JURISDICTION:

A. LABOR ARBITER (ARTICLE 217 (A) )

185. SAN MIGUEL CORP. VS. NLRC
In line with an Innovation Program sponsored by petitioner San Miguel
Corporation ("Corporation;" "SMC") and under which management
undertook to grant cash awards to "all SMC employees ... except [ED-HO
staff, Division Managers and higher-ranked personnel" who submit to the
Corporation Ideas and suggestions found to be beneficial to the Corporation,
private respondent Rustico Vega submitted on 23 September 1980 an
innovation proposal. Mr. Vega's proposal was entitled "Modified Grande
Pasteurization Process," and was supposed to eliminate certain alleged
defects in the quality and taste of the product "San Miguel Beer Grande:"
Title of Proposal
Modified Grande Pasteurization Process
Present Condition or Procedure
At the early stage of beer grande production, several cases of beer grande
full goods were received by MB as returned beer fulls (RBF). The RBF's were
found to have sediments and their contents were hazy. These effects are
usually caused by underpasteurization time and the pasteurzation units for
beer grande were almost similar to those of the steinie.
Proposed lnnovation (Attach necessary information)
In order to minimize if not elienate underpasteurization of beer grande,
reduce the speed of the beer grande pasteurizer thereby, increasing the
pasteurization time and the pasteurization acts for grande beer. In this way,
the self-life (sic) of beer grande will also be increased. 1chanrobles virtual
law library
Mr. Vega at that time had been in the employ of petitioner Corporation for
thirteen (1 3) years and was then holding the position of "mechanic in the
Bottling Department of the SMC Plant Brewery situated in Tipolo, Mandaue
City.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner Corporation, however, did not find the aforequoted proposal

acceptable and consequently refused Mr. Vega's subsequent demands for a
cash award under the Innovation Program. On 22 February 1983., a
Complaint 2 (docketed as Case No. RAB-VII-0170-83) was filed against
petitioner Corporation with Regional Arbitration Branch No. VII (Cebu City)
of the then.", Ministry of Labor and Employment. Frivate respondent Vega
alleged there that his proposal "[had] been accepted by the methods analyst
and implemented by the Corporation [in] October 1980," and that the same
"ultimately and finally solved the problem of the Corporation in the
production of Beer Grande." Private respondent thus claimed entitlement to
a cash prize of P60,000.00 (the maximum award per proposal offered under
the
Innovation
Program)
and
attorney's
fees.chanroblesvirtualawlibrary chanrobles virtual law library
In an Answer With Counterclaim and Position Paper, 3 petitioner Corporation
alleged that private respondent had no cause of action. It denied ever having
approved or adopted Mr. Vega's proposal as part of the Corporation's
brewing procedure in the production of San Miguel Beer Grande. Among
other things, petitioner stated that Mr. Vega's proposal was tumed down by
the company "for lack of originality" and that the same, "even if
implemented [could not] achieve the desired result." Petitioner further
alleged that the Labor Arbiter had no jurisdiction, Mr. Vega having
improperly bypassed the grievance machinery procedure prescribed under a
then existing collective bargaining agreement between management and
employees, and available administrative remedies provided under the rules
of the Innovation Program. A counterclaim for moral and exemplary
damages, attorney's fees, and litigation expenses closed out petitioner's
pleading.chanroblesvirtualawlibrary chanrobles virtual law library
In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that the money
claim of complainant Vega in this case is "not a necessary incident of his
employment" and that said claim is not among those mentioned in Article
217 of the Labor Code, dismissed the complaint for lack of jurisdiction.
However, in a gesture of "compassion and to show the government's concern
for the workingman," the Labor Arbiter also directed petitioner to pay Mr.
Vega the sum of P2,000.00 as "financial assistance." chanrobles virtual law
library

The Labor Arbiter's order was subsequently appealed by both parties, private
respondent Vega assailing the dismissal of his complaint for lack of
jurisdiction and petitioner Corporation questioning the propriety of the award
of "financial assistance" to Mr. Vega. Acting on the appeals, the public
respondent National Labor Relations Commission, on 4 September 1987,
rendered a Decision, 5 the dispositive portion of which reads:
WHEREFORE, the appealed Order is hereby set aside and another udgment
entered, order the respondent to pay the complainant the amount of
P60,000.00 as explained above.chanroblesvirtualawlibrary chanrobles virtual
law library
SO ORDERED.
In the present Petition for certiorari filed on 4 December 1987, petitioner
Corporation, invoking Article 217 of the Labor Code, seeks to annul the
Decision of public respondent Commission in Case No. RAB-VII-01 70-83
upon the ground that the Labor Arbiter and the Commission have no
jurisdiction
over
the
subject
matter
of
the
case.chanroblesvirtualawlibrary chanrobles virtual law library
The jurisdiction of Labor Arbiters and the National Labor Relations
Commission is outlined in Article 217 of the Labor Code, as last amended by
Batas Pambansa Blg. 227 which took effect on 1 June 1982:
ART. 217. Jurisdiction of Labor Arbiters and the commission. (a) The Labor
Arbiters shall have the original and exclusive jurisdiction to hear and decide
within thirty (30) working days after submission of the case by the parties
for decision, the following cases involving are workers, whether agricultural
or non-agricultural:
1. Unfair labor practice cases; chanrobles virtual law library
2. Those that workers may file involving wages, hours of work and other
terms and conditions of employment; chanrobles virtual law library
3. All money claims of workers, including those based on non-payment or
underpayment of wages, overtime compensation, separation pay and other
benefits provided by law or appropriate agreement, except claims for

employees' compensation, social security, MEDICARE and

benefits; chanrobles virtual law library

maternity

4. Cases involving household services; and chanrobles virtual law library

5. Cases arising from any violation of Article 265 of this; Code, including
questions involving the legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters. (Emphasis supplied)
While paragraph 3 above refers to "all money claims of workers," it is not
necessary to suppose that the entire universe of money claims that might be
asserted by workers against their employers has been absorbed into the
original and exclusive jurisdiction of Labor Arbiters. In the first place,
paragraph 3 should be read not in isolation from but rather within the
context formed by paragraph 1 related to unfair labor practices), paragraph
2 (relating to claims concerning terms and conditions of employment),
paragraph 4 (claims relating to household services, a particular species of
employer-employee relations), and paragraph 5 (relating to certain activities
prohibited to employees or to employers). It is evident that there is a
unifying element which runs through paragraphs 1 to 5 and that is, that they
all refer to cases or disputes arising out of or in connection with an
employer-employee relationship. This is, in other words, a situation where
the rule of noscitur a sociis may be usefully invoked in clarifying the scope of
paragraph 3, and any other paragraph of Article 217 of the Labor Code, as
amended. We reach the above conclusion from an examination of the terms
themselves of Article 217, as last amended by B.P. Blg. 227, and even
though earlier versions of Article 217 of the Labor Code expressly brought
within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from
employer employee relations," 6 which clause was not expressly carried over,
in PRINTER'S INK , in Article 217 as it exists today. For it cannot be
presumed that money claims of workers which do not arise out of or in
connection with their employer-employee relationship, and which would
therefore fall within the general jurisdiction of the regular courts of justice,
were intended by the legislative authority to be taken away from the
jurisdiction of the courts and lodged with Labor Arbiters on an exclusive
basis. The Court, therefore, believes and so holds that the money claims of
workers" referred to in paragraph 3 of Article 217 embraces money claims

which arise out of or in connection with the employer-employee relationship,

or some aspect or incident of such relationship. Put a little differently, that
money claims of workers which now fall within the original and exclusive
jurisdiction of Labor Arbiters are those money claims which have some
reasonable
causal
connection
with
the
employer-employee
relationship.chanroblesvirtualawlibrary chanrobles virtual law library
Applying the foregoing reading to the present case, we note that petitioner's
Innovation Program is an employee incentive scheme offered and open only
to employees of petitioner Corporation, more specifically to employees below
the rank of manager. Without the existing employer-employee relationship
between the parties here, there would have been no occasion to consider the
petitioner's Innovation Program or the submission by Mr. Vega of his
proposal concerning beer grande; without that relationship, private
respondent Vega's suit against petitioner Corporation would never have
arisen. The money claim of private respondent Vega in this case, therefore,
arose out of or in connection with his employment relationship with
petitioner.chanroblesvirtualawlibrary chanrobles virtual law library
The next issue that must logically be confronted is whether the fact that the
money claim of private respondent Vega arose out of or in connection with
his employment relation" with petitioner Corporation, is enough to bring
such money claim within the original and exclusive jurisdiction of Labor
Arbiters.chanroblesvirtualawlibrary chanrobles virtual law library
In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a corporation
engaged in the sale and repair of motor vehicles, while private respondent
was the sales Manager of petitioner. Petitioner had sued private respondent
for non-payment of accounts which had arisen from private respondent's
own purchases of vehicles and parts, repair jobs on cars personally owned
by him, and CASH ADVANCES from the corporation. At the pre-trial in the
lower court, private respondent raised the question of lack of jurisdiction of
the court, stating that because petitioner's complaint arose out of the
employer-employee relationship, it fell outside the jurisdiction of the court
and consequently should be dismissed. Respondent Judge did dismiss the
case, holding that the sum of money and damages sued for by the employer
arose from the employer-employee relationship and, hence, fell within the
jurisdiction of the Labor Arbiter and the NLRC. In reversing the order of

dismissal and requiring respondent Judge to take cognizance of the case

below, this Court, speaking through Mme. Justice Melencio-Herrera, said:
Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under
paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other
cases arising from employer-employee relation, unless, expressly excluded
by this Code." Even then, the principle followed by this Court was that,
although a controversy is between an employer and an employee, the Labor
Arbiters have no jurisdiction if the Labor Code is not involved. In Medina vs.
Castro-Bartolome, 11 SCRA 597, 604, in negating jurisdiction of the Labor
Arbiter, although the parties were an employer and two employees, Mr.
Justice Abad Santos stated:
The pivotal question to Our mind is whether or not the Labor Code has any
relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no
relevance, any discussion concerning the statutes amending it and whether
or
not
they
have
retroactive
effect
is
unnecessary.chanroblesvirtualawlibrary chanrobles virtual law library
It is obvious from the complaint that the plaintiffs have not alleged any
unfair labor practice. Theirs is a simple action for damages for tortious acts
allegedly committed by the defendants. Such being the case, the governing
statute is the Civil Code and not the Labor Code. It results that the orders
under review are based on a wrong premise.
And in Singapore Airlines Limited v. Pao , 122 SCRA 671, 677, the following
was said:
Stated differently, petitioner seeks protection under the civil laws and claims
no benefits under the Labor Code. The primary relief sought is
for LIQUIDATED damages for breach of a contractual obligation. The other
items demanded are not labor benefits demanded by workers generally
taken cognizance of in labor disputes, such as payment of wages, overtime
compensation or separation pay. The items claimed are the natural
consequences flowing from breach of an obligation, intrinsically a civil
dispute.
In the case below, PLAINTIFF had sued for monies LOANED to DEFENDANT,
the cost of repair jobs made on his personal cars, and for the purchase price

of vehicles and parts sold to him. Those accounts have no relevance to the
Labor Code. The cause of action was one under the civil laws, and it does
not breach any provision of the Labor Code or the contract of employment of
DEFENDANT. Hence the civil courts, not the Labor Arbiters and the NLRC
should have jurisdiction. 8
It seems worth noting that Medina v. Castro-Bartolome, referred to in the
above excerpt, involved a claim for damages by two (2) employees against
the employer company and the General Manager thereof, arising from the
use of slanderous language on the occasion when the General Manager fired
the two (2) employees (the Plant General Manager and the Plant
Comptroller). The Court treated the claim for damages as "a simple action
for damages for tortious acts" allegedly committed by private respondents,
clearly if impliedly suggesting that the claim for damages did not necessarily
arise
out
of
or
in
connection
with
the
employer-employee
relationship. Singapore Airlines Limited v. Pao, also cited inMolave,
involved a claim for LIQUIDATED damages not by a worker but by the
employer company, unlike Medina. The important principle that runs through
these three (3) cases is that where the claim to the principal relief
sought 9 is to be resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by the general civil
law, the jurisdiction over the dispute belongs to the regular courts of justice
and not to the Labor Arbiter and the NLRC. In such situations, resolution of
the dispute requires expertise, not in labor management relations nor in
wage structures and other terms and conditions of employment, but rather
in the application of the general civil law. Clearly, such claims fall outside the
area of competence or expertise ordinarily ascribed to Labor Arbiters and the
NLRC and the rationale for granting jurisdiction over such claims to these
agencies disappears.chanroblesvirtualawlibrary chanrobles virtual law library
Applying the foregoing to the instant case, the Court notes that the SMC
Innovation Program was essentially an invitation from petitioner Corporation
to its employees to submit innovation proposals, and that petitioner
Corporation undertook to grant cash awards to employees who accept such
invitation and whose innovation suggestions, in the judgment of the
Corporation's officials, satisfied the standards and requirements of the
Innovation Program 10 and which, therefore, could be translated into some
substantial benefit to the Corporation. Such undertaking, though unilateral in
origin, could nonetheless ripen into an enforceable contractual (facio ut

des) 11 obligation on the part of petitioner Corporation under certain

circumstances. Thus, whether or not an enforceable contract, albeit implied
arid innominate, had arisen between petitioner Corporation and private
respondent Vega in the circumstances of this case, and if so, whether or not
it had been breached, are preeminently LEGAL QUESTIONS , questions not
to be resolved by referring to labor legislation and having nothing to do with
wages or other terms and conditions of employment, but rather having
recourse to our law on contracts.chanroblesvirtualawlibrary chanrobles
virtual law library
WEREFORE, the Petition for certiorari is GRANTED. The decision dated 4
September 1987 of public respondent National Labor Relations Commission
is SET ASIDE and the complaint in Case No. RAB-VII-0170-83 is hereby
DISMISSED, without prejudice to the right of private respondent Vega to file
a suit before the proper court, if he so desires. No pronouncement as to
costs.chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED.

186. SANYO PHILIPPINES WORKERS UNION PSSLU VS.

CANIZARES
G.R. No. 101619 July 8, 1992
SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR ANTONIO DIAZ, PSSLU
NATIONAL PRESIDENT, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter, BERNARDO YAP, RENATO BAYBON,
SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO, ARNEL SALVO,
REYNALDO RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND ALEXANDER
ATANASIO, respondents.

MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Caizares dated August 6, 1991
deferring the resolution of the motion to dismiss the complaint of private respondents filed by petitioner Sanyo
Philippines Workers Union-PSSLU Local Chapter No. 109 (PSSLU, for brevity) on the ground that the labor arbiter
had no jurisdiction over said complaint and 2) the order of the same respondent clarifying its previous order and ruling
that it had jurisdiction over the case.
The facts of the case are as follows:

PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989 to June 30, 1994.
The same CBA contained a union security clause which provided:
Sec. 2. All members of the union covered by this agreement must retain their membership in good
standing in the union as condition of his/her continued employment with the company. The union
shall have the right to demand from the company the dismissal of the members of the union by
reason of their voluntary resignation from membership or willful refusal to pay the Union Dues or by
reasons of their having formed, organized, joined, affiliated, supported and/or aided directly or
indirectly another labor organization, and the union thus hereby guarantees and holds the company
free and harmless from any liability whatsoever that may arise consequent to the implementation of
the provision of this article. (pp. 5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national president, informed the management of Sanyo that
the following employees were notified that their membership with PSSLU were cancelled for anti-union, activities,
economic sabotage, threats, coercion and intimidation, disloyalty and for joining another union: Benito Valencia,
Bernardo Yap, Arnel Salvo, Renato Baybon, Eduardo Porlaje, Salvador Solibel, Conrado Sarol, Angelito Manzano,
Allan Misterio, Reynaldo Ricohermoso, Mario Ensay and Froilan Plamenco. The same letter informed Sanyo that the
same employees refused to submit themselves to the union's grievance investigation committee (p. 53, Rollo). It
appears that many of these employees were not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel, Valencia, Misterio and
Ricohermoso, executed a pledged of cooperation with PSSLU promising cooperation with the latter union and among
others, respecting, accepting and honoring the CBA between Sanyo and specifically:
1. That we shall remain officers and members of KAMAO until we finally decide to rejoin Sanyo
Phil. Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly elected union officers of Sanyo Phil.
Workers Union-PSSLU in any and all its activities and programs to insure industrial peace and
harmony;
3. That we collectively accept, honor, and respect the Collective Bargaining Agreement entered into
between Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU dated February 7, 1990;
4 That we collectively promise not to engage in any activities inside company premises contrary to
law, the CBA and existing policies;
5 That we are willing to pay our individual agency fee in accordance with the provision of the Labor
Code, as amended;
6 That we collectively promise not to violate this pledge of cooperation. (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to Sanyo recommending the
dismissal of the following non-union workers: Bernardo Yap, Arnel Salvo, Renato Baybon, Reynaldo Ricohermoso,
Salvador Solibel, Benito Valencia, and Allan Misterio, allegedly because: 1) they were engaged and were still
engaging in anti-union activities; 2) they willfully violated the pledge of cooperation with PSSLU which they signed
and executed on February 14, 1990; and 3) they threatened and were still threatening with bodily harm and even
death the officers of the union (pp. 37-38, Rollo).
Also recommended for dismissal were the following union members who allegedly joined, supported and
sympathized with a minority union, KAMAO: Gerardo Lasala, Legardo Tangkay, Alexander Atanacio, and Leonardo
Dionisio.

The last part of the said letter provided:

The dismissal of the above-named union members is without prejudice to receive (sic) their
termination pay if management decide (sic) to grant them benefits in accordance with law. The
union hereby holds the company free and harmless from any liability that may arise consequent to
the implementation by the company of our recommendations for the dismissal of the abovementioned workers.
It is however suggested that the Grievance Machinery be convened pursuant to Section 3, Article
XV of the Collective Bargaining Agreement (CBA) before their actual dismissal from the company.
(p. 38, Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the same workers advising them that:
As per the attached letter from the local union President SPWU and the federation President,
PSSLU, requesting management to put the herein mentioned employees on preventive
suspension, effective immediately, preliminary to their subsequent dismissal, please be informed
that the following employees are under preventive suspension effective March 13, 1991 to wit:
1. Bernardo Yap
2. Renato Baybon
3. Salvador Solibel
4. Allan Misterio
5. Edgardo Tangkay
6. Leonardo Dionisio
7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
The above listed employees shall not be allowed within company premises without the permission
of management.
As per request of the union's letter to management, should the listed employees fail to appeal the
decision of the union for dismissal, then effective March 23, 1991, said listed employees shall be
considered dismissed from the company. (p 39, Rollo)
The company received no information on whether or not said employees appealed to PSSLU. Hence, it considered
them dismissed as of March 23, 1991 (p. 40, Rollo).

On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC for illegal dismissal.
Named respondent were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor Arbiter was without
jurisdiction over the case, relying on Article 217 (c) of P.D. 442, as amended by Section 9 of Republic Act No. 6715
which provides that cases arising from the interpretation or implementation of the collective bargaining agreements
shall be disposed of by the labor arbiter by referring the same to the grievance machinery and voluntary arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series of conferences before the
National Conciliation and Mediation Board had been terminated; 2) the NLRC Labor Arbiter had jurisdiction over the
case which was a termination dispute pursuant to Article 217 (2) of the Labor Code; and 3) there was nothing in the
CBA which needs interpretation or implementation (pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited article of the Labor Code, the
better interpretation will be to give effect to both, and termination dispute being clearly spelled as
falling under the jurisdiction of the Labor Arbiter, the same shall be respected. The jurisdiction of the
grievance machinery and voluntary arbitration shall cover other controversies.
However, the resolution of the instant issue shall be suspended until both parties have fully
presented their respective positions and the said issue shall be included in the final determination
of the above-captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held pending.
Consequently, the parties are hereby directed to submit their position papers and supporting
documents pursuant to Section 2, Rule VII of the Rules of the Commission on or before the hearing
on the merit of this case scheduled on August 29, 1991 at 11:00 a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint with a prayer that the Labor
Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order which held that it was
assuming jurisdiction over the complaint of private respondents, in effect, holding that it had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor Arbiter cannot assume
jurisdiction over the complaint of public respondents because it had no jurisdiction over the dispute subject of said
complaint. It is their submission that under Article 217 (c) of the Labor Code, in relation to Article 261 thereof, as well
as Policy Instruction No. 6 of the Secretary of Labor, respondent Arbiter has no jurisdiction and authority to take
cognizance of the complaint brought by private respondents which involves the implementation of the union security
clause of the CBA. The function of the Labor Arbiter under the same law and rule is to refer this case to the grievance
machinery and voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is explicit, to wit:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide . . . the following cases involving all workers, . . . :

xxx xxx xxx

2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel, Valencia, Misterio and
Lasala were concerned, they joined another union, KAMAO during the freedom period which commenced on May 1,
1989 up to June 30, 1989 or before the effectivity of the July 1, 1989 CBA. Hence, they are not covered by the
provisions of the CBA between Sanyo and PSSLU. Private respondents Tangkay, Atanacio and Dionisio admit that in
September 1989, they resigned from KAMAO and rejoined PSSLU (pp.
66(a)-68, Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the view that a distinction should be
made between a case involving "interpretation or implementation of collective bargaining agreement or
"interpretation" or "enforcement" of company personnel policies, on the one hand and a case involving termination,
on the other hand. It argued that the case at bar does not involve an "interpretation or implementation" of a collective
bargaining agreement or "interpretation or enforcement" of company policies but involves a "termination." Where the
dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the grievance
machinery set up in the CBA or by voluntary arbitration. Where there was already actual termination, i.e., violation of
rights, it is already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide within
thirty (30) calendar days after the submission of the case by the parties for decision without
extension even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims, arising from employer-employee relations, including those of persons in domestic
or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of company personnel policies shall be
disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.
It is clear from the above article that termination cases fall under the jurisdiction of the Labor Arbiter. It should be
noted however that said article at the outset excepted from the said provision cases otherwise provided for in other
provisions of the same Code, thus the phrase "Except as otherwise provided under this Code . . . ." Under paragraph
(c) of the same article, it is expressly provided that "cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the interpretation and enforcement of company personnel
policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.
It was provided in the CBA executed between PSSLU and Sanyo that a member's voluntary resignation from
membership, willful refusal to pay union dues and his/her forming, organizing, joining, supporting, affiliating or aiding
directly or indirectly another labor union shall be a cause for it to demand his/her dismissal from the company. The
demand for the dismissal and the actual dismissal by the company on any of these grounds is an enforcement of the
union security clause in the CBA. This act is authorized by law provided that enforcement should not be characterized
by arbitrariness (Manila Mandarin Employee Union v. NLRC, G.R. No. 76989, 29 Sept. 1987, 154 SCRA 368) and
always with due process (Tropical Hut Employees Union v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or resolution of grievances
arising from the interpretation or implementation of their CBA and those arising from the interpretation or enforcement
of company personnel policies is mandatory. The law grants to voluntary arbitrators original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel
policies (Art. 261, Labor Code).
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume jurisdiction over the
complaint, thus:
The movants failed to show (1) the provisions of the CBA to be implemented, and (2) the grievance
machinery and voluntary arbitrator already formed and properly named. What self-respecting judge
would refer a case from his responsibility to a shadow? To whom really and specifically shall the
case be indorsed or referred? In brief, they could have shown the (1) existence of the grievance
machinery and (2) its being effective.
Furthermore, the aforecited law merely directs the "referral" cases. It does not expressly confer
jurisdiction on the grievance machinery or voluntary arbitration panel, created or to be created.
Article 260 of the Labor Code describes the formation of the grievance and voluntary arbitration. All
this of course shall be on voluntary basis. Is there another meaning of voluntary arbitration? (The
herein complainant have strongly opposed the motion to dismiss. Would they go willingly to the
grievance machinery and voluntary arbitration which are installed by their opponents if directed to
do so?) (p. 26, Rollo)
The failure of the parties to the CBA to establish the grievance machinery and its unavailability is not an excuse for
the Labor Arbiter to assume jurisdiction over disputes arising from the implementation and enforcement of a provision
in the CBA. In the existing CBA between PSSLU and Sanyo, the procedure and mechanics of its establishment had
been clearly laid out as follows:

ARTICLE XV GRIEVANCE MACHINERY

Sec. 1. Whenever any controversy should arise between the company and the union as to the
interpretation or application of the provision of this agreement, or whenever any difference shall
exist between said parties relative to the terms and conditions of employment, an earnest effort
shall be made to settle such controversy in substantially the following manner:
First step. (Thru Grievance) The dispute shall initially be resolved by conference between the
management to be represented by the Management's authorized representatives on the one hand,
and the Union to be represented by a committee composed of the local union president and one of
the local union officer appointed by the local union president, on the other hand within three days
from date of concurrence of grievance action. In the absence of the local union president, he (shall)
appoint another local union officer to take over in his behalf. Where a controversy personally affects
an employee, he shall not be allowed to be a member of the committee represented by the union.
Second step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled after twenty
(20) days from the first conference or after such period as the parties may agree upon in specified
cases, it shall be referred to an arbitrator chosen by the consent of the company and the union. In
the event of failure to agree on the choice of voluntary arbitrator, the National Conciliation and
Mediation Board, Department of Labor and Employment shall be requested to choose an Arbitrator
in accordance with voluntary arbitration procedures.
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide the issue presented to him and
his decision shall be final, binding and executory upon the parties. He shall have no authority to
add or subtract from and alter any provision of this agreement. The expenses of voluntary
arbitration including the fee of the arbitrator shall be shared equally by the company and the union.
In the event the arbitrator chosen either by the mutual agreement of the company and the union by
(the) way of voluntary arbitration or by the National Conciliation and Mediation Board (NCMB) failed
to assume his position, died, become disabled or any other manner failed to function and or reach
a decision, the company and the union shall by mutual agreement choose another arbitrator; in the
event of failure to agree on the choice of a new voluntary arbitrator, the matter shall again be
referred back to the NCMB who shall be requested again to choose a new arbitrator as above
provided. Any grievance not elevated or processed as above provided within the stipulated period
shall be deemed settled and terminated.
Sec. 3. It is hereby agreed that decisions of the union relative to their members, for implementation
by the COMPANY, should be resolved for review thru the Grievance Machinery; and management
be invited to participate in the Grievance procedure to be undertaken by the union relative to (the)
case of the union against members. (pp. 134-135, Rollo)
All that needs to be done to set the machinery into motion is to call for the convening thereof. If the parties to the CBA
had not designated their representatives yet, they should be ordered to do so.
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the grievance
machinery and when not settled at this level, to a panel of voluntary arbitrators outlined in CBA's does not only
include grievances arising from the interpretation or implementation of the CBA but applies as well to those arising
from the implementation of company personnel policies. No other body shall take cognizance of these cases. The last
paragraph of Article 261 enjoins other bodies from assuming jurisdiction thereof:
The commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of voluntary arbitrators and shall immediately

dispose and refer the same to the grievance machinery or voluntary arbitration provided in the
Collective Bargaining Agreement.
In the instant case, however, We hold that the Labor Arbiter and not the Grievance Machinery provided for in the CBA
has the jurisdiction to hear and decide the complaints of the private respondents. While it appears that the dismissal
of the private respondents was made upon the recommendation of PSSLU pursuant to the union security clause
provided in the CBA, We are of the opinion that these facts do not come within the phrase "grievances arising from
the interpretation or implementation of (their) Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies," the jurisdiction of which pertains to the Grievance
Machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators. Article 260 of the Labor Code on
grievance machinery and voluntary arbitrator states that "(t)he parties to a Collective Bargaining Agreement shall
include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a
machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their
Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel
policies." It is further provided in said article that the parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is not settled in that level, it shall automatically be
referred to voluntary arbitrators (or panel of voluntary arbitrators) designated in advance by the parties. It need not be
mentioned that the parties to a CBA are the union and the company. Hence, only disputes involving the union and the
company shall be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an agreement regarding the
dismissal of private respondents. No grievance between them exists which could be brought to a grievance
machinery. The problem or dispute in the present case is between the union and the company on the one hand and
some union and non-union members who were dismissed, on the other hand. The dispute has to be settled before an
impartial body. The grievance machinery with members designated by the union and the company cannot be
expected to be impartial against the dismissed employees. Due process demands that the dismissed workers
grievances be ventilated before an impartial body. Since there has already been an actual termination, the matter falls
within the jurisdiction of the Labor Arbiter.
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to resolve the complaints of
private respondents immediately.
SO ORDERED.

187. SAN MIGUEL CORPORATION EMPLOYEES UNION PTGWO VS.

BERSAMIRA
MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in
this special civil action for certiorari and Prohibition for having issued the challenged Writ of
Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San
Miguel Corporation vs. SMCEU-PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse
of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig.
for short), for its part, defends the Writ on the ground of absence of any employer-employee
relationship between it and the contractual workers employed by the companies Lipercon Services,
Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of

personality to represent said workers for purposes of collective bargaining. The SOLICITOR
General agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with
Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are
independent contractors duly licensed by the Department of Labor and Employment (DOLE).
SanMig entered into those contracts to maintain its competitive position and in keeping with the
imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was
expressly understood and agreed that the workers employed by the contractors were to be paid by
the latter and that none of them were to be deemed employees or agents of SanMig. There was to
be no employer-employee relation between the contractors and/or its workers, on the one hand, and
SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the
latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989
(Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary,
probationary, or contract employees and workers are excluded from the bargaining unit and,
therefore, outside the scope of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some
Lipercon and D'Rite workers had signed up for union membership and sought the regularization of
their employment with SMC. The Union alleged that this group of employees, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for
SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither
casual nor seasonal as they are performing work or activities necessary or desirable in the usual
business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting
situation. It was then demanded that the employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable response from
SanMig, the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting
(Annex D, Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor
practice (Annex F, Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently,
the two (2) notices of strike were consolidated and several conciliation conferences were held to
settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G,
Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and
D'Rite workers in various SMC plants and offices.

On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent
Court to enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of LIPERCON and/or
D'RITE for the purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of LIPERCON and
D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within
the bargaining unit referred to in the CBA,...;
d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON
and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to man the strike area
and/or picket lines and/or barricades which the defendants may set up at the plants
and offices of plaintiff within the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the other employees
and/or contract workers of plaintiff, as well as those persons lawfully transacting
business with plaintiff at the work places within the bargaining unit referred to in the
CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to,
and egress from, the work places within the bargaining unit referred to in the CBA ..,
to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the
work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to
compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex
H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction
for hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the
ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by
SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned
Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts

complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding
Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer
for whatever damages petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the existence of labor
dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts for services with
Lipercon and D'Rite. The application and contract for employment of the defendants'
witnesses are either with Lipercon or D'Rite. What could be discerned is that there is
no employer-employee relationship between plaintiff and the contractual workers
employed by Lipercon and D'Rite. This, however, does not mean that a final
determination regarding the question of the existence of employer-employee
relationship has already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and engagement of the
putative employee; the mode of payment of wages; the presence or absence of a
power of dismissal; and the Presence or absence of a power to control the putative
employee's conduct. This necessitates a full-blown trial. If the acts complained of are
not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the
other hand, a writ of injunction does not necessarily expose defendants to irreparable
damages.
Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that
"we can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we
required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen
(13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to
conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite
employees were recalled, and discussion on their other demands, such as wage distortion and
appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement
between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case)
and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8
May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to
"lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and
return to work.

After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9
January 1990.
The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction
over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution
of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or
relates to a labor dispute. An affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves
or arose out of a labor dispute and is directly connected or interwoven with the cases pending with
the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).
On the other hand, SanMig denies the existence of any employer-employee relationship and
consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that
"respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of
strike staged by petitioner union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit cannot strike to
compel the employer to hire and thereby create an employment relationship with
contractual workers, especially were the contractual workers were recognized by the
union, under the governing collective bargaining agreement, as excluded from, and
therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only
in the event of a deadlock in a labor dispute over 'wages, hours of work and all other
and of the employment' of the employees in the unit. The union leaders cannot
instigate a strike to compel the employer, especially on the eve of certification
elections, to hire strangers or workers outside the unit, in the hope the latter will help
re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this specie of strike
does not arise out of a labor dispute, is an abuse of right, and violates the employer's
constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476,
Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."

While it is SanMig's submission that no employer-employee relationship exists between itself, on the
one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can
nevertheless exist "regardless of whether the disputants stand in the proximate relationship of
employer and employee" (Article 212 [1], Labor Code,supra) provided the controversy concerns,
among others, the terms and conditions of employment or a "change" or "arrangement" thereof
(ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the
fact that the plaintiffs and defendants do not stand in the proximate relation of employer and
employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union
seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that
they be absorbed into the working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved bringing the matter within the
purview of a labor dispute. Further, the Union also seeks to represent those workers, who have
signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part,
resists that Union demand on the ground that there is no employer-employee relationship between it
and those workers and because the demand violates the terms of their CBA. Obvious then is that
representation and association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation.
Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied
that the controversy below is directly connected with the labor dispute already taken cognizance of
by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and
D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship
may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon
and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the
notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the
employer to hire strangers outside the working unit; those are issues the resolution of which call
for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably
linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon
by SanMig is not controlling as in that case there was no controversy over terms, tenure or
conditions, of employment or the representation of employees that called for the application of labor
laws. In that case, what the petitioning union demanded was not a change in working terms and
conditions, or the representation of the employees, but that its members be hired as stevedores in
the place of the members of a rival union, which petitioners wanted discharged notwithstanding the
existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis
of those facts unique to that case, that such a demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on
21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original
and exclusive jurisdiction to hear and decide the following cases involving all workers including "1.

unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other
terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this
Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the
plain command of the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil
Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That
claim for damages is interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the expeditious settlement of those
disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications, Electronics and
Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and
its best business judgment to determine whether it should contract out the performance of some of
its work to independent contractors. However, the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted activities, including the right to strike
in accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March
1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent
Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of
dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be
observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor
and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
SO ORDERED.

188. MOLAVE SALES, INC. VS. LARON

MELENCIO-HERRERA, J.:
Respondent Judge, presiding Branch XLIV of the Regional Trial Court in Dagupan City, had
dismissed the case below for lack of jurisdiction and had denied reconsideration for lack of merit.
Petitioner, PLAINTIFF in the case below, is a corporation engaged in the sale and repair of motor
vehicles in Dagupan City. Private respondent, the DEFENDANT in the case below, was, or is, the
sales manager of PLAINTIFF. Whether or not there was still a relationship of employer and
employee between the parties when the complaint was filed is an unsettled question which need not
be resolved in this instance.
Alleging that DEFENDANT was a former employee, PLAINTIFF had sued him, on March 22, 1983,
for payment of accounts pleaded as follows:

That during his incumbency as such the defendant caused and without authority from
the plaintiff incurred accounts with the remaining balances in the total sum of
P33,890.38 excluding interests, arising from
the purchases of vehicles and parts,
repair jobs of his personal cars and
CASH ADVANCES ,
faithful reproductions of the Vehicle Invoice, Debit Memos, Deed of Absolute Sale,
Repair Orders, Charge Invoices, Vouchers, PROMISSORY NOTES ,
Acknowledgement Letter and Statement of Account, hereto attached and marked as
Annexes "A", "B", "C", "D", "E", "F", "G", "H", "I", "J", "K", "L", "M", and "N"
respectively and the contents of which being herein additionally pleaded and made
integral parts hereof; (Emphasis supplied)
In his Answer, DEFENDANT denied
... that he incurred any unpaid unauthorized accounts with the plaintiff in the total
sum of P33,890.38 excluding interests therefor, and,
specifically denies under oath that the annexed Vehicle Invoice, Debits Memos Deed
of Absolute Sale, Repair Orders, Charge Invoices, Vouchers, PROMISSORY NOTES
, Acknowledgement Letter and Statement of Account
have remained unpaid as in fact the truth of the matter is as follows, to wit:
(Emphasis supplied)
DEFENDANT further alleged in a counterclaim that he should still be considered an employee of
PLAINTIFF inasmuch as there has been no application for clearance in regards to his separation.
At the pre-trial conference, the DEFENDANT raised the question of jurisdiction of the Court stating
that PLAINTIFF's complaint arose out of employer-employee relationship, and he subsequently
moved for dismissal. It was then when respondent Judge dismissed the case finding that the sum
of money and damages sued upon arose from employer-employee relationship and that jurisdiction
belonged to the Labor Arbiter and the NLRC.
Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of Article
217 of the Labor Code had jurisdiction over "all other cases arising from employer-employee
relation, unless expressly excluded by this Code." Even then, the principle followed by this Court
was that, although a controversy is between an employer and an employee, the Labor Arbiters have
no jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 116 SCRA 597,
604, in negating jurisdiction of the Labor Arbiter, although the parties were an employer and two
employees, Mr. Justice Abad Santos stated:

The pivotal question to Our mind is whether or not the Labor Code has any relevance
to the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any
discussion concerning the statutes amending it and whether or not they have
retroactive effect is unnecessary.
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor
practice. Theirs is a simple action for damages for tortious acts allegedly committed
by the defendants. Such being the case, the governing statute is the Civil Code and
not the Labor Code. It results that the orders under review are based on a wrong
premise.
And in Singapore Airlines Limited vs. Pao, 122 SCRA 671, 677, the following was said:
Stated differently, petitioner seeks protection under the civil laws and claims no
benefits under the Labor Code. The primary relief sought is for LIQUIDATED
damages for breach of a contractual obligation. The other items demanded are not
labor benefits demanded by workers generally taken cognizance of in labor disputes,
such as payment of wages, overtime compensation or separation pay. The items
claimed are the natural consequences flowing from breach of an obligation,
intrinsically a civil dispute.
In the case below, PLAINTIFF had sued for monies LOANED to DEFENDANT, the cost of repair
jobs made on his personal cars, and for the purchase price of vehicles and parts sold to him. Those
accounts have no relevance to the Labor Code. The cause of action was one under the civil laws,
and it does not breach any provision of the Labor Code or the contract of employment of
DEFENDANT. Hence, the civil courts, not the Labor Arbiters and the NLRC, should have jurisdiction.
BP Blg. 227 has amended Article 217 of the Labor Code to read as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor
Arbiters shall have the original and exclusive jurisdiction to hear and decide within
thirty (30) working days after submission of the case by the parties for decision, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that ( involve) WORKERS MAY FILE INVOLVING wages, hours of work and
other terms andconditions of employment;
3. All money claims of workers, including those based on non-payment or
underpayment of wages, overtime compensation, separation pay and other benefits
provided by law or appropriate agreement, except claims for employees
compensation, social security, and maternity benefits;
4. Cases involving household services; and

5. CASES ARISING FROM ANY VIOLATION OF ARTICLE 265 OF THIS CODE,

INCLUDING QUESTIONS INVOLVING THE LEGALITY OF STRIKES AND
LOCKOUTS.
6. All other claims arising from employer-employee relations, unless expressly
excluded by this Code]. (Italics and bracketed portions indicate the deletions, while
the amendments introduced are capitalized).
The dismissal of the case below on the ground that the sum of money and damages sued upon
arose from employer-employee relationship was erroneous. Claims arising from employer-employee
relations are now limited to those mentioned in paragraphs 2 and 3 of Article 217. There is no
difficulty on our part in stating that those in the case below should not be faulted for not being aware
of the last amendment to the frequently changing Labor Code.
The claim of DEFENDANT that he should still be considered an employee of PLAINTIFF, because
the latter has not sought clearance for his separation from the service, will not affect the jurisdiction
of respondent Judge to resolve the complaint of PLAINTIFF. DEFENDANT could still be liable to
PLAINTIFF for payment of the accounts sued for even if he remains an employee of PLAINTIFF.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to take cognizance
of the case below and to render judgment therein accordingly.
No costs.
SO ORDERED.

189. MEDINA VS. CASTRO-BARTOLOME

ABAD SANTOS, J.:
Civil Case No. 33150 of the Court of First Instance of Rizal Branch XV, was filed in May, 1979, by
Ernesto Medina and Jose G. Ong against Cosme de Aboitiz and Pepsi-Cola Bottling Co. of the
Philippines, Inc. Medina was the former Plant General Manager and Ong was the former Plant
Comptroller of the company. Among the averments in the complaint are the following:
3. That on or about 1:00 o'clock in the afternoon of December 20, 1977, defendant
Cosme de Aboitiz, acting in his capacity as President and Chief Executive Officer of
the defendant Pepsi-Cola Bottling Company of the Philippines, Inc., went to the
Pepsi-Cola Plant in Muntinlupa, Metro Manila, and without any provocation, shouted
and maliciously humiliated the plaintiffs with the use of the following slanderous
language and other words of similar import uttered in the presence of the plaintiffs'
subordinate employees, thus-

GOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT UP! FUCK YOU! YOU ARE
BOTH SHIT TO ME! YOU ARE FIRED (referring to Ernesto Medina). YOU TOO ARE
FIRED! '(referring to Jose Ong )
4. That on January 9, 1978, the herein plaintiffs filed a joint criminal complaint for oral
defamation against the defendant Cosme de Aboitiz duly supported with respective
affidavits and corroborated by the affidavits of two (2) witnesses: Isagani Hernandez
and Jose Ganseco II, but after conducting a preliminary investigation, Hon. Jose B.
Castillo, dismissed the complaint allegedly because the expression "Fuck you and
"You are both shit to me" were uttered not to slander but to express anger and
displeasure;
5. That on February 8, 1978, plaintiffs filed a Petition for Review with the office of the
Secretary of Justice (now Ministry of Justice) and on June 13, 1978, the Deputy
Minister of Justice, Catalino Macaraig, Jr., issued a resolution sustaining the plaintiff's
complaint, reversing the resolution of the Provincial Fiscal and directing him to file
against defendant Cosme de Aboitiz an information for Grave Slander. ... ;
6. That the employment records of plaintiffs show their track performance and
impeccable qualifications, not to mention their long years of service to the Company
which undoubtedly caused their promotion to the two highest positions in Muntinlupa
Plant having about 700 employees under them with Ernesto Medina as the Plant
General Manager receiving a monthly salary of P6,600.00 excluding other
perquisites accorded only to top executives and having under his direct supervision
other professionals like himself, including the plaintiff Jose G. Ong, who was the
Plant Comptroller with a basic monthly salary of P4,855.00;
7. That far from taking these matters into consideration, the defendant corporation,
acting through its President, Cosme de Aboitiz, dismissed and slandered the plaintiffs
in the presence of their subordinate employees although this could have been done
in private;
8. That the defendants have evidently enjoyed the act of dismissing the plaintiffs and
such dismissal was planned to make it as humiliating as possible because instead of
allowing a lesser official like the Regional Vice President to take whatever action was
necessary under the circumstances, Cosme de Aboitiz himself went to the
Muntinlupa Plant in order to publicly upbraid and dismiss the plaintiffs;
9. That the defendants dismissed the plaintiffs because of an alleged delay in the use
of promotional crowns when such delay was true with respect to the other Plants,
which is therefore demonstrative of the fact that Cosme de Aboitiz did not really have
a strong reason for publicly humiliating the plaintiffs by dismissing them on the spot;
10. That the defendants were moved by evil motives and an anti-social attitude in
dismissing the plaintiffs because the dismissal was effected on the very day that
plaintiffs were awarded rings of loyalty to the Company, five days before Christmas

and on the day when the employees' Christmas party was held in the Muntinlupa
Plant, so that when plaintiffs went home that day and found their wives and children
already dressed up for the party, they didn't know what to do and so they cried
unashamedly;
xxx xxx xxx
20. That because of the anti-social manner by which the plaintiffs were dismissed
from their employment and the embarrassment and degradation they experience in
the hands of the defendants, the plaintiffs have suffered and will continue to suffer
wounded feelings, sleepless nights, mental torture, besmirched reputation and other
similar injuries, for which the sum of P150,000.00 for each plaintiff, or the total
amount. of P300,000.00 should be awarded as moral damages;
21. That the defendants have demonstrated their lack of concern for the rights and
dignity of the Filipino worker and their callous disregard of Philippine labor and social
legislation, and to prevent other persons from following the footsteps of defendants,
the amount of P50,000.00 for each plaintiff, or the total sum of P100,000.00, should
be awarded as exemplary damages;
22. That plaintiffs likewise expect to spend no less than P5,000.00 as litigation
expenses and were constrained to secure the services of counsel for the protection
and enforcement of their rights for which they agreed to pay the sum of P10,000.00
and P200.00 per appearance as and for attorney's fees.
The complaint contains the following:
P R AY E R
WHEREFORE, in view of all the foregoing. it is most respectfully that after proper
notice and hearing, judgment be rendered for the plaintiffs and against the
defendants ordering them, jointly and solidarily, to pay the plaintiffs the sums of:
1. Unrealized income in such sum as will be established during the trial;
2. P300,000.00 as moral damages;
3. P100,000.00 by way of exemplary damages:
4. P5,000.00 as litigation expenses;
5. P10,000.00 and P200.00 per appearance as and for attorney's fees; and
6. Costs of this suit.

Plaintiffs also pray for such further reliefs and remedies as may be in keeping with
justice and equity.
On June 4, 1979, a motion to dismiss the complaint on the ground of lack of
jurisdiction was filed by the defendants. The trial court denied the motion on
September 6, 1979, in an order which reads as follows:
Up for resolution by the Court is the defendants' Motion to Dismiss dated June 4,
1979, which is basically anchored on whether or not this Court has jurisdiction over
the instant petition.
The complaint alleges that the plaintiffs' dismissal was without any provocation and
that defendant Aboitiz shouted and maliciously humiliated plaintiffs and used the
words quoted in paragraph 3 thereof. The plaintiffs further allege that they were
receiving salaries of P6,600.00 and P4,855.00 a month. So the complaint for civil
damages is clearly not based on an employer-employee relationship but on the
manner of plaintiffs' dismissal and the effects flowing therefrom. (Jovito N. Quisaba
vs, Sta. Ines-Melale Veneer & Plywood Co., Inc., et al., No. L-38088, Aug. 30,1974.)
This case was filed on May 10, 1979. The amendatory decree, P.D. 1367, which took
effect on May 1, 1978 and which provides that Regional Directors shall not indorse
and Labor Arbiters shall not entertain claims for moral or other forms of damages,
now expressly confers jurisdiction on the courts in these cases, specifically under the
plaintiff's causes of action.
Because of the letter dated January 4, 1978 and the statement of plaintiff Medina
that his receipt of the amount from defendant company was done "under strong
protest," it cannot be said that the demands set forth in the complaint have been
paid, waived or other extinguished. In fact, in defendants' Motion to Dismiss, it is
stated that 'in the absence of a showing that there was fraud, duress or violence
attending said transactions, such Release and Quitclaim Deeds are valid and binding
contracts between them, which in effect admits that plaintiffs can prove fraud,
violence, duress or violence. Hence a cause of action for plaintiffs exist.
It is noticed that the defamatory remarks standing alone per se had been made the
sole cause under the first cause of action, but it is alleged in connection with the
manner in which the plaintiffs had been dismissed, and whether the statute of
limitations would apply or not would be a matter of evidence.
IT has been alreadly settled by jurisprudence that mere asking for reinstatement
does not remove from the CFI jurisdiction over the damages. The case must involve
unfair labor practices to bring it within the jurisdiction of the CIR (now NLRC).
WHEREFORE, the defendants' Motion to Dismiss dated June 4, 1979 is hereby
denied.

The defendants are hereby directed to interpose their answer within ten (10) days
from receipt hereof.
While the trial was underway, the defendants filed a second motion to dismiss the complaint dated
January 23, 1981, because of amendments to the Labor Code immediately prior thereto. Acting on
the motion, the trial court issued on May 23, 1981, the following order:
Up for resolution by the Court is the defendants' Motion to Dismiss dated January 23,
1981, on grounds not existing when the first Motion to Dismiss dated June 4, 1979
was interposed. The ground relied upon is the promulgation of P.D. No. 1691
amending Art. 217 of the Labor Code of the Philippines and Batasan Pambansa
Bldg. 70 which took effect on May 1, 1980, amending Art. 248 of the Labor Code.
The Court agrees with defendants that the complaint alleges unfair labor practices
which under Art. 217 of the Labor Code, as amended by P.D. 1691, has vested
original and exclusive jurisdiction to Labor Arbiters, and Art. 248, thereof ... "which
may include claims for damages and other affirmative reliefs." Under the
amendment, therefore, jurisdiction over employee-employer relations and claims of
workers have been removed from the Courts of First Instance. If it is argued that this
case did not arise from employer-employee relation, but it cannot be denied that this
case would not have arisen if the plaintiffs had not been employees of defendant
Pepsi-Cola. Even the alleged defamatory remarks made by defendant Cosme de
Aboitiz were said to plaintiffs in the course of their employment, and the latter were
dismissed from such employment. Hence, the case arose from such employeremployee relationship which under the new Presidential Decree 1691 are under the
exclusive, original jurisdiction of the labor arbiters. The ruling of this Court with
respect to the defendants' first motion to dismiss, therefore, no longer holds as the
positive law has been subsequently issued and being a curative law, can be applied
retroactively (Garcia v. Martinez, et al., L-47629, May 28, 1979; 90 SCRA 331-333).
It will also logically follow that plaintiffs can reinterpose the same complaint with the
Ministry of Labor.
WHEREFORE, let this case be, as it is hereby ordered, dismissed, without
pronouncement as to costs.
A motion to reconsider the above order was filed on July 7, 1981, but it was only on February 8,
1982, or after a lapse of around seven (7) months when the motion was denied.
Plaintiffs have filed the instant petition pursuant to R. A. No. 5440 alleging that the respondent court
committed the following errors:
IN DIVESTING ITSELF OF ITS JURISDICTION TO HEAR AND DECIDE CIVIL
CASE NO. 33150 DESPITE THE FACT THAT JURISDICTION HAD ALREADY
ATTACHED WHICH WAS NOT OUSTED BY THE SUBSEQUENT ENACTMENT OF
PRESIDENTIAL DECREE 1691;

IN HOLDING THAT PRESIDENTIAL DECREE 1691 SHOULD BE GIVEN A

RETROSPECTIVE EFFECT WHEN PRESIDENTIAL DECREE 1367 WHICH WAS
IN FORCE WHEN CIVIL CASE NO. 33150 WAS FILED AND TRIAL THEREOF HAD
COMMENCED, WAS NEVER EXPRESSLY REPEALED BY PRESIDENTIAL
DECREE 1691, AND IF EVER THERE WAS AN IMPLIED REPEAL, THE SAME IS
NOT FAVORED UNDER PREVAILED JURISPRUDENCE;
IN HOLDING THAT WITH THE REMOVAL BY PRESIDENTIAL DECREE 1691 OF
THE PROVISO INSERTED IN ARTICLE 217 OF THE LABOR CODE BY
PRESIDENTIAL DECREE 1367, THE LABOR ARBITERS HAVE ACQUIRED
JURISDICTION OVER CLAIMS FOR DAMAGES ARISING FROM EMPLOYEREMPLOYEE RELATIONS TO THE EXCLUSION OF THE REGULAR COURTS,
WHEN A READING OF ARTICLE 217 WITHOUT THE PROVISO IN QUESTION
READILY REVEALS THAT JURISDICTION OVER DAMAGE CLAIMS IS STILL
VESTED WITH THE REGULAR COURTS;
IN DISMISSING FOR LACK OF JURISDICTION CIVIL CASE NO. 33150 THEREBY
VIOLATING THE CONSTITUTIONAL RIGHTS OF THE PETITIONERS NOTABLY
THEIR RIGHT TO DUE PROCESS.
The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs
sought by the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the
statutes amending it and whether or not they have retroactive effect is unnecessary.
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is
a simple action for damages for tortious acts allegedly committed by the defendants. Such being the
case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under
review are based on a wrong premise.
WHEREFORE, the petition is granted; the respondent judge is hereby ordered to reinstate Civil
Case No. 33150 and render a decision on the merits. Costs against the private respondents.
SO ORDERED.
Barredo (Chairman), Concepcion, Jr. Guerrero, De Castro and Escolin, JJ., concur.

Separate Opinions

AQUINO, J.,dissenting:

I dissent with due deference to the opinion penned by Mr. Justice Abad Santos.
This case is about the jurisdiction of the Court of First Instance to entertain an action for damages
arising from the alleged disgraceful termination of petitioners' employment.
Ernesto Medina, the manager of the Muntinlupa plant of Pepsi-Cola Bottling Company of the
Philippines with a monthly salary of P6,600, and Jose G. Ong, Pepsi's controller in the same plant
with a monthly salary of P4,855, were summarily dismissed by Cosme de Aboitiz, Pepsi's president
and chief executive officer, on December 20, 1977 for having allegedly delayed the use of
promotional crowns (pp. 29-31, Rollo),
The two signed on January 5, 1978 letters of resignation and quitclaims and were paid P93,063 and
P84,386 as separation pay, respectively. However, before receiving those amounts, Medina and Ong
sent by registered mail to Aboitiz letters wherein they indicated that they objected to their illegal
dismissal and that they would sign the quitclaim and resignation papers "under protest" (pp. 32, 270275, Rollo).
More than a month after their dismissal, or on January 27, 1978, Medina and Ong filed with the
Ministry of Labor, a complaint for illegal dismissal. They prayed for reinstatement with full backwages
and, in the alternative, they prayed for additional separation pay of P72,904 for Medina and P35,927
for Ong (NLRC Case No. R4-STF-1-492-78, pp. 40, 288-299, Rollo).
The director of Region IV of the Ministry of Labor dismissed that complaint because of their
resignation and quitclaim. Medina and Ong appealed to the National Labor Relations Commission.
Deputy Minister Amado C. Inciong affirmed the dismissal in his order of April 23, 1979 (p. 246,
Rollo), He denied the motion for reconsideration of Medina and Ong in his Order of October 25,
1979 (p. 327, Rollo).
Seventeen days after that order of dismissal, or on May 10, 1979, Medina and Ong filed, in the Court
of First Instance of Rizal, Makati Branch XV an action for damages against Aboitiz and Pepsi-Cola
by reason of the humiliating manner in which they were dismissed. They prayed for the payment of
unrealized income and P415,000 as moral and exemplary damages, attorney's fees and litigation
expenses (pp. 34-5, 246, Rollo).
Aboitiz and Pepsi-Cola filed a motion to dismiss on the grounds of lack of jurisdiction, pendency of a
labor case, lack of cause of action, payment and prescription (p. 37, Rollo). Ong and Medina
opposed the motion.
Judge Floreliana Castro-Bartolome in her order of September 6, 1979 denied the motion to dismiss
on the ground that under Presidential Decree No. 1367, which took effect on May 1, 1979, the NLRC
and Labor Arbiters cannot entertain claims for moral or other damages, thus implying that such
claims should be ventilated in court (p. 247, Rollo).
After Medina had commenced his testimony, Aboitiz and Pepsi-Cola filed another motion to dismiss
based on Presidential Decree No. 1691, which took effect on May 1, 1980 and which repealed
Presidential Decree No. 1367 and restored to the NLRC and Labor Arbiters the jurisdiction to

adjudicate money claims of workers, including moral damages, and other claims arising from
employer- employee relationship.
Judge Bartolome in her order of May 23, 1981 dismissed the case for lack of jurisdiction. That order
of dismissal is assailed in this appeal by Medina and Ong under Republic Act No. 5440.
In my opinion the dismissal of the civil action for damages is correct because the claims of Medina
and Ong were within the exclusive jurisdiction of the Labor Arbiter and the NLRC, as originally
provided in article 217 of the Labor Code and as reaffirmed in Presidential Decree No. 1691. Medina
and Ong could not split their cause of action against Aboitiz and Pepsi-Cola. (See Aguda vs. Judge
Vallejos, G. R. No. 58133, March 26,1982; Ebon vs. Judge De Guzman, G. R. No. 58265, March 25,
1982; Cardinal Industries, Inc. vs. Vallejos, G. R. No. 57032, June 19, 1982; Pepsi-Cola Bottling Co.
vs. Martinez, G. R. No. 58877, March 15,1982.)
The decisions of the Regional Director and Deputy Minister Inciong are res judicata as to the claims
of Medina and Ong.

Separate Opinions
AQUINO, J.,dissenting:
I dissent with due deference to the opinion penned by Mr. Justice Abad Santos.
This case is about the jurisdiction of the Court of First Instance to entertain an action for damages
arising from the alleged disgraceful termination of petitioners' employment.
Ernesto Medina, the manager of the Muntinlupa plant of Pepsi-Cola Bottling Company of the
Philippines with a monthly salary of P6,600, and Jose G. Ong, Pepsi's controller in the same plant
with a monthly salary of P4,855, were summarily dismissed by Cosme de Aboitiz, Pepsi's president
and chief executive officer, on December 20, 1977 for having allegedly delayed the use of
promotional crowns (pp. 29-31, Rollo),
The two signed on January 5, 1978 letters of resignation and quitclaims and were paid P93,063 and
P84,386 as separation pay, respectively. However, before receiving those amounts, Medina and Ong
sent by registered mail to Aboitiz letters wherein they indicated that they objected to their illegal
dismissal and that they would sign the quitclaim and resignation papers "under protest" (pp. 32, 270275, Rollo).
More than a month after their dismissal, or on January 27, 1978, Medina and Ong filed with the
Ministry of Labor, a complaint for illegal dismissal. They prayed for reinstatement with full backwages
and, in the alternative, they prayed for additional separation pay of P72,904 for Medina and P35,927
for Ong (NLRC Case No. R4-STF-1-492-78, pp. 40, 288-299, Rollo).

The director of Region IV of the Ministry of Labor dismissed that complaint because of their
resignation and quitclaim. Medina and Ong appealed to the National Labor Relations Commission.
Deputy Minister Amado C. Inciong affirmed the dismissal in his order of April 23, 1979 (p. 246,
Rollo), He denied the motion for reconsideration of Medina and Ong in his Order of October 25,
1979 (p. 327, Rollo).
Seventeen days after that order of dismissal, or on May 10, 1979, Medina and Ong filed, in the Court
of First Instance of Rizal, Makati Branch XV an action for damages against Aboitiz and Pepsi-Cola
by reason of the humiliating manner in which they were dismissed. They prayed for the payment of
unrealized income and P415,000 as moral and exemplary damages, attorney's fees and litigation
expenses (pp. 34-5, 246, Rollo).
Aboitiz and Pepsi-Cola filed a motion to dismiss on the grounds of lack of jurisdiction, pendency of a
labor case, lack of cause of action, payment and prescription (p. 37, Rollo). Ong and Medina
opposed the motion.
Judge Floreliana Castro-Bartolome in her order of September 6, 1979 denied the motion to dismiss
on the ground that under Presidential Decree No. 1367, which took effect on May 1, 1979, the NLRC
and Labor Arbiters cannot entertain claims for moral or other damages, thus implying that such
claims should be ventilated in court (p. 247, Rollo).
After Medina had commenced his testimony, Aboitiz and Pepsi-Cola filed another motion to dismiss
based on Presidential Decree No. 1691, which took effect on May 1, 1980 and which repealed
Presidential Decree No. 1367 and restored to the NLRC and Labor Arbiters the jurisdiction to
adjudicate money claims of workers, including moral damages, and other claims arising from
employer- employee relationship.
Judge Bartolome in her order of May 23, 1981 dismissed the case for lack of jurisdiction. That order
of dismissal is assailed in this appeal by Medina and Ong under Republic Act No. 5440.
In my opinion the dismissal of the civil action for damages is correct because the claims of Medina
and Ong were within the exclusive jurisdiction of the Labor Arbiter and the NLRC, as originally
provided in article 217 of the Labor Code and as reaffirmed in Presidential Decree No. 1691. Medina
and Ong could not split their cause of action against Aboitiz and Pepsi-Cola. (See Aguda vs. Judge
Vallejos, G. R. No. 58133, March 26,1982; Ebon vs. Judge De Guzman, G. R. No. 58265, March 25,
1982; Cardinal Industries, Inc. vs. Vallejos, G. R. No. 57032, June 19, 1982; Pepsi-Cola Bottling Co.
vs. Martinez, G. R. No. 58877, March 15,1982.)
The decisions of the Regional Director and Deputy Minister Inciong are res judicata as to the claims
of Medina and Ong.

190. BANEZ VS. HON. VALDEVILLA

GONZAGA_REYES, J.:

The orders of respondent judge dated June 20, 1996 and October 16, 1996,
taking jurisdiction over an action for damages filed by an employer against its
dismissed employee, are assailed in this petition for certiorari under Rule 65
of the Rules of Court for having been issued in grave abuse of discretion.
[1]

Petitioner was the sales operations manager of private respondent in its

branch in Iligan City. In 1993, private respondent "indefinitely suspended"
petitioner and the latter filed a complaint for illegal dismissal with the National
Labor Relations Commission ("NLRC") in Iligan City. In a decision dated July
7, 1994, Labor Arbiter Nicodemus G. Palangan found petitioner to have been
illegally dismissed and ordered the payment of separation pay in lieu of
reinstatement, and of backwages and attorney's fees. The decision was
appealed to the NLRC, which dismissed the same for having been filed out of
time. Elevated by petition for certiorari before this Court, the case was
dismissed on technical grounds ; however, the Court also pointed out that
even if all the procedural requirements for the filing of the petition were met, it
would still be dismissed for failure to show grave abuse of discretion on the
part of the NLRC. Slxmis
[2]

[3]

On November 13, 1995, private respondent filed a complaint for

damages before the Regional Trial Court ("RTC") of Misamis Oriental,
docketed as Civil Case No. 95-554, which prayed for the payment of the
following: Slxsc
a. P709,217.97 plus 12% interest as loss of profit and/or
unearned income of three years;
b. P119,700.00 plus 12% interest as estimated cost of supplies,
facilities, properties, space, etc. for three years;
c. P5,000.00 as initial expenses of litigation; and
d. P25,000.00 as attorney's fees.

