LABOR RELATIONS [ATTY.

ROLAND MARQUEZ]
( 2 A - S . Y . 2 0 1 3 - 2 0 1 4 )

RIGHTS TO SELF ORGANIZATION

ABS CBN SUPERVISORS EMPLOYEE UNION MEMBERS, petitioner, vs. ABS CBN BROADCASTING
CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY MUNOZ, CELSO JAMBALOS, SALVADOR DE
VERA, ARNULFO ALCAZAR, JAKE MADERAZO, GON CARPIO, OSCAR LANDRITO, FRED GARCIA, CESAR
LOPEZ and RUBEN BARRAMEDA, respondents.
Facts:
On December 7, 1989, the ABS-CBN Supervisors Emloyees Union, represented by respondent Union Officers, and ABS-CBN
Broadcasting Corporation signed a Collective Bargaining Agreement with the following check-off provision, to wit:
Article XII The Company agrees to advance to the Union a sum equivalent to 10% of the sum total of all the salary increases
and signing bonuses granted to the Supervisors under this collective Bargaining Agreement and upon signing hereof to cover the
Unions incidental expenses, including attorneys fees and representation expenses for its organization and (sic) preparation and
conduct hereof, and such advance shall be deducted from the benefits granted herein as they accrue.
Petitioners filed with the Bureau of Labor Relations, DOLE-NCR, Quezon City, a Complaint against the Union Officers and
ABS-CBN Broadcasting corporation, praying that (1) the special assessment of ten percent (10%) of the sum total of all salary
increases and signing bonuses granted by respondent Company to the members of the Union be declared illegal for failure to
comply with the labor Code, as amended, particularly Article 241, paragraphs (g), (n), and (o); and in utter violation of the
Constitution and By-Laws of the ABS-CBN Supervisors Employees Union; (2)respondent Company be ordered to suspend
further deductions from petitioners salaries for their shares thereof.
The Med-Arbiter declared that the special assessment of 10% of the sum total of CBA benefits is illegal and ordered the
respondent company to stop and desist from further making advances and deductions from the union members salaries their
share in the advances already made to the union. Respondent Union Officers and respondent Company filed their Motion for
Reconsideration. On July 31, 1992, Undersecretary B.E. Laguesma set aside his former decision and dismissed the complaint for
lack of merit. Hence, the present petition seeking to annul and set aside the above-cited Order of public respondent
Undersecretary B.E. Laguesma, for being allegedly tainted with grave abuse of discretion amounting to lack of jurisdiction.
Issue: WON public respondent acted with grave abuse of discretion in issuing the challenged Order reversing his own Decision
of July 1, 1991.
Ruling: Petitioners also argued that the check-off provision in question is illegal because it was never submitted for consideration
and approval to "all the members at a general membership meeting called for the purpose"; and further alleged that the formalities
mandated by Art. 241, paragraphs (n) and (o) of the Labor Code, as amended, were not complied with.
The legal basis of check-off is found in statutes or in contracts.[16] The statutory limitations on check-offs are found in Article
241, Chapter II, Title IV, Book Five of the Labor Code, which reads:
"Rights and conditions of membership in a labor organization. - The following are the rights and conditions of membership in a
labor organization:
(g) No officer, agent, member of a labor organization shall collect any fees, dues, or other contributions in its behalf or make any
disbursement of its money or funds unless he is duly authorized pursuant to its constitution and by-laws.
(n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized
by a written resolution of a majority of all the members of a general membership meeting duly called for the purpose. The
secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the
purpose of the special assessment or fees and the recipient of such assessment or fees. The record shall be attested to by the
president.
(o) Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any other
extraordinary fees may be checked off from any amount due to an employee with an individual written authorization duly signed
by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deductions.
[Underscoring; supplied]
Article 241 of the Labor Code, as amended, must be read in relation to Article 222, paragraph (b) of the same law, which states:
"No attorney's fees, negotiation fees or similar charges of any kind arising from collective bargaining negotiations or conclusion of
the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorney's
fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement
of any sort to the contrary shall be null and void." [Underscoring; supplied]
Article 241 speaks of three (3) requisites that must be complied with in order that the special assessment for Union's incidental
expenses, attorney's fees and representation expenses, as stipulated in Article XII of the CBA, be valid and upheld
namely: 1) authorization by a written resolution of the majority of all the members at the general membership meeting duly called
for the purpose; (2)secretary's record of the minutes of the meeting; and (3) individual written authorization for check-off duly
signed by the employee concerned.
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LABOR RELATIONS [ATTY. ROLAND MARQUEZ]

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After a thorough review of the records on hand, we find that the three (3) requisites for the validity of the ten percent (10%)
special assessment for Union's incidental expenses, attorney's fees and representation expenses were met.
Records do not indicate that the check-off authorizations were executed by the eighty-five (85) Union members under the
influence of force or compulsion. The presumption is that such check-off authorizations were executed voluntarily by the
signatories. Petitioners contention that the amount to be deducted is uncertain is not persuasive because the check-off
authorization clearly stated that the sum to be deducted is equivalent to ten percent (10%) of all and whatever benefits may accrue
under the CBA. In other words, although the amount is not fixed, it is determinable.
Petitioners further contend that Article 241 (n) of the Labor Code, as amended, on special assessments, contemplates a general
meeting after the conclusion of the collective bargaining agreement. Subject Article does not state that the general membership
meeting should be called after the conclusion of a collective bargaining agreement.
Moreover, Paragraph (o) requires an individual written authorization duly signed by every employee in order that special
assessment maybe validly check-off. Even assuming that the special assessment was validly levied pursuant to paragraph (n), and
granting that individual written authorizations were obtained by the Union, nevertheless there can be no valid check-off
considering that the majority of the Union members had already withdrawn their individual authorizations. A withdrawal of
individual authorization is equivalent to no authorization at all. xxx [Underscoring; supplied]
In this case, the majority of the Union members gave their individual written check-off authorizations for the ten percent (10%)
special assessment. And they have never withdrawn their individual written authorizations for check-off.
WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE Undersecretary B.E. Laguesma is AFFIRMED except that no
deductions shall be taken from the workers who did not give their individual written check-off authorization.
JERRY E. ACEDERA VS INTERNATIONAL CONTAINER TERMINAL SERVICES INC.
Facts:
Jerry Acedera, et al. are employees of International Container Terminal Services, Inc. (ICTSI) and are members of Associated Port
Checkers & Workers Union-International Container Terminal Services, Inc. (APCWU-ICTSI), a duly registered labor
organization. ICTSI entered into a five-year Collective Bargaining Agreement (CBA) with APCWU, which reduced the
employees workdays from 304 to 250 days a year.
The Wage Board decreed wage increases in NCR, which affected ICTSI. Upon the request of APCWU to compute the actual
monthly increase in the employees salary by multiplying the mandated increase by 365 days and dividing by 12 months, ICTSI
stopped using 304 days as divisor and started using 365 days to determine the daily wage.
Later on, ICTSI entered into a retrenchment program, which prompted APCWU to file a complaint before the Labor Arbiter for
ICTSIs use of 365 days, instead of 250 days, as divisor in the computation of wages.
Labor Arbiter: Denied Motion to Intervene
NLRC: Affirmed Labor Arbiter
CA: Affirmed NLRC.
Issue: WON Acedera et al. have no legal right to intervene in the case as their intervention was a superfluity
Ruling: Acedera, et. al. have no legal reight to intervene.
Acedera et al. stress that they have complied with the requisites for intervention because (1) they are the ones who stand to gain
or lose by the direct legal operation and effect of any judgment that may be rendered in this case, (2) no undue delay or prejudice
would result from their intervention since their Complaint-in-Intervention with Motion for Intervention was filed while the Labor
Arbiter was still hearing the case and before any decision thereon was rendered, and (3) it was not possible for them to file a
separate case as they would be guilty of forum shopping because the only forum available for them was the Labor Arbiter.
Acedera et al., however, failed to consider, in addition to the rule on intervention, the rule on representation. A labor union is one
such party authorized to represent its members under Article 242(a) of the Labor Code, which provides that a union may act as
the representative of its members for the purpose of collective bargaining. This authority includes the power to represent its
members for the purpose of enforcing the provisions of the CBA. That APCWU acted in a representative capacity "for and in
behalf of its Union members and other employees similarly situated, the title of the case filed by it at the Labor Arbiters Office so
expressly states.
While a party acting in a representative capacity, such as a union, may be permitted to intervene in a case, ordinarily, a person
whose interests are already represented will not be permitted to do the same except when there is a suggestion of fraud or
collusion or that the representative will not act in good faith for the protection of all interests represented by him.
Acedera et al. cite the dismissal of the case filed by ICTSI, first by the Labor Arbiter, and later by the Court of Appeals. The
dismissal of the case does not, however, by itself show the existence of fraud or collusion or a lack of good faith on the part of
APCWU. There must be clear and convincing evidence of fraud or collusion or lack of good faith independently of the dismissal.
This, Acedera et al. failed to proffer.
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LABOR RELATIONS [ATTY. ROLAND MARQUEZ]

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Acedera et al. likewise express their fear that APCWU would not prosecute the case diligently because of its "sweetheart
relationship" with ICTSI. There is nothing on record, however, to support this alleged relationship which allegation surfaces as a
mere afterthought because it was never raised early on. It was raised only in petitioners-appellants reply to ICTSIs comment in
the petition at bar, the last pleading submitted to this Court, which was filed on June 20, 2001 or more than 42 months after
petitioners-appellants filed their Complaint-in-Intervention with Motion to Intervene with the Labor Arbiter.
To reiterate, for a member of a class to be permitted to intervene in a representative action, fraud or collusion or lack of good
faith on the part of the representative must be proven. It must be based on facts borne on record. Mere assertions, as what
petitioners-appellants proffer, do not suffice.
ASSOCIATED WORKERS UNION-PTGWO VS NLRC
*DISCLAIMER: Sobrang gulo ng case na to. Ponente na nagsabi na nahirapan sila.
These cases have been usually difficult for the Court, not because the issues posed are in themselves intellectually demanding, but because of
problems generated by the procedure adopted by the parties in coming before this Court.
So ang nilagay ko lang na facts e yung sa tingin ko e tugma sa lesson natin.

FACTS:
Associated Workers Union (AWU) filed a Notice of Strike against the respondent Metro Port Service, Inc due to unfilled
vacancies and union busting. During the compulsory arbitration, AWU demanded that Metro terminated the employment of
respondents Adriano Yumul and ten others for having organized the Associated Workers Union in Metroport (AWUM) among
rank and file employees of Metro, ostensibly as a local or chapter of AWU without AWUs permission. AWU had earlier expelled
individual respondents from membership in AUW for disloyalty and, pursuant to the closed-shop provision of the existing AWUMetro collective bargaining agreement ("CBA"), sought the termination of their employment.
Metro resisted with AWUs request but nevertheless relented and suspended Yumul and the 10 individual respondents. This
resulted to the individual respondents filing of a complaint against Metro. As per the decision of the Labor Arbiter, Metro
provisionally reinstated the individual respondents. AWU filed an injunction causing again the suspension of the individual
respondents. When appealed to the NLRC, NLRC consolidated the case and ruled that finding that AWU was a national union,
and that individual respondents have the right to organize themselves into a local chapter thereof, the formation of which was a
protected activity and could not be considered as disloyalty, held the suspension or dismissal of individual respondents as illegal
and, in relation to NLRC Injuction Case No. 993, ordered their reinstatement with backwages, to be paid solidarily by AWU and
respondent Metro.
A new company Marina, replaced Metro as the arrastre operator at the Manila South Habor. Marina was ordered to
reinstate the individual respondents and pay their backwages together with Metro. Marina appealed alleging that they were denied
of due process. However, the Labor Arbiter ruled against Marina.
Issue: Whether or not the NLRC erred in ruling that the creating of AWUM is legal
Held: The NLRC erred.
While it is true that AWUM as a local union, being an entity separate and distinct from AWU, is free to serve the interest
of all its members and enjoys the freedom to disaffiliate, such right to disaffiliate may be exercised, and is thus considered a
protected labor activity, only when warranted by circumstances. Generally, a labor union may disaffiliate from the mother union
to form a local or independent union only during the 60-day freedom period immediately preceding the expiration of the CBA. 6
Even before the onset of the freedom period (and despite the closed-shop provision in the CBA between the mother union and
management) disaffiliation may still be carried out, but such disaffiliation must be effected by a majority of the members in the
bargaining unit. 7This happens when there is a substantial shift in allegiance on the part of the majority of the members of the
union. In such a case, however, the CBA continues to bind the members of the new or disaffiliated and independent union up to
the CBA's expiration date.
The record does not show that individual respondents had disaffiliated during the freedom period. The record does,
however, show that only eleven (11) members of AWU (individual respondents) had decided to disaffiliate from AWU and form
AWUM. Respondent Metro had about 4,000 employees, and around 2,000 of these were members of AWU 9 It is evident that
individual respondents had failed to muster the necessary majority in order to justify their disaffiliation. (In fact, it was only on 5
December 1985 that individual respondents were finally able to register an independent union called Metroport Workers Union
[MWU]. 10 Even then, in the absence of allegation by AWUM [MWU] of the exact number of its members, the Court presumes
that only twenty percent [20%] of the employees of Metro had joined MWU) 11 Thus, in the referendum held on 7 January 1985
at the PTGWO compound (where representatives of the Ministry of Labor and Employment were present) to determine whether
individual respondents should be expelled from AWU, 1,229 members (out of 1,695 members present) voted for expulsion of
individual respondents.
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The individual respondents here have failed to present proof of their allegation that the 1,695 members of AWU were
not employees of respondent Metro alone; the Court therefore presumes that those who voted for their expulsion were bona fide
employees of respondent Metro. Moreover, individual respondents failed to allege that their expulsion for disloyalty violated
AWU's constitution and by-laws. 13 In sum, the attempted disaffiliation of the eleven (11) private respondents from the petitioner
mother union and the effort to organize either a new local of the mother union or an entirely new and separate union, did not,
under the circumstances of this case, constitute protected activities of the eleven (11) individual respondents.
GENARO BAUTISTA, petitioner, vs. HON. COURT OF APPEALS and THE OFFICIALS AND BOARD OF
DIRECTORS OF KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT KAWANI SA METROPOLITAN
WATERWORKS AND SEWERAGE SYSTEM UNION(KKMK-MWSS), REPRESENTED BY ITS PRESIDENT,
PRUDENCIO CRUZ, respondents.
Facts:
A Petition for Prohibition with Prayer for a Temporary Restraining Order/Injunction was filed by Genaro Bautista, et al., against
Perlita Bathan-Velasco, Director, Eugenia Fernandez, Med-Arbiter, and Johnny P. Garcia, Chief, Labor Organizations Division,
all of the BLR, before the Regional Trial Court (RTC), Quezon City, Branch 87. The petition sought to enjoin the herein
respondents from proceeding with the election of officers of KKMK-MWSS scheduled on 02 December 1993, and to
permanently prohibit them from exercising jurisdiction over the conduct of election of the officers of the KKMK-MWSS. On 26
November 1993, the RTC, Quezon City, Branch 87, through Judge Elsie Ligot Telan, issued a temporary restraining order
On 02 December 1993, the election of the officers of KKMK-MWSS pushed through despite the issuance of the temporary
restraining order. Another Order was issued by Branch 87 on the same date.
On 29 December 1993, a Writ of Preliminary Injunction was issued by the RTC, the pertinent portion of which reads:
NOW THEREFORE, you the respondents, your agents and representatives, particularly the officers concerned ordering them
until further orders of this Court to refrain from giving any effect to the elections above adverted to by ratifying and registering
the same, and recognizing as officers the persons supposedly elected; and for the latter to refrain from assuming office and acting
as officers of the KKMK-MWSS.
However on 09 October 1995, a Decision was rendered by the Court of Appeals finding for the private respondents, upholding
that the BLR had jurisdiction over an intra-union dispute.
Issue:
WON the BLR has jurisdiction to call for and conduct the election of officers of an employees association in the public sector?
Ruling:
YES. Insofar as power to call for and supervise the conduct of certification elections is concerned, we rule against the petitioner.
The authority of the BLR in assuming jurisdiction over a certification election, or any inter-union or intra-union conflicts, is found
in Article 226 of the Labor Code of the Philippines, which reads:
ART. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the Labor Relations Division 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 nonagricultural, except those arising from the
implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or
voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of the parties.
It is quite clear from this provision that BLR has the original and exclusive jurisdiction on all inter-union and intra-union
conflicts. An intra-union conflict would 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. The subject of the case at bar, which is the election of the officers
and members of the board of KMKK-MWSS, is, clearly, an intra-union conflict, being within or inside a labor union. It is well
within the powers of the BLR to act upon. The petitioner is asking us to make an illogical edict by declaring that our ruling in
the ACAE case, considering that it involved an inter-union conflict, should not apply to the instant case for the reason that the
latter involves an intra-union conflict. This, we cannot do because the law is very clear on this matter.
DLSU vs Dela Salle University Employees Association (DLSUEA)
Dela Salle University Employees Association-National Federation of Teachers and Employees Union (DLSUEANAFTEU) vs DLSU (April 12, 2000)
Facts:
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Dela Salle University and DLSUEA-NAFTEU entered into a collective bargaining agreement with a life span of 3 years. During
the freedom period, negotiations with the University for a new CBA were unsuccessful. Identifying the unresolved issues, the
matter was submitted for arbitration. One of the issues was the scope of the bargaining unit. Magsalin, as arbitrator decided that
the Computer Operators assigned at the Computer Services Center just like any other Computer Operators in other units, should
be included as members of the bargaining unit, the discipline officers belong to the rank-and-file on the basis of the nature of
their job and that the employees of the College of St. Benilde, the College having a personality separate and distinct from the
University, such employees are outside the bargaining unit of said University.
Both parties filed for reconsideration with the Magsalin but were not entertained by him. The University then filed for certiorari
with the Court.
Issue: Whether or not to pierce the veil of corporate fiction of the College of St. Benilde-DLSU (whether or not the employees
thereat are within or outside the bargaining unit.)
Held: The Solicitor General supports the employees of the College of St. Benilde and the Union that the veil of corporate fiction
should be pierced and thus, according to the Union, the University and the College of St. Benilde should be considered as only
one entity because the latter is but a mere intergral part of the University.
However, the Court affirms the findings of the voluntary arbitrator that the employees of the College of St. Benilde should be
excluded from the bargaining unit of the rank and file employees of Dela Salle University, because the two educational institutions
have their own separate juridical personality and not sufficient evidence was shown to justify the piercing of the veil of corporate
fiction.
FRANKLIN BAKER COMPANY OF THE PHILIPPINES, petitioner, vs. HONORABLE CRESENCIO B.
TRAJANO, respondents. [G.R. No. 75039] January 28, 1988
FACTS:
This is a petition for certiorari seeking the annulment of (a) The Order of the Ministry of Labor and Employment insofar as it
includes the managerial employees (inspectors, foremen and supervisors) in the certification election; (b) the Order also of the
MOLE, dismissing the appeal of aforesaid Order of September 17, 1985 for lack of merit; and (c) the Order of Director denying
reconsideration of his Order of April 7, 1986 and affirming the same in toto.
On April 23, 1984, private respondent Franklin Baker Brotherhood Association-(ATU) filed a petition for certification election
among the office and technical employees of Petitioner Company with the Ministry of Labor and Employment, Davao City. It
alleges that Franklin Baker Company of the Phils. Davao Plant, had in its employ approximately ninety (90) regular technical and
office employees, which group is separate and distinct from the regular rank and file employees and is excluded from the coverage
of existing Collective Bargaining Agreement.
Petitioner Company manifested that out of the ninety (90) employees sought to be represented by the respondent union, seventy
four (74) are managerial employees while two (2) others are confidential employees, hence, must be excluded from the
certification election and from the bargaining unit that may result from such election
Med-Arbiter Conchita J. Martinez issued an order to the petition is hereby granted and a certification election among the office
and technical employees of Franklin Baker Company. The choices shall be the following 1.) Franklin Baker Brotherhood
Association-(ATU) 2.) No Union. The company's latest payroll shall be the basis for determining the office and technical workers
qualified to vote.
Petitioner Company appealed to the Bureau of Labor Relations, praying that the appealed order be set aside and another be issued
declaring the seventy four (74) inspectors, foremen and supervisors as managerial employees.
During the pendency of the appeal, sixty one (61) of the employees involved, filed a Motion to Withdraw the petition for
certification election praying therein for their exclusion from the Bargaining Unit and for a categorical declaration that they are
managerial employees, as they are performing managerial functions.
Bureau of Labor Relations Cresencio B. Trajano issued a Resolution affirming the order. Ordering the certification election
among the office and technical employees of Franklin Baker Company of the Philippines proceed without delay.
Petitioner company sought the reconsideration of the resolution but its motion was denied by Director Cresencio B. Trajano.
Hence, this petition.
ISSUE: WON Public respondent acted with grave abuse of discretion amounting to lack of jurisdiction when he ruled that the 76
employees subject of this petition are not managerial employees (inspectors, foremen, supervisors and the like) and therefore, may
participate in the certification election among the office and technical employees. Such ruling is contrary to jurisprudence and to
the factual evidence presented by petitioner which was not rebutted by private respondent union and is therefore patently
baseless.

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RULING: From this assigned error two questions are raised by petitioner, namely: (1) whether or not subject employees are
managerial employees under the purview of the Labor Code and its Implementing Rules; and (2) whether the Director of the
Bureau of Labor Relations acted with abuse of discretion in affirming the order of Mediator-Arbiter Conchita J. Martinez.
There is no question that there are in the DAVAO Plant of petitioner company approximately 90 regular technical and
office employees which form a unit, separate and distinct from the regular rank and file employees and are excluded from the
coverage of existing Collective Bargaining Agreement; that said group of employees organized themselves as Franklin Baker
Brotherhood Association (technical and office employees) and affiliated with the local chapter of the Association of trade Unions
(ATU), a legitimate labor organization with Registration Permit No. 8745 (Fed) LC and with office located at the 3rd Floor of
Antwell Bldg., Sta. Ana, Davao City; that petitioner company did not object to the holding of such certification, but only sought
the exclusion of inspectors, foremen and supervisors, members of Franklin Baker Brotherhood Association (technical and office
employees) numbering 76 from the certification election on the ground that they are managerial employees.
A managerial employee is defined as one "who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively
recommend such managerial actions."
To sustain its posture, that the inspectors, foreman and supervisors numbering 76 are managerial employees, petitioner
painstakingly demonstrates that subject employees indeed participate in the formulation and execution of company policies and
regulations as to the conduct of work in the plant, exercised the power to hire, suspend or dismiss subordinate employees and
effectively recommend such action, by citing concrete cases. It has also been shown that subject employees have the power to
hire, as evidenced by the hiring, upon the recommendation of Opening Inspector. It will be noted, however, that in the
performance of their duties and functions and in the exercise of their recommendatory powers, subject employees may only
recommend, as the ultimate power to hire, fire or suspend as the case may be, rests upon the plant personnel manager.
The test of "supervisory" or "managerial status" depends on whether a person possesses authority to act in the interest
of his employer in the matter specified in Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing Rules and
whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment. Thus, where
such recommendatory powers as in the case at bar, are subject to evaluation, review and final action by the department heads and
other higher executives of the company, the same, although present, are not effective and not an exercise of independent
judgment as required by law.
Furthermore, in line with the ruling of this Court, subject employees are not managerial employees because, they do not
participate in policy making but are given ready policies to execute and standard practices to observe, thus having little freedom of
action.
Petitioner's contention that the Director of the Bureau of Labor Relations acted with abuse of discretion amounting to
lack of jurisdiction in holding that the 76 employees are not managerial employees and must be included in the certification
election has no basis in fact and in law. Neither is its contention that the use of the word's "and/or" categorically shows that
performance of the functions enumerated in the law qualifies an employee as a managerial employee.
It is well settled that the findings of fact of the Ministry of Labor and National Labor Relations Commission are entitled
to great respect, unless the findings of fact and the conclusions made therefrom, are not supported by substantial evidence, or
when there is grave abuse of discretion committed by said public official.
By "grave abuse of discretion" is meant, such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason
of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined by or to act at all in contemplation of law.
Moreover, this Court has ruled that findings of administrative agencies which have acquired expertise, like the Labor Ministry, are
accorded respect and that the remedy of certiorari does not lie in the absence of any showing of abuse or misuse of power
properly vested in the Ministry of Labor and Employment. After a careful review of the records, no plausible reason could be
found to disturb the findings of fact and the conclusions of law of the Ministry of Labor.
Even if We regard the employees concerned as "managerial employees," they can still join the union of the rank and file
employees. They cannot however form their own exclusive union as "managerial employees"
PREMISES CONSIDERED, the petition is DISMISSED, and the assailed resolution and orders are AFFIRMED. SO
ORDERED.
Golden Donuts, Inc. v NLRC, et. al.
Facts: Petitioner and the Kapisanan ng Manggagawa sa Dunkin Donut-CFW (KMDD-CFW) agreed to meet to finish their
negotiation for a CBA. On the scheduled date, representatives of management arrived late, prompting union officers to walk out
and thereafter refused, for several times, to meet again with management. Despite managements open letter of admonition, the
union staged a strike.

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LABOR RELATIONS [ATTY. ROLAND MARQUEZ]

( 2 A - S . Y . 2 0 1 3 - 2 0 1 4 )

Counsel for management pleaded for a compromise, hence, a compromise agreement was entered into with the union, whereby
they agreed, among others, that they shall withdraw any case filed against each other and shall not file any case upon the execution
of the agreement as it constitutes a general waiver or release by them.
In virtue of such agreement, Out of 267, 262 strikers shall be paid their separation pay. The five disagreed and did not receive the
amount due, arguing that the agreement was entered into by their counsel and the union president without their individual
consent and that the same was not approved by the majority of the union membership, hence, this petition.
Labor Arbiter: Denied.
NLRC: Modified Labor Arbiters decisionreinstatement with backwages
Issue:
(1) WON a union may compromise or waive the rights to security of tenure and money claims of its minority members without
the latters consent; (2) WON the compromise agreement which has not been consented to or ratified by respondents minority
members has the effect of res judicata upon them.
Ruling: Even if a clear majority of the union members agreed to a settlement with the employer, the union has no authority to
compromise the individual claims of members who did not consent to such settlement.
Rule 138, Sec. 23 of the 1964 Revised Rules of Court requires a special authority before an attorney may compromise his clients
litigation. Authority to compromise cannot be lightly presumed and should be duly established by evidence.
In the case at bar, as private respondents did not authorize the union to represent them in the compromise settlement, they are
not bound by the terms thereof. There is no valid waiver of rights.
Money claims due to laborers cannot be the object of settlement effected by a union or counsel without specific individual
consent of each laborer concerned.
Private respondents were not parties to the compromise agreement; hence, judgment approving such agreement cannot have the
effect of res judicata upon them. They have not waived their right to security of tenure and they are not barred from entitlement
of their individual claims.
Since the Labor Arbiter found no evidence showing illegal acts during the strike, the five employees shall be reinstated with
backwages.
HOLY CROSS OF DAVAO COLLEGE, INC., petitioner, vs. HON. JEROME JOAQUIN, in his capacity as Voluntary
Arbitrator, and HOLY CROSS OF DAVAO COLLEGE UNION KALIPUNAN NG MANGGAGAWANG
PILIPINO (KAMAPI), respondents.
Facts:
A collective bargaining agreement was entered into between petitioner Holy Cross of Davao College, Inc. and respondent Holy
Cross of Davao College Union-KAMAPI. Shortly before the expiration of the agreement, KAMAPI President Jose Lagahit, wrote
Holy Cross expressing his unions desire to renew the agreement, withal seeking its extension for two months, on the ground that
the teachers were still on summer vacation and union activities necessary or incident to the negotiation of a new agreement could
not yet be conducted. The Holy Cross President didnt object to the extensions sought. KAMAPI held a meeting to elect a new
set of union officers, at which Rodolfo Gallera won election as president. Surprisingly, Galera discussed the unions disaffiliation
from the KAMAPI Federation.
Galleras group formed a separate organization known as the Holy Cross of Davao College Teachers Union, and elected its own
officers. For its part, the existing union, KAMAPI, sent to the School its proposals for a new collective bargaining contract
on July 31, 1989, the expiry date of the two-month extension it had sought.[3]
Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees the corresponding union dues
and special assessment (payable by union members), and agency fees (payable by non-members), in accordance with the check-off
clause of the CBA. The two unions had a conflict which began with the filing by the new union (headed by Gallera) of a petition
for certification election in the Office of the Med-Arbiter. KAMAPI filed a motion to dismiss the petition. The Med-Arbiter
denied KAMAPIs motion to dismiss, and ordered the holding of a certification election. On appeal, however, the Secretary of
Labor reversed the Med-Arbiters ruling and ordered the dismissal of the petition for certification election, which action was
eventually sustained by this Court in appropriate proceedings. Thereafter, KAMAPI presented revised bargaining proposals to
Holy Cross and asked for the schools counter-proposal. The School replied, that it did not know if the Supreme Court had in fact
affirmed the Labor Secretarys decision in favor of KAMAPI as the exclusive bargaining representative of the School employees.
The school declared that it would take no action towards a new CBA without a definitive ruling on the proper interpretation of
Article I of the old CBA which should have expired on May 31, 1989. Said Article provides inter alia for the automatic extension
of the CBA for another period of three (3) years counted from its expiration, if the parties fail to agree on a renewal, modification
or amendment thereof. It appears, in fact, that the opinion of the DOLE Regional Director on the meaning and import of said
article I had earlier been sought by the College president, Emilio Palma Gil.
KAMAPI accused Holy Cross of unfair labor practice for refusing to bargain despite the formers repeated demands; and on the
following day, it filed a notice of strike with the National Mediation and Conciliation Board.
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( 2 A - S . Y . 2 0 1 3 - 2 0 1 4 )

Voluntary Arbitrator Jerome C. Joaquin decided in favor of KAMAPI and requested the Fiscal Examiner of the NLRC, region
XI, Davao City, to make the proper computation of the union dues to be paid by management to the complainant union.
Dissatisfied, Holy Cross filed a petition challenging the Voluntary Arbitrators decision
Issue:
WON an employer is liable to pay to the union of its employees, the amounts it failed to deduct from their salaries -- as union
dues (with respect to union members) or agency fees (as regards those not union members) -- in accordance with the check-off
provisions of the collective bargaining contract (CBA) which it claims to have been automatically extended.
Ruling:
No provision of law makes the employer directly liable for the payment to the labor organization of union dues and assessments
that the former fails to deduct from its employees salaries and wages pursuant to a check-off stipulation. The employers failure
to make the requisite deductions may constitute a violation of a contractual commitment for which it may incur liability for unfair
labor practice.[23] But it does not by that omission, incur liability to the union for the aggregate of dues or assessments
uncollected from the union members, or agency fees for non-union employees.
Check-offs in truth imposed as extra burden on the employer in the form of additional administrative and bookkeeping costs. It
is a burden assumed by management at the instance of the union and for its benefit, in order to facilitate the collection of dues
necessary for the latters life and sustenance. But the obligation to pay union dues and agency fees obviously devolves not upon
the employer, but the individual employee. It is a personal obligation not demandable from the employer upon default or refusal
of the employer to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions and
remit the collections to the union. The principle of unjust enrichment necessarily precludes recovery of union dues -- or agency
fees -- from the employer, these being, to repeat, obligations pertaining to the individual worker in favor of the bargaining
union. Where the employer fails or refuses to implement a check-off agreement, logic and prudence dictate that the union itself
undertake the collection of union dues and assessments from its members (and agency fees from non-union employees); this, of
course, without prejudice to suing the employer for unfair labor practice.
There was thus no basis for the Voluntary Arbitrator to require Holy Cross to assume liability for the union dues and assessments,
and agency fees that it had failed to deduct from its employees salaries on the proffered plea that contrary to established practice,
KAMAPI had failed to submit to the college comptroller every 8th day of the month, a list of employees from whose pay union
dues and the corresponding agency fees were to be deducted.
WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged decision of the Voluntary Arbitrator, to pay
respondent KAMAPI the amount equivalent to the uncollected union dues and agency fees from August 1989 up to the time a
new collective bargaining agreement is concluded, is NULLIFIED and SET ASIDE; but in all other respects, the decision of the
Voluntary Arbitrator is hereby AFFIRMED.
JOHNSON AND JOHNSON LABOR UNION VS DIRECTOR OF LABOR RELATIONS AND OSCAR PILI
FACTS:

Oscar Pili was dismissed by Johnson & Johnson for non-disclosure in his job application form of the fact that he had a
relative in the company in violation of company policies. Pili applied to the Union for the financial aid from the compulsory
contributions of the union afforded to its members who have been suspended or terminated from work without reasonable cause.
This financial aid is embodied in the Unions constitution. The officers of the union refused to provide Pili of the said financial
aid, since he was not dismissed without reasonable cause.
Aggrieved, Pili filed a complaint against the union for violation of the union constitution and by-laws. The Med-Arbiter
dismissed Pilis motion. On appeal, the Director of Labor Relations reversed the decision of the Med Arbiter and granted that Pili
be paid the sum of P 0.75/week per union member. Both parties moved for reconsideration. The private respondent stated that
he was being discriminated against considering that one Jerwin Taguba, another union member, was terminated for dishonesty
and loss of confidence but was granted financial aid by the petitioners while Taguba's complaint against the company was still
pending with the National Labor Relation Commission. On appeal, Pili won and the Union was ordered to give him financial aid.
The public respondent through Director Pura Ferrer-Calleja denied the petitioners' motion for reconsideration stating
that Article XIII, Section 5 of the union's constitution and by-laws does not require a special fund so that all union members
similarly situated as the private respondent must be entitled to the same right and privilege regarding the grant of financial aid as
therein provided.
ISSUE:
HELD:

Whether or not Oscar Pili is entitled to the financial aid

Petition DENIED.

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LABOR RELATIONS [ATTY. ROLAND MARQUEZ]

( 2 A - S . Y . 2 0 1 3 - 2 0 1 4 )

Section 5, Article XIII of the petitioner-union's constitution and by-laws earlier aforequoted is self-executory. The
financial aid extended to any suspended or terminated union member is realized from the contributions declared to be
compulsory under the said provision in the amount of seventy-five centavos due weekly from each union member. The
petitioner-union's constitution and by-laws govern the relationship between and among its members. As in the interpretation of
contracts, if the terms are clear and leave no doubt as to the intention of the parties, the literal meaning of the stipulations shall
control.
Thus, there is no doubt that the petitioner-union can be ordered to release its funds intended for the promotion of
mutual assistance in favor of the private respondent.
The union constitution is a covenant between the union and its members and among the members. There is nothing in
their constitution which leaves the legal interpretation of its terms unilaterally to the union or its officers or even the general
membership. It is noteworthy to quote the ruling made by the public respondent in this respect, to wit: The union constitution
and by-laws clearly show that any member who is suspended or terminated from employment without reasonable cause is entitled
to financial assistance from the union and its members. The problem, however, is that the constitution does not indicate which
body has the power to determine whether a suspension or dismissal is for reasonable cause or not. To our mind, the constitution's
silence on this matter is a clear recognition of the labor arbiter's exclusive jurisdiction over dismissal cases. After all, the union's
constitution and by-laws is valid only insofar as it is not inconsistent with existing laws.
KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027), petitioner, vs.
THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND CANNING DIVISION
UNIVERSAL ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW EMPLOYEES AND
WORKERS UNITED LABOR ORGANIZATION (NEW ULO), respondents.
Facts:

From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of the workers in the Meat
and Canning Division of the Universal Robina Corporation, with a 3-year collective bargaining agreement which was to expire on
November 15, 1987.
Meanwhile on October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI KRISTO,
registered as a labor union prior to the expiration of the CBA and on October 13, 1987 claiming that it has "the majority of the
daily wage rank and file employees numbering 191," filed a petition for a certification election at the Bureau of Labor Relations.
TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW ULO were mostly members
of the Iglesia ni Kristo sect which for three (3) years have previously refused to affiliate with any labor union. It also accused the
company of using the NEW ULO to defeat TUPAS' bargaining rights.
On November 17, 1987, the Med-Arbiter ordered the holding of a certification election within 20 days. TUPAS appealed to the
Bureau of Labor Relations BLR. In the meantime, TUPAS was able to negotiate a new 3-year CBA with ROBINA, which was
signed on December 3, 1987 and to expire on November 15, 1990. On January 27, 1988, respondent BLR Director Calleja
dismissed the appeal
On April 30, 1988, it filed this petition alleging that the public respondent acted in excess of her jurisdiction and with grave abuse
of discretion in affirming the Med-Arbiter's order for a certification election.
Issue: WON the public respondent BLR director erred in dismissing the petitioner's appeal to dismiss the petition of NEW ULO
for a certification election.
Ruling:
The public respondent did not err in dismissing the petitioner's appeal.
This Court's decision in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the
IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the members of
that sect from forming their own union. The public respondent correctly observed that the recognition of the tenets of the sect
should not infringe on the basic right of self-organization granted by the constitution to workers, regardless of religious
affiliation."
Meanhile, the fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing
CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a timely
petition for certification election on October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it
signed a new CBA with the company on December 3, 1987.
As pointed out by Med-Arbiter Abdullah, a "certification election is the best forum in ascertaining the majority status of the
contending unions wherein the workers themselves can freely choose their bargaining representative thru secret ballot." Since it
has not been shown that this order is tainted with unfairness, this Court will not thwart the holding of a certification election.
WHEREFORE, the petition for certiorari is denied, with costs against the petitioner.
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LABOR RELATIONS [ATTY. ROLAND MARQUEZ]

( 2 A - S . Y . 2 0 1 3 - 2 0 1 4 )

Me-Shurn Corporation and Shammy Chou v Me-Shurn Workers Union-FSM and Rosalina Cruz
Facts:
Pending the application for registration of the union to the Bureau of Labor Relations, petitioner corporation placed on forced
leave all rank and file employees who were members of the unions bargaining unit. Petitioner said it would temporarily lay off
employees and cease operations on account of its alleged inability to meet its export quota.
On behalf of the corporation, Chou imposed a precondition for the resumption of operation and the rehiring of laid off
workersthat upon their return to work, no union or labor organization would be organized. Instead, only union officers will
serve as mediators between labor and management. An agreement was signed and operations resumed.
However, the union reorganized and filed a complaint of unfair labor practice, illegal dismissal, underpayment of wages, and
deficiency in separation pay against petitioner. Petitioner countered, saying that it was compelled to cease its operations to prevent
business losses and questioned the legality of the formation of the union as the exclusive bargaining agent of the employees.
Labor Arbiter: Dismissed unions complaints for lack of merit.
NLRC: Reversed decision of Labor Arbiter
CA: Affirmed NLRC.
Issues:
(1) WON the dismissal of the employees was for an authorized cause and (2) WON respondent union is a legitimate union.
Ruling:
The dismissal was illegal.
Petitioner justified its cessation of operations due to alleged business losses. However, it failed to present credible evidence to
substantiate their allegation.
The claim of petitioners that they were compelled to close to prevent further losses is belied by their resumption of operation
barely a month after.
The closure was a mere subterfuge to dampen the enthusiasm of union members, as the closure of the company was imposed
10 days after the union formally organized.
As a condition for rehiring the employees, union officers were made to sign an agreement that they would not form any union
upon their return to work. This is contrary to law.
Petitioner was not able to prove that some of the employees contracts had expired even before the cessation of operations.
Proper written notices of the closure were not sent to the DOLE and the employees at least one month before the effectivity of
the termination, as required by the Labor Code. Notice to DOLE is indispensable so that it may ascertain whether the
dismissal/closure were being made in good faith. This requirement intends to protect the workers right to security of tenure.
All these considered, it can be concluded that the real reason behind the shutdown of the corporations was the formation of the
union. To constitute ULP, the dismissal need not exclusively be motivated by the unions activities. It is enough that the
discrimination was a contributing factor.
As a general rule, the determination to cease operations is a management prerogative. But where it s manifest that the closure is
motivated not by a desire to avoid further losses but to discourage the formation of a union, the State is bound to intervene.
Respondent union is a legitimate labor association
The DOLE undersecretary granted the unions petition to hold a Certification of Election. DOLE would not have entertained the
petition if the union were not a legitimate labor union within the meaning of the Labor Code, which provides that only a
legitimate labor union may file a petition for certification of election.
The union has the legal personality to sue in its own name to challenge the ULP committed by the petitioner. It would be an
unwarranted impairment of the right to self-organization through formation of labor associations if thereafter such collective
entities
would
be
barred
from
instituting
action
in
their
representative
capacity.
MANILA ELECTRIC COMPANY, petitioner, vs. THE HONORABLE SECRETARY OF LABOR LEONARDO
QUISUMBING AND MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents.
FACTS:

The court directed the parties to execute a CBA incorporating the terms among which are the following modifications
among others: Wages: PhP 1,900 for 1995-1996; Retroactivity: December 28, 1996-Dec. 1999, etc. Dissatisfied, some members of
the union filed a motion for intervention/reconsideration. Petitioner warns that is the wage increase of Php2,000.00 per month as
ordered is allowed, it would pass the cost covering such increase to the consumers through an increase rate of electricity. On the
retroactivity of the CBA arbitral award, the parties reckon the period as when retroaction shall commence.
ISSUE:

Whether or not retroactivity of arbitral awards shall commence at such time as granted by Secretary.

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RULING:
In St. Lukes Medical vs Torres, a deadlock developed during CBA negotiations between management unions. The
Secretary assumed jurisdiction and ordered the retroaction of the CBA to the date of expiration of the previous CBS. The Court
ratiocinated thus: In the absence of a specific provision of law prohibiting retroactive of the effectivity of arbitral awards issued by
the Secretary pursuant to article 263(g) of the Labor Code, public respondent is deemed vested with the plenary and discretionary
powers
to
determine
the
effectivity
thereof.
In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties. On the other
hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual agreement of the
parties but by intervention of the government. In the absence of a CBA, the Secretarys determination of the date of retroactivity
as
part
of
his
discretionary
powers
over
arbitral
awards
shall
control.
Wherefore, the arbitral award shall retroact from December 1, 1995 to November 30, 1997; and the award of wage is increased
from Php1,900 to Php2,000.
METROLAB INDUSTRIES, INC VS ROLDAN CONFESOR
FACTS:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution and
Omnibus Resolution of the Secretary of Labor and Employment on grounds that these were issued with grave abuse of discretion
and in excess of jurisdiction.
Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter referred to as the
Union) is a labor organization representing the rank and file employees of petitioner Metrolab Industries, Inc. (hereinafter
referred to as Metrolab/MII) and also of Metro Drug, Inc.
On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union expired. The negotiations
for a new CBA, however, ended in a deadlock.
Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro Drug Inc. The parties failed to
settle their dispute despite the conciliation efforts of the National Conciliation and Mediation Board.
To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued an assumption order
"any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug Corp. Employees Association - FFW are
likewise directed to cease and desist from committing any and all acts that might exacerbate the situation."
Then Labor Secretary Torres issued an order resolving all the disputed items in the CBA and ordered the parties involved to
execute a new CBA.
Thereafter, the Union filed a motion for reconsideration.
On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab laid off 94 of its rank and
file employees.
On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the mass layoff,
alleging that such act violated the prohibition against committing acts that would exacerbate the dispute as specifically directed in
the assumption order.
On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its management prerogative. It
maintained that the company would suffer a yearly gross revenue loss of approximately sixty-six (66) million pesos due to the
withdrawal of its principals in the Toll and Contract Manufacturing Department.
Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis due to availability of work in the
production lines.
On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of Metrolabs 94 rank and file
workers illegal and ordered their reinstatement with full backwages.
On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not aggravate the dispute since
no untoward incident occurred as a result thereof. It, likewise, filed a motion for clarification regarding the constitution of the
bargaining unit covered by the CBA.
On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The execution, however, was without
prejudice to the outcome of the issues raised in the reconsideration and clarification motions submitted for decision to the
Secretary of Labor.
Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its employees on grounds of
redundancy due to lack of work which the Union again promptly opposed on 5 October 1992.
On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order. Metrolab moved for a reconsideration.
On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution order "MIIs motion for reconsideration
with respect to the consequences of the second wave of layoff affecting 73 employees, to the extent of assailing our ruling that
such layoff tended to exacerbate the dispute, is hereby denied. But inasmuch as the legality of the layoff was not submitted for our
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resolution and no evidence had been adduced upon which a categorical finding thereon can be based, the same is hereby referred
to the NLRC for its appropriate action.
Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-shop provision of the CBA, not from
the bargaining unit.
On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the present petition for certiorari with
application for issuance of a Temporary Restraining Order.
On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary of Labor from enforcing and implementing
the assailed Resolution and Omnibus Resolution dated 14 April 1992 and 25 January 1993, respectively.
ISSUES:
1. W/N PUBLIC RESPONDENT SECRETARY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF
DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY LAYOFF ILLEGAL
AND ORDERING THE REINSTATEMENT AND PAYMENT OF BACKWAGES TO THE AFFECTED EMPLOYEES. NO
2. W/N THE PUBLIC RESPONDENT, CONFESOR GRA VELY ABUSED HER DISCRETION IN INCLUDING
EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF RANK AND FILE EMPLOYEES. -YES
HELD:
Metrolab argues that the Labor Secretarys order enjoining the parties from committing any act that might exacerbate the dispute
is overly broad, sweeping and vague and should not be used to curtail the employers right to manage his business and ensure its
viability.
We cannot give credence to Metrolabs contention.
This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate business
decisions of the employer. However, this privilege is not absolute but subject to limitations imposed by law. It is circumscribed by
limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice.
The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power under the Labor Code
to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. The disputed injunction is
subsumed under this special grant of authority.
Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no untoward incident occurred after
the layoffs were implemented. The affected employees calmly accepted their fate as this was a matter which they had been
previously advised would be inevitable.
Protest against the subject layoffs need not be in the form of violent action or any other drastic measure. In the instant case the
Union registered their dissent by swiftly filing a motion for a cease and desist order. Contrary to petitioners allegations, the Union
strongly condemned the layoffs and threatened mass action if the Secretary of Labor fails to timely intervene.
Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the subject
layoffs. As a result, motions and oppositions were filed diverting the parties attention, delaying resolution of the bargaining
deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict.
We, likewise, find untenable Metrolabs contention that the layoff of the 94 rank-and-file employees was temporary, despite the
recall of some of the laid off workers.
If Metrolab intended the layoff of the 94 workers to be temporary, it should have plainly stated so in the notices it sent to the
affected employees and the Department of Labor and Employment.
MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. While insisting that there is really no best
time to announce a bad news, if there is really no best time to announce a bad news (sic), it wouldnt have mattered if the same
was announced at the first working day of the year. That way, MII could have at least complied with the requirement of the law.
The second issue raised by petitioner merits our consideration.
Metrolab maintains that executive secretaries, who are all members of the company's Management Committee should not only be
exempted from the closed-shop provision but should be excluded from membership in the bargaining unit of the rank and file
employees on the ground that their executive secretaries are confidential employees, having access to "vital labor information".
We concur with Metrolab.
Although Article 245 of the Labor Code[20] limits the ineligibility to join, form and assist any labor organization to managerial
employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or
nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to
sensitive and highly confidential records.
Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature of employment of
confidential employees is quite distinct from the rank and file, thus, warranting a separate category. Excluding confidential
employees from the rank and file bargaining unit, therefore, is not tantamount to discrimination.
WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public respondent Secretary of
Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the extent that executive secretaries of petitioner
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Metrolabs General Manager and the executive secretaries of the members of its Management Committee are excluded from the
bargaining unit of petitioners rank and file employees.
MALAYANG SAMAHAN NG MANGGAGAWA SA M. GREENFILED VS NLRC
FACTS:

There was a disagreement between the local union, the Malayang Samahan ng Manggagawa ng sa M. Greenfield
(MSMG) and the national federation United Lumber and General Workers of the Philippines (ULGWP). MSMG wanted several
employees to be deducted 50.00 in their salary for not attending the general meeting. This was opposed by ULGWP the national
federation. ULGWP directed the company Greenfield to refrain from deducting 50.00 from the employees.
Dismayed, the local union declared general autonomy from the national federation. The Federation asked the company
to stop the remittance of the local unions share in the education funds. This brought about the filing of a complaint with the
Med-Arbiter. The Med-Arbiter ruled the local union officers of ULGWP shall administer the CBA, that the education fund will
be remitted to ULGWP; that the Treasurer of MSMG is authorized to collect the 50.00 from the employees who did not attend
the assembly.
ULGWP designated a certain person and disauthorized the incumbent union officers to represent the employees. This
action was protested by the local union. The local union officers were dismissed from ULGWP. ULGWP advised the respondent
company to expel the 30 union officers which the company did. On that same day, the expelled union officers assigned in the
first shift were physically or bodily brought out of the company premises by the company's security guards. The following day,
March 9, 1989, a strike vote referendum was conducted and out of 2, 103 union members who cast their votes, 2,086 members
voted to declare a strike.
On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive suspension by respondent
company. This prompted the union members to again stage a walk-out and resulted in the official declaration of strike at around
3:30 in the afternoon of March 14, 1989. The strike was attended with violence, force and intimidation on both sides resulting to
physical injuries to several employees, both striking and non-striking, and damage to company properties.
Issue:
Whether or not the Court erred in upholding the dismissal of the union members
Held:

