates do not but are not necessarily decisive. 28 They may shed a useful
necessarily indicate the purpose of a majority of a light upon the purpose sought to be accomplished or upon
convention in adopting a particular clause. It is quite possible the meaning attached to the words employed. And the courts
for a particular clause to appear so clear and unambiguous are free to avail themselves of any light that may be derived
to the members of the convention as to require neither from such sources, but they are not bound to adopt it as the
discussion nor illustration; and the few remarks made sole ground of their decision. 29
concerning it in the convention might have a plain tendency Clearly then, a statute cannot be declared void on the sole
to lead directly away from the meaning in the minds of the ground that it is repugnant to a supposed intent or spirit
majority. It is equally possible for a part of the members to declared in constitutional convention proceedings.
accept a clause in one sense and a part in another. And even
if we were certain we had attained to the meaning of the D. Freedom of Association
convention, it is by no means to be allowed a controlling
force, especially if that meaning appears not to be the one The right of association flows from freedom of
which the words would most naturally and obviously convey. expression. 30 Like the right of expression, the exercise of the
For as the constitution does not derive its force from the right of association is not absolute. It is subject to certain
convention which framed, but from the people who ratified it, limitations.
the intent to be arrived at is that of the people, and it is not
Article 243 of the Labor Code reiterates the right of
to be supposed that they have looked for any dark and
association of people in the labor sector. Article 243
abstruse meaning in the words employed, but rather that
provides:
they have accepted them in the sense most obvious to the
common understanding, and ratified the instrument in the Art. 243. Coverage of employees' right to self-organization.
belief that was the sense designed to be conveyed. 24 All persons employed in commercial, industrial and
agricultural enterprises and in religious, charitable, medical,
It is for this reason that proceedings of constitutional
or educational institutions whether operating for profit or not,
conventions are less conclusive of the proper construction of
shall have the right to self-organization and to form, join, or
the instrument than are legislative proceedings of the proper
assist labor organizations of their own choosing for purposes
construction of the statute. 25 In the statutes, it is the intent
of collective bargaining. Ambulant, intermittent and itinerant
of the legislature that is being sought, while in constitutions,
workers, self-employed people, rural workers and those
it is the intent of the people that is being ascertained
through the discussions and deliberations of their
without any definite employers may form labor organizations In the collective bargaining process, managerial employees
for their mutual aid and protection. are supposed to be on the side of the employer, to act as its
representatives, and to see to it that its interests are well
Article 243 guarantees the right to self-organization and protected. The employer is not assured of such protection if
association to "all persons." This seemingly all-inclusive these employees themselves are union members. Collective
coverage of "all persons," however, actually admits of bargaining in such a situation can become one-sided. It is the
exceptions. same reason that impelled this Court to consider the position
Article 244 31 of the Labor Code mandates that all employees of confidential employees as included in the disqualification
in the civil service, i.e, those not employed in government found in Article 245 as if the disqualification of confidential
corporations established under the Corporation Code, may employees were written in the provision. If confidential
only form associations but may not collectively bargain on employees could unionize in order to bargain for advantages
terms and conditions fixed by law. An employee of a for themselves, then they could be governed by their own
cooperative who is a member and co-owner thereof cannot motives rather than the interest of the employers. Moreover,
invoke the right of collective bargaining and negotiation vis- unionization of confidential employees for the purpose of
a-vis the cooperative. 32 An owner cannot bargain with collective bargaining would mean the extension of the law to
himself or his co-owners. 33 Employees in foreign embassies persons or individuals who are supposed to act "in the
or consulates or in foreign international organizations interest of" the employers. It is not farfetched that in the
granted international immunities are also excluded from the course of collective bargaining, they might jeopardize that
right to form labor organizations. 34 International interest which they are duty-bound to protect. 37
organizations are organized mainly as a means for E. The disqualification extends only to labor organizations.
conducting general international business in which the
member-states have an interest and the immunities granted It must be noted that Article 245 of the Labor Code deprives
them shield their affairs from political pressure or control by managerial employees of their right to join "labor
the host country and assure the unimpeded performance of organizations." A labor organization is defined under the
their functions. 35 Labor Code as:
Confidential employees have also been denied the right to Art. 212 (g). "Labor organization" means any union or
form labor-organizations. Confidential employees do not association of employees which exists in whole or in part for
constitute a distinct category for purposes of organizational the purpose of collective bargaining or of dealing with the
right. Confidentiality may attach to a managerial or non- employer concerning terms and conditions of employment.
managerial position. We have, however, excluded
confidential employees from joining labor organizations A labor organization has two broad rights: (1) to bargain
following the rationale behind the disqualification of collectively and (2) to deal with the employer concerning
managerial employees in Article 245. In the case of National terms and conditions of employment. To bargain collectively
Association of Trade Unions-Republic Planters' Bank is a right given to a labor organization once it registers itself
Supervisors Chapter v. Torres, 36 we held: with the Department of Labor and Employment (DOLE).
Dealing with the employer, on the other hand, is a generic
description of interaction between employer and employees hierarchy. Such a ruling will wreak havoc on the existing set-
concerning grievances, wages, work hours and other terms up between management and labor. If all managerial
and conditions of employment, even if the employees' group employees will be allowed to unionize, then all who are in the
is not registered with the DOLE. 38 Any labor organization payroll of the company, starting from the president, vice-
which may or may not be a union may deal with the president, general managers and everyone, with the
employer. This explains why a workers' Organization does exception of the directors, may go on strike or picket the
not always have to be a labor union and why employer- employer. 40 Company officers will join forces with the
employee collective interactions are not always collective supervisors and rank-and-file. Management and labor will
bargaining. 39 become a solid phalanx with bargaining rights that could be
enforced against the owner of the company. 41 The basic
In the instant case, it may be argued that managerial opposing forces in the industry will not be management and
employees' labor organization will merely "deal with the labor but the operating group on the one hand and the
employer concerning terms and conditions of employment" stockholder and bondholder group on the other. The
especially when top management is composed of aliens, industrial problem defined in the Labor Code comes down to
following the circumstances in the Caltex case. a contest over a fair division of the gross receipts of industry
Although the labor organization may exist wholly for the between these two groups. 42 And this will certainly bring ill-
purpose of dealing with the employer concerning terms and effects on our economy.
conditions of employment, there is no prohibition in the The framers of the Constitution could not have intended a
Labor Code for it to become a legitimate labor organization major upheaval of our labor and socio-economic systems.
and engage in collective bargaining. Once a labor Their intent cannot be made to override substantial policy
organization registers with the DOLE and becomes considerations and create absurd or impossible
legitimate, it is entitled to the rights accorded under Articles 43
situations. A constitution must be viewed as a continuously
242 and 263 (b) of the Labor Code. And these include the operative charter of government. It must not be interpreted
right to strike and picket. as demanding the impossible or the impracticable; or as
Notably, however, Article 245 does not absolutely disqualify effecting the unreasonable or absurd. 44 Courts should always
managerial employees from exercising their right of endeavour to give such interpretation that would make the
association. What it prohibits is merely the right to join labor constitutional provision and the statute consistent with
organizations. Managerial employees may form associations reason, justice and the public interest. 45
or organizations so long as they are not labor organizations. I vote to dismiss the petition.
The freedom of association guaranteed under the
Constitution remains and has not been totally abrogated by VITUG, J., separate concurring and dissenting;
Article 245.
The pivotal issues raised in the case at bar, aptly stated by
To declare Article 245 of the Labor Code unconstitutional cuts the Office of the Solicitor General, are:
deep into our existing industrial life and will open the
floodgates to unionization at all levels of the industrial
(1) Whether or not public respondent, Undersecretary of the appeal, saying that there was no compelling reason to
Department of Labor and Employment ("DOLE") Bienvenido abandon the ruling in the two old cases theretofore decided
E. Laguesma, gravely abused his discretion in categorizing by DOLE. In his order of 22 September 1995, Undersecretary
the members of petitioner union to be managerial employees Laguesma denied the Union's motion for reconsideration.
and thus ineligible to form or join labor organizations; and
The Union went to this Court, via a petition for certiorari,
(2) Whether or not the provision of Article 245 of the Labor assailing the cancellation of its certificate of registration. The
Code, disqualifying managerial employees from joining, Court, after considering the petition and the comments
assisting or forming any labor organization, violates Section thereon filed by both public and private respondents, as well
8, Article III, of the 1987 Constitution, which expresses that as the consolidated reply of petitioner, dismissed the case in
"(t)he right of the people, including those employed in public its resolution of 08 July 1996 on the premise that no grave
and private sectors to form unions, associations or societies abuse of discretion had been committed by public
for purposes not contrary to law shall not be abridged." respondent.
The case originated from a petition for direct certification or Undaunted, the Union moved, with leave, for the
certification election among route managers/supervisory reconsideration of the dismissal of its petition by the
employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed Court En Banc. In its resolution of 16 June 1997, the case was
by the United Pepsi-Cola Supervisory Union ("Union"), referred to the Court En Banc en consulta with the movant's
claiming to be a legitimate labor organization duly registered invocation of unconstitutionality of Article 245 of the Labor
with the Department of Labor and Employment under Code vis-a-vis Section 8, Article III, of the 1987 Constitution.
Registration Certificate No. NCR-UR-3-1421-95. Pepsi
opposed the petition on the thesis that the case was no more There is merit, in my view, in petitioner's motion for
than a mere duplication of a previous petition for direct reconsideration but not on constitutional grounds.
certification 1 filed by the same route managers through the There are, in the hierarchy of management, those who fall
Pepsi-Cola Employees Association (PCEA-Supervisory) which below the level of key officers of an enterprise whose terms
petition had already been denied by Undersecretary and conditions of employment can well be, indeed are not
Laguesma. The holding reiterated a prior decision in Workers infrequently, provided for in collective bargaining
Alliance Trade Unions ("WATU") vs. Pepsi-Cola Products Phils., agreements. To this group belong the supervisory
Inc., 2 that route managers were managerial employees. employees. The "managerial employees," upon the other
In its decision, dated 05 May 1995, Med-Arbiter Brigida C. hand, and relating the matter particularly to the Labor Code,
Fadrigon dismissed for lack of merit the petition of the Union, are those "vested with powers or prerogatives to lay down
stating that the issue on the proper classification and status and execute management policies and/or to hire, transfer,
of route managers had already been ruled with finality in the suspend, lay-off, recall, discharge, assign or discipline
previous decisions, aforementioned, rendered by DOLE. employees" as distinguished from the supervisory employees
whose duties in these areas are so designed as to verily be
The union appealed the decision. In his resolution of 31 implementary to the policies or rules and regulations already
August 1995, Undersecretary Laguesma dismissed the outstanding and priorly taken up and passed upon by
management. The managerial level is the source, as well as 80% Seven-Up
prescribes the compliance, of broad mandates which, in the
field of labor relations, are to be carried out through the next 40% Mirinda
rank of employees charged with actually seeing to the 65% Mt. Dew
specific personnel action required. In fine, the real authority,
such as in hiring or firing of employees, comes from 5% Out of Stock
management and exercised by means of instructions, given
in general terms, by the "managerial employees;" the ACCOUNTS RECEIVABLE 65% Current (Incl. Legal & Col.)
supervisory employees, although ostensibly holding that
MANAGEMENT 80:20 Cash to Credit Ratio
power, in truth, however, only act in obedience to the
directives handed down to them. The latter unit, unlike the DSO assigned Std. to Division
former, cannot be considered the alter ego of the owner of
enterprise. by the District
The duties and responsibilities of the members of petitioner ASSET MANAGEMENT 30 cases for ice-coolers
union, shown by their "job description" below
80 cases for electric coolers
PCPPI
BLOWAGA on Division Vehicles
RM's JOB DESCRIPTION
60 cases on Rolling/Permanent
A. GENERAL/OVERALL OBJECTIVE OF THIS POSITION
Kiosks
To contribute to the growth and profitability of PCPPI via well-
TRADE DEVELOPMENT 100% Buying Customers Based
selected, trained and motivated Route Sales Team who sell,
collect and merchandise, following the Pepsi Way, and on master list that bought once
consistent with Company policies and procedures as well as
the corporate vision of Customer Satisfaction. 5 months payback on concessions
KEY RESULT AREAS STANDARD OR PERFORMANCE EXPENSE MANAGEMENT a). 5% Absentism rate Excl. VL
18 Productive Calls b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY)
CUSTOMER SATISFACTION Customer Complaint attended to c). PROPER HANDLING OF SELLING/MDSG. MATERIALS
within the next working day
d). YESTERDAY's FINAL SETTLEMENT REVIEW
HUMAN RESOURCE 5% Absentism Excl. VL
7. UPDATE REPORTS, MONITORS, DOCUMENTS & TELEPHONE
MANAGEMENT (approved) 3 Documented RR/ CONMATION
5. CONDUCTS SKILLS ENHANCEMENT OR HUDDLES WITH 1. FINANCIAL & ASSET VERIFICATION, CONFIRMATION &
RST's AUDIT
TRADE DEVELOPMENT These then are your functions as Pepsi-Cola Route Manager.
Within these functions managing your job and managing
1. PREPARATION PRIOR TO CALL your people you are accountable to your District Manager
for the execution and completion of various tasks and
2. ACTUAL CALL activities which will make it possible for you to achieve your
sales objectives.
3. POST CALL ANALYSIS
B. PRINCIPAL ACCOUNTABILITIES
(HOW DID I FARE? WHY? WHAT ACTIONS TO TAKE)
1.0 MANAGING YOUR JOB
4. FOLLOW-UP ACTION
The Route Manager is accountable for the following:
C. AT CLOSE OF DAY
1.1 SALES DEVELOPMENT
1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS &
REPORTS 1.1.1 Achieve the sales plan.
2. RM-SLM DEBRIEFING 1.1.2 Achieve all distribution and new account objectives.
3. SLR DISCUSSION (BASED ON A.M. SLR) 1.1.3 Develop new business opportunities thru personal
contacts with dealers.
4. COORDINATES WITH DM ON PLANS & PROGRAMS
1.1.4 Inspect and ensure that all merchandising objectives
5. PREPARATIONS FOR NEXT DAY's ACTIVITIES 3
are achieved in all outlets.
convey no more than those that are aptly consigned to the
1.1.5 Maintain and improve productivity of all cooling
"supervisory" group by the relatively small unit of
equipment and kiosks.
"managerial" employees. Certain portions of a pamphlet, the
so-called "Route Manager Position Description" referred to by 1.1.6 Execute and control all authorized promotions.
Mr. Justice Vicente Mendoza, in his ponencia, hereunder
reproduced for easy reference, thus 1.1.7 Develop and maintain dealer goodwill.
A. BASIC PURPOSE 1.1.8 Ensure all accounts comply with company suggested
retail pricing.
A Manager achieves objectives through others.
1.1.9 Study from time to time individual route coverage and 2.2.1 Maintain the company's reputation through strict
productivity for possible adjustments to maximize utilization adherence to PCPPI's code of conduct and the universal
of resources. standards of unquestioned business ethics.
1.2 Administration offer nothing at all that can approximate the authority and
functions of those who actually and genuinely hold the reins
1.2.1 Ensure the proper loading of route trucks before check- of management.
out and the proper sorting of bottles before check-in.
I submit, with due respect, that the members of petitioning
1.2.2 Ensure the upkeep of all route sales reports and all union, not really being "managerial employees" in the true
other related reports and forms required on an accurate and sense of the term, are not disqualified from forming or
timely basis. joining labor organizations under Article 245 of the Labor
1.2.3 Ensure proper implementation of the various company Code.
policies and procedures include but not limited to I shall now briefly touch base on the constitutional question
shakedown; route shortage; progressive discipline; sorting; raised by the parties on Article 245 of the Labor Code.
spoilages; credit/collection; accident; attendance.
The Constitution acknowledges "the right of the people,
1.2.4 Ensure collection of receivables and delinquent including those employed in the public and private sectors,
accounts. to form unions, associations or societies for purposes not
2.0 MANAGING YOUR PEOPLE contrary to law . . . ." 4 Perforce, petitioner claims, that part
of Article 245 5 of the Labor Code which states: "Managerial
The Route Manager is accountable for the following: employees are not eligible to join, assist or form any labor
organization," being in direct collision with the Constitutional
2.1 Route Sales Team Development provision, must now be declared abrogated in the law.
2.1.1 Conduct route rides to train, evaluate and develop all Frankly, I do not see such a "direct collision." The
assigned route salesmen and helpers at least 3 days a week, Constitution did not obviously grant a limitless right "to form
to be supported by required route ride documents/reports & unions, associations or societies" for it has clearly seen it fit
back check/spot check at least 2 days a week to be to subject its exercise to possible legislative judgment such
supported by required documents/reports. as may be appropriate or, to put it in the language of the
Constitution itself, to "purposes not contrary to law."
2.1.2 Conduct sales meetings and morning huddles. Training
should focus on the enhancement of effective sales and Freedom of association, like freedom of expression, truly
merchandising techniques of the salesmen and helpers. occupies a choice position in the hierarchy of constitutional
Conduct group training at least 1 hour each week on a values. Even while the Constitution itself recognizes the
designated day and of specific topic. State's prerogative to qualify this right, heretofore discussed,
any limitation, nevertheless, must still be predicated on the
2.2 Code of Conduct
existence of a substantive evil sought to be considered rank-and-file employees for purposes of this
6
addressed. Indeed, in the exercise of police power, the Book.
State may, by law, prescribe proscriptions, provided
reasonable and legitimate of course, against even the most Art. 263. . . .
basic rights of individuals. (b) Workers shall have the right to engage in concerted
The restriction embodied in Article 245 of the Labor Code is activities for purposes of collective bargaining or for their
not without proper rationale. Concededly, the prohibition to mutual benefit and protection. The right of legitimate labor
form labor organizations on the part of managerial organizations to strike and picket and of employers to
employees narrows down their freedom of association. The lockout, consistent with the national interest, shall continue
very nature of managerial functions, however, should to be recognized and respected.
preclude those who exercise them from taking a position The maxim "ut res magis quam pereat" requires not merely
adverse to the interest they are bound to serve and protect. that a statute should be given such a consequence as to be
The mere opportunity to undermine that interest can validly deemed whole but that each of its express provisions equally
be restrained. To say that the right of managerial employees should be given the intended effect.
to form a "labor organization" within the context and ambit
of the Labor Code should be deemed totally separable from I find it hard to believe that the fundamental law could have
the right to bargain collectively is not justified by related envisioned the use by managerial employees of coercive
provisions of the Code. For instance means against their own employers over matters entrusted
by the latter to the former. Whenever trust and confidence is
Art. 212. Definitions. 7 . . . a major aspect of any relationship, a conflict of interest on
(g) "Labor organization" means any union or association of the part of the person to whom that trust and confidence is
employees which exists in whole or in part for the purpose of reposed must be avoided and when, unfortunately, it does
collective bargaining or of dealing with employers concerning still arise its containment can rightly be decreed.
terms and conditions of employment. Article 245 of the Labor Code indeed aligns itself to the
xxx xxx xxx Corporation Code, the basic law on by far the most
commonly used business vehicle the corporation which
(m) "Managerial employee" is one who is vested with powers prescribes the tenure of office, as well as the duties and
or prerogatives to lay down and execute management functions, including terms of employment (governed in most
policies and/or to hire, transfer, suspend, lay-off, recall, part by the Articles of Incorporation, the By-laws of the
discharge, assign or discipline employees. Supervisory Corporation, or resolutions of the Board of Directors), of
employees are those who, in the interest of the employer, corporate officers for both the statutory officers,i.e., the
effectively recommend such managerial actions if the president, the treasurer and the corporate secretary, and the
exercise of such authority is not merely routinely or clerical non-statutory officers, i.e., those who occupy positions
in nature but requires the use of independent judgment. All created by the corporate by-laws who are deemed essential
employees not falling within any of the above definitions are for effective management of the enterprise. I cannot imagine
these officers as being legally and morally capable of This Section was adopted in Section 7 of Proposed Resolution
associating themselves into a labor organization and No. 486 of the 1986 Constitutional Commission, entitled
asserting collective bargaining rights against the very entity Resolution to Incorporate in the New Constitution an Article
in whose behalf they act and are supposed to act. on the Bill of Rights, 1 submitted by the Committee on
Citizenship, Bill of Rights, Political Rights and Obligations,
I submit, accordingly, that, firstly, the members of petitioner and Human Rights, with a modification, however, consisting
union or the so-called route managers, being no more than of the insertion of the word union between the words
supervisory employees, can lawfully organize themselves "associations" and "societies." Thus the proposed Section 7
into a labor union within the meaning of the Labor Code, and provided as follows:
that, secondly, the questioned provision of Article 245 of the
Labor Code has not been revoked by the 1987 Constitution. Sec. 7. The right of the people to form associations, unions,
or societies for purposes not contrary to law shall not be
WHEREFORE, I vote, given all the foregoing, for the reversal abridged (emphasis supplied).
of the resolution of 31 August 1995, and the order of 22
September 1995, of public respondent. Commissioner Joaquin G. Bernas, in his sponsorship speech
on the proposed Article on the Bill of Rights, expounded on
Kapunan, Panganiban and Quisumbing, JJ., concur and the nature of the proposed provision, in this wise:
dissent.
Section 7 preserves the old provision not because it is strictly
needed but because its removal might be subject to
Separate Opinions misinterpretation. It reads:
I concur with the majority that the "route managers" of It strictly does not prepare the old provision because it adds
private respondent Pepsi-Cola Products Philippines, Inc. the word UNION, and in the explanation we received from
are managerial employees. However, I respectfully submit Commissioner Lerum, the term envisions not just unions in
that contrary to the majority's holding, Article 245 of the private corporations but also in the government. This
Labor Code is unconstitutional, as it abridges Section 8, preserves our link with the Malolos Constitution as far as the
Article III of the Constitution. right to form associations or societies for purposes not
contrary to law is concerned. 2
Section 8, Article III of the 1987 Constitution was taken from
Section 7, Article IV of the 1973 Constitution which, in turn, During the period of individual amendments, Commissioner
was lifted from Section 6, Article III of the 1935 Constitution. Lerum introduced an amendment to the proposed section
Section 7 of the 1973 Constitution provided as follows: consisting of the insertion of the clause "WHETHER
EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS,
Sec. 7. The right to form associations or societies for purpose which, after consulting other Commissioners, he modified his
not contrary to law shall not be abridged. proposed amendment to read: "INCLUDING THOSE
EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At that The Committee on Style then recommended that commas be
time, the section read: placed after the words people and sectors, while
Commissioner Lerum likewise moved to place the word
Sec. 7. The right of the people including those employed in unions before the word associations. 4 Section 7, which was
the public and private sectors to form associations, unions or subsequently renumbered as Section 8 as presently
societies for purposes not contrary to law shall not be appearing in the text ratified in the plebiscite of 2 February
abridged. 1987, then read as follows:
Pertinently to this dispute Commissioner Lerum's intention The right of the people, including those employed in the
that the amendment "automatically abolish" Articles 245 and public and private sectors, to form unions, associations, or
246 of the Labor Code. The Committee accepted the societies for purposes not contrary to law shall not be
amendment, and there having been no objection from the abridged.
floor, the Lerum amendment was approved, thus:
It is then indubitably clear from the foregoing that the intent
MR. LERUM: . . . In proposing that amendment I ask to make of the Constitutional Commission was to abrogate the law
of record that I want the following provisions of the Labor prohibiting managerial employees from joining, assisting, or
Code to be automatically abolished, which read: forming unions or labor organizations. In this regard, there is
Art. 245. Security guards and other personnel employed for absolutely no need to decipher the intent of the framers of
the protection and security of the person, properties and the 1987 Constitution vis-a-vis Article 245 (originally 246) of
premises of the employers shall not be eligible for the Labor Code, there being no ambiguity or vagueness in
membership in a labor organization. the wording of the present Section 8, Article III of the 1987
Constitution. The provision is clear and written in simple
Art. 246. Managerial employees are not eligible to join, language; neither were there any confusing debates thereon.
assist, and form any labor organization. More importantly, the purpose of Commissioner Lerum's
amendments was unequivocal: he did not merely intend an
THE PRESIDING OFFICER (Mr. Bengzon): implied repeal, but an express repeal of the offending article
of the Labor Code. The approval of the amendments left no
What does the Committee say?
doubt whatsoever, as faithfully disclosed in the Records of
FR. BERNAS: The Committee accepts. the Constitutional Commission, that all employees meaning
rank-and-file, supervisory and managerial whether from
THE PRESIDING OFFICER (Mr. Bengzon): the public or the private sectors, have the right to form
unions for purposes not contrary to law.
The Committee has accepted the amendment, as amended.
The Labor Code referred to by Commissioner Lerum was P.D.
Is there any objection? (Silence) The Chair hears none; the
No. 442, promulgated on 1 May 1974. With the repeal of
amendment, as amended, is approved. 3
Article 239 by Executive Order No. 111 issued on 24
December 1986, 5 Article 246 (as mentioned by
Commissioner Lerum) became Article 245. Thereafter, R.A. employees, they are "not eligible to assist, join or form a
No. 6715 6 amended the new Article 245 (originally Article union or any other organization" should be SET ASIDE for
246) to read, as follows: being violative of Section 8 of Article III of the Constitution,
while that portion thereof denying petitioner's appeal from
Sec. 245. Ineligibility of managerial employees to join any the Med-Arbiter's decision dismissing the petition for direct
labor organization; right of supervisory employees. certification or for a certification election should be
Managerial employees are not eligible to join, assist or form AFFIRMED.
any labor organization. Supervisory employees shall not be
eligible for membership in a labor organization of the rank- PUNO, J., separate concurring;
and-file employees but may join, assist or form separate
labor organizations of their own. 7 With due respect, it is my submission that Article 245 of the
Labor Code was not repealed by section 8, Article III of the
With the abrogation of the former Article 246 of the Labor 1987 Constitution for reasons discussed below.
Code, 8 and the constitutional prohibition against any law
prohibiting managerial employees from joining, assisting or A. Types of Employees.
forming unions or labor organizations, the first sentence then For purposes of applying the law on labor relations, the Labor
of the present Article 245 of the Labor Code must be struck Code in Article 212 (m) defines three (3) categories of
down as unconstitutional. 9 However, due to an obvious employees. They are managerial, supervisory and rank-and-
conflict of interest being closely identified with the file, thus:
interests of management in view of the inherent nature of
their functions, duties and responsibilities managerial Art. 212 (m). "Managerial Employee" is one who is vested
employees may only be eligible to join, assist or form unions with powers or prerogatives to lay down and execute
or labor organizations of their own rank, and not those of the management policies and/or to hire, transfer, suspend, lay-
supervisory employees nor the rank-and-file employees. off, recall, discharge, assign or discipline employees.
"Supervisory employees" are those who, in the interest of the
In the instant case, the petitioner's name United Pepsi- employer, effectively recommended such managerial actions
Cola Supervisory Union (UPSU) indubitably attests that it is if the exercise of such authority is not merely routinary or
a union of supervisory employees. In light of the earlier clerical in nature but requires the use of independent
discussion, the route managers who aremanagerial judgment. All employees not falling within any of the above
employees, cannot join or assist UPSU. Accordingly, the Med- definitions are considered rank-and-file employees for
Arbiter and public respondent Laguesma committed no error purposes of this Book.
in denying the petition for direct certification or for
certification election. The test of "managerial" or "supervisory" status depends on
whether a person possesses authority to act in the interest of
I thus vote to GRANT, IN PART, the instant petition. That his employer and whether such authority is not routinary or
portion of the challenged resolution of public respondent clerical in nature but requires the use of independent
holding that since the route managers of private respondent judgment. 1 The rank-and-file employee performs work that is
Pepsi-Cola Products Philippines, Inc., are managerial
routinary and clerical in nature. The distinction between employees. Although traditionally, supervisors were regarded
these employees is significant because supervisory and rank- as part of management, the NLRB was constrained to
and-file employees may form, join or assist labor recognize supervisors as employees under the coverage of
organizations. Managerial employees cannot. the law. Supervisors were then granted collective bargaining
rights. 7 Nonetheless, the NLRB refused to consider managers
B. The Exclusion of Managerial Employees: Its Historical as covered by the law. 8
Roots in the United States.
The LMRA took away the collective bargaining rights of
The National Labor Relations Act (NLRA), also known as the supervisors. The sponsors of the amendment feared that
Wagner Act, enacted by the U.S. Congress in 1935, was the their unionization would break down industrial discipline as it
first law that regulated labor relations in the United States would blur the traditional distinction between management
and embodied its national labor policy. 2 The purpose of the and labor. They felt it necessary to deny supervisory
NLRA was to eliminate obstructions to the free flow of personnel the right of collective bargaining to preserve their
commerce through the practice of collective bargaining. The loyalty to the interests of their employers. 9
NLRA also sought to protect the workers' full freedoms of
association, self-organization, and designation of Several amendments were later made on the NLRA but the
representatives of their own choosing, for the purpose of exclusion of managers and supervisors from its coverage
negotiating the terms and conditions of their employment or was preserved. Until now managers and supervisors are
other mutual aid and protection. 3 The NLRA established the excluded from the law. 10 Their exclusion hinges on the
right of employees to organize, required employers to theory that the employer is entitled to the full loyalty of
bargain with employees collectively through employee- those whom it chooses for positions of responsibility,
elected representatives, gave employees the right to engage entailing action on the employers' behalf. A supervisor's and
in concerted activities for collective bargaining purposes or manager's ability to control the work of others would be
other mutual aid or protection, and created the National compromised by his sharing of employee status with them. 11
Labor Relations Board (NLRB) as the regulatory agency in
labor-management matters. 4 C. Historical Development in the Philippines.
The NLRA was amended in 1947 by the Labor Management Labor-management relations in the Philippines were first
Relations Act (LMRA), also known as the Taft-Hartley Act. This regulated under the Industrial Peace Act 12 which took effect
Act sought to lessen industrial disputes and placed in 1953. Hailed as the Magna Carta of Labor, it was modelled
employers in a more nearly equal position with unions in after the NLRA and LMRA of the United States. 13 Most of the
bargaining and labor relations procedures. 5 basic principles of the NLRA have been carried over to the
Industrial Peace Act and the Labor Code. 14 This is significant
The NLRA did not make any special provision for "managerial because we have ruled that where our labor statutes are
employees." 6 The privileges and benefits of the Act were based on statutes in foreign jurisdiction, the decisions of the
conferred on "employees." Labor organizations thus high courts in those jurisdictions construing and interpreting
clamored for the inclusion of supervisory personnel in the the Act are given persuasive effects in the application of
coverage of the Act on the ground that supervisors were also Philippine law. 15
The Industrial Peace Act did not carry any provision interest between the managerial staff and the employing
prohibiting managerial employees from joining labor firm. That should ordinarily be the case, especially so where
organizations. Section 3 of said law merely provided: the dispute is between management and the rank-and-file. It
does not necessarily follow though that what binds the
Sec. 3. Employees' Right to Self-Organization. Employees managerial staff to the corporation forecloses the possibility
shall have the right to self-organization and to form, join or of conflict between them. There could be a real difference
assist labor organizations of their own choosing for the between what the welfare of such group requires and the
purpose of collective bargaining through representatives of concessions the firm is willing to grant. Their needs might
their own choosing and to engage in concerted activities for not be attended to then in the absence of any organization of
the purpose of collective bargaining and other mutual aid their own. Nor is this to indulge in empty theorizing. The
and protection. Individuals employed as supervisors shall not records of respondent company, even the very case cited by
be eligible for membership in a labor organization of it, is proof enough of their uneasy and troubled relationship.
employees under their supervision but may form separate Certainly the impression is difficult to erase that an alien firm
organizations of their own. failed to manifest sympathy for the claims of its Filipino
Significantly, the Industrial Peace Act did not define a executives. 17
manager or managerial employee. It defined a "supervisor" The Industrial Peace Act was repealed in 1975 by P.D. 442,
but not a "manager." Thus: the Labor Code of the Philippines. The Labor Code changed
Sec. 2. . . . existing jurisprudence when it prohibited supervisory and
managerial employees from joining labor
(k) "Supervisor" means any person having authority in the organizations. Supervisory unions were no longer recognized
interest of an employer, to hire, transfer, suspend, lay-off, nor allowed to exist and operate as such. 18 We affirmed this
recall, discharge, assign, recommend, or discipline other statutory change in Bulletin Publishing
employees, or responsibly to direct them, and to adjust their Corp. v. Sanchez. 19 Similarly, Article 246 of the Labor Code
grievances, or effectively to recommend such acts, if, in expressly prohibited managerial employees from forming,
connection with the foregoing, the exercise of such authority assisting and joining labor organizations, to wit:
is not of a merely routinary or clerical nature but requires the
use of independent judgment. Art. 246. Ineligibility of managerial employees to join any
labor organization. Managerial employees are not eligible
In 1972, we interpreted Section 3 of the Industrial Peace Act to join, assist or form any labor organization.
to give supervisors the right to join and form labor
organizations of their own. 16 Soon we grappled with the right In the same Bulletin case, the Court applied Article 246 and
of managers to organize. In a case involving Caltex held that managerial employees are the very type of
managers, we recognized their right to organize, viz: employees who, by the nature of their positions and
functions, have been decreed disqualified from bargaining
It would be going too far to dismiss summarily the point with management. This prohibition is based on the rationale
raised by respondent company, that of the alleged identity of that if managerial employees were to belong or be affiliated
with a union, the union might not be assured of their loyalty significance should be considered in deciphering the intent of
in view of evident conflict of interest or that the union can be the framers of the 1987 Constitution vis-a-vis the said Article.
company-dominated with the presence of managerial
employees in the union membership. 20 In the collective With due respect, I do not subscribe to the view that section
bargaining process, managerial employees are supposed to 8, Article III of the Constitution abrogated Article 245 of the
be on the side of the employer, to act as its representative, Labor Code. A textual analysis of section 8, Article III of the
and to see to it that its interests are well protected. The Constitution will not justify this conclusion. With due respect,
employer is not assured of such protection if these the resort by Mr. Justice Davide to the deliberations of the
employees themselves become union members. 21 Constitutional Commission does not suffice. It is generally
recognized that debates and other proceedings in a
The prohibition on managerial employees to join, assist or constitutional convention are of limited value and are an
form labor organizations was retained in the Labor Code unsafe guide to the intent of the people. 23 Judge Cooley has
despite substantial amendments made in 1989 by R.A. 6715, stated that:
the Herrera-Veloso Law. R.A. 6715 was passed after the
effectivity of the 1987 Constitution and this law did not When the inquiry is directed to ascertaining the mischief
abrogate, much less amend the prohibition on managerial designed to be remedied, or the purpose sought to be
employees to join labor organizations. The express accomplished by a particular provision, it may be proper to
prohibition in Article 246 remained. However, as an examine the proceedings of the convention which framed the
addendum to this same Article, R.A. 6715 restored to instrument. Where the proceedings clearly point out the
supervisory employees the right to join labor organizations of purpose of the provision, the aid will be valuable and
their own. 22 Article 246 now reads: satisfactory; but where the question is one of abstract
meaning, it will be difficult to derive from this source much
Art. 246. Ineligibility of managerial employees to join any reliable assistance in interpretation. Every member of such a
labor organization; right of supervisory employees. convention acts upon such motives and reasons as influence
Managerial employees are not eligible to join, assist or form him personally, and the motions and debates do not
any labor organization. Supervisory employees shall not be necessarily indicate the purpose of a majority of a
eligible for membership in a labor organization of the rank- convention in adopting a particular clause. It is quite possible
and-file employees but may join, assist or form separate for a particular clause to appear so clear and unambiguous
labor organizations of their own. to the members of the convention as to require neither
discussion nor illustration; and the few remarks made
Article 246 became Article 245 after then Article 244 was concerning it in the convention might have a plain tendency
repealed by E.O. 111. Article 246 is presently Article 245 of to lead directly away from the meaning in the minds of the
the Labor Code. majority. It is equally possible for a part of the members to
Indeed, Article 245 of the Labor Code prohibiting managerial accept a clause in one sense and a part in another. And even
employees from joining labor organizations has a social and if we were certain we had attained to the meaning of the
historical significance in our labor relations law. This convention, it is by no means to be allowed a controlling
force, especially if that meaning appears not to be the one
which the words would most naturally and obviously convey. The right of association flows from freedom of
For as the constitution does not derive its force from the expression. 30 Like the right of expression, the exercise of the
convention which framed, but from the people who ratified it, right of association is not absolute. It is subject to certain
the intent to be arrived at is that of the people, and it is not limitations.
to be supposed that they have looked for any dark and
abstruse meaning in the words employed, but rather that Article 243 of the Labor Code reiterates the right of
they have accepted them in the sense most obvious to the association of people in the labor sector. Article 243
common understanding, and ratified the instrument in the provides:
belief that was the sense designed to be conveyed. 24 Art. 243. Coverage of employees' right to self-organization.
It is for this reason that proceedings of constitutional All persons employed in commercial, industrial and
conventions are less conclusive of the proper construction of agricultural enterprises and in religious, charitable, medical,
the instrument than are legislative proceedings of the proper or educational institutions whether operating for profit or not,
construction of the statute. 25 In the statutes, it is the intent shall have the right to self-organization and to form, join, or
of the legislature that is being sought, while in constitutions, assist labor organizations of their own choosing for purposes
it is the intent of the people that is being ascertained of collective bargaining. Ambulant, intermittent and itinerant
through the discussions and deliberations of their workers, self-employed people, rural workers and those
representatives. 26 The proper interpretation of constitutional without any definite employers may form labor organizations
provisions depends more on how it was understood by the for their mutual aid and protection.
people adopting it than in the framers' understanding Article 243 guarantees the right to self-organization and
thereof. 27 association to "all persons." This seemingly all-inclusive
Thus, debates and proceedings of the constitutional coverage of "all persons," however, actually admits of
convention are never of binding force. They may be valuable exceptions.
but are not necessarily decisive. 28 They may shed a useful Article 244 31 of the Labor Code mandates that all employees
light upon the purpose sought to be accomplished or upon in the civil service, i.e, those not employed in government
the meaning attached to the words employed. And the courts corporations established under the Corporation Code, may
are free to avail themselves of any light that may be derived only form associations but may not collectively bargain on
from such sources, but they are not bound to adopt it as the terms and conditions fixed by law. An employee of a
sole ground of their decision. 29 cooperative who is a member and co-owner thereof cannot
Clearly then, a statute cannot be declared void on the sole invoke the right of collective bargaining and negotiation vis-
ground that it is repugnant to a supposed intent or spirit a-vis the cooperative. 32 An owner cannot bargain with
declared in constitutional convention proceedings. himself or his co-owners. 33 Employees in foreign embassies
or consulates or in foreign international organizations
D. Freedom of Association granted international immunities are also excluded from the
right to form labor organizations. 34 International
organizations are organized mainly as a means for
conducting general international business in which the E. The disqualification extends only to labor organizations.
member-states have an interest and the immunities granted
them shield their affairs from political pressure or control by It must be noted that Article 245 of the Labor Code deprives
the host country and assure the unimpeded performance of managerial employees of their right to join "labor
their functions. 35 organizations." A labor organization is defined under the
Labor Code as:
Confidential employees have also been denied the right to
form labor-organizations. Confidential employees do not Art. 212 (g). "Labor organization" means any union or
constitute a distinct category for purposes of organizational association of employees which exists in whole or in part for
right. Confidentiality may attach to a managerial or non- the purpose of collective bargaining or of dealing with the
managerial position. We have, however, excluded employer concerning terms and conditions of employment.
confidential employees from joining labor organizations A labor organization has two broad rights: (1) to bargain
following the rationale behind the disqualification of collectively and (2) to deal with the employer concerning
managerial employees in Article 245. In the case of National terms and conditions of employment. To bargain collectively
Association of Trade Unions-Republic Planters' Bank is a right given to a labor organization once it registers itself
Supervisors Chapter v. Torres, 36 we held: with the Department of Labor and Employment (DOLE).
In the collective bargaining process, managerial employees Dealing with the employer, on the other hand, is a generic
are supposed to be on the side of the employer, to act as its description of interaction between employer and employees
representatives, and to see to it that its interests are well concerning grievances, wages, work hours and other terms
protected. The employer is not assured of such protection if and conditions of employment, even if the employees' group
these employees themselves are union members. Collective is not registered with the DOLE. 38 Any labor organization
bargaining in such a situation can become one-sided. It is the which may or may not be a union may deal with the
same reason that impelled this Court to consider the position employer. This explains why a workers' Organization does
of confidential employees as included in the disqualification not always have to be a labor union and why employer-
found in Article 245 as if the disqualification of confidential employee collective interactions are not always collective
employees were written in the provision. If confidential bargaining. 39
employees could unionize in order to bargain for advantages In the instant case, it may be argued that managerial
for themselves, then they could be governed by their own employees' labor organization will merely "deal with the
motives rather than the interest of the employers. Moreover, employer concerning terms and conditions of employment"
unionization of confidential employees for the purpose of especially when top management is composed of aliens,
collective bargaining would mean the extension of the law to following the circumstances in the Caltex case.
persons or individuals who are supposed to act "in the
interest of" the employers. It is not farfetched that in the Although the labor organization may exist wholly for the
course of collective bargaining, they might jeopardize that purpose of dealing with the employer concerning terms and
interest which they are duty-bound to protect. 37 conditions of employment, there is no prohibition in the
Labor Code for it to become a legitimate labor organization
and engage in collective bargaining. Once a labor The framers of the Constitution could not have intended a
organization registers with the DOLE and becomes major upheaval of our labor and socio-economic systems.
legitimate, it is entitled to the rights accorded under Articles Their intent cannot be made to override substantial policy
242 and 263 (b) of the Labor Code. And these include the considerations and create absurd or impossible
43
right to strike and picket. situations. A constitution must be viewed as a continuously
operative charter of government. It must not be interpreted
Notably, however, Article 245 does not absolutely disqualify as demanding the impossible or the impracticable; or as
managerial employees from exercising their right of effecting the unreasonable or absurd. 44 Courts should always
association. What it prohibits is merely the right to join labor endeavour to give such interpretation that would make the
organizations. Managerial employees may form associations constitutional provision and the statute consistent with
or organizations so long as they are not labor organizations. reason, justice and the public interest. 45
The freedom of association guaranteed under the
Constitution remains and has not been totally abrogated by I vote to dismiss the petition.
Article 245.
VITUG, J., separate concurring and dissenting;
To declare Article 245 of the Labor Code unconstitutional cuts
deep into our existing industrial life and will open the The pivotal issues raised in the case at bar, aptly stated by
floodgates to unionization at all levels of the industrial the Office of the Solicitor General, are:
hierarchy. Such a ruling will wreak havoc on the existing set- (1) Whether or not public respondent, Undersecretary of the
up between management and labor. If all managerial Department of Labor and Employment ("DOLE") Bienvenido
employees will be allowed to unionize, then all who are in the E. Laguesma, gravely abused his discretion in categorizing
payroll of the company, starting from the president, vice- the members of petitioner union to be managerial employees
president, general managers and everyone, with the and thus ineligible to form or join labor organizations; and
exception of the directors, may go on strike or picket the
employer. 40 Company officers will join forces with the (2) Whether or not the provision of Article 245 of the Labor
supervisors and rank-and-file. Management and labor will Code, disqualifying managerial employees from joining,
become a solid phalanx with bargaining rights that could be assisting or forming any labor organization, violates Section
enforced against the owner of the company. 41 The basic 8, Article III, of the 1987 Constitution, which expresses that
opposing forces in the industry will not be management and "(t)he right of the people, including those employed in public
labor but the operating group on the one hand and the and private sectors to form unions, associations or societies
stockholder and bondholder group on the other. The for purposes not contrary to law shall not be abridged."
industrial problem defined in the Labor Code comes down to
a contest over a fair division of the gross receipts of industry The case originated from a petition for direct certification or
between these two groups. 42 And this will certainly bring ill- certification election among route managers/supervisory
effects on our economy. employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed
by the United Pepsi-Cola Supervisory Union ("Union"),
claiming to be a legitimate labor organization duly registered
with the Department of Labor and Employment under invocation of unconstitutionality of Article 245 of the Labor
Registration Certificate No. NCR-UR-3-1421-95. Pepsi Code vis-a-vis Section 8, Article III, of the 1987 Constitution.
opposed the petition on the thesis that the case was no more
than a mere duplication of a previous petition for direct There is merit, in my view, in petitioner's motion for
certification 1 filed by the same route managers through the reconsideration but not on constitutional grounds.
Pepsi-Cola Employees Association (PCEA-Supervisory) which There are, in the hierarchy of management, those who fall
petition had already been denied by Undersecretary below the level of key officers of an enterprise whose terms
Laguesma. The holding reiterated a prior decision in Workers and conditions of employment can well be, indeed are not
Alliance Trade Unions ("WATU") vs. Pepsi-Cola Products Phils., infrequently, provided for in collective bargaining
Inc., 2 that route managers were managerial employees. agreements. To this group belong the supervisory
In its decision, dated 05 May 1995, Med-Arbiter Brigida C. employees. The "managerial employees," upon the other
Fadrigon dismissed for lack of merit the petition of the Union, hand, and relating the matter particularly to the Labor Code,
stating that the issue on the proper classification and status are those "vested with powers or prerogatives to lay down
of route managers had already been ruled with finality in the and execute management policies and/or to hire, transfer,
previous decisions, aforementioned, rendered by DOLE. suspend, lay-off, recall, discharge, assign or discipline
employees" as distinguished from the supervisory employees
The union appealed the decision. In his resolution of 31 whose duties in these areas are so designed as to verily be
August 1995, Undersecretary Laguesma dismissed the implementary to the policies or rules and regulations already
appeal, saying that there was no compelling reason to outstanding and priorly taken up and passed upon by
abandon the ruling in the two old cases theretofore decided management. The managerial level is the source, as well as
by DOLE. In his order of 22 September 1995, Undersecretary prescribes the compliance, of broad mandates which, in the
Laguesma denied the Union's motion for reconsideration. field of labor relations, are to be carried out through the next
rank of employees charged with actually seeing to the
The Union went to this Court, via a petition for certiorari, specific personnel action required. In fine, the real authority,
assailing the cancellation of its certificate of registration. The such as in hiring or firing of employees, comes from
Court, after considering the petition and the comments management and exercised by means of instructions, given
thereon filed by both public and private respondents, as well in general terms, by the "managerial employees;" the
as the consolidated reply of petitioner, dismissed the case in supervisory employees, although ostensibly holding that
its resolution of 08 July 1996 on the premise that no grave power, in truth, however, only act in obedience to the
abuse of discretion had been committed by public directives handed down to them. The latter unit, unlike the
respondent. former, cannot be considered the alter ego of the owner of
Undaunted, the Union moved, with leave, for the enterprise.
reconsideration of the dismissal of its petition by the The duties and responsibilities of the members of petitioner
Court En Banc. In its resolution of 16 June 1997, the case was union, shown by their "job description" below
referred to the Court En Banc en consulta with the movant's
PCPPI
RM's JOB DESCRIPTION BLOWAGA on Division Vehicles
b). OPERATIONAL DIRECTIONS & PRIORITIES 2. BACKCHECKS FIRST 5 CUSTOMERS SERVED FOR THE DAY
a). SLM PRACTICES BLOWAGA ON ROUTE TRUCK c). RM's TERRITORY FAMILIARITY
b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY) d). KEY ACCOUNTS GOODWILL
4. FOLLOW-UP ACTION
C. AT CLOSE OF DAY 1.1 SALES DEVELOPMENT
1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS & 1.1.1 Achieve the sales plan.
REPORTS
1.1.2 Achieve all distribution and new account objectives.
2. RM-SLM DEBRIEFING
1.1.3 Develop new business opportunities thru personal
3. SLR DISCUSSION (BASED ON A.M. SLR) contacts with dealers.
4. COORDINATES WITH DM ON PLANS & PROGRAMS 1.1.4 Inspect and ensure that all merchandising objectives
are achieved in all outlets.
5. PREPARATIONS FOR NEXT DAY's ACTIVITIES 3
1.1.5 Maintain and improve productivity of all cooling
convey no more than those that are aptly consigned to the equipment and kiosks.
"supervisory" group by the relatively small unit of
"managerial" employees. Certain portions of a pamphlet, the 1.1.6 Execute and control all authorized promotions.
so-called "Route Manager Position Description" referred to by
Mr. Justice Vicente Mendoza, in his ponencia, hereunder 1.1.7 Develop and maintain dealer goodwill.
reproduced for easy reference, thus 1.1.8 Ensure all accounts comply with company suggested
A. BASIC PURPOSE retail pricing.
A Manager achieves objectives through others. 1.1.9 Study from time to time individual route coverage and
productivity for possible adjustments to maximize utilization
As a Route Manager, your purpose is to meet the sales plan; of resources.
and you achieve this objective through the skillful
management of your job and the management of your 1.2 Administration
people. 1.2.1 Ensure the proper loading of route trucks before check-
These then are your functions as Pepsi-Cola Route Manager. out and the proper sorting of bottles before check-in.
Within these functions managing your job and managing 1.2.2 Ensure the upkeep of all route sales reports and all
your people you are accountable to your District Manager other related reports and forms required on an accurate and
for the execution and completion of various tasks and timely basis.
activities which will make it possible for you to achieve your
sales objectives. 1.2.3 Ensure proper implementation of the various company
policies and procedures include but not limited to
B. PRINCIPAL ACCOUNTABILITIES shakedown; route shortage; progressive discipline; sorting;
1.0 MANAGING YOUR JOB spoilages; credit/collection; accident; attendance.
Not satisfied with the decision of the Office of the Secretary The foregoing issues are factual ones, the resolution of which
of Labor, petitioner filed a Motion for Reconsideration of the is crucial to the petition. For if indeed it is true that at the
Resolution of March 3, 1993, reiterating its claim that as of time of filing of the petition, the said registration certificate
the date of filing of petition for certification election, has not been approved yet, then, petitioner lacks the legal
respondent TMPCLU had not yet acquired the status of a personality to file the petition and the dismissal order is
legitimate labor organization as required by the Labor Code, proper. Sadly, we can not resolve the said questions by
and that the proposed bargaining unit was inappropriate. merely perusing the records. Further hearing and
introduction of evidence are required. Thus, there is a need
Acting on petitioner's motion for reconsideration, the public to remand the case to the Med-Arbiter solely for the purpose.
respondent, on July 13, 1994 set aside its earlier resolution
and remanded the case to the Med-Arbiter concluding that WHEREFORE, the motion is hereby granted and our
the issues raised by petitioner both on appeal and in its Resolution is hereby set aside. Let the case be remanded to
motion for reconsideration were factual issues requiring the Med-Arbiter for the purpose aforestated.
further hearing and production of evidence. 8 The Order
stated SO ORDERED. 9
We carefully re-examined the records vis-a-vis the arguments Pursuant to the Order, quoted above, Med-Arbiter Brigida C.
raised by the movant, and we note that movant correctly Fodrigon submitted her findings on September 28, 1994,
pointed out that petitioner submitted a copy of its certificate stating the following: 10
of registration for the first time on appeal and that in its [T]he controvertible fact is that petitioner could not have
petition, petitioner alleges that it is an independent been issued its Certificate of Registration on November 24,
organization which is in the process of registration." Movant 1992 when it applied for registration only on November 23,
strongly argues that the foregoing only confirms what it has 1992 as shown by the official receipt of payment of filing fee.
been pointing out all along, that at the time the petition was As Enrique Nalus, Chief LEG, this office, would attest in his
letter dated September 8, 1994 addressed to Mr. Porfirio T. Med-Arbiters to the effect that: 1) the inclusion of the
Reyes, Industrial Relations Officer of respondent company, in prohibited mix of rank-and file and supervisory employees in
response to a query posed by the latter, "It is unlikely that an the roster of members and officers of the union cannot be
application for registration is approved on the date that it is cured by a simple inclusion-exclusion proceeding; and that 2)
filed or the day thereafter as the processing course has to the respondent union had no legal standing at the time of the
pass thought routing, screening, and assignment, evaluation, filing of its petition for certification election. 15
review and initialing, and approval/disapproval procedure,
among others, so that a 30-day period is provided for under We grant the petition.
the Labor Code for this purpose, let alone opposition thereto The purpose of every certification election is to determine
by interested parties which must be also given due course. the exclusive representative of employees in an appropriate
Another evidence which petitioner presented. . . is the "Union bargaining unit for the purpose of collective bargaining. A
Registration 1992 Logbook of IRD". . . and the entry date certification election for the collective bargaining process is
November 25, 1992 as allegedly the date of the release of one of the fairest and most effective ways of determining
the registration certificate. . . On the other hand, respondent which labor organization can truly represent the working
company presented . . . a certified true copy of an entry on force. 16 In determining the labor organization which
page 265 of the Union Registration Logbook showing the represents the interests of the workforce, those interests
pertinent facts about petitioner but which do not show the must be, as far as reasonably possible, homogeneous, so as
petitioner's registration was issued on or before November to genuinely reach the concerns of the individual members of
26, 1992. 11 a labor organization.
Further citing other pieces of evidence presented before her, According to Rothenberg, 17 an appropriate bargaining unit is
the Med-Arbiter concluded that respondent TMPCLU could not a group of employees of a given employer, composed of all
have "acquire[d] legal personality at the time of the filing of or less than the entire body of employees, which the
(its) petition." 12 collective interests of all the employees, consistent with
equity to the employer indicate to be best suited to serve
On April 20, 1996, the public respondent issued a new reciprocal rights and duties of the parties under the collective
Resolution, "directing the conduct of a certification election bargaining provisions of law. In Belyca Corporation v. Ferrer
among the regular rank-and-file employees of the Toyota Calleja, 18 we defined the bargaining unit as "the legal
Motor Philippines Corporation. 13 Petitioner's motion for collectivity for collective bargaining purposes whose
reconsideration was denied by public respondent in his Order members have substantially mutual bargaining interests in
dated July 14, 1995. 14 terms and conditions of employment as will assure to all
employees their collective bargaining rights." This in mind,
Hence, this special civil action for certiorari under Rule 65 of the Labor Code has made it a clear statutory policy to
the Revised Rules of Court, where petitioner contends that prevent supervisory employees from joining labor
"the Secretary of Labor and Employment committed grave organizations consisting of rank-and-file employees as the
abuse of discretion amounting to lack or excess of jurisdiction
in reversing, contrary to law and facts the findings of the
concerns which involve members of either group are parts and equipments. He also coordinates with other
normally disparate and contradictory. Article 245 provides: sections in the Production Department.
Art. 245 Ineligibility of managerial employees to join any LEVEL 5 He is responsible for overseeing initial production
labor organization; right of supervisory employees. of new models, prepares and monitors construction
Managerial Employees are not eligible to join, assist or form schedules for new models, identifies manpower requirements
any labor organization. Supervisory employees shall not be for production, facilities and equipment, and lay-out
eligible for membership in a labor organization of the rank- processes. He also oversees other sections in the production
and-file employees but may join, assist or form separate process (e.g. assembly, welding, painting)." (Annex "V" of
labor organizations of their own. Respondent TMP's Position Paper; which is the Job Description
for an Engineer holding Level 5 position in the Production
Clearly, based on this provision, a labor organization Engineering Section of the Production Planning and Control
composed of both rank-and-file and supervisory employees is Department).
no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one, While there may be a genuine divergence of opinion as to
an organization which carries a mixture of rank-and-file and whether or not union members occupying Level 4 positions
supervisory employees cannot possess any of the rights of a are supervisory employees, it is fairly obvious, from a reading
legitimate labor organization, including the right to file a of the Labor Code's definition of the term that those
petition for certification election for the purpose of collective occupying Level 5 positions are unquestionably supervisory
bargaining. It becomes necessary, therefore, anterior to the employees. Supervisory employees, as defined above, are
granting of an order allowing a certification election, to those who, in the interest of the employer, effectively
inquire into the composition of any labor organization recommend managerial actions if the exercise of such
whenever the status of the labor organization is challenged authority is not merely routinary or clerical in nature but
on the basis of Article 245 of the Labor Code. require the use of independent judgment. 21 Under the job
description for level five employees, such personnel all
It is the petitioner's contention that forty-two (42) of the engineers having a number of personnel under them, not
respondent union's members, including three of its officers, only oversee production of new models but also determine
occupy supervisory positions 19 In its position paper dated manpower requirements, thereby influencing important
February 22, 1993, petitioner identified fourteen (14) union hiring decisions at the highest levels. This determination is
members occupying the position of Junior Group Chief neither routine nor clerical but involves the independent
11 20 and twenty-seven (27) members in level five positions. assessment of factors affecting production, which in turn
Their respective job-descriptions are quoted below: affect decisions to hire or transfer workers. The use of
LEVEL 4 (JUNIOR GROUP CHIEF II) He is responsible for all independent judgment in making the decision to hire, fire or
operators and assigned stations, prepares production reports transfer in the identification of manpower requirements
related to daily production output. He oversees smooth flow would be greatly impaired if the employee's loyalties are torn
of production, quality of production, availability of manpower, between the interests of the union and the interests of
management. A supervisory employee occupying a level five
position would therefore find it difficult to objectively identify of the Labor Code's Prohibition of unions composed of
the exact manpower requirements dictated by production supervisory and rank-and-file employees, it could not possess
demands. the requisite personality to file for recognition as a legitimate
labor organization. In any case, the factual issue, albeit
This is precisely what the Labor Code, in requiring separate ignored by the public respondent's assailed Resolution, was
unions among rank-and-file employees on one hand, and adequately threshed out in the Med-Arbiter's September 28,
supervisory employees on the other, seeks to avoid. The 1994 Order
rationale behind the Code's exclusion of supervisors from
unions of rank-and-file employees is that such employees, The holding of a certification election is based on clear
while in the performance of supervisory functions, become statutory policy which cannot be circumvented. 23 Its rules,
the alter ego of management in the making and the strictly construed by this Court, are designed to eliminate
implementing of key decisions at the sub-managerial level. fraud and manipulation. As we emphasized inProgressive
Certainly, it would be difficult to find unity or mutuality of Development Corporation v. Secretary, Department of Labor
interests in a bargaining unit consisting of a mixture of rank- and Employment, 24 the Court's conclusion should not be
and-file and supervisory employees. And this is so because interpreted as impairing any union's right to be certified as
the fundamental test of a bargaining unit's acceptability is the employees' bargaining agent in the petitioner's
whether or not such a unit will best advance to all employees establishment. Workers of an appropriate bargaining unit
within the unit the proper exercise of their collective must be allowed to freely express their choice in an election
bargaining rights. 22 The Code itself has recognized this, in where everything is open to sound judgment and the
preventing supervisory employees from joining unions of possibility for fraud and misrepresentation is absent. 25
rank-and-file employees.
WHEREFORE, the petition is GRANTED. The assailed
In the case at bar, as respondent union's membership list Resolution dated April 20, 1995 and Order dated July 14,
contains the names of at least twenty-seven (27) supervisory 1995 of respondent Secretary of Labor are hereby SET ASIDE.
employees in Level Five positions. the union could not, prior The Order dated September 28, 1994 of the Med-Arbiter is
to purging itself of its supervisory employee members, attain REINSTATED.
the status of a legitimate labor organization. Not being one, it
cannot possess the requisite personality to file a petition for SO ORDERED.
certification election.
ROMERO, J.:
The antecedent facts are undisputed: On September 21, 1991, respondent company, San Miguel
Corporation filed a Motion for Reconsideration with Motion to
On October 5, 1990, petitioner union filed before the suspend proceedings.
Department of Labor and Employment (DOLE) a Petition for
Direct Certification or Certification Election among the On March 11, 1993, an Order was issued by the public
supervisors and exempt employees of the SMC Magnolia respondent granting the Motion, citing the doctrine
Poultry Products Plants of Cabuyao, San Fernando and Otis. enunciated in Philips Industrial Development,
2
Inc. v. NLRC case. Said Order reads in part:
On December 19, 1990, Med-Arbiter Danilo L. Reynante
issued an Order ordering the conduct of certification election . . . Confidential employees, like managerial employees, are
among the supervisors and exempt employees of the SMC not allowed to form, join or assist a labor union for purposes
Magnolia Poultry Products Plants of Cabuyao, San Fernando of collective bargaining.
and Otis as one bargaining unit. In this case, S3 and S4 Supervisors and the so-called exempt
On January 18, 1991, respondent San Miguel Corporation employees are admittedly confidential employees and
filed a Notice of Appeal with Memorandum on Appeal, therefore, they are not allowed to form, join or assist a labor
pointing out, among others, the Med-Arbiter's error in union for purposes of collective bargaining following the
grouping together all three (3) separate plants, Otis, Cabuyao above court's ruling. Consequently, they are not allowed to
and San Fernando, into one bargaining unit, and in including participate in the certification election.
supervisory levels 3 and above whose positions are WHEREFORE, the Motion is hereby granted and the Decision
confidential in nature. of this Office dated 03 September 1991 is hereby modified to
On July 23, 1991, the public respondent, Undersecretary the extent that employees under supervisory levels 3 and 4
Laguesma, granted respondent company's Appeal and (S3 and S4) and the so-called exempt employees are not
ordered the remand of the case to the Med-Arbiter of origin allowed to join the proposed bargaining unit and are
for determination of the true classification of each of the therefore excluded from those who could participate in the
certification election. 3
Hence this petition. must handle the prescribed responsibilities relating to labor
relations. 6
For resolution in this case are the following issues:
The exclusion from bargaining units of employees who, in the
1. Whether Supervisory employees 3 and 4 and the exempt normal course of their duties, become aware of management
employees of the company are considered confidential policies relating to labor relations is a principal objective
employees, hence ineligible from joining a union. sought to be accomplished by the ''confidential employee
2. If they are not confidential employees, do the employees rule." The broad rationale behind this rule is that employees
of the three plants constitute an appropriate single should not be placed in a position involving a potential
bargaining unit. conflict of interests. 7 "Management should not be required to
handle labor relations matters through employees who are
On the first issue, this Court rules that said employees do not represented by the union with which the company is required
fall within the term "confidential employees" who may be to deal and who in the normal performance of their duties
prohibited from joining a union. may obtain advance information of the company's position
with regard to contract negotiations, the disposition of
There is no question that the said employees, supervisors grievances, or other labor relations matters." 8
and the exempt employees, are not vested with the powers
and prerogatives to lay down and execute management There have been precedents in this regards, thus in Bulletin
policies and/or to hire, transfer, suspend, layoff, recall, Publishing Company v. Hon. Augusto Sanchez, 9 the Court
discharge or dismiss employees. They are, therefore, not held that "if these managerial employees would belong to or
qualified to be classified as managerial employees who, be affiliated with a Union, the latter might not be assured of
under Article 245 4 of the Labor Code, are not eligible to join, their loyalty to the Union in view of evident conflict of
assist or form any labor organization. In the very same interest. The Union can also become company-dominated
provision, they are not allowed membership in a labor with the presence of managerial employees in Union
organization of the rank-and-file employees but may join, membership." The same rationale was applied to confidential
assist or form separate labor organizations of their own. The employees in "Golden Farms, Inc. v. Ferrer-Calleja" 10 and in
only question that need be addressed is whether these the more recent case of "Philips Industrial Development,
employees are properly classified as confidential employees Inc. v. NLRC" 11 which held that confidential employees, by
or not. the very nature of their functions, assist and act in a
confidential capacity to, or have access to confidential
Confidential employees are those who (1) assist or act in a matters of, persons who exercise managerial functions in the
confidential capacity, (2) to persons who formulate, field of labor relations. Therefore, the rationale behind the
determine, and effectuate management policies in the field ineligibility of managerial employees to form, assist or join a
of labor relations. 5 The two criteria are cumulative, and both labor union was held equally applicable to them. 12
must be met if an employee is to be considered a confidential
employee that is, the confidential relationship must exist An important element of the "confidential employee rule" is
between the employee and his supervisor, and the supervisor the employee's need to use labor relations information. Thus,
in determining the confidentiality of certain employees, a key Herein listed are the functions of supervisors 3 and higher:
question frequently considered is the employee's necessary
access to confidential labor relations information. 13 1. To undertake decisions to discontinue/temporarily stop
shift operations when situations require.