[4]

On January 30, 1996, petitioner filed a motion to dismiss the above complaint.
He interposed in the court below that the action for damages, having arisen
from an employer-employee relationship, was squarely under the exclusive

original jurisdiction of the NLRC under Article 217(a), paragraph 4 of the Labor
Code and is barred by reason of the final judgment in the labor case. He
accused private respondent of splitting causes of action, stating that the latter
could very well have included the instant claim for damages in its counterclaim
before the Labor Arbiter. He also pointed out that the civil action of private
respondent is an act of forum-shopping and was merely resorted to after a
failure to obtain a favorable decision with the NLRC. Scslx
Ruling upon the motion to dismiss, respondent judge issued the herein
questioned Order, which summarized the basis for private respondent's action
for damages in this manner: Slx
Paragraph 5 of the complaint alleged that the defendant violated
the plaintiffs policy re: His business in his branch at Iligan City
wherein defendant was the Sales Operations Manager, and
paragraph 7 of the same complaint briefly narrated the modus
operandi of defendant, quoted herein: Defendant canvassed
customers personally or through salesmen of plaintiff which were
hired or recruited by him. If said customer decided to buy items
from plaintiff on installment basis, defendant, without the
knowledge of said customer and plaintiff, would buy the items
on cash basis at ex-factory price, a privilege not given to
customers, and thereafter required the customer to
sign PROMISSORY NOTES and other documents using the
name and property of plaintiff, purporting that said customer
purchased the items from plaintiff on installment basis. Thereafter,
defendant collected the installment payments either personally
or through Venus Lozano, a Group Sales Manager of plaintiff but
also utilized by him as secretary in his own business for collecting
and receiving of installments, purportedly for the plaintiff but in
reality on his own account or business. The collection and receipt
of payments were made inside the Iligan City branch using
plaintiffs facilities, property and manpower. That accordingly
plaintiffs sales decreased and reduced to a considerable extent
the profits which it would have earned.
[5]

In declaring itself as having jurisdiction over the subject matter of the instant
controversy, respondent court stated: Mesm
A perusal of the complaint which is for damages does not ask for
any relief under the Labor Code of the Philippines. It seeks to
recover damages as redress for defendant's breach of his
contractual obligation to plaintiff who was damaged and
prejudiced. The Court believes such cause of action is within the
realm of civil law, and jurisdiction over the controversy belongs to
the regular courts.
While seemingly the cause of action arose from employeremployee relations, the employer's claim for damages is
grounded on the nefarious activities of defendant causing damage
and prejudice to plaintiff as alleged in paragraph 7 of the
complaint. The Court believes that there was a breach of a
contractual obligation, which is intrinsically a civil dispute. The
averments in the complaint removed the controversy from the
coverage of the Labor Code of the Philippines and brought it
within the purview of civil law. (Singapore Airlines, Ltd. Vs.
Pao, 122 SCRA 671.) xxx
[6]

Petitioner's motion for reconsideration of the above Order was denied for lack
of merit on October 16, 1996. Hence, this petition. Calrky
Acting on petitioner's prayer, the Second Division of this Court issued a
Temporary Restraining Order ("TRO ") on March 5, 1997, enjoining
respondents from further proceeding with Civil Case No. 95-554 until further
orders from the Court. Kycalr
By way of assignment of errors, the petition reiterates the grounds raised in
the Motion to Dismiss dated January 30, 1996, namely, lack of jurisdiction
over the subject matter of the action, res judicata, splitting of causes of action,
and forum-shopping. The determining issue, however, is the issue of
jurisdiction. Kyle

Article 217(a), paragraph 4 of the Labor Code, which was already in effect at
the time of the filing of this case, reads: Exsm
ART. 217. Jurisdiction of Labor Arbiters and the Commission. --(a) Except as otherwise provided under this Code the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
xxx
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
xxx
The above provisions are a result of the amendment by Section 9 of Republic
Act ("R.A.") No. 6715, which took effect on March 21, 1989, and which put to
rest the earlier confusion as to who between Labor Arbiters and regular courts
had jurisdiction over claims for damages as between employers and
employees. Sppedjo
It will be recalled that years prior to R.A. 6715, jurisdiction over
all money claims of workers, including claims for damages, was originally
lodged with the Labor Arbiters and the NLRC by Article 217 of the Labor
Code. On May 1, 1979, however, Presidential Decree ("P.D.") No. 1367
amended said Article 217 to the effect that "Regional Directors shall not
indorse and Labor Arbiters shall not entertain claims for moral or other forms
of damages." This limitation in jurisdiction, however, lasted only briefly since
on May 1, 1980, P.D. No. 1691 nullified P.D. No. 1367 and restored Article 217
of the Labor Code almost to its original form. Presently, and as amended by
R.A. 6715, the jurisdiction of Labor Arbiters and the NLRC in Article 217 is
comprehensive enough to include claims for all forms of damages "arising
from the employer-employee relations". Miso
[7]

[8]

Whereas this Court in a number of occasions had applied the jurisdictional

provisions of Article 217 to claims for damages filed by employees, we hold
that by the designating clause "arising from the employer-employee relations"
Article 217 should apply with equal force to the claim of an employer for actual
damages against its dismissed employee, where the basis for the claim arises
from or is necessarily connected with the fact of termination, and should be
entered as a counterclaim in the illegal dismissal case. Nexold
[9]

Even under Republic Act No. 875 (the "Industrial Peace Act", now completely
superseded by the Labor Code), jurisprudence was settled that where the
plaintiff's cause of action for damages arose out of, or was necessarily
intertwined with, an alleged unfair labor practice committed by the union, the
jurisdiction is exclusively with the (now defunct) Court of Industrial Relations,
and the assumption of jurisdiction of regular courts over the same is a nullity.
To allow otherwise would be "to sanction split jurisdiction, which is
prejudicial to the orderly administration of justice." Thus, even after the
enactment of the Labor Code, where the damages separately claimed by the
employer were allegedly incurred as a consequence of strike or picketing of
the union, such complaint for damages is deeply rooted from the labor dispute
between the parties, and should be dismissed by ordinary courts for lack of
jurisdiction. As held by this Court in National Federation of Labor vs.
Eisma, 127 SCRA 419: Manikx
[10]

[11]

Certainly, the present Labor Code is even more committed to the

view that on policy grounds, and equally so in the interest of
greater promptness in the disposition of labor matters, a court is
spared the often onerous task of determining what essentially is a
factual matter, namely, the damages that may be incurred by
either labor or management as a result of disputes or
controversies arising from employer-employee relations.
There is no mistaking the fact that in the case before us, private respondent's
claim against petitioner for actual damages arose from a prior employeremployee relationship. In the first place, private respondent would not have
taken issue with petitioner's "doing business of his own" had the latter not
been concurrently its employee. Thus, the damages alleged in the complaint
below are: first, those amounting to lost profits and earnings due to petitioner's

abandonment or neglect of his duties as sales manager, having been

otherwise preoccupied by his unauthorized installment sale scheme; and
second, those equivalent to the value of private respondent's property and
supplies which petitioner used in conducting his "business ". Maniks
Second, and more importantly, to allow respondent court to proceed with the
instant action for damages would be to open anew the factual issue of
whether petitioner's installment sale scheme resulted in business losses and
the dissipation of private respondent's property. This issue has been duly
raised and ruled upon in the illegal dismissal case, where private respondent
brought up as a defense the same allegations now embodied in his complaint,
and presented evidence in support thereof. The Labor Arbiter, however, found
to the contrary ---that no business losses may be attributed to petitioner as in
fact, it was by reason of petitioner's installment plan that the sales of the Iligan
branch of private respondent (where petitioner was employed) reached its
highest record level to the extent that petitioner was awarded the 1989 Field
Sales Achievement Award in recognition of his exceptional sales performance,
and that the installment scheme was in fact with the knowledge of the
management of the Iligan branch of private respondent. In other words, the
issue of actual damages has been settled in the labor case, which is now final
and executory. Manikan
[12]

Still on the prospect of re-opening factual issues already resolved by the labor
court, it may help to refer to that period from 1979 to 1980 when jurisdiction
over employment-predicated actions for damages vacillated from labor
tribunals to regular courts, and back to labor tribunals. In Ebon vs. de
Guzman, 113 SCRA 52, this Court discussed:
[13]

The lawmakers in divesting the Labor Arbiters and the NLRC of

jurisdiction to award moral and other forms of damages in labor
cases could have assumed that the Labor Arbiters' position-paper
procedure of ascertaining the facts in dispute might not be an
adequate tool for arriving at a just and accurate assessment of
damages, as distinguished from backwages and separation pay,
and that the trial procedure in the Court of First Instance would be
a more effective means of determining such damages. xxx

Evidently, the lawmaking authority had second thoughts about

depriving the Labor Arbiters and the NLRC of the jurisdiction to
award damages in labor cases because that setup would
mean duplicity of suits, splitting the cause of action and
possible conflicting findings and conclusions by two tribunals on
one and the same claim.
So, on May 1, 1980, Presidential Decree No. 1691 (which
substantially reenacted Article 217 in its original form) nullified
Presidential Decree No. 1367 and restored to the Labor Arbiter
and the NLRC their jurisdiction to award all kinds of damages in
cases arising from employer-employee relations. xxx
(Underscoring supplied)
Clearly, respondent court's taking jurisdiction over the instant case would bring
about precisely the harm that the lawmakers sought to avoid in amending the
Labor Code to restore jurisdiction over claims for damages of this nature to
the NLRC. Oldmiso
This is, of course, to distinguish from cases of actions for damages where the
employer-employee relationship is merely incidental and the cause of action
proceeds from a different source of obligation. Thus, the jurisdiction of regular
courts was upheld where the damages, claimed for were based on tort ,
malicious prosecution , or breach of contract, as when the claimant seeks to
recover a DEBT from a former employee or seeks LIQUIDATED damages
in enforcement of a prior employment contract.
[14]

[15]

[16]

[17]

Neither can we uphold the reasoning of respondent court that because the
resolution of the issues presented by the complaint does not entail application
of the Labor Code or other labor laws, the dispute is intrinsically civil. Article
217(a) of the Labor Code, as amended, clearly bestows upon the Labor
Arbiter original and exclusive jurisdiction over claims for damages arising from
employer-employee relations ---in other words, the Labor Arbiter has
jurisdiction to award not only the reliefs provided by labor laws, but also
damages governed by the Civil Code.
[18]

Thus, it is obvious that private respondent's remedy is not in the filing of this
separate action for damages, but in properly perfecting an appeal from the
Labor Arbiter's decision. Having lost the right to appeal on grounds of
untimeliness, the decision in the labor case stands as a final judgment on the
merits, and the instant action for damages cannot take the place of such lost
appeal.
Respondent court clearly having no jurisdiction over private respondent's
complaint for damages, we will no longer pass upon petitioner's other
assignments of error. Ncm
WHEREFORE, the Petition is GRANTED, and the complaint in Civil Case No.
95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is
hereby DISMISSED. No pronouncement as to costs. Ncmmis
SO ORDERED.

B. NATIONAL LABOR RELATIONS COMMISSION

(ARTICLE 217 (B); ARTICLE 223, LABOR CODE)
191. SOLIMAN SECURITY SERVICES, INC. VS. COURT OF APPEALS
VITUG, J.:
Respondent Eduardo Valenzuela, a security guard, was a regular employee of petitioner Soliman
Security Services assigned at the BPI-Family Bank, Pasay City. On 09 March 1995, he received a
memorandum from petitioners relieving him from his post at the bank, said to be upon the latters
request, and requiring him to report to the security agency for reassignment. The following month, or
on 07 April 1995, respondent filed a complaint for illegal dismissal on the ground that his services
were terminated without a valid cause and that, during his tenure at the bank, he was not paid his
overtime pay, 13th month pay, and premium pay for services rendered during holidays and rest days.
He averred that, after receiving the memorandum of 09 March 1995, he kept on reporting to the
office of petitioners for reassignment but, except for a brief stint in another post lasting for no more
than a week, he was put on a "floating" status.
Petitioners contended that the relief of respondent from his post, made upon request of the client,
was merely temporary and that respondent had been offered a new post but the latter refused to
accept it. Petitioners argued that respondents floating status for barely 29 days did not constitute
constructive dismissal.

On 31 July 1995, the Labor Arbiter, Ariel Cadiente Santos, arrived at a decision holding petitioners
guilty of constructive dismissal and ordering the reinstatement of the complainant to his former
position with full backwages from the date of his "dismissal" until his actual reinstatement; directing
the Research and Information Unit to compute the various monetary benefits awarded to the
complainant; and adjudging the payment, by way of attorneys fees, of ten percent (10%) of all sums
owing to the complainant.
On 16 October 1998, petitioners filed an appeal to the National Labor Relations Commission
(NLRC).
On 11 November 1998, the NLRC issued an order directing petitioners to submit an affidavit to the
effect that their appeal bond was genuine and that it would be in force and effect until the final
disposition of the case. In his reply memorandum, dated 28 November 1998, respondent,
asseverating that petitioners failed to deposit the required bond for the appeal, sought the appeal to
be declared as not having been validly perfected. On 19 January 1999, petitioners submitted a
manifestation and affidavit in compliance with the 11th November 1998 order of the
NLRC.1Apparently satisfied, the NLRC, on 30 April 1999, gave due course to the appeal and
rendered the presently assailed decision, reversing that of the Labor Arbiter, to wit:
WHEREFORE, the decision appealed from is hereby SET ASIDE. However, respondent
[before the NLRC] is hereby ordered to pay complainant separation pay computed at onehalf (1/2) month for every year of service, reckoned from date of employment on October 9,
1990 up to September 9, 1995, the date the complainant should have been redeployed." 2
A motion for reconsideration, filed by herein private respondent Valenzuela, was denied by the
NLRC.
Valenzuela forthwith brought the matter up to the Court of Appeals. On the thesis that the only issue
interposed was whether or not the NLRC committed grave abuse of discretion when it took
cognizance of the appeal and reversed the decision of the Labor Arbiter despite the failure of herein
petitioners to validly post the appeal bond, the appellate court responded in the affirmative, set aside
the assailed decision of the NLRC and reinstated that of the Labor Arbiter. A motion to reconsider the
decision was denied.
In the instant recourse before this Court, petitioners claim that the Court of Appeals (Eleventh
Division) has committed grave abuse of discretion amounting to lack or excess of jurisdiction in
declaring petitioners to have failed in perfecting their appeal with the NLRC.
This Court finds merit in the petition.
Private respondent would posit that the appeal of petitioners to the NLRC should be considered to
have been made on 19 January 1999 (when petitioner submitted, pursuant to the NLRC order, a
statement under oath to the effect that the surety bond it had posted was genuine and confirmed it to
be in effect until the final termination of the case) which was beyond the ten-day period for perfecting
an appeal. The records before the Court would show, however, that an appeal bond was posted with
the NLRC at the same time that the appeal memorandum of petitioners was filed on 16 October

1998. A certified true copy of the appeal bond3 would indicate that it was received by the
Commission on 16 October 1998, the date reflected by the stamp-mark thereon. The surety bond
issued by the Philippine Charter Insurance Corporation bore the date of 14 October 1998 or two
days before the appeal memorandum was seasonably filed on 16 October 1998. The Order,4 dated
11 November 1998, of the NLRC categorically stated that "records [would] disclose that the instant
appeal [was] accompanied by a surety bond, as the Decision sought to be appealed involved a
monetary award." The NLRC, in fact, ordered petitioner to submit an affidavit to confirm that its
appeal bond was genuine and would be in force and effect until the final disposition of the case. The
Commissions declaration that the appeal was accompanied by a surety bond indicated that there
had been compliance with Article 2235 of the Labor Code.
An appeal to the NLRC is perfected once an appellant files the memorandum of appeal, pays the
required appeal fee and, where an employer appeals and a monetary award is involved, the latter
posts an appeal bond or submits a surety bond issued by a reputable bonding company.6 In line with
the desired objective of labor laws to have controversies promptly resolved on their merits, the
requirements for perfecting appeals are given liberal interpretation and construction. 7
The only issue on the merits of the case is whether or not private respondent should be deemed
constructively dismissed by petitioner for having been placed on "floating status," i.e., with no
reassignment, for a period of 29 days. The question posed is not new. In the case of Superstar
Security Agency, Inc., vs. NLRC,8 this Court, addressing a similar issue, has said:
"x x x The charge of illegal dismissal was prematurely filed. The records show that a month
after Hermosa was placed on a temporary off-detail, she readily filed a complaint against
the petitioners on the presumption that her services were already terminated. Temporary offdetail is not equivalent to dismissal. In security parlance, it means waiting to be posted. It is
a recognized fact that security guards employed in a security agency may be temporarily
sidelined as their assignments primarily depend on the contracts entered into by the agency
with third parties (Agro Commercial Security Agencies, Inc. vs. NLRC, et al., G.R. Nos.
82823-24, 31 July 1989). However, it must be emphasized that such temporary inactivity
should continue only for six months. Otherwise, the security agency concerned could be
liable for constructive dismissal."9
Constructive dismissal exists when an act of clear discrimination, insensibility or disdain, on the part
of an employer has become so unbearable as to leave an employee with no choice but to forego
continued employment.10 The temporary "off-detail" of respondent Valenzuela is not such a case.
WHEREFORE, the instant petition is GRANTED. The assailed decision and resolution of the Court
of Appeals areSET ASIDE and the decision of the National Labor Relations Commission in NCR CN.
04-02620-95 isREINSTATED. No costs.
SO ORDERED.

192. NAVARRO VS. NLRC

QUISUMBING, J.:
This special civil action for certiorari seeks to annul the decision promulgated on July 29, 1993, by
public respondent in NLRC NCR Case No. 003279-92, and its resolution dated April 11, 1994, which
denied petitioner's motion for reconsideration.
Petitioners allege that they were jeepney drivers of private respondent Araceli Cornejo on boundary
system. They regularly ply the jeepneys assigned to them for eleven hours a day, five times a week
and each of the earn an average of P350.00 daily.
On April 20, 1991, when petitioners Rodento Navarro and Antonio Bocabal were about to get the
keys of their respective jeepneys, private respondent Olimpio Breton, the dispatcher, told them that
they cannot go out on the usual working hours of 5 PM to 4 AM (night shift) because their working
hours were moved to a new schedule of work, 7 PM to 6 AM. Expecting that the sudden change of
working hours will adversely affect their earnings, Navarro, Bocabal and seven other night shift
drivers decided not to ply their routes that day to protest the sudden change of working hours.
Petitioner Julian De Guzman reported to work as usual. However, he cut short his trip because he
allegedly felt dizzy and suffered stomach pain.
The following day, all the drivers who participated in the protest action were summoned by Breton
and were meted a one-day suspension but were asked to pay the boundary for April 20. However,
Breton promised to restore the night shift hours to 5 PM to 4 AM.
On April 23, 1991, petitioners were surprised to find somebody else were assigned to their
respective jeepneys. Breton told petitioners to look for work elsewhere, although the other drivers
who participated in the protest action were allowed to work.
For their part, private respondents claim that on April 20, 1991, at about 5:45 PM, Breton advised the
night shift drivers to take out the jeepneys at 7 PM. This action was made considering that the
regular hours were no longer observed by the drivers. Frequently, the jeepneys were no longer
checked-up because immediately after the day shift drivers return the jeepneys at around 6 PM, the
night shift drivers take them out without giving time for inspection. Because of this strict
implementation of time of work, the night shift drivers left the compound and convinced other drivers
to stop their operation. As a consequence, the jeepneys were not taken out that night resulting in the
loss of income to the operator.
On April 21, 1991, Breton met with the night shift drivers wherein they agreed that the working hours
starting the next day would be from 5 AM to 4 PM for the day shift, and 5 PM to 4 AM for the night
shift. Nonetheless, the night shift drivers were not able to drive their units on that day since Breton
advised the day shift and extra drivers to continue driving the units. This was a precautionary step in
the event the regular drivers would continue their strike as what happened in December 1990 when
all the drivers went on strike for five days.
Private respondents also claim that they were surprised petitioners never returned to work. Since
their business is imbued with public interest, extra drivers were made to drive the jeepneys assigned
to petitioners. They maintain that no new drivers were hired to replace petitioners. It was only on

June 7, 1991, after the first hearing of this complaint, when petitioners made clear their refusal to
return to work before the labor arbiter that replacements for them were hired. Private respondents
insist that petitioners were not dismissed but abandoned their work.
On May 15, 1991, petitioners filed before the Regional Arbitration Branch a complaint for illegal
dismissal. The minutes of the proceedings indicate that the counsel for private respondents informed
the labor arbiter of the willingness of private respondents to take petitioners back. Petitioners
reportedly turned down private respondents' offer since the drivers just want separation pay.
On June 28, 1991, petitioners amended their complaint in which they sought payment for severance
pay, backwages, with 12% legal interest per annum; P50,000.00 to each complainant for moral
damages; P50,000.00 as exemplary damages and P15,000.00 as attorney's fees.
On November 26, 1991, the labor arbiter rendered judgment in favor of petitioners and decreed as
follows:
WHEREFORE, premises considered, respondents are ordered to pay complainants:
RODENTO NAVARRO separation pay in the amount of P40,950.00 (9 yrs. P350 x 13 days x
9 yrs.); ANTONIO BOCABAL separation pay in the amount of P22,750.00 (5 yrs. P350.00 x
13 days x 5 yrs.) and JULIAN DE GUZMAN separation pay in the amount of P31,850.00 (7
yrs. P350.00 x 13 days x 7 yrs.) and the equivalent of 10% of the total monetary award as
attorney's fees in the amount of P9,555.00 (10% of 95,550.00).
SO ORDERED. 1
On April 3, 1992, private respondents were served a copy of the decision of the labor arbiter.
Aggrieved, they filed on April 13, 1992 with NLRC their memorandum on appeal. Nevertheless, it
was only on April 30, 1992, that private respondents filed the appeal bond. Unfortunately, the
aforesaid bond was later discovered to be spurious because the person who signed it was no longer
connected with the insurance company for more than ten years already. It was only on July 20,
1993, that private respondents posted a substitute bond issued by another company in the amount
of P95,550.00.
In a decision dated July 29, 1993, public respondent ruled for private respondents, thus:
WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE and
another entered directing the complainants, under pain of losing their employment, to report
back to work within ten (10) days from receipt of this Decision.
SO ORDERED.2
Their motion for reconsideration having been denied, petitioners filed the instant petition imputing
grave abuse of discretion on the part of public respondent:
I

IN FINDING THAT PETITIONERS HAVE ABANDONED THEIR JOBS;

II
IN NOT FINDING THAT THE DISMISSAL OF PETITIONERS WAS WITHOUT NOTICE AND
HEARING.
III
IN ACTING ON THE APPEAL OF PRIVATE RESPONDENTS WHEN THE DECISION HAS
BECOME FINAL FOR NON-FILING OF A SUPERSEDEAS BOND WITHIN THE
REGLEMENTARY PERIOD TO APPEAL.3
We shall first discuss the third issue raised by the petitioners inasmuch as it deals with a
jurisdictional question.
The perfection of an appeal within the reglementary period and in the manner prescribed by law is
jurisdictional, and noncompliance with such legal requirement is fatal and has the effect of rendering
the judgment final and executory. Such requirement cannot be trifled with. 4
Art. 223 of the Labor Code provides:
Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders.
xxx

xxx

xxx

In case of a judgment involving a monetary award, an appeal by the employer may be

perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary
award in the judgment appealed from.
xxx

xxx

xxx

Perfection of an appeal includes the filing, within the prescribed period, of the memorandum of
appeal containing, among others, the assignment of error/s, arguments in support thereof, the relief
sought and, in appropriate cases, posting of the appeal bond. In case where the judgment involves a
monetary award, as in this case, the appeal may be perfected only upon posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the NLRC. 5 The amount of the
bond must be equivalent to the monetary award, exclusive of moral and exemplary damages and
attorney's fees.
The records indicate that private respondents received the copy of labor arbiter's decision on April 3,
1992, hence, they had only until April 13, 1992 to perfect their appeal. While private respondents
filed their memorandum of appeal on time, they posted surety bond only on April 30, 1992, which is

beyond the ten-day reglementaty period, a procedural lapse admitted by private respondents.
Private respondents' failure to post the required appeal bond within the prescribed period is
inexcusable.6 Worse, the appeal bond was bogus having been issued by an officer no longer
connected for a long time with the bonding company. Unfortunately, this irregularity was not
sufficiently explained by private respondents. For sure, they cannot avoid responsibility by
disavowing any knowledge of its fictitiousness for they were required to secure bond only from
reputable companies. Corollary, they should have ensured that the bond is genuine, otherwise, the
purpose of requiring the posting of bond, that is, to guarantee the payment of valid and legal claims
against the employer, would not be served.
We are mindful of the fact that this Court, in a number of cases,7 has relaxed this requirement on
grounds of substantial justice and special circumstances of the case. However, we find no cogent
reason to apply this same liberal interpretation herein when the bond posted was not genuine. In this
case, there is really no bond posted since a fake or expired bond is in legal contemplation merely a
scrap of paper. It should be stressed that the intention of lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the employer is underscored by the
provision that an appeal by the employer may be perfected only upon the posting of a cash or surety
bond. The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or
surety bond by the employer to be the exclusive means by which an employer's appeal may be
perfected.8
1wphi1

As the appeal filed by private respondents was not perfected within the reglementary period, the
running of the prescriptive period for perfecting an appeal was not tolled. 9 Consequently, the decision
of the labor arbiter became final and executory upon the lapse of ten calendar days from receipt of
the decision. Hence, the decision became immutable and it can no longer be amended nor altered
by the labor tribunal. Accordingly, inasmuch as the timely posting of appeal bond is an indispensable
and jurisdictional requisite and not a mere technicality of law, the NLRC has no authority to entertain
the appeal, much less to set aside the decision of the labor arbiter in this case. Any amendment or
alteration made which substantially affects the final and executory judgment is null and void for lack
of jurisdiction, including the entire proceedings held for that purpose. 10
In view of the foregoing disposition, it is no longer necessary to discuss the other issues raised in
this petition.
WHEREFORE, the instant petition is GRANTED. The assailed Decision rendered on July 29, 1993,
by public respondent and its Resolution dated April 11, 1994, are SET ASIDE. The Decision of the
Labor Arbiter dated November 26, 1991, is hereby REINSTATED. Costs against private
respondents.
1wphi1.nt

SO ORDERED.

193. UNITED PLACEMENT INTERNATIONAL VS. NLRC

VITUG, J.:

The petition for certiorari assails the Resolution of the National Labor
Relations Commission ("NLRC") dismissing the appeal of petitioner United
Placement International in POEA Case No. L-86-05-378-A & B for having
been interposed beyond the reglementary period.
Leonardo Arazas, Livy Dacillo and Cesar Hernandez, herein private
respondents, applied for overseas employment with Placementhaus and
General Services (Placementhaus for brevity). Virgilio Reyes of
Placementhaus informed the applicants that their deployment abroad could be
facilitated by completing the requisite documents and paying a placement fee
of P19,300.00 each. Hopeful, private respondents each paid the quoted
amount to Reyes. No receipt was issued.
On 09 November 1985, private respondents were made to sign twoyear employment contracts bearing the signature of the general manager,
Janet A. Gregorio, of Placementhaus. Only private respondent Dacillo,
however, was furnished with a copy of the agreement. Prior to their
departure, in December of 1986, for Dammam, Saudi Arabia, private
respondents were each provided with a sealed envelope with the instruction
that the envelopes were to be opened only if and when required by the
authorities to show their employment contracts at the port of destination. The
envelopes each contained a notice and confirmation of EMPLOYMENT
ISSUED by Luz R. Abad, manager of United Placement International, in
favor of private respondents.
After only a five-month stay in Saudi Arabia, or on 19 April 1986, private
respondents' employment contracts were pre-terminated, and they were sent
back to the Philippines.
Soon after their arrival, private respondents filed with the Philippine
Overseas Employment Administration ("POEA") their complaint for illegal
dismissal, nonpayment of bonus and a refund of placement fees against
Placementhaus and the United Placement International.
Corresponding summonses and notices were sent to petitioner for the
hearings scheduled for 03 July 1986, 15 July 1986, 07 August 1986, 11
August 1986, 03 September 1986, 12 September 1986, 19 September 1986,

17 February 1987, 04 March 1987 and 14 April 1987. On 08 August 1986, a

certain Atty. Hernandez personally appeared for petitioner before the hearing
officer. He requested that the hearing be reset to 03 September 1986. On
said date, neither he nor a representative of petitioner appeared. On 12
September 1986, however, Luz R. Abad personally appeared for
petitioner. She submitted a written manifestation requesting for the
authentication and verification of all documents submitted by private
respondents, claiming that the notices/confirmation of employment given the
private respondents were not genuine and that her signatures thereon were
forged.
While the case was pending with the POEA, petitioner moved its offices
from Suite 450 Padilla de los Reyes Bldg., 232 Juan Luna, Binondo, Manila,
to the second floor of the C. Rivilla Bldg., 115 Aguirre St., Legaspi Village,
Makati, Metro Manila. The transfer was approved by Cecilia E. Curso, Chief
of the Licensing and Evaluation Department of the POEA, on 19 November
1986.
On the day of the supposed final hearing of the case, or on 04 March
1987, petitioner did not appear.
On 18 July 1988, the POEA through then Administrator Tomas Achacoso,
issued an order holding Placementhaus solely responsible for the refund of
placement fees claimed by private respondents since it was that agency which
"actually deployed" the respondents.[1] On 28 July 1988, the POEA rendered
its decision disposing of the case, as follows:
"WHEREFORE, premises considered, judgment is rendered ordering the respondents,
jointly and severally, to pay complainants Leonardo Arazas, Livi Dacillo (sic), and
Cesar Hernandez, the amount of FIVE THOUSAND SEVEN HUNDRED US
DOLLARS (US$5,700.00), for each of them, or their equivalent in Philippine
Currency at the time of payment, representing their individual salaries corresponding
to the unexpired portion of their employment contracts computed at the rate of
US$300.00 a month for nineteen (19) months. Payment of said amounts should be
coursed through this Office.
"SO ORDERED."[2]

The POEA sent a copy of its decision to petitioner by

registered mail (Registered Letter No. 2432) at the latter's address of record
(Binondo office). The post office sent the registered mailnotice on 04 August
1988. Two other notices were sent, one on 11 August 1988 and another on
17 August 1988, to petitioner. On 17 September 1988, since the registered
matter still remained unclaimed, the post office returned the mail to the POEA.
After almost a year, or on 11 September 1989, petitioner appealed the
Achacoso ruling to the NLRC. On 11 December 1990, the NLRC
dismissed[3] the appeal on the ground that the decision sought to be reviewed
had long become final and executory.
The NLRC denied, on 18 November 1991, petitioner's motion for
reconsideration for lack of merit.[4]
Petitioner would now have this Court reverse the NLRC on the argument
that since the transfer to the new address of petitioner was sanctioned by the
POEA itself, the date of service of the decision to the old address should not
be considered as the starting point of the ten-day reglementary period for
appeal but as of 01 September 1989, or about a year later, when petitioner
received the decision "through the initiative of Luz R. Abad." Hence, petitioner
asserted, the appeal was timely filed on 11 September 1989.
The argument is bereft of merit.
Petitioner's notice of change of address, duly acknowledged by the POEA
Licensing and Evaluation Department, was made in compliance with Section
12,[5] Rule II, Book II, of the 1985 POEA Rules and Regulations. This Book
deals with the licensing and regulation of participants in the overseas
employment program. It has nothing to do with the adjudication of complaints
by overseas employees against RECRUITMENT AGENCIES , a matter
separately treated in Book VI of the Rules. In the adjudication of such
complaints, it is the hearing officer, the government official charged with
evaluating and recommending to the POEA Administrator the proper action in
adjudicatory cases, who has custody of the records. [6] In the discharge of his
functions, the hearing officer acts on the basis of the records before
him. Even when a particular matter of interest, like a party's change of

address, is furnished a department of the POEA, the hearing officer would

quite likely still be incognizant thereof; thus, such as it should be, he must
instead be bound by and act on the basis of what appears on record. [7] Notices
of processes are also handled by clerks who themselves must be guided by
the records of the case. It is incumbent upon, and it behooves, the parties or
counsel to themselves make certain that all official communications, either by
mail or personally, properly reach them at their correct addresses, [8] a matter
they can do by simply making that data of record.
Petitioner believes that the service to it of the POEA decision can be
considered complete when and only once the mail is actually received.[9] That
is not the case. Section 8, Rule 13, of theRules of Court, which can apply
suppletorily to the 1985 POEA Rules and Regulations,[10] provides that service
by registered mail is complete upon actual receipt by the addressee; but if he
fails to claim his mail from the post office within five (5) days from the date of
the first notice of the postmaster, service shall take effect at the expiration of
such time. In accordance with this rule, petitioner is deemed to have received
the challenged decision on 09 August 1988 or five (5) days from 04 August
1988 in the absence of proof to overturn the presumption that the postmaster
had regularly performed his duty.[11] Pursuant to Sections 1, 2 and 3 of Rule V,
Book VI, of the 1985 POEA Rules and Regulations, petitioner had only ten
(10) days from 09 August 1988 within which to appeal to the NLRC by filing a
notice of appeal or a memorandum of appeal with the Adjudication
Department of the POEA.
Petitioner's asseveration that it has been denied due process is not borne
out by the records. Even before the acknowledgment by POEA of the transfer
to Makati of petitioner's offices, notices had already been sent to petitioner at
its Binondo office for the seven (7) hearing dates. It would appear that
petitioner simply ignored the notices. Luz R. Abad herself merely considered
the complaint a "nuisance suit, more than anything else."[12] What the law
proscribes is lack of opportunity to be heard. [13] That opportunity, the Court is
convinced, has sufficiently been accorded to petitioner.
Two final reminders that need not be belabored at length: (1) A minute
resolution disposing of a motion for reconsideration, provided it has legal
basis (e.g., the motion's utter lack of merit), is not improper at all, [14] and (2) the

timely perfection of an appeal is not only mandatory but likewise jurisdictional

in character.[15]
WHEREFORE, the questioned NLRC Resolution of 11 December 1990
and the minute resolution of 18 November 1991 are AFFIRMED. Costs
against petitioner.
SO ORDERED.

194. DIAMONON VS. DOLE

FACTS: Petitioner was National Executive VP of the NACUSIP and VP for
Luzon of the PACIWU. He later learned of his removal from the positions he
held in both union in a resolution approved during a meeting of the National
Executive Boards of both unions. Petitioner sought reconsideration of the
resolution on his removal; at the same time, he initiated a complaint before
the DOLE against the National President of NACUSIP and PACIWU
questioning the validity of his removal. He filed a second complaint
accusing officers of the NACUSIP and PACIWU of violation of the C/BL,
illegal disbursement of union funds and abuse of authority. The first case
was decided declaring his removal null and void. The Med-arbiter dismissed
the second complaint for lack of personality. Petitioner appealed the
dismissal of the second complaint to public respondent DOLE who issued the
order holding that petitioners failure to show that the administrative
remedies have been exhausted was fatal to his cause. Petitioner alleges that
public respondents switched the ground for dismissal from that of lack of
personality to file the complaint to non exhaustion of administrative
remedies. Thereby by going outside the issued and purporting to adjudicate
on something upon which the parties were not heard.

ISSUE: W/N public respondent committed grave abuse of discretion in

dismissing the appeal.

HELD: No. An appellate court may only pass upon errors assigned, but
such without exceptions. An appellate court, as well as those in

administrative bodies, are given broad discretionary powers to waive the

lack of assignment of errors and consider errors not assigned. In this case,
not only did petitioner fail to comply with the IRR of the Labor Code, but he
also did not exhaust the remedies set forth by the C/BL of both unions. A
party with an administrative remedy must not merely initiate the prescribed
administrative procedure to obtain relief, but also to pursue it to its
appropriate conclusion before seeking judicial intervention to prevent
unnecessary and premature resort to said bodies.
Facts: Diamonon was National EVP of NACUSIP and VP of PACIWU (both unions) and
he was removed from both unions in a resolution approved during a meeting. He sought
reconsideration and filed two complaintsagainst private respondent Atty. Zoilo V. de la
Cruz, Jr., and the National Treasurer of NACUSIP and PACIWU, Sofia P. Mana-ay. He
accused them of three (3) offenses, the last being abuse of authority as national officers
of both organizations.
On the first case, his removal was held to be null and void; and the second case was
dismissed on the ground that Petitioner lacked legal personality to file complaint in view
of this removal from those positions he previously held. He appealed to the public
respondent DOLE and Laguesma, issued the assailed Order, holding that petitioner's
failure to show in his complaint that the administrative remedies provided for in the
constitution and by-laws of both unions, have been exhausted or such remedies are not
available, was fatal to petitioner's cause.
Issue: Whether or not non-exhaustion of administrative remedies were indeed fatal to
his cause.
Held: Petitioner emphatically stresses that the only issue on appeal before the DOLE
was petitioner's alleged lack of personality to file the complaint. When public respondent
"switched" the ground for dismissal of the complaint from "lack of personality of the
[petitioner] to file the complaint" to "non-exhaustion of administrative remedies," he
staunchly claims that the latter committed grave abuse of discretion amounting to lack
or excess of jurisdiction. For, in doing so, the challenged orders "went outside the issues
and purported to adjudicate something upon which the parties were not heard." The
petition lacks merit.
Generally, an appellate court may only pass upon errors assigned. Exceptions when
appellate courts are accorded a broad discretionary power to waive the lack of
assignment of errors and consider errors not assigned:

(a) Grounds not assigned as errors but affecting the jurisdiction of the court over the
subject matter;
(b) Matters not assigned as errors on appeal but are evidently plain or clerical errors
within contemplation of law;
(c) Matters not assigned as errors on appeal but consideration of which is necessary in
arriving at a just decision and complete resolution of the case or to serve the interests of
a justice or to avoid dispensing piecemeal justice;
(d) Matters not specifically assigned as errors on appeal but raised in the trial court and
are matters of record having some bearing onthe issue submitted which the parties
failed to raise or which the lower court ignored;
(e) Matters not assigned as errors on appeal but closely related to an error assigned;
(f) Matters not assigned as errors on appeal but upon which the determination of a
question properly assigned, is dependent.
These rules also apply to administrative bodies and the instant controversy falls
squarely under the exceptions to the general rule.
Not only did petitioner fail to comply with Section 2, Rule VIII, Book V of the
Implementing Rules and Regulations of the Labor Code as amended neither did he
exhaust the remedies set forth by the Constitution and by-laws of both unions. In the
National Convention of PACIWU and NACUSIP nothing was heard of
petitioner'scomplaint against private respondents and in fact, what the National
Convention resolved was to approve and adopt the resolution of the National Executive
Board removing petitioner from the positions he held. His failure to seek recourse before
the National Convention on his complaint against private respondents taints his action
with prematurity.
When the CBL of both unions dictated the remedy for intra-union dispute, this should be
resorted to before recourse can be made to the appropriate administrative or judicial
body, not only to give the grievance machinery or appeals' body of the union the
opportunity to decide the matter by itself, but also to prevent unnecessary and
premature resort to administrative or judicial bodies.
Thus, a party with an administrative remedy must not merely initiate the prescribed
administrative procedure to obtain relief, but also pursue it to its appropriate conclusion
before seeking judicial intervention. The underlying principle of the rule on exhaustion of

administrative remedies rests on the presumption that when the administrative body, or
grievance machinery, as in this case, is afforded a chance to pass upon the matter, it
will decide the same correctly. Petitioner's premature invocation of public respondent's
intervention is fatal to his cause of action.
Evidently, when petitioner brought before the DOLE his complaint charging private
respondents he overlooked or deliberately ignored the fact that the same is clearly
dismissible for non-exhaustion of administrative remedies.

195. DE OCAMPO VS. NLRC

MEDIALDEA, J.:
This Petition for certiorari seeks to annul and set aside the resolution issued by the
respondent National Labor Relations Commission on July 8, 1991, in Certified Case No. 0548
entitled "In Re: Labor Dispute at Baliwag Mahogany Corporation," affirming with modification its
previous decision dated October 23, 1990, declaring the union officers and/or members who
participated in the illegal strike staged on February 6, 1990 to have lost their status of employment;
and directing private respondent Baliwag Mahogany Corporation to pay separation pay to certain
employees and to reinstate without backwages all union Members not found to have committed
prohibited acts.
The antecedent facts are as follows:
Petitioners Cecile de Ocampo, Wilfredo San Pedro, Reynaldo Dovicar, Bien Medina, Cesar Abriol,
Artemio Castro, Larry Alcantara, Michael Nocum, Jesus Deo, Jr., Publeo Darag, Eduardo Bino,
Eduardo Veles, Ervin David, Prostacio Perez, Noel Victor, Eleno Dacatimban, Antonio Bernardo,
Carlito Victoria, Timoteo Mijares, Alex Ramos, Reynaldo Cruz, Modesto Mamesia, Domingo Silarde,
Renato Puertas, Rene Villanueva, Marcelo dela Cruz and Hernando Legaspi are employees of
private respondent Baliwag Mahogany Corporation. They are either officers or members of the
Baliwag Mahogany Corporation Union-CFW, the existing collective bargaining agent of the rank and
file employees in the company. Private respondent Baliwag Mahogany Corporation is an enterprise
engaged in the production of wooden doors and furniture and has a total workforce of about 900
employees.
In 1988, private respondent Baliwag Mahogany Corporation (company) and Baliwag Mahogany
Corporation Union-CFW (union) entered into a collective bargaining agreement containing, among
other things, provisions on conversion into cash of unused vacation and sick leaves; grievance
machinery procedure; and the right of the company to schedule work on Sundays and holidays.
In November, 1989, the union made several requests from the company, one of which was the cash
conversion of unused vacation and sick leave for 1987-1988 and 1988-1989.

Acting on the matter, the company ruled to allow payment of unused vacation and sick leaves for
the period of 1987-1988 but disallowed cash conversion of the 1988-1989 unused leaves.
On January 3, 1990, the company issued suspension orders affecting twenty (20) employees for
failure to render overtime work on December 30, 1989. The suspension was for a period of three (3)
days effective January 3, 1996 to January 5, 1990.
On the same day, the union filed a notice of strike on the grounds of unfair labor
practice particularly the violation of the CBA provisions on non-payment of unused leaves and illegal
dismissal of seven (7) employees in November, 1989.
On January 13, 1990, the company issued a notice of termination to three (3) employees or union
members, namely, Cecile de Ocampo, Rene Villanueva and Marcelo dela Cruz, of the machinery
department, allegedly to effect cost reduction and redundancy.
The members of the union conducted a picket at the main gate of the company on January 18,
1990.
On the same day, the company filed a petition to declare the strike illegal with prayer for injunction
against the union, Cecile de Ocampo, Wilfredo San Pedro and Rene Aguilar.
An election of officers was conducted by the union on January 19, 1990. Consequently, Cecile de
Ocampo was elected as president.
During the conciliation meeting held at National Conciliation and Mediation Board (NCMB) on
January 22, 1990 relative to the notice of strike filed by the union on January 3, 1990, the issue
pertaining to the legality of the termination of three (3) union members was raised by the union.
However, both parties agreed to discuss it separately.
Subsequently, in a letter dated January 28, 1990, the union requested for the presence of a NCMB
representative during a strike vote held by the union. The strike vote resulted to 388 votes out of 415
total votes in favor of the strike.
Consequently, the union staged a strike on February 6, 1990.
On February 7, 1990, the company filed a petition to assume jurisdiction with the Department of
Labor and Employment.
On February 16, 1990, the company filed an amended petition, praying among other things, that the
strike staged by the union on February 6, 1990 be declared illegal, there being no genuine strikeable
issue and the violation of the no-strike clause of the existing CBA between the parties.
The Secretary of Labor in an order dated February 15, 1990, certified the entire labor dispute to the
respondent Commission for compulsory arbitration and directed all striking workers including the
dismissed employees to return to work and the management to accept them back.

The company filed an urgent motion for assignment of a sheriff to enforce the order of the Secretary.
In an order dated February 22, 1990, the Secretary of Labor directed Sheriff Alfredo Antonio, Jr., to
implement the order.
On February 23, 1990, the sheriff, with the assistance of the PC/INP of San Rafael, removed the
barricades and opened the main gate of the company.
Criminal complaints for illegal assembly, grave threats, and grave coercion were filed against Cecile
de Ocampo, Timoteo Mijares, Modesto Mamesia and Domingo Silarde by the local police authorities
on February 24, 1990.
On February 25, 1990, the company caused the publication of his return to work order in two (2)
newspapers, namely NGAYON and ABANTE.
In its letter dated February 27, 1990, the union, through its President Cecile de Ocampo, requested
the Regional Director of DOLE, Region III to intervene in the existing dispute with management.
Meanwhile, the company extended the February 26, 1990 deadline for the workers to return to work
until March 15, 1990.
The respondent Commission rendered a decision on October 23, 1990, declaring the strikes staged
on January 18, 1990 and February 6, 1990 illegal, the dispositive portion of which provides as
follows, to wit:
WHEREFORE, judgment is hereby rendered as follows:
1. The strike staged on January 18, 1990 is hereby declared illegal and all
employees who participated therein are reprimanded therefor or an further warned
that future similar acts shall be dealt moreseverely;
2. The strike staged on February 6, 1990 is hereby declared illegal and the Union
officers/members are deemed suspended from March 15, 1990 the last deadline of
the company for them to report to the date of promulgation of this Decision. In short,
the Union officers/members are ordered reinstated to their positions but without
backwages;.
3. Baliwag Mahogany Corporation is hereby directed to immediately reinstate Cecile
de Ocampo, Rene Villanueva and Marcelo dela Cruz to their former positions without
loss of seniority rights to pay them full backwages for the period from January 17,
1990 to March 15, 1990 only;
4. The Baliwag Mahogany Corporation is hereby directed to immediately reinstate
Alex Ramos, Ronaldo Cruz, Fernando Hernandez, Renato Puertas, Hernando
Legaspi to their former positions and to pay them backwages from date of dismissal
to March 15, 1990 only;

5. The Baliwag Mahogany Corporation is hereby exonerated of the charge of unfair

labor practice;
6. The Baliwag Mahogany Corporation is directed to pay its employment the cash
equivalent of unused sick leaves for year 1989;
7. The Baliwag Mahogany Corporation is directed to remit to the Union the dues for
the month of January 1990.
SO ORDERED. (Rollo, pp. 68-69)
Such decision prompted the company to file a motion for reconsideration substantially on the ground
that public respondent seriously erred in not dismissing the employees particularly the union officers,
who participated in the illegal strike.
In its supplemental motion for reconsideration, the company contended that as a result of the strike,
it failed to meet the purchase orders for the quarter valued at fifteen million pesos.
Petitioners filed an opposition to the company's motion for reconsideration and subsequently a
supplemental comment/opposition to motion for reconsideration.
On December 13, 1990, the respondent Commission directed the Labor Arbiter to receive evidence
on the issues raised in the motion for reconsideration and additional evidence on the issues already
passed upon and to submit a report thereon.
On July 8, 1991, the respondent Commission rendered a resolution affirming with modification the
decision dated October 23, 1990, the dispositive portion of which provides as follows:
WHEREFORE, premises considered, the Decision of October 23, 1990 is hereby
MODIFIED, to wit:
1. The strike staged on February 6, 1990 is hereby declared illegal and the Union
officers/members who participated in said strike committed prohibited acts are
deemed to have lost their status of employment, to wit:
1. Cecile de Ocampo
2. Wilfredo San Pedro
3. Reynaldo Aguilar
4. Bren Medina (Bien Medina)
5. Cesar Abriol
6. Artemio Castro
7. Larry Alcantara
8. Melie Nocum (Michael Nocum)
9. Jesus Deo, Jr.
10. Publeo Darag
11. Eduardo Bino

12. Eduardo Vices (Eduardo Veles)

13. Abroin David (Ervin David)
14. Protacio Perez (Prostacio Perez)
15. Celso Sarmiento
16. Neol Vicbon (Noel Victor)
17. Alano Dacatimban (Eleno Dacatimban)
18. Antonio Bernardo
19. Carlito Victoria
20. Timoteo Mijares
21. Alex Ramos
22. Reynaldo Cruz
23. Modesto Manesia
24. Domingo Silarde
25. Renato Puertas
26. Hernando Legaspi
2. The Baliwag Mahogany Corporation is directed to pay Cecile de Ocampo, Rene
Villanueva and Marcelo Cruz separation pay computed at one month per year of
service in addition to one month pay as indemnification pay for lack of notice (Art.
283, Labor Code).
3. The Baliwag Mahogany Corporation is directed to pay Alex Ramos, Reynaldo
Cruz, Renato Puertas, Hernando Legaspi separation pay computed at one (1) month
per year of service in addition to backwages limited to six (6) months.
4. The Baliwag Mahogany Corporation is directed to reinstate but without backwages
all Union members not found herein to have committed prohibited acts nor found to
have accepted settlement from it nor have voluntarily left the Company for reasons of
their own.
5. All other findings in the questioned Decision are affirmed.
SO ORDERED. (Rollo, pp. 45-47)
Hence, this present petition raising three (3) issues, to wit:
1. Whether or not there is legal basis for declaring the loss of employment status by
petitioners on account of the strike in respondent Company.
2. Whether or not the dismissals of petitioners Cecile de Ocampo, Rene Villanueva,
and Marcelo dela Cruz from their positions by the company on the ground of
redundancy was done in good faith.
3. Whether or not respondent NLRC acted correctly in allowing respondent company
to submit additional evidence in support of its Motion for Reconsideration and in

giving credence to the said evidence despite the fact that the same were not newlydiscovered evidence as defined under the Rules of Court. (Rollo, p. 11)
After a careful review of the records of this case, the Court finds the petition devoid of merit.
Petitioners insist that there is no specific finding by the respondent commision regarding the
particular participation of the individual petitioners in the supposed acts of violence or commission of
prohibited acts during the strike such as denial of free ingress to the premises of the company and
egress therefrom as well as illegal acts of coercion during the February, 1990 strike.
The Solicitor General disagrees and claims that it is undisputed that the union resorted to illegal acts
during the strike arguing that private respondent's personnel manager specifically identified the
union officers and members who committed the prohibited acts and actively participated therein.
Moreover, the Solicitor General maintains that the illegality of the strike likewise stems from the
failure of the petitioners to honor the certification order and heed the return-to-work order issued by
the Secretary of Labor.
Answering this contention, the petitioners argued that their failure to immediately return to work was
not impelled by any malicious or malevolent motive but rather, by their apprehension regarding their
physical safety due to the presence of military men in the factory who might cause them harm.
The law on the matter is Article 264 (a) of the Labor Code, to wit:
Article 264. (a) Prohibited activities. (a)
No strike or lockout shall be declared after assumption of jurisdiction by the President
or the Minister or after certification or submission of the dispute to compulsory or
voluntary arbitration or during the pendency of cases involving the same grounds for
the strike or lockout.
Any worker whose employment has been terminated as a consequence of an
unlawful lockout shall be entitled to reinstatement with full backwages. Any union
officer who knowingly participates in an illegal strike and any worker or union officer
who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status: Provided, That mere participation of a
worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such
lawful strike.
The clear mandate of the aforequoted article was stressed in the case of Union of Filipro Employees
v. Nestle Philippines, Inc. (G.R. Nos. 88710-13, December 19, 1990, 192 SCRA 396, 411) where it
was held that a strike that is undertaken despite the issuance by the Secretary of Labor of an
assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the
second paragraph of Art. 264 of the Labor Code as Amended and the Union officers and members,

as a result, are deemed to have lost their employment status for having knowingly participated in an
illegal act.
Unrebutted evidence shows that the individual petitioners defied the return-to-work order of the
Secretary of Labor issued on February 15, 1990. As a matter of fact, it was only on February 23,
1990 when the barricades were removed and the main gate of the company was opened. Hence,
the termination of the services of the individual petitioners is justified on this ground alone.
Anent the contention that the respondent Commission gravely abused its discretion when it allowed
the presentation of additional evidence to prove the loss suffered by the company despite the fact
that they were mere afterthoughts and just concocted by the company, time and again, We
emphasize that "technical rules of evidence are not binding in labor cases. Labor officials should use
every and reasonable means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure, all in the interest of due process" (Philippine Telegraph
and Telephone Corporation v. National Labor Relations Commission, G.R. No. 80600, March 21,
1990, 183 SCRA 451, 457).
Turning to the legality of the termination of three (3) of the individual petitioners, petitioners contend
that the company acted in bad faith when it terminated the services of the three mechanics because
the positions held by them were not at all abolished but merely given to Gemac Machineries.
On the contrary, the company stresses that when it contracted the services of Gemac Machineries
for the maintenance and repair of its industrial machinery, it only adopted a cost saving and costconsciousness program in order to improve production efficiency.
We sustain respondent Commission's finding that petitioners' dismissal was justified by redundancy
due to superfluity and hence legal.
We believe that redundancy, for purposes of our Labor Code, exists where the services of an
employee are in excess of what is reasonably demanded by the actual requirement of the enterprise.
Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as over hiring of workers, decreased
volume of business, or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. The employer had no legal obligation to keep in
its PAYROLL more employees, than are necessary for the operation of its business. (Wiltshire File
Co., Inc. v. National Labor Relations Commission, G.R. No. 82249, February 7, 1991; 193 SCRA
665,672).
The reduction of the number of workers in a company made necessary by the introduction of the
services of Gemac Machineries in the maintenance and repair of its industrial machinery is justified.
There can be no question as to the right of the company to contract the services of Gemac
Machineries to replace the services rendered by the terminated mechanics with a view to effecting
more economic and efficient methods of production.
In the same case, We ruled that "(t)he characterization of (petitioners') services as no longer
necessary or sustainable, and therefore properly terminable, was an exercise of business judgment

on the part of (private respondent) company. The wisdom or soundness of such characterization or
decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so
long, of course, as violation of law or merely arbitrary and malicious action is not shown" (ibid, p.
673).
In contracting the services of Gemac Machineries, as part of the company's cost-saving program,
the services rendered by the mechanics became redundant and superfluous, and therefore properly
terminable. The company merely exercised its business judgment or management prerogative. And
in the absence of any proof that the management abused its discretion or acted in a malicious or
arbitrary manner, the court will not interfere with the exercise of such prerogative.
Well-settled is the rule that the factual findings of administrative bodies are entitled to great weight,
and these findings are accorded not only respect but even finality when supported by substantial
evidence (Family Planning Organization of the Philippines, Inc. v. National Labor Relations
Commission, G.R. No. 75987, March 23, 1992, p. 7citing Asian Construction and Development
Corporation v. National Labor Relations Commission, G.R. No. 85866, July 24, 1998, 187 SCRA
784, 787). Hence, the truth or the falsehood of alleged facts is not for this Court now to re-examine.
In the light of the foregoing considerations, it is clear that the assailed resolution of the respondent
Commission is not tainted with arbitrariness nor grave abuse of discretion.
ACCORDINGLY, the petition is DISMISSED for lack of merit and the resolution of the respondent
Commission dated July 8, 1991 is hereby AFFIRMED.
SO ORDERED.

C. COURT OF APPEALS
196. ST. MARTIN FUNERAL HOMES VS. NLRC
FACTS:
Private respondent alleges that he started working as Operations Manager of petitioner St. Martin
Funeral Home on February 6, 1995. However, there was no contract of employment executed between
him and petitioner nor was his name included in the semi-monthly payroll. On January 22, 1996, he was
dismissed from his employment for allegedly misappropriating P38,000.00. Petitioner on the other hand
claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner
of petitioner St.Martins Funeral Home and in January 1996, the mother of Amelita passed away, so the
latter took over the management of the business.
Amelita made some changes in the business operation and private respondent and his wife were no
longer allowed to participate in the management thereof. As a consequence, the latter filed a
complaint charging that petitioner had illegally terminated his employment. The labor arbiter rendered
a decision in favor of petitioner declaring that no employer-employee relationship existed between the
parties and therefore his office had no jurisdiction over the case.

ISSUE: WON the decision of the NLRC are appealable to the Court of Appeals.
RULING:
The Court is of the considered opinion that ever since appeals from the NLRC to the SC were
eliminated, the legislative intendment was that the special civil action for certiorari was and still is the
proper vehicle for judicial review of decisions of the NLRC. The use of the word appeal in relation
thereto and in the instances we have noted could have been a lapsus plumae because appeals by
certiorari and the original action for certiorari are both modes of judicial review addressed to the
appellate courts. The important distinction between them, however, and with which the Court is
particularly concerned here is that the special civil action for certiorari is within the concurrent
original jurisdiction of this Court and the Court of Appeals; whereas to indulge in the assumption that
appeals by certiorari to the SC are allowed would not subserve, but would subvert, the intention of the
Congress as expressed in the sponsorship speech on Senate Bill No. 1495.
Therefore, all references in the amended Section 9 of B.P No. 129 to supposed appeals from the NLRC
to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari
under Rule65. Consequently, all such petitions should henceforth be initially filed in the Court of
Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the
relief desired.

197. VELOSO VS. CHINA AIRLINES, LTD.

QUISUMBING, J.:

This special civil action for certiorari seeks to annul the resolution of the NLRC
promulgated on January 2, 1992 in NLRC NCR Case No. 00-07-02329-87, setting aside the
Decision of the Labor Arbiter that found private respondents guilty of unfair labor practice,
declared the dismissal of petitioner as illegal, and ordered petitioner's reinstatement with
backwages and damages.
Petitioner was employed as supervisor of the ticketing section at the Manila branch office of
respondent China Airlines Ltd. (CAL). At the ticketing section, petitioner was assisted by a
senior ticketing agent, Eleanor Go; and two ticketing agents, Julie Chua and Josephine
Lobendino.
On October 29, 1986, private respondent K.Y. Chang, then district manager of the Manila
branch office of CAL, informed petitioner that management had decided to temporarily close its
ticketing section in order to prevent further losses. Petitioner's three assistants were likewise
notified that they too will be temporarily laid off from employment effective October 30, 1986.
Thereafter, CAL decided to permanently close said ticketing section. Thus, on November 5,
1986, petitioner and her staff members were informed that their recent lay-off from employment

will be considered permanent, effective one month from receipt of such notice. A notice of said
retrenchment was filed with the labor department on November 11, 1986.
Later, petitioner was advised to claim her retirement pay and other benefits. Feeling
aggrieved, petitioner sent a letter to private respondent Chang assailing the validity of her
termination from the service.
On July 1, 1987, petitioner filed with the Arbitration Branch of NLRC a complaint
for unfair labor practice and illegal dismissal with prayer for reinstatement, payment of
backwages, damages and attorney's fees.[1]
In a decision dated June 8, 1990, the labor arbiter ruled in favor of petitioner and decreed as
follows:

"WHEREFORE, foregoing premises considered, judgment is hereby rendered as

follows:
(1) Declaring respondents CHINA AIRLINES , Inc. and K. Y. Chang guilty of unfair labor
practice and ordering them to cease and desist from further committing said acts or similar
acts of unfair labor practice/s;
(2) Declaring the dismissal of complainant Rebecca Veloso as illegal and ordering
respondents CHINA AIRLINES , Inc. and K. Y. Chang to reinstate her to her former
position, or to a substantially equivalent position, without loss of seniority rights and to pay
her, jointly and severally, backwages from the time she was effectively dismissed on October
29, 1986 until June 8, 1990, the date of this Decision and other benefits which she would
have had received had she not been illegally dismissed, in the amount as set forth below;
(3) Ordering respondents to pay, jointly and severally, complainant, within ten (10) days from
receipt of this Decision the total sum of FOUR MILLION THREE HUNDRED TWENTY
SIX THOUSAND FIVE HUNDRED TWENTY (P4,326,520.00) PESOS broken as follows:

(a) P731,560.00 - representing her back monthly salary in the amount of P16,440.00
from October 29, 1986 and every month thereafter until June 8, 1990, the date of
Decision;
(b) P65,760.00 - representing her 13 month pay in the amount of P16,440.00 per year for the
years 1986,1987, 1988 and 1989;
th

(c) P24,600.00 - representing her Mid-year bonus in the amount of P8,200.00 per
year for the years 1987, 1988 and 1989;

(d) P8,000.00 - representing the cash equivalent of her yearly medical

hospitalization benefits in the amount of P2,000.00 per year for the years 1986, 1987
and 1989;
(e) P6,600.00 - representing her monthly transportation allowance of P150.00 per
month beginning October 1986 and every month thereafter until June 6, 1990, the date
of this Decision;
(f) P2,000,000.00 - as moral damages;
(g) P1,000,000.00 - as exemplary damages
(h) P240,000.00 - as attorney's fees, and
(i) P10,000.00 - as litigation expenses.
(4) Further, respondent are hereby directed to show, within ten (10) days from receipt of this
decision, proof of compliance as to the reinstate aspect of this Decision as compulsorily
mandated under the Labor Code, as amended by Republic Act No. 6715.

SO ORDERED."[2]
Dissatisfied with the above judgment, private respondents appealed to the NLRC which in
its resolution dated January 2, 1992, set aside the decision of the labor arbiter. According to
public respondent, the charge of unfair labor practice had no factual and legal basis. It noted that
petitioner was not an elective officer of the union; and she was just an adviser with no formal
designation. The labor tribunal also observed that only those in the ticketing section were
affected by the retrenchment program and not one of the elective union officers were laid
off. Hence, public respondent declared that dismissing a union adviser while retaining all union
officers is far from any intent to bust the union. Accordingly, public respondent ruled that the
retrenchment was validly effected and disposed of the case as follows:

"WHEREFORE, the decision appealed from dated June 8, 1990, is hereby set
aside. The respondent are however directed to pay the complainant the sum of
P428,895.04 as her retrenchment pay.
SO ORDERED."[3]

[4]

Petitioner received copy of the aforesaid resolution of public respondent on January 7, 1992.
However, instead of filing the required motion for reconsideration, petitioner filed the instant

petition for certiorari. In doing so, petitioner boldly avers that a recourse to the NLRC via a
motion for reconsideration is futile and will only injure further her rights to a speedy and
unbiased judgment of the case. She did not expect the labor tribunal to rectify itself.
This precipitate filing of petition for certiorari under Rule 65 without first moving for
reconsideration of the assailed resolution warrants the outright dismissal of this case. As we
have consistently held in numerous cases,[5] a motion for reconsideration is indispensable, for it
affords the NLRC an opportunity to rectify errors or mistakes it might have committed before
resort to the courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law against acts of public respondent. [6] In this case,
the plain and adequate remedy expressly provided by law is a motion for reconsideration of the
impugned resolution, to be made under oath and filed within ten (10) days from receipt of the
questioned resolution of the NLRC, a procedure which is jurisdictional.[7] Hence, the filing of the
petition for certiorari in this case is patently violative of prevailing jurisprudence and will not
prosper without undue damage to the fundamental doctrine that undergirds the grant of this
prerogative writ.
Further, it should be stressed that without a motion for reconsideration seasonably filed
within the ten-day reglementary period, an order, decision or resolution of the NLRC, becomes
final and executory after ten (10) calendar days from receipt thereof.[8] Hence, the resolution of
the NLRC had become final and executory on January 17, 1992, insofar as petitioner is
concerned, because she admits under oath having received notice thereof [9] on January 7,
1992. The merits of her case may no longer be reviewed to determine if the public respondent
might be faulted for grave abuse of discretion, as alleged in her petition dated March 14,
1992. Thus, the court has no recourse but to sustain the respondent's position on jurisdictional
and other grounds, that the petition ought not be given due course and the case should be
dismissed for lack of merit.
WHEREFORE, the instant petition is hereby DISMISSED, and the RESOLUTION of
public respondent NLRC dated January 2, 1992, is hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Bellosillo (Chairman), Puno, Mendoza, and Buena, JJ., concur.

198. ASSOCIATION OF TRADE UNIONS VS. ABELLA

QUISUMBING, J.:
This special civil action for certiorari under Rule 65 of the Rules of Court assails the
resolution of the National Labor Relations Commission promulgated on May 17,
1991, which modified the decision of the labor arbiter.
Respondent company is a domestic corporation engaged in road construction projects
of the government. From 1968 to 1989, it engaged the services of the following
workers to work on various projects on different dates: Rodolfo Monteclaro
(mechanic), Edgar Juesan (painter), Victorio Lunzaga (tanker driver), Alfredo Jalet
(batteryman), Julito Macabodbod (trailer helper), Ramon Tabada (carpenter), Remsy,
Asensi (machinist), Armand Acero (helper mechanic), Lordito Tatad (painter helper),
Rogelio Tantuan (painter), Teodoro Tabio (checker), Gemudo Asejo (electrician),
Roland Olivar (latheman), Valeriano Mijas (driver), Jose Noval (welder), Felimon
Lagbao (mechanic), Pedro Roche (head welder), and Justiniano Sollano (carpenter).
Their contracts indicate the particular project they are assigned, the duration of their
employment and their daily wage.
[1]

[2]

[3]

[4]

In February 1989, the above-named workers joined petitioner union as members.

Accordingly, petitioner union filed a petition for certification election with the
regional office of the labor department. Respondent company opposed the petition on
the ground that the workers were project employees and therefore not qualified to
form part of the rank and file collective bargaining unit. Not for long, the Med-Arbiter
dismissed the petition for certification election. On appeal, the Secretary of Labor and
Employment reversed the Med-Arbiter's decision and ordered the immediate holding
of a certification election.
Meanwhile, the national president of petitioner union sent a demand letter to
respondent company seeking the payment of wage differentials to some affected union
members. As said demand was unheeded, petitioner union and the concerned workers
filed a complaint for payment of wage differentials and other benefits before the
Regional Office of the Department of Labor and Employment.
Shortly thereafter, respondent company terminated the employment of aforementioned
workers owing to the completion of its projects or the expiration of workers' contracts.

Respondent company explained the circumstances surrounding the separation of the

workers from the service as follows:
"(1) The Contract No. 2AIPD-C-10 Second Agusan Irrigation Project of
NIA wherein some of the herein complainants were assigned was already
98% completed when complaints were filed. With the near completion of
the contract, services of the following complainants were no longer
needed:
(a) Gerundio Asejo
(b) Victorio Lunzaga
(c) Ramon R. Tabada
(d) Alfredo E. Julet (sic)
(e) Julito C. Macabodbod
(2) In the case of Contract No. 2AIPD-C-II-second Agusan Irrigation
Project of NIA, the following complainants were terminated because of
the 95% completion of the phase of the project and expiration of their
contract of employment:
(a) Remsy B. Asensi
(b) Rolando G. Olivar
(c) Edgar A. Juezan
(d) Rodolfo G. Monteclaro
(e) Valeriano S. Meyas (sic)
(f) Jose F. Noval
(g) Pedro M. Roche
(3) In Contract Package R11 1/209, Davao del Norte, the contracts of
employment of Armand T. Acero and Felimon J. Dagbao (sic) Jr.
expired.
(4) In the Widening and Improvement of Rafael Castillo St., Davao City
Project, where complainant Teodoro Tabio was assigned, he was
terminated because he went on absent without leave (AWOL) while
Lordito Tatad's contract of employment expired."
[5]

However, the affected workers claim that they were dismissed because of their union
activities. In view of the alleged illegal dismissals and harassment by their employer,
the workers staged a strike on May 17, 1989. Upon complaint of respondent company,
Labor Arbiter Newton Sancho declared said strike illegal and decreed further that
Victorio Lunzaga, Alfred Jalet, Julito Macabodbod, Ramon Tabada and Remsy
Asensi, who had participated in the strike, were deemed to have lost their employment
status.
On appeal, the National Labor Relations Commission affirmed said decision.
Petitioner union then elevated the matter to this Court by way of petition
for certiorari which was eventually dismissed.
[6]

Meanwhile, the aggrieved workers filed with the Regional Arbitration Branch of the
NLRC their individual complaints against private respondent company for illegal
dismissal, unfair labor practice, underpayment of wages, 13th month pay, holiday pay
and overtime pay. They also sought reinstatement with back wages. The cases were
consolidated and assigned to Labor Arbiter Nicolas Sayon for arbitration. However,
noting that a similar case had been filed before the regional office of the labor
department, the labor arbiter refrained from resolving the issue of underpayment of
monetary benefits. He also found the charge of unfair labor practice untenable. But,
on the charge of illegal dismissal, he ruled on October 31, 1989, as follows:
"WHEREFORE in view of the foregoing, judgment is hereby rendered
declaring the dismissal of the following complainants illegal; namely:
1. Victorio C. Lunzaga
2. Julito C. Macabodbod
3. Alfredo E. Jalet
4. Gerundio F. Asejo
5. Ramon R. Tabada
"Respondent ALGON Engineering Construction Corporation and Alex
Gonzales and Edith Yap, are hereby ordered to reinstate the abovenamed complainants to their former positions without loss of seniority
rights plus six months backwages based on their latest salary rate at the
time of their dismissal, which is P65.00 per day equivalent to monthly

rate of P1,700.83, a total ofP 10,204.99 per complainant or in the total

amount of P51,024.95.
"The case of illegal dismissal filed by Armand Acero, Lordito Tatad,
Teodoro Tabio, Ramon Olivar, Valeriano Miyas, Jose Noval, Felimon
Lagbao, Pedro Roche, Remsy Asensi, Rodolfo Monteclaro, Edgar Juesan
and Justiniano Sollano are hereby ordered dismissed for lack of merit.
"SO ORDERED."