In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly committing acts of
disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution and By-laws. Upon demand of the
federation, the company terminated the petitioners without conducting a separate and independent investigation. Respondent
company did not inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to effect the
same. Relying merely upon the federation's allegations, respondent company terminated petitioners from employment when a
separate inquiry could have revealed if the federation had acted arbitrarily and capriciously in expelling the union officers.
Respondent company's allegation that petitioners were accorded due process is belied by the termination letters received by the
petitioners which state that the dismissal shall be immediately effective.
As held in the aforecited case of Cario, "the right of an employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy with either the company or his own union is not wiped away by a
union security clause or a union shop clause in a collective bargaining agreement. An employee is entitled to be protected not only
from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation of
swift and arbitrary expulsion from membership and mere dismissal from his job.
While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union
security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done
hastily and summarily thereby eroding the employees' right to due process, self-organization and security of tenure. The
enforcement of union security clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and
always with due process.16 Even on the assumption that the federation had valid grounds to expel the union officers, due process
requires that these union officers be accorded a separate hearing by respondent company.
`
While it is true that the issue of expulsion of the local union officers is originally between the local union and the
federation, hence, intra-union in character, the issue was later on converted into a termination dispute when the company
dismissed the petitioners from work without the benefit of a separate notice and hearing. As a matter of fact, the records reveal
that the termination was effective on the same day that the termination notice was served on the petitioners. In the case of Liberty
Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.17, the Court held the company liable for the payment of backwages
for having acted in bad faith in effecting the dismissal of the employees. . .
Bad faith on the part of the respondent company may be gleaned from the fact that the petitioner workers were
dismissed hastily and summarily. At best, it was guilty of a tortious act, for which it must assume solidary liability, since it
apparently chose to summarily dismiss the workers at the union's instance secure in the union's contractual undertaking that the
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union would hold it "free from any liability" arising from such dismissal. Thus, notwithstanding the fact that the dismissal was at
the instance of the federation and that it undertook to hold the company free from any liability resulting from such a dismissal,
the company may still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard
on the matter.
CARMELITO L. PALACOL, ET AL., petitioners, vs. PURA FERRER-CALLEJA, Director of the Bureau of Labor
Relations, MANILA CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES),
INC., respondents.
Facts:
The respondent Manila CCBPI Sales Force Union, as the collective bargaining agent of all regular salesmen, regular helpers, and
relief helpers of the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Philippines), Inc. made a
new collective bargaining agreement with the latter. The employees were granted general salary increase to be given in lump sum
including recomputation of actual commissions earned based on the new rates of increase. The president of the Union submitted
to the Company the ratification by the union members of the new CBA and authorization for the Company to deduct union dues
equivalent to 10% by way of special assessment, from the CBA lump-sum pay granted to the union members. The purpose of the
special assessment sought to be levied is "to put up a cooperative and credit union; purchase vehicles and other items needed for
the benefit of the officers and the general membership; and for the payment for services rendered by union officers, consultants
and others." 528 members of the union objected and 272 members agreed. The Company filed an action for interpleader with the
Bureau of Labor Relations in order to resolve the conflicting claims of the parties concerned. Petitioners, who are regular rankand-file employees of the Company and bona fide members of the Union, filed a motion/complaint for intervention therein in
two groups of 161 and 94, respectively. They claimed to be among those union members who either did not sign any individual
written authorization, or having signed one, subsequently withdrew or retracted their signatures therefrom. Petitioners assailed the
10% special assessment as a violation of Article 241(o) in relation to Article 222(b) of the Labor Code. Article 222(b) provides as
follows:
ART. 222. Appearances and Fees
(b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or
conclusion of the collective agreement shall be imposed on any individual member of the contracting union; Provided, however,
that attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be null and void.
On the other hand, Article 241(o) mandates that:
ART. 241. Rights and conditions of membership in a labor organization.
(o) Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any other
extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly
signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction;
The Union countered that the deductions not only have the popular indorsement and approval of the general membership, but
likewise complied with the legal requirements of Article 241 (n) and (o) of the Labor Code in that the board resolution of the
Union imposing the questioned special assessment had been duly approved in a general membership meeting and that the
collection of a special fund for labor education and research is mandated.
Article 241(n) of the Labor Code states that
ART. 241. Rights and conditions of membership in a labor organization.
(n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized
by a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. The
secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the
purpose of the special assessment or fees and the recipient of such assessments or fees. The record shall be attested to by the
president;
Med-Arbiter ruled in favor of petitioners and directed the Company to remit the amount it had kept in trust directly to the rankand-file personnel. On appeal, the Bureau of Labor Relation reversed and set aside the order of the Med-Arbiter. It upheld the
claim of the Union that the special assessment is authorized under Article 241 (n) of the Labor Code, and that the Union has
complied with the requirements. Hence, the instant petition.
Issue:
WON respondent-Director committed a grave abuse of discretion amounting to lack or excess of jurisdiction when she held
Article 241 (n) of the Labor Code to be the applicable provision instead of Article 222(b) in relation to Article 241(o) of the same
law.
Ruling:
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Paragraphs (n) and (o) of Article 241 is applicable in this case. Paragraph (n) refers to "levy" while paragraph (o) refers to "checkoff" of a special assessment. Both provisions must be complied with. Under paragraph (n), the Union must submit to the
Company a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. In
addition, the secretary of the organization must record the minutes of the meeting which, in turn, must include, among others, the
list of all the members present as well as the votes cast.
The Union failed to comply with the requirements of paragraph (n). It held local membership meetings on separate occasions, on
different dates and at various venues, contrary to the express requirement that there must be a general membership meeting. The
contention of the Union that "the local membership meetings are precisely the very general meetings required by law" is
untenable because the law would not have specified a general membership meeting had the legislative intent been to allow local
meetings in lieu of the latter.
It submitted only minutes of the local membership meetings when what is required is a written resolution adopted at the general
meeting. Worse still, the minutes of three of those local meetings held were recorded by a union director and not by the union
secretary. The minutes submitted to the Company contained no list of the members present and no record of the votes cast. Since
it is quite evident that the Union did not comply with the law at every turn, the only conclusion that may be made is that there
was no valid levy of the special assessment pursuant to paragraph (n) of Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an individual written authorization duly signed by every employee in order that a special
assessment may be validly checked-off. Even assuming that the special assessment was validly levied pursuant to paragraph (n),
and granting that individual written authorizations were obtained by the Union, nevertheless there can be no valid check-off
considering that the majority of the union members had already withdrawn their individual authorizations. A withdrawal of
individual authorizations is equivalent to no authorization at all. Moreover, it is well-settled that "all doubts in the implementation
and interpretation of the provisions of the Labor Code shall be resolved in favor of labor."
Of the stated purposes of the special assessment, as embodied in the board resolution of the Union, only the collection of a
special fund for labor and education research is mandated, as correctly pointed out by the Union. The two other purposes,
namely, the purchase of vehicles and other items for the benefit of the union officers and the general membership, and the
payment of services rendered by union officers, consultants and others, should be supported by the regular union dues, there
being no showing that the latter are not sufficient to cover the same.
WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the Bureau of Labor Relations dated
August 19, 1988 is hereby REVERSED and SET ASIDE, while the order of the Med-Arbiter dated February 17, 1988 is
reinstated, and the respondent Coca-Cola Bottlers (Philippines), Inc. is hereby ordered to immediately remit the amount of
P1,267,863.39 to the respective union members from whom the said amount was withheld. No pronouncement as to costs. This
decision is immediately executory.
PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner, vs. HON. BIENVENIDO E.
LAGUESMA, Undersecretary of Labor and Employment
FACTS:
Before us is a petition for certiorari seeking to annul the Resolution and the Order of public respondent Bienvenido E. Laguesma,
acting then as Undersecretary which reversed the Order of Med-Arbiter Phibun D. Pura declaring that supervisors and section
heads of petitioner under its new organizational structure are managerial employees and should be excluded from the list of voters
for the purpose of a certification election among supervisory and technical staff employees of petitioner.
Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the manufacture of paper and timber products,
with principal place of operations at Tabon, Bislig, Surigao del Sur. It has over 9,000 employees, 944 of whom are supervisory and
technical staff employees. More or less 487 of these supervisory and technical staff employees are signatory members of the
private respondent PICOP-Bislig Supervisory and Technical Staff Employees Union (PBSTSEU).
On August 9, 1989. PBSTSEU instituted a Petition for Certification Election to determine the sole and exclusive bargaining agent
of the supervisory and technical staff employees of PICOP for collective bargaining agreement (CBA) purposes.
But PICOP failed to file any comment or position paper. Meanwhile, private respondents Federation of Free Workers (FFW) and
Associated Labor Union (ALU) filed their respective petitions for intervention. Med-Arbiter Arturo L. Gamolo issued an
Order granting the petitions for interventions of the FFW and ALU. Another Order issued on the same day set the holding of a
certification election among PICOP's supervisory and technical staff employees in Tabon, Bislig, Surigao del Sur, with four (4)
choices, namely: (1) PBSTSEU; (2) FFW; (3) ALU; and (4) no union.d
PICOP appealed the Order which set the holding of the certification election contending that the Med-Arbiter committed grave
abuse of discretion in deciding the case without giving PICOP the opportunity to file its comments/answer, and that PBSTSEU
had no personality to file the petition for certification election.
The Secretary of the Labor issued a Resolution which upheld the Med-Arbiter's Order dated September 17, 1989, with
modification allowing the supervising and staff employees in Cebu, Davao and Iligan City to participate in the certification
election.
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PICOP questioned and objected to the inclusion of some section heads and supervisors in the list of voters whose positions it
averred were reclassified as managerial employees. Under the Revised Organizational Structure of the PICOP, the company was
divided into four (4) main business groups, namely: Paper Products Business, Timber Products Business, Forest Resource
Business and Support Services Business.
PICOP advanced the view that considering the alleged present authority of these section managers and unit managers to hire and
fire, they are classified as managerial employees, and hence, ineligible to form or join any labor organization.
Med-Arbiter Phibun D. Pura issued an Order, holding that supervisors and section heads of the petitioner are managerial
employees and therefore excluded from the list of voters for purposes of certification election.
PBSTSEU appealed the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU likewise appealed.
Public respondent Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the assailed Order,setting aside
the Order of the Med-Arbiter and declaring that the subject supervisors and section heads are supervisory employees eligible to
vote in the certification election.
PICOP sought reconsideration however, public denied PICOP's motion for reconsideration. Hence, this petition.
ISSUE:
1. WON THE PUBLIC RESPONDENT HONORABLE BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF
LABOR AND EMPLOYMENT, IN A CAPRICIOUS, ARBITRARY AND WHIMSICAL EXERCISE OF POWER ERRED
AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ACTING WITHOUT OR IN EXCESS OF
JURISDICTION WHEN HE DENIED YOUR PETITIONER'S PLEA TO PRESENT ADDITIONAL EVIDENCE TO
PROVE THAT SOME OF ITS MANAGERIAL EMPLOYEES ARE DISQUALIFIED FROM JOINING OR FORMING A
UNION REPRESENTED BY CO-RESPONDENT PBSTSEU, IN VIEW OF A SUPERVENING EVENT BROUGHT
ABOUT BY THE CHANGES IN THE ORGANIZATIONAL STRUCTURE OF YOUR PETITIONER WHICH WAS
FULLY IMPLEMENTED IN JANUARY 1991 AFTER THE CASE WAS ELEVATED ON APPEAL AND SUBMITTED
FOR DECISION.
2. WON THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA, ALSO ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ARBITRARILY ACTING WITHOUT OR IN
EXCESS OF JURISDICTION WHEN HE TOTALLY DISREGARDED THE DOCUMENTARY EVIDENCE SO FAR
SUBMITTED BY YOUR PETITIONER AND RELIED MAINLY ON THE UNSUBSTANTIATED CLAIM AND MERE
ALLEGATIONS OF PRIVATE RESPONDENT, PBSTSEU, THAT THE REORGANIZATION OF YOUR PETITIONER
WAS A SHAM AND CALCULATED MERELY TO FRUSTRATE THE UNIONIZATION OF YOUR PETITIONER'S
SUPERVISORY PERSONNEL; AND SOLELY ON THIS BASIS, DENIED YOUR PETITIONER'S URGENT MOTION
FOR RECONSIDERATION.
RULING:
The petition, not being meritorious, must fail and the same should be as it is hereby dismissed.
First. In United Pepsi-Co/a Supervisory Union (UPSU) v. Laguesma, we had occasion to elucidate on the term "managerial
employees." Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers. Top and Middle
Managers have the authority to devise, implement and control strategic and operational policies while the task of First-Line
Managers is simply to ensure that such policies are carried out by the rank-and- file employees of an organization. Under this
distinction, "managerial employees" therefore fall in two (2) categories, namely, the "managers" per se composed of Top and
Middle Managers, and the "supervisors" composed of First-Line Managers. Thus, the mere fact that an employee is designated
manager" does not ipso facto make him one. Designation should be reconciled with the actual job description of the
employee, for it is the job description that determines the nature of employment.
In the case at bar, thorough dissection of the job description of the concerned supervisory employees and section heads
indisputably show that they are not actually managerial but only supervisory employees since they do not lay down company
policies. PICOP's contention that the subject section heads and unit managers exercise the authority to hire and fire is ambiguous
and quite misleading for the reason that any authority they exercise is not supreme but merely advisory in character. Theirs is not
a final determination of the company policies inasmuch as any action taken by them on matters relative to hiring, promotion,
transfer, suspension and termination of employees is still subject to confirmation and approval by their respective superior. Thus,
where such power, which is in effect recommendatory in character, is subject to evaluation, review and final action by the
department heads and other higher executives of the company, the same, although present, is not effective and not an exercise of
independent judgment as required by law.
Second. No denial of due process can be ascribed to public respondent Undersecretary Laguesma for the latter's denial to allow
PICOP to present additional evidence on the implementation of its program inasmuch as in the appeal before the said public
respondent, PICOP even then had already submitted voluminous supporting documents. The record of the case is replete with
position papers and exhibits that dealt with the main thesis it relied upon. What the law prohibits is the lack of opportunity to be
heard.
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WHEREFORE, the petition is hereby DISMISSED, and the Resolution and Order of public respondent Bienvenido E.
Laguesma dated April 17, 1991 and August 17, 1991, respectively, finding the subject supervisors and section heads as supervisory
employees eligible to vote in the certification election are AFFIRMED. Costs against petitioner. SO ORDERED.
Philippine Diamond Hotel and Resort, Inc. v Manila Diamond Hotel Employees Union
Facts:
The union, which was registered before DOLE, filed a Petition for Certification of Election before DOLE-NCR seeking to be
the exclusive bargaining representatives of its members. DOLE-NCR denied the petition due to the unions failure to meet legal
requirements enshrined in the IRR of the Labor Code.
Through its president, the union notified the petitioner of its intention to negotiate a CBA. The petitioner answered that the
union cannot enter into a CBA with the company, as it is not recognized as such by the DOLE-NCR. Petitioners refusal to
bargain prompted the union to engage in concerted activities to protect its rights; thus, a plan to stage a strike.
While conciliation conferences were being held, the union president filed a complaint of unfair labor practice (ULP) before the
Arbitration Branch and suddenly, the union went on a strike along with hotel supervisors.
Petitioner filed a petition for injunction before the NLRC to enjoin the illegal strike. Dissatisfied with the supervisors explanation
as per their joining in the strike, petitioner terminated their services. The supervisors then filed a complaint of ULP against
petitioner.
DOLE Secretary: Reinstatement of strikers to payroll
NLRC: Declared strike as illegal; strikers reinstated deemed to have lost their employment status; dismissed ULP complaints
against petitioner.
CA: Affirmed dismissal of ULP complaints; modified reinstatement order to reinstatement with backwages. Petitioner failed to
establish convincing evidence that union members who participated in the strike performed illegal acts; hence, this appeal.
Issues:
(1) WON petitioner should be made liable to pay backwages despite the NLRCs declaration that strikers have already lost their
employment status and (2) WON the strike was illegal.
Ruling:
The strike was illegal.
Under Article 255 of the Labor Code, only the labor organization designated or selected by the majority of the employees in an
appropriate collective bargaining unit is the exclusive representative of the employees in such unit for the purpose of collective
bargaining.
The union is admittedly not the exclusive representative of the majority of the employees of petitioner, hence, it could not
demand from petitioner the right to bargain collectively in their behalf.
The philosophy is to avoid fragmentation of the bargaining unit so as to strengthen the employees bargaining power with the
management. Petitioners refusal to bargain then with respondent cannot be considered a ULP to justify the staging of the strike.
The Court notes that respondent violated Article 264, which proscribes the staging of a strike on the ground of ULP during the
pendency of cases involving the same grounds for the strike.
Article 264(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employers premises for lawful purposes.
It is doctrinal that the exercise of the right of private sector employees to strike is not absolute. Thus, Section 3 of Article XIII of
the Constitution provides: right to strike in accordance with law.
Strikers not entitled to backwages.
In previous decisions of the Court, it was established that "when employees voluntarily go on strike, even if in protest against
unfair labor practices," no backwages during the strike is awarded, for the general rule is that backwages shall not be awarded in
an economic strike on the principle that "a fair days wage" accrues only for a "fair days labor.
Exceptions to this rule are when employees are illegally locked to thus prompt them to stage a valid strike, the employer is guilty
of the grossest form of ULP, the employer committed discrimination in the rehiring of strikers refusing to readmit those against
whom there were pending criminal cases while admitting non-strikers who were also criminally charged in court, or when the
workers who staged a voluntary ULP strike offered to return to work unconditionally but the employer refused to reinstate them.
None of these is present in the case at bar. #
PHILIPPINE SKYLANDERS INC VS NLRC
FACTS:
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Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with Philippine Association of Free
Labor Unions (PAFLU) won in the certification election conducted among rank and file employees of Philippine Skylanders Inc.
(PSI). The rival union, PSEA-WATU protested the result of the election. PSEA disaffiliated with PAFLU due to dereliction of
duty. PSEA subsequently affiliated itself with the National Congress of Workers (NCW). PAFLU oblivious to the disaffiliation,
requested a copy of PSIs audit since the time was ripe for the parties to enter into a collective bargaining agreement. PSI denied
the request due to the disaffiliation.
PAFLU filed a complaint for unfair labor practice against PSI due to its recognition of PSEA-NCW. PAFLU alleged
that aside from PSI's refusal to bargain collectively with its workers, the company through its president and personnel manager,
was also liable for interfering with its employees' union activities. The Labor Arbiter ruled that the disaffiliation of PSEA was
invalid.
Issue:
Whether or not the disaffiliation of PSEA is valid
Held:

Yes. It is valid.
The Court upheld the right of local unions to separate from their mother federation on the ground that as separate and
voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated
but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common
bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when
without succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves.
Upon an application of the aforecited principle to the issue at hand, the impropriety of the questioned Decisions
becomes clearly apparent. There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly
forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As such, the pendency
of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation.
It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had
validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently affiliating with
NCW and entering into a collective bargaining agreement in behalf of its members.
PAMANTASAN NG LUNGSOD NG MAYNILA (PLM), petitioner, vs. CIVIL SERVICE COMMISSION (CSC),
respondents.
FACTS:
The sixteen (16) individual private respondents were full-time instructors of PLM under "temporary contracts" of employment
renewable on a yearly basis. They, among other instructors, joined the PLMFO (Pamantasan Ng Lungsod Ng Maynila Faculty
Organization).
Uniform notices of termination, were individually sent to private respondents informing them of "the expiration of their
temporary appointments at the close of office hours on 31 May 1990" and the non-renewal of their appointments. They were
advised that their retention was not recommended by their respective Deans.
Private respondents, through PLMFO, filed with the CSC a complaint for illegal dismissal and unfair labor practice against
petitioner and its officers.
In its defense, PLM interposed (1) the temporary nature of private respondents' contracts of employment and (2) reasons that
could justify the non- renewal of the contracts. During the proceedings, petitioner relied in main on the temporary nature of
private respondents' employment contracts.
In a Resolution the PSLMC found petitioner guilty of "Unfair Labor Practice" and held that private respondents "should be
reinstated."
Petitioner's request for reconsideration was denied in PSLMC's (Public Sector Labor-Management Council) the PSLMC
transmitted the case to the CSC for appropriate action.
Petitioner filed with this Court a petition for certiorari that sought the annulment of the aforementioned PSLMC resolutions. The
Court dismissed the petition for PLM's failure to submit the certification on forum-shopping. The resolution became final and
executor.
CSC, issued its Resolution sustaining the findings of the PSLMC. The CSC, accordingly, directed the reinstatement, with back
salaries, of private respondents.
ISSUES:
1. WON The Civil Service Commission acted with grave abuse of discretion tantamount to lack of jurisdiction and denial of due
process when it adopted entirely, without according the petitioner the opportunity to be heard, the findings of facts and
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resolutions of the Public Sector Labor and Management Council, a body separate and distinct and with different jurisdiction from
that of the Commission.
2. WON The Civil Service Commission acted with grave abuse discretion in effectively denying the petitioner the opportunity to
present evidence to substantiate its allegations in its defense against the charge of illegal dismissal, to the prejudice of civil service
and public interest.
3. WON The Civil Service Commission committed a grave abuse of discretion in directing reinstatement and payment of
backwages to private respondents whose temporary contracts of employment had already expired.
RULING:
PSLMC's jurisdiction over the unfair labor practice case filed by private respondents against petitioner is not disputed. The
PSLMC, has conducted its proceedings in accordance with its legal mandate. The proceedings conform with the "Rules and
Regulations to Govern the Exercise of the Right of Government Employees to Self Organization"
Sec. 3. The Council may call on any officer or agency for assistance. It may deputize officers to hear and recommend action on
complaints or grievances filed with the council.
Sec. 4. The procedure in the Council shall be non-adversarial in nature. The parties may be required to submit their respective
position papers, together with all evidences available in support of their respective positions within 15 days from receipt of
notices.
Sec. 5. The decision of the Council shall be final.
The conclusion of the PSLMC regarding petitioner's alleged commission of unfair labor practice against private respondents can
no longer be considered a proper issue either before the CSC or in this instance since this particular matter has already been
adjudged with finality.
Petitioner insists that when CSC has ruled on the matter of illegal dismissal without conducting any further hearing of its own,
relying, instead, on PSLMC's finding of unfair labor practice on the part of petitioner, the latter has thereby been denied due
process. Unfortunately for petitioner, however, the two supposed independent issues,i.e., the unfair labor practice charge and the
complaint for illegal dismissal both filed by private respondents, are, in fact, here unavoidably interlinked. The non-renewal of an
employment contract with a term, it is true, is ordinarily a valid mode of removal at the end of each period. This rule, however,
must yield to the superior constitutional right of employees, permanent or temporary, to self-organization. While, a temporary
employment may be ended with or without cause, it certainly may not, however, be terminated for an illegal cause.
Petitioner claims that it was denied "due process." It itself admitted, however, that "it manifested (before the PSLMC) its
intention to submit evidence (that it had other valid grounds for not renewing private respondents' temporary contracts of
employment) which, inadvertently or otherwise, it failed to present . . . This supposed evidence, if true and being material to
substantiate its defense against the unfair labor charge, should have been duly presented, but it did not. Petitioner should not now
be heard to complain that it was denied due process. We ruled, time and again, that "due process" was designed to afford an
opportunity to be heard, 13 not that an actual hearing should always and indispensably be held..
The finding of the PSLMC that the non-renewal by petitioner of the questioned contracts of employment had been motivated by
private respondents' union activities is conclusive on the parties. Indeed, this Court's resolution in G.R. No. 105157 (PLM vs.
PSLMC et al.) which has long become final and executory should now render that matter a fait accompli.
When the case was thus referred to the CSC by the PSLMC to take "appropriate action" it understandably meant that the CSC
should take the necessary steps of reinstating the illegally dismissed employees.
WHEREFORE, the petition for certiorari is DISMISSED and the appealed resolutions of the Civil Service Commission are
AFFIRMED. The temporary restraining order issued by this Court on 18 May 1993, is LIFTED. No costs. SO ORDERED.
PROGRESSIVE DEVELOPMENT CORPORATION- PIZZA HUT VS LAGUESMA and NAGKAKAISANG LAKAS
NG MANGGAGAWA (NLM)
FACTS:
Progressive Development Corporation (PDC) filed alleging fraud, falsification and misrepresentation against labor union
Nagkakaisang Lakas ng Manggawa (NLM). NLM filed a petition for certification election with the DOLE. On the other hand,
PDC alleged that there were forged signatures in the ratification of the Unions constitution, falsification of the attendees of
Union meetings and serious falsities in the dates of the issuance of the charter certification and the organization meeting. PDC
also filed a petition seeking the cancellation of the Unions registration.
The Med-Arbiter directed the holding of a certification of election among petitioners rank and file employees. He ruled
that NLM is a legitimate labor organization and shall remain as such until its very charter certificate is cancelled or revoked.
Petitioner appealed to the Secretary of Labor Laguesma who denied the same.
ISSUE:

Whether or not the public respondent committed grave abuse of discretion in affirming the Med-Arbiter's order to
conduct a certification election among petitioner's rank and file employees.
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HELD:

We grant the petition.

A more than cursory reading of the aforecited provisions clearly indicates that the requirements embodied therein are
intended as preventive measures against the commission of fraud. After a labor organization has filed the necessary papers and
documents for registration, it becomes mandatory for the Bureau of Labor Relations to check if the requirements under Article
234 have been sedulously complied with. And if a certificate of recognition has been issued, the propriety of the labor
organization's registration could be assailed directly through cancellation of registration proceedings in accordance with Articles
238 and 239 of the Labor Code, or indirectly, by challenging its petition for the issuance of an order for certification election.
These measures are necessary and may be undertaken simultaneously if the spirit behind the Labor Code's
requirements for registration are to be given flesh and blood. Registration requirements specifically afford a measure of protection
to unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose sole purpose is to control
union funds or use the labor organization for illegitimate ends. Such requirements are a valid exercise of the police power,
because the activities in which labor organizations, associations and unions of workers are engaged directly affect the public
interest and should be protected.
Registration based on false and fraudulent statements and documents confer no legitimacy upon a labor organization
irregularly recognized, which, at best, holds on to a mere scrap of paper. Under such circumstances, the labor organization, not
being a legitimate labor organization, acquires no rights, particularly the right to ask for certification election in a bargaining unit.
As we laid emphasis in Progressive Development Corporation Labor, "[t]he employer needs the assurance that the union
it is dealing with is a bona fide organization, one which has not submitted false statements or misrepresentations to the Bureau."
Clearly, fraud, falsification and misrepresentation in obtaining recognition as a legitimate labor organization are contrary to the
Med-Arbiter's conclusion not merely collateral issues. The invalidity of respondent Union's registration would negate its legal
personality to participate in certification election.
SAN JOSE CITY ELECTRIC SERVICE COOPERATIVE, INC. (SAJELCO), petitioner, vs. MINISTRY OF LABOR
AND EMPLOYMENT and MAGKAISA-ADLO, respondents.
Facts:
On July 29, 1986, private respondent Manggagawang Nagkakaisa ng SAJELCO-Association of Democratic Labor Organization
(MAGKAISA-ADLO) filed a petition for direct certification election with the Regional Office of the Department of Labor and
Employment in San Fernando, Pampanga.
SAJELCO opposed the petition for direct certification election contending that the employees who sought to be represented by
private respondent are members-consumers of the Cooperative itself and at the same time composed the General Assembly
which, pursuant to the By-laws is also the final arbiter of any dispute arising in the Cooperative.
On September 5, 1986, the Med-Arbiter, assigned to the case, issued an Order granting the petition for direct certification election
on the basis of the pleadings filed. The Order said that while some of the members of petitioner union are members of the
cooperative, it cannot be denied that they are also employees within the contemplation of the Labor Code and are therefore
entitled to enjoy all the benefits of employees, including the right to self-organization.
In its appeal, SAJELCO reiterated its position that: upon the principle that in electric cooperative as in the case of respondent,
there is a merger of the consumer-members that composed of the assembly and that of the rank-and-file members of the
petitioners-into one person or juridical status thus rendering the proposed collective bargaining agent ineffective and/or uncalled
for considering that a grievance machinery for employees and/or member-consumers of the cooperative-has been provided
for by the By-laws as a built-in over-all arbiter involving disputes affecting said cooperative;
However, respondent Director of the Bureau of Labor Relations dismissed the appeal and sustained the ruling of the MedArbiter. SAJELCO filed the instant petition for certiorari in the first division of the Supreme Court praying that the order of
respondent Director be set aside and another one rendered denying the holding or conduct of a certification election among the
rank and file employees of SAJELCO. The Solicitor General filed its comment dated October 30, 1987 wherein it took a stand
contrary to that of respondent. The Solicitor General argued that the union members who seek to be represented by the union are
the very members of the cooperative, thereby resulting in a fusion of two personalities. Thus, it will be inconsistent for the union
members to bargain with themselves.
Issue:
Whether or not the employees-members of an electric cooperative can organize themselves for purposes of collective bargaining.
Ruling:
An employee of such a cooperative who is a member and at the same time co-owner thereof cannot invoke the right to collective
bargaining for certainly an owner cannot bargain with himself or his co-owners.
A provision in its by laws mentions two types of employees, namely:
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1. the members-consumers or members co-owners

2. the members of their immediate families.
As regards employees of SAJELCO who are members-consumers, the rule is settled that they are not qualified to form, join or
assist labor organizations for purposes of collective bargaining. The reason for withholding from employees of a cooperative who
are members-co-owners the right to collective bargaining is clear: an owner cannot bargain with himself.
However, employees who are not members-consumers may form, join or assist labor organizations for purposes of collective
bargaining notwithstanding the fact that employees of SAJELCO who are not members-consumers were employed ONLY
because they are members of the immediate family of members-consumers. The fact remains that they are not themselves
members-consumers, and as such, they are entitled to exercise the rights of all workers to organization, collective bargaining and
negotiations.
ACCORDINGLY, the petition is GRANTED. The assailed Order of respondent Pura Ferrer-Calleja, Director of the Bureau of
Labor Relations is hereby MODIFIED to the effect that only the rank-and-file employees of petitioner who are not its membersconsumers are entitled to self-organization, collective bargaining, and negotiations, while other employees who are membersconsumers thereof cannot enjoy such right.The Regional Office III of the Department of Labor and Employment in San
Fernando, Pampanga is hereby directed to immediately conduct a direct certification election among the rank and file employees
of SAJELCO who are not members-consumers.
SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President,
petitioners, vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF
LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-ARBITER
AND SAN MIGUEL CORPORATION, respondents.
FACTS:
This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order
of public respondent, Undersecretary of the Department of Labor and Employment, Bienvenido E. Laguesma. The Order
excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit
and ruled out their participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the DOLE a Petition for District Certification or Certification Election among
the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification among the
supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one
bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out,
among others, the Med-Arbiters error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into
one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent companys Appeal and ordered the
remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be
included in the appropriate bargaining unit.
Upon petitioner-unions motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on
September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels
1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to
suspend proceedings.
On March 11, 1993, an Order was issued by the public respondent granting the Motion.
Hence this petition.
ISSUES:
1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees,
hence ineligible from joining a union.
2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit.
HELD:
On the first issue, this Court rules that said employees do not fall within the term confidential employees who may be
prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and
prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss
employees. They are, therefore, not qualified to be classified as managerial employees who, under Article 245[4] of the Labor
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Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership
in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. The
only question that need be addressed is whether these employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and
effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee that is, the confidential relationship must exist between the employees and
his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations.
The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests.
There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez,[9] the Court
held that if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their
loyalty to the Union in view of evident conflict of interest. The Union can also become company-dominated with the presence of
managerial employees in Union membership.
An important element of the confidential employee rule is the employees need to use labor relations information.
It is the contention of respondent corporation that Supervisory employees 3 and 4 and the exempt employees come within the
meaning of the term confidential employees primarily because they answered in the affirmative when asked Do you handle
confidential data or documents? in the Position Questionnaires submitted by the Union. In the same questionnaire, however, it
was also stated that the confidential information handled by questioned employees relate to product formulation, product
standards and product specification which by no means relate to labor relations.
As held in Westinghouse Electric Corporation v. National Labor Relations Board, an employee may not be excluded from
appropriate bargaining unit merely because he has access to confidential information concerning employers internal business
operations and which is not related to the field of labor relations.
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to all workers
the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined
so as not to needlessly deprive many employees of their right bargain collectively through representatives of their choosing.
In the case at bar, supervisors 3 and above may not be considered confidential employees merely because the information they
handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to
negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial.
Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition
against confidential employees who are not performing managerial functions to form and join a union.
In this connection, the second issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of
Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out.
It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao Otis and
San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that
Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests.
This Court finds the contention of the petitioner meritorious.
A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working
conditions and other subjects of collective bargaining.
It is readily seen that the employees in the instant case have community or mutuality of interest, which is the standard in
determining the proper constituency of a collective bargaining unit. It is undisputed that they all belong to the Magnolia Poultry
Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the
same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities.
The fact that the three plants are located in three different places is immaterial. Geographical location can be completely
disregarded if the communal or mutual interests of the employees are not sacrificed.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on December 19,
1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the
San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered
conducted.
SO ORDERED
SAN MIGUEL CORPORATION, petitioner, vs. MANDAUE PACKING PRODUCTS PLANTS-SAN PACKAGING
PRODUCTS SAN MIGUEL CORPORATION MONTHLIES RANK-AND-FILE UNION, respondent. [G.R. No.
152356. August 16, 2005]
FACTS:
-CA affirmes DOLE Undersecretary for Labor Relations, Rosalinda Dimapilis-Baldoz, ordering the immediate conduct of a
certification election among the petitioners rank-and-file employees.
-Federation of Free Workers (FFW/ respondent) filed a petition for certification election with the DOLE Regional Office No.
VII. It sought to be certified and to represent the permanent rank-andfile monthly paid employees of the petitioner. The
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following documents were attached to the petition: (1) a Charter Certificate certifying that respondent as of that date was duly
certified as a local or chapter of FFW; (2) a copy of the constitution of respondent prepared by its Secretary, Noel T. Bathan and
attested by its President, Wilfred V. Sagun; (3) a list of respondents officers and their respective addresses, again prepared by
Bathan and attested by Sagun; (4) a certification signifying that respondent had just been organized and no amount had yet been
collected from its members, signed by respondents treasurer Chita D. Rodriguez and attested by Sagun; and (5) a list of all the
rank-and-file monthly paid employees of the Mandaue Packaging Products Plants and Mandaue Glass Plant prepared by Bathan
and attested by Sagun. -SMC (Petitioner) filed a motion to dismiss the petition for certification election on the sole ground that
herein respondent is not listed or included in the roster of legitimatelabor organizations based on the certification issued by the
Officer-In representative, then right to be represented by a bargaining agent should not be denied to other members of the
bargaining unit.
HELD:
1. NO. Ratio EFFECT NON-PARTICIPIATION PREVIOUS ELECTION. No law,administrative rule or precedent prescribes
forfeiture of the right to vote by reason of neglect to exercise the right in past certification elections.
2. NO. Ratio RELIGION/PAST NON-PARTICIPATION. Neither law, administrativerule nor jurisprudence requires that only
employees affiliated with any labor organization may take part in a certification election. On the contrary, the plainly discernible
intendment of the law is to grant the right to vote to all bona fide employees in the bargaining unit, whether they are members of
a labor organization or not.
CERTIFICATION ELECTIONPROCESS
1. The Union as Initiating Party ART. 212. Definitions. -(h) Legitimate labor organization means any labor organization duly
registered with the Department of Labor and Employment, and includes any branch or local thereof. Charge, Regional
Director of the DOLE Regional Office No. VII, Atty. Jesus B. Gabor.
-Respondent submitted to the Bureau of Labor Relations the same documents earlier attached to its petition for certification. The
accompanying letter, signed by respondents president Sagun, stated that such documents were submitted in compliance with the
requirements for the creation of a local/chapter pursuant to the Labor Code and its Implementing Rules; and it was hoped that
the submissions would facilitate the listing of respondent under the roster of legitimate labor organizations. The Chief of Labor
Relations Division of DOLE Regional Office No. VII issued a Certificate of Creation of Local/Chapter No. ITD. I-ARFBT058/98, certifying that from 30 July 1998, respondent has acquired legal personality as a labor organization/workers association,
it having submitted all the required documents.
SUGBUANON RURAL BANK, INC. VS LAGUESMA]
FACTS:
Sugbuanon Rural Bank employed some 5 supervisory employees. APSOLTEU-TUCP, a legitimate labor organization, then filed a
petition for certification election of the said supervisory employees. The bank opposed the petition on the ground that the
supervisory employees were actually managerial/confidential employees. In addition, the union was represented in the petition by
ALU-TUCP, and since according to the Bank the latter also sought to represent the rank and file members, granting the petition
would violate the principle of separation of unions.
ISSUE:
Should the petition for certification election be granted, or denied?
HELD:
It should be granted. For one, the supervisory employees cannot be considered managerial or confidential employees. While the
nature of the employees work (evaluating borrowers capacity to pay, approving loans, scheduling terms of repayment of the
latter, and endorsing delinquent accounts to legal counsel for collection) indeed constituted the core of the banks business, their
functions did not fall within the definition of either a managerial employee (lay down and execute management policies related to
labor relations) or a confidential employee (they did not act in a confidential capacity to persons who formulate and execute
management policies related to labor relations). Secondly, granting the petition would not be violative of the separation of union
doctrine. The petition for certification election was filed by APSOTEU-TUCP, a legitimate labor organization. True, it was
assisted to some extent by ALU and the national federation TUCP. However, APSOTEU-TUCP had separate legal personality
from ALU and TUCP, under the principle that a local union maintains its separate legal personality despite affiliation with a
national federation.
TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner, vs. TOYOTA MOTOR PHILIPPINES
CORPORATION LABOR UNION AND THE SECRETARY OF LABOR AND EMPLOYMENT, respondents.
Facts:
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On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed a petition for certification
election with the Department of Labor, National Capital Region, for all rank-and-file employees of the Toyota Motor
Corporation. In response, petitioner filed a Position Paper seeking the denial of the issuance of an Order directing the holding of
a certification election on two grounds: first, that the respondent union, being "in the process of registration" had no legal
personality to file the same as it was not a legitimate labor organization as of the date of the filing of the petition; and second, that
the union was composed of both rank-and-file and supervisory employees in violation of law. Attached to the position paper was
a list of union members and their respective job classifications, indicating that many of the signatories to the petition for
certification election occupied supervisory positions and were not in fact rank-and-file employees.
The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification election for lack of merit because the
labor organization's membership was composed of supervisory and rank-and-file employees in violation of Article 245 of the
Labor Code, and that at the time of the filing of its petition, respondent union had not even acquired legal personality for they
dont have a certificate of registration. On appeal, the Office of the Secretary of Labor, issued a Resolution setting aside the MedArbiter's Order and directed the holding of a certification election. It contended that TMPCLU was already registered two days
before the filing of the petition and that med-arbiter should not have dismissed the petition based on violation of Article 245 of
the Labor Code.
Petitioner filed a Motion for Reconsideration of the Resolution. Acting on petitioner's motion for reconsideration, the public
respondent, set aside its earlier resolution and remanded the case to the Med-Arbiter concluding that the issues raised by
petitioner both on appeal and in its motion for reconsideration were factual issues requiring further hearing and production of
evidence.
The Med-Arbiter said that the union was not a legitimate labor organization. Despite the findings of the med-arbiter, public
respondent issued a new Resolution, "directing the conduct of a certification election among the regular rank-and-file employees
of the Toyota Motor Philippines Corporation. Petitioner's motion for reconsideration was denied by public respondent. Hence,
petitioner filed this special civil action for certiorari under Rule 65 of the Revised Rules of Court.
Issue:
WON the Secretary of Labor and Employment committed grave abuse of discretion amounting to lack or excess of jurisdiction in
reversing, contrary to law and facts the findings of the Med-Arbiters to the effect that:
1) the inclusion of the prohibited mix of rank-and file and supervisory employees in the roster of members and officers of the
union cannot be cured by a simple inclusion-exclusion proceeding; and that
2) the respondent union had no legal standing at the time of the filing of its petition for certification election.
Ruling:
We grant the petition.
The purpose of every certification election is to determine the exclusive representative of employees in an appropriate bargaining
unit for the purpose of collective bargaining. A certification election for the collective bargaining process is one of the fairest and
most effective ways of determining which labor organization can truly represent the working force.[16]In determining the labor
organization which represents the interests of the workforce, those interests must be, as far as reasonably possible, homogeneous,
so as to genuinely reach the concerns of the individual members of a labor organization.
The Labor Code has made it a clear statutory policy to prevent supervisory employees from joining labor organizations consisting
of rank-and-file employees as the concerns which involve members of either group are normally disparate and contradictory.
Article 245 provides:
ART. 245 Ineligibility of managerial employees to join any labor organization; right of supervisory employees. -- Managerial
Employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of
their own.
Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor
organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization,
including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor
organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code.
This is precisely what the Labor Code, in requiring separate unions among rank-and-file employees on one hand, and supervisory
employees on the other, seeks to avoid. The rationale behind the Code's exclusion of supervisors from unions of rank-and-file
employees is that such employees, while in the performance of supervisory functions, become the alter ego of management in the
making and the implementing of key decisions at the sub-managerial level. Certainly, it would be difficult to find unity or
mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory employees.

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In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees
in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a
legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election.
The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to whether or not respondent union
was in possession of the status of a legitimate labor organization at the time of filing, when, as petitioner vigorously claims, the
former was still at the stage of processing of its application for recognition as a legitimate labor organization. The union's
composition being in violation of the Labor Code's prohibition of unions composed of supervisory and rank-and-file employees,
it could not possess the requisite personality to file for recognition as a legitimate labor organization. In any case, the factual issue,
albeit ignored by the public respondent's assailed Resolution, was adequately threshed out in the Med-Arbiter's September 28,
1994 Order.
The resolution and order respondent Secretary of Labor are hereby SET ASIDE. The Order dated September 28, 1994 of the
Med-Arbiter is REINSTATED.
UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO E. LAGUESMA and
PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents. [G.R. No. 122226. March 25, 1998]
FACTS:
Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification
election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the medarbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial
employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which
provides:
Ineligibility of managerial employees to join any labor organization; right of supervisory employees Managerial employees are not
eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Petitioner filed
a motion for reconsideration, pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as
it declares managerial employees to be ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution which
provides:
The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall not be abridged.
ISSUES:
1) Whether or not the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees and
2) Whether or not Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates
Art. III, 8 of the Constitution.
RULING:
1) YES. The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve, but
goes far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those above them.
They are not mere functionaries with simple oversight functions but business administrators in their own right. Supervisory
employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinely or clerical in nature but require the use of independent judgment." Thus, their only power is to
recommend. Certainly, the route managers in this case more than merely recommend effective management action. They perform
operational, human resource, financial and marketing functions for the company, all of which involve the laying down of
operating policies for themselves and their teams The term "manager" generally refers to "anyone who is responsible for
subordinates and other organizational resources." Managers constitute three levels of a pyramid:
FIRST-LINE MANAGERS: The lowest level in an organization at which individuals are responsible for the work of others is
called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other
managers.
MIDDLE MANAGERS: Middle managers direct the activities of other managers and sometimes also those of operating
employees. Middle managers' principal responsibilities are to direct the activities that implement their organizations' policies and
to balance the demands of their superiors with the capacities of their subordinates.
TOP MANAGERS: Composed of a comparatively small group of executives, top management is responsible for the overall
management of the organization. It establishes operating policies and guides the organization's interactions with its environment.
In the Case, entitled Worker's Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines, Inc .,decided on November 13,
1991, the Secretary of Labor found: we find that only those employees occupying the position of route manager and accounting
manager are managerial employees.
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2) NO. The real intent of Art. III, 8 is evident in Lerums proposal. The Commission intended the absolute right to organize of
government workers, supervisory employees, and security guards to be constitutionally guaranteed. By implication, no similar
absolute constitutional right to organize for labor purposes should be deemed to have been granted to top-level and middle
managers.
Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial employees forming a union. The
right guaranteed in Art. III, 8 is subject to the condition that its exercise should be for purposes "not contrary to law." In the case
of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor organizations.
In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus:
The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with
a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also
become company-dominated with the presence of managerial employees in Union membership.
UNIVERSITY OF THE PHILIPPINES, petitioner, vs. HON. PURA FERRER-CALLEJA, Director of the Bureau of
Labor Relations, Department of Labor and Employment, and THE ALL U.P. WORKERS' UNION, represented by its
President, Rosario del Rosario,respondent.
Facts: The case was initiated in the Bureau of Labor Relations by a petition filed by a registered labor union, the "Organization of
Non-Academic Personnel of UP" (ONAPUP). Claiming to have a membership of 3,236 constituting the non-academic personnel
of UP-Diliman, Los Baos, Manila, and Visayas, it sought the holding of a certification election among all said non-academic
employees of UP.
Another registered labor union, the "All UP Workers' Union," filed a comment, as intervenor in the certification election
proceeding. Alleging that its membership covers both academic and non-academic personnel, and that it aims to unite all UP
rank-and-file employees in one union, it declared its assent to the holding of the election provided the appropriate organizational
unit was first clearly defined.
Director Calleja ruled on the matter and declared that "the appropriate organizational unit should embrace all the regular rankand-file employees, teaching and non-teaching, of the University of the Philippines, including all its branches. She commanded
that a certification election be "conducted among rank-and-file employees, teaching and non-teaching" in all four autonomous
campuses of the UP.
UP sought clarification of the coverage of the term, "rank-and-file" personnel, asserting that not every employee could properly
be embraced within both teaching and non-teaching categories since there are those whose positions are in truth managerial and
policy-determining, and hence, excluded by law. UP filed a Manifestation seeking the exclusion from the organizational unit of
those employees holding supervisory positions among non-academic personnel, and those in teaching staff with the rank of
Professor, Associate Professor and Assistant Professor.
Subsequently, a directors resolution was issued adjudging that said teachers and employees are rank-and-file employees.
UP comes to SC to declare the directors resolution void.
Issues:
WON professors, associate professors and assistant professors are "high-level employees" "whose functions are normally
considered policy determining, managerial or highly confidential in nature."
WON they, and other employees performing academic functions, should comprise a collective bargaining unit distinct and
different from that consisting of the non-academic employees of the University, considering the dichotomy of interests,
conditions and rules existing between them.
Ruling:
the professors, associate professors and assistant professors cannot be considered as exercising such managerial or highly
confidential functions as would justify their being categorized as "high-level employees" of the institution. The departmental and
college academic personnel committees' (to which the professors belong) functions are purely recommendatory in nature, subject
to review and evaluation by the University Academic Personnel Board and the Board of Regents. The power to recommend, in
order to qualify an employee as a supervisor or managerial employee "must not only be effective but the exercise of such authority
should not be merely of a routinary or clerical nature but should require the use of independent judgment." Where such
recommendatory powers, as in the case at bar, are subject to evaluation, review and final action by the department heads and
other higher executives of the company, the same, although present, are not effective and not an exercise of independent
judgment as required by law.
Our labor laws do not provide the criteria for determining the proper collective bargaining unit. When first confronted with the
task of determining the proper collective bargaining unit in a particular controversy, the Court had perforce to rely on American
jurisprudence. In Democratic Labor Association vs. Cebu Stevedoring Company, Inc., it stated that there are various factors
which must be satisfied and considered in determining the proper constituency of a bargaining unit. No particular factor is itself
decisive of the determination. Rothenberg mentions a good number, but the most pertinent to our case are:
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(1) will of the employees (Globe Doctrine); (2) affinity and unit of employees' interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions; ( Mutuality of interest)(3) prior collective bargaining history; and (4)
employment status, such as temporary, seasonal probationary employees
Not much reflection is needed to perceive that the community or mutuality of interests which justifies the formation of a single
collective bargaining unit is wanting between the academic and non-academic personnel of the university. It would seem obvious
that teachers would find very little in common with the University clerks and other non-academic employees as regards
responsibilities and functions, working conditions, compensation rates, social life and interests, skills and intellectual pursuits,
cultural activities, etc. On the contrary, the dichotomy of interests, the dissimilarity in the nature of the work and duties as well as
in the compensation and working conditions of the academic and non-academic personnel dictate the separation of these two
categories of employees for purposes of collective bargaining.
WHEREFORE, the assailed Order of October 30, 1990 is hereby AFFIRMED in so far as it declares the professors, associate
professors and assistant professors of the University of the Philippines as rank-and-file employees. The Order of August 7, 1990
is MODIFIED in the sense that the non-academic rank-and-file employees of the University of the Philippines shall constitute a
bargaining unit to the exclusion of the academic employees of the institution.
UST FACULTY UNION (USTFU) vs. Bitonio
Facts:
Private Respondents are duly elected officers of the UST Faculty Union (USTFU). The union has a subsisting five-year CBA with
UST. The Secretary General of USTFU posted a notice addressed to all USTFU members announcing a general assembly to be
held on 05 October 1996 to elect USTFUs next set of officers. The petitioners on the other hand, questioned before the MedArbiter, that the COMELEC was not constituted in accordance with USTFUs constitution and by-laws (CBL) and that no rules
had been issued to govern the conduct of the 05 October 1996 election. Med-Arbiter issued a TRO enjoining the conduct of
elections. However, a general faculty assembly was held as scheduled. The general assembly was attended by members of the
USTFU and, as admitted by the appellants, also by non-USTFU members [who] are members in good standing of the UST
Academic Community Collective Bargaining Unit. Appellees filed the instant petition seeking injunctive reliefs and the
nullification of the results of the 04 October 1996 election. Appellees alleged that the holding of the same violated the temporary
restraining order issued. Accusing appellants of usurpation, appellees characterized the election as spurious for being violative of
USTFUs CBL, specifically because the general assembly resulting in the election of appellants was not called by the Board of
Officers of the USTFU; there was no compliance with the ten-day notice rule required by Section 1, Article VIII of the CBL; the
supposed elections were conducted without a COMELEC being constituted by the Board of Officers in accordance with Section
1, Article IX of the CBL; the elections were not by secret balloting as required by Section 1, Article V and Section 6, Article IX of
the CBL, and, the general assembly was convened by faculty members some of whom were not members of USTFU, so much so
that non-USTFU members were allowed to vote in violation of Section 1, Article V of the CBL. Agreeing with the med-arbiter
that the USTFU officers purported election held on October 4, 1994 was void for having been conducted in violation of the
unions Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners contention that it was a legitimate
exercise of their right to self-organization. He ruled that the CBL, which constituted the covenant between the union and its
members, could not be suspended during the October 4, 1996 general assembly of all faculty members, since that assembly had
not been convened or authorized by the USTFU. Hence, this Petition.
Issue:
(1) Whether the Collective Bargaining Unit of all the faculty members in that General Faculty Assembly had the right in that
General Faculty Assembly to suspend the provisions of the Constitution and By-Laws of the USTFU regarding the elections of
officers of the union.
(2) Whether the suspension of the provisions of the Constitution and By-Laws of the USTFU in that General Faculty Assembly
is valid pursuant to the constitutional right of the Collective Bargaining Unit to engage in peaceful concerted activities for the
purpose of ousting the corrupt regime of the private respondents.
(3) Whether the overwhelming ratification of the Collective Bargaining Agreement executed by the petitioners in behalf of the
USTFU with the University of Santo Tomas has rendered moot and academic the issue as to the validity of the suspension of the
Constitution and By-Laws and the elections of October 4, 1996 in the General Faculty Assembly.

Ruling:
The petition is not meritorious. Petitioners fail to convince this Court that Director Bitonio gravely abused his discretion in
affirming the med-arbiter and in refusing to recognize the binding effect of the October 4, 1996 general assembly called by the
UST administration.
First Issue: Right to Self-Organization and Union Membership
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Petitioners claim that the numerous anomalies allegedly committed by the private respondents during the latters incumbency
impelled the October 4, 1996 election of the new set of USTFU officers. They assert that such exercise was pursuant to their right
to self-organization.
Petitioners frustration over the performance of private respondents, as well as their fears of a fraudulent election to be held
under the latters supervision, could not justify the method they chose to impose their will on the union. Director Bitonio aptly
elucidated:[17]
The constitutional right to self-organization is better understood in the context of ILO Convention No. 87 (Freedom of
Association and Protection of Right to Organize), to which the Philippines is signatory. Article 3 of the Convention provides that
workers organizations shall have the right to draw up their constitution and rules and to elect their representatives in full
freedom, free from any interference from public authorities. The freedom conferred by the provision is expansive; the
responsibility imposed on union members to respect the constitution and rules they themselves draw up equally so. The point to
be stressed is that the unions CBL is the fundamental law that governs the relationship between and among the members of the
union. It is where the rights, duties and obligations, powers, functions and authority of the officers as well as the members are
defined. It is the organic law that determines the validity of acts done by any officer or member of the union. Without respect
for the CBL, a union as a democratic institution degenerates into nothing more than a group of individuals governed by mob
rule.
Second Issue: USTFUs Constitution and ByLaws Violated
We agree with the finding of Director Bitonio and Med-Arbiter Falconitin that the October 4, 1996 election was tainted with
irregularities because of the following reasons.
First, the October 4, 1996 assembly was not called by the USTFU. It was merely a convocation of faculty clubs, as indicated in
the memorandum sent to all faculty members by Fr. Rodel Aligan, OP, the secretary general of the University of Santo Tomas. It
was not convened in accordance with the provision on general membership meetings as found in the USTFUs CBL. Second,
there was no commission on elections to oversee the election, as mandated by Sections 1 and 2 of Article IX of the USTFUs
CBL. Third, the purported election was not done by secret balloting, in violation of Section 6, Article IX of the USTFUs CBL, as
well as Article 241 (c) of the Labor Code.
Third Issue: Suspension of USTFUs CBL
First, as has been discussed, the general faculty assembly was not the proper forum to conduct the election of USTFU
officers. Not all who attended the assembly were members of the union; some, apparently, were even disqualified from becoming
union members, since they represented management. Thus, Director Bitonio correctly observed:
Further, appellants cannot be heard to say that the CBL was effectively suspended during the 04 October 1996 general
assembly. A union CBL is a covenant between the union and its members and among members (Johnson and Johnson Labor
Union-FFW, et al. v. Director of Labor Relations, 170 SCRA 469). Where ILO Convention No. 87 speaks of a unions full
freedom to draw up its constitution and rules, it includes freedom from interference by persons who are not members of the
union. The democratic principle that governance is a matter for the governed to decide upon applies to the labor movement
which, by law and constitutional mandate, must be assiduously insulated against intrusions coming from both the employer and
complete strangers if the 'protection to labor clause' of the constitution is to be guaranteed. By appellants own evidence, the
general faculty assembly of 04 October 1996 was not a meeting of USTFU. It was attended by members and non-members alike,
and therefore was not a forum appropriate for transacting union matters. The person who moved for the suspension of
USTFUs CBL was not a member of USTFU. Allowing a non-union member to initiate the suspension of a unions CBL, and
non-union members to participate in a union election on the premise that the unions CBL had been suspended in the meantime,
is incompatible with the freedom of association and protection of the right to organize.
WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED. Costs against petitioners.
BENJAMIN VICTORIANO, plaintiff-appellee, vs. ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE
FACTORY, INC., defendants, ELIZALDE ROPE WORKERS' UNION, defendant-appellant.
Facts:
Benjamin Victoriano a member of "Iglesia ni Cristo", had been in the employ of the Elizalde Rope Factory, Inc. since 1958. As
such employee, he was a member of the Elizalde Rope Workers' Union which had with the Company a collective bargaining
agreement containing a closed shop provision which reads as follows: Membership in the Union shall be required as a condition
of employment for all permanent employees workers covered by this Agreement.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No. 3350, the employer was
not precluded "from making an agreement with a labor organization to require as a condition of employment membership
therein, if such labor organization is the representative of the employees."
On June 18, 1961, however, Republic Act No. 3350 was enacted, introducing an amendment to Section 4(a), paragraph 4, of
Republic Act No. 875 as follows: ."but such agreement shall not cover members of any religious sects which prohibit affiliation of
their members in any such labor organization".
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After the amendment, Being a member of a religious sect that prohibits the affiliation of its members with any labor organization,
Victoriano presented his resignation to appellant Union. Thereupon, the Union wrote a letter to the Company asking the latter to
separate Appellee from the service in view of the fact that he was resigning from the Union as a member. The Company in turn
notified Victoriano that unless the he could achieve a satisfactory arrangement with the Union, the Company would be
constrained to dismiss him from the service. This prompted him to file an action for injunctionin the CFI of Manila to enjoin the
Company and the Union from dismissing him. Subsequently, the court rendered a decision in favor of Victoriano enjoining the
defendant Elizalde Rope Factory, Inc. from dismissing the plaintiff from his present employment.
From this decision, the Union appealed directly to SC on purely questions of law.
Issue:
Whether or not RA no. 3350s amendment to Section 4(a), paragraph 4, of Republic Act No. 875 is valid and constitutional in so
far as it states that members of any religious sects which prohibit affiliation of their members in any labor organization are not
covered in the close shop agreements mandating employees to be members of Labor Organizations.
Ruling:
RA no. 3350s amendment to Section 4(a), paragraph 4, of Republic Act No. 875 is valid and constitutional
The union presented arguments that assail the constitutionality of Republic Act no. 3350 and that corresponding oppositions of
SC from each argument were presented.
The Union argues that the Act infringes on the fundamental right to form lawful associations.
SC answers that a right comprehends two broad notions first, liberty or freedom, i.e., the absence of legal restraint, whereby an
employee may act for himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join
or refrain from Joining an association. Republic Act No. 3350 merely excludes ipso jure from the application and coverage of the
closed shop agreement the employees belonging to any religious sects which prohibit affiliation of their members with any labor
organization. The assailed Act, far from infringing the constitutional provision on freedom of association, upholds and reinforces
it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the
liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of
said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they
refuse to sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them from joining.
The Union contends that the act is unconstitutional for impairing the obligation of contracts in that, while the Union is obliged to
comply with its collective bargaining agreement containing a "closed shop provision," the Act relieves the employer from its
reciprocal obligation of cooperating in the maintenance of union membership as a condition of employment.
SC states that All contracts made with reference to any matter is subject to regulation under the police power must be understood
as made in reference to the possible exercise of that power. In spite of the constitutional prohibition, the State continues to
possess authority to safeguard the vital interests of its people. It may not be amiss to point out here that the free exercise of
religious profession or belief is superior to contract rights. In case of conflict, the latter must, therefore, yield to the former.
Religious freedom, although not unlimited, is a fundamental personal right and liberty and has a preferred position in the
hierarchy of values. Contractual rights, therefore, must yield to freedom of religion.
The Union contends that Republic Act No. 3350 discriminatorily favors those religious sects which ban their members from
joining labor unions and it leaves no rights or protection to labor organizations.
SC argues that the primary effects of the exemption from closed shop agreements in favor of members of religious sects that
prohibit their members from affiliating with a labor organization, is the protection of said employees against the aggregate force
of the collective bargaining agreement, and relieving certain citizens of a burden on their religious beliefs. Furthermore, it is SCs
view that the exemption from the effects of closed shop agreement does not directly advance, or diminish, the interests of any
particular religion. Although the exemption may benefit those who are members of religious sects that prohibit their members
from joining labor unions, the benefit upon the religious sects is merely incidental and indirect. What is directly benefited is the
worker and not the religious sect.It would not be amiss to state, regarding this matter, that to compel persons to join and remain
members of a union to keep their jobs in violation of their religious scrupples, would hurt, rather than help, labor unions. Let it be
noted that coerced unity and loyalty even to the country, and a fortiori to a labor union assuming that such unity and loyalty can
be attained through coercion is not a goal that is constitutionally obtainable at the expense of religious liberty.
Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no religious test shall be required for the
exercise of a civil right."
SC states that the Act does not require as a qualification, or condition, for joining any lawful association membership in any
particular religion or in any religious sect; neither does the Act require affiliation with a religious sect that prohibits its members
from joining a labor union as a condition or qualification for withdrawing from a labor union. Joining or withdrawing from a
labor union requires a positive act. Republic Act No. 3350 only exempts members with such religious affiliation from the
coverage of closed shop agreements. So, under this Act, a religious objector is not required to do a positive act to exercise the
right to join or to resign from the union. He is exempted ipso jure without need of any positive act on his part.
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The Union contends that Republic Act No. 3350, violates the "equal protection of laws" clause, it being a discriminately
legislation, inasmuch as by exempting from the operation of closed shop agreement the members of the "Iglesia ni Cristo", it has
granted said members undue advantages over their fellow workers, for while the Act exempts them from union obligation and
liability, it nevertheless entitles them at the same time to the enjoyment of all concessions, benefits and other emoluments that the
union might secure from the employer.
SC believes the Act classifies employees and workers, as to the effect and coverage of union shop security agreements, into those
who by reason of their religious beliefs and convictions cannot sign up with a labor union, and those whose religion does not
prohibit membership in labor unions. This classification rests on real or substantial, not merely imaginary or whimsical,
distinctions. There is such real distinction in the beliefs, feelings and sentiments of employees. The classification, introduced by
Republic Act No. 3350, therefore, rests on substantial distinctions. Moreover, the classification introduced by said Act is also
germane to its purpose. The purpose of the law is precisely to avoid those who cannot, because of their religious belief, join labor
unions, from being deprived of their right to work and from being dismissed from their work because of union shop security
agreements.
The Union contends that Republic Act No. 3350 violates the constitutional provision regarding the promotion of social justice.
SC answers that Social justice is intended to promote the welfare of all the people. Republic Act No. 3350 promotes that welfare
insofar as it looks after the welfare of those who, because of their religious belief, cannot join labor unions; the Act prevents their
being deprived of work and of the means of livelihood. In determining whether any particular measure is for public advantage, it
is not necessary that the entire state be directly benefited it is sufficient that a portion of the state be benefited thereby. SC also
contends that Social justice guarantees equality of opportunity 66 , and this is precisely what Republic Act No. 3350 proposes to
accomplish it gives laborers, irrespective of their religious scrupples, equal opportunity for work.
WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of the Court of First Instance of Manila,
in its Civil Case No. 58894, appealed from is affirmed, with costs against appellant Union. It is so ordered.