It is the contention of respondent corporation that Supervisor
employees 3 and 4 and the exempt employees come within 2. To effectively oversee the quality control function at the
the meaning of the term "confidential employees" primarily processing lines in the storage of chicken and other products.
because they answered in the affirmative when asked "Do 3. To administer efficient system of evaluation of products in
you handle confidential data or documents?" in the Position the outlets.
Questionnaires submitted by the Union. 14In the same
questionnaire, however, it was also stated that the 4. To be directly responsible for the recall, holding and
confidential information handled by questioned employees rejection of direct manufacturing materials.
relate to product formulation, product standards and product
specification which by no means relate to "labor relations." 15 5. To recommend and initiate actions in the maintenance of
sanitation and hygiene throughout the plant. 20
Granting arguendo that an employee has access to
confidential labor relations information but such is merely It is evident that whatever confidential data the questioned
incidental to his duties and knowledge thereof is not employees may handle will have to relate to their functions.
necessary in the performance of such duties, said access From the foregoing functions, it can be gleaned that the
does not render the employee a confidential employee. 16 "If confidential information said employees have access to
access to confidential labor relations information is to be a concern the employer's internal business operations. As held
factor in the determination of an employee's confidential in Westinghouse Electric Corporation v.National Labor
status, such information must relate to the employer's labor Relations Board, 21 "an employee may not be excluded from
relations policies. Thus, an employee of a labor union, or of a appropriate bargaining unit merely because he has access to
management association, must have access to confidential confidential information concerning employer's internal
labor relations information with respect to his employer, the business operations and which is not related to the field of
union, or the association, to be regarded a confidential labor relations."
employee, and knowledge of labor relations information
It must be borne in mind that Section 3 of Article XIII of the
pertaining to the companies with which the union deals, or
1987 Constitution mandates the State to guarantee to "all"
which the association represents, will not cause an employee
workers the right to self-organization. Hence, confidential
to be excluded from the bargaining unit representing
employees who may be excluded from bargaining unit must
employees of the union or association." 17 "Access to
be strictly defined so as not to needlessly deprive many
information which is regarded by the employer to be
employees of their right to bargain collectively through
confidential from the business standpoint, such as financial
representatives of their choosing. 22
information 18 or technical trade secrets, will not render an
employee a confidential employee." 19 In the case at bar, supervisors 3 and above may not be
considered confidential employees merely because they
handle "confidential data" as such must first be strictly bargaining provisions of the
classified as pertaining to labor relations for them to fall law." 24
under said restrictions. The information they handle are
properly classifiable as technical and internal business A unit to be appropriate must effect a grouping of employees
operations data which, to our mind, has no relevance to who have substantial, mutual interests in wages, hours,
negotiations and settlement of grievances wherein the working conditions and other subjects of collective
interests of a union and the management are invariably bargaining. 25
adversarial. Since the employees are not classifiable under It is readily seen that the employees in the instant case have
the confidential type, this Court rules that they may "community or mutuality of interests," which is the standard
appropriately form a bargaining unit for purposes of in determining the proper constituency of a collective
collective bargaining. Furthermore, even assuming that they bargaining unit. 26 It is undisputed that they all belong to the
are confidential employees, jurisprudence has established Magnolia Poultry Division of San Miguel Corporation. This
that there is no legal prohibition against confidential means that, although they belong to three different plants,
employees who are not performing managerial functions to they perform work of the same nature, receive the same
form and join a union. 23 wages and compensation, and most importantly, share a
In this connection, the issue of whether the employees of San common stake in concerted activities.
Miguel Corporation Magnolia Poultry Products Plants of In light of these considerations, the Solicitor General has
Cabuyao, San Fernando, and Otis constitute a single opined that separate bargaining units in the three different
bargaining unit needs to be threshed out. plants of the division will fragmentize the employees of the
It is the contention of the petitioner union that the creation of said division, thus greatly diminishing their bargaining
three (3) separate bargaining units, one each for Cabuyao, leverage. Any concerted activity held against the private
Otis and San Fernando as ruled by the respondent respondent for a labor grievance in one bargaining unit will,
Undersecretary, is contrary to the one-company, one-union in all probability, not create much impact on the operations
policy. It adds that Supervisors level 1 to 4 and exempt of the private respondent. The two other plants still in
employees of the three plants have a similarity or a operation can well step up their production and make up for
community of interests. the slack caused by the bargaining unit engaged in the
concerted activity. This situation will clearly frustrate the
This Court finds the contention of the petitioner meritorious. provisions of the Labor Code and the mandate of the
Constitution. 27
An appropriate bargaining unit may be defined as "a group of
employees of a given employer, comprised of all or less than The fact that the three plants are located in three different
all of the entire body of employees, which the collective places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro
interest of all the employees, consistent with equity to the Manila, and in San Fernando, Pampanga is immaterial.
employer, indicate to be best suited to serve the reciprocal Geographical location can be completely disregarded if the
rights and duties of the parties under the collective communal or mutual interests of the employees are not
sacrificed as demonstrated in UP v.Calleja-Ferrer where all
non-academic rank and file employee of the University of the Petition for certiorari to annul the decision 1 of the National
Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Labor Relations Commission (NLRC) dated July 20, 1979
Baos, Laguna and the Visayas were allowed to participate in which found petitioner Sweden Ice Cream guilty of unfair
a certification election. We rule that the distance among the labor practice for unjustified refusal to bargain, in violation of
three plants is not productive of insurmountable difficulties in par. (g) of Article 249 2 of the New Labor Code, 3 and declared
the administration of union affairs. Neither are there regional the draft proposal of the Union for a collective bargaining
differences that are likely to impede the operations of a agreement as the governing collective bargaining agreement
single bargaining representative. between the employees and the management.
WHEREFORE, the assailed Order of March 11, 1993 is hereby The pertinent background facts are as follows:
SET ASIDE and the Order of the Med-Arbiter on December 19,
1990 is REINSTATED under which a certification election In a certification election held on October 3, 1978, the
among the supervisors (level 1 to 4) and exempt employees Pambansang Kilusang Paggawa (Union for short), a legitimate
of the San Miguel Corporation Magnolia Poultry Products late labor federation, won and was subsequently certified in a
Plants of Cabuyao, San Fernando, and Otis as one bargaining resolution dated November 29, 1978 by the Bureau of Labor
unit is ordered conducted. Relations as the sole and exclusive bargaining agent of the
rank-and-file employees of Sweden Ice Cream Plant
SO ORDERED. (Company for short). The Company's motion for
reconsideration of the said resolution was denied on January
25, 1978.
Collective bargaining which is defined as negotiations We are in total conformity with respondent NLRC's
towards a collective agreement, 6 is one of the democratic pronouncement that petitioner Company is GUILTY of unfair
frameworks under the New Labor Code, designed to stabilize labor practice. It has been indubitably established that (1)
the relation between labor and management and to create a respondent Union was a duly certified bargaining agent; (2) it
climate of sound and stable industrial peace. It is a mutual made a definite request to bargain, accompanied with a copy
responsibility of the employer and the Union and is of the proposed Collective Bargaining Agreement, to the
characterized as a legal obligation. So much so that Article Company not only once but twice which were left
249, par. (g) of the Labor Code makes it an unfair labor unanswered and unacted upon; and (3) the Company made
practice for an employer to refuse "to meet and convene no counter proposal whatsoever all of which conclusively
promptly and expeditiously in good faith for the purpose of indicate lack of a sincere desire to negotiate. 8 A Company's
negotiating an agreement with respect to wages, hours of refusal to make counter proposal if considered in relation to
work, and all other terms and conditions of employment the entire bargaining process, may indicate bad faith and this
including proposals for adjusting any grievance or question is specially true where the Union's request for a counter
arising under such an agreement and executing a contract proposal is left unanswered. 9 Even during the period of
incorporating such agreement, if requested by either party. compulsory arbitration before the NLRC, petitioner
Company's approach and attitude-stalling the negotiation by
While it is a mutual obligation of the parties to bargain, the a series of postponements, non-appearance at the hearing
employer, however, is not under any legal duty to initiate conducted, and undue delay in submitting its financial
contract negotiation. 7 The mechanics of collective bargaining statements, lead to no other conclusion except that it is
is set in motion only when the following jurisdictional unwilling to negotiate and reach an agreement with the
preconditions are present, namely, (1) possession of the Union. Petitioner has not at any instance, evinced good faith
status of majority representation of the employees' or willingness to discuss freely and fully the claims and
representative in accordance with any of the means of demands set forth by the Union much less justify its
selection or designation provided for by the Labor Code; (2) opposition thereto.10
proof of majority representation; and (3) a demand to bargain
under Article 251, par. (a) of the New Labor Code . ... all of The case at bar is not a case of first impression, for in
which preconditions are undisputedly present in the instant the Herald Delivery Carriers Union (PAFLU) vs. Herald
case. Publications 11the rule had been laid down that "unfair labor
practice is committed when it is shown that the respondent
From the over-all conduct of petitioner company in relation to employer, after having been served with a written bargaining
the task of negotiation, there can be no doubt that the Union proposal by the petitioning Union, did not even bother to
has a valid cause to complain against its (Company's) submit an answer or reply to the said proposal This doctrine
attitude, the totality of which is indicative of the latter's was reiterated anew in Bradman vs. Court of Industrial
Relations 12 wherein it was further ruled that "while the law
does not compel the parties to reach an agreement, it does presented before the Labor Arbiter which is the proper forum
contemplate that both parties will approach the negotiation for the purpose.
with an open mind and make a reasonable effort to reach a
common ground of agreement We agree with the pronouncement that it is not obligatory
upon either side of a labor controversy to precipitately accept
As a last-ditch attempt to effect a reversal of the decision or agree to the proposals of the other. But an erring party
sought to be reviewed, petitioner capitalizes on the issue of should not be tolerated and allowed with impunity to resort
due process claiming, that it was denied the right to be heard to schemes feigning negotiations by going through empty
and present its side when the Labor Arbiter denied the gestures. 13 More so, as in the instant case, where the
Company's motion for further postponement. intervention of the National Labor Relations Commission was
properly sought for after conciliation efforts undertaken by
Petitioner's aforesaid submittal failed to impress Us. the BLR failed. The instant case being a certified one, it must
Considering the various postponements granted in its behalf, be resolved by the NLRC pursuant to the mandate of P.D.
the claimed denial of due process appeared totally bereft of 873, as amended, which authorizes the said body to
any legal and factual support. As herein earlier stated, determine the reasonableness of the terms and conditions of
petitioner had not even honored respondent Union with any employment embodied in any Collective Bargaining
reply to the latter's successive letters, all geared towards Agreement. To that extent, utmost deference to its findings of
bringing the Company to the bargaining table. It did not even reasonableness of any Collective Bargaining Agreement as
bother to furnish or serve the Union with its counter proposal the governing agreement by the employees and
despite persistent requests made therefor. Certainly, the management must be accorded due respect by this Court.
moves and overall behavior of petitioner-company were in
total derogation of the policy enshrined in the New Labor WHEREFORE, the instant petition is DISMISSED. The
Code which is aimed towards expediting settlement of temporary restraining order issued on August 27, 1980, is
economic disputes. Hence, this Court is not prepared to affix LIFTED and SET ASIDE.
its imprimatur to such an illegal scheme and dubious
maneuvers. No pronouncement as to costs.
On the same day, the Secretary, through her January 31, Meanwhile, after due proceedings, the NLRC issued its
2002 Order, assumed jurisdiction over the labor dispute and October 9, 2002 Decision in NLRC NCR CC No. 000215-02, in
certified the case to the NLRC for compulsory arbitration, which it ordered the Hotel and the Union to execute a CBA
which was docketed as NLRC NCR CC No. 000215-02. The within 30 days from the receipt of the decision. The NLRC
Secretary's Order partly reads: also held that the January 18, 2002 concerted action was an
illegal strike in which illegal acts were committed by the
WHEREFORE, in order to have a complete determination of Union; and that the strike violated the "No Strike, No
the bargaining deadlock and the other incidents of the Lockout" provision of the CBA, which thereby caused the
dispute, this Office hereby consolidates the two Notices of dismissal of 29 Union officers and 61 Union members. The
Strike - NCMB-NCR-NS-12-369-01 and NCMB-NCR-NS-01-019- NLRC ordered the Hotel to grant the 61 dismissed Union
02 - and CERTIFIES the entire labor dispute covered by these members financial assistance in the amount of month's
Notices and the intervening events, to the NATIONAL LABOR pay for every year of service or their retirement benefits
under their retirement plan whichever was higher. The NLRC Thus, the Union filed the present petitions.
explained that the strike which occurred on January 18, 2002
was illegal because it failed to comply with the mandatory The Union raises several interwoven issues in G.R. No.
30-day cooling-off period10 and the seven-day strike 163942, most eminent of which is whether the Union
ban,11 as the strike occurred only 29 days after the conducted an illegal strike. The issues presented for
submission of the notice of strike on December 20, 2001 and resolution are:
only four days after the submission of the strike vote on -A-
January 14, 2002. The NLRC also ruled that even if the Union
had complied with the temporal requirements mandated by WHETHER OR NOT THE UNION, THE 29 UNION OFFICERS AND
law, the strike would nonetheless be declared illegal because 61 MEMBERS MAY BE ADJUDGED GUILTY OF STAGING AN
it was attended by illegal acts committed by the Union ILLEGAL STRIKE ON JANUARY 18, 2002 DESPITE
officers and members. RESPONDENTS' ADMISSION THAT THEY PREVENTED SAID
OFFICERS AND MEMBERS FROM REPORTING FOR WORK FOR
The Union then filed a Motion for Reconsideration of the ALLEGED VIOLATION OF THE HOTEL'S GROOMING
NLRC's Decision which was denied in the February 7, 2003 STANDARDS
NLRC Resolution. Unfazed, the Union filed a Petition for
Certiorari under Rule 65 with the CA, docketed as CA-G.R. SP -B-
No. 76568, and assailed both the October 9, 2002 Decision
and the February 7, 2003 Resolution of the NLRC. WHETHER OR NOT THE 29 UNION OFFICERS AND 61
MEMBERS MAY VALIDLY BE DISMISSED AND MORE THAN 200
Soon thereafter, the CA promulgated its January 19, 2004 MEMBERS BE VALIDLY SUSPENDED ON THE BASIS OF FOUR
Decision in CA-G.R. SP No. 76568 which dismissed the (4) SELF-SERVING AFFIDAVITS OF RESPONDENTS
Union's petition and affirmed the rulings of the NLRC. The CA
ratiocinated that the Union failed to demonstrate that the -C-
NLRC committed grave abuse of discretion and capriciously
WHETHER OR NOT RESPONDENTS IN PREVENTING UNION
exercised its judgment or exercised its power in an arbitrary
OFFICERS AND MEMBERS FROM REPORTING FOR WORK
and despotic manner.
COMMITTED AN ILLEGAL LOCK-OUT12
For this reason, the Union filed a Motion for Reconsideration
In G.R. No. 166295, the Union solicits a riposte from this
which the CA, in its June 1, 2004 Resolution, denied for lack
Court on whether the Secretary has discretion to impose
of merit.
"payroll" reinstatement when he assumes jurisdiction over
In the meantime, the CA promulgated its May 6, 2004 labor disputes.
Decision in CA-G.R. SP No. 70778 which denied due course to
The Court's Ruling
and consequently dismissed the Union's petition. The Union
moved to reconsider the Decision, but the CA was The Court shall first dispose of G.R. No. 166295.
unconvinced and denied the motion for reconsideration in its
November 25, 2004 Resolution.
According to the Union, there is no legal basis for allowing Thus, it was settled that in assumption of jurisdiction cases,
payroll reinstatement in lieu of actual or physical the Secretary should impose actual reinstatement in
reinstatement. As argued, Art. 263(g) of the Labor Code is accordance with the intent and spirit of Art. 263(g) of the
clear on this point. Labor Code. As with most rules, however, this one is subject
to exceptions. We held in Manila Diamond Hotel Employees'
The Hotel, on the other hand, claims that the issue is now Union v. Court of Appeals that payroll reinstatement is a
moot and any decision would be impossible to execute in departure from the rule, and special circumstances which
view of the Decision of the NLRC which upheld the dismissal make actual reinstatement impracticable must be shown. 14 In
of the Union officers and members. one case, payroll reinstatement was allowed where the
The Union's position is untenable. employees previously occupied confidential positions,
because their actual reinstatement, the Court said, would be
The Hotel correctly raises the argument that the issue was impracticable and would only serve to exacerbate the
rendered moot when the NLRC upheld the dismissal of the situation.15In another case, this Court held that the NLRC did
Union officers and members. In order, however, to settle this not commit grave abuse of discretion when it allowed payroll
relevant and novel issue involving the breadth of the power reinstatement as an option in lieu of actual reinstatement for
and jurisdiction of the Secretary in assumption of jurisdiction teachers who were to be reinstated in the middle of the first
cases, we now decide the issue on the merits instead of term.16 We held that the NLRC was merely trying its best to
relying on mere technicalities. work out a satisfactory ad hoc solution to a festering and
serious problem.17
We held in University of Immaculate Concepcion, Inc. v.
Secretary of Labor: The peculiar circumstances in the present case validate the
Secretary's decision to order payroll reinstatement instead of
With respect to the Secretary's Order allowing payroll actual reinstatement. It is obviously impracticable for the
reinstatement instead of actual reinstatement for the Hotel to actually reinstate the employees who shaved their
individual respondents herein, an amendment to the previous heads or cropped their hair because this was exactly the
Orders issued by her office, the same is usually not allowed. reason they were prevented from working in the first place.
Article 263(g) of the Labor Code aforementioned states that Further, as with most labor disputes which have resulted in
all workers must immediately return to work and all strikes, there is mutual antagonism, enmity, and animosity
employers must readmit all of them under the same terms between the union and the management. Payroll
and conditions prevailing before the strike or lockout. The reinstatement, most especially in this case, would have been
phrase "under the same terms and conditions" makes it clear the only avenue where further incidents and damages could
that the norm is actual reinstatement. This is consistent with be avoided. Public officials entrusted with specific
the idea that any work stoppage or slowdown in that jurisdictions enjoy great confidence from this Court. The
particular industry can be detrimental to the national Secretary surely meant only to ensure industrial peace as she
interest.13 assumed jurisdiction over the labor dispute. In this case, we
are not ready to substitute our own findings in the absence of
a clear showing of grave abuse of discretion on her part.
The issues raised in G.R. No. 163942, being interrelated, shall (2) [when it] violates a specific requirement of law[, such as
be discussed concurrently. Article 263 of the Labor Code on the requisites of a valid
strike]; or
To be determined whether legal or not are the following acts
of the Union: (3) [when it] is declared for an unlawful purpose, such as
inducing the employer to commit an unfair labor practice
(1) Reporting for work with their bald or cropped hair style on against non-union employees; or
January 18, 2002; and
(4) [when it] employs unlawful means in the pursuit of its
(2) The picketing of the Hotel premises on January 26, 2002. objective, such as a widespread terrorism of non-strikers [for
The Union maintains that the mass picket conducted by its example, prohibited acts under Art. 264(e) of the Labor
officers and members did not constitute a strike and was Code]; or
merely an expression of their grievance resulting from the (5) [when it] is declared in violation of an existing injunction[,
lockout effected by the Hotel management. On the other such as injunction, prohibition, or order issued by the DOLE
hand, the Hotel argues that the Union's deliberate defiance Secretary and the NLRC under Art. 263 of the Labor Code]; or
of the company rules and regulations was a concerted effort
to paralyze the operations of the Hotel, as the Union officers (6) [when it] is contrary to an existing agreement, such as a
and members knew pretty well that they would not be no-strike clause or conclusive arbitration clause. 18
allowed to work in their bald or cropped hair style. For this
reason, the Hotel argues that the Union committed an illegal With the foregoing parameters as guide and the following
strike on January 18, 2002 and on January 26, 2002. grounds as basis, we hold that the Union is liable for
conducting an illegal strike for the following reasons:
We rule for the Hotel.
First, the Union's violation of the Hotel's Grooming Standards
Art. 212(o) of the Labor Code defines a strike as "any was clearly a deliberate and concerted action to undermine
temporary stoppage of work by the concerted action of the authority of and to embarrass the Hotel and was,
employees as a result of an industrial or labor dispute." therefore, not a protected action. The appearances of the
Hotel employees directly reflect the character and well-being
In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. of the Hotel, being a five-star hotel that provides service to
National Labor Relations Commission, we cited the various top-notch clients. Being bald or having cropped hair per se
categories of an illegal strike, to wit: does not evoke negative or unpleasant feelings. The reality
Noted authority on labor law, Ludwig Teller, lists six (6) that a substantial number of employees assigned to the food
categories of an illegal strike, viz.: and beverage outlets of the Hotel with full heads of hair
suddenly decided to come to work bald-headed or with
(1) [when it] is contrary to a specific prohibition of law, such cropped hair, however, suggests that something is amiss and
as strike by employees performing governmental functions; insinuates a sense that something out of the ordinary is
or afoot. Obviously, the Hotel does not need to advertise its
labor problems with its clients. It can be gleaned from the accounts, picketing, sit-down strikes, sympathy strikes or any
records before us that the Union officers and members other form of interference and/or interruptions with any of
deliberately and in apparent concert shaved their heads or the normal operations of the HOTEL during the life of this
cropped their hair. This was shown by the fact that after Agreement.
coming to work on January 18, 2002, some Union members
even had their heads shaved or their hair cropped at the The facts are clear that the strike arose out of a bargaining
Union office in the Hotel's basement. Clearly, the decision to deadlock in the CBA negotiations with the Hotel. The
violate the company rule on grooming was designed and concerted action is an economic strike upon which the afore-
calculated to place the Hotel management on its heels and to quoted "no strike/work stoppage and lockout" prohibition is
force it to agree to the Union's proposals. squarely applicable and legally binding. 19
In view of the Union's collaborative effort to violate the Third, the Union officers and members' concerted action to
Hotel's Grooming Standards, it succeeded in forcing the Hotel shave their heads and crop their hair not only violated the
to choose between allowing its inappropriately hair styled Hotel's Grooming Standards but also violated the Union's
employees to continue working, to the detriment of its duty and responsibility to bargain in good faith. By shaving
reputation, or to refuse them work, even if it had to cease their heads and cropping their hair, the Union officers and
operations in affected departments or service units, which in members violated then Section 6, Rule XIII of the
either way would disrupt the operations of the Hotel. This Implementing Rules of Book V of the Labor Code. 20 This rule
Court is of the opinion, therefore, that the act of the Union prohibits the commission of any act which will disrupt or
was not merely an expression of their grievance or impede the early settlement of the labor disputes that are
displeasure but, indeed, a calibrated and calculated act under conciliation. Since the bargaining deadlock is being
designed to inflict serious damage to the Hotel's finances or conciliated by the NCMB, the Union's action to have their
its reputation. Thus, we hold that the Union's concerted officers and members' heads shaved was manifestly
violation of the Hotel's Grooming Standards which resulted in calculated to antagonize and embarrass the Hotel
the temporary cessation and disruption of the Hotel's management and in doing so effectively disrupted the
operations is an unprotected act and should be considered as operations of the Hotel and violated their duty to bargain
an illegal strike. collectively in good faith.
Second, the Union's concerted action which disrupted the Fourth, the Union failed to observe the mandatory 30-day
Hotel's operations clearly violated the CBA's "No Strike, No cooling-of period and the seven-day strike ban before it
Lockout" provision, which reads: conducted the strike on January 18, 2002. The NLRC correctly
held that the Union failed to observe the mandatory periods
ARTICLE XXII - NO STRIKE/WORK STOPPAGE AND LOCKOUT before conducting or holding a strike. Records reveal that the
Union filed its Notice of Strike on the ground of bargaining
SECTION 1. No Strikes deadlock on December 20, 2001. The 30-day cooling-off
The Union agrees that there shall be no strikes, walkouts, period should have been until January 19, 2002. On top of
stoppage or slow-down of work, boycott, refusal to handle that, the strike vote was held on January 14, 2002 and was
submitted to the NCMB only on January 18, 2002; therefore, officer who knowingly participates in an illegal strike
the 7-day strike ban should have prevented them from and any worker or union officer who knowingly
holding a strike until January 25, 2002. The concerted action participates in the commission of illegal acts during a
committed by the Union on January 18, 2002 which resulted strike may be declared to have lost his employment
in the disruption of the Hotel's operations clearly violated the status x x x." The law makes a distinction between union
above-stated mandatory periods. officers and mere union members. Union officers may be
validly terminated from employment for their participation in
Last, the Union committed illegal acts in the conduct of its an illegal strike, while union members have to participate in
strike. The NLRC ruled that the strike was illegal since, as and commit illegal acts for them to lose their employment
shown by the pictures 21 presented by the Hotel, the Union status.25 Thus, it is necessary for the company to adduce
officers and members formed human barricades and proof of the participation of the striking employees in the
obstructed the driveway of the Hotel. There is no merit in the commission of illegal acts during the strikes. 26
Union's argument that it was not its members but the Hotel's
security guards and the police officers who blocked the Clearly, the 29 Union officers may be dismissed pursuant to
driveway, as it can be seen that the guards and/or police Art. 264(a), par. 3 of the Labor Code which imposes the
officers were just trying to secure the entrance to the Hotel. penalty of dismissal on "any union officer who knowingly
The pictures clearly demonstrate the tense and highly participates in an illegal strike." We, however, are of the
explosive situation brought about by the strikers' presence in opinion that there is room for leniency with respect to the
the Hotel's driveway. Union members. It is pertinent to note that the Hotel was
able to prove before the NLRC that the strikers blocked the
Furthermore, this Court, not being a trier of facts, finds no ingress to and egress from the Hotel. But it is quite apparent
reason to alter or disturb the NLRC findings on this matter, that the Hotel failed to specifically point out the participation
these findings being based on substantial evidence and of each of the Union members in the commission of illegal
affirmed by the CA.22 Factual findings of labor officials, who acts during the picket and the strike. For this lapse in
are deemed to have acquired expertise in matters within judgment or diligence, we are constrained to reinstate the 61
their respective jurisdictions, are generally accorded not only Union members.
respect but even finality, and bind us when supported by
substantial evidence.23 Likewise, we are not duty-bound to Further, we held in one case that union members who
delve into the accuracy of the factual findings of the NLRC in participated in an illegal strike but were not identified to have
the absence of clear showing that these were arrived at committed illegal acts are entitled to be reinstated to their
arbitrarily and/or bereft of any rational basis. 24 former positions but without backwages. 27 We then held in G
& S Transport Corporation v. Infante:
What then are the consequent liabilities of the Union officers
and members for their participation in the illegal strike? With respect to backwages, the principle of a "fair day's wage
for a fair day's labor" remains as the basic factor in
Regarding the Union officers and members' liabilities for their determining the award thereof. If there is no work performed
participation in the illegal picket and strike, Art. 264(a), by the employee there can be no wage or pay unless, of
paragraph 3 of the Labor Code provides that "[a]ny union
course, the laborer was able, willing and ready to work but 14. JOSE MUZONES
was illegally locked out, suspended or dismissed or otherwise 15. RAY NERVA
illegally prevented from working. While it was found that 16. JESUS NONAN
respondents expressed their intention to report back to work, 17. MARLYN OLLERO
the latter exception cannot apply in this case. In Philippine 18. CATHY ORDUNA
Marine Officer's Guild v. Compaia Maritima, as affirmed 19. REYNALDO RASING
in Philippine Diamond Hotel and Resort v. Manila Diamond 20. JUSTO TABUNDA
Hotel Employees Union, the Court stressed that for this 21. BARTOLOME TALISAYON
exception to apply, it is required that the strike be legal, a 22. JUN TESORO
situation that does not obtain in the case at bar. 28 23. LYNDON TESORO
24. SALVADOR TIPONES
In this light, we stand by our recent rulings and reinstate the 25. SONNY UY
61 Union members without backwages. 26. WILFREDO VALLES, JR.
WHEREFORE, premises considered, the CA's May 6, 2004 27. MEL VILLAHUCO
Decision in CA-G.R. SP No. 70778 is hereby AFFIRMED. 28. EMMA Q. DANAO
29. JORDAN ALEJANDRO
The CA's January 19, 2004 Decision in CA-G.R. SP No. 76568
is hereby SET ASIDE. The October 9, 2002 Decision of the The 61 Union members are hereby REINSTATED to their
NLRC in NLRC NCR CC No. 000215-02 is former positions without backwages:
hereby AFFIRMED withMODIFICATIONS, as follows: 1. DANILO AGUINALDO
The 29 Union officials are hereby declared to have lost their 2. CLARO ABRANTE
employment status, to wit: 3. FELIX ARRIESGADO
4. DAN BAUTISTA
1. LEO ANTONIO ATUTUBO 5. MA. THERESA BONIFACIO
2. EDWIN E. BALLESTEROS 6. JUAN BUSCANO
3. LORETTA DIVINA DE LUNA 7. ELY CHUA
4. INISUSAN DE VELEZ 8. ALLAN DELAGON
5. DENNIS HABER 9. FRUMENCIO DE LEON
6. MARITES HERNANDEZ 10. ELLIE DEL MUNDO
7. BERNARD HUGO 11. EDWIN DELOS CIENTOS
8. NORZAMIA INTAL 12. SOLOMON DIZON
9. LAURO JAVIER 13. YLOTSKI DRAPER
10. SHANE LAUZ 14. ERLAND COLLANTES
11. MAY BELEN LEANO 15. JONAS COMPENIDO
12. EDGAR LINGHON 16. RODELIO ESPINUEVA
13. MILAGROS LOPEZ 17. ARMANDO ESTACIO
18. SHERWIN FALCES 54. LOURDES TAYAG
19. JELA FRANZUELA 55. ROLANDO TOLENTINO
20. REY GEALOGO 56. REYNALDO TRESNADO
21. ALONA GERNOMINO 57. RICHARD SABLADA
22. VINCENT HEMBRADOR 58. MAE YAP-DIANGCO
23. ROSLYN IBARBIA 59. GILBERTO VEDASTO
24. JAIME IDIOMA, JR. 60. DOMINGO VIDAROZAGA
25. OFELIA LLABAN 61. DAN VILLANUEVA
26. RENATON LUZONG
27. TEODULO MACALINO In view of the possibility that the Hotel might have already
28. JAKE MACASAET hired regular replacements for the afore-listed 61 employees,
29. HERNANIE PABILONIA the Hotel may opt to pay SEPARATION PAY computed at
30. HONORIO PACIONE one (1) month's pay for every year of service in lieu
31. ANDREA VILLAFUERTE of REINSTATEMENT, a fraction of six (6) months being
32. MARIO PACULAN considered one year of service.
33. JULIO PAJINAG SO ORDERED.
34. JOSELITO PASION
35. VICENTE PASIOLAN
36. HAZEL PENA
37. PEDRO POLLANTE
38. EDUARDO RAMOS
39. IMELDA RASIN
40. DELFIN RAZALAN
41. EVANGELINE REYES
42. RODOLFO REYES
43. BRIGILDO RUBIO
44. RIO SALCEDO
45. JUANITO SANCHEZ
46. MA. THERESA SANCHEZ
47. DONATO SAN AGUSTIN
48. RICARDO SOCORRO
49. VALERIO SOLIS
50. DOMINADOR SUAREZ
51. ORLANDO TABUGOCA
52. HELEN TALEON
53. ROBERT TANEGRA
G.R. No. L-19778 September 30, 1964
REGALA, J.:
Three days after, the company dismissed Francisco In a conference called by the Department of Labor, the
Gaddi and Cresenciano Andrada, leaders of the shipping strikers offered to return to work provided the company
department-employees. And so on March 7, the union observed the provisions of the bargaining contract. But the
dispatched another letter to the company, calling attention to company insisted that the strikers could be taken back only
the contents of its March 2 letter and protesting the dismissal under the terms of its March 1 order. As already stated, this
of Gaddi and Andrada. It gave the company 48 hours within order reverted salesmen to salary and commission basis,
which to act on its grievance and reinstate the dismissed abolished their helper's allowance and stopped the payment
employees. of per diem and other allowances to provincial salesmen.
On March 6, the company President replied, stating in In addition, the company set as price for continued
part that conciliation conference the remittance by the salesmen of
their collections and the return of delivery trucks and stocks
... Effective March 1st, I reduced all salesmen's on hand. The union replied that the strikers had not lost their
salaries, I discontinued the helper's allowance and, in the employee status and that at any rate they were bonded. It
case of provincial salesmen, I discontinued the payment of suffered though to deposit with the Conciliation Service of
any per diems. the Department of Labor the things demanded by the
In another letter sent the following day, the company company, but the company was unyielding in its demand.
explained that the relief of Gaddi and Andrada was in line Anyway, nothing came out of the conference. The employees
with its policy of laying off extra employees.
gradually gave up the strike and the salesmen later settled b) to reinstate salesmen Antonio Jacinto, Celestino Gualberto,
their accounts and returned the property of the company. Constantino Atienza, Elias Berrova and Pedro del Rosario with
half backwages from the date they have cleared their
On September 19, 1957 this case was filed in the Court accountabilities or responsibilities with the Company, minus
of Industrial Relations, charging the company, together with what they have earned during the pendency of the dispute
its President and Vice President, with unfair labor practice. unless they have found substantial employment elsewhere.
After trial, the court rendered judgment as follows: The case of Teofilo Nuez is dismissed as heretofore
IN VIEW OF ALL THE FOREGOING, the Respondent and indicated. With respect to Roberto Dijamco as also
all its officers and agents are hereby ordered: mentioned, there is a pending separate unfair labor practice
in the Court (Case No. 1271-ULP).
(1) To cease and desist from:
c) To reinstate all the strikers listed in Annex "A" of the
a) refusing to bargain collectively in good faith with the complaint, without backwages, in view of the circumstances,
Union. as explained on the subject of the strike, unless they have
found substantial employment elsewhere during the
b) refusing to bargain collectively in good faith with respect pendency of this case.
to the grievance of the Union by appointing its
representatives to the grievance committee as provided for In addition, respondent is hereby ordered to post a
in the said agreement. copy of this order in the company's bulletin board, if any or in
default thereof, in any conspicuous place at company's
c) making changes in the working condition, of the salesmen premises, and report to the Court as soon as possible its
who are members of the Union with respect to their salaries compliance.
and the helper's allowance of provincial salesmen without
complying with the requirements of Sec. 13 of Republic Act The union moved for a reconsideration of the decision,
875. contending that the trial judge erred (1) in awarding only half
back wages to Francisco Gaddi and the five salesmen, (2) in
(2) To take the following affirmative acts which the Court awarding no back wages to the rest of the strikers and (3) in
finds will effectuate the policy of the Act: denying reinstatement to Cresenciano Andrada and Angel
Dario and to those who might have found substantially
a) to reinstate Francisco Gaddi with half backpay from March
equivalent employment elsewhere. The court in banc
5, 1957 to actual date of his reinstatement, minus whatever
affirmed the decision. Hence this appeal.
salaries he might have earned during the pendency of this
case, unless he has found a substantial employment The issues in this appeal relate to the power of the
elsewhere. And with respect to Cresenciano Andrada, his Court of Industrial Relations to order reinstatement and the
onehalf back wages shall be from March 5, 1957 until the payment of back wages in unfair labor practice cases as a
date he committed illegal acts in the picket line. Angel Dario means of effectuating the policy of the law.
is not entitled to reinstatement.
Section 5 (c) of the Industrial Peace Act states:
... If, after investigation, the Court shall be of the case of unfair labor practice, its discretion is not unbounded.
opinion that any person named in the complaint has engaged (Big Five Products Workers Union (CLP) v. Court of Industrial
in or is engaging in any unfair labor practice, then the Court Relations, et al., G.R. No. L-17600, July 31, 1963). It cannot
shall state its findings of fact and shall issue and cause to be exercise its right beyond the point which the object of
served on such person an order requiring such person to "effectuation" of the act requires. It can not order the
cease and desist from such unfair labor practice and take reinstatement of those convicted of violence upon the
such affirmative action as will effectuate the policies of this employer's property. (Rothenberg on Labor Relations, 573-
Act, including (but not limited to) reinstatement of employees 574; Philippine Education Co., Inc. v. Court of Industrial
with or without backpay and including rights of the Relations, et al., G.R. No. L-7156, May 31, 1955; Consolidated
employees prior to dismissal including seniority. ... Labor Ass'n of the Phil. v. Marsman & Co., Inc., et al., G.R. No.
L-17038, July 31, 1964).
At the outset, two types of employees involved in this
case must be distinguished, namely, those who were Such is the case of Cresenciano Andrada and Angel
discriminatorily dismissed for union activities and those who Dario who were found guilty of acts of violence consisting of
voluntarily went on strike. To the first class belong Francisco hurling stones which smashed glass windows of the building
Gaddi and Cresenciano Andrada, both of whom, as earlier of the company and the headlights of a car and the utterance
shown, had been dismissed for union activities, and the five of obscenities such as "Putang ina".
salesmen who were virtually locked out by the company
when they were ordered to put their trucks in the garage. To But the union contends that the acts committed by
the second class belong those who declared a strike on Andrada and Dario were not so serious as to call for the
March 11, 1957, following the failure of the company-union forfeiture of their right to reinstatement. It is not for Us to
conference to settle their dispute. judge the effect of misconduct by employees. That is
primarily for the Court of Industrial Regulations to determine.
Both types of employees are entitled to reinstatement. (See NLRB v. Weissman Co., 170 F [24] 952). In the absence
Indeed, it is said that striking employees are entitled to of proof of abuse of discretion on the part of the Court of
reinstatement whether or not the strike was the consequence Industrial Relations, this Court will not interfere with the
of the employer's unfair labor practice, unless, where the exercise of that discretion.
strike was not due to any unfair labor practice, the employer
has hired others to take the place of the strikers and has The same thing may be said of the denial of
promised them continued employment. (Teller, 2 Labor reinstatement to those who might have found substantial
Disputes and Collective Bargaining, Sec. 371, pp. 396-397) employment elsewhere. We agree with the union that under
the ruling of Phelps Dodge Corp. v. NLRB 313 U.S. 177, 85 L.
From this rule, however, must be excepted those who, ed. 1271 (See also Cox and Bok Cases on Labor Law. 259, 5th
although discriminatorily discharged, must nevertheless be ed.), the mere fact that strikers or dismissed employees have
denied reinstatement because of (1) unlawful conduct or (2) found such employment elsewhere is not necessarily a bar to
because of violence. For while the Court of Industrial their reinstatement.1 But it is just as true to say that
Relations has indeed discretion in determining the remedy in the Phelps Dodge case did not rule that in any
event discriminatorily dismissed employees must be ordered was provoked by unfair labor practices of the company.
reinstated even though they have in the meanwhile found Indeed a reading of the 46-page decision of the Court of
substantially equivalent employment somewhere else. While Industrial Relations fails to yield the reason that impelled the
denying that employees who have obtained equivalent court to deny backwages to the strikers.
employment are ineligible as a matter of law to
reinstatement, the Supreme Court of the United States at the Nevertheless, We believe that the denial of backpay
same time denied also that the definition of the term may be justified, although on a different ground. For this
"employee" can be disregarded by the National Labor purpose, We shall advert again to the distinction earlier made
Relations Board in exercising its power under Section 10(c) of between discriminatorily dismissed employees and those
the Wagner Act, which corresponds to Section 5(c) of our who struck, albeit in protest against the company's unfair
Industrial Peace Act, to direct the taking of affirmative action labor practice. Discriminatorily dismissed employees
by an employer to remedy unfair labor practices. According received backpay from the date of the act of discrimination,
to the Court, it is for the Board in each case to weigh the that is from the day of their discharge. On this score, the
particular facts and to determine, in the exercise of wise award of backpay to Gaddi, Andrada and the salesmen may
administrative discretion, whether the Act would best be be justified. The salesmen, as already stated, were practically
effectuated by directing reinstatement despite the fact that locked out when they were ordered to put their trucks in the
the given employees had found equivalent employment. garage; they did not voluntarily strike. (See Macleod & Co. of
the Phil. v. Progressive Federation of Labor, G.R. No. L-7887,
Obviously it was after considering the facts in this case May 31, 1955) Hence, the award of backwages.
that the Court of Industrial Relations predicated the
reinstatement of the employees concerned on the fact that In contrast, the rest of the employees struck as a
they had not found substantially equivalent employment voluntary act of protest against what they considered unfair
elsewhere. Thus, it made clear in the dispositive portion of its labor practices of the company. The stoppage of their work
decision that it was ordering the taking of affirmative acts was not the direct consequence of the company's unfair labor
"which the Court finds will effectuate the policy of the Act". practice. Hence their economic loss should not be shifted to
The union has not shown that in so doing the Court of the employer. (See Dinglasan v. National Labor Union, G.R.
Industrial Relations abused its discretion. No. L-14183, Nov. 28, 1959) As explained by the National
Labor Relations Board in the case of American Manufacturing
Coming now to the question of backpay, the decision Co., NLRB 443, "When employees voluntarily go on strike,
under review directs the company "to reinstate all the even if in protest against unfair labor practices, it has been
strikers listed in Annex 'A' of the complaint, without our policy not to award them backpay during the strike.
backwages, in view of the circumstances, as explained on However, when the strikers abandon the strike and apply for
the subject of the strike, unless they have found substantial reinstatement despite the unfair labor practices and the
employment elsewhere during the pendency of this case." employer either refuses to reinstate them or imposes upon
The union assails this order as erroneous. According to the their reinstatement new conditions that constitute unfair
union, it is unfair to deny backwages to the strikers after labor practices, We are of the opinion that the considerations
finding that the strike declared by them was legal because it impelling our refusal to award backpay are no longer
controlling. Accordingly, We hold that where, as in this case, WHEREFORE, the decision and resolution of the Court
an employer refuses to reinstate strikers except upon their of Industrial Relations appealed from are hereby affirmed,
acceptance of the new conditions that discriminate against without pronouncement as to costs.
them because of their union membership or activities, the
strikers who refuse to accept the conditions and are Bengzon, C.J., Bautista Angelo, Paredes, Dizon, Makalintal
consequently refused reinstatement are entitled to be made Bengzon, J.P., and Zaldivar, JJ., concur.
whole for any losses of pay they may have suffered by Concepcion, J., concurs with the dissenting opinion of Justice
reason of the respondent's discriminatory acts." (Quoted in J.B.L. Reyes.
Teller, 2 Labor Disputes and Collective Bargaining, Sec. 371, Barrera, J., took no part.
pp. 997-998)1awphl.nt
REGALADO, J.:
Petitioner Gomez likewise moved for reconsideration with the Petitioners then filed a petition for certiorari with this Court
DECS and then appealed to the Merit Systems Protection but, on August 29, 1995, their petition was referred to the
Board (MSPB). The other petitioners also filed individual Court of Appeals pursuant to Revised Administrative Circular
appeals to the MSPB, but all of their appeals were dismissed No. 1-95. 4
for lack of merit.
On October 20, 1995, the Court of Appeals dismissed the
Not satisfied with the aforestated adjudication of their petition for lack of merit. 5 Petitioners' motion for
respective cases, petitioners appealed to the Civil Service reconsideration was also denied by respondent court, 6 hence
Commission (CSC). The appeals of petitioners Cabalfin, the instant petition alleging that the Court of Appeals
Montances and Pagpaguitan were dismissed for having been committed grave abuse of discretion when it upheld the
filed out of time. On motion for reconsideration, however, the resolutions of the CSC (1) that penalized petitioners whose
CSC decided to rule on the merits of their appeal in the only offense was to exercise their constitutional right to
interest of justice. peaceably assemble and petition the government for redress
of grievances; (2) that penalized petitioner Mariano even
Thereafter, the CSC issued Resolution No. 94-1765 finding after respondent commission found out that the specific basis
Cabalfin guilty of conduct prejudicial to the best interest of of the charges that former Secretary Cario filed against him
the service and imposing on him a penalty of six months was a falsehood; and (3) that denied petitioners their right to
suspension without pay. The CSC also issued Resolutions Nos. back wages covering the period when they were illegally not
94-2806 and 94-2384 affirming the penalty of nine months allowed to teach. 7
suspension without pay theretofore imposed on petitioners
Montances and Pagpaguitan. It is the settled rule in this jurisdiction that employees in the
public service may not engage in strikes. While the
With respect to the appeals of the other petitioners, the CSC Constitution recognizes the right of government employees
also found them guilty of conduct prejudicial to the best to organize, they are prohibited from staging strikes,
interest of the service. It, however, modified the penalty of demonstrations, mass leaves, walk-outs and other forms of
nine months suspension previously meted to them to six mass action which will result in temporary stoppage or
disruption of public services. The right of government
employees to organize is limited only to the formation of which produced adverse effects upon their students for
unions or associations, without including the right to strike. 8 whose education they are responsible. The actuations of
petitioners definitely constituted conduct prejudicial to the
Petitioners contend, however, that they were not on strike best interest of the service, punishable under the Civil
but were merely exercising their constitutional right Service law, rules and regulations.
peaceably to assemble and petition the government for
redress of grievances. We find such pretension devoid of As aptly stated by the Solicitor General, "It is not the exercise
merit. by the petitioners of their constitutional right to peaceably
assemble that was punished, but the manner in which they
The issue of whether or not the mass action launched by the exercised such right which resulted in the temporary
public school teachers during the period from September up stoppage or disruption of public service and classes in
to the first half of October, 1990 was a strike has been various public schools in Metro Manila. For, indeed, there are
decided by this Court in a resolution, dated December 18, efficient but non-disruptive avenues, other than the mass
1990, in the herein cited case of Manila Public School actions in question, whereby petitioners could petition the
Teachers Association, et al. vs. Laguio, Jr.,supra. It was there government for redress of grievances." 11
held "that from the pleaded and admitted facts, these 'mass
actions' were to all intents and purposes a strike; they It bears stressing that suspension of public services, however
constituted a concerted and unauthorized stoppage of, or temporary, will inevitably derail services to the public, which
absence from, work which it was the teachers' duty to is one of the reasons why the right to strike is denied
perform, undertaken for essentially economic reasons." government employees. 12 It may be conceded that the
petitioners had valid grievances and noble intentions in
It is an undisputed fact that there was a work stoppage and staging the "mass actions," but that will not justify their
that petitioners' purpose was to realize their demands by absences to the prejudice of innocent school children. Their
withholding their services. The fact that the conventional righteous indignation does not legalize an illegal work
term "strike" was not used by the striking employees to stoppage.
describe their common course of action is inconsequential,
since the substance of the situation, and not its appearance, As expounded by this Court in its aforementioned resolution
will be deemed to be controlling. 9 of December 18, 1990, in the Manila Public School Teachers
Association case, ante:
The ability to strike is not essential to the right of association.
In the absence of statute, public employees do not have the It is, of course, entirely possible that petitioners and their
right to engage in concerted work stoppages for any member-teachers had and have some legitimate grievances.
purpose. 10 This much may be conceded. After all, and for one thing,
even the employees of the Court have found reason to
Further, herein petitioners, except Mariano, are being complain about the manner in which the provisions of the
penalized not because they exercised their right of peaceable salary standardization law on pay adjustments and position
assembly and petition for redress of grievances but because classification have been, or are being, implemented.
of their successive unauthorized and unilateral absences Nonetheless, what needs to be borne in mind, trite though it
may be, is that one wrong cannot be righted by another, and suspending them, are illegal. These submissions are
that redress, for even the most justifiable complaints, should incorrect.
not be sought through proscribed or illegal means. The belief
in the righteousness of their cause, no matter how deeply Section 51 of Executive Order No. 292 provides that "(t)he
and fervently held, gives the teachers concerned no license proper disciplining authority may preventively suspend any
to abandon their duties, engage in unlawful activity, defy subordinate officer or employee under his authority pending
constituted authority and set a bad example to their an investigation, if the charge against such officer or
students. employee involves dishonesty, oppression or grave
misconduct, or neglect in the performance of duty, or if there
Petitioners also assail the constitutionality of Memorandum are reasons to believe that the respondent is guilty of
Circular No. 6 issued by the Civil Service Commission. The charges which would warrant his removal from the service."
resolution of the said issue is not really necessary in the case
at bar. The argument of petitioners that the said circular was Under the aforesaid provision, it is the nature of the charge
the basis of` their liability is off tangent. against an officer or employee which determines whether he
may be placed under preventive suspension. In the instant
As a general rule, even in the absence of express statutory case, herein petitioners were charged by the Secretary of the
prohibition like Memorandum Circular No. 6, public DECS with grave misconduct, gross neglect of duty, gross
employees are denied the right to strike or engage in a work violation of Civil Service law, rules and regulations, and
stoppage against a public employer. 13 The right of the reasonable office regulations, refusal to perform official duty,
sovereign to prohibit strikes or work stoppages by public gross insubordination, conduct prejudicial to the best interest
employees was clearly recognized at common law. Indeed, it of the service and absence without official leave (AWOL), for
is frequently declared that modern rules which prohibit such joining the teachers' mass actions held at Liwasang Bonifacio
strikes, either by statute or by judicial decision, simply on September 17 to 21, 1990. Hence, on the basis of the
incorporate or reassert the common law rule. 14 charges against them, it was within the competence of the
Secretary to place herein petitioners under preventive
To grant employees of the public sector the right to strike, suspension.
there must be a clear and direct legislative authority
therefor. 15 In the absence of any express legislation allowing As to the immediate execution of the decision of the
government employees to strike, recognizing their right to do Secretary against petitioners, the same is authorized by
so, or regulating the exercise of the right, employees in the Section 47, paragraph (2), of Executive Older No. 292, thus:
public service may not engage in strikes, walkouts and "The Secretaries and heads of agencies and
temporary work stoppages like workers in the private instrumentalities, provinces, cities and municipalities shall
sector. 16 have jurisdiction to investigate and decide matters involving
disciplinary action against officers and employees under their
On the issue of back wages, petitioners' claim is premised on jurisdiction. Their decisions shall be final in case the penalty
the allegation that their preventive suspension, as well as the imposed is suspension for not more than thirty days or fine in
immediate execution of the decision dismissing or an amount not exceeding thirty days' salary. In case the
decision rendered by a bureau or office head is appealable to gross insubordination conduct prejudicial to the best interest
the Commission, the same shall be executory except when of the service, and absence without official leave, for his
the penalty is removal, in which case the same shall be participation in the mass actions on September 18, 20 and
executory only after confirmation by the Secretary 21, 1990. It was his alleged participation in the mass actions
concerned." that was the basis of his preventive suspension and, later, his
dismissal from the service.
Petitioners' claim of denial of due process must also fail. The
records of this case clearly show that they were given However, the Civil Service Commission, in the questioned
opportunity to refute the charges against them but they resolution, made a finding that Mariano was not involved in
failed to avail themselves of the same. The essence of due the "mass actions" but was absent because he was in Ilocos
process is simply an opportunity to be heard or, as applied to Sur to attend the wake and interment of his grandmother.
administrative proceedings, an opportunity to seek Although the CSC imposed upon him the penalty of
reconsideration of the action or ruling complained of. 17 For as reprimand, the same was for his violation of reasonable office
long as the parties were given the opportunity to be heard rules and regulations because he failed to inform the school
before judgment was rendered, the demands of due process or his intended absence and neither did he file an application
were sufficiently met. 18 for leave covering such absences. 20
Having ruled that the preventive suspension of petitioners Under Section 23 of the Rules Implementing Book V of
and the immediate execution of the DECS decision are in Executive Order No. 292 and other pertinent civil service
accordance with law, the next query is whether or not laws, in violations of reasonable office rules and regulations,
petitioners may be entitled to back wages. the first offense is punishable by reprimand. To deny
petitioner Mariano his back wages during his suspension
The issue regarding payment of back salaries during the would be tantamount to punishing him after his exoneration
period of suspension of a member of the civil service who is from the charges which caused his dismissal from the
subsequently ordered reinstated, is already settled in our service. 21
jurisdiction. Such payment of salaries corresponding to the
period when an employee is not allowed to work may be However, with regard to the other petitioners, the payment of
decreed if he is found innocent of the charges which caused their back wages must be denied. Although the penalty
the suspension and when the suspension is unjustified. 19 imposed on them was only suspension, they were not
completely exonerated of the charges against them. The CSC
With respect to petitioner Rodolfo Mariano, payment of his made specific findings that, unlike petitioner Mariano, they
back wages is in order. A reading of the resolution of the Civil indeed participated in the mass actions. It will be noted that
Service Commission will show that he was exonerated of the it was their participation in the mass actions that was the
charges which formed the basis for his suspension. The very basis of the charges against them and their subsequent
Secretary of the DECS charged him with and he was later suspension.
found guilty of grave misconduct, gross neglect of duty, gross
violation of the Civil Service Law, rules and regulations and The denial of salary to an employee during the period of his
reasonable office regulations, refusal to perform official duty, suspension, if he should later be found guilty, is proper
because he had given ground for his suspension. It does not WHEREFORE, the decision of the Court of Appeals is hereby
impair his constitutional rights because the Constitution itself AFFIRMED, but with the MODIFICATION that petitioner Rodolfo
allows suspension for cause as provided by law and the law Mariano shall be given back wages without deduction or
provides that an employee may be suspended pending an qualification from the time he was suspended until his actual
investigation or by way of penalty. 22 reinstatement which, under prevailing jurisprudence, should
not exceed five years.
Moreover, the general proposition is that a public official is
not entitled to any compensation if he has not rendered any SO ORDERED.
service. As he works, he shall earn. Since petitioners did not
work during the period for which they are now claiming
salaries, there can be no legal or equitable basis to order the
payment of such salaries. 23
9. After the submission of position papers and hearing, Labor 10. On February 26, 1982, the NFSW by passing the NLRC
Arbiter Ovejera declared the NFSW strike illegal. The filed the instant Petition for prohibition alleging that Labor
dispositive part of his decision dated February 20, 1982 Arbiter Ovejera, CAC and the PC Provincial Commander of
reads: Negros Occidental were threatening to immediately enforce
the February 20, 1982 decision which would violate
Wherefore, premises considered, judgment is hereby fundamental rights of the petitioner, and praying that
rendered:
WHEREFORE, on the foregoing considerations, it is prayed of
1. Declaring the strike commenced by NFSW on January 28, the Honorable Court that on the Petition for Preliminary
1982, illegal, Injunction, an order, after hearing, issue:
2. Directing the Central to resume operations immediately 1. Restraining implementation or enforcement of the Decision
upon receipt hereof; of February 20, 1982;
3. Directing the Central to accept back to work all employees 2. Enjoining respondents to refrain from the threatened acts
appearing in its payroll as of January 28, 1982 except those violative of the rights of strikers and peaceful picketers;
covered by the February 1, 1982 memorandum on preventive
3. Requiring maintenance of the status quo as of February III. DISCUSSION
20, 1982, until further orders of the Court;
1. Articles 264 and 265 of the Labor Code, insofar as
and on the Main Petition, judgment be rendered after pertinent, read:
hearing.
Art. 264, Strikes, picketing and lockouts. ...
1. Declaring the Decision of February 2O, l982 null and void;
(c) In cases of bargaining deadlocks, the certified or duly
2. Making the preliminary injunction permanent; recognized bargaining representative may file a notice of
strike with the Ministry (of Labor and Employment) at
3. Awarding such other relief as may be just in the premises. least thirty (30) days before the intended date thereof. In
11. Hearing was held, after which the parties submitted their cases of unfair labor practices, the period of notice shall be
memoranda. No restraining order was issued. shortened tofifteen (15) days; ...
II ISSUES (d) During the cooling-off period, it shall be the duty of the
voluntary sttlement. Should the dispute remain unsettled
The parties have raised a number of issues, including some until the lapse of the requisite number of days from the
procedural points. However, considering their relative mandatory filing of the notice, the labor union may strike or
importance and the impact of their resolution on ongoing the employer may declare a lockout.
labor disputes in a number of industry sectors, we have
decided in the interest of expediency and dispatch to (f) A decision to declae a strike must be approved by at least
brush aside non-substantial items and reduce the remaining two-thirds (2/3) of the total union membership in the
issues to but two fundamental ones: bargaining unit concerened by secret ballots in meetings or
referenda. A decision to declae a lockout must be approved
1. Whether the strike declared by NFSW is illegal, the by at least two-thirds (2/3) of the board of direcotrs of the
resolution of which mainly depends on the mandatory or employer corporation or association or of the partners in a
directory character of the cooling-off period and the 7-day partnership obtained by secret ballot in a meeting called for
strike ban after report to MOLE of the result of a strike-vote, the purpose. the decision shall be valid for the duration of
as prescribed in the Labor Code. the dispute based on substantially the same grounds
considered when the strike or lockout vote was taken . The
2. Whether under Presidential Decree 851 (13th Month Pay Ministry, may at its own intitiative or upon the request of any
Law), CAC is obliged to give its workers a 13th month affected party, supervise the conduct of the secret
salary in addition to Christmas, milling and amelioration balloting. In every case, the union of the employer shall
bonuses, the aggregate of which admittedly exceeds by far furnish the Ministry the results of the voting at least seven
the disputed 13th month pay. (See petitioner's memorandum (7) days before the intended strike or lockout, subject to the
of April 12, 1982, p. 2; CAC memorandum of April 2, 1982, cooling-off periodherein provided. (Emphasis supplied).
pp. 3-4.) Resolution of this issue requires an examination of
the thrusts and application of PD 851.
ART. 265. Prohibited activities. It shall be unlawful for any specifically and emphatically prescribed by law,
labor organization or employer to declare a strike or lockout the purposes (hereafter discussed) for which the filing of the
without first having bargained collectively in accordance with strike notice and strike-vote report is required would not be
Title VII of this Book or without first having filed the notice achieved, as when a strike is declaredimmediately after a
required in the preceding Article or without the necessary strike notice is served, or when as in the instant case
strike or lockout vote first having been obtained and reported the strike-vote report is filed with MOLE after the strike had
to the Ministry. actually commenced Such interpretation of the law ought not
and cannot be countenanced. It would indeed be self-
It shall likewise be unlawful to declare a strike or lockout defeating for the law to imperatively require the filing on a
after assumption of jurisdiction by the President or the strike notice and strike-vote report without at the same time
Minister or after certification or submission of the dispute to making the prescribed waiting periods mandatory.
compulsory or voluntary arbitration or during the pendency
of cases involving the same grounds for the strike or lockout. (b) Purposes of strike notice and strike-vote report. In
(Emphasis supplied.) requiring a strike notice and a cooling-off period, the avowed
intent of the law is to provide an opportunity for mediation
(a) Language of the law. The foregoing provisions hardly and conciliation. It thus directs the MOLE "to exert all efforts
leave any room for doubt that the cooling-off period in Art. at mediation and conciliation to effect a voluntary
264(c) and the 7-day strike ban after the strike-vote report settlement" during the cooling-off period . As applied to the
prescribed in Art. 264(f) were meant to be, and should be CAC-NFSW dispute regarding the 13th month pay, MOLE
deemed, mandatory. intervention could have possibly induced CAC
When the law says "the labor union may strike" should the to provisionally give the 13th month pay in order to avert
dispute "remain unsettled until the lapse of the requisite great business loss arising from the project strike,without
number of days (cooling-off period) from the filing of the prejudice to the subsequent resolution of the legal dispute by
notice," the unmistakable implication is that the union may competent authorities; or mediation/conciliation could have
not strike before the lapse of the cooling-off period. Similarly, convinced NFSW to at least postpone the intended strike so
the mandatory character of the 7-day strike ban after the as to avoid great waste and loss to the sugar central, the
report on the strike-vote is manifest in the provision that "in sugar planters and the sugar workers themselves, if the
every case," the union shall furnish the MOLE with the results strike would coincide with the mining season.
of the voting "at least seven (7) days before the intended So, too, the 7-day strike-vote report is not without a purpose.
strike, subject to the (prescribed) cooling-off period." It must As pointed out by the Solicitor General
be stressed that the requirements of cooling-off period and 7-
day strike ban must both be complied with, although the Many disastrous strikes have been staged in the past based
labor union may take a strike vote and report the same merely on the insistence of minority groups within the union.
within the statutory cooling-off period. The submission of the report gives assurance that a strike
vote has been taken and that, if the report concerning it is
If only the filing of the strike notice and the strike-vote report false, the majority of the members can take appropriate
would be deemed mandatory, but not the waiting periods so
remedy before it is too late. (Answer of public respondents, (d) State policy on amicable settlement of criminal liability.
pp. 17-18.) Petitioner contends that since the non-compliance (with PD
851) imputed to CAC is an unfair labor practice which is an
If the purpose of the required strike notice and strike-vote offense against the state, the cooling-off period provided in
report are to be achieved, the periods prescribed for their the Labor Code would not apply, as it does not apply to ULP
attainment must, as aforesaid, be deemed mandatory., strikes. It is argued that mediation or conciliation in order to
... when a fair interpretation of the statute, which directs acts settle a criminal offense is not allowed.
or proceedings to be done in a certain way, shows the In the first place, it is at best unclear whether the refusal of
legislature intended a compliance with such provision to be CAC to give a 13th month pay to NFSW constitutes a criminal
essential to the validity of the act or proceeding, or when act. Under Sec. 9 of the Rules and regulations Implementing
some antecedent and prerequisite conditions must exist prior Presidential Decree No. 851
to the exercise of power or must be performed before certain
other powers can be exercised, the statute must be regarded Non-payment of the thirteenth-month pay provided by the
as mandatory. So it has been held that, when a statute is Decree and these rules shall be treated as money claims
founded on public policy [such as the policy to encourage cases and shall be processed in accordance with the Rules
voluntary settlement of disputes without resorting to strikes], Implementing the Labor Code of the Philippines and the Rules
those to whom it applies should not be permitted to waive its of the National Labor Relations Commission.
provisions. (82 C.J.S. 873-874. Emphasis supplied.)
Secondly, the possible dispute settlement, either permanent
(c) Waiting period after strike notice and strike-vote report, or temporary, could very well be along legally permissible
valid regulation of right to strike. To quote Justice Jackson lines, as indicated in (b) above or assume the form of
in International Union vs. Wisconsin Employment Relations measures designed to abort the intended strike, rather than
Board, 336 U.S. 245, at 259 compromise criminal liability, if any. Finally, amicable
settlement of criminal liability is not inexorably forbidden by
The right to strike, because of its more serious impact upon law. Such settlement is valid when the law itself clearly
the public interest, is more vulnerable to regulation than the authorizes it. In the case of a dispute on the payment of the
right to organize and select representatives for lawful 13th month pay, we are not prepared to say that its
purposes of collective bargaining ... voluntary settlement is not authorized by the terms of Art.