[7]

Petitioners and private respondents separately appealed the Labor Arbiters ruling to
the National Labor Relations Commission. Pending appeal, Edgar Juesan, Lordito
Tatad and Ramon Tabada filed their respective duly sworn affidavits of desistance and
motions to withdraw their complaints and money claims against private respondents.
Said motions were seasonably granted.
On May 17, 1991, the NLRC promulgated its resolution modifying the decision of
Labor Arbiter Nicolas Sayon. It held that the labor arbiter erred in not resolving the
issue of underpayment of wages because not all of the original complainants filed the
same money claims with the labor department. Thus, it awarded monetary benefits to
qualified workers. The NLRC disposed of the case as follows:
[8]

"Accordingly, the appealed decision is hereby modified as follows:

"1. Respondent ALGON Engineering Construction Corporation is
hereby ordered to pay the complainants hereinafter enumerated, the
following sums:
WAGE DIFFERENTIALS:
1. VALERIANO MIJAS
December 14, 1987 to April 15, 1989
419 days x P64.00/day . = P26,816.00
Less:
December 14, 1987 to April 15, 1989
419 days x P61.00/day . = P25,559.00

TOTAL. . .
= P 1,257.00
SERVICE INCENTIVE LEAVE PAY:

1) RAMSI ASENSI
5 days x P64.00 . . .= P320.00
2) VICTORIO LUNZAGA
10 days x P64.00 . . = 640.00
5 days x 53.00 . . .= 265.00
P905.00
3) JULIETO MACABODBOD
10 days x P64.00 . . = P640.00
5 days x
53.00 . . .= .265.00..P905.00
4) GERONIMO ASEJO
10 days x P64.00 . . = 640.00
5 days x
53.00 . . .= .265.000..P905.00
5) ALFREDO JALET
10 days x P64.00 . . = 640.00
5 days x 53.00 . . .=. 265.00
P905.00
6) VALERIANO MIJAS
10 days x P64.00 . . = 640.00
5 days x
53.00 . . .= . 265.00 . P905.00

7) PEDRO ROCHE
5 days x P64.00 . . .= 320.00
8) RODOLFO MONTECLARO
5 days x P64.00 . . .= 320.00
13th MONTH PAY:
1) RAMSI ASENSI
26 days x P64.00 x 10 mos. =
P16,640.00 x 1/12 . = P1,386.67
2) VICTORIO LUNZAGA
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
3) JULIETO MACABODBOD
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
4) GERONIMO ASEJO
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
5) ALFREDO JALET
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
6) VALERIANO MIJAS
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00

7) PEDRO ROCHE
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = P1,664.00
8) RODOLFO MONTECLARO
26 days x P64.00 x 12 mos. =
P19,968.00 x 1/12 . = Pl,664.00
9) JOSE NAVAL
26 days x P64.00 x 3 mos. =
P4,992.00 x 1/12 . = P 416.00
"2. The complaints of Edgar Juezon (sic), Lordito Tadtad and Ramon
Tabada are hereby dismissed as prayed for by said complainants.
"3. The complainants for illegal dismissal filed by Victorio Lunzaga
(Lonzaga) and Alfredo Jalet (Jalit) are hereby dismissed for having been
rendered moot and academic by Our decision in Case No. RAB-11-0500352-89.
"4. The complaints of Macabodbod and Asejo for illegal dismissal are
hereby DISMISSED for lack of merit.
"5. The charge of unfair labor practice is hereby dismissed for lack of
merit.
"SO ORDERED."

[9]

As noted by the Solicitor General, private respondents filed their motion for
reconsideration, which was denied. We find, however, that herein petitioners did not
move for reconsideration, as the petition did not so indicate and none appears on the
records before us.
[10]

Filing a petition for certiorari under Rule 65 without first moving for reconsideration
of the assailed resolution generally warrants the petition's outright dismissal. As we
consistently held in numerous cases, a motion for reconsideration by a concerned
[11]

party is indispensable for it affords the NLRC an opportunity to rectify errors or

mistakes it might have committed before resort to the courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy
and adequate remedy in the ordinary course of law against acts of public respondents.
Here, the plain and adequate remedy expressly provided by law was a motion for
reconsideration of the impugned resolution, based on palpable or patent errors, to be
made under oath and filed within ten (10) days from receipt of the questioned
resolution of the NLRC, a procedure which is jurisdictional. Further, it should be
stressed that without a motion for reconsideration seasonably filed within the ten-day
reglementary period, the questioned order, resolution or decision of NLRC, becomes
final and executory after ten (10) calendar days from receipt thereof. Moreover, even
if procedural lapses were to be set aside, we find no cogent reason sufficient to justify
a departure from public respondent's decision, as hereafter elucidated.
[12]

[13]

[14]

In this recourse, petitioners impute the following errors on the part of public
respondent:
[I]
"THAT THE HONORABLE COMMISSION ERRED IN HOLDING
THAT THE DISMISSAL OF FIVE COMPLAINANTS WERE
JUSTIFIED IN VIEW OF THE FACT THAT THEIR COMPLAINT
HAVE BEEN RENDERED MOOT AND ACADEMIC BY ITS
DECISION IN CASE NO. RAB-O5-00353-89.
[II]
THAT HONORABLE COMMISSION AGAIN ERRED IN
DISMISSING THE COMPLAINT OF THE COMPLAINANTS
MACABODBOD AND ASEJO FOR LACK OF MERIT.
[III]
THE HONORABLE COMMISSION SERIOUSLY ERRED IN
AFFIRMING THE DECISION OF THE LABOR ARBITER
DISMISSING PETITIONER'S CHARGE OF UNFAIR LABOR
PRACTICE AGAINST THE RESPONDENT CORPORATION.

[IV]
QUESTION OF LAW."

[15]

In petitions for certiorari under Rule 65 of the Rules of Court, it may be noted that
"want of jurisdiction" and "grave abuse of discretion," and not merely reversible
error, are the proper grounds for review. The respondent acts without jurisdiction if he
does not have the legal authority to decide a case. There is excess of jurisdiction if the
respondent, having the power to determine the case, oversteps his lawful authority.
And there is grave abuse of discretion where the respondent acts in a capricious,
whimsical, arbitrary or despotic manner, in effect equivalent to lack of jurisdiction.
Here, petitioners neither assail the jurisdiction of public respondent nor attribute any
grave abuse of discretion on the part of the labor tribunal. Necessarily, this petition
must fail, for lack of substantial requisites under Rule 65.
[16]

[17]

Nevertheless, if only to cast aside all doubts for the benefit of the concerned workers,
we assayed into the merits of the case. As properly stated by the Solicitor General, the
point of inquiry here is whether petitioners areregular or project employees of
respondent company.
The Labor Code defines regular, project and casual employees as follows:
"ART 280. Regular and Casual Employment. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
And employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in

which he is employed and his employment shall continue while such

activity exists." (Italics supplied.)
Thus, regular employees are those who have been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer even
if the parties enter into an agreement stating otherwise. In contrast, project
employees are those whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time
of the engagement of the employee, or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
[18]

[19]

Furthermore, Policy Instruction No. 20, which was in force during the period of
petitioners' employment, stated:
[20]

"Project employees are those employed in connection with a particular

construction project. Non-project (regular) employees are those
employed by a construction company without reference to any particular
project.
Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of projects
in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain clearance from the
Secretary of Labor in connection with such termination. What is required
of the company is report to the nearest Public Employment Office for
statistical purposes."
In the case at bar, the contracts of employment of the petitioners attest to the fact that
they had been hired for specific projects, and their employment was coterminous with
the completion of the project for which they had been hired. Said contracts expressly
provide that the workers' tenure of employment would depend on the duration of any
phase of the project or the completion of the awarded government construction
projects in any of their planned phases. Further, petitioners were informed in advance
that said project or undertaking for which they were hired would end on a stated or
determinable date. Besides, public respondent noted that respondent company
regularly submitted reports of termination of services of project workers to the

regional office of the labor department as required under Policy Instruction No. 20.
This compliance with the reportorial requirement confirms that petitioners were
project employees.
Considering that petitioners were project employees, whose nature of employment
they were fully informed about, at the time of their engagement, related to a specific
project, work or undertaking, their employment legally ended upon completion of said
project. The termination of their employment could not be regarded as illegal
dismissal.
WHEREFORE, the instant petition is DISMISSED, and the assailed RESOLUTION
of respondent NLRC dated May 17, 1991, is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

199. PHILIPPINE AIRLINES, INC. VS. NLRC

QUISUMBING, J.:
This special civil action for certiorari seeks to annul the Decision of National
Labor Relations Commission (NLRC) promulgated on June 20, 1996, in NLRC
NCR Case No. 00-05-04118-94, and its Resolution dated September 12,
1996, which denied petitioner's motion for reconsideration.
On January 19, 1993, private respondent Marcelito Pescante and another PAL
employee, Edgar Vicente, were assigned to handle petitioner's flight PR 841
bound for Cebu as load controller and check-in clerk, respectively. As load
controller, private respondent's main task is to manifest the baggage of
passengers with reference to their respective weights and to determine the
proper LOAD BALANCE of the aircraft. As check-in clerk, Vicente's duty is to
check-in the passengers and place the corresponding tags on their luggage.
The check-in clerk takes down the weight of the passenger's baggage, then
reflects the same on the tickets that are eventually passed on to the load

controller who uses the same as the basis in determining the load of the
aircraft. As a policy, load controllers are prohibited from assisting in the
checking-in of passengers to prevent collusion with the check-in clerks.
On that same day, a passenger named Myla Cominero checked in for the
flight. She was escorted by Sgt. Jose Tompong, the police assistance officer
assigned at the domestic airport. The events of that day were best narrated by
Sgt. Tompong, in his statement dated January 25, 1993, submitted by both
parties as their common evidence.
"Q. Can you recall any incident that happened last January 19,
1993...?
A.
There was no unusual incident, except [that] a certain
woman who [greeted] me ... she presented to me her ticket. At
this point, I guided her [to] the Check-in Counter. Later, I came to
know her as Ms. Cominero.
Q.

Upon reaching the check-in counter, what happened? Esmsc

A.
She presented her ticket to CIC Pelayo and when asked
how many pieces of baggage she was carrying, she said, seven
pieces of baggage.
Q.
Did you see the seven (7) pieces of baggage [checked-in]
by said passenger?
A.
Yes, when CIC Pelayo was about to check-in her baggage,
preparing the seven pieces of baggage tags, CIC Edgar Vicente
arrived and said Ako na ang bahala diyan.
Q.

What happened next?

A.
After the weighing of baggage, Ed Vicente talked to the
passenger because the weight of her seven (7) pieces of baggage
was more than 100 kgs.
Q.

What did you hear about (sic) their conversation?

A.
Sabi ni Ed, magbabayad ka rito ng more than P1,000.00,
kaya bale kinontrata na niya ang pasahero at ako ay lumayo na
sa counter.
Q.

What happened next?

A.
Noong bumalik ako sa ENTRANCE GATE , sabi sa akin ng
pasahero, Kuya, pakibigay mo nga itong pera doon sa kausap
kong lalaki na nag check in sa akin.
Q.

What did you answer?

A.
Tinanong ko kung para saan ito at ang sabi niya para doon
sa excess baggage ko. Nakatipid ako ng kaunti.
Q.

Magkano naman ang pera na ibinigay sa iyo?

A.

Naka roll ang pera at nalaman kong isang libo (Pl,000.00)

xxx

Q.
Ano naman ang ginawa mo sa pera na [ibinigay] sa iyo ng
pasahero?
A.
Noong mga 1500H na, kinuha sa akin in Ed Vicente ang
pera.
Q.

Saan mo banda ibinigay ang pera?

A.
Doon[,] malapit sa telephone booth ng terminal 2.
Pagkatapos nalaman ko nahuli pala ang pasahero bumalik at
sumakay sa eroplano.
Q.
Noong sinamahan mo ang pasahero na mag check-in sa
counter, may dala ba siyang ibang ticket or kaya ay may mga
kasama? Esmmis
A.
Nag check[-]in ang nasabing pasahero at walang kasama
at isang ticket ang hawak na inabot kay Ed Vicente.

Q.
Ayon sa aking pagtatanong, nasa iyo daw ang pera noong
hindi dumating ang pasahero sa eroplano noong boarding time
na, tutoo ba ito?
A.
Hindi po tutuo iyan. Kung sa akin ang pera, bakit si Ed
Vicente ang nag-atubiling magbayad ng excess charges ng
pasahero ng malaman niyang bulilyaso na. At ang masama rito ay
tinuruan pa ako in Ed na gumawa ng scenario.
Q.

Anong klaseng scenario?

A.
Sabihin ko raw na humingi ng tulong sa akin si Ms.
Cominero para hanapan ng pasaherong walang bagahe.
Q.

Ano naman ang sagot mo?

A.
Sinabi ko Pare huwag. Kasi hindi ko naman ito ginawa at
pati ako isasabit pa ninyo diyan.
Q.
Okay wala na akong itatanong. Mayroon ka bang gustong
sabihin sa pagtatanong na ito?
A.
Ang masasabi ko lang po ay ito. Kaya ako nagbigay ng
statement ay sa kadahilanan na nais kong bigyan ng katarungan
ang aking pangalan."
[1]

It appears that Vicente reflected a lighter weight of baggage on Cominero's

ticket to make it appear that the same was within the allowable level.
Cominero's excess baggage was pooled with other passengers with lesser
baggage weight or no baggage at all. After checking-in, Cominero left.
On boarding time, Cominero failed to show up. Hence, preparations were
made to off-load her baggage. A check with the passenger manifest prepared
by private respondent showed that Cominero was presumably travelling with
three companions since her ticket was pooled with boarding passes numbers
fifteen (15) to seventeen (17). To verify whether Cominero was taking the flight
or not, PAL ramp agent Danilo Baniqued talked to Cominero's supposed
travelling companions. But to his surprise, all denied knowmg Cominero.

Then, Cominero arrived during the final call for boarding and before the actual
off-loading of her baggage. When questioned, Cominero insisted that she had
paid one thousand (P1,000.00) pesos as excess baggage charges at the
check-in counter although she was not issued any receipt. Informed of this
incident, the duty manager instructed the station control to call Cebu to
intercept Cominero and collect the corresponding excess baggage fee.
Thereafter, an investigation was conducted. Es-mso
When the anomaly was discovered, Vicente hastily went to the cashier, Loreto
Condez, to pay the excess baggage fee. Condez' statement submitted by both
parties as their common evidence, attests to these events:
"20 Jan. '9[3]
To

: Atty. R. Neri

From : L. B. Condez
Subject

: Handling Details of Issuance

EBT # 2834095-5 PR 841 19 Jan. '93

1. That on or about 5:30 in the afternoon, Mr. Ed Vicente handed me a
piece of paper indicating five pieces of bge weighing 88 kilos minus 18
kilos, 70 kilos excess bge. The amount of P983.50 paid to me by Ed
Vicente.
2. I instructed Ed Vicente to get the flight coupon and indicate the
number of pieces, weight, bge tag number. When he presented [the]
ticket taken from the LCC room, that was the only time I issued EBT.
3. Submitted as requested.
SIGNED
Loreto B. Condez
20 Jan. 93"

[2]

Despite said payment by Vicente in the amount of P983.50 representing

excess baggage, Cominero further paid the sum of P672.95 representing her
excess baggage fee upon arrival in her port of destination in Cebu. Ms-esm
In his report dated January 23, 1993, Vicente implicated private respondent in
the aforementioned anomaly. He explained that:
"9. I was in this situation sensing something is wrong, when LCP
Pescante approached me and told me the best thing for me to do
is to call his friend in Cebu with a name Buloy Benabaye also an
LCD to intercept said passenger because he learned that those
baggage will be withheld in Cebu until further questioning of said
passenger. I immediately followed him because I was at a loss on
what to do ... I called up Cebu ... and learned said LCD is on off
duty. ... I realized that there was no sense in calling the person
since he is not involve[d] with the situation.
10. When I was about to go back to the counter, he approached
me again and suggested that the last resort I could (sic) do is that
he will get the money from the one in white polo barong. After a
few minutes, he came with PASCOM Sgt. Tompong and then he
handed me P 1,000.00. He asked me to have It issued an Excess
Baggage Receipt ."
[3]

In addition, CSA Alfredo Pelayo submitted a written explanation dated

February 22, 1993 regarding the incident, which reads:
"2. When I was at the Cebu check-in counter PNP Sgt. Tompong
approached the counter and presented a ticket. I noticed LCD
Brando Pescante standing beside me at the counter and told me
to please check-in the ticket, ...Then LCD Pescante told me Sige
na pare, okay lang yan and then I responded Ayoko nga and
then he told me (LCD Pescante) Pare, ang laki naman yata ng
daga mo sa dibdib. (pointing to my chest). And then I insisted,
'Pagsinabi kong ayoko, AYOKO!. Then he said 'O sige, di bale na
lang pare...."

3. I was standing at the Cashier's counter when I heard Mr.

Pescante calling CIC Ed Vicente who was at the moment
checking in passengers at the other end of the counter at the
Davao check in counter. He yelled, "Ed, sandali lang pare!" and
Mr. Vicente responded "Sandali lang, pare!" And after a few
minutes he (Vicente) went to Mr. Pescante's call."
[4]

On January 29, 1993, petitioner filed an administrative case against private

respondent and Vicente with "fraud against the company" as defined under
petitioner's Code of Discipline. Accordingly, private respondent and Vicente
submitted their respective affidavits in answer to the charge. After several
hearings, both were found guilty as charged and were meted the penalty of
dismissal from the service. Private respondent elevated his case to
petitioner's Step III Grievance, but the same was denied. E-xsm
[5]

[6]

On May 27, 1994, private respondent filed before the labor arbiter, a complaint
for illegal dismissal with prayer for reinstatement and payment of backwages,
damages and attorney's fees. On July 31, 1995, the labor arbiter ruled that
private respondent had direct involvement in the illegal pooling of baggage,
which is a scheme to obtain secret profits for himself and that such act of
attempting to defraud petitioner of its revenues warranted the termination of
private respondent from the service. The labor official thus decreed:
"WHEREFORE, foregoing premises considered, the complaint is,
as it is hereby DISMISSED for lack of merit and the dismissal of
the complaint is declared to be for a valid and for just and lawful
cause.
However, since complainant has served the respondent company
for almost eight (8) years without adverse records and on ground
of equitable consideration, we hereby adjudge an award of
P5,000.00 by way of financial assistance.
SO ORDERED."

[7]

Dissatisfied with the decision, private respondent appealed to the NLRC,

which in its assailed decision dated June 20, 1996, reversed the labor arbiter's

decision. In justifying the reversal, the NLRC declared that the alleged
defrauding of petitioner's excess baggage revenue was not the handiwork of
private respondent. The labor tribunal further held that petitioner failed to
show that it suffered losses in revenues as a consequence of private
respondent's questioned act. It then disposed of the case as follows:
"WHEREFORE, in view of the foregoing considerations, the
Decision appealed from is hereby set aside and another one
entered reinstating the complainant with full backwages less
earnings elsewhere, if any.
SO ORDERED."

[8]

Its motion for reconsideration having been denied, petitioner filed the instant
petition before us, raising the following issues:
-I-

"WHETHER OR NOT THE FINDING OF PUBLIC RESPONDENT

NLRC THAT "THE DEFRAUDING OF RESPONDENT COMPANY
OF EXCESS BAGGAGE REVENUE WAS NOT THE
HANDIWORK OF THE HEREIN COMPLAINANT" IS
SUPPORTED BY EVIDENCE ON RECORD. Ky-le
-II-

WHETHER OR NOT PUBLIC RESPONDENT WAS LEGALLY

JUSTIFIED IN DISREGARDING AND GIVING NO PROBATIVE
VALUE TO THE STATEMENTS OF ED VICENTE AND ALFRED
PELAYO.
-III-

WHETHER OR NOT MATERIAL DAMAGE IS NECESSARY FOR

THE VALIDITY AND LEGALITY OF DISMISSAL DUE TO LOSS
OF TRUST AND CONFIDENCE.
-IV-

WHETHER OR NOT PUBLIC RESPONDENT WAS JUSTIFIED

IN ORDERING THE REINSTATEMENT OF PRIVATE
RESPONDENT WITH FULL BACKWAGES."
[9]

More appropriately phrased, the issue for our consideration is whether or not
the NLRC committed grave abuse of discretion in reversing and setting aside
the labor arbiter's decision finding private respondent's dismissal to be valid
and for just cause.
To begin with, we reiterate the rule that in certiorari proceedings under Rule
65, this Court does not assess and weigh the sufficiency of evidence upon
which the labor arbiter and public respondent NLRC based their decisions.
Our query is limited to the determination of whether or not public respondent
acted without or in excess of jurisdiction or with grave abuse of discretion in
rendering the assailed decisions. But when the findings of the NLRC
contradict those of the labor arbiter, this Court, in the exercise of its equity
jurisdiction, must of necessity review the records of the case to determine
which findings should be preferred as more conformable to the evidentiary
facts, as in this case.
[10]

[11]

The core of petitioner's evidence against private respondent is the incident

report of Vicente and the written explanation of Pelayo. Unfortunately,
Vicente's report was not accorded PROBATIVE value by the public
respondent on the ground that Vicente appears to be the real and actual
culprit. Similarly, Pelayo's statement was not given credence on the belief that
it was biased. We think, public respondent gravely erred on this point. Ky-calr
It is erroneous to discredit the statement of Vicente just because he appears
guilty too. Rather, Vicente's declaration must be weighed side by side the
testimonies of other witnesses regarding the incident. As to Pelayo's
statement, it should not be considered biased in the absence of proof showing
that the declarant was actuated by ill motive. Save for his bare denials, private
respondent did not give any plausible reason, much less presented evidence,
to show that his co-workers were moved by ill will in testifying against him.
Verily, the testimonies of persons not shown to be harboring any motive to
depose falsely against an employee must be given due credence, particularly

where no rational motive is shown why the employer would single out private
respondent for dismissal unless the latter were truly guilty of serious offense.

[12]

That the statements of Vicente and Pelayo are credible is shown by the fact
that these are replete with essential details, which interlock with the
declarations of other witnesses. Thus, Sgt. Tompong declared that at around 5
p.m. private respondent retrieved from him the money earlier given by Vicente
because a problem cropped up. Next, another PAL employee, Irene Cancio in
her sworn statement, asserted that private respondent ordered the alterations
in the flight coupons so as to reflect the true charges on excess baggage of
Cominero. Then, Condez averred that Vicente paid the excess baggage fee of
Cominero long after the aircraft had departed, after which, private respondent
ordered Vicente to PHOTOCOPY the excess baggage receipt and send a
copy to Cebu via flight PR 839.
In the case at bar, there is substantial evidence showing that private
respondent had direct involvement in the illegal pooling of baggage. First,
private respondent urged Pelayo to check-in Cominero by proxy. Failing to
convince Pelayo, he chided the latter by saying "Pare ang laki naman yata ng
daga mo sa dibdib", and then called Vicente who in turn willingly cooperated
in checking-in Cominero. Second, when the anomaly was uncovered, private
respondent approached Sgt. Tompong and said, "Sarge, pakibalik mo na lang
ang pera dahil mayroon itong problema". Third, private respondent handed
the money amounting to P1,000.00 to Vicente, which the latter used to pay
the excess baggage fee. Fourth, private respondent instructed Vicente to call
a fellow load controller in Mactan airport to intercept Cominero and fix the
matter. Fifth, private respondent did not report the matter to his supervisors
although it is the practice whenever one is confronted with situation of the
same nature. Calr-ky
Surely, had the irregularity not been accidentally discovered, private
respondent would have enriched himself at the expense of petitioner. Worth
mentioning at this point is the failure of the private respondent to refute the
oral testimony of Vicente during the clarificatory hearing on March 25, 1993,
conducted by the Administrative Panel, which convincingly shows the actual
participation of the private respondent in the commission of fraud against the
petitioner.

Obviously, private respondent's act is inexcusable as it constitutes a serious

offense under petitioner's Code of Discipline, which reads:
"Section 2. Fraud against the Company
Any employee who makes a false or fraudulent claim against the
company, or knowingly initiates or takes part in any action
intended to defraud the Company or to obtain a payment,
benefit or gain from the Company to which he is not
entitled, or knowingly honors a forged signature for his own
benefit or that of another person; or gives due course or approval
to a document knowing it to be false erroneous shall suffer the
penalty of dismissal." (Emphasis supplied)
[13]

The fact that petitioner failed to show it suffered losses in revenue as a

consequence of private respondent's questioned act is immaterial. It must be
stressed that actual defraudation is not necessary in order that an employee
may be held liable under the aforequoted rule. That private respondent
attempted to deprive petitioner of its lawful revenue is already tantamount to
fraud against the company, which warrants dismissal from the service.
Since private respondent's dismissal was for just and valid cause, the order of
public respondent for the reinstatement of private respondent with award of
backwages has no factual and legal basis. Neither could we allow the award
of P5,000.00 as financial assistance on equitable consideration as decreed by
the labor arbiter. As we have consistently held in previous cases, such
monetary award is justified only in those instances where the employee is
validly dismissed for causes other than serious misconduct or those adversely
affecting his moral character. Thus, if the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like
theft, fraud, falsification or illicit sexual relations with a fellow worker,
separation pay or financial assistance, or by whatever other name it is called,
may not be allowed. Me-sm
[14]

WHEREFORE, the petition is GRANTED. The assailed Decision of NLRC is

hereby SET ASIDE. Accordingly, the Decision of the Labor Arbiter is

REINSTATED with MODIFICATION in that the award therein of P5,000.00

financial assistance is deleted for lack of factual and legal basis.
SO ORDERED.

200. MC ENGINEERING, INC. VS. NLRC

This is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Resolution [1] of the Court of Appeals dated
December 27, 1999 in CA-G.R. SP No. 56298 and its subsequent Resolution [2] dated
March 3, 2000 denying petitioners motion for reconsideration thereto. The December
27, 1999 Resolution of the Court of Appeals dismissed petitioners Petition for
Certiorari[3] dated December 17, 1999 for failure to comply with the requirements
regarding the certification of non-forum shopping and explanation of service by
registered mail.
The facts of the case are as follows:
Petitioner Hanil Development Co., Ltd. (hereinafter Hanil) is the overseas
employer of all contract workers deployed by petitioner MC Engineering, Inc.
(hereinafter MCEI) under a Service ContractAgreement between the two
petitioners. Contract workers deployed by MCEI for Hanil for overseas work enter
into an employment contract with MCEI in accordance with the terms and conditions
set forth by Philippine Overseas Employment Administration (hereinafter POEA)
Regulations and the Service Contract Agreement between MCEI and Hanil [4].
On 18 September 1992, private respondent Aristotle Baldameca entered into an
Employment Agreement[5] with MCEI for deployment as a PLUMBER IN Tabuk,
Saudi Arabia. He commenced working for petitioner Hanil in Saudi Arabia on
September 21, 1992. The contract was for a term of twelve (12) months.
For some reason, private respondent was not able to finish the full term of his
contract and he was repatriated back to Manila on January 19, 1993. On October 19,
1993, private respondent filed a complaint with the POEA against petitioners for
illegal dismissal. In his complaint, private respondent prayed for the payment of his

salaries for the unexpired portion of his employment agreement and the
reimbursement of his AIRFARE [6].
In March of 1996, the case was referred to the National Labor
Relations Commission (hereinafter NLRC) Arbitration Division as by then it was
this agency which had jurisdiction over private respondents complaint by virtue of
Republic Act 8042, the Migrant Workers and Overseas Filipinos Act of 1995. After
the submission of position of papers, the labor arbiter assigned to the case rendered a
decision[7] dated April 27, 1998 in favor of private respondent. In this decision, the
labor arbiter held petitioners MCEI and Hanil jointly and severally liable to private
respondent in the amount of US$2,500.00 and 10% of the cash award as and by way
of attorneys fees.
The decision of the labor arbiter was appealed to the NLRC by petitioners on June
15, 1998. However, this appeal was dismissed by the NLRC in a Resolution [8] dated
February 26, 1999. The motion for reconsideration filed by petitioners was likewise
denied by the NLRC in its Order[9] dated September 28, 1999.
On December 17, 1999, petitioners filed a petition for certiorari with the Court of
Appeals questioning the above Resolution and Order of the NLRC. However, the
Court of Appeals dismissed the petition filed by petitioners in a Resolution [10] dated
December 27, 1999. The full text of the resolution is as follows:
The instant Petition for Certiorari is fatally defective for two (2) reasons: (1) there is
no certification against forum shopping by co-petitioner Hamil Development Co.,
Ltd.; and (2) there is no written explanation why the service of the pleading was not
done personally (Section 3, Rule 46 and Section 11, Rule 13, 1997 Rules of Civil
Procedure).
WHEREFORE, the instant Petition for Certiorari, having failed to comply with the
requirement of the Rules, as aforesaid, is DISMISSED outright.
SO ORDERED.
Petitioners filed a Motion for Reconsideration from this December 27, 1999
Resolution but this was denied by the Court of Appeals in a Resolution [11] dated March
3, 2000.

Hence, the recourse by petitioners to this Court where they raise, among other
issues, the propriety of the dismissal of their petition for certiorari by the Court of
Appeals on the grounds of non-compliance with the requirements of non-forum
shopping and lack of explanation of service by registered mail.
With respect to the first ground for the dismissal of the petition by the appellate
court, the requirement regarding the need for a certification of non-forum shopping in
original cases filed before the Court of Appeals and the corresponding sanction for
non-compliance thereto is found in Section 3, Rule 46 of the 1997 Rules of Civil
Procedure. Said section, in pertinent part, provides as follows:
Rule 46, Sec. 3. Contents and filing of petition; effect of non-compliance with
requirements.
XXX
The petitioner shall also submit together with the petition a sworn certification that he
has not theretofore commenced any other involving the same issues in the Supreme
Court, the Court of Appeals or different divisions thereof, or any other tribunal or
agency; if there is such other action or proceeding, he must state the status of the
same; and if he should thereafter learn that a similar action or proceeding has been
filed or is pending before the Supreme Court, the Court of Appeals, or different
divisions thereof, or any other tribunal or agency, he undertakes to promptly inform
the aforesaid courts and other tribunal or agency thereof within five (5) days
therefrom.
XXX
The failure of the petitioner to comply with any of the foregoing requirements shall be
sufficient ground for the dismissal of the petition.
In the case at bar, the petition for certiorari filed by petitioners before the Court of
Appeals contains a certification against forum shopping [12]. However, the said
certification was signed only by the corporate secretary of petitioner MCEI. No
representative of petitioner Hanil signed the said certification. As such, the issue to be
resolved is whether or not a certification signed by one but not all of the parties in a
petition constitutes substantial compliance with the requirements regarding the
certification of non-forum shopping.

The rule quoted above requires that in all cases filed in the Court of Appeals, as
with all initiatory pleadings before any tribunal, a certification of non-forum shopping
signed by the petitioner must be filed together with the petition. The failure of a
petitioner to comply with this requirement constitutes sufficient ground for the
dismissal of his petition. Thus, the Court has previously held that a certification not
attached to the complaint or petition or one belatedly filed [13] or one signed by counsel
and not the party himself[14] constitutes a violation of the requirement which can result
in the dismissal of the complaint or petition.
However, with respect to the contents of the certification, the rule of substantial
compliance may be availed of. This is because the requirement of strict compliance
with the provisions regarding the certification of non-forum shopping merely
underscores its mandatory nature in that the certification cannot be altogether
dispensed with or its requirements completely disregarded. [15] It does not thereby
interdict substantial compliance with its provisions under justifiable circumstances. [16]
In the case at bar, the Court of Appeals should have taken into consideration the
fact that petitioner Hanil is being sued by private respondent in its capacity as the
foreign principal of petitioner MCEI. It was petitioner MCEI, as the local private
employment agency, who entered into contracts with potential overseas workers on
behalf of petitioner Hanil.
It must be borne in mind that local private employment agencies, before they can
commence recruiting workers for their foreign principal, must submit with the POEA
a formal appointment or agency contract executed by the foreign based employer
empowering the local agent to sue and be sued jointly and solidarily with the principal
or foreign-based employer for any of the violations of the recruitment agreement and
contract of employment.[17] Considering that the local private employment agency may
sue on behalf of its foreign principal on the basis of its contractual undertakings
submitted to the POEA, there is no reason why the said agency cannot likewise sign
or execute a certification of non-forum shopping for its own purposes and/or on behalf
of its foreign principal.
It must likewise be stressed that the rationale behind the requirement that the
petitioners or parties to the action themselves must execute the certification of nonforum shopping is that the said petitioners or parties are in the best position to know
of the matters required by the Rules of Court in the said certification. [18] Such

requirement is not circumvented and is substantially complied with when, as in this

case, the local private employment agency signs the said certification alone. It is the
local private employment agency, in this case petitioner MCEI, who is in the best
position to know of the matters required in a certification of non-forum shopping.
Concerning the second ground for the appellate courts decision, Section 11, Rule
13 of the 1997 Rules of Civil Procedure provides:
Sec. 11. Priorities in modes of service and filing. Whenever practicable, the service
and filing of pleadings and other papers shall be done personally. Except with respect
to papers emanating from the court, a resort to other modes must be accompanied by a
written explanation why the service or filing was not done personally. A violation of
this rule may be cause to consider the paper as not filed.
Pursuant to this section, service and filing of pleadings and other papers must,
whenever practicable, be done personally. If they are made through other modes, the
party concerned must provide a written explanation as to why the service or filing was
not done personally. To underscore the mandatory nature of this rule requiring
personal service whenever practicable, Section 11 of Rule 13 gives the court the
discretion to consider a pleading or paper as not filed if the other modes of service or
filing were resorted to and no written explanation was made as to why personal
service was not done in the first place. [19]
In the instant case, it is not disputed that petitioners Petition for Certiorari filed in
the Court of Appeals did not contain an explanation why resort was made to other
modes of service of the petition to the parties concerned. In the exercise of its
discretion granted under Section 11 of Rule 13, the Court of Appeals considered the
same as not having been filed and dismissed the petition outright.
Petitioners, in this petition for review on certiorari, do not give a reason why their
petition before the Appellate Court was not accompanied by an explanation why they
resorted to other modes of service as required by the rules. Instead, they argue that
there has been substantial compliance with the requirements of the rule as the petition
contains the required affidavit of service that shows that the petition has indeed been
served on the parties concerned. Moreover, petitioners claim that their failure to
indicate an explanation was a purely technical error which does not call for an outright
dismissal of the petition. Citing the oft-quoted doctrine laid down in Alonso vs.

Villamor[20], they argue that technicality, when it deserts its proper office as an aid to
justice and becomes its great hindrance, should deserve scant consideration from the
courts[21].
We are not persuaded.
In the case at bar, there was no substantial compliance made by petitioners of the
requirement in Section 11, Rule 13 of the 1997 Rules of Civil Procedure. The utter
disregard of the rules made by petitioners cannot justly be rationalized by harking on
the policy of liberal construction and substantial compliance. [22]
The fact that an affidavit of service accompanied their petition does not amount to
a substantial compliance with the requirement of an explanation why other modes of
service other than personal service were resorted to. An affidavit of service, under
Section 13, Rule 13 of the 1997 Rules of Civil Procedure, is required merely as proof
that service has been made to the other parties in a case. Thus, it is a requirement
totally different from the requirement that an explanation be made if personal service
of pleadings was not resorted to. In fact, a cursory reading of the affidavit of
service[23] attached by petitioners in their petition before the Court of Appeals shows
that it merely states that a certain Rogelio Mindol served copies of the pleading to the
counsel of private respondent, the NLRC, and the Solicitor-General by registered
mail. There is not even a hint of an explanation why such mode of service was
resorted to.
With respect to petitioners reliance on the much-abused doctrine laid down in the
case of Alonso vs. Villamor and other analogous cases, we adhere to our
pronouncement in the case of Solar Team Entertainment, Inc. vs. Court of Appeals [24].
To our mind, if motions to expunge or strike out pleadings for violation of Section 11
of Rule 13 were to be indiscriminately resolved under Section 6 of Rule
1[25] or Alonso vs. Villamor and other analogous cases, then Section 11 would become
meaningless and its sound purpose negated.
We are aware that in the cited case, the violation of Section 11, Rule 13 committed
by the party therein was eventually condoned and the pleading was allowed to remain
in the records. However, such action by the Court was premised on the fact that
counsel therein may not have been fully aware of the requirements and ramifications

of the said provision as the 1997 Rules of Civil Procedure had only been in effect for a
few months. Such circumstance does not obtain in the case at bar considering that it
has been years since the effectivity of the 1997 Rules of Civil Procedure. Moreover,
our decision in the Solar Team Entertainment, Inc.case contained a directive that, for
the guidance of the bench and the bar, strictest compliance with Section 11 of Rule 13
is mandated one month from the promulgation of the said decision. Petitioners thus
have no excuse for their non-compliance with the requirements embodied therein.
WHEREFORE, premises considered, the resolutions of the Court of Appeals
dated December 27, 1999 and March 03, 2000 are hereby AFFIRMED.
SO ORDERED.

D. SUPREME COURT
201. TANCINCO VS. GSIS
DE LEON, JR., J.:

Before us is a petition for review on certiorari, praying for the reversal of the
Resolutions dated May 30, 1997 and March 5, 1998 issued by the former Sixteenth Division of
the Court of Appeals in CA-G.R. SP No. 44148. The first resolution dismissed petitioners
appeal from the decision of the Employees Compensation Commission, whereas the second
resolution denied her motion for reconsideration.
[1]

The facts are:

At around noon of July 17, 1995, while he was repairing a service vehicle in front of his
house along the National Road in Barangay Palanas, Lemery, Batangas, SPO1 Eddie G. Tancinco
was shot dead by five (5) unidentified armed men. SPO1 Tancinco was a member of the
NCR Security Protection Group of the Philippine National Police, and at the time of his death,
was assigned as part of the close-in security detail of then Vice-President Joseph E.
Estrada. SPO1 Tancinco was off-duty at the time inasmuch as the former Vice-President was in
the United States for medical treatment.
His widow, petitioner Rufina Tancinco, filed a claim for benefits before the Government
Service Insurance System (GSIS). On February 19, 1996, the GSIS denied petitioners claim on

the ground that there was no proof that petitioners husbands death was work-related. Petitioner
appealed the denial to the Employees Compensation Commission (Commission) which, on
December 19, 1996, issued a Resolution dismissing the appeal for lack of merit. As ruled by
the Commission:
[2]

It is evident that the death of SPO1 Tancinco on July 17, 1995, when he was on off
duty status did not arise out of and in the course of his employment as a member of
the PNP Security Command.
Apparently, the conditions aforementioned were not satisfied in the present
case. Notably, SPO1 Tancinco was repairing his service vehicle at the time of his
death. He was neither executing an order for VP Estrada nor performing an official
function on that fateful day inasmuch as Police Superintendent Atilano Miranda duly
certified that SPO1 Tancinco was on off-duty status on July 17, 1995.
We would like to stress once more that not all contingencies such as injury, disability,
or death which befall an employee are compensable. The same must be the result
of ACCIDENT arising out of and in the course of employment.
Since the cause of SPO1 Tancincos death is no longer part of his official functions,
the claim for compensation benefits under Presidential Decree No. 626, as amended,
cannot be given due course.
Petitioner filed a petition for review from the aforesaid decision of the Commission before
the Court of Appeals. On May 30, 1997, the appellate court issued the first assailed
resolution dismissing the petition for review on the following grounds: (a) that the certification
of non-forum shopping was defective; (b) that certified true copies of material portions of the
record were not attached to the petition; and (c) that the petitionfailed to state all the material
dates which would establish the timeliness thereof. As admitted by petitioner herself, she
received a copy of the resolution on June 9, 1997, and yet it was only on January 27, 1998, or
seven-and-a-half (7 ) months later, that she filed a motion for reconsideration. As can be
expected, the appellate court denied her motion in the second assailed resolution of March 5,
1998.
[3]

[4]

Petitioner seeks recourse before us via this petition for review on certiorari, arguing that:

RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION OR A REVERSIBLE ERROR IN NOT ENTERTAINING THE

PETITION FILED BY PETITIONER WHICH SUBSTANTIALLY COMPLIED

WITH THE RULES AND WAS ON ITS FACE MERITORIOUS.
In lieu of a comment, the Office of the SOLICITOR General filed a
Manifestation signifying its solidarity with petitioner. The SOLICITOR General adopts the
view that SPO1 Tancincos death is work-related given the circumstances under which he was
killed, given that (a) the deceased was a policeman and (b) the killing was done in a professional
manner. He speculates that the motive behind the killing is likely to have arisen during the
duration of the almost eighteen (18) years that he served as constable in the PC and as a
policeman.
[5]

With regret, we deny the petition.

The conclusion is inevitable because the instant petition was not timely filed. Under section
1 of Rule 45 of the former Revised Rules of Court, which was then still in effect, an appeal
from a decision rendered by the Court of Appeals to this Court must be made within fifteen (15)
days from notice of the judgment or the denial of a motion for reconsideration filed in due
time. In the case at bar, petitioner filed her motion for reconsideration from receipt of the
resolution of dismissal two hundred thirty one (231) days late, thereby rendering the said
resolution final and executory. The gap of more than seven (7) months is too large for us to
ignore. Petitioner did not even offer any explanation to account for the tardiness. It behooves
the party invoking liberality in the application of procedural rules to at least explain his noncompliance therewith. We have held that the period of appeal is not only mandatory, but more
importantly, it is jurisdictional. Even we cannot ignore the immutable character of a final
judgment.
[6]

[7]

[8]

[9]

Prescinding from the finality of the appealed resolutions, the appeal will still fail on the
merits. Rule III of the Amended Rules on Employees Compensation provides:

SECTION 1. Grounds(a) For the injury and the resulting disability or death to be
compensable, the injury must be the result of an employment ACCIDENT satisfying
all of the following conditions:
(1) The employee must have been injured at the place where his work requires him to
be;
(2) The employee must have been performing his official functions; and
(3) If the injury is sustained elsewhere, the employee must have been executing an
order for the employer.

xxx

xxx

xxx

The aforesaid requirements have not been met. Anent the first, as part of the former VicePresidents security detail, the decedent was required to guard the person of the former; hence,
his presence was officially required wherever the Vice-President would go. At the time of his
death, SPO1 Tancinco was off-duty since Vice-President Estrada was out of the country. In fact,
he was at home; it is not even known if he was temporarily re-assigned to another detail while
the Vice-President was away. Clearly, he was not at the place where his work required him to be.
As to the second requirement, it was not sufficiently established that SPO1 Tancinco died
while performing his official functions. In this regard, we held that policemen are regarded as
being on twenty-four (24) hour alert. As we explained in Employees Compensation
Commission v. Court of Appeals,
[10]

xxx But for claritys sake and as a guide for future cases, we hereby hold that
members of the national police, like P/Sgt. Alvaran, are by the nature of their
functions technically on duty 24 hours a day. Except when they are on vacation leave,
policemen are subject to call at any time and may be asked by their superiors or by
any distressed citizen to assist in maintaining the peace and security of the
community.
xxx

xxx

xxx

We hold that by analogy and for purposes of granting compensation under P.D. No.
626, as amended, policemen should be treated in the same manner as soldiers.

[11]

The twenty-four hour duty rule was originally applied to members of the armed forces,
until it was applied by extension to policemen, as aforesaid, and eventually to firemen.
[12]

However, in the more recent case of Government Service Insurance System v. Court of
Appeals, we clarified that not all deaths of policemen are compensable. Thus,
[13]

Taking together jurisprudence and the pertinent guidelines of the ECC with respect to
claims for death benefits, namely: (a) that the employee must be at the place where his
work requires him to be; (b) that the employee must have been performing his official
functions; and (c) that if the injury is sustained elsewhere, the employee must have
been executing an order for the employer, it is not difficult to understand then why
SPO2 Alegres widow should be denied the claims otherwise due her. Obviously, the
matter SPO2 Alegre was attending to at the time he met his death, that of ferrying

passengers for a fee, was intrinsically private and unofficial in nature proceeding as it
did from no particular directive or permission of his superior officer. In the absence
of such prior authority as in the cases of Hinoguin and Nitura, or peacekeeping nature
of the act attended to by the policeman at the time he died even without the explicit
permission or directive of a superior officer, as in the case of P/Sgt. Alvaran, there is
no justification for holding that SPO2 Alegre met the requisites set forth in the ECC
guidelines. That he may be called upon at any time to render police work as he is
considered to be on a round-the-clock duty and was not on an approved vacation leave
will not change the conclusion arrived at considering that he was not placed in a
situation where he was required to exercise his authority and duty as a policeman. In
fact, he was refusing to render one pointing out that he already complied with the duty
detail. At any rate, the 24-hour duty doctrine, as applied to policemen and soldiers,
serves more as an after-the-fact validation of their acts to place them within the scope
of the guidelines rather than a blanket license to benefit them in all situations that
may give rise to their deaths. In other words, the 24-hour duty doctrine should not be
sweepingly applied to all acts and circumstances causing the death of a police officer
but only to those which, although not on official line of duty, are nonetheless basically
police service in character. [italics supplied]
In the present case, the decedent was repairing a service vehicle when he was killed. We
have tried to view it from all possible angles, but the inescapable conclusion is that he was not
performing acts that are basically police service in character. As a policeman, SPO1 Tancinco
is part of an organized civil force for maintaining order, preventing and detecting crimes, and
enforcing the laws xxx. Based on these parameters, it cannot be said that the deceased was
discharging official functions; if anything, repairing a service vehicle is only incidental to his
job.
[14]

Neither was the last requirement satisfied. As the fatal incident occurred when SPO1
Tancinco was at home, it was incumbent on petitioner to show that her husband was discharging
a task pursuant to an order issued by his superiors. This also was not done.
In administrative proceedings, the quantum of proof necessary to support a claim is
substantial evidence, which is that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. Unfortunately, the burden was not
successfully met.
[15]

[16]

In closing, we express our heartfelt commiseration with petitioner for the misfortune which
has befallen her and her family. Even this Court, the embodiment of justice dispensed

impartially, can feel very human emotions, as it does so now. However, for reasons both
procedural and substantive, we cannot grant her petition.
WHEREFORE, the instant petition is hereby DENIED. The Resolutions dated May 30,
1997 and March 5, 1998 are AFFIRMED in toto. No costs.
SO ORDERED.

202. ABALOS VS. PHILEX MINING CORPORATION

QUISUMBING, J.:

This petition for review assails the decision dated July 30, 1999 of
the Court of Appeals in CA-G.R. SP No. 50167, which affirmed the
order dated December 11, 1998 of Arbitrator Juan Valdez of the National
Conciliation and Mediation Board, Cordillera Administrative Region, Baguio
City. That order partially modified an earlier one dated March 5, 1994, by
directing respondent Philex Mining Corporation to pay petitioners their
separation pay in lieu of reinstatement.
[1]

[2]

[3]

The factual antecedent are uncomplicated.

A manpower audit conducted by respondent Philex, for brevity, revealed
that 241 of its employees were redundant. Thus, Philex undertook a
retrenchment program that resulted in the termination of petitioners
employment effective June 30, 1993. Consequently, petitioners filed a case for
illegal dismissal against respondent. The case was submitted for arbitration
through a submission agreement coursed through the National Conciliation
and Mediation Board, Cordillera Administrative Region, Baguio City.
On March 5, 1994, Voluntary Arbitrator Juan Valdez rendered his decision,
concluding that:
IN THE LIGHT OF THE FOREGOING, Respondent is hereby ordered to reinstate
the Complainants and Intervenors to their former positions with back wages without
loss of seniority and privileges within 10 days from receipt hereof except the two
employees namely Pedro Otgalon and Miguel Guyapat who have applied for and

granted EARLY RETIREMENT ; provided that the amount of separation pay

already received by them shall be deducted from their backwages; and provided
further that should the backwages of the employee concerned be less than the amount
of separation pay received, the employee concerned shall refund to Respondent the
balance thereof; and for Respondent to pay to Counsel of the Complainants and
Intervenors 10% each of the total amount of backwages due the employees
represented by them as attorneys fees. No award of damages.
SO ORDERED.

[4]

Philex appealed to this Court and the case was remanded to the Court of
Appeals. On July 22, 1997, the appellate court promulgated its decision,
thus:
In view of the foregoing, we rule that, while there was indeed a valid reason for
retrenchment, the means employed were disadvantageous, thus inequitable, to the
affected workers. The fact that these workers signed quitclaims and received their
separation pay would not estop them from seeking reinstatement. The Supreme Court
said: The reason why quitclaims are commonly frowned upon as contrary to public
policy, and why they are held to be ineffective to bar claims for the full measure of the
workers legal rights, is the fact that the employer and the employee obviously do not
stand on the same footing. (Marcos vs. National Labor Relations Commission, G.R.
No. 111744, 248 SCRA 146 [1995]).
WHEREFORE, the petition is dismissed for lack of merit.
SO ORDERED.

[5]

Philex elevated the case to the Supreme Court via a petition for review on
certiorari, which we denied in a resolution dated January 14, 1998. Entry of
judgment was made on April 27, 1998.
On August 14, 1998, Philex filed a manifestation and motion for leave to
offer separation pay to petitioners, in lieu of reinstatement, before the Office of
Voluntary Arbitrator Juan Valdez. Philex alleged that petitioners positions no
longer existed and that there arose strained relations between the parties that
effectively barred reinstatement.

Arbitrator Juan Valdez granted Philexs motion in his order dated

December 11, 1998, thus:
In the light of the foregoing, Respondent is ordered to pay the Complainants and
Intervenors the amounts of backwages and separation pay stated above less the total
amount of salary they received as a result of their reinstatement thru PAYROLL
from November 24, 1997 to date within twenty (20) days from receipt hereof plus ten
percent (10%) thereof as attorneys fees, otherwise this Office will direct the proper
Sheriff to execute this Order.
SO ORDERED.

[6]

Consequently, petitioners filed a petition for certiorari with the Court of

Appeals on the ground that Arbitrator Juan Valdez acted without or in excess
of jurisdiction. On July 30, 1990, the Court of Appeals dismissed the petition
and affirmed the order of Arbitrator Valdez. It likewise denied the petitioners
motion for reconsideration.
Hence, this petition for review, anchored on a single assignment of error:
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN AFFIRMING
THE DECEMBER 11, 1998 ORDER OF VOLUNTARY ARBITRATOR JUAN B.
VALDEZ ALTERING AND MODIFYING HIS MARCH 5, 1994 DECISION
WHICH HAD ALREADY BECOME FINAL AND EXECUTORY ON APRIL 27,
1998.
[7]

Petitioners aver that when the March 5, 1994 order directing their
reinstatement became final and executory, Arbitrator Valdez no longer had
jurisdiction to modify the same. According to them, an order that has become
final and executory can no longer be modified or altered.
Petitioners further insist that Philex failed to sufficiently establish (1) that
there were supervening events which rendered enforcement of the final order
unjust, and (2) that the positions vacated by them no longer existed and there
were no similar positions available for them. Petitioners point out that Philex
did not conduct any investigation as to the manner and purpose of the
abolition of their former positions. They also assert that Philex subcontracted

to outsiders the work previously performed by the retrenched employees,

which proved that there was no need to abolish their positions.
As to the alleged strained relations between the parties, petitioners
maintain that this was also not proven adequately. Petitioners submit that for
this doctrine to apply, it must be shown that the affected employees occupied
positions of trust and confidence, or that the employees differences with their
employer
are
of
such
nature
or
degree
as
to
preclude
reinstatement. Petitioners argue that neither of these conditions is present in
this case.
For its part, respondent contends that it presented evidence showing the
impossibility and inappropriateness of reinstatement, which justify the
modification of the March 5, 1994 arbitration order. Arbitrator Valdez found
proof of this fact and upon appeal, the Court of Appeals declared said finding
as sufficiently supported by evidence. Invoking the principle embodied
in Compania Maritima, Inc. vs. Court of Appeals, respondent avers that this
factual finding must be accorded great weight, in the absence of any showing
that it is whimsical, capricious, or arbitrary.
[8]

A basic tenet in our rules of procedure is that an award that is final and
executory cannot be amended or modified anymore. Nothing is more settled
in law than that once a judgment attains finality it thereby becomes immutable
and unalterable. It may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the highest court of the
land. However, this rule is subject to exceptions as stated in the case
of David vs. CA, 316 SCRA 710 (1999), cited by respondent:
[9]

One exception is that where facts and/or events transpire after a decision has become
executory, which facts and/or events present a supervening cause or reason which
renders the final and executory decision no longer enforceable. Under the law, the
court may modify or alter a judgment even after the same has become executory
whenever circumstances transpire rendering its execution unjust and inequitable, as
where certain facts and circumstances justifying or requiring such modification or
alteration transpired after the judgment has become final and executory.
[10]

In David, we held also that where an execution order [which] has been
issued is still pending, all proceedings on the execution are still proceedings in
the suit. As such, modification of the execution of such judgment is allowed.
[11]

In Torres vs. National Labor Relations Commission, 330 SCRA 311

(2000), this Court ruled that:
Execution is the final stage of litigation, the end of the suit. It cannot be frustrated
except for serious reasons demanded by justice and equity. In this jurisdiction, the rule
is that when a judgment becomes final and executory, it is the ministerial duty of the
court to issue a writ of execution to enforce the judgment. A writ of execution may
however be refused on equitable grounds as when there was a change in the situation
of the parties that would make execution inequitable or when certain circumstances,
which transpired after judgment became final, rendered execution of judgment
unjust. The fact that the decision has become final does not preclude a modification
or an alteration thereof because even with the finality of judgment, when its execution
becomes impossible or unjust, it may be modified or altered to harmonize the same
with justice and the facts(emphasis supplied).
[12]

In Deltaventures Resources Inc. vs. Cabato, 327 SCRA 521 (2000), we

held that jurisdiction once acquired is not lost upon the instance of the parties
but continues until the case is terminated. The power of a voluntary
arbitrator to issue a writ of execution carries with it the power to inquire into
the correctness of its execution and to consider whatever supervening events
transpire during execution. Therefore, we are in agreement with the
appellate court that a voluntary arbitrator has jurisdiction to amend the mode
of executing an award if and when the case merits such amendment.
[13]

[14]

However, we find respondents reliance on the doctrine of strained

relations misplaced. In Mercury Drug Corporation vs. Quijano, we stated
that said doctrine is inapplicable to a situation where the employee has no say
in the operation of the employers business. Petitioners herein are part of the
rank-and-file workforce; they are cooks, miners, helpers and mechanics of the
respondent. As held also in the Mercury Drug case:
[15]

[16]

To protect labors security of tenure, we emphasize that the doctrine of strained

relations should be strictly applied so as not to deprive an illegally dismissed

employee of his right to reinstatement. Every labor dispute almost always results in
strained relations and the phrase cannot be given an overarching interpretation,
otherwise an unjustly dismissed employee can never be reinstated.
[17]

Considering the circumstances in the present case, we find that the only
issue to be resolved is whether the supervening events are grave enough to
warrant a modification in the execution of the judgment. Both the voluntary
arbitrator and the Court of Appeals found that reinstatement is no longer
possible due to the fact that respondent has been continuously suffering
business losses and reducing the number of its employees pending litigation,
and so the positions held by petitioners were abolished as a cost-cutting
measure. Petitioners argue, however, that to excuse the respondent from
reinstating the petitioners would be to allow it to do indirectly what it was not
allowed to do directly the retrenchment of the petitioners. They add that
what is so scheming about this ploy is that respondent now tries to justify its
refusal to reinstate the petitioners by its very own act of abolishing their
positions.
[18]

[19]

Despite our sympathy for the workers plight, however, we find no legal
support for their opposition to the conclusion and findings of the voluntary
arbitrator and the Court of Appeals. On record, there is no showing that the
abolition of the petitioners positions was capricious or whimsical. The
appellate court, as well as the voluntary arbitrator, based their decisions on
applicable law and the evidence. As confirmed by the appellate court, the
voluntary arbitrator also found that petitioners reinstatement had become not
only inappropriate but also impossible.
Regrettably, petitioners now raise questions the determination of which
would require the Court to look into the evidence adduced by the parties. This
cannot be done in a petition for review on certiorari. It is outside its purview
under Rule 45 of the 1997 Rules of Court. Factual findings of labor officials
who are deemed to have acquired expertise in matters within their respective
jurisdiction are generally accorded not only respect but even finality, and bind
us when supported by substantial evidence. It is not our function to assess
and evaluate the evidence all over again, particularly where the findings of
both the arbitrator and the Court of Appeals coincide. Thus, in this case,
absent a showing of an error of law committed by the court below, or of
[20]

whimsical or capricious exercise of its judgment, or a demonstrable lack of

basis for its conclusions, we may not disturb its factual findings, much less
reverse its judgment outright.
[21]

WHEREFORE, the instant petition is DENIED. The decision dated July

30, 1999 of the Court of Appeals in CA-G.R. SP No. 50167, sustaining the
order dated December 11, 1998 of the Arbitrator of the National Conciliation
and Mediation Board, Cordillera Administrative Region, Baguio City, is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.

E. REGIONAL DIRECTOR (ARTICLE 129, LABOR

CODE)
203. MATERNITY CHILDRENS HOSPITAL VS. SECRETARY OF LABOR
Facts: The petitioner is a semi-government hospital, managed by the Board of Directors
of the Cagayan de Oro Women's Club and Puericulture Center, headed by Mrs. Antera
Dorado, as holdover President. The hospital derives its finances from the club itself as
well as from paying patients, averaging 130 per month. It is also partly subsidized by
the Philippine Charity Sweepstakes Office and the Cagayan De Oro City government.
On May 23, 1986, ten employees of the petitioner employed in different
capacities/positions filed a complaint with the Office of theRegional Director of Labor
and Employment for underpayment of their salaries and ECOLAs, which was docketed
as ROX Case No. CW-71-86. On June 16, 1986, the Regional Director directed two of
his Labor Standard and Welfare Officers to inspect the records of the petitioner to
ascertain the truth of the allegations in the complaints. PAYROLLS covering the
periods of May, 1974, January, 1986, November, 1985 and May, 1986, were duly
submitted for inspection. On July 17, 1986, the Labor Standard and Welfare Officers
submitted their report confirming that there was underpayment of wages and ECOLAs
of all the employees by the petitioner. As a result, the petitioner appealed from this
Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who
rendered a Decision on September 24, 1986, modifying the said Order in that deficiency
wages and ECOLAs, should be computed only from May 23, 1983 to May 23, 1986. On
October 24, 1986, the petitioner filed a motion for reconsideration which was denied by
the Secretary of Labor in his Order dated May 13, 1987, for lack of merit. Petitioner

likewise maintains that the Order of the respondent Regional Director of Labor, as
affirmed with modifications by respondent Secretary of Labor, does not clearly and
distinctly state the facts and the law on which the award was based. In its "Rejoinder to
Comment, the petitioner further questions the authority of the Regional Director to
award salary differentials and ECOLAs to private respondents, alleging that the original
and exclusive jurisdiction over money claims is properly lodged in the Labor Arbiter,
based on Article 217, paragraph 3 of the Labor Code.
Issue: Whether or not the Regional Director had jurisdiction over the case.
Held: This is a labor standards case, and is governed by Art. 128 of the Labor
Code. Labor standards refer to the minimum requirements prescribed by existing laws,
rules, and regulations relating to wages, hours of work, cost of living allowance and
other monetary and WELFARE BENEFITS , including occupational, safety, and health
standards. Under the present rules, a Regional Director exercises both visitorial and
enforcement power over labor standards cases, and is therefore empowered to
adjudicate money claims, provided there still exists an employer-employee relationship,
and the findings of the regional office is not contested by the employer concerned.

204. ODIN SECURITY AGENCY VS. DELA SERNA

GRIO-AQUINO, J.:
This petition for certiorari and prohibition with prayer for a restraining order and/or preliminary
injunction seeks to annul and set aside the order dated March 20, 1987, issued by public respondent
Luna C. Piezas in his capacity as the Regional Director, National Capital Region, Department
of Labor and Employment, and the orders dated March 23, 1988 and March 13, 1989, issued by
public respondent Dionisio C. De la Serna as Undersecretary of the Department of Labor and
Employment, and to enjoin the public respondents and the Department of Labor and Employment
(DOLE) from executing said orders.
On July 8, 1986, a complaint was filed by Sergio Apilado and fifty-five (55) others charging the
petitioner Odin SECURITY AGENCY (hereafter "OSA"), underpayment of wages, illegal
deductions, non-payment of night shift differential, overtime pay, premium pay for holiday work, rest
days and Sundays, service incentive leaves, vacation and sick leaves, and 13th-month pay. When
conciliation efforts failed, the parties were required to submit their position papers.
Private respondents alleged in their position paper that their latest monthly salary was P1,600; that
from this amount, petitioner deducted P100 as administrative cost and P20 as bond; that they were
not paid their premium pay and overtime pay for working on the eleven (11) legal holidays per year;
and, that since private respondents were relieved or constructively dismissed, they must also be
paid backwages.

Petitioner, on the other hand, contended that on July 21, 1986, some 48 SECURITY GUARDS
threatened mass action against it. Alarmed by a possible abandonment of post by the guards and
mindful of its contractual obligations to its clients/principals, petitioner relieved and re-assigned the
complaining guards to other posts in Metro Manila. Those relieved were ordered to report to the
agency's main office for reassignment. Only few complied, so those who failed to comply were
placed on "AWOL" status. Petitioner claimed it complied with the Labor Code provisions, and in
support thereof, it submitted the "Quitclaim and Waiver" of thirty-four (34) complainants. It further
alleged that complainants who rendered over-time work as shown by their time sheets were paid
accordingly; that service incentive leaves not availed of, night shift differential, rest days, and
holidays were paid in cash.
On November 18, 1986, petitioner filed an ex parte manifestation alleging that nineteen (19)
complainants had withdrawn their complaints.
On January 1, 1987, petitioner again filed a supplemental ex parte manifestation alleging that
Luis San Franciscoalso withdrew his complaint.
Earlier, on October 21, 1986, seventeen (17) complainants repudiated their quitclaim and waiver.
They alleged that management pressured them to sign documents which they were not allowed to
read and that if such waiver existed, they did not have any intention of waiving their rights under the
law.
Petitioner in its reply argued that complainants were estopped from denying their quitclaims on the
ground of equity; that being high school graduates, complainants fully understood the document
they signed; and that complainant's allegation of coercion or threat was a mere afterthought.
Later, six (6) of the seventeen (17) complainants who repudiated their quitclaims again executed
quitclaims and waivers.
On March 20, 1987, public respondent Luna C. Piezas issued an order, the dispositive portion of
which reads:
WHEREFORE, premises considered, Order of Compliance is hereby issued directing
respondent to pay complainants the amounts opposite their names, to wit:
1. Mamerto Gener Pl,989.05
2. Armando Yumul 1,989.05
3. Herminigildo Bargas 1,989.05
4. Marciano Bolocon 1,989.05
5. William Adami 1,989.05
6. Antonio Publico 1,989.05

7. Leopoldo Saavedra 1,989.05

8. Warlito Ilaga 1,989.05
9. Jovany Serate 1,989.05
10. Daniel Minglana. 1,989.05
11. Jose Miranda, Jr. 1,989.05
12. Anastacio Santillan 1,989.05
13. Rolando Fernandez 1,989.05
14. Nicanor Fereras 1,776.95
15. Francisco Verzosa 1,015.40
16. Plaridel Eloria 253.95
within 15 days from receipt hereof. (p. 51, Rollo.)
The complaining guards filed a motion for reconsideration which was treated as an appeal by
respondent Undersecretary Dionisio C. De la Serna.
On March 23, 1988, the Undersecretary affirmed the order of the Regional Director with
modifications. The dispositive portion of his order reads as follows:
WHEREFORE, the Order dated March 20, 1987 is hereby affirmed subject to the
following modifications, to wit:
1. The complaints of the sixteen (16) complainants above set forth are hereby
reinstated and their names added to those listed by the Regional Director in his
Order;
2. The monetary awards is [sic] hereby extended to three years from the time of the
filing of the instant complaint without any qualification; and
3. Respondent is hereby directed to reinstate all the above active complainants to
their former positions without loss of seniority rights plus backwages from the time of
their relief from work until their actual reinstatement. (p. 69, Rollo.)
The sixteen (16) complainants mentioned in the body of the decision are:
1. Pagayo, Apsin

2. Dorado, Jaime
3. Ellares, Guillermo
4. Factor, Arturo
5. Feruish, Daniel
6. Fonseca, Crisostomo
7. Ga, Jerry
8. Guinsatao, Francisco
9. Liper, Sixto
10. Manalla, Allan
11. Orquesta, George
12. Pardeno, Joseph
13. Quiroz, Wilfredo
14. Uy, Benjamin
15. Ordona, Edwin
16. Torres, Deuretiro
Petitioner filed a motion for reconsideration.
On March 13, 1989, public respondent Undersecretary modified his order of March 23, 1988 as
follows:
WHEREFORE, the Order of this Office dated 23 March 1988 is hereby modified to
read as follows, to wit:
1. The complaint of the fifteen (15) complainants above set forth are hereby
reinstated and their names added to those listed by the Regional Director in his
order;
2. The monetary awards is [sic] hereby limited to the past three years from the time
of the filing of the complaint without any qualification subject to computation at
the Regional Office. (p. 105, Rollo.)