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RIGHTS OF LEGITIMATE LABOR ORGANIZATION

CMC vs TRAJANO
Facts:
CMCEA-AFW is a duly registered labor union acting as the certified collective bargaining agent of the rank-and-file employees.
On Oct, 2, 1997, CMCEA-AFW sent CMC a letter requesting for negotiation of their CBA. In its reply, however, CMC
challenged the legitimacy of CMCEA-AFW. Hence, the former filed a petition for cancellation of the union's certificate of
registration (which was later on dismissed by the Regional Director). The union then filed with NCMB a notice of strike against
CMC on the ground that the CMC's refusal to bargain amounts to ULP. Despite efforts of NCMB no amicable settlement had
been reached, thus the union staged a strike. On Dec. 4, 1997, former Labor Secretary Quisumbing assumed jurisdiction over the
labor dispute and ordered all striking workers and management to resume normal work operations, and directing both parties to
submit their proposals and counter- proposals leading for the conclusion of their CBA. However, CMC assailed the decision of
Quisumbing and filed a motion for reconsideration which was denied. Hence this petition for certiorari.
Issues:

1. Whether the filing of cancellation of certificate of registration ipso facto justify the suspension of negotiation process
e.g certification election.
2. Whether former Labor Sec. Quisumbing acted with grave abuse of discretion.
Ruling:
CMC contends that its petition for the cancellation of union's certificate of registration involves a prejudicial question that should
be settled before the Sec. of Labor could order the parties to bargain collectively. This contention is wrong. In order to allow an
employer (CMC) to validly suspend the bargaining process, there must be a valid petition for certification election. The mere filing
of a petition does not ipso facto justify the suspension of negotiation by the employer. Pending cancellation proceedings against
union is not a bar to set in motion the mechanics of collective bargaining. If a certification election may still be ordered despite
the pendency of a petition to cancel the union's registration certificate, more so should the collective bargaining process continue
despites its pendency. As decided in Colegio de Sanjuan de Letran Case, "if pending a petition for certification, the collective
bargaining is allowed by Supreme Court to proceed, with more reason should the collective bargaining continue since the High
Court recognized the union as the certified bargaining agent in spite of several petitions for cancellation."
There is no grave abuse of discretion on the part of the Sec. Of Labor, whose power is plenary and includes the resolution of all
controversies arising from labor dispute. The discretion to assume jurisdiction may be exercised by Sec. Of Labor without the
necessity of prior notice or hearing given to any party. The reason for his primary assumption off jurisdiction can justifiably rest
on his own consideration of the exigency of the situation in relation to national interest.
LVN PICTURES EES AND WORKERS ASSOCIATION VS LVN PICTURES
Facts:
The LVN Pictures, Inc. was a corporation engaged in the business of producing Tagalog movies. Among its employees were the
members of the LVN Pictures Employees and Workers Association (NLU) (hereinafter referred to as the EWA) with which it
executed on April 23, 1959 a collective bargaining agreement to expire on December 31, 1960. During their employment with
LVN, the members of the EWA served in various capacities in the LVN, such as cameramen and their assistants, soundmen and
their assistants, sound technicians, carpenters, electricians, drivers, laboratory personnel and laborers doing odd jobs. Previous to
the year 1957, the LVN was realizing profits from its business. However, from 1957 to 1961, it suffered heavy losses in its movie
production due to causes beyond its control. Not withstanding the foregoing adverse financial posture, the LVN continued to
operate its movie production with the expectation that it would recoup part of its losses and investments. And in order to avoid
immediate closure of business, as well as lay-off of employees, the management of the LVN, proposed to the EWA a change in
the payment of salaries and wages of the employees from salary or wage basis to the "pakiao" system per picture. This proposal
was however rejected in the union. LVN asked again the EWA to reconsider its decision on the "pakiao" system, to no avail.
LVN then proposed to reduce the monthly compensation of all its employees and laborers regardless of whether or not they were
union members. This proposal was approved by the board of directors of the LVN as a measure to stave off the mounting losses
in the operation of its Tagalog movie production. But it was also rejected by the EWA . After the expiration of the term of the
collective bargaining contract, the EWA proposed negotiations for a contract. The LVN informed the EWA that the LVN
stockholders would hold a meeting at which one of the matters to be discussed was whether because of the financial losses of the
corporation, it would still continue to make pictures. The LVN therefore advised the union that it would answer neither yes nor
no to the proposed negotiations but would await the outcome of the stockholders' meeting. LVN informed the EWA that,
because of huge losses incurred and the many obligations of the former which could not be met, the stockholders had agreed not
to invest additional capital and to stop producing new moving pictures, and to finish only the pictures that were then under
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production. Moreover, in view of the refusal of the EWA to consider the LVN's proposals and because of the mounting losses,
the LVN's board of directors decided to close its movie production. Due to stoppage of its movie production, the LVN was
compelled to dismiss all its personnel employed in the said movie production.
Issue:
WON LVN violated its duty to bargain
Ruling:
The argument is advanced that the LVN refused to bargain when it put off answering the proposals of the EWA and the LPCU
pending the stockholders' meeting. We do not agree. It was entirely reasonable for the LVN to hold in abeyance its answers to the
proposals because whether or not it would still enter into a collective bargaining agreement with the EWA and the LPCU would
depend on the consensus that would be arrived at by the stockholders. There would be neither rhyme nor reason for a collective
bargaining agreement if the company would decide as it did decide to stop producing moving pictures, because the
resultant ultimate effect would be the dismissal or separation of employees. In fact, subsequent events proved the prudence of the
action taken by the LVN. When the stockholders decided to stop movie production as of May 31, 1961, the LVN was compelled
to dismiss its employees because there was no more work for them. Had the LVN agreed to enter into collective bargaining
agreements with the two unions without awaiting the result of the stockholders' meeting, the contracts would have become inutile
anyway because it was closing shop.
STANDARD CHARTERED BANK EES UNION VS HON. NIEVES CONFESSOR
Facts:
In August of 1990, Standard Chartered Bank and the Union signed a five-year collective bargaining agreement (CBA) with a
provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-year period 2 but within the sixtyday freedom period, the Union initiated the negotiations. The Union, through its President, Eddie L. Divinagracia, sent a letter
containing its proposals covering political provisions and thirty-four (34) economic provisions.
The Bank took note of the Unions proposals and attached its counter-proposal to the non-economic provisions proposed
by the Union. The Bank posited that it would be in a better position to present its counter-proposals on the economic items after
the Union had presented its justifications for the economic proposals. The parties agreed to set meetings to settle their differences
on the proposed CBA. Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the Banks
head of the negotiating panel, Cielito Diokno, that the bank lawyers should be excluded from the negotiating team. The Bank
acceded. Meanwhile, Diokno suggested to Divinagracia that the President of NUBE, the federation to which the Union was
affiliated, be excluded from the Unions negotiating panel. However, Umali was retained as a member thereof. The parties met
and set the ground rules for the negotiation. Diokno suggested that the negotiation be kept a family affair. The proposed
noneconomic provisions of the CBA were discussed first. Even during the final reading of the non-economic provisions , there
were still provisions on which the Union and the Bank could not agree which both parties later on agreed to place the notation
DEFERRED/DEADLOCKED. The negotiation for economic provisions commenced. Towards the end of the Banks
presentation, Umali requested the Bank to validate the Unions guestimates, especially the figures for the rank and file staff. In
the succeeding meetings, Umali chided the Bank for the insufficiency of its counter-proposal on the provisions on salary increase,
group hospitalization, death assistance and dental benefits. Upon the Banks insistence, the parties agreed to tackle the economic
package item by item. Upon the Unions suggestion, the Bank indicated which provisions it would accept, reject, retain and agree
to discuss. The Bank suggested that the Union prioritize its economic proposals, considering that many of such economic
provisions remained unresolved. The Union, however, demanded that the Bank make a revised itemized proposal which the Bank
later on did. Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what it wanted to
be included in the total economic package. Umali replied that it was impossible to do so because the Banks counter-proposal was
unacceptable. Diokno suggested that in order to break the impasse, the Union should prioritize the items it wanted to iron out.
Divinagracia stated that the Bank should make the first move and make a list of items it wanted to be included in the economic
package. Except for the provisions on signing bonus and uniforms, the Union and the Bank failed to agree on the remaining
economic provisions of the CBA. The Union declared a deadlock and filed a Notice of Strike before the NCMB.
Issues:
1. WON the Bank violated its duty to bargain and commited ULP when it engaged in surface bargaining
2. WON the Bank violated the Union's right when it refused to furnish the information needed by the Union
Ruling:
1. The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article 248(g) when it
engaged in surface bargaining. It alleged that the Bank just went through the motions of bargaining without any intent of
reaching an agreement, as evident in the Banks counter-proposals. It explained that of the 34 economic provisions it
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2.

made, the Bank only made 6 economic counterproposals. Further, as borne by the minutes of the meetings, the Bank,
after indicating the economic provisions it had rejected, accepted, retained or were open for discussion, refused to make
a list of items it agreed to include in the economic package.
Surface bargaining is defined as going through the motions of negotiating without any legal intent to reach an
agreement. The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a
party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of
the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged partys
conduct both at and away from the bargaining table. It involves the question of whether an employers conduct
demonstrates an unwillingness to bargain in good faith or is merely hard bargaining. The minutes of meetings do not
show that the Bank had any intention of violating its duty to bargain with the Union. Records show that after the Union
sent its proposal to the Bank, the latter replied with a list of its counter-proposals. Thereafter, meetings were set for the
settlement of their differences. The minutes of the meetings show that both the Bank and the Union exchanged
economic and non-economic proposals and counterproposals. The Union has not been able to show that the Bank had
done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement
with the Union or to settle the differences between it and the Union. Admittedly, the parties were not able to agree and
reached a deadlock. However, it is herein emphasized that the duty to bargain does not compel either party to agree to
a proposal or require the making of a concession.Hence, the parties failure to agree did not amount to ULP under
Article 248(g) for violation of the duty to bargain. In view of the finding of lack of ULP based on Article 248(g), the
accusation that the Bank made bad faith provisions has no leg to stand on. The records show that the Banks counterproposals on the non-economic provisions or political provisions did not put up for grabs the entire work of the
Union and its predecessors. As can be gleaned from the Banks counter-proposal, there were many provisions which it
proposed to be retained. The revisions on the other provisions were made after the parties had come to an agreement.
Far from buttressing the Unions claim that the Bank made bad-faith proposals on the non-economic provisions, all
these, on the contrary, disprove such allegations.
While the refusal to furnish requested information is in itself an unfair labor practice, and also supports the inference of
surface bargaining, in the case at bar, Umali, in a meeting requested the Bank to validate its guestimates on the data of
the rank and file. However, Umali failed to put his request in writing as provided for in Article 242(c) of the Labor Code.
The Union, did not, as the Labor Code requires, send a written request for the issuance of a copy of the data about the
Banks rank and file employees. Moreover, as alleged by the Union, the fact that the Bank made use of the aforesaid
guestimates, amounts to a validation of the data it had used in its presentation.

MANILA ELECTRIC CO. VS HON. SECRETARY OF LABOR AND MEWA

Facts:
MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. On September 7, 1995, MEWA
informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 1992-1997 Collective Bargaining
Agreement (CBA) covering the remaining period of two years starting from December 1, 1995 to November 30, 1997.
MERALCO signified its willingness to re-negotiate through and formed a CBA negotiating panel for the purpose. MEWA
submitted its proposal to MERALCO, which, in turn, presented a counter-proposal. Thereafter, collective bargaining negotiations
proceeded. However, despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties failed
to arrive at terms and conditions acceptable to both of them. MEWA filed a Notice of Strike with the NCMB on the grounds
of bargaining deadlock and unfair labor practices. The NCMB then conducted a series of conciliation meetings but the parties
failed to reach an amicable settlement. Through an order, the Labor Secretary granted the petition filed by MERALCO praying
for the assumption of jurisdiction over the labor dispute and enjoining the striking employees to go back to work. Thereafter, the
parties submitted their respective memoranda and on August 19, 1996, the Secretary resolved the labor dispute through an Order,
vi containing the awards on several issues such as wage, allowance, christmas bonus, etc. MERALCO filed a motion for
reconsideration alleging that the Secretary of Labor committed grave abuse of discretion amounting to lack or excess of
jurisdiction. One of the assailed provisions in that order is one where the Secretary ordered the CBA to be effective December
1995 instead of August 19, 1996 when he resolved the dispute.
Issue: WON the Secretary of Labor committed grave abuse of discretion in ordering that the effectivity of the new CBA shall
retroact to December 1995, the date of the commencement of the last two years of the effectivity of the existing CBA
Ruling: Article 253-A serves as the guide in determining when the effectivity of the CBA at bar is to take effect. It provides that
the representation aspect of the CBA is to be for a term of 5 years, while x x x [A]ll other provisions of the Collective Bargaining
Agreement shall be re-negotiated not later than 3 years after its execution. Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within 6 months from the date of expiry of the term of such other provisions as
fixed in such Collective Bargaining Agreement shall retroact to the day immediately following such date. If such agreement is
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entered into beyond 6 months, the parties shall agree on the duration of the effectivity thereof. x x x. Under these terms, it is
clear that the 5-year term requirement is specific to the representation aspect. What the law additionally requires is that a CBA
must be re-negotiated within 3 years after its execution. It is in this re-negotiation that gives rise to the present CBA deadlock.
If no agreement is reached within 6 months from the expiry date of the 3 years that follow the CBA execution, the law expressly
gives the parties - not anybody else - the discretion to fix the effectivity of the agreement. Significantly, the law does not
specifically cover the situation where 6 months have elapsed but no agreement has been reached with respect to effectivity. In this
eventuality, we hold that any provision of law should then apply for the law abhors a vacuum. One such provision is the principle
of hold over, i.e., that in the absence of a new CBA, the parties must maintain the status quo and must continue in full force and
effect the terms and conditions of the existing agreement until a new agreement is reached. li In this manner, the law prevents the
existence of a gap in the relationship between the collective bargaining parties. Another legal principle that should apply is that in
the absence of an agreement between the parties, then, an arbitrated CBA takes on the nature of any judicial or quasi-judicial
award; it operates and may be executed only respectively unless there are legal justifications for its retroactive application.
Consequently, we find no sufficient legal ground on the other justification for the retroactive application of the disputed CBA,
and therefore hold that the CBA should be effective for a term of 2 years counted from December 28, 1996 (the date of the
Secretary of Labor's disputed order on the parties' motion for reconsideration) up to December 27, 1999.
CALTEX REFINERY EMPLOYEES ASSOCIATION VS BRILLANTES AND CALTEX
Facts:

Anticipating the expiration of their Collective Bargaining Agreement on July 31, 1995, petitioner and private respondent
negotiated the terms and conditions of employment to be contained in a new CBA. The negotiation between the two parties was
participated in by the National Conciliation and Meditation Board (NCMB) and the Office of the Secretary of Labor and
Employment. Some items in the new CBA were amicably arrived at and agreed upon, but some others were unresolved.
To settle the unresolved issues, eight meetings between the parties were conducted. Because the parties failed to reach
any significant progress in these meetings, petitioner declared a deadlock. On July 24, 1995, petitioner filed a notice of strike. Six
(6) conciliation meetings conducted by the NCMB failed to settle the parties differences. Then, the parties held marathon
meetings at the plant level, but this remedy proved also unavailing.
During a strike vote on August 16, 1995, the members of petitioner opted for a walkout. Private respondent then filed
with the Department of Labor and Employment (DOLE) a petition for assumption of jurisdiction in accordance with Article 263
(g) of the Labor Code.
In an Order dated August 22, 1995, public respondent assumed jurisdiction over the entire labor dispute at Caltex
(Philippines) Inc.,
In defiance of the above Order expressly restraining any strike or lockout, petitioner began a strike and set up a picket in
the premises of private respondent on August 25, 1995. Thereafter, several company notices directing the striking employees to
return to work were issued, but the members of petitioner defied them and continued their mass action.
In the course of the strike, DOLE Undersecretary Bienvenido Laguesma interceded and conducted several conciliation
meetings between the contending parties. He was able to convince the members of the union to return to work and to enter into
a memorandum of agreement with private respondent. On September 9, 1995, the picket lines were finally lifted. Thereafter, the
contending parties filed their position papers pertaining to unresolved issues.
Because of the strike, private respondent terminated the employment of some officers of petitioner union. The legality
of these dismissals brought additional contentious issues.
Again, the parties tried to resolve their differences through conciliation. Failing to come to any substantial agreement,
the parties stopped further negotiation and, on September 13, 1995, decided to refer the problem to the secretary of labor and
employment:
It appearing that the possibility of an amicable settlement appears remote, the parties agreed to submit their respective
position paper and evidence simultaneously on 27 September 1995 at the Office of the Secretary. The parties further
agreed that there will be no extension of time for filing and no further pleading will be filed.
As already stated, public respondent issued as scheduled on October 9, 1995 the assailed Order resolving the deadlock,
followed by two more assailed Orders on November 21, 1995 and January 16, 1996 disposing of the motions for
reconsideration/clarification of both parties. Dissatisfied with these Orders issued by public respondent, petitioner sought
remedy from this Court.
After realizing the urgency of the case and after meticulously reviewing the Petition dated February 23, 1996; Comment by the
private respondent dated April 16, 1996 which was adopted as its own by the public respondent; Reply by the petitioner dated
September 7, 1996; Rejoinder dated October 3, 1996 and Sur-Rejoinder dated November 12, 1996, the Court resolved to give due
course to the petition and to consider the case submitted for resolution without requiring memoranda from the parties.
Issue: Whether or not the Honorable Secretary of Labor and Employment committed grave abuse of discretion in resolving the
instant labor dispute.
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Ruling:
We have carefully reviewed the assailed Orders. Other than his failure to rule on the issue of union security, the secretary of labor
cannot be indicted for grave abuse of discretion amounting to want or excess of jurisdiction . In Saballa vs. National Labor Relations
Commission, we ruled on how a decision of an administrative body must be drawn:
The Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make
certain that they truly and accurately reflect their conclusions and their final dispositions. x x x The same thing goes for the findings of
fact made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by
substantial evidence; otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of
discretion. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided, with an
explanation of the factual and legal reasons that led to the conclusions of the court. A decision that does not clearly and distinctly
state the facts and the law of which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the
losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal.

In the present case, the foregoing requirements has been sufficiently met. Petitioners claim of grave abuse of discretion is
anchored on the simple fact that public respondent adopted largely the proposals of private respondent. It should be understood
that bargaining is not equivalent to an adversarial litigation where rights and obligations are delineated and remedies applied. It is
simply a process of finding a reasonable solution to a conflict and harmonizing opposite positions into a fair and reasonable
compromise. When parties agree to submit unresolved issues to the secretary of labor for his resolution, they should not expect
their positions to be adopted in toto. It is understood that they defer to his wisdom and objectivity in insuring industrial
peace. And unless they can clearly demonstrate bias, arbitrariness, capriciousness or personal hostility on the part of such public
officer, the Court will not interfere or substitute the said officers judgment with its own. In this case, it is possible that this
Court, or some its members at least, may even agree with the wisdom of petitioners claims. But unless grave abuse of discretion
is cogently shown, this Court will refrain from using its extraordinary power of certiorari to strike down decisions and orders of
quasi-judicial officers specially tasked by law to settle administrative questions and disputes. This is particularly true in the
resolution of controversies in collective bargaining agreements where the question is rarely one of legal right or wrong nay, of
black and white but one of wisdom, cogency and compromise as to what is possible, fair and reasonable under the
circumstances.
UNION OF FILIPINO EMPLOYEES, ETC VS. NESTLE PHIL., INC.
Facts:
UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank and-file employees of Nestl belonging to the latters
Alabang and Cabuyao plants. On 4 April 2001, as the existing collective bargaining agreement (CBA) between Nestl and UFEDFA-KMU was to end on 5 June 2001, the Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed
Nestl of their intent to open [our] new Collective Bargaining Negotiation for the year 2001-2004 x x x as early as June 2001. In
response thereto, Nestl informed them that it was also preparing its own counter-proposal and proposed ground rules to govern
the impending conduct of the CBA negotiations. On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division
only) Nestl reiterated its stance that unilateral grants, one-time company grants, company-initiated policies and programs,
which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very
nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom. Dialogue between the company and
the union thereafter ensued. 14 August 2001, however, Nestl requested the NCMB, to conduct preventive mediation
proceedings between it and UFE-DFA-KMU owing to an alleged impasse in said dialogue; i.e., that despite fifteen (15) meetings
between them, the parties failed to reach any agreement on the proposed CBA. Conciliation proceedings proved ineffective,
though, and the UFE-DFAKMU filed a Notice of Strike on 31 October 2001 with the NCMB, complaining, in essence, of a
bargaining deadlock pertaining to economic issues, i.e., retirement (plan), panel composition, costs and attendance, and CBA. 11
On 07 November 2001, another Notice of Strike 12 was filed by the union, this time predicated on Nestls alleged unfair labor
practices, that is, bargaining in bad faith by setting pre-conditions in the ground rules and/or refusing to include the issue of the
Retirement Plan in the CBA negotiations. The result of a strike vote conducted by the members of UFE-DFA-KMU yielded an
overwhelming approval of the decision to hold a strike. Prior to holding the strike, Nestl filed with the DOLE a Petition for
Assumption of Jurisdiction, praying for the Secretary of the DOLE to assume jurisdiction over the current labor dispute in order
to effectively enjoin any impending strike by the members of the UFE-DFA-KMU at the Nestls Cabuyao Plant in Laguna.
Issue: WON Nestl violated its duty to bargain
Ruling:
The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor Code, as amended. Obviously, the purpose of
collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to reach an
agreement after negotiations have continued for a reasonable period does not establish a lack of good faith. The statutes invite
and contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation
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to reach an agreement. The crucial question, therefore, of whether or not a party has met his statutory duty to bargain in good
faith typically turns on the facts of the individual case. As we have said, there is no per se test of good faith in bargaining. Good
faith or bad faith is an inference to be drawn from the facts. To some degree, the question of good faith may be a question of
credibility. The effect of an employers or a unions individual actions is not the test of good-faith bargaining, but the impact of all
such occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively may offer a basis for the
finding of the NLRC. For a charge of unfair labor practice to prosper, it must be shown that Nestl was motivated by ill will,
bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of
course, that in social humiliation, wounded feelings, or grave anxiety resulted x x x disclaiming unilateral grants as proper
subjects in their collective bargaining negotiations. While the law makes it an obligation for the employer and the employees to
bargain collectively with each other, such compulsion does not include the commitment to precipitately accept or agree to the
proposals of the other. All it contemplates is that both parties should approach the negotiation with an open mind and make
reasonable effort to reach a common ground of agreement. Herein, the union merely bases its claim of refusal to bargain on a
letter dated written by Nestl where the latter laid down its position that unilateral grants, one-time company grants, companyinitiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling
Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom. But as
we have stated in this Courts Decision, said letter is not tantamount to refusal to bargain. In thinking to exclude the issue of
Retirement Plan from the CBA negotiations, Nestl, cannot be faulted for considering the same benefit as unilaterally granted,
considering that eight out of nine bargaining units have allegedly agreed to treat the Retirement Plan as a unilaterally granted
benefit. This is not a case where the employer exhibited an indifferent attitude towards collective bargaining, because the
negotiations were not the unilateral activity of the bargaining representative. Nestls desire to settle the dispute and proceed with
the negotiation being evident in its cry for compulsory arbitration is proof enough of its exertion of reasonable effort at goodfaith bargaining. In the case at bar, Nestle never refused to bargain collectively with UFEDFA-KMU. The corporation simply
wanted to exclude the Retirement Plan from the issues to be taken up during CBA negotiations, on the postulation that such was
in the nature of a unilaterally granted benefit. An employers steadfast insistence to exclude a particular substantive provision is no
different from a bargaining representatives perseverance to include one that they deem of absolute necessity. Indeed, an adamant
insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith.
SAMAHANG MANGGAGAWA SA TOP
PHILIPPINES (SMTFM-UWP) VS NLRC

FORM

MANUFACTURING-UNITED

WORKERS

OF

THE

Facts:
Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the Philippines (SMTFM) was the certified
collective bargaining representative of all regular rank and file employees of private respondent Top Form Manufacturing
Philippines, Inc. At the collective bargaining negotiation held in Makati, the parties agreed to discuss unresolved economic issues.
According to the minutes of the meeting, Article VII of the collective bargaining agreement was discussed wherein the Union
proposed that any future wage increase given by the government should be implemented by the company across-the-board or
non-conditional. The RTWPB-NCR later on issued Wage Order No. 01 and 02 providing for salary increases.an across-the-board
basis. Private respondent refused to accede to that demand. Instead, it implemented a scheme of increases purportedly to avoid
wage distortion. The union, through its legal counsel, wrote private respondent a letter demanding that it should "fulfill its pledge
of sincerity to the union by granting an across-the-board wage increases (sic) to all employees under the wage orders." The union
reiterated that it had agreed to "retain the old provision of CBA" on the strength of private respondent's "promise and assurance"
of an across-the-board salary increase should the government mandate salary increases.
Issue: WON Top Form's promise at the collective bargaining conferences to implement any government-mandated wage
increases on an across-the-board basis is binding upon the parties considering it was not part of the CBA though contained in the
Minutes of the Meeting
Ruling:
To start with, if there was indeed a promise or undertaking on the part of private respondent to obligate itself to grant an
automatic across-the-board wage increase, petitioner union should have requested or demanded that such "promise or
undertaking" be incorporated in the CBA. After all, petitioner union has the means under the law to compel private respondent to
incorporate this specific economic proposal in the CBA. It could have invoked Article 252 of the Labor Code defining "duty to
bargain," thus, the duty includes "executing a contract incorporating such agreements if requested by either party." Petitioner
union's assertion that it had insisted on the incorporation of the same proposal may have a factual basis considering the
allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that the duty to bargain "does
not compel any party to agree to a proposal or make any concession." Thus, petitioner union may not validly claim that the
proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally entered into with private respondent.
The CBA is the law between the contracting parties the collective bargaining representative and the employercompany.
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Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions should
be "construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon
it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve." This is founded on
the dictum that a CBA is not an ordinary contract but one impressed with public interest. It goes without saying, however, that
only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party
does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation. Hence,
petitioner union's contention that the Minutes of the collective bargaining negotiation meeting forms part of the entire agreement
is pointless. The Minutes reflects the proceedings and discussions undertaken in the process of bargaining for worker benefits in
the same way that the minutes of court proceedings show what transpired therein. At the negotiations, it is but natural for both
management and labor to adopt positions or make demands and offer proposals and counterproposals. However, nothing is
considered final until the parties have reached an agreement. In fact, one of management's usual negotiation strategies is to ". . .
agree tentatively as you go along with the understanding that nothing is binding until the entire agreement is reached." If indeed
private respondent promised to continue with the practice of granting acrossthe-board salary increases ordered by the
government, such promise could only be demandable in law if incorporated in the CBA. Moreover, by making such promise,
private respondent may not be considered in bad faith or at the very least, resorting to the scheme of feigning to undertake the
negotiation proceedings through empty promises. As earlier stated, petitioner union had, under the law, the right and the
opportunity to insist on the foreseeable fulfillment of the private respondent's promise by demanding its incorporation in the
CBA. Because the proposal was never embodied in the CBA, the promise has remained.
ASSOCIATED TRADE UNION VS TRAJANO
Facts:
Private respondent union (TUPAS) filed with the Malolos labor office of the MOLE a petition for certification election at the
Baliwag Transit, Inc. among its rankand-file workers. Despite opposition from the herein petitioner, Associated Trade Unions
(ATU), the petition was granted by the med-arbiter and a certification election was ordered "to determine the exclusive
bargaining agent (of the workers) for purposes of collective bargaining with respect to (their) terms and conditions of
employment." On appeal, this order was sustained by the respondent Director of Labor Relations in his order dated June 20,
1986, which he affirmed in his order of July 17, 1986, denying the motion for reconsideration. ATU then came to this Court
claiming that the said orders are tainted with grave abuse of discretion and so should be reversed. A temporary restraining order
was issue by the Court maintaining the status quo among the parties. In support of its petition, ATU claims that the private
respondent's petition for certification election is defective because (1) at the time it was filed, it did not contain the signatures of
30% of the workers, to signify their consent to the certification election; and (2) it was not allowed under the contract-bar rule
because a new collective bargaining agreement had been entered into by ATU with the company on April 1, 1986. TUPAS for its
part, supported by the Solicitor General, contends that the 30% consent requirement has been substantially complied with, the
workers' signatures having been subsequently submitted and admitted. As for the contract-bar rule, its position is that the
collective bargaining agreement, besides being vitiated by certain procedural defects, was concluded by ATU with the
management only on April 1, 1986 after the filing of the petition for certification election on March 25, 1986.
Issue:
1. WON TUPAS' petition for certification election is defective because it did not contain the signatures of 30% of the workers, to
signify their consent to the certification election
2. WON the petition for certification election is covered by the contract-bar rule
Ruling:
1. Insofar as the first issue is concerned has become at best only academic now. The reason is that the 30% consent required
under then Section 258 of the Labor Code is no longer in force owing to the amendment of this section by Executive Order No.
111, which became effective on March 4, 1987 The applicable provision in the case at bar is Article 256 because Baliwag transit,
Inc. is an organized establishment. Under this provision, the petition for certification election need no longer carry the signatures
of the 30% of the workers consenting to such petition as originally required under Article 258. The present rule provides that as
long as the petition contains the matters required in Section 2, Rule 5, Book V of the Implementing Rules and Regulations, as
amended by Section 6, Implementing Rules of E.O. No. 111, the med-arbiter "shall automatically order" an election by secret
ballot "to ascertain the will of the employees in the appropriate bargaining unit." The consent requirement is now applied only to
unorganized establishments under Article 257, and at that, significantly, has been reduced to only 20%.
2. The petition must also fail on the second issue which is based on the contract-bar rule under Section 3, Rule 5, Book V of the
Implementing Rules and Regulations. This rule simply provides that a petition for certification election or a motion for
intervention can only be entertained within sixty days prior to the expiry date of an existing collective bargaining agreement.
Otherwise put, the rule prohibits the filing of a petition for certification election during the existence of a collective bargaining
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agreement except within the freedom period, as it is called, when the said agreement is about to expire. The purpose, obviously, is
to ensure stability in the relationships of the workers and the management by preventing frequent modifications of any collective
bargaining agreement earlier entered into by them in good faith and for the stipulated original period. ATU insists that its
collective bargaining agreement concluded by it with Baliwag Transit, Inc, on April 1, 1986, should bar the certification election
sought by TUPAS as this would disturb the said new agreement. Moreover, the agreement had been ratified on April 3, 1986, by a
majority of the workers and is plainly beneficial to them because of the many generous concessions made by the management.
Besides pointing out that its petition for certification election was filed within the freedom period and five days before the new
collective bargaining agreement was concluded by ATU with Baliwag Transit, Inc. TUPAS contends that the said agreement
suffers from certain fatal procedural flaws. Specifically, the CBA was not posted for at least five days in two conspicuous places in
the establishment before ratification, to enable the workers to clearly inform themselves of its provisions. Moreover, the CBA
submitted to the MOLE did not carry the sworn statement of the union secretary, attested by the union president, that the CBA
had been duly posted and ratified, as required by Section 1, Rule 9, Book V of the Implementing Rules and Regulations. These
requirements being mandatory, non-compliance therewith rendered the said CBA ineffective. The Court will not rule on the
merits and/or defects of the new CBA and shall only consider the fact that it was entered into at a time when the petition for
certification election had already been filed by TUPAS and was then pending resolution. The said CBA cannot be deemed
permanent, precluding the commencement of negotiations by another union with the management. In the meantime however, so
as not to deprive the workers of the benefits of the said agreement, it shall be recognized and given effect on a temporary basis,
subject to the results of the certification election. The agreement may be continued in force if ATU is certified as the exclusive
bargaining representative of the workers or may be rejected and replaced in the event that TUPAS emerges as the winner. This
ruling is consistent with our earlier decisions on interim arrangements of this kind where we declared: ... we are not unmindful
that the supplemental collective bargaining contract, entered into in the meanwhile between management and respondent Union
contains provisions beneficial to labor. So as not to prejudice the workers involved, it must be made clear that until the
conclusion of a new collective bargaining contract entered into by it and whatever labor organization may be chosen after the
certification election, the existing labor contract as thus supplemented should be left undisturbed. Its terms call for strict
compliance.
PLANTERS PRODUCTS, INC. VS NLRC
Facts:
This case involves about 440 retrenched employees of the respondent from its Bataan and Makati-based operations. It was filed
by the complainants as individuals, and jointly with their respective unions, as a class suit on behalf of Bataan-based Planters
Products, Inc. (PPI) employees. The complainants and Complainants-Intervenors were all regular employees of the Respondent
until their respective dates of retirement/retrenchment. All the Complainants, except the Complainants-Intervenors, are members
of either one of the following Unions of workers/employees of the Respondent: a. Planters Product Employees Union (PPEU);
b. First Line Association of Management Employees (FLAME);and c. Super 21, and/or were represented by said unions as their
respective agents. These Unions of former employees of Respondent have always had collective bargaining agreements. On
October 11, 1982, the Respondent instituted a Retirement and Pension Plan (RPP) for all employees, which was to be effective
retroactive to March 31, 1982. This non-contributory RPP was funded exclusively by PPI. PPI, to institutionalize the RPP,
entered into a Trust Agreement with Philippine Trust Co., Inc. (PTC), under the terms of which, PTC shall administer and
manage the fund. On September 28, 1984, a CBA for 1984-1987 was signed between PPI and the directors and principal officers
of its unions, assisted by their lawyer. The 1984-87 CBA was never formally submitted to the membership of the Unions for
ratification. Later on, the RPP was submitted and approved by the Bureau of Internal Revenue as a Retirement and Pension Plan
After the RPP was approved by the BIR, PPI issued a circular to all employees announcing the funding of the RPP and its
approval by the BIR. Without formally informing the PPI employees beneficiaries of the RPP, the RPP was unilaterally amended
by the company, and the amendments were approved by the BIR.
Issue: WON the 1984-1987 CBA was validly entered into by the parties
Ruling:
It is contended that the 1984-1987 CBA was not only negotiated in bad faith but was also not formally ratified. There was
allegedly bad faith in limiting the application of the termination allowance as the company already had plans to retrench the
workers. We apply the established rule, that a CBA is the Law among the parties, to the 1984-1987 CBA. Bad faith in the
negotiations was not present considering that the provision on termination allowance was made to apply to everybody including
those subsequently retrenched or retired after the complainants' and complainants- intervenors' retrenchment. There was no
singling out of the complainants and intervenors-complainants. Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V
of the Implementing Rules, the parties to a collective agreement are required to furnish copies to the appropriate Regional Office
with accompanying proof of ratification by the majority of all the workers in the bargaining unit. This was not done in the case at
bar. But we do not declare the 1984-1987 CBA invalid or void considering that the employees have enjoyed benefits from it. They
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cannot receive benefits under provisions favorable to them and later insist that the CBA is void simply because other provisions
turn out not to the liking of certain employees. Moreover, the two CBAs prior to the 1984-1987 CBA were not also formally
ratified, yet the employees are basing their present claims on these CBAs. It is inequitous to receive benefits from a CBA and later
on disclaim its validity.
New Pacific Timber &Supply Company Inc. (NPC) vs. NLRC and National Federation of Labor (NFL)
Facts:
The NFL was the sole and exclusive bargaining representative of all the regular rank-and-file employees of NPC Inc.. NFL
wanted to negotiate with NPC Inc. for better terms and conditions of employment, however, due to stiff resistance by the
company, the union filed a complaint for ULP on the ground of refusal to bargain. The Executive LA issued an order declaring
NPC Inc. guilty of ULP and that the CBA proposals submitted by NFL be considered as the CBA between the regular rank and
file employees in the bargaining unit and the company. The NPC Inc. appealed to NLRC which dismissed the appeal for lack of
merit. Thus, LA issued an order directing NPC Inc. to pay the entitled 142 employees of the benefits due to them under the CBA
which was duly complied. However, a "Petition for Relief" was filed in behalf of 186 of private respondents Akilit and 350 others.
They alleged that they were wrongfully excluded from enjoying the benefits under the CBA and claimed that NFL's
misrepresentation had precluded them from appealing their exclusion. Treating the petition as an appeal, NLRC entertained the
petition. The NLRC issued a resolution declaring that the 186 excluded form part and parcel of the then existing rank-and-file
bargaining unit and therefore entitled to said CBA benefits.
In line with this, NPC Inc. assailed the NLRC decision saying that the claimant employees were not entitled because said
employees were hired after the term of the CBA even if they subsequently become members of the bargaining unit. According to
NPC Inc. the provision on wage increase in the 1981-1984 CBA between the company and the union provided for yearly increase
had already ended since the CBA stipulates only increase for the years 1981-1984 pursuant to Art. 254 of LC. However, NPC Inc.
motion for reconsideration was denied, hence this petition for certiorari.
Issue/s: Whether a CBA continues to be binding even after its expiration absence/ until a new agreement has been reached by
both parties.
Ruling:
It is clear from the above provision of law (Art. 253 of LC) that until a ne CBA has been executed by and between the parties,
they are duty bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing
agreement. The law does not provide for any exception nor qualification as to which of the economic provisions of the existing
agreement are to retain force and effect, therefore, it must be understood as encompassing all the terms and conditions in the said
agreement. Consequently, the automatic renewal clause provided by law, which is deemed incorporated in all CBA's provides the
reason why the new CBA can only be given prospective effect. Thus, employees hired after the stipulated term of a CBA are
entitled to the benefits provided thereunder. For, otherwise, to exclude them would constitute undue discrimination and deprive
them of monetary benefits.
Petition granted.
Union of Filipro Employees (UFE) vs NLRC and Nestle Phil. Inc. (NPI)
Facts:
On June 22, 1988, petitioner Union Filipro Employees is the sole and exclusive bargaining agent of all rank and file employees of
Nestle Phil. Inc. UFE filed a notice of strike with the Department of Labor against NPI on the ground of ULP and raising the
issue of CBA deadlock. NCMB invited the parties for a conference for the purpose of settling the dispute but NPI failed to attend
and assailed the proponents of the said notice of strike.
Based from the records the respective CBAs in the 4 units of Nestle, in Alabang-Cabuyao, Makati, Cagayan de Oro and
Cebu/Davao work locations had all expired. 2 of the said work locations were represented by UFE respectively at
Alabang/Cabuyao and Makati. It was shown in the records that UFE, prior to the expiration of the CBAs for Makati and
Alabang/Cabuyao, submitted its proposals to NPI which the latter expressed its readiness to negotiate. On Sept. 14, 1987, NPI
terminated the employment of all UFE union officers and all members of negotiating panel who participated in a strike at Makati,
Alabang, Cabuyao and Cagayan De Oro held on Sept. 11, 1987 without notice of strike and strike vote to obtained such purpose.
The union filed a complaint of illegal dismissal. However, LA upheld the validity of the dismissal which is later on affirmed by
NLRC en banc. However, the union officers asserted their authority to represent the regular rank and file employees being the
duly elected officers of said union. On Oct. 18, 1988, UFE filed a motion asking Sec. Of Justice to assume jurisdiction over the
dispute of deadlock in collective bargaining between parties because of failure of NCMB to amicably settle the dispute due to
irreconcilable conflicts. Sec. Of Justice, Drilon, directed that the issue be submitted to NLRC for compulsory arbitration. NLRC
promulgated a resolution granting wage increase and ordering both parties to execute and implement a collective bargaining
agreement for a duration of 5 years.
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Issue/s: Whether the NLRC acted without jurisdiction in rendering the resolution.
Whether NLRC had acted with grave abuse of discretion and committed serious errors in fact and in law when it ruled
that the CBA is effective only upon the promulgation of the assailed resolution.
Whether NLRC erred in denying the union's demand for contract signing bonus and modified union shop in the assailed
resolution.
Ruling:
1. No. The assumption of jurisdiction by the Sec. Of Labor over labor disputes causing or likely to cause a strike or lockout in an
industry indispensable to the national interest is in the nature of a police power for in this case the company affected with public
interest is one of the largest manufacturers of food products. Through this, prolonged strike or lockout is inimical to the national
economy. Corollarily, it was the Sec. Of Labor's certification order for compulsory arbitration which directed NLRC to
promulgate an immediate resolution for an already delayed CBA. Hence, when sitting in a compulsory arbitration certified by Sec.
Of Labor, NLRC s not sitting as a judicial court but as an administrative body charged with the duty to implement the order of
the Secretary. Thus, its function is only to formulate the terms and conditions of the CBA and not to go beyond the order.
2. No. Arts. 253 and 253-A as amended by RA 6715 are clear. To quote; "... if any agreement on such other provisions of the CBA entered
within 6 months from the date of expiry of the term of such other provisions as fixed in the CBA, shall retroact to the day immediately following such
date. If any such agreement is entered beyond 6 months, the parties shall agree on the duration of retroactivity thereof." In view of this, the Court
upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the
assailed resolution by NLRC. The assailed resolution was promulgated on June 5, 1989 which is outside the 6 month period from
June 30, 1987, the expiry date of the past CBA. Based on the foregoing provision since no agreement to that effect was made
NLRC did not abuse its discretion in giving the said CBA prospective effect.
3. The contention of the union is wrong. The Court ruled that NLRC is in the best position to formulate a CBA whch is equitable
to all concerned due to its expertise in settling disputes. Hence it is imbued with competence to appraise and evaluate the
evidence and positions presented by the parties. Absence showing of the grave abuse of discretion, the findings of NLRC should
not be disturbed.
Petition is hereby dismiss and the decision of NLRC is affirmed except insofar as the ruling absolving NPI of ULP is set aside.
Manila Electric Company [Meralco] vs. Hon. Secreatary of Labor Leonardo Quisumbing and Meralco Employees and
Workers Association [MEWA]
Facts:
The case before us is about the decision promulgated on Januray 27, 1999 whereby the Court granted the petition of MEWA
regarding the benefits contained in the terms and conditions of the new CBA which is now assailed by MERALCO. MERALCO
alleged that the wage increase per month as ordered by the Secretary would simply pass the cost covering such increase to the
consumers thru an increase in the rate of electricity. The Court answered that any increased in the prices of electric current needs
the approval of appropriate regulatory government agency. Hence, the wage increase must be sustained although there exists
discrepancy between the wage increase of supervisory and rank and files employees. The Court in its decision ruled that the new
amounts granted herein are significantly higher than the weighted average salary (1992-1997) currently enjoyed by other rank and
file employees within the community. It should be noted that the relations between labor and capital is impressed with public
interest which must yield to the common good. Neither party should act oppressively against the other or impair the interest or
convenience of the public. Hence, the issues regarding wage increase being settled, the question now is about the reckoning date
of the CBA (arbitral award) insofar as the last 2 year period thereof is concerned?
Issue: What date would be the reckoning date of the renegotiated CBA?
Ruling:
The Court in the Jan. 27, 1999 decision stated that the CBA shall be "effective for a period of 2 years counted from Dec. 28, 1996
up to Dec. 27, 1999 which is actually covering a 3 year period. Thus, what should be applied is the provision of Art. 253-A of
Labor Code, although an arbitral award cannot per se be categorized as an agreement voluntarily agreed by the parties. However,
the arbitral award can be considered as an approximation of a collective bargaining agreement which would otherwise have been
entered into by the parties. The reckoning date shall, therefore would be Dec. 1, 1995 to November 30, 1997. As reasoned out,
"the law is silent as to the retroactivity of CBA arbitral award or that granted by virtue of the mutual agreement of the parties but
by intervention of the government. Despite the silence of the law, the Court rules herein that CBA arbitral awards granted after 6
months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their
union. Absent such agreement as to retroactivity, the award shall retroact to the first day after the 6 month period following the
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expiration. In the absence of CBA, the Secretary's determination of the date of retroactivity as part of his discretionary powers
over arbitral awards shall control."
MANILA ELECTRIC CO VS QUISUMBING
Facts:
MERALCO filed a motion for Partial Modification on the Resolution dated Feb. 22, 2000 questioning the Court's ruling on the
retroactivity issue and the huge cost that the said award imposes to the company estimated at no less than P800 Million. In the
said motion, MERALCO alleged that the Resolution contravenes the jurisprudential rule laid down in the cases of Union Filipro
Employees v. NLRC, Pier 8 Arrastre and Stevedoring Services v. Roldan- Confessor and St. Luke's Medical Center v. Torre.
Issue: Whether the 2 year term of the CBA in question be fixed from Dec. 28, 1996- Dec. 27, 1998 and not Dec. 1, 1995- Nov.
30, 1997.
Ruling:
The Court, basing its decision on the provision of Art. 253-A, ruled that said provision speaks of agreements by and between the
parties and not arbitral awards. In the abscence of a specific provision of the law prohibiting retroactivity of arbitral awards issued
by the Sec of Labor pursuant to Art. 263(g) of the LC, the Sec of Labor is deemed vested with plenary and discretionary powers
to determine the effectivity thereof. Thus, in resolving the case, the Court tool into account the fact that MERALCO belongs to
an industry imbued with pubic interest. As such, this Court cannot ignore the enormous cost that the company will have to bear
as a consequence of the fu retroaction of the arbitral award to the date of the expiry of the old CBA and the inevitable effect it
would have on the national economy. However, pursuant to social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those less privilege in life should have more in law. Balancing this 2
interests by the parties, the Court turned to he dictates of fairness and equitable justice and thus arrived at a formula that would
address the concerns of both sides. Hence, it s held that the arbitral award be made to retroact to the first day after the 6 month
period following the expiration of the last day of the CBA, June 1, 1996 to May 31, 1998.
Petition granted.
San Miguel Corporation Employees Union-PTGWO (Union), etc. v Confessor, San Miguel Corporation, Magnolia
Corp. and San Miguel Foods, Inc. (SMC)
Facts:
On June 28, 1990, Union concluded a CBA with SMC which is to take effect upon the expiration of the old CBA on June 30,
1989. The said CBA provided that the agreement shall remain in force until June 30, 1992 but that in accordance with Art. 253-A
of the Labor Code as amended, the term of the CBA, insofar as the representation aspect is concerned, shall be for 5 years from
July 1, 1989 to June 30, 1994. In keeping with the vision and long term strategy for business expansion, SMC management
informed its employees in a letter dated Aug. 13, 1991, the Magnolia and Feeds and Livestock Divisions were spun-off and
became 2 separate and distinct corporations. Notwithstanding the spin-offs, the CBA remained in force and effect. The CBA
renegotiation started in July 1992. During the said negotiation the Union insisted that the bargaining unit of SMC should still
include the employees of the spun-off corporations, Magnolia and SMFI and that the renegotiated terms shall be effective only
for the remaining period of 2 years or until June 30, 1994. SMC however, alleged that the employees spun-off to Magnolia and
SMFI automatically ceased to be part of the bargaining unit and the CBA should be effective for 3 years in accordance with Art.
253-A of the LC.
Issue/s: Whether the duration of the renegotiated terms of the CBA is 3 or 2 years.
Whether the bargaining unit of SMC includes also the employees spun-off.
Ruling:
The Court defines 2 classes of CBA, first the representation aspect which refers to the identity and majority status of the union
that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit. Second, nonrepresentation aspect/all other provisions simply refers to the rest of the CBA, economic as well as non-economic provisions,
other than representational.
Obviously, the framers of the law wanted to maintain industrial peace and stability by having both management and labor work
harmoniously together without any disturbance. Thus, no outside union can enter the establishment within 5 years and challenge
the status of the incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic
and non-economic) cannot be questioned by the employers or employees during the effectivity of the CBA. The CBA is a
contract between the parties and the parties must respect the terms and conditions of the agreement. It must be noted that the
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framers of the law did not give fixed terms as to the effectivity of the terms and conditions of employment. Hence, it can be
gleaned from their discussions that it is left to the parties.
The Court resolved the issue as to the term of the non-representation provisions of the CBA pursuant to the Memorandum of
the Secretary of Labor dated Feb. 24, 1994, whereas a matter of policy the parties are encouraged to enter into a renegotitated
CBA with a term which would coincide with the aforesaid 5 year term of the bargaining representative. In the present case
however, the parties, by mutual agreement, enter into a renegotiated contract with a term of 3 years or 1 which does not coincide
with the said 5 year term and said agreement is ratified by majority of the members in the bargaining unit, the subject contract is
valid legal and therefore, binds the contracting parties. The same will however, not adversely affect the right of another union to
challenge the majority status of the incumbent bargaining agent within 60 days before the lapse of the original 5 year term of the
CBA. Thus, the ruling of the Secretary of Labor on the effectivity of the renegotiated terms of the CBA shall be for 3 years.
Gerardo Rivera et al., vs Espiritu
Facts:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the Phil. Went on a 3-week strike causing serious
loasses to the financially beleaguered flag carrier. PAL faced with bankruptcy, adopted a rehabilitation plan and downsized its
labor force by more than 1/3. On July 22, 1998, PALEA, another union in PAL went on strike to protest the retrenchment
measures adopted by the airline, which affected 1899 union members. PAL offered a plan to transfer some shares of stock to
employees. The union board pressured by the members rejected the offer. PAL announced cessation of operations and sent
termination notices to employees. On Sept. 27, 1998, the PALEA proposed some terms and conditions subject to ratification by
the general membership, including a 10 year suspension of the CBA and entitlement to the 3 seats in the PAL board. PAL
management accepted this proposal. In referendum 61% were in favour of accepting the PAL-PALEA agreement, while 34%
rejected such. 5 days later, PAL resumed domestic operations. However, on the same day, 7 officers and members of PALEA
filed petition to annul the said agreement.
Issue: Whether the 10-year suspension of the CBA is unconstitutional and contrary to public policy.
Ruling:
The assailed agreement was the result of voluntary collective bargaining negotiation undertaken in the light of severe financial
situations faced by the employee, with the peculiar and unique intention of not merely promoting industrial peace at PAL but
preventing the latters closure. There exists no conflict between the agreement and Art. 253-A of the Labor Code, for the former
has a two-fold purpose. To wit; to promote industrial stability and predictability inasmuch as the agreement sought to promote
industrial peace. The other is to assign timetables wherein negotiations become a matter of right and requirement. It can be
deduced then that nothing prohibits the parties from waiving or suspending the mandate timetables and agreeing on the remedies
to enforce the same. In sum, the Court is of the view that the PAL-PALEA agreement dated Sept. 27, 1998 is valid exercise of the
freedom to contract. Under the principle of inviolability of contracts guaranteed by the Constitution, the contract must be upheld.
Philippine Airlines, Inc. vs. NLRC
Facts:
In March 1985, the PAL completely revised its Code of Discipline and circulated it among the employees for immediate
implementation. Subsequently, some employees were subjected to disciplinary measures for alleged violations of the revised code.
PALEA filed a complaint before the NLRC for ULP with the following remarks ULP with arbitrary implementation of PALs
Code of Discipline without notice and prior discussion with Union by Management. PAL filed a motion to dismiss the
complaint, asserting the prerogative to prescribe rules and regulations regarding employees conduct carrying out their duties and
functions. LA found no bad faith on the part of PAL but held PAL was not totally fault-free. On appeal by PAL, the NLRC
found no evidence of ULP by PAL and affirmed the dismissal of PALEAs charge. However, NLRC made a pronouncement that
the management can no longer exclude labor in the deliberation and adoption of rules and regulations that will affect them. Hence
this petition for certiorari, where PAL alleged that there was no such law mandating the sharing of responsibility between ER and
EE when it revised its Code in March 15, 1985.
Issue/s:
Whether the labor force has the right to participate in policy and decision making in a company. \
Ruling:
It was only in March 21, 1989 when RA 6715 amending Art. 211 of the LC, that the law explicitly considered it a state policy to
ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. However,
even in the absence of said clear provision of law, the exercise of management prerogative was never considered boundless. Thus,
management prerogative must be without abuse of discretion. Hence, when the subject affect the employees rights, duties and
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welfare, which in the given case affecting the EEs tenure, employees participation in shaping the policy is required. It must be
noted however that participation does not mean co-management. Participation in this sense refers to the Unions right to be
allowed to participate in policy formulation and decision-making process on matters affecting the Union members right, duties
and welfare as required by Art. 211 (a and g).
Indophil Textile Mill Workers Union-PTGWO (PTGWO) vs Voluntary Arbitrator Teodoro P. Calica and Indophil
Textile Mills, Inc. (ITMInc.)
Facts:
Herein petitioner-union is a LLO duly registered with DOLE and the exclusive bargaining agent of all rank and file employees of
ITMInc. In April, 1987, PTGWO and ITMCInc executed a CBA effective April 1, 1987 to March 31, 1990. On Nv. 3, 1967,
Indophil Acrylic Manufacturing Corp was formed and registered with SEC. In 1988, Acrylic became operational and hired
workers according to its own criteria and standards. Subsequently, the workers of Acrylic unionized and a duly certified CBA was
executed. The following year, PTGWO claimed that the plant facilities of Acrylic should be considered as an extension of the
facilities of ITMInc pursuant to a provision of the existing CBA. ITMInc was quick to contend that Acrylic was a separate and
distinct juridical entity from ITMInc. An impasse led PTGWO and ITMInc to enter into a submission agreement and jointly
requested Calica as their VA for the proper interpretation and implementation of the CBA. The VA rendered its award positing
that the interretation and application of the provision of the existing CBA in connection with the issue does not extend to the
employees of Arcylic being an extension or expansion of ITMInc. HTP
Issue/s:
Whether ITMInc and Acrylic are 2 distinct and separate juridical entity for purposes of union representation.
Ruling:
The fact that ITMInc and Acrylic are related, that some of the employees of ITMInc are the same persons manning and providing
for auxiliary services with the units of Acrylic, and that physical plants, offices and facilities are situated in the same compound do
not sufficiently justify the piercing the corporate veil of Acrylic. Hnece, the Acrylic not being an extension or expansion of
ITMInc, the rank and file employees working at Acrylic should not be recognized as part of, and/or within the scope of PTGWO
as the bargaining representative of ITMInc. In recent jurisprudence, the Court made pronouncements that legal corporate entity is
disregarded only if it is sought to hold offices and stockholders directly liable for a corporate obligation. That it is a grave abuse of
discretion to treat 2 companies as a single bargaining unit when these companies are indubitably distinct entities with separate
juridical personalities.
Petition dismissed.
Capitol Medical Center of Concerned Employees-Unified Filipino Service Workers (CEUFSW) vs Hon. Bienvenido e.
Laguesma and Capitol Medical Center Employees Association- Alliance of Filipino Workers (EAAFW)and Capitol
Medical Center Incorporated (CMCInc.) and Dr. Thelma Clemente
Facts:
On Feb. 17 1992, Med- Arbiter Abdullah issued an order which granted the EAAFW petition for certification election among the
rank and file employees of the CMC. CMCInc. appealed the order to the office of the Secretary by questioning the legal status of
EAAFW's affiliation with Alliance of Filipino Workers (AFW). To correct any supposed infirmity in its legal status, EAAFW
registered itself independently and withdrew the earlier petition for certification election. Subsequently, said union filed another
petition for certification election which was granted by Med- Arbiter Cruz on May, 29, 1992. CMCInc again appealed but the
Office of Secretary granted the petition. Finally, an election had been held with EAAFW garnering 204 votes, 168 for no union
and 8 spoiled ballots out of 380 votes cast. As a result said union was certified as the sole and exclusive bargaining representative
of the rank and file employees at CMC. However, CMCInc appealed the result. Pending the appeal, EAAFW after being declared
as the certified bargaining agent presented to CMCInc economic proposal for the negotiation of CBA which the latter alleged that
such negotiation should be suspended due to the pending appeal which was later on denied. Due to CMCInc refusal to bargain
EAAFW fielded a notice of strike and later on staged a strike. The Sec of Labor assumed jurisdiction and ordered that the dispute
for compulsory arbitration. Pending said arbitration, CEUFSW filed a petition for certification election on the ground that the 12
month bar rule and last CE had already elapsed. Moreover, no CBA had been concluded between EAAFW and CMCInc.
EAAFW challenged the said petition by CEUFSW alleging that it had already been certified and declared as bargaining agent
which was confirmed by Sec of Labor and by the Court.
Issue/s:

Whether the Undersecretary Laguesma committed grave abuse of discretion in denying CEUFSW petition for
certification election.
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Whether EAAFW has the right to bargain collectively with CMCInc.