The cooling-off period and the 7-day strike ban after the filing 264(e) of the Labor Code, which makes it the duty of the
of a strike- vote report, as prescribed in Art. 264 of the Labor MOLE to exert all efforts at mediation and conciliation to
Code, are reasonable restrictions and their imposition is effect a voluntary settlement of labor disputes.
essential to attain the legitimate policy objectives embodied (e) NFSW strike is illegal. The NFSW declared the strike six
in the law. We hold that they constitute a valid exercise of the (6) days after filing a strike notice, i.e., before the lapse of
police power of the state. the mandatory cooling-off period. It also failed to file with the
MOLE beforelaunching the strike a report on the strike-vote,
when it should have filed such report "at least seven (7) days
before the intended strike." Under the circumstances, we are Keenly sensitive to the needs of the workingmen, yet mindful
perforce constrained to conclude that the strike staged by of the mounting production cost that are the woe of capital
petitioner is not in conformity with law. This conclusion which provides employment to labor, President Ferdinand E.
makes it unnecessary for us to determine whether the Marcos issued Presidential Decree No. 851 on 16 December
pendency of an arbitration case against CAC on the same 1975. Thereunder, "all employers are hereby required to pay
issue of payment of 13th month pay [R.A.B No. 512-81, salary of not more than all their employees receiving a basic
Regional Arbitration Branch No. VI-A, NLRC, Bacolod City, in P1,000 a month, regardless of the nature of their
which the National Congress of Unions in the Sugar Industry employment, a 13th month pay not later than December 24
of the Philippines (NACUSIP) and a number of CAC workers of every year." Exempted from the obligation however are:
are the complainants, with NFSW as Intervenor seeking the
dismissal of the arbitration case as regards unnamed CAC Employers already paying their employees a 13th month pay
rank and file employees] has rendered illegal the above or its equivalent ...
strike under Art. 265 of the Labor Code which provides: (Section 2.)
It shall likewise be unlawful to declare a strike or lockout The evident intention of the law, as revealed by the law itself,
after assumption of jurisdiction by the President or the was to grant an additional income in the form of a 13th
Minister, or after certification or submission of the dispute to month pay to employees not already receiving the same.
compulsory or voluntary arbitration or during the pendency Otherwise put, the intention was to grant some relief not
of cases involving the same grounds for the strike or lockout. to all workers but only to the unfortunate ones not actually
(Emphasis supplied.) paid a 13th month salary or what amounts to it, by whatever
name called; but it was not envisioned that a double burden
(2) The Second Issue. At bottom, the NFSW strike arose would be imposed on the employer already paying his
from a dispute on the meaning and application of PD 851, employees a 13th month pay or its equivalent whether out
with NFSW claiming entitlement to a 13th month pay on top of pure generosity or on the basis of a binding agreement
of bonuses given by CAC to its workers, as against the and, in the latter ease, regardless of the conditional
diametrically opposite stance of CAC. Since the strike was character of the grant (such as making the payment
just an offshoot of the said dispute, a simple decision on the dependent on profit), so long as there is actual payment.
legality or illegality of the strike would not spell the end of Otherwise, what was conceived to be a 13th month salary
the NFSW-CAC labor dispute. And considering further that would in effect become a 14th or possibly 15th month pay.
there are other disputes and strikes actual and impending
involving the interpretation and application of PD 851, it is This view is justified by the law itself which makes no
important for this Court to definitively resolve the problem: distinction in the grant of exemption: "Employers already
whether under PD 851, CAC is obliged to give its workers a paying their employees a 13th month pay or its
13th month salary in addition to Christmas, milling and equivalent are not covered by this Decree." (P.D. 851.)
amelioration bonuses stipulated in a collective bargaining The Rules Implementing P.D. 851 issued by MOLE
agreement amounting to more than a month's pay. immediately after the adoption of said law reinforce this
stand. Under Section 3(e) thereof
The term "its equivalent" ... shall include Christmas bonus, wouldadditionally be entitled to a 13th month pay, NFSW and
mid-year bonus, profit-sharing payments and other cash CAC concluded a compromise agreement by which they
bonuses amounting to not less than 1/12th of the basic
salary but shall not include cash and stock dividends, cost of agree(d) to abide by the final decision of the Supreme Court
living allowances and all other allowances regularly enjoyed in any case involving the 13th Month Pay Law if it is clearly
by the employee, as well as non-monetary benefits. Where held that the employer is liable to pay a 13th month pay
an employer pays less than 1/12th of the employee's basic separate and distinct from the bonuses already given.
salary, the employer shall pay the difference." (Italics When this agreement was forged on November 30,1981, the
supplied.) original decision dismissing the petition in the
Having been issued by the agency charged with the aforecited Marcopper case had already been promulgated by
implementation of PD 851 as its contemporaneous this Court. On the votes of only 7 Justices, including the
interpretation of the law, the quoted rule should be accorded distinguished Chief Justice, the petition of Marcopper Mining
great weight. Corp. seeking to annul the decision of Labor Deputy Minister
Amado Inciong granting a 13th month pay to Marcopper
Pragmatic considerations also weigh heavily in favor of employees (in addition to mid- year and Christmas bonuses
crediting both voluntary and contractual bonuses for the under a CBA) had been dismissed. But a motion for
purpose of determining liability for the 13th month pay. To reconsideration filed by Marcopper was pending as of
require employers (already giving their employees a 13th November 30, 1981. In December 1981, the original decision
month salary or its equivalent) to give a second 13th month was affirmed when this Court finally denied the motion for
pay would be unfair and productive of undesirable results. To reconsideration. But the resolution of denial was supported
the employer who had acceded and is already bound to give by the votes of only 5 Justices. The Marcopper decision is
bonuses to his employees, the additional burden of a 13th therefore a Court decision but without the necessary eight
month pay would amount to a penalty for his munificence or votes to be doctrinal. This being so, it cannot be said that
liberality. The probable reaction of one so circumstance would the Marcopper decision "clearly held" that "the employer is
be to withdraw the bonuses or resist further voluntary grants liable to pay a 13th month pay separate and distinct from the
for fear that if and when a law is passed giving the same bonuses already given," within the meaning of the NFSW-CAC
benefits, his prior concessions might not be given due credit; compromise agreement. At any rate, in view of the rulings
and this negative attitude would have an adverse impact on made herein, NFSW cannot insist on its claim that its
the employees. members are entitled to a 13th month pay in addition to the
bonuses already paid by CAC. WHEREFORE, the petition is
In the case at bar, the NFSW-CAC collective bargaining dismissed for lack of merit. No costs.
agreement provides for the grant to CAC workers of
Christmas bonus, milling bonus and amelioration bonus, the SO ORDERED.
aggregate of which is very much more than a worker's
monthly pay. When a dispute arose last year as to whether Aquino, Guerrero, Escolin, Vasquez, Relova and Gutierrez, JJ.,
CAC workers receiving the stipulated bonuses concur.
Concepcion, J., is on leave. constitutionalism. Anything less would deprive it of its quality
as the fundamental law. It is my submission, therefore, that
Teehankee, J., concurs in the result. statutes, codes, decrees, administrative rules, municipal
ordinances and any other jural norms must be construed in
the light of and in accordance with the Constitution. There is
this explicit affirmation in the recently decided case of De la
Llana v. Alba sustaining the validity of Batas Pambansa Blg.
Separate Opinions 129 reorganizing the judiciary: "The principle that the
Constitution enters into and forms part of every act to avoid
any unconstitutional taint must be applied. Nunez v.
MAKASIAR, J., concurring: Sandiganbayan, promulgated last January, has this relevant
excerpt: 'It is true that the other Sections of the Decree could
Concurs in the separate opinion of qualified concurrence as have been so worded as to avoid any constitutional
to the illegality of the strike and of dissent as to the objection. As of now, however, no ruling is called for. The
interpretation of Presidential Decree No. 851 submitted by view is given expression in the concurring and dissenting
the Chief Justice. opinion of Justice Makasiar that in such a case to save the
Decree from the dire fate of invalidity, they must be
FERNANDO, CJ., concurring:
construed in such a way as to preclude any possible erosion
With qualifications on the questions of the legality of the on the powers vested in this Court by the Constitution. That
strike and dissenting on the interpretation to be accorded is a proposition too plain to be contested. It commends itself
Presidential Decree No. 851 on the thirteenth-month for approval.'" 1
additional pay.,
1. It may not be amiss to start with the dissenting portion of
There is at the outset due acknowledgmen t on my part of this separate opinion. It is worthwhile to recall the decision
the high quality of craftsmanship in the opinion of the Court in Marcopper Mining Corporation v. Hon. Blas Ople. 2 It came
penned by Justice Efren Plana. It is distinguished by its from a unanimous Court. It is true that only seven Justices
lucidity. There is the imprint of inevitability in the conclusion signed the opinion, two of the members of this Tribunal, who
approached based on the basic premise that underlies it. So participated in the deliberation, Justices Teehankee and
it should be if the decisive consideration is the language used Melencio-Herrera having reserved their votes. Justice
both of the applicable provisions of the Labor Code, Article Concepcion Jr. was on leave. It is accurate, therefore, to state
264 (c), (e), and (f) and Article 265, as well as of Presidential that Marcopper as stated in Justice Plana's opinion, is not
Decree No. 851. In that sense, the decision of the Court can doctrinal in character, the necessary eight votes not having
stand the test of scrutiny based on sheer logic. been obtained. It is a plurality as distinguished from a
majority opinion. It is quite apparent, however, that there
That for me would not suffice. Such an approach, to my mind, was not a single dissenting vote. There was subsequently a
is quite limited. The standard that should govern is the one motion for reconsideration. This Court duly weighed the
supplied by the Constitution. That is the clear implication of arguments for and against the merit of the unanimous
opinion rendered. The resolution denying the motion for likewise evident in the opinion of the Court in this case. It is
reconsideration was not issued until December 15, 1981 on quite obvious from the above resolution of denial that the
which occasion three Justices dissented. 3 In the brief approach based on the Constitution, compelling in its
resolution denying the option for reconsideration, with five character set forth in the opinion of the Court of June 11,
Justices adhering to their original stand 4 it was set forth that 1981, is the one followed by the members of this Court either
such denial was based: "primarily [on] the reason that the adhering to or departing from the previous unanimous
arguments advanced had been duly considered and found conclusion reached. The main reliance to repeat, is on the
insufficient to call for a decision other than that promulgated social justice provision 9 as reinforced by the protection to
on June 11, 1981, which stands unreversed and unmodified. labor provision. 10 As noted, such concepts were enshrined in
This is a case involving the social justice concept, which, as the 1935 Constitution. 11 The opinion pursued the matter
pointed out in Carillo v. Allied Workers Association of the further: "Even then, there was a realization of their
Philippines involves 'the effectiveness of the community's importance in vitalizing a regime of liberty not just as
effort to assist the economically under- privileged. For under immunity from government restraint but as the assumption
existing conditions, without such succor and support, they by the State of an obligation to assure a life of dignity for all,
might not, unaided, be able to secure justice for themselves.' especially the poor and the needy. The expanded social
In an earlier decision, Del Rosario v. De los Santos, it was justice and protection to labor provisions of the present
categorically stated that the social justice principle 'is the Constitution lend added emphasis to the concern for social
translation into reality of its significance as popularized by and economic rights. ... That was so under the 1935
the late President Magsaysay: He who has less in life should Constitution. Such an approach is even more valid now. As a
have more in law.'" 5 In his dissent, Justice Fernandez took matter of fact, in the first case after the applicability of the
issue on the interpretation of social justice by relying on the 1973 constitution where social and economic rights were
well- known opinion of Justice Laurel in Calalang v. involved, this Court in Alfanta v. Noe, through Justice Antonio,
William 6 and concluded: "It is as much to the benefit of labor stated: 'In the environment of a new social order We can do
that the petitioner be accorded social justice. For if the no less. Thus, under the new Constitution, property
mining companies, like the petitioner, can no longer operate, ownership has been impressed with a social function. This
all the laborers employed by aid company shall be laid- implies that the owner has the obligation to use his property
off." 7 To reinforce such a conclusion, it was further stated: not only to benefit himself but society as well. Hence, it
"The decision in this case is far reaching. It affects all provides under Section 6 of Article II thereof, that in the
employers similarly situated as the petitioner. The natural promotion of social justice, the State "shall regulate the
reaction of employers similarly situated as the petitioner will acquisition, ownership, use, enjoyment, and disposition of
be to withdraw gratuities that they have been giving private property, and equitably diffuse property ownership
employees voluntarily. In the long run, the laborers will suffer. and profits." The Constitution also ensures that the worker
In the higher interest of all concerned the contention of the shall have a just and living wage which should assure for
petitioner that the mid-year bonus and Christmas bonus that himself and his family an existence worthy of human dignity
it is giving to the laborers shall be applied to the 13th month and give him opportunity for a better life.' Such a sentiment
pay should be sustained." 8 Such pragmatic consideration is finds expression in subsequent opinions. 12
2. It thus becomes apparent, therefore, why predicated on the view that I espouse. That is to attain its basic objective,
what for me is the significance of the social justice and the namely, to cope with the ravages of inflation. Moreover, the
protection to labor mandates of the Constitution, I cannot, Decree only benefits the low-salaried employees. There is
with due respect, concur with my brethren. The stand taken thus ample warrant for a more liberal approach. It only
by this Court, I submit, cannot be justified by the hitherto remains to be added that there was in Marcopper not only a
hospitable scope accorded such provisions. It is to the credit recognition of the administrative determination by the
of this Administration that even during the period of crisis Minister of Labor as well as the then Deputy Minister of Labor
government, the social and economic rights were fully but also an acceptance of the ably-written memorandum of
implemented. As a matter of fact, some critics, not fully Solicitor General Mendoza. Hence, to repeat, my inability to
informed of the actual state of affairs, would predicate their concur on this point with my brethren whose views, as I
assessment of its accomplishments in this sphere on their stated earlier, are deserving of the fullest respect.
inaccurate and unsympathetic appraisal of how much
success had been achieved. It is a matter of pride for the 3. There is, however and it must be so recognized an
Philippines that as far back as her 1935 Constitution, obstacle to the approach above followed. There is an
provisions assuring liberty in its positive sense, enabling her agreement both on the part of management and labor in this
citizens to live a life of humanity and dignity, were already case quoted in the main opinion to this effect, "to abide by
incorporated. The social and economic rights found therein the final decision of the Supreme Court in any case involving
antedated by thirteen years the Universal Declaration of the 13th Month Pay Law if it is clearly heldthat the employer
Human Rights. When it is considered that, as pointed out in is liable to pay a 13th month pay separate and distinct from
the opinion of Justice Antonio in Alfanta, rendered in the first the bonuses already given." Such an obstacle, on further
year of the present Constitution, the social justice principle reflection, is not, for me, insurmountable. The only case then
now lends itself to the equitable diffusion of property within the contemplation of the parties is Marcopper. With
ownership and profits, it becomes difficult for me to justify the unanimous opinion rendered and a subsequent denial of
why any lurking ambiguity in Presidential Decree No. 851 a motion for reconsideration, it would appear that while it
could be construed against the rights of labor. This Court is lacked doctrinal force, this Court "clearly held" that there is
not acting unjustly if it promotes social justice. This Court is liability on the part of the employer to pay a 13-month pay
not acting unjustly if it protects labor. This Court is just being separate and distinct from the bonuses already given.
true to its mission of fealty to the Constitution. Under the Perhaps the parties, especially labor, could have been more
concept of separation of powers, while the political branches accurate and more precise. It take comfort from the view
enact the laws and thereafter enforce them, any question as expressed by Justice Cardozo in Wood v. Duff-Gordon: 13 "The
to their interpretation, justiciable in character, is for the law has outgrown its primitive stage of formalism when the
courts, ultimately this Tribunal, to decide. That is its sworn precise word was the sovereign talisman, and every slip was
duty. It cannot be recreant to such a trust. Its role, therefore, fatal. It takes a broader view today. A promise may be
is far from passive. It may be said further that if the object Of lacking, and yet the whole writing may be 'instinct with an
statutory construction is in the well-known language of obligation,' imperfectly expressed." 14
Learned Hand "proliferation of purpose," there is warrant for
4. Now as to the qualified concurrence. Based on the codal I am authorized to state that Justice Makasiar joins me in this
provisions the finding of the illegality of strike is warranted. separate opinion.
That for me does not fully resolve the questions raised by
such a declaration. From my reading of the opinion of the BARREDO, J., concurring:
Court, it does not go as far as defining the consequences of At this stage of my tenure in the Supreme Court which is to
such illegal strike. Again the approach I propose to follow is end in about four months from now, I feel it is but fitting and
premised on the two basic mandates of social justice and proper that I make my position clear and unmistakable in
protection to labor, for while they are obligations imposed on regard to certain principles that have to be applied to this
the government by the fundamental law, compulsory labor case now before Us. Few perhaps may have noticed it,
arbitration as a result of which there could be a finding of but the fact is that in most cases of this nature I have
illegality is worded in permissive not in mandatory language. endeavored my very best to fully abide by the part that
It would be, for me, a departure from principles to which this pertains to the judiciary in the social justice and protection to
Court has long remained committed, if thereby loss of labor clauses of the Constitution, not alone because. I
employment, even loss of seniority rights or other privileges consider it as an obligation imposed by the fundamental law
is ultimately incurred. That is still an open question. The of the land but by natural inclination, perhaps because I
decision has not touched on that basic aspect of this began to work as a common worker at the age of thirteen,
litigation. The issue is not foreclosed. It seems fitting that this and I cannot in any sense be considered as a capitalist or
brief concurrence and dissent should end with a relevant management-inclined just because I happen to have joined,
excerpt from Free Telephone Workers Union v. The Minister of within the legal bounds of the position I occupy, some
Labor: 15 "It must be stressed anew, however, that the power business ventures with the more affluent members of my
of compulsory arbitration, while allowable under the family and with some good and faithful old time friends. I
Constitution and quite understandable in labor disputes need not say that I am pro-labor; I only wish to deny most
affected with a national interest, to be free from the taint of vehemently that I am anti-labor
unconstitutionality, must be exercised in accordance with the
constitutional mandate of protection to labor. The arbiter Having been one of the seven members of the Court who co-
then is called upon to take due care that in the decision to be signed with our learned Chief Justice the Marcopper
reached, there is no violation of 'the rights of workers to self- "decision" and later on reserved my vote when a motion for
organization, collective bargaining, security of tenure, and reconsideration thereof was filed for me to concur now by
just and humane conditions of work.' It is of course manifest merely cosigning the brilliant opinion of our distinguished
that there is such unconstitutional application if a law 'fair on colleague, Mr. Justice Plana, is to my mind short of what all
its face and impartial in appearance [is] applied and concerned might expect from me. For me to merely vote in
administered by public authority with an evil eye and an support of the judgment herein without any explanation of
unequal hand.' It does not even have to go that far. An my peculiar situation does not satisfy my conscience, not to
instance of unconstitutional application would be discernible mention that I owe such explanation to those who would all
if what is ordained by the fundamental law, the protection of probably be raising their eyebrows since they must come to
labor, is ignored or disregarded. 16
feel they could depend on me to always vote in favor of The term "its equivalent" as used in paragraph (c) hereof
labor. shall include Christmas bonus, midyear bonus, profit-sharing
payments and other cash bonuses amounting to not less
The Supreme Court is a court of law and of equity at the than 1/12th of the basic but shall not include cash and stock
same time but, understandably, equity comes in only when dividends, cost of living allowances and all other allowances
law is inadequate to afford the parties concerned the essence regularly enjoyed by the employee, as well as non-monetary
of justice, fairness and square dealing. It is to this basic tenet benefits. Where an employer pays less than 1/12th of the
that I am bound by my oath of office before God and our employee's basic salary the employer shall pay the
people Having this Ideal in mind, the paramount thought that difference.
should dominate my actuations is complete and absolute
impartiality in the best light God has given me. Hence, when Petitioner National Federation of Sugar Workers (NFSW, for
the aid of the Court is sought on legal grounds, We can resort short) is now before Us with the plea that because in its
to equity only when there is no law that can be properly agreement with respondent Central Azucarera de la Carlota
applied. My view of the instant case is that it is one of law, (CAC, for short) of November 30, 1981 to the effect that:
not of equity. It is on this fundamental basis that I have
ventured to write this concurrence. The parties agree to abide by the final decision of the
Supreme Court in any case involving the 13th Month Pay Law
Looking back at my concurrence in Marcopper, and guided by if it is clearly held that the employer is liable to pay a 13th
the observations in the main opinion herein, as to the month pay separate and distinct from the bonuses already
doctrinal value of Our decision therein, I have come to the given. (Par. 4)
realization, after mature deliberation, that the conclusion
reached in the opinion of the Chief Justice may not always be and because this Court dismissed, in legal effect, for lack of
consistent with the evident intent and purpose of Section 2 of necessary votes, the petition in the Marcopper case seeking
P.D. No. 851 which, indeed, unequivocally provides that the setting aside of Deputy Minister Inciong's decision which
"(E)mployers already paying their employees a 13th month considered the midyear and Christmas bonuses being given
pay or its equivalent are not covered by this decree", albeit it to the Marcopper workers as not the equivalent of the 13th
does not clarify what it means by the "equivalent" of the 13th month pay enjoined by P.D. 851, We should now order CAC to
month pay. Such being the case, nothing can be more proper pay NFSW members in the same way as stated in the opinion
than for everyone to abide by or at least give due respect to of the Chief Justice in the Marcopper case.
the meaning thereof as has been officially expressed by the At first glance, such a pause does appear tenable and
usual executive authority called upon to implement the plausible. But looking deeper at the precise wording of the
same, none other than the Ministry of Labor (MOLE, for November 30, 1981 agreement between NFSW and CAC
short), unless, of course, the understanding of MOLE appears abovequoted, the proposition in the main opinion herein that
to be manifestly and palpably erroneous and completely alien what must be deemed contemplated in said agreement is
to the evident intent of the decree. And Section 3(e) of the that the final decision of the Supreme Court therein referred
Rules Implementing P.D. 851 issued by MOLE reads thus: to must be one wherein it would be "clearly held that the
employer is liable to pay 13th month pay separate and
distinct from the bonuses already given", compels belief should ever induce me to allow it to tilt in the slightest
concurrence on my part. I find said agreement to be degree in favor of anyone.
definitely worded. There is no room at all for doubt as to the
meaning thereof. And tested in the light of such The concept of social justice has been variously explained in
unambiguous terminology of the said agreement, the previous decisions of this Court. In Talisay Silay, 1penned by
Marcopper opinion signed by only seven members of this this writer, We went as far as to hold that when it comes to
Court, cannot, under the Constitution and prevailing binding labor-management relationship, the social justice principle is
legal norms, unfortunately, have doctrinal worth and cannot more pervasive and imperious than police power. It is indeed
be considered as stare decisis. Hence, it cannot be said to be consecrated as one of the most valued principles of national
the "definite" decision of the Supreme Court the parties (CAC policy in the Constitution. (Sec. 6, Art. II) So also is protection
and NFSW) had in mind. Accordingly, it is my considered to labor. (See. 9, Id.) I am of the firm conviction, however,
opinion that NFSW's plea in this case is premature and rather that these constitutional injunctions are primarily directed to
off tangent. and are responsibilities of the policy-determining
departments of the government. In the enforcement of said
I am not unmindful of the possibility or even probability that principles, the role of the judiciary is to a certain degree less
labor may argue that in signing the November 30, 1981 active. The courts are supposed to be called upon only to
agreement, NFSW little cared, for it was not fully informed strike down any act or actuation of anyone violative thereof,
about what doctrinal and what is not doctrinal signify in law. and, of course 6 in case of doubt in any given situation, to
Labor may argue that it is enough that Marcopper workers resolve the same in favor of labor. Verily, neither the
got their 13th month pay in addition to their bonuses by Supreme Court nor any other court is enjoined to favor labor
virtue of the denial by this Supreme Court of Marcopper merely for labor's sake, even as the judiciary is duty bound
Company's appeal to US, and NFSW members should not be never to place labor at a disadvantage, for that would not be
left getting less. And it would only be rational to expect labor only unconstitutional but inhuman, contrary to the Universal
to invoke in support of their plea no less than the social Declaration of Human Rights and unpardonably degrading to
justice and protection to labor provisions of the Constitution. the dignity of man who has been precisely created in the
image of God. At bottom the Ideal in social justice is precisely
As I have said at the outset, I am about to leave this Court. to maintain the forces of all the economic segments of
Nothing could warm my heart and lift my spirit more than to society in undisturbed and undisturbable equilibrium, as
part with the noble thought that during my tenure of fourteen otherwise there would be no justice for anyone of them at all.
years in this Supreme Court, I have given labor the most that
it has been within my power to give. But again I must In the case at bar, I do not feel at liberty to disregard what
emphasize that what is constitutionally ordained, and by that the parties have freely agreed upon, assuming, as I must,
I mean also by God and by our country and people, is for me that in entering into such agreement both parties were fully
to jealously guard that the scales of justice are in perfect aware of their legal rights and responsibilities. In this
balance. No fondness for any sector of society, no love for connection, I take particular note of the fact that if CAC is a
any man or woman, no adherence to any political party, no big financially well conditioned concern, NFSW is not just one
feeling for any relative or friend nor religious consideration or ignorant laborer or group of laborers, but a federation with
leaders and lawyers of adequate if not expert knowledge- on the grant of Christmas bonus, milling bonus, and
ability in regard to their rights and other relevant matters amelioration bonus to the extent as the latter is required by
affecting labor. I am satisfied that there is here no occasion law." It can thus be said that La Carlota is already paying the
to apply the Civil Code rule regarding vigilance whenever equivalent of the 13th-month pay. 2. In Marcopper, the
there is inequality in the situations of the parties to an company's liability for the 13th month pay was determined
agreement or transaction. by no less than the Deputy Minister of Labor, Amado G.
Inciong. I have always given much weight to the
In conclusion, I concur fully in the main opinion of Justice determination of officers who are tasked with implementing
Plana as regards both issues of illegality of the strike here in legislation because their expertise qualifies them in making
question and the non- applicability hereto of whatever has authoritative decisions. In the present case of La Carlota,
been said in Marcopper. I have added the above remarks only there has been no determination that the employees are
to make myself clear on labor-management issues before I entitled to the 13th-month pay. In fact, a negative conclusion
leave this Court, lest there be no other appropriate occasion can be implied from the declaration of Labor Arbiter Ovejera
for me to do so. that the labor union's strike against La Carlota was illegal.
ABAD SANTOS, J., concurring: MELENCIO-HERRERA, J., concurring.
I concur but lest I be accused of inconsistency because A. The question of law involved in this Petition for Prohibition
in Marcopper Mining Corporation vs. Ople, et al., No. 51254, with Preliminary Injunction is based on the following relevant
June 11, 1981, 105 SCRA 75, I voted to dismiss the petition facts which are indicated in the record:
for lack of merit and as a result Marcopper had to give the
13th-month pay provided in P.D. No. 851 even as its 1. Prior to December 16, 1975, Central Azucarera de la
employees under the CBA had mid-year and end-of-year Carlota (LA CARLOTA, for short), which operates a sugar mill
bonuses, I have to state that Marcopper and La Carlota have in La Carlota, Negros Occidental, may be deemed as paying
different factual situations as follows: 1. In Marcopper, the to its employees milling bonus, amelioration bonus, and
CBA clearly stated that the company was obligated to "grant Christmas bonus equal at least to a months' salary.
midyear and end-of-year bonuses to employees following
years in which it had profitable operations." Thus the 2. PD 851, effective on the aforementioned date of December
payment of the bonuses was contingent upon the realization 16, 1975, required employers to pay their employees a 13the
of profits. If there were no profits, there were to be no month pay, provided the employer was not already paying
bonuses. Accordingly, it was fair and proper to conclude that the said 13th month pay or itsequivalent.
Marcopper had not shown that it was already paying its 3. On December 22, 1975, the then Department of Labor
employees the 13th-month pay or its equivalent as provided promulgated a regulation stating that "Christmas bonus" is
in Sec. 2 of P.D. No. 851. However, in the instant case of La an equivalent of the 13th month pay,
Carlota the obligation of the employer to pay bonuses is not
contingent on the realization of profits. The CBA stipulates 4. From 1975 to 1981, LA CARLOTA was not paying 13th
that the "parties also agree to maintain the present practice month pay on the assumption that the "Christmas bonus" it
was paying was an "equivalent" of the 13th month pay. The practice, and that it could declare the strike even before the
employees of LA CARLOTA and their labor unions had not expiration of fifteen (15) days thereafter. The unfair labor
protested the non-payment of the 13th month pay in addition practice relied upon was management's alleged renegation
to the Christmas bonus. of the November 30, 1981 agreement, considering that the
finality of the Marcopper Decision had "clearly held that the
5. On June 11, 1981, this Court promulgated its Decision in employer is liable to pay a 13th month pay separate and
the "Marcopper" case, which involved a relationship between distinct from "the Christmas bonus".
the " 13th month pay" and the "Christmas bonus" being paid
by an employer. A Motion for reconsideration of the Decision 2. On the other hand, LA CARLOTA took the position that the
was subsequently filed in said case, which was denied only strike was not a ULP strike but an economic strike subject to
on December 15,1981. a cooling period of thirty (30) days with its attendant
requirements.
6. In the meantime, on November 29, 1981, the National
Federation of Sugar Workers (NFSW), as the labor union 3. It is clear that the controversy between NFSW and LA
representing the majority of employees at LA CARLOTA, CARLOTA substantially hinges on the question of whether or
staged a strike because LA CARLOTA had refused to pay the not the Marcopper Decision has clearly held that a Christmas
13th month pay in addition to Christmas bonus. The strike bonus, in whatsoever form, should not deter the employer's
lasted one day on November 30, 1981, LA CARLOTA and obligation to the payment of the 13th month pay.
NFSW entered into a settlement agreement, paragraph 4
whereof provided as follows: C. The proceedings in the case below were as follows:
4. The parties agree to abide by the final decision of the 1. On February 4, 1982, LA CARLOTA filed a petition to
Supreme Court in any case involving the 13th Month Pay Law declare the strike of January 28, 1982 as illegal in R. A. B.
if it is clearly held that the employer is liable to pay a 13th Case No. 110- 82 of the Regional Arbitration Branch No. VI-A
Month Pay separate and distinct from the bonuses already of the National Labor Commission in Bacolod City (the CASE
given; BELOW).
7. On January 28, 1982, NFSW declared a strike on the 2. After relatively protracted hearings, respondent Labor
ground that, despite the finality of the Marcopper Decision, Arbiter rendered a Decision declaring illegal the strike of
LA CARLOTA had refused to grant 13th month pay to its January 28, 1982. That is the Decision assailed by NFSW in
employees, in addition to Christmas bonus, as agreed upon this instance claiming it to be null and void.
in the settlement agreement of November 30, 1981. D. Reference to a collateral proceeding may be made at this
B. The legal controversy in the matter may be explained as juncture:
follows: 1. It appears that, in LA CARLOTA, there is another labor
1. NFSW filed a notice of strike on January 22, 1982, claiming union under the name of National Congress of Unions in the
that the contemplated strike was based on an unfair labor Sugar Industry in the Philippines (NACUSIP).
2. On July 30, 1981, NACUSIP filed a complaint in FSD Case rule on the merits of the substantial question between LA
No. 1192-81 before R. A. B. No. VI-A in Bacolod City praying CARLOTA and NFSW for the public benefit with a clarification
that an Order be issued directing LA CARLOTA to pay 13th of the Marcopper judgment.
month pay to its employees from the effective date of PD 851
(the COLLATERAL PROCEEDING). I agree with the proposition taken by the Ministry of Labor
and Employment that Christmas bonus, not contingent on
3. On December 4, 1981, NFSW filed a notice to intervene in realization of profit as in the Marcoper case, is
the COLLATERAL PROCEEDING. the equivalent of the 13th month pay. In regards to the
juxtaposition of the terms "13th month pay" and "Christmas
4. On January 26, 1982, a Decision was rendered in the bonus" in an amount not less than a month's salary, the
COLLATERAL PROCEEDING which, in part, said: following may be explained:
On the contrary, what this Labor Arbiter is aware of, with Within recent time, it has been usual for an industrial or
which he can take notice, is the policy declaration of the commercial firm, which has had a successful year, to grant a
Honorable Minister of Labor and Employment contained in a bonus to its employees generally denominated before as
telegram addressed to Asst. Director Dante G. Ardivilla year-end bonus. A firm usually knows whether or not it has
Bacolod District Office, this Ministry, and disseminated for the had a successful year by the middle of December. In case of
information of this Branch which states, among other things, profitability, payment of the year-end bonus does not have to
that where bonuses in CBAs are not contingent on realization await the end of the year, but it is often times given some
of profit as in the Marcopper case, the decision (of the days before New Year, generally about Christmas day. Before
Supreme Court, re: Marcopper case), does not apply, and long, the year-end bonus became also known as Christmas
cases thereon should be resolved under the provisions of PD bonus, following the change of the Christmas gift-giving day
851 and its implementing rules. from January 6th to December 25th. Thus, it has been stated:
5. On February 15, 1982, NFSW filed a Motion for "a less formal use of the bonus concept, which is designed to
Reconsideration of the Decision. reward workers for a successful business year, is the annual
or Christmas bonus" (3 Ency. Brit., 918).
Upon the foregoing exposition, there is justification for an
outright dismissal of the Petition for Prohibition for the simple Although the original concept of a year-end bonus or
reason that the strike of January 28, 1982 may not be Christmas bonus, was that it depended on a successful year,
considered a ULP strike. When the strike was declared, it the bonus, in many instances, has been developed into an
could not be validly claimed that there was already a final obligatory payment as part of wages and not related to
decision made by this Court which "clearly held that the profitability of operations. As part of wages, they are subject
employer is liable to pay a 13th month pay separate and to CBA negotiation. That has been the general trend in the
distinct from" the Christmas bonus being paid by LA United States and in our country.
CARLOTA. However, since the Marcopper Decision has ... But where so-called gifts are so tied to the remuneration
engendered controversies in labor-management relations in which employees receive for their work that they are in fact a
several industrial/commercial firms, the Court has resolved to
part of it, they are in reality wages within the meaning of the and Regulations Implementing Presidential Decree 851 ",
Act. with the following relevant provision:
xxx xxx xxx The term "its equivalent" as used in paragraph (c) hereof
shall include Christmas bonus, mid-year bonus, profit-sharing
In a number of cases an employer has been held required to payments and other cash bonuses amounting to not less
bargain concerning bonuses, including regularly given than 1/12th of the basic salary but shall not include cash and
Christmas bonuses. (48 Am Jur 2d., p. 455). stock dividends cost of living allowances and all other
Moreover, once a Christmas bonus becomes institutionalized, allowances regularly enjoyed by the employee, as well as
it has to be non-discriminatory. "An employer violates 29 USC non-monetary benefits. Where an employer pays less than
(Sec.) 158(a) (3) where, to discourage union membership, he 1/12th of the employees basic salary, the employer shall pay
ceases giving a Christmas bonus to all employees and gives the difference.
the bonus only to office and supervisory employees after When administrative rules and regulations are not properly
unionization of his production and maintenance employees." "delegated", they cannot have the force and effect of law. It
(48 Am Jur 2d., p. 420). has been stated that:
The Christmas bonus, as it clearly denotes, has Administrative rules and regulations. As discussed in Public
a literal religious connection, "Christmas" being a term within Administrative Bodies and Procedure (Sec.) 108, rules and
the Christian religion. Considering that the Christmas bonus regulations duly promulgated and adopted in pursuance of
has become obligatory and non- discriminatory in many properly delegated authority have the force and effect of law
jurisdictions, a tendency arose to disassociate that bonus where they are legislative in character, but rules and
from its religious connotation. Some countries, with non- regulations which are merely executive or administrative
christian or "liberal" christian segments, have opted to make views as to the meaning and construction of the statute are
the year-end or Christmas bonus obligatory, and they called not controlling on the courts, and cannot alter or extend the
it the 13th month pay. It is, perhaps, having our Moslem plain meaning of a statute, although they are entitled to
brothers in mind that the Government had decided to set up great weight where the statute is ambiguous. (82 C.J.S., pp.
in our country the obligatory payment of the 13th month pay 770, 771).
Thereby, the orthodox non-christian employee is not
subjected to "discrimination" due to his inability to accept the Although the rule defining the term "equivalent" as used in
Christmas bonus because of strict allegiance to this own PD 851 does not have the force and effect of law, it can and
faith. It should, therefore, be apparent that "christmas bonus" should be considered as an administrative view entitled to
and "13th month pay" should be equated one with the other. great weight as it is an interpretation of "equivalent" made
by the administrative agency which has the duty to enforce
PD 851 does not contain a provision for rules and regulations the Decree.
to be promulgated by the Department of Labor for
implementation of the Decree. Notwithstanding, on In the light of the foregoing views, I concur with the dismissal
December 22, 1975, the Department of Labor issued "Rules of the Petition for Prohibition with the express statements
that LA CARLOTA's Christmas bonus and other bonuses as the fundamental law. It is my submission, therefore, that
exempts it from giving 13th month pay to its employees, and statutes, codes, decrees, administrative rules, municipal
that the strike of January 28, 1982 was not a ULP strike and ordinances and any other jural norms must be construed in
should be considered illegal even if NFSW had complied with the light of and in accordance with the Constitution. There is
all statutory requirements for the strike. this explicit affirmation in the recently decided case of De la
Llana v. Alba sustaining the validity of Batas Pambansa Blg.
129 reorganizing the judiciary: "The principle that the
Separate Opinions Constitution enters into and forms part of every act to avoid
any unconstitutional taint must be applied. Nunez v.
MAKASIAR, J., concurring: Sandiganbayan, promulgated last January, has this relevant
excerpt: 'It is true that the other Sections of the Decree could
Concurs in the separate opinion of qualified concurrence as have been so worded as to avoid any constitutional
to the illegality of the strike and of dissent as to the objection. As of now, however, no ruling is called for. The
interpretation of Presidential Decree No. 851 submitted by view is given expression in the concurring and dissenting
the Chief Justice. opinion of Justice Makasiar that in such a case to save the
Decree from the dire fate of invalidity, they must be
FERNANDO, CJ., concurring:
construed in such a way as to preclude any possible erosion
With qualifications on the questions of the legality of the on the powers vested in this Court by the Constitution. That
strike and dissenting on the interpretation to be accorded is a proposition too plain to be contested. It commends itself
Presidential Decree No. 851 on the thirteenth-month for approval.'" 1
additional pay.,
1. It may not be amiss to start with the dissenting portion of
There is at the outset due acknowledgmen t on my part of this separate opinion. It is worthwhile to recall the decision
the high quality of craftsmanship in the opinion of the Court in Marcopper Mining Corporation v. Hon. Blas Ople. 2 It came
penned by Justice Efren Plana. It is distinguished by its from a unanimous Court. It is true that only seven Justices
lucidity. There is the imprint of inevitability in the conclusion signed the opinion, two of the members of this Tribunal, who
approached based on the basic premise that underlies it. So participated in the deliberation, Justices Teehankee and
it should be if the decisive consideration is the language used Melencio-Herrera having reserved their votes. Justice
both of the applicable provisions of the Labor Code, Article Concepcion Jr. was on leave. It is accurate, therefore, to state
264 (c), (e), and (f) and Article 265, as well as of Presidential that Marcopper as stated in Justice Plana's opinion, is not
Decree No. 851. In that sense, the decision of the Court can doctrinal in character, the necessary eight votes not having
stand the test of scrutiny based on sheer logic. been obtained. It is a plurality as distinguished from a
majority opinion. It is quite apparent, however, that there
That for me would not suffice. Such an approach, to my mind, was not a single dissenting vote. There was subsequently a
is quite limited. The standard that should govern is the one motion for reconsideration. This Court duly weighed the
supplied by the Constitution. That is the clear implication of arguments for and against the merit of the unanimous
constitutionalism. Anything less would deprive it of its quality opinion rendered. The resolution denying the motion for
reconsideration was not issued until December 15, 1981 on quite obvious from the above resolution of denial that the
which occasion three Justices dissented. 3 In the brief approach based on the Constitution, compelling in its
resolution denying the option for reconsideration, with five character set forth in the opinion of the Court of June 11,
Justices adhering to their original stand 4 it was set forth that 1981, is the one followed by the members of this Court either
such denial was based: "primarily [on] the reason that the adhering to or departing from the previous unanimous
arguments advanced had been duly considered and found conclusion reached. The main reliance to repeat, is on the
insufficient to call for a decision other than that promulgated social justice provision 9 as reinforced by the protection to
on June 11, 1981, which stands unreversed and unmodified. labor provision. 10 As noted, such concepts were enshrined in
This is a case involving the social justice concept, which, as the 1935 Constitution. 11 The opinion pursued the matter
pointed out in Carillo v. Allied Workers Association of the further: "Even then, there was a realization of their
Philippines involves 'the effectiveness of the community's importance in vitalizing a regime of liberty not just as
effort to assist the economically under- privileged. For under immunity from government restraint but as the assumption
existing conditions, without such succor and support, they by the State of an obligation to assure a life of dignity for all,
might not, unaided, be able to secure justice for themselves.' especially the poor and the needy. The expanded social
In an earlier decision, Del Rosario v. De los Santos, it was justice and protection to labor provisions of the present
categorically stated that the social justice principle 'is the Constitution lend added emphasis to the concern for social
translation into reality of its significance as popularized by and economic rights.** That was so under the 1935
the late President Magsaysay: He who has less in life should Constitution. Such an approach is even more valid now. As a
have more in law.'" 5 In his dissent, Justice Fernandez took matter of fact, in the first case after the applicability of the
issue on the interpretation of social justice by relying on the 1973 constitution where social and economic rights were
well- known opinion of Justice Laurel in Calalang v. involved, this Court in Alfanta v. Noe, through Justice Antonio,
William 6 and concluded: "It is as much to the benefit of labor stated: 'In the environment of a new social order We can do
that the petitioner be accorded social justice. For if the no less. Thus, under the new Constitution, property
mining companies, like the petitioner, can no longer operate, ownership has been impressed with a social function. This
all the laborers employed by aid company shall be laid- implies that the owner has the obligation to use his property
off." 7 To reinforce such a conclusion, it was further stated: not only to benefit himself but society as well. Hence, it
"The decision in this case is far reaching. It affects all provides under Section 6 of Article II thereof, that in the
employers similarly situated as the petitioner. The natural promotion of social justice, the State "shall regulate the
reaction of employers similarly situated as the petitioner will acquisition, ownership, use, enjoyment, and disposition of
be to withdraw gratuities that they have been giving private property, and equitably diffuse property ownership
employees voluntarily. In the long run, the laborers will suffer. and profits." The Constitution also ensures that the worker
In the higher interest of all concerned the contention of the shall have a just and living wage which should assure for
petitioner that the mid-year bonus and Christmas bonus that himself and his family an existence worthy of human dignity
it is giving to the laborers shall be applied to the 13th month and give him opportunity for a better life.' Such a sentiment
pay should be sustained." 8 Such pragmatic consideration is finds expression in subsequent opinions. 12
likewise evident in the opinion of the Court in this case. It is
2. It thus becomes apparent, therefore, why predicated on the view that I espouse. That is to attain its basic objective,
what for me is the significance of the social justice and the namely, to cope with the ravages of inflation. Moreover, the
protection to labor mandates of the Constitution, I cannot, Decree only benefits the low-salaried employees. There is
with due respect, concur with my brethren. The stand taken thus ample warrant for a more liberal approach. It only
by this Court, I submit, cannot be justified by the hitherto remains to be added that there was in Marcopper not only a
hospitable scope accorded such provisions. It is to the credit recognition of the administrative determination by the
of this Administration that even during the period of crisis Minister of Labor as well as the then Deputy Minister of Labor
government, the social and economic rights were fully but also an acceptance of the ably-written memorandum of
implemented. As a matter of fact, some critics, not fully Solicitor General Mendoza. Hence, to repeat, my inability to
informed of the actual state of affairs, would predicate their concur on this point with my brethren whose views, as I
assessment of its accomplishments in this sphere on their stated earlier, are deserving of the fullest respect.
inaccurate and unsympathetic appraisal of how much
success had been achieved. It is a matter of pride for the 3. There is, however and it must be so recognized an
Philippines that as far back as her 1935 Constitution, obstacle to the approach above followed. There is an
provisions assuring liberty in its positive sense, enabling her agreement both on the part of management and labor in this
citizens to live a life of humanity and dignity, were already case quoted in the main opinion to this effect, "to abide by
incorporated. The social and economic rights found therein the final decision of the Supreme Court in any case involving
antedated by thirteen years the Universal Declaration of the 13th Month Pay Law if it is clearly heldthat the employer
Human Rights. When it is considered that, as pointed out in is liable to pay a 13th month pay separate and distinct from
the opinion of Justice Antonio in Alfanta, rendered in the first the bonuses already given." Such an obstacle, on further
year of the present Constitution, the social justice principle reflection, is not, for me, insurmountable. The only case then
now lends itself to the equitable diffusion of property within the contemplation of the parties is Marcopper. With
ownership and profits, it becomes difficult for me to justify the unanimous opinion rendered and a subsequent denial of
why any lurking ambiguity in Presidential Decree No. 851 a motion for reconsideration, it would appear that while it
could be construed against the rights of labor. This Court is lacked doctrinal force, this Court "clearly held" that there is
not acting unjustly if it promotes social justice. This Court is liability on the part of the employer to pay a 13-month pay
not acting unjustly if it protects labor. This Court is just being separate and distinct from the bonuses already given.
true to its mission of fealty to the Constitution. Under the Perhaps the parties, especially labor, could have been more
concept of separation of powers, while the political branches accurate and more precise. It take comfort from the view
enact the laws and thereafter enforce them, any question as expressed by Justice Cardozo in Wood v. Duff-Gordon: 13 "The
to their interpretation, justiciable in character, is for the law has outgrown its primitive stage of formalism when the
courts, ultimately this Tribunal, to decide. That is its sworn precise word was the sovereign talisman, and every slip was
duty. It cannot be recreant to such a trust. Its role, therefore, fatal. It takes a broader view today. A promise may be
is far from passive. It may be said further that if the object Of lacking, and yet the whole writing may be 'instinct with an
statutory construction is in the well-known language of obligation,' imperfectly expressed." 14
Learned Hand "proliferation of purpose," there is warrant for
4. Now as to the qualified concurrence. Based on the codal I am authorized to state that Justice Makasiar joins me in this
provisions the finding of the illegality of strike is warranted. separate opinion.
That for me does not fully resolve the questions raised by
such a declaration. From my reading of the opinion of the BARREDO, J., concurring:
Court, it does not go as far as defining the consequences of At this stage of my tenure in the Supreme Court which is to
such illegal strike. Again the approach I propose to follow is end in about four months from now, I feel it is but fitting and
premised on the two basic mandates of social justice and proper that I make my position clear and unmistakable in
protection to labor, for while they are obligations imposed on regard to certain principles that have to be applied to this
the government by the fundamental law, compulsory labor case now before Us. Few perhaps may have noticed it,
arbitration as a result of which there could be a finding of but the fact is that in most cases of this nature I have
illegality is worded in permissive not in mandatory language. endeavored my very best to fully abide by the part that
It would be, for me, a departure from principles to which this pertains to the judiciary in the social justice and protection to
Court has long remained committed, if thereby loss of labor clauses of the Constitution, not alone because. I
employment, even loss of seniority rights or other privileges consider it as an obligation imposed by the fundamental law
is ultimately incurred. That is still an open question. The of the land but by natural inclination, perhaps because I
decision has not touched on that basic aspect of this began to work as a common worker at the age of thirteen,
litigation. The issue is not foreclosed. It seems fitting that this and I cannot in any sense be considered as a capitalist or
brief concurrence and dissent should end with a relevant management-inclined just because I happen to have joined,
excerpt from Free Telephone Workers Union v. The Minister of within the legal bounds of the position I occupy, some
Labor: 15 "It must be stressed anew, however, that the power business ventures with the more affluent members of my
of compulsory arbitration, while allowable under the family and with some good and faithful old time friends. I
Constitution and quite understandable in labor disputes need not say that I am pro-labor; I only wish to deny most
affected with a national interest, to be free from the taint of vehemently that I am anti-labor
unconstitutionality, must be exercised in accordance with the
constitutional mandate of protection to labor. The arbiter Having been one of the seven members of the Court who co-
then is called upon to take due care that in the decision to be signed with our learned Chief Justice the Marcopper
reached, there is no violation of 'the rights of workers to self- "decision" and later on reserved my vote when a motion for
organization, collective bargaining, security of tenure, and reconsideration thereof was filed for me to concur now by
just and humane conditions of work.' It is of course manifest merely cosigning the brilliant opinion of our distinguished
that there is such unconstitutional application if a law 'fair on colleague, Mr. Justice Plana, is to my mind short of what all
its face and impartial in appearance [is] applied and concerned might expect from me. For me to merely vote in
administered by public authority with an evil eye and an support of the judgment herein without any explanation of
unequal hand.' It does not even have to go that far. An my peculiar situation does not satisfy my conscience, not to
instance of unconstitutional application would be discernible mention that I owe such explanation to those who would all
if what is ordained by the fundamental law, the protection of probably be raising their eyebrows since they must come to
labor, is ignored or disregarded . 16
feel they could depend on me to always vote in favor of The term "its equivalent" as used in paragraph (c) hereof
labor. shall include Christmas bonus, midyear bonus, profit-sharing
payments and other cash bonuses amounting to not less
The Supreme Court is a court of law and of equity at the than 1/12th of the basic but shall not include cash and stock
same time but, understandably, equity comes in only when dividends, cost of living allowances and all other allowances
law is inadequate to afford the parties concerned the essence regularly enjoyed by the employee, as well as non-monetary
of justice, fairness and square dealing. It is to this basic tenet benefits. Where an employer pays less than 1/12th of the
that I am bound by my oath of office before God and our employee's basic salary the employer shall pay the
people Having this Ideal in mind, the paramount thought that difference.
should dominate my actuations is complete and absolute
impartiality in the best light God has given me. Hence, when Petitioner National Federation of Sugar Workers (NFSW, for
the aid of the Court is sought on legal grounds, We can resort short) is now before Us with the plea that because in its
to equity only when there is no law that can be properly agreement with respondent Central Azucarera de la Carlota
applied. My view of the instant case is that it is one of law, (CAC, for short) of November 30, 1981 to the effect that:
not of equity. It is on this fundamental basis that I have
ventured to write this concurrence. The parties agree to abide by the final decision of the
Supreme Court in any case involving the 13th Month Pay Law
Looking back at my concurrence in Marcopper, and guided by if it is clearly held that the employer is liable to pay a 13th
the observations in the main opinion herein, as to the month pay separate and distinct from the bonuses already
doctrinal value of Our decision therein, I have come to the given. (Par. 4)
realization, after mature deliberation, that the conclusion
reached in the opinion of the Chief Justice may not always be and because this Court dismissed, in legal effect, for lack of
consistent with the evident intent and purpose of Section 2 of necessary votes, the petition in the Marcopper case seeking
P.D. No. 851 which, indeed, unequivocally provides that the setting aside of Deputy Minister Inciong's decision which
"(E)mployers already paying their employees a 13th month considered the midyear and Christmas bonuses being given
pay or its equivalent are not covered by this decree", albeit it to the Marcopper workers as not the equivalent of the 13th
does not clarify what it means by the "equivalent" of the 13th month pay enjoined by P.D. 851, We should now order CAC to
month pay. Such being the case, nothing can be more proper pay NFSW members in the same way as stated in the opinion
than for everyone to abide by or at least give due respect to of the Chief Justice in the Marcopper case.
the meaning thereof as has been officially expressed by the At first glance, such a pause does appear tenable and
usual executive authority called upon to implement the plausible. But looking deeper at the precise wording of the
same, none other than the Ministry of Labor (MOLE, for November 30, 1981 agreement between NFSW and CAC
short), unless, of course, the understanding of MOLE appears abovequoted, the proposition in the main opinion herein that
to be manifestly and palpably erroneous and completely alien what must be deemed contemplated in said agreement is
to the evident intent of the decree. And Section 3(e) of the that the final decision of the Supreme Court therein referred
Rules Implementing P.D. 851 issued by MOLE reads thus: to must be one wherein it would be "clearly held that the
employer is liable to pay 13th month pay separate and
distinct from the bonuses already given", compels belief should ever induce me to allow it to tilt in the slightest
concurrence on my part. I find said agreement to be degree in favor of anyone.
definitely worded. There is no room at all for doubt as to the
meaning thereof. And tested in the light of such The concept of social justice has been variously explained in
unambiguous terminology of the said agreement, the previous decisions of this Court. In Talisay Silay, 1penned by
Marcopper opinion signed by only seven members of this this writer, We went as far as to hold that when it comes to
Court, cannot, under the Constitution and prevailing binding labor-management relationship, the social justice principle is
legal norms, unfortunately, have doctrinal worth and cannot more pervasive and imperious than police power. It is indeed
be considered as stare decisis. Hence, it cannot be said to be consecrated as one of the most valued principles of national
the "definite" decision of the Supreme Court the parties (CAC policy in the Constitution. (Sec. 6, Art. II) So also is protection
and NFSW) had in mind. Accordingly, it is my considered to labor. (See. 9, Id.) I am of the firm conviction, however,
opinion that NFSW's plea in this case is premature and rather that these constitutional injunctions are primarily directed to
off tangent. and are responsibilities of the policy-determining
departments of the government. In the enforcement of said
I am not unmindful of the possibility or even probability that principles, the role of the judiciary is to a certain degree less
labor may argue that in signing the November 30, 1981 active. The courts are supposed to be called upon only to
agreement, NFSW little cared, for it was not fully informed strike down any act or actuation of anyone violative thereof,
about what doctrinal and what is not doctrinal signify in law. and, of course 6 in case of doubt in any given situation, to
Labor may argue that it is enough that Marcopper workers resolve the same in favor of labor. Verily, neither the
got their 13th month pay in addition to their bonuses by Supreme Court nor any other court is enjoined to favor labor
virtue of the denial by this Supreme Court of Marcopper merely for labor's sake, even as the judiciary is duty bound
Company's appeal to US, and NFSW members should not be never to place labor at a disadvantage, for that would not be
left getting less. And it would only be rational to expect labor only unconstitutional but inhuman, contrary to the Universal
to invoke in support of their plea no less than the social Declaration of Human Rights and unpardonably degrading to
justice and protection to labor provisions of the Constitution. the dignity of man who has been precisely created in the
image of God. At bottom the Ideal in social justice is precisely
As I have said at the outset, I am about to leave this Court. to maintain the forces of all the economic segments of
Nothing could warm my heart and lift my spirit more than to society in undisturbed and undisturbable equilibrium, as
part with the noble thought that during my tenure of fourteen otherwise there would be no justice for anyone of them at all.
years in this Supreme Court, I have given labor the most that
it has been within my power to give. But again I must In the case at bar, I do not feel at liberty to disregard what
emphasize that what is constitutionally ordained, and by that the parties have freely agreed upon, assuming, as I must,
I mean also by God and by our country and people, is for me that in entering into such agreement both parties were fully
to jealously guard that the scales of justice are in perfect aware of their legal rights and responsibilities. In this
balance. No fondness for any sector of society, no love for connection, I take particular note of the fact that if CAC is a
any man or woman, no adherence to any political party, no big financially well conditioned concern, NFSW is not just one
feeling for any relative or friend nor religious consideration or ignorant laborer or group of laborers, but a federation with
leaders and lawyers of adequate if not expert knowledge- on the grant of Christmas bonus, milling bonus, and
ability in regard to their rights and other relevant matters amelioration bonus to the extent as the latter is required by
affecting labor. I am satisfied that there is here no occasion law." It can thus be said that La Carlota is already paying the
to apply the Civil Code rule regarding vigilance whenever equivalent of the 13th-month pay. 2. In Marcopper, the
there is inequality in the situations of the parties to an company's liability for the 13th month pay was determined
agreement or transaction. by no less than the Deputy Minister of Labor, Amado G.
Inciong. I have always given much weight to the
In conclusion, I concur fully in the main opinion of Justice determination of officers who are tasked with implementing
Plana as regards both issues of illegality of the strike here in legislation because their expertise qualifies them in making
question and the non- applicability hereto of whatever has authoritative decisions. In the present case of La Carlota,
been said in Marcopper. I have added the above remarks only there has been no determination that the employees are
to make myself clear on labor-management issues before I entitled to the 13th-month pay. In fact, a negative conclusion
leave this Court, lest there be no other appropriate occasion can be implied from the declaration of Labor Arbiter Ovejera
for me to do so. that the labor union's strike against La Carlota was illegal.
ABAD SANTOS, J., concurring: MELENCIO-HERRERA, J., concurring.
I concur but lest I be accused of inconsistency because A. The question of law involved in this Petition for Prohibition
in Marcopper Mining Corporation vs. Ople, et al., No. 51254, with Preliminary Injunction is based on the following relevant
June 11, 1981, 105 SCRA 75, I voted to dismiss the petition facts which are indicated in the record:
for lack of merit and as a result Marcopper had to give the
13th-month pay provided in P.D. No. 851 even as its 1. Prior to December 16, 1975, Central Azucarera de la
employees under the CBA had mid-year and end-of-year Carlota (LA CARLOTA, for short), which operates a sugar mill
bonuses, I have to state that Marcopper and La Carlota have in La Carlota, Negros Occidental, may be deemed as paying
different factual situations as follows: 1. In Marcopper, the to its employees milling bonus, amelioration bonus, and
CBA clearly stated that the company was obligated to "grant Christmas bonus equal at least to a months' salary.
midyear and end-of-year bonuses to employees following
years in which it had profitable operations." Thus the 2. PD 851, effective on the aforementioned date of December
payment of the bonuses was contingent upon the realization 16, 1975, required employers to pay their employees a 13the
of profits. If there were no profits, there were to be no month pay, provided the employer was not already paying
bonuses. Accordingly, it was fair and proper to conclude that the said 13th month pay or itsequivalent.
Marcopper had not shown that it was already paying its 3. On December 22, 1975, the then Department of Labor
employees the 13th-month pay or its equivalent as provided promulgated a regulation stating that "Christmas bonus" is
in Sec. 2 of P.D. No. 851. However, in the instant case of La an equivalent of the 13th month pay,
Carlota the obligation of the employer to pay bonuses is not
contingent on the realization of profits. The CBA stipulates 4. From 1975 to 1981, LA CARLOTA was not paying 13th
that the "parties also agree to maintain the present practice month pay on the assumption that the "Christmas bonus" it
was paying was an "equivalent" of the 13th month pay. The practice, and that it could declare the strike even before the
employees of LA CARLOTA and their labor unions had not expiration of fifteen (15) days thereafter. The unfair labor
protested the non-payment of the 13th month pay in addition practice relied upon was management's alleged renegation
to the Christmas bonus. of the November 30, 1981 agreement, considering that the
finality of the Marcopper Decision had "clearly held that the
5. On June 11, 1981, this Court promulgated its Decision in employer is liable to pay a 13th month pay separate and
the "Marcopper" case, which involved a relationship between distinct from "the Christmas bonus".
the " 13th month pay" and the "Christmas bonus" being paid
by an employer. A Motion for reconsideration of the Decision 2. On the other hand, LA CARLOTA took the position that the
was subsequently filed in said case, which was denied only strike was not a ULP strike but an economic strike subject to
on December 15,1981. a cooling period of thirty (30) days with its attendant
requirements.
6. In the meantime, on November 29, 1981, the National
Federation of Sugar Workers (NFSW), as the labor union 3. It is clear that the controversy between NFSW and LA
representing the majority of employees at LA CARLOTA, CARLOTA substantially hinges on the question of whether or
staged a strike because LA CARLOTA had refused to pay the not the Marcopper Decision has clearly held that a Christmas
13th month pay in addition to Christmas bonus. The strike bonus, in whatsoever form, should not deter the employer's
lasted one day on November 30, 1981, LA CARLOTA and obligation to the payment of the 13th month pay.
NFSW entered into a settlement agreement, paragraph 4
whereof provided as follows: C. The proceedings in the case below were as follows:
4. The parties agree to abide by the final decision of the 1. On February 4, 1982, LA CARLOTA filed a petition to
Supreme Court in any case involving the 13th Month Pay Law declare the strike of January 28, 1982 as illegal in R. A. B.
if it is clearly held that the employer is liable to pay a 13th Case No. 110- 82 of the Regional Arbitration Branch No. VI-A
Month Pay separate and distinct from the bonuses already of the National Labor Commission in Bacolod City (the CASE
given; BELOW).
7. On January 28, 1982, NFSW declared a strike on the 2. After relatively protracted hearings, respondent Labor
ground that, despite the finality of the Marcopper Decision, Arbiter rendered a Decision declaring illegal the strike of
LA CARLOTA had refused to grant 13th month pay to its January 28, 1982. That is the Decision assailed by NFSW in
employees, in addition to Christmas bonus, as agreed upon this instance claiming it to be null and void.
in the settlement agreement of November 30, 1981. D. Reference to a collateral proceeding may be made at this
B. The legal controversy in the matter may be explained as juncture:
follows: 1. It appears that, in LA CARLOTA, there is another labor
1. NFSW filed a notice of strike on January 22, 1982, claiming union under the name of National Congress of Unions in the
that the contemplated strike was based on an unfair labor Sugar Industry in the Philippines (NACUSIP).
2. On July 30, 1981, NACUSIP filed a complaint in FSD Case rule on the merits of the substantial question between LA
No. 1192-81 before R. A. B. No. VI-A in Bacolod City praying CARLOTA and NFSW for the public benefit with a clarification
that an Order be issued directing LA CARLOTA to pay 13th of the Marcopper judgment.
month pay to its employees from the effective date of PD 851
(the COLLATERAL PROCEEDING). I agree with the proposition taken by the Ministry of Labor
and Employment that Christmas bonus, not contingent on
3. On December 4, 1981, NFSW filed a notice to intervene in realization of profit as in the Marcoper case, is
the COLLATERAL PROCEEDING. the equivalent of the 13th month pay. In regards to the
juxtaposition of the terms "13th month pay" and "Christmas
4. On January 26, 1982, a Decision was rendered in the bonus" in an amount not less than a month's salary, the
COLLATERAL PROCEEDING which, in part, said: following may be explained:
On the contrary, what this Labor Arbiter is aware of, with Within recent time, it has been usual for an industrial or
which he can take notice, is the policy declaration of the commercial firm, which has had a successful year, to grant a
Honorable Minister of Labor and Employment contained in a bonus to its employees generally denominated before as
telegram addressed to Asst. Director Dante G. Ardivilla year-end bonus. A firm usually knows whether or not it has
Bacolod District Office, this Ministry, and disseminated for the had a successful year by the middle of December. In case of
information of this Branch which states, among other things, profitability, payment of the year-end bonus does not have to
that where bonuses in CBAs are not contingent on realization await the end of the year, but it is often times given some
of profit as in the Marcopper case, the decision (of the days before New Year, generally about Christmas day. Before
Supreme Court, re: Marcopper case), does not apply, and long, the year-end bonus became also known as Christmas
cases thereon should be resolved under the provisions of PD bonus, following the change of the Christmas gift-giving day
851 and its implementing rules. from January 6th to December 25th. Thus, it has been stated:
5. On February 15, 1982, NFSW filed a Motion for "a less formal use of the bonus concept, which is designed to
Reconsideration of the Decision. reward workers for a successful business year, is the annual
or Christmas bonus" (3 Ency. Brit., 918).