The reason for the reduction to fifteen (15) of the original list of sixteen (16) complainants was
because the Undersecretary found that Joseph Pardeno was never relieved from his post but
continued to work for petitioner.
In this petition for certiorari, the petitioner alleges:
1. that it was deprived of due process of law, both substantive and procedural;
2. that the Order dated March 20, 1987 is contrary to law and that respondent Luna
C. Piezas acted with grave abuse of discretion amounting to lack or excess of
jurisdiction; and
3. that the Orders dated March 23, 1988 and March 13, 1989, affirming and
modifying the Order dated March 20, 1987 are contrary to law and that respondent
Dionisio C. De la Serna acted with grave abuse of discretion amounting to lack or
excess of jurisdiction.
On April 17, 1989, as prayed for in the petition, the Court issued a temporary restraining
order upon a bond of P50,000 enjoining the respondents from enforcing or executing the orders
dated March 20, 1987, March 23, 1988 and March 13, 1989 of the Department of Labor and
Employment.
The petition has no merit.
The petitioner was not denied due process for several hearings were in fact conducted by the
hearing officer of the Regional Office of the DOLE and the parties submitted position papers upon
which the Regional Director based his decision in the case. There is abundant jurisprudence to the
effect that the requirements of due process are satisfied when the parties are given an opportunity to
submit position papers (Coca-Cola Bottlers, Phil., Inc. vs. NLRC, G.R. No. 78787, December 18,
1989; Asiaworld Publishing House vs. Ople, 152 SCRA 224; Manila Doctors Hospital vs. NLRC, 135
SCRA 262). What the fundamental law abhors is not the absence of previous notice but rather the
absolute lack of opportunity to be heard (Antipolo Realty Corp. vs. National Housing Authority, 153
SCRA 399). There is no denial of due process where a party is given an opportunity to be heard and
present his case (Ong, Sr. vs. Parel, 156 SCRA 768; Adamson & Adamson, Inc. vs. Amores, 152
SCRA 237). Since petitioner herein participated in the hearings, submitted a position paper, and filed
a motion for reconsideration of the March 23, 1988 decision of the Labor Undersecretary, it was not
denied due process.
The petitioner is estopped from questioning the alleged lack of jurisdiction of the Regional Director
over the private respondents' claims. Petitioner submitted to the jurisdiction of the Regional Director
by taking part in the hearings before him and by submitting a position paper. When the Regional
Director issued his March 20, 1987 order requiring petitioner to pay the private respondents the
benefits they were claiming, petitioner was silent. Only the private respondents filed a motion for
reconsideration. It was only after the Undersecretary modified the order of the Regional Director on
March 23, 1988 that the petitioner moved for reconsideration and questioned the jurisdiction of the

public respondents to hear and decide the case. The principle of jurisdiction by estoppel bars it from
doing this. In Tijam vs. Sibonghanoy, 23 SCRA 29, 35-36, we held:
It has been held that a party can not invoke the jurisdiction of a court to secure
affirmative relief against his opponent and, after obtaining or failing to obtain such
relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or. 694, 86
A.L.R. 79). In the case just cited, by way of explaining the rules, it was further said
that the question whether the court had jurisdiction either of the subject-matter of the
action or of the parties was not important in such cases because the party is barred
from such conduct not because the judgment or order of the court is valid and
conclusive as an adjudication, but for the reason that such a practice can not be
tolerated obviously for reasons of public policy.
Furthermore, it has also been held that after voluntarily submitting a cause and
encountering an adverse decision on the merits, it is too late for the loser to question
the jurisdiction or power of the court (Pease vs. Rathbunjones, etc., 243 U.S. 273, 61
L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35 L. Ed. 659).
And in Littleton vs. Burgess, 16 Wyo, 58, the Court said that it is not right for a party
who has affirmed and invoked the jurisdiction of a court in a particular matter to
secure an affirmative relief, to afterwards deny that same jurisdiction to escape a
penalty.
Sibonghanoy was reiterated in Crisostomo vs. C.A., 32 SCRA 54; Libudan vs. Gil, 45 SCRA
17; Capilitan vs. De la Cruz, 55 SCRA 706; and PNB vs. IAC, 143 SCRA 299.
The fact is, the Regional Director and the Undersecretary did have jurisdiction over the private
respondents' complaint which was originally for violation of labor standards (Art. 128[b], Labor
Code). Only later did the guards ask for backwages on account of their alleged constructive
dismissal (p. 32, Rollo). Once vested, that jurisdiction continued until the entire controversy was
decided (Lee vs. MTC, 145 SCRA 408; Abadilla vs. Ramos, 156 SCRA 92; and Pucan vs. Bengzon,
155 SCRA 692).
The jurisdiction of public respondents over the complaints is clear from a reading of Article 128(b) of
the Labor Code, as amended by Executive Order No. 111, thus:
(b) The provisions of Article 217 of this Code to the contrary notwithstanding and in
cases where the relationship of employer-employee still exists, the Minister of Labor
and Employment or his duly authorized representatives shall have the power to order
and administer, after due notice and hearing, compliance with the labor standards
provisions of this Code and other labor legislation based on the findings of labor
regulation officers or industrial safety engineers made in the course of inspection,
and to issue writs of execution to the appropriate authority for the enforcement of
their orders, except in cases where the employer contests the findings of the labor
regulation officer and raises issues which cannot be resolved without considering
evidentiary matters that are not verifiable in the normal course of inspection.

In Briad Agro Development Corp. vs. Hon. Dionisio De la Serna, G.R. No. 82805, June 29, 1989, we
clarified the amendment when we ruled, thus:
To recapitulate under EO 111, the Regional Directors, in representation of the
Secretary of Labor and notwithstanding the grant of exclusive original jurisdiction
to Labor Arbiters by Article 217 of the Labor Code, as amended have power to
hear cases involving violations of labor standards provisions of the Labor Code or
other legislation discovered in the course of normal inspection, and order compliance
therewith, provided that:
l) the alleged violations of the employer involve persons who are still his employees,
i.e., not dismissed, and
2) the employer does not contest the findings of the labor regulations officer or raise
issues which cannot be resolved without considering evidentiary matters that are not
verifiable in the normal course of inspection (p. 9, Concurring Opinion, J. Narvasa.)
The ruling in Briad Agro was reiterated in Maternity Children's Hospital vs. Secretary of Labor, G.R.
No. 78909, June 30, 1989:
... Under the present rules, a Regional Director exercises both visitorial and
enforcement power over labor standards cases, and is therefore empowered to
adjudicate money claims, provided there still exists an employer-employee
relationship, and the findings of the regional office is not contested by the employer
concerned. (p. 5, Decision.)
WHEREFORE, the petition is dismissed and the orders dated March 23, 1988 and March 13, 1989
of the Undersecretary of Labor are hereby affirmed. The temporary restraining order earlier issued
by this Court is lifted. No costs.
SO ORDERED.

205. SSK PARTS CORPORATION VS. CAMAS

GRIO-AQUINO, J.:
This is a petition for review on certiorari of the decision dated November 16, 1988 of the
Department of Labor and Employment, affirming the Order of the Regional Director dated
January 11, 1988 in three consolidated cases filed against the petitioner: (1) by Teodorico
Camas for illegal deductions; (2) for underpayment of wages, non-payment of legal holiday
pay and service incentive leave filed by the union in behalf of its members; and (3) for nonpayment of employees' service incentive leave, underpayment of allowance, overtime pay,
premium pay, and non-payment of two (2) regular holidays in December which were
discovered upon routine inspection conducted by the labor regulation officers.

After the parties had submitted their position papers and evidence, the Regional Director
issued an order on January 11, 1988, the dispositve portion of which reads thus:
WHEREFORE, premises considered, an Order is hereby entered:
a) Ordering respondent [herein petitioner] to refund to complainant Teodorico
Camas the amount of Seven Hundred and Seventy Five Pesos (P775.00) having
been illegally deducted from his salaries; and
b) Ordering respondent to pay individual claimants in the second case their
unpaid overtime pay, legal holiday pay, living allowance and service incentive
leave within ten (10) days from receipt hereof, otherwise a writ of execution
shall be issued for the enforcement of this Order. (p. 92, Rollo.)
Petitioner's appeal to the Secretary of Labor was dismissed by the latter. Hence, this petition
for certiorari in which the petitioner alleges:
1. that the Regional Director has no jurisdiction over its employees' claims;
and
2. that it (petitioner) was denied due process.
The petition is devoid of merit. The jurisdiction of the Regional Director over claims for
violation of labor standards is conferred by Article 128-B of the Labor Code, as amended by
Executive Order No. 111 of March 26,1987 which provides that:
(b) The Provisions of Article 217 of this Code to the contrary notwithstanding
and in cases where the relationship of employer-employee still exists, the
Minister of Labor and Employment or his duly authorized representatives shall
have the power to order and administer, after due notice and hearing,
compliance with the labor standards provisions of this Code and other labor
legislation based on the findings of labor regulation officers or industrial
safety engineers made in the course of inspection, and to issue writs of
execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the labor
regulation officer and raises issues which cannot be resolved without
considering evidentiary matters that are not verifiable in the normal course of
inspections. (Emphasis supplied.)
The jurisdiction of the Regional Director over employees' claims for wages and other
monetary benefits not exceeding P5,000 has been affirmed by Republic Act No. 6715,
amending Article 129 of the Labor Code as follows:
Art. 129. Recovery of wages, simple money claims and other benefits. Upon
complaint of any interested party, the Regional Director of the Department of
Labor and Employment or any of the duly authorized hearing officers of the

Department is empowered, through summary proceeding and after due notice,

to hear and decide any matter involving the recovery of wages and other
monetary claims and benefits, including legal interest, owing to an employee
or person employed in domestic or household service or househelper under
this Code, arising from employer-employee relations: Provided, that such
complaint does not include a claim forreinstatement: Provided, further, That
the aggregate money claims of each employee or househelper do not exceed
five thousand pesos (P5,000.00). The Regional Director or hearing officer shall
decide or resolve the complaint within thirty (30) calendar days from the date
of the filing of the same.
Being a curative statute, Republic Act No. 6715 may be given retroactive effect if, as in this
case, no vested rights would be impaired (DBP vs. Court of Appeals, 96 SCRA 342; Santos vs.
Duata, 14 SCRA 1041; Briad-Agro Dev. Corp. vs. De la Serna, et al., G.R. No. 82805, Nov.
9,1989).
Under the exception clause in Article 128 (b) of the Labor Code, the Regional Director may
not be divested of his jurisdiction over these claims, unless three (3) elements concur,
namely: (a) that the petitioner (employer) contests the findings of the labor regulation officer
and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and (c) that such matters are not verifiable in the normal course of
inspection.
In this case, although the petitioner contested the Regional Director's finding of violations of
labor standards committed by the petitioner, that issue was resolved by an examination of
evidentiary matters which were verifiable in the ordinary course of inspection. Hence, there
was no need to indorse the case to the appropriate arbitration branch of the National Labor
Relations Commission (NLRC) for adjudication (Sec. 2, Rules Implementing Executive Order
111).
The petitioner's allegation that it was denied due process is not well taken. The petitioner
actively participated in the proceedings a quo by filing its answer to the complaint,
presenting a position paper to the Regional Director, submitting evidence in support of its
claim, and appealing the decision of the Regional Director to the Secretary of Labor. Each of
those steps was a part and parcel of its right to due process. As the petitioner had all those
opportunities to be heard, it may not complain that it was denied due process (People vs.
Retamia, 95 SCRA 201; Divine Word High School vs. NLRC, 143 SCRA 346; Municipality of
Daet vs. Hidalgo Enterprises, Inc., 138 SCRA 265).
WHEREFORE, the petition for certiorari is dismissed for lack of merit.
SO ORDERED.

206. GUICO VS. QUISUMBING

PUNO, J.:

This is a petition for certiorari seeking review of two (2) Orders [1] issued by the respondent
Secretary of Labor and Employment dismissing petitioner's appeal.
The case started when the Office of the Regional Director, Department of Labor and
Employment (DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April
25, 1995, requesting for an investigation of petitioner's establishment, Copylandia Services &
Trading, for violation of labor standards laws. Pursuant to the visitorial and enforcement powers
of the Secretary of Labor and Employment or his duly authorized representative under Article
128 of the Labor Code, as amended, inspections were conducted at Copylandia's outlets on April
27 and May 2, 1995. The inspections yielded the following violations involving twenty-one (21)
employees who are copier operators: (1) underpayment of wages; (2) underpayment of 13th
month pay; and (3) no service incentive leave with pay.[2]
The first hearing of the case was held on June 14, 1995, where petitioner was represented by
Joseph Botea, Officer-in-Charge of the Dagupan City outlets, while the 21 employees were
represented by Leilani Barrozo, Gemma Gales, Majestina Raymundo and Laureta Clauna. It was
established that a copier operator was receiving a daily salary ranging from P35.00 to P60.00
plus commission of P20.00 per P500.00 worth of PHOTOCOPYING . There was also incentive
pay of P20.00 per P250.00 worth of PHOTOCOPYING in excess of the first P500.00.[3]
On July 13, 1995, petitioner's representative submitted a Joint Affidavit signed and executed
by the 21 employees expressing their disinterest in prosecuting the case and their waiver and
release of petitioner from his liabilities arising from non-payment and underpayment of their
salaries and other benefits. Individually signed documents dated December 21, 1994, purporting
to be the employees' Receipt, Waiver and Quitclaim were also submitted.[4]
In the investigation conducted by Hearing Officer Adonis Peralta on July 21, 1995, the 21
employees claimed that they signed the Joint Affidavit for fear of losing their jobs. They added
that their daily salary was increased to P92.00 effective July 1, 1995, but the incentive and
commission schemes were discontinued. They alleged that they did not waive the unpaid benefits
due to them.[5]
On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Order [6] favorable to
the 21 employees. First, he ruled that the purported Receipt, Waiver and Quitclaim dated
December 21 and 22, 1994, could not cause the dismissal of the labor standards case against the
petitioner since the same were executed before the filing of the said case. Moreover, the
employees repudiated said waiver and quitclaim. Second, he held that despite the salary increase
granted by the petitioner, the daily salary of the employees was still below the minimum daily
wage rate of P119.00 under Wage Order No. RB-I-03. Thirdly, he held that the removal of the
commission and incentive schemes during the pendency of the case violated the prohibition

against elimination or diminution of benefits under Article 100 of the Labor Code, as amended.
The dispositive portion of the Order states:

"WHEREFORE, premises considered and pursuant to the Rules on the Disposition of

Labor Standards Cases in the Regional Offices issued by the Secretary of Labor and
Employment on 16 September 1987, respondent Copylandia Services and Trading
thru its owner/manager Mr. Francisco Guico, is hereby ORDERED to pay the
employees the amount of ONE MILLION EIGHTY ONE THOUSAND SEVEN
HUNDRED FIFTY SIX PESOS AND SEVENTY CENTAVOS (P1,081,756.70)
representing their backwages, distributed as follows:
1.

Rosalina Carrera

- P68,010.91

2.

Joanna Ventura

- 28,568.10

3.

Mercelita Paredes

- 68,010.91

4.

Aida Licuanan

- 68,010.91

5.

Gemma Gales

- 68,010.91

6.

Clotilda Zarata

- 27,808.33

7.

Consolacion Miguel

- 65,708.28

8.

Gemma Macalalay

- 68,010.91

9.

Wandy Aquino

- 19,559.58

10.

Laureta Clauna

- 68,010.91

11.

Josephine Valdez

- 27,808.33

12.

Leilani Berrozo

13.

Majestina Raymundo - 68,010.91

14.

Theresa Rosario

15.

Edelyn Maramba

- 27,808.33

- 68,010.91
- 68,010.91

21.

16.

Yolly Dimabayao

- 40,380.60

17.

Vilma Calaguin

- 68,010.91

18.

Maila Balolong

- 40,380.60

19.

Clarissa Villena

- 27,808.33

20.

Maryann Galinato

- 68,010.91

Desiree Cabasag

Total

- 27,808.33
P1,081,756.70

and to submit proof of payment to this Office within seven (7) days from
receipt hereof. Otherwise, a Writ of Execution will be issued to enforce this
Order.
"SO ORDERED."[7]
Petitioner received a copy of the Order on November 10, 1995. On November 15, 1995,
petitioner filed a Notice of Appeal. [8] The next day, he filed a Memorandum of Appeal
accompanied by a Motion to Reduce Amount of Appeal Bond and a Manifestation of an Appeal
Bond.
In his appeal memorandum,[9] petitioner questioned the jurisdiction of the Regional Director
citing Article 129 of the Labor Code, as amended, [10] and Section 1, Rule IX of the Implementing
Rules of Republic Act No. 6715.[11] He argued that the Regional Director has no jurisdiction over
the complaint of the 21 employees since their individual monetary claims exceed the P5,000.00
limit. He alleged that the Regional Director should have indorsed the case to the Labor Arbiter
for proper adjudication and for a more formal proceeding where there is ample opportunity for
him to present evidence to contest the claims of the employees. He further alleged that the
Regional Director erred in computing the monetary award since it was done without regard to the
actual number of days and time worked by the employees. He also faulted the Regional Director
for not giving credence to the Receipt, Waiver and Quitclaim of the employees.
In the Motion to Reduce Amount of Appeal Bond,[12] petitioner claimed he was having
difficulty in raising the monetary award which he denounced as exorbitant. Pending resolution
of the motion, he posted an appeal bond in the amount of P105,000.00 insisting that the

jurisdiction of the Regional Director is limited to claims of P5,000.00 per employee and there
were 21 employees involved in the case.
On November 22, 1995, petitioner also filed a request to hold in abeyance any action
relative to the case for a possible amicable settlement with the employees.[13]
On January 10, 1996, District Labor Officer Adonis Peralta forwarded a Report showing that
the petitioner and most of the 21 employees had reached a compromise agreement. The
Release, Waiver and Quitclaim was signed by the following employees and show the following
amounts they received, viz:
1. Aida Licuanan

- P3,000.00

2. Clarissa Villena

- 3,000.00

3. Gemma Gales

- 3,000.00

4. Desiree Cabansag

- 3,000.00

5. Clotilda Zarata

- 3,000.00

6. Consolacion Miguel

- 5,000.00

7. Josephine Valdez

- 3,000.00

8. Maryann Galinato

- 5,000.00

9. Theresa Rosario

- 3,000.00

10.Yolly Dimabayao

- 3,000.00

11.Vilma Calaguin

- 3,000.00

12.Gemma Macalalay

- 3,000.00

13.Edelyn Maramba

- 5,000.00

14.Charito Gonzales

- 3,000.00

15.Joanna Ventura

- 3,000.00

Four (4) employees did not sign in the compromise agreement. They insisted that they be paid
what is due to them according to the Order of the Regional Director in the total amount of

P231,841.06. They were Laureta Clauna, Majestina Raymundo, Leilani Barrozo and Rosalina
Carrera.[14]
In a letter[15] dated February 23, 1996, the Regional Director informed petitioner that he
could not give due course to his appeal since the appeal bond of P105,000.00 fell short of the
amount due to the 4 employees who did not participate in the settlement of the case. In the same
letter, he directed petitioner to post, within ten (10) days from receipt of the letter, the amount
of P126,841.06 or the difference between the monetary award due to the 4 employees and the
appeal bond previously posted.
On March 13, 1996, petitioner filed a Motion for Reconsideration to Reduce Amount of
Appeal Bond.[16] He manifested that he has closed down his business operations due to severe
financial losses and implored the Regional Director to accept the appeal bond already filed for
reasons of justice and equity.
In an Order dated December 3, 1996, the respondent Secretary denied the foregoing Motion
for Reconsideration on the ground that the directive from the Regional Director to post an
additional surety bond is contained in a "mere letter" which cannot be the proper subject for a
Motion for Reconsideration and/or Appeal before his office. He added that for failure of the
petitioner to post the correct amount of surety or cash bond, his appeal was not perfected
following Article 128 (b) of the Labor Code, as amended. Despite the non-perfection of the
appeal, respondent Secretary looked into the Receipt, Waiver and Quitclaim signed by the
employees and rejected it on the ground that the consideration was unconscionably
inadequate. He ruled, nonetheless, that the amount received by the said employees should be
deducted from the judgment award and the difference should be paid by the petitioner.
On December 26, 1996, petitioner filed a Motion for Reconsideration. On February 13,
1997, he filed a Motion to Admit Additional Bond and posted the amount of P126,841.06 in
compliance with the order of the Regional Director in his letter dated February 13, 1996.[17]
On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He
ruled that the Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor
Code, as amended. He pointed out that Republic Act No. 7730 repealed the jurisdictional
limitations imposed by Article 129 on the visitorial and enforcement powers of the Secretary of
Labor and Employment or his duly authorized representatives. In addition, he held that
petitioner is now estopped from questioning the computation made by the Regional Director as a
result of the compromise agreement he entered into with the employees. Lastly, he reiterated his
ruling that the Receipt, Waiver and Quitclaim signed by the employees was not valid.
Petitioner is now before this Court raising the following issues:

Whether or not Public Respondent acted with grave abuse of discretion amounting to
lack or in excess of jurisdiction when he set aside the Release and Quitclaim executed
by the seventeen (sic) complainants before the Office of the Regional Director when
Public Respondent himself ruled that the Appeal of the Petitioner was not perfected
and, therefore, Public Respondent did not acquire jurisdiction over the case.
II

Whether or not Public Respondent acted with grave abuse of discretion amounting to
lack or in excess of jurisdiction when in complete disregard of Article 227 of the
Labor Code, Public Respondent set aside and nullified the Release and Quitclaim
executed by the seventeen (sic) complainants.
III

Whether or not Public Respondent acted with grave abuse of discretion amounting to
lack or in excess of jurisdiction when he affirmed the Order of the Regional Director
who, in complete disregard of the due process requirements of law, computed the
monetary award given to the private respondents without notice to petitioner and
without benefit of hearing.
IV

Whether or not petitioner is deemed estopped from appealing the decision of the
Regional Director when it (sic) entered into a compromise settlement with
complainants/private respondents.
The threshold issues that need to be settled in this case are: (1) whether or not the Regional
Director has jurisdiction over the instant labor standards case, and (2) whether or not petitioner
perfected his appeal.
With regard to the issue of jurisdiction, petitioner alleged that the Regional Director has no
jurisdiction over the instant case since the individual monetary claims of the 21 employees
exceed P5,000.00. He further argued that following Article 129 of the Labor Code, as amended,
and Section 1, Rule IX of the Implementing Rules of Republic Act No. 6715, the jurisdiction
over this case belongs to the Labor Arbiter, and the Regional Director should have indorsed it to
the appropriate regional branch of the National Labor Relations Commission (NLRC). On the
other hand, the respondent Secretary held that the jurisdictional limitation imposed by Article

129 on his visitorial and enforcement power under Article 128 (b) of the Labor Code, as
amended, has been repealed by Republic Act No. 7730.[18] He pointed out that the amendment
"[n]otwithstanding the provisions of Article 129 and 217 of the Labor Code to the contrary"
erased all doubts as to the amendatory nature of the new law, and in effect, overturned this
Court's ruling in the case ofServando's Inc. v. Secretary of Labor and Employment.[19]
We sustain the jurisdiction of the respondent Secretary. As the respondent correctly pointed
out, this Court's ruling in Servando --- that the visitorial power of the Secretary of Labor to order
and enforce compliance with labor standard laws cannot be exercised where the individual claim
exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730
amending Article 128 (b) of the Labor Code, viz:

Article 128 (b) - Notwithstanding the provisions of Articles 129 and 217 of this Code
to the Contrary, and in cases where the relationship of employer-employee still exists,
the Secretary of Labor and Employment or his duly authorized representatives shall
have the power to issue compliance orders to give effect to the labor standards
provisions of the Code and other labor legislation based on the findings of the labor
employment and enforcement officers or industrial safety engineers made in the
course of inspection. The Secretary or his duly authorized representatives shall issue
writs of execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs which were
not considered in the course of inspection.
An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this article may be appealed to the latter. In case said order
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or SURETY BOND issued by a reputable bonding company
duly accredited by the Secretary of Labor and Employment in the amount equivalent
to the monetary award in order appealed from. (Italics supplied.)
The records of the House of Representatives[20] show that Congressmen Alberto S. Veloso and
Eriberto V. Loreto sponsored the law. In his sponsorship speech, Congressman Veloso
categorically declared that "this bill seeks to do away with the jurisdictional limitations imposed
through said ruling (referring to Servando) and to finally settle any lingering doubts on the
visitorial and enforcement powers of the Secretary of Labor and Employment." [21] Petitioner's
reliance on Servando is thus untenable.

The next issue is whether petitioner was able to perfect his appeal to the Secretary of Labor
and Employment. Article 128 (b) of the Labor Code clearly provides that the appeal bond must
be "in the amount equivalent to the monetary award in the order appealed from." The records
show that petitioner failed to post the required amount of the appeal bond. His appeal was
therefore not perfected.
IN VIEW WHEREOF, the petition for certiorari is dismissed. No pronouncement as to
costs.
SO ORDERED.

F. SECRETARY OF LABOR (ARTICLE 128, 263(G),

LABOR CODE)
207. TELEFUNKEN SEMICONDUCTORS EMPLOYEES UNION FFW
VS. CA
DE LEON, JR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Decision [1] of the Court of Appeals dated December
23, 1999 in CA-G.R. SP Nos. 54227 and 54665 and its Resolution [2] dated April 19,
2000, denying herein petitioners motion for reconsideration.
The assailed Decision of respondent Court of Appeals granted the petition of private
respondent TEMIC TELEFUNKEN MICROELECTRONICS, (Phils.), INC., (Company,
for brevity) in CA-G.R. SP No. 54227 reversing and setting aside the Secretary of
Labors: (1) Decision dated May 28, 1999; and (2) Resolution dated July 16, 1999,
insofar as the Company was directed to pay backwages and grant financial assistance
to the striking workers.
In CA-G.R. SP No. 54665, on the other hand, the petition of TELEFUNKEN
SEMICONDUCTORS EMPLOYEES UNION-FFW (Union, for brevity) and individual
union members DANILO G. MADARA and ROMEO L. MANAYAO was dismissed on a
finding that the Secretary of Labor did not abuse his discretion nor acted in excess of
his jurisdiction when he declared illegal the strike staged by the Union, its officers and
members on September 14, 1995, and that as a result thereof, those who participated
therein have lost their employment status.

The petition is not meritorious, and the same should be as it is hereby dismissed.
The facts as borne by the records are as follows:
The labor dispute started on August 25, 1995 when the Company and the Union
reached
a
deadlock
in
their
negotiations
for
a
new collective
bargaining agreement. On August 28, 1995, the Union filed a Notice of Strike with the
National Conciliation and Mediation Board (NCMB).
On September 8, 1995,[3] the then Acting Secretary of the Department of Labor and
Employment, Jose S. Brillantes, intervened and assumed jurisdiction over the dispute
pursuant to Art. 263, par. (g),[4] of the Labor Code, as amended. Thus, the Order[5] of the
said Acting Secretary of Labor enjoined any strike or lockout, whether actual or
intended, between the parties. His Notice of the Assumption Order [6]was personally
served on the representatives of the Company, namely, on Atty. Allan Montao, counsel
of the Union-FFW, on September 9, 1995 at 1:25 p.m. and twice on Ms. Liza Dimaano,
Union President, first on September 8, 1995 at 7:15 p.m. and again on September 11,
1995 at 9:30 a.m. but both union representatives refused to acknowledge receipt
thereof.
Despite the assumption Order, the Union struck on September 14, 1995. Two (2)
days later, the Acting Secretary of Labor issued an Order [7]directing the striking workers
to return to work within twenty-four (24) hours and for the Company to admit them back
to work under the terms and conditions prevailing prior to the strike. Notice[8] of the
Return-to-Work Order[9] dated September 16, 1995 of the Acting Secretary of Labor
was sent to the striking Union members but still some of them refused to heed the order
and continued with their picket. The Federation of Free Workers (FFW) received and
acknowledged receipt of the said Return to Work Order on September 18, 1995. On
September 23, 1995, violence erupted in the picket lines. The service bus ferrying nonstriking workers was stoned, causing injuries to its passengers. Thereafter, complaints
for threats, defamation, illegal detention and physical injuries were filed against the
strikers.
On October 2, 1995, the Company issued letters of termination for cause to the
workers who did not report back to work despite the Notice of Assumption and Returnto-Work Orders issued by the Acting Secretary Jose S. Brillantes of the Department of
Labor and Employment (DOLE).
On October 27, 1995, the Acting Secretary of Labor issued another
Order[10] directing the Company to reinstate all striking workers except the Union
Officers, shop stewards, and those with pending criminal charges, x x x while the

resolution of the legality of the strike was pending. This exclusion Order was reaffirmed
with some modifications in an Order[11] dated November 24, 1995.
On December 5, 1995, the Union filed with this Court a petition for certiorari,
docketed as G.R. No. 122743, questioning the exclusions made in the aforesaid Orders.
On June 27, 1996, while the said petition in G.R. No. 122743 was pending, then
Secretary of Labor Leonardo A. Quisumbing issued a Writ of Execution[12] for the
physical reinstatement of the remaining striking workers who were not reinstated as
contained in the thirty-two (32) page list[13] attached to the aforesaid writ.
Accordingly, on July 3, 1996, the Company filed a Motion to Quash, Recall or
Suspend the Writ of Execution [14] issued by Secretary Quisumbing. This motion was
denied[15] by the Department of Labor and Employment (DOLE, for brevity) for lack of
merit and, in the same Order, the DOLE directed the issuance of an Alias Writ to
enforce the actual and physical reinstatement of the workers, or in case the same was
not feasible, to effect PAYROLL reinstatement. On November 21, 1996, the
Companys motion for reconsideration was also denied. [16]
On December 9, 1996, the Company filed with this Court a petition for certiorari,
docketed as G.R. No. 127215, questioning the denial of its motion for reconsideration
and the Alias Writ issued by the DOLE to enforce the actual and physical reinstatement
or the PAYROLL reinstatement of the workers (including the Original Writ of Execution
of June 27, 1996).
After we consolidated[17] the petitions for certiorari of the Company and the Union in
G.R. Nos. 122743 and 127215, respectively, we rendered a Decision therein
on December 12, 1997. The Companys petition for certiorari in G.R. No. 127215 was
dismissed for lack of merit. In G.R. No. 122743, we granted the Unions petition and
ordered the reinstatement of all striking workers without exception. We also directed
the Secretary of Labor and Employment to determine with dispatch the legality of the
strike as well as the liability of the individual strikers, if any.
After receipt of our said Decision in G.R. Nos. 122743 and 127215, the DOLE
issued an Alias Writ of Execution on August 26, 1998. Thereafter, the Company moved
to quash the Alias Writ which was, however, denied [18] by the DOLE. The motion for
reconsideration filed by the Company was similarly denied. [19] Aggrieved by the
preceding rulings of the DOLE, the Company elevated this case to this Court via
another petition for certiorari docketed as G.R. No. 135788.

On December 7, 1998, we resolved [20] to dismiss the said petition in G.R. No.
135788 for (a) failing to state the place of service by registered mail on the adverse
party; (b) failing to submit a certification duly executed by the president of the
petitioning Company or by its representative which shows its authority to represent and
act on behalf of the Company; and (c) for lack of the requisite certificate of nonforum shopping. We denied this petition with finality on our March 15, 1999
Resolution[21] where we held that the Secretary of Labor did not abuse his discretion in
denying the Companys motion to quash the execution of our Decision dated December
12, 1997.
In compliance with our order to the Secretary of Labor and Employment to
determine with dispatch the legality of the strike, marathon hearings were
conducted[22] at the DOLE Office with Atty. Lita V. Aglibut as hearing officer. On
September 22, 1998, both the Union and the Company complied with the order to
submit their respective position papers. The Company adduced evidence and
submitted its case for decision. The Union did not adduce evidence. Instead, the Union
manifested that it would file a motion to dismiss for failure of the Company to prove its
case with the request that it be allowed to present evidence should its motion be denied.
During the subsequent hearings[23] conducted by the hearing officer of DOLE, the
Union insisted that a ruling should first be made on the Demurrer to Evidence it
previously filed notwithstanding repeated reminders by the Hearing Officer that the
technical rules of evidence and procedure do not apply to proceedings before
DOLE. Thereafter, an exchange of pleadings, reiterating their respective positions,
ensued between the Company and the Union.
On May 19, 1999, the Union filed a motion before the DOLE praying for the
issuance of another Alias Writ of Execution in connection with our March 15, 1999
Resolution in G.R. No. 135788. The Union contended that this Resolution has declared
the dismissals of the striking workers as illegal and therefore a writ should be issued for
the physical reinstatement of the workers with full backwages and other benefits
reckoned from June 27, 1996.
On May 28, 1999, the Secretary of Labor and Employment resolved the matter in a
Decision.[24] The Secretary of Labor declared therein that in hearings and resolutions of
labor disputes, before the DOLE, his Office is not governed by the strict and technical
rules of evidence and procedure observed in the regular courts of law, and that it will
resolve the issues based on the pleadings, the documentary evidence and other
records of the case. The dispositive portion of the said Decision dated May 28, 1999
reads:

WHEREFORE, PREMISED ON THE FOREGOING, this Office hereby:

a. Declares the strike conducted by the Telefunken Semiconductors Employees UnionFFW on 14 September 1995 as illegal for having been waged in open, willful and
knowing defiance of the assumption order dated 8 September 1995 and the
subsequent return-to-work order dated 16 September 1995 and consequently, the
striking workers are declared to have lost their employment status;
b. Directs the payment of backwages and other benefits to the striking workers
corresponding to the temporary reinstatement periods (1) from 27 June 1996 to 28
October 1996, (2) from 21 November 1998 up to the date of this Decision;
c. Directs the Telefunken Micro-Electronics (Phils.), Inc. to grant financial
assistance equivalent to one (1) month for every year of service to the striking
workers conformably with its grant of the same benefit to other strikers as
manifested by the Company to the Supreme Court on 20 November 1997.

In this connection, the Bureau of Working Conditions, this Department, is

hereby directed to compute the total award herein made and to submit its
report of computation to this Office within ten (10) days from receipt of this
Decision.
SO ORDERED.[25]
Dissatisfied, both the Company and the Union together with individual union
members Nancy Busa and Arnel Badua, filed motions for reconsideration of the said
Decision of the Secretary of Labor. On July 16, 1999,[26] the Secretary of Labor denied
the said motions.
The Company and the Union filed their respective petitions for certiorari docketed
as CA-G.R. SP Nos. 54227 and 54665 with the Court of Appeals and these were later
on consolidated. On December 23, 1999, the Court of Appeals rendered its now
assailed Decision, the dispositive portion of which states:

WHEREFORE, the COMPANYs Petition in CA-G.R. No. SP 54227 is

GRANTED. The Secretary of Labors Decision dated 28 May 1999 and his
Resolution dated 16 July 1999 are REVERSED and SET ASIDE in so far as
they direct the company to pay backwages and grant financial assistance to
the striking workers. The said Decision and Resolution are AFFIRMED in all
other respects. The Unions Petitions in CA-G.R. SP No. 546654 is
DISMISSED.

SO ORDERED.
On January 24, 2000, only the Union sought reconsideration [27] of the said Decision
of the appellate court. However, it was denied for lack of merit by the Court of Appeals
on April 19, 2000 in its Resolution.[28]
In the petition at bench, petitioners Union, Madara and Manayao submits the
following assignment of errors, to wit:

THE HONORABLE COURT OF APPEALS ERRED:

I

IN AFFIRMING THE DECISION OF THE RESPONDENT SECRETARY OF

LABOR IN FINDING THE STRIKE STAGE BY THE UNION ILLEGAL WHICH
WAS FEEBLY BASED ON THE COMPANYS POSITION PAPER AND THE
MATERIALS AND PICTORIALS ATTACHED THERETO WHICH ARE
BEREFT OF PROBATIVE VALUE BECAUSE THEY ARE PATENTLY
INADMISSIBLE AND INCOMPETENT.
II

.IN SUSTAINING THE RESPONDENT SECRETARYS DECISION

EFFECTING THE WHOLESALE TERMINATION OF EMPLOYMENT OF THE
STRIKING TEMIC WORKERS WITHOUT ANY DETERMINATION OF THEIR
INDIVIDUAL LIABILITY, IF ANY, AS ORDERED BY THE HONORABLE
SUPREME COURT, IN THE ABSENCE OF ANY ILLEGAL ACTS
COMMITTED BY THE STRIKERS ATTENDANT TO THE STRIKE.
III

.IN RULING THAT THE SOLE OFFICE OF THE WRIT OF CERTIORARI

IS THE CORRECTION OF ERRORS OF JURISDICTION INCLUDING THE
COMMISSION OF ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION, DOES NOT INCLUDE CORRECTION OF HEREIN PUBLIC
RESPONDENT SECRETARY OF LABORS EVALUATION OF THE
EVIDENCE AND FACTUAL FINDINGS THEREON.
IV

.IN RULING IN A MANNER ABSOLUTE THAT TECHNICAL RULES OF

EVIDENCE PREVAILING IN THE COURTS OF LAW AND EQUITY HAVE NO
ROOM IN ADMINISTRATIVE AND/OR QUASI-JUDICIAL PROCEEDINGS.
V

.IN UPHOLDING THE RESPONDENT SECRETARY OF LABORS RULING

THAT THE NON-APPLICATION OF TECHNICAL RULES OF PROCEDURE
IN PROCEEDINGS BEFORE THE OFFICE OF THE SECRETARY OF
LABOR BARS THE PETITIONERS FROM ADDUCING EVIDENCE AFTER
THE DENIAL OF THE UNION'S DEMURRER TO EVIDENCE.
VI

.IN NEGATING THE PETITIONERS VESTED RIGHT TO BACKWAGES.

The petition has no merit.
As to the first and second assigned errors, herein petitioners contend that according
to the Constitution[29] and jurisprudence,[30] strikes enjoy the presumption of legality and
the burden of proving otherwise rests upon the respondent Company; that the case
should not have been decided on the basis of the position paper method because in
several instances[31] this Court has looked with disfavor on the position paper method in
disposing labor cases; that due to the transcendental issues involved, a hearing should
have been conducted to avoid the impression of denial of due process considering the
dearth of evidence submitted by respondent Company; and that the pieces of evidence
submitted by respondent Company are wanting in probative value.
Herein petitioners also argue that for a union officer to lose his employment status it
must be proved that he knowingly participated in an illegal strike; and that in the case of
an ordinary member, it must not only be demonstrated that he actually participated in
the illegal strike but also that he has committed illegal acts during the strike and which
respondent Company allegedly failed to prove.
We do not agree. Despite petitioners vain attempt to structure the case to show, on
its surface, a question of law, nevertheless, the case essentially involves a question of
fact. The issues raised basically boils down to a determination of whether or not the
position paper and the pieces of evidence adduced by the Company before the DOLE
are sufficient in probative value to overthrow the constitutional presumption of the
legality of the strike. As correctly observed by the Solicitor General in his Comment,

[32]

it . . . .(the first and second assigned errors) essentially involve questions of fact. It
calls for a re-evaluation of facts and a re-examination of the evidence.
We take this occasion to emphasize that the office of a petition for review
on certiorari under Rule 45 of the Rules of Court requires that it shall raise only
questions of law.[33] The factual findings by quasi-judicial agencies, such as the
Department of Labor and Employment, when supported by substantial evidence, are
entitled to great respect in view of their expertise in their respective fields. [34] Judicial
review of labor cases does not go so far as to evaluate the sufficiency of evidence on
which the labor officials findings rest. [35] It is not our function to assess and evaluate all
over again the evidence, testimonial and documentary, adduced by the parties to an
appeal, particularly where the findings of both the trial court (here, the DOLE Secretary)
and the appellate court on the matter coincide, [36] as in this case at bar. The Rule limits
that function of the Court to the review or revision of errors of law and not to a second
analysis of the evidence.[37] Here, petitioners would have us re-calibrate all over again
the factual basis and the probative value of the pieces of evidence submitted by the
Company to the DOLE, contrary to the provisions of Rule 45. Thus, absent any
showing of whimsical or capricious exercise of judgment, and unless lack of any basis
for the conclusions made by the appellate court be amply demonstrated, we may not
disturb such factual findings.
Although we have ruled against the reliability of position papers in disposing of labor
cases, in the cases of Batongbacal v. Associated Bank [38] and Progress Homes v.
NLRC,[39] this was due to certain patent matters that should have been tried by the
administrative agency concerned, such as certain factual circumstances which,
however, are unavailing in the case at bar.
In Batongbacal, we withheld judgment on the case due to the absence of a
definitive factual determination of the status of petitioner therein as an assistant vicepresident of therein respondentBank. It has not been established by the Labor Arbiter
whether the petitioner therein was a managerial or a rank-and-file employee, noting that
there are different causes of termination for both the managerial and rank-and-file
employees. Thus, the need to remand the case was necessary.
In Progress Homes, on the other hand, we found that despite the absence of any
evidence to establish and support therein private respondents claim that the petitioners
therein were their immediate employers, the Labor Arbiter forthwith concluded the illegal
dismissal of the private respondents. Also, there was the apparent failure of the Labor
Arbiter to justify why the private petitioner therein should be held solidarily liable
with Progress Homes. There was a clear absence of evidence to show that petitioner
therein had engaged the services of private respondents therein and that petitioner

therein had acted maliciously and in bad faith in terminating the services of private
respondents.
The herein petitioners dismally failed to show that there really existed certain issues
which would necessitate the remand of this case at bar, or that the appellate court
misapprehended certain facts when it dismissed their petition for certiorari.
The need to determine the individual liabilities of the striking workers, the union
officers and members alike, was correctly dispensed with by the Secretary of Labor
after he gave sufficient opportunity to the striking workers to cease and desist from
continuing with their picket. Ensconced in the Labor Code of the Philippines, as
amended, is the rule that:

Art. 263. Strikes, picketing and lockouts.

xxx

xxx

xxx

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the dispute and decide
it or certify the same to the Commission for compulsory arbitration. Such
assumption per certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or
certification order. If one had already taken place at the time of assumption or
certification, all striking or locked outemployees shall immediately return to
work and the employer shall immediately resume operations and re-admit all
workers under the same terms and conditions prevailing before the strike or
lockout. The Secretary of Labor and Employment or the Commission may seek the
assistance of law enforcement agencies to ensure the compliance with this
provision as well as with such orders as he may issue to enforce the same.
(Emphasis Ours)

xxx

xxx

xxx

It is clear from the foregoing legal provision that the moment the Secretary of Labor
assumes jurisdiction over a labor dispute in an industry indispensable to national
interest, such assumption shall have the effect of automatically enjoining the
intended or impending strike. It was not even necessary for the Secretary of Labor to
issue another order directing them to return to work. The mere issuance of an
assumption order by the Secretary of Labor automatically carries with it a return-to-work
order, even if the directive to return to work is not expressly stated in the assumption
order.[40] However, petitioners refused to acknowledge this directive of the Secretary of

Labor on September 8, 1995 thereby necessitating the issuance of another

order expressly directing the striking workers to cease and desist from their actual
strike, and to immediately return to work but which directive the herein petitioners opted
to ignore. In this connection, Article 264(a) of the Labor Code clearly provides that:

Article 264. Prohibited Activities.

(a) x x x
No strike or lock out shall be declared after the assumption of
jurisdiction by the President or the Secretary or after certification or
submission of the dispute to compulsory or voluntary arbitration or during
the pendency of cases involving the same grounds for the strike or
lockout.
x x x. Any union officer who knowingly participates in illegal strike and any
worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have
lost his employment status: Provided, that mere participation of a
worker in a lawful strike shall not constitute sufficient ground for
termination of his employment even if a replacement had been hired by
the employer during such lawful strike. (Emphasis Ours)
The rationale of this prohibition is that once jurisdiction over the labor dispute has been
properly acquired by the competent authority, that jurisdiction should not be interfered
with by the application of the coercive processes of a strike. [41] We have held in a
number of cases that defiance to the assumption and return-to-work orders of the
Secretary of Labor after he has assumed jurisdiction is a valid ground for loss of the
employment status of any striking union officer or member.[42]
Furthermore, the claim of petitioners that the assumption and return-to-work Orders
issued by the Secretary of Labor were allegedly inadequately served upon them is
untenable in the light of what have already been clearly established in this case, to wit:

x x x, the reports of the DOLE process server, shows that the Notice of Order
of 8 September 1995 was actually served on the Union President. The latter,
however, refused to acknowledge receiptof the same on two separate
occasions (on 8 September 1995 at 7:15 p.m. and on 11 September 1995 at
9:30 a.m.). The Unions counsel of record, Atty. Allan Montano, similarly

refused to acknowledge receipt of the 8 September 1995 Order on 9

September 1995 at 1:25 p.m.
Records also show that the Order of 16 September 1995 was served at
the strike area with copies left with the striking workers, per the process
servers return, although a certain Virgie Cardenas also refused to
acknowledge receipt. The Federation of Free Workers officially received
a copy as acknowledged by a certain Lourdes at 3:40 p.m. of 18
September 1995.
The foregoing clearly negate the Unions contention of inadequate service of
the Orders dated 8 and 16 September 1995 of Acting Secretary
Brillantes. Furthermore, the DOLE process servers discharge of his function
is an official act carrying the presumption of regularity in its performance which
the Union has not disproved, much less disputed with clear and convincing
evidence.
Likewise, it would be stretching the limits of credibility if We were to believe
that the Union was unaware of the said Orders during all the conciliation
conferences conducted by the NCMB-DOLE. Specifically, in the conciliation
meetings after the issuance of the Order of 8 September 1995 to settle the
unresolved CBA issues and after the issuance of the Order of 16 September
1995 to establish the mechanics for a smooth implementation of this Offices
return-to-work directive, the Union with its officers and members in
attendance never questioned the propriety or adequacy by which these
Orders were served upon them.
We are not unaware of the difficulty of serving assumption and return-to-work
orders on striking unions and their members who invariably view the DOLEs
process servers with suspicion and hostility. The refusal to receive such
orders and other processes is, as described by the Supreme Court in an
analogous case, an apparent attempt to frustrate the ends of
justice. (Navale, et al. v. Court of Appeals, 253 SCRA 705)
Such being the case, We cannot allow the Union to thwart the efficacy of the
assumption and return to work orders, issued in the national interest, through
the simple expediency of refusing to acknowledge receipt thereof.

Having thus resolved the threshold issue as hereinabove discussed, it

necessarily follows that the strike of the Union cannot be viewed as
anything but illegal for having been staged in open and knowing
defiance of the assumption and return-to-work orders. The necessary
consequence thereof are also detailed by the Supreme Court in its
various rulings. In Marcopper Mining Corp. v. Brillantes (254 SCRA 595),
the High Tribunal stated in no uncertain terms that by staging a strike after the assumption of jurisdiction or certification
for arbitration, workers forfeited their right to; be readmitted to work,
having abandoned their employment, and so could be validly replaced.
Again, in Allied Banking Corporation v. NLRC (258 SCRA 724), the Supreme
Court ruled that:
xxx. However, private respondents failed to take into consideration the cases
recently decided by this Court which emphasized on the strict adherence to
the rule that defiance of the return-to-work order of the Secretary of Labor
would constitute a valid ground for dismissal. The respective liabilities of
striking union officers and members who failed to immediately comply with the
return-to-work order, are clearly spelled out in Article 264 of the Labor Code
which provides that any declaration of a strike or lock out after the Secretary
of Labor and Employment has assumed jurisdiction over the labor dispute is
considered an illegal act. Therefore, any worker or union officer who
knowingly participates in a strike defying a return-to-work order may as a
result thereof be considered to have lost his employment status.
Viewed in the light of the foregoing, We have no alternative but to confirm the
loss of employment status of all those who participated in the strike in
defiance of the assumption order dated 8 September 1995 and did not report
back to work as directed in the Order of 16 September 1995.[43]
To cast doubt on the regularity of the aforesaid service of the two Orders issued by
the Secretary of Labor, petitioners cite Section 1, Rule IX of the NLRC Manual on
Execution of Judgment which provides that:

Section 1. Hours and Days When Writ Shall Be Served. Writ of

Execution shall be served at any day, except Saturdays, Sundays and

holidays, between the hours of eight in the morning and five in the afternoon.
xxx
However, the above-cited rule is not applicable to the case at bar inasmuch as
Sections 1[44] and 4,[45] Rule III of the same NLRC Manual provide that such Execution
shall issue only upon a judgment or order that finally disposes of an action or
proceeding. The assumption and return-to-work Orders issued by the Secretary of
Labor in the case at bar are not the kind of orders contemplated in the immediately cited
rule of the NLRC because such Orders of the Secretary of Labor did not yet finally
dispose of the labor dispute. As pointed out by the Secretary of Labor in his Decision,
petitioners cannot now feign ignorance of his official intervention, to wit:

The admissibility of the evidence presented by the Company, however, has

been questioned. The Unions arguments are less than convincing. The
numerous publications of the subject DOLE Orders in various newspapers,
tabloids, radio and television cannot be considered hearsay and subject to
authentication considering that the subject thereof were the lawful Orders of a
competent government authority. In the case of the announcements posted
on the Unions bulletin board, pictures of which were presented by the
Company in evidence, suffice it for us to state that the bulletin board belonged
to the Union. Since the veracity of the contents of the announcements on the
bulletin board were never denied by the Union except to claim that these were
self-serving, unverified/unverifiable and thus utterly inadmissible, We cannot
but admit the same for the purpose for which it was presented.[46]
As regards the third assigned error, petitioners contend that a resolution of a petition
for certiorari under Rule 65 of the Rules of Court should include the correction of the
Secretary of Labors evaluation of the evidence and factual findings thereon pursuant to
the doctrine laid down in Meralco v. The Honorable Secretary of Labor Leonardo A.
Quisumbing.[47] That contention is misplaced. In that case, we ruled that:

The extent of judicial review over the Secretary of Labors arbitral award is
not limited to a determination of grave abuse in the manner of the secretarys
exercise of his statutory powers. This Court is entitled to, and must in the
exercise of its judicial power review the substance of the Secretarys award
when grave abuse of discretion is alleged to exist in the award, i.e., in the
appreciation of and the conclusions the Secretary drew from the evidence
presented.

However, this Courts review (of) the substance does not mean a re-calibration of the
evidence presented before the DOLE but only a determination of whether the Secretary
of Labors award passed the test of reasonableness when he arrived at his conclusions
made thereon. Thus, we declared in Meralco, that:

In this case we believe that the more appropriate and available standard and
one does not require a constitutional interpretationis simply the standard of
reasonableness. In laymans terms, reasonableness implies the absence of
arbitrariness; in legal parlance, this translates into the exercise of proper
discretion and to the observance of due process. Thus, the question we have
to answer in deciding this case is whether the Secretarys actions have been
reasonable in light of the parties positions and the evidence they presented.[48]
Thus, notwithstanding any allegation of grave abuse of discretion, unless it can be
amply demonstrated that the Secretary of Labors arbitral award did not pass the test of
reasonableness, his conclusions thereon shall not be disturbed, as in the case at bar.
The main thrust of a petition for certiorari under Rule 65 of the Rules of Court is only
the correction of errors of jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction. However, for this Court to
properly exercise the power of judicial review over a decision of an administrative
agency, such as the DOLE, it must first be shown that the tribunal, board or officer
exercising judicial or quasi-judicial functions has indeed acted without or in excess of its
or his jurisdiction, and that there is no appeal, or any plain, speedy and adequate
remedy in the ordinary course of law.[49] In the absence of any showing of lack of
jurisdiction or grave abuse tantamount to lack or excess of jurisdiction, judicial review
may not be had over an administrative agencys decision. We have gone over the
records of the case at bar and we see no cogent basis to hold that the Secretary of
Labor has abused his discretion.
In the fourth and fifth assignment of errors, petitioners would have us believe that
the Court of Appeals, in its assailed Decision ruled in a manner absolute that prevailing
technical rules of evidence in the courts of law and equity have no room in
administrative and/or quasi-judicial proceedings; and that the non-application of
technical rules of procedure in proceedings before the Office of the Secretary of Labor
should not have barred herein petitioners from adducing evidence after their demurrer
to evidence was denied.
We do not agree. That declaration of the Court of Appeals should be taken in the
context of the whole paragraph and the law and the jurisprudence cited in the assailed

portion of its decision. We do not sanction the piecemeal interpretation of a decision to

advance ones case. To get the true intent and meaning of a decision, no specific
portion thereof should be isolated and resorted to but the decision must be considered
in its entirety.[50] The portion of the Court of Appeals assailed Decision reads, to wit:

x x x, it cannot be gainsaid that technical rules of evidence prevailing in courts

of law and equity have no room in administrative and/or quasi-judicial
proceedings (Lawin Security Services, Inc. v. National Labor Relations
Commission, 273 SCRA 132; Valderama v. National Labor Relations
Commission, 256 SCRA 466; De Ysasi III v. National Labor Relations
Commission, 231 SCRA 173). In fact, Article 221 of the Labor Code expressly
mandates that in proceedings before the (National Labor Relations)
Commission or any of the Labor Arbiters, the rules of evidence prevailing in
courts of law or equity shall not be controlling x x x. This provision is also
applicable to proceedings before the Office of the Secretary of Labor and
Employment which, under the said Code, is empowered to hear and resolve
matters arising from the exercise of its plenary power to issue assumption or
(sic) jurisdiction and return-to-work orders, all in keeping with the national
interest (Article 263(g) and Article 264 of the Labor Code).[51]
The contention of petitioners that they should have been allowed to present
evidence when their demurrer to evidence was denied by the Secretary of Labor, is
untenable. The record shows that in the hearing of September 22, 1998 attended by
the parties, Atty. Lita V. Aglibut, Hearing Officer, of the public respondents office, who
presided over the hearing directed the parties to submit their respective position
papers together with the affidavits and documentary evidence within ten (10)
days.[52] While the Company submitted its position paper together with supporting
evidence and rested its case for resolution, herein petitioners, however, submitted only
its position paper but without attaching thereto any supporting documentary
evidence. Petitioners chose to rely on the Rules of Court by filing a demurrer to
evidence in the hope of a favorable decision and disregarded our resolution in G.R. No.
127215 ordering the Secretary of Labor to determine with dispatch the legality of the
strike. On the other hand, the petitioners argued merely on the presumption that the
strike was legal. The fact that the Hearing Officer of DOLE admitted their demurrer to
evidence is not a valid excuse for herein petitioners not to comply with her said directive
for the petitioners to submit their position paper and to attach thereto affidavits and
documentary evidence within ten (10) days. Petitioners non-compliance with that
directive by failing or refusing to attach affidavits and supporting evidence to their
position paper should not be ascribed as the fault of the Secretary of Labor when he

denied their demurrer to evidence and forthwith rendered decision on the illegality of the
strike. Petitioners have only themselves to blame for having defied the order of the said
Hearing Officer of DOLE to submit position papers with supporting evidence. A
party who has availed of the opportunity to present his position paper cannot claim to
have been denied due process.[53] The requirements of due process are satisfied when
the parties to a labor case are given the opportunity to submit position papers wherein
they are supposed to attach all the documents that would prove their claim in the event
it will be decided that no further hearing should be conducted or that hearing was not
necessary.[54]
The grant of plenary powers to the Secretary of Labor under Art. 263(g) of the Labor
Code, as amended, makes it incumbent for him to bring about soonest, a fair and just
solution to the differences between the employer and the employees so that the
damage such labor dispute might cause upon the national interest may be minimized as
much as possible, if not totally averted, by avoiding stoppage of work or any lagging of
the activities of the industry or the possibility of these contingencies which might cause
detriment to such national interest. [55] Accordingly, he may adopt the most reasonable
and expeditious way of writing finis to the labor dispute. Otherwise, the result would be
absurd and contrary to the grant of plenary powers to him by the Labor Code over a
labor dispute causing or likely to cause a strike or lockout in an industry indispensable
to the national interest.
And finally, with respect to petitioners claim of backwages, we find that the
ratiocination of the appellate court in its assailed Decision is in accord with law and
settled jurisprudence, to wit:

On the issue of the award of backwages and financial assistance to the

striking workers, the well-entrenched doctrine is that it is only when there is a
finding of illegal dismissal that backwages are granted (St. Theresas School
of Novaliches Foundation vs. National Labor Relations Commission, 289
SCRA 111; Industrial Timber Corporation-Stanply Operations vs. National
Labor Relations Commission, 253 SCRA 623; Jackson Building Condominium
Corporation, 246 SCRA 329), and financial assistance or separation pay
allowed (Mabeza v. National Labor Relations Commission, 271 SCRA 670;
Capili v. National Labor Relations Commission, 270 SCRA 688; Aurora Land
Projects Corporation v. National Labor Relations Commission, 266 SCRA 48).
Since, as correctly found by the Secretary of Labor, the strikers were not
illegally dismissed, the COMPANY is under no obligation to pay backwages to
them. It is simply inconsistent, nay, absurd, to award backwages when there is

no finding of illegal dismissal (Filflex Industrial and Manufacturing Corporation,

286 SCRA 245). xxx when the record shows that the striking workers did not
comply with lawful orders for them to return to work during said periods of
time. In fact, the Secretary of Labor observed that while it was obligatory on the
part of both parties to restore, in the meantime, the status quo obtaining in the
workplace, the same was not possible considering the strikers had defied the
return-to-work Order of this Office (p. 8, Ibid). With such blatant disregard by the
strikers of official edicts ordering their temporary reinstatement, there is no
basis to award them backwages corresponding to said time frames. Otherwise,
they will recover something they have not or could not have earned by their
willful defiance of the return-to-work order, a patently incongruous and unjust
situation (Santos v. National Labor Relations Commission, 154 SCRA 166).
The same view holds with respect to the award of financial assistance or separation
pay. The assumption for granting financial assistance or separation pay, which is, that
there is an illegally dismissed employee and that illegally dismissed employee would
otherwise have been entitled to reinstatement, is not present in the case at
bench. Here, the striking workers have been validly dismissed. Where the employees
dismissal was for a just case, it would be neither fair nor just to allow the employee to
recover something he has not earned or could not have earned. This being so, there
can be no award of backwages, for it must be pointed out that while backwages are
granted on the basis of equity for earnings which a worker or employee has lost due to
his illegal dismissal, where private respondents dismissal is for just cause, as is (sic)
the case herein, there is no factual or legal basis to order the payment of backwages;
otherwise, private respondent would be unjustly enriching herself at the expense of
petitioners. (Cathedral School of Technology v. National Labor Relations Commission,
214 SCRA 551). Consequently, granting financial assistance to the strikers is clearly a
specious Inconsistency supra. We are of course aware that financial assistance may
be allowed as a measure of social justice in exceptional circumstances and as an
equitable concession. We are likewise mindful that financial assistance is allowed only
in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character (Zenco Sales, Inc. v.
National Labor Relations Commission, 234 SCRA 689). However, the attendant facts
show that such exceptional circumstances do not obtain in the instant cases to warrant
the grant of financial assistance to the striking workers. To our mind, the strikers open
and willful defiance of the assumption order dated September 16, 1995 constitute
serious misconduct as well as reflective of their moral character, hence, granting
financial assistance to them is not and cannot be justified (PHILIPPINES AIRLINES ,
Inc. v. National Labor Relations Commission, 282 SCRA 536, citing Philippine Long
Distance Telephone Company v. National Labor Relations Commission, 164 SCRA
671).[56]

In fine, there is no reversible error in the assailed Decision and Resolution of the
Court of Appeals.
WHEREFORE, the petition is DISMISSED. The appealed Decision dated December
23, 1999 and the Resolution dated April 19, 2000 of public respondent Court of Appeals
are AFFIRMED. No costs.
SO ORDERED.

208. PHIMCO INDISTRIES, INC. VS. BRILLIANTES

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, seeking to
set aside the July 7, 1995 Order[1] of the then Acting Secretary Jose Brillantes of the Department
of Labor and Employment, in NCMB-NCR-NS-03-122-95, on the ground of grave abuse of
discretion amounting to lack or excess of jurisdiction.
The antecedent facts are, as follows:
On March 9, 1995, the private respondent, Phimco Industries Labor Association (PILA),
duly certified collective bargaining representative of the daily paid workers of the petitioner,
Phimco Industries Inc. (PHIMCO), filed a notice of strike with the National Conciliation and
Mediation Board, NCR, against PHIMCO, a corporation engaged in the production of matches,
after a deadlock in the collective bargaining and negotiation. On April 21, 1995, when the
several conciliation CONFERENCES CALLED by the contending parties failed to resolve
their differences PILA, composed of 352[2] members, staged a strike.
On June 7, 1995, PILA presented a petition for the intervention of the Secretary of Labor in
the resolution of the labor dispute, to which petition PHIMCO opposed. Pending resolution of
the said petition or on June 26, 1995, to be precise, PHIMCO sent notice of termination to some
47[3] workers including several union officers.
On July 7, 1995, the then Acting Secretary of Labor Jose Brillantes assumed jurisdiction
over the labor dispute and issued his Order; ruling, thus:

WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263

(g) of the Labor Code, as amended, this office hereby assumes jurisdiction over the
dispute at Phimco Industries, Inc.

Accordingly, all the striking workers, except those who have been handed down
termination papers on June 26, 1995, are hereby directed to return to work within
twenty-four (24) hours from receipt of this Order and for the Company to accept them
back under the same terms and conditions prevailing prior to the strike.
The parties are further ordered to cease and desist from committing any act that will
aggravate the situation.
To expedite the resolution of this dispute, the parties are directed to submit
their position papers and evidence within ten (10) days from receipt of this Order.
SO ORDERED.[4]
On July 12, 1995, petitioner brought the present petition; theorizing, that:

I
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN ISSUING THE ASSAILED ORDER.
II
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN HE WENT BEYOND THE BASIS FOR ASSUMPTION
OF JURISDICTION UNDER ART. 263 OF THE LABOR CODE."[5]
On July 31, 1995, two weeks after the filing of the Petition, the public respondent issued
another Order[6] temporarily holding in abeyance the implementation of the questioned Order
dated July 7, 1995 for a period of thirty (30) day; directing, as follows:

WHEREFORE, PREMISES CONSIDERED, the implementation of our Order dated

7 July 1995 is hereby temporarily held in abeyance for a period of thirty (30) days
effective from receipt thereof pending the private negotiations of the parties for
the settlement of their labor dispute. Thereafter, both the Union and the Company are
directed to submit to this Office the result of their negotiations for our evaluation and
appropriate action.

SO ORDERED."[7]
The pivotal issue here is: whether or not the public respondent acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in assuming jurisdiction over subject labor
dispute.
The petition is impressed with merit
Article 263, paragraph (g) of the Labor Code, provides:

(g) When, in his opinion, there exist a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the dispute and decide it or
certify the same to the Commission for compulsory arbitration x x x.
The Labor Code vests in the Secretary of Labor the discretion to determine what
industries are indispensable to the national interest. Accordingly, upon the
determination by the Secretary of Labor that such industry is indispensable to the
national interest, he will assume jurisdiction over the labor dispute in the said
industry.[8] This power, however, is not without any limitation. In upholding the
constitutionality of B.P. 130 insofar as it amends Article 264 (g) [9] of the Labor Code, it
stressed in the case of Free telephone Workers Union vs. Honorable Minister of
Labor and Employment, et al.,[10] the limitation set by the legislature on the power of
the Secretary of Labor to assume jurisdiction over a labor dispute, thus:
Batas Pambansa Blg. 130 cannot be any clearer, the coverage being limited to
strikes or lockouts adversely affecting the national interest. [11]
In this case at bar, however, the very admission by the public respondent draws the labor
dispute in question out of the ambit of the Secretarys prerogative, to wit:

While the case at bar appears on its face not to fall within the strict categorization
of cases imbued with national interest, this office believes that the obtaining
circumstances warrant the exercise of the powers under Article 263 (g) of the Labor
Code, as amended.[12]
The private respondent did not even make any effort to touch on the indispensability of the
match factory to the national interest. It must have been aware that a match factory, though of
value, can scarcely be considered as an industry indispensable to the national interest as it

cannot be in the same category as generation and distribution of energy, or those undertaken by
banks, hospitals, and export-oriented industries.[13] Yet, the public respondent assumed
jurisdiction thereover, ratiocinating as follows:

For one, the prolonged work disruption has adversely affected not only the
protagonists, i.e., the workers and the Company, but also those directly and indirectly
dependent upon the unhampered and continued operations of the Company for their
means of livelihood and existence. In addition, the entire community where the plant
is situated has also been placed in jeopardy. If the dispute at the Company remains
unabated, possible loss of employment, not to mention consequent social problems,
might result thereby compounding the unemployment problem of the country.
Thus we cannot be unmindful of the possible dire consequences that might ensue if the
present dispute is allowed to remain unresolved, particularly when an alternative
dispute resolution mechanism obtains to dispose of the differences between the
parties herein.[14]
It is thus evident from the foregoing that the Secretarys assumption of jurisdiction
grounded on the alleged obtaining circumstances and not on a determination that the industry
involved in the labor dispute is one indispensable to the national interest, the standard set by
the legislature, constitutes grave abuse of discretion amounting to lack of or excess of
jurisdiction. To uphold the action of the public respondent under the premises would be
stretching too far the power of the Secretary of Labor as every case of a strike or lockout where
there are inconveniences in the community, or work disruptions in an industry though not
indispensable to the national interest, would then come within the Secretarys power. It would be
practically allowing the Secretary of Labor to intervene in any Labor dispute at his
pleasure. This is precisely why the law sets and defines the standard: even in the exercise of his
power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must
follow the law. For when an overzealous official by-passes the law on the pretext of retaining a
laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is
disregarded[15]
In light of the foregoing, we hold that the public respondent gravely abused his discretion in
assuming jurisdiction over the labor dispute sued upon in the case.
WHEREFORE, the petition is hereby GRANTED; and the assailed Order, dated July 7,
1995, of the Acting Secretary of Labor SET ASIDE. No pronouncement as to costs.
SO ORDERED.