Ruling:
While it is true that 12 months/ a year had lapsed since the final certification result and that no CBA had been concluded,
CEUFSW cannot directly file a petition for PCE since the delay in forging a CBA could not be attributed to EAAFW. Based from
the record it is CMCInc who refused to bargain with the latter due to pending case questioning the legal personality of the
certified bargaining agent. Moreso, bargaining deadlock was no attendant in the present case since no reasonable effort at good
faith bargaining was held, instead CMCInc employed all legal means to block the certification of EAAFW as the bargaining agent
of rank and file employees which is worse than deadlock. Hence, the Court cited Art. 252 of LC which explicitly mandates the
duty to bargain collectively between the agent and the management. Therefore, the duly certified bargaining agent should not be
made to further bear the brunt flowing from the CMCInc reluctance and thinly disguised refusal to bargain.
Petition dismissed and Undersecretary's resolution affirmed.
Samahang Manggawa Sa PERMEX (SMP) vs Sec of Labor, National Federation of Labor, PERMEX Producer and
Exporter Corporation (PPEC)
Facts:
On Jan. 15, 1991, a certification election was conducted among employees of PPEC which resulted to a no union. However, some
employees of said company formed a labor organization known as the Samahang Manggagawa sa PERMEX (SMP) which was
registered with DOLE. The union affiliated itself with Philippine Industries Labor Union (PIILU). On Aug. 16, 1991, SMPPIILU requested PPEC to recognize the former as the sole and exclusive bargaining agent of the employees. PECC recognized
SMP-PIILU and both entered into a collective bargaining agreement Dec. 1, 1991) which was later on ratified by the majority of
the rank and file employees (Dec. 9 & 10, 1991) which was subsequently certified by DOLE (Dec. 13, 1991).
On Feb. 25, 1992, National Federation of Labor (NFL) filed a PCE which was dismissed by the Med- Arbiter but granted by Sec
of Labor on appeal. SMP-PIILU questioned the resolution of the Sec of Labor. Hence this petition.
Issue:
Whether PECC's voluntary recognition of SMP-PIILU as the exclusive bargaining agent within 12 months after the last
certification election is valid.
Ruling:
As pointed out by the respondent Sec of Labor in his decision, there can be no determination of a bargainng representative within
a year of the proclamation of the results of the certification election. Here the results, which showed that 61% of the employees
voted for "no union, during the first PCE were certified on Feb. 22, 1991 but on Dec. 1, 1991 PECC already recognized SMPPIILU and entered a CBA with it. The Court said that there is something dubious about the fact that just 10 months after the
employees had voted that they did not want any union to represent them, they would be expressing support for SMP-PIILU.
Excepted from the contract bar rule are certain types of contracts which do not forester industrial stability, such as contracts
where the identity of the representative is in doubt. Any stability derived from such contracts must be subordinated to the
employees' freedom of choice because it does not establish the kind of industrial peace contemplated by law. Moreso, in the case
at bar, the sworn affidavits f some employees showed that there existed coercion and intimidation when they supported SMPPIILU.
LAGUNA AUTOPARTS MANUFACTURING CORPORATION, petitioner, vs. OFFICE OF THE SECRETARY,
DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) and LAGUNA AUTOPARTS MANUFACTURING
CORPORATION OBRERO PILIPINO-LAMCOR CHAPTER,respondents.
Facts:
On May 3, 1999, the respondent union filed a petition for certification election before the Department of Labor and Employment
(DOLE), Regional Office No. IV, Calamba, Laguna. In its petition, the respondent union alleged that Obrero Pilipino was a
legitimate labor organization and that its chapter affiliate, LAMCOR Chapter. A copy of the respondent unions Certificate of
Creation was attached to the petition. The petition further alleged that the bargaining unit sought to be represented was
composed of all the rank-and-file employees in the petitioner company, more or less, 160 employees. It averred that the said
bargaining unit is unorganized and that there has been no certification election conducted for the past 12 months prior to the
filing of the petition.
The petitioner company moved to dismiss the petition for certification election. It claimed that the respondent union was not a
legitimate labor organization for failure to show that it had complied with the registration requirements to the Regional Office or
the Bureau of Labor Relations (BLR). The petitioner company further asserted in the said motion that even if the respondent
union was issued a certificate of registration, it could not file a petition for certification election since its legal personality was at
question.
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On October 24, 2000, Med-Arbiter Anastasio L. Bactin dismissed the petition for certification election for the respondent unions
lack of legal personality. The Med-Arbiter found that the respondent union had not yet attained the status of a legitimate labor
organization because it failed to indicate its principal office on the documents it submitted to the Regional Office. He opined that
this was a fatal defect tantamount to failure to submit the complete requirements, which warranted the dismissal of the petition
for certification election.
The respondent union appealed the case to the Secretary of Labor and Employment, and reversed the ruling of the Med-Arbiter.
Not convinced, the petitioner filed a petition for certiorari with the CA rendered a Decision in favor of the respondent union,
affirming the decision of SOLE.
Ruling:

The issues are the following: (a) whether or not the respondent union is a legitimate labor organization; (b) whether or
not a chapters legal personality may be collaterally attacked in a petition for certification election; and (c) whether or not the
petitioner, as the employer, has the legal standing to oppose the petition for certification election.
Indeed, a local or chapter need not be independently registered to acquire legal personality. Section 3, Rule VI of the
Implementing Rules of Book V, as amended by D.O. No. 9 clearly states
SEC. 3. Acquisition of legal personality by local/chapter. A local/chapter constituted in accordance with Section 1 of this Rule shall
acquire legal personality from the date of filing of the complete documents enumerated therein. Upon compliance with all
documentary requirements, the Regional Office or Bureau shall issue in favor of the local/chapter a certificate indicating that it is
included in the roster of legitimate labor organizations.

The task of determining whether the local or chapter has submitted the complete documentary requirements is lodged
with the Regional Office or the BLR, as the case may be. The records of the case show that the respondent union submitted the
said documents to Regional Office No. IV and was subsequently issued a certificate recognizing its legal personality as labor
organization. Hence, the Regional Office, through the Labor Relations Division Chief, has determined that the respondent union
complied with the requirements under the law. It, therefore, declared that the respondent union has acquired legal personality as a
labor organization. Absent any pronouncement to the contrary, such determination of the Labor Relations Division Chief will
stand, on the presumption that the duty of determining whether the respondent union submitted the complete documentary
requirements has been regularly performed.
We rule, however, that such legal personality may not be subject to a collateral attack but only through a separate action
instituted particularly for the purpose of assailing it. This is categorically prescribed by Section 5, Rule V of the Implementing
Rules of Book V, which states as follows:
SEC. 5. Effect of registration. The labor organization or workers association shall be deemed registered and vested with legal
personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be subject to collateral attack but may
be questioned only in an independent petition for cancellation in accordance with these Rules.

Hence, to raise the issue of the respondent unions legal personality is not proper in this case. The pronouncement of
the Labor Relations Division Chief, that the respondent union acquired a legal personality with the submission of the complete
documentary requirement, cannot be challenged in a petition for certification election.
Equally important is Section 11, Paragraph II, Rule IX of D.O. 9, which provides for the dismissal of a petition for certification
election based on the lack of legal personality of a labor organization only in the following instances: (1) appellant is not listed by
the Regional Office or the BLR in its registry of legitimate labor organizations; or (2) appellants legal personality has been
revoked or cancelled with finality. Since appellant is listed in the registry of legitimate labor organizations, and its legitimacy has
not been revoked or cancelled with finality, the granting of its petition for certification election is proper.
Finally, on the issue of whether the petitioner has the legal standing to oppose the petition for certification election, we
rule in the negative. Our ruling in San Miguel Foods, Inc.-Cebu B-Meg Feed Plant v. Laguesma is still sound, thus:
In any case, this Court notes that it is petitioner, the employer, which has offered the most tenacious resistance to the holding of a
certification election among its monthly-paid rank-and-file employees. This must not be so, for the choice of a collective bargaining
agent is the sole concern of the employees. The only exception to this rule is where the employer has to file the petition for
certification election pursuant to Article 258 of the Labor Code because it was requested to bargain collectively, which exception finds
no application in the case before us. Its role in a certification election has aptly been described in Trade Unions of the Philippines and
Allied Services (TUPAS) v. Trajano, as that of a mere bystander. It has no legal standing in a certification election as it cannot oppose
the petition or appeal the Med-Arbiters orders related thereto.

ALEXANDER REYES, ALBERTO M. NERA,

vs. CRESENCIANO B. TRAJANO, et al., respondent.

EDGARDO

M.

GECA,

and

138

others, petitioners,

Facts:
The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano) sustained the denial by the Med Arbiter of
the right to vote of one hundred forty-one (141) members of the "Iglesia ni Kristo" (INK), all employed in the same company, at
a certification election at which two (2) labor organizations were contesting the right to be the exclusive representative of the
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employees in the bargaining unit. That denial is assailed as having been done with grave abuse of discretion in the special civil
action of certiorari at bar, commenced by the INK members adversely affected thereby.
The certification election was authorized to be conducted by the Bureau of Labor Relations among the employees of Tri-Union
Industries Corporation on October 20, 1987. The competing unions were Tri-Union Employees Union-Organized Labor
Association in Line Industries and Agriculture (TUEU-OLALIA), and Trade Union of the Philippines and Allied Services
(TUPAS). Of the 348 workers initially deemed to be qualified voters, only 240 actually took part in the election, conducted under
the provision of the Bureau of Labor Relations. Among the 240 employees who cast their votes were 141 members of the INK.
The ballots provided for three (3) choices. They provided for votes to be cast, of course, for either of the two (2) contending
labor organizations, (a) TUPAS and (b) TUEU-OLALIA; and, conformably with established rule and practice, for (c) a third
choice: "NO UNION.
The final tally of the votes showed the following results:
TUPAS 1
TUEU-OLALIA 95
NO UNION 1
SPOILED 1
CHALLENGED 141

The challenged votes were those cast by the 141 INK members. They
were segregated and excluded from the final count in virtue of an
agreement between the competing unions, reached at the pre-election
conference that the INK members should not be allowed to vote
"because they are not members of any union and refused to participate
in the previous certification elections.

The INK employees promptly made known their protest to the exclusion of their votes. They filed f a petition to cancel
the election alleging that it "was not fair" and the result thereof did "not reflect the true sentiments of the majority of the
employees." TUEU-OLALIA opposed the petition. It contended that the petitioners "do not have legal personality to protest the
results of the election," because "they are not members of either contending unit, but . . . of the INK" which prohibits its
followers, on religious grounds, from joining or forming any labor organization. . . ."
The Med-Arbiter certified, on December 21, 1987, the TUEU-OLALIA as the sole and exclusive bargaining agent of the
rank-and-file employees. In that Order he decided the fact that "religious belief was (being) utilized to render meaningless the
rights of the non-members of the Iglesia ni Kristo to exercise the rights to be represented by a labor organization as the
bargaining agent," and declared the petitioners as "not possessed of any legal personality to institute this present cause of action"
since they were not parties to the petition for certification election.
The petitioners brought the matter up on appeal to the Bureau of Labor Relations. There they argued that the MedArbiter had "practically disenfranchised petitioners who had an overwhelming majority," and "the TUEU-OLALIA certified
union cannot be legally said to have been the result of a valid election where at least fifty-one percent of all eligible voters in the
appropriate bargaining unit shall have cast their votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge
of the Bureau of Labor Relations, denied the appeal in his Decision of July 22, 1988. He opined that the petitioners are "bereft of
legal personality to protest their alleged disenfrachisement" since they "are not constituted into a duly organized labor union,
hence, not one of the unions which vied for certification as sole and exclusive bargaining representative." He also pointed out that
the petitioners "did not participate in previous certification elections in the company for the reason that their religious beliefs do
not allow them to form, join or assist labor organizations."
It is this Decision of July 22, 1988 that the petitioners would have this Court annul and set aside in the present special
civil action of certiorari.
Ruling: Guaranteed to all employees or workers is the "right to self-organization and to form, join, or assist labor organizations
of their own choosing for purposes of collective bargaining." This is made plain by no less than three provisions of the Labor
Code of the Philippines. Article 243 of the Code provides as follows:

ART. 243. Coverage and employees right to self-organization. All persons employed in commercial, industrial and agricultural enterprises
and in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right to self-organization
and to form, join, or assist labor organizations of their own choosing for purposes or collective bargaining. Ambulant, intermittent and itinerant
workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual
aid and protection.

The right of self-organization includes the right to organize or affiliate with a labor union or determine which of two or
more unions in an establishment to join, and to engage in concerted activities with co-workers for purposes of collective
bargaining through representatives of their own choosing, or for their mutual aid and protection, i.e., the protection, promotion,
or enhancement of their rights and interests.
Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor organization, is
subsumed in the right to join, affiliate with, or assist any union, and to maintain membership therein. The right to form or join a
labor organization necessarily includes the right to refuse or refrain from exercising said right. It is self-evident that just as no one
should be denied the exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred right.
The fact that a person has opted to acquire membership in a labor union does not preclude his subsequently opting to renounce
such membership.
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The right to refuse to join or be represented by any labor organization is recognized not only by law but also in the rules
drawn up for implementation thereof. The original Rules on Certification promulgated by the defunct Court of Industrial
Relations required that the ballots to be used at a certification election to determine which of two or more competing labor
unions would represent the employees in the appropriate bargaining unit should contain, aside from the names of each union, an
alternative choice of the employee voting, to the effect that he desires not to which of two or more competing labor unions would
represent the employees in the appropriate bargaining unit should contain, aside from the names of each union, an alternative
choice of the employee voting, to the effect that he desires not to be represented by any union. And where only one union was
involved, the ballots were required to state the question "Do you desire to be represented by said union?" as regards which
the employees voting would mark an appropriate square, one indicating the answer, "Yes" the other, "No."
The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the employees in
the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case, by which
particular labor organization. If the results of the election should disclose that the majority of the workers do not wish to be
represented by any union, then their wishes must be respected, and no union may properly be certified as the exclusive
representative of the workers in the bargaining unit in dealing with the employer regarding wages, hours and other terms and
conditions of employment. The minority employees who wish to have a union represent them in collective bargaining can
do nothing but wait for another suitable occasion to petition for a certification election and hope that the results will be different.
They may not and should not be permitted, however, to impose their will on the majority who do not desire to have a union
certified as the exclusive workers' benefit in the bargaining unit upon the plea that they, the minority workers, are being denied
the right of self-organization and collective bargaining. As repeatedly stated, the right of self-organization embraces not only the
right to form, join or assist labor organizations, but the concomitant, converse right NOT to form, join or assist any labor union.
That the INK employees, as employees in the same bargaining unit in the true sense of the term, do have the right of selforganization, is also in truth beyond question, as well as the fact that when they voted that the employees in their bargaining unit
should be represented by "NO UNION," they were simply exercising that right of self-organization, albeit in its negative aspect.
AIRTIME SPECIALISTS, INC., et al., petitioners, vs. HON. DIRECTOR OF LABOR RELATIONS PURA
FERRER-CALLEJA, et al., respondents.
Facts:
Respondent Samahan ng mga Manggagawa sa Asia-FFW Chapter (SAMA-ASIA, for short) filed with the National Capital Region,
Ministry of Labor and Employment, two separate petitions for direct certification and/or certification election on behalf of the
regular rank-and-file employees of the petitioners Airtime Specialists and Absolute Sound, Inc. The other respondent Pinagbuklod
ng Manggagawa sa Ataco-FFW Chapter (PMA for short) also filed with the same office, on the same day, similar separate
petitions in behalf of the regular rank and file employees of petitioners Country Wealth Development, Ad Planner and Marketing
Counsellors and Atlas Resources.
All these five cases were consolidated.
Petitioners filed their position paper with motion to dismiss on the following grounds-disaffiliation of the rank and file
employees, ineligibility of some signatories because they had less than one (1) year of service resulting in the non-compliance with
the 30% requirement.
On March 9, 1987, the Med-Arbiter issued decision ordering a certification election to be conducted among the rank and
file employees of the Airtime Specialists, Inc.; Absolute Sound, Inc.; Commonwealth Development Corporation; Ad Planners &
Mktg. Corp.; and Atlas Resources & Management Group, within 20 days from receipt of this Order. The parties are (1) Samahan
ng mga Manggagawa sa Asia (SAMA-ASIA) FFW Chapter & Pinagbuklod ng mga Manggagawa sa Ataco (PMA-FFW); and (2)
No union.
Petitioners' motion for reconsideration having been denied, they filed the instant petition for "Certiorari and Prohibition
with Preliminary Injunction" with a Prayer for the issuance of a temporary restraining order enjoining public respondents from
conducting any further proceedings in the said five cases. The petition was given due course and the parties were required to
submit simultaneously their respective memoranda.
Thus, petitioners argue that the public respondents committed grave abuse of discretion when they considered (a)
employees with less than one year of service and even (b) probationary employees as qualified participants in the certification
election process. They contend that "by the very fact that such (probationary)-employees have not earned regular status, they are
not of the bargaining unit". Petitioners maintain that this, "directly violates" the ruling of this Court in Tarnate vs. Noriel, (100
SCRA 93) where it held that "at least one year of service is required for an employee to enjoy the benefits of membership in any
labor union."
Ruling:
Petitioners' contentions are untenable. It is Our holding in the case of B.F. Goodrich Phils., Inc. vs. B.F. Goodrich Confidential &
Salaried Employees Union-NATU (49 SCRA 532) that the objectives of the Industrial Peace Act would be sooner attained if at the
earliest opportunity the employees, all of them, in an appropriate bargaining unit be pooled to determine which labor organization
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should be its exclusive representative. This Court had made it clear that We should give discretion to the Court of Industrial
Relations, or in this case, the Bureau of Labor Relations in deciding whether or not to grant a petition for certification election
considering the facts and circumstances of which it has intimate knowledge. The Bureau is left without any discretion but to
order the holding of certification election. Parenthetically, where the petition is supported by less than 30% (now 20%) the
Bureau of Labor Relations has discretion whether or not to order the holding of certification election depending on the
circumstances of the case. Thus, it is Our holding in LVN Pictures vs. Musicians Guild, et al. (1 SCRA 132) that in connection with
certification election, the Court of Industrial Relations enjoys a wide discretion in determining the procedure necessary to insure a
fair and free choice of bargaining representatives by employees, and having exercised its sound discretion, this Court cannot
interfere. (Arguelles v. Young, 153 SCRA 690).
In a certification election all rank-and-file employees in the appropriate bargaining unit are entitled to vote. This principle is clearly
stated in Art. 255 of the Labor Code which states that the "labor organization designated or selected by the majority of the
employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of
collective bargaining." Collective bargaining covers all aspects of the employment relation and the resultant CBA negotiated by
the certified union binds all employees in the bargaining unit. Hence, all rank-and-file employees, probationary or permanent,
have a substantial interest in the selection of the bargaining representative.
Petitioner argue at length that more than a majority of the signatories to the petitions for certification election "have disaffiliated
from the two private respondent unions (PMA-FFW and SAMA-ASIA-FFW) and have joined another union (ADLO)." and
would, therefore, fall short of the 20% consent requirement of the Labor Code. Assuming the fact of such disaffiliation and even
assuming further that the 20% requirement is not reached, this will not defeat the petition for certification election. On the
contrary, it becomes more imperative to conduct one. The alleged disaffiliation from the petitioning unions (PMA-FFW and
SAMA-ASIA-FFW) in favor of the ADLO-KMU raised a genuine representation issue which can best be tested in a certification
election. In VICMICO Industrial Workers Association (VWA) vs. The Honorable Carmelo Noriel, et al. (131 SCRA 569) this Court ruled
upon the same argument. Thus:
On the issue that more than 600 bona fide rank and file members of VIWA had disaffiliated with respondents NFSW, this Court had
occasion to state what should be followed in case of withdrawal or retraction of signatures. In National Mines and Allied Workers
Union vs. Luna, 83 SCRA 607, it was held that the " best forum for determining whether there were indeed retractions from some of
the laborers is the certification election itself wherein the workers can freely express their choice in a secret ballot ... To hold otherwise
would be violative of the liberal approach constantly followed by this Court in matters of certification elections.

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UNFAIR LABOR PRACTICE

PHILCOM EMPLOYEES UNION
CORPORATION

vs

PHILIPPINE

GLOBAL

COMMUNICATIONS

and

PHILCOM

Facts :

Upon the expiration of the Collective Bargaining Agreement (CBA) between petitioner Philcom Employees Union
(PEU or union, for brevity) and private respondent Philippine Global Communications, Inc. (Philcom, Inc.), the parties started
negotiations for the renewal of their CBA in July 1997. While negotiations were ongoing, PEU filed on October 21, 1997 with the
(NCMB ,a Notice of Strike, due to perceived unfair labor practice committed by the company . In its position paper, the union
raised the issue of the alleged unfair labor practice of the company hereunder enumerated as follows:
"(a) PABX transfer and contractualization of PABX service and position;
"(b) Massive contractualization;
"(c) Flexible labor and additional work/function;
"(d) Disallowance of union leave intended for union seminar;
"(e) Misimplementation and/or non-implementation of employees' benefits like shoe allowance, rainboots, raincoats, OIC shift
allowance, P450.00 monthly allowance, driving allowance, motorcycle award and full-time physician;
"(f) Non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time and staff meetings;
"(g) Economic inducement by promotion during CBA negotiation;
"(h) Disinformation scheme, surveillance and interference with union affairs;
"(i) Issuance of memorandum/notice to employees without giving copy to union, change in work schedule at Traffic Records
Section and ITTO policies; and
"(j) Inadequate transportation allowance, water and facilities."
At a conciliation conference held at the NCMB-NCR office, the parties agreed to consolidate the two (2) Notices of
Strike filed by the union and to maintain the status quo during the pendency of the proceedings , however, while the union and
the company officers and representatives were meeting, the remaining union officers and members staged a strike at the company
premises, barricading the entrances and egresses thereof and setting up a stationary picket at the main entrance of the building.
The company immediately filed a petition for the Secretary of Labor and Employment to assume jurisdiction over the
labor dispute Acting Labor Secretary Cresenciano B. Trajano issued an Order assuming jurisdiction over the dispute, enjoining
any strike or lockout, whether threatened or actual, directing the parties to cease and desist from committing any act that may
exacerbate the situation, directing the striking workers to return to work within twenty-four (24) hours from receipt of the
Secretary's Order and for management to resume normal operations, as well as accept the workers back under the same terms and
conditions prior to the strike.
Issue:

whether or not the employer committed ULP

Ruling:

no. Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the
workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not
unfair labor practices.23 The only exception is Article 248(f), which in any case is not one of the acts specified in PEU's charge of
unfair labor practice. A review of the acts complained of as unfair labor practices of Philcom convinces us that they do not fall
under any of the prohibited acts defined and enumerated in Article 248 of the Labor Code. The issues of misimplementation or
non-implementation of employee benefits, non-payment of overtime and other monetary claims, inadequate transportation
allowance, water, and other facilities, are all a matter of implementation or interpretation of the economic provisions of the CBA
between Philcom and PEU subject to the grievance procedure.
Instance of Valid exercise of management rights. The Court has always respected a company's exercise of its prerogative
to devise means to improve its operations. Thus, we have held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work assignments, supervision and transfer of employees,
working methods, time, place and manner of work.25 This is so because the law on unfair labor practices is not intended to
deprive employers of their fundamental right to prescribe and enforce such rules as they honestly believe to be necessary to the
proper, productive and profitable operation of their business.26 Even assuming arguendo that Philcom had violated some
provisions in the CBA, there was no showing that the same was a flagrant or malicious refusal to comply with its economic
provisions. The law mandates that such violations should not be treated as unfair labor practices.27

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WISE AND CO., INC. VS. WISE & CO., EMPLOYEES UNION
Facts:

When the management introduced a profit-sharing scheme for its managers and supervisors, the union wrote the
management to ask that the union members be allowed to participate in the profit- sharing program. The management denied the
request on the ground that such participation was not provided in the CBA.
Later, when the renegotiation of the CBA was approaching, the management wrote the union that it was willing to
consider including the union members in the profit- sharing scheme if the negotiations would be concluded before December
1987.
On March 30, 1988, the company distributed the profit- sharing benefit not only to managers and supervisors but also to
all rank-and-file employees not covered by the CBA because they were excluded from their agreed definition of bargaining unit,
such as the regular rand-and-file employees in the office of the president, vice president, security office, corporate affairs office,
accounting and treasury department.
Issue:

Whether the grant by the management of profit- sharing benefits to its employees who are non-union members is
discriminatory against the union members. Is the act discriminatory amounting to ULP.
Ruling:

There can be no discrimination committed by the employer as the situation of the union employees is different from the
non union employees. Discrimination per se is not unlawful. There can be no discrimination where employees concerned are not
similarly situated.
The grant of the employer of profit- sharing benefits to the employees outside the bargaining unit falls under the
ambit of its managerial prerogative. It appears to have been done in good faith and without ulterior motive. More so when as in
this case there is a clause in the CBA where the employees are classified into those who are members of the union and those who
are not. In the case of the union members, they derive their benefits from the terms and conditions of the CBA which constitutes
the law between the contracting parties. Both the employer and the union members are bound by such agreement.
However, the Court serves notice that it will not hesitate to strike down any act of the employer that tends to be
discriminatory against union members. It is only because of the peculiar circumstances of this case showing there is no such
intention that this court has ruled otherwise.
Dabuet, et al. Vs. Roche Pharmaceuticals, Inc.
Facts:

The individual petitioners, who were all officers of the Roche Products Labor Union, wrote the company expressing the
grievances of the union and seeking a formal conference with the management regarding the previous dismissal of the unions
president and vice-president. At the meeting, the companys general manager, instead of discussing the problems affecting the
labor union and management, allegedly berated the petitioners for writing that letter and called the letter and the person who
prepared it stupid.
Feeling that he was the one alluded to, since he had prepared the letter, the counsel for labor union filed a case for grave
slander versus the general manager. The charge was based on the affidavit executed by the petitioners. The company and the
manager, in turn, filed a complaint for perjury against petitioners alleging that their affidavit contained false statements.
The respondent company, furthermore, construed the execution by petitioners of the affidavit as an act of breach of
trust and confidence and inimical to the interest of the company, for which they were suspended and later on dismissed.
Ruling:

The respondent company had committed ULP practice in dismissing the petitioners without just and valid cause.
In Republic Savings Bank vs. CIR, where the dismissed employees had written a letter decried by the bank as patently
libellous for alleging immorality, nepotism and favouritism on the part of the bank president, thus amounting to behaviour
necessitating their dismissal, the Court declared the dismissal illegal as the letter was a concerted activity protected by R.A. 875.
Where, as in this case, the letter written by and for the union addressed to the management referred to employee
grievances and/ or labor management issues and the employees concerned were all officers of the union, then seeking a
renegotiation of the CBA, a fact which respondent company does not deny, there should, all the more, be a recognition of such
letter as an act for the mutual aid, protection and benefit of the employees concerned. This recognition in turn should extend to
petitioners execution of an affidavit in support of the charge of slander against private respondent, for calling the unions lawyer,
who prepared the letter, and the contents thereof as stupid.

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Breach of trust and confidence, the grounds alleged for petitioners dismissal must not be indiscriminately used as a shield to
dismiss an employee arbitrarily.
We, thus, hold that respondent companys act in dismissing the petitioners, who then constituted the remaining and
entire officialdom of the Roche Products Labor Union, after the unions president and vice-president had been earlier dismissed
and when the CBA in the company was about to be renegotiated, was an ULP under Sec. 4(a) (1) of the Industrial Peace Act.
Their dismissal, under the circumstances, amounted to interference with, and restraint or coercion of, the petitioners in the
exercise of their right to engage in concerted activities for their mutual aid and protection.
The Insular Life Assurance Co., Ltd.,Employees Association v. Insular Life Assurance Co. Ltd.
Facts:

The company president sent individual letters to the striking employees urging them to abandon their strike with a
promise of free coffee and movies and paid overtime. He also warned them that if they failed to return to work by a certain date,
they might be replaced in their jobs. Aside from this, company- hired men broke into the picket line, resulting in violence and the
filng of criminal charges versus some union officers and members. When the strike was overm, the company refused to readmit
the unionists facing criminal charges.
Ruling:
1. Letter to individual employees- It is an act of interference for the employer to send letters to all employees notifying them to
return to work at a time specified therein, otherwise new employees would be engaged to perform their jobs. Individual
solicitation of the employees or visiting their homes, with the employer or his representative urging the employees to
cease union activities or cease striking constitutes ULP. All the above- detailed activities are ULP because they tend to
undermine the concerted activity of the employees, an activity to which they are entitled, free from the employers
molestation.
2.

3.

4.

5.

Strike- Breaking- Where the respondent company offered reinstatement and attended to bribe the strikers with
comfortable cots, free coffee and occasional movies, overtime pay for work performed in excess of 8 hours, and
arrangements for their families so they would abandon the strike and return to work, it was guilty of strike breaking
and/or union- busting and, consequently of ULP.
Acts violative of right to organize- Violative of the righrt to organize are the following acts: the offer of a Christmas bonus to
all loyal employees shortly after the union requested to bargain with the employer; the giving of wage increases to
mollify the employees after the employer has refused to bargain with the union, or to induce the striking employees to
return to work; the promise of benefits in return for the strikers abandonment of their strike; and the employers
statement., made after the strike started, that if the strikers would return to work, they would receive new benefits in the
form of hospitalization, accident insurance, profit- sharing and a new building to work in.
Test of interference or coercion- The test of whether an employer interfered with and coerved employees is whether the
employer has engaged in conduct which it may reasonably ne said tends to interfere with the free exercise of employees
right. It is not necessary that there be direct evidence that an employee was in fact intimidated or coerced by statements
of threats of the employer if there is reasonable inference that the anti union conduct of the employer does have an
adverse effect on self- organization and collective bargaining.
The Totality of Conduct Doctrine- The letters of the company president to the individual strikers should not be considered
by themselves alone but should be read in the light of the preceding and subsequent circumstances. The letter should be
interpreted according to the totality if conduct doctrine, whereby the culpability of an employers remarks has to be
evaluated not only on the basis of their implicit implications, but in conjunction with collateral circumstances.

Shell Oil Workers Union vs. Shell Company of the Philippines

Facts:

Shell Company dissolved its security guard section and replaced it with an outside agency, claiming that such act was a
valid exercise management prerogative. The Union argued otherwise, relying on the CBA provision which assured continued
existence of a security guard section at least during the lifetime of the CBA.
The crucial question thus is whether the then existing collective bargaining contarc running for 3 years from August 1,
1966 to De. 31, 1969 constituted a bar to such a decision reached by management.
Ruling:

The answer must be in the affirmative. As correctly stressed in the brief for the petitioner union, there was a specific
coverage concerning the security guard section in the collective bargaining contract. It is found not only in the body thereof but in

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the two appendices concerning the wage schedules as well as the premium pay and the night compensation to which personnel in
such section were entitled. It was thus an assurance of security of tenure, at least, during the lifetime of the agreement. Nor is it a
sufficient answer, as set forth in the decision of respondent court, that while such section would be abolished, the guards would
not be unemployed as they would be transferred to another position with an increase in pay and with a transfer bonus. For what
is involved is the integrity of the agreement reached, the terms of which should be binding on both parties. One of them may be
released but only with the consent of the other. The right to object belongs to the latter, and if exercised must be respected. Such
a state of affairs should continue during the existence of the contract. Only thus may there be compliance with and fulfilment of
the covenants in a valid subsisting agreement.
What renders the stand of Shell Company even more vulnerable is the fact that as set forth in its brief and as found by
respondent Court as far back as 1964, it had already been studying the matter of dissolving the security guard section and
contracting out such service to an outside agency. Apparently, it had reached a decision to that effect for implementation the next
year. In July 1966, there was a joint consultation between it and the Union on the matter. Nonetheless on August 26, 1966, a
collective bargaining contract was entered into which, as indicated above, did assure the existence of the security guard section.
The Shell company did not have to agree to such stipulation. Or it could have reserved the right to effect a dissolution and
reassign the gurads. It did not do so. Instead, when it decided to take such a step resulting in the strike, it would rely primarily on
provisions in the collective bargaining contract couched in general terms, merely declaratory of certain management prerogatives.
Considering the circumstances of records, there can be no justification then for Shell Companys insistence on pushing through
its project of such dissolution without thereby incurring a violation of the CBA.
Accordingly, the ULP strike called by the Union did not have the impress of validity.
Complex Electronics Employees Association vs. NLRC, et al.
Facts:

Complex Electronics Corporation was engaged in the manufacture of electronic products. It was actually a
subcontractor of electronic products where its customers gave their job orders, sent their own materials and consigned their
equipment to it. The customers were foreign-based companies with different product lines and specifications requiring the
employment of workers with specific skills for each product line. Thus, there was the AMS Line for the Adaptive Micro System,
Inc., the Heril Line for Heril Co., Ltd., the Lite-On Line for the Lite-On Philippines Electronics Co., etc.
The rank and file workers of Complex were organized into a union known as the Complex Electronics Employees
Association.
On March 4, 1992, Complex received a facsimile message from Lite-On Philippines Electronics Co., requiring it to lower its price
by 10%.
Complex informed its Lite-On personnel that lowering its selling price by 10% was not feasible as they were already
incurring losses, hence, Complex informed the employees that it had to close down the operation of the Lite-On Line.
Nonetheless, the company promised that it would follow the law by giving one month notice and retrenchment pay, i.e., halfmonth pay for every year of service.
The Union, on the other hand, demanded a retrenchment pay of one month salary for every year of service which
Complex refused.
On March 13, 1992, Complex filed a notice of closure of the Lite-On Line and the retrenchment of the 97 affected
employees.
The Union filed a notice of strike and conducted a strike vote which resulted in a yes vote.
In the evening of April 6, 1992, the machinery, equipment and materials being used for production at Complex were pulled out
from the company premises and transferred to the premises of Ionics Circuit Inc. at Cabuyao, Laguna. The following day,
Complex totally closed its operation.
The union filed a complaint for ULP, illegal closure/ illegal lockout and money claims. The Union alleged that the pullout of the machinery, equipment and materials from the company premises which resulted to the sudden closure of the company,
violated the Labor Code and the existing CBA. Ionics was impleaded as a party defendant because the officers and management
personnel of Complex were also holding offices at Ionics.
The Union anchors its position on the fact that Complex and Ionics have the same president and Board of Directors. It claims
that business has not ceased at Complex but was merely transferred to Ionics, a runaway shop. To prove that Ionics was just a
runaway shop, petitioner asserts that out of the 80,000 shares comprising the increased capital stock of Ionics, Complex owns the
majority of the shares.
Issue:

Whether or not Ionics was a runaway shop

Ruling:

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The Unions contentions are untenable.

A "runaway shop" is defined as an industrial plant moved by its owners from one location to another to escape union
labor regulations or state laws, but the term is also used to describe a plant removed to a new location in order to discriminate
against employees at the old plant because of their union activities. It is one wherein the employer moves its business to another
location or it temporarily closes its business for anti-union purposes. A "runaway shop" in this sense, is a relocation motivated by
anti-union animus rather than for business reasons. In this case, however, Ionics was not set up merely for the purpose of
transferring the business of Complex. At the time the labor dispute arose at Complex, Ionics was already existing as an
independent company. As earlier mentioned, it has been in existence since July 5, 1984. It cannot, therefore, be said that the
temporary closure in Complex and its subsequent transfer of business to Ionics was for anti-union purposes. The Union failed to
show that the primary reason for the closure of the establishment was due to the union activities of the employees.
The mere fact that one or more corporations are owned or controlled by the same or single stockholder is not a
sufficient ground for disregarding separate corporate personalities. Thus, in Indophil Textile Mill Workers Union vs. Calica, we
ruled that:
In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the
corporation is a devise to evade the application of the CBA between petitioner Union and private respondent company. While we
do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are we inclined to
apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private respondent and
Acrylic are related, that some of the employees of the private respondent are the same persons manning and providing for
auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is
our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.
Likewise, in Del Rosario vs. National Labor Relations Commission, 17 the Court stated that substantial identity of the
incorporators of two corporations does not necessarily imply that there was fraud committed to justify piercing the veil of
corporate fiction.
In the recent case of Santos vs. National Labor Relations Commission, 18 we also ruled that:
The basic rule is still that which can be deduced from the Court's pronouncement in Sunio vs. National Labor Relations
Commission, thus:
. . . . . Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is
not of itself sufficient ground for disregarding the separate corporate personality.
Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough reason to pierce the veil of
corporate fiction of the corporation. Well-settled is the rule that a corporation has a personality separate and distinct from that of
its officers and stockholders. This fiction of corporate entity can only be disregarded in certain cases such as when it is used to
defeat public convenience, justify wrong, protect fraud, or defend crime. To disregard said separate juridical personality of a
corporation, the wrongdoing must be clearly and convincingly established.
We, likewise, disagree with the Union that there was in this case an illegal lockout/illegal dismissal. Lockout is the
temporary refusal of employer to furnish work as a result of an industrial or labor dispute. It may be manifested by the employer's
act of excluding employees who are union members.
In the present case, there was a complete cessation of the business operations at Complex not because of the labor
dispute. It should be recalled that, before the labor dispute, Complex had already informed the employees that they would be
closing the Lite-On Line. The employees, however, demanded for a separation pay equivalent to 1 month salary for every year of
service which Complex refused to give. When Complex filed a notice of closure of its Lite-On Line, the employees filed a notice
of strike which greatly alarmed the customers of Complex and this led to the pull-out of their equipment, machinery and materials
from Complex. Thus, without the much needed equipment, Complex was unable to continue its business. It was left with no
other choice except to shut down the entire business. The closure, therefore, was not motivated by the union activities of the
employees, but rather by necessity since it can no longer engage in production without the much needed materials, equipment and
machinery.
Mabeza vs. NLRC
Facts:

The employer told the employee to sign a statement that she and the other employees were receiving the legal minimum
wage and other labor standards. The employee signed but she refused to follow the employers instruction to go to the City
Prosecutors office to swear to the truth of her statement. Her refusal displeased the employer. Thereafter, she was ordered to
turn over the keys to her living quarters. Subsequently, she was charged with abandonment of job and stealing of company
property; finally, she was dismissed for loss of confidence. It does not appear that she was organizing a union at the time of
dismissal.
Issue:

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Whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice
Ruling:

The answer in this case must inevitably be in the affirmative.

Clearly, the efforts to justify petitioners dismissal on top of the private respondents scheme of inducing his employees
to sign an affidavit absolving him from possible violations of the Labor Code taints with evident bad faith and deliberate malice.
The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the
employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted
action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument
indicating that the employer observed labor standards provisions of law when he might have not, together with the act of
terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act
clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action.
We agree with the Solicitor General's observation in his manifestation that "this actuation... is analogous to the situation
envisaged in paragraph (f) of Article 248 of the Labor Code" which distinctly makes it an unfair labor practice "to dismiss,
discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony" under the
Labor Code.

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RIGHT TO SECURITY OF TENURE

PHILIPPINE GLOBAL COMMUNICATIONS VS DE VERA
Facts:

De Vera, via a letter, offered his services to PhilCom, therein proposing his plan of works required of a practitioner in
industrial medicine. The parties agreed and formalized respondents proposal in a document denominated as RETAINERSHIP
CONTRACT which will be for a period of one year subject to renewal, it being made clear therein that respondent will cover
the retainership the Company previously had with Dr. K. Eulau and that respondents retainer fee will be at P4,000.00 a
month. Said contract was renewed yearly. The retainership arrangement went on from 1981 to 1994 with changes in the retainers
fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally.
The turning point in the parties relationship surfaced in December 1996 when Philcom, thru a letter bearing on the
subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue
the latters retainers contract with the Company effective at the close of business hours of December 31, 1996 because
management has decided that it would be more practical to provide medical services to its employees through accredited hospitals
near the company premises.
On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission
(NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed
without due process. He averred that he was designated as a company physician on retainer basis for reasons allegedly known
only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not give much attention to the
designation as anyway he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other
regular employees of Philcom.
Issue:

Whether or not employer-employee relationship exists between the parties

Ruling:

The appellate courts premise that regular employees are those who perform activities which are desirable and necessary
for the business of the employer is not determinative in this case. For, we take it that any agreement may provide that one party
shall render services for and in behalf of another, no matter how necessary for the latters business, even without being hired as
an employee. This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement.
Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an
employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual.
It does not apply where, as here, the very existence of an employment relationship is in dispute.
Buttressing his contention that he is a regular employee of petitioner, respondent invokes Article 157 of the Labor Code,
and argues that he satisfies all the requirements thereunder.
Had only respondent read carefully the very statutory provision invoked by him, he would have noticed that in nonhazardous workplaces, the employer may engage the services of a physician on retained basis. As correctly observed by the
petitioner, while it is true that the provision requires employers to engage the services of medical practitioners in certain
establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so
engaged be actually hired as employees, adding that the law, as written, only requires the employer to retain, not employ, a parttime physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours.
Respondent takes no issue on the fact that petitioners business of telecommunications is not hazardous in nature. As
such, what applies here is the last paragraph of Article 157 which, to stress, provides that the employer may engage the services of
a physician and dentist on retained basis, subject to such regulations as the Secretary of Labor may prescribe. The successive
retainership agreements of the parties definitely hue to the very statutory provision relied upon by respondent.
Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free from doubt. Where
the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the
mandate is obeyed. As it is, Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous
establishments to engage on retained basis the service of a dentist or physician. Nowhere does the law provide that the
physician or dentist so engaged thereby becomes a regular employee. The very phrase that they may be engaged on retained
basis, revolts against the idea that this engagement gives rise to an employer-employee relationship.
With the recognition of the fact that petitioner consistently engaged the services of respondent on a retainer basis, as
shown by their various retainership contracts, so can petitioner put an end, with or without cause, to their retainership
agreement as therein provided

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LABOR CONGRESS VS NLRC

Facts:

The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food
Products, which hired them on various dates. Petitioners filed against private respondents a complaint for payment of money
claim[s] and for violation of labor standard[s] laws. On January 23, 1991, petitioners filed a complaint against private respondents
for, among others, unfair labor practice, illegal lockout and/or illegal dismissal for being terminated for failure to work for one
day.
Issue:

Whether or not petitioners are illegaly dismissed and therefore entitled to reinstatement

Ruling:

It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other
papers evidencing hours of work, payment etc., such circumstance, standing alone, does not warrant the directive to reinstate
complainants to their former positions. It is [a] well settled rule that there must be a finding of illegal dismissal before
reinstatement be mandated.
In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of
Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of their failure to work, the
cheese curls ready for repacking on said date were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of
work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a complaint for,
among others, unfair labor practice, illegal lockout and/or illegal dismissal. In several cases, this Honorable Court held that one
could not possibly abandon his work and shortly thereafter vigorously pursue his complaint for illegal dismissal. In Atlas
Consolidated, supra, this Honorable Court explicitly stated:
It would be illogical for Caballo, to abandon his work and then immediately file an action seeking for his reinstatement.
We can not believe that Caballo, who had worked for Atlas for two years and ten months, would simply walk away from his job
unmindful of the consequence of his act, i.e. the forfeiture of his accrued employment benefits. In opting to finally to [sic]
contest the legality of his dismissal instead of just claiming his separation pay and other benefits, which he actually did but which
proved to be futile after all, ably supports his sincere intention to return to work, thus negating Atlas stand that he had
abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate and unjustified refusal to
resume employment and not mere absence that constitutes abandonment. The absence of petitioner employees for one day on
January 21, 1991 as testified [to] by Security Guard Orlando Cairo did not constitute abandonment.
That petitioner employees are pakyao or piece workers does not imply that they are not regular employees entitled to
reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit processing company. In Tabas v. California
Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court held that the work of merchandisers of processed food, who
coordinate with grocery stores and other outlets for the sale of the processed food is necessary in the day-to-day operation[s] of
the company. With more reason, the work of processed food repackers is necessary in the day-to-day operation[s] of respondent
Empire Food Products.
It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee, such as
abandonment, rests on the employer, a burden private respondents failed to discharge.
Private respondents, moreover, in considering petitioners employment to have been terminated by abandonment,
violated their rights to security of tenure and constitutional right to due process in not even serving them with a written notice of
such termination. Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides:
SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall furnish him a written notice stating
the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be
served at the workers last known address.
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code, as
amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of employees involved, the
length of time that has lapsed since their dismissal, and the perceptible resentment and enmity between petitioners and private
respondents which necessarily strained their relationship, reinstatement would be impractical and hardly promotive of the best
interests of the parties. In lieu of reinstatement then, separation pay at the rate of one month for every year of service, with a
fraction of at least six (6) months of service considered as one (1) year, is in order.

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PAGUIO VS NLRC
Facts:

On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with
petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm. Again, petitioner was to solicit
advertisements for "The Manila Times," a newspaper of general circulation, published by respondent company. Petitioner, for his
efforts, was to receive compensation consisting of a 15% commission on direct advertisements less withholding tax and a 10%
commission on agency advertisements based on gross revenues less agency commission and the corresponding withholding tax.
The commissions, released every fifteen days of each month, were to be given to petitioner only after the clients would have paid
for the advertisements. Apart from commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he
met the P30,000.00-monthly quota.
On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from
respondent firm -Dear Mr. Paguio, Please be advised of our decision to terminate your services as Account Executive of Manila
Times effective September 30, 1992.This is in accordance with our contract signed last July 1, 1992.
Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating
clients from his co-executives and failing to produce results, no definite cause for petitioners termination was given. Aggrieved,
petitioner filed a case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with
entitlement to backwages without loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be
held accountable for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages.
In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner
outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines. Asserting their right to
terminate the contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end
the contract provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice
to the other.
Issues:

Whether or not petitioner's contract with private respondents company is for a fixed period.

Ruling:

The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and
respondent company - was it or was it not one of regular employment?
A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the
following factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the
presence or absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative
employee or the power to control the employee with respect to the means or methods by which his work is to be accomplished.
The "control test" assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is
performed or services are rendered under the control and supervision of the party contracting for the service, not only as to the
result of the work but also as to the manner and details of the performance desired.
An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent Metromedia
Times Corporation not only of the right to control the results to be achieved but likewise the manner and the means used in
reaching that end.[10] Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to
submit a daily sales activity report and also a monthly sales report as well. Various solicitation letters would indeed show that
Robina Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed
and monitored the sales activities of petitioner.
Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the
usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. Even in these
latter cases, where such person has rendered at least one year of service, regardless of the nature of the activity performed or of
whether it is continuous or intermittent, the employment is considered regular as long as the activity exists, it not being
indispensable that he be first issued a regular appointment or be formally declared as such before acquiring a regular status.
That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went
on for more than a year, could hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly
necessary and desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei,
its President, herself admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence.
Implicitly, respondent corporation recognized petitioners invaluable contribution to the business when it renewed, not just once
but five times, its contract with petitioner.

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Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law,
in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract,
but also on the basis of the nature of the work petitioner has been called upon to perform. The law affords protection to an
employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as
and when it is utilized to deprive the employee of his security of tenure. The sheer inequality that characterizes employeremployee relations, where the scales generally tip against the employee, often scarcely provides him real and better options.
The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A
lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or authorized
cause and must comply with the rudimentary due process of notice and hearing. It is not shown that respondent company has
fully bothered itself with either of these requirements in terminating the services of petitioner. The notice of termination recites
no valid or just cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his
defense.
ABSCBN BROADCASTING CORPORATION VS NAZARENO
Facts:

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different
dates. On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since petitioner
refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime
Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner
before the NLRC.
Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be given specific
assignments at its discretion, and were thus under its direct supervision and control regardless of nomenclature. Complainants
further pray to declare them regular and permanent employees of respondent ABS-CBN as a condition precedent for their
admission into the existing union and collective bargaining unit of respondent company where they may as such acquire or
otherwise perform their obligations thereto or enjoy the benefits due therefrom.
Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs they produce,
such as drama talents in other productions. As program employees, a PAs engagement is coterminous with the completion of the
program, and may be extended/renewed provided that the program is on-going; a PA may also be assigned to new programs
upon the cancellation of one program and the commencement of another. As such program employees, their compensation is
computed on a program basis, a fixed amount for performance services irrespective of the time consumed. At any rate, petitioner
claimed, as the payroll will show, respondents were paid all salaries and benefits due them under the law
Issue:

Whether or not the respondents are project employees

Ruling:

Not considered regular employees are "project employees," the completion or termination of which is more or less
determinable at the time of employment, such as those employed in connection with a particular construction project, and
"seasonal employees" whose employment by its nature is only desirable for a limited period of time. Even then, any employee
who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity
performed and while such activity actually exists.
Respondents cannot be considered as project or program employees because no evidence was presented to show that
the duration and scope of the project were determined or specified at the time of their engagement. Under existing jurisprudence,
project could refer to two distinguishable types of activities. First, a project may refer to a particular job or undertaking that is
within the regular or usual business of the employer, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second, the term
project may also refer to a particular job or undertaking that is not within the regular business of the employer. Such a job or
undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The
job or undertaking also begins and ends at determined or determinable times.
The principal test is whether or not the project employees were assigned to carry out a specific project or undertaking,
the duration and scope of which were specified at the time the employees were engaged for that project.
In this case, it is undisputed that respondents had continuously performed the same activities for an average of five
years. Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner. The persisting need for their
services is sufficient evidence of the necessity and indispensability of such services to petitioners business or trade. While length

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of time may not be a sole controlling test for project employment, it can be a strong factor to determine whether the employee
was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the
usual trade or business of the employer.41We note further that petitioner did not report the termination of respondents
employment in the particular "project" to the Department of Labor and Employment Regional Office having jurisdiction over the
workplace within 30 days following the date of their separation from work, using the prescribed form on employees termination/
dismissals/suspensions.
It is not the will or word of the employer which determines the nature of employment of an employee but the nature of
the activities performed by such employee in relation to the particular business or trade of the employer. Considering that We
have clearly found that private respondents are regular employees of petitioner, their exclusion from the said CBA on the
misplaced belief of the parties to the said agreement that they are project employees, is therefore not proper. Finding said private
respondents as regular employees and not as mere project employees, they must be accorded the benefits due under the said
Collective Bargaining Agreement.
`
Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees of the
respondents. Moreover, under Article 1702 of the New Civil Code: "In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living of the laborer."
MAGSALIN VS NOWM
Facts:

Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as sales route helpers for
a limited period of five months. After five months, respondent workers were employed by petitioner company on a day-to-day
basis. According to petitioner company, respondent workers were hired to substitute for regular sales route helpers whenever the
latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an
unusually high volume of work. The practice was for the workers to wait every morning outside the gates of the sales office of
petitioner company. If thus hired, the workers would then be paid their wages at the end of the day.
Ultimately, respondent workers asked petitioner company to extend to them regular appointments. Petitioner company
refused. On 07 November 1997, twenty-three (23) of the temporary workers (herein respondents) filed with the National
Labor Relations Commission (NLRC) a complaint for the regularization of their employment with petitioner company. The
complaint was amended a number of times to include other complainants that ultimately totaled fifty-eight (58) workers.
Claiming that petitioner company meanwhile terminated their services, respondent workers filed a notice of strike and a complaint
for illegal dismissal and unfair labor practice with the NLRC.
On 01 April 1998, the parties agreed to submit the controversy, including the issue raised in the complaint for
regularization of employment, for voluntary arbitration. On 18 May 1998, the voluntary arbitrator rendered a decision dismissing
the complaint on the thesis that respondents (then complainants) were not regular employees of petitioner company.Respondent
workers filed with the Court of Appeals a petition for review under Rule 43 of the Rules of Civil Procedure assailing the decision
of the voluntary arbitrator. The Court of Appeals reversed and set aside the ruling of the voluntary arbitrator. Hence, this petition.
Issue:

Whether or not the nature of work of respondents in the company is of such nature as to be deemed necessary and
desirable in the usual business or trade of petitioner that could qualify them to be regular employees.
Ruling:

Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country. Respondent
workers have long been in the service of petitioner company. Respondent workers, when hired, would go with route salesmen on
board delivery trucks and undertake the laborious task of loading and unloading softdrink products of petitioner company to its
various delivery points.
Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a
regular workers security of tenure, however, can hardly be doubted. In determining whether an employment should be
considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the
work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking
into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the
usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the
particular business or trade. But, although the work to be performed is only for a specific project or seasonal, where a person
thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely
intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or

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desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be
regular with respect to such activity and while such activity exists.]
The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to
respondent workers as sales route helpers so involves merely postproduction activities, one which is not indispensable in the
manufacture of its products, scarcely can be persuasive. If, as so argued by petitioner company, only those whose work are
directly involved in the production of softdrinks may be held performing functions necessary and desirable in its usual business or
trade, there would have then been no need for it to even maintain regular truck sales route helpers. The nature of the work
performed must be viewed from a perspective of the business or trade in its entirety[4] and not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or
desirability of their services in the regular conduct of the business or trade of petitioner company. The Court of Appeals has
found each of respondents to have worked for at least one year with petitioner company. While this Court, in Brent School, Inc.
vs. Zamora, has upheld the legality of a fixed-term employment, it has done so, however, with a stern admonition that where
from the circumstances it is apparent that the period has been imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy. The
pernicious practice of having employees, workers and laborers, engaged for a fixed period of few months, short of the normal sixmonth probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious
circumvention of the law cannot be countenanced. The fact that respondent workers have agreed to be employed on such basis
and to forego the protection given to them on their security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness between labor and capital. A contract of employment is
impressed with public interest. The provisions of applicable statutes are deemed written into the contract, and the parties are
not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting
with each other.
ALCATEL VS RELOS
Facts:

Alcatel is a domestic corporation primarily engaged in the business of installation and supply of telecommunications
equipment. Petitioner Delos Reyes was a former Administrative Officer of Alcatel.
On 4 January 1988, Alcatel offered respondent temporary employment as Estimator/Draftsman Civil Works to assist
in the preparation of manholes and conduit design for the proposal preparation for PLDT X-5 project for the period 4 January
1988 to 28 February 1988.
On 1 March 1988, Alcatel again offered respondent temporary employment as
Estimator/Draftsman to assist in the PLDTs X-4 IOT project for the period 1 March 1988 to 30 April 1988.
Subsequently, Alcatel undertook the PLDT 1342 project (project) which involved the installation of microwave antennas
and towers in Eastern Visayas and Eastern Mindanao for the Philippine Long Distance Company. On 1 February 1991, Alcatel
offered respondent temporary employment as Civil Works Inspector, to assist in the implementation of the PLDT 1342 Project,
for the period 1 February 1991 to 31 March 1991. Upon the expiration of his contract, respondent was again offered temporary
employment this time as Civil Works Engineer from 1 April 1991 to 30 September 1991. Respondent was offered temporary
employment in the same capacity five more times from 1 October 1991 to 31 July 1992. Then, on 1 August 1992, Alcatel hired
respondent as project employee for the PLDT 1342 project to work as Civil Engineer from the period of 1 August 1992 to 31
July 1993. Alcatel renewed respondents contract twice from 1 August 1993 to 31 December 1993. In a letter dated 22
December 1993, Alcatel informed respondent that the civil works portion of the project was near completion; however, the
remaining works encountered certain delays and had not been completed as scheduled. Alcatel then extended respondents
employment for another three months or until 31 March 1994. Thereafter, Alcatel employed respondent as a Site Inspector until
31 December 1995.
On 11 December 1995, Alcatel informed respondent that the project would be completed on 31 December 1995 nd that
his contract with Alcatel would expire on the same day. Alcatel asked respondent to settle all his accountabilities with the
company and advised him that he would be called if it has future projects that require his expertise.
In March 1997, respondent filed a complaint for illegal dismissal, separation pay, unpaid wages, unpaid overtime pay,
damages, and attorneys fees against Alcatel. Respondent alleged that he was a regular employee of Alcatel and that he was
dismissed during the existence of the project.
Issue:

Whether respondent was a regular employee or a project employee

Ruling:

The principal test for determining whether a particular employee is a project employee or a regular employee is whether
the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified

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at the time the employee is engaged for the project. Project may refer to a particular job or undertaking that is within the
regular or usual business of the employer, but which is distinct and separate and identifiable as such from the undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times.
In our review of respondents employment contracts, we are convinced that respondent was a project employee. The
specific projects for which respondent was hired and the periods of employment were specified in his employment contracts.
The services he rendered, the duration and scope of each employment are clear indications that respondent was hired as a project
employee.
We do not agree with respondent that he became a regular employee because he was continuously rehired by Alcatel
every termination of his contract. InMaraguinot, Jr. v. NLRC, we said:
A project employee or a member of a work pool may acquire the status of a regular employee when the following concur:
1) There is a continuous rehiring of project employees even after the cessation of a project; and
2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business or
trade of the employer.
While respondent performed tasks that were clearly vital, necessary and indispensable to the usual business or trade of
Alcatel, respondent was not continuously rehired by Alcatel after the cessation of every project. Records show that respondent
was hired by Alcatel from 1988 to 1995 for three projects, namely the PLDT X-5 project, the PLDT X-4 IOT project and the
PLDT 1342 project. On 30 April 1988, upon the expiration of respondents contract for the PLDT X-4 IOT project, Alcatel did
not rehire respondent until 1 February 1991, or after a lapse of 33 months, for the PLDT 1342 project. Alcatels continuous
rehiring of respondent in various capacities from February 1991 to December 1995 was done entirely within the framework of
one and the same project the PLDT 1342 project. This did not make respondent a regular employee of Alcatel as respondent
was not continuously rehired after the cessation of a project. Respondent remained a project employee of Alcatel working on the
PLDT 1342 project.
The employment of a project employee ends on the date specified in the employment contract. Therefore, respondent
was not illegally dismissed but his employment terminated upon the expiration of his employment contract. Here, Alcatel
employed respondent as a Site Inspector until 31 December 1995.
VIOLETA VS NLRC
FACTS:

Violeta worked in Construction and Development Corporation of the Philippines (CDCP), a sister corporation of
Dasmarinas Industrial and Steelworks Corporation (DISC) with whom he was employed as a regular project employee from
January 21, 1985 to March 15, 1992. Baltazar also started in the employ of CDCP on June 23, 1980 and was separated from such
employment on December 20, 1991. They signed a quitclaim upon their separation. Contending that they are already regular
employees who cannot be dismissed on the ground of the completion of the particular project where they are engaged, petitioners
filed two separate complaints for illegal dismissal against private respondent, w/ a prayer for reinstatement and backwages plus
damages. The Labor Arbiter dismissed their claims on the basis of their own admission that they are regular project employees.
Thus, their employment was deemed coterminous with the project for w/c their employer engaged them. Claims for
reinstatement and backwages were denied but they were given separation pay based on the findings that it is the policy of the
private respondent to pay employees who have rendered at least one year of continued service. The NLRC reversed the ruling of
the Labor Arbiter but reversed itself upon motion of the private respondent thereby upholding the previous ruling of the Labor
Arbiter.
ISSUE:

Whether petitioners are regular (non-project) employees or project employees

DECISION:
They are regular employees.
As Handyman and Erector III, respectively, petitioners services are both necessary and vital to the operation of the
business of the respondent. This is more clearly enunciated by the fact that they were continually and successively assigned to
different projects of private respondent and its sister company. The principal test for determining whether particular employees
are properly characterized as project employees is whether these workers are hired for a specific project or undertaking and the
completion/termination of such project or undertaking has been determined at the time of engagement of the employee. It is
undisputed that they were hired for a specific project or undertaking as clearly shown in their Appointments for Project
Employment. However, the records are barren of any definite period or duration for the expiration of the completion or
termination of the project for w/c petitioners were hired was not determined at the start of their employment. There is no
specific mention of the period of duration when the project will be completed or terminated. In fact, the lines for Date of

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Coverage in the appointments are left blank. The Said contract states that your appointment will be co-terminus w/ the need
of the Structures as it will necessitate personnel in such number and duration contingent upon the progress accomplishment from
time to time. The company shall determine the personnel and the number as the work progresses. Clearly, the employment is
subject to no term but rather, a condition, that is progress accomplishment. It cannot therefore be said to be definite. With
such ambiguous and obscure words and conditions, their employment was not coexistent with the duration of their particular
work assignments because their employer could, at any stage of such work, determine whether their services were needed or not.
Their services could then be terminated even before the completion of the phase of work assigned to them.
Also, nowhere in the records is there any showing that private respondent reported the completion of its projects and
the dismissal of petitioners in its finished projects to the nearest Public Employment Office in compliance with Policy Instruction
No. 20. Jurisprudence abounds with the consistent rule that the failure of an employer to report to the nearest Public
Employment Office the termination of its workers services every time a project or phrase thereof is completed indicates that said
workers are not project employees. In the case at bar, only the last and final termination of petitioners were reported to the
aforementioned labor office. Private respondent should have filed as many reports of termination as there construction projects
actually finished if petitioners were indeed project employees, considering that petitioners were hired again and again rehired for
various projects or the phases of work therein. Its failure to submit reports of termination cannot but sufficiently convince us
further that petitioners are truly regular employees. Just as important, the fact that petitioners had rendered more than one year of
service at the time of their dismissal overturns private respondents allegations that petitioners were hired for a specific or a fixed
undertaking for a limited period of time.
The fact that petitioners signed quitclaims will not bar them from pursuing their claims against private respondent
because quitclaims executed by laborers are frowned upon as contrary to public policy, and are ineffective to bar claims for the
full measure of the workers legal rights. These were actually pro-forma provisions printed in the clearance certificate they had to
get from private respondent. These were not in the nature of a compromise but a compulsory general release required for them,
for which no consideration was either given or even started.
HACIENDA FATIMA VS NATIONAL FEDERATION OF SUGARCANE WORKERS
FACTS:

When complainant union was certified as the collective bargaining representative in the certification elections,
respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a
CBA. Moreover, the workers including complainants were not given work for more than one month. In protest, complainants
staged a strike which was however settled upon the signing of a MOA. The provision which states that: the management will
provide 15 wagons for the workers and existing workforce prior to the actual strike will be given priority. However, in case the
said workforce would not be enough, the management can hire additional workers to supplement them. was used as a ground by
the respondents to renege its commitment to sit down and bargain collectively. Alleging that the complainants failed to load the
15 wagons, the petitioners employed all means including the use of private armed guards to prevent the organizers from entering
the premises. Petitioners did not any more give work assignments to the complainants forcing the union to stage a strike but due
to the conciliation efforts by the DOLE, another MOA was signed by the parties. The union again staged a strike against the
management grounded on the dismissal of the union officials and members. During the Conciliation Meeting, it was agreed that
some employees will receive their 13th month pay while the rest shall be reinstated immediately. As petitioners again reneged on
its commitment, the petitioners filed the present complaint. Despite their persistence in regaining their jobs, the respondents now
accused them of refusing to work and being choosy in the kind of work they have to perform. The CA affirmed that while the
work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore
still employed by petitioners. The workers enjoyed security of tenure and any infringement upon this right was deemed by the CA
to be tantamount to illegal dismissal.
ISSUES:
WON the workers are regular employees
WON the petitioners are guilty of ULP
DECISION:
For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or
services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves
the existence of the first, but not of the second, condition. The fact that respondents -- with the exception of Luisa Rombo,
Ramona Rombo, Bobong Abriga and Boboy Silva --repeatedly worked as sugarcane workers for petitioners for several years is
not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of
regular employment is applicable.