Upon the foregoing exposition, there is justification for an
outright dismissal of the Petition for Prohibition for the simple Although the original concept of a year-end bonus or
reason that the strike of January 28, 1982 may not be Christmas bonus, was that it depended on a successful year,
considered a ULP strike. When the strike was declared, it the bonus, in many instances, has been developed into an
could not be validly claimed that there was already a final obligatory payment as part of wages and not related to
decision made by this Court which "clearly held that the profitability of operations. As part of wages, they are subject
employer is liable to pay a 13th month pay separate and to CBA negotiation. That has been the general trend in the
distinct from" the Christmas bonus being paid by LA United States and in our country.
CARLOTA. However, since the Marcopper Decision has ... But where so-called gifts are so tied to the remuneration
engendered controversies in labor-management relations in which employees receive for their work that they are in fact a
several industrial/commercial firms, the Court has resolved to
part of it, they are in reality wages within the meaning of the and Regulations Implementing Presidential Decree 851 ",
Act. with the following relevant provision:
xxx xxx xxx The term "its equivalent" as used in paragraph (c) hereof
shall include Christmas bonus, mid-year bonus, profit-sharing
In a number of cases an employer has been held required to payments and other cash bonuses amounting to not less
bargain concerning bonuses, including regularly given than 1/12th of the basic salary but shall not include cash and
Christmas bonuses. (48 Am Jur 2d., p. 455). stock dividends cost of living allowances and all other
Moreover, once a Christmas bonus becomes institutionalized, allowances regularly enjoyed by the employee, as well as
it has to be non-discriminatory. "An employer violates 29 USC non-monetary benefits. Where an employer pays less than
(Sec.) 158(a) (3) where, to discourage union membership, he 1/12th of the employees basic salary, the employer shall pay
ceases giving a Christmas bonus to all employees and gives the difference.
the bonus only to office and supervisory employees after When administrative rules and regulations are not properly
unionization of his production and maintenance employees." "delegated", they cannot have the force and effect of law. It
(48 Am Jur 2d., p. 420). has been stated that:
The Christmas bonus, as it clearly denotes, has Administrative rules and regulations. As discussed in Public
a literal religious connection, "Christmas" being a term within Administrative Bodies and Procedure (Sec.) 108, rules and
the Christian religion. Considering that the Christmas bonus regulations duly promulgated and adopted in pursuance of
has become obligatory and non- discriminatory in many properly delegated authority have the force and effect of law
jurisdictions, a tendency arose to disassociate that bonus where they are legislative in character, but rules and
from its religious connotation. Some countries, with non- regulations which are merely executive or administrative
christian or "liberal" christian segments, have opted to make views as to the meaning and construction of the statute are
the year-end or Christmas bonus obligatory, and they called not controlling on the courts, and cannot alter or extend the
it the 13th month pay. It is, perhaps, having our Moslem plain meaning of a statute, although they are entitled to
brothers in mind that the Government had decided to set up great weight where the statute is ambiguous. (82 C.J.S., pp.
in our country the obligatory payment of the 13th month pay 770, 771).
Thereby, the orthodox non-christian employee is not
subjected to "discrimination" due to his inability to accept the Although the rule defining the term "equivalent" as used in
Christmas bonus because of strict allegiance to this own PD 851 does not have the force and effect of law, it can and
faith. It should, therefore, be apparent that "christmas bonus" should be considered as an administrative view entitled to
and "13th month pay" should be equated one with the other. great weight as it is an interpretation of "equivalent" made
by the administrative agency which has the duty to enforce
PD 851 does not contain a provision for rules and regulations the Decree.
to be promulgated by the Department of Labor for
implementation of the Decree. Notwithstanding, on In the light of the foregoing views, I concur with the dismissal
December 22, 1975, the Department of Labor issued "Rules of the Petition for Prohibition with the express statements
that LA CARLOTA's Christmas bonus and other bonuses
exempts it from giving 13th month pay to its employees, and
that the strike of January 28, 1982 was not a ULP strike and G.R. No. 86000 September 21, 1990
should be considered illegal even if NFSW had complied with GOLD CITY INTEGRATED PORT SERVICES, INC.
all statutory requirements for the strike. (INPORT), petitioner,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION (NLRC) and JOSE L. BACALSO,respondents.
FELICIANO, J.:
Bernie Del Thus, the Labor Arbiter is correct in ruling that the
Mundo Member Id. 88
employment of all individual private respondents are deemed
validly terminated.
Roberto Eco Member Id.89
WHEREFORE, the petition is granted. The Decision and
Joven Talidong Member Id.90 Resolution of the Court of Appeals together with the Decision
Id.;91 threatening non-strikers dated November 29, 2000 of the National Labor Relations
Leny Lucente Member with bodily harm;92 Commission are REVERSED and SET ASIDE. The Decision of
the Labor Arbiter dated October 12, 1999
Intimidating, harassing, is REINSTATED. The Court finds the strike illegal and, as a
preventing, and discouraging consequence thereto, the union officers who participated in
customers from entering the the illegal strike and in the commission of illegal acts,
restaurant;93 cursing and use of namely, Emmanuel Cayno, Billy Bacus, Analiza Cablay, Jose
abusive language towards Neil Arcilla, Roel Esancha, and Claudio Panaligan, as well as
Rigoberto management, non-strikers, or the union members who participated in the commission of
Tubaon Member customers;94 illegal acts during the strike, namely, Rey Arsenal, Alex
Martinez, Hermie Raz, Jose Lanorias, Lito Arce, Cesar
Merly Naz Member Intimidating, harassing, Sangreo, Rolando Fabregas, Jimmy Balan, Joven Lualhati,
preventing, and discouraging Antonio Enebrad, Edgar Eugenio, Albert Agbuya, Arnel
customers from entering the Salvador, Ricky Del Prado, Bernie Del Mundo, Roberto Eco,
restaurant;95 cursing and use of Joven Talidong, Leny Lucente, Rigoberto Tubaon, Merly Naz,
abusive language towards Lino Salubre, Rolando Pugong, and John Bathan, all private
management, non-strikers, or
respondents, are hereby declared to have lost their Manggagawang Pang-Edukasyon sa Sta. Eskolastika-NAFTEU
employment status. (UNION, for brevity) initiated negotiations for a first-ever
collective bargaining agreement. A deadlock in the
No pronouncement as to costs. negotiations prompted the UNION to file on 4 October 1990 a
SO ORDERED. Notice of Strike with the Department of Labor and
Employment (DEPARTMENT, for brevity), docketed as NCMB-
NCR-NS-10-826.
On 9 November 1995 both the COMPANY and the UNION filed ACCORDINGLY, A Writ of Execution is here issued
their respective motions for reconsideration. On 24 commanding Sheriff Edgar Paredes of the National Capital
November 1995 Acting Secretary Brillantes issued an order Regional Office, this Department, to proceed to the premises
modifying in part his 27 October 1995 Order, but affirmed of Temic Telefunken Microelectronics (Phils.) Inc., at the Temic
that portion which excluded the union officers, shop stewards Building, Bagsakan Road, FTI Estate, Taguig, Metro Manila,
and those with pending criminal charges, from the order to and execute fully and faithfully the Decision of the Secretary
accept back all striking workers pending the resolution of the dated October 27, 1995 and November 24, 1995 by seeing
issue involving the legality of the strike. the actual and physical reinstatement of the remaining
striking workers listed in the 32 page Annex A who are yet to
On 5 December 1995, the UNION, aggrieved by the Order of be readmitted as ordered in the Decisions under the same
27 October 1995 instituted a petition for certiorari before this terms and conditions prevailing before the strike on
Court questioning the order excluding all union officers, shop September 14, 1995 and, if necessary, to seek the aid of the
stewards and all those with pending criminal charges. The Taguig Police Station, Taguig, Metro Manila, which is here
UNION argued that since, as stated in the Order of 27 deputized for the purpose of aiding this Office in the
October 1995, the termination (of all union officers, shop enforcement of its Orders and to make a return within thirty
(30) days from issuance of the Writ to the Office of the In the main, the consolidated case raise three (3) issues:
Secretary, copy furnished the Legal Service. [3] whether the Secretary of Labor and Employment gravely
abused his discretion, first, in excluding union officers, shop
The COMPANY filed a Motion to Quash, Recall or Suspend the stewards and those with pending criminal charges in his
Writ of Execution. On 17 October 1996 the motion was order to the COMPANY to accept back the striking
denied for lack of merit and an alias writ of execution was workers; second, in issuing a writ of execution pending
issued directing the reinstatement of the strikers in the resolution of a related petition for certioraribefore this
payroll if actual and physical reinstatement was not possible. Court; and third, in holding that complaints lodged before
On 23 October 1996 the COMPANY filed a motion for the police authorities before 27 October 1995 and
reconsideration which on 21 November 1996 was denied. On subsequently filed with the provincial prosecutor after 27
9 December 1996 the COMPANY, not satisfied with the October 1995 are not within the ambit of the phrase with
rulings of the Secretary of Labor and Employment, petitioned pending criminal charges.
this Court for a writ of certiorari.
We first resolve the exclusion of certain employees. In Union
In these twin petitions, the UNION argues that the exclusion of Filipro Employees v. Nestle Philippines, Inc. [4] we said -
of union officers, shop stewards and those with pending
criminal charges from the directive to the COMPANY to x x x an assumption and/or certification order of the
accept back the striking workers is tantamount to illegal Secretary of Labor automatically results in return-to-work of
dismissal since the workers are in effect being terminated all striking workers, whether or not a corresponding order has
without due process of law. The COMPANY on the other hand been issued by the Secretary of Labor x x x x Article 264 (g)
maintains that the dismissal of those who failed to comply is clear. Once an assumption/certification order is issued,
with the assumption and return-to-work orders is valid and in strikes are enjoined, or if one has already taken place, all
accordance with jurisprudence. strikers shall immediately return to work.
Furthermore, the COMPANY asserts that the Secretary of A strike that is undertaken despite the issuance of the
Labor and Employment should have refrained from issuing a Secretary of Labor of an assumption or certification order
writ of execution mandating the immediate reinstatement of becomes a prohibited activity and thus illegal, pursuant to
some 1,500 dismissed striking workers since the exclusion of the second paragraph of Art. 264 of the Labor Code as
union officers, shop stewards and those with pending amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. No.
criminal charges from the directive to the COMPANY to 82088, October 13, 1989; 178 SCRA 482).
accept back the striking workers is still pending before this
Court. Also, the COMPANY claims that the Secretary of Labor In Gold City Integrated Port Service, Inc. v. National Labor
gravely abused his discretion when he ruled that complaints Relations Commission [5] we explained -
lodged with the police authorities before 27 October 1995 The effects of such illegal strikes, outlined in Article 265 (now
and subsequently filed with the provincial prosecutor after 27 Article 264) of the Labor Code, make a distinction between
October 1995 are not within the ambit of the phrase with workers and union officers who participate therein.
pending criminal charges.
A union officer who knowingly participates in an illegal strike testimonies of the parties involved, this Office likewise finds
and any worker or union officer who knowingly participates in it appropriate to conduct further hearing hereon. Hence,
the commission of illegal acts during a strike may be resolution on this issue is hereby deferred until the
declared to have lost their employment status. An ordinary termination of the appropriate proceedings hereon.
striking worker cannot be terminated for mere participation
in an illegal strike. There must be proof that he committed Thus in the dispositive portion of his Order the Secretary of
illegal acts during a strike. A union officer, on the other hand, Labor stated that the termination of subject employees shall
may be terminated from work when he knowingly be among the issues yet to be heard by Atty. Genilo who was
participates in an illegal strike, and like other workers, when designated to immediately call the parties and hear and
he commits an illegal act during a strike. receive evidence on the matter of illegal strike, including the
reciprocal demands of the parties for damages arising
But as we said in Batangas Laguna Tayabas Bus Company v. therefrom x x x x [7]
NLRC- [6]
It may be true that the workers struck after the Secretary of
That is only half the picture. As the NLRC further explained, it Labor and Employment had assumed jurisdiction over the
was not inclined to declare a wholesale forfeiture of case and that they may have failed to immediately return to
employment status of all those who participated in the work even after the issuance of a return-to-work order,
strike because, first of all, there was an inadequate service making their continued strike illegal. For, a return-to-work
of the certification order on the union as of the date the order is immediately effective and executory notwithstanding
strike was declared and there was no showing that the the filing of a motion for reconsideration. [8] But, the liability
striking members had been apprised of such order by the of each of the union officers and the workers, if any, has yet
NAFLU x x x x We agree with the Solicitor General that the to be determined. More so in the instant case where the
mere filing of charges against an employee for alleged illegal UNION alleges inadequate service upon the UNION leadership
acts during a strike does not by itself justify his dismissal. of the Assumption Order of 8 September 1995 and the
The charges must be proved at an investigation duly called return-to-work order of 16 September 1995. [9] Thus, did all or
where the employee shall be given an opportunity to defend some of the UNION leaders knowingly participate in the
himself. This is true even if the alleged ground constitute a illegal strike? Did any or all of the members of the UNION
criminal offense x x x x who then had pending criminal charges knowingly participate
in the commission, if any, of illegal acts during the strike?
In the case before us, we cannot see how respondent The records do not bear the answers to these questions, but
Secretary of Labor and Employment arrived at his decision of not expectedly so, for Atty. Genilo of the DOLE has yet to
excluding union officers, shop stewards and those with hear and receive evidence on the matter, and to submit a
pending criminal charges in his directive to the COMPANY to report and recommendation thereon.
accept back the striking workers. For in the same assailed
Order he said on the illegal strike issue - Thus to exclude union officers, shop stewards and those with
pending criminal charges in the directive to the COMPANY to
Taking into account that the determination of this issue accept back the striking workers without first determining
requires the appreciation of evidentiary matters and
whether they knowingly committed illegal acts would be resolve the dispute, as the case may be. The decision of the
tantamount to dismissal without due process of law. We President, the Secretary of Labor and Employment, the
therefore hold that the Honorable Secretary of Labor gravely Commission or the Voluntary Arbitrator shall be final and
abused his discretion in excluding union officers, shop executory ten (10) calendar days after receipt thereof by the
stewards and those with pending criminal charges in the parties.
order to the COMPANY to accept back the striking workers
pending resolution of the issue involving the legality of the In the case at bar, the Supreme Court did not issue any
strike. Temporary Restraining Order. There is therefore no legal
impediment to the enforcement of the Writ of Execution and
We however sustain the authority of the Secretary of Labor Alias Writ of Execution previously issued by this Office.
and Employment to issue the assailed writ of execution- [10]
This, to say the least, is elementary. Thus, as correctly cited
We likewise do not find any merit in the Company's by the UNION, [11] this Court in Santiago v. Vasquez [12] said -
contention that when the Union filed a Petition
for Certiorari with the Supreme Court (docketed as G.R. No. Petitioner further posits, however, that the filing of the
122743), with a prayer that the Company be directed to instant special civil action for certiorari divested the
accept back all striking workers without any exception, it has Sandiganbayan of its jurisdiction over the case therein.
effectively raised the matter to the Supreme Court. Whether generated by misconception or design, we shall
address this proposition which, in the first place, had no
We must emphasize that the issue involved in reason for being and should not hereafter be advanced under
the certiorari case now pending before the Supreme Court is like similar procedural scenarios.
the legality of the exclusion of the Union officers, shop
stewards and those against whom criminal charges were filed The original and special civil action filed with this Court is, for
on October 27, 1995, vis-a-vis, this Office's return-to-work all intents and purposes, an invocation for the exercise of its
order. On the other hand, the pending issue before this Office supervisory powers over the lower courts. It does not have
is the propriety of the issuance of a Writ of Execution to the effect of divesting the inferior courts of jurisdiction validly
enforce the twin orders dated October 27, 1995 and acquired over the case pending before them. It is elementary
November 24, 1995 which have long become final and that the mere pendency of a special civil action for certiorari,
executory. commenced in relation to a case pending before a lower
court, does not even interrupt the course of the latter when
We need not remind the Company that the decision of this there is no writ of injunction restraining it. The inevitable
Office is final and executory ten (10) calendar days after conclusion is that for as long as no writ of injunction or
receipt thereof by the parties. Thus, in clear and categorical restraining order is issued in the special civil action
language, Art. 263 (1) of the Labor code, as amended, for certiorari, no impediments exists and there is nothing to
provides: prevent the lower court from exercising its jurisdiction and
proceeding with the case pending before it. And, even if such
Art. 263 (1) The Secretary of Labor and Employment, the injunctive writ or order is issued, the lower court nevertheless
Commission or the Voluntary Arbitrator shall decide or continues to retain its jurisdiction over the principal action.
The COMPANY likewise argues that the Secretary of Labor execution was already issued on 27 June 1996, or long after
gravely abuse his discretion when he ruled that complaints the clarificatory order dated 7 December 1995 had become
filed with the police authorities before 27 October 1995 and final and executory.
subsequently with the provincial prosecutor after 27 October
1995 are not within the ambit of the phrase with pending In fine, we repeat what the Solicitor General astutely
criminal charges. Suffice it to say that this issue has been observed in Batangas Laguna Tayabas Bus Company v.
rendered moot. For, we have earlier said that no striker NLRC- [14]
should have been excluded it appearing from the record that The assailed Resolution does not prevent petitioner from
the strike has yet to be ruled upon and the liability of each continuing with its investigations and come up with evidence
striker still to be determined. against these workers. But they have to be admitted back to
But if only for the sake of argument, the contention of the their work first. This is clearly a situation where the social
COMPANY is still specious. The Secretary of Labor could not justice provisions of our laws and jurisprudence come in aid
have explained this point any better -[13] of labor. Since such investigations might be extended,
intentionally or otherwise, the workers are in danger of losing
In clarifying the workers excluded by the order dated 27 their livelihood. As compared to the management that is in a
October 1995, we are guided by the principle that the return- position to wage an extended legal struggle against labor,
to-work Order issued herein was designed to restore the the latter cannot do so. This is where the State intervenes to
Company's normal operations and at the same time provide equalize matters between labor and management.
employment to the greater majority of its employees pending
resolution of the labor dispute. It would does be absurd, nay, While this Court prefers to rule likewise on the legality or
illogical for us to interpret and conclude that the phrase illegality of the strike and determine the individual liability of
those with pending criminal charges covers criminal cases the strikers, if any, to put an end to this protracted labor
filed against the striking workers after the issuance of the dispute, this Court is unable to do so as the record is wanting
Order dated 27 October 1995. To our mind, such an of any evidence to support a conclusion. We thus order the
interpretation would open the floodgates to the massive Secretary of Labor to resolve the instant case with utmost
exclusion from work of the striking workers thru the simple dispatch and determine whether the strike was illegal and
expedient of filing criminal charges against them long after the liability of the individual strikers, if any.
the issuance of the return-to-work Order. A word of admonition to petitioner-employees who camped in
At best the raising of this issue by COMPANY appears to be front of the Supreme Court Building, commenced a hunger
an afterthought as the COMPANY has failed to seek the strike, and who now appear to have vowed to continue with
reversal of the Order of 7 December 1995 holding that the their protest march until the end -
phrase those with pending criminal charges' shall only cover The right of petition is conceded to be an inherent right of
those workers with pending criminal charges at the time of the citizen under all free governments. However, such right,
the issuance of the Order dated 27 October 1995. The natural and inherent though it may be, has never been
COMPANY merely questioned this ruling after a writ of invoke to shatter the standards of propriety entertained for
the conduct of courts. For,it is a traditional conviction petition in G.R. No. 127215 was not even submitted yet for
of civilized society everywhere that courts and juries, in the decision. The pleadings had yet to be completed.
decision of issues of fact and law, should be immune from
every extraneous influence; the facts should be decided Indeed, it would be unfeeling, if not unchristian, to ignore the
upon evidence produced in court; and that the determination hunger strike of the workers and allow them to be exposed
of such facts should be uninfluenced by bias, prejudice or to the elements - the cold of the night and the scorching heat
sympathies x x x x Moreover, parties have a constitutional of the noonday sun. But the strikers must realize that judicial
right to have their causes tried fairly in court by an impartial decisions are not issued on pity and sympathy. They are
tribunal, uninfluenced by publication or public clamor. Every weighed according to the established facts and the merits of
citizen has a profound personal interest in the enforcement of the arguments of the parties. This Court at times may show
the fundamental right to have justice administered by the compassion and mercy but it cannot hem and haw to lay
courts, under the protection and forms of law free from aside its emotional nuance and sacrifice the broader interest
outside coersion or interference.' The aforecited acts of the of fair play and justice. Let this then be a stern warning to all
respondents are therefore not only an affront to the dignity of those who hanker for justice yet desire to obtain it through
this Court, but equally a violation of the above-stated right of improper pressure and influence, e.g., demonstrations,
the adverse parties and the citizenry at large x x x x The pretensions, mass actions, etc. This schematic artifice will
Court will not hesitate in future similar situations to apply the take them nowhere. On the contrary, such wantonness and
full force of the law and punish for contempt those who unrestrained misconduct gravely offend and affront the
attempt to pressure the Court into acting one way or the dignity of the Court.
other in any case pending before it. Grievances, if any, must WHEREFORE, the petition in G.R. No. 122743 is GRANTED.
be ventilated through the proper channels, i.e., through Respondent TEMIC TELEFUNKEN MICROELECTRONICS
appropriate petitions, motions or other pleadings in keeping (PHILS.), INC., is ORDERED to accept back immediately all
with the respect due to the Courts as impartial administrators striking workers of TELEFUNKEN SEMICONDUCTORS
of justice entitled to proceed to the disposition of its EMPLOYEES UNION - FFW WITHOUT EXCEPTION.
business in an orderly manner, free from outside interference
obstructive of its functions and tending to embarrass the In G.R. No. 127215, the petition is DISMISSED for lack of
administration of justice.' [15] merit. Accordingly, respondent Secretary of Labor and
Employment is DIRECTED to ensure the effective
Here, the Court will do no less. It will not yield its judicial enforcement of the writ of execution he issued and determine
prerogatives to petitioning strikers if only to appease them, WITH DISPATCH the legality of the strike as well as the
much less give in to their demand for a favorable decision liability of the individual strikers, if any. The members of the
and violate the basic tenets of due process. For when TELEFUNKEN SEMICONDUCTORS EMPLOYEES UNION - FFW
petitioners marched with their placards in front of the are WARNED that a repetition of the same or similar mass
premises of the Court, pitched their tents on the sidewalk demonstration within or about the premises of this Court will
across the street and went on hunger strike while be dealt with severely.
demanding an early disposition in their favor, until they
moved over to the Department of Justice next door, the SO ORDERED.
G.R. Nos. 92981-83 January 9, 1992
REGALADO, J.:
The issue before us is whether or not the Secretary of the the provisions of their collective bargaining agreement and in
Department of Labor and Employment has the power to total and complete defiance of the provisions of the Labor
assume jurisdiction over a labor dispute and its incidental Code;
controversies, including unfair labor practice cases, causing
or likely to cause a strike or lockout in an industry 2. Associated Labor Union vs. International
indispensable to the national interest. Pharmaceuticals, Inc., et al., NLRC Case No-VII-08-0715-
89, 2 a complaint for unfair labor practice with prayer for
The operative facts which culminated in the present recourse damages and attorney's fees filed by the Union against the
are undisputed. Company, its personnel manager, and the Workers Alliance of
Trade Unions (WATU) as a result of the Company's refusal to
Prior to the expiration on January 1, 1989 of the collective include the sales workers in the bargaining unit resulting in a
bargaining agreement between petitioner International deadlock in the bargaining negotiations; for coddling the
Pharmaceuticals, Inc. (hereafter, Company) and the respondent WATU as a separate bargaining agent of the sales
Associated Labor Union (Union, for brevity), the latter workers despite a contrary ruling of the Med-Arbiter; and
submitted to the Company its economic and political undue interference by the Company in the right of the
demands. These were not met by the Company, hence a workers to self-organization through harassment and
deadlock ensued. dispersal of a peaceful picket during the strike; and
On June 27, 1989, the Union filed a notice of strike with 3. International Pharmaceuticals, Inc., et al. vs. Associated
Regional Office No. VII of the National Conciliation and Labor Union, NLRC Case No. VII-08-0742-89, 3 a petition to
Mediation Board, Department of Labor and Employment, declare the strike illegal with prayer for damages filed by the
which was docketed as NCMB-RBVII-NS-06-050-89. After all Company alleging, among others, that the notice of strike
conciliation efforts had failed, the Union went on strike on filed by the Union with the National Conciliation and
August 8, 1989 and the Company's operations were Mediation Board did not conform with the requirements of
completely paralyzed. the Labor Code, and that the Union, in violation of the Labor
Subsequently, three other labor cases involving the same Code provisions on the conduct of the strike, totally
parties were filed with the National Labor Relations blockaded and continued to blockade the ingress and egress
Commission (NLRC) to wit: of the Company's premises by human barricades, placards,
benches and other obstructions, completely paralyzing its
1. International Pharmaceuticals, Inc. vs. Associated Labor business operations.
Union, NLRC Case No. VII-09-0810-89, 1 a petition for
injunction and damages with temporary restraining order Meanwhile, considering that the Company belongs to an
filed by the Company against the Union and some of its industry indispensable to national interest, it being engaged
members for picketing the Company's establishment in Cebu, in the manufacture of drugs and pharmaceuticals and
Davao, and Metro Manila allegedly without the required employing around 600 workers, then Acting Secretary of
majority of the employees approving and agreeing to the Labor, Ricardo C. Castro, invoking Article 263 (g) of the Labor
strike and with simulated strike votes, in direct violation of Code, issued an order dated September 26, 1989 assuming
jurisdiction over the aforesaid case docketed as NCMB-RBVII- 09-0810-89, VII-08-0715-89 and VII-08-0742-89 are hereby
NS-06-050-89 and directing the parties to return to the status ordered consolidated with the instant proceedings. The Labor
quo before the work stoppage. The decretal portion of the Arbiter handling the same is directed to immediately transmit
order reads: the records of the said cases to the Asst. Regional Director,
DOLE Regional Office No. 7 who has been designated to hear
WHEREFORE, PREMISES CONSIDERED, this Office hereby and receive the evidence of the parties.
assumes jurisdiction over the labor dispute at the
5
International Pharmaceuticals, Incorporated pursuant to SO ORDERED.
Article 263 (g) of the Labor Code, as amended.
The Company's subsequent motion for reconsideration of the
Accordingly, all striking workers are hereby directed to return order consolidating the cases was denied by the Secretary on
to work and management to accept them under the same March 5, 1990. 6 Thereafter, the Assistant Regional Director
terms and conditions prevailing before the work stoppage, of Regional Office No. VII, as directed, assumed jurisdiction
within twenty four (24) hours from receipt of this Order. over the consolidated cases and set the same for reception of
Management is directed to post copies of this Order in three evidence.
(3) conspicuous places in the company premises.
Petitioner Company now comes to this Court assailing the
The parties are likewise ordered to cease and desist from aforesaid orders and alleging grave abuse of discretion on
committing any and all acts that will prejudice either party the part of the public respondent in the issuance thereof. The
and aggravate the situation as well as the normalization of Union, as the bargaining agent of the rank and file workers of
operations. the Company, was impleaded as the private respondent.
4
SO ORDERED. Petitioner Company submits that the exclusive jurisdiction to
hear and decide the three NLRC cases above-specified is
On January 15, 1990, the Union filed a motion in NCMB-RBVII- vested in the labor arbiter as provided in paragraph (a) (1)
NS-06-050-85, the case over which jurisdiction had been and (5) of Article 217 of the Labor Code.
assumed by the Secretary of Labor and Employment
(hereafter referred to as the Secretary), seeking the Moreover, petitioner insists that there is nothing in Article
consolidation of the three NLRC cases (NLRC Cases Nos. VII- 263 (g) of the Labor Code which directs the labor arbiter to
09-0810-89, VII-08-0715-89, and VII-08-0742-89) with the hold in abeyance all proceedings in the NLRC cases and await
first stated case. instruction from the Secretary. Otherwise, so it postulates,
Section 6, Rule V of the Revised Rules of the NLRC which is
In an order dated January 31, 1990, Secretary of Labor Ruben invoked by the Secretary is null and void since it orders the
D. Torres granted the motion and ordered the consolidation of cessation of all proceedings before the labor arbiter and
the three NLRC cases with NCMB-RBVII-NS-06-050-89, as orders him to await instructions from the Secretary in labor
follows: disputes where the Secretary bas assumed jurisdiction,
WHEREFORE, finding the Associated Labor Union's Motion to thereby amending Article 263 (g) of the Labor Code by
be meritorious, the same is granted and NLRC Cases Nos. VII- enlarging the jurisdiction of the Secretary.
Petitioner further contends that, granting arguendo that There are three governing labor law provisions which are
Section 6, Rule V of the Revised Rules of the NLRC is in determinative of the present issue of jurisdiction, viz.:
accordance with Article 263 (g) of the Labor Code, still the
Secretary should not have ordered the consolidation of the 1. Article 217 (a) (1) and (5) of the Labor Code which
three unfair labor practice cases with NCMB-RBVII-NS-06-050- provides:
89, since the Secretary assumed jurisdiction only over the Art. 217. Jurisdiction of Labor Arbiters and the Commission
deadlock in the negotiation of the collective bargaining (a) Except as otherwise provided under this Code the
agreement and the petition for contempt as a result of the Labor Arbiters shall have original and exclusive jurisdiction to
said deadlock. hear and decide . . . the following cases involving all workers.
Respondents, on the other band, assert that the authority to ...
assume jurisdiction over labor disputes, vested in the 1. Unfair labor practice cases;
Secretary by Article 263 (g) of the Labor Code, extends to all
questions and incidents arising therein causing or likely to xxx xxx xxx
cause strikes or lockouts in industries indispensable to
national interest. 5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and
Moreover, respondents counter that Section 6, Rule V of the lockouts; . . .
Revised Rules of the NLRC is in accordance with Article 263
(g) of the Labor Code, notwithstanding the provisions of 2. Article 263 (g) of the Labor Code which declares:
Article 217 of the Labor Code. To rule otherwise, they point
(g) When, in his opinion, there exists a labor dispute causing
out, would encourage splitting of jurisdiction, multiplicity of
or likely to cause a strike of lockout in an industry
suits, and possible conflicting findings and decisions which
indispensable to the national interest, the Secretary of Labor
could only result in delay and complications in the disposition
and Employment may assume jurisdiction over the dispute
of the labor disputes.
and decide it or certify the same to the Commission for
It was also stressed that the three NLRC cases which compulsory arbitration. . . .
respondent Secretary ordered consolidated with the labor
3. Section 6, Rule V of the Revised Rules of the NLRC which
dispute over which he had assumed jurisdiction arose from or
states:
are directly related to and are incidents of the said labor
dispute. Sec. 6. Disposition of cases. . . .
Finally, respondents invoke the rule that all doubts in the Provided, that when the Minister (Secretary) of Labor and
implementation and interpretation of the Labor Code Employment has assumed jurisdiction over a strike or lockout
provisions should be resolved in favor of labor. By virtue of dispute or certified the same to the Commission, the parties
the assailed orders, the Union and its members were relieved to such dispute shall immediately inform the Minister
of the burden of having to litigate their interrelated cases in (Secretary) or the Commission as the case may be, of all
different fora. cases between them pending before any Regional Arbitration
Branch, and the Labor Arbiter handling the same of such dispose of the primary dispute. To hold the contrary may
assumption or certification, whereupon all proceedings even lead to the absurd and undesirable result wherein the
before the Labor Arbiter concerning such cases shall cease Secretary and the labor arbiter concerned may have
and the Labor Arbiter shall await instructions from the diametrically opposed rulings. As we have said, "(i)t is
Minister (Secretary) or the Commission. fundamental that a statute is to be read in a manner that
would breathe life into it, rather than defeat it." 10
The foregoing provisions persuade us that the Secretary did
not gravely abuse his discretion when he issued the In fine, the issuance of the assailed orders is within the
questioned orders. province of the Secretary as authorized by Article 263 (g) of
the Labor Code and Article 217 (a) (1) and (5) of the same
As early as 1913, this Court laid down in Herrera vs. Baretto, Code, taken conjointly and rationally construed to subserve
et al., 7 the fundamental normative rule that jurisdiction is the objective of the jurisdiction vested in the Secretary.
the authority to bear and determine a cause the right to
act in a case. However, this should be distinguished from the Our pronouncement on this point should be distinguished
exercise of jurisdiction. The authority to decide a case at all from the situation which obtained and our consequent ruling
and not the decision rendered therein is what makes up in Servando's, Inc. vs. The Secretary of Labor and
11
jurisdiction. Where there is jurisdiction over the person and Employment, et al. wherein we referred to the appropriate
the subject matter, the decision of all other questions arising labor arbiter a case previously decided by the Secretary. The
in the case is but an exercise of that jurisdiction. 8 said case was declared to be within the exclusive jurisdiction
of the labor arbiter since the aggregate claims of each of the
In the present case, the Secretary was explicitly granted by employees involved exceeded P5,000.00. In Servando, the
Article 263 (g) of the Labor Code the authority to assume Secretary invoked his visitorial and enforcement powers to
jurisdiction over a labor dispute causing or likely to cause a assume jurisdiction over the case, the exclusive and original
strike or lockout in an industry indispensable to the national jurisdiction of which belongs to the labor arbiter. We said that
interest, and decide the same accordingly. Necessarily, this to uphold the Secretary would empower him, under his
authority to assume jurisdiction over the said labor dispute visitorial powers, to hear and decide an employee's claim of
must include and extend to all questions and controversies more than P5,000.00. We held that he could not do that and
arising therefrom, including cases over which the labor we, therefore, overruled him.
arbiter has exclusive jurisdiction.
In the present case, however, by virtue of Article 263 (g) of
Moreover, Article 217 of the Labor Code is not without, but the Labor Code, the Secretary has been conferred jurisdiction
contemplates, exceptions thereto. This is evident from the over cases which would otherwise be under the original and
opening proviso therein reading "(e)xcept as otherwise exclusive jurisdiction of labor arbiters. There was an existing
provided under this Code . . ." Plainly, Article 263 (g) of the labor dispute as a result of a deadlock in the negotiation for a
Labor Code was meant to make both the Secretary (or the collective bargaining agreement and the consequent strike,
various regional directors) and the labor arbiters share over which the Secretary assumed jurisdiction pursuant to
jurisdiction, subject to certain conditions. 9 Otherwise, the Article 263 (g) of the Labor Code. The three NLRC cases were
Secretary would not be able to effectively and efficiently
just offshoots of the stalemate in the negotiations and the Moreover, the rule is that all doubts in the interpretation and
strike. We, therefore, uphold the Secretary's order to implementation of labor laws should be resolved in favor of
consolidate the NLRC cases with the labor dispute pending labor. In upholding the assailed orders of the Secretary, the
before him and his subsequent assumption of jurisdiction Court is only giving meaning to this rule. The Court should
over the said NLRC cases for him to be able to competently help labor authorities provide workers immediate access to
and efficiently dispose of the dispute in its totality. their rights and benefits, without being hampered by
arbitration or litigation processes that prove to be not only
Petitioner's thesis that Section 6, Rule V of the Revised Rules nerve-wracking, but financially burdensome in the long
of the NLRC is null and void has no merit. The aforesaid rule run. 13 Administrative rules of procedure should be construed
has been promulgated to implement and enforce Article 263 liberally in order to promote their object and assist the
(g) of the Labor Code. The rule is in harmony with the parties, especially the workingman, in obtaining just, speedy,
objectives sought to be achieved by Article 263 (g) of the and inexpensive determination of their respective claims and
Labor Code, particularly the Secretary's assumption of defenses. By virtue of the assailed orders. The Union and its
jurisdiction over a labor dispute and his subsequent members are relieved of the burden of litigating their
disposition of the same in the most expeditious and interrelated cases in different tribunals.
conscientious manner. To be able to completely dispose of a
labor dispute, all its incidents would have to be taken into WHEREFORE. there being no grave abuse of discretion
consideration. Clearly, the purpose of the questioned committed by the Secretary of Labor and Employment, the
regulation is to carry into effect the broad provisions of petition at bar is hereby DISMISSED.
Article 263 (g) of the Labor Code.
SO ORDERED.
By and large, Section 6, Rule V of the Revised Rules of the
NLRC is germane to the objects and purposes of Article 263
(g) of the Labor Code, and it is not in contradiction with but
conforms to the standards the latter requires. Thus, we hold
that the terms of the questioned regulation are within the
statutory power of the Secretary to promulgate as a
necessary implementing rule or regulation for the
enforcement and administration of the Labor Code, in
accordance with Article 5 of the same Code.
Ross, Selph, Salcedo, Del Rosario, Bito & Misa for petitioners.
Leonardo C. Fernandez and Cipriano Cid & Associates for
respondents.
G.R. No. L-25471 March 27, 1968 (b) his persistent refusal to disaffiliate from complainant
union;
BENGUET CONSOLIDATED, INC., STANLEY WILLIMONT,
EUGENE KNEEBONE, C.W. HEROLD, A.P. DAVIDSON, (c) his petitions for the betterment of his co-employees for
G.N. WRIGHT and O.M. WESTERFIELD, petitioners, which he was discriminated by the company;1wph1.t
Petitioners filed their answer on September 28, 1963 with the exception of complainant Andrada who, although he
denying the alleged discrimination against respondent was reclassified from clerk second class to clerk first class,
Andrada and the alleged unjust refusal on their part to did not receive any corresponding increase in his pay (Exh.
implement the wage scale under the Collective Bargaining "1").
Agreements.
Then, on or about January 1, 1955, he was transferred
Issues having been joined, trial was conducted. On from the Accounting Department, clerk first class, to the
March 23, 1965, Associate Judge Amando Bugayong before Purchasing Department also as clerk first class with the same
whom the hearings were made, rendered decision finding salary of P97.20 per month or P3.24 per day (Exh. "E"). His
petitioners guilty of unfair labor practice based on the assignment in the Purchasing Department was recommended
following of facts:2 by S.J. Willimont, his former department head, and C.W.
Herold, head of the Purchasing Department, and approved by
Respondent Benguet Consolidated, Inc., is a domestic A.P. Davidson, General Superintendent. He was assigned to
corporation engaged in the mining industry with respondents replace Ramon M. Alvia, a bodeguero performing invoice
Stanley Willimont, Eugene Kneebone, C.W. Herold, G.N. clearing duties who resigned December 19, 1954 and who
Wright, O.M. Westerfield, A.P. Davidson and William Johnson was receiving a salary of P4.60 per day (Exh. "E-1").
as its officers. Complainant BCI Employees and Workers
Union (PAFLU) is a legitimate labor union while complainant To support his claim that he was discriminated against
Donaciano Andrada is a member thereof. because of his militant union activities, complainant Andrada
testified that sometime after he, together with several
Prior to December 19, 1954, complainant Andrada was others, petitioned the respondent company for a
a payroll clerk in the respondent Company with a salary of reclassification and readjustment of their wages, as first class
P3.24 per day. On August 28, 1954, he and several others clerk (Exh. "B") he brought the matter to the attention of his
petitioned the respondent company that they be given the union, then the Benguet-Balatoc Workers Union and
rates of pay as prescribed in the collective bargaining accordingly the latter, through Braulio Oximana, union
contract. It appears that at that time there was an existing steward, wrote a letter dated October 6, 1954 (Exh. "F") to
collective bargaining contract between the respondent the respondent company requesting information as to the
company then operating under the trade name Benguet action taken by said respondent on the aforesaid petition for
Consolidated Mining Company and Balatoc Mining Company reclassification. He also testified that an or about October 8,
and the Benguet-Balatoc Workers Union of which complainant 1954, he had occasion to talk with Stanley Willimont, then
Andrada was then a member. Said contract (Exh. "A") his department head, and the latter told him that had he not
provides for the wage scales of the workers and pursuant brought his petition to the union, his future would have been
thereto, the wage scale of a payroll clerk, first class category, better; and that as a matter of fact he was the only
was P3.56 per day (Exh. "A-1"). Thus, complainant Andrada, employee who did not receive any adjustment in his salary
together with several others, requested for adjustment of although he was placed in the first class clerk category.
their wages (Exh. "B") and the respondent company, in Complaint Andrada further testified that sometime in 1955
compliance thereto made the necessary salary adjustment after he was transferred to the Purchasing Department, as
replacement of Ramon M. Alvia, a "bodeguero" performing kinds of categories and that he was not benefitted by the
invoice clearing duties and who was receiving a salary of increase; that he asked O.M. Westerfield, his department
P4.60 per day, he received the same salary as payroll clerk head, to give him also an increase, but the latter said to him,
which was P97.20 per month or P3.24 per day. So, he "If you will not stop asking or complaining about your rate,
approached C. W. Herold, head of the Purchasing Mr. Crosby will step over your head."
Department, and complained to the latter about his situation
hoping that he will be extended the proper wage xxx xxx x x x1wph1.t
appertaining to the position of "bodeguero" as provided in Accordingly, petitioners were ordered "to implement
the collective bargaining contract, but nothing came out of the salary scale with respect to the daily wage of
his request. complainant Donaciano S. Andrada from 1954 until his wage
He also declared that on or about August 26, 1967, on reaches the level as embodied in the collective bargaining
the occasion of a grievance meeting concerning the agreements between the Benguet-Balatoc Workers Union, the
adjustment of his wages, Eugene Kneebone, one of the complainant labor organization, and the respondent
respondent herein, said to him, "am spending much of my company."
time for your complaint. My time is precious. I tell you that as Petitioners subsequently moved for reconsideration,
long as I am still connected with Benguet Consolidated, Inc., which the lower court, en banc, denied altho one of the five
this office cannot give you any change of classification judges dissented. They then elevated the case to this Court
whatsoever"; That Mr. Kneebone further said, "By for review by way of certiorari. Pending the appeal and at
representing your grievance to the union, you are cutting petitioners' instance, this Court issued preliminary injunction
your neck entirely, and I tell you to think it over or retract to prevent immediate execution of the judgment.
your complaint"; that complaint again met Mr. Kneebone who
said to him, "The question with you is, you are too vocal of Petitioners' principal submission, in the first three
your union activities. Had you shut your mouth, your case errors assigned, is that they were held liable for
should not have happened like that." He also testified that discriminating against respondent Andrada in 1954 on
sometime in 1958, he was elected district governor for account of militant union activities which, however, were
Balatoc and on July 28, 1958 the union's counsel sent a letter conducted in 1958. This is erroneous on two counts. First,
to the respondent company informing the latter of the what was charged was not discrimination committed in 1954
appointment of complainant Andrada as union steward for alone but rather continuing acts of discrimination committed
Balatoc (Exh. "D"); that as district governor and steward of "starting 1954" as alleged in par. 3 of the complaint for unfair
the union, he was most often alone in representing the labor practice. The charge of discrimination, consisting in
workers in his district; that sometime in 1959, the respondent petitioners' refusal to implement the proper salary scale as to
company offered to transfer him as "bodeguero" to the Kias respondent Andrada is adequately supported by the following
Dynamite Storage area, but the same was intended to take findings of the court a quo. In August, 1954, Andrada's
him far from the company where he performs his duties as category was changed to clerk first class but he received no
union district steward. Complaint further testified that salary adjustment unlike the other employees. In 1955, after
sometime in July, 1962, there was an increase of P.24 to all he was transferred to the Purchasing Department and was
assigned to perform the work done by one Ramon Alvia who pay rate to be the same. This finding of the court is based on
held the category of bodeguero (with a higher pay rate) the admission of Willimont, one co-petitioner company's own
respondent Andrada still received no corresponding pay officials.
increase. In July, 1962, there was a general pay hike but
Andrada was not benefitted. In fine, this Court finds that the findings of fact below
furnish satisfactory answers to the questions presented here
Second, the militant union activity, involved is not by petitioners. And there is not even a slight suggestion from
Andrada's having been elected as Union District Governor them that these findings are not based on substantial
and Steward and his actuations as such, but rather Andrada's evidence. Hence, said findings are controlling.
having sought the help of his union in pursuing what he
believed was his right to salary adjustment. It should be WHEREFORE, the judgment sought to be reviewed is
noted that the damaging statement on this score 3imputed to hereby affirmed and the preliminary injunction previously
co-petitioners Stanley Willimont and Eugene Kneebone by issued is hereby revoked and set aside. Costs against
respondent Andrada in his testimony to which the court a petitioners. So ordered.
quo gave credence, were never denied or controverted by
them. And it is unquestionable that the seeking of the union's
help by one of its members in connection with the latter's
correct wages constitutes proper union activity.
2. The collection agents do not have to devote their time The plain language of the agreement reveals that the
exclusively for SINGER. There is no prohibition on the part of designation as collection agent does not create an
the collection agents from working elsewhere. Nor are these employment relationship and that the applicant is to be
considered at all times as an independent contractor. This is
consistent with the first rule of interpretation that the literal of or imposed upon employees." (Investment Planning Corp.
meaning of the stipulations in the contract controls (Article of the Phil. v. Social Security System, supra)
1370, Civil Code; La Suerte Cigar and Cigarette Factory v.
Director of Bureau of Labor, Relations, 123 SCRA 679 [1983]). The last and most important element of the control test is not
No such words as "to hire and employ" are present. satisfied by the terms and conditions of the contracts. There
Moreover, the agreement did not fix an amount for wages nor is nothing in the agreement which implies control by the
the required working hours. Compensation is earned only on Company not only over the end to be achieved but also over
the basis of the tangible results produced, i.e., total the means and methods in achieving the end (LVN Pictures,
collections made (Sarra v. Agarrado, 166 SCRA 625 [1988]). Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).
In Investment Planning Corp. of the Philippines v. Social The Court finds the contention of the respondents that the
Security System, 21 SCRA 924 [1967] which involved union members are employees under Article 280 of the Labor
commission agents, this Court had the occasion to rule, thus: Code to have no basis. The definition that regular employees
We are convinced from the facts that the work of petitioner's are those who perform activities which are desirable and
agents or registered representatives more nearly necessary for the business of the employer is not
approximates that of an independent contractor than that of determinative in this case. Any agreement may provide that
an employee. The latter is paid for the labor he performs, one party shall render services for and in behalf of another
that is, for the acts of which such labor consists the former is for a consideration (no matter how necessary for the latter's
paid for the result thereof . . . . business) even without being hired as an employee. This is
precisely true in the case of an independent contractorship
xxx xxx xxx as well as in an agency agreement. The Court agrees with
the petitioner's argument that Article 280 is not the yardstick
Even if an agent of petitioner should devote all of his time for determining the existence of an employment relationship
and effort trying to sell its investment plans he would not because it merely distinguishes between two kinds of
necessarily be entitled to compensation therefor. His right to employees, i.e., regular employees and casual employees,
compensation depends upon and is measured by the tangible for purposes of determining the right of an employee to
results he produces." certain benefits, to join or form a union, or to security of
Moreover, the collection agent does his work "more or less at tenure. Article 280 does not apply where the existence of an
his own pleasure" without a regular daily time frame imposed employment relationship is in dispute.
on him (Investment Planning Corporation of the Philippines v. Even Section 8, Rule 8, Book III of the Omnibus Rules
Social Security System, supra; See alsoSocial Security Implementing the Labor Code does not apply to this case.
System v. Court of Appeals, 30 SCRA 210 [1969]). Respondents assert that the said provision on job contracting
The grounds specified in the contract for termination of the requires that for one to be considered an independent
relationship do not support the view that control exists "for contractor, he must have "substantial capital or investment
the causes of termination thus specified have no relation to in the form of tools, equipment, machineries, work premises,
the means and methods of work that are ordinarily required and other materials which are necessary in the conduct of his
business." There is no showing that a collection agent needs The assumption of jurisdiction by the DOLE over the case is
tools and machineries. Moreover, the provision must be justified as the case was brought on appeal by the petitioner
viewed in relation to Article 106 of the Labor Code which itself which prayed for the reversal of the Order of the Med-
provides: Arbiter on the ground that the union members are not its
employees. Hence, the petitioner submitted itself as well as
Art. 106. Contractor or subcontractor. Whenever an the issue of existence of an employment relationship to the
employer enters into a contract with another person for the jurisdiction of the DOLE which was faced with a dispute on an
performance of the former's work, the employees of the application for certification election.
contractor and of the latter's subcontractor, if any, shall be
paid in accordance with the provisions of this Code. The Court finds that since private respondents are not
employees of the Company, they are not entitled to the
In the event that the contractor or subcontractor fails to pay constitutional right to join or form a labor organization for
the wages of his employees in accordance with this Code, the purposes of collective bargaining. Accordingly, there is no
employer shall be jointly and severally liable with his constitutional and legal basis for their "union" to be granted
contractor or subcontractor to such employees to the extent their petition for direct certification. This Court made this
of the work performed under the contract, in the same pronouncement in La Suerte Cigar and Cigarette Factory
manner and extent that he is liable to employees directly v. Director of Bureau of Labor Relations, supra:
employed by him.
. . . The question of whether employer-employee relationship
xxx xxx xxx exists is a primordial consideration before extending labor
There is "labor-only" contracting where the person supplying benefits under the workmen's compensation, social security,
workers to an employer does not have substantial capital or medicare, termination pay and labor relations law. It is
investment in the form of tools, equipment, machineries, important in the determination of who shall be included in a
work premises, among others, and the workers recruited and proposed bargaining unit because, it is the sine qua non, the
placed by such persons are performing activities which are fundamental and essential condition that a bargaining unit be
directly related to the principal business of such employer. In composed of employees. Failure to establish this juridical
such cases, the person or intermediary shall be considered relationship between the union members and the employer
merely as an agent of the employer who shall be responsible affects the legality of the union itself. It means the
to the workers in the same manner and extent as if the latter ineligibility of the union members to present a petition for
were directly employed by him." (p. 20) certification election as well as to vote therein . . . . (At p.
689)
It can readily be seen that Section 8, Rule 8, Book Ill and
Article 106 are relevant in determining whether the employer WHEREFORE, the Order dated June 14,1989 of Med-Arbiter
is solidarily liable to the employees of an alleged contractor Designate Felix B. Chaguile, Jr., the Resolution and Order of
and/or sub-contractor for unpaid wages in case it is proven Secretary Franklin M. Drilon dated November 2, 1989 and
that there is a job-contracting situation. December 14, 1989, respectively are hereby REVERSED and
SET ASIDE. The petition for certification election is ordered
dismissed and the temporary restraining order issued by the
Court on December 21, 1989 is made permanent.
G.R. No. 70705 August 21, 1989
SO ORDERED.
MOISES DE LEON, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and LA
TONDE;A INC., respondents.
FERNAN, C.J.:
This petition for certiorari seeks to annul and set aside: (1)
the majority decision dated January 28, 1985 of the National
Labor Relations Commission First Division in Case No. NCR-
83566-83, which reversed the Order dated April 6,1984 of
Labor Arbiter Bienvenido S. Hernandez directing the
reinstatement of petitioner Moises de Leon by private
respondent La Tonde;a Inc. with payment of backwages and
other benefits due a regular employee; and, (2) the
Resolution dated March 21, 1985 denying petitioner's motion
for reconsideration.
The fallacy of the reasoning is readily apparent in view of the Furthermore, the petitioner performed his work of painting
admitted fact that petitioner's activities included not only and maintenance activities during his employment in
painting but other maintenance work as well, a fact which respondent's business which lasted for more than one year,
even the respondent Commission, like the private until early January, 1983 when he demanded to be
respondent, also expressly recognized when it stated in its regularized and was subsequently dismissed. Certainly, by
decision that, 'Although complainant's (petitioner) work was this fact alone he is entitled by law to be considered a regular
mainly painting, he was occasionally asked to do other odd employee. And considering further that weeks after his
jobs in connection with maintenance work. 12 It misleadingly dismissal, petitioner was rehired by the company through a
assumed that all the petitioner did during his more than one labor agency and was returned to his post in the
year of employment was to paint a certain building of the Maintenance Section and made to perform the same
respondent company, whereas it is admitted that he was activities that he used to do, it cannot be denied that as
given other assignments relating to maintenance work activities as a regular painter and maintenance man still
besides painting company building and equipment. exist.
It is self-serving, to say the least, to isolate petitioner's It is of no moment that petitioner was told when he was hired
painting job to justify the proposition of casual employment that his employment would only be casual, that he was paid
and conveniently disregard the other maintenance activities through cash vouchers, and that he did not comply with
of petitioner which were assigned by the respondent regular employment procedure. Precisely, the law overrides
company when he was not painting. The law demands that such conditions which are prejudicial to the interest of the
the nature and entirety of the activities performed by the worker whose weak bargaining position needs the support of
employee be considered. In the case of petitioner, the the State. That determines whether a certain employment is
painting and maintenance work given him manifest a regular or casual is not the will and word of the employer, to
treatment consistent with a maintenance man and not just a which the desperate worker often accedes, much less the
painter, for if his job was truly only to paint a building there procedure of hiring the employee or the manner of paying his
would have been no basis for giving him other work salary. It is the nature of the activities performed in relation
assignments In between painting activities. to the particular business or trade considering all
circumstances, and in some cases the length of time of its
It is not tenable to argue that the painting and maintenance performance and its continued existence.
work of petitioner are not necessary in respondent's business
of manufacturing liquors and wines, just as it cannot be said Finally, considering its task to give life and spirit to the
that only those who are directly involved in the process of Constitutional mandate for the protection of labor, to enforce
producing wines and liquors may be considered as necessary and uphold our labor laws which must be interpreted liberally
employees. Otherwise, there would have been no need for in favor of the worker in case of doubt, the Court cannot
the regular Maintenance Section of respondent company's understand the failure of the respondent Commission to
perceive the obvious attempt on the part of the respondent
company to evade its obligations to petitioner by dismissing
the latter days after he asked to be treated as a regular
worker on the flimsy pretext that his painting work was
suddenly finished only to rehire him indirectly weeks after his
dismissal and assign him to perform the same tasks he used
to perform. The devious dismissal is too obvious to escape
notice. The inexplicable disregard of established and decisive
facts which the Commission itself admitted to be so, in
justifying a conclusion adverse to the aggrieved laborer
clearly spells a grave abuse of discretion amounting to lack
of jurisdiction.
SO ORDERED.
extent of the liability of private respondent? These are the
questions raised in this petition.
Is there an employer-employee relationship between Private respondents, on the other hand, denied the existence
petitioners and private respondent Hi-Line Timber, Inc. or of an employer-employee relationship between the company
merely an employer-independent contractor relationship and the petitioners claiming that the latter are under the
between said private respondent and petitioner Isagani Ecal employ of an independent contractor, petitioner Isagani Ecal,
with the other petitioners being mere contract workers of an employee of the company until his resignation on
Ecal? In the case of the latter, is Ecal engaged in "job" February 4, 1987.
contracting or "labor-only" contracting? What then is the
After submission of the supplemental position papers and
other evidence by the parties, the labor arbiter rendered his
decision dated June 10, 1988 finding no employer-employee February 1987 and who tendered his resignation on the latter
relationship between the parties. Thus, he dismissed the two date, were not at all employees of respondents; secondly, the
cases for lack of merit. 1 payrolls of the respondents do not indicate that said
complainants were employees of the respondents; thirdly,
On appeal, public respondent National Labor Relations the Sinumpaang Salaysay of Jose Mendoza, the Secretary-
Commission (NLRC) affirmed the aforesaid decision of the Treasurer of the Hi-Line Workers Union-Confederation of Free
labor arbiter in a resolution dated October 2, 1989. 2 Laborers (CFL), a registered labor Union under Reg. Cert. No.
The motion for reconsideration of petitioners was denied in a (FED-425)-6756-11, issued March, 1987, to the effect that
resolution dated March 12, 1990. 3 none of the complainants, except Isagani Ecal, were listed as
members of the union and/or employees of respondents; and
In this petition for certiorari, petitioners primarily question lastly, two (2) Sinumpaang Salaysay dated 22 April 1988
the finding of the public respondent NLRC that no employer- executed by respondents' company guard Honorio T. Battung
employee relationship existed between them and Hi-Line and Foreman Clemente S. Sales, respectively, attesting that
Timber, Inc. They contend that petitioner Isagani Ecal is not it was only Isagani Ecal who worked with respondents but
an independent contractor but a mere employee of Hi-Line resigned on 4 February 1987 to work as (an) independent
Line. contractor. 5
In response, the Solicitor General points out that the issue of Petitioners claim that the NLRC based its decision solely on
whether or not an employer-employee relationship exists the evidence aforestated and completely ignored the
between the parties is a question of fact and the findings of evidence they presented thus denying them due process.
the labor arbiter and the NLRC on this issue are conclusive The Court carefully examined the records of the case and
upon this Court if they are supported by substantial finds that the NLRC limited itself to a superficial evaluation of
evidence 4 as in this case. the relationship of the parties based mainly on the
aforestated documents with emphasis on the company
The NLRC ruled payrolls without regard to the particular circumstances of the
case.
We have carefully examined and evaluated the basis of the
decision of the Labor Arbiter and to Our mind his factual The finding of the NLRC that Isagani Ecal is no longer an
findings are indeed supported by substantial evidence. Thus, employee of Hi-Line line is amply supported by the evidence
we cite a few of the clear and convincing evidence and on record. His resignation letter dated February 4, 1987
record which compelled the Labor Arbiter to disregard the stating "ako po ay magreresign na sa aking trabaho bilang
claim of the complainants that there was (an) employer- "laborer" sapagka't nakita ko na mas malaki ang kikitain
employee relationship between the contending parties. kung mangongontrata na lamang " 6speaks for itself. This
Firstly, the affidavit of respondents' personnel officer, was unsuccessfully rebutted by petitioners.
Elizabeth Natividad, dated 22 April 1988, clearly attesting to
the fact that complainants, except Isagani Ecal, who worked To determine whether there exists an employer-employee
at their plant at Bocaue, Bulacan, from 24 April 1986 up to 4 relationship, the four-way test should be applied, namely: (1)
selection and engagement of the employee; (2) the payment very limited supervision as there are only so many ways of
of wages; (3) the power of dismissal; and (4) the power to segregating lumber according to their sizes and of loading
control the employee's conductthe last being the most and unloading them in the dryer so that all that the company
important element. 7 Neither the NLRC nor the labor arbiter has to do is to check on the results of their work.
utilized these guides in their disposition of the complaint.
The foregoing observation suggests that there is a certain
The records show that Hi-Line does not choose the workers relationship existing between the parties although a clear-cut
but merely accepts whoever may be selected by petitioner characterization of such relationship whether it is an
Isagani Ecal. Petitioners are not included in the payroll. employer-employee relationship or an employer-independent
Instead a lump sum of P1,400.00 is given to Isagani Ecal or contractor relationship is unavailing. Hence, a closer
his representative Solomon de los Santos, every four days, to scrutiny of said relationship is in order.
cover their wages for the period which the petitioners divide
among themselves. Petitioners urge that even assuming arguendo that Isagani
Ecal is an independent contractor, he should be considered
Private respondents allege that Isagani Ecal customarily only a labor supplier who is deemed an agent of the company
removes some of his laborers at the Hi-Line sawmill and so that petitioners should enjoy the status of being its
assigns them to other sawmills; however, there was no employees; therefore, Hi-Line should be held liable for
evidence adduced to show that indeed Ecal regularly or even illegally dismissing petitioners and for the non-payment of
once transferred some of his workers to other sawmills. benefits due them. Private respondents, however, maintain
Petitioners worked at the company compound at Wakas, that Isagani Ecal is an independent contractor or a job
Bocaue, Bulacan, at least eight hours a day, for seven days a contractor.
week so that it would be impossible for them to find time to
work in some other sawmill. On June 6, 1987, the company The Solicitor General adopts the theory that Ecal is an
unilaterally terminated the services of petitioners without independent contractor. However, he faults the labor arbiter
notice allegedly on the ground that its contract with Isagani for his failure to determine the benefits due petitioners, an
Ecal has already expired. issue raised by the latter, on the ground that Hi-Line, being
an indirect employer, is jointly and severally liable with
As to the matter of control, it would seem that petitioners Isagani Ecal to the extent of the work performed by the
were mostly left on their own to devise the most expeditious employees as if they were directly employed by it. He,
way of segregating lumber materials as to sizes and of therefore, seeks the remand of the case to the labor arbiter
loading and unloading the same in the chamber for drying. for determination of the unpaid benefits of petitioners.
However, their task is performed within the work premises of
Hi-Line, specifically at its Kiln Drying Section, so it cannot be The pertinent provisions of the Labor Code, as amended, are:
said that no amount of control and supervision is exerted Art. 106. Contractor or subcontractor. Whenever an
upon them by the company through their foremen, private employer enters into a contract with another person for the
respondent Matchuka and Clemente S. Sales. Moreover, the performance of the former's work, the employees of the
very nature of the task performed by petitioners requires
contractor and of the latter's subcontractor, if any, shall be Under the provisions of Article 106, paragraphs 1 and 2, an
paid in accordance with the provisions of this Code. employer who enters into a contract with a contractor for the
performance of work for the employer does not thereby
In the event that the contractor or subcontractor fails to pay establish an employer-employee relationship between
the wages of his employees in accordance with this Code, the himself and the employees of the contractor. The law itself,
employer shall be jointly and severally liable with his however, creates such a relationship when a contractor fails
contractor or subcontractor to such employees to the extent to pay the wages of his employees in accordance with the
of the work performed under the contract, in the same Labor Code, and only for this limited purpose, i.e. to ensure
manner and extent that he is liable to employees directly that the latter will be paid the wages due them. 8
employed by him.
On the other hand, the legal effect of a finding that a
The Secretary of Labor may, by appropriate regulations, contractor is merely a "labor only" contractor was explained
restrict or prohibit the contracting out of labor to protect the in Philippine Bank of Communications vs. National Labor
rights of workers established under this Code. In so Relations Commission, et al., 9
prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job . . . The "labor-only" contractor i.e., "the person or
contracting as well as differentiations within these types of intermediary" is considered "merely as an agent of the
contracting and determine who among the parties involved employer." The employer is made by the statute responsible
shall be considered the employer for purposes of this Code, to the employees of the "labor only" contractor as if such
to prevent any violation or circumvention of any provision of employee had been directly employed by the employer.
this Code. Thus, where "labor-only" contracting exists in a given case,
the statute itself implies or establishes an employer-
There is "labor-only" contracting where the person supplying employee relationship between the employer (the owner of
workers to an employer does not have substantial capital or the project) and the employees of the "labor-only" contractor,
investment in the form of tools, equipment, machineries, this time for a comprehensive purpose: "employer for
work premises, among others, and the workers recruited and purposes of this Code, to prevent any violation or
placed by such person are performing activities which are circumvention of any provision of this Code." The law in
directly related to the principal business of such employer. In effect holds both the employer and the 'labor-only' contractor
such cases, the person or intermediary shall be considered responsible to the latter's employees for the more effective
merely as an agent of the employer who shall be responsible safeguarding of the employees' rights under the Labor Code.
to the workers in the same manner and extent as if the latter
were directly employed. Sections 8 and 9, Rule VIII, Book III of the Omnibus Rules
implementing the Labor Code set forth the distinctions
Art. 107. Indirect Employer. The provisions of the between "job" contracting and "labor-only" contracting
immediately preceding Article shall likewise apply to any
person, partnership, association or corporation which, not Sec. 8. Job contracting. There is job contracting
being an employer, contracts with an independent contractor permissible under the Code if the following conditions are
for the performance of any work, task, job or project. met:
(1) The contractor carries on an independent business and even afford to have his daughter treated for malnutrition. He
undertakes the contract work on his own account under his resigned and became a supplier of laborers for Hi-Line,
own responsibility according to his own manner and method, because he saw an opportunity for him to earn more than
free from control and direction of his employer or principal in what he was earning while still in the payroll of the company.
all matters connected with the performance of the work At the same time, he continued working for the company as a
except as to the results thereof, and laborer at the kiln drying section. He definitely does not have
sufficient capital to invest in tools and machineries. Private
(2) The contractor has substantial capital or investment in respondents, however, claim that the business contracted by
the form of tools, equipments, machineries, work premises, Ecal did not require the use of tools, equipment and
and other materials which are necessary in the conduct of his machineries and the contracted task had to be executed in
business. the premises of Hi-Line. Precisely, the job assigned to
Sec. 9. Labor-only contracting (a) Any person who petitioners has to be executed within the work premises of
undertakes to supply workers to an employer shall be Hi-Line where they use the machineries and equipment of the
deemed to be engaged in labor-only contracting where such company for the drying of lumber materials. Even the
person: company's personnel officer Elizabeth Natividad admitted
that Ecal resigned in order to supply manpower to the
(1) Does not have substantial capital or investment in the company on a task basis. 10 By the very allegations of private
form of tools, equipments, machineries, work premises and respondents, it is quite clear that Isagani Ecal only supplies
other materials; and manpower to Hi-Line within the context of "labor-only"
contracting as defined by law.