209. NATIONAL FEDERATION OF LABOR VS. LAGUESMA

KAPUNAN, J.:
Before us is a petition for certiorari under Rule 65 assailing the Resolution in OS-A-7-142-93
(RO700-9412-RU-037) dated August 8, 1995 of Undersecretary Bienvenido E. Laguesma, by
authority of the Secretary of Labor and Employment, setting aside the Resolution of the Med-Arbiter
dated March 13, 1995.
The antecedents are summarized in the assailed Resolution of Undersecretary Laguesma as
follows:
Records show that on 27 December 1994, a petition for certification election among
the rank and file employees of Cebu Shipyard and Engineering Work, Inc. was filed
by the Alliance of Nationalist and Genuine Labor Organization (ANGLO-KMU),
alleging among others, that it is a legitimate labor organization; that respondent Cebu
Shipyard and Engineering Work, Inc. is a company engaged in the business of
shipbuilding and repair with more or less, four hundred (400) rank and file
employees; that the Nagkahiusang Mamumuo sa Baradero National Federation of
Labor is the incumbent bargaining agent of the rank and file employees of the
respondent company; that the petition is supported by more than twenty-five percent
(25%) of all the employees in the bargaining unit; that the petition is filed within the
sixty (60) day period prior to the expiry date of the collective bargaining agreement
(CBA) entered into by and between the Nagkahiusang Mamumuo sa Baradero-NFL
and Cebu Shipyard Engineering Work, Inc. which is due to expire on 31 December
1994; and, that there is no bar to its bid to be certified as the sole and exclusive
bargaining agent of all the rank and file employees of the respondent company.
On 2 January 1995, the Med-Arbiter issued an Order, the pertinent portion of which reads as follows:
The petitioner is given five days from receipt of this Order to present proofs that it
has created a local in the appropriate bargaining unit where it seeks to operate as
the bargaining agent and that, relative thereto, it has submitted to the Bureau of
Labor Relations or the Industrial Relations Division of this Office the following: 1) A
charter certificate; 2) the constitution and by-laws, a statement on the set of officers,
and the books of accounts all of which are certified under oath by the Secretary or
Treasurer, as the case may be, of such local or chapter and attested to by its
President, OTHERWISE, this case will be dismissed.
SO ORDERED.
On 9 January 1995, forced-intervenor National Federation of Labor (NFL) moved for
the dismissal of the petition on grounds that petitioner has no legal personality to file
the present petition for certification election and that it failed to comply with the

twenty-five percent (25%) consent requirement. It averred among others, that settled
is the rule that when a petition for certification election is filed by the federation which
is merely an agent, the petition is deemed to be filed by the local/chapter, the
principal, which must be a legitimate labor organization; that for a local to be vested
with the status a legitimate labor organization, it must submit to the Bureau of Labor
Relations (BLR) or the Industrial Relations Division of the Regional Office of the
Department of Labor and Employment the following: a) charter certificate, indicating
the creation or establishment of a local or chapter; b) constitution and by-laws; c) set
of officers, and d) books of accounts; that petitioner failed to submit the aforesaid
requirements necessary for its acquisition of legal personality; that compliance with
the aforesaid requirements must be made at the time of the filing of the petition within
the freedom period; that the submission of the aforesaid requirements beyond the
freedom period will not operate to allow the defective petition to prosper; that
contrary to the allegation of the petitioner, the number of workers in the subject
bargaining unit is 486, twenty-five percent (25%) of which is 122; that the consent
signatures submitted by the petitioner is 120 which is below the required 25%
consent requirement; that of the 120 employees who allegedly supported the petition,
one (1) executed a certification stating that the signature, Margarito Cabalhug, does
not belong to him, 15 retracted, 9 of which were made before the filing of the petition
while 6 were made after the filing of the petition; and, that the remaining 104
signatures are way below the 25% consent requirement.
On 16 January 1995, forced-intervenor filed an Addendum/Supplement to its Motion
to Dismiss, together with the certification issued by the Regional Office No. VII, this
Department, attesting to the fact that the mandatory requirements necessary for the
petitioner to acquire the requisite legal personality were submitted only on 6 January
1995 and the certification issued by the BLR, this Department, stating that as of 11
January 1995, the ANGLO-Cebu Shipyard and Engineering Work has not been
reported as one of the affiliates of the Alliance of Nationalist and Genuine Labor
Organization (ANGLO). Forced intervenor alleged that it is clear from the said
certification that when the present petition was filed on 27 December 1994, petitioner
and its alleged local/chapter have no legal personality to file the same. It claimed that
the fatal defect in the instant petition cannot be cured with the submission of the
requirements in question as the local/chapter may be accorded the status of a
legitimate labor organization only on 6 January 1995 which is after the freedom
period expired on 31 December 1994. Forced intervenor further claimed that the
documents submitted by the petitioner were procured thru misrepresentation, and
fraud, as there was no meeting on 13 November 1994 for the purpose of ratifying a
constitution and by-laws and there was no election of officers that actually took place.
On 15 February 1995, petitioner filed its opposition to the respondent's motion to
dismiss. It averred among others, that in compliance with the order of the MedArbiter, it submitted to the Regional Office No. VII, this Department, the following
documents; charter certificate, constitution and by-laws; statement on the set of
officers and treasurer's affidavit in lieu of the books of accounts; that the submission
of the aforesaid document, as ordered, has cured whatever defect the petition may

have at the time of the filing of the petition, that at the time of the filing of petition, the
total number of rank and file employees in the respondent company was about 400
and that the petition was supported by 120 signatures which are more than the 25%
required by law; that granting without admitting that it was not able to secure the
signatures of at least 25% of the rank and file employees in the bargaining unit, the
Med-Arbiter is still empowered to order for the conduct of a certification election
precisely for the purpose of ascertaining which of the contending unions shall be the
exclusive bargaining agent pursuant to the ruling of the Supreme Court in the case
of California Manufacturing Corporation vs.Hon. Undersecretary of Labor, et al., G.R.
No. 97020, June 8, 1992.
On 20 February 1995, forced-intervenor filed its reply, reiterating all its arguments
and allegations contained in its previous pleadings. It stressed that petitioner is not a
legitimate labor organization at the time of the filing of the petition and that the
petitioner's submission of the mandatory requirements after the freedom period
would not cure the defect of the petition.
On 13 March 1995, the Med-Arbiter issued the assailed Resolution dismissing the
petition, after finding that the submission of the required documents evidencing the
due creation of a local was made after the lapse of the freedom period. 1
The Alliance of Nationalist Genuine Labor Organization-Kilusang Mayo Uno (ANGLO-KMU) filed an
appeal from the March 13, 1995 Med-Arbiter's resolution insisting that it is a legitimate labor
organization at the time of the filing of the petition for certification election, and claiming that
whatever defect the petition may have had was cured by the subsequent submission of the
mandatory requirements.
In a Resolution dated August 8, 1995, respondent Undersecretary Bienvenido E. Laguesma, by
authority of the Secretary of Labor and Employment, set aside the Med-Arbiter's resolution and
entered in lieu thereof a new order "finding petitioner [ANGLO-KMU] as having complied with the
requirements of registration at the time of filing of the petition and remanding the records of this case
to the Regional Office of origin . . . ." 2
The National Federation of Labor thus filed this special civil action for certiorari under Rule 65 of the
Rules of Court raising the following grounds:
A. RESOLUTION OF PUBLIC RESPONDENT HON.
BIENVENIDO E. LAGUESMA DATED 8 AUGUST
1995 AND HIS ORDER DATED 14 SEPTEMBER
1995 WERE ISSUED IN DISREGARD OF EXISTING
LAWS AND JURISPRUDENCE; AND
B. GRAVELY ABUSED HIS DISCRETION IN
APPLYING THE RULING IN THE CASE OF FUR V.
LAGUESMA, G.R. NO. 109251, MAY 26, 1993, IN
THE PRESENT CASE.

We will not rule on the merits of the petition. Instead, we will take this opportunity to lay the rules on
the procedure for review of decisions or rulings of the Secretary of Labor and Employment under the
Labor Code and its Implementing Rules. (P.D. No. 442 as amended)
In St. Martin Funeral Homes v. National Labor Relations Commission and Bienvenido Aricayos, G.R.
No. 130866, September 16, 1998, the Court re-examined the mode of judicial review with respect to
decisions of the National Labor Relations Commission.
The course taken by decisions of the NLRC and those of the Secretary of Labor and Employment
are tangent, but all are within the umbra of the Labor Code of the Philippines and its implementing
rules. On this premise, we find that the very same rationale in St. Martin Funeral Homes
v. NLRC finds application here, leading ultimately to the same disposition as in that leading case.
We have always emphatically asserted our power to pass upon the decisions and discretionary acts
of the NLRC well as the Secretary of Labor in the face of the contention that no judicial review is
provided by the Labor Code. We stated in San Miguel Corporation v. Secretary of Labor 3 thus:
. . . It is generally understood that as to a administrative agencies exercising quasijudicial or legislative power there is an underlying power in the courts to scrutinize
the acts of such agencies on questions of law and jurisdiction even though no right of
review is given by statute (73 C.J.S. 506, note 56).
The purpose of judicial review is to keep the administrative agency within its
jurisdiction and protect substantial rights of parties affected by its decision (73 C.J.S.
507, Sec. 165). It is part of the system of checks and balances which restricts the
separation of powers and forestalls arbitrary and unjust adjudications.
Considering the above dictum and as affirmed by decisions of this Court, St. Martin Funeral Homes
v. NLRCsuccinctly pointed out, the remedy of an aggrieved party is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a
special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
The propriety of Rule 65 as a remedy was highlighted in St. Martin Funeral Homes v. NLRC, where
the legislative history of the pertinent statutes on judicial review of cases decided under the Labor
Code was traced, leading to and supporting the thesis that "since appeals from the NLRC to the
Supreme Court were eliminated, the legislative intendment was that the special civil action
of certiorari was and still is the proper vehicle for judicial review of decision of the NLRC" 4 and
consequently "all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions
for certiorari under Rule 65." 5
Proceeding therefrom and particularly considering that the special civil action of certiorari under Rule
65 is within the concurrent original jurisdiction of the Supreme Court and the Court of
Appeals, St. Martin Funeral Homes v. NLRCconcluded and directed that all such petitions should be
initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts.

In the original rendering of the Labor Code, Art. 222 thereof provided that the decisions of the NLRC
are appealable to the Secretary of Labor on specified grounds. 6 The decisions of the Secretary of
Labor may be appealed to the President of the Philippines subject to such conditions or limitations as the
President may direct.
Thus under the state of the law then, this Court had ruled that original actions for certiorari and
prohibition filed with this Court against the decision of the Secretary of Labor passing upon the
decision of the NLRC were unavailing for mere error of judgment as there was a plain, speedy and
adequate remedy in the ordinary course of law, which was an appeal to the President. We said in the
1975 case, Scott v. Inciong, 7quoting Nation Multi Service Labor Union v.Acgoaili: 8 "It is also a matter of
significance that there was an appeal to the President. So it is explicitly provided by the Decree. That was
a remedy both adequate and appropriate. It was in line with the executive determination, after the
proclamation of martial law, to leave the solution of labor disputes as much as possible to administrative
agencies and correspondingly to limit judicial participation." 9
Significantly, we also asserted in Scott v. Inciong that while appeal did not lie, the corrective power of
this Court by a writ of certiorari was available whenever a jurisdictional issue was raised or one of
grave abuse of discretion amounting to a lack or excess thereof, citing San Miguel Corporation v.
Secretary of Labor. 10
P.D. No. 1367 11 amending certain provisions of the Labor Code eliminated appeals to the President, but
gave the President the power to assume jurisdiction over any cases which he considered national interest
cases. The subsequent P.D. No. 1391, 12 enacted "to insure speedy labor justice and further stabilize
industrial peace", further eliminated appeals from the NLRC to the Secretary of Labor but the President
still continued to exercise his power to assume jurisdiction over any cases which he considered national
interest
cases. 13
Though appeals from the NLRC to the Secretary of Labor were eliminated, presently there are
several instances in the Labor Code and its implementing and related rules where an appeal can be
filed with the Office of the Secretary of Labor or the Secretary of Labor issues a ruling, to wit:
(1) Under the Rules and Regulations Governing Recruitment and Placement
Agencies for Local Employment 14 dated June 5, 1997 superseding certain provisions of
Book I (Pre-Employment) of the implementing rules, the decision of the Regional Director
on complaints against agencies is appealable to the Secretary of Labor within ten (10)
working days from receipt of a copy of the order, on specified grounds, whose decision
shall be final and inappealable.
(2) Art. 128 of the Labor Code provides that an order issued by the duly authorized
representative of the Secretary of Labor in labor standards cases pursuant to his
visitorial and enforcement power under said article may be appealed to the Secretary
of Labor.
Sec. 2 in relation to Section 3 (a), Rule X, Book III (Conditions of Employment) of the
implementing rules gives the Regional Director the power to order and administer
compliance with the labor standards provisions of the Code and other labor

legislation. Section 4 gives the Secretary the power to review the order of the
Regional Director, and the Secretary's decision shall be final and executory.
Sec. 1, Rule IV (Appeals) of the Rules on the Disposition of Labor Standards Cases
in the Regional Offices dated September 16, 1987 15 provides that the order of the
Regional Director in labor standards cases shall be final and executory unless appealed
to the Secretary of Labor.
Sec. 5, Rule V (Execution) provides that the decisions, orders or resolutions of the
Secretary of Labor and Employment shall become final and executory after ten (10)
calendar days from receipt of the case records. The filing of a petition
for certiorari before the Supreme Court shall not stay the execution of the order or
decision unless the aggrieved party secures a temporary restraining order from the
Court within fifteen (15) calendar days from the date of finality of the order or
decision or posts a supersedeas bond.
Sec. 6 of Rule VI (Health and Safety Cases) provides that the Secretary of Labor at
his own initiative or upon the request of the employer and/or employee may review
the order of the Regional Director in occupational health and safety cases. The
Secretary's order shall be final and executory.
(2) Art. 236 provides that the decision of the Labor Relations Division in the regional
office denying an applicant labor organization, association or group of unions or
workers' application for registration may be appealed by the applicant union to the
Bureau of Labor Relations within ten (10) days from receipt of notice thereof.
Sec. 4, Rule V, Book V (Labor Relations), as amended by Department Order No. 9
dated May 1, 199716 provides that the decision of the Regional Office denying the
application for registration of a workers association whose place of operation is confined
to one regional jurisdiction, or the Bureau of Labor Relations denying the registration of a
federation, national or industry union or trade union center may be appealed to the
Bureau or the Secretary as the case may be who shall decide the appeal within twenty
(20) calendar days from receipt of the records of the case.
(3) Art. 238 provides that the certificate of registration of any legitimate organization
shall be canceled by the Bureau of Labor Relations if it has reason to believe, after
due hearing, that the said labor organization no longer meets one or more of the
requirements prescribed by law.
Sec. 4, Rule VIII, Book V provides that the decision of the Regional Office or the
Director of the Bureau of Labor Relations may be appealed within ten (10) days from
receipt thereof by the aggrieved party tothe Director of the Bureau or the Secretary of
Labor, as the case may be, whose decision shall be final and executory.
(4) Art. 259 provides that any party to a certification election may appeal the order or
results of the election as determined by the Med-Arbiter directly to the Secretary of
Labor who shall decide the same within fifteen (15) calendar days.

Sec. 12, Rule XI, Book V provides that the decision of the Med-Arbiter on the petition
for certification election may be appealed to the Secretary.
Sec. 15, Rule XI, Book V provides that the decision of the Secretary of Labor on an
appeal from the Med-Arbiter's decision on a petition for certification election shall be
final and executory. The implementation of the decision of the Secretary affirming the
decision to conduct a certification election shall not be stayed unless restrained by
the appropriate court.
Sec. 15, Rule XII, Book V provides that the decision of the Med-Arbiter on the results
of the certification election may be appealed to the Secretary within ten (10) days
from receipt by the parties of a copy thereof, whose decision shall be final and
executory.
Sec. 7, Rule XVIII (Administration of Trade Union Funds and Actions Arising
Therefrom), Book V provides that the decision of the Bureau in complaints filed
directly with said office pertaining to administration of trade union funds may be
appealed to the Secretary of Labor within ten (10) days from receipt of the parties of
a copy thereof.
Sec. 1, Rule XXIV (Execution of Decisions, Awards, or Orders), Book V provides that
the decision of the Secretary of Labor shall be final and executory after ten (10)
calendar days from receipt thereof by the parties unless otherwise specifically
provided for in Book V.
(5) Art. 263 provides that the Secretary of Labor shall decide or resolve the labor
dispute over which he assumed jurisdiction within thirty (30) days from the date of the
assumption of jurisdiction. His decision shall be final and executory ten (10) calendar
days after receipt thereof by the parties.
From the foregoing we see that the Labor Code and its implementing and related rules generally do
not provide for any mode for reviewing the decision of the Secretary of Labor. It is further generally
provided that the decision of the Secretary of Labor shall be final and executory after ten (10) days
from notice. Yet, like decisions of the NLRC which under Art. 223 of the Labor Code become final
after ten (10) days, 17 decisions of the Secretary of Labor come to this Court by way of a petition
for certiorari even beyond the ten-day period provided in the Labor Code and the implementing rules but
within the reglementary period set for Rule 65 petitions under the 1997 Rules of Civil Procedure. For
example, in M.Ramirez Industries v. Secretary of Labor, 18 assailed was respondent's order affirming the
Regional Director's having taken cognizance of a case filed pursuant to his visitorial powers under Art.
128 (a) of the Labor Code; in Samahang Manggagawa sa Permex v. Secretary of
Labor, 19 assailed was respondent's order setting aside the Med-Arbiter's dismissal a petition for
certification election;Samahan ng Manggagawa sa Pacific Plastic v. Laguesma, 20 assailed was
respondent's order affirming the Med-Arbiter's decision on the results of a certification election;
in Philtread Workers Union v. Confessor, 21 assailed was respondent's order issued under Art. 263
certifying a labor dispute to the NLRC for compulsory arbitration.

In two instances, however, there is specific mention of a remedy from the decision of the Secretary
of Labor, thus:
(1) Section 15, Rule XI, Book V of the amended implementing rules provides that the decision of the
Secretary of Labor on appeal from the Med-Arbiter's decision on a petition for certification election
shall be final and executory, but that the implementation of the Secretary's decision affirming the
Med-Arbiter's decision to conduct a certification election "shall not be stayed unless restrained by
the appropriate court."
(2) Section 5, Rule V (Execution) of the Rules on the Disposition of Labor Standards Cases in
Regional Offices provides that "the filing of a petition for certiorari before the Supreme Court shall
not stay the execution of the [appealed] order or decision unless the aggrieved party secures a
temporary restraining order from the Court."
We perceive no conflict with our pronouncements on the proper remedy which is Rule 65 and which
should be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of
courts. Accordingly, we read "the appropriate court" in Section 15, Rule XI, Book V of the
Implementing Rules to refer to the Court of Appeals.
Sec. 5, Rule V of the Rules on the Disposition of Labor Standards Cases in Regional Offices
specifying the Supreme Court as the forum for filing the petition for certiorari is not infirm in like
manner or similarly as is the statute involved in Fabian v. Desierto. 22 And Section 5 cannot be read to
mean that the petition for certiorari can only be filed exclusively and solely with this Court, as the provision
must invariably be read in relation to the pertinent laws on the concurrent original jurisdiction of this Court
and the Court of Appeals in Rule 65 petitions.
In fine, we find that it is procedurally feasible as well as practicable that petitions for certiorari under
Rule 65 against the decision of the Secretary of Labor rendered under the Labor Code and its
implementing and related rules be filed initially in the Court of Appeals. Paramount consideration is
strict observance of the doctrine on the hierarchy of the courts, emphasized in St. Martin Funeral
Homes v. NLRC, on "the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where exceptional and compelling
circumstances justify availment of a remedy within and calling for the exercise of our preliminary
jurisdiction." 23
WHEREFORE, in view of the foregoing, certiorari, together with all pertinent records REFERRED to
the Court of Appeals for disposition.
SO ORDERED.

G. BUREAU OF LABOR RELATIONS (ARTICLE 226,

LABOR CODE)
210 PEPSI COLA SALES & ADVERTISING UNION VS. SECRETARY OF
LABOR
NARVASA, C.J.:
In its Decision in G.R. No. 80587 (Wenphil Corporation v. NLRC), promulgated on February 8,
1989, 1 this Court 2laid down the doctrine governing an illegal dismissal case where the employee
satisfactorily establishes that his employment was terminated without due process i.e., without written
notice to him of the charges against him and without according him opportunity to defend himself
personally or through a representative but the employer nevertheless proves the existence of just
cause for the employee's dismissal. The controlling principle in such a case is that since the employee's
dismissal was for just cause, he is entitled neither to reinstatement or back wages nor separation pay or
salaries for the unexpired portion of his contract, being entitled only to the salaries earned up to the last
day of employment; at the same time, however, as a general proposition, the employer is obliged, on
account of its failure to comply with the requirements of due process in terminating the services of the
employee, to pay damages to the latter fixed at P1,000.00, a sum deemed adequate for the purpose.
This doctrine, which has since been reaffirmed by this Court, 3 applies in the case at bar, in resolution
of the issue of whether or not the private respondent, Roberto Alisasis, may be considered to have been
dismissed for just cause within the meaning of the charter papers organizing and governing a mutual aid
program of which he was a participant.
From 1964 until sometime about 1985, Alisasis was an employee of the Pepsi-Cola Bottling Co., Inc.
and later, of the Pepsi-Cola Products (Philippines) Inc., after the latter had bought out the
former. 4 He was also a member of the labor organization of all regular route and truck salesmen and
truck helpers of the company the Pepsi Cola Sales & Advertising Union (PSAU) from June 1, 1965
up to the termination of his employment in 1985. 5 As a member of the PSAU, he was also a participant in
the "Mutual Aid Plan" set up by said union sometime in 1980. During the entire period of his employment,
there were regularly deducted from his wages the amounts corresponding to union dues as well as
contributions to the fund of the Mutual Aid Plan. 6
On May 7, 1986, Alisasis filed with the NLRC Arbitration Branch, Capital Region, Manila, a complaint
for illegal dismissal against Pepsi-Cola, Inc. 7 This resulted in a judgment by the Labor Arbiter dated
January 25, 1988 declaring him to have been illegally dismissed and ordering the employer to reinstate
him "to his former position without loss of seniority rights and with full backwages for one (1) year from the
time he was not allowed to report for
work . . ." 8 The judgment was subsequently affirmed with modification. by the Fourth Division of the NLRC dated December 29,
1989, 9 disposing of the appeal as follows: 10
In view therefore of the foregoing considerations, the decision appealed from is
hereby modified in the sense that the order for respondent to reinstate complainant
is hereby set aside. The rest of the decision shall stand.

The deletion of the relief of reinstatement was justified by the NLRC in the following manner:

11

Certainly, with the actuations of complainant, respondent had ample reason or

enough basis then to lose trust and confidence in him. Complainant, being a
salesman, should be considered to have occupied a position of responsibility so that,
if respondent had lost trust and confidence in him, the former could validly and legally
terminate the services of the latter (Lamaan Trading, Inc. vs. Leodegario, Jr., G.R.
73245, September 30, 1986).
However, although there was valid and lawful cause in the dismissal of complainant
by respondent, the manner in which it was effected was not in accordance with law.
Complainant was not given written notice by respondent but was only verbally
advised, thru its Field Sales Manager, sometime in May 1985 that he should not
report for work anymore, obviously, because there was a charge against him.
And this is what makes the dismissal of complainant arbitrary and illegal for failure to
comply with the notice requirement under Batas Pambansa Blg. 130 on termination
of employees.
Ordinarily, when the dismissal of an employee is declared unjustified or illegal, he is
entitled to reinstatement and backwages (Art. 279 of the Labor Code). However, in
the instant case, considering that respondent had already lost trust and confidence in
complainant which is founded on a reasonable ground, as discussed earlier, there is
no point in requiring respondent to reinstate complainant to his former position. To do
so would be tantamount to compelling the management to employ someone whom it
can no longer trust, which is oppressive.
It appears that both Alisasis and Pepsi-Cola, Inc. accepted the NLRC's verdict and complied
therewith; that Pepsi-Cola gave Alisasis back wages for one (1) year; and that, Alisasis issued the
corresponding quitclaim and considered himself separated from his employment.
Alisasis thereafter asked his labor organization, PSAU, to pay
him monetary benefits in accordance with Section 3, Article X of the "Amended By-Laws of the
Mutual Aid Plan of the Pepsi-Cola Sales & Advertising Union (U.O.E.F.), 12 in an amount equal to "One
(P1.00) Peso per year of service multiplied by the number of member(s) . . ." 13 PSAU demurred, invoking
in its turn Section 1, Article XII of the same amended by-laws, declaring as disqualified from any
entitlement to the PLAN and . . (from any) Benefit or return of contributions . . under any
circumstances," inter alia, "(a)ny member dismissed for cause." 14
Alisasis thereupon filed a complaint against the union, PSAU, with the Med Arbitration Unit, National
Capital Region, Department of Labor and Employment, to compel the latter to pay him his claimed
benefits. 15 The principal defenses alleged by PSAU were that Alisasis was disqualified to claim any
benefits under the Mutual Aid Plan, supra; and that the Med-Arbiter had no original jurisdiction over the
case since Alisasis' claim for financial assistance was not among the cases cognizable by Med-Arbiters
under the law "such as representation cases, internal union and inter-union disputes . . (or) a violation of
the union's constitution and by-laws and the rights and conditions of membership in a labor
organization." 16 After due proceedings, the Med-Arbiter promulgated an Order on April 16, 1990, ruling
that he had jurisdiction and "ordering respondent . . (PSAU) to pay complainant Roberto Alisasis . . his

claim for financial assistance under the Mutual Aid Fund of the union." PSAU appealed to the Secretary of
Labor and Employment who, by Resolution dated July 25, 1990, denied the appeal but reduced the MedArbiter's award from P18,669.00 to P17,886.00. 17 Nullification of the Med-Arbiter's Order of April 16, 1990
and the respondent Secretary's Resolution of July 25, 1990 is the prayer sought by the petitioner in the
special civil action of certiorari at bar.

Resolving first the issue of whether or not the case at bar is within the original jurisdiction of the
Med-Arbiter of the Bureau of Labor Relations, the Court holds that it is.
The jurisdiction of the Bureau of Labor Relations and its Divisions is set forth in the first paragraph of
Article 226 of the Labor Code, as amended, viz.:
Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the Department of Labor shall have
original and exclusive authority to act, at their own initiative or upon request of either
or both parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor management relations in all
workplaces whether agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining agreements which shall be
the subject of grievance procedure and/or voluntary arbitration.
xxx xxx xxx
It is evident that the case at bar does not concern a dispute, grievance or problem "arising from or
affecting labor-management relations." So, if it is to be deemed as coming within the Med-Arbiter's
jurisdiction, it will have to be as either an "intra-union" or "inter-union" conflict.
No definition is given by law of these precise terms, "intra-union and inter-union conflicts." It is
known, however, that "intra-" and "inter-" are both combining forms, prefixes the first, "intra-,"
meaning "within, inside of [intramural, intravenous];" and the other, "inter-, denoting "1. between or
among: the second element is singular in form [interstate] 2. with or on each other (or one another),
together, mutual, reciprocal, mutually, or reciprocally [interact]."18 An intra-union conflict would
therefore refer to a conflict within or inside a labor union conflict would therefore refer to a conflict within
or inside a labor union, and an inter-union controversy or dispute, one occurring or carried on between or
among unions. In this sense, the controversy between Alisasis and his union, PSAU respecting the
former's rights under the latter's "Mutual Aid Plan" would be an intra-union conflict under Article 226 of
the Labor Code and hence, within the exclusive, original jurisdiction of the Med-Arbiter of the Bureau of
Labor Relations whose decision, it may additionally be mentioned, is appealable to the Secretary of
Labor.
Certainly, said controversy is not one of those within the jurisdiction of the Labor Arbiters in
accordance with Article 217 of the Code, it not being an unfair labor practice case, or a termination
dispute, or one involving wages, rates of pay, hours of work and other terms and conditions of
employment (which is "accompanied with a claim for reinstatement"), or one for damages arising
from the employer-employee relations, or one for a violation of Article 264 of the Code, or any other
claim arising from employer-employee relations, or from the interpretation or implementation of a
collective bargaining agreement or of company personnel policies.

The second issue relates to the character of Alisasis' dismissal from employment. The Court holds
that Alisasis had indeed been "dismissed for cause." His employer had established this factual
proposition by competent evidence to the satisfaction of both the Labor Arbiter and the National
Labor Relations Commission. In the Latter's view, and in its own words, "Certainly, with the
actuations of complainant, . . (Alisasis' employer) had ample reason or enough basis to lose trust
and confidence in him . . . considering that (said employer) had already lost trust and confidence in
complainant which is founded on a reasonable ground, as discussed earlier, (and therefore) there is
no point in requiring respondent to reinstate complainant to his former position . . (as to) do so would
be tantamount to compelling the management to employ someone whom it can no longer trust,
which is oppressive."
It was merely "the manner in which such a dismissal from employment was effected . . (that was
deemed as) not in accordance with law, (there having been) failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on termination of employees." That imperfection is,
however, a circumstance quite distinct from the existence of what the NLRC has clearly and
expressly conceded to be a "valid and lawful cause in the dismissal of complainant by respondent."
And this is precisely the reason why, as already pointed out, the NLRC declined to accord to Alisasis
all the remedies or reliefs usually attendant upon an illegal termination of employment e.g.,
reinstatement, award of damages although requiring payment by the employer of the sum of
P1,000.00 simply on account of its failure "to comply with the notice requirement under Batas
Pambansa Blg. 130 on termination of employees." The situation is on all fours with that in
the Wenphil Corporation Case, 19 cited in this opinion's opening paragraph, in which the following
pronouncements, among others, were made:
Thus in the present case, where the private respondent, who appears to be of violent
temper, caused trouble during office hours and even defied his superiors as they
tried to pacify him, should not be rewarded with re-employment and back wages. It
may encourage him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe. Under the circumstancesthe
dismissal of the private respondent for just cause should be maintained. He has no
right to return to his former employer.
However, the petitioner (employer) must nevertheless be held to account for failure to
extend to private respondent his right to an investigation before causing his
dismissal. . . Thus, it must be imposed a sanction for its failure to give a formal notice
and conduct an investigation as required by law before dismissing . . (respondent)
from employment. Considering the circumstances of this case petitioner (employer)
must indemnify the private respondent (employee) the amount of P1,000.00. The
measure of this award depends on the facts of each case and the gravity of the
omission committed by the employer.
The petitioner union (PSAU) was therefore quite justified in considering Alisasis as a "member
dismissed for cause," and hence disqualified under its amended by-laws to claim any "Benefit or
return of contributions . . under any circumstances, . . ." The ruling to the contrary of the Med-Arbiter
and the Secretary of Labor and Employment must thus be set aside as tainted with grave abuse of
discretion.

WHEREFORE, the petition is granted and the writ of certiorari prayed for issued, NULLIFYING and
SETTING ASIDE the challenged Order of the Med-Arbiter dated April 16, 1990 and the Resolution of
the respondent Secretary of Labor and Employment dated July 25, 1990, and DIRECTING THE
DISMISSAL of Alisasis' complaint in NLRC Case No. NCR-Od-M-90-01-037, without pronouncement
as to costs.
SO ORDERED.

211. ABBOT LABORATORIES PHILIPPINES VS. ABBOT

LABORATORIES EMPLOYEES UNION
DECISION
DAVIDE, JR., C.J.:
This special civil action for certiorari and mandamus assails the action of the then
Acting Secretary of Labor and Employment Cresenciano. B. Trajano contained in its
letter dated 19 September 1997, informing petitioner Abbott
Laboratories Philippines, Inc. (hereafter ABBOTT), thru its counsel that the Office
of the Secretary of Labor cannot act on ABBOTT's appeal from the decision of 31
March 1997 and the Order of 9 July 1997 of the Bureau of Labor Relations, for
lack of appellate jurisdiction.
[1]

[2]

[3]

ABBOTT is a corporation engaged in the manufacture and distribution

of pharmaceutical drugs. On 22 February 1996, the Abbott Laboratories Employees
Union (hereafter ALEU) represented by its president, Alvin B. Buerano, filed an
application for union registration in the Department of Labor and Employment.
ALEU alleged in the application that it is a labor organization with members
consisting of 30 rank-and-file employees in the manufacturing unit of ABBOTT and
that there was no certified bargaining agent in the unit it sought to represent, namely,
the manufacturing unit.
[4]

On 28 February 1996, ALEU's application was approved by the Bureau of Labor

Relations, which in due course issued Certificate of Registration No. NCR-UR-21638-96. Consequently, ALEU became a legitimate labor organization.
[5]

On 2 April 1996, ABBOTT filed a petition for cancellation of the Certificate of

Registration No. NCR-UR-2-1638-96 in the Regional Office of the Bureau of Labor
[6]

Relations. This case was docketed as Case No. OD-M-9604-006. ABBOTT assailed
the certificate of registration since ALEU's application was not signed by at least 20%
of the total 286 rank-and-file employees of the entire employer unit; and that it
omitted to submit copies of its books of account.
On 21 June 1996, the Regional Director of the Bureau of Labor Relations decreed the
cancellation of ALEU's registration certificate No. NCR-UR-II-1585-95. In its
decision, the Regional Director adopted the 13 June 1996 findings and
recommendations of the Med-Arbiter. It ruled that the union has failed to sliow that
the rank-and-file employees in the manufacturing unit of ABBOTT were bound by a
common interest to justify the formation of a bargaining unit separate from those
belonging to the sales and office staff units. There was, therefore, sufficient reason to
assume that the entire membership of the rank-and-file consisting of 286 employees or
the "employer unit" make up the appropriate bargaining unit. However, it was clear on
the record that the union's application for registration was supported by 30 signatures
of its members or barely constituting 10% of the entire rank-and-file employees of
ABBOTT. Thus the Regional Director found that for ALEU's failure to satisfy the
requirements of union registration under Article 234 of the Labor Code; the
cancellation of its certificate of registration was in order.
[7]

[8]

[9]

Forthwith, on 19 August 11996, ALEU appealed said cancellation to the Office of

the Secretary of Labor and Employment, which referred the same to the Director of
the Bureau of Labor Relations. The said appeal was docketed as Case No. BLR-A-1025-96.
[10]

On 31 March 1997, the Bureau of Labor Relations rendered judgment reversing the
21 June 1996 decision of the Regional Director, thus:
[11]

WHEREFORE, the appeal is GRANTED and the decision of the

Regional Director dated 21 June 1996 is hereby REVERSED. Abbott
Laboratories Employees Union shall remain in the roster of legitimate
labor organizations, with all the rights, privileges and obligations
appurtenant thereto.
[12]

It gave the following reasons to justify the reversal: ( 1) Article 234 of the Labor Code
does not require an applicant union to show proof of the "desirability of more than
one Ibargaining unit within an employer unit," and the absence of such proof is not a

ground for the cancellation of a union's registration pursuant to Article 239 of Book V,
Rule II of the implementing rules of the Labor Code; (2) the issue pertaining to the
appropriateness of a bargaining unit cannot be raised in a cancellation proceeding but
may be threshed out in the exclusion-inclusion process during a certification election;
and (3) the "one-bargaining unit, one-employer unit policy" must not be interpreted in
a manner that shall derogate the right of the employees to self-organization and
freedom of association as guaranteed by Article III, Section 8 of the 1987 Constitution
and Article II of the International Labor Organization's Convention
No.87.
Its motion to reconsider the 31 March 1997 decision of the Bureau of Labor Relations
having been denied for lack of merit in the Order of 9 July 1997, ABBOTT appealed
to the Secretary of Labor and Employment. However, in its letter dated 19 September
1997, addressed to ABBOTT's counsel, the Secretary of Labor and Employment
refused to act on ABBOTT's appeal on the ground that it has no jurisdiction to review
the decision of the Bureau of Labor Relations on iappeals in cancellation cases
emanating from the Regional Offices. The decision of the Bureau of Labor Relations
therein is final and executory under Section 4, Rule III, Book V of the Rules and
Regulations Implementing thc Labor Code, as amended by Department Order No. 09,
s. of 1997. Finally, the Secretary stated:
[13]

[14]

It has always been the policy of this Office that pleadings denominated
as appeal thereto over decisions of the BLR in cancellation cases coming
from the Regional Offices are referred back to the BLR, so that the same
may be treated as motions for reconsideration and disposed of
accordingly. However, since your office has already filed a motion for
reconsideration with the BLR which has been denied in its Order dated
09 July 1997, your recourse should have been a special civil action
for certiorari with the Supreme Court.
In view of the foregoing, please be informed that the Office of the
Secretary cannot act upon your Appeal, except to cause the BLR to
include it in the records of the case.
Hence, this petition. ABBOTT premised its argument on the authority of the Secretary
of Labor and Employment to review the decision of the Bureau of Labor Relations

and at the same time raised the issue on the validity of ALEU's certificate of
registration.
We find no merit in this petition.
At the outset, it is wortl1y to note that the present petition assails only the letter of the
then Secretary of Labor & Employment refusing to take cognizance of ABBOTT's
appeal for lack of appellate jurisdiction. Hence, in the resolution of the present
petition, it is just appropriate to limit the issue on the power of the Secretary of Labor
and Employment to review the decisions of the Bureau of Labor Relations rendered in
the exercise of its appellate jurisdiction over decisions of the Regional Director in
cases involving cancellations of certificates of registration of labor unions. The issue
anent the validity of ALEU's certificate of registration is subject of the Bureau of
Labor Relations decision dated 31 March 1997. However, said decision is not being
assailed in the present petition; hence, we are not at liberty to review the
same.
Contrary to ABBOTT's contention, there has been no grave abuse of discretion on the
part of the Secretary of Labor and Employment. Its refusal to take cognizance of
ALEU's appeal from the decision of the Bureau of Labor Relations is in accordance
with the provisions of Rule VIII, Book V of the Omnibus Rules Implementing the
Labor Code as amended by Department Order No. 09. The rule governing petitions
for cancellation of registration of any legitimate labor organization or worker
association, as it now stands, provides:
[15]

SECTION 1. Venue of Action --If the respondent to the petition is a

local/chapter, affiliate, or a workers' association with operations limited
to one region, the petition shall be filed with the Regional Office having
jurisdiction over the place where the respondent principally operates.
Petitions filed against federations, national or industry unions, trade
union centers, or workers' associations operating in more than one
regional jurisdiction, shall be filed with the Bureau.
SECTION 3. Cancellation of registration;. nature and grounds. -Subject to the requirements of notice and due process, the registration of
any legitimate labor organization or worker's association may be
cancelled by the Bureau or the Regional Office upon the filing of an

independent petition for cancellation based on any of the following

grounds:
(a) Failure to comply with any of the requirements prescribed under
Articles 234, 237 and 238 of the Code;
(b) Violation of any of the provisions of Article 239 of the Code;
(b) Commission of any of the acts enumerated under Article 241 of the
Code; provided, that no petition for cancellation based on this ground
may be granted unless supported by at least thirty percent (30%) of all
the members of the respondent labor organization or workers'
association.
Section 4. Action on the petition; appeals -- The Regional or Bureau
Director, as the case may be, shall have thirty (30) days from submission
of the case for resolution within which to resolve the petition. The
decision of the Regional or Bureau Director may be appealed to the
Bureau or the Secretary, as the case may be, within ten (10) days from
receipt thereof by the aggrieved party on the ground of grave abuse of
discretion or any violation of these Rules.
The Bureau or the Secretary shall have fifteen ( 15) days from receipt of
the records of the case within which to decide the appeal. The decision
of the Bureau or the Secretary shall be final and executory.
Clearly, the Secretary of Labor and Employment has no jurisdiction to entertain the
appeal of ABBOTT. The appellate jurisdiction of the Secretary .of Labor and
Employment is limited only to a review of cancellation proceedings decided by the
Bureau of Labor Relations in the exercise of its exclusive and original jurisdiction.
The Secretary of Labor and Employment has no jurisdiction over decisions of the
Bureau of Labor Relations rendered in the exercise of its appellate power to review
the decision of the Regional Director in a petition to cancel the union's certificate of
registration, said decisions being final and inappealable. We sustain the analysis and
interpretation of the OSG on this matter, to wit:
[16]

From the foregoing, the Office of the Secretary correctly maintained that
it cannot take cognizance of petitioner's appeal from the decision of BLR

Director Bitonio. Sections 7 to 9 (of the Implementing Rules of the

Labor Code) thus provide for two situations:
[17]

(1) The first situation involves a petition for cancellation of union

registration which is filed with a Regional Office. A decision of a
Regional Office cancelling a union's certificate of registration may be
appealed to the BLR whose decision on the matter shall be final and
inappealable.
(2) The second situation involves a petition for cancellation of certificate
of union registration which is filed directly with the BLR. A decision of
the BLR cancelling a union's certificate of registration may be appealed
to the Secretary of Labor whose decision on the matter shall be final and
inappealable.
Respondent Acting Labor Secretary's ruling --that the BLR's decision
upholding the validity of respondent union's certificate of registration is
final and inappealable --is thus in accordance with aforequoted Omnibus
Rules because the petition for cancellation of union registration was filed
by petitioner with a Regional Office, specifically, with the Regional
Office of the BLR, National Capital Region (vide pp.1-2, Annex 2,
Petition). The cancellation proceedings initiated by petitioner before the
Regional Office is covered by the first situation contemplated by
Sections 7 to 9 of the Omnibus Rules. Hence, an appeal from the
decision of the Regional Office may be brought to the BLR whose
decision on the matter is final and inappealable.
In the instant case, upon the cancellation of respondent union's
registration by the Regional Office, respondent union incorrectly
appealed said decision to the Office of the Secretary. Nevertheless, this
situation was immediately rectified when the Office of the
Secretary motu proprio referred the appeal to the BLR However, upon
reversal by the BLR of the decision of the Regional Office cancelling
registration, petitioner should have immediately elevated the BLR
decision to the Supreme Court in a special civil action
for certiorari under Rule 65 of the Rules of Court.

Under Sections 3 and 4, Rule VIII of Book V of the Rules and

Regulations implementing the Labor Code, as amended by Department
Order No. 09, petitions for cancellation of union registration may be
filed with a Regional office, or directly, with the Bureau of Labor
Relations. Appeals from the decision of a Regional Director may be filed
with the BLR Director whose decision shall be final and executory. On
the other hand, appeals from the decisions of the BLR may be filed with
the Secretary of Labor whose decision shall be final and executory .
Thus, under Sections 7 to 9 of the Omnibus Rules and under Sections 3
and 4 of the Implementing Rules (as amended by Department Order No.
09), the finality of the BLR decision is dependent on whether or not the
petition for cancellation was filed with the BLR directly. Under said
Rules, if the petition for cancellation is directly filed with the BLR, its
decision cancelling union registration is not yet final and executory as it
may still be appealed to the Office of the Secretary. However, if the
petition for cancellation was filed with the Regional Office, the decision
of the BLR resolving an appeal of the decision of said Regional Office is
final and executory.
[18]

It is clear then that the Secretary of Labor and Employment did not commit grave
abuse of discretion in not acting on ABBOTT's appeal. The decisions of the Bureau of
Labor Relations on cases brought before it on appeal from the Regional Director are
final and executory. Hence, the remedy of the aggrieved party is to seasonably avail of
the special civil action of certiorari under Rule 65 of the Rules of Court.
[19]

Even if we relaxed the rule and consider the present petition as a petition
for certiorari not only of the letter of the Secretary of Labor and Employment but also
of the decision of the Bureau of the Labor Relations which overruled the order of
cancellation of ALEU's certificate of registration, the same would still be dismissable
for being time-barred. Under Sec. 4 of Rule 65 of the 1997 Revised Rules of Court the
special civil action forcertiorari should be instituted within a period of sixty (60) days
from notice of the judgment, order or resolution sought to be assailed. ABBOTT
received the decision of the Bureau of Labor Relations on 14 April 1997 and the order
denying its motion for reconsideration of the said decision on 16 July 1997. The
present petition was only filed on 28 November 1997, after the laps of more than four

months. Thus, for failure to avail of the correct remd4y within the period provided by
law, the decision of the Bureau of Labor Relations has become final and executory.
WHEREFORE, the Petition is DENIED. The challenged order in BLR-A-10-25-96
of the Secretary of Labor and Employment embodied in its 19 September letter is
hereby AFFIRMED.
SO ORDERED.

H. GRIEVANCE MACHINERY (ARTICLE 260, LABOR

CODE)
212. MASTER IRON LABOR UNION VS. NLRC
MELO, J.:
The petition for certiorari before us seeks to annul and to set aside the decision of the National
Labor RelationsCommission (Second Division) dated July 12, 1986 which affirmed that of Labor
Arbiter Fernando V. Cinco declaring illegal the strike staged by petitioners and terminating the
employment of the individual petitioners.
The Master IRON WORKS Construction Corporation (Corporation for brevity) is a duly organized
corporate entity engaged in STEEL FABRICATION and other related business activities. Sometime
in February 1987, the Master Iron Labor Union (MILU) entered into a collective barganing agreement
(CBA) with the Corporation for the three-year period between December 1, 1986 and November 30,
1989 (Rollo, p. 7). Pertinent provisions of the CBA state:
Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown of work,
or any other interference with any of the operation of the COMPANY during the term
of this AGREEMENT, unless allowed and permitted by law.
Sec. 2. Service Allowance The COMPANY agrees to continue the granting of
service allowance of workers assigned to work outside the company plant, in addition
to his daily salary, as follows:
(a) For those assigned to work outside the plant within Metro Manila,
the service allowance shall be P12.00;
(b) For those assigned to work outside Metro Manila, the service
allowance shall be P25.00/day;

(c) The present practice of conveying to and from jobsites of workers

assigned to work outside of the company plant shall be maintained.
Right after the signing of the CBA, the Corporation subcontracted outside workers to do the
usual jobs done by its regular workers including those done outside of the company plant. As a
result, the regular workers were scheduled by the management to work on a rotation basis allegedly
to prevent financial losses thereby allowing the workers only ten (10) working days a month
(Rollo, p. 8). Thus, MILU requested implementation of the grievance procedure which had also been
agreed upon in the CBA, but the Corporation ignored the request.
Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,
p. 54) with the Department of Labor and Employment. Upon the intervention of the DOLE, through
one Atty. Bobot Hernandez, the Corporation and MILU reached an agreement whereby the
Corporation acceded to give back the usual work to its regular employees who are members of
MILU (Rollo, p. 55).
Notwithstanding said agreement, the Corporation continued the practice of hiring outside workers.
When the MILU president, Wilfredo Abulencia, insisted in doing his regular work of cutting steel bars
which was being done by casual workers, a supervisor reprimanded him, charged him with
insubordination and suspended him for three (3) days (Rollo, pp. 9 & 51-52). Upon the request of
MILU, Francisco Jose of the DOLE called for conciliation conferences. The Corporation, however,
insisted that the hiring of casual workers was a management prerogative. It later ignored subsequent
scheduled conciliation conferences (Rollo, pp. 51-52 & 57-58).
Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a) violation of CBA;
(b) discrimination; (c) unreasonable suspension of union officials; and (d) unreasonable refusal to
entertain grievance (Rollo,
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road leading to the
Corporation's plant entrance and premises.
At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been summoned by
the Corporation's counsel, came and arrested the picketers. They were brought to Camp Karingal
and, the following day, to the Caloocan City jail. Charges for illegal possession of firearms and
deadly weapons were lodged against them. Later, however, those charges were dismissed for failure
of the arresting CAPCOM soldiers to appear at the investigation (Rollo, p. 10). The dispersal of the
picketlines by the CAPCOM also resulted in the temporary lifting of the strike.
On August 4, 1987, the Corporation filed with the NLRC National Capital Region arbitration branch a
petition to declare the strike illegal (Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng Manggagawa sa
Valenzuela (AMVA), re-staged the strike. Consequently, the Corporation filed a petition for injunction
before the NLRC which, on September 24, 1987, issued an order directing the workers to remove
the barricades and other obstructions which prevented ingress to and egress from the company
premises. The workers obliged on October 1, 1987 (Rollo, p. 25). On October 22, 1987, through its
president, MILU offered to return to work in a letter which states:

22 Okt. 1987
Mr. Elieze Hao
Master Iron Works & Construction Corp.
790 Bagbagin, Caloocan City
Dear Sir:
Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi,
nagsusuhestiyon o nag-oofer sa inyong pangasiwaan ng aming kahilingan na
bumalik na sa trabaho dahilan din lang sa kalagayan na tuloy tuloy ang ating paguusap para sa ikatitiwasay ng ating relasyon. Gusto naming manatili ang ating
magandang pagtitinginan bilang magkasangga para sa ika-uunlad ng ating
kumpanya. Sana ay unawain niyo kami dahil kailangan namin ng trabaho.
Gumag
alang,
(Sgd.)
WILFREDO
ABULENCIA
Pangulo
(Rollo, p. 590)
On October 30, 1987, MILU filed a position paper with counter-complaint before the NLRC. In said
counter-complaint, the workers charged the Corporation with unfair labor practice for
subcontracting work that was normally done by its regular workers thereby causing the reduction of
the latter's workdays; illegal suspension of Abulencia without any investigation; discrimination for
hiring casual workers in violation of the CBA, and illegal dispersal of the picket lines by CAPCOM
agents (Rollo, pp. 26-27).
In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter Fernando Cinco
declaring illegal the strike staged by MILU. The dispositive portion of the decision reads:
WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered,
as follows:
1. Declaring the strike by the respondents illegal and unlawful;
2. Ordering the cancellation of the registered permit of respondent union MILU for
having committed an illegal strike;

3. Ordering the termination of employment status of the individual respondents,

including the forfeiture of whatever benefits are due them under the law, for having
actively participated in an illegal strike, namely: Wilfredo Abulencia,
President; Rogelio Cabana, Vice-President; Lopito Saranilla, Secretary; Jesus
Moises, Treasurer; Basilio dela Cruz, Auditor; as Members of the Board: Edgar
Aranes, Melchor Bose, Restituto Payabyab, Matias Pajimula, Daniel Bacolon, and
Ely Borromeo, as Members of the Union: Teofilo Antolin, Robert Aspuria, Justino
Botor, Alfredo Fabros, Agapito Tabios, Bernardo Alfon, Benigno Barcena, Bernardo
Navaro, Moises Labrador, Ernesto dela Cruz, Eduardo Espiritu, Ignacio Pagtama,
Bayani Perez, Simplicio Puaso, Edwin Velarde, Beato Abogado, Danila San Antonio,
Bermes Borromeo and Jose Borromeo.
The respondents as appearing in Annex "A" of the Petition, but not included as
among those whose employment status were not terminated as above-mentioned,
are given priority of reinstatement, without backwages, in the event petitioner starts
its normal operations, or shall be paid their separation pay according to law.
4. Ordering the respondents to cease and desist from further committing the illegal
acts complained of;
5. Ordering Respondent Union to pay the amount of P10,000.00 to Petitioner's
Counsel as attorney's fees;
6. Ordering the dismissal of the claim for damages for lack of merit; and
7. Ordering the dismissal of the counter-complaint in view of the filing of a separate
complaint by the respondents.
SO ORDERED. (pp. 35-36, Rollo.)
On appeal to the NLRC, MILU and the individual officers and workers named in Labor Arbiter Cinco's
decision alleged that said labor arbiter gravely abused his discretion and exhibited bias in favor of
the Corporation in disallowing their request to cross-examine the Corporation's witnesses, namely,
Corporate Secretary Eleazar Hao, worker Daniel Ignacio and foreman Marcial Barcelon, who all
testified on the manner in which the strike was staged and on the coercion and intimidation allegedly
perpetrated by the strikers (Rollo,
p. 151).
The Second Division of the NLRC affirmed with modifications the decision of the labor arbiter. The
decision, which was promulgated on July 12, 1989 with Commissioners Domingo H. Zapanta and
Oscar N. Abella concurring and Commissioner Daniel M. Lucas, Jr. dissenting, disagreed with the
labor arbiter on the "summary execution of the life of Master Iron Labor Union (MILU)" on the
grounds that the Corporation did not specifically pray for the cancellation of MILU's registration and
that pursuant to Articles 239 and 240 of the Labor Code, only the Bureau of Labor Relations may
cancel MILU's license or certificate of registration. It also deleted the award of P10,000.00 as
attorney's fees for lack of sufficient basis but it affirmed the labor arbiter with regard to the

declaration of illegality of the strike and the termination of employment of certain employees and the
rest of the dispositive portion of the labor arbiter's decision (Rollo, pp. 48-49).
In his dissent, Commissioner Lucas stated that he is "for the setting aside of the decision appealed
from, and remanding of the case to the labor arbiter of origin, considering the respondent's
countercharge or complaint for unfair labor practice was not resolved on the merits" (Rollo, p. 49).
MILU filed a motion for the reconsideration but the same was denied by the NLRC for lack of merit in
its Resolution of August 9, 1989 (Rollo, p. 50). Hence, the instant petition. 1
Petitioners contend that notwithstanding the non-strike provision in the CBA, the strike they staged
was legal because the reasons therefor are non-economic in nature. They assert that the NLRC
abused its discretion in holding that there was "failure to exhaust the provision on grievance
procedure" in view of the fact that they themselves sought grievance meetings but the Corporation
ignored such requests. They charge the NLRC with bias in failing to give weight to the fact that the
criminal charges against the individual petitioners were dismissed for failure of the CAPCOM
soldiers to testify while the same individual strikers boldly faced the charges against them. Lastly,
they aver that the NLRC abused its discretion in holding that the workers' offer to return to work was
conditional.
In holding that the strike was illegal, the NLRC relied solely on the no-strike no-lockout provision of
the CBA aforequoted. As this Court has held in Philippine Metal Foundries, Inc. vs. CIR (90 SCRA
135 [1979]), a no-strike clause in a CBA is applicable only to economic strikes. Corollarily, if the
strike is founded on an unfair labor practice of the employer, a strike declared by the union cannot be
considered a violation of the no-strike clause.
An economic strike is defined as one which is to force wage or other concessions from the employer
which he is not required by law to grant (Consolidated Labor Association of the Philippines vs.
Marsman & Co., Inc., 11 SCRA 589 [1964]). In this case, petitioners enumerated in their notice of
strike the following grounds: violation of the CBA or the Corporation's practice of subcontracting
workers; discrimination; coercion of employees; unreasonable suspension of union officials, and
unreasonable refusal to entertain grievance.
Private respondent contends that petitioner's clamor for the implementation of Section 2, Article VIII
of the CBA on service allowances granted to workers who are assigned outside the company
premises is an economic issue (Rollo, p. 70). On the contrary, petitioners decry the violation of the
CBA, specifically the provision granting them service allowances. Petitioners are not, therefore,
already asking for an economic benefit not already agreed upon, but are merely asking for the
implementation of the same. They aver that the Corporation's practice of hiring subcontractors to do
jobs outside of the company premises was a way "to dodge paying service allowance to the
workers" (Rollo, pp. 61 & 70).
Much more than an economic issue, the said practice of the Corporation was a blatant violation of
the CBA and unfair labor practice on the part of the employer under Article 248(i) of the Labor
Code. Although the end result, should the Corporation be required to observe the CBA, may be
economic in nature because the workers would then be given their regular working hours and

therefore their just pay, not one of the said grounds is an economic demand within the meaning of
the law on labor strikes. Professor Perfecto Fernandez, in his
book Law on Strikes,Picketing and Lockouts (1981 edition, pp. 144-145), states that an economic
strike involves issues relating to demands for higher wages, higher pension or overtime rates,
pensions, profit sharing, shorter working hours, fewer work days for the same pay, elimination of
night work, lower retirement age, more healthful working conditions, better health services, better
sanitation and more safety appliances. The demands of the petitioners, being covered by the CBA,
are definitely within the power of the Corporation to grant and therefore the strike was not an
economic strike.
The other grounds, i.e., discrimination, unreasonable suspension of union officials and unreasonable
refusal to entertain grievance, had been ventilated before the Labor Arbiter. They are clearly unfair
labor practices as defined in Article 248 of the Labor Code. 2 The subsequent withdrawal of petitioners'
complaint for unfair labor practice (NLRC-NCR Case No. 00-11-04132-87) which was granted by Labor
Arbiter Ceferina Diosana who also considered the case closed and terminated (Rollo, pp. 97 & 109) may
not, therefore, be considered as having converted their other grievance into economic demands.
Moreover, petitioners staged the strike only after the Corporation had failed to abide by the
agreement forged between the parties upon the intervention of no less than the DOLE after the
union had complained of the Corporation's unabated subcontracting of workers who performed the
usual work of the regular workers. The Corporation's insistence that the hiring of casual employees
is a management prerogative betrays its attempt to coat with legality the illicit curtailment of its
employees' rights to work under the terms of the contract of employment and to a fair
implementation of the CBA.
While it is true that an employer's exercise of management prerogatives, with or without reason,
does not per seconstitute unjust discrimination, such exercise, if clearly shown to be in grave abuse
of discretion, may be looked into by the courts (National Federation of Labor Unions vs. NLRC, 202
SCRA 346 [1991]). Indeed, the hiring, firing, transfer, demotion, and promotion of employees are
traditionally identified as management prerogatives. However, they are not absolute prerogatives.
They are subject to limitations found in law, a collective bargaining agreement, or general principles
of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990] citing Abbott
Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]). The Corporation's assertion that it was
exercising a management prerogative in hiring outside workers being contrary to the contract of
employment which, of necessity, states the expected wages of the workers, as well as the CBA, is
therefore untenable.
Private respondent's failure to traverse petitioners' allegations that the NLRC abused its discretion in
holding that the provision on grievance procedure had not been exhausted clearly sustains such
allegation and upholds the petitioners' contention that the Corporation refused to undergo said
procedure. It should be remembered that a grievance procedure is part of the continuous process of
collective bargaining (Republic Savings Bank. vs. CIR, et al., 21 SCRA 226 [1967]). It is intended to
promote a friendly dialogue between labor and management as a means of maintaining industrial
peace. The Corporation's refusal to heed petitioners' request to undergo the grievance procedure
clearly demonstrated its lack of intent to abide by the terms of the CBA.

Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a cursory
reading of the letter aforequoted would reveal that no conditions had been set by petitioners. It is
incongruous to consider as a "condition" the statement therein that the parties would continue talks
for a peaceful working relationship ("tuloy tuloy ang ating pag-uusap sa ikatitiwasay ng ating
relasyon"). Conferences form part of the grievance procedure and their mere mention in Abulencia's
letter did not make the same "conditional".
In the same manner, the following findings of the Labor Arbiter showed the illegal breakup of the
picket lines by the CAPCOM:
d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at the picket
line of respondents and searches were made on reported deadly weapons and
firearms in the possession of the strikers. Several bladed weapons and firearms in
the possession of the strikers were confiscated by the CAPCOM soldiers, as a result
of which, the apprehended strikers were brought to Camp Tomas Karingal in Quezon
City for proper investigation and filing of the appropriate criminal charges against
them. The strikers who were charged of illegal possession of deadly weapon and
firearms were: Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz, Beato
Abogado, Lopito Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana.
Criminal informations were filed by Inquest Fiscal, marked as Exhibits "E", "E-1 to E8". These strikers were jailed for sometime until they were ordered release after
putting up the required bail bond. Other strikers were also arrested and brought to
Camp Tomas Karingal, and after proper investigation as to their involvement in the
offense charged, they were released for lack of prima facie evidence. They were
Edwin Velarde, Bayani Perez, Daniel Bacolon, Jesus Moises, Robert Aspurias and
Benigno Barcena.
After the strikers who were arrested were brought to Camp Tomas Karingal on 28
July 1987, the rest of the strikers removed voluntarily their human and material
barricades which were placed and posted at the road leading to the premises of the
Company. (Rollo, p. 32)
The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported outbreak of
violence, was clearly in violation of the following prohibited activity under Article 264 of the Labor
Code:
(d) No public official or employee, including officers and personnel of the New Armed
Forces of the Philippines or the Integrated National Police, or armed person, shall
bring in, introduce or escort in any manner any individual who seeks to replace
strikers in entering or leaving the premises of a strike area, or work in place of the
strikers. The police force shall keep out of the picket lines unless actual violence or
other criminal acts occur therein; Provided, That nothing herein shall be interpreted
to prevent any public officer from taking any measure necessary to maintain peace
and order, protect life and property, and/or enforce the law and legal order.
(Emphasis supplied.)

As the Labor Arbiter himself found, no pervasive or widespread coercion or violence were
perpetrated by the petitioners as to warrant the presence of the CAPCOM soldiers in the picket lines.
In this regard, worth quoting is the following excerpt of the decision in Shell Oil Workers' Union
vs. Shell Company of the Philippines, Ltd., 39 SCRA 276 [1971], which was decided by the Court
under the old Industrial Peace Act but which excerpt still holds true:
. . . What is clearly within the law is the concerted activity of cessation of work in
order that . . . employer cease and desist from an unfair labor practice. That the law
recognizes as a right. There is though a disapproval of the utilization of force to attain
such an objective. For implicit in the very concept of the legal order is the
maintenance of peaceful ways. A strike otherwise valid, if violent in character, may be
placed beyond the pale. Care is to be taken, however, especially where an unfair
labor practice is involved, to avoid stamping it with illegality just because it is tainted
with such acts. To avoid rendering illusory the recognition of the right to strike,
responsibility in such a case should be individual and not collective. A different
conclusion would be called for, of course, if the existence of force while the strike
lasts is pervasive and widespread, consistently and deliberately resorted to as a
matter of policy. It could be reasonably concluded then that even if justified as to
ends, it becomes illegal because of the means employed. (at p. 292.)
All told, the strike staged by the petitioners was a legal one even though it may have been called to
offset what the strikers believed in good faith to be unfair labor practices on the part of the employer
(Ferrer, et al. vs. Court of Industrial Relations, et al., 17 SCRA 352 [1966]). Verily, such presumption
of legality prevails even if the allegations of unfair labor practices are subsequently found out to be
untrue (People's Industrial and Commercial Employees and Workers Org. [FFW] vs. People's
Industrial and Commercial Corporation, 112 SCRA 440 [1982]). Consonant with these jurisprudential
pronouncements, is Article 263 of the Labor Code which clearly states "the policy of the State to
encourage free trade unionism and free collective bargaining". Paragraph (b) of the same article
guarantees the workers' "right to engage in concerted activities for purposes of collective bargaining
or for their mutual benefit and protection" and recognizes the "right of legitimate labor organizations
to strike and picket and of employers to lockout" so long as these actions are "consistent with the
national interest" and the grounds therefor do not involve inter-union and intra-union disputes.
The strike being legal, the NLRC gravely abused its discretion in terminating the employment of the
individual petitioners, who, by operation of law, are entitled to reinstatement with three years
backwages. Republic Act No. 6715 which amended Art. 279 of the Labor Code by giving "full
backwages inclusive of allowances" to reinstated employees, took effect fifteen days from the
publication of the law on March 21, 1989. The decision of the Labor Arbiter having been promulgated
on March 16, 1988, the law is not applicable in this case.
WHEREFORE, the questioned decision and resolution of the NLRC as well as the decision of the
Labor Arbiter are hereby SET ASIDE and the individual petitioners are reinstated to their positions,
with three years backwages and without loss of seniority rights and other privileges. Further,
respondent corporation is ordered to desist from subcontracting work usually performed by its
regular workers.

SO ORDERED.