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The fact that [respondents] do not work continuously for one whole year but only for the duration of the x x x season
does not detract from considering them in regular employment since in a litany of cases this Court has already settled that
seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from
service in said period, but merely considered on leave until re-employed.
The CA did not err when it ruled that Mercado v. NLRC was not applicable to the case at bar. In the earlier case, the
workers were required to perform phases of agricultural work for a definite period of time, after which their services would be
available to any other farm owner. They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on
and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks for petitioners
every season for several years, are considered the latters regular employees for their respective tasks. Petitioners eventual refusal
to use their services -- even if they were ready, able and willing to perform their usual duties whenever these were available -- and
hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter.
The Court finds no reason to disturb the CAs dismissal of what petitioners claim was their valid exercise of a
management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented
immediately after respondents had organized themselves into a union and started demanding collective bargaining. Those who
were union members were effectively deprived of their jobs. Petitioners move actually amounted to unjustified dismissal of
respondents, in violation of the Labor Code.
Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the
matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized
cause. In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are
regular employees.
Indeed, from respondents refusal to bargain, to their acts of economic inducements resulting in the promotion of those
who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials
and members, one cannot but conclude that respondents did not want a union in their hacienda a clear interference in the right
of the workers to self-organization. Petitioners are guilty of ULP.
Philippine Tobacco Flue-curing And Redrying Corp. vs NLRC
Petitioner posits that the separation pay of a seasonal worker, who works for only a fraction of a year, should not be
equated with that of a regular worker. Positing that the total number of working days in one year is 303 days, petitioner [employer]
submits the following formula for the computation of a seasonal workers separation pay:
Total No. of Days Actually Worked
x Daily Rate x 15 days
Total No. of Working Days in One Year
Agreeing with the labor arbiter and the NLRC, on the other hand, claim that their separation pay should be based on the
actual number of years they have been in the petitioners service. They cite the law on service incentive leave, the implementing
rules regarding the 12th month pay, Manila Hotel vs. CIR, and Chartered Bank vs. Ople which allegedly stated that each season in a
year should be construed as one year of service.
The amount of separation pay is based on two factors: the amount of monthly salary and number of years of service.
Although the Labor Code provides different definitions as to what constitutes one year of service Book Six does not specifically
define one year of service for purposes of computing separation pay. However, Articles 283 and 284 both stare in connection
with separation pay that a fraction of at least six months shall be considered one whole year. Applying this to the case of bar, we
hold that the amount of separation pay which is respondent members of the Lubat and Luris groups should receive is one-half
their respective average monthly pay during the last season they worked multiplied by the numbers of years they actually rendered
pay during the last season they worked for at least six months during the given year.
The Formula that petitioner proposes, wherein a year of work is equivalent to actual rendered for 303 days, is both
unfair and inapplicable, considering that Articles 283 and 284 provide that in connection with the separation pay, a fraction of at
least six months shall be considered one whole year. Under these provisions, an employee who worked for only six months in a
given year which is certainly less that 303 days is considered to have worked for one whole year.
PHILIPS SEMICONDUCTOR INC., VS FADRIQUELA
FACTS:

The petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation engaged in the production and assembly of
semiconductors. It caters to domestic and foreign corporations that manufacture computers, telecommunications equipment and
cars. Aside from contractual employees, the petitioner employed 1,029 regular workers. The employees were subjected to periodic
performance appraisal based on output, quality, attendance and work attitude. One was required to obtain a performance rating of
at least 3.0 for the period covered by the performance appraisal to maintain good standing as an employee. Respondent Eloisa

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Fadriquela executed a Contract of Employment with the petitioner in which she was hired as a production operator. Her initial
contract was for a period of three months but was extended for two months when she garnered a performance rating of 3.15.
Due to good performance ratings, her contract was again renewed for several times to June 4, 1993. She, however, incurred five
absences in the month of April, three absences in the month of May and four absences in the month of June. Line supervisor
Shirley F. Velayo asked the respondent why she incurred the said absences, but the latter failed to explain her side. The
respondent was warned that if she offered no valid justification for her absences, Velayo would have no other recourse but to
recommend the non-renewal of her contract. Because of her failure to respond, her performance rating dropped to 2.8 and her
employment was eventually terminated due to habitual absenteeism. The respondent questioned her termination alleging that she
had rendered more than six months of service to the petitioner, that she was already a regular employee and could not be
terminated without any justifiable cause. Also, that she was not notified of the charges against her and she was not accorded a
chance to be heard. The petitioner, on the other hand, contended that the respondent had not been dismissed, but that her
contract of employment for the period of April 4, 1993 to June 4, 1993 merely expired and was no longer renewed because of her
low performance rating. Hence, there was no need for a notice or investigation. it is worth noting that the petitioner and the PSPI
Workers Union had agreed in their CBA that a contractual employee would acquire a regular employment status only upon
completion of seventeen months of service. This was also reflected in the minutes of the meeting of April 6, 1993 between the
petitioner and the union. Further, a contractual employee was required to receive a performance rating of at least 3.0, based on
output, quality of work, attendance and work attitude, to qualify for contract renewal. In the respondents case, she had worked
for the petitioner for only twelve months. In the last extension of her employment contract, she garnered only 2.8 points, below
the 3.0 required average, which disqualified her for contract renewal, and regularization of employment. The LA and the NLRC
ruled in favor of the petitioner. The CA reversed the previous decisions and held that those were inappropriate because the CBA
and the Minutes of the Meeting between the union and the management showed that the CBA did not cover contractual
employees like the respondent. Thus, the seventeenth-month probationary period under the CBA did not apply to her.
ISSUE:

WON the respondent was still a contractual employee of the petitioner as of June 4, 1993

DECISION:
The fact that the petitioner had rendered more than one year of service at the time of his (sic) dismissal only shows that
she is performing an activity which is usually necessary and desirable in private respondents business or trade. The work of
petitioner is hardly specific or seasonal. The petitioner is, therefore, a regular employee of private respondent, the provisions
of their contract of employment notwithstanding. The private respondents prepared employment contracts placed petitioner at
the mercy of those who crafted the said contract.
The language of the law manifests the intent to protect the tenurial interest of the worker who may be denied the rights
and benefits due a regular employee because of lopsided agreements with the economically powerful employer who can maneuver
to keep an employee on a casual or temporary status for as long as it is convenient to it. In tandem with Article 281 of the Labor
Code, Article 280 was designed to put an end to the pernicious practice of making permanent casuals of our lowly employees by
the simple expedient of extending to them temporary or probationary appointments, ad infinitum.
The original contract of employment had been extended or renewed for four times, to the same position, with the same
chores. Such a continuing need for the services of the respondent is sufficient evidence of the necessity and indispensability of her
services to the petitioners business. By operation of law, then, the respondent had attained the regular status of her employment
with the petitioner, and is thus entitled to security of tenure. The respondents re-employment under contracts ranging from two
to three months over a period of one year and twenty-eight days, with an express statement that she may be reassigned at the
discretion of the petitioner and that her employment may be terminated at any time upon notice, was but a catch-all excuse to
prevent her regularization.
In the Romares v. NLRC case, we cited the criteria under which term employment cannot be said to be in
circumvention of the law on security of tenure, namely:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress,
or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no
moral dominance exercised by the former or the latter.
None of these criteria has been met in this case.
The contention of private respondent that petitioner was employed on as needed basis because its operations and
manpower requirements are dictated by the volume of business from its client and the availability of the basic materials, such that
when the need ceases, private respondent, at its option, may terminate the contract, is certainly untenable. Indubitably, even after
the lapse of seventeen months, the operation of private respondent would still be dependent on the volume of business from its
client and the availability of basic materials. The point is, the operation of every business establishment naturally depends on the
law of supply and demand. It cannot be invoked as a reason why a person performing an activity, which is usually desirable and

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necessary in the usual business, should be placed in a wobbly status. In reiteration, the relation between capital and labor is not
merely contractual. It is so impressed with public interest that labor contracts must yield to the common good.
The CBA, during its lifetime, constitutes the law between the parties. Such being the rule, the aforementioned CBA
should be binding only upon private respondent and its regular employees who were duly represented by the bargaining union.
The agreement embodied in the Minutes of Meeting between the representative union and private respondent, providing that
contractual employees shall become regular employees only after seventeen months of employment, cannot bind petitioner. Such
a provision runs contrary to law not only because contractual employees do not form part of the collective bargaining unit which
entered into the CBA with private respondent but also because of the Labor Code provision on regularization. The law explicitly
states that an employee who had rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee. The period set by law is one year. The seventeen months provided by the Minutes of Meeting is
obviously much longer. The principle is well settled that the law forms part of and is read into every contract without the need for
the parties expressly making reference to it.
Petitioners dismissal is illegal because, first, she was dismissed in the absence of a just cause, and second, she was not
afforded procedural due process. We order the reinstatement of petitioner to her former job and the payment of full backwages.
PANGILINAN VS GENERAL MILLING
FACTS:

The respondent General Milling Corporation is a domestic corporation engaged in the production and sale of livestock
and poultry. It is also the distributor of dressed chicken to various restaurants and establishments nationwide. As such, it employs
hundreds of employees, some on a regular basis and others on a casual basis, as emergency workers.
The petitioners were employed by the respondent on different dates as emergency workers at its poultry plant in Cainta,
Rizal, under separate temporary/casual contracts of employment for a period of five months. Most of them worked as chicken
dressers, while the others served as packers or helpers. Upon the expiration of their respective contracts, their services were
terminated. They later filed separate complaints for illegal dismissal and non-payment of holiday pay, 13th month pay, night-shift
differential and service incentive leave pay against the respondent. The Labor Arbiter rendered a decision in favor of the
petitioners declaring that they were regular employees. The NLRC reversed the decision of the Labor Arbiter. The CA rendered a
decision affirming with modification the decision of the NLRC.
ISSUE:

WON the petitioners were regular employees of the respondent GMC when their employment was terminated.

DECISION:
We furthered that it does not necessarily follow that where the duties of the employee consist of activities usually
necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the
performance of such activities.
Stipulations in employment contracts providing for term employment or fixed period employment are valid when the
period were agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure, being brought to
bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by
the former over the latter.
An examination of the contracts entered into by the petitioners showed that their employment was limited to a fixed
period, usually five or six months, and did not go beyond such period.
This Temporary/Casual Employment contract, unless sooner terminated for any of the causes above-cited, shall then
automatically cease on its expiry date, without the necessity of any prior notice to the employee concerned. The records reveal
that the stipulations in the employment contracts were knowingly and voluntarily agreed to by the petitioners without force,
duress or improper pressure, or any circumstances that vitiated their consent. Similarly, nothing therein shows that these contracts
were used as a subterfuge by the respondent GMC to evade the provisions of Articles 279 and 280 of the Labor Code.
The petitioners were hired as emergency workers and assigned as chicken dressers, packers and helpers at the Cainta
Processing Plant. The respondent GMC is a domestic corporation engaged in the production and sale of livestock and poultry,
and is a distributor of dressed chicken. While the petitioners employment as chicken dressers is necessary and desirable in the
usual business of the respondent, they were employed on a mere temporary basis, since their employment was limited to a fixed
period. As such, they cannot be said to be regular employees, but are merely contractual employees. Consequently, there was no
illegal dismissal when the petitioners services were terminated by reason of the expiration of their contracts. Lack of notice of
termination is of no consequence, because when the contract specifies the period of its duration, it terminates on the expiration of
such period. A contract for employment for a definite period terminates by its own term at the end of such period. In sum, we
rule that the appeal was filed within the ten (10)-day reglementary period. Although the petitioners who mainly worked as chicken

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dressers performed work necessary and desirable in the usual business of the respondent, they were not regular employees therein.
Consequently, the termination of their employment upon the expiry of their respective contracts was valid
CLARION PRINTING VS NLRC
FACTS:

Michelle Miclat was employed on April 21, 1997 on a probationary basis as marketing assistant by petitioner
Clarion printing House (CLARION) owned by its co-petitioner Eulogio Yutingco. On September 16, 1997, the EYCO Group of
Companies of which CLARION formed part filed with the Securities and Exchange Commission (SEC) a Petition for the
Declaration of Suspension of Payment, Formation and Appointment of Rehabilitation Receiver/ Committee, Approval of
Rehabilitation Plan with Alternative Prayer for Liquidation and Dissolution of Corporation. On October 22, 1997, the Assistant
Personnel Manager of CLARION informed Miclat by telephone that her employment contract had been terminated effective
October 23, 1997. No reason was given for the termination. The following day or on October 23, 1997, on reporting for work,
Miclat was informed by the General Sales Manager that her termination was part of CLARIONs cost-cutting measures. On
November 17, 1997, she filed a complaint for illegal dismissal against CLARION and Yutingco (petitioners) before the NLRC.
She claimed that she was never informed of the standards which would qualify her as a regular employee. Thus, she asserted that
she is a regular employee plus the fact that her immediate supervisor even submitted a written recommendation in her favor
before she was terminated without just or authorized cause. She disputed the petitioners alleged financial losses. In any event, she
also claimed that assuming that her termination was necessary, the manner in which it was carried out was illegal, no written
notice thereof having been served on her, and she merely learned of it only a day before it became effective.
On the other hand, petitioners claimed that they could not be faulted for retrenching some of its employees including
Miclat, they drawing attention to the EYCO Group of Companies being placed under receivership, notice of which was sent to
its supervisors and rank and file employees via a Memorandum of July 21, 1997; that in the same memorandum, the EYCO
Group of Companies advised them of a scheme for voluntary separation from employment with payment of severance pay; and
that CLARION was only adopting the LAST IN, FIRST OUT PRINCIPLE when it terminated Miclat who was relatively new
in the company.
The LA found that she was illegally dismissed and directed her reinstatement. The NLRC affirmed the said decision. The
CA sustained the resolutions of the NLRC with the following as grounds:
1.
The evidence presented by Clarion is inadmissible in evidence due to Clarions failure to explain the delay.
2.
Even if such financial statements were admitted in evidence, they would not alter the outcome of the case as
statements have weak probative value. The required method of proof in such case is the presentation of financial statements
prepared by independent auditors and not merely by company accountants.
3.
Even audited financial statements are not enough. The employer must present the statement for the year
immediately preceding the year the employee was retrenched, which Clarion failed to do in the instant case, to prove not only the
fact of business losses but more importantly, the fact that such losses were substantial, continuing and without immediate
prospect of abatement; sliding incomes or decreasing gross revenues alone are not necessarily business losses within the
meaning of Art. 283 since in the nature of things, the possibility of incurring losses is constantly present in business operations.
4.
Even if business losses were indeed sufficiently proven, the employer must still prove that retrenchment was
resorted to only after less drastic measures such as the reduction of both management and rank-and-file bonuses and salaries,
going on reduced time, improving manufacturing efficiency, reduction of marketing and advertising costs, faster collection of
customer accounts, reduction of raw materials investment and others, have been tried and found wanting.
ISSUE:

WON Clarion is a regular employee

WON his dismissal is legal

DECISION:
She is a regular employee.
The dismissal is legal based on Art. 283 Closure of Establishment and Reduction of Personnel.
Contrary to the CAs ruling, petitioners could present evidence for the first time on appeal to the NLRC. It is wellsettled that the NLRC is not precluded from receiving evidence, even for the first time on appeal, because technical rules of
procedure are not binding in labor cases.
The settled rule is that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are
not binding in labor cases. In fact, labor officials are mandated by the Labor Code to use every and all 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. Thus, in Lawin Security Services v. NLRC, and Bristol Laboratories Employees Association-DFA v. NLRC, we
held that even if the evidence was not submitted to the labor arbiter, the fact that it was duly introduced on appeal to the NLRC is

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enough basis for the latter to be more judicious in admitting the same, instead of falling back on the mere technicality that said
evidence can no longer be considered on appeal. Certainly, the first course of action would be more consistent with equity and
the basic notions of fairness.
It is likewise well-settled that for retrenchment to be justified, any claim of actual or potential business losses must satisfy
the following standards: (1) the losses are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to be effective in preventing expected losses; and (4) the alleged losses, if
already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.[25]
And it is the employer who has the onus of proving the presence of these standards.
In fine, CLARIONs claim that at the time it terminated Miclat it was experiencing business reverses gains more light
from the SECs disapproval of the EYCO Group of Companies petition to be declared in state of suspension of payment, filed
before Miclats termination, and of the SECs consequent order for the group of companies dissolution and liquidation.
This Courts finding that Miclats termination was justified notwithstanding, since at the time she was hired on
probationary basis she was not informed of the standards that would qualify her as a regular employee, she was deemed to have
been hired from day one as a regular employee. Clarion, however, failed to comply with the notice requirement provided for in
Art. 283 thus This Court thus deems it proper to award the amount equivalent to Miclats one (1) month salary of P6,500.00 as
nominal damages to deter employers from future violations of the statutory due process rights of employees. An employee whose
services were terminated any time before the time for payment of the 13th month pay is entitled to this monetary benefit in
proportion to the length of time he worked during the calendar year up to the time of his resignation or termination from the
service. Thus if he worked only from January up to September his proportionate 13th month pay shall be equivalent to 1/12 of
his total basic salary he earned during that period.
DUSIT HOTEL VS GATBONTON
FACTS:

Respondent Renato M. Gatbonton was hired as Chief Steward in petitioner Dusit Hotel Nikkos Food and Beverage
Department. He signed a three-month probationary employment contract and the standards by which he would be assessed to
qualify for regular employment were explained to him at the start of his employment. The hotel alleged that at the end of the
probation period, Ingo Rauber, Director of its Food and Beverage Department,
observed that Gatbonton failed to meet the qualification standards for Chief Steward, and Rauber recommended a two month
extension of Gatbontons probationary period, or until April 22, 1999. At the end of the 4th month, on March 24, 1999, Rauber
informed Gatbonton that the latter had poor ratings on staff supervision, productivity, quantity of work, andoverall efficiency and
did not qualify as Chief Steward. Gatbonton requested another month or until April 22, 1999 to improve his performance, to
which Rauber agreed but allegedly refused to sign the Performance Evaluation Form. Neither did he sign the Memorandum on
the extension. On March 31, 1999, a notice6 of termination of probationary employment effective April 9, 1999, on the above
alleged grounds was served on Gatbonton. On April 12, 1999, he filed a complaint for illegal dismissal. The Labor Arbiter found
that at the time of the respondents termination, he was already a regular employee. Further, there was no evidence that
Gatbonton was assessed or evaluated by the petitioner during his three-month probationary employment; thus, he could not be
dismissed for failure to meet the reasonable standards for his position. The NLRC reversed the Labor Arbiters decision and
declared the respondents dismissal illegal.
ISSUES: Was respondent a regular employee at the time of his dismissal?
Was he validly terminated?
DECISION:
As Article 281 clearly states, a probationary employee can be legally terminated either: (1) for a just cause; or (2) when
the employee fails to qualify as a regular employee in accordance with the reasonable standards made known to him by the
employer at the start of the employment.10 Nonetheless, the power of the employer to terminate an employee on probation is not
without limitations. First, this power must be exercised in accordance with the specific requirements of the contract. Second, the
dissatisfaction on the part of the employer must be real and in good faith, not feigned so as to circumvent the contract or the law;
and third, there must be no unlawful discrimination in the dismissal. In termination cases, the burden of proving just or valid
cause for dismissing an employee rests on the employer.11
Here, the petitioner did not present proof that the respondent was evaluated from November 21, 1998 to February 21, 1999, nor
that his probationary employment was validly extended.
The Personnel Action Form dated March 2, 1999, contained the following remarks: "subject to undergo extension of
probation for two (2) months as per attached memo." Yet, we find this document inconclusive. First, the action form did not
contain the results of the respondents evaluation. Without the evaluation, the action form had no basis. Second, the action form
spoke of an attached memo which the petitioner identified as Raubers Memorandum, recommending the extension of the

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respondents probation period for two months. Again, the supposed Memorandum was not presented. Third, the action form did
not bear the respondents signature.
In the absence of any evaluation or valid extension, we cannot conclude that respondent failed to meet the standards of
performance set by the hotel for a chief steward. At the expiration of the three-month period, Gatbonton had become a regular
employee. It is an elementary rule in the law on labor relations that a probationary employee engaged to work beyond the
probationary period of six months, as provided under Article 281 of the Labor Code, or for any length of time set forth by the
employer (in this case, three months), shall be considered a regular employee.
Since respondent was not dismissed for a just or authorized cause, his dismissal was illegal, and he is entitled to
reinstatement without loss of seniority rights, and other privileges as well as to full backwages, inclusive of allowances, and to
other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of
his actual reinstatement.
Singer Sewing Machine Co. vs. Drilon, et. al.
Facts:

The nature of the relationship between a company and its collecting agents depends on the circumstances of each
particular relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors: the
collectors could fall under either category depending on the facts of each case.
The respondents' contention that the union members are employees of the Company is based on selected provisions of
the Agreement but ignores the following circumstances which respondents never refuted either in the trial proceedings before the
labor officials nor in its pleadings filed before this Court.
1.
The collection agents are not required to observe office hours or report to Singer's office everyday except, naturally and
necessarily, for the purpose of remitting their collections.
2.
The collection agents do not have to devote their time exclusively for SINGER. There is no prohibition on the part of
the collection agents from working elsewhere. Nor are these agents required to account for their time and submit a record of their
activity.
3.
The manner and method of effecting collections are left solely to the discretion of the collection agents without any
interference on the part of Singer.
4.
The collection agents shoulder their transportation expenses incurred in the collections of the accounts assigned to
them.
5.
The collection agents are paid strictly on commission basis. The amounts paid to them are based solely on the amounts
of collection each of them make. They do not receive any commission if they do not effect any collection even if they put a lot of
effort in collecting. They are paid commission on the basis of actual collections.
6.
The commissions earned by the collection agents are directly deducted by them from the amount of collections they are
able to effect. The net amount is what is then remitted to Singer."
Issue:

Whether or not the union members are employees of the Company

Ruling:

The Court finds the contention of the respondents that the union members are employees under Article 280 of the
Labor Code to have no basis. The definition that regular employees are those who perform activities which are desirable and
necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall
render services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without
being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement.
The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of
tenure. Article 280 does not apply where the existence of an employment relationship is in dispute.
Serrano vs. NLRC and Isetann
Facts:

Petitioner Serrano was hired by private respondent Isetann Department Store as a security checker to apprehend
shoplifters and prevent pilferage of merchandise. Initially hired on October 4, 1984 on contractual basis, petitioner eventually
became a regular employee on April 4, 1985. In 1988, he became head of the Security Checkers Section of private respondent.

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Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security section and engage the
services of an independent security agency. For this reason, Serrano was terminated as Security Section Head.
Issue:

Whether or not the hiring of an independent security agency by the private respondent to replace its current security
section is a valid ground for the dismissal of the employees classed under the latter
Ruling:

Yes, it is a valid ground for dismissal. Hence, petitioners contention has no merit. Art. 283 provides:
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 Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least 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 closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to at
least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered as one (1) whole year.
In De Ocampo v. National Labor Relations Commission, this Court upheld the termination of employment of three
mechanics in a transportation company and their replacement by a company rendering maintenance and repair services. It held:
In contracting the services of Gemac Machineries, as part of the companys 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.
In Asian Alcohol Corporation v. National Labor Relations Commission, the Court likewise upheld the termination of
employment of water pump tenders and their replacement by independent contractors. It ruled that an employers good faith in
implementing a redundancy program is not necessarily put in doubt by the availment of the services of an independent contractor
to replace the services of the terminated employees to promote economy and efficiency.
Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of promoting
efficiency and attaining economy by a study of what units are essential for its operation. To it belongs the ultimate determination
of whether services should be performed by its personnel or contracted to outside agencies . . . [While there] should be mutual
consultation, eventually deference is to be paid to what management decides." Consequently, absent proof that management acted
in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.
In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private
respondents real purpose was to avoid payment to the security checkers of the wage increases provided in the collective
bargaining agreement approved in 1990. Such an assertion is not a sufficient basis for concluding that the termination of
petitioners employment was not a bona fide decision of management to obtain reasonable return from its investment, which is a
right guaranteed to employers under the Constitution. Indeed, that the phase-out of the security section constituted a "legitimate
business decision" is a factual finding of an administrative agency which must be accorded respect and even finality by this Court
since nothing can be found in the record which fairly detracts from such finding.
Wack Wack Golf and Country Club vs NLRC
Facts:

How many jobs can be contracted out?

Because a large portion of the Wack Wack Golf and Country Club was destroyed by fire, the club has to suspend the
operation of its Food and Beverage deparment, about which it notified the DOLE and the affected employees. But contending
that the projected suspension of operations was discriminatory, the employees filed a notice of strike. In the conciliation
proceedings before the NCMB, the management and the union, assisted by counsel, entered in an agreement which offered a
special separation benefit or retirement package to Wack Wack employees, including those in the F & B Department. The
package consisted of one and one-half months salary for every year of service regardless of length of service, plus other benefits,
such as cash value of unused leaves, proportionate 13th month pay and other benefits. A number of employees availed
themselves of the package, among them the complainants, one of whom was the personnel officer. The employees who received
the package signed a Release and Quitclaim in favor of Wack Wack; the personnel officer signed such document on September
30, 1997.

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On October 30, 1997, Wack Wack entered into a management contract with the Business Staffing and Management Inc.,
under which BSMI would provide the following services: (1) golf operations management, (2) management and maintenance of
building facilities, (3) management of food and beverage operation, (4) management of materials and procurement of functions,
and (5) Administrative and support services for the said projects.
Four other contractors were hired by Wack Wack to handle various operating functions as those of golf director,
agriculturist, gardeners, locker attendants, secretaries, janitorial and finance and accounting.
Sometime in October 1997, the personnel officer and a telephone operator from Wack Wack Golf Club filed
applications for employment with BSMI. They were hired as project employees under probationary status. But soon thereafter,
serving required the notices, their services were terminated in February 1998. They filed complaints of illegal dismissal and
damages against Wack Wack and BSMI.
The pertinent questions were; Was there severance of employment relationship with Wack Wack? Was it legal? Was the
contracting out of the complainants jobs with BSMI legal and valid? The labor arbiter dismissed the complaint, ruling that the
employment termination was for a valid and authorized cause. On appeal, however, the NLRC considered BSMI a labor-only
contractor and ordered Wack Wack to reinstate the complainants with full backwages.
Ruling:

It must be recalled that [the employees] availed of the special separation package offered by the petitioner [Wack Wack].
This special separation package was thought of and agreed by the two parties (Wack wack and the Union) after a series of
discussions and negotiations to avert any labor unrest due to the closure of Wak Wack. The applications which were similarly
worded read as follows;
TO: WACK WACK GOLF & COUNTRY CLUB
BOARD OF DIRECTORS AND MANAGEMENT
Based on the information that the club and the employees Union have reached an agreement on a special separation
benefit package equivalent to one and one half months salary for every year of service, regardless of the number of years of
service, for employees who have been affected and may be affected by ongoing as well as forthcoming Club renovation,
construction and related activities and reportedly even for those who may not be affected but wish to avail of an early retirement
under the above package arrangement, I hereby register my desire to be separated from the Club and receive the benefits under
the above stated package.
Thereafter, the respondents [employees] signed their respective release and quitclaims after receiving their money
benefits.
It cannot be said that the respondents in the case at bar did not fully comprehend and realize the consequences of their
acts. Herein respondents are not unlettered persons who need special protection. They held responsible positions in the
petitioner-employer, so they presumably understood the contents of the document they signed. There is no showing that the
execution thereof was tainted with deceit or coercion. Further, the respondents were paid hefty amounts of separation pay
indicating that their separation from the company was for a valuable consideration. Where the person making the waiver has done
so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as being a valid and binding undertaking. As in contracts, these quitclaims amount to a valid and binding
compromise agreement between the parties which deserve to be respected.
The NLRC posits that BSMI is merely a supplier of workers or a labor only contractor; hence, the petitioner remains to
be the principal employer of the respondents and liable for their reinstatement and payment of backwages.
The ruling of the NLRC is wrong.
There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects,
business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its
principal business. It had provided management service to various industrial and commercial business establishments.
As a legitimate job contractor, there can be no doubt as to the exercise of an employer-employee relationship between
the contractor and the workers.
Mercado Sr., et al vs National Labor Relations Commission et al.
Facts:

Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all agricultural
phases of work on the 7 hectares of rice land and 10 hectares of sugar land owned by the latter. Their employment individually
started between 1949 and 1979. In any case, their individual employment exceeds one year.
Private respondent Cruz denied that said petitioners were her regular employees and instead averred that she engaged
their services, throuh Spouses F. and R. Mercado, their mandarols, that is persons who take charge in supplying the number of

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workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production
and/or sugar cane production, after which they would be free to render services to other farm owners who need their services.
The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent farmworkers
and therefore entitled to the benefits which they pray for. And corollary to this, whether or not said petitioners were illegally
dismissed by private respondents.
Petitioners content that the Labor Arbiter and the NLRC erred when both ruled that petitioners are not regular
and permanent employees of private respondents based on the terms and conditions of their hiring, for said finding are contrary
to the provisions of Article 280 of the Labor Code. They submit that petitioners employment, even assuming said employment
were seasonal, continued for so many years such that, by express provision of Article 280 of the Labor Code, as amended,
petitioners have become regular and permanent employees.
Moreover, they argue that Policy Instructions No. 12 of the Department of Labor and Employment clearly lends
support to this contention, when it states:
PD 830 has defined the concept of regular and casual employment. What determined regularity or casualness is not the
employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main
business of the employer, then employment is regular. If not, then the employment is casual. Employment for a definite period
which exceeds one year shall be considered regular for the duration of the definite period.
Ruling:

The petition is not impressed with merit.

The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been applied in
their case presents an opportunity to clarify the aforementioned provision of law.
Article 280 of the Labor Code reads in full: x x x
The first paragraph answers the question of who are regular employees. It states that, regardless of any written or oral
agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual
business or trade of the employer, except for project employees.
A project employee has been defined to be one 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 service to be performed is seasonal in nature and the employment is for the duration of the season, as in the present case.
The second paragraph of Article 280 demarcates as casual employees, all other employees who do not fall under the
definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those casual
employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken.
Petitioners, in effect, content that the proviso in the second paragraph of Article 280 is applicable to their case and that
the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit.
Policy Instructions No. 12 of the DOLE discloses that the concept of regular and casual employees was designed to put
an end to casual employment in regular jobs, which has been abused by many employers to prevent so-called casuals from
enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso
in the second paragraph of Article 280 was not designed to stifle small-scale businesses nor to oppress agricultural landowners to
further the interest of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their
employees and not, as petitioners would have us believe, to prevent small-scale business from engaging in legitimate methods to
realize profit. Hence, the proviso is applicable only to the employees who are deemed casuals but not to the project
employees nor the regular employees treated in paragraph one of Article 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their
employment legally ends upon completion of the project or season. The termination of their employment cannot and should not
constitute as illegal dismissal.
Maraguinot and Enero vs NLRC and Viva Films
Facts:
concur:

A project employee or a member of a work pool may acquire the status of a regular employee when the following

1. There is a continuous rehiring of project employees even after cessation of a project; and
2. The tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business or
trade of the employer.
However, the length of time during which the employee was continuously rehired is not controlling, but merely serves as
a badge of regular employment.
In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and
engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three years and worked at least

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twenty three projects. Moreover, as petitioners tasks involved, among other chores, the loading, unloading and arranging of
movie equipment to the Viva Films warehouse, and assisting in the fixing of the lighting system, it may not be gainsaid that
these tasks were vital, necessary and indispensable to the usual business or trade of the employer. As regards the underscored
phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety.
Truly, the cessation of construction activities at the end of very project is a foreseeable suspension of work. Of course,
no compensation can be demanded from the employer because the stoppage of operations at the end of a project and before the
start of a new one is regular and expected by both parties to the labor relations. Similar to the case of regular seasonal employees,
the employment relation is not severed by merely being suspended. The employees are, strictly speaking, not separated from
services by merely on leave of absence without pay until they are reemployed. Thus, we cannot affirm the argument that nonpayment of salary or non-inclusion in the payroll and the opportunity to seek other employment denote project employment.
While Lao admittedly involved in the construction industry, to which Policy Instructions No. 20/Department Order 19
regarding work pools specifically applies, there seems to be no impediment to applying the underlying principles to industries
other than the construction industry. Neither may it be argued that a substantial distinction exists between the projects undertaken
in the construction industry and the motion picture industry. On the contrary, the raison d etre of both industries concern
projects with a foreseeable suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a
project employee even after the completion of the project for which he was hired. The import of this decision is not to impose a
positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a
judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e. the
continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the
employers usual business or trade. Let it not be said that this decision coddles labor, for as Lao has ruled, project or work pool
employees who have gained the status of regular employees are subject to the no-work no-pay principle.
Brent School, Inc. vs Zamora
Facts:

Alegre was engaged as athletic director by Brent School for a specific term of five years from July 18, 1971 to July 17,
1976. Subsequent subsidiary agreements reiterated the same terms and conditions, including the expiry date as those contained in
the original contract of July 18, 1971.
When the employment contract was signed on July 18, 1971, it was perfectly legitimate for them to fix the duration of
the employment.
Some three months before the expiration of the stipulated period, i.e., on April 20, 1976, Alegre was given a copy of the
report filed by Brent School with the Labor Department advising of the termination of his services to be effected on July 16,
1976. The stated ground of termination was completion of contract, expiration of the definite period of employment. Alegre
received and signed a receipt indicating full payment of his services.
The Regional Director considered Brent Schools report as an application for clearance to terminate employment, and
refused to give such clearance and instead required Alegres reinstatement, as a permanent employee. The Director declared
that the ground cited by the School was not sanctioned under PD 442.
Ruling: The Supreme Court set aside the Decision, declared Alegres contract of employment with Brent School was lawfully
terminated and that therefore he was not entitled to reinstatement. The Court explained:
Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of
employment contracts which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable
distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that
such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude
absurdity in its application.
Since the entire purpose behind the development of legislation culminating in the present Article 280 is to prevent
circumvention of the employees right to be secure in his tenure, the clause in said article indiscriminately and completely ruling
out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to
refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure.
It should have no application to instances where a fixed period of employment was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent
any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus
limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it this becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurdity and unintended consequences.

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Alegres employment was terminated upon expiration of his last contract with Brent School on July 16, 1976 without the
necessity of any notice.

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MANAGEMENT PREROGATIVES
INTERNATIONAL HARVESTER MACLEOD, INC. VS IAC
Who determines the need for the existence of a department in the employer corporation and the reduction of personnel?
Facts:
There was no dispute that, as claimed by petitioner, the sole function of its government sales department of which
private respondent [employee] was the government relations officer, a managerial position, was to take charge of sales of trucks,
equipment and space parts to the government. Such function, originally handled by the Asia Pacific Corporation special
government dealer, was taken over by International Heavy Equipment Corporation with bigger man power and resources.
Eventually, the government sales department was phased out and the complainant was offered a lesser position in the fleet
account sales with less salary and without allowance, although with commission, on the ground that his position has become
redundant. Respondent employee refusal transfer which refusal resulted in the termination of the services.
Ruling:

A searching review of the records fails to show that petitioner in demoting private respondent and later terminating his
services acted oppressively, unjustly or arbitrarily. The lower court, observing that the phasing out of the department in question
was preceded by a bitter discussion between private respondent and his superiors, alluded to the later as the probable cause of the
alleged illegal dismissal. But such is only a surmise in the absence of any concrete evidence that the reorganization being
undertaken by petitioner company is for any other purpose than its declared objective as a labor and cost-saving device. Indeed,
there is no argument against the fact that with the hiring of IHEC, it was no longer economical to retain the services of the
private respondent; so much so that despite the findings of the trail court that on many occasions, petitioner company under took
direct sales to the Philippine government despite engagement of the Asia Pacific Corporation as government dealer, it is not
precluded from adopting a new policy conducive to a more economical and effective management.
Moreover, the issue as to whether or not his employer has the right to demote him has been laid to rest in Petrophil vs.
NLRC, where the SC quoted with approval the ruling of the Labor Arbiter in this regard:
Time and again, this office has sustained the view that it is management prerogative to transfer, demote, discipline and
even to dismiss an employee to protect its business, provided that it is not tainted with unfair labor practice.
Neither can he complain of arbitrariness because even his senior officer has been transferred to head the sales project
department after which the department in question ceased to operate.
STAR PAPER CORPORATION VS SIMBOL
FACTS:

Petitioner Star Paper Corporation (the company) is a corporation engaged in tradingprincipally of paper products.
Josephine Ongsitco is its Manager of the Personnel and Administration Department while Sebastian Chua is its Managing
Director. The respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all
regular employees of the company. Simbol was employed by the company on 1993 and met Alma Dayrit, also an employee of the
company, whom he married on 1998. Prior to the marriage, Ongsitco advised the couple that should they decide to get married,
one of them should resign pursuant to a company policy. Thus, Simbol resigned. Comia was hired by the company on 1997. She
met Howard Comia, a co-employee, whom she married on 2000. Ongsitco likewise reminded them. Comia resigned on June 30,
2000. Estrella was hired on 1994. She met Luisito Zuiga also a co-worker. Petitioners stated that Zuiga, a married man, got
Estrella pregnant. The company allegedly could have terminated her services due to immorality but she opted to resign on
December 21, 1999. The respondents each signed a Release and Confirmation Agreement. They stated therein that they have no
money and property accountabilities in the company and that they release the latter of any claim or demand of whatever nature.
Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not resign voluntarily. Estrella was
asked to sign a memorandum stating that she was being dismissed for immoral conduct. She refused to sign the memorandum
because she was on leave for 21 days and has not been given a chance to explain. The management asked her to write an
explanation. However, after submission of the explanation, she was nonetheless dismissed by the company. Due to her urgent
need for money, she later submitted a letter of resignation in exchange for her 13th month pay. The Labor Arbiter dismissed the
complaint for lack of merit. The NLRC affirmed the said decision.
ISSUE:

WON the respondents were validly terminated

DECISION:
Respondents submit that their dismissal violates the provisions of the Labor Code. Petitioners allege that its policy "may
appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if read together with the first paragraph of

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the rule. The rule does not require the woman employee to resign. The employee spouses have the right to choose who between
them should resign. Further, they are free to marry persons other than co-employees. Hence, it is not the marital status of the
employee, per se, that is being discriminated. It is only intended to carry out its no-employment-for-relatives-within-the-thirddegree-policy which is within the ambit of the prerogatives of management. It is true that the policy of petitioners prohibiting
close relatives from working in the same company takes the nature of an anti-nepotism employment policy. Companies adopt
these policies to prevent the hiring of unqualified persons based on their status as a relative, rather than upon their ability. These
policies focus upon the potential employment problems arising from the perception of favoritism exhibited towards relatives.
With more women entering the workforce, employers are also enacting employment policies specifically prohibiting spouses from
working for the same company. We note that two types of employment policies involve spouses: policies banning only spouses
from working in the same company (no-spouse employment policies), and those banning all immediate family members, including
spouses, from working in the same company (anti-nepotism employment policies).
There is no reasonable business necessity in the case at bar. Petitioners sole contention that "the company did not just
want to have two (2) or more of its employees related between the third degree by affinity and/or consanguinity" is lame.
Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an
employee of the Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how this
detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting Department, who married
Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere fear that employees married to each
other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on
an unproven presumption of a perceived danger at the expense of an employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to
marry persons other than co-employees. The questioned policy may not facially violate Article 136 of the Labor Code but it
creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing
that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the employees right to be free from arbitrary discrimination
based upon stereotypes of married persons working together in one company.
Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the
petitioners. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from
the legislatures silence that married persons are not protected under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule
that the questioned policy is an invalid exercise of management prerogative. Corollarily, the issue as to whether respondents
Simbol and Comia resigned voluntarily has become moot and academic.
The contention of petitioners that Estrella was pressured to resign because she got impregnated by a married man and
she could not stand being looked upon or talked about as immoral is incredulous. If she really wanted to avoid embarrassment
and humiliation, she would not have gone back to work at all. Nor would she have filed a suit for illegal dismissal and pleaded for
reinstatement. We have held that in voluntary resignation, the employee is compelled by personal reason(s) to dissociate himself
from employment. It is done with the intention of relinquishing an office, accompanied by the act of abandonment. Thus, it is
illogical for Estrella to resign and then file acomplaint for illegal dismissal. Given the lack of sufficient evidence on the part of
petitioners that the resignation was voluntary, Estrellas dismissal is declared illegal.
Benguet Electric Cooperative vs. Fianza
Facts:

Fianza was employed by the petitioner Beneco from 1979 to 1999 as Property Custodian. She was temporarily
transferred as Bill Distributor without any change in salary rate.
Respondent however considered the transfer as a demotion in rank hence her objection. She filed complaint for the
alleged constructive dismissal. Pending the resolution of the case, she continued her work as Property Custodian.
The company contended that the temporary transfer was due to company restructuring, wherein the position of the
respondent was actually abolished. The company contended rather transferred her than terminate her services.
Labor Arbiter - dismissed complaint of Fianza, there was no constructive dismissal.
NLRC - affirmed LA, there was no constructive dismissal
CA reversed, ordered reinstatement and backwages of Fianza
Issue: WON there is constructive dismissal
Ruling: There was neither constructive dismissal nor demotion of position. The Supreme Court affirmed that the position had
been abolished. The abolition of position deemed no longer necessary is a valid exercise of management prerogative.

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Absent any finding of malice and arbitrariness on the part of the management will not efface the privilege to protect the
person holding that office.
The position Property Custodian was deemed a superfluity, hence abolished due to corporate restructuring, the law
permits the severance of the employer-employee relationship provided that certain requirements are met. In the case at bar,
Fianza was not terminated from employment, but was transferred to another department.
The employer has the burden of proving the transfer is for valid and legitimate grounds.
Incidental inconvenience is not suffered to warrant Fianza's claim of constructive dismissal. Fianza cannot complain of
constructive dismissal because the transfer was against her wishes and not commensurate to her self worth or personal
qualifications.
Finally, Fianza's refusal to obey the transfer order constitutes willful disobedience of a lawful order of her employer.
Beneco was willing to reinstate her, however she refused her transfer.
Mendoza vs. Rural Bank of Lucban
Facts:

The Board of Directors of Rural Bank of Lucban issued a resolution which directs the reshuffling of the employees
without changes in their compensation and other benefits.
The petitioner took the directive differently wrote a letter to the respondent stating that the reshuffling was a demotion
on his position from Appraiser to Clerk-Meralco Collection.
The respondent bank replied and explained that the reshuffling is a legitimate exercise of management prerogative. It
shall be a used as a tool in providing the bank a sound internal control system and as a basis of evaluating the performance of
each employee.
Mendoza filed two leave of absences for ten and later, twenty days. During the subsequent LOA, he filed complaint of
illegal dismissal before the NLRC against the respondent.
Labor Arbiter sustained the petitioner; there was an illegal dismissal.
NLRC Reversed the decision; the objective of the employer was legitimate and will serve for the advancement of the operations
of the bank. The resolution was not aimed solely towards the petitioner but for all the employees.
CA affirmed NLRC, no grave abuse of discretion.
Issue: WON Mendoza was constructively dismissed from employment.
Ruling: NO. Constructive is defined as an involuntary resignation resorted to when continued employment is rendered
impossible, unreasonable or unlikely; when there is demotion in rank or a diminution of pay or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee.
In the pursuit of legitimate business interest, management has the prerogative to transfer or assign employees from one office or
area of operation to another as long as there is no demotion in rank, salary or benefits.
Security of tenure does not give vested right to their positions to the extent of depriving management of its prerogative to change
their assignments.
Management prerogatives are not without limitations. They are subject to the terms of the CBA, general principles of fair play and
justice. Having the right should not be confused with the manner in which the right is excused. The employer must be able to
show that the transfer is not unreasonable or prejudicial to the employee nor does it involve a demotion in rank. Failure to
overcome this shall be tantamount to constructive dismissal.
In the case at bar, there was no constructive dismissal. The employer has shown substantial evidence to justify the directive.
The Philippine American Life and General Insurance vs Gramaje
Facts: Gramaje was employed as AVP and Head of the Pensions Dept. and Trust officer of Philam Savings Bank.She was given
another position as Head of Trust of the Banking Division under a separate compensation.
On November 1998, she applied for a housing and car loan. On the contrary, two of the officers of the company offered her
250,000 for her to vacate her position in the following month. Gramaje declined the offer, stating that there was no reason for her
to leave. Subsequently, the management issued a memorandum instead transferring her to the Legal Dept. She protested the
unexplained transfer to a non-existing position and stressed that she was hired because of her marketing, finance and management
skills not legal skill which she had no training of. She alleged that she will not be productive in that area.
Later, during the Christmas season, it was a tradition for the company to give away hams and queso de bole. When
Gramaje asked for her share, she knew that her name was not listed as an employee of the company.
She then filed complaint for illegal or constructive dismissal against her employer.
Labor Arbiter ruled that there was no illegal dismissal.

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NLRC affirmed LA.

CA reversed NLRC and ordered corporation to give separation pay and back wages.
Issue: WON Gramaje was constructively dismissed
Ruling: YES.
It is true that the transfer by the employer to Gramaje to a different department was not a demotion in rank nor
diminution of salaries, benefits and privileges. The management has the prerogative to transfer or assign its employees from one
office to another provided there is no demotion in rank or diminution of salaries or benefits provided that there is no bad faith
and discrimination.
In the case at bar, the Court found undue discrimination against Gramaje. The transfer was unreasonable, inconvenient
and prejudicial to her because the management knew that she had no previous exposure in litigation.
The company did not give her enough support when she was in the Pensions Dept. she was left to fend for herself but was
required to bring in numbers. She ran the Pensions Dept single-handedly with only one Administrative Assistant as her staff and
lastly, her name was not in the list of employees of Philam Life.
Management prerogative should not be used with grave abuse of discretion on the part of the employer and is subject to
limitations provided by law, CBA and principles of fair play and justice.
The Petitioner contended that the transfer was made because of the change in business strategy of the company, and as a result,
the Pensions Dept. had to dispense with the position of the respondent who was specifically hired to perform trust work. The
reasoning of the company was however negated by the replacement hired by the petitioner for Gramajes post.
SC held that there was a constructive dismissal as there was an act of clear discrimination or disdain by the employer
which is unbearable to the employee leaving him with no option but to forego with his continued employment.
There was no abandonment on the part of the respondent. She filed complaint for illegal dismissal first before an
alleged termination due to abandonment case was filed.
PT & T vs. CA
Facts: The petitioner came up with a Relocation and Restructuring Program which aims to sustain its operations, decongest
surplus workforce, and promote efficiency and productivity, lower expenses incidental to hiring and training new personnel and
avoid retrenchment of employees occupying redundant positions.
The private respondents received each a letter giving them option to choose which branch they would like to be
transferred, later they were directed to transfer to their new branches. The private respondents rejected the offer, explaining that
the transfer would cause them difficulties on transportation and separation from their families. The explanation given by
employees were found insufficient by the management and considered it as insubordination and willful disobedience to a lawful
order hence they were dismissed.
The respondent bargaining agent filed complaint against the petitioner for illegal dismissal and ULP in behalf of the
employees, alleging that their dismissal was invalid. Their transfer was prejudicial and inconvenient hence unreasonable.
Labor Arbiter ruled in favor of the employer. The transfer was not tainted with bad faith and was a valid exercise of
management prerogative.
NLRC reversed the ruling of the LA. The employer was guilty of illegal dismissal.
CA affirmed NLRC
SC There was illegal dismissal.
The transfer of the respondents were incidental to scalar ascent of their job grades, hence promotion. Promotion is
defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law and
is usually accompanied by increase in salary.
An employee cannot be promoted, even if as a result of transfer, without his consent. A transfer that results in
promotion or demotion, advancement or reduction or a transfer that aims to lure the employee away from his permanent position
cannot be done without the employees consent.
There is no law that compels an employee to accept a promotion because it is in the nature of a gift o reward, which the
person has the right to refuse. Therefore, the refusal of private respondents of the transfer and promotion does not amount to
insubordination or willful disobedience of a lawful order of the employer.
National Book Store vs. CA, Ymasa and Gabriel
Facts: Ymasa and Gabriel were Cash Custodian and Head Cashier respectively in National Book Store (NBS) who were
terminated due to gross neglect of duty and loss of confidence because of an alleged loss of company fund. The private

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respondents were tasked to count money in a days sale, deposit in a vault and supposed to deposit such money in the next
business day. The next day, they counted again the money before depositing them but were short of Php 42, 758.
The management asked them to explain in writing why they should not be dismissed for the loss of company funds and
immediately placed them under preventive suspension. NBS found their explanation unsatisfactory, hence terminated them.
The respondents filed complaint for illegal dismissal before the Labor Arbiter who ruled in their favor. It was held that
although there was due process, the dismissal was not founded on valid and justifiable grounds. The Labor Arbiter ordered to
give separation pay instead or reinstatement due to strained relations between the NBS and the private respondents.
NLRC denied the appeal.
CA dismissed petition for certiorari.
Issue: WON the private respondents were illegally dismissed.
Ruling: Yes, they were illegally dismissed.
The burden of proof of proving that the dismissal of the employee was for a valid and authorized cause is on the
employer and failure to prove such cause would mean that the dismissal was not justified and therefore illegal.
Requisites of valid termination:
The employee must be afforded due process. It requires the two notice requirements:
a.
Notice containing the cause of termination or the specific act which caused termination to afford him opportunity to
defend himself, and
b.
If the employer decided to terminate the employees services, the employer should notify him in writing of such
decision.
The respondents were terminated due to gross neglect of duty and loss of confidence. Although these were just causes
of termination, there was no evidence given to prove that the respondents were negligent in their work and the same was not
habitual.
Loss of trust and confidence must be based on willful breach of trust and established on clear facts. The Supreme Court
affirms the decision of the Labor Arbiter and NLRC that there was no intentional breach and no substantial evidence to prove
the same. Both are entitled of reinstatement but ordered to give separation pay instead.
Heavylift Manila Inc. vs. CA and Galay
Facts: Heavylift, thru its Administrative and Finance Manager Evangelio, sent a letter to Galay informing her of her low
performance rating and negative feedback from her team members regarding her work attitude. She was also relieved from all
other functions except the development of the new Access program.
Subsequently, after 6 months, she was terminated for loss of confidence. Hence she filed complaint before the Labor
Arbiter for illegal dismissal.
Labor Arbiter ruled that Galay was illegally terminated because the petitioner failed to prove she violated any regulation and that
there was no proper notice.
NLRC denied appeal of Heavylift for lack of merit. It affirmed Labor Arbiters decision and denied MR as well.
CA certiorari was dismissed due to procedural lapses. The court also denied MR for lack of sufficient justification.
Issue: WON attitude problem was a valid ground for termination of an employee.
Ruling: Yes, it may be a valid ground for termination as it may be detrimental to the company for he can upset and strain the
working environment. Management has the prerogative to take the necessary action to correct the situation and protect its
organization. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer.
However, in the case at bar, SC ruled that Galay was illegally terminated because Heavylift failed to give the two written
notices as required by law. The employer has the burden to provide substantial evidence to support the termination. The mere
mention of negative feedback and the letter previously given are not proof of attitude problem.
Two notice requirement:
1.
Notice which informs the employee of particular act or omission for which dismissal was sought, and
2.
Subsequent notice informing the employee of employers decision to dismiss him.
The petitioner never gave Galay the opportunity to explain her side, hence there was no due process.
Equitable Banking Corp. vs. NLRC and Sadac

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Facts: Sadac was appointed as VP for Legal Dept. of petitioner bank. Nine lawyers under his supervision each sent a letterpetition to the Chairman of Board of Directors, accusing Sadac of abusive conduct, inefficiency, mismanagement and
ineffectiveness.
The management conducted a meeting between the lawyers and the petitioner but to no avail. Mr. Banico, the officer
charged by the management to look further into the matter and determine the proper action, submitted a report to the bank
concluding that the charges of the lawyers were true against the private respondent.
The President of the petitioner issued a memorandum to Sadac, stating the decision that the Board chose to wait for his
voluntary dismissal instead of terminating him from his office. As a client, the petitioner alleged that it exercises management
prerogative to appoint another lawyer to replace Sadac.
Sadac denied the allegations and requested for a full hearing. The bank told him that it did not terminate his services but opted to
wait for his resignation. There was no constrictive dismissal because Sadac was given the option to stay under employment;
however the bank is not obliged to give him any work as a valid exercise of management prerogative.
Sadac then filed a complaint of illegal dismissal before the Arbitration Branch of the NLRC after learning that the petitioner has
actually terminated him from service.
Labor Arbiter dismissed the complaint sustaining the stand of the petitioner that the relationship was that of client and
lawyer.
NLRC reversed ruled that there was an employer-employee relationship. The bank never stated that Sadac was an outside
counsel. Since there was no hearing, there was no factual basis to support lack of confidence.
SC there was an employer-employee relationship between the petitioner and Sadac; hence the failure of the petitioner bank to
prove the basis of the ground loss of trust and confidence renders the dismissal as illegal.
The ground contended by the petitioner to terminate services of Sadac -- breach of trust and confidence in order for
it to constitute a just cause, the act complained of must be related to the performance of duties of the employee and which should
show that he is unfit to continue his work.
The petitioner also failed to comply with the procedural requirement for terminating ones employment:
1.
Notice apprising the employee of the act or omissions for which the dismissal was sought.
2.
Another notice informing the employee of employers decision to dismiss him.
Failure to comply with those requirements shall render any judgment void and inexistent. The consultations previously
conducted were not sufficient to substitute proper observance of notice and hearing
Mabeza vs. NLRC, Peter Ng/Hotel Supreme
Facts: The petitioner and co-employees were asked by the hotel management to sign an instrument attesting the employers
compliance with the minimum wage and other labor standards provisions of law.
Petitioner signed the affidavit but refused to go the City Prosecutors Office to swear to the contents of the affidavit.
The instrument was made to refute the report made by the Labor Inspector which was adverse to the interest of the private
respondent.
On the same day, the petitioner was ordered by the management to return the keys and remove her belongings from the
hotel in view of the insubordination by the petitioner in not going to the prosecutors office as instructed by the respondent.
She filed a leave of absence but returned after two days. She was advised by the hotels cashier not to return to work
anymore. After 3 days, she filed a complaint for illegal dismissal before the Arbitration Branch of the NLRC.
The respondent contended that Mabeza abandoned her work and subsequently, he filed another ground in terminating
the petitioner which was loss of confidence supported by qualified theft for the alleged stealing of company property.
Labor Arbitrator dismissed complaint of the petitioner; dismissal was justified.
NLRC affirmed
Issue: WON the petitioner was validly dismissed by the respondent employer.
Ruling: NO.
1.
There was no abandonment. In order for abandonment to arise, there must be concurrence of two requisites:
a.
Lack of intention to work
b.
Presence of overt acts signifying employees intention not to work.
Her absence of two days does not constitute abandonment; her overt act of returning to work was a clear indication of the
contrary.
2.
Loss of confidence should ideally apply only to cases involving employees with positions of trust and confidence or to
those situations where employees are routinely charged with the care and custody of employers money and property.
It should not be simulated in order to justify a dismissal. It must be genuine and not a mere afterthought to justify and
earlier action taken in bad faith.