(2) The workers recruited and placed by such person are
performing activities which are directly related to the There is also no question that the task performed by
principal business or operations of the employer in which petitioners is directly related to the business of Hi-Line.
workers are habitually employed. Petitioners were assigned to sort out the lumber materials
whether wet or fresh kiln as to sizes and to carry them from
(b) Labor-only contracting as defined herein is hereby the stockpile to the dryer where they are loaded for drying
prohibited and the person acting as contractor shall be after which they are unloaded. The work of petitioners is an
considered merely as an agent or intermediary of the integral part of the operation of the sawmill of Hi-Line without
employer who shall be responsible to the workers in the which production and company sales will suffer.
same manner and extent as if the latter were directly
employed by him. A finding that Isagani Ecal is a "labor-only" contractor is
equivalent to a finding that an employer-employee
xxx xxx xxx relationship exists between the company and Ecal including
the latter's "contract workers" herein petitioners, the
Applying the foregoing provisions, the Court finds petitioner
relationship being such as provided by the law itself. 11
Isagani Ecal to be a "labor-only" contractor, a mere supplier
of manpower to Hi-Line. Isagani Ecal was only poor laborer at
the time of his resignation on February 4, 1987 who cannot
Indeed, the law prohibits "labor-only" contracting and creates guards. The argument of private respondents that the
an employer- employee relationship for the protection of the contract of Ecal with the company expired cannot be
laborers. The Court had in fact observed that businessmen, sustained. Petitioners may only be dismissed for an
with the aid of lawyers, have tried to avoid the bringing authorized or just cause and after due process.
about of an employer-employee relationship in some of their
enterprises because that juridical relation spawns obligations At this juncture, We note that petitioners and private
connected with workmen's compensation, social security, respondents allege conflicting dates of employment of the
medicare, minimum wage, termination pay and unionism. 12 former. Petitioners claim that as early as March or May, 1986,
they have already been working with Hi-Line Line, while
This unscrupulous practice is quite evident in the case at bar. private respondents contend that it was only in April, 1987
It is company policy that once an employee is assigned to the that they had been engaged by the company. This Court is
kiln drying section, he is no longer included in the payroll and not a trier of facts and there is not enough basis in the
is then paid on a task basis, even if he had long been records to enable Us to come up with definite dates of
employed with the company. Since the employee will no employment. However, whatever be the date of their
longer be included in the payroll, it becomes easy for the employment, petitioners will still be considered employees of
company to deny the regular employment of such a worker the company. If petitioners had started their employment in
and is able to avoid whatever obligations it may have under 1986, they would have rendered more than 1 year of service
an employer-employee relationship. Moreover, Hi-Line limits at the time of their dismissal and, therefore, should be
the period of undertaking to only four days presumably to considered regular employees. Even if they have been
make termination of the services of petitioners easier and to engaged only in April of 1987, they will still be deemed
prevent them from attaining regular status. The company regular employees for as earlier indicated, Isagani Ecal is a
had no doubt taken advantage of these laborers in order to "labor-only" contractor and petitioners perform activities
escape liability for benefits and privileges accruing to one directly related to the principal business of Hi-Line Line.
holding a regular employment. Without a law prohibiting
"labor-only" contracting to protect the rights of labor, these Petitioners, having been illegally dismissed on June 6, 1987,
poor workers will always be at the mercy of the employer. are entitled to backwages equivalent to three years without
qualifications and deductions in line with prevailing
Since petitioners perform tasks which are usually necessary jurisprudence.
or desirable in the main business of Hi-Line, they should be
deemed regular employees of the latter 13 and as such are WHEREFORE, the decision of public respondent NLRC is
entitled to all the benefits and rights appurtenant to regular hereby REVERSED and SET ASIDE. Private respondent Hi-Line
employment. Timber, Inc. is hereby ordered to reinstate petitioners to their
former positions with backwages equivalent to three (3)
Being regular employees, they should have been afforded years without deductions and qualifications. The records of
due process prior to their dismissal. 14 Instead they were the case are remanded to the labor arbiter for determination
unceremoniously dismissed on June 6, 1987 when they were of the unpaid benefits due petitioners. No costs.
not allowed to enter the company's premises by the security
SO ORDERED.
G.R. No. 74969 May 7, 1990
FERNAN, C.J.:
The issue in this petition for certiorari is whether public on December 7, 1981 which was to take effect on even date
respondent National Labor Relations Commission committed with an agreed compensation of P21.36 a day.
grave abuse of discretion in reversing and setting aside the
decision of Labor Arbiter Domingo V. del Rosario dated June On March 6, 1982, private respondent posted a notice of
22, 1983 directing private respondent in Case No. NLRC-NCR- termination on its bulletin board to take effect the following
8-5215-82 entitled "Telesforo Magante, complainant, vs. day, March 7, 1989, which included petitioner and other
Constress Philippines, Inc., respondent" to reinstate employees as among those whose services were being
petitioner to his position with full backwages with all the terminated by private respondent. Petitioner was told that he
rights and benefits granted by law. In lieu of the aforesaid cannot work anymore because he is already old, that his
decision, public respondent commission entered a new contract had already expired and was not renewed being a
judgment dismissing petitioner's complaint for illegal project employee. The termination of petitioner and his fellow
dismissal on the ground that said petitioner is a project workers was reported to the Ministry of Labor.
employee whose employment terminated upon the Consequently, petitioner filed a complaint with the then
completion of the project to which he was assigned. 1 Ministry (now Department) of Labor and Employment for
The undisputed facts of the case as culled from the records of illegal dismissal. After the filing of the respective position
the case are: papers by the parties, Labor Arbiter Domingo del Rosario
rendered a decision 2 on June 22, 1983 with the following
Private respondent Constress Philippines Inc. is engaged in pronouncement:
the concrete structural business with address at Ortigas
Avenue, Pasig, Metro Manila. Petitioner Telesforo Magante, on The terms of the contract that complainant is a project
the other hand, was employed by the former as a carpenter worker is not the determining factor of the status of
from April 17, 1980 until his dismissal on March 6, 1982 complainant or any worker but the work performed by him
earning three hundred pesos (P300.00), more or less, a week and the place where he performed his assignment. The
excluding allowance and rendering about fourteen (14) hours contract entered into by respondent and complainant is more
of work daily from 7:00 in the morning to 10:00 in the of a scheme to evade its liability or obligation under the law.
evening. His work involved the making of molds (forma or WHEREFORE, respondent is directed to reinstate complainant
siding of cement post) for bridges, buildings, charcoal builder to his position with full backwages with all the rights and
sea file, and others. Apparently. petitioner was never benefits granted by law and by respondent Company. 3
assigned to work outside the plant of private respondent.
From the foregoing decision of the labor arbiter, private
Every three (3) months, petitioner was made to fill up and respondent filed an appeal before the National Labor
sign an employment contract relating to a particular phase of Relations Commission premised on the ground that the
work in a specific project. Allegedly, the terms of the contract termination of petitioner's employment was occasioned by
written in English were not understood by petitioner nor was the completion of the phase of work in the project for which
the same explained to him. The last hiring agreement he was specifically hired and that he was duly notified
entered into between petitioner and private respondent was thereof in compliance with the requirements of law.
Finding merit in the appeal, public respondent held that finding of the Labor Arbiter's decision that the contract
petitioners employment falls squarely within the purview of entered into by private respondent with the petitioner is
Policy Instructions No. 20, a regulation intended for more of a scheme to evade its liability or obligation under the
stabilizing employer-employee relations in the construction law by making it appear that said petitioner is a project to
industry which has aptly taken into consideration the unique project employee.
characteristics of respondent's business herein, quoting the
pertinent provisions as follows: The Solicitor-General, when required to file a Comment to the
instant petition, took the same stand as petitioner citing the
Generally, there are two types of employees in the case Fequirin et al. vs. National Labor Relations Commission,
construction industry namely: et al. 5 as the basis for considering petitioner as a regular and
permanent employee, who should therefore be reinstated to
1) Project employees, and his position with backwages. 6
2) Non-project employees In view of the Solicitor-General's contrary stand to the
Project employees are those employed in connection with a decision of public respondent National Labor Relations
particular construction project. . . . Commission, the latter was given an opportunity to file its
own comment to the petition. In the aforesaid comment,
Project employees are not entitled to termination pay if they public respondent defends its decision in line with Article 281
are terminated as a result of the completion of the project or of the Labor Code which provides the exception to regular
any phase thereof in which they are employed, regardless of and casual employment, that is, when the employment has
the number of projects in which they have been employed by been fixed for a specific project or undertaking the
a particular construction company. 4 completion or termination of which has been determined at
the time of the engagement of employment. Public
Public respondent further found that upon completion of a respondent contends that petitioner's case falls within the
particular phase of work in the project for which petitioner's exception and the Fegurin case relied upon by petitioner
services have been hired, his termination was indubitably for does not stand on all fours with the present case because the
cause. With these justifications, public respondent set aside complainants in said case had lengths of service for nine (9),
the appealed decision of the labor arbiter and entered a new eight (8) and six (6) years, the shortest being three (3) years.
judgment dismissing the complaint for lack of merit. In the instant case, petitioner worked only for over a year, his
Petitioner filed a motion for reconsideration of the aforesaid last contract lasting only a span of four (4) months.
decision but the same was denied. Furthermore, Article 281 of this Labor Code is intended for all
industries except the construction industry. Precisely, Policy
Petitioner now comes before Us by way of certiorari to set
Instruction No. 20 was promulgated for the reason that
aside the aforesaid decision of public respondent
problems of regularity of employment in the construction
promulgated on August 1, 1984 for having been issued with
industry has continued to plague it. This policy merely
grave abuse of discretion. It is asserted in the instant petition
implements the exception to Article 281 of the Labor Code. 7
that private respondent's argument that petitioner was only
hired for a fixed period of time cannot escape the factual
We find merit in the petition as We sustain the position of the assignments did not end on a project to project basis,
Solicitor-General that petitioner Telesforo Magante was a although the contrary was made to appear by private
regular employee of private respondent. respondent through the signing of separate employment
contracts allegedly for different projects because it is indeed
Article 281 of the Labor Code provides: obvious that petitioner continued to perform the same kind of
Art. 281. Regular and Casual Employment. The provisions work throughout his period of employment allegedly
of written agreement to the contrary notwithstanding and considered to have been done on a project to project basis.
regardless of the oral agreements of the parties, an Although petitioner had only rendered almost two years of
employment shall be deemed to be regular where the service, nevertheless this should not detract from his status
employee has been engaged to perform activities which are of being a regular employee because as correctly stated by
usually necessary or desirable in the usual business or trade the labor arbiter, the determining factor of the status of
of the employer except where the employment has been complainant-petitioner or any worker is the nature of the
fixed for a specific project or undertaking, the completion or work performed by the latter and the place where he
termination of which has been determined at the time of the performed his assignment.
engagement of the employee or where the work or service to
be performed is seasonal in nature and the employment is We have re-examined the case of Fegurin vs. National Labor
for the duration of the season. Relations Commission 8 and found that although the facts of
the said case are not on all fours with the instant petition
An employment shall be deemed to be casual if it is not there being a work pool to which the complaining employees
covered by the preceding paragraph:Provided, that, any therein belonged, nonetheless, the doctrine therein may be
employee who has rendered at least one year of service, similarly applied in the case at bar considering that the
whether such service is continuous or broken shall be nature of the work of petitioner herein and in said case also
considered a regular employee with respect to the activity in involved carpentry work and there was a continuous
which he is employed and his employment shall continue assignment of similar workload from project to project.
while such actually exists.
We held therein that the employment of petitioners with the
As aptly observed by the Solicitor-General, petitioner has company for several years [four (4) of whom for nine (9)
established that since the very inception of his employment years, one (1) for eight (8) years, another for six (6) years,
in 1980, he was never deployed from project to project of the shortest term being three (3) years] despite the shorter
private respondent but had been regularly assigned to employment periods specified in their notices of
perform carpentry work under the supervision of a certain employment, performing activities usually necessary or
Bernardo Padaon who, since 1964 until his resignation on desirable in the usual business of the company, shows that
January 2, 1982 worked for private respondent as the they are regular employees.
supervisor of its Carpentry Department. This goes to show
two things: that petitioner was assigned to perform tasks Moreover, if petitioner were employed as a "project
which are usually necessary or desirable in the usual employee" private respondent should have submitted a
business or trade of private respondent; and that said report of termination to the nearest public employment office
every time his employment is terminated due to completion
of each construction project, as required by Policy Instruction
No. 20, 9 which provides:
SO ORDERED.
Petitioner Baguio Country Club Corporation (corporation) is a
recreational establishment certified by the Ministry of Labor
and Employment as an" entertainment-service"
establishment. Respondent National Labor Relations
Commission (Commission) is a government instrumentality
created by law, impleaded in its official capacity, while
private respondent Associated Labor Union (union) is a duly
registered labor organization and private respondent Jimmy
Calamba is an employee of the petitioner corporation as
laborer, dishwasher, and gardener.
G.R. No. 71664 February 28, 1992
Private respondent Jimmy Calamba was employed on a day
BAGUIO COUNTRY CLUB CORPORATION, petitioner, to day basis in various capacities as laborer and dishwasher
vs. for a period of ten (10) months from October 1, 1979 to July
NATIONAL LABOR RELATIONS COMMISSION, 24, 1980. On September 1, 1980 to October 1, 1980, private
ASSOCIATED LABOR UNION (ALU) and JIMMY respondent Calamba was hired as a gardener and rehired as
CALAMBA,respondents. such on November 15, 1980 to January 4, 1981 when he was
dismissed by the petitioner corporation. (see Rollo, pp. 28-
Guillermo B. Bandonill and A.N. Bolinao, Jr. for petitioner. 36)
Jose C. Evangelista for Jimmy Calamba. On August 3, 1981, private respondent Jimmy Calamba
assisted by private respondent union instituted a complaint
against petitioner corporation with the Ministry of Labor (now
MEDIALDEA, J.: Department of Labor and Employment), Baguio District
Office, Baguio City for unfair labor practice, illegal dismissal
This petition for certiorari seeks to annul and set aside the and non-payment of 13th month pay for 1979 and 1980.
resolution issued by the respondent National Labor Relations
Commission dated June 10, 1985 dismissing the appeal of The Executive Labor Arbiter Sotero L. Tumang rendered a
petitioner for lack of merit and affirming in toto the decision decision on September 15, 1982 declaring private
of the Executive Labor Arbiter dated September 15, 1982 respondent Calamba as a regular employee and ordering
declaring private respondent Calamba as a regular employee petitioner to reinstate private respondent to the position of
entitled to reinstatement to the position of gardener without gardener without loss of seniority and with full backwages,
loss of seniority and with full backwages, benefits and benefits and privileges from the time of his dismissal up to
privileges from the time of his dismissal up to reinstatement reinstatement including 13th month pay.
including 13th month pay.
Labor Arbiter Tumang found as follows:
The antecedent facts are as follows:
After a careful perusal of the facts presented by the parties, report of his dismissal as mandated by law was submitted to
we find the complaint for illegal dismissal and non-payment the Ministry of Labor and Employment.
of thirteenth (13th) month pay, meritorious for the following
reasons: 4. The Company did not refute the claim of Jimmy Calamba
for payment of his thirteenth (13th) month pay under P.D.
1. Complainant Jimmy Calamba has attained regular status 851 nor presented any report of compliance to that effect
as an employee of the Club on account of the nature of the with the Ministry of Labor and Employment and, therefore, he
job he was hired, to perform continuously and on staggered must be paid correspondingly. (Rollo, pp. 39-40)
basis for a span of thirteen months. True that there were
employment contracts executed between the Club and the Hence, the petitioner interposed an appeal to the respondent
complainant indicating the period or the number of days the Commission.
complainant is being needed but what is to be considered is On June 10, 1985, after finding that there existed no
not the agreement, written or otherwise, of the parties in sufficient justification to disturb the appealed decision, the
determining the regularity or casualness of job but it should respondent Commission rendered a resolution dismissing the
be the nature of the job. Clearly, the work of a gardener is appeal for lack of merit.
not a seasonal or for a specific period undertaking but it is a
whole year round activity. We must not lose sight of the fact Hence, this present petition raising four (4) assignments of
that the Baguio Country Club Corporation is an exclusive Club errors, which are as follows:
with sustaining members who avails (sic) of its facilities the
whole year round and it is necessary, is has been observed I
and of common knowledge, that the gardens including the
THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN
green of its golf course where the complainant was assigned
HOLDING THAT PRIVATE RESPONDENT JIMMY CALAMBA WAS
must be properly kept and maintained.
A "CASUAL" EMPLOYEE AND HAD ATTAINED THE STATUS OF A
2. Being a regular employee with more than one (1) year REGULAR EMPLOYEE, DESPITE THE INCONTROVERTIBLE FACT
length of service with the respondent, Jimmy Calamba could THAT SAID PRIVATE RESPONDENT WAS A CONTRACTUAL AND
not be terminated without a just or valid cause. This is so SEASONAL EMPLOYEE.
explicit in our Constitution that the security of tenure of a
II
worker must be safeguarded and protected and Jimmy
Calamba should enjoy no less protection. THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN
HOLDING THAT THE CONCLUSIONS OF THE EXECUTIVE
3. Jimmy Calamba was dismissed without any written
LABOR ARBITER WERE FULLY SUPPORTED BY THE EVIDENCE
clearance from the Ministry of Labor and Employment prior to
AND IN UPHOLDING THE REINSTATEMENT OF PRIVATE
his termination. Worse, the respondent fired the complainant
RESPONDENT JIMMY CALAMBA.
from his job due to the a (sic) alleged expiration of his
employment contract ten (10) times but not even a single III
THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN In addition, petitioner stresses that there was absolutely no
HOLDING THAT THE DISMISSAL OF PRIVATE RESPONDENT oral or documentary evidence to support the conclusion of
JIMMY CALAMBA REQUIRED PRIOR CLEARANCE FROM THE the Executive Labor Arbiter which was subsequently affirmed
MINISTRY OF LABOR AND EMPLOYMENT EACH TIME HIS by the respondent Commission that private respondent
CONTRACT OF EMPLOYMENT EXPIRED. Calamba has rendered thirteen (13) months of continuous
service.
IV
On the contrary, respondent Commission through the
THAT THE RESPONDENT COMMISSION GRAVELY ERRED IN Solicitor General argues that private respondent Calamba,
NOT HOLDING THAT PRIVATE RESPONDENT ASSOCIATED having rendered services as laborer, gardener and
LABOR UNION HAS NO LEGAL PERSONALITY TO FILE THIS dishwasher for more than one (1) year, was a regular
CASE FOR PRIVATE RESPONDENT JIMMY CALAMBA BEFORE employee at the time his employment was terminated.
THE REGIONAL OFFICE OF THE NATIONAL LABOR RELATIONS
COMMISSION, AS SAID PRIVATE RESPONDENT BEING A Moreover, the nature of private respondent Calamba's
CONTRACTUAL EMPLOYEE IS EXPRESSLY EXCLUDED FROM employment as laborer, gardener, and dishwasher pertains
THE BARGAINING UNIT UNDER THE COLLECTIVE BARGAINING to a regular employee because they are necessary or
AGREEMENT (Rollo, pp. 98-99) desirable in the usual business of petitioner as a recreational
establishment.
Petitioner maintains that private respondent Calamba was a
contractual employee whose employment was for a fixed and The pivotal issue therefore in whether or not the private
specific period as set forth and evidenced by the private respondent Jimmy Calamba has acquired the status of a
respondent's contracts of employment, the pertinent portions regular employee at the time his employment was
of which are quoted as follows: terminated.
xxx xxx xxx After a careful review of the records of this case the Court
finds no merit in the petition and holds that the respondent
. . . the employment may be terminated any time without Commission did not gravely abuse its discretion when it
liability to the Baguio Country Club other than for salary affirmed in toto the decision of the labor arbiter.
actually earned up to and including the date of last service.
The law on the matter is Article 280 of the Labor Code which
His/her employment shall be on a day to day BASIS for defines regular and casual employment as follows:
a temporary period . . . subject to termination at any time at
the discretion of the Baguio Country Club Corporation. Art. 280. Regular and Casual Employment. The provisions
of written agreement to the contrary notwithstanding and
xxx xxx xxx regardless of the oral agreement of the parties, an
(Rollo, p. 7) employment shall be deemed to be regular where the
employee has been engaged to perform activities which are
necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a The primary standard, therefore, of determining a regular
specific project or undertaking the completion or termination employment is the reasonable connection between the
of which has been determined at the time of the engagement particular activity performed by the employee in relation to
of the employee or where the work or services to be the usual business or trade of the employer. The test is
performed is seasonal in nature and the employment is for whether the former is usually necessary or desirable in the
the duration of the season. usual business or trade of the employer. The connection can
be determined by considering the nature of the work
An employment shall be deemed to be casual if it is not performed and its relation to the scheme of the particular
covered by the preceding paragraph:Provided, That any business or trade in its entirety. Also, if the employee has
employee who has rendered at least one year of service, been performing the job for at least one year, even if the
whether such service is continuous or broken, shall be performance is not continuous or merely intermittent, the law
considered a regular employee with respect to the activity in deems the repeated and continuing need for its performance
which he is employed and his employment shall continue as sufficient evidence of the necessity if not indispensability
while such actually exists. of that activity to the business. Hence, the employment is
This provision reinforces the Constitutional mandate to also considered regular, but only with respect to such activity
protect the interest of labor. Its language evidently manifests and while such activity exists. (De Leon v. National Labor
the intent to safeguard the tenurial interest of the worker Relations Commission, G.R. No. 70705, August 21, 1989. 176
who may be denied the rights and benefits due a regular SCRA 615, 620-621)
employee by virtue of lopsided agreements with the In the case at bar, the petitioner corporation, which is
economically powerful employer who can maneuver to keep certified by the Ministry of Labor and Employment as an
an employee on a casual status for as long as convenient. "entertainment-service" establishment, claims that private
Thus, contrary agreements notwithstanding, an employment respondent was contracted for a fixed and specific period.
is deemed regular when the activities performed by the However, the records are that the private respondent was
employee are usually necessary or desirable in the usual repeatedly re-hired to perform tasks ranging from
business or trade of the employer. Not considered regular are dishwashing and gardening, aside from performing
the so-called "project employment" the completion or maintenance work.
termination of which is more or less determinable at the time
of employment, such as those employed in connection with a Such repeated rehiring and the continuing need for his
particular construction project, and seasonal employment service are sufficient evidence of the necessity and
which by its nature is only desirable for a limited period of indispensability of his service to the petitioner's business or
time. However, any employee who has rendered at least one trade.
year of service, whether continuous or intermittent, is
deemed regular with respect to the activity he performed and The law demands that the nature and entirety of the
while such activity actually exits. activities performed by the employee be considered. It is not
tenable to argue that the aforementioned tasks of private
respondent are not necessary in petitioner's business as a
recreational establishment, just as it cannot be said that only It is noteworthy that what determines whether a certain
those who are directly involved in providing entertainment employment is regular or casual is not the will and word of
service may be considered as necessary employees. the employer, to which the desperate worker often accedes.
Otherwise, there would have been no need for the regular It is the nature of the activities performed in relation to the
maintenance section of petitioner corporation. particular business or trade considering all circumstances,
and in some cases the length of time of its performance and
Furthermore, the private respondent performed the said its continued existence. (see De Leon v. NLRC, Ibid)
tasks which lasted for more than one year, until early
January, 1981 when he was terminated. Certainly, by this fact All premises considered, the Court is convinced that the
alone he is entitled by law to be considered a regular assailed resolution of the respondent Commission is not
employee. tainted with arbitrariness that would amount to grave abuse
of discretion or lack of jurisdiction and therefore, We find no
Owing to private respondent's length of service with the reason to disturb the same.
petitioner corporation, he became a regular employee, by
operation of law, one year after he was employed. It is more ACCORDINGLY, the petition is DISMISSED for lack of merit.
in consonance with the intent and spirit of the law to rule
that the status of regular employment attaches to the casual SO ORDERED.
employee on the day immediately after the end of his first
year of service. To rule otherwise is to impose a burden on
the employee which is not sanctioned by law. (see Kimberly
Independent Labor Union for Solidarity, Activism and
Nationalism in Line Industries and Agriculture v. Drilon, G.R. G.R. No. 149793. April 15, 2005
No. 77629, May 9, 1990, 185 SCRA 190, 203-204)
WACK WACK GOLF & COUNTRY CLUB, Petitioners,
It is of no moment that private respondent was told when he vs.
was hired that his employment would only be "on a day to NATIONAL LABOR RELATIONS COMMISSION, MARTINA
day basis for a temporary period" and may be terminated at G. CAGASAN, CARMENCITA F. DOMINGUEZ, and
any time subject to the petitioner's discretion. Precisely, the BUSINESS STAFFING AND MANAGEMENT,
law overrides such conditions which are prejudicial to the INC., Respondents.
interest of the worker. Evidently, the employment contracts
DECISION
entered into by private respondent with the petitioner have
the purpose of circumventing the employee's security of CALLEJO, SR., J.:
tenure. The Court therefore, rigorously disapproves said
contracts which demonstrate a clear attempt to exploit the This is a petition for review of the Resolution 1 of the Court of
employee and deprive him of the protection sanctioned by Appeals (CA) in CA-G.R. SP No. 63658, dismissing the petition
the Labor Code. for certiorari before it for being insufficient in form and the
subsequent resolution denying the motion for reconsideration
thereof.
The undisputed antecedent facts are as follows: regardless of the number of years of service rendered. That,
in addition, said employees shall also receive the other
On November 29, 1996, a fire destroyed a large portion of benefits due them, namely, the cash equivalent of unused
the main clubhouse of the Wack Wack Golf and Country Club vacation and sick leave credits, proportionate 13th month
(Wack Wack), including its kitchen. In view of the pay; and other benefits, if any, computed without premium;
reconstruction of the whole clubhouse complex, Wack Wack
filed a notice with the Department of Labor and Employment 2. That the affected F & B employees who have already
(DOLE) on April 14, 1997 that it was going to suspend the signified intention to be separated from the service under the
operations of the Food and Beverage (F & B) Department one special separation benefit package shall receive their
(1) month thereafter. Notices to 54 employees (out of a separation pay as soon as possible;
complement of 85 employees in the department) were also
sent out, informing them that they need not report for work 3. That the same package shall, likewise, be made available
anymore after April 14, 1997 but that they would still be paid to other employees who are members of the bargaining unit
their salaries up to May 14, 1997. They were further told that and who may or may not be affected by future similar
they would be informed once full operations in Wack Wack suspensions of operations. The UNION re-affirms and
resume. recognizes that it is the sole prerogative of the management
of the Club to suspend part or all of its operations as may be
The Wack Wack Golf Employees Union branded the necessitated by the exigencies of the situation and the
suspension of operations of the F & B Department as general welfare of its membership. The closure of the West
arbitrary, discriminatory and constitutive of union-busting, so Course, which is scheduled for conversion to an All-Weather
they filed a notice of strike with the DOLEs National Championship golf course, is cited as an example. It is,
Conciliation and Mediation Board (NCMB). Several meetings however, agreed that if a sufficient number of employees,
between the officers of Wack Wack and the Union, headed by other than F & B employees, would apply for availment of the
its President, Crisanto Baluyot, Sr., and assisted by its package within the next two months, the Club may no longer
counsel, Atty. Pedro T. De Quiroz, were held until the parties go through the process of formally notifying the Department
entered into an amicable settlement. An Agreement 2 was of Labor. The processing and handling of benefits for these
forged whereby a special separation benefit/retirement other employees shall be done over a transition period within
package for interested Wack Wack employees, especially one year;
those in the F & B Department was offered. The terms and
conditions thereof reads as follows: 4. All qualified employees who may have been separated
from the service under the above package shall be
1. The UNION and the affected employees of F & B who are considered under a priority basis for employment by
members of the UNION hereby agree to accept the special concessionaires and/or contractors, and even by the Club
separation benefit package agreed upon between the CLUB upon full resumption of operations, upon the
management on the one hand, and the UNION officers and recommendation of the UNION. The Club may even persuade
the UNION lawyer on the other, in the amount equivalent to an employee-applicant for availment under the package to
one-and-one-half months salary for every year of service, remain on his/her job, or be assigned to another position. 3
Respondent Carmencita F. Dominguez, who was then working 3 .Management of food and beverage operation;
in the Administrative Department of Wack Wack, was the first
to avail of the special separation package. 4 Computed at 1 4. Management of materials and procurement functions;
months for every year of service pursuant to the Agreement, 5. To provide and undertake administrative and support
her separation pay amounted to P91,116.84, while economic services for the [said] projects. 15
benefits amounted toP6,327.53.5 On September 18, 1997,
Dominguez signed a Release and Quitclaim 6 in favor of Wack Pursuant to the Agreement, the retired employees of Wack
Wack. Wack by reason of their experience were given priority by
BSMI in hiring. On October 21, 1997, respondents Cagasan
Respondent Martina B. Cagasan was Wack Wacks Personnel and Dominguez filed their respective applications 16 for
Officer who, likewise, volunteered to avail of the separation employment with BSMI. They were eventually hired by BSMI
package.7 On September 30, 1997, she received from Wack to their former positions in Wack Wack as project employees
Wack the amount of P469,495.66 as separation pay and and were issued probationary contracts. 17
other economic benefits amounting to P17,010.50.8 A
Release and Quitclaim9 was signed on September 30, 1997. Aside from BSMI, Wack Wack also engaged several
contractors which were assigned in various operating
The last one to avail of the separation package was Crisanto functions of the club, to wit:
Baluyot, Sr. who, in a Letter10 dated January 16, 1998
addressed to Mr. Bienvenido Juan, Administrative Manager of 1. Skills and Talent Employment Promotion (STEP) whose 90
Wack Wack, signified his willingness to avail of the said early workers are designated as locker attendants, golf bag
retirement package. The total amount of P688,290.3011 was attendants, nurses, messengers, technical support engineer,
received and the Release and Quitclaim 12 signed on May 14, golf director, agriculturist, utilities and gardeners;
1998.
2. Marvel Manpower Agency - whose 19 employees are
On October 15, 1997, Wack Wack entered into a Management designated as sweepers, locker attendants, drive range
Contract13 with Business Staffing and Management, Inc. attendant, telephone operator, workers and secretaries;
(BSMI), a corporation engaged in the business as
Management Service Consultant undertaking and managing 3 City Service Corporation contractor for janitorial services
for a fee projects which are specialized and technical in for the whole club;
character like marketing, promotions, merchandising,
4. Microstar Business and Management Services, Inc. whose
financial management, operation management and the
15 employees are designated in the Finance and Accounting
like.14 BSMI was to provide management services for Wack
departments.18
Wack in the following operational areas:
Due to these various management service contracts, BSMI
1. Golf operations management;
undertook an organizational analysis and manpower
2. Management and maintenance of building facilities; evaluation to determine its efficacy, and to streamline its
operations. In the course of its assessment, BSMI saw that
the positions of Cagasan and Dominguez were redundant. In In a Decision20 dated January 25, 2000, the Labor Arbiter
the case of respondent Cagasan, her tasks as personnel found that the dismissal of Dominguez and Cagasan was for
officer were likewise being taken cared of by the different a valid and authorized cause, and dismissed their complaints.
management service contractors; on the other hand,
Dominguezs work as telephone operator was taken over by The position of personnel manager occupied by Martina
the personnel of the accounting department. Thus, in Cagasan was redundated as it is allegedly not necessary,
separate Letters19 dated February 27, 1998, the services of because her functions will be taken over [by] the field
Dominguez and Cagasan were terminated. With respect to superintendent and the companys personnel and operations
Baluyot, he applied for the position of Chief Porter on May 12, manager. The work of Carmencita Dominguez on the other
1998. The position, however, was among those hand as telephone operator will be taken over by the
recommended to be abolished by the BSMI, so he was offered accounting department personnel. Such move really are
the position of Caddie Master Aide with a starting salary intended to streamline operations. While admittedly, they are
of P5,500.00 a month. Baluyot declined the offer. Pending still necessary in the operations of Wack Wack, their jobs can
Wack Wacks approval of the proposed abolition of the be assigned to some other personnel, who will be performing
position of Chief Porter, Baluyot was temporarily accepted to dual functions and does save Wack Wack money. This is
the position with a monthly salary of P12,000.00. In July feasible on account of the fact that they are functions
1998, Baluyot decided not to accept the position of Caddie pertaining to administrative work.21
Master Aide; thus, BSMI continued with its plan to abolish the As to Baluyot, however, the Labor Arbiter found that while
said position of Chief Porter and Baluyot was dismissed from the position of chief porter had been abolished, the caddie
the service. master aide had been created. Their functions were one and
Thereafter, the three (3) employees filed their respective the same. The porters, upon instructions from the chief
complaints with the National Labor Relations Commission porter, are the ones who bring down the golf bags of the
(NLRC) for illegal dismissal and damages against Wack Wack players from the vehicle. The caddie master receives them
and BSMI. and counts the number of clubs inside the golf set. After the
game, the same procedure is repeated before the golf sets
The complainants averred that they were dismissed without are loaded once more into the vehicle. 22 The Labor Arbiter
cause. They accepted the separation package upon the found that the dismissal of Baluyot as Chief Porter was
assurance that they would be given their former work and unjustified and can not be considered redundant in the case
assignments once the Food and Beverage Department of at bar. It was a means resorted to in order to unduly sever
Wack Wack resumes its operations. On the other hand, the Baluyots relationship with BSMI without justifiable cause. The
respondents therein alleged that the dismissal of the Labor Arbiter therefore found Baluyots dismissal to be
complainants were made pursuant to a study and evaluation illegal. The dispositive portion of the decision reads as
of the different jobs and positions and found them to be follows:
redundant.
CONFORMABLY WITH THE FOREGOING, judgment is
hereby rendered dismissing the complaints of Carmencita F.
Dominguez and Martina Cagasan for lack of merit. Finding Management, Inc. (BSMI) is a contractor who [merely]
Crisanto Baluyots dismissal to be illegal. Consequently, he supplies workers to respondent Wack Wack. It has nothing to
should immediately be reinstated to his former position as do with the grievance of the complainants with their
Chief Porter or Caddie Master, and paid his backwages which, employer, respondent Wack Wack."
as of December 31, 1999, has accumulated in the sum
of P180,000.00 by BSMI. Wack Wack and BSMI filed a motion for reconsideration which
was denied in the Resolution26 dated December 15, 2000.
All other claims are dismissed for lack of merit.23
Wack Wack, now the petitioner, consequently filed a petition
Since Baluyot no longer appealed the decision, complainants for certiorari with the Court of Appeals, docketed as CA-G.R.
Dominguez and Cagasan filed a Partial Appeal on the ground SP No. 63658 alleging the following:
of prima facie abuse of discretion on the part of the Labor
Arbiter and serious errors in his findings of facts and law. A. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
Their claims were anchored on the Agreement between the DISCRETION AMOUNTING TO LACK OR EXCESS OF
Union and management, that they were promised to be JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING
rehired upon the full resumption of operations of Wack Wack. THAT RESPONDENTS CAGASAN AND DOMINGUEZ HAVE
They asserted that Wack Wack and BSMI should not avoid REGAINED THEIR JOBS OR EMPLOYMENT PURSUANT TO THE
responsibility to their employment, by conniving with each AGREEMENT BETWEEN PETITIONER AND WACK WACK GOLF
other to render useless and meaningless the Agreement. EMPLOYEES UNION.
BSMI also appealed to the NLRC, alleging that the Labor B. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
Arbiter committed grave abuse of discretion in finding DISCRETION AMOUNTING TO LACK OR EXCESS OF
Baluyots dismissal to be illegal, when in fact his position as JURISDICTION AND DENIAL OF DUE PROCESS IN RULING THAT
Chief Porter was abolished pursuant to a bona RESPONDENT BSMI IS NOT AN INDEPENDENT CONTRACTOR
fidereorganization of Wack Wack. It was not motivated by BUT A MERE SUPPLIER OF WORKERS TO THE PETITIONER.
factors other than the promotion of the interest and welfare C. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
of the company. DISCRETION AMOUNTING TO LACK OR EXCESS OF
On September 27, 2000, the NLRC rendered its JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING
Decision24 ordering Wack Wack to reinstate Carmencita F. PETITIONER LIABLE FOR THE REINSTATEMENT OF
Dominguez and Martina Cagasan to their positions in RESPONDENTS CAGASAN AND DOMINGUEZ AND FOR THE
respondent Wack Wack Golf & Country Club with full PAYMENT OF THEIR SUPPOSED BACKWAGES DESPITE THE
backwages and other benefits from the date of their ABSENCE OF EMPLOYER-EMPLOYEE RELATION BETWEEN
dismissal until actually reinstated. It anchored its ruling on THEM.27
the Agreement dated June 16, 1997 reached between the Likewise, BSMI also assailed the resolutions of the NLRC and
Union and Wack Wack, particularly Section 4 25 thereof. The filed its own petition for certiorari with the CA, docketed as
NLRC directed Wack Wack to reinstate the respondents and CA-G.R. SP No. 63553.28 A perusal of the petition which is
pay their backwages since "Business Staffing and
attached to the records reveal that BSMI ascribes grave constrained to file its own petition for certiorari with the CA,
abuse of discretion on the part of the NLRC in ruling that: (a) docketed as CA-G.R. SP No. 63553 pending with the Special
the private respondents have regained their employment Fourth Division, just to stress that there is no guaranty of
pursuant to the Agreement between Wack Wack and the perpetual employment in favor of the complainants.
Wack Wack Golf Employees Union; (b) the dismissal of
private respondents was made pursuant to the petitioners On August 31, 2001, the CA denied petitioners motion for
exercise of its management prerogatives; and (c) the reconsideration.
petitioner (BSMI) is liable for the reinstatement of private The petitioner is now before the Court, assailing the twin
respondents and the payment of their backwages. 29 resolutions of the CA. It points out that BSMI has filed its
On April 3, 2001, the CA (Twelfth Division) dismissed the petition for certiorari before the CA one day late and yet, the
petition on the ground that the petitioner therein failed to Special Fourth Division admitted the petition in the interest of
attach an Affidavit of Service as required in Section 11, Rule substantial justice, and directed the respondents to file a
13 of the 1997 Rules of Civil Procedure. Moreover, the comment thereon;31 whereas, in the instant case, the mere
verification and certification against forum shopping was lack of proof of authority of Wack Wacks General Manager to
insufficient for having been executed by the general manager sign the certificate of non-forum shopping was considered
who claimed to be the duly-authorized representative of the fatal by the CAs Twelfth Division. It further asserts that its
petitioner, but did not show any proof of authority, i.e., a petition for certiorari is meritorious, considering that the
board resolution, to the effect. NLRC committed grave abuse of discretion in ordering Wack
Wack to reinstate the respondents Cagasan and Dominguez,
A motion for reconsideration was, consequently, filed and to pay their backwages when indubitable evidence
appending thereto the requisite documents of proof of shows that the said respondents were no longer employees
authority. It asserted that in the interest of substantial of Wack Wack when they filed their complaints with the Labor
justice, the CA should decide the case on its merits. Arbiter.
BSMI filed a Comment30 to the Motion for Reconsideration of There is merit in the petition.
the petitioner, also urging the CA to set aside technicalities
and to consider the legal issues involved: (a) whether or not In Novelty Philippines, Inc. v. Court of Appeals,32 the Court
there is a guaranty of employment in favor of the recognized the authority of the general manager to sue on
complainants under the Agreement between the petitioner behalf of the corporation and to sign the requisite verification
and the Union; (b) whether or not the termination of the and certification of non-forum shopping. The general
employment of the complainants, based on redundancy, is manager is also one person who is in the best position to
legal and valid; and (c) who are the parties liable for the know the state of affairs of the corporation. It was also error
reinstatement of the complainants and the payment of for the CA not to admit the requisite proof of authority when
backwages. It further added that it shares the view of the in the Novelty case, the Court ruled that the subsequent
petitioner, that the assailed resolutions of the NLRC are submission of the requisite documents constituted
tainted with legal infirmities. For this reason, it was also substantial compliance with procedural rules. There is ample
jurisprudence holding that the subsequent and substantial
compliance of an appellant may call for the relaxation of the TO : WACK WACK GOLF & COUNTRY CLUB
rules of procedure in the interest of justice. 33 While it is true
that rules of procedure are intended to promote rather than BOARD OF DIRECTORS AND MANAGEMENT
frustrate the ends of justice, and while the swift unclogging Based on the information that the Club and the employees
of court dockets is a laudable objective, it nevertheless must Union have reached an agreement on a special separation
not be met at the expense of substantial justice. 34 It was, benefit package equivalent to one-and-one-half months
therefore, reversible error for the CA to have dismissed the salary for every year of service, regardless of the number of
petition for certiorari before it. The ordinary recourse for us to years of service, for employees who have been affected and
take is to remand the case to the CA for proper disposition on may be affected by ongoing as well as forthcoming Club
the merits; however, considering that the records are now renovation, construction and related activities and reportedly
before us, we deem it necessary to resolve the instant case even for those who may not be affected but wish to avail of
in order to ensure harmony in the rulings and expediency. an early retirement under the above package arrangement, I
Indeed, the merits of the case constitute special or hereby register my desire to be separated from the Club and
compelling reasons for us to overlook the technical rules in receive the benefits under the above stated package. 36
this case. With the dismissal of its petition for certiorari Thereafter, the respondents signed their respective release
before the CA, the petitioner by virtue of the NLRC decision is and quitclaims after receiving their money benefits.
compelled to reinstate respondents Cagasan and Dominguez
and pay their full backwages from the time of their dismissal It cannot be said that the respondents in the case at bar did
until actual reinstatement when the attendant circumstances, not fully comprehend and realize the consequences of their
however, show that the respondents had no cause of action acts. Herein respondents are not unlettered persons who
against the petitioner for illegal dismissal and damages. need special protection. They held responsible positions in
the petitioner-employer, so they presumably understood the
It must be recalled that said respondents availed of the contents of the documents they signed. There is no showing
special separation package offered by the petitioner. This that the execution thereof was tainted with deceit or
special separation package was thought of and agreed by the coercion. Further, the respondents were paid hefty amounts
two parties (Wack Wack and the Union) after a series of of separation pay indicating that their separation from the
discussions and negotiations to avert any labor unrest due to company was for a valuable consideration. Where the person
the closure of Wack Wack.35 Priority was given to the making the waiver has done so voluntarily, with a full
employees of the F & B Department, but was, likewise, understanding thereof, and the consideration for the
offered to the other employees who may wish to avail of the quitclaim is credible and reasonable, the transaction must be
separation package due to the reconstruction of Wack Wack. recognized as being a valid and binding undertaking. 37 As in
Respondents do not belong to the F & B Department and yet, contracts, these quitclaims amount to a valid and binding
on their own volition opted to avail of the special separation compromise agreement between the parties which deserve
package. The applications which were similarly worded read to be respected.38
as follows:
We reiterate what was stated in the case of Periquet v. responsibility according to his own manner and method, free
NLRC 39 that: from the control and direction of his employer or principal in
all matters connected with the performance of the work
Not all waivers and quitclaims are invalid as against public except as to the results thereof; and (b) has substantial
policy. If the agreement was voluntarily entered into and capital or investment in the form of tools, equipments,
represents a reasonable settlement, it is binding on the machineries, work premises and other materials which are
parties and may not later be disowned simply because of a necessary in the conduct of the business. Jurisprudential
change of mind. It is only where there is clear proof that the holdings are to the effect that in determining the existence of
waiver was wangled from an unsuspecting or gullible person, an independent contractor relationship, several factors may
or the terms of settlement are unconscionable on its face, be considered, such as, but not necessarily confined to,
that the law will step in to annul the questionable whether or not the contractor is carrying on an independent
transaction. But where it is shown that the person making the business; the nature and extent of the work; the skill
waiver did so voluntarily, with full understanding of what he required; the term and duration of the relationship; the right
was doing, and the consideration for the quitclaim is credible to assign the performance of specified pieces of work; the
and reasonable, the transaction must be recognized as a control and supervision of the work to another; the
valid and binding undertaking. 40 employers power with respect to the hiring, firing, and
When the respondents voluntarily signed their quitclaims and payment of the contractors workers; the control of the
accepted the separation package offered by the petitioner, premises; the duty to supply premises, tools, appliances,
they, thenceforth, already ceased to be employees of the materials and labor; and the mode, manner and terms of
petitioner. Nowhere does it appear in the Agreement that the payment.41
petitioner assured the respondents of continuous There is indubitable evidence showing that BSMI is an
employment in Wack Wack. Qualified employees were independent contractor, engaged in the management of
given priority in being hired by its concessionaires and/or projects, business operations, functions, jobs and other kinds
contractors such as BSMI when it entered into a management of business ventures, and has sufficient capital and resources
contract with the petitioner. to undertake its principal business. It had provided
This brings us to the threshold issue on whether or not BSMI management services to various industrial and commercial
is an independent contractor or a labor-only contractor. The business establishments. Its Articles of Incorporation proves
NLRC posits that BSMI is merely a supplier of workers or a its sufficient capitalization. In December 1993, Labor
labor-only contractor; hence, the petitioner remains to be the Secretary Bienvenido Laguesma, in the case of In re Petition
principal employer of the respondents and liable for their for Certification Election Among the Regular Rank-and-File
reinstatement and payment of backwages. Employees Workers of Byron-Jackson (BJ) Services
International Incorporated, Federation of Free Workers
The ruling of the NLRC is wrong. An independent contractor is (FFW)-Byron Jackson Services Employees
42
one who undertakes "job contracting," i.e., a person who: (a) Chapter, recognized BSMI as an independent contractor. As
carries on an independent business and undertakes the a legitimate job contractor, there can be no doubt as to the
contract work on his own account under his own
existence of an employer-employee relationship between the
contractor and the workers.43
In the Court's Resolution of September 20, 1989, the Court As we adverted to at the outset, the labor arbiter dismissed
granted leave for the petitioner to prosecute the case as a the complaint. The petitioner then appealed, but was
pauper litigant. 1 Meanwhile, in a Manifestation dated January dismissed, on a finding by the National Labor Relations
10, 1990, the Solicitor General informed the Court that, Commission that the appeal had been filed unseasonably.
based on his own assessment, he is unable to defend the The latter subsequently reconsidered, but at any rate,
decision of the National Labor Relations Commission. affirmed the appealed decision.
The records disclose that the petitioner, prior to his In support of this petition, the petitioner attached thereto,
separation, was a carpenter for the respondent, Philippine among other things, certain "personnel action forms" which
National Construction Corporation; that sometime in showed that he was given appointments for specific projects
September, 1984, while on duty at Apalit, Pampanga, where on June 16, 1974, 3 July 2, 1975 4 July 1, 1976,5 May 1,
the respondent corporation was pursuing the construction of 1977, 6 April 5, 1978, 7 December 1, 1979, 8 July 30,
the Apalit Bridge, he vomitted blood and was treated at the 1980, 9 November 20, 1981, 10 March 16, 1982, 11August 24,
company clinic after which he was sent home; that he 1983, 12 September 30, 1983, 13 December 30,1983, 14 and
reported back in December, 1984, but was no longer May 1, 1984; 15 and that since January 15, 1978, he had been
accepted and was informed by Moises Chiu General Manager a member of the CDCP Employees Savings & Loan
of the respondent corporation, that he had been replaced; Association; 16 and that, as a result, he has become a regular,
that between January and September 1985, he sought not a project, employee, who may be terminated only for a
reinstatement but invariably, he was rebuffed by the lawful cause.
company. The Government Corporate Counsel, arguing on behalf of the
Presently, he instituted a complaint, initially, for separation respondent corporation in lieu of the Solicitor General,
pay but upon an amendment, prayed for reinstatement on alleges that the findings of fact of the National Labor
account of an illegal dismissal plus backwages and payment Relations Commission are binding on the Court, and that the
of legal benefits. finding that the petitioner was a project employee is a finding
of fact; that the petitioner has been compensated fully; and
The private respondent, on the other hand, presented the that the personnel action forms partake of new matters that
petitioner's "201-file" which disclosed that he had been hired can not be appreciated at this stage of the proceedings.
as Carpenter II on March 31, 1984; that among the terms and
The National Labor Relations Commission, on the other hand, that he had been involved in project works will not alter his
denies any grave abuse of discretion attributed to it because status because the law requires a "specific project or
it was not aware of the facts the petitioner now deposits. undertaking the completion or termination of which has been
determined at the time of the engagement" in order to make
The petition is impressed with merit. a project employee a true project employee. Based on his
It is clear from the records that the petitioner is, contrary to employment contract:
the assailed decision, a non-project employee and is, hence, Your herein Appointment Employment will be co-terminus
entitled to regular employment having rendered service for with the need of Structures [of North Luzon Expressway
more than ten years. As such, he can not be terminated (Stage) II] as it will necessitate personnel in such number and
unless for just cause. duration contingent upon the progress accomplishment from
Article 280 of the Labor Code provides, as follows: time to time. The company shall determine the personnel
and the number as the work progresses. 17
Art. 280. Regular and Casual Employment. The provisions
of written agreement to the contrary notwithstanding and we can not say that the petitioner's engagement has been
regardless of the oral agreement of the parties, an pre-determined because the duration of the work is
employment shall be deemed to be regular where the "contigent upon the progress accomplishment" and secondly,
employee has been engaged to perform activities which are the company, under the contract, is free to "determine the
usually necessary or desirable in the usual business or trade personnel and the number as the work progresses." Clearly,
of the employer, except where the employment has been the employment is subject to no term but rather, a condition,
fixed for a specific project or undertaking the completion or that is, "progress accomplishment." It can not therefore be
termination of which has been determined at the time of the said to be definite that will therefore exempt the respondent
engagement of the employee or where the work or services company from the effects of Article 280. 18
to be performed is (sic) seasonal in nature and the It is to be noted that under Policy Instructions No. 20 of the
employment is for the duration of the season. Secretary of Labor, regular employment in specific
An employment shall be deemed to be casual if it is not undertakings are recognized and defined as follows:
covered by the preceding paragraph;Provided, That, any xxx xxx xxx
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be Members of a work pool from which a construction company
considered a regular employee with respect to the activity in draws its project employees, if considered employees of the
which he is employed and his employment shall continue construction company while in the work pool, are non-project
while such actually exists. employees or employees for an indefinite period. If they are
employed in a particular project, the completion of the
Without question, the petitioner, a carpenter, performs work project or of any phase thereof will not mean severance of
"necessary, or desirable" in the construction business, the employer-employee relationship.
respondent corporation's field of activity. The fact however
However, if the workers in the work pool are free to leave been working for the firm since 1974; (2) that
anytime and offer their services to other employers then they notwithstanding, it insisted that he, the petitioner, had joined
are project employees employed by a construction company the company in 1984 only; and (3) it took an unfair
in a particular project or in a phase thereof. advantage of the petitioner's unfamiliarity with procedure,
and will take that advantage herein, in order to trap him, so
Generally, there are three (3) types of non-project to speak, to its theory of the case.
employees: first, probationary employees; second, regular
employees; and third, casual employees. It is true that this Court is normally bound by the factual
findings of the National Labor Relations Commission, that
Probationary employees are those who, upon the completion rule is, however subject to a fundamental exception, that is,
of the probationary period, are entitled to regularization. unless it would defeat, rather than enhance, the State
Regular employees are those who have completed the protection to labor guaranteed by the Constitution. 20 No rule,
probationary period or those appointed to fill up regular legal or judicial, can override a constitutional mandate.
positions vacated as a result of death, retirement,
resignation, or termination of the regular holders thereof. On The respondent corporation, as we said, was no stranger to
the other hand, casual employees are those employed for a the personnel action forms in question, and hence it can not
short term duration to perform work not related to the main rightfully say that they constitute "fresh matters." It has
line of the business of the employer. failed furthermore to deny their genuineness, much less,
their existence.
xxx xxx xxx
To allow, therefore, the respondent company to object to the
Based therefore on the personnel action forms submitted to above personnel action forms on nebulous pretenses of
this Court, the petitioner is either a member of a work pool of violation of due process is indeed, to reward it for its own
workers, which Policy Instructions No. 20 terms as "non- breach of faith.
project employees," or at the very least, a probationary
worker who, after the period of six months, has achieved a We can not, finally, accept the alleged "quitclaim" 21 executed
regular status. 19 by the petitioner in which he denied any liability by the
employer, as a genuine act of remission in this case. There is
As a regular employee, the petitioner could not have been nothing there that suggests any acceptance by the petitioner
validly terminated by reason alone of the completion of the of his termination from work. Apart from that, the same is
project. couched in the English language and the respondent
The respondent corporation, of course, assails the various company has not shown that the petitioner understands
personnel action forms as new matters that can not be English. We can not presume that he, a humble carpenter, is
introduced in the Supreme Court without infringing its right aware of that language, much more, conversant with it, and
to due process. What the respondent firm very obviously under the Civil Code, it is incumbent upon the respondent to
overlooks is the fact that: (1) it had known all along, but "show that the terms thereof have seen fully explained." 22 It
concealed it from the labor arbiter, that the petitioner had has not made that showing here.
WHEREFORE, the petition is GRANTED. The petitioner is Assailed in this petition for certiorari is the decision * of the
REINSTATED and awarded backwages based on the latest pay respondent national Labor Relations Commission (NLRC)
scale corresponding to the position Carpenter II equivalent to dated 8 August 1984 which affirmed the decision of
three years without qualification or deduction. respondent Labor Arbiter Luciano P. Aquino with the slight
modification of deleting the award of financial assistance to
IT IS SO ORDERED. petitioners, and the resolution of the respondent NLRC dated
17 August 1987, denying petitioners' motion for
reconsideration.
Respondent Labor Arbiter Luciano P. Aquino ruled in favor of Respondent Labor Arbiter further held that only money
private respondents and held that petitioners were not claims from years 1976-1977, 1977-1978 and 1978-1979
regular and permanent workers of the private respondents, may be properly considered since all the other money claims
for the nature of the terms and conditions of their hiring have prescribed for having accrued beyond the three (3) year
reveal that they were required to perform phases of period prescribed by law. 9 On grounds of equity, however,
agricultural work for a definite period of time after which respondent Labor Arbiter awarded petitioners financial
their services would be available to any other farm assistance by private respondent Aurora Cruz, in the amount
owner. 4 Respondent Labor Arbiter deemed petitioners' of Ten Thousand Pesos (P10,000.00) to be equitably divided
contention of working twelve (12) hours a day the whole year among an the petitioners except petitioner Fortunato
round in the farm, an exaggeration, for the reason that the Mercado, Jr. who had manifested his disinterest in the further
planting of lice and sugar cane does not entail a whole year prosecution of his complaint against private respondent. 10
as reported in the findings of the Chief of the NLRC Special
Task Force. 5 Even the sworn statement of one of the
Both parties filed their appeal with the National Labor Moreover, they argue that Policy Instruction No. 12 15 of the
Relations Commissions (NLRC). Petitioners questioned Department of Labor and Employment clearly lends support
respondent Labor Arbiter's finding that they were not regular to this contention, when it states:
and permanent employees of private respondent Aurora Cruz
while private respondents questioned the award of financial PD 830 has defined the concept of regular and casual
assistance granted by respondent Labor Arbiter. employment. What determines regularity or casualness is not
the employment contract, written or otherwise, but the
The NLRC ruled in favor of private respondents affirming the nature of the job. If the job is usually necessary or desirable
decision of the respondent Labor Arbiter, with the to the main business of the employer, then employment is
modification of the deletion of the award for financial regular. If not, then the employment is casual. Employment
assistance to petitioners. The dispositive portion of the for a definite period which exceeds one (1) year shall be
decision of the NLRC reads: considered re for the duration of the definite period.
WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino This concept of re and casual employment is designed to put
dated March 3, 1983 is hereby modified in that the award of an end to casual employment in regular jobs which has been
P10,000.00 financial assistance should be deleted. The said abused by many employers to prevent so-called casuals from
Decision is affirmed in all other aspects. enjoying the benefits of regular employees or to prevent
casuals from joining unions.
11
SO ORDERED.
This new concept should be strictly enforced to give meaning
Petitioners filed a motion for reconsideration of the Decision to the constitutional guarantee of employment tenure. 16
of the Third Division of the NLRC dated 8 August 1984;
however, the NLRC denied tills motion in a resolution dated Tested under the laws invoked, petitioners submit that it
17 August 1987. 12 would be unjust, if not unlawful, to consider them as casual
workers since they have been doing all phases of agricultural
In the present Petition for certiorari, petitioners seek the work for so many years, activities which are undeniably
reversal of the above-mentioned rulings. Petitioners contend necessary, desirable and indispensable in the rice and sugar
that respondent Labor Arbiter and respondent NLRC erred cane production business of the private respondents. 17
when both ruled that petitioners are not regular and
permanent employees of private respondents based on the In the Comment filed by private respondents, they submit
terms and conditions of their hiring, for said findings are that the decision of the Labor Arbiter, as aimed by
contrary to the provisions of Article 280 of the Labor respondent NLRC, that petitioners were only hired as casuals,
Code. 13 They submit that petitioners' employment, even is based on solid evidence presented by the parties and also
assuming said employment were seasonal, continued for so by the Chief of the Special Task Force of the NLRC Regional
many years such that, by express provision of Article 280 of Office and, therefore, in accordance with the rule on findings
the Labor Code as amended, petitioners have become of fact of administrative agencies, the decision should be
regular and permanent employees. 14 given great weight. 18 Furthermore, they contend that the
arguments used by petitioners in questioning the decision of
the Labor Arbiter were based on matters which were not evidence, even if not overwhelming or preponderant; 22 that
offered as evidence in the case heard before the regional it is not for the reviewing court to weigh the conflicting
office of the then Ministry of Labor but rather in the case evidence, determine the credibility of the witnesses or
before the Social Security Commission, also between the otherwise substitute its own judgment for that of the
same parties. 19 administrative agency on the sufficiency of the
evidence; 23 that the administrative decision in matters
Public respondent NLRC filed a separate comment prepared within the executive's jurisdiction can only be set aside upon
by the Solicitor General. It submits that it has long been proof of gross abuse of discretion, fraud, or error of law. 24
settled that findings of fact of administrative agencies if
supported by substantial evidence are entitled to great The questioned decision of the Labor Arbiter reads:
weight. 20 Moreover, it argues that petitioners cannot be
deemed to be permanent and regular employees since they Focusing the spotlight of judicious scrutiny on the evidence
fall under the exception stated in Article 280 of the Labor on record and the arguments of both parties, it is our well-
Code, which reads: discerned opinion that the petitioners are not regular and
permanent workers of the respondents. The very nature of
The provisions of written agreements to the contrary the terms and conditions of their hiring reveal that the
notwithstanding and regardless of the oral agreements of the petitioners were required to perform p of cultural work for a
parties, an employment shall be deemed to be regular where definite period, after which their services are available to any
the employee has been engaged to perform activities which farm owner. We cannot share the arguments of the
are usually necessary or desirable in the usual business or petitioners that they worked continuously the whole year
trade of the employer, exceptwhere the employment has round for twelve hours a day. This, we feel, is an
been fixed for a specific project or undertaking the exaggeration which does not deserve any serious
completion or termination of which has been determined at consideration inasmuch as the plan of rice and sugar cane
the time of the engagement of the employee or where the does not entail a whole year operation, the area in question
work or services to be performed is seasonal in nature and being comparatively small. It is noteworthy that the findings
the employment is for the duration of the of the Chief of the Special Task Force of the Regional Office
season. 21 (emphasis supplied) are similar to this.
The Court resolved to give due course to the petition and In fact, the sworn statement of one of the petitioners
required the parties to submit their respective memoranda Fortunato Mercado, Jr., the son of spouses Fortunato
after which the case was deemed submitted for decision. Mercado, Sr. and Rosa Mercado, indubitably shows that said
petitioners were only hired as casuals, on-and-off basis. With
The petition is not impressed with merit. this kind of relationship between the petitioners and the
The invariable rule set by the Court in reviewing respondent Aurora Cruz, we feel that there is no basis in law
administrative decisions of the Executive Branch of the upon which the claims of the petitioners should be sustained,
Government is that the findings of fact made therein are more specially their complaint for illegal dismissal. It is within
respected, so long as they are supported by substantial the prerogative of respondent Aurora Cruz either to take in
the petitioners to do further work or not after any single been fixed for a specific project or undertaking the
phase of agricultural work has been completed by them. We completion or termination of which has been determined at
are of the opinion that the real cause which triggered the the time of the engagement of the employee or where the
filing of this complaint by the petitioners who are related to work or services to be performed is seasonal in nature and
one another, either by consanguinity or affinity was due to the employment is for the duration of the season.
the filing of a criminal complaint by the respondent Aurora
Cruz against Reynaldo Mercado, son of spouses Fortunato An employment shall be deemed to be casual if it is not
Mercado, Sr. and Rosa Mercado. In April 1979, according to covered by the preceding paragraph: Provided, That, any
Jesus David, Zone Chairman of the locality where the employee who has rendered at least one year of service
petitioners and respondent reside, petitioner Fortunato whether such service is continuous or broken, shall be
Mercado, Sr. asked for help regarding the case of his son, considered a regular employee with respect to the activity in
Reynaldo, to talk with respondent Aurora Cruz and the said which he is employed and his employment shall continue
Zone Chairman also stated under oath that the petitioners while such actually exists.
were never regularly employed by respondent Aurora Cruz The first paragraph answers the question of who are
but were on-and-off hired to work to render services when employees. It states that, regardless of any written or oral
needed. 25 agreement to the contrary, an employee is deemed regular
A careful examination of the foregoing statements reveals where he is engaged in necessary or desirable activities in
that the findings of the Labor Arbiter in the case are ably the usual business or trade of the employer, except for
supported by evidence. There is, therefore, no circumstance project employees.
that would warrant a reversal of the questioned decision of A project employee has been defined to be one whose
the Labor Arbiter as affirmed by the National Labor Relations employment has been fixed for a specific project or
Commission. undertaking, the completion or termination of which has
The contention of petitioners that the second paragraph of been determined at the time of the engagement of the
Article 280 of the Labor Code should have been applied in employee, or where the work or service to be performed is
their case presents an opportunity to clarify the afore- seasonal in nature and the employment is for the duration of
mentioned provision of law. the season 26 as in the present case.