213. SAN MIGUEL CORPORATION VS. NLRC

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing
the Resolution[1] of the National Labor Relations Commission in NLRC NCR CASE NO.
00094-90, which dismissed the complaint of San Miguel Corporation (SMC), seeking to dismiss
the notice of strike given by the private respondent union and to compel the latter to comply with
the provisions of the Collective Bargaining Agreement(CBA)[2] on grievance machinery,
arbitration, and the no-strike clause, with prayer for the issuance of a temporary restraining order.
The antecedent facts are as follows:
In July 1990, San Miguel Corporation, alleging the need to streamline its operations due to
financial losses, shut down some of its plants and declared 55 positions as redundant, listed as
follows: seventeen (17)employees in the Business LOGISTICS Division (BLD),
seventeen (17) in the Ayala Operations Center (AOC), and eighteen (18) in the MagnoliaManila Buying Station (Magnolia-MBS).[3] Consequently, the private respondent union filed
several grievance cases for the said retrenched employees, praying for the redeployment of the
said employees to the other divisions of the company.
The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the
parties 1990 Collective Bargaining Agreement providing for the following procedures, to wit:

Sec.5. Processing of Grievance. - Should a grievance arise, an earnest effort shall be

made to settle the grievance expeditiously in accordance with the following
procedures:
Step 1. - The individual employee concerned and the Union Directors, or the Union
Steward shall, first take up the employees grievance orally with his immediate
superior. If no satisfactory agreement or adjustment of the grievance is reached, the
grievance shall, within twenty (20) working days from the occurrence of the cause or
event which gave rise to the grievance, be filed in writing with the Department
Manager or the next level superior who shall render his decision within ten (10)

working days from the receipt of the written grievance. A copy of the decision shall
be furnished the Plant Personnel Officer.
Step 2. - If the decision in Step 1 is rejected, the employee concerned may elevate or
appeal this in writing to the Plant Manager/Director or his duly authorized
representative within twenty (20) working days from the receipt of the Decision of the
Department Manager. Otherwise, the decision in Step 1 shall be deemed accepted by
the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer shall determine
the necessity of conducting grievance meetings. If necessary, the Plant
Manager/Director and the Plant Personnel Officer shall meet the employee
concerned and the Union Director/Steward on such date(s) as may be designated by
the Plant Manager. In every plant/office, Grievance Meetings shall be scheduled at
least twice a month.
The Plant Manager shall give his written comments and decision within ten (10)
working days after his receipt of such grievance or the date of submission of the
grievance for resolution, as the case may be. A copy of his Decision shall be
furnished the Employee Relations Directorate.
Step 3. - If no satisfactory adjustment is arrived at Step 2, the employee may appeal
the Decision to the Conciliation Board as provided under Section 6 hereof, within
fifteen (15) working days from the date of receipt of the decision of the Plant
Manager/Director or his designate. Otherwise, the decision in Step 2 shall be
deemed accepted by the employee.
The Conciliation Board shall meet on the grievance in such dates as shall be
designated by the Division/Business Unit Manager or his representative. In every
Division/Business Unit, Grievance Meetings of the Conciliation Board shall be
scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of
submission of the grievance for resolution within which to decide on the grievance.
SEC. 6. Conciliation Board. - There shall be a conciliation Board per Business Unit
or Division. Every Conciliation Board shall be composed of not more than five (5)

representatives each from the Company and the Union. Management and the Union
may be assisted by their respective legal counsels.
In every Division/Business Unit, the names of the Company and Union
representatives to the Conciliation Board shall be submitted to the Division/Business
Unit Manager not later than January of every year. The Conciliation Board members
shall act as such for one (1) year until removed by the Company or the Union, as the
case may be.
xxx

Sec. 8. Submission to Arbitration. - If the employee or Union is not satisfied with the
Decision of the Conciliation Board and desires to submit the grievance to arbitration,
the employee or the Union shall serve notice of such intention to the Company within
fifteen (15) working days after receipt of the Boards decision. If no such written
notice is received by the Company within fifteen (15) working days, the grievance
shall be considered settled on the basis of the companys position and shall no longer
be available for arbitration.[4]
During the grievance proceedings, however, most of the employees were redeployed, while
others accepted EARLY RETIREMENT . As a result only 17 employees remained when the
parties proceeded to the third level (Step 3) of the grievance procedure. In a meeting on October
26, 1990, petitioner informed private respondent union that if by October 30, 1990, the
remaining 17 employees could not yet be redeployed, their services would be terminated on
November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a
representative of the union, declared that there was nothing more to discuss in view of
the deadlock.[5]
On November 7, 1990, the private respondent filed with the National Conciliation and
Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) a notice of
strike on the following grounds: a)bargaining deadlock; b) union busting; c) gross violation of
the Collective Bargaining Agreement (CBA), such as non-compliance with the grievance
procedure; d) failure to provide private respondent with a list of vacant positions pursuant to the
parties side agreement that was appended to the 1990 CBA; and e) defiance of voluntary
arbitration award. Petitioner on the other hand, moved to dismiss the notice of strike but the
NCMB failed to act on the motion.
On December 21, 1990, petitioner SMC filed a complaint [6] with the respondent NLRC,
praying for: (1) the dismissal the notice of strike; (2) an order compelling the respondent union

to submit to grievance and arbitration the issue listed in the notice of strike; (3) the recovery of
the expenses of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the
complaint; holding, thus:

NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant

-versus- San Miguel Corporation Employees Union-PTWO (SMCEU), Respondent. Considering the allegations in the complaint to restrain Respondent Union from
declaring a strike and to enforce mutual compliance with the provisions of the
collective bargaining agreement on grievance machinery, and the no-strike clause,
with prayer for issuance of temporary restraining order, and the evidence adduced
therein, the Answer filed by the respondent and the memorandum filed by the
complainant in support of its application for the issuance of an injunction, the Second
Division, after due deliberation, Resolved to dismiss the complaint for lack of
merit.[7]
Aggrieved by the said resolution, petitioner found its way to this court via the present
petition, contending that:

I
IT IS THE POSITIVE LEGAL DUTY OF RESPONDENT NLRC TO COMPEL
ARBITRATION AND TO ENJOIN A STRIKE IN VIOLATION OF A NO
STRIKE CLAUSE.
II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE
DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO
AVOID.[8]
On June 3, 1991, to preserve the status quo, the Court issued a Resolution[9] granting
petitioners prayer for the issuance of a Temporary Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor Code [10],
reads:

Section 1. Grounds for strike and lockout. -- A strike or lockout may be declared in
cases of bargaining deadlocks and unfair labor practices. Violations of the collective
bargaining agreements, except flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor practice and shall not be
strikeable. No strike or lockout may be declared on grounds involving inter-union
and intra-union disputes or on issues brought to voluntary or compulsory
arbitration.
In the case under consideration, the grounds relied upon by the private respondent union are
non-strikeable. The issues which may lend substance to the notice of strike filed by the private
respondent union are: collective bargaining deadlock and petitioners alleged violation of the
collective bargaining agreement. These grounds, however, appear more illusory than real.
Collective Bargaining Deadlock is defined as the situation between the labor and the
management of the company where there is failure in the collective bargaining negotiations
resulting in a stalemate[11] This situation, is non-existent in the present case since there is a
Board assigned on the third level (Step 3) of the grievance machinery to resolve the conflicting
views of the parties. Instead of asking the Conciliation Board composed of five representatives
each from the company and the union, to decide the conflict, petitioner declared a deadlock, and
thereafter, filed a notice of strike. For failing to exhaust all the steps in the grievance machinery
and arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike
should have been dismissed by the NLRC and private respondent union ordered to proceed with
the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co.,
[12]
the court declared as illegal the strike staged by the union for not complying with the
grievance procedure provided in the collective bargaining agreement, ruling that:

x x x the main purpose of the parties in adopting a procedure in the settlement of

their disputes is to prevent a strike. This procedure must be followed in its
entirety if it is to achieve its objective. x x x strikes held in violation of the terms
contained in the collective bargaining agreement are illegal, specially when they
provide for conclusive arbitration clauses. These agreements must be strictly
adhered to and respected if their ends have to be achieved. x x x[13]
As regards the alleged violation of the CBA, we hold that such a violation is chargeable
against the private respondent union. In abandoning the grievance proceedings and stubbornly
refusing to avail of the remedies under the CBA, private respondent violated the mandatory
provisions of the collective bargaining agreement.

Abolition of departments or positions in the company is one of the recognized management

prerogatives.[14] Noteworthy is the fact that the private respondent does not question the validity
of the business move of petitioner. In the absence of proof that the act of petitioner was illmotivated, it is presumed that petitioner San Miguel Corporation acted in good faith. In fact,
petitioner acceded to the demands of the private respondent union by redeploying most of the
employees involved; such that from an original 17 excess employees in BLD, 15 were
successfully redeployed. In AOC, out of the 17 original excess, 15 were redeployed. In the
Magnolia - Manila Buying Station, out of 18 employees, 6 were redeployed and only 12 were
terminated.[15]
So also, in filing complaint with the NLRC, petitioner prayed that the private respondent
union be compelled to proceed with the grievance and arbitration proceedings. Petitioner having
evinced its willingness to negotiate the fate of the remaining employees affected, there is no
ground to sustain the notice of strike of the private respondent union.
All things studiedly considered, we are of the ineluctable conclusion, and so hold, that the
NLRC gravely abused its discretion in dismissing the complaint of petitioner SMC for the
dismissal of the notice of strike, issuance of a temporary restraining order, and an order
compelling the respondent union to settle the dispute under the grievance machinery of their
CBA.
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel
Corporation and private respondent San Miguel Corporation Employees Union - PTGWO are
hereby directed to complete the third level (Step 3) of the Grievance Procedure and proceed with
the Arbitration proceedings if necessary. No pronouncement as to costs.
SO ORDERED.

I. VOLUNTARY ARBITRATION (ARTICLE 260 262,

LABOR CODE)
214. LUDO & LUYM CORPORATION VS. SAORDINO
DECISION
QUISUMBING, J.:

This petition for review on certiorari seeks to annul and set aside the
decision[1] of the Court of Appeals promulgated on July 6, 1999 and its Order
denying petitioners motion for reconsideration in CA-G.R. SP No. 44341.
The relevant facts as substantially recited by the Court of Appeals in its
decision are as follows:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a
domestic corporation engaged in the manufacture of COCONUT OIL , corn
starch, glucose and related products. It operates a manufacturing plant located
at Tupas Street, Cebu City and a wharf where raw materials and finished
products are shipped out.
In the course of its business operations, LUDO engaged the arrastre
services of Cresencio Lu Arrastre Services (CLAS) for the loading and
unloading of its finished products at the wharf. Accordingly, several arrastre
workers were deployed by CLAS to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as
regular rank-and-file employees of LUDO every time the latter needed
additional manpower services. Said employees thereafter joined respondent
union, the LUDO Employees Union (LEU), which acted as the exclusive
bargaining agent of the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective bargaining
agreement with LUDO which provides certain benefits to the employees, the
amount of which vary according to thelength of service rendered by the
availing employee.
Thereafter, the union requested LUDO to include in its members period of
service the time during which they rendered arrastre services to LUDO
through the CLAS so that they could get higher benefits. LUDO failed to act
on the request. Thus, the matter was submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole
issue of the date of regularization of the workers for resolution by the
Voluntary Arbitrator.

In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1)
the respondent employees were engaged in activities necessary and
desirable to the business of petitioner, and (2) CLAS is a labor-only contractor
of petitioner.[2] It disposed of the case thus:
WHEREFORE, in view of the foregoing, this Voluntary Arbitrator finds the claims of
the complainants meritorious and so hold that:
a.
the 214 complainants, as listed in the Annex A, shall be considered regular
employees of the respondents six (6) months from the first day of service at CLAS;
b.
the said complainants, being entitled to the CBA benefits during the regular
employment, are awarded a) sick leave, b) vacation leave & c) annual wage
and salary increases during such period in the amount of FIVE MILLION SEVEN
HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND
SIXTY ONE CENTAVOS (P5,707,261.61) as computed in Annex A;
c.

the respondents shall pay attorneys fees of ten (10) percent of the total award;

d.
an interest of twelve (12) percent per annum or one (1) percent per month shall
be imposed to the award from the date of promulgation until fully paid if only to
speed up the payment of these long over due CBA benefits deprived of the
complaining workers.
Accordingly, all separation and/or RETIREMENT BENEFITS shall be construed
from the date of regularization aforementioned subject only to the appropriate
government laws and other social legislation.
SO ORDERED.[3]
In due time, LUDO filed a motion for reconsideration, which was
denied. On appeal, the Court of Appeals affirmed in toto the decision of the
Voluntary Arbitrator, thus:
WHEREFORE, finding no reversible error committed by respondent voluntary
arbitrator, the instant petition is hereby DISMISSED.
SO ORDERED.[4]

Hence this petition. Before us, petitioner raises the following issues:
I

WHETHER OR NOT BENEFITS CONSISTING OF SALARY INCREASES,

VACATION LEAVE AND SICK LEAVE BENEFITS FOR THE YEARS 1977 TO
1987 ARE ALREADY BARRED BY PRESCRIPTION WHEN PRIVATE
RESPONDENTS FILED THEIR CASE IN JANUARY 1995;
II

WHETHER OR NOT A VOLUNTARY ARBITRATOR CAN AWARD BENEFITS

NOT CLAIMED IN THE SUBMISSION AGREEMENT.[5]
Petitioner contends that the appellate court gravely erred when it upheld
the award of benefits which were beyond the terms of submission
agreement. Petitioner asserts that the arbitrator must confine its adjudication
to those issues submitted by the parties for arbitration, which in this case is
the sole issue of the date of regularization of the workers. Hence, the award
of benefits by the arbitrator was done in excess of jurisdiction.[6]
Respondents, for their part, aver that the three-year prescriptive period is
reckoned only from the time the obligor declares his refusal to comply with his
obligation in clear and unequivocal terms. In this case, respondents maintain
that LUDO merely promised to review the company records in response to
respondents demand for adjustment in the date of their regularization without
making a categorical statement of refusal. [7] On the matter of the benefits,
respondents argue that the arbitrator is empowered to award the assailed
benefits because notwithstanding the sole issue of the date of regularization,
standard companion issues on reliefs and remedies are deemed
incorporated. Otherwise, the whole arbitration process would be rendered
purely academic and the law creating it inutile.[8]
The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and
Labor Arbiters is clearly defined and specifically delineated in the Labor
Code. The pertinent provisions of the Labor Code, read:

Art. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as
otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases:
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wage, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
xxx
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining Agreement
and those arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as grievances under the
Collective Bargaining Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances or matters under the
exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the Grievance
Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement.

Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or
panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and
decide all other labor disputes including unfair labor practices and bargaining
deadlocks.
In construing the above provisions, we held in San Jose vs. NLRC, that
the jurisdiction of the Labor Arbiter and the Voluntary Arbitrator or Panel of
Voluntary Arbitrators over the cases enumerated in the Labor Code, Articles
217, 261 and 262, can possibly include money claims in one form or another.
[10]
Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC,
[11]
compulsory arbitration has been defined both as the process of settlement
of labor disputes by a government agency which has the authority to
investigate and to make an award which is binding on all the parties, and as a
mode of arbitration where the parties are compelled to accept the resolution of
their dispute through arbitration by a third party (emphasis supplied). [12] While
a voluntary arbitrator is not part of the governmental unit or labor departments
personnel, said arbitrator renders arbitration services provided for under labor
laws.
[9]

Generally, the arbitrator is expected to decide only those questions

expressly delineated by the submission agreement. Nevertheless, the
arbitrator can assume that he has the necessary power to make a final
settlement since arbitration is the final resort for the adjudication of disputes.
[13]
The succinct reasoning enunciated by the CA in support of its holding, that
the Voluntary Arbitrator in a labor controversy has jurisdiction to render the
questioned arbitral awards, deserves our concurrence, thus:
In general, the arbitrator is expected to decide those questions expressly stated and
limited in the submission agreement. However, since arbitration is the final resort for
the adjudication of disputes, the arbitrator can assume that he has the power to make a
final settlement. Thus, assuming that the submission empowers the arbitrator to
decide whether an employee was discharged for just cause, the arbitrator in this
instance can reasonable assume that his powers extended beyond giving a yes-or-no
answer and included the power to reinstate him with or without back pay.
In one case, the Supreme Court stressed that xxx the Voluntary Arbitrator had
plenary jurisdiction and authority to interpret the agreement to arbitrate and to

determine the scope of his own authority subject only, in a proper case, to the
certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his
authority as embracing not merely the determination of the abstract question of
whether or not a performance bonus was to be granted but also, in the affirmative
case, the amount thereof.
By the same token, the issue of regularization should be viewed as two-tiered
issue. While the submission agreement mentioned only the determination of the date
or regularization, law and jurisprudence give the voluntary arbitrator enough leeway
of authority as well as adequate prerogative to accomplish the reason for which the
law on voluntary arbitration was created speedy labor justice. It bears stressing that
the underlying reason why this case arose is to settle, once and for all, the ultimate
question of whether respondent employees are entitled to higher benefits. To require
them to file another action for payment of such benefits would certainly undermine
labor proceedings and contravene the constitutional mandate providing full protection
to labor.[14]
As regards petitioners contention that the money claim in this case is
barred by prescription, we hold that this contention is without merit. So is
petitioners stance that the benefits claimed by the respondents, i.e., sick
leave, vacation leave and 13th-month pay, had already prescribed, considering
the three-year period for the institution of monetary claims. [15] Such
determination is a question of fact which must be ascertained based on the
evidence, both oral and documentary, presented by the parties before the
Voluntary Arbitrator. In this case, the Voluntary Arbitrator found that
prescription has not as yet set in to bar the respondents claims for the
monetary benefits awarded to them. Basic is the rule that findings of fact of
administrative and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally
accorded not only great respect but even finality.[16] Here, the Voluntary
Arbitrator received the evidence of the parties first-hand. No compelling
reason has been shown for us to diverge from the findings of the Voluntary
Arbitrator, especially since the appellate court affirmed his findings, that it took
some time for respondent employees to ventilate their claims because of the
repeated assurances made by the petitioner that it would review the company

records and determine therefrom the validity of the claims, without expressing
a categorical denial of their claims. As elucidated by the Voluntary Arbitrator:
The respondents had raised prescription as defense. The controlling law, as ruled by
the High Court, is:
The cause of action accrues until the party obligated refuses xxx to comply with his
duty. Being warded off by promises, the workers not having decided to assert [their]
right[s], [their] causes of action had not accrued (Citation omitted.)
Since the parties had continued their negotiations even after the matter was raised
before the Grievance Procedure and the voluntary arbitration, the respondents had not
refused to comply with their duty. They just wanted the complainants to present some
proofs. The complainants cause of action had not therefore accrued yet. Besides, in
the earlier voluntary arbitration case aforementioned involving exactly the same issue
and employees similarly situated as the complainants, the same defense was raised
and dismissed by Honorable Thelma Jordan, Voluntary Arbitrator.
In fact, the respondents promised to correct their length of service and grant them the
back CBA benefits if the complainants can prove they are entitled rendered the former
in estoppel, barring them from raising the defense of laches or prescription. To hold
otherwise amounts to rewarding the respondents for their duplicitous representation
and abet them in a dishonest scheme against their workers. [17]
Indeed, as the Court of Appeals concluded, under the equitable principle
of estoppel, it will be the height of injustice if we will brush aside the
employees claims on a mere technicality, especially when it is petitioners
own action that prevented them from interposing the claims within the
prescribed period.
WHEREFORE, the petition is DENIED. The appealed decision of the
Court of Appeals in CA-G.R. SP No. 44341 and the resolution denying
petitioners motion for reconsideration, areAFFIRMED. Costs against
petitioner.
SO ORDERED.

215. VIVERO VS. COURT OF APPEALS

Home > ChanRobles Virtual Law
Library > Philippine Supreme Court
Jurisprudence > 2000 Decisions >

SECOND DIVISION
G.R. No. 138938. October
24, 2000
CELESTINO
VIVIERO, Petitioner,
vs. COURT OF APPEALS,
HAMMONIA
MARINE
SERVICES, and HANSEATIC
SHIPPING
CO.,
LTD. Respondents.
DECISION
BELLOSILLO, J.:
CELESTINO VIVERO, in this
petition for review, seeks the
reversal of the Decision of the
Court of Appeals of 26 May
1999
setting
aside
the
Decision of the National Labor
Relations Commission of 28
May 1998 as well as its

Resolution of 23 July 1998

denying his motion for its
reconsideration,
and
reinstating the decision of the
Labor Arbiter of 21 January
1997.
Petitioner Vivero, a licensed
seaman, is a member of the
Associated Marine Officers and
Seamen's
Union
of
the
Philippines (AMOSUP). The
Collective
Bargaining
Agreement entered into by
AMOSUP
and
private
respondents provides, among
others ARTICLE XII
GRIEVANCE PROCEDURE
xxxx
Sec. 3. A dispute or grievance
arising in connection with the
terms and provisions of this
Agreement shall be adjusted
in
accordance
with
the
following procedure:
1. Any seaman who feels that
he has been unjustly treated
or even subjected to an unfair
consideration shall endeavor
to
have
said
grievance
adjusted by the designated
representative
of
the
unlicensed department abroad

the vessel in the following

manner:
A.
Presentation
of
the
complaint to his immediate
superior.
B. Appeal to the head of the
department in which the
seaman involved shall be
employed.
C. Appeal
Master.

directly

to

the

Sec. 4. If the grievance

cannnot be resolved under the
provision of Section 3, the
decision of the Master shall
govern at sea x x x x in
foreign ports and until the
vessel arrives at a port where
the Master shall refer such
dispute
to
either
the
COMPANY or the UNION in
order to resolve such dispute.
It is understood, however, if
the dispute could not be
resolved then both parties
shall avail of the grievance
procedure.
Sec. 5. In furtherance of the
foregoing principle, there is
hereby created a GRIEVANCE
COMMITTEE to be composed
of
two
COMPANY
REPRESENTATIVES
to
be
designated by the COMPANY

and
two
LABOR
REPRESENTATIVES
to
be
designated by the UNION.
Sec. 6. Any grievance, dispute
or
misunderstanding
concerning
any
ruling,
practice, wages or working
conditions in the COMPANY, or
any
breach
of
the
Employment Contract, or any
dispute arising from the
meaning or the application of
the
provision
of
this
Agreement or a claim of
violation
thereof
or
any
complaint that any such
crewmembers
may
have
against the COMPANY, as well
as
complaint
which
the
COMPANY may have against
such crewmembers shall be
brought to the attention of the
GRIEVANCE
COMMITTEE
before either party takes any
action, legal or otherwise.
Sec. 7. The COMMITTEE shall
resolve any dispute within
seven (7) days from and after
the same is submitted to it for
resolution and if the same
cannot be settled by the
COMMITTEE
or
if
the
COMMITTEE fails to act on the
dispute within the 7-day
period herein provided, the
same shall be referred to a

VOLUNTARY
COMMITTEE.

ARBITRATION

An "impartial arbitrator" will

be appointed by mutual choice
and consent of the UNION and
the COMPANY who shall hear
and decide the dispute or
issue presented to him and his
decision shall be final and
unappealable x x x x1
crlwvirtualibrry

As found by the Labor Arbiter

Complainant was hired by
respondent as Chief Officer of
the
vessel
"M.V. Sunny
Prince" on 10 June 1994
under
the
terms
and
conditions, to wit:
Duration of Contract - - - - 10
months
Basic Monthly Salary - - - - US
$1,100.00
Hours of Work - - - - 44
hrs./week
Overtime - - - - 495 lump O.T.
Vacation leave with pay - - - US $220.00/mo.
On grounds of very poor
performance and conduct,
refusal
to
perform
hisb,

refusal to report to the

Captain
or
the
vessels
Engineers or cooperate with
other ship officers about the
problem in cleaning the cargo
holds or of the shipping pump
and his dismal relations with
the Captain of the vessel,
complainant was repatriated
on 15 July 1994.
On
01
August
1994,
complainant filed a complaint
for
illegal
dismissal
at
Associated Marine Officers
and Seamans Union of the
Philippines (AMOSUP) of which
complainant was a member.
Pursuant to Article XII of the
Collective
Bargaining
Agreement,
grievance
proceedings were conducted;
however, parties failed to
reach and settle the dispute
amicably,
thus,
on
28
November 1994, complainant
filed [a] complaint with the
Philippine
Overseas
Employment
Administration
2
(POEA).
The law in force at the time
petitioner
filed
his Complaint with the POEA
was EO No. 247.3
crlwvirtualibrry

While the case was pending

before the POEA, private
respondents filed a Motion to

Dismisson the ground that the

POEA had no jurisdiction over
the case considering petitioner
Vivero's failure to refer it to a
Voluntary
Arbitration
Committee in accordance with
the CBA between the parties.
Upon the enactment of RA
8042, the Migrant Workers
and Overseas Filipinos Act of
1995,
the
case
was
transferred to the Adjudication
Branch of the National Labor
Relations Commission.
On 21 January 1997 Labor
Arbiter Jovencio Ll. Mayor Jr.,
on the basis of the pleadings
and documents available on
record, rendered a decision
dismissing the Complaint for
want
of
4
jurisdiction. According to the
Labor Arbiter, since the CBA of
the parties provided for the
referral
to
a
Voluntary
Arbitration Committee should
the Grievance Committee fail
to settle the dispute, and
considering the mandate of
Art. 261 of the Labor Code on
the original and exclusive
jurisdiction
of
Voluntary
Arbitrators, the Labor Arbiter
clearly had no jurisdiction
over the case.5
crlwvirtualibrry

Petitioner (complainant before

the Labor Arbiter) appealed

the dismissal of his petition to
the NLRC. On 28 May 1998
the NLRC set aside the
decision of the Labor Arbiter
on the ground that the record
was clear that petitioner had
exhausted his remedy by
submitting his case to the
Grievance
Committee
of
AMOSUP. Considering however
that he could not obtain any
settlement he had to ventilate
his case before the proper
forum, i.e.,
the
Philippine
Overseas
Employment
6
Administration. The
NLRC
further
held
that
the
contested portion in the CBA
providing for the intercession
of a Voluntary Arbitrator was
not binding upon petitioner
since both petitioner and
private respondents had to
agree voluntarily to submit
the case before a Voluntary
Arbitrator
or
Panel
of
Voluntary Arbitrators. This
would entail expenses as the
Voluntary Arbitrator chosen by
the parties had to be paid.
Inasmuch
however
as
petitioner
chose
to
file
his Complaint originally
with
POEA, then the Labor Arbiter
to whom the case was
transferred would have to

take cognizance of the case.7

crlwvirtualibrry

The NLRC then remanded the

case to the Labor Arbiter for
further proceedings. On 3 July
1998
respondents
filed
a Motion
for
Reconsideration which
was
denied by the NLRC on 23 July
1998.
Thus,
private
respondents
raised the case to the Court of
Appeals contending that the
provision in the CBA requiring
a dispute which remained
unresolved by the Grievance
Committee to be referred to a
Voluntary
Arbitration
Committee, was mandatory in
character in view of the CBA
between the parties. They
stressed that "since it is a
policy of the state to promote
voluntary arbitration as a
mode
of
settling
labor
disputes, it is clear that the
public
respondent
gravely
abused its discretion in taking
cognizance of a case which
was still within the mantle of
the
Voluntary
Arbitration
Commitees jurisdiction."8
crlwvirtualibrry

On the other hand, petitioner

argued (A)s strongly suggested by its
very title, referral of cases of

this nature to the Voluntary

Arbitration
Committee
is
voluntary
in
nature.
Otherwise,
the
committee
would not have been called
Voluntary
Arbitration
Committee but rather, a
Compulsory
Arbitration
Committee. Moreover, if the
referral of cases of similar
nature
to
the
Voluntary
Arbitration Committee would
be deemed mandatory by
virtue of the provisions in the
CBA, the [NLRC] would then
be effectively deprived of its
jurisdiction to try, hear and
decide termination disputes,
as provided for under Article
217 of the Labor Code. Lastly,
[respondents] ought to be
deemed to have waived their
right
to
question
the
procedure
followed
by
[petitioner], considering that
they have already filed their
Position
Paper
before
belatedly filing a Motion to
Dismiss x x x x 9
crlwvirtualibrry

But the Court of Appeals ruled

in
favor
of
private
respondents. It held that the
CBA "is the law between the
parties
and
compliance
therewith is mandated by the
express
policy
of
the
10
law." Hence,
petitioner

should have followed the

provision in the CBA requiring
the submission of the dispute
to the Voluntary Arbitration
Committee
once
the
Grievance Committee failed to
settle
the
11
controversy. According
to
the Court of Appeals, the
parties did not have the
choice to "volunteer" to refer
the dispute to the Voluntary
Arbitrator or a Panel of
Arbitrators when there was
already
an
agreement
requiring them to do so.
"Voluntary Arbitration" means
that it is binding because of a
prior agreement or contract,
while
"Compulsory
Arbitration" is when the law
declares the dispute subject to
arbitration, regardless of the
consent or desire of the
parties.12
crlwvirtualibrry

The Court of Appeals further

held that the Labor Code itself
enumerates the original and
exclusive jurisdiction of the
Voluntary Arbitrator or Panel
of Voluntary Arbitrators, and
prohibits the NLRC and the
Regional Directors of the
Department of Labor and
Employment
(DOLE)
from
entertaining
cases
falling
13
under the same. Thus, the

fact that private respondents

filed their Position Paper first
before filing their Motion to
Dismiss was immaterial and
did not operate to confer
jurisdiction upon the Labor
Arbiter, following the wellsettled rule that jurisdiction is
determined by law and not by
consent or agreement of the
parties or by estoppel.14
crlwvirtualibrry

Finally, the appellate court

ruled that a case falling under
the jurisdiction of the Labor
Arbiter as provided under Art.
217 of the Labor Code may be
lodged
instead
with
a
Voluntary Arbitrator because
the law prefers, or gives
primacy,
to
voluntary
arbitration
instead
of
compulsory
arbitration.15 Consequently,
the contention that the NLRC
would be deprived of its
jurisdiction to try, hear and
decide termination disputes
under Art. 217 of the Labor
Code, should the instant
dispute be referred to the
Voluntary
Arbitration
Committee, is clearly bereft of
merit.16 Besides, the Voluntary
Arbitrator,
whether
acting
solely or in a panel, enjoys in
law the status of a quasijudicial agency independent

of, and apart from, the NLRC

since his decisions are not
appealable to the latter.17
crlwvirtualibrry

Celestino
Vivero,
in
his
petition for review assailing
the Decision of the Court of
Appeals, alleges that the
appellate court committed
grave abuse of discretion in
holding that a Voluntary
Arbitrator
or
Panel
of
Voluntary Arbitrators, and not
the Adjudication Branch of the
NLRC, has jurisdiction over his
complaint for illegal dismissal.
He claims that his complaint
for
illegal
dismissal
was
undeniably
a
termination
dispute and did not, in any
way, involve an "interpretation
or
implementation
of
collective
bargaining
agreement" or "interpretation"
or "enforcement" of company
personnel policies. Thus, it
should fall within the original
and exclusive jurisdiction of
the NLRC and its Labor
Arbiter, and not with a
Voluntary
Arbitrator,
in
accordance with Art. 217 of
the Labor Code.
Private respondents, on the
other hand, allege that the
case is clearly one "involving
the

proper interpretation and impl

ementation of the Grievance
Procedure found
in
theCollective
Bargaining
Agreement (CBA) between the
parties"18 because
of
petitioners allegation in his
claim/assistance request form
submitted to the Union, to
wit:
NATURE OF COMPLAINT
3. Illegal Dismissal - Reason:
(1) That in this case it was the
master of M.V. SUNNY PRINCE
Capt. Andersen who created
the trouble with physical
injury
and
stating
false
allegation; (2) That there was
no
proper
procedure
of
grievance; (3) No proper
notice of dismissal.
Is there a Notice of dismissal?
_x_ Yes or ____ No
What date? 11 July 1994
Is
there
a
Grievance
Procedure observed? ____ Yes
or _x_ No19
crlwvirtualibrry

Private respondents further

allege that the fact that
petitioner
sought
the
assistance
of
his
Union
evidently
shows
that
he
himself was convinced that

his Complaint was within the

ambit of the jurisdiction of the
grievance
machinery
and
subsequently by a Panel of
Voluntary
Arbitrators
as
provided for in their CBA, and
as explicitly mandated by Art.
261 of the Labor Code.20
crlwvirtualibrry

Thus, the issue is whether the

NLRC
is
deprived
of
jurisdiction
over
illegal
dismissal cases whenever a
CBA provides for grievance
machinery
and
voluntary
arbitration proceedings. Or,
phrased in another way, does
the dismissal of an employee
constitute
a
"grievance
between the parties," as
defined under the provisions
of the CBA, and consequently,
within the exclusive original
jurisdiction of the Voluntary
Arbitrators, thereby rendering
the NLRC without jurisdiction
to decide the case?
On the original and exclusive
jurisdiction of Labor Arbiters,
Art. 217 of the Labor Code
provides Art. 217. Jurisdiction of Labor
Arbiters and the Commission.
- (a) Except as otherwise
provided under this Code, the
Labor Arbiters shall have
original
and
exclusive

jurisdiction to hear and decide

within thirty (30) calendar
days after the submission of
the case by the parties for
decision without extension,
even in the absence of
stenographic
notes,
the
following cases involving all
workers, whether agricultural
or non-agricultural: (1) Unfair
labor
practice
cases;
(2) Termination disputes; (3)
If accompanied with a claim
for reinstatement, those cases
that
workers
may
file
involving wages, rates of pay,
hours of work and other terms
and
conditions
of
employment; (4) Claims for
actual, moral, exemplary and
other forms of damages
arising from the employeremployee relations; (5) Cases
arising from any violation of
Article 264 of this Code,
including questions involving
the legality of strikes and
lockouts; and, (6) Except
claims
for
Employees
Compensation,
Social
Security,
Medicare
and
maternity benefits, all other
claims arising from employeremployee relations, including
those of persons in domestic
or
household
service,
involving
an
amount
exceeding five thousand pesos

(P5,000.00)
regardless
of
whether accompanied with a
claim for reinstatement.
(b) The Commission shall
have
exclusive
appellate
jurisdiction over all cases
decided by Labor Arbiters.
(c) Cases arising from the
interpretation
of
collective
bargaining agreements and
those
arising
from
the
interpretation or enforcement
of company personnel policies
shall be disposed of by the
Labor Arbiter by referring the
same
to
the
grievance
machinery
and
voluntary
arbitration
as
may
be
provided in said agreements
(emphasis supplied).
However, any or all of these
cases may, by agreement of
the parties, be submitted to a
Voluntary Arbitrator or Panel
of Voluntary Arbitrators for
adjudication. Articles 261 and
262 of the Labor Code provide
Art.
261. Jurisdiction
of
Voluntary Arbitrators or Panel
of Voluntary Arbitrators. - The
Voluntary Arbitrator or panel
of Voluntary Arbitrators shall
have original and exclusive
jurisdiction to hear and decide

all
unresolved
grievances
arising from the interpretation
or implementation of the
Collective
Bargaining
Agreement and those arising
from the interpretation or
enforcement
of
company
personnel policies referred to
in the immediately preceding
article. Accordingly, violations
of a Collective Bargaining
Agreement,
except
those
which are gross in character,
shall no longer be treated as
unfair labor practice and shall
be resolved as grievances
under
the
Collective
Bargaining Agreement. For
purposes of this article, gross
violations
of
Collective
Bargaining Agreement shall
mean
flagrant
and/or
malicious refusal to comply
with the economic provisions
of such agreement.
The Commission, its Regional
Offices and the Regional
Directors of the Department of
Labor and Employment shall
not
entertain
disputes,
grievances or matters under
the exclusive and original
jurisdiction of the Voluntary
Arbitrator
or
panel
of
Voluntary Arbitrators and shall
immediately dispose and refer
the same to the Grievance

Machinery
or
Voluntary
Arbitration provided in the
Collective
Bargaining
Agreement.
Art. 262. Jurisdiction Over
Other Labor Disputes. - The
Voluntary Arbitrator or panel
of Voluntary Arbitrators, upon
agreement of the parties,
shall also hear and decide all
other labor disputes including
unfair labor practices and
bargaining
deadlocks
(emphasis supplied).
Private respondents attempt
to justify the conferment of
jurisdiction over the case on
the Voluntary Arbitrator on
the ground that the issue
involves
the
proper
interpretation
and
implementation
of
the
Grievance Procedure found in
the CBA. They point out that
when petitioner sought the
assistance of his Union to
avail
of
the
grievance
machinery,
he
in
effect
submitted himself to the
procedure set forth in the CBA
regarding
submission
of
unresolved grievances to a
Voluntary Arbitrator.
The argument is untenable.
The case is primarily a
termination dispute. It is clear

from
the
claim/assistance
request form submitted by
petitioner to AMOSUP that he
was challenging the legality of
his dismissal for lack of cause
and lack of due process. The
issue of whether there was
proper
interpretation
and
implementation of the CBA
provisions comes into play
only because the grievance
procedure provided for in the
CBA was not observed after
he
sought
his
Unions
assistance in contesting his
termination.
Thus,
the
question
to
be
resolved
necessarily springs from the
primary issue of whether
there was a valid termination;
without this, then there would
be no reason to invoke the
need
to
interpret
and
implement the CBA provisions
properly.
In San
Miguel
Corp.
v.
National
Labor
Relations
21
Commission this Court held
that the phrase "all other
labor disputes" may include
termination disputes provided
that the agreement between
the Union and the Company
states
"in
unequivocal
language that [the parties]
conform to the submission of
termination
disputes
and

unfair
labor
practices
to
22
voluntary arbitration." Ergo,
it is not sufficient to merely
say that parties to the CBA
agree on the principle that "all
disputes" should first be
submitted to a Voluntary
Arbitrator. There is a need for
an express stipulation in the
CBA that illegal termination
disputes should be resolved
by a Voluntary Arbitrator or
Panel of Voluntary Arbitrators,
since the same fall within a
special class of disputes that
are
generally
within
the
exclusive original jurisdiction
of Labor Arbiters by express
provision of law. Absent such
express
stipulation,
the
phrase "all disputes" should
be construed as limited to the
areas of conflict traditionally
within the jurisdiction of
Voluntary
Arbitrators, i.e.,
disputes relating to contractinterpretation,
contractimplementation,
or
interpretation or enforcement
of
company
personnel
policies. Illegal termination
disputes - not falling within
any of these categories should then be considered as
a special area of interest
governed
by
a
specific
provision of law.

In this case, however, while

the parties did agree to make
termination
disputes
the
proper subject of voluntary
arbitration, such submission
remains discretionary upon
the parties. A perusal of the
CBA provisions shows that
Sec. 6, Art. XII (Grievance
Procedure) of the CBA is the
general agreement of the
parties to refer grievances,
disputes or misunderstandings
to a grievance committee, and
henceforth, to a voluntary
arbitration committee. The
requirement of specificity is
fulfilled by Art. XVII (Job
Security) where the parties
agreed Sec. 1. Promotion, demotion,
suspension,
dismissal
or
disciplinary action of the
seaman shall be left to the
discretion of the Master, upon
consultation
with
the
Company and notification to
the
Union.
This
notwithstanding, any and all
disciplinary action taken on
board the vessel shall be
provided for in Appendix B
of this Agreement x x x x 23
crlwvirtualibrry

Sec. 4. x x x x Transfer, lay-off

or discipline of seamen for
incompetence,
inefficiency,

neglect of work, bad behavior,

perpetration
of
crime,
drunkenness, insubordination,
desertion, violation of x x x
regulations
of
any
port
touched by the Companys
vessel/s and other just and
proper causes shall be at
Masters discretion x x x in the
high seas or foreign ports. The
Master
shall
refer
the
case/dispute upon reaching
port and if not satisfactorily
settled, the case/dispute may
be referred to the grievance
machinery
or
procedure hereinafter
provided
(emphasis
24
supplied).
crlwvirtualibrry

The use of the word "may"

shows the intention of the
parties to reserve the right to
submit the illegal termination
dispute to the jurisdiction of
the Labor Arbiter, rather than
to a Voluntary Arbitrator.
Petitioner validly exercised his
option to submit his case to a
Labor Arbiter when he filed
his Complaint before
the
proper government agency.
Private
respondents
invoke Navarro
III
v.
25
Damasco wherein the Court
held that "it is the policy of
the
state
to
promote

voluntary arbitration as a
mode of settling disputes."26 It
should be noted, however,
that in Navarro III all the
parties voluntarily submitted
to the jurisdiction of the
Voluntary
Arbitrator
when
they filed their respective
position papers and submitted
documentary evidence before
him.
Furthermore,
they
manifested during the initial
conference that they were not
questioning the authority of
the Voluntary Arbitrator.27 In
the case at bar, the dispute
was never brought to a
Voluntary
Arbitrator
for
resolution; in fact, petitioner
precisely requested the Court
to recognize the jurisdiction of
the Labor Arbiter over the
case. The Court had held
in San
Miguel
Corp.
v.
28
NLRC that neither officials
nor tribunals can assume
jurisdiction in the absence of
an express legal conferment.
In
the
same
manner,
petitioner cannot arrogate into
the
powers
of
Voluntary
Arbitrators the original and
exclusive jurisdiction of Labor
Arbiters over unfair labor
practices,
termination
disputes,
and
claims
for
damages, in the absence of an
express agreement between

the parties in order for Art.

262 of the Labor Code to
apply in the case at bar. In
other words, the Court of
Appeals is correct in holding
that Voluntary Arbitration is
mandatory in character if
there is a specific agreement
between the parties to that
effect. It must be stressed
however that, in the case at
bar, the use of the word
"may" shows the intention of
the parties to reserve the
right of recourse to Labor
Arbiters.
The CBA clarifies the proper
procedure to be followed in
situations where the parties
expressly stipulate to submit
termination disputes to the
jurisdiction of a Voluntary
Arbitrator
or
Panel
of
Voluntary
Arbitrators.
For
when the parties have validly
agreed on a procedure for
resolving grievances and to
submit a dispute to voluntary
arbitration
then
that
procedure should be strictly
observed.
Non-compliance
therewith cannot be excused,
as petitioner suggests, by the
fact that he is not well-versed
with the "fine prints" of the
CBA. It was his responsibility
to find out, through his Union,

what the provisions of the

CBA were and how they could
affect his rights. As provided
in Art. 241, par. (p), of the
Labor Code (p) It shall be the duty of any
labor organization and its
officers to inform its members
on the provisions of its
constitution
and
by-laws,
collective
bargaining
agreement,
the
prevailing
labor relations system and all
their rights and obligations
under existing labor laws.
In fact, any violation of the
rights and conditions of union
membership is a "ground for
cancellation
of
union
registration or expulsion of
officer from office, whichever
is appropriate. At least thirty
percent (30%) of all the
members of a union or any
member
or
members
especially
concerned
may
report such violation to the
Bureau [of Labor Relations] x
x x x"29
crlwvirtualibrry

It may be observed that

under Policy Instruction No.
56 of the Secretary of Labor,
dated 6 April 1993, "Clarifying
the
Jurisdiction
Between
Voluntary
Arbitrators
and
Labor
Arbiters
Over

Termination
Cases
and
Providing Guidelines for the
Referral
of
Said
Cases
Originally Filed with the NLRC
to the NCMB," termination
cases arising in or resulting
from the interpretation and
implementation of collective
bargaining agreements and
interpretation
and
enforcement
of
company
personnel policies which were
initially processed at the
various steps of the plantlevel Grievance Procedures
under the parties' collective
bargaining agreements fall
within
the
original
and
exclusive jurisdiction of the
voluntary arbitrator pursuant
to Art. 217 (c) and Art. 261 of
the Labor Code; and, if filed
before the Labor Arbiter, these
cases shall be dismissed by
the Labor Arbiter for lack of
jurisdiction and referred to the
concerned
NCMB
Regional
Branch for appropriate action
towards
an
expeditious
selection by the parties of a
Voluntary Arbitrator or Panel
of Arbitrators based on the
procedures agreed upon in the
CBA.
As earlier stated, the instant
case is a termination dispute
falling under the original and

exclusive jurisdiction of the

Labor Arbiter, and does not
specifically
involve
the
application, implementation or
enforcement
of
company
personnel
policies
contemplated
in Policy
Instruction
No.
56.
Consequently, Policy
Instruction No. 56 does not
apply in the case at bar. In
any case, private respondents
never invoked the application
of Policy Instruction No. 56 in
their Position Papers, neither
did they raise the question in
their Motion to Dismiss which
they filed nine (9) months
after the filing of their Position
Papers. At this late stage of
the proceedings, it would not
serve the ends of justice if
this case is referred back to a
Voluntary
Arbitrator
considering that both the
AMOSUP
and
private
respondents have submitted
to the jurisdiction of the Labor
Arbiter
by
filing
their
respective Position Papers and
ignoring
the
grievance
procedure set forth in their
CBA.
After
the
grievance
proceedings have failed to
bring about a resolution,
AMOSUP,
as
agent
of

petitioner,
should
have
informed him of his option to
settle
the
case
through
voluntary arbitration. Private
respondents, on their part,
should have timely invoked
the provision of their CBA
requiring the referral of their
unresolved disputes to a
Voluntary Arbitrator once it
became apparent that the
grievance machinery failed to
resolve it prior to the filing of
the case before the proper
tribunal.
The
private
respondents should not have
waited for nine (9) months
from the filing of their Position
Paper with the POEA before it
moved to dismiss the case
purportedly
for
lack
of
jurisdiction. As it is, private
respondents are deemed to
have waived their right to
question
the
procedure
followed
by
petitioner,
assuming that they have the
right to do so. Under their
CBA,
both
Union
and
respondent companies are
responsible for selecting an
impartial arbitrator or for
convening
an
arbitration
30
committee; yet,
it
is
apparent that neither made a
move
towards
this
end.
Consequently,
petitioner
should not be deprived of his

legitimate recourse because of

the refusal of both Union and
respondent
companies
to
follow
the
grievance
procedure.
WHEREFORE, the Decision of
the Court of Appeals is SET
ASIDE and the case is
remanded to the Labor Arbiter
to dispose of the case with
dispatch
until
terminated
considering the undue delay
already incurred.
SO ORDERED.

J. LIABILITY OF CORPORATE OFFICIALS

216. BUSINESSDAY INFORMATION SYSTEMS AND SERVICES, INC.
VS. NLRC
1. LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT ; EMPLOYER
MAY NOT, IN THE GUISE OF EXERCISING MANAGEMENT PREROGATIVES, PAY SEPARATION
BENEFITS UNEQUALLY; CASE AT BAR. Petitioners' right to terminate employees on account of
retrenchment to prevent losses or closure of business operations, is recognized by law, but it may
not pay separation benefits unequally for such discrimination breeds resentment and ill-will among
those who have been treated less generously than others. "Granting that the 16 May 1988
termination was a retrenchment scheme, and the 31 July 1988 and the 28 February 1989 were due
to closure, the law requires the granting of the same amount of separation benefits to the affected
employees in any of the cases. The respondent argued that the giving of more separation benefit to
the second and third batches of employees separated was their expression of gratitude and
benevolence to the remaining employees who have tried to save and make the company viable in
the remaining days of operations. This justification is not plausible. there are workers in the first
batch who have rendered more years of service and could even be said to be more efficient than
those separated subsequently, yet, they did not receive the same recognition. Understandably, their
being retained longer in their job and be not included in the batch that was first terminated, was a
concession enough and may already be considered as favor granted by the respondents to the
prejudice of the complainants. As it happened, there are workers in the first batch who have
rendered more years in service but received lesser separation pay, because of that arrangement

made by the respondents in paying their termination benefits . . ." Clearly, there was impermissible
discrimination against the private respondents in the payment of their separation benefits. The law
requires an employer to extend equal treatment to its employees. It may not, in the guise of
exercising management prerogatives, grant greater benefits to some and less to others.
Management prerogatives are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA
758). Article 283 of the Labor Code, as amended, protects workers whose employment is terminated
because of closure of the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA 141,
145).
2. ID.; ID.; CORPORATE OFFICER NOT PERSONALLY LIABLE FOR MONEY CLAIMS OF
DISCHARGED CORPORATE EMPLOYEES; EXCEPTION. A corporate officer is not personally
liable for the money claims of discharged corporate employees unless he acted with evident malice
and bad faith in terminating their employment. There is no evidence in this case that Locsin acted in
bad faith or with malice in carrying out the retrenchment and eventual closure of the company
(Garcia vs. NLRC, 153 SCRA 640), hence, he may not be held personally and solidarily liable with
the company for the satisfaction of the judgment in favor of the retrenched employees.
3. ID.; GRANT OF BONUS; A PREROGATIVE, NOT AN OBLIGATION, OF EMPLOYER; ENTIRELY
DEPENDENT ON FINANCIAL CAPABILITY OF EMPLOYER TO GIVE IT. It is settled do trine that
the grant of a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs.
NLRC, 189 SCRA 274). The matter of giving a bonus over and above the worker's lawful salaries
and allowances is entirely dependent on the financial capability of the employer to give it. The fact
that the company's business was no longer profitable (it was in fact moribund) plus the fact that the
private respondents did not work up to the middle of the year (they were discharge in May 1988)
were valid reasons for not granting them a mid-year bonus. Requiring the company to pay a midyear bonus to them also would in effect penalize the company for its generosity to those workers
who remained with the company "till the end" of its days. (Traders Royal Bank vs. NLRC, supra.)
The award must therefore be deleted.
DECISION
GRIO-AQUINO, J p:
In this petition for certiorari, the Businessday Information Systems and Services Inc. (or BSSI for
brevity) and its president/manager, Raul Locsin, seek to annul and set aside the decision dated
February 13, 1991 of the National Labor Relations Commission (NLRC) which affirmed the Labor
Arbiter's finding that they (petitioners) are liable to pay the private respondents separation pay
differentials and mid-year bonus.
BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its
creditors, the Development Bank of the Philippines (DBP) and the Asset Privatization Trust (APT),
took possession of its assets, including a manufacturing plant in Marilao, Bulacan.
As a retrenchment measure, some plant employees, including the private respondents, were laid off
on May 16, 1988, after prior notice, and were paid separation pay equivalent to one-half (1/2) month

pay for every year of service. Upon receipt of their separation pay, the private respondents signed
individual releases and quitclaims in favor of BSSI.
BSSI retained some employees in an attempt to rehabilitate its business as a TRADING COMPANY
.
However, barely two and a half months later, these remaining employees were likewise discharged
because the company decided to cease business operations altogether. Unlike the private
respondents, that batch of employees received separation pay equivalent to a full month's salary for
every year of service plus mid-year bonus.
Protesting against the discrimination in the payment of their separation benefits, the twenty-seven
(27) private respondents filed three (3) separate complaints against the BSSI and Raul Locsin.
These cases were later consolidated.
At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion, petitioners denied that
there was unlawful discrimination in the payment of separation benefits to the employees. They
argued that the first batch of employees was paid "retrenchment" benefits mandated by law, while
the remaining employees were granted higher "separation" benefits because their termination was
on account of the closure of the business.
Based on the pleadings of the parties, Labor Arbiter Asuncion rendered a decision on April 25, 1989
in favor of the complainants, now private respondents, the dispositive portion of which reads:
"WHEREFORE, the respondents are hereby ordered to pay the complainants their separation pay
differentials and mid-year bonus for the year 1988." (p- 38, Rollo).
Upon appeal by the company to the NLRC, the Second Division on February 13, 1991, affirmed the
decision of the Labor Arbiter.
Petitioners' motion for reconsideration of the resolution having been denied, they have taken the
present recourse.
In case of retrenchment of a company to prevent losses and closure of business operation, the law
provides:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate
the employment of any employee due to the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operations of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or 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 (l /2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year." (Labor Code; emphasis supplied.)
Undoubtedly, petitioners' right to terminate employees on account of retrenchment to prevent losses
or closure of business operations, is recognized by law, but it may not pay separation benefits
unequally for such discrimination breeds resentment and ill-will among those who have been treated
less generously than others.
The following observations of the Commission are relevant:
"The respondents cited financial business difficulties to justify their termination of the complainants'
employment on 16 May 1988. They were given one-half (1/2) month of their salary for every year of
service. Due to continuing losses, which is a sign that business, after the termination did not
improve, they closed operations on 31 July 1989, where they dismissed the second batch of
employees who were given one (1) month pay for every year they served. The third batch of
employees were terminated on 28 February 1989, who were likewise given one (1) monthly pay for
every year of service. The business climate obtaining on 16 May 1988 when the complainants were
terminated did not at all defer (sic) improvement-wise, with that of 31 July 1988 nor to 28 February
1989. The internal between the dates of termination was so close to each other, so that, no
improvement in business maybe likely expected. In fact, the respondents suffered continuous
losses, hence, there is no difference in the circumstances of the business to distinguish.
"Granting that the 16 May 1988 termination was a retrenchment scheme, and the 31 July 1988 and
the 28 February 1989 were due to closure, the law requires the granting of the same amount of
separation benefits to the affected employees in any of the cases. The respondent argued that the
giving of more separation benefit to the second and third batches of employees separated was their
expression of gratitude and benevolence to the remaining employees who have tried to save and
make the company viable in the remaining days of operations. This justification is not plausible.
There are workers in the first batch who have rendered more years of service and could even be
said to be more efficient than those separated subsequently, yet they did not receive the same
recognition. Understandably, their being retained longer in their job and be not included in the batch
that was first terminated, was a concession enough and may already be considered as favor granted
by the respondents to the prejudice of the complainants. As it happened, there are workers in the
first batch who have rendered more years in service but received lesser separation pay, because of
that arrangement made by the respondents in paying their termination benefits . . ."
(pp. 36-37, Rollo)
Clearly, there was impermissible discrimination against the private respondents in the payment of
their separation benefits. The law requires an employer to extend equal treatment to its employees.
It may not, in the guise of exercising management prerogatives, grant greater benefits to some and
less to others. Management prerogatives are not absolute prerogatives but are subject to legal limits,
collective bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190
SCRA 758). Article 283 of the Labor Code, as amended, protects workers whose employment is

terminated because of closure of the establishment or reduction of personnel (Abella vs. NLRC, 152
SCRA 141, 145).
With regard to the private respondents' claim for the mid-year bonus, it is settled doctrine that the
grant of a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC,
189 SCRA 274). The matter of giving a bonus over and above the worker's lawful salaries and
allowances is entirely dependent on the financial capability of the employer to give it. The fact that
the company's business was no longer profitable (it was in fact moribund) plus the fact that the
private respondents did not work up to the middle of the year (they were discharged in May 1988)
were valid reasons for not granting them a mid-year bonus. Requiring the company to pay a midyear bonus to them also would in effect penalize the company for its generosity to those workers
who remained with the company till the end" of its days. (Traders Royal Bank vs. NLRC, supra.) The
award must therefore be deleted.
There is merit in the contention of petitioner Raul Locsin that the complaint against him should be
dismissed. A corporate officer is not personally liable for the money claims of discharged corporate
employees unless he acted with evident malice and bad faith in terminating their employment. There
is no evidence in this case that Locsin acted in bad faith or with malice in carrying out the
retrenchment and eventual closure of the company (Garcia vs. NLRC, 153 SCRA 640), hence, he
may not be held personally and solidarily liable with the company for the satisfaction of the judgment
in favor of the retrenched employees.
WHEREFORE, the resolution of the NLRC ordering the petitioner company to pay separation pay
differentials to the private respondents is AFFIRMED. However, the award of mid-year bonus to them
is hereby deleted and set aside. Petitioner Raul Locsin is absolved from any personal liability to the
respondent employees. No costs.
SO ORDERED.

217. A.C. RANSOM LABOR UNION CCLU VS. NLRC

MELENCIO-HERRERA, J.:
In a joint Decision in two earlier cases rendered by the then Court of Industrial Relations (CIR) on
August 19, 1972, it declared in the dispositive portion thereof:
IN VIEW OF ALL THE FOREGOING, ... the A.C. Ransom Philippine Corporation is
guilty of unfair labor practice of interference and discrimination herein above held
and specified; ordering said corporation, its officers and agents to cease and desist
from committing the same: finding the strike legal and justified; and to reinstate
immediately ... , to their respective positions with backwages from July 25, 1969 until
actually reinstated, without loss of seniority rights and other privileges appurtenant to
their employment. (Emphasis supplied). 1

This Court affirmed that Decision when it denied the Petition for Review filed by RANSOM on
February 26, 1973 in G.R. Nos. L-36226-68.
The backwages due the 22 employees having been computed at P 199,276.00 by the (CIR)
Examiner, successive Motions for Execution were filed by the UNION on January 27, 1973 and
March 1, 1973, all of which RANSOM opposed stressing its "precarious financial position if
immediate execution of the backwages would be ordered." Upon the UNION's Motion of April 22,
1973 asking the CIR that RANSOM be ordered to deposit with the Court the backwages due them.
RANSOM manifested that it did not have the necessary funds to deposit and asked that the
employees' earnings elsewhere during this suspension be deducted. After several hearings, a
recomputation was made and the award of P199,276.00 was reduced to P 164,984.00. 2
The records show that, upon application filed by RANSOM on April 2, 1973, it was granted clearance
by the Secretary of Labor on June 7, 1973 to cease operation and terminate employment effective
May 1, 1973, without prejudice to the right of subject employees to seek redress of grievances under
existing laws and decrees. 3 The reasons given by RANSOM for the clearance application
were financial difficulties on account of obligations incurred prior to 1966.
On January 21, 1974, the UNION filed another Motion for Execution alleging that although RANSOM
had assumed a posture of suffering from business reverse, its officers and principal stockholders
had organized a new corporation, the Rosario Industrial Corporation (thereinafter called ROSARIO),
using the same equipment, personnel, business stocks and the same place of business. For its part,
RANSOM declared that ROSARIO is a distinct and separate corporation, which was organized long
before these instant cases were decided adversely against RANSOM.
It appears that sometime in 1969, ROSARIO, a closed corporation, was, in fact, established. It was
engaged in the same line of business as RANSOM with the same Hernandez family as the owners,
the same officers, the same President, the same counsel and the same address at 555 Quirino
Avenue, Paranaque, Rizal. The compound, building, plant, equipment, machinery, laboratory and
bodega were the same as those occupied and used by RANSOM. The UNION claims that
ROSARIO thrives to this day.
Writs of execution were issued successively against RANSOM on June 23, 1976, and February 17,
1977, to no avail.
On December 18, 1978, the UNION again filed an ex-parte Motion for Writ of Execution and
Garnishment praying that the Writ issue against the Officers/Agents of RANSOM personally and or
their estates, as the case may be, considering their success in hiding or shielding the assets of said
company. RANSOM countered that the CIR Decision, dated August 19, 1972, could no longer be
enforced by mere Motion because more than five (5) years had already lapsed.
Acting on the Motion, Labor Arbiter Tito F. Genilo issued, on March 11, 1980, an Order, the pertinent
part of which reads:
Under the circumstances and pursuant to the decision aforementioned, especially
that portion holding the respondent corporation's officers and agents liable, the

following officers of the respondent corporation as appears in the record-are

hereby deemed included parties respondents in their official capacity:
a) Ruben Hernandez (President, per his testimony on August 21, 1974);
b) Maximo C. Hernandez, Jr. (Director);
c) Porfirio N. Valencia (Director);
d) Laura H. Cornejo (Director);
e) Francisco Hernandez (Chairman of the Board);
f) Celestino C. Hernandez (Director); and
g) Ma. Rosario Hernandez (Director).
Consequently, let a writ of execution be issued for P 164,984.00 against respondent
corporation and its officers/agents enumerated above.
SO ORDERED. (Emphasis supplied) 4
It appears that among the persons named in the aforequoted Order, Ma. Rosario Hernandez died in
1971; Francisco Hernandez died in 1977: and Celestino C. Hernandez passed away in 1979. And
Maximo Hernandez who was named in the CIR Decision, died in 1966. 5
The NLRC, on appeal, modified the Decision by relieving the officers and agents of liability as
follows:
As to the liability of the respondent's officers and agents, we agree with the
contention of the respondent-appellant that there is nothing in the order dated March
11, 1980 that would justify the holding of the individual officers and agents of
respondent in their personal capacity. As a general rule, officers of the corporation
are not liable personally for the official acts unless they have exceeded the scope of
their authority. In the absence of evidence showing that the officers mentioned in the
Order of the Labor Arbiter dated March 11, 1980 have exceeded their authority, the
writ of execution can not be enforced against them, especially' so since they were
not given a chance to be heard.
WHEREFORE, the Order appealed from is hereby affirmed, except as modified
above.
SO ORDERED. 6
Reconsideration sought by the UNION from the NLRC was denied, hence this special civil action of
Certiorari.

On June 10, 1986, this Court promulgated its Decision, the dispositive portion of which decrees:
WHEREFORE, the questioned Decision of the National Labor Relations
Commission is SET ASIDE, and the Order of the Labor Arbiter Tito F. Genilo of
March 11, 1980 is reinstated with the modification that personal liability for the
backwages due the 22 strikers shall be limited to Ruben Hernandez, who was
President of RANSOM in 1974, jointly and severally with other Presidents of the
same corporation who had been elected as such after 1972 or up to the time the
corporate life was terminated.
Both parties have moved for reconsideration. Private respondents point out that they were never
impleaded as parties in the Trial Court, and that their personal liabilities were never at issue; that
judgment holding Ruben Hernandez personally liable is tantamount to deprivation of property without
due process of law; and that he was not an officer of the corporation at the time the unfair labor
practices were committed.
The UNION on the other hand, in its own Motion for Reconsideration, prays that the veil of corporate
fiction be pierced and that the Decision be modified, in that all the individual private respondents and
not only the President, should be held jointly and severally liable with RANSOM. On November 4,
1986, it further filed an Urgent Motion for Preliminary Mandatory Injunction "directing private
respondents to deposit the amount of P 199,276.00 or to put up a supersedeas bond of the same
sum."
Incontrovertible is the fact that RANSOM was found guilty by the CIR, in its Decision of August 19,
1972, of unfair labor practice; that its officers and agents were ordered to cease and desist from
further committing acts constitutive of the same, and to reinstate immediately the 22 union members
to their respective positions with backwages from July 25, 1969 until actually reinstated.
The CIR Decision became final, conclusive, and executory after this Court denied the RANSOM
petition for review in 1973. In other words, this Court upheld that portion of the judgment ordering
the officers and agents of RANSOM to reinstate the laborers concerned, with backwages. The
inclusion of the officers and agents was but proper since a corporation, as an artificial being, can act
only through them. It was also pursuant to the CIR Act (CA No. 103 ), 7 the Industrial Peace Act (R.A.
875) 8 the Minimum Wage Law (R.A. 602). 9 Consequently, when, in resolving the UNION's Motion for Writ
of Execution and Garnishment in the Order of March 11, 1980, Labor Arbiter Genilo named the seven (17)
private respondents herein as the RANSOM officers and agents, who should be held liable (supra), he
merely implemented the already final and executory CIR decision of August 19, 1972. The NLRC, on
appeal to it by RANSOM, could not have modified the CIR Decision, as affirmed by this Court, by relieving
RANSOM's officers and agents of liability. It is also for that reason that in our Decision of June 10, 1986
we set aside said NLRC Decision and reinstated the Order of Labor Arbiter Genilo, with modification, in
that we limited liability for backwages due the 22 UNION members to the President of RANSOM in 1974
jointly and severally with other Presidents of the same corporation who had been elected as such after
1972 or up to the time the corporation life was terminated, since the President should also be deemed
included in the term "employer. "
The foregoing, however, limits the scope of liability and deviates from the CIR Decision, affirmed by
this Court in 1973, holding the officers and agents of RANSOM liable. In other words, the officers

and agents listed in the Genilo Order except for those who have since passed away, should, as
affirmed by this Court, be held jointly and severally liable for the payment of backwages to the 22
strikers.
This finding does not ignore the legal fiction that a corporation has a personality separate and
distinct from its stockholders and members, for, as this Court had held "where the incorporators and
directors belong to a single family, the corporation and its members can be considered as one in
order to avoid its being used as an instrument to commit injustice," 10 or to further an end subversive of
justice. 11 In the case of Claparols vs. CIR 12 involving almost similar facts as in this case, it was also held that the shield of corporate fiction
should be pierced when it is deliberately and maliciously designed to evade financial obligations to employees. To the same effect was this
Court's rulings in still other cases:

When the notion of legal entity is used as a means to perpetrate fraud or an illegal
act or as a vehicle for the evasion of an existing obligation, the circumvention of
statutes, and or confuse legitimate issues the veil which protects the corporation will
be lifted (Villa Rey Transit, Inc. vs. Ferrer, 25 SCRA 846 [1968]; Republic vs. Razon,
20 SCRA 234 [1967]; A.D. Santos, Inc. vs. Vasquez, 22 SCRA 1156 [1968];
Telephone Eng'g. & Service Company, Inc. vs. WCC, 104 SCRA 354 [1981]).
The alleged bankruptcy of RANSOM furnishes no justification for non-payment of backwages to the
employees concerned taking into consideration Article 110 of the Labor Code, which provides:
ART. 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or
liquidation of an employer's business, his workers shall enjoy first preference as
regards wages due them for services rendered during the period prior to the
bankruptcy or liquidation, any provision of law to the contrary notwithstanding.
Unpaid wages shag be paid in full before other creditors may establish any claim to a
share in the assets of the employer.
The term "wages" refers to all remunerations, earnings and other benefits in terms of money
accruing to the employees or workers for services rendered. They are to be paid in full before other
creditors may establish any claim to a share in the assets of the employer.
Section 10. Payment of wages in case of bankruptcy.-Unpaid wages earned by the
employees before the declaration of bankruptcy or judicial liquidation of the
employer's business shall be given first preference and shall be paid in full before
other creditors may establish any claim to a share in the assets of the employer. 13
The foregoing provisions are but in consonance with the principles of social justice and protection to
labor guaranteed by past and present Constitutions and are not really being given any retroactive
effect when applied herein.
The Decision of the CIR was rendered on August 19, 1972. Clearance to RANSOM to cease
operations and terminate employment granted by the Secretary of Labor was made effective on May
1, 1973. The right of the employees concerned to backwages awarded them, therefore, had already
vested at the time and even before clearance was granted. Note should also be taken of the fact that

the clearance was without prejudice to the right of subject employees to seek redress of grievances
under existing laws and decrees.
The worker preference applies even if the employer's properties are encumbered by means of a
mortgage contract, as in this case. So that, when machinery and equipment of RANSOM were sold
to Revelations Manufacturing Corporation for P 2M in 1975, the right of the 22 laborers to be paid
from the proceeds should have been recognized, even though it is claimed that those proceeds were
turned over to the Commercial Bank and Trust Company (Comtrust) in payment of RANSOM
obligations, since the workers' preference is over and above the claim of other creditors.
The contention, therefore, of the heirs of the late Maximo C. Hernandez, Sr. that since they paid from
their own personal funds the balance of the amount owing by RANSOM to Comtrust they are the
"preferential creditors" of RANSOM, is clearly without merit. Workers are to be paid in full before
other creditors may establish any claim to a share in the assets of the employer.
... even if the employer's properties are encumbered by means of a mortgage
contract, still the workers' wages which enjoy first preference in case of bankruptcy
or liquidation are duly protected by an automatic first lien over and above all other
earlier encumbrances on the said properties. Otherwise, workers' wages may be
imperilled by foreclosure of mortgages, and as a consequence, the aforecited
provision of the New Labor Code would be rendered meaningless. 14
Aggravating RANSOM's clear evasion of payment of its financial obligations is the organization of a
"run-away corporation," ROSARIO, in 1969 at the time the unfair labor practice case was pending
before the CIR by the same persons who were the officers and stockholders of RANSOM, engaged
in the same line of business as RANSOM, producing the same line of products, occupying the same
compound, using the same machineries, buildings, laboratory, bodega and sales and accounts
departments used by RANSOM, and which is still in existence. Both corporations were closed
corporations owned and managed by members of the same family. Its organization proved to be a
convenient instrument to avoid payment of backwages and the reinstatement of the 22 workers. This
is another instance where the fiction of separate and distinct corporate entities should be
disregarded.
It is very obvious that the second corporation seeks the protective shield of a
corporate fiction whose veil in the present case could, and should, be pierced as it
was deliberately and maliciously designed to evade its financial obligation to its
employees.
... When a notion of legal entity is used to. defeat public convenience, justify wrong,
protect fraud, or defend crime, the law will regard the corporation as an association
or persons, or, in the case of two corporations, will merge them into one. 15
The corporation will be treated merely as an aggregation of individuals or, where there are two corporations, they will
be merged as one, the one being merely regarded as part of the instrumentality of the other. 16

The UNION's plea, therefore, for the reinstatement of the 22 strikers in ROSARIO should be
favorably heard. However, ROSARIO shall have the option to award them separation pay equivalent
to one-half month for every year of service actually rendered by the 22 strikers.
The plea of the UNION for the restoration of the original computation of P199,276.00 or to grant the
22 Union members three (3) years backwages is rejected. It is the amount of P164,984.00 as
backwages, which was the subject of the Writ of Execution issued by the Labor Arbiter pursuant to
the CIR Decision of 1972.
With the conclusions arrived at, the UNION's Urgent Motion for a Writ of Preliminary Mandatory
Injunction directing private respondents to deposit the amount due as backwages in the meantime,
need no longer be acted on.
A final and executory Decision in favor of the UNION obtained in 1972 and affirmed by this Court in
1973 has remained unsatisfied to this date despite no less than ten (10) Motions for Execution over
a period of fourteen (14) years, not to mention the fact that this is the second time that this case is
before this Court. The detriment and prejudice caused the employees concerned is subversive of the
ends of justice. This protracted litigation must end and labor should now enjoy the just deserts of its
legal victory.
ACCORDINGLY, private respondents' Motion for Reconsideration is hereby denied with FINALITY;
the Motion for Reconsideration filed by petitioner is granted in part; and the dispositive portion of the
Decision, dated June 10, 1986, is hereby amended to read as follows:
WHEREFORE, the questioned Decision of the National Labor
Relations Commission is SET ASIDE, and the Order of Labor Arbiter Tito F. Genilo
of March 11, 1980 is reinstated with the modification that Rosario Industrial
Corporation and its officers and agents are hereby held jointly and severally liable
with the surviving private respondents for the payment of the backwages due the 22
union members.
Rosario Industrial Corporation is hereby ordered to reinstate the 22 union members
or, if this is not possible, to award them separation pay equivalent at least to one (1)
month pay or to one (1) month salary for every year of service actually rendered by
them with A.C. Ransom (Phils). Corporation, whichever is higher.
This decision is immediately executory.
SO ORDERED.