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The delay in giving the ground of loss of confidence and filing of complaint of qualified theft do not warrant serious
consideration as valid and sufficient ground to dismiss petitioner.
SC ruled that there was illegal dismissal, the subsequent ground given and complaint was only an afterthought to build a
case against the petitioner.

Rivera vs. SolidBank Corporation

Facts: Petitioner worked for SolidBank from 1977 to 1994 where he chose to have a special retirement as offered him by the
bank. He was then entitled of P963, 619 as net of the retirement pay. He was made to sign a Release, Waiver and Quitclaim
(RWQ) acknowledging that he already received his retirement pay and a stipulation that he would not, at any time, directly or
indirectly engage in any unlawful activity prejudicial to the interest of the bank. It was also stipulated in the instrument that the
bank shall have a cause of action to seek an award for damages resulting from his breach of the Release, Waiver and Quitclaim
and that he shall return any amount received by him in lieu of his retirement.
He was made to sign an undertaking wherein he promised that he will never seek employment with a competitor bank or
financial institution within one year from February 1995.
On May 1995, the Equitable Banking Corp. employed Rivera as Manager of a certain department, practically the same
position he left in SolidBank. Later, SolidBank informed Rivera that he has violated the undertaking and demanded to return all
the monetary benefits he received in consideration of the special retirement. The respondent bank filed a complaint for a sum of
money with prayer of Writ of Preliminary Attachment.
RTC ordered Rivera to return the amount received from his retirement with interest. The court ruled that since he voluntarily
executed the RWQ. He had a choice to retire but opted to have a special retirement at the age of 45.
CA affirmed RTC
Issues:
1. WON the employment ban stipulated which Rivera executed upon his retirement was unreasonable, oppressive hence contrary
to public policy.
2. WON Rivera is obliged to return the benefits he received from his retirement pay.
Rulings:
1. Yes, the undertaking stipulated was unreasonable.
The Civil Code allows parties to stipulate the terms of the contract provided that the stipulations are not contrary to law,
morals, good customs and public policy.
In the case at bar, the retirement plan must be liberally construed in favor of the employee as they are intended to help
the employee enjoy the remaining years of his life and as a form of reward for being loyal to the employer.
On the face of the undertaking signed by Rivera, the post retirement employment ban is unreasonable because it has no
geographical limits, the respondent is barred from accepting any kind of employment in any competitive bank within the
proscribed period which was considered by the Court as a restraint to trade hence contrary to public policy; therefore from the
beginning. There is injury to public be being deprived of Riveras industry; and injury to Rivera himself by being precluded from
pursuing his occupation and preventing him to support his family.
2. Previous cases declared that post-retirement competitive employment restriction is generally valid as protection to the
employer. It is a forfeiture of retirement and other benefits or will be obliged to restitute the same to the employer. However, in
the case at bar, the RWQ do not provide for the automatic forfeiture of the benefits that the petitioner received under the special
retirement program.
The respondent still has to prove its entitlement to the said amount by producing the best evidence.
DUNCAN ASSOCIATION OF DETAILMAN AND TECSON VS GLAXO WELLCOME PHILIPPINES
Facts: Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical
representative on October 24, 1995, after Tecson had undergone training and orientation. Thereafter, Tecson signed a contract of
employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to
management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug
companies and should management find that such relationship poses a possible conflict of interest, to resign from the company.

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Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals3(Astra), a
competitor of Glaxo. Even before they got married, Tecson received several reminders from his District Manager regarding the
conflict of interest which his relationship with Bettsy might engender.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecson
requested for time to comply with the company policy against entering into a relationship with an employee of a competitor
company. In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked
Glaxo to reconsider its decision, but his request was denied. Because the parties failed to resolve the issue at the grievance
machinery level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay.
Issues:
(1) Whether the Court of Appeals erred in ruling that Glaxos policy against its employees marrying employees from competitor
companies is valid, and in not holding that said policy violates the equal protection clause of the Constitution;
(2) Whether Tecson was constructively dismissed.
Ruling: Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos
employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the
company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and
to expansion and growth.20 Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that
management has rights which are also entitled to respect and enforcement in the interest of fair play.21
Chua-Qua vs. Hon. Jacobo C. Clave, et al
Facts:

Evelyn had been employed in an educational institution in Bacolod City as a teacher since 1963 and, in 976 when this
dispute arose, was the class adviser in the sixth grade where one Bobby was enrolled. The teacher and the student (about half the
teachers age) fell in love and eventually got married in accordance with the rites of their religion.
On February 4, 1976, private respondent (school) filed with the sub-regional office of the Department of Labor at
Bacolod City an application for clearance to terminate the employment of the petitioner on the ground that her abusive and
unethical conduct is unbecoming of a dignified school teacher and that her continued employment is inimical to the best interest,
and would downgrade the high moral values of the school.
Ruling:
(1)
Teacher falling in love with student, not immoral. Even the labor arbiter conceded that there was no direct evidence to
show that immoral acts were committed. Nonetheless, indulging in a patently unfair conjecture, he concluded that it is however
enough for a sane and credible mind to imagine and conclude what transpired during those times. In reversing his decision, the
National Labor Relations Commission observed that the assertions of immoral acts or conducts are gratuitous and that there is no
direct evidence to support such claim.
With the finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged violation of
the Code of Ethics governing school teachers would have no basis. Private respondent (school) utterly failed to show that
petitioner took advantage of her position to court her student. If the two eventually fell in love, despite the disparity of their ages
and academic levels, this only lends substance to the truism that the heart has reasons of its own which reason does not know.
But, definitely, yielding tho this gentle and universal emotion is not to be so casually equated with immorality. The deviation of
the circumstances of their marriage from the usual societal pattern cannot be considered as a defiance of contemporary social
mores.
It would seem quite obvious that the avowed policy of the school in rearing and educating children is being
unnecessarily bannered to justify the dismissal of the petitioner. This policy, however, is not at odds with and should not be
capitalized on to defeat the security of tenure granted by the Constitution to labor. In termination cases, the burden of proving
just and valid cause for dismissing an employee rests on the employer and his failure to do so would result in a finding that the
dismissal in unjustified.
(2)
Reinstatement, not possible.- The charge against petitioner not having been substantiated, we declare her dismissal as
unwarranted and illegal. It being apparent, however, that the relationship between petitioner and private respondent has been

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inevitably and severely strained, we believe that it would neither be to the interest of the parties nor would any prudent purpose to
be served by ordering her reinstatement.
Escobin, et al. vs. NLRC
Facts:

Some seventy security guards of PISI were assigned tto UP-NDC Basilan Plantation. When placed under the agrarian
reform program, the plantation had to reduce the number of security guards. Fifty-seven of them were placed on floating
status. While in that status they were instructed to report to PISI head office at San Juan M. M. for posting to clients in Metro
Manila. The guards id not reply nor comply. PISI reiterated the instruction and threatened the guards with disciplinary action. Still
no reply or compliance. PISI terminated their employment on ground of insubordination or wilful disobedience. Late in the day,
they wrote the PISI general manager that they had no intention to abandon their employment, nor to defy fair, reasonable and
lawful orders. They complained of illegal termination by way of constructive dismissal.
Labor arbiter Rhett Julius J. Plagata found that complainants are residents of Basilan, have families in Basilan, have never
been assigned beyond Mindanao or Visayas, were not provided with fare money. Neither were they assured of posting while in
Manila. Their transfer would surely ntail great inconvenience to complainants and their families. Thus, the labor arbiter held that
the transfer order was unreasonable and herefore, could not be sustained. On appeal the NLRC reversed the Labor Arbiters
decision, holding that petitioners refusal to comply with said order and their wanton disregard of the order to explain their
inability to xxxxx comply and obey lawful orders from their employer constituted the proximate cause for their dismissal.
Ruling:

The court set aside the NLRC decision and reinstated that of the Labor Arbiter. In the distinctive decision-writing style
of Mr. Justice Panganiban the court said:
First, it was grossly inconvenient for petitioners, who were residents and heads of families residing in Basilan, to
commute to Manila.
Second, petitioners were not provided with funds to defray their transportation and living expenses. Petitioners, not
unknown to their employer, earned only P1,500 to P2,500 a month before they were placed on reverse status, after which they
remained jobless. Furthermore, being residents of Basilan, petitioners would have required living arrangements in Manila which,
in turn, would have entailed additional expenses on their part.
Third, private respondent argues that it sent transportation money to petitioners. However, the recipients of such funds
are not parties in this case. Moreover, the alleged transportation allowance was given only after petitioners had already been
terminated from service. The letter purportedly granting transportation allowance to other security guards was dated August 12,
1991, which was after petitioners had been dismissed June 28, 1991.
Fourth, no reason was given by private respondent company explaining why it had failed to inform pwtitioner of their
specific security assignments prior to their departure from Basilan. If indeed the postings were to be made in Basilan, there would
have been no necessity for petitioners to report to Manila and no justification for respondents insistence on their compliance
with its directive. Since private respondent did not provide transportation and living allowances, and since, in the first place,
petitioners could have been easily informed of their new assignments right there in Basilan, there was no reason for petitioners to
travel all the way to Manila. Xxxx It is obvious to us that the dismissal was effected with mala fides, as it was intended to punish
petitioners for their refusal to heed their employers unreasonable directive. Respondent commission therefore committed grave
abuse of discretion in holding that petitioners were dismissed for a just cause.
Blue Dairy Corp. vs. NLRC
Facts:

Indeed, it is the prerogative of management to transfer an employee from one office to another within the business
establishment based on its assessment and perception of the employees qualifications, aptitudes and competence, and in order to
ascertain where he can function with maximum benefit to the company. This is a privilege inherent in the employers right to
control and manage his enterprise effectively. The freedom of management to conduct its business operations to achieve its
purpose cannot be denied. But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should
not be confused with the manner in which that right is exercised. Thus, it cannot be used as subterfuge by the employer to rid
himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges, and
other benefits. Should the employer fail to overcome this burden of proof, the employees transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable
or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when an act of

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clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with n
opinion but to forego with his continued employment.
In the present case, petitioners failed to justify Recaldes transfer from the position of food technologist in the laboratory
to a worker in the vegetable processing section. We recall that what triggered Recaldes transfer was the 21 October incident
where she was found to have allegedly utilized company vehicle in looking for a new residence during office hours without
permission from management. In petitioners view, she was dishonest such that they lost their trust and confidence in her, yet, it
does not appear that Recalde was provided an opportunity to refute the reason for the transfer. As food technologist in the
laboratory, she occupied a high technical position requiring use of her mental faculty. As a worker in the vegetable processing
section, she performed mere mechanical work. It was virtually a transfer from a position of dignity to a servile or mental job. We
agree with the observation of the OSG that the radical change in Recaldes nature of work unquestionable resulted in, as rightly
perceived by her, a demeaning and humiliating work condition. The transfer was a demotion in rank, beyond doubt.
Dosch vs NLRC and Northwest Airlines
Facts:

Petitoner Dosch, an American citizen, married to a Filipina, was the resident Manager of Northwest Airlines, Inc. in the
Philippines for nine years. He received an inter-office communication from Northwests Vice President for Orient Region,
promoting him to the position of Director of International Sales and transferring him to Northwests General Office in
Minneapolis, USA. He acknowledged receipt of the above memo, expressed appreciation for the promotion but as the same time
regretted that for personal reasons and reasons involving my family, I am unable to accept a transfer from the Philippines. The
vice president for the Orient Region advised petitioner that in view of the foregoing, your status as an employee of the company
ceased on the close of business on August 31, 1975 and the company therefore considers your letter of August 28, 1975, to be a
resignation without notice. Northwest filed a report on Resignation of Managerial Employee, i.e., Mr. Dosch, before the
Regional Office of DOLE. The report was contested by the petitioner and the case was certified to the executive labor arbiter, for
compulsory arbitration. The labor arbiter directed Northwest Airlines to reinstate complainant Dosch to his former position with
full backwages, without loss of seniority rights and other benefits. Northwest appealed to the NLRC assigning the following
errors: (a) the Labor Arbiter erred in not holding that petitioner could be dismissed for failure/refusal to comply with the valid
transfer order and for the employers loss of trust and confidence of his employee. The decision en banc of the NLRC reversed
the Labor Arbiters decision and dismissed the case for lack merit, holding that:
The hiring, firing, transfer, demotion and promotion of employees has been traditionally identified as a management
prerogative. This is a function associated with the employers inherent right to control and manage effectively its enterprise. The
free will of management to conduct its own business affairs to achieve its purpose cannot be denied. This exercise finds support
not only in actual management practice but has become a part of our jurisprudence in labor relations law. Dosch petitioned the
Supreme Court to review the NLRC decision.
Ruling:

(1) Employer cannot shift cause of separation from resignation to dismissal. an indicated earlier, Northwest on appeal
o NLRC changed its stand and claimed that petitioner was guilty of insubordination when he refused to comply with the
transfer order made by Vice President Jenkins. And for such act of insubordination, Northwest claimed it lost confidence in the
petitioner. Since resignation was the particular cause alleged by Northwest in terminating petitioners employment, Northwest is
restricted to the ground specified and may not invoke any other cause for the discharge.
(2) Management may decline a promotion.- We must rightly treat the Jenkins letter as directing the promotion of the
petitioner from his position as Philippine Manager t Director of International Sales in Minneapolis, USA. It is not merely a
transfer order alone but as the Solicitor General correctly observes, It is more in the nature of a promotion than a transfer, the
latter being merely incidental to such promotion. The inter-office communication of Vice President Jenkins is captioned
Transfer but it is basically and essentially a promotion, for the nature of an instrument is characterized not by the title given to
it but by its body and contents. The communication informed the petitioner that effective August 18, 1975, he was to be
promoted t the position of Director of International Sales, and his compensation would be upgraded and the payroll accordingly
adjusted. Petitioner was, therefore, advanced to a higher position and rank and his salary was increased and that is promotion. It
has been held promotion denotes a scalar ascent of an officer or an employee to another position, higher either in rank or salary.
There is no law that compels an employee to accept a promotion, as promotion is in the nature of a gift or a reward, which a
person has a right to refuse. When petitioner refused to accept his promotion to Director of International Sales, he was exercising
a right and he cannot be punished for it as qui jure suo utitur neminem laedit. He who uses his own legal right injures no one.
While it may be true that the right to transfer or reassign an employee is an employers exclusive right and the prerogative of
management, such right is not absolute.
(3) Managers security of tenure. The fact that petitioner is a managerial employee does not itself exclude him from the
protection of the constitutional guarantee of security of tenure.

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(4) No insubordination. We cannot agree to Northwests submission that petitioner was guilty of disobedience and
insubordination which respondent Commission sustained. The only piece of evidence on which Northwest bases the charge of
contumacious refusal is petitioners letter dated August 28, 1975 to R.C. Jenkins wherein petitioner acknowledged receipt of the
formers memorandum dated August 18, 1975, appreciated his promotion to Director of International Sales but at the same time
regretted that at this time for personal reasons and the reasons of my family, I am unable to accept the transfer from the
Philippines and thereafter expressed his preference to remain in his position, saying: I would, therefore, prefer to remain in my
position of Manager-Philippines until such time that my services in that capacity are no longer required by Northwest Airlines.
From this evidence, we cannot discern even the slightest hint of defiance, much less imply insubordination on the part of
petitioner.
(5) Dismissal too severe. Indeed, the outright dismissal of petitioner from his position as Manager-Philippines of
Northwest Airlines is much too severe, considering the length of service that petitioner has rendered for eleven (11) faithful and
loyal years, a strong and vital factor that must be taken into account in labor law determinations.
John Hancock Life Insurance vs. J. Davis
Facts: Respondent Joanna Cantre Davis was agency administration officer of petitioner John Hancock Life Insurance
Corporation. On October 18, 2000, Patricia Yuseco, petitioners corporate affairs manager, discovered that her wallet was
missing. She immediately reported the loss of her credit cards to AIG and BPI Express. To her surprise, she was informed that
Patricia Yuseco had just made substantial purchases using her credit cards in various stores in the City of Manila. She was also
told that a proposed transaction in Abensons-Robinsons Place was disapproved because she gave the wrong information upon
verification.
Because loss of personal property among its employees had become rampant in its office, petitioner sought the
assistance of the National Bureau of Investigation (NBI). The NBI, in the course of its investigation, obtained a security video
from Abensons showing the person who used Yusecos credit cards. Yuseco and other witnesses positively identified the person
in the video as respondent. Petitioner placed respondent under preventive suspension and instructed her to cooperate with its
ongoing investigation. Instead of doing so, however, respondent filed a complaint for illegal dismissal alleging that petitioner
terminated her employment without cause.
Issue: Whether or not petitioner substantially proved the presence of valid cause for respondents termination
Ruling: Yes, petitioner substantially proved the presence of valid cause for respondents termination.
Article 282 of the Labor Code provides:
Termination by Employer. An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobendience by the employee of the lawful orders of his employer or his representatives in
connection with his work;
(e) Other causes analogous to the foregoing.
Misconduct involves the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful
in character, and implies wrongful intent and not mere error in judgment. For misconduct to be serious and therefore a valid
ground for dismissal, it must be: (1) of grave and aggravated character and not merely trivial or unimportant and (2) connected
with the work of the employee.
In this case, petitioner dismissed respondent based on the NBIs finding that the latter stole and used Yusecos credit
cards. But since the theft was not committed against petitioner itself but against one of its employees, respondents misconduct
was not work-related and therefore, she could not be dismissed for serious misconduct. Nonetheless, Article 282(e) of the Labor
Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail. For
an employee to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary
and/or willful act or omission of the employee. A cause analogous to serious misconduct is a voluntary and/or willful act or
omission attesting to an employees moral depravity. Theft committed by an employee against a person other than his employer, if
proven by substantial evidence, is a cause analogous to serious misconduct. The labor arbiter and the NLRC relied not only on
the affidavits of the NBIs witnesses but also on that of respondent. They likewise considered petitioners own investigative
findings. Clearly, they did not merely adopt the findings of the NBI but independently assessed evidence presented by the parties.
Their conclusion (that there was valid cause for respondents separation from employment) was therefore supported by
substantial evidence.
King of Kings Transport Inc. (KKTI) vs. MAMAC
Facts: Petitioner KKTI is a corporation engaged in public transportation. Respondent Mamac was hired as bus conductor of
Don Mariano Transit Corporation (DMTC) on April 29, 1999. The DMTC employees including respondent formed the

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Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and registered it with the Department of Labor
and Employment. Pending the holding of a certification election in DMTC, petitioner KKTI was incorporated with the Securities
and Exchange Commission which acquired new buses. Many DMTC employees were subsequently transferred to KKTI and
excluded from the election.
Respondent Mamac was required to accomplish a Conductors Trip Report and submit it to the company after each
trip. This report indicates the ticket opening and closing for the particular day of duty. After submission, the company audits the
reports. Once an irregularity is discovered, the company issues an Irregularity Report against the employee, indicating the nature
and details of the irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written statement
or counter-affidavit at the back of the same Irregularity Report. After considering the explanation of the employee, the company
then makes a determination of whether to accept the explanation or impose upon the employee a penalty for committing an
infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee.
Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an irregularity. It discovered that
respondent declared several sold tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos.
While no irregularity report was prepared on the October 28, 2001 incident, KKTI nevertheless asked respondent to explain the
discrepancy. In his letter, respondent said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional.
He explained that during that days trip, the windshield of the bus assigned to them was smashed; and they had to cut short the
trip in order to immediately report the matter to the police. As a result of the incident, he got confused in making the trip report.
Respondent thereafter received a letter terminating his employment effective November 29, 2001. The dismissal letter
alleged that the October 28, 2001 irregularity was an act of fraud against the company. KKTI also cited as basis for respondents
dismissal the other offenses he allegedly committed since 1999.
Issue: Whether or not a verbal appraisal of the charges against the employee is a breach of the procedural due process
Ruling: Yes. It is a breach of the procedural due process. To clarify, the following should be considered in terminating the
services of employees:
1.
The first written notice to be served on the employees should contain the specific causes or grounds for termination
against them, and a directive that the employees are given the opportunity to submit their written explanation within
a reasonable period. Reasonable opportunity under the Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A general description of the charge will
not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged against the employees.
2.
After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2)
present evidence in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable settlement.
3.
After determining that termination of employment is justified, the employers shall serve the employees a written
notice of termination indicating that: (1) all circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of their employment.
The Court is not convinced with the alibi of KKTI that it had substantially complied with the rules, claiming that respondent
would not have issued a written explanation had he not been informed of the charges against him.
First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A
verbal appraisal of the charges against an employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co.
v. NLRC, the Court held that consultations or conferences are not a substitute for the actual observance of notice and hearing.
Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense,
such would not comply with the requirements of the law. We observe from the irregularity reports against respondent for his
other offenses that such contained merely a general description of the charges against him. The reports did not even state a
company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for
termination of employment under Art. 282 of the Labor Code. Thus, KKTIs standard charge sheet is not sufficient notice to
the employee.

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Third, no hearing was conducted. Regardless of respondents written explanation, a hearing was still necessary in order for him to
clarify and present evidence in support of his defense. Moreover, respondent made the letter merely to explain the circumstances
relating to the irregularity in his October 28, 2001 Conductors Trip Report. He was unaware that a dismissal proceeding was
already being effected. Thus, he was surprised to receive the November 26, 2001 termination letter indicating as grounds, not
only his October 28, 2001 infraction, but also his previous infractions.

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PROCEDURE AND CONSEQUENCES OF TERMINATION

ACESITE CORPORATION v. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 152308; January 26, 2005
Leo A. Gonzales was hired on October 18, 1993 as Chief of Security of Holiday Inn Manila under the management of
Acesite Corporation.
Before the expiration of his 12-day vacation leave or on April 23, 1998, Gonzales filed an application for emergency leave for
10 days commencing on April 30 up to May 13, 1998. The application was not, however, approved. Gonzales did not report for
work on April 30, 1998. On even date, he received a telegram from Acesite advising him that he was on unauthorized leave and
asking him to provide a written explanation within the next 24 hours why he was not reporting for work. At the same time, he
was required to report for work the following day or on May 1, 1998.
On May 2, 1998, Gonzales sent a telegram to Acesite
stating that he was still recovering from severe stomach disorder and would report back for work on May 4, 1998.
Gonzales reported for work on May 4, 1988 and presented himself to Johann Angerbauer, then Resident Manager of the
hotel. They had a meeting in which Gonzales explained to Angerbauer why he had been absent despite orders for him to report
back for work to which he (Gonzales) replied that it was necessary for him to go home to his province in Abra. Furthermore,
Gonzales requested for leave without pay from May 5-9, 1998 which was provisionally approved on condition that he (Gonzales)
would be sending his explanation through e-mail behind his absences on April 30, 1998 and May 2, 1998 so that Angerbauer
could send it to the hotel General Manager Phil Kennedy who was then out of the country.
Gonzales not having reported for work on May 5, 1998, Angerbauer sent him telegram at his provincial address in Abra
indicating that he must report back to work immediately upon receiving such notice due matters involving security departments
concern and such telegram shall be considered as the final advice of management. Gonzales, who claims to have received the
May 5, 1998 telegram only in the afternoon of May 7, 1998, immediately repaired back to Manila on May 8, 1998 only to be
barred by the from entering the premises.
It appears that on May 7, 1998, Angerbauer issued the following Notice of Termination10 through an inter-office memo
stating that he was being terminated due to "Acts of gross disobedience or insubordination" and provisions of the Labor Code,
specifically Art. 282.
Gonzales thus filed a complaint against Acesite, Angerbauer and Kennedy for illegal dismissal.
After the filing of their respective the Labor Arbiter dismissed the complaint for lack of merit, it holding that Gonzales was
dismissed for just cause and was not denied of due process.
However, NLRC reversed the decision of the Labor Arbiter stating that Gonzales was illegally dismissed and it was affirmed
with modification by the Court of Appeals. Such modification was the deletion of awards of fringe benefits or their monetary
equivalents which the NLRC ordered to be given to Gonzales from the the time he was illegally dismissed up to his actual
reinstatement.
ISSUE: Whether Gonzales is entitled to "fringe benefits or their monetary equivalent due to being illegally dismissed.
RULING: Yes.
As to the deletion of the "fringe benefits or their monetary equivalent," this Court agrees with Gonzales that it is not in
accord with law and jurisprudence. Article 279 of the Labor Code provides:
ART. 279 SECURITY OF TENURE. In cases of regular employment, the employer shall not terminate the services of an employee except for just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement wi thout loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.

NOTES:
In illegal dismissal cases, reinstatement to an illegally dismissed employees former position may be excused on the
ground of "strained relations." This may be invoked against employees whose positions demand trust and confidence, or
whose differences with their employer are of such nature or degree as to preclude reinstatement.
In order that an employer may dismiss an employee on the ground of willful disobedience, there must be concurrence of
at least two (2) requisites: the employees assailed conduct must have been willful or intentional, the willingness being
characterized by a wrongful and perverse attitude; and that the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been engaged to discharge.
Unless they have exceeded their authority, corporate officers are, as a general rule, not personally liable for their official
acts, because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders and
members.

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KING OF KINGS TRANSPORT INC. v. SANTIAGO O. MAMAC

G.R. No. 166208; June 29, 2007
King of Kings Transport Inc. (KKTI) is a corporation engaged in public transportation and managed by Claire Dela Fuente
and Melissa Lim.
Mamac was hired as a bus conductor and was required to accomplish a "Conductors Trip Report" and submit it to the
company after each trip.
Upon audit Conductors Report, KKTI noted an irregularity. It discovered that Mamac declared several sold tickets as
returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. While no irregularity report was prepared,
KKTI nevertheless asked Mamac to explain the discrepancy. In his letter, he stated that the erroneous declaration in Trip Report
was unintentional. He explained that during that days trip, the windshield of the bus assigned to them was smashed; and they had
to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got confused in making
the trip report.
On November 26, 2001, Mamac received a letter4 terminating his employment.The dismissal letter alleged that irregularity
was an act of fraud against the company. KKTI also cited as basis for respondents dismissal the other offenses he allegedly
committed since 1999.
Mamac filed a complaint of illegal dismissal.
ISSUE: Is a verbal appraisal of the charges against the employee a breach of the procedural due process?
RULING: Yes.
First, Mamac was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A
verbal appraisal of the charges against an employee does not comply with the first notice requiremen t. In Pepsi Cola
Bottling Co. v. NLRC,18 the Court held that consultations or conferences are not a substitute for the actual observance of notice
and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano, the Court, sanctioning the employer for disregarding the due process
requirements, held that the employees written explanation did not excuse the fact that there was a complete absence of the first
notice
Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his
offense, such would not comply with the requirements of the law. We observe from the irregularity reports against respondent for
his other offenses that such contained merely a general description of the charges against him. The reports did not even state a
company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for
termination of employment under Art. 282 of the Labor Code. Thus, KKTIs "standard" charge sheet is not sufficient notice to
the employee.
Third, no hearing was conducted. Regardless of respondents written explanation, a hearing was still necessary in order for
him to clarify and present evidence in support of his defense.
NOTES:
If the dismissal is done without due process, the employer should indemnify the employee with nominal damages.
Due process under the Labor Code involves two aspects: first, substantivethe valid and authorized causes of
termination of employment under the Labor Code; and second, proceduralthe manner of dismissal.
For termination of employment based on just causes as defined in Article 282 of the Code:
a)

A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.
b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is
given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.
c) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employees last known address.

LOADSTAR SHIPPING CO., INC. v. ROMEO MESANO

G.R. No. 138956; August 7, 2003
Loadstar Shipping Co., Inc. is a domestic corporation engaged in the operation of shipping vessels, which included the M/V
Beaver. On November 4, 1980, Romeo R. Mesano, respondent, was employed as a seaman. Subsequently, he occupied the

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position of bosun/boatswin in charge of the care and custody of the entire vessel as well as its accessories and cargo. On January
22, 1995, Mesano brought out from the vessel M/V Beaver a colored television set and a telescope. This incident prompted the
company to conduct an investigation.
Immediately, Mesano voluntarily submitted his written explanation asking for forgiveness. He explained that he intended to
have the television repaired. However, when it could not be done, he returned the unit to the vessel.
On February 24, 1995, Mesano asked from the company a disembarking clearance from his accountabilities. But what the
company handed to Mesano was a disembarkation order dated March 1, 1995 terminating his services effective February 28, 1995.
Mesano filed a complaint of illegal dismissal.
ISSUE: Whether Mesano was deprived of his right to due process?
RULING: Yes.
The mandatory first notice is undeniably absent in the case at bar. Prior to Mesano's termination from the service, he was
neither apprised of the particular acts for which his dismissal is sought, nor was he directed to explain why he should not be
dismissed for taking out from the vessel company property.
While it is true that Mesano voluntarily submitted his written explanation, nonetheless, he did not expressly acknowledge that
he committed any offense. In fact, being in charge of the companys vessel and its accessories and cargo, his intention in taking
out the TV set was to have it repaired.
NOTES:
A rule deeply embedded in our jurisprudence is that "(i)n order to constitute a valid dismissal, two requisites must
concur: (a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code; and (b) the employee
must be accorded due process, basic of which is the opportunity to be heard and to defend himself.
Simply put, the twin requirements of due process, substantive and procedural, must be complied with before a dismissal
can be considered valid.
The law requires that an employee sought to be dismissed must be served two written notices before termination of his
employment. The first notice is to apprise the employee of the particular acts or omissions by reason of which his
dismissal has been decided upon; and the second notice is to inform the employee of the employer's decision to dismiss
him. Failure to comply with the requirement of two notices makes the dismissal illegal. The procedure is mandatory.
Non-observance thereof renders the dismissal of an employee illegal and void
ISMAEL V. SANTOS v. COURT OF APPEALS, PEPSI COLA PRODUCTS PHILIPPINES, INC.
G.R. No. 141947; July 5, 2001
Pepsi Cola Products Phils., Inc. (PEPSI) is a domestic corporation engaged in the production, distribution and sale of
beverages. At the time of their termination, Ismael V. Santos and Alfredo G. Arcewere employed by PEPSI as Complimentary
Distribution Specialists (CDS) while Hilario M. Pastrana was employed as Route Manager.
PEPSI informed its employees that due to poor performance of its Metro Manila Sales Operations it would restructure and
streamline certain physical and sales distribution systems to improve its warehousing efficiency. Certain positions, including that
of petitioners (Santos, Arcewere and Pastrana), were declared redundant and abolished. Consequently, employees with affected
positions were terminated.
Petitioners left their respective positions, accepted their separation pays and executed the corresponding releases and
quitclaims. However, before the end of the year, petitioners learned that PEPSI created new positions called Account
Development Managers (ADM) with substantially the same duties and responsibilities as the CDS. Aggrieved, on 15 Apri1 1996,
petitioners filled a complaint with the Labor Arbiter for illegal dismissal.
In their complaint, petitioners alleged of possible procedural errors, they claimed that while they were notified of their
termination, PEPSI had not shown that the Department of Labor and Employment (DOLE) was also notified as mandated by
Art. 283 of the Labor Code.
ISSUE: Whether the petitioners were deprived of procedural due process of their termination?
RULING: No.
If an employee consented to his retrenchment or voluntarily applied for retrenchment with the employer due to instillation of
labor-savings devices, redundancy, closure or cessation of operation or to prevent financial losses to the business of the employer,
the required previous notice to the DOLE is NOT necessary as the employee thereby acknowledge the existence of a valid cause for the termination of his
employment.

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HYATT TAXI SERVICES INC. v. RUSTOM M. CATINOY

G.R. No. 143204; June 26, 2001
Rustom Catinoy was hired on October 10, 1992 as a taxi driver by the Hyatt Taxi Services. He is also a member and officer
(Secretary) of Hyatt Taxi Employees Association, a legitimate labor organization and is the exclusive bargaining representative of
all taxi drivers of Respondent Hyatt Taxi Service, Inc. Jaime Dublin is the President and Chairman of the Board of the
association.
Being the Secretary of the association, Catinoy keeps all the records and documents of the association in the drawer of his
desk at the Union Office which is located inside the premises of the company (Hyatt).
On August 21, 1995, Catinoy went inside the union office and to his surprise found his drawer to have been forcibly opened.
Since he saw the acting President of the Union, Mr. Tomas Saturnino inside the office together with two rice suppliers, Catinoy
asked Saturnino who opened his drawer. Saturnino replied that he was the one who forcibly opened the drawer to retrieve some
documents particularly the list of union members. An argument ensued and Saturnino then approached the complainant and
shoved him. Catinoy retaliated with fist blow but it failed to hit Saturnino and the latter hit him twice in the face The aggression
of Saturnino was only interrupted when the Operations Manager of the company Mr. Caraig intervened and told Saturnino to
stop.
On August 24, 1995 about 25 union members requested the chairman of the Board of the Association to suspend the
complainant and Saturnino for engaging in a fist fight. On August 26, 1995, the Asst. Vice-President of the company issued a
memorandum preventively suspending for 30 days the services of the complainant and Saturnino pending investigation in
response to the recommendation of the Chairman of the Board of the Association.
After the lapse of Catinoys 30 days preventive suspension, he reported for work but he was not allowed to resume his duties
as a taxi driver allegedly, since he is pursuing the criminal complainant for physical injuries against Saturnino, the associations'
President and the complaint for the illegal suspension with the National Labor Relations Commission.
On October 12, 1995, since there was no response from the company, complainant decided to amend his complaint to
include constructive dismissal as an additional cause of action since he was not allowed to resume his employment after the lapse
of his preventive suspension.
ISSUE: Whether Catinoy was constructively dismissed?
RULING: Yes.
Clearly, constructive dismissal had already set in when the suspension went beyond the maximum period allowed by law.
Section 4, Rule XIV, Book V of the Omnibus Rules provides that preventive suspension cannot be more than the maximum
period of 30 days. Hence, we have ruled that after the 30-day period of suspension, the employee must be reinstated to his former
position because suspension beyond this maximum period amounts to constructive dismissal.
The evidence as it stands shows that after the lapse of the 30-day suspension period, Catinoy reported for work but he was
not allowed to resume his duties as a taxi driver. To reiterate, from the time that the 30-day suspension period had expired,
respondent can be already deemed as constructively dismissed.
Notes:
Constructive dismissal consists in the act of quitting because continued employment is rendered impossible, unreasonable
or unlikely as in the case of an offer involving demotion in rank and a diminution in pay.
Constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefit and
privileges. There may be constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his
continued employment.
JERRY MAPILI v. PHILIPPINE RABBIT BUS LINES, INC.
G.R. No. 172506; July 27, 2011
An employees propensity to commit repetitious infractions evinces wrongful intent, making him undeserving of the compassion accorded by law to labor.
Natividad P. Nisce (Nisce) is the President of Philippine Rabbit Bus Lines, Inc. (PRBLI), an entity engaged in the
transportation business. Jerry Mapili was hired as bus conductor.
While Mapili was on duty en route from Manila to Alaminos, Pangasinan, he was caught by PRBLIs field inspector
extending a free ride to a lady passenger who boarded at Barangay Magtaking, Labrador, Pangasinan.
Mapili was preventively suspended and was directed to appear in an administrative investigation. Thereafter, a formal hearing
was conducted during which Mapilu was given an opportunity to present and explain his side. Consequently, through a

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memorandum dated November 9, 2001, Mapili was terminated from employment for committing a serious irregularity by
extending a free ride to a passenger in violation of company rules. Notably, that was already the third time that petitioner
committed said violation.
Mapili filed a complaint for illegal dismissal.
ISSUE: Whether Mapili was illegally dismissed?
RULING: No.
Mapilis violation of company rules was intentional, willful, serious and a just cause for dismissal.
It bears stressing that Mapili has been in the employ of PRBLI for more than eight years already and is a member of the
companys labor union. As such, he ought to know the specific company rules pertaining to his line of work as a bus conductor.
Hence, he ought to have known better than to repeat the same violation as he is presumed to be thoroughly acquainted with the
prohibitions and restrictions against extending free rides. We also cannot agree with petitioners contention that his infraction was
trivial. As a bus conductor whose duties primarily include the collection of transportation fares, which is the lifeblood of the
PRBLI, petitioner should have exercised the required diligence in the performance thereof and his habitual failure to exercise the
same cannot be taken for granted. As correctly observed by the CA, Mapilis position is imbued with trust and confidence because
it involves handling of money and failure to collect the proper fare from the riding public constitutes a grave offense which
justifies his dismissal. Moreover, petitioners "series of irregularities when put together may constitute serious misconduct."
TOYOTA MOTOR PHILIPPINES CORP. WORKERS ASSOCIATION v. NLRC
G.R. Nos. 158786 & 158789; October 19, 2007
Toyota Motor Philippines Corporation Workers Association (Union) is a legitimate labor organization and is the sole and
exclusive bargaining agent of all Toyota rank and file employees. Toyota, on the other hand, is a domestic corporation engaged in
the assembly and sale of vehicles and parts.
The Union submitted its Collective Bargaining Agreement (CBA) proposals to Toyota, but the company refused to negotiate
in view of its pending appeal regarding the certification election of the Union. Consequently, the Union filed a notice of strike
based on Toyotas refusal to bargain.
In connection with Toyotas appeal, Toyota and the Union were required to attend a hearing on before the Bureau of Labor
Relations in relation to the exclusion of the votes of alleged supervisory employees from the votes cast during the certification
election. The first hearing was cancelled and reset on the next day. In the meantime, 135 Union officers and members failed to
render the required overtime work, and instead marched to and staged a picket in front of the BLR office. The Union, in a letter
of the same date, also requested that its members be allowed to be absent to attend the hearing and instead work on their next
scheduled rest day. This request however was denied by Toyota.
Despite denial of the Unions request, more than 200 employees staged mass actions in front of the BLR and the DOLE
offices, to protest the partisan and anti-union stance of Toyota. Due to the deliberate absence of a considerable number of
employees, Toyota experienced acute lack of manpower which resulted in huge losses of PhP 53,849,991.
Soon thereafter, Toyota sent individual letters to some 360 employees requiring them to explain within 24 hours why they
should not be dismissed for their obstinate defiance of the companys directive to render overtime work, for their failure to report
for work, and for their participation in the concerted actions which severely disrupted and paralyzed the plants operations.
Meanwhile, a Manifesto was circulated by the Union which urged its members to participate in a strike/picket and to
abandon their posts.
The Union nonetheless submitted an explanation in compliance with the notices sent by Toyota to the erring employees. The
Union members explained that their refusal to work on their scheduled work time for two consecutive days was simply an
exercise of their constitutional right to peaceably assemble and to petition the government for redress of grievances. It further
argued that the demonstrations staged by the employees could not be classified as an illegal strike or picket, and that Toyota had
already condoned the alleged acts when it accepted back the subject employees.
Nevertheless, Toyota terminated the employment of 227 employees for participation in concerted actions in violation of its
Code of Conduct and for misconduct under Article 282 of the Labor Code.
In reaction to the dismissal of its union members and officers, the Union went on strike. The Union intensified its strike by
barricading the gates of Toyotas Bicutan and Sta. Rosa plants. The strikers prevented workers who reported for work from
entering the plants.
Toyata as a standard operating procedure, took photographs and video footages of those who participated in the strike. Seen
on video footages taken on various dates actively participating in the strike were union officers.
On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and issued an Order directing all striking
workers to return to work at their regular shifts On the other hand, it ordered Toyota to accept the returning employees under the

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same terms and conditions obtaining prior to the strike or at its option, put them under payroll reinstatement. The parties were
also enjoined from committing acts that may worsen the situation.
The union members and officers tried to return to work on but were told that Toyota opted for payroll-reinstatement
authorized by the Order of the DOLE Secretary.
Meanwhile, despite the issuance of the DOLE Secretarys certification Order, several payroll-reinstated members of the
Union staged a protest rally in front of Toyotas Bicutan Plant bearing placards and streamers in defiance of the Order.
Then around forty-four (44) Union members staged another protest action in front of the Bicutan Plant. At the same time,
some twenty-nine (29) payroll-reinstated employees picketed in front of the Santa Rosa Plants main entrance, and were later
joined by other Union members.
The Union and the company were ordered to submit their position papers which the company complied with. However, the
Union, notwithstanding repeated orders to file its position paper, the Union still failed to submit its position paper.
ISSUE 1: Whether separation pay should be awarded to the Union members who participated in the illegal strikes.
RULING: No.
In a slew of cases, this Court refrained from awarding separation pay or financial assistance to union officers and members
who were separated from service due to their participation in or commission of illegal acts during strikes.
This Court declared that the union officers who participated in and the union members who committed illegal acts during the
illegal strike have lost their employment status. In this case, the strike was held illegal because it violated agreements providing for
arbitration. Again, there was no award of separation pay nor financial assistance.
Based on existing jurisprudence, the award of separation pay to the Union officials and members in the instant petitions
cannot be sustained.
ISSUE 2: Whether the Unions right to due process was violated when the NLRC excluded their Position Paper.
RULING: No.
It is entirely the Unions fault that its position paper was not considered by the NLRC. It was explained that a party cannot
complain of deprivation of due process if he was afforded an opportunity to participate in the proceedings but failed to do so. If
he does not avail himself of the chance to be heard, then it is deemed waived or forfeited without violating the constitutional
guarantee.
MA. WENELITA TIRAZONA v. COURT OF APPEALS
G.R. No. 169712; March 14, 2008
Petitioner Wenelita Tirazona, a managerial employee holding a position of trust and confidence was reprimanded by PET
officers/directors for her mishandling of a situation involving a rank-and-file employee. Instead of openly taking her superiors
reminders and diplomatically explaining her side, Tirazona refused to cooperate with PETs investigation of her case.
Subsequently, she asked for indemnity amounting to P2, 000,000 from PETs officers for an alleged denial of due process with a
threat of subsequent filing a suit against the company officers. To aggravate the situation, she shamelessly read what was supposed
to be a confidential letter of the legal counsel of PET to PET officers/ directors expressing his legal opinion on the administrative
case. Thereafter, petitioner was dismissed for violation of trust and confidence reposed on her by the company. Tirazona argued
before the court that her dismissal should be declared illegal and that she be awarded separation pay and retirement benefits.
ISSUE: WON Tirazona is entitled to the award of separation pay.
HELD: NO.
As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor
Code is not entitled to separation pay. Although by way of exception, the grant of separation pay or some other financial
assistance may be allowed to an employee dismissed for just causes on the basis of equity. Separation pay shall be allowed as a
measure of social justice only in those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. A contrary rule would have the effect of rewarding rather than
punishing the erring employee for his offense. The award of separation or any other kind of financial assistance to Tirazona,
under the guise of compassionate justice, is not warranted in this case.
EASTERN SHIPPING LINES, INC. v. DISCORO SEDAN

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G.R. No. 159354; April 7, 2006

Petitioner Eastern shipping lines hired respondent Sedan on a per-voyage basis as 3rd marine engineer and oiler in one of its
vessels. He served the company for 24 years, his last voyage being on July 27, 1997 on board the M/V Eastern Universe. Sedan
claims to have disembarked because he was going to take the board examinations for marine engineers. Two months later, Sedan
sent a letter to petitioners applying for optional retirement on the ground of his daughters death. Petitioner however refused to
take action on such retirement application since Sedans services on board the ship were still needed. Instead, it offered to extend
a loan to defray the costs incurred for the burial and funeral expenses of Sedans daughter. Despite such offer by Eastern
Shipping Lines, Sedan sent a second letter insisting on the release his optional retirement benefits for he can no longer continue
to work due to health reasons. Petitioners in reply allegedly sent a telegram informing that Sedan that his services were still
needed, thus retirement could not be granted yet. The company asked him to immediately return for work, as there was no
available replacement. Sedan claims that he did not receive the telegram nor was this fact proved by the company before the labor
arbiter.
ISSUE: WON Sedan is entitled to retirement benefits/financial assistance when in fact it was him who refused to report for
work.
HELD:
The age of retirement is primarily determined by the existing agreement between the employer and the employees. However,
in the absence of such agreement, the retirement age shall be fixed by law. Under Art 287 of the LC, the legally mandated age for
compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years. In the case at bar however, there
was an agreement between the petitioner and respondent setting compulsory retirement at the age of 60. Optional retirement shall
likewise be available for those employees who shall have rendered at least 15 years of service, subject to the exclusive prerogative
and option of the company.
Records show that respondent was only 48 years old when he applied for optional retirement thus he couldnt claim
retirement benefits as a matter of right. It would not be wrong to deprive him of a retirement gratuity/ separation pay. However if
we take a look at the circumstances of the case, the grant of financial assistance would be in order leaning in the principle of social
and compassionate justice. Sedans almost 24 years of unblemished service and compelling reasons for disembarking indubitably
merit equitable concessions via principle of compassionate justice for the working class.
"J" MARKETING CORPORATION v. CESAR L. TARAN
G.R. No. 16392; June 18, 2009
Respondent worked as a credit collector for J Marketing. He allegedly failed to meet his quota for a period if one year and he
was also subjected to investigation for illegal custody of a colored television unit in violation of the company rules. Sometime in
February 1993, he informed Branch Manager Hector Caludac of his intention to resign. Cadulac thereafter sent a memorandum,
requiring respondent to submit a formal resignation which respondent duly complied with on February 15, 1993. Months later,
respondent filed with the NLRC a complaint for illegal dismissal and holiday differential. He claimed that there was a verbal
arrangement between him and Caludac whereby the latter would pay him 100% separation pay and other benefits.
ISSUE: Won Respondent Taran Is Entitled To Receive Separation Pay.
HELD: YES.
While it must be noted that there is no provision in the labor code that grants separation pay to voluntarily resigning
employees or those not within the ambit of Art. 283, the circumstances of the case negate the denial of an award for separation
pay. Although the general rule is that an employee who voluntarily resigns from employment is not entitled to separation pay
except when stipulated in the employment contract, CBA, or is sanctioned by established employer practice, a reading of
documentary evidences in the case at bar suggests that there was indeed a prior arrangement between respondent and Caludac.
Clearly, the primary consideration that impelled respondent to tender his resignation was the assurance that hed be paid
separation pay. It is neither Caludacs fault for initiating a talk regarding resignation nor Tarans mistake for relying on Caludac
word for there is nothing illegal with this approach. In Alfaro vs. CA, the court held that as a general rule, separation pay need not
be paid to an employee who voluntarily resigns. However, an employer who agrees to expend such benefit as an incident of
resignation should not be allowed to renege on the fulfillment of such commitment.
ST. MICHAEL'S INSTITUTE v. CARMELITA A. SANTOS
G.R. No. 145280; December 4, 2001

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Respondents were faculty members whose service with the school was abruptly interrupted when each of them was served a
notice of termination of employment for participating at a public rally aimed at calling the attention of the school administration
to certain grievances. Respondents thereafter immediately filed a complaint for illegal dismissal. Although the labor arbiter moved
to dismiss the case, the NLRC on appeal reversed the ruling of the Labor Arbiter and held that the employees had been illegally
dismissed.
ISSUE: WON there was illegal dismissal.
HELD: YES.
The employers right to conduct the affairs of his business according to his own discretion and judgment is well recognized.
He enjoys a wide latitude of discretion to regulate all aspects of employment including the prerogative to instill discipline and
impose penalties, including dismissal, upon erring employees. The only criterion is that such policies must always be fair and
reasonable and corresponding penalties when prescribed should be commensurate to the offense involved. Under the attendant
factual circumstances in the case at bar, the dismissal meted out on the respondents for dereliction of duty for one school day and
denouncing school authority appear to be a harsh penalty. It must be noted that the respondents are being held liable for a first
time offense coupled with unblemished services. Despite of transgression of rules committed, due consideration must still be
given to the respondents length of service and record of conduct in the actual imposition of penalties.
As a just cause for termination, the misconduct must be serious, which implies that it must be of such grave and aggravated
character and not merely trivial or unimportant. On the other hand, disobedience as a just cause of termination must be willful or
intentional. In the case at bar, evidence is wanting on the depravity of conduct and willfulness of the disobedience on the part of
the respondents. Art. 279 of the Labor Code therefore mandates that an illegally dismissed employee is entitled to twin reliefs or
either reinstatement or separation pay, and if reinstatement is no longer viable, back wages. Both are distinct reliefs given to
alleviate the economic damage suffered by an illegally dismissed employee.
WENPHIL CORPORATION v. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 80587; February 8, 1989
At about 2:30pm on May 20, 1985, private respondent had an altercation with a co-employee, as a result of which, they were
suspended on the following morning. On the same day, respondent Mallare was issued a memorandum advising him of his
dismissal in accordance with the companys personnel manual. Soon after, private respondent filed a complaint for illegal
dismissal but due to his counsels repeated absence, the case was submitted for resolution. The case was subsequently dismissed
for lack of merit. On appeal, NLRC reversed the labor arbiters ruling ordering reinstatement and 1 year back wages. Petitioner
company seeks to impress upon the court that private respondent had waived his right to an investigation by not requesting for
one in accordance with the personnel manual.
ISSUE: WON there was an infringement on respondents right to due process.
WON respondent is entitled to reinstatement of back wages.
HELD: Yes and NO.
Provisions on the personnel manual regarding requests for investigation do not relieve petitioner- company of the duty to
conduct an investigation before dismissing the respondent. The failure to give private respondent the benefit of hearing before he
was dismissed constitutes an infringement of his constitutional right to due process of law and equal protection of the laws. The
rules require that before an employer may dismiss an employee, the latter must be given a written notice stating the particular act
or omission constituting the grounds thereof; that the employee may answer the allegations within a reasonable period; that the
employer shall afford him ample opportunity to be heard and to defend himself with the assistance of his representative, if he so
desires; and that it is only then that the employer may dismiss the employee by notifying him of the decision in writing stating
clearly the reasons therefor.
It has been however held that dismissal of the private respondent was for a just cause having been found guilty of grave
misconduct and insubordination. Reinstatement and back wages would be of no moment, as it would become highly prejudicial to
the interest of the employer. Where the respondent has been guilty of causing trouble during office hours and defying his
superiors, he should not be rewarded with re-employment and back wages otherwise it will just render a mockery of the rules of
discipline that the employees are required to observe.
RUBEN SERRANO v. NLRC and ISETANN DEPARTMENT STORE
G.R. No. 117040; January 27, 2000

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Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend shoplifters and
prevent pilferage of merchandise. Originally hired on contractual basis, petitioner eventually became a regular employee within a
year after he was hired. Three years after, he became the head of the security checkers section of the respondent company.
Sometime in 1991 however, Isetann decide to phase out its entire security section and engage the services of an independent
contractor as a cost-cutting device. Petitioner was thereby terminated thus causing him to file a complaint for illegal dismissal.
NLRC ordered petitioner to be given separation pay holding that the phase out of the security section was a legitimate exercise of
business judgment. Respondent was however denied of statutory due process because of Isetanns failure to provide for a written
notice before severance of his employment.
ISSUE: WON dismissal of the respondent is valid.
Effect of violation of the notice requirement when termination is anchored on an authorized cause.
HELD:
The management cannot be denied the faculty of promoting efficiency and attaining economy by shredding out the units that
are not essential to its operation. To it belongs the ultimate determination of whether services should be performed by its
personnel or contracted to outside agencies. Absent proof that the management acted in a malicious or arbitrary manner, the
court is not bound to interfere with the managements exercise of business judgment.
A more compelling issue in the case at bat however is the violation of the notice requirement mandated by the Labor Code.
Circumstances show that petitioner was given a notice of termination on October 11, 1991. On the same day, his services were
likewise terminated thus denying him of his right to be given notice before severance of employment. The Wenphil doctrine
stated that in cases where dismissal was for a just cause but due process was not satisfied, it would be unjust to require an
employer to reinstate an employee. The remedy is to order the payment of back wages from the time of his dismissal until the
time when the court finds that the dismissal was for a just cause; his dismissal should be upheld and no reinstatement is in order.
In contrast with termination due to just causes, a violation of the notice requirement in termination of employment under Art 283
does not constitute a denial of due process. Its purpose is not to afford the employee of an opportunity to be heard but to give
him ample time to prepare for the eventual loss of his job and also for the DOLE to determine whether economic causes indeed
justifies the termination of employment. At best, the court can only grant an award for damages to penalize the employer for not
complying with the statutory requirements.
JENNY M. AGABON v. NLRC and RIVIERA HOME IMPROVEMENTS INC.
G.R. No. 158693; November 17, 2004
Virgilio and Jenny Agabon worked for respondent Riviera Home Improvements, Inc. as gypsum and cornice installers from January 1992 until February
1999. Their employment was terminated when they were dismissed for allegedly abandoning their work. Petitioners Agabon then filed a case of illegal
dismissal. Despite conflicting claims between the spouses and the company, what is undisputed is that Riviera failed to send the
Agabons letters of termination to their last known address as the same would be futile, for the no longer reside there anymore.
Due to this, the spouses claim that there was a transgression to their right to notice of hearing. The Labor Arbiter ruled in favor
of the spouses and ordered that they be paid their corresponding money claims. On appeal, the NLRC reversed the Labor Arbiter
finding that the Agabon spouses were indeed guilty of abandonment. The CA further modified both prior decisions rendered
ruling that there was abandonment but money claims were in order.
ISSUE: WON the Agabon spouses were illegally dismisses
WON a violation of the procedural requirements is a violation of the due process; consequences.
HELD:
After hearing the cases in due course, the court held that the dismissal was valid being one of the just causes allowed by the
labor code. Under Art 282 of the LC, gross and habitual neglect by the employee of his duty including unjustified abandonment
of work, is one of the just causes for termination of an employees services. In order to establish the existence of such cause, it
must be proved that there was an unjustified failure of the employee charged to report for work and that such manifests a clear
intention to sever the existing employer-employee relationship. In the case at bar, the Agabon spouses were frequently absent
from work for having performed installation work for another company despite prior warning given by Riviera. To the courts
mind, such a situation clearly establishes an intention to renounce their employment relationship with Riviera, which in turn
completes the elements of abandonment.
On the other hand, while the employer has the right to expect good performance, diligence, good conduct and loyalty from
its employees, it has also the duty to provide for just compensation and to observe the requisite procedures of notice and hearing
in the termination of his employees. Under the rules, the employer is required to furnish the employee with a written notice
specifying the grounds for termination and giving him the opportunity to be heard. Accordingly, a hearing should also be

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conducted in order for the employee to be given the opportunity to respond to charges against him and rebut the evidence
presented against him. After such proceedings, if the employer still wished to terminate the employee, it shall serve a written
notice of termination indicating the grounds that have been established to justify his termination.
To reiterate the ruling, the dismissal was valid but Riviera should pay nominal damages to the Agabons in vindication of the
latter for violating their right to notice and hearing. The penalty imposed is usually in the nature of an indemnification, the
amount of which dependent on the facts of each case, including the nature and gravity of the offense.