Article 280 of the Labor Code reads in full: The second paragraph of Art. 280 demarcates as "casual"
employees, all other employees who do not fan under the
Article 280. Regular and Casual Employment. The definition of the preceding paragraph. The proviso, in said
provisions of written agreement to the contrary second paragraph, deems as regular employees those
notwithstanding and regardless of the oral agreement of the "casual" employees who have rendered at least one year of
parties, an employment shall be deemed to be regular where service regardless of the fact that such service may be
the employee has been engaged to perform activities which continuous or broken.
are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has
Petitioners, in effect, contend that the proviso in the second Clearly, therefore, petitioners being project employees, or, to
paragraph of Art. 280 is applicable to their case and that the use the correct term, seasonal employees, their employment
Labor Arbiter should have considered them regular by virtue legally ends upon completion of the project or the season.
of said proviso. The contention is without merit. The termination of their employment cannot and should not
constitute an illegal dismissal. 30
The general rule is that the office of a proviso is to qualify or
modify only the phrase immediately preceding it or restrain WHEREFORE, the petition is DISMISSED. The decision of the
or limit the generality of the clause that it immediately National Labor Relations Commission affirming that of the
follows. 27 Thus, it has been held that a proviso is to be Labor Arbiter, under review, is AFFIRMED. No pronouncement
construed with reference to the immediately preceding part as to costs.
of the provision to which it is attached, and not to the statute
itself or to other sections thereof. 28 The only exception to SO ORDERED.
this rule is where the clear legislative intent is to restrain or
qualify not only the phrase immediately preceding it (the
proviso) but also earlier provisions of the statute or even the
statute itself as a whole. 29
There was, to repeat, clear albeit implied recognition of the It is plain then that when the employment contract was
licitness of term employment. RA 1787 also enumerated signed between Brent School and Alegre on July 18, 1971, it
what it considered to be just causes for terminating an was perfectly legitimate for them to include in it a stipulation
employment without a definite period, either by the fixing the duration thereof Stipulations for a term were
explicitly recognized as valid by this Court, for instance,
in Biboso v. Victorias Milling Co., Inc., promulgated on March Article 321 prescribed the just causes for which an employer
31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, could terminate "an employment without a definite period."
promulgated on December 29, 1983. 14 TheThompson case
involved an executive who had been engaged for a fixed And Article 319 undertook to define "employment without a
period of three (3) years. Bibosoinvolved teachers in a fixed period" in the following manner: 18
private school as regards whom, the following An employment shall be deemed to be without a definite
pronouncement was made: period for purposes of this Chapter where the employee has
What is decisive is that petitioners (teachers) were well been engaged to perform activities which are usually
aware an the time that their tenure was for a limited necessary or desirable in the usual business or trade of the
duration. Upon its termination, both parties to the employer, except where the employment has been fixed for a
employment relationship were free to renew it or to let it specific project or undertaking the completion or termination
lapse. (p. 254) of which has been determined at the time of the engagement
of the employee or where the work or service to be
Under American law 15 the principle is the same. "Where a performed is seasonal in nature and the employment is for
contract specifies the period of its duration, it terminates on the duration of the season.
the expiration of such period." 16 "A contract of employment
for a definite period terminates by its own terms at the end The question immediately provoked by a reading of Article
of such period." 17 319 is whether or not a voluntary agreement on a fixed term
or period would be valid where the employee "has been
The status of legitimacy continued to be enjoyed by fixed- engaged to perform activities which are usually necessary or
period employment contracts under the Labor Code desirable in the usual business or trade of the employer." The
(Presidential Decree No. 442), which went into effect on definition seems a non sequitur. From the premise that the
November 1, 1974. The Code contained explicit references duties of an employee entail "activities which are usually
to fixed period employment, or employment with a necessary or desirable in the usual business or trade of the
fixed or definite period. Nevertheless, obscuration of the employer the" conclusion does not necessarily follow that
principle of licitness of term employment began to take place the employer and employee should be forbidden to stipulate
at about this time any period of time for the performance of those activities.
There is nothing essentially contradictory between a definite
Article 320, entitled "Probationary and fixed period period of an employment contract and the nature of the
employment," originally stated that the "termination of employee's duties set down in that contract as being "usually
employment of probationary employees and those employed necessary or desirable in the usual business or trade of the
WITH A FIXED PERIOD shall be subject to such regulations as employer." The concept of the employee's duties as being
the Secretary of Labor may prescribe." The asserted "usually necessary or desirable in the usual business or trade
objective to was "prevent the circumvention of the right of of the employer" is not synonymous with or identical to
the employee to be secured in their employment as employment with a fixed term. Logically, the decisive
provided . . . (in the Code)." determinant in term employment should not be the activities
that the employee is called upon to perform, but the day agreement stipulating a longer period. The services of an
certain agreed upon by the parties for the commencement employee who has been engaged in a probationary basis
and termination of their employment relationship, a day may be terminated for a just cause or when he fails to qualify
certain being understood to be "that which must necessarily as a regular employee in accordance with reasonable
come, although it may not be known standards made known by the employer to the employee at
when." 19 Seasonal employment, and employment for a the time of his engagement. An employee who is allowed to
particular project are merely instances employment in which work after a probationary period shall be considered a
a period, where not expressly set down, necessarily implied. regular employee.
Of course, the term period has a definite and settled Also amended by PD 850 was Article 319 (entitled
signification. It means, "Length of existence; duration. A point "Employment with a fixed period," supra) by
of time marking a termination as of a cause or an activity; an (a) deleting mention of employment with a fixed or definite
end, a limit, a bound; conclusion; termination. A series of period, (b) adding a general exclusion clause declaring
years, months or days in which something is completed. A irrelevant written or oral agreements "to the contrary," and
time of definite length. . . . the period from one fixed date to (c) making the provision treat exclusively of "regular" and
another fixed date . . ." 20 It connotes a "space of time which "casual" employment. As revised, said article, renumbered
has an influence on an obligation as a result of a juridical act, 270, 23 now reads:
and either suspends its demandableness or produces its
extinguishment." 21 It should be apparent that this settled . . . Regular and Casual Employment.The provisions of
and familiar notion of a period, in the context of a contract of written agreement to the contrary notwithstanding and
employment, takes no account at all of the nature of the regardless of the oral agreement of the parties, an
duties of the employee; it has absolutely no relevance to the employment shall be deemed to be regular where the
character of his duties as being "usually necessary or employee has been engaged to perform activities which are
desirable to the usual business of the employer," or not. usually necessary or desirable in the usual business or trade
of the employer except where the employment has been
Subsequently, the foregoing articles regarding employment fixed for a specific project or undertaking the completion or
with "a definite period" and "regular" employment were termination of which has been determined at the time of the
amended by Presidential Decree No. 850, effective December engagement of the employee or where the work or service to
16, 1975. be employed is seasonal in nature and the employment is for
the duration of the season.
Article 320, dealing with "Probationary and fixed period
employment," was altered by eliminating the reference to An employment shall be deemed to he casual if it is not
persons "employed with a fixed period," and was renumbered covered by the preceding paragraph:provided, that, any
(becoming Article 271). The article 22 now reads: employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
. . . Probationary employment.Probationary employment considered a regular employee with respect to the activity in
shall not exceed six months from the date the employee
started working, unless it is covered by an apprenticeship
which he is employed and his employment shall continue the opening paragraph of this opinion should now be
while such actually exists. addressed. Is it then the legislative intention to outlaw
stipulations in employment contracts laying down a definite
The first paragraph is identical to Article 319 except that, as period therefor? Are such stipulations in essence contrary to
just mentioned, a clause has been added, to wit: "The public policy and should not on this account be accorded
provisions of written agreement to the contrary legitimacy?
notwithstanding and regardless of the oral agreements of the
parties . . ." The clause would appear to be addressed inter On the one hand, there is the gradual and progressive
alia to agreements fixing a definite period for employment. elimination of references to term or fixed-period employment
There is withal no clear indication of the intent to deny in the Labor Code, and the specific statement of the
validity to employment for a definite period. Indeed, not only rule 25 that
is the concept of regular employment not essentially
inconsistent with employment for a fixed term, as above . . . Regular and Casual Employment. The provisions of
pointed out, Article 272 of the Labor Code, as amended by written agreement to the contrary notwithstanding and
said PD 850, still impliedly acknowledged the propriety of regardless of the oral agreement of the parties, an
term employment: it listed the "just causes" for which "an employment shall be deemed to be regular where the
employer may terminate employment without a definite employee has been engaged to perform activities which are
period," thus giving rise to the inference that if the usually necessary or desirable in the usual business or trade
employment be with a definite period, there need be no just of the employer except where the employment has been
cause for termination thereof if the ground be precisely the fixed for a specific project or undertaking the completion or
expiration of the term agreed upon by the parties for the termination of which has been determined at the time of the
duration of such employment. engagement of the employee or where the work or service to
be employed is seasonal in nature and the employment is for
Still later, however, said Article 272 (formerly Article 321) the duration of the season.
was further amended by Batas Pambansa Bilang 130, 24to
eliminate altogether reference to employment without a An employment shall be deemed to be casual if it is not
definite period. As lastly amended, the opening lines of the covered by the preceding paragraph:provided, that, any
article (renumbered 283), now pertinently read: "An employee who has rendered at least one year of service,
employer may terminate an employment for any of the whether such service is continuous or broken, shall be
following just causes: . . . " BP 130 thus completed the considered a regular employee with respect to the activity in
elimination of every reference in the Labor Code, express or which he is employed and his employment shall continue
implied, to employment with a fixed or definite period or while such actually exists.
term. There is, on the other hand, the Civil Code, which has always
It is in the light of the foregoing description of the recognized, and continues to recognize, the validity and
development of the provisions of the Labor Code bearing on propriety of contracts and obligations with a fixed or definite
term or fixed-period employment that the question posed in period, and imposes no restraints on the freedom of the
parties to fix the duration of a contract, whatever its object,
be it specie, goods or services, except the general where no such intent to circumvent the law is shown, or
admonition against stipulations contrary to law, morals, good stated otherwise, where the reason for the law does not
customs, public order or public policy. 26Under the Civil Code, exist, e.g., where it is indeed the employee himself who
therefore, and as a general proposition, fixed-term insists upon a period or where the nature of the engagement
employment contracts are not limited, as they are under the is such that, without being seasonal or for a specific project,
present Labor Code, to those by nature seasonal or for a definite date of termination is a sine qua non, would an
specific projects with pre-determined dates of completion; agreement fixing a period be essentially evil or illicit,
they also include those to which the parties by free choice therefore anathema? Would such an agreement come within
have assigned a specific date of termination. the scope of Article 280 which admittedly was enacted "to
prevent the circumvention of the right of the employee to be
Some familiar examples may be cited of employment secured in . . . (his) employment?"
contracts which may be neither for seasonal work nor for
specific projects, but to which a fixed term is an essential and As it is evident from even only the three examples already
natural appurtenance: overseas employment contracts, for given that Article 280 of the Labor Code, under a narrow and
one, to which, whatever the nature of the engagement, the literal interpretation, not only fails to exhaust the gamut of
concept of regular employment will all that it implies does employment contracts to which the lack of a fixed period
not appear ever to have been applied, Article 280 of the would be an anomaly, but would also appear to restrict,
Labor Code not withstanding; also appointments to the without reasonable distinctions, the right of an employee to
positions of dean, assistant dean, college secretary, principal, freely stipulate with his employer the duration of his
and other administrative offices in educational institutions, engagement, it logically follows that such a literal
which are by practice or tradition rotated among the faculty interpretation should be eschewed or avoided. The law must
members, and where fixed terms are a necessity, without be given a reasonable interpretation, to preclude absurdity in
which no reasonable rotation would be possible. Similarly, its application. Outlawing the whole concept of term
despite the provisions of Article 280, Policy, Instructions No. 8 employment and subverting to boot the principle of freedom
of the Minister of Labor 27 implicitly recognize that certain of contract to remedy the evil of employer's using it as a
company officials may be elected for what would amount to means to prevent their employees from obtaining security of
fixed periods, at the expiration of which they would have to tenure is like cutting off the nose to spite the face or, more
stand down, in providing that these officials," . . . may lose relevantly, curing a headache by lopping off the head.
their jobs as president, executive vice-president or vice-
president, etc. because the stockholders or the board of It is a salutary principle in statutory construction that there
directors for one reason or another did not re-elect them." exists a valid presumption that undesirable consequences
were never intended by a legislative measure, and that a
There can of course be no quarrel with the proposition that construction of which the statute is fairly susceptible is
where from the circumstances it is apparent that periods favored, which will avoid all objecionable mischievous,
have been imposed to preclude acquisition of tenurial undefensible, wrongful, evil and injurious consequences. 28
security by the employee, they should be struck down or
disregarded as contrary to public policy, morals, etc. But
Nothing is better settled than that courts are not to give former over the latter. Unless thus limited in its purview, the
words a meaning which would lead to absurd or law would be made to apply to purposes other than those
unreasonable consequences. That s a principle that does explicitly stated by its framers; it thus becomes pointless and
back to In re Allen decided oil October 27, 1903, where it was arbitrary, unjust in its effects and apt to lead to absurd and
held that a literal interpretation is to be rejected if it would be unintended consequences.
unjust or lead to absurd results. That is a strong argument
against its adoption. The words of Justice Laurel are Such interpretation puts the seal on Bibiso 31 upon the effect
particularly apt. Thus: "The fact that the construction placed of the expiry of an agreed period of employment as still good
upon the statute by the appellants would lead to an absurdity rulea rule reaffirmed in the recent case of Escudero
is another argument for rejecting it. . . ." 29 vs. Office of the President (G.R. No. 57822, April 26, 1989)
where, in the fairly analogous case of a teacher being served
. . . We have, here, then a case where the true intent of the by her school a notice of termination following the expiration
law is clear that calls for the application of the cardinal rule of the last of three successive fixed-term employment
of statutory construction that such intent of spirit must contracts, the Court held:
prevail over the letter thereof, for whatever is within the
spirit of a statute is within the statute, since adherence to the Reyes (the teacher's) argument is not persuasive. It loses
letter would result in absurdity, injustice and contradictions sight of the fact that her employment was probationary,
and would defeat the plain and vital purpose of the statute. 30 contractual in nature, and one with a definitive period. At the
expiration of the period stipulated in the contract, her
Accordingly, and since the entire purpose behind the appointment was deemed terminated and the letter
development of legislation culminating in the present Article informing her of the non-renewal of her contract is not a
280 of the Labor Code clearly appears to have been, as condition sine qua non before Reyes may be deemed to have
already observed, to prevent circumvention of the ceased in the employ of petitioner UST. The notice is a mere
employee's right to be secure in his tenure, the clause in said reminder that Reyes' contract of employment was due to
article indiscriminately and completely ruling out all written expire and that the contract would no longer be renewed. It
or oral agreements conflicting with the concept of regular is not a letter of termination. The interpretation that the
employment as defined therein should be construed to refer notice is only a reminder is consistent with the court's finding
to the substantive evil that the Code itself has singled out: in Labajo supra. ... 32
agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a Paraphrasing Escudero, respondent Alegre's employment was
fixed period of employment was agreed upon knowingly and terminated upon the expiration of his last contract with Brent
voluntarily by the parties, without any force, duress or School on July 16, 1976 without the necessity of any notice.
improper pressure being brought to bear upon the employee The advance written advice given the Department of Labor
and absent any other circumstances vitiating his consent, or with copy to said petitioner was a mere reminder of the
where it satisfactorily appears that the employer and impending expiration of his contract, not a letter of
employee dealt with each other on more or less equal terms termination, nor an application for clearance to terminate
with no moral dominance whatever being exercised by the which needed the approval of the Department of Labor to
make the termination of his services effective. In any case,
such clearance should properly have been given, not denied.
SO ORDERED.
1. That the term of this Agreement is six (6) months from and In his position paper, the petitioner claimed he started
after the execution hereof, unless otherwise earlier working for the private respondent on June 16, 1984, and
terminated at the option of either party; having done so for more than six months had acquired the
status of a regular employee. As such, he could no longer be
2. That the net income of the said vehicle after fuel and oil dismissed except for lawful cause. He also contended that he
shall be divided by and between them on ninety/ten percent had been removed because of his refusal to sign, as required
(90/10%) basis in favor of the FIRST PARTY; by the private respondent, an affidavit reading as follows:
3. That there is no employer/employee relationship between AFFIDAVIT
the parties, the nature of this Agreement being contractual;
That I, ZOSIMO CIELO, Filipino, of legal age, married/single
4. In the event the SECOND PARTY needs a helper the and a resident of Agusan Canyon, Camp Philipps, after having
personnel so employed by him shall be to his personal been duly sworn to in accordance with law, hereby depose
account, who shall be considered his own employee; and say:
5. That the loss of or damage to the said vehicle shall be to That I am one of the drivers of the trucks of Mr. HENRY LEI
account of the SECOND PARTY; he shall return the unit upon whose hauling trucks are under contract with the Philippine
the expiration or termination of this contract in the condition Packing Corporation;
the same was received by him, fair wear and tear excepted.
That I have received my salary and allowances from Mr.
IN WITNESS WHEREOF, the parties hereunto affixed their HENRY LEI the sum of P1,421.10 for the month of October
signature on this 30th day of June, 1984, at Digos, Davao del 1984. That I have no more claim against the said Mr. Henry
Sur, Philippines. Lei.
(Sgd.) HENRY LEI (Sgd.) ZOSIMO CIELO IN WITNESS WHEREOF, I have hereunto affixed my signature
First Party Second Party this 15th day of November 1984.
SIGNED IN THE PRESENCE OF: ______________
(Sgd.) VICTOR CHAN (Sgd.) AMALFE M. NG Driver
The agreement was supposed to have commenced on June The private respondent rests its case on the agreement and
30, 1984, and to end on December 31, 1984. On December maintains that the labor laws are not applicable because the
22, 1984, however, the petitioner was formally notified by relations of the parties are governed by their voluntary
the private respondent of the termination of his services on stipulations. The contract having expired, it was the
the ground of expiration of their contract. Soon thereafter, on prerogative of the trucking company to renew it or not as it
saw fit.
The writ will issue. making it appear that the drivers of the trucking company
were not its regular employees.
While insisting that it is the agreement that regulates its
relations with the petitioner, the private respondent is Under these arrangements, the private respondent hoped to
ensnared by its own words. The agreement specifically be able to terminate the services of the drivers without the
declared that there was no employer-employee relationship inhibitions of the Labor Code. All it had to do was refuse to
between the parties. Yet the affidavit the private respondent renew the agreements, which, significantly, were uniformly
prepared required the petitioner to acknowledge that "I have limited to a six-month period. No cause had to be established
received my salary and allowances from Mr. Henry Lei," because such renewal was subject to the discretion of the
suggesting an employment relationship. According to its parties. In fact, the private respondent did not even have to
position paper, the petitioner's refusal to sign the affidavit wait for the expiration of the contract as it was there
constituted disrespect or insubordination, which had "some provided that it could be "earlier terminated at the option of
bearing on the renewal of his contract of employment with either party."
the respondent." Of this affidavit, the private respondent had
this to say: By this clever scheme, the private respondent could also
prevent the drivers from becoming regular employees and
. . . Since October 1984, respondent adopted a new policy to thus be entitled to security of tenure and other benefits, such
require all their employees to sign an affidavit to the effect as a minimum wage, cost-of-living allowances, vacation and
that they received their salaries. Copy of which is hereto sick leaves, holiday pay, and other statutory requirements.
attached as Annex "C," covering the months of October and The private respondent argues that there was nothing wrong
November 1984. All other employees of the respondent with the affidavit because all the affiant acknowledged
signed the said affidavit, only herein complainant refused to therein was full payment of the amount due him under the
do so for reasons known only to him. . . . agreement. Viewed in this light, such acknowledgment was
indeed not necessary at all because this was already
It appears from the records that all the drivers of the private embodied in the vouchers signed by the payee-driver. But
respondent have been hired on a fixed contract basis, as the affidavit, for all its seeming innocuousness, imported
evidenced by the mimeographed form of the agreement and more than that. What was insidious about the document was
of the affidavit. The private respondent merely filled in the the waiver the affiant was unwarily making of the statutory
blanks with the corresponding data, such as the driver's rights due him as an employee of the trucking company.
name and address, the amount received by him, and the
date of the document. Each driver was paid through And employee he was despite the innocent protestations of
individual vouchers 4 rather than a common payroll, as is the private respondent. We accept the factual finding of the
usual in companies with numerous employees. Labor Arbiter that the petitioner was a regular employee of
the private respondent. The private respondent is engaged in
The private respondent's intention is obvious. It is remarkable the trucking business as a hauler of cattle, crops and other
that neither the NLRC nor the Solicitor General recognized it. cargo for the Philippine Packing Corporation. This business
There is no question that the purpose behind these individual requires the services of drivers, and continuously because
contracts was to evade the application of the labor laws by
the work is not seasonal, nor is it limited to a single 280 of the Labor Code clearly appears to have been, as
undertaking or operation. Even if ostensibly hired for a fixed already observed, to prevent circumvention of the
period, the petitioner should be considered a regular employee's right to be secure in his tenure, the clause in said
employee of the private respondent, conformably to Article article indiscriminately and completely ruling out all written
280 of the Labor Code providing as follows: or oral agreements conflicting with the concept of regular
employment as defined therein should be construed to refer
Art. 280. Regular and Casual Employment. The provisions to the substantive evil that the Code itself has singled out:
of written agreement to the contrary notwithstanding and agreements entered into precisely to circumvent security of
regardless of the oral agreement of the parties, an tenure.
employment shall be deemed to be regular where the
employee has been engaged to perform activities which are The agreement in question had such a purpose and so was
usually necessarily or desirable in the usual business or trade null and void ab initio.
of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or The private respondent's argument that the petitioner could
termination of which has been determined at the time of the at least be considered on probation basis only and therefore
engagement of the employee or where the work or services separable at will is self-defeating. The Labor Code clearly
to be performed is seasonal in nature and the employment is provides as follows:
for the duration of the season. Art. 281. Probationary employment. Probationary
An employment shall be deemed to be casual if it is not employment shall not exceed six (6) months from the date
covered by the preceding paragraph; Provided, that, any the employee started working, unless it is covered by an
employee who has rendered at least one year of service, apprenticeship agreement stipulating a longer period. The
whether such service is continuous or broken, shall be services of an employee who has been engaged on a
considered a regular employee with respect to the activity in probationary basis may be terminated for a just cause or
which he is employed and his employment shall continue when he fails to qualify as a regular employee in accordance
while such actually exists. (Emphasis supplied) with reasonable standards made known by the employer to
the employee at the time of his engagement. An employee
In Brent School, Inc. vs. Zamora, the Court affirmed the who is allowed to work after a probationary period shall be
general principle that "where from the circumstances it is considered a regular employee.
apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should There is no question that the petitioner was not engaged as
be struck down or disregarded as contrary to public policy, an apprentice, being already an experienced truck driver
morals, etc." Such circumstances have been sufficiently when he began working for the private respondent. Neither
established in the case at bar and justify application of the has it been shown that he was informed at the time of his
following conclusions: employment of the reasonable standards under which he
could qualify as a regular employee. It is plain that the
Accordingly, and since the entire purpose behind the petitioner was hired at the outset as a regular employee. At
development of legislation culminating in the present Article any rate, even assuming that the original employment was
probationary, the Labor Arbiter found that the petitioner had against an unguarded waiver of the benefits due him under
completed more than six month's service with the trucking the Labor Code. Such willful disobedience should commend
company and so had acquired the status of a regular rather than prejudice him for standing up to his rights, at
employee at the time of his dismissal. great risk to his material security, against the very source of
his livelihood.
Even if it be assumed that the six-month period had not yet
been completed, it is settled that the probationary employee The Court looks with stern disapproval at the contract
cannot be removed except also for cause as provided by law. entered into by the private respondent with the petitioner
It is not alleged that the petitioner was separated for poor (and who knows with how many other drivers). The
performance; in fact, it is suggested by the private agreement was a clear attempt to exploit the unwitting
respondent that he was dismissed for disrespect and employee and deprive him of the protection of the Labor
insubordination, more specifically his refusal to sign the Code by making it appear that the stipulations of the parties
affidavit as required by company policy. Hence, even as a were governed by the Civil Code as in ordinary private
probationer, or more so as a regular employee, the petitioner transactions. They were not, to be sure. The agreement was
could not be validly removed under Article 282 of the Labor in reality a contract of employment into which were read the
Code, providing as follows: provisions of the Labor Code and the social justice policy
mandated by the Constitution. It was a deceitful agreement
Art. 282. Termination by employer. An employer may cloaked in the habiliments of legality to conceal the selfish
terminate an employment for any of the following causes: desire of the employer to reap undeserved profits at the
(a) Serious misconduct or willful disobedience by the expense of its employees. The fact that the drivers are on the
employee of the lawful orders of his employer or whole practically unlettered only makes the imposition more
representative in connection with his work censurable and the avarice more execrable.
(b) Gross and habitual neglect by the employee of his duties; WHEREFORE, the petition is GRANTED. The decision of the
National Labor Relations Commission is SET ASIDE and that
(c) Fraud or willful breach by the employee of the trust of the Labor Arbiter REINSTATED, with costs against the
reposed in him by his employer or duly authorized private respondents.
representative;
SO ORDERED.
(d) Commission of a crime or offense by the employee
against the person of his employer or any immediate
member of his family or his duly authorized representative;
and
DECISION
YNARES-SANTIAGO, J.:
c. No salary deduction, with full medical benefits. On May 17, 1999, the SEC approved the proposed "Amended
and Restated Rehabilitation Plan" of PAL and appointed a
5. PAL shall grant the benefits under the 26 July 1998 permanent rehabilitation receiver for the latter. 21
Memorandum of Agreement forged by and between PAL and
PALEA, to those employees who may opt to retire or be On June 7, 1999, the SEC issued an Order confirming its
separated from the company. approval of the "Amended and Restated Rehabilitation Plan"
of PAL. In said order, the cash infusion of US$200 million
6. PALEA members who have been retrenched but have not made by Lucio Tan on June 4, 1999 was acknowledged. 22
received separation benefits shall be granted priority in the
hiring/rehiring of employees. On October 4, 2007, PAL officially exited receivership; thus,
our ruling in Philippine Air Lines v. Kurangking 23 no longer
7. In the absence of applicable Company rule or regulation, applies.
the provisions of the Labor Code shall apply. 15
On June 22, 1998, FASAP filed a Complaint24 against PAL and
In a referendum conducted on October 2, 1998, PAL Patria T. Chiong25 (Chiong) for unfair labor practice, illegal
employees ratified the above proposal. On October 7, 1998, retrenchment with claims for reinstatement and payment of
salaries, allowances and backwages of affected FASAP
members, actual, moral and exemplary damages with a 1. Ramon and Marian Joy Camahort v. PAL, et al. (NLRC-NCR
prayer to enjoin the retrenchment program then being Case No. 00-07-05854-98);
implemented. Instead of a position paper, respondents filed a
Motion to Dismiss and/or Consolidation with NCMB Case No. 2. Erlinda Arevalo and Chonas Santos v. PAL, et al. (NLRC-NCR
NS 12-514-97 pending with the Office of the Secretary of the Case No. 00-07-09793-98); and
Department of Labor and Employment and/or Suspension 3. Victor Lanza v. PAL, et al. (NLRC-NCR Case No.00-04-
and Referral of Claims to the interim rehabilitation 04254-99).
proceedings (motion to dismiss).26
On July 21, 2000, Labor Arbiter Jovencio Ll. Mayor rendered a
On July 6, 1998, FASAP filed its Comment to respondents Decision,33 the dispositive portion of which reads, as follows:
motion to dismiss. On July 23, 1998, the Labor Arbiter issued
an Order27 denying respondents motion to dismiss; granting WHEREFORE, premises considered, this Office renders
a writ of preliminary injunction against PALs implementation judgment declaring that Philippine Airlines, Inc., illegally
of its retrenchment program with respect to FASAP members; retrenched One Thousand Four Hundred (1,400) cabin
setting aside the respective notices of retrenchment attendants including flight pursers for effecting the
addressed to the cabin crew; directing respondents to restore retrenchment program in a despotic and whimsical manner.
the said retrenched cabin crew to their positions and PALs Philippine Airlines, Inc. is likewise hereby ordered to:
payroll until final determination of the case; and directing
respondents to file their position paper. 1. Reinstate the cabin attendants retrenched and/or demoted
to their previous positions;
Respondents appealed to the NLRC which reversed the
decision of the Labor Arbiter. The NLRC directed the lifting of 2. Pay the concerned cabin attendants their full backwages
the writ of injunction and to vacate the directive setting aside from the time they were illegally dismissed/retrenched up to
the notices of retrenchment and reinstating the dismissed their actual reinstatements;
cabin crew to their respective positions and in the PAL
3. Pay moral and exemplary damages in the amount of Five
payroll.28
Hundred Thousand Pesos (P500,000.00); and
FASAP filed its Position Paper 29 on September 28, 1999. On
4. Ten (10%) per cent of the total monetary award as and by
November 8, 1999, respondents filed their Position
way of attorneys fees.
Paper30 with counterclaims against FASAP, to which FASAP
filed its Reply.31 Thereafter, the parties were directed to file SO ORDERED.34
their respective Memoranda.32
Respondents appealed to the NLRC. Meanwhile, FASAP
Meanwhile, instead of being dismissed in accordance with the moved for the implementation of the reinstatement aspect of
Kurangking case, the FASAP case (NLRC-NCR Case No. 06- the Labor Arbiters decision. Despite respondents opposition,
05100-98) was consolidated with the following cases: the Labor Arbiter issued a writ of execution with respect to
the reinstatement directive in his decision. Respondents
moved to quash the writ, but the Labor Arbiter denied the PETITION FOR CERTIORARI UNDER RULE 65 AND EFFECTIVELY
same. Again, respondents took issue with the NLRC. VALIDATED THE RETRENCHMENT EXERCISED BY
RESPONDENT PAL WHICH WAS INITIALLY DECLARED AS
Meanwhile, on May 31, 2004, the NLRC issued its ILLEGAL BY THE LABOR ARBITER A QUO SINCE:
Decision35 in the appeal with respect to the Labor Arbiters
July 21, 2000 decision. The dispositive portion thereof reads: FIRST, the record shows that PAL failed or neglected to adopt
less drastic cost-cutting measures before resorting to
WHEREFORE, premises considered, the Decision dated July retrenchment. No less than the Supreme Court held that
21, 2000 is hereby SET ASIDE and a new one entered resort to less drastic cost-cutting measures is an
DISMISSING the consolidated cases for lack of merit. indispensable requirement for a valid retrenchment x x x.
With respect to complainant Ms. Begonia Blanco, her SECOND, PAL arbitrarily and capriciously singled out the year
demotion is hereby declared illegal and respondent PAL is 1997 as a reference in its alleged assessment of employee
ordered to pay her salary differential covering the period efficiency. With this, it totally disregarded the employees
from the time she was downgraded in July 1998 up to the performance during the years prior to 1997. This resulted in
time she resigned in October 1999. the unreasonable and unfair retrenchment or demotion of
Respondent PAL is likewise ordered to pay the separation several flight pursers and attendants who showed
benefits to those complainants who have not received their impeccable service records during the years prior to 1997.
separation pay and to pay the balance to those who have THIRD, seniority was totally disregarded in the selection of
received partial separation pay. employees to be retrenched, which is a clear and willful
The Order of the Labor Arbiter dated April 6, 2000 is also SET violation of the CBA.
ASIDE and the Writ of Execution dated November 13, 2000 is FOURTH, PAL maliciously represented in the proceedings
hereby quashed. below that it could only operate on a fleet of fourteen (14)
Annexes "A" and "B" are considered part of this Decision. planes in order to justify the retrenchment scheme. Yet, the
evidence on record revealed that PAL operated a fleet of
SO ORDERED.36 twenty two (22) planes. In fact, after having illegally
retrenched the unfortunate flight attendants and pursers, PAL
FASAP moved for reconsideration but it was denied; hence it rehired those who were capriciously dismissed and even
filed an appeal to the Court of Appeals which was denied in hired from the outside just to fulfill their manning
the herein assailed Decision. requirements.
FASAPs motion for reconsideration was likewise denied; FIFTH, PAL did not use any fair and reasonable criteria in
hence, the instant petition raising the following issues: effecting retrenchment. If there really was any, the same was
applied arbitrarily, if not discriminatorily.
WHETHER OR NOT THE COURT OF APPEALS DECIDED THE
CASE A QUO IN A WAY CONTRARY TO LAW AND/OR
APPLICABLE JURISPRUDENCE WHEN IT DENIED FASAPS
FINALLY, and perhaps the worst transgression of FASAPs pay shall be equivalent to one (1) month pay or at least one-
rights, PAL used retrenchment to veil its union-busting half (1/2) month pay for every year of service, whichever is
motives and struck at the heart of FASAP when it retrenched higher. A fraction of at least six (6) months shall be
seven (7) of its twelve (12) officers and demoted three (3) considered one (1) whole year.
others.37 (Emphasis supplied)
The law recognizes the right of every business entity to
These issues boil down to the question of whether PALs reduce its work force if the same is made necessary by
retrenchment scheme was justified. compelling economic factors which would endanger its
existence or stability.40 Where appropriate and where
It is a settled rule that in the exercise of the Supreme Courts conditions are in accord with law and jurisprudence, the
power of review, the Court is not a trier of facts and does not Court has authorized valid reductions in the work force to
normally undertake the re-examination of the evidence forestall business losses, the hemorrhaging of capital, or
presented by the contending parties during trial. However, even to recognize an obvious reduction in the volume of
there are several exceptions to this rule38 such as when the business which has rendered certain employees redundant. 41
factual findings of the Labor Arbiter differ from those of the
NLRC, as in the instant case, which opens the door to a Nevertheless, while it is true that the exercise of this right is
review by this Court.39 a prerogative of management, there must be faithful
compliance with substantive and procedural requirements of
Under the Labor Code, retrenchment or reduction of the law and jurisprudence, for retrenchment strikes at the
employees is authorized as follows: very heart of the workers employment, the lifeblood upon
ART. 283. Closure of establishment and reduction of which he and his family owe their survival. Retrenchment is
personnel. - The employer may also terminate the only a measure of last resort, when other less drastic means
employment of any employee due to the installation of labor- have been tried and found to be inadequate. 42
saving devices, redundancy, retrenchment to prevent losses The burden clearly falls upon the employer to prove
or the closing or cessation of operation of the establishment economic or business losses with sufficient supporting
or undertaking unless the closing is for the purpose of evidence. Its failure to prove these reverses or losses
circumventing the provisions of this Title, by serving a written necessarily means that the employees dismissal was not
notice on the workers and the Ministry of Labor and justified.43 Any claim of actual or potential business losses
Employment at least one (1) month before the intended date must satisfy certain established standards, all of which must
thereof. In case of termination due to the installation of labor- concur, before any reduction of personnel becomes
saving devices or redundancy, the worker affected thereby legal.44 These are:
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 (1) That retrenchment is reasonably necessary and likely to
year of service, whichever is higher. In case of retrenchment prevent business losses which, if already incurred, are not
to prevent losses and in cases of closures or cessation of merely de minimis, but substantial, serious, actual and real,
operations of establishment or undertaking not due to or if only expected, are reasonably imminent as perceived
serious business losses or financial reverses, the separation objectively and in good faith by the employer;
(2) That the employer served written notice both to the Firstly, the losses expected should be substantial and not
employees and to the Department of Labor and Employment merely de minimis in extent. If the loss purportedly sought to
at least one month prior to the intended date of be forestalled by retrenchment is clearly shown to be
retrenchment; insubstantial and inconsequential in character, the bona fide
nature of the retrenchment would appear to be seriously in
(3) That the employer pays the retrenched employees question. Secondly, the substantial loss apprehended must
separation pay equivalent to one (1) month pay or at least be reasonably imminent, as such imminence can be
one-half () month pay for every year of service, whichever perceived objectively and in good faith by the employer.
is higher; There should, in other words, be a certain degree of urgency
(4) That the employer exercises its prerogative to retrench for the retrenchment, which is after all a drastic recourse with
employees in good faith for the advancement of its interest serious consequences for the livelihood of the employees
and not to defeat or circumvent the employees right to retired or otherwise laid-off. Because of the consequential
security of tenure; and, nature of retrenchment, it must, thirdly, be reasonably
necessary and likely to effectively prevent the expected
(5) That the employer used fair and reasonable criteria in losses. The employer should have taken other measures prior
ascertaining who would be dismissed and who would be or parallel to retrenchment to forestall losses, i.e., cut other
retained among the employees, such as status, efficiency, costs than labor costs. An employer who, for instance, lays
seniority, physical fitness, age, and financial hardship for off substantial numbers of workers while continuing to
certain workers.45 dispense fat executive bonuses and perquisites or so-called
"golden parachutes," can scarcely claim to be retrenching in
In view of the facts and the issues raised, the resolution of good faith to avoid losses. To impart operational meaning to
the instant petition hinges on a determination of the the constitutional policy of providing "full protection" to labor,
existence of the first, fourth and the fifth elements set forth the employers prerogative to bring down labor costs by
above, as well as compliance therewith by PAL, taking to retrenching must be exercised essentially as a measure of
mind that the burden of proof in retrenchment cases lies with last resort, after less drastic means - e.g., reduction of both
the employer in showing valid cause for dismissal; 46 that management and rank-and-file bonuses and salaries, going
legitimate business reasons exist to justify retrenchment. 47 on reduced time, improving manufacturing efficiencies,
trimming of marketing and advertising costs, etc. - have
FIRST ELEMENT: That retrenchment is reasonably necessary
been tried and found wanting.
and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, Lastly, but certainly not the least important, alleged losses if
actual and real, or if only expected, are reasonably imminent already realized, and the expected imminent losses sought to
as perceived objectively and in good faith by the employer. be forestalled, must be proved by sufficient and convincing
evidence.
The employers prerogative to layoff employees is subject to
certain limitations. In Lopez Sugar Corporation v. Federation The law speaks of serious business losses or financial
of Free Workers,48 we held that: reverses. Sliding incomes or decreasing gross revenues are
not necessarily losses, much less serious business losses render too easy the abuse of this ground for termination of
within the meaning of the law. The fact that an employer may services of employees; scheming employers might be merely
have sustained a net loss, such loss, per se, absent any other feigning business losses or reverses in order to ease out
evidence on its impact on the business, nor on expected employees.56
losses that would have been incurred had operations been
continued, may not amount to serious business losses In establishing a unilateral claim of actual or potential losses,
mentioned in the law. The employer must show that its losses financial statements audited by independent external
increased through a period of time and that the condition of auditors constitute the normal method of proof of profit and
the company will not likely improve in the near future, 49 or loss performance of a company.57 The condition of business
that it expected no abatement of its losses in the coming losses justifying retrenchment is normally shown by audited
years.50 Put simply, not every loss incurred or expected to be financial documents like yearly balance sheets and profit and
incurred by a company will justify retrenchment. 51 loss statements as well as annual income tax returns.
Financial statements must be prepared and signed by
The employer must also exhaust all other means to avoid independent auditors; otherwise, they may be assailed as
further losses without retrenching its self-serving.58 A Statement of Profit and Loss submitted to
52
employees. Retrenchment is a means of last resort; it is prove alleged losses, without the accompanying signature of
justified only when all other less drastic means have been a certified public accountant or audited by an independent
tried and found insufficient.53 Even assuming that the auditor, is nothing but a self-serving document which ought
employer has actually incurred losses by reason of the Asian to be treated as a mere scrap of paper devoid of any
economic crisis, the retrenchment is not completely justified probative value.59
if there is no showing that the retrenchment was the last
recourse resorted to.54 Where the only less drastic measure The audited financial statements should be presented before
that the employer undertook was the rotation work scheme, the Labor Arbiter who is in the position to evaluate evidence.
or the three-day-work-per-employee-per-week schedule, and They may not be submitted belatedly with the Court of
it did not endeavor at other measures, such as cost Appeals, because the admission of evidence is outside the
reduction, lesser investment on raw materials, adjustment of sphere of the appellate courts certiorari jurisdiction. Neither
the work routine to avoid scheduled power failure, reduction can this Court admit in evidence audited financial
of the bonuses and salaries of both management and rank- statements, or make a ruling on the question of whether the
and-file, improvement of manufacturing efficiency, and employer incurred substantial losses justifying retrenchment
trimming of marketing and advertising costs, the claim that on the basis thereof, as this Court is not a trier of
retrenchment was done in good faith to avoid losses is facts.60 Even so, this Court may not be compelled to accept
belied.55 the contents of said documents blindly and without
thinking.61
Alleged losses if already realized, and the expected imminent
losses sought to be forestalled, must be proved by sufficient The requirement of evidentiary substantiation dictates that
and convincing evidence. The reason for requiring this is not even the affidavit of the Assistant to the General
readily apparent: any less exacting standard of proof would Manager is admissible to prove losses, as the same is self-
serving.62 Thus, in Central Azucarera de la Carlota v. National personnel. Although the Philippine economy was gravely
Labor Relations Commission,63 the Court ruled that the mere affected by the Asian financial crisis, however, it cannot be
citation by the employer of the economic setback suffered by assumed that it has likewise brought PAL to the brink of
the sugar industry as a whole cannot, in the absence of bankruptcy. Likewise, the fact that PAL underwent corporate
adequate, credible and persuasive evidence, justify its rehabilitation does not automatically justify the retrenchment
retrenchment program, 64 thus: of its cabin crew personnel.
A litany of woes, from a labor strike way back in 1982 to the Records show that PAL was not even aware of its actual
various crises endured by the sugar industry, droughts, the financial position when it implemented its retrenchment
1983 assassination of former Senator Benigno Aquino, Jr., program. It initially decided to cut its fleet size to only 14
high crop loan interests, spiraling prices of fertilizers and ("Plan 14") and based on said plan, it retrenched more than
spare parts, the depression of sugar prices in the world 1,400 of its cabin crew personnel. Later on, however, it
market, cutback in the U.S. sugar quota, abandonment of abandoned its "Plan 14" and decided to retain 22 units of
productive areas because of the insurgency problem and the aircraft ("Plan 22"). Unfortunately, it has retrenched more
absence of fair and consistent government policies may have than what was necessary. PAL admits that:
contributed to the unprecedented decline in sugar production
in the country, but there is no solid evidence that they [U]pon reconsideration and with some optimistic prospects
translated into specific and substantial losses that would for operations, the Company (PAL) decided not to implement
necessitate retrenchment. Just exactly what negative effects "Plan 14" and instead implemented "Plan 22," which would
were borne by petitioner as a result, petitioner failed to involve a fleet of 22 planes. Since "Plan 14" was abandoned,
underscore.65 the Company deemed it appropriate to recall back into
employment employees it had previously retrenched. Thus,
In Anino v. National Labor Relations Commission, 66 the Court some of the employees who were initially laid off were
also held that the employers claim that retrenchment was recalled back to duty, the basis of which was passing the
undertaken as a measure of self-preservation to prevent 1997 efficiency rating to meet the Companys operational
losses brought about by the continuing decline of nickel requirements.68
prices and export volume in the mining industry, as well as
its allegation that the reduction of excise taxes on mining PAL decided to adopt "Plan 14" on June 12, 1998. Three days
from 5% to 1% on a graduated basis as provided under after, or on June 15, 1998, it sent notices of retrenchment to
Republic Act No. 7729 was a clear recognition by the its cabin crew personnel to take effect on July 15, 1998.
government of the industrys worsening economic difficulties However, after allegedly realizing that it was going to retain
was a bare claim in the absence of evidence of actual 22 of its aircraft instead of 14, and after more than 1,400 of
losses in its business operations. 67 its cabin crew have been fired during the period from
November 30, 1998 to December 15, 1998, it suddenly
In the instant case, PAL failed to substantiate its claim of recalled to duty 202 of the retrenched cabin crew
actual and imminent substantial losses which would justify personnel.69
the retrenchment of more than 1,400 of its cabin crew
This only proves that PAL was not aware of the true state of This bare and unilateral claim does not suffice. The Labor
its finances at the time it implemented the assailed massive Arbiters finding that PAL "amply satisfied the rules imposed
retrenchment scheme. It embarked on the mass dismissal by law and jurisprudence that sustain retrenchment," is
without first undertaking a well-considered study on the without basis, absent the presentation of documentary
proposed retrenchment scheme. This view is underscored by evidence to that effect. In Saballa v. National Labor Relations
the fact that previously, PAL terminated the services of 140 Commission,71 we ruled that where the decision of the Labor
probationary cabin attendants, but rehired them almost Arbiter did not indicate the specific bases for such crucial
immediately and even converted their employment into finding that the employer was suffering business reverses,
permanent and regular, even as a massive retrenchment was the same was arbitrary. We ratiocinated therein that since
already looming in the horizon. the employer insisted that its critical financial condition was
the central and pivotal reason for its retrenchment, there was
To prove that PAL was financially distressed, it could have no reason why it should have neglected or refused to submit
submitted its audited financial statements but it failed to its audited financial statements.
present the same with the Labor Arbiter. Instead, it narrated
a litany of woes without offering any evidence to show that PALs assertion that its finances were gravely compromised
they translated into specific and substantial losses that would as a result of the 1997 Asian financial crisis and the pilots
necessitate retrenchment, thus: strike lacks basis due to the non-presentation of its audited
financial statements to prove actual or imminent losses. Also,
1. It is a matter of public knowledge that PAL had been the fact that PAL was placed under receivership did not
suffering severe financial losses that reached its most critical excuse it from submitting to the labor authorities copies of its
condition in 1998 when its liabilities amounted to about audited financial statements to prove the urgency, necessity
P90,642,933,919.00, while its assets amounted to only about and extent, of its retrenchment program. PAL should have
P85,109,075,351.00. The precarious situation prompted PAL presented its audited financial statements for the years
to adopt cost-cutting measures to prevent it from becoming immediately preceding and during which the retrenchment
totally bankrupt, including the reduction of its flight fleet was carried out. Law and jurisprudence require that alleged
from 56 to 14 aircrafts and the retrenchment of unneeded losses or expected imminent losses must be proved by
employees. sufficient and convincing evidence.
xxxx Likewise, PAL has not shown to the Courts satisfaction that
26. To save its business, PAL had every right to undergo a the pilots strike had gravely affected its operations. It
retrenchment program immediately. PAL did not need, by offered no proof to show the correlation between the pilots
law, to justify or explain to FASAP the reasons for the strike and its alleged financial difficulties. In Guerrero v.
retrenchment before it could implement it. Proof of actual National Labor Relations Commission, 72 the Court held that
financial losses incurred by the company is not a condition where the employer failed to prove its claim with competent
sine qua non for retrenchment. 70 evidence that the employees strike paralyzed its operations
and resulted in the withdrawal of its clients orders, the
retrenchment of its employees must be declared illegal. 73
Moreover, as the Court ruled in the case of EMCO Plywood Also, the claim that PAL saved P24 million monthly due to the
Corporation,74 it must be shown that the employer resorted implementation of the retrenchment program does not prove
to other means but these proved to be insufficient or anything; it has not been shown to what extent or degree
inadequate, such as cost reduction, lesser investment on raw such savings benefited PAL, vis--vis its total expenditures or
materials, adjustment of the work routine to avoid scheduled its overall financial position. Likewise, its claim that its
power failure, reduction of the bonuses and salaries of both liabilities reached P90 billion, while its assets amounted to
management and rank-and-file, improvement of P85 billion only or a debt to asset ratio of more than 1:1
manufacturing efficiency, and trimming of marketing and may not readily be believed, considering that it did not
advertising costs. In the instant case, there is no proof that submit its audited financial statements. All these allegations
PAL engaged in cost-cutting measures other than a mere are self-serving evidence.
reduction in its fleet of aircraft and the retrenchment of 5,000
of its personnel. Interestingly, PAL submitted its audited financial statements
only when the case was the subject of certiorari proceedings
The only manifestation of PALs attempt at exhausting other in the Court of Appeals by attaching in its Comment 76 a copy
possible measures besides retrenchment was when it of its consolidated audited financial statements for the years
conducted negotiations and consultations with FASAP which, 2002, 2003 and 2004.77 However, these are not the financial
however, ended nowhere. None of the plans and suggestions statements that would have shown PALs alleged precarious
taken up during the meetings was implemented. On the position at the time it implemented the massive
other hand, PALs September 4, 1998 offer of shares of stock retrenchment scheme in 1998. PAL should have submitted its
to its employees was adopted belatedly, or only after its financial statements for the years 1997 up to 1999; and not
more than 1,400 cabin crew personnel were retrenched. for the years 2002 up to 2004 because these financial
Besides, this offer can hardly be considered to be borne of statements cover a period markedly distant to the years in
good faith, considering that it was premised on the condition question, which make them irrelevant and unacceptable.
that, if accepted, all existing CBAs between PAL and its
employees would have to be suspended for 10 years. When Neither could PAL claim to suffer from imminent or resultant
the offer was rejected by the employees, PAL ceased its losses had it not implemented the retrenchment scheme in
operations on September 23, 1998. It only resumed business 1998. It could not have proved that retrenchment was
when the CBA suspension clause was ratified by the necessary to prevent further losses, because immediately
employees in a referendum subsequently thereafter or in February 1999 78 PAL was on the road to
conducted.75 Moreover, this stock distribution scheme does recovery; this is the airlines bare admission in its Comment
not do away with PALs expenditures or liabilities, since it has to the instant petition.79 During that period, it was recalling to
for its sole consideration the commitment to suspend CBAs duty cabin crew it had previously retrenched. In March 2000,
with its employees for 10 years. It did not improve the PAL declared a net income of P44.2 million. In March 2001, it
financial standing of PAL, nor did it result in corporate reported a profit of P419 million. In March 2003, it again
savings, vis--vis the financial difficulties it was suffering at registered a net income of P295 million.80 All these facts are
the time. anathema to a finding of financial difficulties.
Finally, what further belied PALs allegation that it was subject to discretionary review, provided of course that
suffering from substantial actual and imminent losses was violation of law or arbitrary or malicious action is not shown. 82
the fact that in December 1998, PAL submitted a "stand-
alone" rehabilitation plan to the SEC, and on June 4, 1999, or The foregoing principle holds true with respect to PALs claim
less than a year after the retrenchment, the amount of in its Comment that the only issue is the manner by which its
US$200 million was invested directly into PAL by way of retrenchment scheme was carried out because the validity of
additional capital infusion for its operations. 81 These facts the scheme has been settled in its favor. 83Respondents might
betray PALs claim that it was in dire financial straits. By have confused the right to retrench with its actual
submitting a "stand-alone" rehabilitation plan, PAL retrenchment program, treating them as one and the same.
acknowledged that it could undertake recovery on its own The first, no doubt, is a valid prerogative of management; it
and that it possessed enough resources to weather the is a right that exists for all employers. As to the second, it is
financial storm, if any. always subject to scrutiny in regard to faithful compliance
with substantive and procedural requirements which the law
Thus said, it was grave error for the Labor Arbiter, the NLRC and jurisprudence have laid down. The right of an employer
and the Court of Appeals, to have simply assumed that PAL to dismiss an employee differs from and should not be
was in grievous financial state, without requiring the latter to confused with the manner in which such right is exercised. 84
substantiate such claim. It bears stressing that in
retrenchment cases, the presentation of proof of financial FOURTH ELEMENT: That the employer exercises its
difficulties through the required documents, preferably prerogative to retrench employees in good faith for the
audited financial statements prepared by independent advancement of its interest and not to defeat or circumvent
auditors, may not summarily be done away with. the employees right to security of tenure.
That FASAP admitted and took for granted the existence of Concededly, retrenchment to prevent losses is an authorized
PALs financial woes cannot excuse the latter from proving to cause for terminating employment and the decision whether
the Courts satisfaction that indeed it was bleeding to resort to such move or not is a management prerogative.
financially. It was the airlines obligation to prove that it was However, the right of an employer to dismiss an employee
in such financial distress; that it was necessary to implement differs from and should not be confused with the manner in
an appropriate retrenchment scheme; that it had to undergo which such right is exercised. It must not be oppressive and
a retrenchment program in proportion to or commensurate abusive since it affects one's person and property. 85
with the extent of its financial distress; and that, it was In Indino v. National Labor Relations Commission, 86 the Court
carrying out the scheme in good faith and without held that it is almost an inflexible rule that employers who
undermining the security of tenure of its employees. The contemplate terminating the services of their workers cannot
Court is mindful that the characterization of an employees be so arbitrary and ruthless as to find flimsy excuses for their
services as no longer necessary or sustainable, and decisions. This must be so considering that the dismissal of
therefore, properly terminable, is an exercise of business an employee from work involves not only the loss of his
judgment on the part of the employer, and that the wisdom position but more important, his means of livelihood.
or soundness of such characterization or decision is not Applying this caveat, it is therefore incumbent for the
employer, before putting into effect any retrenchment jobs, only to be recalled but assigned to lower positions (i.e.,
process on its work force, to show by convincing evidence demoted), and, worse, some as new hires, without due
that it was being wrecked by serious financial problems. regard for their long years of service with the airline.
Simply declaring its state of insolvency or its impending
doom will not be sufficient. To do so would render the The irregularity of PALs implementation of Plan 14 becomes
security of tenure of workers and employees illusory. Any more apparent when it rehired 140 probationary cabin
employer desirous of ridding itself of its employees could attendants whose services it had previously terminated, and
then easily do so without need to adduce proof in support of yet proceeded to terminate the services of its permanent
its action. We can not countenance this. Security of tenure is cabin crew personnel.
a right guaranteed to employees and workers by the In sum, we find that PAL had implemented its retrenchment
Constitution and should not be denied on the basis of mere program in an arbitrary manner and with evident bad faith,
speculation. which prejudiced the tenurial rights of the cabin crew
On the requirement that the prerogative to retrench must be personnel.
exercised in good faith, we have ruled that the hiring of new Moreover, the managements September 4, 1998 offer to
employees and subsequent rehiring of "retrenched" transfer PAL shares of stock in the name of its employees in
employees constitute bad faith;87 that the failure of the exchange for the latters commitment to suspend all existing
employer to resort to other less drastic measures than CBAs for 10 years; the closure of its operations when the
retrenchment seriously belies its claim that retrenchment offer was rejected; and the resumption of its business after
was done in good faith to avoid losses; 88 and that the the employees relented; all indicate that PAL had not acted in
demonstrated arbitrariness in the selection of which of its earnest in regard to relations with its employees at the time.
employees to retrench is further proof of the illegality of the
employers retrenchment program, not to mention its bad FIFTH ELEMENT: That the employer used fair and reasonable
faith.89 criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status,
When PAL implemented Plan 22, instead of Plan 14, which efficiency, seniority, physical fitness, age, and financial
was what it had originally made known to its employees, it hardship for certain workers.
could not be said that it acted in a manner compatible with
good faith. It offered no satisfactory explanation why it In selecting employees to be dismissed, fair and reasonable
abandoned Plan 14; instead, it justified its actions of criteria must be used, such as but not limited to: (a) less
subsequently recalling to duty retrenched employees by preferred status (e.g., temporary employee), (b) efficiency
making it appear that it was a show of good faith; that it was and (c) seniority.90
due to its good corporate nature that the decision to consider
recalling employees was made. The truth, however, is that it In Villena v. National Labor Relations Commission, 91 the Court
was unfair for PAL to have made such a move; it was considered seniority an important aspect for the validity of a
capricious and arbitrary, considering that several thousand retrenchment program. In Philippine Tuberculosis Society, Inc.
employees who had long been working for PAL had lost their v. National Labor Union,92 the Court held that the
implementation of a retrenchment scheme without taking retrenchment program; and that the criteria actually used
seniority into account rendered the retrenchment invalid, which was unilaterally formulated by PAL using its
even as against factors such as dependability, adaptability, Performance Evaluation Form in its Grooming and
trainability, job performance, discipline, and attitude towards Appearance Handbook was reasonable and fair. Indeed, PAL
work. was not obligated to consult FASAP regarding the standards it
would use in evaluating the performance of the each cabin
In the implementation of its retrenchment scheme, PAL crew. However, we do not agree with the findings of the
evaluated the cabin crew personnels performance during the appellate court that the criteria utilized by PAL in the actual
year preceding the retrenchment (1997), based on the retrenchment were reasonable and fair.
following set of criteria or rating variables found in the
Performance Evaluation Form of the cabin crew personnels This Court has repeatedly enjoined employers to adopt and
Grooming and Appearance Handbook: observe fair and reasonable standards to effect
retrenchment. This is of paramount importance because an
A. INFLIGHT PROFICIENCY EVALUATION 30% employers retrenchment program could be easily justified
B. JOB PERFORMANCE 35% considering the subjective nature of this requirement. The
adoption and implementation of unfair and unreasonable
Special Award +5 criteria could not easily be detected especially in the
retrenchment of large numbers of employees, and in this
Commendations +2 aspect, abuse is a very distinct and real possibility. This is
where labor tribunals should exercise more diligence; this
Appreciation +1
aspect is where they should concentrate when placed in a
Disciplinary Actions Reminder (-3), Warning/Admonition & position of having to judge an employers retrenchment
Reprimands (-5), Suspension (-20), Passenger Complaints (- program.
30), Appearance (-10)
Indeed, the NLRC made a detailed listing of the retrenchment
C. ATTENDANCE 35% scheme based on the ICCD Masterank and Seniority 1997
Ratings. It found the following:
Perfect Attendance +2
1. Number of employees retrenched due to inverse seniority
Missed Assignment -30 rule and other reasons -- 454
Sick Leaves in excess of allotment and other leaves in 2. Number of employees retrenched due to excess sick
excess of allotment -20 leaves -- 299
93
Tardiness -10 3. Number of employees who were retrenched due to excess
sick leave and other reasons -- 61
The appellate court held that there was no need for PAL to
consult with FASAP regarding standards or criteria that the
airline would utilize in the implementation of the
4. Number of employees who were retrenched due to other under the parties CBA. Moreover, "gross violations of CBA"
reasons -- 107 under the same Article referred to flagrant and/or malicious
refusal to comply with the economic provisions of such
5. Number of employees who were demoted -- 552 agreement, which is not the issue in the instant
Total -- 1,473.94 case.1avvphi1
Prominent from the above data is the retrenchment of cabin Also, we fail to see any specific instance of union busting,
crew personnel due to "other reasons" which, however, are oppression or harassment and similar acts of FASAPs
not specifically stated and shown to be for a valid cause. This officers. The fact that majority of FASAPs officers were either
is not allowed because it has no basis in fact and in law. retrenched or demoted does not prove restraint or coercion
in their right to organize. Instead, we see a simple
Moreover, in assessing the overall performance of each cabin retrenchment scheme gone wrong for failure to abide by the
crew personnel, PAL only considered the year 1997. This stringent rules prescribed by law, and a failure to discharge
makes the evaluation of each cabin attendants efficiency the employers burden of proof in such cases.
rating capricious and prejudicial to PAL employees covered
by it. By discarding the cabin crew personnels previous years Quitclaims executed as a result of PALs illegal retrenchment
of service and taking into consideration only one years worth program are likewise annulled and set aside because they
of job performance for evaluation, PAL virtually did away with were not voluntarily entered into by the retrenched
the concept of seniority, loyalty and past efficiency, and employees; their consent was obtained by fraud or mistake,
treated all cabin attendants as if they were on equal footing, as volition was clouded by a retrenchment program that was,
with no one more senior than the other. at its inception, made without basis. The law looks with
disfavor upon quitclaims and releases by employees
In sum, PALs retrenchment program is illegal because it was pressured into signing by unscrupulous employers minded to
based on wrongful premise (Plan 14, which in reality turned evade legal responsibilities. As a rule, deeds of release or
out to be Plan 22, resulting in retrenchment of more cabin quitclaim cannot bar employees from demanding benefits to
attendants than was necessary) and in a set of criteria or which they are legally entitled or from contesting the legality
rating variables that is unfair and unreasonable when of their dismissal. The acceptance of those benefits would
implemented. It failed to take into account each cabin not amount to estoppel. The amounts already received by
attendants respective service record, thereby disregarding the retrenched employees as consideration for signing the
seniority and loyalty in the evaluation of overall employee quitclaims should, however, be deducted from their
performance. respective monetary awards. 95
Anent the claim of unfair labor practices committed against In Trendline Employees Association-Southern Philippines
petitioner, we find the same to be without basis. Article 261 Federation of Labor v. NLRC, 96 we held that where the
of the Labor Code provides that violations of a CBA, except employer led its employees to believe that the employer was
those which are gross in character, shall no longer be treated suffering losses and as a result thereof accept retrenchment
as unfair labor practice and shall be resolved as grievances by executing quitclaims and waivers, there was evident bad
faith on the part of the employer justifying the setting aside motion for reconsideration, are REVERSED and SET ASIDE
of the quitclaims and waivers executed. and a new one is rendered:
As to PALs recall and rehire process (of retrenched cabin 1. FINDING respondent Philippine Airlines, Inc. GUILTY of
crew employees), the same is likewise defective. Considering illegal dismissal;
the illegality of the retrenchment, it follows that the
subsequent recall and rehire process is likewise invalid and 2. ORDERING Philippine Air Lines, Inc. to reinstate the cabin
without effect. crew personnel who were covered by the retrenchment and
demotion scheme of June 15, 1998 made effective on July 15,
A corporate officer is not personally liable for the money 1998, without loss of seniority rights and other privileges,
claims of discharged corporate employees unless he acted and to pay them full backwages, inclusive of allowances and
with evident malice and bad faith in terminating their other monetary benefits computed from the time of their
employment.97 We do not see how respondent Patria Chiong separation up to the time of their actual reinstatement,
may be held personally liable together with PAL, it appearing provided that with respect to those who had received their
that she was merely acting in accordance with what her respective separation pay, the amounts of payments shall be
duties required under the circumstances. Being an Assistant deducted from their backwages. Where reinstatement is no
Vice President for Cabin Services of PAL, she takes direct longer feasible because the positions previously held no
orders from superiors, or those who are charged with the longer exist, respondent Corporation shall pay backwages
formulation of the policies to be implemented. plus, in lieu of reinstatement, separation pay equal to one (1)
month pay for every year of service;
With respect to moral damages, we have time and again held
that as a general rule, a corporation cannot suffer nor be 3. ORDERING Philippine Airlines, Inc. to pay attorneys fees
entitled to moral damages. A corporation, being an artificial equivalent to ten percent (10%) of the total monetary award.
person and having existence only in legal contemplation, has
no feelings, no emotions, no senses; therefore, it cannot Costs against respondent PAL.
experience physical suffering and mental anguish. Mental SO ORDERED.
suffering can be experienced only by one having a nervous
system and it flows from real ills, sorrows, and griefs of life
all of which cannot be suffered by an artificial, juridical
person.98 The Labor Arbiters award of moral damages was
therefore improper.
PRESENT
G.R. No. 117040 January 27, 2000 In view of the retrenchment program of the company, we
hereby reiterate our verbal notice to you of your termination
RUBEN SERRANO, petitioner, as Security Section Head effective October 11, 1991.
vs.
NATIONAL LABOR RELATIONS COMMISSION and Please secure your clearance from this office.
ISETANN DEPARTMENT STORE, respondents.
Very truly yours,
MENDOZA, J.:
[Sgd.] TERESITA A. VILLANUEVA
Human Resources Division Manager
The loss of his employment prompted petitioner to file a WHEREFORE, above premises considered, judgment is
complaint on December 3, 1991 for illegal dismissal, illegal hereby decreed:
layoff, unfair labor practice, underpayment of wages, and
nonpayment of salary and overtime pay. 4 (a) Finding the dismissal of the complainant to be illegal and
concomitantly, Respondent is ordered to pay complainant full
The parties were required to submit their position papers, on backwages without qualification or deduction in the amount
the basis of which the Labor Arbiter defined the issues as of P74,740.00 from the time of his dismissal until
follows:5 reinstatement. (computed till promulgation only) based on
his monthly salary of P4,040.00/month at the time of his
Whether or not there is a valid ground for the dismissal of the termination but limited to (3) three years;
complainant.