K. LIABILITY OF THE TRANSFEREE OF AN

ENTERPRISE

218. SUNDOWNER DEV. CORPORATION VS. DRILON

GANCAYCO, J.:
The principal issue in this case is whether or not the purchaser of the assets of an employer
corporation can be considered a successor employer of the latter's employees.
Private respondent Hotel Mabuhay, Inc. (Mabuhay for short,) LEASED the premises belonging to
Santiago Syjuco, Inc. (Syjuco for short) located at 1430 A. Mabini St., Ermita, Manila. However, due
to non-payment of rentals, a case for ejectment was filed by Syjuco against Mabuhay in the
Metropolitan Trial Court of Manila. Mabuhay offered to amicably settle the case by surrendering the
premises to Syjuco and to sell its assets and personal property to any interested party.
Syjuco offered the said premises for lease to petitioner. The negotiation culminated with the
execution of the LEASE AGREEMENT on April 16, 1987 to commence on May 1, 1987 and to
expire on April 30,1992. 1 Mabuhay offered to sell its assets and personal properties in the premises to
petitioner to which petitioner agreed. A deed of assignment of said assets and personal properties was
executed by Mabuhay on April 29,1987 in favor of petitioner. 2
On same date Syjuco formally turned over the possession of the leased premises to petitioner who
actually took possession and occupied the same on May 1, 1987.
On May 4, 1987, respondent National Union of Workers IN HOTEL , Restaurant and Allied
Services (NUWHRAIN for short) picketed the leased premises, barricaded the entrance to the
leased premises and denied petitioner's officers, employees and guests free access to and egress
from said premises. Thus, petitioner wrote a letter-complaint to Syjuco.
A complaint for damages with preliminary injunction and/or temporary restraining order was filed
by petitioner on May 7, 1987 with the Regional Trial Court of Manila docketed as Civil Case No. 8740436. On the same day, the Executive Judge of said court issued a restraining order against
respondent NUWHRAIN and its officers and members as prayed for in the petition. Nevertheless,
NUWHRAIN maintained their strike on the subject premises but filed an answer to the complaint.
On May 14, 1987, an order was issued by public respondent Secretary of Labor assuming
jurisdiction over the labor dispute pursuant to Article 263(g) of the Labor Code as amended and in
the interim, requiring all striking employees to return to work and for respondent Mabuhay to accept
all returning employees pending final determination of the issue of the absorption of the former
employees of Mabuhay. The parties were also directed to submit their respective position papers
within ten (10) days from receipt of the order.
On May 25, 1987, Mabuhay submitted its position paper alleging among others that it had sold all its
assets and personal properties to petitioner and that there was no sale or transfer of its shares
whatsoever and that Mabuhay completely ceased operation effective April 28,1987 and surrendered
the premises to petitioner so that there exists a legal and physical impossibility on its part to comply
with the return to work order specifically on absorption.

On June 26, 1987, petitioner in order to commence its operation, signed a tri-partite agreement so
the workers may lift their strike, by and among petitioner, respondents NUWHRAIN and Mabuhay
whereby the latter paid to respondent NUWHRAIN the sum of P 638,000.00 in addition to the first
payment in the sum of P 386,447.11, for which reason respondent NUWHRAIN agreed to lift the
picket . 3
Respondent NUWHRAIN on July 13, 1987 filed its position paper alleging connivance between
Mabuhay and petitioner in selling the assets and closing the HOTEL to escape its obligations to the
employees of Mabuhay and so it prays that petitioner accept the workforce of Mabuhay and pay
backwages from April 15,1986 to April 28,1987, the day Mabuhay stopped operation.
On the other hand, petitioner filed a "Partial Motion for Reconsideration and Position Paper," alleging
that it was denied due process; that there were serious errors in the findings of fact which would
cause grave and irreparable damage to its interest; as well as on questions of law. On January 20,
1988, the public respondent issued an order requiring petitioner to absorb the members of the union
and to pay backwages from the time it started operations up to the date of the order. 4
Petitioner filed on January 27,1988 a motion for reconsideration of the aforesaid order alleging that
the theory of implied acceptance and assumption of statutory wrong does not apply in the instant
case; that the prevailing doctrine that there is no law requiring bona fide purchasers of the assets of
an on-going concern to absorb in its employ the employees of the latter should be applied in this
case; that the order for absorption of the employees of Mabuhay as well as the payment of their
backwages is contrary to law. Respondent NUWHRAIN also filed a motion for clarification of the
aforesaid order.
On March 8, 1988, the public respondent denied said motion for reconsideration and motion for
clarification for lack of merit.
Hence, this petition for review by certiorari with prayer for preliminary injunction and/or temporary
restraining order filed by petitioner in this Court. Petitioner presents seven issues for resolution
which all revolve about the singular issue of whether or not under the circumstances of this case the
petitioner may be compelled to absorb the employees of respondent Mabuhay.
On March 23, 1988, this Court, without giving due course to the petition, required respondents to
comment thereon within ten (10) days from notice and issued a temporary restraining order enjoining
public respondent or his duly authorized representatives from executing and implementing the
orders dated January 20, 1988 and March 8, 1988.
The petition is impressed with merit.
The rule is that unless expressly assumed, labor contracts such as employment contracts and
collective bargaining agreements are not enforceable against a transferee of an enterprise, labor
contracts being in personam, thus binding only between the parties .5 A labor contract merely
creates an action in personally and does not create any real right which should be respected by third
parties. This conclusion draws its force from the right of an employer to select his employees and to

decide when to engage them as protected under our Constitution, and the same can only be
restricted by law through the exercise of the police power. 6
As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern
to absorb in its employ the employees of the latter. 7
However, although the purchaser of the assets or enterprise is not legally bound to absorb in its
employ the employers of the seller of such assets or enterprise, the parties are liable to the
employees if the transaction between the parties is colored or clothed with bad faith. 8
In the case at bar, contrary to the claim of the public respondent that the transaction between
petitioner and Mabuhay was attended with bad faith, the court finds no cogent basis for such
contention. Thus, the absorption of the employees of Mabuhay may not be imposed on petitioner.
It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to
offer same to other lessees it was Syjuco who found petitioner and persuaded petitioner to LEASE
said premises. Mabuhay had nothing to do with the negotiation and consummation of the lease
contract between petitioner and Syjuco.
It was only when Mabuhay offered to sell its assets and personal properties in the premises to
petitioner that they came to deal with each other. It appears that petitioner agreed to purchase said
assets of respondent Mabuhay to enable Mabuhay to pay its obligations to its striking employees
and to Syjuco. Indeed, in the deed of assignment that was executed by Mabuhay in favor of
petitioner on April 14, 1 987 for and in consideration of P2,500,000.00, it is specifically provided
therein that the same is "purely for and in consideration of the sale/transfer and assignment of the
personal properties and assets of HOTEL Mabuhay, Inc. listed . . . " and "in no way involves any
assumption or undertaking on the part of Second Party (petitioner) of any DEBTS or liabilities
whatsoever of Hotel Mabuhay, Inc." 9 The liabilities alluded to in this agreement should be interpreted to
mean not only any monetary liability of Mabuhay but any other liability or obligation arising from the
operation of its business including its liability to its employees.
Moreover, in the tripartite agreement that was entered into by petitioner with respondents
NUWHRAIN and Mabuhay, it is clearly stipulated as follows:
8. That, immediately after the execution of this Agreement, the FIRST PARTY shall
give a list of its members to the THIRD PARTY that it desires to recommend for
employment so that the latter can consider them for employment, with no
commitment whatsoever on the part of the THIRD PARTY to hire them in the
business that it will operate in the premises formerly occupied by the Hotel
Mabuhay;10
From the foregoing, it is clear that petitioner has no liability whatsoever to the employees of
Mabuhay And its responsibility if at all, is only to consider them for re-employment in the operation of
the business in the same premises. There can be no implied acceptance of the employees of
Mabuhay by petitioner and acceptance of statutory wrong as it is expressly provided in the
agreement that petitioner has no commitment or duty to absorb them.

Moreover, the court does not subscribe to the theory of public respondent that petitioner should have
informed NUWHRAIN of its LEASE of the premises and its purchase of the assets and personal
properties of Mabuhay therein so that said employees could have taken steps to protect their
interest. The court finds no such duty on the part of petitioner and its failure to notify said employees
cannot be an indicium of bad faith.
Much less is there any evidence that petitioner and respondent Mabuhay are joint tortfeasors as
found by public respondent. While it is true that petitioner is using the LEASED property for the
same type of business as that of respondent Mabuhay, there can be no continuity of the business
operations of the predecessor employer by the successor employer as respondent Mabuhay had not
retained control of the business. Petitioner is a corporation entirely different from Mabuhay. It has no
controlling interest whatever in respondent Mabuhay. Petitioner and Mabuhay have no privity and
are strangers to each other.
What is obvious is that the petitioner, by purchasing the assets of respondent Mabuhay in
the HOTEL premises, enabled Mabuhay to pay its obligations to its employees. There being no
employer-employee relationship between the petitioner and the Mabuhay employees, the petition
must fail. Petitioner can not be compelled to absorb the employees of Mabuhay and to pay them
backwages.
WHEREFORE, the petition is GRANTED and the questioned orders of public respondent Secretary
of Labor and Employment dated January 20, 1988 and March 8, 1988 are reversed and set aside.
The restraining order that this Court issued on March 20,1988 is hereby made permanent. No
pronouncement as to costs.
SO ORDERED.

219. FILIPINAS PORT SERVICES, INC. VS. NLRC

PARAS, J.:p
This is a petition for clarification with prayer for preliminary injunction filed by Filipinas Port
Services, Inc. (hereinafter referred to as Filport) seeking to clarify two conflicting decisions rendered
by this Court in cases involving identical or similar parties, facts and issues.
The antecedent facts of the case are as follows:
In view of the government policy which ordained that cargo handling operations should be limited to
only one cargo handling operator-contractor for every port (under Customs Memorandum Order
28075, later on superseded by General Ports Regulations of the Philippine Ports Authority) the
different stevedoring and arrastre corporations operating in the Port of Davao were integrated into
a single dockhandlers corporation, known as the Davao Dockhandlers, Inc., which was registered
with the Securities and Exchange Commission on July 13, 1976.

Due to the late receipt of its permit to operate at the Port of Davao from the Bureau of Customs,
Davao Dockhandlers, Inc., which was subsequently renamed Filport, actually started its operation on
February 16, 1977.
As a result of the merger, Section 118, Article X of the General Guidelines on The Integration of
Stevedoring/Arrastre Services (PPA Administrative Order No. 13-77) mandated Filport to draw its
personnel complements from the merging operators, as follows:
Sec. 118. Absorption of labor.Subject to the provisions of the immediate preceding
section, and consistent with the actual operational requirements of the new
management, all labor force together with its necessary personnel complement, of
the merging operators shall be absorbed by the merged or integrated organization to
constitute its labor force. (Emphasis supplied)
Thus, Filport's labor force was mostly taken from the integrating corporations, among them the
private respondents.
On February 4,1987, private respondent Paterno Liboon and 18 others filed a complaint with
the Department of Labor and Employment Regional Office in Davao City, alleging that they were
employees of Filport since 1955 through 1958 up to December 31, 1986 when they retired; that they
were paid RETIREMENT BENEFITS computed from February 16,1977 up to December 31, 1986
only; and that taking into consideration their continuous length of service, they are entitled to be
paid RETIREMENT BENEFITS differentials from the time they started working with the
predecessors of Filport up to the time they were absorbed by the latter in 1977 (p. 15, Rollo).
Finding Filport a mere alter ego of the different integrating corporations, the Labor Arbiter held Filport
liable for retirement benefits due private respondents for services rendered prior to February 16,
1977. Said decision was affirmed by the NLRC on appeal.
Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 85704, claiming
that it is an entirely new corporation with a separate juridical personality from the integrating
corporations; and that Filport is not a successor-employer, liable for the obligations of private
respondents' previous employers, as shown clearly in the memorandum dated November 21,1978 of
PPA Assistant General Manager Maximo S. Dumlao, Jr., to wit:

21 November 19
MEMORANDUM
TO: The Officer-in-Charge
PMU Davao
FROM: The AGM for Operations
SUBJECT: Clarification of Sec. 116 of PPA Administrative

Order No. 13-77 of New Organization's Liability.

In reply to your telegram dated November 16, 1978, Sec. 116 of PPA Administrative
Order #13-77 is hereby quoted for clarification:
New Organization's LiabilityThe integrated cargo-handling organization shall be
absolutely free from any liability or obligation of the merging operators who shall
continue to be individually liable for their respective liabilities or obligations, if any.
(emphasis supplied) ...
xxx xxx xxx
The new organization's liability shall be the payment of salaries, benefits and all
other money due the employee as a result of his employment, starting on the date of
his service in the newly integrated organization.
In answer to your query, therefore, the absorption of an employee into a newly
integrated organization does not include the carry over of his length of service.
s/t MAXIMO S. DUMLAO, JR.
Asst. General Manager
While G.R. No. 85704 was still pending decision by this Court, Josefino Silva, another employee of
Filport, instituted a suit against Filport and Damasticor (one of the defunct stevedoring firms)
claiming for retirement benefits for services rendered prior to February 19, 1977. The labor arbiter
found for Josefino Silva and said decision was affirmed by the NLRC.
Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 86026. On August
31, 1989, this Court, through the First Division, rendered a decision, holding that:
Petitioner (Filport) cannot be held liable for the payment of the retirement pay of private respondent
(Josefino Silva) while in the employ of DAMASTICOR ... who is held responsible for the same as the
labor contract is in personam and cannot be passed on to the petitioner." (Rollo, p. 7)
In so ruling, the First Division relied heavily on the case of Fernando v. Angat Labor Union (5 SCRA
248) where it was held that unless expressly assumed, labor contracts are not enforceable against a
transferee of an enterprise labor contracts being in personam.
Per entry of judgment, the aforesaid decision became final and executory on November 24, 1989 (p.
87, Rollo).
On September 3, 1990, however, this Court, through the Second Division, dismissed the petition in
G.R. No. 85704 "for failure to sufficiently show that the questioned judgment is tainted with grave
abuse of discretion."

Per entry of judgment, said resolution became final and executory on December 4, 1 990 (p. 108,
Rollo).
Hence, the instant petition for clarification with prayer for preliminary injunction to enjoin the
respondents from enforcing the decision in G.R. No. 85704 until further orders of this Court.
We see no reason to disturb the findings of fact of the public respondent, supported as they are by
substantial evidence in the light of the well established principle that findings of administrative
agencies which have acquired expertise because their jurisdiction is confined to specific matters are
generally accorded not only respect but at times even finality, and that judicial review by this Court
on labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the
Labor Arbiter and the NLRC based their determinations but are limited to issues of jurisdiction or
grave abuse of discretion. (National Federation of Labor Union v. Ople, 143 SCRA 129).
In the case filed by private respondent Paterno Liboon et al against Filport, the findings of the NLRC
in its November 27, 1987 decision are categorical:
In resolving the issues, the Labor Arbiter concludes as follows:
The eventual incorporation of the arrastre/stevedoring firms and their subsequent
registration with the Securities and Exchange Commission on July 13, 1975 brought
to the fore the interlocking ownership of the new corporation.
xxx xxx xxx
Subsequent amendment of its Articles of Incorporation highlighted by the renaming of
the Davao Dockhandlers, Inc. to Filipinas Port Services, Inc. did not diminish the fact
that the ownership and constituency of the new corporation are basically Identical
with the previous owners.
It is, therefore, the considered view of this Office that respondent Filport being a
mere alter ego of the different merging companies has at the very least, the
obligation not only to absorb into its employ workers of the dissolved companies, but
also to absorb the length of service earned by the absorbed employees from their
former employers.
xxx xxx xxx
We are in full accord with, and hereby sustain, the findings and conclusions of the
Labor Arbiter. Under the circumstances, respondent-appellant is a successoremployer. As a successor entity, it is answerable to the lawful obligations of the
predecessor employers, herein integrees. This Commission has so held under the
principle of 'substitution' that the successor firm is liable to (sic) the obligations of the
predecessor employer, notwithstanding the change in management or even
personality, of the new CONTRACTING EMPLOYER ." (Lakas Ng Manggagawang
Filipino (LAKAS] v. Tarlac Electrical Cooperative, Inc. et al., NLRC Case No. RB III-1

57-75, January 28,1978, En Banc). ... The Supreme Court earlier upheld the
"Substitutionary" doctrine in the case of Benguet Consolidated, Inc. vs. BOI
Employees & Workers Union, (G.R. L-24711, April 30, 1968, 23 SCRA 465). (pp. 35
& 37, Rollo)
Said findings were reiterated in the case filed by Josefino Silva against Filport where the NLRC, in its
decision dated January 19, 1988, further ruled that:
... As We have ruled in the similar case involving herein appellant, the latter is
deemed a survivor entity because it continued in an essentially unchanged manner
the business operators of the predecessor arrastre and port service operators, hiring
substantially the same workers, including herein appellee, of the integree
predecessors, using substantially the same facilities, with similar working conditions
and line of business, and employing the same corporate control, although under a
new management and corporate personality. (G.R. No. 86026, p. 35, Rollo)
Thus, granting that Filport had no contract whatsoever with the private respondents regarding the
services rendered by them prior to February 16, 1977, by the fact of the merger, a succession of
employment rights and obligations had occurred between Filport and the private respondents. The
law enforced at the time of the merger was Section 3 of Act No. 2772 which took effect on March 6,
1918. Said law provides:
Sec. 3. Upon the perfecting, as aforesaid, of a consolidation made in the manner
herein provided, the several CORPORATIONS PARTIES thereto shall be deemed
and taken as one corporation, upon the terms and conditions set forth in said
agreement; or, upon the perfecting of a merger, the corporation merged shall be
deemed and taken as absorbed by the other corporation and incorporated in it; and
all and singular rights, privileges, and franchises of each of said corporations, and all
property, real and personal, and all debts due on whatever account, belonging to
each of such corporations, shall be taken and deemed as transferred to and vested
in the new corporation formed by the consolidation, or in the surviving corporation in
case of merger, without further act or deed; and the title to real estate, either by deed
or otherwise, under the laws of the Philippine Islands vested in either corporation,
shall not be deemed in any way impaired by reason of this Act: Provided, however,
That the rights of creditors and all liens upon the property of either of said
corporations shall be preserved unimpaired; and all debts liabilities, and duties of
said corporations shall thenceforth attach to the new corporation in case of a
consolidation, or to the surviving corporation in case of a merger, and be enforced
against said new corporation or surviving corporation as if said debts, liabilities, and
duties had been incurred or contracted by it.
As earlier stated, it was mandated that Filport shall absorb all labor force and necessary personnel
complement of the merging operators, thus, clearly indicating the intention to continue the employeremployee relationships of the individual companies with its employees through Filport.

The alleged memorandum of the PPA Assistant General Manager exonerating Filport from any
liability arising from and as a result of the merger is contrary to public policy and is violative of the
workers' right to security of tenure. Said memorandum was issued in response to a query of the
PMU Officer-in-Charge and was not even published nor made known to the workers who came to
know of its existence only at the hearing before the NLRC. (G.R. No. 86026, pp. 93-94, Rollo)
The principle involved in the case cited by the First Division (Fernando v. Angat Labor Union [supra])
applies only when the transferee is an entirely new corporation with a distinct personality from the
integrating firms and NOT where the transferee was found to be merely an alter ego of the different
merging firms, as in this case. Thus, Filport has the obligation not only to absorb the workers of the
dissolved companies but also to include the length of service earned by the absorbed employees
with their former employees as well. To rule otherwise would be manifestly less than fair, certainly,
less than just and equitable.
Finally, to deny the private respondents the fruits of their labor corresponding to the time they
worked with their previous employers would render at naught the constitutional provisions on labor
protection. In interpreting the protection to labor and social justice provisions of the Constitution and
the labor laws, and rules and regulations implementing the constitutional mandate, the Supreme
Court has always adopted the liberal approach which favors the exercise of labor rights. (EuroLinea
Phils., Inc. v. NLRC, 156 SCRA 83).
WHEREFORE, the Resolution of the Second Division of this Court in G.R. No. 85704 dated
September 3, 1990 is hereby REITERATED.
SO ORDERED.

L. COMPROMISE SETTLEMENTS
220. PERIQUET VS. NLRC
CRUZ, J.:
It is said that a woman has the privilege of changing her mind but this is usually allowed only in
affairs of the heart where the rules are permissibly inconstant. In the case before us, Corazon
Periquet, the herein petitioner, exercised this privilege in connection with her work, where the rules
are not as fickle.
The petitioner was dismissed as toll collector by the Construction Development Corporation of the
Philippines, private respondent herein, for willful breach of trust and unauthorized possession of
accountable toll tickets allegedly found in her purse during a surprise inspection. Claiming she had
been "framed," she filed a complaint for illegal dismissal and was sustained by the labor arbiter, who
ordered her reinstatement within ten days "without loss of seniority rights and other privileges and
with fun back wages to be computed from the date of her actual dismissal up to date of her actual
reinstatement." 1 On appeal, this order was affirmed in toto by public respondent NLRC on August 29,
1980. 2

On March 11, 1989, almost nine years later, the petitioner filed a motion for the issuance of a writ of
execution of the decision. The motion was granted by the executive labor arbiter in an order dated
June 26, 1989, which requiredpayment to the petitioner of the sum of P205,207.42 "by way of
implementing the balance of the judgment amount" due from the private respondent. 3 Pursuant
thereto, the said amount was garnished by the NLRC sheriff on July 12, 1989. 4 On September 11, 1989,
however, the NLRC sustained the appeal of the CDCP and set aside the order dated June 20, 1989, the
corresponding writ of execution of June 26, 1989, and the notice of garnishment. 5
In its decision, the public respondent held that the motion for execution was time-barred, having
been filed beyond the five-year period prescribed by both the Rules of Court and the Labor Code. It
also rejected the petitioner's claim that she had not been reinstated on time and ruled as valid the
two quitclaims she had signed waiving her right to reinstatement and acknowledging settlement in
full of her back wages and other benefits. The petitioner contends that this decision is tainted with
grave abuse of discretion and asks for its reversal. We shall affirm instead.
Sec. 6, Rule 39 of the Revised Rules of Court, provides:
SEC. 6. Execution by motion or by independent action. A judgment may be
executed on motion within five (5) years from the date of its entry or from the date it
becomes final and executory. After the lapse of such time, and before it is barred by
the statute of limitations, a judgment may be enforced by action.
A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715, viz.
ART. 224. Execution of decision, orders, awards. (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter or MedArbiter, or the Voluntary Arbitrator may, motu propio, or on motion of any interested
party, issue a writ of execution on a judgment within five (5) years from the date it
becomes final and executory, requiring a sheriff or a duly deputized officer to execute
or enforce a final decision, order or award. ...
The petitioner argues that the above rules are not absolute and cites the exception snowed
in Lancita v. Magbanua,6 where the Court held:
Where judgments are for money only and wholly unpaid, and execution has been
previously withheld in the interest of the judgment debtor, which is in financial
difficulties, the court has no discretion to deny motions for leave to issue
execution more than five years after the judgments are entered. (Application of
Molnar, Belinsky, et al. v. Long Is. Amusement Corp., I N.Y.S, 2d 866)
In computing the time limited for suing out of an execution, although there is authority
to the contrary, the general rule is that there should not be included the time when
execution is stayed, either by agreement of the parties for a definite time, by
injunction, by the taking of an appeal or writ of error so as to operate as a
supersedeas, by the death of a party, or otherwise. Any interruption or delay

occasioned by the debtor will extend the time within which the writ may be issued
without scire facias.
xxx xxx xxx
There has been no indication that respondents herein had ever slept on their rights to
have the judgment executed by mere motions, within the reglementary period. The
statute of limitation has not been devised against those who wish to act but cannot
do so, for causes beyond their central.
Periquet insists it was the private respondent that delayed and prevented the execution of the
judgment in her favor, but that is not the way we see it. The record shows it was she who dillydallied.
The original decision called for her reinstatement within ten days from receipt thereof following its
affirmance by the NLRC on August 29, 1980, but there is no evidence that she demanded her
reinstatement or that she complained when her demand was rejected. What appears is that she
entered into a compromise agreement with CDCP where she waived her right to reinstatement and
received from the CDCP the sum of P14,000.00 representing her back wages from the date of her
dismissal to the date of the agreement. 7
Dismissing the compromise agreement, the petitioner now claims she was actually reinstated only
on March 16, 1987, and so should be granted back pay for the period beginning November 28,
1978, date of her dismissal, until the date of her reinstatement. She conveniently omits to mention
several significant developments that transpired during and after this period that seriously cast doubt
on her candor and bona fides.
After accepting the sum of P14,000.00 from the private respondent and waiving her right to
reinstatement in the compromise agreement, the petitioner secured employment as kitchen
dispatcher at the Tito Rey Restaurant, where she worked from October 1982 to March 1987.
According to the certification issued by that business, 8 she received a monthly compensation of
P1,904.00, which was higher than her salary in the CDCP.
For reasons not disclosed by the record, she applied for re-employment with the CDCP and was on
March 16,1987, given the position of xerox machine operator with a basic salary of P1,030.00 plus
P461.33 in allowances, for a total of P1,491.33 monthly. 9
On June 27, 1988; she wrote the new management of the CDCP and asked that the rights granted
her by the decision dated August 29, 1980, be recognized because the waiver she had signed was
invalid. 10
On September 19, 1988, the Corporate Legal Counsel of the private respondent (now Philippine
National Construction Corporation) recommended the payment to the petitioner of the sum of
P9,544.00, representing the balance of her back pay for three years at P654. 00 per month (minus
the P14,000.00 earlier paid). 11

On November 10, 1988, the petitioner accepted this additional amount and signed another Quitclaim
and Release reading as follows:
KNOW ALL MEN BY THESE PRESENTS:
THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis St., Quezon
City, hereby acknowledged receipt of the sum of PESOS: NINE THOUSAND FIVE HUNDRED
FORTY FOUR PESOS ONLY (P9,544.00) Philippine currency, representing the unpaid balance of
the back wages due me under the judgment award in NLRC Case No. AB-2-864-79 entitled
"Corazon Periquet vs. PNCC- TOLLWAYS" and I further manifest that this payment is in full
satisfaction of all my claims/demands in the aforesaid case. Likewise, I hereby manifest that I had
voluntarily waived reinstatement to my former position as TOLL TELLER and in lieu thereof, I sought
and am satisfied with my present position as XEROX MACHINE OPERATOR in the Central Office.
Finally, I hereby certify that delay in my reinstatement, after finality of the Decision dated 10 May
1979 was due to my own fault and that PNCC is not liable thereto.
I hereby RELEASE AND DISCHARGE the said corporation and its officers from money and all
claims by way of unpaid wages, separation pay, differential pay, company, statutory and other
benefits or otherwise as may be due me in connection with the above-entitled case. I hereby state
further that I have no more claims or right of action of whatever nature, whether past, present, future
or contingent against said corporation and its officers, relative to NLRC Case No. AB-2-864-79.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November 1988 at
Mandaluyong, Metro Manila. (Emphasis supplied.) 12
The petitioner was apparently satisfied with the settlement, for in the memorandum she sent the
PNCC Corporate Legal Counsel on November 24, 1988, 13 she said in part:
Sir, this is indeed my chance to express my gratitude to you and all others who have
helped me and my family enjoy the fruits of my years of stay with PNCC by way of
granting an additional amount of P9,544.00 among others ...
As per your recommendation contained therein in said memo, I am now occupying
the position of xerox machine operator and is (sic) presently receiving a monthly
salary of P2,014.00.
Reacting to her inquiry about her entitlement to longevity pay, yearly company increases and other
statutory benefits, the private respondent adjusted her monthly salary from P2,014.00 to P3,588.00
monthly.
Then the lull. Then the bombshell.
On March 11, 1989, she filed the motion for execution that is now the subject of this petition.

It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if she does
not know her own mind. First she signed a waiver and then she rejected it; then she signed another
waiver which she also rejected, again on the ground that she had been deceived. In her first waiver,
she acknowledged full settlement of the judgment in her favor, and then in the second waiver, after
accepting additional payment, she again acknowledged fun settlement of the same judgment. But
now she is singing a different tune.
In her petition she is now disowning both acknowledgments and claiming that the earlier payments
both of which she had accepted as sufficient, are insufficient. They were valid before but they are not
valid now. She also claimed she was harassed and cheated by the past management of the CDCP
and sought the help of the new management of the PNCC under its "dynamic leadership." But now
she is denouncing the new management-for also tricking her into signing the second quitclaim.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding on the parties and may not later be
disowned simply because of a change of mind. It is only where there is clear proof that the waiver
was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable
on its face, that the law will step in to annul the questionable transaction. But where it is shown that
the person making the waiver did so voluntarily, with full understanding of what he was doing, and
the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as
a valid and binding undertaking. As in this case.
The question may be asked: Why did the petitioner sign the compromise agreement of September
16, 1980, and waive all her rights under the judgment in consideration of the cash settlement she
received? It must be remembered that on that date the decision could still have been elevated
on certiorari before this Court and there was still the possibility of its reversal. The petitioner
obviously decided that a bird in hand was worth two on the wing and so opted for the compromise
agreement. The amount she was then waiving, it is worth noting, had not yet come up to the
exorbitant sum of P205,207.42 that she was later to demand after the lapse of eight years.
The back pay due the petitioner need not detain us. We have held in countless cases that this
should be limited to three years from the date of the illegal dismissal, during which period (but not
beyond) the dismissed employee is deemed unemployed without the necessity of proof. 14 Hence, the
petitioner's contention that she should be paid from 1978 to 1987 must be rejected, and even without
regard to the fact (that would otherwise have been counted against her) that she was actually employed
during most of that period.
Finally, the petitioner's invocation of Article 223 of the Labor Code to question the failure of the
private respondent to file a supersedeas bond is not well-taken. As the SOLICITOR General
correctly points out, the bond is required only when there is an appeal from the decision with a
monetary award, not an order enforcing the decision, as in the case at bar.
As officers of the court, counsel are under obligation to advise their clients against making untenable
and inconsistent claims like the ones raised in this petition that have only needlessly taken up the
valuable time of this Court, the SOLICITOR General, the Government Corporate Counsel, and the
respondents. Lawyers are not merely hired employees who must unquestioningly do the bidding of

the client, however unreasonable this may be when tested by their own expert appreciation of the
pertinent facts and the applicable law and jurisprudence. Counsel must counsel.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

M. WORKERS PREFERENCE IN CASE OF

BANKRUPTCY (ARTICLE 110, LABOR CODE)
221. DEVELOPMENT BANK OF THE PHILIPPINES VS. SECRETARY OF
LABOR
Petitioner Development Bank of the Philippines seeks the nullification of an order dated July 29,
1987 and issued by the Undersecretary of Labor and Employment, affirming that of National
Capital Region Officer-in-Charge Romeo A. Young, directing the petitioner to deliver the properties of
Riverside Mills Corporation (RMC) which it had in its possession to the Ministry (now Department) of
Labor and Employment (MOLE) for proper disposition in Case No. NCR-LSED-7-334-84 pursuant to
Article 110 of the Labor Code.
Labor Case No. NCR-LSED-7-334-84 involves a complaint for illegal dismissal, unfair labor practice,
illegal deductions from salaries and violation of the minimum wage law filed by private respondents
herein against RMC. On July 3, 1985, a decision was rendered by Director Severo M. Pucan of the
National Capital Region, MOLE, ordering RMC to pay private respondents backwages and
separation benefits. A corresponding writ of execution was issued on October 22, 1985 directing the
sheriff to collect the amount of ONE MILLION TWO HUNDRED FIFTY-SIX THOUSAND SIX
HUNDRED SEVENTY-EIGHT PESOS AND SEVENTY SIX CENTAVOS (P1,256,678.76) from RMC
and, in case of failure to collect, to execute the writ by selling the goods and chattel of RMC not
exempt from execution or, in case of insufficiency thereof, the real or immovable properties of RMC.
However, on May 23, 1986, the writ of execution was returned unserved and unsatisfied, with the
information that the company premises of RMC had been padlocked and foreclosed by petitioner. It
appears that petitioner had instituted extra-judicial foreclosure proceedings as early as 1983 on the
properties and other assets of RMC as a result of the latter's failure to meet its obligations on THE
LOANS it secured from petitioner.
Consequently, private respondents filed with the MOLE a "Motion for Delivery of Properties of the
[RMC] in the Possession of the [DBP] to the [MOLE] for Proper Disposition," stating that pursuant to
Article 110 of the Labor Code, they enjoy first preference over the mortgaged properties of RMC for
the satisfaction of the judgment rendered in their favor notwithstanding the foreclosure of the same
by petitioner as MORTGAGE creditor [Rollo, pp. 16-17]. Petitioner filed its opposition.
In an order signed by Officer-in-Charge Romeo A. Young and dated December 11, 1986, private
respondents' motion was granted based on the finding that Article 110 of the Labor Code and the
ruling laid down in Philippine Commercial and Industrial Bank v. Natural Mines and Allied Workers'

(NAMAWU-MIF) [G.R. No. 50402, August 19, 1982, 115 SCRA 873] support the conclusion that
private respondents still enjoyed a preferential lien for the payment of their backwages and
separation benefits over the properties of RMC which were foreclosed by petitioner [Rollo, pp. 2122].
Petitioner then filed its motion for reconsideration on December 24,1986 contending that Article 110
of the Labor Code finds no application in the case at bar for the following reasons: (1) The properties
sought to be delivered have ceased to belong to RMC in view of the fact that petitioner had
foreclosed on the mortgage, and the properties have been sold and delivered to third parties; (2) The
requisite condition for the application of Article 110 of the Labor Code is not present since
no BANKRUPTCY or insolvency proceedings over RMC properties and assets have been
undertaken [Rollo, pp. 24-28]. In an order dated July 29, 1987, petitioner's motion for reconsideration
was denied for lack of merit by Undersecretary Dionisio C. dela Serna.
Hence, petitioner filed this special civil action for certiorari with prayer for the issuance of a writ of
preliminary injunction. On August 27, 1987, this Court issued a temporary restraining order enjoining
public respondent from enforcing or carrying out its order dated July 29, 1987. After considering the
allegations made and issues raised in the petition, comments thereto and reply, the Court, on March
14, 1988, resolved to give due course to the petition and to require the parties to submit their
respective memoranda. Petitioner and private respondent submitted their memoranda, while public
respondent adopted as its memorandum the comment it had previously submitted.
After a careful study of the various arguments adduced, as well as the legal provisions and
jurisprudence on the matter, the Court finds the petition impressed with merit. Indeed, the assailed
Order suffers from infirmities which must be rectified by the grant of a writ of certiorari in favor of
petitioner.
Firstly, public respondent acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in enforcing private respondents' right of first preference under Article 110 of the Labor
Code notwithstanding the absence of bankruptcy, LIQUIDATION or insolvency proceedings against
RMC.
Article 110 of the Labor Code and Section 10, Rule VIII, Book III of the Omnibus Rules Implementing
the Labor Code provide the following:
Article 110. WORKER PREFERENCE IN CASE OF BANKRUPTCY.In the event
of BANKRUPTCY or LIQUIDATION of an employer's business, his workers shall
enjoy first preference as regards wages due them for services rendered during the
period prior to the bankruptcy or LIQUIDATION , any provision of law to the contrary
notwithstanding. Unpaid wages shall be paid in full before other creditors may
establish any claim to a share in the assets of the employer [Emphasis supplied].
Section 10. PAYMENT OF WAGES IN CASE OF BANKRUPTCY. Unpaid wages
earned by the employees before the declaration of bankruptcy or
judicial LIQUIDATION of the employer's business shall be given first preference

and shall be paid in full before other creditors may establish any claim to a share in
the assets of the employer.
It is clear from the wording of the law that the preferential right accorded to employees and workers
under Article 110 may be invoked only during bankruptcy or judicial liquidation proceedings against
the employer. The law is unequivocal and admits of no other construction.
Respondents contend that the terms "bankruptcy" or "liquidation" are broad enough to cover a
situation where there is a cessation of the operation of the employer's business as in the case at bar.
However, this very same contention was struck down as unmeritorious in the case of Development
Bank of the Philippines vs. Hon. Labor Arbiter Ariel C. Santos [G.R. Nos. 78261-62, March 8, 1989]
involving a group of RMC employees which sought to enforce its preference of credit Article 110
against DBP over certain RMC real properties. In that case, the Court laid down the ruling that Article
110 of the Labor Code, which cannot be viewed in isolation of, and must always be reckoned with
the provisions of the Civil Code on concurrence and preference of credits, may not be invoked by
employees or workers of RMC like private respondents herein, in the absence of a formal
declaration of bankruptcy or a judicial liquidation order of RMC.
The rationale for making the application of Article 110 of the Labor Code contingent upon the
institution of BANKRUPTCY or judicial LIQUIDATION proceedings against the employer is
premised upon the very nature of a preferential right of credit. A preference of credit bestows upon
the preferred creditor an advantage of having his credit satisfied first ahead of other claims which
may be established against the debtor. Logically, it becomes material only when the properties and
assets of the debtor are insufficient to pay his debts in full; for if the debtor is amply able to pay his
various creditors in full, how can the necessity exist to determine which of his creditors shall be paid
first or whether they shall be paid out of the proceeds of the sale of the debtor's specific property?
Indubitably, the preferential right of credit attains significance only after the properties of the debtor
have been inventoried and LIQUIDATED , and the claims held by his various creditors have been
established [Kuenzle & Streiff (Ltd.) v. Villanueva, 41 Phil. 611 (1916); Barrette v. Villanueva, G.R.
No. L-14938, December 29, 1962, 6 SCRA 928; Philippine Savings Bank v. Lantin, G.R. No. L33929, September 2, 1983, 124 SCRA 476].
In this jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings provide the
only proper venue for the enforcement of a creditor's preferential right such as that established in
Article 110 of the Labor Code, for these are in rem proceedings binding against the whole world
where all persons having any interest in the assets of the debtor are given the opportunity to
establish their respective credits [Philippine Savings Bank v. Lantin, supra; Development Bank of the
Philippines v. Santos supra].
Secondly, public respondent's Order directing petitioner to deliver to the MOLE the properties it had
foreclosed from RMC for the purpose of executing the judgment rendered against RMC in Case No.
NCR-LSED 7-334-84 violates the basic rule that the power of a court or tribunal in the execution of
its judgment extends only over properties unquestionably belonging to the judgment debtor [Special
Services Corporation v. Centro La Paz, G.R. No. L- 44100, April 28, 1983, 121 SCRA 748; National
Mines and Allied Workers' Union v. Vera, G.R. No. L-44230, November 19, 1984, 133 SCRA 295].

It appears on record, and remains undisputed by respondents, that petitioner had extra-judicially
foreclosed the subject properties from RMC as early as 1983 and purchased the same at public
auction, and that RMC had failed to exercise its right to redeem. Thus, when Officer-in-Charge
Young issued on December 11, 1986 the order which directed the delivery of these properties to the
MOLE, RMC had ceased to be the absolute owner thereof [See Dizon v. Gaborra, G.R. No. L-36821,
June 22, 1978, 83 SCRA 688]. Consequently, the order was directed against properties which no
longer belonged to the judgment debtor RMC.
However, respondents, in citing the case of PCIB v. NAMAWU-MIF [supra], argue that by virtue of
Article 110 of the Labor Code, an "automatic first lien" was created in favor of private respondents on
RMC propertiesa "lien" which predated the FORECLOSURE of the subject properties by
petitioner, and remained vested on these properties even after its sale to petitioner and other parties.
There is no merit to this contention. It proceeds from a misconception which must be corrected.
What Article 110 of the Labor Code establishes is not a lien, but a preference of credit in favor of
employees [See Republic v. Peralta, G.R. No. 56568, May 20, 1987, 150 SCRA 37]. This simply
means that during bankruptcy, insolvency or liquidation proceedings involving the existing properties
of the employer, the employees have the advantage of having their unpaid wages satisfied ahead of
certain claims which may be proved therein.
It bears repeating that a preference of credit points out solely the order in which creditors would be
paid from the properties of a debtor inventoried and appraised during BANKRUPTCY
, INSOLVENCY or liquidation proceedings. Moreover, a preference does not exist in any effective
way prior to, and apart from, the institution of these proceedings, for it is only then that the legal
provisions on concurrence and preference of credits begin to apply. Unlike a lien, a preference of
credit does not create in favor of the preferred creditor a charge or proprietary interest upon any
particular property of the debtor. Neither does it vest as a matter of course upon the mere accrual of
a money claim against the debtor. Certainly, the debtor could very well sell, mortgage or pledge his
property, and convey good title thereon, to third parties free from such preference [Kuenzle & Streiff
v. Villanueva, supra].
Incidentally, the Court is not unmindful of the 1989 amendments to the article introduced by Section
1, R.A. No. 6715 [March 21, 1989]. Article 110 of the Labor Code as amended reads:
WORKER PREFERENCE IN CASE OF BANKRUPTCY. In the event of bankruptcy
or liquidation of an employer's business, his workers shall enjoy first preference as
regards their unpaid wages and other monetary claims, any provision of law to the
contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in
full before the claims of the Government and other creditors may be paid.
[Amendments indicated.]
However, these amendments only relate to the scheme of concurrence and preference of credits;
they do not affect the issues heretofore discussed regarding the applicability of Article 110 to the
attendant facts.

WHEREFORE, considering the foregoing, the present petition is hereby GRANTED. The assailed
order dated July 29, 1987 is SET ASIDE and the temporary restraining order issued by the Court on
August 27, 1987 is made PERMANENT.
SO ORDERED.

222. RUBBERWORLD (PHILIPPINES), INC. VS. NLRC

PANGANIBAN, J.:

Presidential Decree 902-A, as amended, provides that "upon the appointment of a

management committee, rehabilitation receiver board or body pursuant to this Decree,
all actions for claims against corporations, partnerships, or associations under
management or receivership pending, before any court, tribunal, board or body shall be
suspended accordingly."[1] Such suspension is intended to give enough breathing space
for the management committee or rehabilitation receiver to make the business viable
again, without having to divert attention and resources to litigations in various
fora. Among, the actions suspended are those for money claims before labor tribunals,
like the National Labor Relation Commission (NLRC) and the Labor arbiters.
Statement of the Case

The foregoing Summarizes this Court's grant of the Petition for Certiorari under
Rule 65 of the Rules of Court, assailing the April 26, 1996 Resolution [2] promulgate by
the NLRC[3] which upheld the labor arbiter's refusal to suspend proceedings involving,
monetary claims of the petitioner's employees.
Petitioner likewise assails the June 20, 1996 NLRC Resolution [4] which denied its
Motion for Reconsideration.
On November 20, 1996, this Court issued a temporary restraining order signed by
then Chief Justice Andres R. Narvasa, "restraining the public respondents from further
conducting proceedings in the aforesaid cases effective immediately xxx."
The Facts

The facts are undisputed. They are narrated by the Office of the SOLICITOR
General as follows:

"Petitioner xxx is a domestic corporation which used to be in the business of

manufacturing footwear, bags and garments. It filed with the Securities and
Exchange Commission on November 24, 1994 a petition for suspension of

payments praying that it be declared in a state of suspension of payments and

that the SEC accordingly issue an order restraining its creditors from enforcing
their claims against petitioner corporation. It further prayed for the creation of
a management committee as well as for the approval of the proposed
rehabilitation plan and memorandum of agreement between petitioner
corporation and its creditors.
"In an order dated December 28, 1994, the SEC favorably ruled on the
petition for suspension of payments thusly:
'Accordingly, with the creation of the Management Committee, all actions for
claims against Rubberworld Philippines, Inc. pending before any court,
tribunal, office, board, body Commission of Sheriff are hereby deemed
SUSPENDED.
'Consequently, all pending incidents for preliminary injunctions, writ of
attachments (sic), FORECLOSURES' and the like are hereby rendered moot
and academic.'
"Private respondents, who claim to be employees of petitioner corporation,
filed against petitioners [from] April to July 1995 their respective complaints for
illegal dismissal, unfair labor practice, damages and payment of separation
pay, RETIREMENT BENEFITS , 13th month pay and service incentive pay.
"Petitioners moved to suspend the proceedings in the above labor cases on
the strength of the SEC Order dated December 28, 1994. Likewise,
petitioners cited the rulings of BF Homes vs. Court of Appeals (190 SCRA
262), Alemar's Sibal & Sons, Inc. vs. Elbinias (186 SCRA 94) and Bank of
Philippine Islands vs. Court of Appeals (229 SCRA 223) to support their
motion to suspend the proceedings in the labor cases.
"In an Order dated September 25, 1995, the Labor Arbiter denied the
aforesaid motion holding that the injunction contained in the SEC Order
applied only to the enforcement of established rights and did not include the
suspension of proceedings involving claims against petitioner which have yet
to be ascertained. The Labor Arbiter further held that the order of the SEC
suspending all actions for claims against petitioners does not cover the claims

of private respondents in the labor cases because said claims and the
concomitant liability of petitioners still had to be determined, thus carrying no
dissipation of the assets of petitioners.
"Petitioners appealed the adverse order of the Labor Arbiter to public
respondent which, in a Resolution dated April 26, 1996, dismissed the appeal
for lack of merit and, instead, sustained the rulings of the Labor Arbiter.
"The motion for reconsideration of petitioners fared no better and was denied
by public respondent in a Resolution dated June 20, 1996."[5]
Hence, this petition.[6]
The Issue

Petitioner raises only one issue:

"Whether or not the Respondent NLRC acted without or in excess of Jurisdiction or
with grave abuse of discretion amounting to lack of jurisdiction in affirming the order
of Labor Arbiter Voltaire A. Balitaan denying petitioners' motion to suspend
proceedings despite the Order of the Securities and Exchange Commission under
Sec. 6 (c) of P.D. 902-A directing the suspension of all actions against a company
under the first stages of INSOLVENCY proceedings."[7]
This Court's Ruling

The petition is meritorious.

Sole Issue:

Suspension Proceedings

Jurisprudence teaches us:

"xxx where the petition filed is one for declaration of a state of suspension of
payments due to a recognition of the inability to pay one's debts and
liabilities, and where the petitioning corporation either: (a) has sufficient
property to cover all its debts but foresees the impossibility of meeting them
when they fall due (solvent but illiquid) or (b) has no sufficient property
(insolvent) but is under the management of a rehabilitation receiver or a

management committee, the applicable law is P.D. 902-A pursuant to Sec. 5

par. (d) thereof. However, if the petitioning corporation has no sufficient
assets to cover its liabilities and is not under a rehabilitation receiver or a
management committee created under P.D. 902-A and does not seek merely
to have the payments of its debts suspended,but seeks a declaration of
insolvency xxx the applicable law is Act 1956 [The Insolvency Law] on
voluntary insolvency, xxx."[8]
In the case at bar, Petitioner Rubberworld filed before the SEC a Petition for
Declaration of Suspension of Payments, as well as a propose rehabilitation plan. On
December 28, 1994, the SEC ordered the creation of a management committee and the
suspension of all actions for claim against Rubberworld. Clearly, the applicable law is
PD 902-A, as amended, the relevant provision of which read:

"SECTION 5. In addition to the regulatory adjudicative functions of the

Securities and Exchange Commission over corporations, partnerships and
other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:
xxx

xxx

xxx

d) Petitions of corporations, partnerships or associations to be declared in the

state of suspension of payments in cases where the corporation, partnership
or association possesses sufficient property to cover all its debts but foresees
the impossibility of meeting them when they respectively fall due or in cases
where the corporation, partnership or association has no sufficient assets to
cover its liabilities, but is under the management of a rehabilitation receiver or
management committee created pursuant to this Decree.
SECTION 6. In order to effectively exercise such jurisdiction, the Commission
shall possess the following powers:
xxx

xxx

xxx

c) To appoint one or more receivers of the property, real or personal, which is

the subject of the action pending before the Commission in accordance with
the pertinent provisions of the Rules of Court in such other cases whenever

necessary in order to preserve the rights of the parties-litigants and/or protect

the interest of the investing public and creditors: x x x Provided finally, That
upon appointment of a management committee, the rehabilitation receiver,
board or body, pursuant to this Decree, all actions for claims against
corporations, partnerships, or associations under management or receivership
pending before any court, tribunal, board or body shall be suspended
accordingly."
It is plain from the foregoing provisions of law that "upon the appointment [by, the
SEC] of a management committee or a rehabilitation receiver," all actions for claims
against the corporation pending before any court, tribunal or board shall ipso jure be
suspended.[9] The justification for the automatic stay of all pending actions for claims "is
to enable the management committee or the rehabilitation receiver to effectively
exercise its/his powers free from any judicial or extra-judicial interference that might
unduly hinder or prevent the 'rescue' of the debtor company. To allow such other
actions to continue would only add to the burden of the management committee or
rehabilitation receiver, whose time, effort and resources would be wasted in defending
claims against the corporation instead of being directed toward its restructuring and
rehabilitation."[10]
Parenthetically, the rehabilitation of a financially distressed corporation benefits its
employees, creditors, stockholders and, in a larger sense, the general public. And in
considering whether to rehabilitate or not, the SEC gives preference to the interest of
creditors, including employees. The reason that shareholders can recover their
investments only upon liquidation of' the corporation, and only if there are assets
remaining after all corporate creditors ire paid. [11]
Labor Claims Included in Suspension Order

The SOLICITOR general, representing Public Respondent NLRC, argues that the
rationale for an automatic stay will not be frustrated even if the NLRC proceeds with the
disposition of these labor cases, because any favorable judgment obtained by the
private respondents would only establish their rights as creditors. The solicitor general
also contends that the assailed Resolutions of the NLRC will not result in an undue
preference for the assets of Rubberworld, as the private respondents will still present
their claims before the management committee. [12]
We disagree. The law is clear: upon the creation of a management committee or
the appointment of rehabilitation receiver, all claims for actions "shall be suspended
accordingly." No exception in favor of labor claims is mentioned in the law. Since the

law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit
nec nos distinguere debemos. [13] Allowing labor cases to proceed clearly defeats the
purpose of the automatic stay and severely encumbers the management committee's
time and resources. The said committee would need to defend against these suits, to
the detriment of its primary and urgent duty to work towards rehabilitating the
corporation and making it viable again. To rule otherwise would open the floodgates to
other similarly situated claimants and forestall if not defeat the rescue efforts. Besides,
even if the NLRC awards the claims of private respondents, as it did, its ruling could not
be enforced as long as the petitioner is under the management committee.[14]
In Chua v. National Labor Relation Commission, [15] we ruled that labor claims cannot
proceed independently of a BANKRUPTCY LIQUIDATION proceeding, since these
claims "would spawn needless controversy, delays, and confusion." [16] With more
reason, allowing labor claims to continue in spite of a SEC suspension order in
rehabilitation case would merely lead to such results.
The solicitor general insists that since Article 217 of the Labor Code [17] vested public
respondent with jurisdiction to hear and decide these labor cases, the NLRC did not
exceed its jurisdiction when it refused to suspend the proceedings therein. [18] The Court
is not persuaded.
Article 217 of the Labor Code should be construed not in isolation but in harmony
with PD 902-A, according to the basic rule in statutory construction that implied repeals
are not favored.[19]Indeed, it is axiomatic that each and every statute must be construed
in a way that would avoid conflict with existing laws. [20] True, the NLRC has the power to
hear and decide labor disputes, but such authority is deemed suspended when PD 902A is put into effect by the Securities and Exchange Commission.
Preference in Favor of Workers in Case of BANKRUPTCY

or LIQUIDATION

The private respondents contend that automatic stay under PD 902-A is not
applicable to the instant case; otherwise, the preference granted to workers by Article
110 of the Labor Code would be rendered ineffective. [21] This contention is misleading.
The preferential right of workers and employees under Article 110 of the
Labor Code may be invoked only upon the institution of INSOLVENCY or judicial
liquidation proceeding.[22] Indeed, it is well-settled that "a declaration of bankruptcy or a
judicial liquidation must be present before preferences over various money claims may
be enforced."[23] But debtors resort to preference of credit -- giving preferred creditors the
right to have their claims paid ahead of those of other claimants -- only when their
assets are insufficient to pay their debts fully.[24] The purpose of rehabilitation

proceedings is precisely to enable the company to gain a new lease on life and
thereby allow creditors to be paid their claims from its earnings. In insolvency
proceedings, on the other hand, the company stops operating, and the claims of
creditors are satisfied from the assets of the insolvent corporation. The present case
involves the rehabilitation, not the liquidation, of petitioner-corporation. Hence, the
preference of credit granted to workers or employees under Article 110 of the Labor
Code is not applicable.
Duration of Automatic Stay Under PD 902-A

Finally, private respondents posit that under Section 6 of the Insolvency Law, the
December 28, 1994 Order of the SEC suspending all actions for claims against
Rubberworld should have expired after three months, in the absence of an agreement
between the company and the corporate creditors. [25] Private respondents also accuse
the SEC of abusing its power by "allowing said suspension order to remain pending for
many years without resolving and approving any rehabilitation plan."[26] They contend
that "[t]his is fatal to the instant petition for it had been a party to the abuse by the SEC
of its suspension order."[27]
This Court notes that PD 902-A itself does not provide for the duration of the
automatic stay. Neither does the Order[28] of the SEC. Hence, the suspensive effect
has no time limit and remains in force as long as reasonably necessary to accomplish
the purpose of the Order.[29] On the other hand, the attack against the SEC's alleged
"abuse of power" is misplaced. Under review in this Petition for Certiorari are Resolutions
of the NLRC, not of the SEC. The scope of this review is thus limited to whether the
NLRC gravely abused or exceeded its jurisdiction in refusing to heed the SEC Order of
Suspension and in issuing its challenged Resolutions. In any event, the bare allegation
of inaction is insufficient to condemn the Securities and Exchange Commission and the
management committee where, it should be noted, all affected parties, including, the
labor union in the company, are represented.
WHEREFORE, the petition is hereby GRANTED. The assailed Resolutions of the
NLRC dated April 26, 1996, and June 20, 1996, are REVERSED and SET ASIDE. No
costs.
SO ORDERED.

N. PRESCRIPTION (ARTICLES 290-291, LABOR

CODE)

223. CALLANTE VS. CARNATION PHILIPPINES

FERNAN, J.:
The issue raised in this petition for certiorari is whether or not an action for illegal dismissal
prescribes in three [3] years pursuant to Articles 291 and 292 of the Labor Code which provide:
Art. 291. Offenses. Offenses penalized under this Code and the rules and
regulations issued pursuant thereto shall prescribe in three [3] years.
xxx xxx xxx
Art. 292. Money Claims. All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three [3]
years from the time the cause of action accrued; otherwise, they shall be forever
barred.
xxx xxx xxx
Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc.
[Carnation, for brevity] in January 1974 as a salesman in the Agusan del Sur area. Five [51 years
later or on June 1, 1979, respondent Carnation filed with the Regional Office No. X of the Ministry of
Labor and Employment [MOLE], an application for clearance to terminate the employment of Virgilio
Callanta on the alleged grounds of serious misconduct and misappropriation of company funds
amounting to P12,000.00, more or less.
Upon approval on June 26, 1979 by MOLE Regional Director Felizardo G. Baterbonia, of said
clearance application, petitioner Virgilio Callanta's employment with Carnation was terminated
effective June 1, 1979.
On July 5, 1982, Virgilio Callanta filed with the MOLE, Regional Office No. X, a complaint for illegal
dismissal with claims for reinstatement, backwages, and damages against respondent Carnation.
In its position paper dated October 5, 1982, respondent Carnation put in issue the timeliness of
petitioner's complaint alleging that the same is barred by prescription for having been filed more than
three [3] years after the date of Callanta's dismissal.
On March 24, 1983, Labor Arbiter Pedro C. Ramos rendered a decision finding the termination of
Callanta's employment to be without valid cause. Respondent Carnation was therefore ordered to
reinstate Virgilio Callanta to his former position with backwages of one [1] year without qualification
including all fringe benefits provided for by law and company policy, within ten [10] days from receipt
of the decision. It was likewise provided that failure on the part of respondent to comply with the
decision shall entitle complainant to full backwages and all fringe benefits without loss of seniority
rights.

On April 18, 1983, respondent Carnation appealed to respondent National Labor Relations
Commission [NLRC] which in a decision dated February 25, 1985, 1 set aside the decision of the Labor
Arbiter. It declared the complaint for illegal dismissal filed by Virgilio Callanta to have already prescribed.
Thus:
Records show that Virgilio Callanta was dismissed from his employment with
respondent company effective June 1, 1979; and that on 5 July 1982, he filed the
instant complaint against respondent for: Unlawful Dismissal with Backwages, etc.
The provisions of the Labor Code applicable are:
Art. 291. Offenses. Offenses penalized under this Code and the rules and
regulations issued pursuant thereto shall prescribe in three [3] years.
Art. 292. Money claims. All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three [3]
years from the time the cause of action accrued; otherwise, they shall be forever
barred.
Obviously, therefore, the causes of action, i.e., "Unlawful Dismissal" and
"Backwages, etc." have already prescribed, the complaint therefore having been filed
beyond the three-year period from accrual date.
With this finding, there is no need to discuss the other issues raised in the appeal.
WHEREFORE, in view of the foregoing, the Decision appealed from is hereby SET
ASIDE and another one entered, dismissing the complaint.
SO ORDERED.
Hence, this petition, which We gave due course in the resolution dated September 18, 1985. 2
Petitioner contends that since the Labor Code is silent as to the prescriptive period of an action for illegal
dismissal with claims for reinstatement, backwages and damages, the applicable law, by way of
supplement, is Article 1146 of the New Civil Code which provides a four [4]-year prescriptive period for an
action predicated upon "an injury to the rights of the plaintiff" considering that an action for illegal
dismissal is neither a "penal offense" nor a mere "money claim," as contemplated under Articles 291 and
292, respectively, of the Labor Code. Petitioner further claims that an action for illegal dismissal is a more
serious violation of the rights of an employee as it deprives him of his means of livelihood; thus, it should
correspondingly have a prescriptive period longer than the three 13] years provided for in "money claims."

Public respondent, on the other hand, counters with the arguments that a case for illegal dismissal
falls under the general category of "offenses penalized under this Code and the rules and
regulations pursuant thereto" provided under Article 291 or a money claim under Article 292, so that
petitioner's complaint for illegal dismissal filed on July 5, 1982, or three [3] years, one [1] month and
five [5] days after his alleged dismissal on June 1, 1979, was filed beyond the three-year prescriptive
period as provided under Articles 291 and 292 of the Labor Code, hence, barred by prescription; that

while it is admittedly a more serious offense as it involves an employee's means of livelihood, there
is no logic in assuming that it has a longer prescriptive period, as naturally, one who is truly
aggrieved would immediately seek the redress of his grievance; that assuming arguendo that the law
does not provide for a prescriptive period for the enforcement of petitioner's right, it is nevertheless
beyond dispute that the said right has already lapsed into a stale demand; and that considering the
seriousness of the act committed by petitioner, private respondent was justified in terminating the
employment.
We find for petitioner.
Verily, the dismissal without just cause of an employee from his employment constitutes a violation
of the Labor Code and its implementing rules and regulations. Such violation, however, does not
amount to an "offense" as understood under Article 291 of the Labor Code. In its broad sense, an
offense is an illegal act which does not amount to a crime as defined in the penal law, but which by
statute carries with it a penalty similar to those imposed by law for the punishment of a crime. 3 It is in
this sense that a general penalty clause is provided under Article 289 of the Labor Code which provides
that "... any violation of the provisions of this code declared to be unlawful or penal in nature shall be
punished with a fine of not less than One Thousand Pesos [P1,000.00] nor more than Ten Thousand
Pesos [10,000.00], or imprisonment of not less than three [3] months nor more than three [3] years, or
both such fine and imprisonment at the discretion of the court." [Emphasis supplied.]
The confusion arises over the use of the term "illegal dismissal" which creates the impression that
termination of an employment without just cause constitutes an offense. It must be noted, however
that unlike in cases of commission of any of the probihited activities during strikes or lockouts under
Article 265, unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities
under Article 38, among others, which the Code itself declares to be unlawful, termination of an
employment without just or valid cause is not categorized as an unlawful practice.
Besides, the reliefs principally sought by an employee who was illegally dismissed from his
employment are reinstatement to his former position without loss of seniority rights and privileges, if
any, backwages and damages, in case there is bad faith in his dismissal. As an affirmative relief,
reinstatement may be ordered, with or without backwages. While ordinarily, reinstatement is a
concomitant of backwages, the two are not necessarily complements, nor is the award of one a
condition precedent to an award of the other. 4 And, in proper cases, backwages may be awarded
without ordering reinstatement . In either case, no penalty of fine nor improsonment is imposed on the
employer upon a finding of illegality in the dismissal. By the very nature of the reliefs sought, therefore, an
action for illegal dismissal cannot be generally categorized as an "offense" as used under Article 291 of
the Labor Code, which according to public respondent, must be brought within the period of three[3] years
from the time the cause of action accrued, otherwise, the same is forever barred.
It is true that the "backwwages" sought by an illegally dismissed employee may be considered, by
reason of its practical effect, as a "money claim." However, it is not the principal cause of action in an
illegal dismissal case but the unlawful deprivation of the one's employment committed by the
employer in violation of the right of an employee. Backwages is merely one of the reliefs which an
illegally dismissed employee prays the labor arbiter and the NLRC to render in his favor as a
consequence of the unlawful act committed by the employer. The award thereof is not private
compensation or damages 5 but is in furtherance and effectuation of the public objectives of the Labor

Code. 6even though the practical effect is the enrichment of the individual, the award of backwages is not
inredness of a private right, but, rather, is in the nature of a command upon the employer to make public
reparation for his violation of the Labor Code. 7
The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil. 732, a 1959 case cited by petitioner, is
applicable in the instant case insofar as it concerns the issue of prescription of actions. In said case, this
Court had occasion to hold that an action for damages involving a plaintiff seperated from his employment
for alleged unjustifiable causes is one for " injury to the rights of the plaintiff, and must be brought within
four [4] years. 8
In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court, thru then Chief Justice Enrique M.
Fernando, sustained the sand of the Solicitor General that the period of prescription mentioned under
Article 281, now Article 292, of the Labor Code, refers to and "is limited to money claims, an other cases
of injury to rights of a workingman being governed by the Civil Code." Accordingly, this Court ruled that
petitioner Marciana Santos, who sought reinstatement, had four [4] years within which to file her
complaint for the injury to her rights as provided under Article 1146 of the Civil Code.