JAKA FOOD PROCESSING CORPORATION v. PACOT

G.R. No. 151378; March 28, 2005
On August 29, 1997, respondents services were terminated by JAKA Foods Processing Corp due to dire financial loses. The
requirements set forth under Art 283 of the Labor Code were however not complied with. Neither employees nor the DOLE
received a written notice one month before the intended date of termination. Consequently, complaints for illegal dismissal,
underpayment of wages and non-payment of service incentive leave as well as 13 th month pay were filed against the petitioner
company and its HRD Manager.
ISSUE: What are the legal implications of non-compliance of the notice requirement under the Labor Code?
HELD:
Where the dismissal is for a just or authorized cause, the lack of statutory due process should not nullify the dismissal, or
render it illegal or ineffectual. The employer however should indemnify the employee for violation of his statutory rights. If the
dismissal is based on just causes under Art 282 of the LC but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because after all, the dismissal is imputable to the employee himself. If the
dismissal is based on authorized causes under Art 283 of the LC but the employer failed to comply with the twin notice
requirement, the sanction to be imposed upon him should be stiffer because the dismissal process was initiated by the employers
exercise of his management prerogative.
In the case at bar, it is established that there was a ground for employees dismissal, i.e. retrenchment. It is likewise
undisputed that JAKA failed to comply with the notice requirement thus the court resolved to grant indemnity in the amount of
P50, 000. The rule therefore, is that in all cases of business closure, the affected employee is entitled to separation pay. This is
consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights, as well
as its welfare. The only exception to this rule is when the closure of the business or cessation of its operations is due to serious
business losses or financial reverses duly proved.
INDUSTRIAL TIMBER CORPORATION v. ABABON
G.R. No. 164518; March 30, 2006
After leasing plywood plant from Industrial Plywood Group Corp, ITC commenced plant operations and hired 387 workers.
On March 1990, it notified both its employees and the DOLE that it will undergo a no plant operation due to lack of raw
materials and will resume as soon as longs will be available for milling. On August 1990, IPGC and ITCs contract of lease
expired with the former refusing to renew the same. Subsequent final notices of the closure or cessation of business operations
were issued prompting Vergilio Ababon et al to file a complaint for illegal dismissal, ULP and damages. Among others, he alleged
that such cessation of business operations was intended to bust the union and that IPGC and ITC are the same entity being
controlled by the same owner.
ISSUE: WON the employees were illegally dismissed due to business closure.
WON employees are entitled to separation pay, back wages and other monetary awards.
HELD:
The right to close the operation of the establishment is one of the authorized causes in terminating employment of workers,
the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination embodied
in the LC. A partial or total closure of operation of establishment may either be due to serious business losses or otherwise. Under
the former, the employer must sufficiently and convincingly prove its allegation of substantial losses. Under the latter, the
employer is required to serve notice to the DOLE and its employees at least one month before the intended date of termination,

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the cessation must be bona fide in character, and it must likewise pay a termination pay amounting to one month pay or at least
one-half month pay for every year of service, whichever is higher.
Having established that ITCs closure was done in good faith, the employees could therefore not have been illegally dismissed
thus, not entitled to back wages. They are still however entitled to receive separation pay mandated under the law. Moreover, the
employees are also entitled to a reasonable award of P50,000 for nominal damages caused by ITCs non-compliance with the
notice requirement to be filed with the DOLE. The court found ITCs notice to DOLE insufficient as it only embodied the
intention to suspend business operations but not closure. Where the dismissal is based on an authorized cause under Art 283 of
the LC but the employer failed to comply with the notice requirement, the sanction should be stiff as the employer initiated the
dismissal process.

GLOBE-MACKAY CABLE AND RADIO CORPORATION v. NLRC

G.R. No. 82511; March 3, 1992
Acting on reports that some of its expensive equipment and spare parts were missing, GMCR conducted an investigation on
Saldivar, the manager for technical operations support. He was also investigated over the report that he formed apartnership with
Yambao, a supplier of GMCR.
Another employee, Salazar, was also under investigation because she signed as a witness to the Articles of Partnership
between Yambao and Saldivar. She shared with Saldivar a private apartment where a GMCR-owned airconditioning unit was
found. Salazar, being closely associated with Saldivar, was placed under preventive suspension, an action that prompted Salazar to
file a complaint.
HELD: On the matter of preventive suspension, we find for petitioner GMCR.
The findings of the auditor, which pointed to Saldivars acts in conflict with his position as technical operations manager,
necessitated immediate and decisive action on any employee closely associated with Saldivar. The suspension of Salazar was
further impelled by the discovery of the missing Fedders airconditioning unit inside the apartment she shared with Saldivar.
Under such circumstances, preventive suspension was the proper remedial recourse available to the company pending Salazars
investigation. By itself, preventive suspension does not signify that the company has adjudged the employee guilty of the charges
she was asked to answer and explain. Such disciplinary measure was resorted to for the protection of the companys property
pending investigation of any alle3ged malfeasance or misfeasance committed by the employee. Thus it is not correct to conclude
that petitioner GMCR had violated Salazars right to due process when she was promptly suspended. If at all, the fault lay with her
when she ignored petitioners memorandum giving her ample opportunity to present her side to the management. Instead she
went directly to the Labor Department and filed her complaint for illegal suspension without giving her employer a chance to
evaluate her side of the controversy.
While we agree with the propriety of Salazars preventive suspension, we hold that her eventual separation from employment
was not for cause.
The Court held that Salazar was illegally dismissed for the reason that her dismissal does not constitute any of the just causes
or authorized causes as enumerated by law. Therefore Salazar is entitled to reinstatement and payment of backwages. The
principle of strained relations cannot be applied indiscriminately otherwise reinstatement can never be possible simply because
some hostility is invariably engendered between the parties as a result of litigation. Besides, no strained relations should arise from
a valid and legal act of asserting ones right; otherwise, an employee who shall assert his right could be easily separated from the
service, by merely paying his separation pay on the pretext that his relationship with his employer has already become strained. In
this case, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a
position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee.
DANDY V. QUIJANO VS. G.A. BARTOLABAC AND A.R. QUIMPO
ADM. CASE NO. 5649; JANUARY 27, 2006
Complainant relates that he filed with Labor Arbiter Bartolabac a motion for execution on December 8, 1998 but despite the
final resolution of his case, Bartolabac issued an order that in effect changed the tenor of the final judgment. While the decision of
the Supreme Court had mandated complainants reinstatement, Bartolabac instead awarded separation pay and backwages and
separation pay.
For his part, commissioner Quimpo alleges that his inclusion in the present administrative case was due to his participation in
disposing of the corporations appeal on the issue of complainants reinstatement as self-service attendant. He asserts that by law,
the commissioner has exclusive appellate jurisdiction to hear and decide all decisions, awards or orders rendered by the labor
arbiter.

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The court referred this case to Integrated bar of the Philippines (IBP) for investigation, report and recommendation. On 6
May 2003, the IBP submitted its resolution recommending dismissal of the complaint against respondents.
RULING: The Court is unyielding in its adjudication that complaint must be reinstated to his former position as warehouse or to
a substantially equivalent position. This was stated in its decision dated 8 July 1988, reiterated in the resolution dated 5 July 1999,
and again stressed in the resolution, it was particularly expressed that:
Indeed, private respondents [Mercury Drug Corporation] contention, as erroneously upheld by the labor arbiter, that there is
no substantially equivalent position for petitioners reinstatement has been categorically discounted by this court. We took judicial
notice of the fact that private respondent mercury drug corporation operates nationwide and has numerous branches all over the
Philippines. Petitioner, as warehousemen occupied a clerical/rank and file position in said company and we find it highly
inconceivable that no other substantially equivalent position exists to effects his reinstatement.
Clearly, the court is unwillingly to accept the corporation and respondent labor arbiters reason that reinstatement is no
longer feasible because the position of warehousemen had already been abolished and there is no substantially equivalent position
in the corporation.
Both respondent labor arbiter and commissioner do not have any latitude to depart from the courts ruling. The decision in
G.R No. 126561 is final and executor and may no longer be amended. It is incumbent upon respondents to order the execution
of the judgment and implement the same to the letter. Respondents have no discretion on this matter, much less any authority to
change the order of the court. The acts of respondents cannot be regarded as acceptable discretionary performance of their
function as labor arbiter and commissioner of the NLRC, respectively, for they do not have any discretion in executing a final
decision. The implementation of the final and executory decision is mandatory.
TRIAD SECURITY & ALLIED SERVICES, INC. v. SILVESTRE ORTEGA, JR.
G.R. No. 160871; February 6, 2006

Respondents filed a complaint against petitioners and a certain Ret. B/Gen. Javier D. Carbonell for
underpayment/nonpayment of salaries, overtime pay, premium pay for holiday and rest day, service incentive leave pay, holiday
pay, and attorneys fees. The complaint was amended on 20 April 1999 to include the charges of illegal dismissal, illegal
deductions, and underpayment/nonpayment of allowance, separation pay, and claims for 13th month pay, moral and exemplary
damages as well as night shift differential.
RULING: In this case, the labor arbiter ordered the reinstatement of respondents and the payment of their backwages until their
actual reinstatement and in case reinstatement is no longer viable, the payment of separation pay it bears emphasizing that the
law [Article 223, Labor code] mandates the prompt reinstatement of the dismissal or separated employee. This, the petitioners
failed to heed. They are now before this court insisting that they have fully disposed of their legal obligation to respondents when
they paid the latters separation pay. We do not agree.
It should be pointed out that an order of reinstatement by the labor arbiter is not the same as actual reinstatement of
dismissal or separated employee. Thus, until the employer continuously fails to actually implement the reinstatement aspect of the
decision of the labor arbiter, their obligation to respondents, insofar as accrued back wages and other benefits are concerned,
continue to accumulate. It is only when the illegally dismissed employees receive the separation pay that it could be claimed with
certainly that the employer-employee relationship has formally ceased thereby precluding the possibility of reinstatement. In the
meantime, the illegally dismissed employees entitlement to back wages, 13 th month pay, and other benefits subsists. Until the
payment of separation pay is carried out, the employer should not be allowed to remain unpunished for the delay, if not outright
refusal, to immediately execute the reinstatement aspect of the labor arbiters decision.
The records of this case are bereft of any indication that respondents were actually reinstated to their previous job or to the
company payroll. Instead, they were given, albeit with much resistance from petitioners, the full amount of the money judgment
stated in the 28 February 2000 decision of the labor arbiter, inclusive of separation pay, more than two years the labor arbiter had
issued his decision on the illegal dismissal case filled by respondents. As the law clearly requires petitioners to pay respondents
back wages until actual reinstatement, we resolve that petitioners are still liable to responds for accrued back wages and other
benefits from 25 February 2000 until 16 December 2002, the day before arbiter ordered the release to respondents of P603,794.77
representing the full satisfaction of 28 February 2000 judgment, including separation pay.
ALEJANDRO ROQUERO v. PHILIPPINES AIRLINES, INC.
G.R. NO. 152329; APRIL 22, 2003
R and P, equipment mechanics of the Philippines Airlines, were caught red-handed possessing and using shabu in a raid
conducted by PAL and NARCOM security personnel. They were charged administratively and placed under preventive
suspension. R and P assailed their arrest and asserted that they did not voluntarily indulge in the said act but were instigated
by certain PAL personnel. Dismissed by PAL R and P filed a case for illegal dismissal.

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The labor arbiter found both parties at fault- PAL for applying means to entice the complainants into committing the
infraction and the complainants for giving in to the temptation and eventually indulging in the prohibited activity In other words
the dismissal was valid but the labor arbiter awarded separation pay and attorneys fees to the complainants.
While the case was on appeal with the NLRC the complainants were acquitted by the regional trial court in the criminal case
on the ground of instigation
The NLRC ruled that the dismissal was invalid as it likewise found PAL guilty of instigation. It ordered reinstatement but
without back wages. Complainants did not appeal from the decision but filled a motion for a writ of execution of the order of
reinstatement. The labor arbiter granted the motion but PAL refused to execute the said order on the ground that they had filed a
petition for review which was referred to the court of appeals.
The CA however reversed the decision of the NLRC and reinstated that of the labor arbiter insofar as it upheld the dismissal
of R (P withdrew from the case)
ISSUES:
1. Whether the instigated employee shall be solely responsible for an action arising from the instigation by the employer.
2. Whether the employees reinstated can be halted a petition filed in higher courts without any restraining order or
preliminary injunction having been ordered in the meantime
RULING:R is guilty of serious misconduct for possessing and using shabu. He violated chapter 2, article VII section 4 of the
PAL code of discipline which states:
Any employee who while on company premises or on duty takes or is under the influence of prohibited or controlled drugs
or hallucinogenic substantial or narcotics shall be dismissed
Even if R was instigated to take drugs he has no right to be reinstated to his position. He took the drug fully knowing that
he was on duty and more so that it is prohibited by company rules. Instigation is only a defense against criminal liability. It cannot
be used as used as a shield against dismissal from employment especially when the position involves the safety of human lives.
Petitioner cannot complain he was denied procedural due process. PAL complied with the twin notice requirement before
dismissing the petitioner.
Article 223 (3rd paragraph) of the labor code as amended by section 12 of republic Act. No. 6715 and section 2 of the NLRC
interim rules on appeals under R.A. No. 6715 amending the labor code provide that an order of reinstatement by the labor arbiter
is immediately executory even pending appeal.
The unjustified refusal of the employer to reinstatement a dismissed employee entitles him to payment of his salaries effective
from the time the employer failed to reinstate him despite the insurance of a writ of execution. Unless there is a restraining
ordered issued it is ministerial upon the labor arbiter to implement the order of reinstatement in the case at bar no restraining
order was granted. Thus it was mandatory on PAL to actually reinstate him in the payroll having failed to do so PAL must pay R
the salary he entitled to as if he was reinstated from the time of the decision of the NLRC until finality of the decision of this
(Supreme) court.
JUANITO GARCIA AND ALBERTO DUMAGO VS. PHILIPPINE AIRLINES, INC.
G.R. NO. 164856; JANUARY 20, 2009
The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners3 after they were
allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL
Technical Centers Toolroom Section on July 24, 1995. After due notice, PAL dismissed petitioners on October 9, 1995 for
transgressing the PAL Code of Discipline prompting them to file a complaint for illegal dismissal and damages which was, by
Decision of January 11, 1999, resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia, immediately comply
with the reinstatement aspect of the decision.
RULING: The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes the
basis for implementing the reinstatement aspect of a labor arbiters decision. In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory,
pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely reinstated in the payroll. Even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated
during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. In other words, a
dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement and it is mandatory on the employer to comply therewith.

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The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of
appeal until reversal by the higher court. It settles the view that the Labor Arbiter's order of reinstatement is immediately
executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their
dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the
employees salaries.

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GRIEVANCE MACHINERIES AND VOLUNTARY ARBITRATION

Continental Steel Manufacturing Corporation, Vs. Voluntary Arbitrator Allan S. Montao Et Al
Facts:

Hortillano, an employee of (Continental Steel) filed a claim for Paternity Leave, Bereavement Leave and Death and
Accident Insurance for dependent, pursuant to the (CBA) concluded between Continental and the Union which states The
Company agrees to grant a bereavement leave with pay to any employee in case of death of the employees legitimate dependent
(parents, spouse, children, brothers and sisters).
The claim was based on the death of Hortillanos unborn child. Hortillanos wife, had a premature delivery while she was
in the 38th week of pregnancy.
Atty. Montao, the appointed Accredited Voluntary Arbitrator, issued a Resolution ruling that Hortillano was entitled to
bereavement leave with pay and death benefits.
Atty. Montao found that there was no dispute that the death of an employees legitimate dependent occurred. The fetus
had the right to be supported by the parents from the very moment he/she was conceived. The fetus had to rely on another for
support; he/she could not have existed or sustained himself/herself without the power or aid of someone else, specifically,
his/her mother. Therefore, the fetus was already a dependent, although he/she died during the labor or delivery. There was also
no question that Hortillano and his wife were lawfully married, making their dependent, unborn child, legitimate.
Continental Steel claimed that Atty. Montao erred in granting Hortillanos claims for bereavement leave with pay and
other death benefits because no death of an employees dependent had occurred. The death of a fetus, at whatever stage of
pregnancy, was excluded from the coverage of the CBA since what was contemplated by the CBA was the death of a legal person,
and not that of a fetus, which did not acquire any juridical personality. Continental Steel pointed out that its contention was
bolstered by the fact that the term death was qualified by the phrase legitimate dependent. It asserted that the status of a child
could only be determined upon said childs birth, otherwise, no such appellation can be had. Hence, the conditions sine qua non
for Hortillanos entitlement to bereavement leave and other death benefits under the CBA were lacking.
Issue: whether or not Hortillano was entitled to bereavement leave and other death benefits
Ruling : Yes
The SC sustained the ruling of VA. While the Civil Code expressly provides that civil personality may be extinguished by
death, it does not explicitly state that only those who have acquired juridical personality could die. Even a child inside the womb
already has life.
No less than the Constitution recognizes the life of the unborn from conception, that the State must protect equally with the life
of the mother. If the unborn already has life, then the cessation thereof even prior to the child being delivered, qualifies as death.
Likewise, the unborn child can be considered a dependent under the CBA. As Continental Steel itself defines, a
dependent is "one who relies on another for support; one not able to exist or sustain oneself without the power or aid of
someone else." Under said general definition, even an unborn child is a dependent of its parents. Hortillanos child could not have
reached 38-39 weeks of its gestational life without depending upon its mother, Hortillanos wife, for sustenance. Additionally, it is
explicit in the CBA provisions in question that the dependent may be the parent, spouse, or child of a married employee; or the
parent, brother, or sister of a single employee. The CBA did not provide a qualification for the child dependent, such that the
child must have been born or must have acquired civil personality, as Continental Steel avers. Without such qualification, then
child shall be understood in its more general sense, which includes the unborn fetus in the mothers womb. Hence, the employee
is entitled to the leave with pay and the insurance benefit under the CBA because of death of a legitimate dependent child.
Sanyo Philippines Workers Union-Psslu Local Vs.Hon. Potenciano S. Canizares, In His Capacity As Labor Arbiter, Et
Al
Facts: 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.
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to Sanyo recommending the
dismissal of the some non-union workers allegedly because: 1) they were engaged and were still engaging in anti-union activities;

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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
Also recommended for dismissal were the union members who allegedly joined, supported and sympathized with a
minority union, KAMAO.
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. The dismissed employees filed a complaint 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.
Issue: whether or not labor arbiter has jurisdiction to hear and decide over the illegal dismissal complaints
Ruling: 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.
Rosario Maneja Vs. National Labor Relations Commission And Manila Midtown Hotel
Facts: Maneja worked for Manila Midtown Hotel as a telephone operator. She was also a member of the Union (NUWHRAIN)
with a CBA. A fellow telephone operator named Lelong received a Request for Long Distance Call (RLDC) and a deposit from a
guest named Hiota Ieda. The call was unanswered and the P500 deposit was forwarded to the cashier. Ieda made a second call
and second P500 deposit but the call was also unanswered. Loleng passed on the RLDC to Maneja for follow up. Maneja
monitored the call.
A hotel cashier subsequently inquired about the P1000 deposit made by Ieda. After a search, Loleng found the first
deposit in the guest folio and the second in the folder for cancelled calls. Maneja saw that the second RLDC was tamped with the
wrong date, she changed it from Feb. 15 to Feb 13, 1990. Loleng then delivered the RLDC and money to the cashier.The chief
telephone operator issued a memorandum directing Maneja and Loleng to explain the February 15 incident. The CTO
recommended they be subject to disciplinary action for forging falsifying official documents and culpable carelessness for failure
to follow specific instruction or established procedure. Maneja was served with a notice of dismissal, and wrote instead under
protest.
Petitioner filed for illegal dismissal before the labor arbiter, who held that petitioner was illegally dismissed, however he
held that the complaint was on its face within the juridical ambit of the grievance procedure under the CBA and if unresolved one
for proper voluntary arbitration. The Hotel appealed on the ground of lack of jurisdiction as the case should have been filed with
the proper grievance procedure or voluntary arbitration. The NLRC affirmed the decision. Maneja contended that Article
217(a)(2) and (c) relied upon by respondent. NLRC in divesting the labor arbiter of jurisdiction over the illegal dismissal case,
should be read in conjunction with Article 261 [14] of the Labor Code. It is the view of petitioner that termination cases arising

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from the interpretation or enforcement of company personnel policies pertaining to violations of Offenses Subject to Disciplinary
Actions (OSDA), are under the jurisdiction of the voluntary arbitrator only if these are unresolved in the plant-level grievance
machinery. Petitioner insists that her termination is not an unresolved grievance as there has been no grievance meeting between
the NUWHRAIN union and the management. The reason for this, petitioner adds, is that it has been a company practice that
termination cases are not anymore referred to the grievance machinery but directly to the labor arbiter. The Hotel argued that the
LA should have dismissed the illegal dismissal case outright after finding it was within the jurisdictional ambit of the grievance
procedure.
Issue: Whether or not the LA has jurisdiction over the illegal dismissal case.
Ruling: Termination cases fall under the original and exclusive jurisdiction of the Labor Arbiter. It should be noted, however,
that in the opening paragraph there appears the phrase: Except as otherwise provided under this Code x x x. It is paragraph (c)
of the same Article which respondent Commission has erroneously interpreted as giving the voluntary arbitrator jurisdiction over
the illegal dismissal case.
However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code which 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. Note the phrase unresolved grievances. In the case at bar, the termination of petitioner is not an
unresolved grievance.
It is to be stressed that under Article 260 of the Labor Code, which explains the function of the grievance machinery and
voluntary arbitrator, (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. Article 260 further provides that the parties to a CBA shall name
or designate their respective representative to the grievance machinery and if the grievance is unsettled in that level, it shall
automatically be referred to the voluntary arbitrators designated in advance by the parties to a CBA of the union and the
company. It can thus be deduced that only disputes involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators.
In the case at bar, the union does not come into the picture, not having objected or voiced any dissent to the dismissal
of the herein petitioner. The reason for this, according to petitioner is that the practice in said Hotel in cases of termination is
that the latter cases are not referred anymore to the grievance committee; and that the terminated employee who wishes to
question the legality of his termination usually goes to the Labor Arbiter for arbitration, whether the termination arose from the
interpretation or enforcement of the company personnel policies or otherwise.
As we ruled in Sanyo, Since there has been an actual termination, the matter falls within the jurisdiction of the Labor Arbiter.
The aforequoted doctrine is applicable foursquare in petitioners case. The dismissal of the petitioner does not call for the
interpretation or enforcement of company personnel policies but is a termination dispute which comes under the jurisdiction of
the Labor Arbiter.
UNION OF NESTLE WORKERS CAGAYAN DE ORO vs. NESTLE PHILPPINES, INC.,
Facts: (Nestle) adopted the Drug Abuse Policy. Pursuant to this policy, the management shall conduct simultaneous drug tests on
all employees from different factories and plants. Drug testing commenced at the Lipa City factory, then followed by the other
factories and plants. However, there was resistance to the policy in the Nestle Cagayan de Oro factory. Out of 496 employees,
only 141 or 28.43% submitted themselves to drug testing. Union of Nestle Workers Cagayan de Oro Factory and its officers,
petitioners, wrote Nestle challenging the implementation of the policy and branding it as a mere subterfuge to defeat the
employees constitutional rights. petitioners filed with (RTC)Cagayan de Oro City, a complaint for injunction with prayer for the
issuance of a temporary restraining order against Nestle. RTC issued a temporary restraining order enjoining respondents from
proceeding with the drug test.
Forthwith, they filed a motion to dismiss the complaint on the ground that the RTC has no jurisdiction over the case as
it involves a labor dispute or enforcement of a company personnel policy cognizable by the Voluntary Arbitrator or Panel of
Voluntary Arbitrators. Petitioners filed their opposition, contending that the RTC has jurisdiction since the complaint raises
purely constitutional and legal issues.However, based on the pleadings and pronouncements of the parties, a close scrutiny of the
issues would actually reveal that the main issue boils down to a labor dispute.
Issue: whether or not the companys drug abuse policy is within the jurisdiction of VA
RULING: Yes

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The company implemented a new drug abuse policy whereby all its employees should undergo a drug test under pain of
penalty for refusal. The employees who are the union members questioned the implementation alleging that: can they be
compelled to undergo the drug test even against their will, which violates their right against self-incrimination? At this point, the
issue seems constitutional. But if we go further and ask the reason for their refusal to undergo the drug test, the answer is because
the policy was formulated and implemented without proper consultation with the union members. So that, the issue here boils
down to a labor dispute between an employer and employees. Petitioners are not per se questioning whether or not the person
will undergo the drug test or the constitutionality or legality of the Drug Abuse Policy. They are assailing the manner by which
respondents are implementing the policy. According to them, it is arbitrary in character because: (1) the employees were not
consulted prior to its implementation; (2) the policy is punitive inasmuch as an employee who refuses to abide with the policy may
be dismissed from the service; and (3) such implementation is subject to limitations provided by law which were disregarded by
the management.
Respondent Nestles Drug Abuse Policy states that (i)llegal drugs and use of regulated drugs beyond the medically
prescribed limits are prohibited in the workplace. Illegal drug use puts at risk the integrity of Nestle operations and the safety of
our products. It is detrimental to the health, safety and work-performance of employees and is harmful to the welfare of families
and the surrounding community.[6 This pronouncement is a guiding principle adopted by Nestle to safeguard its employees
welfare and ensure their efficiency and well-being. To our minds, this is a company personnel policy.
Considering that the Drug Abuse Policy is a company personnel policy, it is the Voluntary Arbitrators or Panel of
Voluntary Arbitrators, not the RTC, which exercises jurisdiction over this case. Article 261 of the Labor Code, as amended,
pertinently provides:
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
Sime Darby Pilipinas Inc vs Magsalin
Facts: Petitioner Sime Darby and private respondent SDEA executed a Collective Bargaining Agreement (CBA) providing,
among others, that:. A performance bonus shall be granted, the amount of which [is] to be determined by the Company
depending on the return of [sic] capital investment as reflected in the annual financial statement. On 31 July 1989, the Sime Darby
Salaried Employees Association- ALU (SDSEA-ALU) wrote petitioner demanding the implementation of a provision Identical to
the above contained in their own CBA with petitioner. On 1 August 1989, the parties were called to a conciliation meeting and in
such meeting, both parties agreed to submit their dispute to voluntary arbitration. Their agreement to arbitrate stated, among
other things, that they were "submitting the issue of performance bonus to voluntary arbitration" and that "the decision/award of
the voluntary arbitrator shall be respected and implemented by the parties as final and executory, in accordance with the law."
However, before petitioner could submit its Reply to the union's Position Paper, the Voluntary Arbitrator on 17 August
1989 issued an award which declared respondent union entitled to a performance bonus equivalent to 75% of the monthly basic
pay of its members. In that award, the Voluntary Arbitrator held that a reading of the CBA provision on the performance bonus
would show that said provision was mandatory hence the only issue to be resolved was the amount of performance bonus. The
Voluntary Arbitrator further stated that petitioner company's financial statements as of 30 June 1988 revealed retained earnings in
the amount of P 324,370,372.32. From the foregoing, the Voluntary Arbitrator concluded that petitioner company could well
afford to give members of respondent union a substantial performance bonus.
Petitioner mainly argues that respondent Voluntary Arbitrator gravely abused his discretion in holding that the grant of
performance bonus was mandatory and that the only issue before him was the amount of the bonus. It is contended that since a
performance bonus is a "gift" based on the company's performance, the same is not justified when the company's performance
has been poor. Petitioner also argues that even if a performance bonus were justified, the Voluntary Arbitrator gravely abused his
discretion in giving an award of 75% of the monthly basic rate without any evidence of the basis used in arriving at such an award.
It is insisted that under the relevant CBA provision, the company determines the amount of the bonus if the same be justified.
Issue: Whether or not the Voluntary Arbitrator acted with grave abuse of discretion or without or in excess of jurisdiction in
passing upon both the question of whether or not a performance bonus is to be granted by petitioner Sime Darby to the private
respondents and the further question of the amount thereof
Ruling: In respect of the issue, petitioner Sime Darby urges that the Arbitrator gravely abused his discretion in passing upon not
only the question of whether or not a performance bonus is to be granted but also, in the affirmative case, the matter of the
amount thereof. The position of petitioner, to the extent we can understand it, is that the Arbitrator was authorized to determine
only the question of whether or not a performance bonus was to be granted, the second question being reserved for
determination by the employer Sime Darby. We noted earlier that in their agreement to arbitrate, the parties submitted to the

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Voluntary Arbitrator "the issue of performance bonus." The language of the agreement to arbitrate may be seen to be quite
cryptic. There is no indication at all that the parties to the arbitration agreement regarded "the issue of performance bonus" as a
two-tiered issue, only one tier of which was being submitted to arbitration. Possibly, Sime Darby's counsel considered that issue as
having dual aspects and intended in his own mind to submit only one of those aspects to the Arbitrator; if he did, however, he
failed to reflect his thinking and intent in the arbitration agreement.
It is thus essential to stress that 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.
Nippon Paint Union vs CA
Facts: Petitioner Nippon Paint Employees Union (NPEU) is a labor union duly organized under the laws of the Philippines.
Respondent Nippon Paint Phils., Inc. (NPPI) is a corporation duly organized under the laws of the Philippines engaged in the
manufacture and sale of car paint.
NPEU and NPPI were engaged in collective bargaining negotiations. These negotiations ended in a deadlock, prompting
NPEU to file a notice of strike with the National Conciliation and Mediation Board. While the said labor dispute was pending,
NPEU Secretary Adonis Guansing was interviewed by a reporter of the Philippine Daily Inquirer (PDI). The interview was
subsequently published in the PDI.
On 2 April 2002, NPPI issued a memorandum to Mr. Guansing, ordering him to explain why he should not be
penalized for violation of company rules and regulations, which state: b) Engaging in any activity which is conflict (sic) with the
Companys interests, either directly or indirectly.
After the submission of Mr. Guansings reply and unsuccessful efforts by NPPI to organize a conference between them,
the latter issued a memorandum on 16 May 2002 terminating the formers employment effective 20 May 2002. Thereafter, Mr.
Guansing, represented by NPEU, filed a complaint for illegal dismissal with the National Labor Relations Commission. Both
parties agreed to submit the dispute to voluntary arbitration. On 18 December 2002, Voluntary Arbitrator Bernardino Volante
promulgated a decision in favor of NPPI declaring Mr. Guansings dismissal as legally effected but awarding P40,000.00 to the
latter in the name of compassionate justice. NPEU, acting on behalf of Mr. Guansing, challenged the said decision in the Court
of Appeals by filing a Rule 65 petition for certiorari on 14 April 2003. The Court of Appeals dismissed NPEUs petition in its
decision dated 25 April 2003. Hence, the present petition for certiorari.
Issue: Whether the Court of Appeals properly dismissed its petition for certiorari under Rule 65 for being an improper mode of
appeal.
Ruling: In the case of Luzon Development Bank vs. Association of Luzon Development Bank Employees, this Court ruled that
a voluntary arbitrator partakes of the nature of a quasi-judicial instrumentality and is within the ambit of Section 9(3) of the
Judiciary Reorganization Act, as amended, which provides:
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial
Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission,
the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of
the fourth paragraph of Section 17 of the Judiciary Act of 1948.
As such, the decisions of a voluntary arbitrator fall within the exclusive appellate jurisdiction of the Court of Appeals.
It is elementary in remedial law that the use of an erroneous mode of appeal is cause for dismissal of the petition for
certiorari and it has been repeatedly stressed that a petition for certiorari is not a substitute for a lost appeal. This is due to the
nature of a Rule 65 petition for certiorari which lies only where there is no appeal, and no plain, speedy and adequate remedy
in the ordinary course of law. As previously ruled by this Court:
x x x We have time and again reminded members of the bench and bar that a special civil action for certiorari under
Rule 65 lies only when "there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law." Certiorari cannot
be allowed when a party to a case fails to appeal a judgment despite the availability of that remedy, certiorari not being a substitute
for lost appeal. The remedies of appeal and certiorari are mutually exclusive and not alternative or successive.
The fact that the NPEU used the Rule 65 modality as a substitute for a lost appeal is made plainly manifest by: a) its
filing the said petition 45 days after the expiration of the 15-day reglementary period for filing a Rule 43 appeal; and b) its petition
which makes specious allegations of grave abuse of discretion but asserts the failure of the voluntary arbitrator to properly
appreciate facts and conclusions of law.

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This salutary rule has been disregarded on occasion by this Court in instances where valid and compelling circumstances
warrant. However, NPEU has not provided this Court any compelling reason why it must disregard the mandate of the Rules of
Court.
Samahan ng mga Manggagawa sa Hyatt vs Bacungan
Facts: In 1995 and 1996, Mario Dacles and Teodoro Valencia respectively assumed their duties as glass cleaners at Hyatt Regency
Manila (respondent Hyatt), pursuant to the cleaning service contract4 executed between respondent Hyatt and City Service
Corporation (CSC). Meanwhile, in April 1998, respondent Hyatt hired Amelia Dalmacio and Renato Dazo on a casual basis as
florist/sales clerk and helper/driver, respectively. After their contracts expired on 30 August 1998, Dalmacio and Dazo continued
reporting for work. On 16 September 1998, Dalamcio and Dazo signed another employment contract with respondent Hyatt.6
During the Labor Management Committee Meeting (LMC), petitioner Samahan ng mga Manggagawa sa HyattNUWHRAIN-APL (petitioner union), a legitimate labor organization composed of the rank-and-file employees of respondent
Hyatt, questioned the status as non-regular employees of Dacles, Valencia, Dalmacio and Dazo (Dacles, et al.).7
On 19 April 1999, petitioner union and respondent Hyatt agreed to submit the matter for resolution through the
grievance machinery as provided for in their collective bargaining agreement (CBA). Petitioner union claimed that Dacles, et al.
were regular employees on account of the nature of their functions as well as the length of their service. On the other hand,
respondent Hotel maintained that Dalmacio and Dazo were mere project employees whose employments were co-terminus with
the existence of the flower shop outlet and that Dacles and Valencia were employees of CSC, an independent contractor. On 16
September 1999, respondent Hyatt dismissed Dacles and Valencia and disallowed them from reporting to work on the ground
that the service contract between respondent Hyatt and CSC had been terminated.
Petitioner union and respondent Hyatt were unable to settle the dispute through the grievance procedure and, thus,
agreed to elevate the issue for voluntary arbitration. The parties selected Dean Froilan Bacungan as voluntary arbitrator. After the
exchange of responsive pleadings, the case was deemed submitted for resolution.
Petitioner union argues that the proper remedy to assail a decision of a voluntary arbitrator is a special civil action for
certiorari under Rule 65 of the Rules of Court and not an appeal via a petition for review under Rule 43. Petitioner unions theory
is based on the following ratiocinations: first, the decision of the voluntary arbitrator is similar to the decisions rendered by the
National Labor Relations Commission (NLRC) and the Secretary of Labor and Employment, which become final and executory
after ten (10) calendar days from receipt of notice, in that the Labor Code expressly disallows an appeal from their judgment or
final order; second, Section 2 of Rule 43, which exempts judgments or final orders issued under the Labor Code from an appeal
via Rule 43, should apply with equal force to decisions of labor voluntary arbitrators.
Issue: Whether or not court of appeals committed grievous error in ruling that the appropriate remedy for assailing the decision
of the respondent voluntary arbitrator is an appeal by petition for review under rule 43 and not a petition for certiorari under rule
65 of the 1997 rules of civil procedure
Ruling: The petition lacks merit.The question on the proper recourse to assail a decision of a voluntary arbitrator has already
been settled in Luzon Development Bank v. Association of Luzon Development Bank Employees,12 where the Court held that
the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in
line with the procedure outlines in Revised Administrative Circular No. 1-95 (now embodied in Rule 43 of the 1997 Rules of Civil
Procedure), just like those of the quasi-judicial agencies, boards and commissions enumerated therein, and consistent with the
original purpose to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities.
On some occasions, rules of procedure may be relaxed and on that basis the Court of Appeals could have treated the
petition for certiorari as a petition for review under Rule 43. However, as correctly pointed out by the Court of Appeals, the
petition was filed beyond the reglementary period for filing a petition for review under Rule 43. It is elementary in remedial law
that the use of an erroneous mode of appeal is a cause for dismissal of the petition for certiorari and it has been repeatedly
stressed that a petition for certiorari is not a substitute for a lost appeal.
In any event, the voluntary arbitrator did not commit any reversible error in ruling that Dacles and Valencia were
employees of CSC, an independent contractor, whose services may be terminated upon the expiration of the contract for cleaning
services between CSC and respondent Hyatt. There is no dispute that Dacles and Valencia performed services at respondent
Hyatt pursuant to the said contract. The Court affirms the ruling of the voluntary arbitrator that Dacles and Valencia cannot be
considered as employees of respondent Hyatt in the absence of evidence to prove that CSC had been engaged in labor-only
contracting.
WHEREFORE, the instant petition for review on certiorari is DENIED
United Kimberly-Clark Employees Union-PTGWO vs. Kimberly-Clark Philippines, Inc.

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Facts: The CBA of the parties provides:

Section 1. The Company agrees to employ, regardless of sex, the immediate member of the family of an employee provided qualified,
upon the employee's resignation, retirement, disability or death. In case of resignation, however, employment of an immediate
member of the family of an employee may be allowed provided the employee has rendered a service of ten (10) years and above and
the resignation is not a forced resignation. For the purpose of this section, the phrase "immediate member of the family of an
employee" shall refer to the employee's legitimate children and in default thereof to the employee's collateral relative within the third
civil degree. The recommendee of the retired/resigned employee shall, if qualified, be hired on probationary status.

Under this provision, some ex-employees recommended applicants who were only high school graduates and the
company hired some of them. In 1993, the provision was the subject of a Supreme Court interpretation in the case Kimberly
Clark vs. Loredo that a retired employee could recommend a nephew instead of a son or a daughter who was still a minor. The
Supreme Court decision also stated that the company was not obliged to unconditionally accept the recommendeee since the
latter must still meet the required employment standard therefore set by it. Because of this decision, the company formulated in
1995 the Guidelines on hiring qualifications or standards. Among them is the requirement that the recommendee should have
completed a two-year technical/vocational course or a 3rd year college education.
Objecting to the educational requirement in the Guidelines, the union requested that its implementation be deferred, to
which request the employer agreed. The union attempted to write into the CBA that high school education should be enough. But
two renegotiated CBAs were concluded and the questioned provision remained intact. When the company started to implement
the Guidelines, the union filed its complaint.

Issue: Whether or not respondent company is required to hire recommendees of retired/resigned, deceased or disabled
employees who possess the educational qualification standards for employees contained in the November 7, 1995 Guidelines
Ruling: We rule against petitioner.
By agreement of the parties, the implementation of the Guidelines was deferred until January 1, 1997, unless revoked or
amended by the 1997 CBA. Petitioner proposed that the practice of hiring recommendees of retired/resigned, deceased or
disabled employees who were union members, who were at least high school graduates, be included in their CBA, but respondent
did not agree. Hence, Article XX, Section 1 of the 1997 CBA of the parties remained intact. There was thus no more legal bar for
respondent to implement the November 7, 1995 Guidelines. By executing the 1997 CBA, in its present form, petitioner is bound
by the terms and conditions therein set forth.
In other words, the Court finds that respondent employer acted in accord with the CBA and the 19995 Guidelines. These, by
agreement of the parties, may be implemented by respondent after January 1, 1997.
Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines (SMTFM-UWP) vs. NLRC,
et. al.
Facts: The union charged the employer with ULP through bargaining in bad faith when the employer refused to implement
across-the-board the wage increases mandated by Wage Order Numbers 01 and 02. The union alleged that during the CBA
negotiation, the management panel committed itself to be an across-the-board implementation of government-mandated wage
increase. But nowhere does the CBA mention such alleged promise or commitment.
Issue: Whether or not an employer committed an unfair labor practice by bargaining in bad faith and discriminating against its
employees by its refusal to grant across-the-board increases to its employees
Ruling: The basic premise of this argument is definitely untenable. The court affirmed the dismissal of the unions complaint.
Through Justice Romero, the Supreme Court explains its ruling:
To start with, if there was indeed a promise or undertaking on the part of private respondent to obligate itself to grant an
automatic across-the-board wage increase, petitioner union should have requested or demanded that such "promise or
undertaking" be incorporated in the CBA. After all, petitioner union has the means under the law to compel private respondent to
incorporate this specific economic proposal in the CBA. It could have invoked Article 252 of the Labor Code defining "duty to
bargain," thus, the duty includes "executing a contract incorporating such agreements if requested by either party." Petitioner
union's assertion that it had insisted on the incorporation of the same proposal may have a factual basis considering the
allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that the duty to bargain "does
not compel any party to agree to a proposal or make any concession." Thus, petitioner union may not validly claim that the
proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally entered into with private respondent.
Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and the proponent
has no claim whatsoever to its implementation.
Hence, petitioner union's contention that the Minutes of the collective bargaining negotiation meeting forms part of the
entire agreement is pointless. The Minutes reflects the proceedings and discussions undertaken in the process of bargaining for

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worker benefits in the same way that the minutes of court proceedings show what transpired therein. At the negotiations, it is but
natural for both management and labor to adopt positions or make demands and offer proposals and counter-proposals.
However, nothing is considered final until the parties have reached an agreement. In fact, one of management's usual negotiation
strategies is to ". . . agree tentatively as you go along with the understanding that nothing is binding until the entire agreement is
reached." If indeed private respondent promised to continue with the practice of granting across-the-board salary increases
ordered by the government, such promise could only be demandable in law if incorporated in the CBA.
Moreover, by making such promise, private respondent may not be considered in bad faith or at the very least, resorting
to the scheme of feigning to undertake the negotiation proceedings through empty promises. As earlier stated, petitioner union
had, under the law, the right and the opportunity to insist on the foreseeable fulfillment of the private respondent's promise by
demanding its incorporation in the CBA. Because the proposal was never embodied in the CBA, the promise has remained just
that, a promise, the implementation of which cannot be validly demanded under the law.
Sundowner Development Corp. vs. Hon. F. Drilon, National Union of Workers in Hotel Restaurant and Allied
Industries (NUWHRAIN), et. al.
Facts: Hotel Mabuhay Inc., lessee of premises belonging to Syjuco Inc., was to be ejected for non-payment of rentals. To raise
the needed money to pay Syjuco and Mabuhay employees, Mabuhay asked Syjuco to find a buyer of its assets. Syjuco found
Sundowner Development Corp., a legally existing entity, bought Mabuhays assets and properties. NUWHRAIN, the union of
Mabuhay employees, demanded that the employees be retained by Sundowner.
Issue: Whether or not the purchaser of the assets of an employer corporation can be considered a successor employer of the
latter's employees
Ruling: No, the purchaser of the assets of an employer corporation cannot be considered a successor employer of the latter's
employees.
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. 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.
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." 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:
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;
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

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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 cannot be compelled to absorb the employees of Mabuhay and to pay them
backwages.
Apalisok vs. Radio Philippines Network, et. al.
Facts: Apalisok, a production chief for RPN station was asked to explain her allegedly hostile, arrogant, disrespectful and defiant
behavior towards her superior, the Station Manager. She gave her explanation the next day. After 15 days, she was dismissed. She
informed RPN that she waived her right to resolve her case through the grievance machinery as provided in the CBA; instead, she
filed an illegal dismissal complaint with the NLRC which referred the case to the NCMB.
By a Submission Agreement, the employee and the employer agreed to submit the case to a Voluntary Arbitrator. The
VA resolved the case in the employees favor.
On appeal, the CA ruled in favor of RPN because it considered the waiver of petitioner to file her complaint before the
grievance machinery as a relinquishment of her right to avail herself of the aid of the Voluntary Arbitrator. The CA said the
waiver had the effect of resolving an otherwise unresolved grievance; thus the decision of the Voluntary Arbitrator should be set
aside for lack of jurisdiction.
Issue: Whether or not the voluntary arbitrator had jurisdiction over the parties' controversy
Ruling: Yes. The voluntary arbitrator had jurisdiction over the parties' controversy.
Article 262 of the Labor Code provides that upon agreement of the parties, the voluntary arbitrator can hear and decide all other
labor disputes.
Contrary to the finding of the Court of Appeals, voluntary arbitration as a mode of settling the dispute was not forced
upon respondents. Both parties indeed agreed to submit the issue of validity of the dismissal of petitioner to the jurisdiction of
the voluntary arbitrator by the Submission Agreement duly signed by their respective counsels.
The employees waiver of her option to submit her case to grievance machinery did not amount to relinquishing her right to avail
herself of voluntary arbitration.

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AUTHORIZED CAUSES FOR TERMINATION

ISMAEL V. SANTOS v. COURT OF APPEALS, PEPSI COLA PRODUCTS PHILIPPINES INC
G.R. No. 141947; July 5, 2001
Creation of new positions with functions related or similar to those of the Abolished Positions does not necessarily invalidate the declaration of
Redundancy.
In a letter dated December 1994, PEPSI informed its employees that due to poor performance of its Metro Manila Sales
Operations it would restructure and streamline certain physical and sales distribution systems to improve its warehousing
efficiency. Certain positions, including that of petitioners, were declared redundant and abolished.
The petitioners left their respective positions and accepted their separation pays. However, before the end of the year, they
learned that PEPSI created new positions called Account Development Managers (ADM) with substantially the same duties and
responsibilities as the CDS. The petitioners filed a complaint with the Labor Arbiter for illegal dismissal with a prayer for
reinstatement, back wages, etc. The petitioners contend that the creation of the new positions contradicted PEPSI's claim of
redundancy.
PEPSI, on the other hand, maintained that termination due to redundancy was a management prerogative the wisdom and
soundness of which were beyond the discretionary review of the courts. It further maintained that the redundancy program was
made in good faith and was not implemented to purposely force certain employees out of their employment. The Labor Arbiter
dismissed the complaint for lack of merit. On appeal, NLRC affirmed the ruling of the Labor Arbiter. Later, the CA dismissed the
petition outright for failure to comply with a number of requirements. HTP.
HELD: On the question of whether the duties and responsibilities of the CDS and ADM positions are similar is a question
properly belonging to both the Labor Arbiter and the NLRC. In fact, the NLRC merely affirmed the finding of the Labor Arbiter
on this point and further elaborated on the differences between the two.
Factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect, even
finality, and will not be disturbed for as long as such findings are supported by substantial evidence, defined as such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion. In this case, there is no doubt that the findings
of the NLRC are supported by substantial evidence. The job descriptions submitted by PEPSI are replete with information and is
an adequate basis to compare and contrast the two positions.
Therefore, the two positions being different, it follows that the redundancy program instituted by PEPSI was undertaken in
good faith. Petitioners have not established that the title Account Development Manager was created in order to maliciously
terminate their employment. Nor have they shown that PEPSI had any ill motive against them. It is therefore apparent that the
restructuring and streamlining of PEPSI's distribution and sales systems were an honest effort to make the company more
efficient.
Finally, in a last ditch effort to plead their case, petitioners would want us to believe that their termination was illegal since
PEPSI did not employ fair and reasonable criteria in implementing its redundancy program. This issue was not raised before the
Labor Arbiter nor with the NLRC. As it would be offensive to the basic rules of fair play and justice to allow a party to raise a
question which has not been passed upon by both administrative tribunals, it is now too late to entertain it.
RUBEN SERRANO v. NLRC and ISETANN DEPARTMENT STORE
G.R. No. 117040; January 27, 2000
In the management of a company, it cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential
for its operation. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies; while
there should be mutual consultation, eventually deference is to be paid to what management decides.
Serrano was hired by Isetann Department Store as a security checker to apprehend shoplifters and prevent pilferage of
merchandise. Initially hired on contractual basis, petitioner eventually became a regular employee. And later, he became head of
the Security Checkers Section of Isetann Department Store. But after years of service, he was sent a letter of termination due to
the retrenchment program of the company wherein they have decided to phase out its entire security section and engage the
services of an independent security agency. With this, the petitioner filed a complaint on for illegal dismissal, illegal layoff, unfair
labor practice, underpayment of wages, and nonpayment of salary and overtime pay.
The Labor Arbiter rendered a decision finding petitioner to have been illegally dismissed. He ruled that private respondent
failed to establish that it had retrenched its security section to prevent or minimize losses to its business; that private respondent
had not shown that petitioner and other employees in the security section were so inefficient so as to justify their replacement by

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a security agency; instead, the day after petitioner's dismissal, private respondent employed a safety and security supervisor with
duties and functions similar to those of petitioner.
Private respondent appealed to the NLRC which reversed the decision of the Labor Arbiter and ordered petitioner to be
given separation pay equivalent to one month pay for every year of service, unpaid salary, and proportionate 13th month pay.
Petitioner filed a motion for reconsideration, but his motion was denied.
The NLRC held that the phase-out of private respondent's security section and the hiring of an independent security agency
constituted an exercise by private respondent of "[a] legitimate business decision whose wisdom we do not intend to inquire into
and for which we cannot substitute our judgment". HTP
HELD: On the issue as to the hiring of an independent security agency in lieu of the petitioner as an authorized cause for
termination, the SC answers this in affirmative.
In De Ocampo v. National Labor Relations Commission,this Court upheld the termination of employment of three
mechanics in a transportation company and their replacement by a company rendering maintenance and repair services. It held
that 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.
Indeed, as pointed out in cases, the management of a company cannot be denied the faculty of promoting efficiency and
attaining economy by a study of what units are essential for its operation. To it belongs the ultimate determination of whether
services should be performed by its personnel or contracted to outside agencies; while there should be mutual consultation,
eventually deference is to be paid to what management decides." Consequently, absent proof that management acted in a
malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.
In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private respondent's
real purpose was to avoid payment to the security checkers of the wage increases provided in the collective bargaining agreement.
Such an assertion is not sufficient basis for concluding that the termination of petitioner's employment was not a bona fide
decision of management to obtain reasonable return from its investment, which is a right guaranteed to employers under the
Constitution. Indeed, that the phase-out of the security section constituted a "legitimate business decision" is a factual finding of
an administrative agency which must be accorded respect and even finality by this Court since nothing can be found in the record
which fairly detracts from such finding. Accordingly, we hold that the termination of petitioner's services was for an authorized
cause, i.e., redundancy.
BONIFACIO ASUFRIN, JR. v. SAN MIGUEL CORPORATION and CA
G.R. No. 156658; March 10, 2004
The determination that employees services are no longer necessary or sustainable and, therefore, properly terminable is an exercise of business
judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided
there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to
merely declare that it has become over manned. It must produce adequate proof that such is the actual situation to justify the dismissal of the affected
employees for redundancy.
San Miguel Beer Corporation (SMC) hired Asufrin as a miscellaneous worker. Later, he became a regular employee paid on
daily basis as a Forklift Operator. Then, consequently, he became a monthly paid employee promoted as Stock Clerk.
Respondent SMC implemented a new marketing system known as the "pre-selling scheme" and as a consequence, all
positions of route sales and warehouse personnel were declared redundant. SMC thereafter wrote a letter to petitioner informing
him that, owing to the implementation of the "pre-selling operations" scheme, all positions of route and warehouse personnel will
be declared redundant will be closed. Thereafter, the employees were informed that they can avail of respondents early retirement
package pursuant to the retrenchment program, while those who will not avail of early retirement would be redeployed or
absorbed at the Brewery or other sales offices. Petitioner opted to remain and manifested his willingness to be assigned to any
job, considering that he had three children in college.
Petitioner was surprised when he was informed by the Acting Personnel Manager that his name was included in the list of
employees who availed of the early retirement package. Petitioners request that he be given an assignment in the company was
ignored by the Acting Personnel Manager. Thus, he filed a complaint for illegal dismissal with the NLRC which the Labor Arbiter
dismissed for lack of merit. On appeal, NLRC set aside the Labor Arbiters decision and ordered respondent SMC to reinstate
petitioner to his former or equivalent position with full backwages. Court of Appeals reversed the decision of the NLRC and
reinstated the judgment of the Labor Arbiter dismissing the complaint for illegal dismissal. HTP

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HELD: The primordial issue to be resolved is whether or not the dismissal of petitioner is based on an authorized cause. In the
case at bar, petitioner was dismissed on the ground of redundancy, one of the authorized causes for dismissal. Even if petitioners
were given the option to retire, be retrenched or dismissed, they were made to understand that they had no choice but to leave the
company. More bluntly stated, they were forced to swallow the bitter pill of dismissal but afforded a chance to sweeten their
separation from employment. They either had to voluntarily retire, be retrenched with benefits or be dismissed without receiving
any benefit at all.
What was the true nature of petitioners offer to private respondents? It was in reality a Hobsons choice. All that the private
respondents were offered was a choice on the means or method of terminating their services but never as to the status of their
employment. In short, they were never asked if they wanted to work for petitioner. It bears stressing that whether it be by
redundancy or retrenchment or any of the other authorized causes, no employee may be dismissed without observance of the
fundamentals of good faith.
All told, to sustain the position taken by the appellate court would be to dilute the workingmans most important right: his
constitutional right to security of tenure. While respondent may have offered a generous compensation package to those whose
services were terminated upon the implementation of the "pre-selling scheme," we find such an offer, in the face of the prevailing
facts, anathema to the underlying principles which give life to our labor statutes because it would be tantamount to likening an
employer-employee relationship to a salesman and a purchaser of a commodity.
As has been said, we do not treat our workers as merchandise and their right to security of tenure cannot be valued in precise
peso-and-centavo terms. It is a right which cannot be allowed to be devalued by the purchasing power of employers who are only
too willing to bankroll the separation pay of their illegally dismissed employees to get rid of them
WHEREFORE, in view of all the foregoing, the petition is granted. Accordingly, petitioners dismissal is declared illegal, and
respondent is ordered to reinstate him to his former or equivalent position, with full backwages.
LOPEZ SUGAR CORPORATION v. FEDERATION OF FREE WORKERS and NLRC
G.R. Nos. 75700-01; August 30, 1990
Lopez Sugar Corporation, allegedly to prevent losses due to major economic problems, and exercising its privilege under its
CBA entered into between Philippine Labor Union Association (PLUA-NACUSIP), caused the retrenchment and retirement of a
number of its employees.
Thus, petitioner filed with the Bacolod District Office of the then Ministry of Labor and Employment ("MOLE") a
combined report on retirement and application for clearance to retrench affecting 86 of its employees. Wherein, 59 were retired
and 27 were to be retrenched in order to prevent losses.
Meanwhile, private respondent Federation of Free Workers (FFW), as the certified bargaining agent of the rank-and-file
employees of petitioner, filed with the Bacolod District Office of the MOLE a complaint for unfair labor practices and recovery
of union dues. In said complainant, FFW claimed that the terminations undertaken by petitioner were violative of the security of
tenure of its members and were intended to "bust" the union and hence constituted an unfair labor practice.
The Labor Arbiter denied petitioner's application for clearance to retrench its employees on the ground that for
retrenchment to be valid, the employer's losses must be serious, actual and real and must be amply supported by sufficient and
convincing evidence. The application to retire was also denied on the ground that petitioner's prerogative to so retire its
employees was granted by the CBA which agreement had long ago expired. Petitioner was, therefore, ordered to reinstate twentyseven retired or retrenched employees represented by private respondent PLUA-NACUSIP and FFW and to pay them full
backwages from the time of termination until actual reinstatement.
On appeal, the NLRC, finding no justifiable reason for disturbing the decision of the Labor Arbiter, affirmed that decision.
HTP
HELD: SC considers that it may be useful to sketch the general standards in terms of which the acts of petitioner employer must
be appraised, or more specified, the four standards of retrenchment:
Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be
forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of
the retrenchment would appear to be seriously in question.
Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively
and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment,
which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise
laid-off.
Third. Because of the consequential nature of retrenchment, it must, be reasonably necessary and likely to effectively prevent
the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses,
i.e., cut other costs than labor costs.