(b) Ordering the Respondent to immediately reinstate the
Whether or not complainant is entitled to his monetary complainant to his former position as security section head or
claims for underpayment of wages, nonpayment of salaries, to a reasonably equivalent supervisorial position in charges
13th month pay for 1991 and overtime pay. of security without loss of seniority rights, privileges and
Whether or not Respondent is guilty of unfair labor practice. benefits. This order is immediately executory even pending
appeal;
Thereafter, the case was heard. On April 30, 1993, the Labor
Arbiter rendered a decision finding petitioner to have been (c) Ordering the Respondent to pay complainant unpaid
illegally dismissed. He ruled that private respondent failed to wages in the amount of P2,020.73 and proportionate 13th
establish that it had retrenched its security section to prevent month pay in the amount of P3,198.30;
or minimize losses to its business; that private respondent (d) Ordering the Respondent to pay complainant the amount
failed to accord due process to petitioner; that private of P7,995.91, representing 10% attorney's fees based on the
respondent failed to use reasonable standards in selecting total judgment award of P79,959.12.
employees whose employment would be terminated; that
private respondent had not shown that petitioner and other All other claims of the complainant whether monetary or
employees in the security section were so inefficient so as to otherwise is hereby dismissed for lack of merit.
justify their replacement by a security agency, or that "cost-
saving devices [such as] secret video cameras (to monitor SO ORDERED.
and prevent shoplifting) and secret code tags on the Private respondent appealed to the NLRC which, in its
merchandise" could not have been employed; instead, the resolution of March 30, 1994; reversed the decision of the
day after petitioner's dismissal, private respondent employed Labor Arbiter and ordered petitioner to be given separation
a safety and security supervisor with duties and functions pay equivalent to one month pay for every year of service,
similar to those of petitioner.1wphi1.nt unpaid salary, and proportionate 13th month pay. Petitioner
Accordingly, the Labor Arbiter ordered: 6 filed a motion for reconsideration, but his motion was denied.
The NLRC held that the phase-out of private respondent's Closure of establishment and reduction of personnel. The
security section and the hiring of an independent security employer may also terminate the employment of any
agency constituted an exercise by private respondent of "[a] employee due to the installation of labor-saving devices,
legitimate business decision whose wisdom we do not intend redundancy, retrenchment to prevent losses or the closing or
to inquire into and for which we cannot substitute our cessation of operations of the establishment or undertaking
judgment"; that the distinction made by the Labor Arbiter unless the closing is for the purpose of circumventing the
between "retrenchment" and the employment of cost-saving provisions of this Title, by serving a written notice on the,
devices" under Art. 283 of the Labor Code was insignificant workers and the Department of Labor and Employment at
because the company official who wrote the dismissal letter least one (1) month before the intended date thereof. In case
apparently used the term "retrenchment" in its "plain and of termination due to the installation of labor-saving devices
ordinary sense: to layoff or remove from one's job, regardless or redundancy, the worker affected thereby shall be entitled
of the reason therefor"; that the rule of "reasonable criteria" to a separation pay equivalent to at least one (1) month pay
in the selection of the employees to be retrenched did not or to at least one (1) month pay for every year of service,
apply because all positions in the security section had been whichever is higher. In case of retrenchment to prevent
abolished; and that the appointment of a safety and security losses and in cases of closure or cessation of operations of
supervisor referred to by petitioner to prove bad faith on establishment or undertaking not due to serious business
private respondent's part was of no moment because the losses or financial reverses, the separation pay shall be
position had long been in existence and was separate from equivalent to at least one (1) month pay or at least one-half
petitioner's position as head of the Security Checkers (1/2) month pay for every year of service, whichever is
Section. higher. A fraction of at least six (6) months shall be
considered as one (1) whole year.
Hence this petition. Petitioner raises the following issue:
In De Ocampo v. National Labor Relations Commission,8 this
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY Court upheld the termination of employment of three
THE PRIVATE RESPONDENT TO REPLACE ITS CURRENT mechanics in a transportation company and their
SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF replacement by a company rendering maintenance and
THE EMPLOYEES CLASSED UNDER THE LATTER? 7 repair services. It held:
Petitioner contends that abolition of private respondent's In contracting the services of Gemac Machineries, as part of
Security Checkers Section and the employment of an the company's cost-saving program, the services rendered by
independent security agency do not fall under any of the the mechanics became redundant and superfluous, and
authorized causes for dismissal under Art. 283 of the Labor therefore properly terminable. The company merely
Code. exercised its business judgment or management prerogative.
Petitioner Laid Off for Cause And in the absence of any proof that the management
abused its discretion or acted in a malicious or arbitrary
Petitioner's contention has no merit. Art. 283 provides: manner, the court will not interfere with the exercise of such
prerogative.9
In Asian Alcohol Corporation v. National Labor Relations Accordingly, we hold that the termination of petitioner's
Commission,10 the Court likewise upheld the termination of services was for an authorized cause, i.e., redundancy.
employment of water pump tenders and their replacement Hence, pursuant to Art. 283 of the Labor Code, petitioner
by independent contractors. It ruled that an employer's good should be given separation pay at the rate of one month pay
faith in implementing a redundancy program is not for every year of service.
necessarily put in doubt by the availment of the services of
an independent contractor to replace the services of the Sanctions for Violations of the Notice Requirement
terminated employees to promote economy and efficiency. Art. 283 also provides that to terminate the employment of
Indeed, as we pointed out in another case, the an employee for any of the authorized causes the employer
"[management of a company] cannot be denied the faculty must serve "a written notice on the workers and the
of promoting efficiency and attaining economy by a study of Department of Labor and Employment at least one (1) month
what units are essential for its operation. To it belongs the before the intended date thereof." In the case at bar,
ultimate determination of whether services should be petitioner was given a notice of termination on October 11,
performed by its personnel or contracted to outside 1991. On the same day, his services were terminated. He
agencies . . . [While there] should be mutual consultation, was thus denied his right to be given written notice before
eventually deference is to be paid to what management the termination of his employment, and the question is the
decides."11 Consequently, absent proof that management appropriate sanction for the violation of petitioner's right.
acted in a malicious or arbitrary manner, the Court will not To be sure, this is not the first time this question has arisen.
interfere with the exercise of judgment by an employer. 12 In Subuguero v. NLRC,16 workers in a garment factory were
In the case at bar, we have only the bare assertion of temporarily laid off due to the cancellation of orders and a
petitioner that, in abolishing the security section, private garment embargo. The Labor Arbiter found that the workers
respondent's real purpose was to avoid payment to the had been illegally dismissed and ordered the company to pay
security checkers of the wage increases provided in the separation pay and backwages. The NLRC, on the other hand,
collective bargaining agreement approved in 1990. 13 Such an found that this was a case of retrenchment due to business
assertion is not sufficient basis for concluding that the losses and ordered the payment of separation pay without
termination of petitioner's employment was not a bona fide backwages. This Court sustained the NLRC's finding.
decision of management to obtain reasonable return from its However, as the company did not comply with the 30-day
investment, which is a right guaranteed to employers under written notice in Art. 283 of the Labor Code, the Court
the Constitution.14 Indeed, that the phase-out of the security ordered the employer to pay the workers P2,000.00 each as
section constituted a "legitimate business decision" is a indemnity.
factual finding of an administrative agency which must be The decision followed the ruling in several cases involving
accorded respect and even finality by this Court since dismissals which, although based on any of the just causes
nothing can be found in the record which fairly detracts from under Art. 282,17 were effected without notice and hearing to
such finding.15 the employee as required by the implementing rules. 18 As
this Court said: "It is now settled that where the dismissal of
one employee is in fact for a just and valid cause and is so Petitioner committed an infraction of the second
proven to be but he is not accorded his right to due requirement. Thus, it must be imposed a sanction for its
process, i.e., he was not furnished the twin requirements of failure to give a formal notice and conduct an investigation
notice and opportunity to be heard, the dismissal shall be as required by law before dismissing petitioner from
upheld but the employer must be sanctioned for non- employment. Considering the circumstances of this case
compliance with the requirements of, or for failure to petitioner must indemnify the private respondent the amount
observe, due process."19 of P1,000.00. The measure of this award depends on the
facts of each case and the gravity of the omission committed
The rule reversed a long standing policy theretofore followed by the employer.
that even though the dismissal is based on a just cause or
the termination of employment is for an authorized cause, The fines imposed for violations of the notice requirement
the dismissal or termination is illegal if effected without have varied from P1,000.0022 to P2,000.0023 to P5,000.0024 to
notice to the employee. The shift in doctrine took place in P10,000.00.25
1989 in Wenphil Corp. v. NLRC.20 In announcing the change,
this Court said:21 Need for Reexamining the Wenphil Doctrine
The Court holds that the policy of ordering the reinstatement Today, we once again consider the question of appropriate
to the service of an employee without loss of seniority and sanctions for violations of the notice experience during the
the payment of his wages during the period of his separation last decade or so with the Wenphil doctrine. The number of
until his actual reinstatement but not exceeding three (3) cases involving dismissals without the requisite notice to the
years without qualification or deduction, when it appears he employee, although effected for just or authorized causes,
was not afforded due process, although his dismissal was suggest that the imposition of fine for violation of the notice
found to be for just and authorized cause in an appropriate requirement has not been effective in deterring violations of
proceeding in the Ministry of Labor and Employment, should the notice requirement. Justice Panganiban finds the
be re-examined. It will be highly prejudicial to the interests of monetary sanctions "too insignificant, too niggardly, and
the employer to impose on him the services of an employee sometimes even too late." On the other hand, Justice Puno
who has been shown to be guilty of the charges that says there has in effect been fostered a policy of "dismiss
warranted his dismissal from employment. Indeed, it will now; pay later" which moneyed employers find more
demoralize the rank and file if the undeserving, if not convenient to comply with than the requirement to serve a
undesirable, remains in the service. 30-day written notice (in the case of termination of
employment for an authorized cause under Arts. 283-284) or
xxx xxx xxx to give notice and hearing (in the case of dismissals for just
causes under Art. 282).
However, the petitioner must nevertheless be held to
account for failure to extend to private respondent his right For this reason, they regard any dismissal or layoff without
to an investigation before causing his dismissal. The rule is the requisite notice to be null and void even though there are
explicit as above discussed. The dismissal of an employee just or authorized cause for such dismissal or layoff.
must be for just or authorized cause and after due process.
Consequently, in their view, the employee concerned should was for a just cause. But, otherwise, his dismissal must be
be reinstated and paid backwages. upheld and he should not be reinstated. This is because his
dismissal is ineffectual.
Validity of Petitioner's Layoff Not Affected by Lack of Notice
For the same reason, if an employee is laid off for any of the
We agree with our esteemed colleagues, Justices Puno and causes in Arts. 283-284, i.e., installation of a labor-saving
Panganiban, that we should rethink the sanction of fine for an device, but the employer did not give him and the DOLE a
employer's disregard of the notice requirement. We do not 30-day written notice of termination in advance, then the
agree, however, that disregard of this requirement by an termination of his employment should be considered
employer renders the dismissal or termination of ineffectual and he should be paid backwages. However, the
employment null and void. Such a stance is actually a termination of his employment should not be considered void
reversion to the discredited pre-Wenphil rule of ordering an but he should simply be paid separation pay as provided in
employee to be reinstated and paid backwages when it is Art. 283 in addition to backwages.
shown that he has not been given notice and hearing
although his dismissal or layoff is later found to be for a just Justice Puno argues that an employer's failure to comply with
or authorized cause. Such rule was abandoned in Wenphil the notice requirement constitutes a denial of the employee's
because it is really unjust to require an employer to keep in right to due process. Prescinding from this premise, he
his service one who is guilty, for example, of an attempt on quotes the statement of Chief Justice Concepcion Vda. de
the life of the employer or the latter's family, or when the Cuaycong v. Vda. de Sengbengco 26 that "acts of Congress, as
employer is precisely retrenching in order to prevent losses. well as of the Executive, can deny due process only under
the pain of nullity, and judicial proceedings suffering from the
The need is for a rule which, while recognizing the same flaw are subject to the same sanction, any statutory
employee's right to notice before he is dismissed or laid off, provision to the contrary notwithstanding." Justice Puno
at the same time acknowledges the right of the employer to concludes that the dismissal of an employee without notice
dismiss for any of the just causes enumerated in Art. 282 or and hearing, even if for a just cause, as provided in Art. 282,
to terminate employment for any of the authorized causes or for an authorized cause, as provided in Arts. 283-284, is a
mentioned in Arts. 283-284. If the Wenphil rule imposing a nullity. Hence, even if just or authorized cause exist, the
fine on an employer who is found to have dismissed an employee should be reinstated with full back pay. On the
employee for cause without prior notice is deemed other hand, Justice Panganiban quotes from the statement
ineffective in deterring employer violations of the notice in People v. Bocar27 that "[w]here the denial of the
requirement, the remedy is not to declare the dismissal void fundamental right of due process is apparent, a decision
if there are just or valid grounds for such dismissal or if the rendered in disregard of that right is void for lack of
termination is for an authorized cause. That would be to jurisdiction."
uphold the right of the employee but deny the right of the
employer to dismiss for cause. Rather, the remedy is to order Violation of Notice Requirement Not a Denial of Due Process
the payment to the employee of full backwages from the
time of his dismissal until the court finds that the dismissal The cases cited by both Justices Puno and Panganiban refer,
however, to the denial of due process by the State, which is
not the case here. There are three reasons why, on the other foreclose the right of the latter to question the legality of his
hand, violation by the employer of the notice requirement dismissal. As Art. 277(b) provides, "Any decision taken by the
cannot be considered a denial of due process resulting in the employer shall be without prejudice to the right of the worker
nullity of the employee's dismissal or layoff. to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor
The first is that the Due Process Clause of the Constitution is Relations Commission."
a limitation on governmental powers. It does not apply to the
exercise of private power, such as the termination of Indeed, to contend that the notice requirement in the Labor
employment under the Labor Code. This is plain from the text Code is an aspect of due process is to overlook the fact that
of Art. III, 1 of the Constitution, viz.: "No person shall be Art. 283 had its origin in Art. 302 of the Spanish Code of
deprived of life, liberty, or property without due process of Commerce of 1882 which gave either party to the employer-
law. . . ." The reason is simple: Only the State has authority to employee relationship the right to terminate their
take the life, liberty, or property of the individual. The relationship by giving notice to the other one month in
purpose of the Due Process Clause is to ensure that the advance. In lieu of notice, an employee could be laid off by
exercise of this power is consistent with what are considered paying him a mesada equivalent to his salary for one
civilized methods. month.28 This provision was repealed by Art. 2270 of the Civil
Code, which took effect on August 30, 1950. But on June 12,
The second reason is that notice and hearing are required 1954, R.A. No. 1052, otherwise known as the Termination Pay
under the Due Process Clause before the power of organized Law, was enacted reviving the mesada. On June 21, 1957,
society are brought to bear upon the individual. This is the law was amended by R.A. No. 1787 providing for the
obviously not the case of termination of employment under giving of advance notice or the payment of compensation at
Art. 283. Here the employee is not faced with an aspect of the rate of one-half month for every year of service. 29
the adversary system. The purpose for requiring a 30-day
written notice before an employee is laid off is not to afford The Termination Pay Law was held not to be a substantive
him an opportunity to be heard on any charge against him, law but a regulatory measure, the purpose of which was to
for there is none. The purpose rather is to give him time to give the employer the opportunity to find a replacement or
prepare for the eventual loss of his job and the DOLE an substitute, and the employee the equal opportunity to look
opportunity to determine whether economic causes do exist for another job or source of employment. Where the
justifying the termination of his employment. termination of employment was for a just cause, no notice
was required to be given to the, employee. 30 It was only on
Even in cases of dismissal under Art. 282, the purpose for the September 4, 1981 that notice was required to be given even
requirement of notice and hearing is not to comply with Due where the dismissal or termination of an employee was for
Process Clause of the Constitution. The time for notice and cause. This was made in the rules issued by the then Minister
hearing is at the trial stage. Then that is the time we speak of of Labor and Employment to implement B.P. Blg. 130 which
notice and hearing as the essence of procedural due process. amended the Labor Code. And it was still much later when
Thus, compliance by the employer with the notice the notice requirement was embodied in the law with the
requirement before he dismisses an employee does not amendment of Art. 277(b) by R.A. No. 6715 on March 2,
1989. It cannot be that the former regime denied due made homosexual advances on a student was sustained, it
process to the employee. Otherwise, there should now appearing that in the NLRC, the employee was fully heard in
likewise be a rule that, in case an employee leaves his job his defense.
without cause and without prior notice to his employer, his
act should be void instead of simply making him liable for Lack of Notice Only Makes Termination Ineffectual
damages. Not all notice requirements are requirements of due process.
The third reason why the notice requirement under Art. 283 Some are simply part of a procedure to be followed before a
can not be considered a requirement of the Due Process right granted to a party can be exercised. Others are simply
Clause is that the employer cannot really be expected to be an application of the Justinian precept, embodied in the Civil
entirely an impartial judge of his own cause. This is also the Code,33 to act with justice, give everyone his due, and
case in termination of employment for a just cause under Art. observe honesty and good faith toward one's fellowmen.
282 (i.e., serious misconduct or willful disobedience by the Such is the notice requirement in Arts. 282-283. The
employee of the lawful orders of the employer, gross and consequence of the failure either of the employer or the
habitual neglect of duties, fraud or willful breach of trust of employee to live up to this precept is to make him liable in
the employer, commission of crime against the employer or damages, not to render his act (dismissal or resignation, as
the latter's immediate family or duly authorized the case may be) void. The measure of damages is the
representatives, or other analogous cases). amount of wages the employee should have received were it
not for the termination of his employment without prior
Justice Puno disputes this. He says that "statistics in the notice. If warranted, nominal and moral damages may also
DOLE will prove that many cases have been won by be awarded.
employees before the grievance committees manned by
impartial judges of the company." The grievance machinery We hold, therefore, that, with respect to Art. 283 of the Labor
is, however, different because it is established by agreement Code, the employer's failure to comply with the notice
of the employer and the employees and composed of requirement does not constitute a denial of due process but a
representatives from both sides. That is why, in Batangas mere failure to observe a procedure for the termination of
Laguna Tayabas Bus Co. v. Court of Appeals,31 which Justice employment which makes the termination of employment
Puno cites, it was held that "Since the right of [an employee] merely ineffectual. It is similar to the failure to observe the
to his labor is in itself a property and that the labor provisions of Art. 1592, in relation to Art. 1191, of the Civil
agreement between him and [his employer] is the law Code34 in rescinding a contract for the sale of immovable
between the parties, his summary and arbitrary dismissal property. Under these provisions, while the power of a party
amounted to deprivation of his property without due process to rescind a contract is implied in reciprocal obligations,
of law." But here we are dealing with dismissals and layoffs nonetheless, in cases involving the sale of immovable
by employers alone, without the intervention of any property, the vendor cannot exercise this power even though
grievance machinery. Accordingly in Montemayor v. Araneta the vendee defaults in the payment of the price, except by
University Foundation,32 although a professor was dismissed bringing an action in court or giving notice of rescission by
without a hearing by his university, his dismissal for having means of a notarial demand.35 Consequently, a notice of
rescission given in the letter of an attorney has no legal That would be a misapplication of this noble phrase originally
effect, and the vendee can make payment even after the due from Professor Thomas Reed Powell of the Harvard Law
date since no valid notice of rescission has been given. 36 School.
Indeed, under the Labor Code, only the absence of a just Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,39 in
cause for the termination of employment can make the support of his view that an illegal dismissal results not only
dismissal of an employee illegal. This is clear from Art. 279 from want of legal cause but also from the failure to observe
which provides: "due process." The Pepsi-Cola case actually involved a
dismissal for an alleged loss of trust and confidence which, as
Security of Tenure. In cases of regular employment, the found by the Court, was not proven. The dismissal was,
employer shall not terminate the services of an employee therefore, illegal, not because there was a denial of due
except for a just cause or when authorized by this Title. An process, but because the dismissal was without cause. The
employee who is unjustly dismissedfrom work shall be statement that the failure of management to comply with the
entitled to reinstatement without loss of seniority rights and notice requirement "taints the dismissal with illegality" was
other privileges and to his full backwages, inclusive of merely a dictum thrown in as additional grounds for holding
allowances, and to his other benefits or their monetary the dismissal to be illegal.
equivalent computed from the time his compensation was
withheld from him up to the time of his actual Given the nature of the violation, therefore, the appropriate
reinstatement.37 sanction for the failure to give notice is the payment of
backwages for the period when the employee is considered
Thus, only if the termination of employment is not for any of not to have been effectively dismissed or his employment
the causes provided by law is it illegal and, therefore, the terminated. The sanction is not the payment alone of
employee should be reinstated and paid backwages. To nominal damages as Justice Vitug contends.
contend, as Justices Puno and Panganiban do, that even if the
termination is for a just or authorized cause the employee Unjust Results of Considering Dismissals/Layoffs Without
concerned should be reinstated and paid backwages would Prior Notice As Illegal
be to amend Art. 279 by adding another ground for
considering a dismissal illegal. What is more, it would ignore The refusal to look beyond the validity of the initial action
the fact that under Art. 285, if it is the employee who fails to taken by the employer to terminate employment either for an
give a written notice to the employer that he is leaving the authorized or just cause can result in an injustice to the
service of the latter, at least one month in advance, his employer. For not giving notice and hearing before dismissing
failure to comply with the legal requirement does not result an employee, who is otherwise guilty of, say, theft, or even of
in making his resignation void but only in making him liable an attempt against the life of the employer, an employer will
for damages.38 This disparity in legal treatment, which would be forced to keep in his employ such guilty employee. This is
result from the adoption of the theory of the minority cannot unjust.
simply be explained by invoking resident Ramon Magsaysay's It is true the Constitution regards labor as "a primary social
motto that "he who has less in life should have more in law." economic force."40 But so does it declare that it "recognizes
the indispensable role of the private sector, encourages On the other hand, with respect to dismissals for cause under
private enterprise, and provides incentives to needed Art. 282, if it is shown that the employee was dismissed for
investment."41 The Constitution bids the State to "afford full any of the just causes mentioned in said Art. 282, then, in
protection to labor."42 But it is equally true that "the law, in accordance with that article, he should not be reinstated.
protecting the right's of the laborer, authorizes neither However, he must be paid backwages from the time his
oppression nor self-destruction of the employer." 43 And it is employment was terminated until it is determined that the
oppression to compel the employer to continue in termination of employment is for a just cause because the
employment one who is guilty or to force the employer to failure to hear him before he is dismissed renders the
remain in operation when it is not economically in his interest termination of his employment without legal effect.
to do so.
WHEREFORE, the petition is GRANTED and the resolution of
In sum, we hold that if in proceedings for reinstatement the National Labor Relations Commission is MODIFIED by
under Art. 283, it is shown that the termination of ordering private respondent Isetann Department Store, Inc.
employment was due to an authorized cause, then the to pay petitioner separation pay equivalent to one (1) month
employee concerned should not be ordered reinstated even pay for every year of service, his unpaid salary, and his
though there is failure to comply with the 30-day notice proportionate 13th month pay and, in addition, full
requirement. Instead, he must be granted separation pay in backwages from the time his employment was terminated on
accordance with Art. 283, to wit: October 11, 1991 up to the time the decision herein becomes
final. For this purpose, this case is REMANDED to the Labor
In case of termination due to the installation of labor-saving Arbiter for computation of the separation pay, backwages,
devices or redundancy, the worker affected thereby shall be and other monetary awards to petitioner.
entitled to a separation pay equivalent to at least his one (1)
month pay or to at least one month for every year of service, SO ORDERED.
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 months shall be considered one (1)
whole year.
DECISION
YNARES-SANTIAGO, J.:
Serrano was confronting the practice of employers to Due process under the Labor Code, like Constitutional due
"dismiss now and pay later" by imposing full backwages. process, has two aspects: substantive, i.e., the valid and
authorized causes of employment termination under the
We believe, however, that the ruling in Serrano did not Labor Code; and procedural, i.e., the manner of dismissal.
consider the full meaning of Article 279 of the Labor Code Procedural due process requirements for dismissal are found
which states: in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book
ART. 279. Security of Tenure. In cases of regular VI, Rule I, Sec. 2, as amended by Department Order Nos. 9
employment, the employer shall not terminate the services and 10.27 Breaches of these due process requirements violate
of an employee except for a just cause or when authorized by the Labor Code. Therefore statutory due process should be
this Title. An employee who is unjustly dismissed from work differentiated from failure to comply with constitutional due
shall be entitled to reinstatement without loss of seniority process.
rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their Constitutional due process protects the individual from the
monetary equivalent computed from the time his government and assures him of his rights in criminal, civil or
compensation was withheld from him up to the time of his administrative proceedings; while statutory due
actual reinstatement. process found in the Labor Code and Implementing Rules
protects employees from being unjustly terminated without
This means that the termination is illegal only if it is not for just cause after notice and hearing.
any of the justified or authorized causes provided by law.
In Sebuguero v. National Labor Relations Commission,28 the After carefully analyzing the consequences of the divergent
dismissal was for a just and valid cause but the employee doctrines in the law on employment termination, we believe
was not accorded due process. The dismissal was upheld by that in cases involving dismissals for cause but without
the Court but the employer was sanctioned. The sanction observance of the twin requirements of notice and hearing,
should be in the nature of indemnification or penalty, and the better rule is to abandon the Serrano doctrine and to
depends on the facts of each case and the gravity of the follow Wenphil by holding that the dismissal was for just
omission committed by the employer. cause but imposing sanctions on the employer. Such
sanctions, however, must be stiffer than that imposed
In Nath v. National Labor Relations Commission,29 it was ruled in Wenphil. By doing so, this Court would be able to achieve
that even if the employee was not given due process, the a fair result by dispensing justice not just to employees, but
failure did not operate to eradicate the just causes for to employers as well.
dismissal. The dismissal being for just cause,albeit without
due process, did not entitle the employee to reinstatement, The unfairness of declaring illegal or ineffectual dismissals for
backwages, damages and attorney's fees. valid or authorized causes but not complying with statutory
due process may have far-reaching consequences.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG
Marine Services, Inc. v. National Labor Relations This would encourage frivolous suits, where even the most
Commission,30 which opinion he reiterated in Serrano, stated: notorious violators of company policy are rewarded by
invoking due process. This also creates absurd situations
C. Where there is just cause for dismissal but due process where there is a just or authorized cause for dismissal but a
has not been properly observed by an employer, it would not procedural infirmity invalidates the termination. Let us take
be right to order either the reinstatement of the dismissed for example a case where the employee is caught stealing or
employee or the payment of backwages to him. In failing, threatens the lives of his co-employees or has become a
however, to comply with the procedure prescribed by law in criminal, who has fled and cannot be found, or where serious
terminating the services of the employee, the employer must business losses demand that operations be ceased in less
be deemed to have opted or, in any case, should be made than a month. Invalidating the dismissal would not serve
liable, for the payment of separation pay. It might be pointed public interest. It could also discourage investments that can
out that the notice to be given and the hearing to be generate employment in the local economy.
conducted generally constitute the two-part due process
requirement of law to be accorded to the employee by the The constitutional policy to provide full protection to labor is
employer. Nevertheless, peculiar circumstances might obtain not meant to be a sword to oppress employers. The
in certain situations where to undertake the above steps commitment of this Court to the cause of labor does not
would be no more than a useless formality and where, prevent us from sustaining the employer when it is in the
accordingly, it would not be imprudent to apply the res ipsa right, as in this case. 32 Certainly, an employer should not be
loquitur rule and award, in lieu of separation pay, nominal compelled to pay employees for work not actually performed
damages to the employee. x x x.31 and in fact abandoned.
The employer should not be compelled to continue that, in case of reasonable doubt, we are to tilt the balance in
employing a person who is admittedly guilty of misfeasance favor of the poor to whom the Constitution fittingly extends
or malfeasance and whose continued employment is patently its sympathy and compassion. But never is it justified to give
inimical to the employer. The law protecting the rights of the preference to the poor simply because they are poor, or
laborer authorizes neither oppression nor self-destruction of reject the rich simply because they are rich, for justice must
the employer.33 always be served for the poor and the rich alike, according to
the mandate of the law.35
It must be stressed that in the present case, the petitioners
committed a grave offense, i.e., abandonment, which, if the Justice in every case should only be for the deserving party. It
requirements of due process were complied with, would should not be presumed that every case of illegal dismissal
undoubtedly result in a valid dismissal. would automatically be decided in favor of labor, as
management has rights that should be fully respected and
An employee who is clearly guilty of conduct violative of enforced by this Court. As interdependent and indispensable
Article 282 should not be protected by the Social Justice partners in nation-building, labor and management need
Clause of the Constitution. Social justice, as the term each other to foster productivity and economic growth;
suggests, should be used only to correct an injustice. As the hence, the need to weigh and balance the rights and welfare
eminent Justice Jose P. Laurel observed, social justice must be of both the employee and employer.
founded on the recognition of the necessity of
interdependence among diverse units of a society and of the Where the dismissal is for a just cause, as in the instant case,
protection that should be equally and evenly extended to all the lack of statutory due process should not nullify the
groups as a combined force in our social and economic life, dismissal, or render it illegal, or ineffectual. However, the
consistent with the fundamental and paramount objective of employer should indemnify the employee for the violation of
the state of promoting the health, comfort, and quiet of all his statutory rights, as ruled in Reta v. National Labor
persons, and of bringing about "the greatest good to the Relations Commission.36 The indemnity to be imposed should
greatest number."34 be stiffer to discourage the abhorrent practice of "dismiss
now, pay later," which we sought to deter in
This is not to say that the Court was wrong when it ruled the the Serrano ruling. The sanction should be in the nature of
way it did in Wenphil, Serrano and related cases. Social indemnification or penalty and should depend on the facts of
justice is not based on rigid formulas set in stone. It has to each case, taking into special consideration the gravity of the
allow for changing times and circumstances. due process violation of the employer.
Justice Isagani Cruz strongly asserts the need to apply a Under the Civil Code, nominal damages is adjudicated in
balanced approach to labor-management relations and order that a right of the plaintiff, which has been violated or
dispense justice with an even hand in every case: invaded by the defendant, may be vindicated or recognized,
We have repeatedly stressed that social justice or any and not for the purpose of indemnifying the plaintiff for any
justice for that matter is for the deserving, whether he be a loss suffered by him.37
millionaire in his mansion or a pauper in his hovel. It is true
As enunciated by this Court in Viernes v. National Labor payment, the general rule is that the burden rests on the
Relations Commissions,38 an employer is liable to pay employer to prove payment, rather than on the employee to
indemnity in the form of nominal damages to an employee prove non-payment. The reason for the rule is that the
who has been dismissed if, in effecting such dismissal, the pertinent personnel files, payrolls, records, remittances and
employer fails to comply with the requirements of due other similar documents which will show that overtime,
process. The Court, after considering the circumstances differentials, service incentive leave and other claims of
therein, fixed the indemnity at P2,590.50, which was workers have been paid are not in the possession of the
equivalent to the employee's one month salary. This worker but in the custody and absolute control of the
indemnity is intended not to penalize the employer but to employer.41
vindicate or recognize the employee's right to statutory due
process which was violated by the employer. 39 In the case at bar, if private respondent indeed paid
petitioners' holiday pay and service incentive leave pay, it
The violation of the petitioners' right to statutory due process could have easily presented documentary proofs of such
by the private respondent warrants the payment of monetary benefits to disprove the claims of the petitioners.
indemnity in the form of nominal damages. The amount of But it did not, except with respect to the 13th month pay
such damages is addressed to the sound discretion of the wherein it presented cash vouchers showing payments of the
court, taking into account the relevant benefit in the years disputed.42 Allegations by private
circumstances.40 Considering the prevailing circumstances in respondent that it does not operate during holidays and that
the case at bar, we deem it proper to fix it at P30,000.00. We it allows its employees 10 days leave with pay, other than
believe this form of damages would serve to deter employers being self-serving, do not constitute proof of payment.
from future violations of the statutory due process rights of Consequently, it failed to discharge the onus
employees. At the very least, it provides a vindication or probandi thereby making it liable for such claims to the
recognition of this fundamental right granted to the latter petitioners.
under the Labor Code and its Implementing Rules.
Anent the deduction of SSS loan and the value of the shoes
Private respondent claims that the Court of Appeals erred in from petitioner Virgilio Agabon's 13th month pay, we find the
holding that it failed to pay petitioners' holiday pay, service same to be unauthorized. The evident intention of
incentive leave pay and 13th month pay. Presidential Decree No. 851 is to grant an additional
income in the form of the 13th month pay to employees not
We are not persuaded. already receiving the same 43 so as "to further protect the
We affirm the ruling of the appellate court on petitioners' level of real wages from the ravages of world-wide
money claims. Private respondent is liable for petitioners' inflation."44 Clearly, as additional income, the 13th month pay
holiday pay, service incentive leave pay and 13th month pay is included in the definition of wage under Article 97(f) of the
without deductions. Labor Code, to wit:
As a general rule, one who pleads payment has the burden of (f) "Wage" paid to any employee shall mean the
proving it. Even where the employee must allege non- remuneration or earnings, however designated, capable of
being expressed in terms of money whether fixed or the amount of P2,150.00 isAFFIRMED with
ascertained on a time, task, piece , or commission basis, or the MODIFICATION that private respondent Riviera Home
other method of calculating the same, which is payable by an Improvements, Inc. is furtherORDERED to pay each of the
employer to an employee under a written or unwritten petitioners the amount of P30,000.00 as nominal damages
contract of employment for work done or to be done, or for for non-compliance with statutory due process.
services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, No costs.
of board, lodging, or other facilities customarily furnished by SO ORDERED.
the employer to the employee"
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-
from which an employer is prohibited under Article 113 45 of Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales,
the same Code from making any deductions without the Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia,
employee's knowledge and consent. In the instant case, JJ., concur.
private respondent failed to show that the deduction of the
SSS loan and the value of the shoes from petitioner Virgilio
Agabon's 13th month pay was authorized by the latter. The
lack of authority to deduct is further bolstered by the fact
that petitioner Virgilio Agabon included the same as one of SEPARATE OPINION
his money claims against private respondent.
TINGA, J:
The Court of Appeals properly reinstated the monetary claims
I concur in the result, the final disposition of the petition
awarded by the Labor Arbiter ordering the private respondent
being correct. There is no denying the importance of the
to pay each of the petitioners holiday pay for four regular
Court's ruling today, which should be considered as definitive
holidays from 1996 to 1998, in the amount of P6,520.00,
as to the effect of the failure to render the notice and hearing
service incentive leave pay for the same period in the
required under the Labor Code when an employee is being
amount of P3,255.00 and the balance of Virgilio Agabon's
dismissed for just causes, as defined under the same law.
thirteenth month pay for 1998 in the amount of P2,150.00.
The Court emphatically reaffirms the rule that dismissals for
WHEREFORE, in view of the foregoing, the petition just cause are not invalidated due to the failure of the
is DENIED. The decision of the Court of Appeals dated employer to observe the proper notice and hearing
January 23, 2003, in CA-G.R. SP No. 63017, finding that requirements under the Labor Code. At the same time,
petitioners' Jenny and Virgilio Agabon abandoned their work, The Decision likewise establishes that the Civil Code
and ordering private respondent to pay each of the provisions on damages serve as the proper framework for the
petitioners holiday pay for four regular holidays from 1996 to appropriate relief to the employee dismissed for just cause if
1998, in the amount of P6,520.00, service incentive leave the notice-hearing requirement is not met. Serrano v.
pay for the same period in the amount of P3,255.00 and the NLRC,1 insofar as it is controlling in dismissals for
balance of Virgilio Agabon's thirteenth month pay for 1998 in unauthorized causes, is no longer the controlling precedent.
Any and all previous rulings and statements of the Court
inconsistent with these determinations are now board and cornice. In January of 1992, the Agabons were
deemed inoperative. hired in January of 1992 as cornice installers by Riviera
Home. According to their personnel file with Riviera Home,
My views on the questions raised in this petition are the Agabon given address was 3RDS Tailoring, E. Rodriguez
comprehensive, if I may so in all modesty. I offer this opinion Ave., Moonwalk Subdivision, P-II Paraaque City, Metro
to discuss the reasoning behind my conclusions, pertaining Manila.4
as they do to questions of fundamental importance.
It is not disputed that sometime around February 1999, the
Prologue Agabons stopped rendering services for Riviera Home. The
The factual backdrop of the present Petition for Review is not Agabons allege that beginning on 23 February 1999, they
novel. Petitioners claim that they were illegally dismissed by stopped receiving assignments from Riviera Home. 5 When
the respondents, who allege in turn that petitioners had they demanded an explanation, the manager of Riviera
actually abandoned their employment. There is little difficulty Homes, Marivic Ventura, informed them that they would be
in upholding the findings of the NRLC and the Court of hired again, but on a "pakyaw" (piece-work) basis. When the
Appeals that petitioners are guilty of abandonment, one of Agabons spurned this proposal, Riviera Homes refused to
the just causes for termination under the Labor Code. Yet, the continue their employment under the original terms and
records also show that the employer was remiss in not giving agreement.6 Taking affront, the Agabons filed a complaint for
the notice required by the Labor Code; hence, the resultant illegal dismissal with the National Labor Relations
controversy as to the legal effect of such failure vis--vis the Commission ("NLRC").
warranted dismissal. Riviera Homes adverts to a different version of events
Ostensibly, the matter has been settled by our decision leading to the filing of the complaint for illegal dismissal. It
in Serrano2, wherein the Court ruled that the failure to alleged that in the early quarter of 1999, the Agabons
properly observe the notice requirement did not render the stopped reporting for work with Riviera. Two separate letters
dismissal, whether for just or authorized causes, null and dated 10 March 1999, were sent to the Agabons at the
void, for such violation was not a denial of the constitutional address indicated in their personnel file. In these notices, the
right to due process, and that the measure of appropriate Agabons were directed to report for work
7
damages in such cases ought to be the amount of wages the immediately. However, these notices were returned
employee should have received were it not for the unserved with the notation "RTS Moved." Then, in June of
termination of his employment without prior notice. 3 Still, the 1999, Virgilio Agabon informed Riviera Homes by telephone
Court has, for good reason, opted to reexamine the so- that he and Jenny Agabon were ready to return to work for
called Serrano doctrine through the present petition Riviera Homes, on the condition that their wages be first
adjusted. On 18 June 1999, the Agabons went to Riviera
Antecedent Facts Homes, and in a meeting with management, requested a
wage increase of up to Two Hundred Eighty Pesos (P280.00) a
Respondent Riviera Home Improvements, Inc (Riviera Home) day. When no affirmative response was offered by Riviera
is engaged in the manufacture and installation of gypsum
Homes, the Agabons initiated the complaint before the On appeal, the NLRC Second Division set aside the Labor
NLRC.8 Arbiter's Decision and ordered the dismissal of the complaint
for lack of merit.13 The NLRC held that the Agabons were not
In their Position Paper, the Agabons likewise alleged that able to refute the assertion that for the payroll period ending
they were required to work even on holidays and rest days, on 15 February 1999, Virgilio and Jenny Agabon worked for
but were never paid the legal holiday pay or the premium only two and one-half (2) and three (3) days, respectively. It
pay for holiday or rest day. They also asserted that they were disputed the earlier finding that Riviera Homes had known of
denied Service Incentive Leave pay, and that Virgilio Agabon the change in address, noting that the address indicated in
was not given his thirteenth (13th) month pay for the year the
1998.9
identification cards was not the Agabons, but that of the
After due deliberation, Labor Arbiter Daisy G. Cauton- persons who should be notified in case of emergency
Barcelona rendered a Decision dated 28 December 1999, concerning the employee.14 Thus, proper service of the notice
finding the termination of the Agabons illegal, and ordering was deemed to have been accomplished. Further, the notices
Riviera Homes to pay backwages in the sum of Fifty Six evinced good reason to believe that the Agabons had not
Thousand Two Hundred Thirty One Pesos and Ninety Three been dismissed, but had instead abandoned their jobs by
Centavos (P56,231.93) each. The Labor Arbiter likewise refusing to report for work.
ordered, in lieu of reinstatement, the payment of separation
pay of one (1) month pay for every year of service from date In support of its conclusion that the Agabons had abandoned
of hiring up to 29 November 1999, as well as the payment of their work, the NLRC also observed that the Agabons did not
holiday pay, service incentive leave pay, and premium pay seek reinstatement, but only separation pay. While the choice
for holiday and restday, plus thirteenth (13th) month of relief was premised by the Agabons on their purported
differential to Virgilio Agabon.10 strained relations with Riviera Homes, the NLRC pointed out
that such claim was amply belied by the fact that the
In so ruling, the Labor Arbiter declared that Riviera Homes Agabons had actually sought a conference with Riviera
was unable to satisfactorily refute the Agabons' claim that Homes in June of 1999. The NLRC likewise found that the
they were no longer given work to do after 23 February 1999 failure of the Labor Arbiter to justify the award of extraneous
and that their rehiring was only on "pakyaw" basis. The Labor money claims, such as holiday and service incentive leave
Arbiter also held that Riviera Homes failed to comply with the pay, confirmed that there was no proof to justify such claims.
notice requirement, noting that Riviera Homes well knew of
the change of address of the Agabons, considering that the A Petition for Certiorari was promptly filed with the Court of
identification cards it issued stated a different address from Appeals by the Agabons, imputing grave abuse of discretion
that on the personnel file.11 The Labor Arbiter asserted the on the part of the NLRC in dismissing their complaint for
principle that in all termination cases, strict compliance by illegal dismissal. In a Decision15 dated 23 January 2003, the
the employer with the demands of procedural and Court of Appeals affirmed the finding that the Agabons had
substantive due process is a condition sine qua non for the abandoned their employment. It noted that the two elements
same to be declared valid.12 constituting abandonment had been established, to wit: the
failure to report for work or absence without valid justifiable address despite its knowledge of their change of address as
reason, and; a clear intention to sever the employer- indicated in the identification cards. 19Further, the Agabons
employee relationship. The intent to sever the employer- note that only one notice was sent to each of them, in
employee relationship was buttressed by the Agabon's choice violation of the rule that the employer must furnish two
to seek not reinstatement, but separation pay. The Court of written notices before termination the first to apprise the
Appeals likewise found that the service of the notices were employee of the cause for which dismissal is sought, and the
valid, as the Agabons did not notify Riviera Homes of their second to notify the employee of the decision of
change of address, and thus the failure to return to work dismissal.20 The Agabons likewise maintain that they did not
despite notice amounted to abandonment of work. seek reinstatement owing to the strained relations between
them and Riviera Homes.
However, the Court of Appeals reversed the NLRC as regards
the denial of the claims for holiday pay, service incentive The Agabons present to this Court only one issue, i.e.:
leave pay, and the balance of Virgilio Agabon's thirteenth whether or not they were illegally dismissed from their
(13th) month pay. It ruled that the failure to adduce proof in employment.21 There are several dimensions though to this
support thereof was not fatal and that the burden of proving issue which warrant full consideration.
that such benefits had already been paid rested on Riviera
Homes.16 Given that Riviera Homes failed to present proof of The Abandonment Dimension
payment to the Agabons of their holiday pay and service Review of Factual Finding of Abandonment
incentive leave pay for the years 1996, 1997 and 1998, the
Court of Appeals chose to believe that such benefits had not As the Decision points out, abandonment is characterized by
actually been received by the employees. It also ruled that the failure to report for work or absence without valid or
the apparent deductions made by Riviera Homes on the justifiable reason, and a clear intention to sever the
thirteenth (13th) month pay of Virgilio Agabon violated employer-employee relationship. The question of whether or
Section 10 of the Rules and Regulations Implementing not an employee has abandoned employment is essentially a
Presidential Decree No. 851.17 Accordingly, Riviera Homes factual issue.22 The NLRC and the Court of Appeals, both
was ordered to pay the Agabons holiday for four (4) regular appropriate triers of fact, concluded that the Agabons had
holidays in 1996, 1997 and 1998, as well as their service actually abandoned their employment, thus there is little
incentive leave pay for said years, and the balance of Virgilio need for deep inquiry into the correctness of this factual
Agabon's thirteenth (13th) month pay for 1998 in the amount finding. There is no doubt that the Agabons stopped
of Two Thousand One Hundred Fifty Pesos (P2,150.00). 18 reporting for work sometime in February of 1999. And there
is no evidence to support their assertion that such absence
In their Petition for Review, the Agabons claim that they had was due to the deliberate failure of Riviera Homes to give
been illegally dismissed, reasserting their version of events, them work. There is also the fact, as noted by the NLRC and
thus: (1) that they had not been given new assignments the Court of Appeals, that the Agabons did not pray for
since 23 February 1999; (2) that they were told that they reinstatement, but only for separation
would only be re-hired on a "pakyaw" basis, and; (3) that
Riviera Homes had knowingly sent the notices to their old
pay and money claims.23 This failure indicates their At the same time, Section 2, Book V, Rule XXIII of the
disinterest in maintaining the employer-employee Implementing Rules does not require strict compliance with
relationship and their unabated avowed intent to sever it. the above procedure, but only that the same be
Their excuse that strained relations between them and "substantially observed."
Riviera Homes rendered reinstatement no longer feasible was
hardly given credence by the NLRC and the Court of Riviera Homes maintains that the letters it sent on 10 March
Appeals.24 1999 to the Agabons sufficiently complied with the notice
rule. These identically worded letters noted that the Agabons
The contrary conclusion arrived at by the Labor Arbiter as had stopped working without permission that they failed to
regards abandonment is of little bearing to the case. All that return for work despite having been repeatedly told to report
the Labor Arbiter said on that point was that Riviera Homes to the office and resume their employment. 26 The letters
was not able to refute the Agabons' claim that they were ended with an invitation to the Agabons to report back to the
terminated on 23 February 1999.25 The Labor Arbiter did not office and return to work.27
explain why or how such finding was reachhy or how such
finding was reachhe Agabons was more credible than that of The apparent purpose of these letters was to advise the
Riviera Homes'. Being bereft of reasoning, the conclusion Agabons that they were welcome to return back to work, and
deserves scant consideration. not to notify them of the grounds of termination. Still,
considering that only substantial compliance with the notice
Compliance with Notice Requirement requirement is required, I am prepared to say that the letters
sufficiently conform to the first notice required under the
At the same time, both the NLRC and the Court of Appeals Implementing Rules. The purpose of the first notice is to duly
failed to consider the apparent fact that the rules governing inform the employee that a particular transgression is being
notice of termination were not complied with by Riviera considered against him or her, and that an opportunity is
Homes. Section 2, Book V, Rule XXIII of the Omnibus Rules being offered for him or her to respond to the charges. The
Implementing the Labor Code (Implementing Rules) letters served the purpose of informing the Agabons of the
specifically provides that for termination of employment pending matters beclouding their employment, and
based on just causes as defined in Article 282, there must be: extending them the opportunity to clear the air.
(1) written notice served on the employee specifying the
grounds for termination and giving employee reasonable Contrary to the Agabons' claim, the letter-notice was
opportunity to explain his/her side; (2) a hearing or correctly sent to the employee's last known address, in
conference wherein the employee, with the assistance of compliance with the Implementing Rules. There is no dispute
counsel if so desired, is given opportunity to respond to the that these letters were not actually received by the Agabons,
charge, present his evidence or rebut evidence presented as they had apparently moved out of the address indicated
against him/her; and (3) written notice of termination served therein. Still, the letters were sent to what Riviera Homes
on the employee indicating that upon due consideration of all knew to be the Agabons' last known address, as indicated in
the circumstances, grounds have been established to justify their personnel file. The Agabons insist that Riviera Homes
termination. had known of the change of address, offering as proof their
company IDs which purportedly print out their correct new Justice Puno proposes that the failure to render due notice
address. Yet, as pointed out by the NLRC and the Court of and hearing prior to dismissal for just cause constitutes a
Appeals, the addresses indicated in the IDs are not the violation of the constitutional right to due process. This view,
Agabons, but that of the person who is to be notified in case as acknowledged by Justice Puno himself, runs contrary to
on emergency involve either or both of the Agabons. the Court's pronouncement in Serrano v. NLRC28 that the
absence of due notice and hearing prior to dismissal, if for
The actual violation of the notice requirement by Riviera just cause, violates statutory due process.
Homes lies in its failure to serve on the Agabons the second
notice which should inform them of termination. As The ponencia of Justice Vicente V. Mendoza
the Decision notes, Riviera Homes' argument that sending in Serrano provides this cogent overview of the history of the
the second notice was useless due to the change of address doctrine:
is inutile, since the Implementing Rules plainly require that
the notice of termination should be served at the employee's Indeed, to contend that the notice requirement in the Labor
last known address. Code is an aspect of due process is to overlook the fact that
Art. 283 had its origin in Art. 302 of the Spanish Code of
The importance of sending the notice of termination should Commerce of 1882 which gave either party to the employer-
not be trivialized. The termination letter serves as indubitable employee relationship the right to terminate their
proof of loss of employment, and its receipt compels the relationship by giving notice to the other one month in
employee to evaluate his or her next options. Without such advance. In lieu of notice, an employee could be laid off by
notice, the employee may be left uncertain of his fate; thus, paying him a mesadaequivalent to his salary for one month.
its service is mandated by the Implementing Rules. Non- This provision was repealed by Art. 2270 of the Civil Code,
compliance with the notice rule, as evident in this case, which took effect on August 30, 1950. But on June 12, 1954,
contravenes the Implementing Rules. But does the R.A. No. 1052, otherwise known as the Termination Pay Law,
violation serve to invalidate the Agabons' dismissal was enacted reviving the mesada. On June 21, 1957, the law
for just cause? was amended by R.A. No. 1787 providing for the giving of
advance notice for every year of service. 29
The So-Called Constitutional Law Dimension
Under Section 1 of the Termination Pay Law, an employer
Justices Puno and Panganiban opine that the Agabons should could dismiss an employee without just cause by serving
be reinstated as a consequence of the violation of the notice written notice on the employee at least one month in
requirement. I respectfully disagree, for the reasons advance or one-half month for every year of service of the
expounded below. employee, whichever was longer. 30 Failure to serve such
Constitutional Considerations written notice entitled the employee to compensation
Of Due Process and the Notice-Hearing equivalent to his salaries or wages corresponding to the
Requirement in Labor Termination Cases required period of notice from the date of termination of his
employment.
However, there was no similar written notice requirement B.P. Blg. 130 which amended the Labor Code. And it was still
under the Termination Pay Law if the dismissal of the much later when the notice requirement was embodied in the
employee was for just cause. The Court, speaking through law with the amendment of Art. 277(b) by R.A. No. 6715 on
Justice JBL Reyes, ruled in Phil. Refining Co. v. Garcia:31 March 2, 1989.35
[Republic] Act 1052, as amended by Republic Act 1787, It cannot be denied though that the thinking that absence of
impliedly recognizes the right of the employer to dismiss his notice or hearing prior to termination constituted a
employees (hired without definite period) whether for just constitutional violation has gained a jurisprudential foothold
case, as therein defined or enumerated, or without it. If with the Court. Justice Puno, in his Dissenting Opinion, cites
there be just cause, the employer is not required to several cases in support of this theory, beginning
serve any notice of discharge nor to disburse with Batangas Laguna Tayabas Bus Co. v. Court of
termination pay to the employee. xxx32 Appeals36 wherein we held that "the failure of petitioner to
give the private respondent the benefit of a hearing before
Clearly, the Court, prior to the enactment of the Labor Code, he was dismissed constitutes an infringement on his
was ill-receptive to the notion that termination for just cause constitutional right to due process of law. 37
without notice or hearing violated the constitutional right to
due process. Nonetheless, the Court recognized an award of Still, this theory has been refuted, pellucidly and effectively
damages as the appropriate remedy. In Galsim v. PNB,33 the to my mind, by Justice Mendoza's disquisition inSerrano,
Court held: thus:
Of course, the employer's prerogative to dismiss employees xxx There are three reasons why, on the other hand, violation
hired without a definite period may be with or without cause. by the employer of the notice requirement cannot be
But if the manner in which such right is exercised is abusive, considered a denial of due process resulting in the nullity of
the employer stands to answer to the dismissed employee the employee's dismissal or layoff.
for damages.34
The first is that the Due Process Clause of the Constitution is
The Termination Pay Law was among the repealed laws with a limitation on governmental powers. It does not apply to the
the enactment of the Labor Code in 1974. Significantly, the exercise of private power, such as the termination of
Labor Code, in its inception, did not require notice or hearing employment under the Labor Code. This is plain from the text
before an employer could terminate an employee for just of Art. III, 1 of the Constitution, viz.: "No person shall be
cause. As Justice Mendoza explained: deprived of life, liberty, or property without due process of
law. . . ." The reason is simple: Only the State has authority to
Where the termination of employment was for a just cause, take the life, liberty, or property of the individual. The
no notice was required to be given to the employee. It was purpose of the Due Process Clause is to ensure that the
only on September 4, 1981 that notice was required to be exercise of this power is consistent with what are considered
given even where the dismissal or termination of an civilized methods.
employee was for cause. This was made in the rules issued
by the then Minister of Labor and Employment to implement
The second reason is that notice and hearing are required "First, the general reflections. The protection of fundamental
under the Due Process Clause before the power of organized liberties in the essence of constitutional democracy.
society are brought to bear upon the individual. This is Protection against whom? Protection against the state. The
obviously not the case of termination of employment under Bill of Rights governs the relationship between the individual
Art. 283. Here the employee is not faced with an aspect of and the state. Its concern is not the relation between
the adversary system. The purpose for requiring a 30-day individuals, between a private individual and other
written notice before an employee is laid off is not to afford individuals. What the Bill of Rights does is to declare some
him an opportunity to be heard on any charge against him, forbidden zones in the private sphere inaccessible to any
for there is none. The purpose rather is to give him time to power holder." (Sponsorship Speech of Commissioner Bernas;
prepare for the eventual loss of his job and the DOLE an Record of the Constitutional Commission, Vol. 1, p. 674; July
opportunity to determine whether economic causes do exist 17,1986; Italics supplied)40
justifying the termination of his employment.
I do not doubt that requiring notice and hearing prior to
xxx termination for just cause is an admirable sentiment borne
out of basic equity and fairness. Still, it is not a constitutional
The third reason why the notice requirement under Art. 283 requirement that can impose itself on the relations of private
can not be considered a requirement of the Due Process persons and entities. Simply put, the Bill of Rights affords
Clause is that the employer cannot really be expected to be protection against possible State oppression against its
entirely an impartial judge of his own cause. This is also the citizens, but not against an unjust or repressive conduct by a
case in termination of employment for a just cause under Art. private party towards another.
282 (i.e., serious misconduct or willful disobedience by the
employee of the lawful orders of the employer, gross and Justice Puno characterizes the notion that constitutional due
habitual neglect of duties, fraud or willful breach of trust of process limits government action alone as "pass,"and
the employer, commission of crime against the employer or adverts to nouvelle vague theories which assert that private
the latter's immediate family or duly authorized conduct may be restrained by constitutional due process. His
representatives, or other analogous cases). 38 dissent alludes to the American experience making
references to the post-Civil War/pre-World War II era when the
The Court in the landmark case of People v. Marti39 clarified US Supreme Court seemed overly solicitous to the rights of
the proper dimensions of the Bill of Rights. big business over those of the workers.
That the Bill of Rights embodied in the Constitution is not Theories, no matter how entrancing, remain theoretical
meant to be invoked against acts of private individuals finds unless adopted by legislation, or more controversially, by
support in the deliberations of the Constitutional judicial opinion. There were a few decisions of the US
Commission. True, the liberties guaranteed by the Supreme Court that, ostensibly, imposed on private persons
fundamental law of the land must always be subject to the values of the constitutional guarantees. However, in
protection. But protection against whom? Commissioner deciding the cases, the American High Court found it
Bernas in his sponsorship speech in the Bill of Rights answers necessary to link the actors to adequate elements of the
the query which he himself posed, as follows:
"State" since the Fourteenth Amendment plainly begins with accumulate profits. Perhaps the State and the employer are
the words "No State shall"41 similarly capacitated to inflict injury or discomfort on persons
under their control, but the same power is also possessed by
More crucially to the American experience, it had become a school principal, hospital administrator, or a religious
necessary to pass legislation in order to compel private leader, among many others. Indeed, the scope and reach of
persons to observe constitutional values. While the equal authority of an employer pales in comparison with that of the
protection clause was deemed sufficient by the Warren Court State. There is no basis to conclude that an employer, or
to bar racial segregation in public facilities, it necessitated even the employer class, may be deemed a de facto state
enactment of the Civil Rights Acts of 1964 to prohibit and on that premise, compelled to observe the Bill of Rights.
segregation as enforced by private persons within their There is simply no nexus in their functions, distaff as they
property. In this jurisdiction, I have trust in the statutory are, that renders it necessary to accord the same
regime that governs the correction of private wrongs. There jurisprudential treatment.
are thousands of statutes, some penal or regulatory in
nature, that are the source of actionable claims against It may be so, as alluded in the dissent of Justice Puno, that a
private persons. There is even no stopping the State, through conservative court system overly solicitous to the concerns of
the legislative cauldron, from compelling private individuals, business may consciously gut away at rights or privileges
under pain of legal sanction, into observing the norms owing to the labor sector. This certainly happened before in
ordained in the Bill of Rights. the United States in the early part of the twentieth century,
when the progressive labor legislation such as that enacted
Justice Panganiban's Separate Opinion asserts that corporate during President Roosevelt's New Deal regime most of
behemoths and even individuals may now be sources of them addressing problems of labor were struck down by
abuses and threats to human rights and liberties. 42 The an arch-conservative Court.43 The preferred rationale then
concern is not unfounded, but appropriate remedies exist was to enshrine within the constitutional order business
within our statutes, and so resort to the constitutional trump prerogatives, rendering them superior to the express
card is not necessary. Even if we were to engage the premise, legislative intent. Curiously, following its judicial philosophy
the proper juristic exercise should be to examine whether an at the time the U. S. Supreme Court made due process
employer has taken the attributes of the State so that it guarantee towards employers prevail over the police power
could be compelled by the Constitution to observe the to defeat the cause of labor. 44
proscriptions of the Bill of Rights. But the strained analogy
simply does not square since the attributes of an employer Of course, this Court should not be insensate to the means
are starkly incongruous with those of the State. Employers and methods by which the entrenched powerful class may
plainly do not possess the awesome powers and the maneuver the socio-political system to ensure self-
tremendous resources which the State has at its command. preservation. However, the remedy to rightward judicial bias
is not leftward judicial bias. The more proper judicial attitude
The differences between the State and employers are not is to give due respect to legislative prerogatives, regardless
merely literal, but extend to their very essences. Unlike the of the ideological sauce they are dipped in.
State, the raison d'etre of employers in business is to
While the Bill of Rights maintains a position of primacy in the alone would be forever diminished because of a questionable
constitutional hierarchy,45 it has scope and limitations that notion that contravenes with centuries of political thought.
must be respected and asserted by the Court, even though
they may at times serve somewhat bitter ends. The It is not difficult to be enraptured by novel legal ideas. Their
dissenting opinions are palpably distressed at the effect of characterization is susceptible to the same marketing traps
the Decision, which will undoubtedly provoke those that hook consumers to new products. With the help of
reflexively sympathetic to the labor class. But haphazard unique wrapping, a catchy label, and testimonials from
legal theory cannot be used to justify the obverse result. The professed experts from exotic lands, a malodorous idea may
adoption of the dissenting views would give rise to all sorts of gain wide acceptance, even among those self-possessed with
absurd constitutional claims. An excommunicated Catholic their own heightened senses of perception. Yet before we join
might demand his/her reinstatement into the good graces of the mad rush in order to proclaim a theory as "brilliant," a
the Church and into communion on the ground that rigorous test must first be employed to determine whether it
excommunication was violative of the constitutional right to complements or contradicts our own system of laws and
due process. A celebrity contracted to endorse Pepsi Cola juristic thought. Without such analysis, we run the risk of
might sue in court to void a stipulation that prevents him/her abnegating the doctrines we have fostered for decades and
from singing the praises of Coca Cola once in a while, on the the protections they may have implanted into our way of life.
ground that such stipulation violates the constitutional right Should the Court adopt the view that the Bill of Rights may
to free speech. An employee might sue to prevent the be invoked to invalidate actions by private entities against
employer from reading outgoing e-mail sent through the private individuals, the Court would open the floodgates to,
company server using the company e-mail address, on the and the docket would be swamped with, litigations of the
ground that the constitutional right to privacy of scurrilous sort. Just as patriotism is the last refuge of
communication would be breached. scoundrels, the broad constitutional claim is the final resort
The above concerns do not in anyway serve to trivialize the of the desperate litigant.
interests of labor. But we must avoid overarching Constitutional Protection of Labor
declarations in order to justify an end result beneficial to
labor. I dread the doctrinal acceptance of the notion that the The provisions of the 1987 Constitution affirm the primacy of
Bill of Rights, on its own, affords protection and sanctuary not labor and advocate a multi-faceted state policy that affords,
just from the acts of State but also from the conduct of among others, full protection to labor. Section 18, Article II
private persons. Natural and juridical persons would hesitate thereof provides:
to interact for fear that a misstep could lead to their being
charged in court as a constitutional violator. Private The State affirms labor as a primary social economic force. It
institutions that thrive on their exclusivity, such as churches shall protect the rights of workers and promote their welfare.
or cliquish groups, could be forced to renege on their
Further, Section 3, Article XIII states:
traditional tenets, including vows of secrecy and the like, if
deemed by the Court as inconsistent with the Bill of Rights.