Indeed there is, merit in the contention of petitioner that the four [4]-year prescriptive period under
Article 1146 of the New Civil Code, applies by way of supplement, in the instant case, to wit:
Art. 1146. The following actions must be instituted within four years.
[1] Upon an injury to the lights of the plaintiff.
xxx xxx xxx
[Emphasis supplied]
As this Court stated in Bondoc us. People's Bank and Trust Co., 9 when a person has no property, his
job may possibly be his only possession or means of livelihood, hence, he should be protected against
any arbitrary and unjust deprivation of his job. Unemployment, said the Court in Almira vs. B.F. Goodrich
Philippines, 10 brings "untold hardships and sorrows on those dependent on the wage earners. The misery
and pain attendant on the loss of jobs thus could be avoided if there be acceptance of the view that under
all the circumstances of this case, petitioners should not be deprived of their means of livelihood."
It is a principle in American jurisprudence which, undoubtedly, is well-recognized in this jurisdiction
that one's employment, profession, trade or calling is a "property right," and the wrongful interference
therewith is an actionable wrong. 11 The right is considered to be property within the protection of a
constitutional guaranty of due process of law. 12 Clearly then, when one is arbitrarily and unjustly deprived
of his job or means of livelihood, the action instituted to contest the legality of one's dismissal from
employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as
contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years.
In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3]
years, one [1] month and five [5] days after the alleged effectivity date of his dismissal on June 1,
1979 which is well within the four [4]-year prescriptive period under Article 1146 of the New Civil
Code.

Even on the assumption that an action for illegal dismissal falls under the category of "offenses" or
"money claims" under Articles 291 and 292, Labor Code, which provide for a three-year prescriptive
period, still, a strict application of said provisions will not destroy the enforcement of fundamental
rights of the employees. As a statutory provision on limitations of actions, Articles 291 and 292 go to
matters of remedy and not to the destruction of fundamental rights. 13 As a general rule, a statute of
limitation extinguishes the remedy only. Although the remedy to enforce a right may be barred, that right
may be enforced by some other available remedy which is not barred. 14
More so, in the instant case, where the delay in filing the case was with justifiable cause. The threat to
petitioner that he would be charged with estafa if he filed a complaint for illegal dismissal, which private
respondent did after all on June 22, 1981, justifies, the delayed filing of the action for illegal dismissal with
the Regional Office No. X, MOLE on July 5, 1982. Laches will not in that sense strengthen the cause of
public respondent. Besides, it is deemed waived as it was never alleged before the Labor Arbiter nor the
NLRC.

Public respondent dismissed the action for illegal dismissal on the sole issue of prescription of
actions. It did not resolve the case of illegal dismissal on the merits. Nonetheless, to resolve once
and for all the issue of the legality of the dismissal, We find that petitioner, who has continuously
served respondent Carnation for five [5] years was, under the attendant circumstances, arbitrarily
dismissed from his employment. The alleged shortage in his accountabilities should have been
impartially investigated with all due regard for due process in view of the admitted enmity between
petitioner and E.L. Corsino, respondent's auditor. 15 Absent such an impartial investigation, the alleged
shortage should not have been attended with such a drastic consequence as termination of the
employment relationship. Outright dismissal was too severe a penalty for a first offense, considering that
the alleged shortage was explained to respondent's Auditor, E.L. Corsino, in accordance with
respondent's accounting and auditing policies.
The indecent haste of his dismissal from employment was, in fact, aggravated by the filing of the
estafa charge against petitioner with the City Fiscal of Butuan City on June 22, 1981, or two [2] years
after his questioned dismissal. After the case had remained pending for five [5] years, the Regional
Trial Court of Agusan del Norte and Butuan City, Branch V finally dismissed the same provisionally in
an order dated February 21, 1986 for failure of the prosecution's principal witness to appear in court.
Admittedly, loss of trust and confidence arising from the same alleged misconduct is sufficient
ground for dismissing an employee from his employment despite the dismissal of the criminal
case. 16 However, it must not be indiscriminately used as a shield to dismiss an employee
arbitrarily. 17 For, who can stop the employer from filing all the charges in the books for the simple exercise
of it, and then hide behind the pretext of loss of confidence which can be proved by mere preponderance
of evidence.
We grant the petition and the decision of the NLRC is hereby reversed and set aside. Although We
are strongly inclined to affirm that part of the decision of the Labor Arbiter ordering the reinstatement
of petitioner to his former position without loss of seniority rights and privileges, a supervening event,
which petitioner mentioned in his motion for early decision dated January 6, 1986 18 that is, FILIPRO,
Inc.'s taking over the business of Carnation, has legally rendered the order of reinstatement difficult to
enforce, unless there is an express agreement on assumption of liabilities 19by the purchasing
corporation, FILIPRO, Inc. Besides, there is no law requiring that the purchasing corporation should

absorb the employees of the selling corporation. 20 In any case, the very concept of social justice dictates
that petitioner shall be entitled to backwages of three [3] years. 21
WHEREFORE, respondent Carnation Philippines, Inc. is hereby ordered to pay petitioner Virgilio Callanta
backwages for three [3] years without qualification and deduction. This decision is immediately executory.
No costs.

SO ORDERED.

O. LABOR INJUNCTIONS (ARTICLES 254; 218 AND

263, LABOR CODE)
224. DELTAVENTURES RESOURCES, INC. VS, JUDGE CABATO
QUISUMBING, J.:
This special civil action for certiorari seeks to annual the Order dated November 7, 1994, 1 of
respondent Judge Fernando P. Cabato of the Regional Trial Court of La Trinidad, Benguet, Branch
62, in Civil Case No. 94-CV-0948, dismissing petitioner's amended third-party complaint, as well as
the Order dated December 14, 1994,2 denying motion for reconsideration.
On July 15, 1992, a Decision3 was rendered by Executive Labor Arbiter Norma Olegario, National
Labor RelationsCommission Regional Arbitration Board, Cordillera Autonomous Region
(Commission), in NLRC Case No. 01-08-0165-89 entitled "Alejandro Bernardino, et al, vs. Green
Mountain Farm, Roberto Ongpin and Almus Alabe", the dispositive portion of which reads as
follows:
WHEREFORE, judgment is hereby rendered declaring the respondents guilty of Illegal
Dismissal and Unfair Labor Practice and ordering them to pay the complainants, in
solidum, in the amount herein below listed:
1. Violy Libao P131,368.07
2. Myra Bayaona 121,470.23
3. Gregorio Dulay 128,362.17
4. Jesus Gatcho 126,475.17
5. Alejandro Bernardino 110,158.20
6. Pilando Tangay 107,802.66
7. Aida Libao 129,967.34
8. Rey Dayap 123,289.21

9. Nestor Rabang 90,611.69

10. Augusto Granados 108,106.03
plus attorney's fees in the amount of P10.000.00.
Respondent Almus Alabe is also ordered to answer in exemplary damages in the amount of
P5,00.00 each to all the complainants.
xxx

xxx

xxx

SO ORDERED. 4
On May 19, 1994, complainants in the abovementioned labor case filed before the Commission a
motion for the issuance of a writ of execution as respondent's appeal to the Commission and this
Court5 were respectively denied.
On June 16, 1994, Executive Labor Arbiter Gelacio C. Rivera, Jr. to whom the case was reassigned
in view of Labor Arbiter Olegario's transfer, issued a writ of execution6 directing NLRC Deputy
Sheriff Adam Ventura to execute the judgment against respondents, Green Mountain Farm, Roberto
Ongpin and Almus Alabe Sheriff Ventura then proceeded to enforce the writ by garnishing certain
personal properties of respondents. Findings that said judgment debtors do not have sufficient
personal properties to satisfy the monetary award, Sheriff Ventura proceeded to levy upon a real
property covered by Tax Declaration No. 9697, registered in the name of Roberto Ongpin, one of
the respondents in the labor case. Thereafter, Sheriff Ventura caused the publication on the July 17,
1994 edition of the Baguio Midland Courier the date of the public auction of said real property.
On July 27, 1994, a month before the scheduled auction sale, herein petitioner filed before the
Commission a third-party claim7 asserting ownership over the property levied upon and subject of
the Sheriff notice of sale. Labor Arbiter Rivera thus issued an order directing the suspension of the
auction sale until the merits of petitioner's claim has been resolved. 8
However, on August 16, 1994, petitioner filed with the Regional Trial Court of La Trinidad, Benguet a
complaint for injunction and damages, with a prayer for the issuance of a temporary retraining order
against Sheriff Ventura, reiterating the same allegations it raised in the third party claim it field with
the Commission. The petition was docketed as Civil Case No. 94-CV-0948, entitled "Deltaventures
Resources, Inc., petitioner vs. Adam P. Ventura, etal., defendants." The next day, August 17, 1994,
respondent Judge Cabato issued a temporary restraining order, enjoining respondents in the civil
case before him to hold in abeyance any action relative to the enforcement of the decision in the
labor case.9
Petitioner likewise filed on August 30, 1994, an amended complaint10 to implead Labor arbiter Rivera
and herein private respondent-laborers.

Further, on September 20, 1994, petitioner, filed with the Commission a manifestation11 questioning
the latter's authority to hear the case, the matter being within the jurisdiction of the regular courts.
The manifestation however, was dismissed by Labor arbiter Rivera on October 3, 1994. 12
Meanwhile, on September 20, 1994, private respondent-laborers, moved for the dismissal of the civil
case on the ground of the court's lack of jurisdiction. 13 Petitioner filed its opposition to said motion on
October 4, 1994.14
On November 7, 1994, after both parties had submitted their respective briefs, respondent court
rendered its assailed decision premised on the following grounds:
First, this Court is equal rank with the NLRC, hence, has no jurisdiction to issue an injunction
against the execution of the NLRC decision. . . .
Second, the NLRC retains authority over all proceedings anent the execution of its decision.
This power carries with it the right to determine every question which may be involved in the
execution of its decision. . . .
Third, Deltaventures Resources, Inc. should rely on and comply with the Rules of the NLRC
because it is theprincipal procedure to be followed, the Rules of Court being merely
suppletory in application, . . .
Fourth, the invocation of estoppel by the plaintiffs is misplaced. . . . . [B]efore the defendants
have filed their formal answer to the amended complaint, they moved to dismiss it for lack of
jurisdiction.
Lastly, the plaintiff, having in the first place addressed to the jurisdiction of the NLRC by filing
with it a Third Party Claim may not at the same time pursue the present amended Complaint
under the forum shoppingrule.15
Their motion for reconsideration having been denied by respondent Judge,
this petition now before us.

16

petitioner promptly filed

In spite of the many errors assigned by petitioner,17 we find that here the core issue is whether or not
the trial court may take cognizance of the complaint filed by petitioner and consequently provide the
injunction relief sought. Such cognizance in turn, would depend on whether the acts complained of
are related to, connected or interwoven with the cases falling under the exclusive jurisdiction of the
Labor arbiter or the NLRC.
Petitioner avers that court a quo erred in dismissing the third-party claim on the ground of lack of
jurisdiction. Further, it contends that the NLRC-CAR did not acquire jurisdiction over the claim for it
did not impugn the decision of the NLRC-CAR but merely questioned the propriety of the levy made
by Sheriff Ventura. In support of its claim, petitioner asserts that the instant case does not involve a
labor dispute, as no-employer-employee relationship exists between the parties. Nor is the
petitioner's case related in any way to either parties' case before the NLRC-CAR hence, not within
the jurisdiction of the Commission.

Basic as a hornbook principle, jurisdiction over the subject matter of a case is conferred by law and
determined by the allegations in the complainant18 which comprise a concise statement of the
ultimate facts constituting the petitioner's cause of action.19 Thus we have held that:
Jurisdiction over the subject-matter is determined upon the allegations made in the
complainant, irrespective of whether the plaintiff is entitled or not entitled to recover upon the
claim asserted therein - a matter resolved only after and as a result of the trial. 20
Petitioner filed the third-party claim before the court a quo by reason of a writ of execution issued by
the NLRC-CAR Sheriff against a property to which it claims ownership. The writ was issued to
enforce and execute the commission's decision in NLRC Case No. 01-08-0165-89 (Illegal Dismissal
and Unfair Labor Practice) against Green Mountain Farm, Roberto Ongpin and Almus Alabe.
Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but
in essence it was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of
execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff implementing the
writ. The complainant was in effect a motion to quash the writ of execution of a decision rendered on
a case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor
Practice. Considering the factual setting, it is then logical to conclude that the subject matter of the
third party claim is but an incident of the labor case, a matter beyond the jurisdiction of regional trial
courts.
Precedents abound confirming the rule that said courts have no labor jurisdiction to act on labor
cases or various incidents arising therefrom, including the execution of decisions, awards or
orders.21 Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official
concerned under the Department of Labor and Employment. To hold otherwise is to sanction split
jurisdiction which is obnoxious to the orderly administration of justice. 22
Petitioner failed to realize that by filing its third-party claim with the deputy sheriff, it submitted itself
to the jurisdiction of the Commission acting through the Labor Arbiter. It failed to perceive the fact
that what it is really controverting is the decision of the Labor arbiter and not the act of the deputy
sheriff in executing said order issued as a consequence of said decision rendered.
1wphi1

Jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is
terminated.23Whatever irregularities attended the issuance and execution of the alias writ of
execution should be referred to the same administrative tribunal which rendered the decision. 24 This
is because any court which issued a writ of execution has the inherent power, for the advancement
of justice, to correct errors of its ministerial officers and to control its own processes. 25
The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by
Articles 217, 218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction
over incidents arising from, in connection with or relating to labor disputes, as the controversy under
consideration, to the exclusion of the regular courts.

Having established that jurisdiction over the case rests with the Commission, we find no grave abuse
of discretion on the part of respondent Judge Cabato in denying petitioner's motion for the issuance
of an injunction against the execution of the decision of the National Labor Relations Commission.
Moreover, it must be noted that the Labor Code in Article 254 explicitly prohibits issuance of a
temporary or permanent injunction or restraining order in any case involving or growing out of labor
disputes by any court or other entity (except as otherwise provided in Arts. 218 and 264). As
correctly observed by court a quo, the main issue and the subject of the amended complaint for
injunction are questions interwoven with the execution of the Commission's decision. No doubt the
aforecited prohibition in Article 254 is applicable.
1wphi1

Petitioner should have filed its third-party claim before the Labor Arbiter, from whom the writ of
execution originated, before instituting said civil case. The NLRC's Manual on Execution of
Judgment,26 issued pursuant to Article 218 of the Labor Code, provides the mechanism for a thirdparty claimant to assert his claim over a property levied upon by the sheriff pursuant to an order or
decision of the Commission or of the Labor Arbiter. The power of the Labor Arbiter to issue a writ of
execution carries with it the power to inquire into the correctness of the execution of his decision and
to consider whatever supervening events might transpire during such execution.
Moreover, in denying petitioner's petition for injunction, the court a quo is merely upholding the timehonored principle that a Regional Trial Court, being a co-equal body of the National Labor Relations
Commission, has no jurisdiction to issue any restraining order or injunction to enjoin the execution of
any decision of the latter.27
WHEREFORE, the petition for certiorari and prohibition is DENIED. The assailed Orders of
respondent Judge Fernando P. Cabato dated November 7, 1994 and December 14, 1994,
respectively are AFFIRMED. The records of this case are hereby REMANDED to the National Labor
Relations Commission for further proceedings.
1wphi1.nt

Costs against petitioner.

SO ORDERED.

225. BISIG NG MANGGAGAWA SA CONCRETE AGGREGATES, INC.

VS. NLRC
PUNO, J.:
The restoration of the right to strike is the most valuable gain of labor after the EDSA revolution. It is
the employees' sole weapon which can effectively protect their basic rights especially in a society
where the levers of powers are nearly monopolized by the propertied few or their franchisees. In
recognition of its importance, our Constitution has accorded the rights to strike a distinct status while
our laws have assured that its rightful exercise will not be negated by the issuance of unnecessary
injunctions. The impugned Order of the public respondents in the case at bar infringes petitioners'
right to strike and hence must be struck down.

The labor conflict between the parties broke out in the open when
the petitioner union 1 struck on April 6, 1992 protesting issues ranging from unfair labor practices and
union busting allegedly committed by the private respondent. 2 The union picketed the premises of the
private respondent at Bagumbayan and Longos in Quezon City; Angono and Antipolo in Rizal; San
Fernando, Pampanga and San Pedro, Laguna.
The strike hurt the private respondent. On April 8, 1992, it filed with the NLRC a petition for
injunction 3 to stop the strike which it denounced as illegal. It alleged:
xxx xxx xxx
13. On April 6, 1992, at around 7:00 p.m., respondents led by its officers and some
members staged a wild-cat strike, without a valid notice of strike, nor observing
cooling-off period, and made even during the pendency of a preventive mediation
proceedings which was still scheduled for April 10, 1992;
14. And during the said wild-cat strike, respondents have set-up makeshifts, tents,
banners and streamers and other man-made obstructions at the main plant and
offices of petitioner which effectively impeding, as in fact still effectively impeding the
ingress and egress of persons who have lawful business with the petitioner;
15. Furthermore, respondents have resorted, as in fact still resorting to, unlawful and
illegal acts including among others threats, intimidations and coercions against
persons who have lawful business with the petitioner and the non-striking employees
who wish to return to work;
16. Without complying with the legal requirements for a valid strike, respondents'
staging of the said "wild-cat strike", is by law considered as illegal or unlawful act
which must be enjoined;
17. As a direct result of the aforesaid unlawful and illegal acts of the respondents,
petitioner which has on-going projects for the government and other private entities
which require completion on and agreed schedule, is at great and imminent danger
to suffer substantial damages and injury, which if not urgently redressed, will
inevitably become irreparable;
18. Said prohibited and unlawful acts have been threatened and will continuously be
committed unless the injunction or temporary restraining order be issued against the
respondents; (pp. 2-5, Records).
xxx xxx xxx
23. The injury and damages to the government of Republic of the Philippines, the
petitioner and other persons are unavoidable, so much so that the issuance of a
Temporary Restraining Order without notice becomes imperative, as the police

officers or agents of authority called upon to enforce the right to ingress and egress
are unable to do so; (p. 6, ibid)
The petition was set for hearing on April 13, 1992 at 3 p.m. The union, however, claimed that it was
not furnished a copy of the petition. Allegedly, the company misrepresented its address to be at Rm.
205-6 Herald Bldg., Muralla St., Intramuros, Manila.
On April 13, 1992, the NLRC heard the evidence of the company alone. The ex parte hearing started
at 2:30 p.m. where testimonial and documentary evidence were presented. 4 Some thirty (30) minutes
later, an Ocular Inspection Report was submitted by an unnamed NLRC representative 5 which reads:
OCULAR INSPECTION REPORT
Authorization dated April 13, 1992 was issued to the effect of directing the
undersigned to conduct an ocular inspection of the premises of the petitioner located
at Bagumbayan, Quezon City.
The inspection was conducted immediately upon receipt hereof.
OBSERVATION
The passage was obstructed with pieces of rock, an old ladder, pieces of wood and
other hard objects that gave rise to a strong indication that the passage to and from
the premises was not free. The barricades and obstruction were put up fifty (50)
meters or less away from the main gate.
The business operation was completely paralized (sic) as no person was noticed
inside the company compound. No persons and/or vehicles were seen entering and
leaving the premises. Ingress to and engress from the company is presumed to be
not free.
Before the day was over, the respondent NLRC (First Division) issued a temporary restraining order
against the union, viz.:
. . . RESOLVED, to issue a Temporary Restraining Order valid for twenty (20) days,
subject to petitioner's posting of a cash or surety bond of Twenty Thousand
(P20,000.00) Pesos conditioned to recompense respondents for any loss, expense
or damage they may suffer in the event it is eventually found out that petitioner is not
entitled to the relief sought and herein granted, DIRECTING: a) the respondents,
their agents and symphatizers to remove (subject to their right to conduct a lawful
picket) the man made barricades/obstructions complained of and to direct from
further preventing and/or impeding the free ingress to and egress from petitioner's
main plant and office premises of its employees, officials, vehicles, customers or any
party who may want to transact business thereat through the use of any obstructive
means prohibited by law; b) any officer from the Legal Division of this Commission to
ensure compliance of the foregoing restraining order and where necessary, to enlist

in the implementation of this Order, as deputized enforcement officers, the

assistance of peace officers of this government that has jurisdiction over the strike
areas;
c) Labor Arbiter Ernilo V. Pealosa to immediately set this case for further hearing
with the aim of affording respondents enough opportunity to contest/oppose the
issuance of temporary/permanent injunction prayed for in the petition and to submit a
report to this Commission within ten (10) days from termination of said hearing.
No copy of this Order was furnished the union. The union learned of the Order only when it was
posted on April 15, 1992 at the premises of the company. On April 21, 1992, it filed its
Opposition/Answer to the petition for Injunction. Among others, it alleged:
xxx xxx xxx
9. The allegation in paragraph 13 of an alleged illegal strike for the reasons stated
therein is denied. It is also added that the question of strike legality is outside the
original jurisdiction of the NLRC except if the labor dispute has been certified to it for
compulsory arbitration. Hence, not only is paragraph 13 denied, denial is made
likewise of paragraph 16 which asks that the strike must be enjoined. Paragraph 16
is irrelevant to the cause of action in injunction because only the illegal or unlawful
acts maybe enjoined. The strike itself cannot be enjoined unless certified by the
honorable Secretary of Labor to the NLRC for compulsory arbitration.
9. Paragraphs 14, 15, 17, 18, and 19 of the allegations supporting the cause of
action are also denied for being self-serving and premature.
10. Respondents also deny the allegation in paragraph 20 as the public officers
charged with the duty to protect the petitioner's property are able and willing to
furnish adequate protection as shown by the fact that when the temporary restraining
order was served, the police and other law enforcement agency personnel came
immediately to respond and enforced the order peacefully.
On April 24, 1992, the union also filed its own Petition for Injunction to enjoin the company "from
asking the aid of the police and the military officer in escorting scabs to enter the struck
establishment."
The records show that the case was heard on April 24 and 30, May 4 and 5, 1992 by respondent
Labor Arbiter Enrilo Pealosa. 6 On April 30, 1992, the company filed a Motion for the Immediate
Issuance of Preliminary Injunction wherein it alleged:
xxx xxx xxx
7. In the meantime, the respondents are still committing illegal acts, by resorting to
grave threats, intimidation against the non-striking employees and persons with
lawful transactions with the company since April 20, 1992, continuously up to this
time, either by actual threats and intimidation whenever these persons attempt to

report to work or transact business with the company, or by calling at their houses or
places of residence, and then and there coerce not to report for work on pain of
bodily harm; As proof thereof, petitioner attaches the affidavit of
Atty. Elmer Jolo, Augusto Bautista, Ronnie Mercado, among others, as Annexes "A",
"B" and "C" and made integral parts thereof.
8. For these reasons, said workers and persons are constrained to refrain from
reporting for work or from transacting business with the company;
9. Finally, no less than the president of the Union, supported by the leaders of the
strikers, threatened that upon the expiration of the validity of the temporary
restraining order, they will "sisimentuhin namin and gates ng Concrete Aggregates
na kahit ipis ay hindi makakapasok at makakalabas" ("We will cement the gates of
the Concrete Aggregates that even cockcroaches could not pass through");
The union got wind of the motion only on May 4, 1992. The next day, May 5, 1992, it opposed the
motion, alleging:
xxx xxx xxx
They were never furnished by the petitioner with a copy of the original petition for
injunction filed on April 8, 1992 because as seen from the petition, petitioner
addressed the respondents at Rm. 205-206 Herald Bldg., Muralla St., Manila as
stated in paragraph 2 of the said petition and they came to know only of the same
when Commission issued a temporary restraining order dated April 15, 1992 which
was served to them at the picket line on April 15, 1992 and thus they opposed the
same on April 20, 1992 (pp. 99-100, Records).
. . . . The suspicion is that same is deliberate in order for the union not to be able to
immediately oppose the petition praying for a temporary restraining order and so
petitioner was scot-free when it presented ex-parte evidence. The motion for the
immediate issuance of a preliminary injunction foisted upon the Honorable
Commission with affidavits of employees debunked by cross-examination and
officers of the company making fantastic claims is an attempt to have lightning strike
twice at the same place. We hope this Honorable Commission is not fooled and
therefore we beseech it to examine carefully the pleadings and the transcript on this
question of threat or prohibited acts.
xxx xxx xxx
The allegation of damages if no injunction is secured is therefore premature and
irrelevant in this proceedings because there is no proof that the strike is illegal. For if
the strike is legal then both sides must bear their own losses in an economic contest:
the company loss of income; the workers loss of wages. These are the stakes
in an economic dispute. The desperate company posture to enjoin even the strike
itself is shown by its letter to the Secretary of Labor dated April 6, 1992, a copy of

which is hereto attached as Annex "A". The Secretary of Labor has not yet acted on
this request. The company believes probably that an injunction petition would
substitute the provision of Art. 263 of the Labor Code.
The same day, however, the respondent NLRC issued its disputed Order 7 granting the company's
motion for preliminary injunction. It reads:
It appears that despite the issuance of a temporary restraining order on April 14,
1991, the respondents have not ceased in committing the illegal acts being enjoined.
As shown by petitioner during the hearings of its main petition for preliminary and/or
permanent injunction, held on the first day of the implementation of the temporary
restraining order on April 20, 1992 and the day thereafter, respondents, thru the
formation of human blockade, have prevented the company vehicles and Employees'
Shuttle Buses from entering the company premises, and through forces and
intimidation made the non-striking employees on board the vehicles and buses to get
down: that even the company's Assistant Manager for Operations, Mr. Ronnie
Mercado, who tried to help the non-striking employees to enter the company
premises was blocked by the strikers and was even told "wala kaming pakialam sa
restraining order ninyo, basta hindi namin papapasukin para magtrabaho and sino
mang empleyado ng Concrete Aggregates. Bubugbugin namin kayo pag kayo
nagpilit." He was further told that "Ikaw Mercado huwag kang mapapel dito baka may
mangyari sa iyo." As a result of the said blockade, threats and intimidation, more or
less 100 non-striking employees now, have not been able to report for work;
moreover, the inability of the company's Longos Plant to operate fully had caused it
to lose the contracted RMC Sales of around 10,000 cubic meters worth around P10
million, not to mention the expected loss in sales for the next three (3) months at P14
million per month since no customers, regular or prospective, could transact
business with the company. But foremost of all, it has been shown that no less than
the President of the Union, Ramos Banas, with the support of the leaders of the
strikers, has threatened that upon the expiration of the validity of the temporary
restraining order on May 5, 1992, they will not only barricade the gates of the
company but even seal them all so that "even cockcroaches could not pass through."
While respondents witnesses, who were mentioned in the testimonies/affidavits of
petitioner's witnesses, tried to deny the illegal acts imputed against them, the fact
remains undisputed that when the convoy of the company cars and Employees
Shuttle Buses with reporting non-striking employees on board were about to enter
the compound of the company's Longos Plant in Quezon City, they were stopped by
the respondents on the lame excuse that they were only to inquire as to who those
on board and that they asked those who are allegedly non employees of the
petitioner to get down. It has been substantially established that out of the work force
of the Longos Plant, about 100 more or less employees have not been able to enter
the plant premises from April 20, 1991 up to the present, for fear of bodily harm from
the strikers. Likewise, if it were true, as claimed, that no threats and intimidation were
committed against the company officials who were to report for work, then there is no
reason why the Manager for Operations, Ronnie Mercado, should be complaining to

the police nearby and for the latter to advise respondents Ramon Banas and Ernest
Lascona behave well. Moreover, there is merit to the claim of petitioner that even
contract workers hired by it who, even before the strike and up to the present, were
assigned to work inside the premises of the Longos were denied entrance by the
strikers for their being alleged scabs. With this admission regarding the contract
worker, there is reason to believe the truth and veracity of the statement as of
petitioner's witnesses, especially the reasonable fear that after the lapse of the
twenty (20) days duration of the temporary restraining order, the respondents-strikers
will again resort to barricading the entrances of petitioner's plants to
preventanyone from entering the said plant's premises.
On the bases of all the foregoing facts and circumstances, the First Division of this
Commission, after due deliberation hereby RESOLVED: (pending conclusion of the
hearing on petitioner's main petition of April 24, 1991), to issue preliminary injunction:
a) enjoining the respondents, their representative and symphatizers, if any, without
prejudice to their right to conduct a peaceful and lawful picket, from preventing the
non-striking employees, officials of the company and their vehicles, customers and
visitors free ingress to and egress from petitioner's plant and premises; directing
them to make the ingress to and egress from said premises free from any and all
obstruction at all times; and requiring them to desist from further threatening and
intimidating at their houses or elsewhere the non-striking employees who up to now
could not report for work and to allow them to report for work unmolested; b) directing
them, despite the union president's statement that none of the feared illegal acts will
be committed after the lapse of the temporary restraining order, to refrain from doing
any illegal act which will exacerbate the situation upon the expiration of the
temporary restraining order; c) applying the cash or surety bond of P20,000.00
posted by petitioner for the temporary restraining order that will expire on May 5,
1992 as the case or surety bond for this preliminary injunction; d) deputizing any
officer from the Legal Division of this Commission to effectively enforce and
implement this injunctive order and, if necessary, to enlist the assistance of the PNP
or other peace officers having jurisdiction over the strike areas in the enforcement
and implementation of this Order.
Let two (2) copies of this injunctive order be posted in two (2) conspicuous places of
each of the strike areas by the Bailiff of this Commission for the information and
proper guidance of all concerned.
SO ORDERED.
The union then filed the instant petition for certiorari and mandamus raising the following issues:
xxx xxx xxx
3. Whether or not the respondent NLRC can issue a preliminary injunction, as it did
issue, after the lapse of a twenty day temporary restraining order without regard to
the specific provision of Article 218 (e) of the Labor Code, . . ., considering that in the

Order dated May 5, 1992 (attached as Annex "E" of this petition) there is no finding
of fact by the respondent NLRC in any of the five pages of the aforesaid Order, to the
effect that, as required by law, "(4) That complainant has no adequate remedy at law;
and (5) That the public officers charged with the duty to protect complainants
property are unable or unwilling to furnish adequate protection.
4. Whether or not public respondent NLRC and Labor Arbiter have unlawfully
neglected the performance of an act which the law enjoins as a duty resulting from
office considering that after petitioner also filed on April 24, 1992 a petition asking a
temporary restraining order and injunctionagainst the escorting by police authorities
of individuals "who seek to replace the strikers in entering or leaving the premises of
a strike area or work in the place of the strikers and that the police force will keep out
of the picket lines unless actual violence or other criminal acts occur therein" as
provided or Article 264 (d) of the Labor Code, considering that the Labor Arbiter
reluctantly allowed petitioners to present their evidence in support of their petition to
enjoin the scabs being escorted by the police; WHILE in contrast, it continuously set
the motion for immediate issuance of preliminary injunction of private respondents on
April 30, 1992, May 4 and 5, 1992 and issued a temporary restraining order in favor
of the respondent corporation in an hour.
We ordered the public and private respondents to comment on the petition. 8 In its 29-page Comment,
Solicitor General Raul I. Goco 9 took the position that the petition is impressed with merit. In contrast, the
private respondent company, defended the validity of the Order dated May 5, 1992 of the
NLRC. 10 Similarly, the NLRC contended that it did not abuse its discretion in issuing the disputed Order. 11
We find for the petitioners.
Strike has been considered the most effective weapon of labor in protecting the rights of employees
to improve the terms and conditions of their employment. It may be that in highly developed
countries, the significance of strike as a coercive weapon has shrunk in view of the preference for
more peaceful modes of settling labor disputes. In underdeveloped countries, however, where the
economic crunch continues to enfeeble the already marginalized working class, the importance of
the right to strike remains undiminished as indeed it has proved many a time as the only coercive
weapon that can correct abuses against labor. It remains as the great equalizer.
In the Philippine milieu where social justice remains more as a rhetoric than a reality, labor has
vigilantly fought to safeguard the sanctity of the right to strike. Its struggle to gain the right to strike
has not been easy and effortless. Labor's early exercise of the right to strike collided with the laws on
rebellion and sedition and sent its leaders languishing in prisons. The spectre of incarceration did not
spur its leaders to sloth; on the contrary it spiked labor to work for its legitimization. This effort was
enhanced by the flowering of liberal ideas in the United States which inevitably crossed our shores.
It was enormously boosted by the American occupation of our country. Hence, on June 17, 1953,
Congress gave statutory recognition to the right to strike when it enacted RA 875, otherwise known
as the Industrial Peace Act. For nearly two (2) decades, labor enjoyed the right to strike until it was
prohibited on September 12, 1972 upon the declaration of martial law in the country. The 14-year
battle to end martial rule produced many martyrs and foremost among them were the radicals of the

labor movement. It was not a mere happenstance, therefore, that after the final battle against martial
rule was fought at EDSA in 1986, the new government treated labor with a favored eye. Among
those chosen by then President Corazon C. Aquino to draft the 1987 Constitution were recognized
labor leaders like Eulogio Lerum, Jose D. Calderon, Blas D. Ople and Jaime S.L. Tadeo. These
delegates helped craft into the 1987 Constitution its Article XIII entitled Social Justice and Human
Rights. For the first time in
our constitutional history, the fundamental law of our land mandated the State to ". . . guarantee the
rights of all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law." 12 This constitutional
imprimatur given to the right to strike constitutes signal victory for labor. Our Constitutions of 1935 and
1973 did not accord constitutional status to the right to strike. Even the liberal US Federal Constitution did
not elevate the right to strike to a constitutional level. With a constitutional matrix, enactment of a law
implementing the right to strike was an inevitability. RA 6715 came into being on March 21, 1989, an
intentional replication of RA 875. 13 In light of the genesis of the right to strike, it ought to be obvious that
the right should be read with a libertarian latitude in favor of labor. In the wise words of Father Joaquin G.
Bernas, S.J., a distinguished commissioner of the 1987 Constitutional Commission " . . . the constitutional
recognition of the right to strike does serve as a reminder that injunctions, should be reduced to the barest
minimum". 14
In the case at bar, the records will show that the respondent NLRC failed to comply with the letter
and spirit of Article 218 (e), (4) and (5) of the Labor Code in issuing its Order of May 5, 1992. Article
218 (e) of the Labor Code provides both the procedural and substantive requirements which must
strictly be complied with before a temporary or permanent injunction can issue in a labor
dispute, viz.:
Art. 218. Powers of the Commission. The Commission shall have the power and
authority:
xxx xxx xxx
(e) To enjoin or restrain any actual or threatened commission of any or all prohibited
or unlawful acts or to require the performance of a particular act in any labor dispute
which, if not restrained or performed forthwith, may cause grave or irreparable
damage to any party or render ineffectual any decision in favor of such
party: Provided, That no temporary or permanent injunction in any case involving or
growing out of a labor dispute as defined in this Code shall be issued except after
hearing the testimony of witnesses, with opportunity for cross-examination, in support
of the allegations of a complaint made under oath, and testimony in opposition
thereto, if offered, and only after a finding of fact by the commission, to the effect:
(1) That prohibited or unlawful acts have been threatened and will be committed and
will be continued unless restrained but no injunction or temporary restraining order
shall be issued on account of any threat, prohibited or unlawful act, except against
the person or persons, association or organization making the threat or committing
the prohibited or unlawful act or actually authorizing or ratifying the same after actual
knowledge thereof;

(2) That substantial and irreparable injury to complainants property will follow;
(3) That as to each item of relief to be granted, greater injury will be inflicted upon
complainant by the denial of relief than will be inflicted upon defendants by the
granting of relief;
(4) That complainant has no adequate remedy at law; and
(5) That the public officers charged with the duty to protect complainants property
are unable or unwilling to furnish adequate protection.
Such hearing shall be held after due and personal notice thereof has been served, in
such manner as the Commission shall direct, to all known persons against whom
relief is sought, and also to the Chief Executive and other public officials of the
province or city within which the unlawful have been threatened or committed
charged with the duty to protect complainant's property: . . . (Emphasis ours)
In his Comment, the Solicitor General cited various evidence on record showing the failure of public
respondents to fulfill the requirements, especially of paragraphs four (4) and five (5) of the above
cited law. We quote with approval the pertinent portions of the Comment:
xxx xxx xxx
It must be noted that to support the claim of threats, intimidation, unlawful and
prohibited acts, etc. allegedly committed by the union against the non-striking
employees, the company even submitted a joint affidavit signed by Joselito
Concepcion, Renato Trambulo and Armando Arcos. Said affidavit reads
JOINT AFFIDAVIT
We ARMANDO ARCOS, CESAR NAVARRO and RENATO TRAMBULO residents of
Dasmarias, Cavite and JOSELITO CONCEPCION of Binangonan, Rizal all of legal
age, Filipino after having been sworn hereby depose and say:
That we are contract worker (sic) of CAC under Engr. Mercado;
That last April 20, 1992 at around 8:00 a.m. we were denied entry at the Longos
Plant by striking workers particularly Ramon Banas, Ricardo Manalang, Rodrigo
Manalang, Rodrigo Lauihon and Ernesto Lascona;
That the abovenamed persons stopped us at the gate of Longos Plant, told us to get
off the bus, and in threatening manner told us to leave and vacate the premises
otherwise something bad will happen to us;

That because of this unlawful, illegal and felonious acts of the said persons we were
compelled to do something against our will that is to leave without being able to
report for work;
That the abovenamed person and the herein complainants are residents of
barangays in different cities and municipalities hence the matter is not covered by PD
1508;
That we are executing this affidavit to charge Ramon Banas, Ricardo Manalang,
Rodrigo Lauihon and Ernesto Lascana with Grave Coercion. (Exh. "I", p. 896,
Records) (Emphasis Supplied).
However, when presented before the Labor Arbiter, the affiants themselves
controverted the allegations in said joint-affidavit. They innocently divulged having
signed the prepared affidavit without first reading the same. Likewise, they admitted
that they did not see or hear Banas, Manalang, Lacuna and Lacejon threatened the
group of "non-strikers" including themselves of bodily harm (pp. 13-14, 20-21, 35- 37,
46-47, 49-50, 54-61, TSN, April 24, 1992). They testified, thus
CROSS-EXAMINATION OF JOSELITO CONCEPCION
ARBITER PEALOSA:
The question is . . . who prepared the affidavit? Alam mo raw ba kung
sino ang gumawa ng affidavit na ito?
ATTY. ESPINAS:
Sinong gumawa?
ATTY. MACARUBBO:
Para sa iyo?
MR. CONCEPCION:
Si Attorney po. (pp. 20, 21, ibid)
DIRECT TESTIMONY OF RENATO TRAMBULO
ATTY. MACARUBBO:
Mr. Witness, did you sign an affidavit dated April 24,
1992?
MR. TRAMBULO:

Yes, Sir.
ATTY. MACARUBBO:
Have you read this affidavit?
MR. TRAMBULO:
Hindi pa ho.
xxx xxx xxx
ATTY. MACARUBBO:
Perhaps, what you meant is . . . .
ATTY. ESPINAS:
No, no, no, . . . You can ask another question. His answer is - Before
I, signed it but I have not read it yet.
ATTY. MACARUBBO:
What do you mean that you have not read this?
MR. TRAMBULO:
Sa akin lang po, iyong sinabi sa akin na . . . iyong hinarang kami,
pinababa kami . . . iyon lang po ang alam ko. Wala na po akong
ibang alam.
ATTY. MACARUBBO:
Hinarang ka?
MR. TRAMBULO:
Hinarang kami, pinababa kami dahil hindi daw kami empleyado sa
kompanya.
ATTY. MACARUBBO:
At iyon and ibig sabihin nito?
MR. TRAMBULO:

CROSS-EXAMINATION OF RENATO TRAMBULO

ATTY. ESPINAS:
What did Lacejon said (sic)
MR. TRAMBULO:
Pinababa na lang po kami sa service. Sabi niya, bumaba na kayo
dahil hindi naman kayo empleyado ng Concrete, kaya bumaba na
lang po kami. (pp. 46-47, 49-50, id)
TESTIMONY OF ARMANDO ARCOS :
ATTY. ESPINAS:
Cross-examination. Sinabi ba ng mga taong ito na kung hindi kayo
bababa, masama ang mangyayari sa inyo? Meron bang sinabing
ganoon?
ATTY. ARCOS:
Wala ho.
ATTY. ESPINAS:
Dito sa second paragraph which says . . . told you to leave and
vacate the premises otherwise something bad will happen to
us. Kung hindi kayo umalis . . . walang sinabing ganoon?
MR. ARCOS:
Wala naman ho.
xxx xxx xxx
ATTY. ESPINAS:
Sino ang nagsabi sa inyo na "Hindi naman kayo empleyado, bumaba
na kayo?"
MR. ARCOS:
Si Lacejon. Iyong may salamin.
ATTY. ESPINAS:

Pero walang sinabi si Lacejon na kung hindi kayo bababa may

masamang mangyayari sa inyo?
MR. ARCOS:
Wala naman ho.
(pp. 59-61, id)
Moreover, no less than Mr. Ronnie Mercado, the Assistant Manager for Operations of the Company,
testified that after the issuance of the ex parte temporary restraining order, the barricade blocking the
gates were removed and people were allowed free ingress and egress (please see also pp. 70-71,
96, TSN, April 30, 1992). He stated thus
CROSS-EXAMINATION OF MR. MERCADO
ATTY. ESPINAS:
So after the temporary restraining order, were the barricade
removed?
MR. WITNESS:
Those blocking the gates, yes.
xxx xxx xxx
ATTY. ESPINAS:
But the barricades blocking the gates were already removed.
MR. WITNESS:
The barricades blocking the gates were already removed.
(pp. 66-67, TSN, April 30, 1992)
xxx xxx xxx
ATTY. ESPINAS:
Let us go to Antipolo. After the restraining order the people were able
to enter?
MR. WITNESS:

After the restraining order the people can already enter.

ATTY. ESPINAS:
They were escorted by the police?
MR. WITNESS:
No, sir.
(p. 75, ibid) (Emphasis ours)
xxx xxx xxx
ATTY. ESPINAS:
O, lahat ng gustong pumasok, makakapasok na ngayon?
MR. WITNESS:
Yes, sir.
(p. 85, ibid)
Furthermore, Atty. Elmer Jolo, the Personnel Manager joined by Mr. Mercado,
disclosed that the public authorities charged to protect the company's properties
were neither unwilling or unable to furnish adequate protection. As a matter of fact,
the police regularly patrolling the area, was never requested assistance. Thus
CROSS-EXAMINATION OF ATTY. ELMER JOLO
ATTY. ESPINAS:
Did you not ask the assistance of the San Pedro policemen on this
matter of obstruction and other similar activities in obstructing the
gates of the plant?
MR. WITNESS:
I did not.
ATTY. ESPINAS:
Did you not ask the policemen of Angono, Rizal to help you on this
matter again of extracting the trucks which were supposed to deliver
pre-stress material of that day?

MR. WITNESS:
Personally I did not because I leave this police matter to my chief
security officer.
ATTY. ESPINAS:
Did your chief security officers ask the assistance of the policemen of
Quezon City with respect to the Longos Plant?
MR. WITNESS:
That I do not know.
ATTY. ESPINAS:
Did you ask the aid of the policemen at Bagumbayan, Quezon City to
help you regarding the incident of April 6, 1992 at 7:00 p.m.?
MR. WITNESS:
I did not personally because I instructed this police matter to my chief
security officer.
ATTY. ESPINAS:
Did your chief security officer seek the aid of the policemen?
MR. WITNESS:
That I do not know.
(pp. 41-43, TSN, April 30, 1992)
CROSS-EXAMINATION OF MR. MERCADO
ATTY. ESPINAS:
The policemen are from Quezon city.
MR. WITNESS:
I think so, kasi nagpa-patrol sila.
ATTY. ESPINAS:

Nagpatrol? They were called by the company?

MR. WITNESS:
No, sir, kaya lang parati silang umiikot diyan.
ATTY. ESPINAS:
So the policemen were present patrolling?
MR. WITNESS:
Paminsan-minsan sumulpot lang.
(pp. 85-86, id)
The foregoing testimonies of the senior officers of the company are further
buttressed by the admission of one of the laborers, also presented as witness by the
company, who testified that
CROSS-EXAMINATION OF AUGUSTUS BAUTISTA
ATTY. ESPINAS:
But they were not bodily stopped from entering after the 21. Were
they?
MR. WITNESS:
No.
(p. 124, TSN, April 30, 1992)
xxx xxx xxx
ATTY. ESPINAS:
In other words, aside from the police there is a security office
detained?
MR. WITNESS:
Yes, we have our own.
ATTY. ESPINAS:

And the security officer can request the aid of the policemen?
MR. WITNESS:
Yes.
(pp. 128-129, id)
Verily, the factual circumstances proven by the evidence show that there was no
concurrence of the five (5) prerequisites mandated by Art. 218 (e) of the Labor Code.
Thus there is no justification for the issuance of the questioned Order of preliminary
injunction.
The Comments of the private and public respondents did not dispute the correctness of these
documentary and testimonial evidence.
Moreover, the records reveal the continuing misuse of unfair strategies to secure ex parte temporary
restraining orders against striking employees. Petitioner union did not receive any copy of private
respondent's petition for injunction in Case No. 000249-92 filed on April 8, 1992. Its address as
alleged by the private respondent turned out to be "erroneous". 15 Consequently, the petitioner was
denied the right to attend the hearing held on April 13, 1992 while the private respondent enjoyed a field
day presenting its evidence ex parte. On the basis of uncontested evidence, the public respondent, on the
same day April 13, 1992, temporarily enjoined the petitioner from committing certain alleged illegal acts.
Again, a copy of the Order was sent to the wrong address of the petitioner. Knowledge of the Order came
to the petitioner only when its striking members read it after it was posted at the struck areas of the
private respondent.
To be sure, the issuance of an ex parte temporary restraining order in a labor dispute is not per
se prohibited. Its issuance, however, should be characterized by care and caution for the law
requires that it be clearly justified by considerations of extreme necessity, i.e., when the commission
of unlawful acts is causing substantial and irreparable injury to company properties and the company
is, for the moment, bereft of an adequate remedy at law. This is as it ought to be, for imprudently
issued temporary restraining orders can break the back of EMPLOYEES ENGAGED in a legal
strike. Often times, they unduly tilt the balance of a labor warfare in favor of capital. When that
happens, the deleterious effects of a wrongfully issued, ex parte temporary restraining order on the
rights of striking employees can no longer be repaired for they defy simple monetization. Moreover,
experience shows that ex parte applications for restraining orders are often based on fabricated
facts and concealed truths. A more becoming sense of fairness, therefore, demands that such ex
parte applications should be more minutely examined by hearing officers, lest, our constitutional
policy of protecting labor becomes nothing but a synthetic shibboleth. The immediate need to hear
and resolve these ex parte applications does not provide any excuse to lower our vigilance in
protecting labor against the issuance of indiscriminate injunctions. Stated otherwise, it behooves
hearing officers receiving evidence in support of ex parte injunctions against employees in strike to
take a more active stance in seeing to it that their right to social justice is in no way violated despite
their absence. This equalizing stance was not taken in the case at bar by the public respondents.

Nor do we find baseless the allegation by petitioner that the public respondents have neglected to
resolve with reasonable dispatch its own Petition for Injunction with prayer for a temporary
restraining order dated April 25, 1992. The petition invoked Article 264(d) of the Labor Code 16 to
enjoin the private respondent from using the military and police authorities to escort scabs at the struck
establishment. Sadly contrasting is the haste with which public respondent heard and acted on a similar
petition for injunction filed by the private respondent. In the case of the private respondent, its prayer for
an ex parte temporary restraining order was heard on April 13, 1992 and it was granted on the same day.
Its petition for preliminary injunction was filed on April 30, 1992, and was granted on May 5, 1992. In the
case of petitioner, its petition for injunction was filed on April 24, 1992, and to date, the records do not
reveal whether the public respondent has granted or denied the same. The disparate treatment is
inexplicable considering that the subject matters of their petition are of similar importance to the parties
and to the public.
IN VIEW WHEREOF, the petition for certiorari and mandamus is granted. The Order dated May 5,
1992 of the public respondent in NLRC NCR IC No. 000249-92 is annulled and set aside. The public
respondents are likewise ordered to hear and resolve, with deliberate speed petitioner's petition for
injunction filed on April 30, 1992.
SO ORDERED.

226. SAN MIGUEL VS. NLRC

SAN

MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD
NG MANGGAGAWA (IBM),respondents.
DECISION

AZCUNA, J.:

Before us is a petition for certiorari and prohibition seeking to set aside the
decision of the Second Division of the National Labor Relations Commission
(NLRC) in Injunction Case No. 00468-94 dated November 29, 1994, and its
resolution dated February 1, 1995 denying petitioners motion for
reconsideration.
[1]

[2]

Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod

ng Manggagawa (IBM), exclusive bargaining agent of petitioners daily-paid
rank and file employees, executed a Collective Bargaining Agreement (CBA)
under which they agreed to submit all disputes to grievance and arbitration

proceedings. The CBA also included a mutually enforceable no-strike nolockout agreement. The pertinent provisions of the said CBA are quoted
hereunder:
ARTICLE IV
GRIEVANCE MACHINERY
Section 1. - The parties hereto agree on the principle that all disputes between labor
and management may be solved through friendly negotiation;. . . that an open conflict
in any form involves losses to the parties, and that, therefore, every effort shall be
exerted to avoid such an open conflict. In furtherance of the foregoing principle, the
parties hereto have agreed to establish a procedure for the adjustment of grievances so
as to (1) provide an opportunity for discussion of any request or complaint and (2)
establish procedure for the processing and settlement of grievances.
xxx

xxx

xxx
ARTICLE V
ARBITRATION

Section 1. Any and all disputes, disagreements and controversies of any kind between
the COMPANY and the UNION and/or the workers involving or relating to wages,
hours of work, conditions of employment and/or employer-employee relations arising
during the effectivity of this Agreement or any renewal thereof, shall be settled by
arbitration through a Committee in accordance with the procedure established in this
Article. No dispute, disagreement or controversy which may be submitted to the
grievance procedure in Article IV shall be presented for arbitration until all the steps
of the grievance procedure are exhausted.
xxx

xxx

xxx
ARTICLE VI

STRIKES AND WORK STOPPAGES

Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or
slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise,
picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other
interference with any of the operations of the COMPANY during the term of this
Agreement.
Section 2. The COMPANY agrees that there shall be no lockout during the term of
this Agreement so long as the procedure outlined in Article IV hereof is followed by
the UNION.
[3]

On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed
with the National Conciliation and Mediation Board (NCMB) a notice of strike,
docketed as NCMB-NCR-NS-04-180-94, against petitioner for allegedly
committing: (1) illegal dismissal of union members, (2) illegal transfer, (3)
violation of CBA, (4) contracting out of jobs being performed by union
members, (5) labor-only contracting, (6) harassment of union officers and
members, (7) non-recognition of duly-elected union officers, and (8) other acts
of unfair labor practice.
[4]

The next day, IBM filed another notice of strike, this time through its
president Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2)
labor-only contracting, (3) violation of CBA, (4) dismissal of union officers and
members, and (5) other acts of unfair labor practice. This was docketed as
NCMB-NCR-NS-04-182-94.
[5]

The Galvez group subsequently requested the NCMB to consolidate its

notice of strike with that of the Colomeda group, to which the latter opposed,
alleging Galvezs lack of authority in filing the same.
[6]

[7]

Petitioner thereafter filed a Motion for Severance of Notices of Strike with

Motion to Dismiss, on the grounds that the notices raised non-strikeable
issues and that they affected four corporations which are separate and distinct
from each other.
[8]

After several conciliation meetings, NCMB Director Reynaldo Ubaldo

found that the real issues involved are non-strikeable. Hence on May 2, 1994,

he issued separate letter-orders to both union groups, converting their notices

of strike into preventive mediation. The said letter-orders, in part, read:
During the conciliation meetings, it was clearly established that the real issues
involved are illegal dismissal, labor only contracting and internal union disputes,
which affect not only the interest of the San Miguel Corporation but also the interests
of the MAGNOLIA-NESTLE CORPORATION, the SAN MIGUEL FOODS, INC.,
and the SAN MIGUEL JUICES, INC.
Considering that San Miguel Corporation is the only impleaded employer-respondent,
and considering further that the aforesaid companies are separate and distinct
corporate entities, we deemed it wise to reduce and treat your Notice of Strike as
Preventive Mediation case for the four (4) different companies in order to evolve
voluntary settlement of the disputes. . . . (Emphasis supplied)
[9]

On May 16, 1994, while separate preventive mediation conferences were

ongoing, the Colomeda group filed with the NCMB a notice of holding a strike
vote. Petitioner opposed by filing a Manifestation and Motion to Declare
Notice of Strike Vote Illegal, invoking the case of PAL v. Drilon, which held
that no strike could be legally declared during the pendency of preventive
mediation. NCMB Director Ubaldo in response issued another letter to the
Colomeda Group reiterating the conversion of the notice of strike into a case
of preventive mediation and emphasizing the findings that the grounds raised
center only on an intra-union conflict, which is not strikeable, thus:
[10]

xxx

xxx

[11]

xxx

A perusal of the records of the case clearly shows that the basic point to be resolved
entails the question of as to who between the two (2) groups shall represent the
workers for collective bargaining purposes, which has been the subject of a Petition
for Interpleader case pending resolution before the Office of the Secretary of Labor
and Employment. Similarly, the other issues raised which have been discussed by the
parties at the plant level, are ancillary issues to the main question, that is, the union
leadership... (Emphasis supplied)
[12]

Meanwhile, on May 23, 1994, the Galvez group filed its second notice of
strike against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional

grounds were set forth therein, including discrimination, coercion of

employees, illegal lockout and illegal closure. The NCMB however found
these grounds to be mere amplifications of those alleged in the first notice that
the group filed. It therefore ordered the consolidation of the second notice with
the preceding one that was earlier reduced to preventive mediation. On the
same date, the group likewise notified the NCMB of its intention to hold a
strike vote on May 27, 1994.
[13]

[14]

On May 27, 1994, the Colomeda group notified the NCMB of the results of
their strike vote, which favored the holding of a strike. In reply, NCMB issued
a letter again advising them that by virtue of the PAL v. Drilon ruling, their
notice of strike is deemed not to have been filed, consequently invalidating
any subsequent strike for lack of compliance with the notice requirement.
Despite this and the pendency of the preventive mediation proceedings, on
June 4, 1994, IBM went on strike. The strike paralyzed the operations of
petitioner, causing it losses allegedly worth P29.98 million in daily lost
production.
[15]

[16]

[17]

Two days after the declaration of strike, or on June 6, 1994, petitioner filed
with public respondent NLRC an amended Petition for Injunction with Prayer
for the Issuance of Temporary Restraining Order, Free Ingress and Egress
Order and Deputization Order. After due hearing and ocular inspection, the
NLRC on June 13, 1994 resolved to issue a temporary restraining order
(TRO) directing free ingress to and egress from petitioners plants, without
prejudice to the unions right to peaceful picketing and continuous hearings on
the injunction case.
[18]

[19]

To minimize further damage to itself, petitioner on June 16, 1994, entered

into a Memorandum of Agreement (MOA) with the respondent-union, calling
for a lifting of the picket lines and resumption of work in exchange of good
faith talks between the management and the labor management committees.
The MOA, signed in the presence of Department of Labor and Employment
(DOLE) officials, expressly stated that cases filed in relation to their dispute
will continue and will not be affected in any manner whatsoever by the
agreement. The picket lines ended and work was then resumed.
[20]

Respondent thereafter moved to reconsider the issuance of the TRO, and

sought to dismiss the injunction case in view of the cessation of its picketing
activities as a result of the signed MOA. It argued that the case had become
moot and academic there being no more prohibited activities to restrain, be
they actual or threatened. Petitioner, however, opposed and submitted
copies of flyers being circulated by IBM, as proof of the unions alleged threat
to revive the strike. The NLRC did not rule on the opposition to the TRO and
allowed it to lapse.
[21]

[22]

On November 29, 1994, the NLRC issued the challenged decision,

denying the petition for injunction for lack of factual basis. It found that the
circumstances at the time did not constitute or no longer constituted an actual
or threatened commission of unlawful acts. It likewise denied petitioners
motion for reconsideration in its resolution dated February 1, 1995.
[23]

[24]

Hence, this petition.

Aggrieved by public respondents denial of a permanent injunction,
petitioner contends that:
A.

THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO

ENFORCE, BY INJUNCTION, THE PARTIES RECIPROCAL OBLIGATIONS TO
SUBMIT TO ARBITRATION AND NOT TO STRIKE.
B.

THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING

INJUNCTION WHICH IS THE ONLY IMMEDIATE AND EFFECTIVE
SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE THAT
ARBITRATION IS DESIGNED TO AVOID.
C.

THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO

TO LAPSE WITHOUT RESOLVING THE PRAYER FOR INJUNCTION,
DENYING INJUNCTION WITHOUT EXPRESSING THE FACTS AND THE LAW

ON WHICH IT IS BASED AND ISSUING ITS DENIAL FIVE MONTHS AFTER

THE LAPSE OF THE TRO.
[25]

We find for the petitioner.

Article 254 of the Labor Code provides that no temporary or permanent
injunction or restraining order in any case involving or growing out of labor
disputes shall be issued by any court or other entity except as otherwise
provided in Articles 218 and 264 of the Labor Code. Under the first exception,
Article 218 (e) of the Labor Code expressly confers upon the NLRC the power
to enjoin or restrain actual and threatened commission of any or all prohibited
or unlawful acts, or to require the performance of a particular act in any labor
dispute which, if not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any decision in favor of
such party x x x. The second exception, on the other hand, is when the labor
organization or the employer engages in any of the prohibited activities
enumerated in Article 264.
Pursuant to Article 218 (e), the coercive measure of injunction may also be
used to restrain an actual or threatened unlawful strike. In the case of San
Miguel Corporation v. NLRC, where the same issue of NLRCs duty to enjoin
an unlawful strike was raised, we ruled that the NLRC committed grave abuse
of discretion when it denied the petition for injunction to restrain the union from
declaring a strike based on non-strikeable grounds. Further, in IBM v. NLRC,
we held that it is the legal duty and obligation of the NLRC to enjoin a
partial strike staged in violation of the law. Failure promptly to issue an
injunction by the public respondent was likewise held therein to be an abuse
of discretion.
[26]

[27]

In the case at bar, petitioner sought a permanent injunction to enjoin the

respondents strike. A strike is considered as the most effective weapon in
protecting the rights of the employees to improve the terms and conditions of
their employment. However, to be valid, a strike must be pursued within legal
bounds. One of the procedural requisites that Article 263 of the Labor Code
and its Implementing Rules prescribe is the filing of a valid notice of strike with
the NCMB. Imposed for the purpose of encouraging the voluntary settlement
[28]

of disputes, this requirement has been held to be mandatory, the lack of

which shall render a strike illegal.
[29]

[30]

In the present case, NCMB converted IBMs notices into preventive

mediation as it found that the real issues raised are non-strikeable. Such order
is in pursuance of the NCMBs duty to exert all efforts at mediation and
conciliation to enable the parties to settle the dispute amicably, and in line
with the state policy of favoring voluntary modes of settling labor disputes. In
accordance with the Implementing Rules of the Labor Code, the said
conversion has the effect of dismissing the notices of strike filed by
respondent. A case in point is PAL v. Drilon, where we declared a strike
illegal for lack of a valid notice of strike, in view of the NCMBs conversion of
the notice therein into a preventive mediation case. We ruled, thus:
[31]

[32]

[33]

[34]

The NCMB had declared the notice of strike as appropriate for preventive
mediation. The effect of that declaration (which PALEA did not ask to be
reconsidered or set aside) was to drop the case from the docket of notice of strikes, as
provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During
the pendency of preventive mediation proceedings no strike could be legally
declared... The strike which the union mounted, while preventive mediation
proceedings were ongoing, was aptly described by the petitioner as an ambush.
(Emphasis supplied)
Clearly, therefore, applying the aforecited ruling to the case at bar, when
the NCMB ordered the preventive mediation on May 2, 1994, respondent had
thereupon lost the notices of strike it had filed. Subsequently, however, it still
defiantly proceeded with the strike while mediation was ongoing, and
notwithstanding the letter-advisories of NCMB warning it of its lack of notice of
strike. In the case of NUWHRAIN v. NLRC, where the petitioner-union
therein similarly defied a prohibition by the NCMB, we said:
[35]

Petitioners should have complied with the prohibition to strike ordered by the NCMB
when the latter dismissed the notices of strike after finding that the alleged acts of
discrimination of the hotel were not ULP, hence not strikeable. The refusal of the
petitioners to heed said proscription of the NCMB is reflective of bad faith.

Such disregard of the mediation proceedings was a blatant violation of the

Implementing Rules, which explicitly oblige the parties to bargain
collectively in good faith and prohibit them from impeding or disrupting the
proceedings.
[36]

The NCMB having no coercive powers of injunction, petitioner sought

recourse from the public respondent. The NLRC issued a TRO only for free
ingress to and egress from petitioners plants, but did not enjoin the unlawful
strike itself. It ignored the fatal lack of notice of strike, and five months after
came out with a decision summarily rejecting petitioners cited jurisprudence
in this wise:
Complainants scholarly and impressive arguments, formidably supported by a long
line of jurisprudence cannot however be appropriately considered in the favorable
resolution of the instant case for the complainant. The cited jurisprudence do not
squarely cover and apply in this case, as they are not similarly situated and the remedy
sought for were different.
[37]

Unfortunately, the NLRC decision stated no reason to substantiate the above

conclusion.
Public respondent, in its decision, moreover ruled that there was a lack of
factual basis in issuing the injunction. Contrary to the NLRCs finding, we find
that at the time the injunction was being sought, there existed a threat to
revive the unlawful strike as evidenced by the flyers then being circulated by
the IBM-NCR Council which led the union. These flyers categorically
declared: Ipaalala nyo sa management na hindi iniaatras ang ating Notice of
Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket
line. These flyers were not denied by respondent, and were dated June 19,
1994, just a day after the unions manifestation with the NLRC that there
existed no threat of commission of prohibited activities.
[38]

Moreover, it bears stressing that Article 264(a) of the Labor

Code explicitly states that a declaration of strike without first having filed the
required notice is a prohibited activity, which may be prevented through an
injunction in accordance with Article 254. Clearly, public respondent should
[39]

have granted the injunctive relief to prevent the grave damage brought about
by the unlawful strike.
Also noteworthy is public respondents disregard of petitioners argument
pointing out the unions failure to observe the CBA provisions on grievance
and arbitration. In the case of San Miguel Corp. v. NLRC, we ruled that the
union therein violated the mandatory provisions of the CBA when it filed a
notice of strike without availing of the remedies prescribed therein. Thus we
held:
[40]

x x x For failing to exhaust all steps in the grievance machinery and arbitration
proceedings provided in the Collective Bargaining Agreement, the notice of strike
should have been dismissed by the NLRC and private respondent union ordered to
proceed with the grievance and arbitration proceedings. In the case of Liberal Labor
Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for
not complying with the grievance procedure provided in the collective bargaining
agreement. . . (Citations omitted)
As in the abovecited case, petitioner herein evinced its willingness to
negotiate with the union by seeking for an order from the NLRC to compel
observance of the grievance and arbitration proceedings. Respondent
however resorted to force without exhausting all available means within its
reach. Such infringement of the aforecited CBA provisions constitutes further
justification for the issuance of an injunction against the strike. As we said long
ago: Strikes held in violation of the terms contained in a collective bargaining
agreement are illegal especially when they provide for conclusive arbitration
clauses. These agreements must be strictly adhered to and respected if their
ends have to be achieved.
[41]

As to petitioners allegation of violation of the no-strike provision in the

CBA, jurisprudence has enunciated that such clauses only bar strikes which
are economic in nature, but not strikes grounded on unfair labor practices.
The notices filed in the case at bar alleged unfair labor practices, the initial
determination of which would entail fact-finding that is best left for the labor
arbiters. Nevertheless, our finding herein of the invalidity of the notices of
strike dispenses with the need to discuss this issue.
[42]

We cannot sanction the respondent-unions brazen disregard of legal

requirements imposed purposely to carry out the state policy of promoting
voluntary modes of settling disputes. The states commitment
to enforce mutual compliance therewith to foster industrial peace is affirmed
by no less than our Constitution. Trade unionism and strikes are legitimate
weapons of labor granted by our statutes. But misuse of these instruments
can be the subject of judicial intervention to forestall grave injury to a business
enterprise.
[43]

[44]

WHEREFORE, the instant petition is hereby GRANTED. The decision and

resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and
SET ASIDE. Petitioner and private respondent are hereby directed to submit
the issues raised in the dismissed notices of strike to grievance procedure and
proceed with arbitration proceedings as prescribed in their CBA, if necessary.
No pronouncement as to costs.
SO ORDERED.