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Lastly, but certainly not the least important, alleged if already realized, and the expected imminent losses sought to be
forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is
readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of
services of employees.
In the instant case, the Labor Arbiter found no sufficient and convincing evidence to sustain petitioner's essential contention
that it was acting in order to prevent substantial and serious losses. There is no question that an employer may reduce its work
force to prevent losses, however, these losses must be serious, actual and real. In the instant case, even assuming arguendo that
applicant company was, in fact, surrounded by the major economic problems stated earlier, the question may be asked will it
suffer serious losses as a result of the said economic problems? We find the answer to be negative. We have scanned the records
but failed to find evidence submitted to show that applicant company would suffer serious business losses or reverses as a
consequence of the alleged major economic problems. In fact, applicant company asseverated that these problems
only threatens its survival, hence, it had to reduce its work force. Another thing, while applicant company was retrenching its
regular employees, it also hired the services of casuals. This militated its claim to reduce its work force to set up cost reduction. It
must be stated that settled is the rule that serious business losses or reverses must be actual, real and amply supported by
sufficient and convincing evidence.
We conclude that because the attempted retrenchment on the part of the petitioner was legally ineffective, all retrenched
employees should be reinstated and backwages paid them corresponding to a period of three (3) years without qualification or
deduction, in accordance with the three-year rule laid down in a long line of cases.
ASIONICS PHILIPPINES, INC. v. NLRC
G.R. No. 124950; May 19, 1998
Boaquina and Gayola started working for Asionics Philippines Inc. API as material control clerk and as production operator,
respectively. During the third quarter of 1992, API commenced negotiations with the duly recognized bargaining agent of its
employees, the Federation of Free Workers ("FFW"), for a CBA. A deadlock, however, ensued and the union decided to file a
notice of strike. This event prompted the two customers of API to thereupon refrain from sending to API additional kits or
materials for assembly. API, given the circumstance that its assembly line had to thereby grind to a halt, was forced to suspend
operations. Respondents Boaquina and Gayola were among the employees asked to take a leave from work.
Upon the resolution of the bargaining deadlock, a CBA was concluded between API and FFW. Respondent Boaquina was
directed to report back since her previous assignment pertained to the issuance of raw materials needed for the production of
electronic items being ordered by one of their clients which promptly resumed its business with API. On the other hand, Gayola,
among other employees, could not be recalled forthwith because the client, where she was assigned as the production operator,
had yet to renew its production orders.
Inasmuch as its business activity remained critical, API was constrained to implement a company-wide retrenchment
affecting 105 employees. The selection was based on productivity/performance standards pursuant to the CBA. Yolanda
Boaquina was one of those affected by the retrenchment and API. In that letter, Boaquina was informed that her services were to
be dispensed. While Juana Gayola was not supposed to be affected by the retrenchment in view of her high performance rating,
her services, nevertheless, were considered to have been ended when she was ordered by API to take an indefinite leave of
absence. She had not since been recalled.
Dissatisfied with their union, Boaquina and Gayola, together with some of other co-employees, joined the Lakas ng
Manggagawa sa Pilipinas Labor Union ("Lakas Union") which filed a notice of strike against API on the ground of unfair labor
practice ("ULP") allegedly committed by the latter, specifically, for union busting, termination of union officers/members,
harassment and discrimination.
Claiming that the strike staged by Lakas Union was illegal, API brought before the NLRC a petition for declaration of
illegality of the strike. Lakas Union countered that their strike was valid and staged as a measure of self-preservation and as selfdefense against the illegal dismissal of petitioners aimed at union busting in the guise of a retrenchment program. The Labor
Arbiter promulgated a decision declaring the strike staged by Lakas Union to be illegal. HTP
HELD: As to whether private respondents who are officers of the union are still entitled to separation pay and indemnity despite
having participated in a strike that has been declared illegal, the Court answers in affirmative.
The position advanced by petitioners on the first issue is bereft of merit. It is quite evident that the termination of
employment of private respondent was due to the retrenchment policy adopted by API and not because of the former's union
activities. In a letter API itself advised Boaquina that she was one of those affected by the retrenchment program of the company
and that her services were to be deemed terminated. In their pleadings submitted to the Labor Arbiter, in connection with the
illegal dismissal case, petitioners firmly averred that the services of private respondents were being dispensed with not by reason
of their union activities but in view of the retrenchment policy of the company.

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The decision of the Labor Arbiter, declaring private respondents to have lost their employment status due to their
participation in an illegal strike is of no really significance to petitioners. It should suffice to say, as so aptly observed by the
NLRC, that the retrenchment of private respondents has, in fact, preceded the declaration of strike. Also, nothing on record is
shown to indicate that the petitioner has acted in bad faith or with malice in carrying out the retrenchment program of the
company. His having been held by the NLRC to be solidarily and personally liable with API is thus legally unjustified.
FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES (FASAP) v. PAL
G.R. No. 178083; July 22, 2008
By discarding the an employees previous years of service and taking into consideration only one years worth of job performance for evaluation, the
company virtually did away with the concept of seniority, loyalty and past efficiency, and treated all its workers as if they were on equal footing, with no
one more senior than the other.
PAL, a domestic corporation organized and existing under the laws of the Republic of the Philippines, retrenched 5,000 of its
employees allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought about
by the Asian financial crisis. In implementing such scheme, it adopted its so-called "Plan 14" whereby PALs fleet of aircraft
would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel. PAL admits that the retrenchment
is wholly premised upon such reduction in fleet, and to "the strike staged by PAL pilots since this action also translated into a
reduction of flights." It also claims that the scheme resulted in savings that would greatly alleviate PALs financial crisis.
Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a series of consultations
and meetings and explored all possibilities of cushioning the impact of the impending reduction in cabin crew personnel.
However, the parties failed to agree on how the scheme would be implemented. Thus PAL unilaterally resolved to utilize the
criteria set forth in the CBA in retrenching cabin crew personnel (that retrenchment shall be based on the individual employees
efficiency rating and seniority).
PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin crew members
overall performance for one year alone. Their respective performance during previous years, i.e., the whole duration of service
with PAL of each cabin crew personnel, was not considered. The factors taken into account on whether the cabin crew member
would be retrenched, demoted or retained were: the existence of excess sick leaves; the crew members being physically
overweight; seniority; previous suspensions or warnings imposed, and as it stated, for some other reasons (which were not
specified). Subsequently, PAL ceased its operations and sent notices of termination to its employees.
FASAP filed motion to dismiss which the Labor Arbiter denied and thus granting a writ of preliminary injunction against
PALs implementation of its retrenchment program with respect to FASAP members. Respondents appealed to the NLRC which
reversed the decision of the Labor Arbiter. The NLRC directed the lifting of the writ of injunction and to vacate the directive
setting aside the notices of retrenchment and reinstating the dismissed cabin crew to their respective positions and in the PAL
payroll. FASAP moved for reconsideration but it was denied; hence it filed an appeal to the Court of Appeals which was also
denied. HTP
HELD: As to the issue of whether or not PALs retrenchment program is valid, the court answers in negative; prominent from
the above data is the retrenchment of cabin crew personnel due to "other reasons" which, however, are not specifically stated and
shown to be for a valid cause. This is not allowed because it has no basis in fact and in law.
Moreover, in assessing the overall performance of each cabin crew personnel, PAL only considered one year. This makes the
evaluation of each cabin attendants efficiency rating capricious and prejudicial to PAL employees covered by it. By discarding the
cabin crew personnels previous years of service and taking into consideration only one years worth of job performance for
evaluation, PAL virtually did away with the concept of seniority, loyalty and past efficiency, and treated all cabin attendants as if
they were on equal footing, with no one more senior than the other.
In sum, PALs retrenchment program is illegal because it was based on wrongful premise and in a set of criteria or rating
variables that is unfair and unreasonable when implemented. It failed to take into account each cabin attendants respective
service record, thereby disregarding seniority and loyalty in the evaluation of overall employee performance.
WHEREFORE, the instant petition is GRANTED.
FE S. SEBUGUERO v. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 115394 September 27, 1995
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is an act of the employer of dismissing employees because of losses in
the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this
Court.

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The petitioners were among the 38 regular employees of private respondent GTI Sportswear Corporation (GTI), who were
given "temporary lay-off" notices by the latter due to alleged lack of work and heavy losses caused by the cancellation of orders
from abroad and by the garments embargo.
Believing that their "temporary lay-off" was a ploy to dismiss them, resorted to because of their union activities and was in
violation of their right to security of tenure since there was no valid ground therefor, the 38 laid-off employees filed with the
Labor Arbiter's office in the National Capital Region complaints for illegal dismissal, unfair labor practice, underpayment of
wages, and non-payment of overtime pay and 13th month pay.
Private respondent GTI denied the claim of illegal dismissal and asserted that it was its prerogative to lay-off its employees
temporarily for a period not exceeding six months to prevent losses due to lack of work or job orders from abroad, and that the
lay-off affected both union and non-union members.
The Labor Arbiter found no sufficient evidence to prove the petitioners' charges of unfair labor practice, overtime pay, and
for moral and exemplary damages.
On appeal to the NLRC, it concurred with the findings of the Labor Arbiter that there was a valid lay-off of the petitioners
due to lack of work, but disagreed with the latter's ruling granting back wages.
HELD: The petitioners contention is based on a wrong premise or on a miscomprehension of the statement of the NLRC. What
the NLRC sustained and affirmed is not redundancy, but retrenchment as a ground for termination of employment.
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is an act of
the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction
on the volume of his business, a right consistently recognized and affirmed by this Court.
To determine, therefore, whether the petitioners were validly retrenched or were illegally dismissed, we must determine
whether there was compliance with the law regarding a valid retrenchment at anytime within the six month-period that they were
temporarily laid-off. Under Article 283 of the Labor Code, there are three basic requisites for a valid retrenchment:
First, whether or not an employer would imminently suffer serious or substantial losses for economic reasons is
essentially a question of fact for the Labor Arbiter and the NLRC to determine. Here, both the Labor Arbiter and the NLRC
found that the private respondent was suffering and would continue to suffer serious losses, thereby justifying the
retrenchment of some of its employees, including the petitioners.
Second, on the requirement of notice to both the employees concerned and the Department of Labor and Employment
(DOLE) which is mandatory and must be written and given at least one month before the intended date of retrenchment. In
this case, it is undisputed that the petitioners were given notice of the temporary lay-off. There is, however, no evidence that
any written notice to permanently retrench them was given at least one month prior to the date of the intended
retrenchment. The NLRC found that GTI conveyed to the petitioners the impossibility of recalling them due to the
continued unavailability of work. But what the law requires is a written notice to the employees concerned and that
requirement is mandatory. There is also nothing in the records to prove that a written notice was ever given to the DOLE as
required by law.
Lastly, with respect to the payment of separation pay, the NLRC found that GTI offered to give the petitioners their
separation pay but that the latter rejected such offer which was accepted only by 22 out of the 38 original complainants in
this case.
Hence, it is the view of the SC that the lack of written notice to the petitioners and to the DOLE does not, however, make
the petitioners' retrenchment illegal such that they are entitled to the payment of back wages and separation pay in lieu of
reinstatement as they contend. Their retrenchment, for not having been effected with the required notices, is merely defective. It
is now settled that where the dismissal of an employee is in fact for a just and valid cause and is so proven to be but he is not
accorded his right to due process, the dismissal shall be upheld but the employer must be sanctioned for non-compliance with the
requirements of or for failure to observe due process. The sanction, in the nature of indemnification or penalty.
HOTEL ENTERPRISES OF THE PHILIPPINES, INC (HEPI) v. SAMASAH-NUWHRAIN
G.R. No. 165756; June 5, 2009
SAMASAH-NUWHRAIN is the certified collective bargaining agent of the rank-and-file employees of Hyatt Regency
Manila, a hotel owned by petitioner Hotel Enterprises of the Philippines, Inc. (HEPI). Then, HEPIs hotel business suffered a
slump due to the local and international economic slowdown, aggravated by the events of September 11, 2001 in the United
States. An audited financial report made by Sycip Gorres Velayo (SGV) & Co. on January 28, 2002 indicated that the hotel
suffered a gross operating loss, a decline which is incomparable to its gross operating profit the year prior.

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According to petitioner, the management initially decided to cost-cut by implementing energy-saving schemes: prioritizing
acquisitions/purchases; reducing work weeks in some of the hotels departments; directing the employees to avail of their
vacation leaves; and imposing a moratorium on hiring employees whenever practicable.
Meanwhile, SAMASAH-NUWHRAIN filed a notice of strike due to a bargaining deadlock before the NCMB. In the course
of the proceedings, HEPI submitted its economic proposals for the rank-and-file employees. The proposal included manning and
staffing standards for the 248 regular rank-and-file employees. The Union accepted the economic proposals. Hence, a new
collective bargaining agreement (CBA) was signed, adopting the manning standards for the rank-and-file employees.
Then, HEPI issued a memorandum offering a Special Limited Voluntary Resignation/Retirement Programto its regular
employees. Employees who were qualified to resign or retire were given separation packages based on the number of years of
service. The vacant positions, as well as the regular positions vacated, were later filled up with contractual personnel and agency
employees.
Subsequently, the petitioner decided to implement a downsizing scheme after studying the operating costs of its different
divisions to determine the areas where it could obtain significant savings. It found that the hotel could save on costs if certain
jobs. The petitioner met with respondent Union to formally discuss the downsizing program. The Union opposed the downsizing
plan because no substantial evidence was shown to prove that the hotel was incurring heavy financial losses, and for being
violative of the CBA, more specifically the manning/staffing standards agreed upon by both parties. Despite its opposition, a list
of the positions declared redundant and to be contracted out was given by the management to the Union. Notices of termination
were, likewise, sent to 48 employees whose positions were to be retrenched or declared as redundant. The Union filed a notice of
strike based on unfair labor practice (ULP) against HEPI. But HEPI filed a motion to dismiss notice of strike which was opposed
by the Union.
The Acting Labor Arbiter issued an order certifying the labor dispute to the NLRC for compulsory arbitration and directing
the striking workers, except the 48 workers earlier terminated, to return to work within 24 hours. On appeal, the NLRC reversed
the labor arbiters decision. The Union filed a petition for certiorari with the CA questioning in the main the validity of the
NLRCs reversal of the labor arbiters decision. The CA promulgated the assailed Decision, reversing the resolution of the NLRC
and reinstating the decision of the Labor Arbiter which declared the strike valid. The CA also ordered the reinstatement of the 48
terminated employees on account of the hotel managements illegal redundancy and retrenchment scheme and the payment of
their backwages from the time they were illegally dismissed until their actual reinstatement. HEPI moved for reconsideration but
the same was denied for lack of merit. HTP
HELD: As to the issue of whether the petitioners downsizing scheme valid, the court answers in affirmative.
In the case at bar, petitioner justifies the downsizing scheme on the ground of serious business losses it suffered in 2001.
Some positions had to be declared redundant to cut losses. In this context, what may technically be considered as redundancy may
verily be considered as a retrenchment measure. The hotel was already operating not only on a slump in income, but on a huge
deficit as well. In short, while the hotel did earn, its earnings were not enough to cover its expenses and other liabilities; hence, the
deficit. With the local and international economic conditions equally unstable, belt-tightening measures logically had to be
implemented to forestall eventual cessation of business.
WHEREFORE, the petition is GRANTED. The downsizing scheme implemented by petitioner is hereby declared a valid
exercise of management prerogative.
UNICORN SAFETY GLASS, INC. v. RODRIGO BASARTE
G.R. No. 154689; November 25, 2004
The exercise of management prerogative is not absolute. By its very nature, encompassing as it could be, management prerogative must be exercised in
good faith and with due regard to the rights of laborverily, with the principles of fair play at heart and justice in mind.
Respondents were regular employees of Unicorn Safety Glass Incorporated, a company engaged in the business of glass
manufacturing. Respondents normally worked 6 times a week, from Monday to Saturday, and were paid on a weekly basis. They
were likewise officers of the organized union in the company, owned and managed by the Spouses Yulo.
Yulo, as general manager of Unicorn, issued 2 Memorandums, first, informing the respondents that their workdays shall be
reduced due to economic considerations, such as decrease in sales, increase in the cost of production, devaluation of the peso and
increase in minimum wage, which contributed to the current economic state of the company; second, announcing the
implementation of a work rotation schedule which will effectively reduce respondents' workdays to merely three days a week. The
respondents surmised that the management was merely getting back at them for forming a union especially since only the union
officers were affected by the work reduction.
Respondents wrote a letter of protest expressing their frustrations at the apparent lack of willingness on the part of the
company's management to address their concerns and objections. On the same day, respondents met with the Spouses Yulo and

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inquired as to the reasons for the imposition of the reduced workweek. They were told that it was management's prerogative to
do so.
Instead of attending work, the respondents filed a complaint against the petitioner with the NLRC for constructive dismissal
and unfair labor practice. The Labor Arbiter rendered judgment finding that respondents were not constructively terminated by
the company. He likewise dismissed the charge of unfair labor practice for lack of legal and factual basis. In a decision, the NLRC
sustained the findings of the Labor Arbiter.
HELD: Constructive dismissal or a constructive discharge has been defined as quitting because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. Constructive
dismissal, however, does not always take the form of a diminution.
In the case at bar, we agree with the Court of Appeals that petitioners' bare assertions on the alleged reason for the rotation
plan as well as its failure to refute respondents' contention that they were targeted due to their union activities, merit the reversal
of the Labor Arbiter's decision. It was incumbent upon petitioners to prove that the rotation scheme was a genuine business
necessity and not meant to subdue the organized union. The reasons enumerated by petitioners in their Memoranda dated were
factors too general to actually substantiate the need for the scheme. Petitioners cite the reduction in their electric consumption as
proof of an economic slump. This may be true to an extent. But it does not, by itself, prove that the rotation scheme was the
most reasonable alternative to remedy the company's problems.
It also appears that respondents attempted on more than one occasion to have a dialogue with Yulo to discuss the work
reduction. Good faith should have prompted Yulo to hear the side of the respondents, to come up with a scheme amenable to
both parties or attempt to convince the employees concerned that there was no other viable option. However, petitioners ignored
the letters sent by respondents, which compelled the latter to seek redress with the Labor Arbiter.
The exercise of management prerogative is not absolute. By its very nature, encompassing as it could be, management
prerogative must be exercised in good faith and with due regard to the rights of laborverily, with the principles of fair play at
heart and justice in mind. While we concede that management would best know its operational needs, the exercise of management
prerogative cannot be utilized as an implement to circumvent our laws and oppress employees.
In the case at bar, the manner by which petitioners exercised their management prerogative appears to be an underhanded
circumvention of the law. Petitioners were keen on summarily implementing the rotation plan, obviously singling out respondents
who were all union officers. The management's apparent lack of interest to hear what the respondents had to say, created an
uncertain situation where reporting for work was tantamount to an acquiescence in an unjust situation.
ME-SHURN CORPORATION v. ME-SHURN WORKERS UNION-FSM
G.R. No. 156292; January 11, 2005
To justify the closure of a business and the termination of the services of the concerned employees, the law requires the employer to prove that it
suffered substantial actual losses. The cessation of a companys operations shortly after the organization of a labor union, as well as the resumption of
business barely a month after, gives credence to the employees claim that the closure was meant to discourage union membership and to interfere in union
activities. These acts constitute unfair labor practices.
The regular rank and file employees of Me-Shurn Corporation organized Me-Shurn Workers Union-FSM, an affiliate of the
February Six Movement (FSM). Then, the petitioner-corporation started placing on forced leave all the rank and file employees
who were members of the unions bargaining unit.
The respondent union filed a Petition for Certification Election with the Med-Arbitration Unit of the Department of Labor
and Employment (DOLE), Regional Office No. 3. Instead of filing an answer to the Petition, the corporation filed a comment
stating that it would temporarily lay off employees and cease operations, on account of its alleged inability to meet the export
quota required by the Board of Investment.
While the Petition was pending, 184 union members allegedly submitted a retraction/withdrawal thereof on July 14, 1998. As
a consequence, the med-arbiter dismissed the Petition. Also, the DOLE Undersecretary granted the unions appeal and ordered
the holding of a certification election among the rank and file employees of the corporation.
Meanwhile, the respondent union filed a Notice of Strike against petitioner corporation on the ground of unfair labor
practice, illegal dismissal, underpayment of wages and deficiency in separation pay, for which they prayed for damages and
attorneys fees.
The corporation countered that because of economic reversals and filed such in the NLRC, accordingly, it was compelled to
close and cease its operations to prevent serious business losses; that under Article 283 of the Labor Code, it had the right to do
so; also, it had paid its 342 laid off employees separation pay and benefits in the total amount and that by virtue of these
payments, the cases had already become moot and academic.
Upon decision, the Labor Arbiter dismissed the Complaints against the petitioner for lack of merit. He ruled that (1) actual
and expected losses justified the closure of petitioner-corporation and its dismissal of its employees; (2) the voluntary acceptance

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of separation pay by the workers precluded them from questioning the validity of their dismissal; and (3) the claim for separation
pay lacked factual basis.
On appeal, the NLRC reversed the Decision of Labor Arbiter. Finding petitioners guilty of unfair labor practice, the
Commission ruled that the closure of the corporation shortly after respondent union had been organized, as well as the dismissal
of the employees, had been effected under false pretenses. After the denial of their Motion for Reconsideration, petitioners
elevated the cases to the CA who maintained that the NLRC had committed grave abuse of discretion and serious errors of fact
and law in reversing the Decision of the labor arbiter and in finding that the corporations cessation of operations had been
tainted with unfair labor practice. HTP
HELD: On the issue as to whether the dismissal of the employees of petitioner Meshurn Corporation is for an authorized cause
the Court answers in negative.
The reason invoked by petitioners to justify the cessation of corporate operations was alleged business losses. Yet, other than
generally referring to the financial crisis and to their supposed difficulty in obtaining an export quota, interestingly, they never
presented any report on the financial operations of the corporation during the period before its shutdown. Neither did they
submit any credible evidence to substantiate their allegation of business losses.
Basic is the rule in termination cases that the employer bears the burden of showing that the dismissal was for a just or
authorized cause. Otherwise, the dismissal is deemed unjustified. Apropos this responsibility, petitioner corporation should have
presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the
proceedings before the labor arbiter or, under justifiable circumstances, even on appeal with the NLRC.
To justify the closure of a business and the termination of the services of the concerned employees, the law requires the
employer to prove that it suffered substantial actual losses. The cessation of a companys operations shortly after the organization
of a labor union, as well as the resumption of business barely a month after, gives credence to the employees claim that the
closure was meant to discourage union membership and to interfere in union activities. These acts constitute unfair labor
practices.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK v. NLRC
G.R. No. 82135; August 20, 1990
The Banco Filipino Savings and Mortgage Bank was placed under receivership and later ordered liquidated by the Monetary
Board. The chief operating officer who was at the same time holding the position of Executive Vice President Fortunato Dizon,
whose employment was terminated, filed a complaint against the bank for recovery of termination pay under Article 283 of the
Labor Code, moral damages and other claims.
The bank argued that the officer was not entitled to separation pay, citing Article 283 (now 282) of the Labor Code. It was
the banks interpretation of the law that when an institution was closed due to serious business losses or financial reverses, its
workers are not entitled to separation pay.
Issue: Should Separation Pay be paid in case of closure because of serious business losses?
Ruling: Yes.
We quote with approval the opinion of respondent Labor Arbiter, thus:
Article 283 (Art. 282) of the Labor Code enumerated the just causes for an employer to terminate an employee. If an employee is
dismissed for just cause, he is not entitled to termination pay. However, in Article 284 (Art. 283), in case of closure of establishment, the
employee is always given termination pay. The reason for the closure is taken into consideration only to determine whether to give one month or one-half
month pay for every year of service. This provision is based on social justice and equity.
STATE INVESTMENT HOUSE, INC. v. COURT OF APPEALS
G.R. No. 89767; February 19, 1992
In 1981, the Philippine Blooming Mills, Inc (PBM) stopped operations due to business losses and financial reverses. On April
1, 1982, the PBM filed with the Security Exchange Commission (SEC) a petition seeking for a declaration of a state of suspension
of payments. On April 6, 1982, the SEC assumed jurisdiction over the petition. On July 9, 1982, the SEC placed the PBM under
rehabilitation receivership and appointed rehabilitation receivers. The employees of PBM then filed a complaint for illegal

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dismissal with money claims against PBM with the National Labor Relations. Those who filed belonged to the rank-and-file and
managerial/technical employees identified and categorized by groups. Common claims of the employees were unpaid benefits
under Wage Order No. 1, 15th month-pay, money value of unearned vacation and sick leaves and holiday pay.
Issue: Should Separation Pay be paid in case of closure because of serious business losses?
Ruling: No.
The Supreme Court agreed with the NLRC in not requiring separation pay for the employees of a business closed down by
financial losses.
On appeal, the Labor Arbiter's decision was modified by the NLRC, to wit:
WHEREFORE, except for the modification dismissing the claim for separation pay for lack of merit , the Decision
appealed from is hereby AFFIRMED in all other respects. The injunction issued on 15 November 1984 is lifted. (Rollo G.R.
No. 79202, p. 18)
In G.R. No. 79202, we affirmed the NLRC decision in a resolution dated November 18, 1987 . Thus, we dismissed the
petition for certiorari filed by the employees questioning the deletion of the award of separation pay resulting from serious losses
by PBM.
This Court has stated that in various and more appropriate cases involving consortiums of banks trying to recover even only a
percentage of the loans extended to Philippine Blooming Mills (PBM), it was determined that PBM not only incurred serious
losses but was in desperate straits leading to its collapse.

Any claims of laborers, including those enjoying preference over other credits, will have to be submitted in the course
of the bankruptcy, liquidation or rehabilitation proceedings.
In G.R. No. 80580, the Solicitor General has taken sides with the petitioner and adopted the petitioner's reply to the private
respondents' comment. No explanation is given and no substantial distinctions are cited to explain why the National Labor
Relations Commission should take an action in G.R. No. 80580 which is different from and conflicts with its stand in G.R. No.
79202. This being the case, the Court reiterates its ruling in G.R. No. 79202.

It must be noted that the Court that the claims of the Philippine Blooming Mills laborers are not denied. The Court simply
rules that all valid claims including those of the laborers must be submitted in the course of bankruptcy, liquidation
and rehabilitation proceedings. This is a function of the Securities and Exchange Commission for appropriate action.
J.A.T. GENERAL SERVICES v. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 148340; January 26, 2004
Jesusa Adlawan Trading & General Services (JAT) is a single proprietorship engaged in the business of selling second-hand
heavy equipment. Sometime in April 1997, JAT hired Jose F. Mascarinas as helper tasked to coordinate with the cleaning and
delivery of the heavy equipment sold to customers.
In October 1997, the sales of heavy equipment declined because of the Asian currency crisis. Consequently, JAT temporarily
suspended its operations. It advised its employees, Jose F. Mascarinas, not to report for work starting on the first week of March
1998. JAT indefinitely closed shop effective May 1998.
A few days after, Jose F. Mascarinas filed a case for illegal dismissal and underpayment of wages against petitioners before the
NLRC.
In his Complaint, he related that he was one of those retrenched from employment by JAT and was allegedly required to sign
a piece of paper which he refused, causing his termination from employment.
On December 14, 1998, JAT filed an Establishment Termination Report with the Department of Labor and Employment
(DOLE), notifying JAT of its decision to close its business operations due to business losses and financial reverses.

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Issue 1: Whether Jose F. Mascarinas was validly dismissed from employment due to closure of JATs business because of
substantial losses.
Ruling: No.
While business reverses or losses are recognized by law as an authorized cause for terminating employment, it is an essential
requirement that alleged losses in business operations must be proven convincingly . Otherwise, said ground for
termination would be susceptible to abuse by scheming employers, who might be merely feigning business losses or reverses in
their business ventures in order to ease out employees. In this case, the financial statements were not only belatedly submitted but
were also bereft of necessary details on the extent of the alleged losses incurred, if any. The income statements only indicated a
decline in sales in 1998 as compared to 1997. These fell short of the stringent requirement of the law that the employer prove
sufficiently and convincingly its allegation of substantial losses.
Issue 2: Whether Jose F. Mascarinas was validly dismissed on the ground of closure or cessation of operations for reasons other

than substantial business losses.

Ruling: Yes.

In the present case, while JAT did not sufficiently establish substantial losses to justify closure of the business, its income
statement shows declining sales in 1998, prompting the petitioners to suspend its business operations sometime in March 1998,
eventually leading to its permanent closure in December 1998. Apparently, the petitioners saw the declining sales figures and the
unsustainable business environment with no hope of recovery during the period of suspension as indicative of bleak business
prospects, justifying a permanent closure of operation to save its business from further collapse. On this score, we agree that
undue interference with an employers judgment in the conduct of his business is uncalled for. Even as the law is solicitous of the
welfare of employees, it must also protect the right of an employer to exercise what is clearly a management prerogatives. As long as the companys exercise
of the same is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid
agreement such exercise will be upheld. The closure of business operation by petitioners, in our view, is not tainted with bad faith or other
circumstance that arouses undue suspicion of malicious intent.
Notes:
Difference between Closure and Retrenchment
Closure of Business
Reversal of fortune of the employer whereby there is a
complete cessation of business operations and/or an
actual locking-up of the doors of establishment, usually
due to financial losses.
It is an authorized cause for termination of employment
aims to prevent further financial drain upon an employer who cannot
pay anymore his employees since business has already stopped

Retrenchment
Reduction of personnel usually due to poor financial
returns so as to cut down on costs of operations in terms
of salaries and wages to prevent bankruptcy of the
company. It is sometimes also referred to as down-sizing.
Retrenchment is an authorized cause for termination of
employment which the law accords an employer who is not
making good in its operations in order to cut back on expenses for
salaries and wages by laying off some employees.
Purpose: to save a financially ailing business establishment
from eventually collapsing

In any case, Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even
if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding
to their length of service. It would, indeed, be stretching the intent and spirit of the law if we were to unjustly interfere in
managements prerogative to close or cease its business operations just because said business operation or undertaking is not
suffering from any loss.
In the event, under Article 283 of the Labor Code, three requirements are necessary for a valid cessation of business operations, namely:
(a) Service of a written notice to the employees and to the DOLE at least one (1) month before the intended date thereof;
(b) Cessation of business must be bona fide in character; and
(c) Payment to the employees of termination pay amounting to at least one-half (1/2) month pay for every year of service, or
one (1) month pay, whichever is higher

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We must stress that the closure of business operation is allowed under the Labor Code, provided separation pay be paid to the
terminated employee. It is settled that in case of closure or cessation of operation of a business establishment not due to serious business losses or
financial reverses, the employees are always given separation benefits. The amount of separation pay must be computed from the
time private respondent commenced employment with petitioners until the time the latter ceased operations

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RESIGNATION RETIREMENT - PRESCRIPTION

PHILIPPINE TODAY, INC. v. NLRC
Respondent Alegre filed a request for a 30 day leave of absence citing the advice of his personal physician for him to undergo
medical consultations abroad. Days later he wrote a Memorandum for File. Alegre then received a letter from the petitioner saying
that they are accepting his resignation. Thus Alegre accused the petitioners of illegal dismissal claiming that the memorandum is
not a resignation since it is not expressly stated. However the Labor Arbiter ruled in favor of the petitioners.
ISSUE: Did the Memorandum for File constitute voluntary resignation?
RULING: Yes. The court held that the said memorandum judicially constituted a letter of resignation.
We see merit in the findings and conclusions drawn by the labor arbiter. They are more in accord with prudence, common
sense and sound judgment. The labor arbiter correctly deduced from Alegre's memorandum and attendant actuations that he
resigned. In contrast, the NLRC was too strict in its interpretation of what constitutes "resignation." It adhered literally to the
dictionary meaning of the word without relating it to the peculiarity of the factual circumstances surrounding the case. Courts and
quasi-judicial bodies, in the exercise of their functions and in making decisions, must not be too dogmatic as to restrict themselves
to literal interpretations of words, phrases and sentences. A complete and wholistic view must be taken in order to render a just
and equitable judgment.
Alegre's choice of words and way of expression betray his allegation that the memorandum was simply an "opportunity to
open the eyes of (Petitioner) Belmonte to the work environment in petitioners' newspaper with the end in view of persuading
(her) to take a hand at improving said environment.
The Supreme Court sustained the Labor Arbiters dismissal of the complaint. After a thorough scrutiny of the
memorandum of Alegre and a careful deliberation on the peculiar circumstances attendant to its writing and the antecedent,
contemporaneous and subsequent actions of private respondent, the SC held that said memorandum juridically constituted a
letter of resignation. Further, the court said: Common sense dictates that Alegre meant to resign when he wrote the
memorandum. Otherwise he should have used a more tempered language and a less confrontational tone. The court gave
significant weight to the employees confidential position. As assistant to the publisher, he performs administration and
operations functions aside from his journalistic duties. It is a position of evident responsibility requiring the utmost confidence of
his immediate superior. Thus, the court upheld the employers acceptance of the employees resignation.
PAL v. AIRLINE PILOTS OF THE PHILIPPINES
The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and respondent Airline Pilots Association of the
Philippines (ALPAP), the exclusive bargaining representative of all commercial airline pilots of petitioner, stemmed from
petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes under Section 2, Article VII, of the 1967 PAL-ALPAP
Retirement Plan. Contending, inter alia, that the retirement of Captain Collantes constituted illegal dismissal and union busting,
ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE). Pursuant to Article 263 (g) of the
Labor Code, the Secretary of the DOLE (hereafter referred to as Secretary) assumed jurisdiction over the labor dispute. The the
Secretary issued the assailed order upholding PALs action of unilaterally retiring Captain Collantes and recognizing the same as a
valid exercise of its option under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. The Secretary further ordered
that the basis of the computation of Captain Collantes retirement benefits should be Article 287 of the Labor Code (as amended
by Republic Act No. 7641) and not Section 2, Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in the
exercise of its option to retire pilots, PAL should first consult the pilot concerned before implementing his retirement.
Ruling: The stipulation in the CBA that a pilot will be retired after 20 years of service or after flying 20,000 hours even though
the pilot is less than 60 years old is valid.
The issue of whether petitioner should consult the pilot concerned before exercising its option to retire pilots.
The option of an employer to retire its employees is recognized as valid. The retirement of an employee may be done upon
initiative and option of the management. And where there are cases of voluntary retirement, the same is effective only upon the
approval of management. The requirement to consult the pilots prior to their retirement defeats the exercise by management of
its option to retire the said employees. It gives the pilot concerned an undue prerogative to assail the decision of management.
Due process only requires that notice be given to the pilot of the decision to retire him.

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PROGRESSIVE DEVELOPMENT CORPORATION v. NLRC

In 1980 PDC implemented its Employees' Non-Contributory Retirement Plan (The Plan) which took effect on 1 April 1980.
Thereafter, a number of employees was retired pursuant to the optional retirement provision of The Plan. On 8 October 1990,
upon request by PDC, Director Augusto G. Sanchez of the Bureau of Working Conditions, Department of Labor and
Employment, confirmed the validity of The Plan, particularly its provision on optional retirement.
On 28 November 1994 PDC notified its employees who had rendered more than twenty (20) years of service in the
Company of its decision to retire them effective 31 December 1994. On 7 December 1994, Jose Riego and private respondent
Rholanda Andres, and two (2) of those who were retired, filed a complaint for illegal retirement and unfair labor practices against
petitioners. They contended that their retirement from PDC was done by the latter as a retaliatory measure for their union
activities.
RULING: A valid non-contributory retirement plan under which the employer may retire an employee, regardless of age, with 20
years of service. Such retirement plan, made known to the employees and accepted by them, forms part of the employment
contract.
The retirement plan under which private respondents were retired is valid for it forms part of the employment contract of
petitioner-company. The pronouncement made by no less than the DOLE must be given substantial weight, as what the Labor
Arbiter did, in the absence of any contrary evidence. Moreover, the undisputed fact that a number of employees of petitionercompany had availed of The Plan since its effectivity only confirms that The Plan has already been part of the employment
contract of petitioner-company for a long time. Private respondents, particularly Andres, may not now feign ignorance of The
Plan considering that she was the chairman of the union of rank-and-file employees of petitioner-company and, as such, was
considered to be familiar with the policies of the company.
Obviously, private respondents failed to substantiate their allegation that The Plan was invalid. The NLRC was thus incorrect
in ruling in their favor by declaring that they were illegally retired. Hence, the affirmation by the Court of Appeals of the Decision
of the NLRC must likewise be declared erroneous.
CAINTA CATHOLIC SCHOOL v. CAINTA CATHOLIC SCHOOL EMPLOYEES
On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School (School) and
the Cainta Catholic School Employees Union (Union) effective 1 January 1986 to 31 May 1989. On 10 September 1993 that the
Union held an election of officers, with Mrs. Rosalina Llagas (Llagas) being elected as President; Paz Javier (Javier), VicePresident; Fe Villegas (Villegas), Treasurer; and Maria Luisa Santos (Santos), Secretary. Llagas was then the Dean of the Student
Affairs while Villegas and Santos were Year-Level Chairmen. The other elected officers were Rizalina Fernandez, Ester Amigo,
secretaries; Nena Marvilla, treasurer; Gilda Galange and Jimmy del Rosario, auditors; Filomeno Dacanay and Adelina Andres,
P.R.O.s; and Danilo Amigo and Arturo Guevarra, business managers. On 15 October 1993, the School retired Llagas and Javier,
who had rendered more than twenty (20) years of continuous service, pursuant to Section 2, Article X of the CBA.
RULING: The law and this court frown upon unfair labor practices by management including so called union busting. Such
illegal practices will not be sustained by the court even if guised under ostensibly legal premises but with respect to an active
unionized employee who claims having lost his/her job for union activities there are different consideration presented if the
termination is justified under just or authorized cause under the labor code and if the separation from service is effected through
the exercise of a duly accorded management prerogative to retire an employee. There is perhaps a greater imperative to recognize
the management prerogative on retirement than the prerogative to dismiss employee for just or authorized causes. For one there
is a greater subjectivity not to mention factual dispute attached to the concept of just or authorize cause than retirement which
normally contemplates merely the attainment of a certain age or a certain number years in service. It would be easier for
management desirous eliminate pesky union members to abuse the prerogative of termination for such purpose since the
determination of just or authorized cause is rarely a simplistic question but involves facts highly prone to dispute and subjective
interpretation. On the other hand the exercise by management of its retirement prerogative is less susceptible to dubitability as the
question whether an employee could be validly retired. The only factual matter to consider then is whether the employee
concerned had attained the requisite age or number of years in service pursuant to the CBA or employment agreement or if none
pursuant to article 287 of the labor code. In fact the amount of retirement benefits is more likely to be questioned than the
retirement itself. Evidently it more clearly emerges in the case of retirement.

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JACUBE v. SILLIMAN UNIVERSITY

Sometime in 1958, petitioner began working for respondents university medical center as a nurse.
In 1992, respondents human resources department informed petitioner that she was approaching her 35th year of service
with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This
was pursuant to respondents retirement plan for its employees, which provided that its members could be automatically retired
"upon reaching the age of 65 or after 35 years of uninterrupted service to the university."
Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded
with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for
SSS pension. But respondent stood pat on its decision to retire her, citing "company policy."
On November 15, 1993, petitioner filed a complaint in the NLRC termination of service and on November 18, 1993,
respondent compulsorily retired petitioner.
The labor arbiter rendered a decision finding respondent guilty of illegal dismissal and ordered that petitioner be reinstated
with paid full backwages. On appeal, however, the NLRC reversed the labor arbiters decision. The NLRC likewise denied
petitioners motion for reconsideration. In the assailed decision and resolution, the CA affirmed the NLRC. Hence, this petition.
ISSUES:
1) Did respondents retirement plan imposing automatic retirement after 35 years of service contravene the security of tenure
clause in the 1987 Constitution and the Labor Code?
2) Did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its retirement plan?
RULING: Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are
not per se repugnant to the constitutional guaranty of security of tenure.
By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60
years.
However, after reviewing the assailed decision together with the rules and regulations of respondents retirement plan, we
find that the plan runs afoul of the constitutional guaranty of security of tenure. The CA, in ruling against petitioner, premised its
decision to uphold the retirement plan on her voluntary participation therein (The contract fixing for retirement age as allowed
under Article 287 of the Labor Code does not exclusively refer to CBA which provides for an agreed retirement age. The said
provision explicitly allows, as well, other applicable employment contract to fix retirement age.).
The records disclose that the private respondents Retirement Plan has been in effect for more than 30 years. The said plan is
deemed integrated into the employment contract between private respondent and its employees as evidenced by the latters
voluntary contribution through monthly salary deductions.
The Supreme Court, however, finds that it was through no voluntary act of her own that petitioner became a member of the
plan and the repeated use of the word "shall" ineluctably pointed to the conclusion that employees had no choice but to
contribute to the plan. Furthermore, the respondents retirement plan came into effect after petitioner started working for the
company. In short, it was not part of the terms of employment to which petitioner agreed when she started working for
respondent. The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain
from doing so was to resign or lose her jobno agreement of any kind involving such was entered into by the parties.
Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by
her, respondent was guilty of illegal dismissal.
ORO ENTERPRISES v. NLRC
After working continuously with the company for 41 years, private respondent manifested her intention to retire from work
by filing with petitioner a "Claim for Retirement Pay."
In her claim, private respondent pleaded that "the retirement pay she (was) receiving from the Social Security System in the
total sum of P500.00 a month could hardly (suffice to) meet her daily subsistence
Petitioner argued that it has no collective bargaining agreement or any other agreement or established policy concerning
payment of retirement benefits to employees who reach a certain age except that which is required by the Social Security Law.
During the pendency of the appeal, Republic Act No. 7641 took effect, providing among other things, thusly:
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
ISSUE: Whether or not R.A. 7641 can favorably apply to private respondent's case.

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RULING: There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute
has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time
said employment contracts have started. It is a well-settled principle that police power legislation intended to promote public
welfare applies to existing contracts.
The Court, then, affirmed NLRCs findings:
After all, the least that could be said here is that the complainant filed her claim for retirement pay only on January 7, 1993
the date R.A. No. 7641 took effect and that against the backdrop that she retired only on September 15, 1990, her
monetary claim could be treated as well filed within the three (3) years prescriptive period set by law
Thus, the Court ruled that the NLRC cannot be said to have acted with grave abuse of discretion in concluding thereby that
private respondent's claim for retirement benefits should accordingly be held to fall within the ambit of Republic Act No. 7641.
Petition of Oro Enterprises dismissed.
UE v. UE FACULTY ASSOCIATION
As the parties could not come to an agreement on the proper computation of the amount that may be due under a particular
Malacaang decision, the UEFA filed a complaint of underpayment while UE answered with a claim of overpayment.
The petitioner maintained that since the total sixty-percent incremental proceeds from three tuition-fee increases amounted
to P65, 807,263.00 and the actual disbursement to the teaching and non-teaching employees amounted to P73, 308,756.00, it was
alleged that there was an overpayment.
Thereafter, the City Sheriff of Manila as ordered to execute paragraph 3 of the decision of the Office of the President.
In the meantime, however, UE has been filing various pleadings all of which question the correctness of the resolution
granting execution and pointing out alleged irregularities in the execution proceedings. UE likewise claims that due to these errors
and irregularities, it had paid the faculty association more than what is due.
ISSUE: Whether or not there was an overpayment/underpayment on the part of UE.
RULING: This labor dispute traces its origin in a bargaining deadlock between the UE and the UEFA for the renewal of their
collective bargaining agreement for the period June 1, 1978 to May 31, 1981. Consequently, the judgment, to be valid, must be
deemed to refer only to what the contractual rights of the parties should be for the given period. Corollary, any writ of execution
in this case must likewise be so limited. That is, execution must be limited to the enforcement of these contractual rights. A writ
of execution purporting to execute anything beyond this would be void for want of authority.
Consistently, therefore, with the nature of the case a bargaining deadlock case the third paragraph of the Malacanang
decision still referred to what the contractual rights of the parties from 1978 to 1981 would be. The legal import of the third
paragraph is that a new faculty member in 1978 would have for his starting pay, not the rate in 1974, but rather the 1974 rate plus
whatever share a teacher of the same category was entitled to get under the three tuition fee increases.
Also, the claim of underpayment with respect to the 1974, 1976 and 1977 salary increases under PD 451 was rightly
dismissed by the Office of the President, as it "is unmistakably a labor standard case which may be, or should have been
prosecuted before the appropriate authority of primary jurisdiction . . ., and not a labor relations dispute like the instant case,"
The City Sheriff of Manila in executing paragraph 3 of the Malacanang decision obviously went beyond said portion of the
decision. He also unilaterally awarded to the faculty members amounts corresponding to the faculty members' share in tuition fee
increases collected from 1974 to 1983!
A re-computation is therefore necessary for the proper execution of the judgment, and before We can determine whether
there was indeed an overpayment, as claimed by UE, or an underpayment, as claimed by the UEFA.
R&E TRANSPORT v. LATAG
Pedro Latag was a regular employee of La Mallorca Taxi since 1961. When La Mallorca closed down, Latag (P) transferred to
R&E Transport (P). As a taxi driver, Latag received an average daily salary of five hundred pesos.
Latag got sick in 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he
reported for work in 1998 but was no longer allowed to continue working due to old age.
Latag thus asked R&E Transport for his retirement pay pursuant to Republic Act 7641, but he was ignored. Thus, Latag filed a
case for payment of his retirement pay before the NLRC.
The labor arbiter credited Latag with 37 years of service for La Mallorca and R&E Transport. This was reversed by the
NLRC and credited Latag with only 14 years of service at R&E Transport. However, before the NLRC decision, Latag's widow
accepted a part of the retirement pay and signed a quitclaim or waiver.
Later on appeal, the appellate court upheld the finding of the labor arbiter.

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ISSUES: Is a taxi driver entitled to retirement pay despite of the quitclaim?

RULING: Yes. Latag was credited with 14 years of service with R&E Transport pursuant Article 287 of the Labor Code, as
amended by Republic Act No. 7641, provides:
Article 287. Retirement. - x x x In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee x x x may retire and shall be entitled to retirement pay equivalent to at least
one-half month salary for every year of service, a fraction of at least six months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus onetwelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.
As to the Quitclaim and Waiver signed by Latag's widow, the appellate court committed no error when it ruled that the
document was invalid and could not bar Latag from demanding the benefits legally due.
A quitclaim is ineffective in barring recovery of the full measure of a workers rights, and the acceptance of benefits
therefrom does not amount to estoppel.
SALOMON ET AL. v. ASSOCIATION OF INTERNATIONAL SHIPPING LINES
Association of International Shipping Lines, Inc. suffered substantial financial losses as a result of a decline in the volume of
cargo measuring activities and shipping transactions.
With this, respondent adopted an organizational streamlining program that resulted in the closure of its Measuring
Department and retrenchment or termination from the service of 17 workers. It terminated petitioners services. Aggrieved,
petitioners filed with the National Conciliation and Mediation Board a complaint for illegal dismissal and payment of retirement
benefits.
During the conciliation proceedings, respondent paid petitioners their retirement pay at the rate of one-month salary per year
of service. And after having been paid their retirement pay, they executed and signed separate Releases and Quitclaims.
Consequently, the above case was considered closed and terminated.
Surprisingly, petitioners filed with the Labor Arbiter a complaint for payment of retirement benefits, damages, and attorneys
fees against respondent, but was dismissed by the NLRC and Court of Appeals.
The CA held: It is clear from the records that petitioners were separated from service due to retrenchment undertaken by
private respondent company. Unarguably, retrenchment is recognized as one of the authorized causes for termination of
employment under the Labor Code. Hence, this petition.
Issue: Whether the grant of retirement benefits to petitioners as shown in their quitclaims precludes their availment of retirement
benefits pursuant to their Collective Bargaining Agreement.
Ruling: The NLRC and the Labor Arbiter ruled that the amount received by petitioners as shown in their quitclaims represent all
the retirement benefits due them. The Court will not disturb this finding for upon review of the said quitclaims, it is apparent that
the amount is representative of all the claims of petitioners. x x x.
Moreover, the minutes of the conference in the NCMB showed that the parties studied their options. Petitioners asked private
respondent Company to show proof of losses to justify its decision to abolish the department. Thereafter, the parties agreed
upon the following: (1) private respondent company will abolish the Measuring Department, (2) private respondent company will
pay petitioners their retirement benefits plus other benefits due them.
A perusal of the records reveals that petitioners freely and voluntarily signed their individual quitclaims. Moreover, during their
conciliation meetings, petitioners were assisted by their union. x x x. Absent any evidence showing that petitioners were tricked
into signing their quitclaim, the Court will not resort to surmises and conjectures as to what is behind the quitclaim executed by
the parties. As correctly held by public respondent NLRC, petitioners are no longer entitled to separation pay nor additional
retirement benefits under their CBA.
E. RAZON, JR. v. NLRC
Inc.

Since 1966, private respondent (Nicolas S. Garzota) had been employed by petitioner company then known as E. Razon,

On February 28, 1986, because of failing health and having qualified for compulsory retirement at age 65, private respondent,
then the company's chief accountant, submitted a letter request for retirement.
Thereafter, petitioners discovered that books of account allegedly in the custody of private respondent as chief accountant
were missing. Thus, petitioner Enrique Razon, Jr. issued on March 19, 1986 a memorandum terminating the services of private
respondent on the ground of loss of trust and confidence.

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Acting on the private respondents complaint for illegal dismissal and unpaid retirement benefits, the Labor Arbiter ordered
payment of such, which the NLRC affirmed.
Meanwhile, the Marina Port Services, Inc. hired private respondent.
ISSUE: WON the NLRC ravely abused its discretion when it sustained the grant of retirement benefits to private respondent.
RULING: In the case at bar, petitioners' rejection of the subject claim cannot be justifiably sustained. The reported loss of
confidence was due to the disappearance of certain books of account which petitioners directly attributed to private respondent.
Petitioners were convinced that simply because private respondent could not produce the needed books on demand, he was no
longer worthy of their trust and confidence. They abruptly dismissed him without giving him a chance to explain his side.
Thus, the resulting dismissal of private respondent was in itself marked by arbitrariness and lack of due process. Petitioners
cannot now be allowed to use that as their legal excuse for denying the employee's legitimate claim for retirement pay.
The fact that private respondent sought employment elsewhere should not hinder him from claiming his retirement benefits.
It is an inexorable fact that at 65 years, he reached the mandatory age for retirement and, therefore, qualified to retire.
R. SERRANO v. CA
From 1974 to 1991, A Company, the local agent of foreign corporation B Company, deployed petitioner Serrano as a seaman to
Liberian, British and Danish ships. As petitioners was on board a ship most of the time, respondent Maersk offered to send
portions of petitioners salary to his family in the Philippines by money order. Petitioner agreed and from 1977 to 1978, he
instructed respondent Maersk to send money orders to his family. Respondent Maersk also deducted various amounts from his
salary for Danish Social Security System (SSS), welfare contributions, ship clubs, and SSS medicate. Petitioners family failed to
receive the money orders petitioners sent through respondent Maersk. Upon learning this in 1978, petitioners demanded that
respondent Maersk pay him the amounts the latter deducted from his salary, which request were ignored. Whenever he returned
to the Philippines, petitioners follow up his money claims but he would be told to return after several weeks while respondent
Maersk would hire him again to board another one of their vessels for about a year.
Finally, in October 1993, petitioner wrote to respondent Maersk demanding immediate payment to him of the total amount of the
money orders deducted from his salary from 1977 to 1978. On November 11, 1993, B company replied to petitioner that they
keep accounting documents only for a certain number of years, thus data on his money claims from 1977 to 1978 were no longer
declined petitioners demand for payment. In April 1994, petitioners filed a complaint for collection of the total amount of the
unsent money orders and illegal salary deductions against the respondents Maersk in the Philippine Overseas Employment
Agency (POEA). The NLRC dismissed within three years from the time the cause of action accrued; otherwise they shall be
forever berried.
Issue: Did the money claim of petitioner prescribe?
Held: No. Petitioners cause of action accrued only in 1993 when respondent A.P Moller wrote to him that its accounting records
showed it had no outstanding money orders and that his case was considered outdated. Thus the three (3) years prescriptive
period should be counted from 1993 and not 1978 and since his complaint was filed in 1994, he claims that it has not prescribed.
It is settled jurisprudence that a cause of action has three elements, to wit (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; 2) an obligation on the part of the named defendant to respect or not to violate
such right, and 3) an act or omission on the part of such defendant volatile of the right of the plaintiff or constituting a branch of
the obligation of the defendant to the plaintiff. In October 1993, Serrano finally demanded in writing payment of the unsent
money orders. Then and only then did respondent categorically deny the claim. Moller in its letter dated November 22, 1993.
Following the Baliwag Transit ruling (1989), petitioners cause of action accrued only upon respondent. Mollers definite denial of
his claim in November 1993. Having filed his action five (5) months thereafter or in April 1994, we holds that it was filed within
the three year (3) prescriptive period provided in Article 291 of the Labor Code.
LUDO CORP. v. SAORNIDO
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.
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 the length of service rendered by the availing employee.

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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 results of the voluntary arbitration are as follows:
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.
In due time, LUDO filed a motion for reconsideration, which was denied by the Court of Appeals. Hence this petition.
ISSUE: 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.
RULING: 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. 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. Here, the Voluntary Arbitrator received the evidence of the parties firsthand. 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.
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.
SPECIALIST ACCESSORIES v. ALABANZA
Petitioners aver that the action of the respondents for the recovery of unpaid wages, separation pay, and the 13th month pay
has already prescribed since the action was filed almost 5 years from the time Jones severed his employment from ASI. Jones files
his resignation on 31 October 1997, while the complaint before the La was instituted on 29 September 2002. Petitioners contend
that the 3-year prescriptive period under Article 291 of the Labor Code had already set in, thereby barring all of respondent's
money claims arising from their employer-employee relationship.

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Based on the findings of fact of the LA, it was ASI which was responsible for the delay in the institution of the complaint.
When Jones filed his resignation, he immediately asked for the payment of his money claims. However, the management of ASI
promised him that he would be paid immediately after the claims of the rank-and-file employees had been paid. Jones relied on
this representation. Unfortunately, the promise was never fulfilled even until the time of Jones' death.
In light of these circumstances, we can apply the principle of PROMISSORY ESTOPPEL, which is a recognized exception
to the 3-year prescriptive period enunciated in Article 291 of the Labor Code.
PROMISSORY ESTOPPEL may arise from the making of a promise, even though without consideration,
1.
2.

if it was intended that the promise should be relied upon, as in fact it was relied upon, and
if a refusal to enforce it would virtually sanction the perpetration of fraud or would result in other injustice.

Promissory estoppel presupposes the existence of a promise on the part of one against whom estoppel is claimed. the
promise must be plain and unambiguous and sufficiently specific so that the court can understand the obligation assumed and
enforce the promise according to its terms.
In order to make out a claim of promissory estoppel, a party bears the burden of establishing the following elements: a
promise was reasonably expected to induce action or forbearance; such promise did, in fact, induce such action or forbearance;
and the party suffered detriment as a result.
All the requisites of promissory estoppel are present in this case. Jones relied on the promise of ASI that he would be paid as
soon as the claims of all rank-and-file employees had been paid. If not for this promise that he had held on to until the time of his
death, we see no reason why he would delay filing the complaint before the LA. Thus, we find ample justification not to follow
the prescriptive period imposed under Article 291 of the Labor Code. Great injustice will be committed if we will brush aside the
employee's claims on a mere technicality, especially when it was petitioner's own action that prevented respondent from
interposing the claims within the required period.
Petitioners argue that the NLRC committed grave abuse of discretion in dismissing their appeal for failure to post the
complete amount of the bond. They assert that they cannot post an appeal bond due to financial incapacity. They say that strict
enforcement of the NLRC rules of procedure that appeal bond shall be equivalent to the monetary award is oppressive and would
have the effect of depriving petitioners of their right to appeal.
Under Article 223 of the Labor Code, the posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the LA.
The filing of a bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to
confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of the LA final and executory. This
requirement is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor
upon the dismissal of the employer's appeal. It is intended to discourage employers from using an appeal to delay or evade their
obligation to satisfy their employees' just and lawful claims.
Furthermore, we would like to reiterate that appeal is not a constitutional right but a mere statutory privilege. Thus, parties
who seek to avail themselves of it must comply with the statutes or rules allowing it. Perfection of an appeal in the manner and
within the period permitted by law is mandatory and jurisdictional. The requirements for perfecting an appeal must as a rule, be
strictly followed.
The propriety of the monetary award of the LA is already binding upon this Court. Petitioners' failure to perfect their appeal
in the manner and period required by the rules makes the award final and executory. Just as a losing party has the privilege to file
an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision.

129 | A m p u a n - B e s m o n t e - C a o a g a s - C a r i l l o - C o - J a v i e r - L a s a m - L e a l - M a b a l o t - M a r o n i l l a P asc ual -P erol a-Sal and anan -Santos-Tropic ale s-Vill amor-Vi ll anue va