Indeed, that fundamental right of all private persons to be let
The State shall afford full protection to labor, local and The State shall afford full protection to labor, promote full
overseas, organized and unorganized, and promote full employment and equality in employment, ensure equal work
employment and equal employment opportunities for all. opportunities regardless of sex, race or creed, and regulate
the relations between workers and employers. The State shall
It shall guarantee the rights of all workers to self- assure the rights of workers to self-organization, collective
organization, collective bargaining and negotiations, and bargaining, security of tenure, and just and humane
peaceful concerted activities, including the right to strike in conditions of work. The State may provide for compulsory
accordance with law. They shall be entitled to security to arbitration.
tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes On the other hand, prior to the 1973 Constitution, the right to
affecting their rights and benefits as may be provided by law. security of tenure could only be found in legislative
enactments and their respective implementing rules and
The State shall promote the principle of shared responsibility regulations. It was only in the 1973 Constitution that security
between workers and employers and the preferential use of of tenure was elevated as a constitutional right. The
voluntary modes in settling disputes, including conciliation, development of the concept of security of tenure as a
and shall enforce their mutual compliance therewith to foster constitutionally recognized right was discussed by this Court
industrial peace. in BPI Credit Corporation v. NLRC,46 to wit:
The State shall regulate the relations between workers and The enthronement of the worker's right to security or tenure
employers, recognizing the right of labor to its just share in in our fundamental law was not achieved overnight. For all its
the fruits of production and the right of enterprises to liberality towards labor, our 1935 Constitution did not elevate
reasonable returns on investments, and to expansion and the right as a constitutional right. For a long time, the
growth. worker's security of tenure had only the protective mantle of
The constitutional enshrinement of the guarantee of full statutes and their interpretative rules and regulations. It was
protection of labor is not novel to the 1987 Constitution. as uncertain protection that sometimes yielded to the
Section 6, Article XIV of the 1935 Constitution reads: political permutations of the times. It took labor nearly four
decades of sweat and tears to persuade our people thru their
The State shall afford protection to labor, especially to leaders, to exalt the worker's right to security of tenure as a
working women, and minors, and shall regulate the relations sacrosanct constitutional right. It was Article II, section 2 [9]
between the landowner and tenant, and between labor and of our 1973 Constitution that declared as a policy that the
capital in industry and in agriculture. The State may provide State shall assure the right of worker's to security tenure. The
for compulsory arbitration. 1987 Constitution is even more solicitous of the welfare of
labor. Section 3 of its Article XIII mandates that the State
Similarly, among the principles and state policies declared in shall afford full protection to labor and declares that all
the 1973 Constitution, is that provided in Section 9, Article II workers shall be entitled to security of tenure. Among the
thereof: enunciated State policies are the
promotion of social justice and a just and dynamic social In the case of Manila Prince Hotel v. GSIS,48 we affirmed the
order. In contrast, the prerogative of management to dismiss presumption that all constitutional provisions are self-
a worker, as an aspect of property right, has never been executing. We reasoned that to declare otherwise would
endowed with a constitutional status. result in the pernicious situation wherein by mere inaction
and disregard by the legislature, constitutional mandates
The unequivocal constitutional declaration that all workers would be rendered ineffectual. Thus, we held:
shall be entitled to security of tenure spurred our lawmakers
to strengthen the protective walls around this hard earned As against constitutions of the past, modern constitutions
right. The right was protected from undue infringement both have been generally ed upon a different principle and have
by our substantive and procedural laws. Thus, the causes for often become in effect extensive codes of laws intended to
dismissing employees were more defined and restricted; on operate directly upon the people in a manner similar to that
the other hand, the procedure of termination was also more of statutory enactments, and the function of constitutional
clearly delineated. These substantive and procedural laws conventions has evolved into one more like that of a
must be strictly complied with before a worker can be legislative body. Hence, unless it is expressly provided that a
dismissed from his employment.47 legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the
It is quite apparent that the constitutional protection of labor constitution are self-executing. If the constitutional provisions
was entrenched more than eight decades ago, yet such did are treated as requiring legislation instead of self-executing,
not prevent this Court in the past from affirming dismissals the legislature would have the power to ignore and
for just cause without valid notice. Nor was there any practically nullify the mandate of the fundamental law. This
pretense made that this constitutional maxim afforded a can be cataclysmic. That is why the prevailing view is, as it
laborer a positive right against dismissal for just cause on the has always been, that
ground of lack of valid prior notice. As demonstrated earlier,
it was only after the enactment of the Labor Code that the . . . in case of doubt, the Constitution should be considered
doctrine relied upon by the dissenting opinions became en self-executing rather than non-self-executing. . . . Unless the
vogue. This point highlights my position that the violation of contrary is clearly intended, the provisions of the Constitution
the notice requirement has statutory moorings, not should be considered self-executing, as a contrary rule would
constitutional. give the legislature discretion to determine when, or
whether, they shall be effective. These provisions would be
It should be also noted that the 1987 Constitution also subordinated to the will of the lawmaking body, which could
recognizes the principle of shared responsibility between make them entirely meaningless by simply refusing to pass
workers and employers, and the right of enterprise to the needed implementing statute. 49
reasonable returns, expansion, and growth. Whatever
perceived imbalance there might have been under previous In further discussing self-executing provisions, this Court
incarnations of the provision have been obviated by Section stated that:
3, Article XIII.
In self-executing constitutional provisions, the legislature may
still enact legislation to facilitate the exercise of powers
directly granted by the constitution, further the operation of needed to define the parameters of these guaranteed rights
such a provision, prescribe a practice to be used for its to ensure the protection and promotion, not only the rights of
enforcement, provide a convenient remedy for the protection the labor sector, but of the employers' as well. Without
of the rights secured or the determination thereof, or place specific and pertinent legislation, judicial bodies will be at a
reasonable safeguards around the exercise of the right. The loss, formulating their own conclusion to approximate at least
mere fact that legislation may supplement and add to or the aims of the Constitution.
prescribe a penalty for the violation of a self-executing
constitutional provision does not render such a provision Ultimately, therefore, Section 3 of Article XIII cannot, on its
ineffective in the absence of such legislation. The omission own, be a source of a positive enforceable right to stave off
from a constitution of any express provision for a remedy for the dismissal of an employee for just cause owing to the
enforcing a right or liability is not necessarily an indication failure to serve proper notice or hearing. As manifested by
that it was not intended to be self-executing. The rule is that several framers of the 1987 Constitution, the provisions on
a self-executing provision of the constitution does not social justice require legislative enactments for their
necessarily exhaust legislative power on the subject, but any enforceability. This is reflected in the record of debates on
legislation must be in harmony with the constitution, further the social justice provisions of the Constitution:
the exercise of constitutional right and make it more MS. [FELICITAS S.] AQUINO: We appreciate the concern of the
available. Subsequent legislation however does not Commissioner. But this Committee [on Social Justice] has
necessarily mean that the subject constitutional provision is actually become the forum already of a lot of specific
not, by itself, fully enforceable.50 grievances and specific demands, such that
Thus, the constitutional mandates of protection to labor and understandably, we may have been, at one time or
security of tenure may be deemed as self-executing in the another, dangerously treading into the functions of
sense that these are automatically acknowledged and legislation. Our only plea to the Commission is to focus our
observed without need for any enabling legislation. However, perspective on the matter of social justice and its rightful
to declare that the constitutional provisions are enough to place in the Constitution. What we envision here is a
guarantee the full exercise of the rights embodied therein, mandate specific enough that would give impetus for
and the realization of ideals therein expressed, would be statutory implementation. We would caution ourselves
impractical, if not unrealistic. The espousal of such view in terms of the judicious exercise of self-censorship
presents the dangerous tendency of being overbroad and against treading into the functions of legislation.
exaggerated. The guarantees of "full protection to labor" and (emphasis supplied)51
"security of tenure", when examined in isolation, are facially xxx
unqualified, and the broadest interpretation possible
suggests a blanket shield in favor of labor against any form of [FLORENZ D.] REGALADO: I notice that the 1935 Constitution
removal regardless of circumstance. This interpretation had only one section on social justice; the same is true with
implies an unimpeachable right to continued employment-a the 1973 Constitution. But they seem to have stood us in
utopian notion, doubtless-but still hardly within the good stead; and I am a little surprised why, despite that
contemplation of the framers. Subsequent legislation is still
attempt at self-censorship, there are certain the membership of the legislature, if they do not get
provisions here which are properly for legislation.52 organized. It is, in fact, a recognition of the principle that
unless a citizenry is organized and mobilized to pursue its
xxx ends peacefully, then it cannot really participate effectively. 54
BISHOP [TEODORO S.] BACANI: [I] think the distinction that There is no pretense on the part of the framers that the
was given during the presentation of the provisions on the provisions on Social Justice, particularly Section 3 of Article
Bill of Rights by Commissioner Bernas is very apropos XIII, are self-executory. Still, considering the rule that
here. He spoke of self-executing rights which belong provisions should be deemed self-executing if enforceable
properly to the Bill of Rights, and then he spoke of a without further legislative action, an examination of Section 3
new body of rights which are more of claims and that of Article XIII is warranted to determine whether it is
these have come about largely through the works of complete in itself as a definitive law, or if it needs future
social philosophers and then the teaching of the legislation for completion and enforcement. 55Particularly, we
Popes. They focus on the common good and hence, it should inquire whether or not the provision voids the
is not as easy to pinpoint precisely these rights nor dismissal of a laborer for just cause if no valid notice or
the situs of the rights. And yet, they exist in relation to the hearing is attendant.
common good.53
Constitutional Commissioner Fr. Joaquin G. Bernas makes a
xxx significant comment on Section 3, Article XIII of the 1987
MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of Constitution:
this kind of collaboration will be left to legislation but The [cluster] of rights guaranteed in the second paragraph
the important thing now is the conservation, utilization or are the right "to security of tenure, humane conditions of
maximization of the very limited resources. xxx work, and a living wage." Again, although these have been
[RICARDO J.] ROMULO: The other problem is that, by and set apart by a period (.) from the next sentence and are
large, government services are inefficient. So, this is a therefore not modified by the final phrase "as may be
problem all by itself. On Section 19, where the report says provided by law," it is not the intention to place these
that people's organizations as a principal means of beyond the reach of valid laws. xxx (emphasis supplied)56
empowering the people to pursue and protect through At present, the Labor Code is the primary mechanism to
peaceful means, I do not suppose that the Committee carry out the Constitution's directives. This is clear from
would like to either preempt or exclude the Article 357 under Chapter 1 thereof which essentially restates
legislature, because the concept of a representative the policy on the protection of labor as worded in the 1973
and democratic system really is that the legislature is Constitution, which was in force at the time of enactment of
normally the principal means. the Labor Code. It crystallizes the fundamental law's policies
[EDMUNDO G.] GARCIA: That is correct. In fact, people on labor, defines the parameters of the rights granted to
cannot even dream of influencing the composition or labor such as the right to security of tenure, and prescribes
the standards for the enforcement of such rights in concrete
terms. While not infallible, the measures provided therein Before I proceed with my discussion on dismissals for just
tend to ensure the achievement of the constitutional aims. causes, a brief comment regarding dismissals for authorized
cause under Article 283 of the Labor Code. While the
The necessity for laws concretizing the constitutional justiciable question in Serrano pertained to a dismissal for
principles on the protection of labor is evident in the reliance unauthorized cause, the ruling therein was crafted as
placed upon such laws by the Court in resolving the issue of definitive to dismissals for just cause. Happily,
the validity of a worker's dismissal. In cases where that was the Decision today does not adopt the same unwise tack. It
the issue confronting the Court, it consistently recognized the should be recognized that dismissals for just cause and
constitutional right to security of tenure and employed the dismissals for authorized cause are governed by different
standards laid down by prevailing laws in determining provisions, entail divergent requisites, and animated by
whether such right was violated.58 The Court's reference to distinct rationales. The language of Article 283 expressly
laws other than the Constitution in resolving the issue of effects the termination for authorized cause to the service of
dismissal is an implicit acknowledgment that the right to written notice on the workers and the Ministry of Labor at
security of tenure, while recognized in the Constitution, least one (1) month before the intended date of termination.
cannot be implemented uniformly absent a law prescribing This constitutes an eminent difference than dismissals for
concrete standards for its enforcement. just cause, wherein the causal relation between the notice
As discussed earlier, the validity of an employee's dismissal and the dismissal is not expressly stipulated. The
in previous cases was examined by the Court in accordance circumstances distinguishing just and authorized causes are
with the standards laid down by Congress in the Termination too markedly different to be subjected to the same rules and
Pay Law, and subsequently, the Labor Code and the reasoning in interpretation.
amendments thereto. At present, the validity of an Since the present petition is limited to a question arising from
employee's dismissal is weighed against the standards laid a dismissal for just cause, there is no reason for making any
down in Article 279, as well as Article 282 in relation to pronouncement regarding authorized causes. Such
Article 277(b) of the Labor Code, for a dismissal for just declaration would be merely obiter, since they are neither the
cause, and Article 283 for a dismissal for an authorized law of the case nor dispositive of the present petition. When
cause. the question becomes justiciable before this Court, we will be
The Effect of Statutory Violation confronted with an appropriate factual milieu on which we
can render a more judicious disposition of this admittedly
Of Notice and Hearing important question.
There is no doubt that the dismissal of an employee even for B. Dismissal for Just Cause
just cause, without prior notice or hearing, violates the Labor
Code. However, does such violation necessarily void the There is no express provision in the Labor Code that voids a
dismissal? dismissal for just cause on the ground that there was no
notice or hearing. Under Section 279, the employer is
precluded from dismissing an employee except for a just
cause as provided in Section 282, or an authorized cause process would fall under the broad grant of power to the
under Sections 283 and 284. Based on reading Section 279 Secretary of Labor to investigate under Article 273.
alone, the existence of just cause by itself is sufficient to
validate the termination. However, the remedy of reinstatement despite termination
for just cause is simply not authorized by the Labor Code.
Just cause is defined by Article 282, which unlike Article 283, Neither the Labor Code nor its implementing rules states that
does not condition the termination on the service of written a termination for just cause is voided because the
notices. Still, the dissenting opinions propound that even if requirement of notice and hearing was not observed. This is
there is just cause, a termination may be invalidated due to not simply an inadvertent semantic failure, but a conscious
the absence of notice or hearing. This view is anchored effort to protect the prerogatives of the employer to dismiss
mainly on constitutional moorings, the basis of which I had an employee for just cause. Notably, despite the several
argued against earlier. For determination now is whether pronouncements by this Court in the past equating the
there is statutory basis under the Labor Code to void a notice-hearing requirement in labor cases to a constitutional
dismissal for just cause due to the absence of notice or maxim, neither the legislature nor the executive has adopted
hearing. the same tack, even gutting the protection to provide that
substantial compliance with due process suffices.
As pointed out by Justice Mendoza in Serrano, it was only in
1989 that the Labor Code was amended to enshrine into The Labor Code significantly eroded management
statute the twin requirements of notice and hearing. 59 Such prerogatives in the hiring and firing of employees. Whereas
requirements are found in Article 277 of the Labor Code, employees could be dismissed even without just cause under
under the heading "Miscellaneous Provisions." Prior to the the Termination Pay Law 61, the Labor Code affords workers
amendment, the notice-hearing requirement was found broad security of tenure. Still, the law recognizes the right of
under the implementing rules issued by the then Minister of the employer to terminate for just cause. The just causes
Labor in 1981. The present-day implementing rules likewise enumerated under the Labor Code serious misconduct or
mandate that the standards of due process, including the willful disobedience, gross and habitual neglect, fraud or
requirement of written notice and hearing, "be substantially willful breach of trust, commission of a crime by the
observed."60 employee against the employer, and other analogous causes
are characterized by the harmful behavior of an employee
Indubitably, the failure to substantially comply with the against the business or the person of the employer.
standards of due process, including the notice and hearing
requirement, may give rise to an actionable claim against the These just causes for termination are not negated by the
employer. Under Article 288, penalties may arise from absence of notice or hearing. An employee who tries to kill
violations of any provision of the Labor Code. The Secretary the employer cannot be magically absolved of trespasses just
of Labor likewise enjoys broad powers to inquire into existing because the employer forgot to serve due notice. Or a less
relations between employers and employees. Systematic extreme example, the gross and habitual neglect of an
violations by management of the statutory right to due employee will not be improved upon just because the
employer failed to conduct a hearing prior to termination.
In fact, the practical purpose of requiring notice and hearing Award for Damages Must Have Statutory Basis
is to afford the employee the opportunity to dispute the
contention that there was just cause in the dismissal. Yet it The Court has grappled with the problem of what should be
must be understood if a dismissed employee is the proper remedial relief of an employee dismissed with just
deprived of the right to notice and hearing, and thus cause, but not afforded either notice or hearing. In a long line
denied the opportunity to present countervailing of cases, beginning with Wenphil Corp. v. NLRC63 and up
evidence that disputes the finding of just cause, until Serrano in 2000, the Court had deemed an
reinstatement will be valid not because the notice and indemnification award as sufficient to answer for the violation
hearing requirement was not observed, but because by the employer against the employee. However, the
there was no just cause in the dismissal. The doctrine was modified in Serrano.
opportunity to dispute the finding of the just cause is readily I disagree with Serrano insofar as it held that employees
available before the Labor Arbiter, and the subsequent levels terminated for just cause are to be paid backwages from the
of appellate review. Again, as held in Serrano: time employment was terminated "until it is determined that
Even in cases of dismissal under Art. 282, the purpose for the the termination is for just cause because the failure to hear
requirement of notice and hearing is not to comply with the him before he is dismissed renders the termination of his
Due Process Clause of the Constitution. The time for notice employment without legal effect."64 Article 279 of the Labor
and hearing is at the trial stage. Then that is the time we Code clearly authorizes the payment of backwages only if an
speak of notice and hearing as the essence of procedural due employee is unjustly dismissed. A dismissal for just cause is
process. Thus, compliance by the employer with the notice obviously antithetical to an unjust dismissal. An award for
requirement before he dismisses an employee does not backwages is not clearly warranted by the law.
foreclose the right of the latter to question the legality of his The Impropriety of Award for Separation Pay
dismissal. As Art. 277(b) provides, "Any decision taken by the
employer shall be without prejudice to the right of the worker The formula of one month's pay for every year served does
to contest the validity or legality of his dismissal by filing a have statutory basis. It is found though in the Labor Code
complaint with the regional branch of the National Labor though, not the Civil Code. Even then, such computation is
Relations Commission.62 made for separation pay under the Labor Code. But
separation pay is not an appropriate as a remedy in this
The Labor Code presents no textually demonstrable case, or in any case wherein an employee is terminated for
commitment to invalidate a dismissal for just cause due to just cause. As Justice Vitug noted in his separate opinion
the absence of notice or hearing. This is not surprising, as in Serrano, an employee whose employment is terminated
such remedy will not restore the employer or employee into for a just cause is not entitled to the payment of separation
equity. Absent a showing of integral causation, the mutual benefits.65 Separation pay is traditionally a monetary award
infliction of wrongs does not negate either injury, but instead paid as an alternative to reinstatement which can no longer
enforces two independent rights of relief. be effected in view of the long passage of time or because of
The Damages' Dimensions the realities of the situation.66 However, under Section 7, Rule
1, Book VI of the Omnibus Rules Implementing the Labor
Code, "[t]he separation from work of an employee for a just equity or social justice can be invoked as basis for the award.
cause does not entitle him to the termination pay provided in However, this sort of arbitrariness, indeterminacy and judicial
the Code."67 Neither does the Labor Code itself provide usurpation of legislative prerogatives is precisely the source
instances wherein separation pay is warranted for dismissals of my discontent. Social justice should be the aspiration of all
with just cause. Separation pay is warranted only for that we do, yet I think it the more mature attitude to consider
dismissals for authorized causes, as enumerated in Article that it ebbs and flows within our statutes, rather than view it
283 and 284 of the Labor Code. as an independent source of funding.
The Impropriety of Equity Awards Article 288 of the Labor Code as a Source of Liability
Admittedly, the Court has in the past authorized the award of Another putative source of liability for failure to render the
separation pay for duly terminated employees as a measure notice requirement is Article 288 of the Labor Code, which
of social justice, provided that the employee is not guilty of states:
serious misconduct reflecting on moral character. 68 This
doctrine is inapplicable in this case, as the Agabons are guilty Article 288 states:
of abandonment, which is the deliberate and unjustified Penalties. Except as otherwise provided in this Code, or
refusal of an employee to resume his employment. unless the acts complained of hinges on a question of
Abandonment is tantamount to serious misconduct, as it interpretation or implementation of ambiguous provisions of
constitutes a willful breach of the employer-employee an existing collective bargaining agreement, any violation of
relationship without cause. the provisions of this Code declared to be unlawful or penal
The award of separation pay as a measure of social justice in nature shall be punished with a fine of not less than One
has no statutory basis, but clearly emanates from the Court's Thousand Pesos (P1,000.00) nor more than Ten Thousand
so-called "equity jurisdiction." The Court's equity jurisdiction Pesos (P10,000.00), or imprisonment of not less than three
as a basis for award, no matter what form it may take, is months nor more than three years, or both such fine and
likewise unwarranted in this case. Easy resort to equity imprisonment at the discretion of the court.
should be avoided, as it should yield to positive rules which It is apparent from the provision that the penalty arises due
pre-empt and prevail over such persuasions. 69 Abstract as the to contraventions of the provisions of the Labor Code. It is
concept is, it does not admit to definite and objective also clear that the provision comes into play regardless of
standards. who the violator may be. Either the employer or the
I consider the pronouncement regarding the proper monetary employee may be penalized, or perhaps even officials tasked
awards in such cases as Wenphil Corp. v. NLRC,70Reta,71 and with implementing the Labor Code.
to a degree, even Serrano as premised in part on equity. This However, it is apparent that Article 288 is a penal provision;
decision is premised in part due to the absence of cited hence, the prescription for penalties such as fine and
statutory basis for these awards. In these cases, the Court imprisonment. The Article is also explicit that the imposition
deemed an indemnity award proper without exactly saying of fine or imprisonment is at the "discretion of the court."
where in statute could such award be derived at. Perhaps,
Thus, the proceedings under the provision is penal in employed a few other cases, 75 may have left an erroneous
character. The criminal case has to be instituted before the impression that the award implemented beginning
proper courts, and the Labor Code violation subject thereof with Wenphil was based on Article 288 of the Labor Code.
duly proven in an adversarial proceeding. Hence, Article 288 Yet, an examination of Wenphilreveals that what the Court
cannot apply in this case and serve as basis to impose a actually awarded to the employee was an "indemnity",
penalty on Riviera Homes. dependent on the facts of each case and the gravity of the
omission committed by the employer. There is no mention
I also maintain that under Article 288 the penalty should be in Wenphil of Article 288 of the Labor Code, or indeed, of any
paid to the State, and not to the person or persons who may statutory basis for the award.
have suffered injury as a result of the violation. A penalty is a
sum of money which the law requires to be paid by way of The Proper Basis: Employer's Liability under the Civil Code
punishment for doing some act which is prohibited or for not
doing some act which is required to be done. 72 A penalty As earlier stated, Wenphil allowed the payment of indemnity
should be distinguished from damages which is the pecuniary to the employee dismissed for just cause is dependent on the
compensation or indemnity to a person who has suffered facts of each case and the gravity of the omission committed
loss, detriment, or injury, whether to his person, property, or by the employer. However, I considered Wenphil flawed
rights, on account of the unlawful act or omission or insofar as it is silent as to the statutory basis for the
negligence of another. Article 288 clearly serves as a punitive indemnity award. This failure, to my mind, renders it unwise
fine, rather than a compensatory measure, since the for to reinstate the Wenphil rule, and foster the impression
provision penalizes an act that violates the Labor Code even that it is the judicial business to invent awards for damages
if such act does not cause actual injury to any private person. without clear statutory basis.
Independent of the employee's interests protected by the The proper legal basis for holding the employer liable
Labor Code is the interest of the State in seeing to it that its for monetary damages to the employee dismissed for
regulatory laws are complied with. Article 288 is intended to just cause is the Civil Code. The award of damages
satiate the latter interest. Nothing in the language of Article should be measured against the loss or injury sufered
288 indicates an intention to compensate or remunerate a by the employee by reason of the employer's violation
private person for injury he may have sustained. or, in case of nominal damages, the right vindicated
by the award. This is the proper paradigm authorized
It should be noted though that in Serrano, the Court observed by our law, and designed to obtain the fairest possible
that since the promulgation of Wenphil Corp. v. NLRC73 in relief.
1989, "fines imposed for violations of the notice requirement
have varied from P1,000.00 to P2,000.00 to P5,000.00 Under Section 217(4) of the Labor Code, the Labor Arbiter
to P10,000.00."74 Interestingly, this range is the same range has jurisdiction over claims for actual, moral, exemplary and
of the penalties imposed by Article 288. These "fines" other forms of damages arising from the employer-employee
adverted to in Serrano were paid to the dismissed employee. relations. It is thus the duty of Labor Arbiters to adjudicate
The use of the term "fines," as well as the terminology claims for damages, and they should disabuse themselves of
any inhibitions if it does appear that an award for damages is
warranted. As triers of facts in a specialized field, they should contracts, quasi-contracts, acts or omissions punished by
attune themselves to the particular conditions or problems law, and quasi-delicts, or where any property right has been
attendant to employer-employee relationships, and thus be in invaded.
the best possible position as to the nature and amount of
damages that may be warranted in this case. Clearly, the bare act of failing to observe the notice
requirement gives rise to nominal damages assessable
The damages referred under Section 217(4) of the Labor against the employer and due the employee. The Labor Code
Code are those available under the Civil Code. It is but proper indubitably entitles the employee to notice even if dismissal
that the Civil Code serve as the basis for the indemnity, it is for just cause, even if there is no apparent intent to void
being the law that regulates the private relations of the such dismissals deficiently implemented. It has also been
members of civil society, determining their respective rights held that one's employment, profession, trade, or calling is a
and obligations with reference to persons, things, and civil "property right" and the wrongful interference therewith
acts.76 No matter how impressed with the public interest the gives rise to an actionable wrong.78
relationship between a private employer and employee is, it
still is ultimately a relationship between private individuals. In Better Buildings, Inc. v. NLRC,79 the Court ruled that the
Notably, even though the Labor Code could very well have while the termination therein was for just and valid cause,
provided set rules for damages arising from the employer- the manner of termination was done in complete disregard of
employee relationship, referral was instead made to the the necessary procedural safeguards. 80 The Court found
concept of damages as enumerated and defined under the nominal damages as the proper form of award, as it was
Civil Code. purposed to vindicate the right to procedural due process
violated by the employer.81 A similar holding was maintained
Given the long controversy that has dogged this present in Iran v. NLRC82 and Malaya Shipping v. NLRC.83 The doctrine
issue regarding dismissals for just cause, it is wise to lay has express statutory basis, duly recognizes the existence of
down standards that would guide the proper award of the right to notice, and vindicates the violation of such right.
damages under the Civil Code in cases wherein the employer It is sound, logical, and should be adopted as a general rule.
failed to comply with statutory due process in dismissals for
just cause. The assessment of nominal damages is left to the discretion
of the court,84 or in labor cases, of the Labor Arbiter and the
First. I believe that it can be maintained as a general rule, successive appellate levels. The authority to nominate
that failure to comply with the statutory requirement of standards governing the award of nominal damages has
notice automatically gives rise to nominal damages, at the clearly been delegated to the judicial branch, and it will serve
very least, even if the dismissal was sustained for just cause. good purpose for this Court to provide such guidelines.
Considering that the affected right is a property right, there is
Nominal damages are adjudicated in order that a right of a justification in basing the amount of nominal damages on the
plaintiff which has been violated or invaded by another may particular characteristics attaching to the claimant's
be vindicated or recognized without having to indemnify the employment. Factors such as length of service, positions
plaintiff for any loss suffered by him. 77 Nominal damages may held, and received salary may be considered to obtain the
likewise be awarded in every obligation arising from law,
proper measure of nominal damages. After all, the degree by failure of the employer to observe procedural due process
which a property right should be vindicated is affected by the mandated by the Labor Code is the proximate cause of
estimable value of such right. pecuniary loss or injury to the dismissed employee, then
actual or compensatory damages may be awarded.
At the same time, it should be recognized that nominal
damages are not meant to be compensatory, and should not Third. If there is a finding of pecuniary loss arising from the
be computed through a formula based on actual losses. employer violation, but the amount cannot be proved with
Consequently, nominal damages usually limited in pecuniary certainty, then temperate or moderate damages are
value.85 This fact should be impressed upon the prospective available under Article 2224 of the Civil Code. Again,
claimant, especially one who is contemplating seeking sufficient discretion is afforded to the adjudicator as regards
actual/compensatory damages. the proper award, and the award must be reasonable under
the circumstances. 88 Temperate or nominal damages may yet
Second. Actual or compensatory damages are not available prove to be a plausible remedy, especially when common
as a matter of right to an employee dismissed for just cause sense dictates that pecuniary loss was suffered, but
but denied statutory due process. They must be based on incapable of precise definition.
clear factual and legal bases,86 and correspond to such
pecuniary loss suffered by the employee as duly Fourth. Moral and exemplary damages may also be awarded
proven.87 Evidently, there is less degree of discretion to in the appropriate circumstances. As pointed out by
award actual or compensatory damages. the Decision, moral damages are recoverable where the
dismissal of the employee was attended by bad faith, fraud,
I recognize some inherent difficulties in establishing actual or was done in a manner contrary to morals, good customs or
damages in cases for terminations validated for just cause. public policy, or the employer committed an act oppressive
The dismissed employee retains no right to continued to labor.89 Exemplary damages may avail if the dismissal was
employment from the moment just cause for termination effected in a wanton, oppressive or malevolent manner.
exists, and such time most likely would have arrived even
before the employer is liable to send the first notice. As a Appropriate Award of Damages to the Agabons
result, an award of backwages disguised as actual damages
would almost never be justified if the employee was The records indicate no proof exists to justify the award of
dismissed for just cause. The possible exception would be if it actual or compensatory damages, as it has not been
can be proven the ground for just cause came into being only established that the failure to serve the second notice on the
after the dismissed employee had stopped receiving wages Agabons was the proximate cause to any loss or injury. In
from the employer. fact, there is not even any showing that such violation
caused any sort of injury or discomfort to the Agabons. Nor
Yet it is not impossible to establish a case for actual damages do they assert such causal relation. Thus, the only
if dismissal was for just cause. Particularly actionable, for appropriate award of damages is nominal damages.
example, is if the notices are not served on the employee, Considering the circumstances, I agree that an award of
thus hampering his/her opportunities to obtain new Fifteen Thousand Pesos (P15,000.00) each for the Agabons is
employment. For as long as it can be demonstrated that the sufficient.
All premises considered, I VOTE to: DOMINGO ASIA, FRANCISCO BAYUGA, ARTHUR M.
ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT
(1) DENY the PETITION for lack of merit, and AFFIRM A. ORDOO, BERNARD V. JULARBAL, IGNACIO C.
the Decision of the Court of Appeals dated 23 January 2003, ALINGBAS and LEODEL N. SORIANO, petitioners,
with the MODIFICATION that in addition, Riviera Homes be vs.
ORDERED to pay the petitioners the sum of Fifteen Thousand NATIONAL LABOR RELATIONS COMMISSION (THIRD
Pesos (P15,000.00) each, as nominal damages. DIVISION), and BENGUET ELECTRIC COOPERATIVE, INC.
(BENECO) respondents.
(2) HOLD that henceforth, dismissals for just cause may not
be invalidated due to the failure to observe the due process AUSTRIA-MARTINEZ, J.:
requirements under the Labor Code, and that the only Before us is a petition for certiorari seeking to annul the
indemnity award available to the employee dismissed for just decision promulgated by the National Labor Relations
cause are damages under the Civil Code as duly proven. Any Commission (NLRC) on July 2, 1992 in NLRC CA No. L-000384-
and all previous rulings and statements of the Court 92,1 and its resolution dated September 24, 1992 denying
inconsistent with this holding are now deemed INOPERATIVE. petitioners motion for reconsideration.
DANTE O. TINGA The factual background of this case, as summarized by the
Associate Justice Labor Arbiter, is as follows:
Please be informed that effective at the close of office hours 2. Respondent is also ordered:
of December 31, 1990, your services with the BENECO will be
terminated. Your termination has nothing to do with your A. To pay complainants the amount representing
performance. Rather, it is because we have to retrench on underpayment of their wages:
personnel as we are already overstaffed. a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward
x x x. (Annex C, CJPP) Abellera, Francisco Bayuga, Arthur Oribello, Buenaventura de
Guzman, Jr., Robert Ordoo, Bernard Jularbal and Leodel
On the same date, the complainants filed separate Soriano, P1,994.25 each;
complaints for illegal dismissal. And following the
amendment of said complaints, they submitted their joint b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and
position paper on April 4, 1991. Respondent filed its position c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas,
paper on April 2, 1991. P1,816.25 each.
It is the contention of the complainants that they were not B. To extend to complainant Jaime Viernes an appointment as
apprentices but regular employees whose services were regular employee for the position of meter reader, the job he
illegally and unjustly terminated in a manner that was held prior to his termination, and to pay him P2,590.50 as
whimsical and capricious. On the other hand, the respondent indemnity, plus the underpayment of his wages as above
invokes Article 283 of the Labor Code in defense of the stated.
questioned dismissal.2
C. To pay P7,000.00 as and for attorneys fees.
On October 18, 1991, the Labor Arbiter rendered a decision,
the dispositive portion of which reads as follows: No damages.
1. Dismissing the complaints for illegal dismissal filed by the Aggrieved by the Labor Arbiters decision, the complainants
complainants for lack of merit. However in view of the offer and the respondent filed their respective appeals to the
of the respondent to enter into another temporary NLRC.
employment contract with the complainants, the respondent
is directed to so extend such contract to each complainant, On July 2, 1992, the NLRC modified its judgment, to wit:
with the exception of Jaime Viernes, and to pay each the
amount of P2,590.50, which represents a months salary, as
WHEREFORE, premises considered, judgment is hereby prior to the promulgation of the St. Martin decision, the Court
rendered modifying the appealed decision by declaring generally opts to take the case itself for its final disposition. 8
complainants dismissal illegal, thus ordering their
reinstatement to their former position as meter readers or to and considering that the parties have filed their respective
any equivalent position with payment of backwages limited memoranda as of 1994, we opt to resolve the issues raised in
to one year and deleting the award of indemnity and the present petition.
attorneys fees. The award of underpayment of wages is The parties raised the following issues:
hereby AFFIRMED.
1. Whether the respondent NLRC committed grave abuse of
SO ORDERED.4 discretion in ordering the reinstatement of petitioners to their
On August 27, 1992, complainants filed a Motion for former position as meter readers on probationary status in
Clarification and Partial Reconsideration. 5 On September 24, spite of its finding that they are regular employees under
1992, the NLRC issued a resolution denying the Article 280 of the Labor Code.
complainants motion for reconsideration. 6 2. Whether the respondent NLRC committed grave abuse of
Hence, complainants filed herein petition. discretion in limiting the backwages of petitioners to one
year only in spite of its finding that they were illegally
Private respondent BENECO filed its Comment; the Office of dismissed, which is contrary to the mandate of full
the Solicitor General (OSG) filed a Manifestation and Motion backwages until actual reinstatement but not to exceed three
in Lieu of Comment; public respondent NLRC filed its own years.
Comment; and petitioners filed their Manifestation and
Motion In Lieu of Consolidated Reply. Public respondent NLRC, 3. Whether the respondent NLRC committed grave abuse of
herein petitioners, and private respondent filed their discretion in deleting the award of indemnity pay which had
respective memoranda, and the OSG, its Manifestation in become final because it was not appealed and in deleting the
1994. award of attorneys fees because of the absence of a trial-
type hearing.
Pursuant to our ruling in Rural Bank of Alaminos Employees
Union vs. NLRC,7 to wit: 4. Whether the mandate of immediately executory on the
reinstatement aspect even pending appeal as provided in the
in the decision in the case of St. Martin Funeral Homes vs. decision of Labor Arbiters equally applies in the decision of
National Labor Relations Commission, G.R. No. 130866, the National Labor Relations Commission even pending
promulgated on September 16, 1998, this Court pronounced appeal, by means of a motion for reconsideration of the order
that petitions for certiorari relating to NLRC decisions must reinstating a dismissed employee or pending appeal because
be filed directly with the Court of Appeals, and labor cases the case is elevated on certiorari before the Supreme Court. 9
pending before this Court should be referred to the appellate
court for proper disposition. However, in cases where the We find the petition partly meritorious.
Memoranda of both parties have been filed with this Court
As to the first issue: We sustain petitioners claim that they voluntarily by the parties, without any force, duress or
should be reinstated to their former position as meter improper pressure being brought to bear upon the employee
readers, not on a probationary status, but as regular and absent any other circumstances vitiating his consent, or
employees. where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms
Reinstatement means restoration to a state or condition from with no moral dominance whatever being exercised by the
which one had been removed or separated. 10 In case of former over the latter.12
probationary employment, Article 281 of the Labor Code
requires the employer to make known to his employee at the is misplaced.
time of the latters engagement of the reasonable standards
under which he may qualify as a regular employee. The principle we have enunciated in Brent applies only with
respect to fixed term employments. While it is true that
A review of the records shows that petitioners have never petitioners were initially employed on a fixed term basis as
been probationary employees. There is nothing in the letter their employment contracts were only for October 8 to 31,
of appointment, to indicate that their employment as meter 1990, after October 31, 1990, they were allowed to continue
readers was on a probationary basis. It was not shown that working in the same capacity as meter readers without the
petitioners were informed by the private respondent, at the benefit of a new contract or agreement or without the term
time of the latters employment, of the reasonable standards of their employment being fixed anew. After October 31,
under which they could qualify as regular employees. 1990, the employment of petitioners is no longer on a fixed
Instead, petitioners were initially engaged to perform their term basis. The complexion of the employment relationship
job for a limited duration, their employment being fixed for a of petitioners and private respondent is thereby totally
definite period, from October 8 to 31, 1990. changed. Petitioners have attained the status of regular
employees.
Private respondents reliance on the case of Brent School,
Inc. vs. Zamora,11 wherein we held as follows: Under Article 280 of the Labor Code, a regular employee is
one who is engaged to perform activities which are necessary
Accordingly, and since the entire purpose behind the or desirable in the usual business or trade of the employer, or
development of legislation culminating in the present Article a casual employee who has rendered at least one year of
280 of the Labor Code clearly appears to have been, as service, whether continuous or broken, with respect to the
already observed, to prevent circumvention of the activity in which he is employed.
employees right to be secure in his tenure, the clause in said
article indiscriminately and completely ruling out all written In De Leon vs. NLRC,13 and Abasolo vs. NLRC,14 we laid down
or oral agreements conflicting with the concept of regular the test in determining regular employment, to wit:
employment as defined therein should be construed to refer
to the substantive evil that the Code itself has singled out: The primary standard, therefore, of determining regular
agreements entered into precisely to circumvent security of employment is the reasonable connection between the
tenure. It should have no application to instances where a particular activity performed by the employee in relation to
fixed period of employment was agreed upon knowingly and the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the term, petitioners have become full-fledged regular
usual business or trade of the employer. The connection can employees. The fact alone that petitioners have rendered
be determined by considering the nature of the work service for a period of less than six months does not make
performed and its relation to the scheme of the particular their employment status as probationary.
business or trade in its entirety. Also if the employee has
been performing the job for at least a year, even if the Since petitioners are already regular employees at the time
performance is not continuous and merely intermittent, the of their illegal dismissal from employment, they are entitled
law deems repeated and continuing need for its performance to be reinstated to their former position as regular
as sufficient evidence of the necessity if not indispensability employees, not merely probationary.
of that activity to the business. Hence, the employment is As to the second issue, Article 279 of the Labor Code, as
considered regular, but only with respect to such activity and amended by R.A. No. 6715, which took effect on March 21,
while such activity exists.15 1989, provides that an illegally dismissed employee is
Clearly therefrom, there are two separate instances whereby entitled to full backwages, inclusive of allowances, and to his
it can be determined that an employment is regular: (1) The other benefits or their monetary equivalent computed from
particular activity performed by the employee is necessary or the time his compensation was withheld from him up to the
desirable in the usual business or trade of the employer; or time of his actual reinstatement. Since petitioners were
(2) if the employee has been performing the job for at least a employed on October 8, 1990, the amended provisions of
year. Article 279 of the Labor Code shall apply to the present case.
Hence, it was patently erroneous, tantamount to grave abuse
Herein petitioners fall under the first category. They were of discretion on the part of the public respondent in limiting
engaged to perform activities that are necessary to the usual to one year the backwages awarded to petitioners.
business of private respondent. We agree with the labor
arbiters pronouncement that the job of a meter reader is With respect to the third issue, an employer becomes liable
necessary to the business of private respondent because to pay indemnity to an employee who has been dismissed if,
unless a meter reader records the electric consumption of in effecting such dismissal, the employer fails to comply with
the subscribing public, there could not be a valid basis for the requirements of due process. 16 The indemnity is in the
billing the customers of private respondent. The fact that the form of nominal damages intended not to penalize the
petitioners were allowed to continue working after the employer but to vindicate or recognize the employees right
expiration of their employment contract is evidence of the to procedural due process which was violated by the
necessity and desirability of their service to private employer.17 Under Article 2221 of the Civil Code, nominal
respondents business. In addition, during the preliminary damages are adjudicated in order that a right of the plaintiff,
hearing of the case on February 4, 1991, private respondent which has been violated or invaded by the defendant, may
even offered to enter into another temporary employment be vindicated or recognized, and not for the purpose of
contract with petitioners. This only proves private indemnifying the plaintiff for any loss suffered by him.
respondents need for the services of herein petitioners. With We do not agree with the ruling of the NLRC that indemnity is
the continuation of their employment beyond the original incompatible with the award of backwages. These two
awards are based on different considerations. Backwages are (b) It shall be unlawful for any person to demand or accept,
granted on grounds of equity to workers for earnings lost due in any judicial or administrative proceedings for the recovery
to their illegal dismissal from work. 18 On the other hand, the of the wages, attorneys fees which exceed ten percent of the
award of indemnity, as we have earlier held, is meant to amount of wages recovered.
vindicate or recognize the right of an employee to due
process which has been violated by the employer. As to the last issue, Article 223 of the Labor Code is plain and
clear that the decision of the NLRC shall be final and
In the present case, the private respondent, in effecting the executory after ten (10) calendar days from receipt thereof
dismissal of petitioners from their employment, failed to by the parties. In addition, Section 2(b), Rule VIII of the New
comply with the provisions of Article 283 of the Labor Code Rules of Procedure of the NLRC provides that "should there
which requires an employer to serve a notice of dismissal be a motion for reconsideration entertained pursuant to
upon the employees sought to be terminated and to the Section 14, Rule VII of these Rules, the decision shall be
Department of Labor, at least one month before the intended executory after ten calendar days from receipt of the
date of termination. Petitioners were served notice on resolution on such motion."
January 3, 1991 terminating their services, effective
December 29, 1990, or retroactively, in contravention of We find nothing inconsistent or contradictory between Article
Article 283. This renders the private respondent liable to pay 223 of the Labor Code and Section 2(b), Rule VIII, of the NLRC
indemnity to petitioners. Rules of Procedure. The aforecited provision of the NLRC
Rules of Procedure merely provides for situations where a
Thus, we find that the NLRC committed grave abuse of motion for reconsideration is filed. Since the Rules allow the
discretion in deleting the award of indemnity. In Del Val vs. filing of a motion for reconsideration of a decision of the
NLRC,19 we held that the award of indemnity ranges from NLRC, it simply follows that the ten-day period provided
P1,000.00 to P10,000.00 depending on the particular under Article 223 of the Labor Code should be reckoned from
circumstances of each case. In the present case, the amount the date of receipt by the parties of the resolution on such
of indemnity awarded by the labor arbiter is P2,590.50, which motion. In the case at bar, petitioners received the resolution
is equivalent to petitioners one-month salary. We find no of the NLRC denying their motion for reconsideration on
cogent reason to modify said award, for being just and October 22, 1992. Hence, it is on November 2, 1992 that the
reasonable. questioned decision became executory.
As to the award of attorneys fees, the same is justified by WHEREFORE, the petition is partially GRANTED. The decision
the provisions of Article 111 of the Labor Code, to wit: of the National Labor Relations Commission dated July 2,
1992 is MODIFIED. Private respondent Benguet Electric
Art. 111. Attorneys fees (a) In cases of unlawful Cooperative, Inc. (BENECO) is hereby ordered to reinstate
withholding of wages the culpable party may be assessed petitioners to their former or substantially equivalent position
attorneys fees equivalent to ten percent of the amount of as regular employees, without loss of seniority rights and
wages recovered. other privileges appurtenant thereto, with full backwages
from the time of their dismissal until they are actually
reinstated. The amount of P2,590.50 awarded by the labor On November 7, 1990, Alan D. Gustilo, petitioner, was
arbiter as indemnity to petitioners is REINSTATED. Private employed by Wyeth Philippines, Inc., respondent company,
respondent is also ordered to pay attorneys fees in the as a pharmaceutical territory manager. Eventually, he was
amount of ten percent (10%) of the total monetary award placed in charge of its various branches in Metro Bacolod City
due to the petitioners. In all other respects the assailed and Negros Occidental. To ensure a profitable sale of its
decision and resolution are AFFIRMED. pharmaceutical products, he performed various functions,
such as visiting hospitals, pharmacies, drugstores and
Costs against private respondent BENECO. physicians concerned; preparing and submitting his pre-
SO ORDERED. dated itinerary; and submitting periodic reports of his daily
call visits, monthly itinerary, and weekly locator and incurred
expenses.
1. To reinstate complainant Alan Gustilo to his former position 1. On February 2, 1993, he was suspended for falsifying,
without loss of seniority rights and other privileges and to tampering and/or altering the gasoline receipt (Annex 12,
pay his full backwages, inclusive of allowances and other Wyeths Position Paper, Rollo, p. 142).
benefits, or their monetary equivalent computed from the
time his compensation was withheld from him up to the time 2. On June 28, 1993, he was warned for false reporting of his
of his actual reinstatement. If reinstatement is no longer trade outlet calls (Annex 13, Wyeths Position Paper, Rollo,
feasible, complainant may opt to receive his separation pay p. 143).
equivalent to at least one month salary for every year of 3. On September 8, 1993, he was guilty of unauthorized
service, in lieu of reinstatement. availment of sick leaves, emergency leaves, vacation leaves
2. To refund, jointly and severally, complainant in the amount and unauthorized absences (Annex 14, Wyeths Position
of P4,190.00; and Paper, Rollo, p. 144).
3. To pay 10% of the total monetary award as attorneys fees. 4. On November 28, 1994, he was cited for his repeated
delay in submitting his expense reports (Annex 4, Wyeths
SO ORDERED." Position Paper, Rollo, p. 132).
Respondents filed their motion for reconsideration but was 5. On July 10, 1995, he was cited for failure to submit his
denied by the NLRC in a Resolution dated December 28, expense report on time (Annex 5, Wyeths Position Paper,
1999. Rollo, p. 133).
As a consequence, respondents filed with the Court of 6. On September 26, 1995, he was charged with breach of
Appeals a petition for certiorari with prayer for issuance of a the rule on submission of required reports (Annex 8,
temporary restraining order and a writ of preliminary Wyeths Position Paper, Rollo, p. 136).
injunction.
7. On November 28, 1995, he was again cited for car, the supposed car and the NISSAN LEC have to be
unauthorized absence on October 19, 1995 and other maintained.
violations of company rules as contained in a letter of the
same date (Annex 9, Wyeths Position Paper, Rollo, p. 137). In view of our finding that there was a valid dismissal,
petitioners Aurello Mercado and Edgar Epilepsia, as a
From 1993 up to 1995, respondent has repeatedly consequence, cannot be held personally liable to respondent
guaranteed not to repeat transgressing company rules under Gustilo. Even assuming ex grati argumentithat termination is
pain of termination, but to no avail (Letter dated January 16, illegal, corporate officers like petitioners Mercado and
1993; Rollo, p. 141; Internal Memo dated February 1, 1993; Epilepsia are mere agents of Wyeth and acts done in good
Rollo, p. 142; Internal Memo dated July 11, 1995; Rollo, p. faith and in representation or on behalf of said company and
134; Plan of Action dated February 6, 1996; Rollo, p. 147). It within the scope of their authority cannot give rise to any
has become clear that respondent Gustilo is a habitual liability on their part as said acts are considered corporate
ofender whose numerous contraventions of company acts.
rules has left Wyeth with no choice but to terminate
him based on Article 282 of the Labor Code, gross and xxx
habitual neglect by the employee of his duties, being WHEREFORE, the subject Decision and Resolution,
a valid cause for termination. promulgated on August 13, 1999 and December 28, 1999,
While dismissal is proper, the Court however considers respectively, by respondent National Labor Relations
the length of service of respondent Gustilo with Commission are SET ASIDE and REVERSED and a new
Wyeth, the loyalty awards he received and the grudge judgment is rendered, as follows:
of petitioner Verzano, Jr. as mitigating factors. The 1. The Complaint for illegal dismissal against petitioners
Court is inclined to reinstate respondent Gustilo to his Wyeth Philippines, Inc., Aurelio Mercado and Edgar Epilepsia
former position without backwages and other is dismissed for lack of merit;
benefits. However in view of the strained relationship
between respondent Gustilo and petitioner Verzano, 2. Petitioner Wyeth Philippines, Inc. is ordered to pay
Jr., the Court rules to award separation pay to respondent Alan Gustilo P106,890.00 as separation pay;
respondent Gustilo in the amount of P106,890.00.
3. Wyeth Philippines, Inc. is ordered to pay respondent
In view of our finding that there are valid causes for Gustilo P68,000.00 representing the difference between the
dismissal, it follows that the award for payment of prices of the supposed car, KIA and the NISSAN LEC,
backwages, damages and attorneys fees has to be recalled and P4,190.00 equivalent to the cost of one piece of tire,
for want of basis. headlight and tire wrench.
Hence, this petition for review on certiorari. Records show the various violations of respondent companys
rules and regulations committed by petitioner. His dismissal
Petitioner, in the present petition, contends that he was from the service is, therefore, in order. Indeed, in Piedad vs.
illegally dismissed from the service by respondent company. Lanao del Norte Electric Cooperative, Inc.,5we ruled that a
Hence, he should be reinstated and paid his full backwages series of irregularities when put together may constitute
and other benefits and privileges. serious misconduct, which under Article 282 of the Labor
In Philippine Journalists, Inc. vs. Mosqueda,3 we reiterated the Code, as amended,6 is a just cause for dismissal.
well-established rule that "findings of fact by the Court of But the Court of Appeals still awarded him separation pay
Appeals are conclusive on the parties and are not reviewable of P106,890.00 by reason of several mitigating factors
by this Court. x x x. The rationale behind this doctrine is that mentioned in its assailed Decision. The issue for our
review of the findings of fact by the Court of Appeals is not a determination now is whether he is entitled to such an
function that the Supreme Court normally undertakes." award.
Here, the Court of Appeals unequivocally ruled that "Gustilo The rule embodied in the Omnibus Rules Implementing the
(herein petitioner) is a habitual ofender whose Labor Code is that a person dismissed for cause as defined
numerous contraventions of company rules has left therein is not entitled to separation pay. 7 However, in PLDT
Wyeth (herein respondent) with no choice but to terminate vs. NLRC and Abucay,8 we held:
his services x x x."
"x x x henceforth, separation pay shall be allowed as a
Evidently, there is no cogent reason why we should not measure of social justice only in those instances
accord deference and finality to the Appellate Courts factual where the employee is validly dismissed for causes
findings which are supported by substantial evidence as other than serious misconduct or those reflecting on
shown by the records. his moral character. Where the reason for the valid
In Family Planning Organization of the Philippines, Inc. vs. dismissal is, x x x an offense involving moral turpitude x x x,
NLRC,4 we held: the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or
"It is the employer's prerogative to prescribe reasonable rules whatever other name it is called, on the ground of social
and regulations necessary or proper for the conduct of its justice."
business or concern, to provide certain disciplinary measures
to implement said rules and to assure that the same be Similarly, in Telefunken Semiconductors Employees Union-
complied with. At the same time, it is one of the fundamental FFW vs. Court of Appeals,9 we ruled:
duties of the employee to yield obedience to all reasonable
rules, orders, and instructions of the employer, and willful or
"The same view holds with respect to the award of financial that he is the nephew of Mr. Danao, respondent
assistance or separation pay. The assumption for granting Wyeths Nutritional Territory Manager. Also, on February
financial assistance or separation pay, which is, that there is 2, 1993, he was suspended for falsifying a gasoline
an illegally dismissed employee and that illegally dismissed receipt. On June 28, 1993, he was warned for submitting
employee would otherwise have been entitled to a false report of his trade outlet calls. On September 8,
reinstatement, is not present in the case at bench. Here, the 1993, he was found guilty of unauthorized availment of
striking workers have been validly dismissed Where the sick, vacation and emergency leaves. These
employees dismissal was for a just cause, it would be infractions manifest his slack of moral principle. In
neither fair nor just to allow the employee to recover simple term, he is dishonest.
something he has not earned or could not have earned. This
being so, there can be no award of backwages, for it must be Neither can petitioner find reliance on the policy of social
pointed out that while backwages are granted on the basis of justice. As aptly held by this Court in the same case
equity for earnings which a worker or employee has lost due ofPhilippine Long Distance Telephone vs. NLRC and
to his illegal dismissal, where private respondents dismissal Abucay,10 "[T]hose who invoke social justice may do so only if
is for just cause, as in the case herein, there is no factual or their hands are clean and their motives blameless x x x."
legal basis to order the payment of backwages; otherwise, Here, petitioner failed to measure up to such requirement.
private respondent would be unjustly enriching herself at the In sum, we find that petitioner was legally dismissed from
expense of petitioners. (Cathedral School of Technology vs. employment and is, therefore, not entitled to reinstatement
National Labor Relations Commission, 214 SCRA 551). or an award of separation pay or other benefits.
Consequently, granting financial assistance to the strikers is Unfortunately, respondent company did not interpose an
clearly a specious inconsistency (supra). We are of course appeal to this Court. Hence, no affirmative relief can be
aware that financial assistance may be allowed as a extended to it. A party in a case who did not appeal is not
measure of social justice in exceptional circumstances entitled to any affirmative relief.11 Thus, respondent company
and as an equitable concession. We are likewise has to comply with the Appellate Courts mandate to grant
mindful that financial assistance is allowed only in petitioner his separation pay.
those instances where the employee is validly
dismissed for causes other than serious misconduct or WHEREFORE, the petition is DENIED. Costs against
those reflecting on his moral character (Zenco Sales, petitioner.
Inc. vs. National Labor Relations Commission, 234 SCRA 689).
x x x." SO ORDERED.
G.R. No. 151378. March 28, 2005 In time, respondents separately filed with the regional
Arbitration Branch of the National Labor Relations
JAKA FOOD PROCESSING CORPORATION, Petitioners, Commission (NLRC) complaints for illegal dismissal,
vs. underpayment of wages and nonpayment of service
DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, incentive leave and 13th month pay against JAKA and its HRD
MARLON DOMINGO, RHOEL LESCANO and JONATHAN Manager, Rosana Castelo.
CAGABCAB, Respondents.
After due proceedings, the Labor Arbiter rendered a
DECISION decision3 declaring the termination illegal and ordering JAKA
and its HRD Manager to reinstate respondents with full
GARCIA, J.:
backwages, and separation pay if reinstatement is not
Assailed and sought to be set aside in this appeal by way of a possible. More specifically the decision dispositively reads:
petition for review on certiorari under rule 45 of the Rules of
WHEREFORE, judgment is hereby rendered declaring as
Court are the following issuances of the Court of Appeals in
illegal the termination of complainants and ordering
CA-G.R. SP. No. 59847, to wit:
respondents to reinstate them to their positions with full
1. Decision dated 16 November 2001,1 reversing and backwages which as of July 30, 1998 have already amounted
setting aside an earlier decision of the National Labor to P339,768.00. Respondents are also ordered to pay
Relations Commission (NLRC); and complainants the amount of P2,775.00 representing the
unpaid service incentive leave pay of Parohinog, Lescano and
2. Resolution dated 8 January 2002, 2 denying petitioners Cagabcab an the amount of P19,239.96 as payment for 1997
motion for reconsideration. 13th month pay as alluded in the above computation.
The material facts may be briefly stated, as follows: If complainants could not be reinstated, respondents are
ordered to pay them separation pay equivalent to one month
salary for very (sic) year of service.
SO ORDERED. 13th month pay and, in addition, full backwages from the
time their employment was terminated on August 29, 1997
Therefrom, JAKA went on appeal to the NLRC, which, in a up to the time the Decision herein becomes final.
decision dated August 30, 1999,4 affirmed in toto that of the
Labor Arbiter. SO ORDERED.
JAKA filed a motion for reconsideration. Acting thereon, the This time, JAKA moved for a reconsideration but its motion
NLRC came out with another decision dated January 28, was denied by the appellate court in its resolution of January
2000,5 this time modifying its earlier decision, thus: 8, 2002.
WHEREFORE, premises considered, the instant motion for Hence, JAKAs present recourse, submitting, for our
reconsideration is hereby GRANTED and the challenged consideration, the following issues:
decision of this Commission [dated] 30 August 1999 and the
decision of the Labor Arbiter xxx are hereby modified by "I. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY
reversing an setting aside the awards of backwages, service AWARDED FULL BACKWAGES TO RESPONDENTS.
incentive leave pay. Each of the complainants-appellees shall II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY
be entitled to a separation pay equivalent to one month. In AWARDED SEPARATION PAY TO RESPONDENTS".
addition, respondents-appellants is (sic) ordered to pay each
of the complainants-appellees the sum of P2,000.00 as As we see it, there is only one question that requires
indemnification for its failure to observe due process in resolution, i.e. what are the legal implications of a situation
effecting the retrenchment. where an employee is dismissed for cause but such dismissal
was effected without the employers compliance with the
SO ORDERED. notice requirement under the Labor Code.
Their motion for reconsideration having been denied by the This, certainly, is not a case of first impression. In the very
NLRC in its resolution of April 28, 2000,6 respondents went to recent case of Agabon vs. NLRC,8 we had the opportunity to
the Court of Appeals via a petition for certiorari, thereat resolve a similar question. Therein, we found that the
docketed as CA-G.R. SP No. 59847. employees committed a grave offense, i.e.,abandonment,
As stated at the outset hereof, the Court of Appeals, in a which is a form of a neglect of duty which, in turn, is one of
decision dated November 16, 2000, applying the doctrine laid the just causes enumerated under Article 282 of the Labor
down by this Court in Serrano vs. NLRC,7 reversed and set Code. In said case, we upheld the validity of the dismissal
aside the NLRCs decision of January 28, 2000, thus: despite non-compliance with the notice requirement of the
Labor Code. However, we required the employer to pay the
WHEREFORE, the decision dated January 28, 2000 of the dismissed employees the amount of P30,000.00,
National Labor Relations Commission is REVERSEDand SET representing nominal damages for non-compliance with
ASIDE and another one entered ordering respondent JAKA statutory due process, thus:
Foods Processing Corporation to pay petitioners separation
pay equivalent to one (1) month salary, the proportionate
"Where the dismissal is for a just cause, as in the instant a dismissal for authorized cause under Article 283, on the
case, the lack of statutory due process should not nullify the other.
dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee for the violation of A dismissal for just cause under Article 282 implies that the
his statutory rights, as ruled in Reta vs. National Labor employee concerned has committed, or is guilty of, some
Relations Commission. The indemnity to be imposed should violation against the employer, i.e. the employee has
be stiffer to discourage the abhorrent practice of dismiss committed some serious misconduct, is guilty of some fraud
now, pay later, which we sought to deter in against the employer, or, as in Agabon, he has neglected his
the Serrano ruling. The sanction should be in the nature of duties. Thus, it can be said that the employee himself
indemnification or penalty and should depend on the facts of initiated the dismissal process.
each case, taking into special consideration the gravity of the On another breath, a dismissal for an authorized
due process violation of the employer. cause under Article 283 does not necessarily imply
xxx xxx xxx delinquency or culpability on the part of the employee.
Instead, the dismissal process is initiated by the employers
The violation of petitioners right to statutory due process by exercise of his management prerogative, i.e. when the
the private respondent warrants the payment of indemnity in employer opts to install labor saving devices, when he
the form of nominal damages. The amount of such damages decides to cease business operations or when, as in this
is addressed to the sound discretion of the court, taking into case, he undertakes to implement a retrenchment program.
account the relevant circumstances. Considering the
prevailing circumstances in the case at bar, we deem The clear-cut distinction between a dismissal for just cause
it proper to fix it at P30,000.00. We believe this form of under Article 282 and a dismissal for authorized cause under
damages would serve to deter employers from future Article 283 is further reinforced by the fact that in the first,
violations of the statutory due process rights of employees. payment of separation pay, as a rule, is not required, while in
At the very least, it provides a vindication or recognition of the second, the law requires payment of separation pay. 9
this fundamental right granted to the latter under the Labor For these reasons, there ought to be a difference in
Code and its Implementing Rules," (Emphasis supplied). treatment when the ground for dismissal is one of the just
The difference between Agabon and the instant case is that causes under Article 282, and when based on one of the
in the former, the dismissal was based on a just cause under authorized causes under Article 283.
Article 282 of the Labor Code while in the present case, Accordingly, it is wise to hold that: (1) if the dismissal is
respondents were dismissed due to retrenchment, which is based on a just cause under Article 282 but the employer
one of the authorized causes under Article 283 of the same failed to comply with the notice requirement, the sanction to
Code. be imposed upon him should be tempered because the
At this point, we note that there are divergent implications of dismissal process was, in effect, initiated by an act imputable
a dismissal for just cause under Article 282, on one hand, and 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 corporation, it necessarily necessarily (sic) follows that the
be stiffer because the dismissal process was initiated by the ground in support of retrenchment existed at the time the
employers exercise of his management prerogative. complainants-appellees were terminated. We cannot
therefore sustain the findings of the Labor Arbiter that the
The records before us reveal that, indeed, JAKA was suffering alleged losses of the respondent-appellant was [sic] not well
from serious business losses at the time it terminated substantiated by substantial proofs. It is therefore logical for
respondents employment. As aptly found by the NLRC: the corporation to implement a retrenchment program to
"A careful study of the evidence presented by the prevent further losses."10
respondent-appellant corporation shows that the audited Noteworthy it is, moreover, to state that herein respondents
Financial Statement of the corporation for the periods 1996, did not assail the foregoing finding of the NLRC which,
1997 and 1998 were submitted by the respondent-appellant incidentally, was also affirmed by the Court of Appeals.
corporation, The Statement of Income and Deficit found in
the Audited Financial Statement of the respondent-appellant It is, therefore, established that there was ground for
corporation clearly shows the following in 1996, the deficit of respondents dismissal, i.e., retrenchment, which is one of
the respondent-appellant corporation was P188,218,419.00 the authorized causes enumerated under Article 283 of the
or 94.11% of the stockholders [sic] equity which amounts to Labor Code. Likewise, it is established that JAKA failed to
P200,000,000.00. In 1997 when the retrenchment program of comply with the notice requirement under the same Article.
respondent-appellant corporation was undertaken, the deficit Considering the factual circumstances in the instant case and
ballooned to P247,222,569.00 or 123.61% of the the above ratiocination, we, therefore, deem it proper to fix
stockholders equity, thus a capital deficiency or impairment the indemnity at P50,000.00.
of equity ensued. In 1998, the deficit grew to
P355,794,897.00 or 177% of the stockholders equity. From We likewise find the Court of Appeals to have been in error
1996 to 1997, the deficit grew by more that (sic) 31% while when it ordered JAKA to pay respondents separation pay
in 1998 the deficit grew by more than 47%. equivalent to one (1) month salary for every year of service.
This is because in Reahs Corporation vs. NLRC,11 we made
The Statement of Income and Deficit of the respondent- the following declaration:
appellant corporation to prove its alleged losses was
prepared by an independent auditor, SGV & Co. It "The rule, therefore, is that in all cases of business closure or
convincingly showed that the respondent-appellant cessation of operation or undertaking of the employer, the
corporation was in dire financial straits, which the affected employee is entitled to separation pay. This is
complainants-appellees failed to dispute. The losses incurred consistent with the state policy of treating labor as a primary
by the respondent-appellant corporation are clearly social economic force, affording full protection to its rights as
substantial and sufficiently proven with clear and satisfactory well as its welfare. The exception is when the closure of
evidence. Losses incurred were adequately shown with business or cessation of operations is due to serious
respondent-appellants audited financial statement. Having business losses or financial reverses; duly proved, in
established the loss incurred by the respondent-appellant which case, the right of afected employees to
separation pay is lost for obvious reasons. xxx".
(Emphasis supplied)
SO ORDERED.