Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

169632 March 28, 2006

The parties then made a joint request for the SOLE to assume jurisdiction over the dispute. The labor dispute was docketed as OS-AJ-0032-2003. On September 18, 2003, an Assumption of Jurisdiction Order5 (AJO) was issued by the SOLE, thus: WHEREFORE, this Office hereby ASSUMES JURISDICTION over the labor dispute at the UNIVERSITY OF SAN AGUSTIN, pursuant to Article 263(g) of the Labor Code, as amended. ACCORDINGLY, any strike or lockout whether actual or intended, is hereby strictly enjoined and the parties are directed to cease and desist from committing any act that might exacerbate the situation. Finally, to expedite resolution of the dispute, the parties are directed to submit their respective position papers and evidence to this Office within TEN (10) calendar days from receipt hereof, with proof of service to the other party. REPLY thereto shall be submitted with proof of service to the other party, within five (5) calendar days from receipt of the other partys P OSITION PAPER. On September 19, 2003, the Union staged a strike. At 6:45 a.m. of the same day, Sheriffs Francisco L. Reyes and Rocky M. Francisco had arrived at San Agustin University to serve the AJO on the Union. At the main entrance of the University, the sheriffs saw some elements of the Union at the early stages of the strike. There they met Merlyn Jara, the Unions vice president, upon whom the sheriffs tried to serve the AJO, but who, after reading it, refused to receive the same, citing Union Board Resolution No. 3 naming the union president as the only person authorized to do so. The sheriffs explained to Ms. Jara that even if she refused to acknowledge receipt of the AJO, the same would be considered served. Sheriff Reyes further informed the Union that once the sheriffs post the AJO, it would be considered received by the Union. 6 At approximately 8:45 a.m., the sheriffs posted copies of the AJO at the main gate of San Agustin University, at the main entrance of its buildings and at the Unions office inside the campus. At 9:20 a.m., the sheriffs served the AJO on the University. Notwithstanding the sheriffs advice as to the legal implication of the Unions refusal to be served with the AJO, the Union went ahead with the strike. At around 5:25 p.m., the Union president arrived at the respondent Universitys premises and received the AJO from the sheriffs. On September 24, 2003, the University filed a Petition to Declare Illegal Strike and Loss of Employment Status7 at the National Labor Relations Commission (NLRC) Sub-regional Arbitration Branch No. VI in Iloilo City. The case was docketed as NLRC SRAB Case No. 06-0950370-03, which the University later on requested to be consolidated with OS-AJ-0032-2003 pending before the SOLE. The motion for consolidation was granted by the Labor Arbiter in an Order dated November 7, 2003.8 On April 6, 2004, the SOLE rendered a Decision9 resolving the various economic issues over which the parties had a deadlock in the collective bargaining, including the issue of legality/illegality of the September 19, 2003 strike. Dispositively, the decision reads: WHEREFORE, the parties are hereby directed to conclude a memorandum of agreement embodying the foregoing dispositions to be appended to the current CBA. The petition to declare the strike illegal is hereby DISMISSED for want of legal and factual basis. Consequently, there is no basis whatsoever to declare loss of employment status on the part of any of the striking union members. SO ORDERED. The University moved for a reconsideration of the said decision but its motion was denied by the SOLE in a Resolution10 of May 24, 2004. In time, the University elevated the matter to the CA by way of a petition for certiorari, thereat docketed as CA-G.R. SP No. 85317. On March 4, 2005, the CA rendered a Decision11 partially granting the Universitys petition. While the CA affirmed the rest of the SOLEs decision on the economic issues, particularly the

UNIVERSITY OF SAN AGUSTIN EMPLOYEES UNION-FFW (USAEU-FFW), and individual union officers THEODORE NEIL LASOLA, MERLYN JARA, JULIUS MARIO, FLAVIANO MANALO, RENE CABALUM, HERMINIGILDO CALZADO, MA. LUZ CALZADO, RAY ANTHONY ZUIGA, RIZALENE VILLANUEVA, RUDANTE DOLAR, ROVER JOHN TAVARRO, RENA LETE, ALFREDO GORIONA, RAMON VACANTE and MAXIMO MONTERO, Petitioners, vs. THE COURT OF APPEALS and UNIVERSITY OF SAN AGUSTIN, Respondents. DECISION GARCIA, J.: By this petition for review on certiorari, petitioners University of San Agustin Employees UnionFFW (Union) and its officers seek to reverse and set aside the Partially Amended Decision 1 of the Court of Appeals (CA) dated August 23, 2005 in CA-G.R.SP No. 85317, reversing the Decision and Resolution of the Secretary of Labor and Employment (SOLE) dated April 6, 2004 and May 24, 2004, respectively. The assailed CA decision declared the strike conducted by the petitioner Union, illegal, and consequently, the co-petitioner union officers were deemed to have lost their employment status. It further vacated the SOLEs resolution of the economic issues involved in the case and directed the parties to resort to voluntary arbitration in accordance with the grievance machinery as embodied in their existing collective bargaining agreement (CBA). The facts: Respondent University of San Agustin (University) is a non-stock, non-profit educational institution which offers both basic and higher education courses. Petitioner Union is the duly recognized collective bargaining unit for teaching and non-teaching rank-and-file personnel of the University while the other individual petitioners are its officers. On July 27, 2000, the parties entered into a 5-year CBA which, among other things, provided that the economic provisions thereof shall have a period of three (3) years or up to 2003. Complementary to said provisions is Section 3 of Article VIII of the CBA providing for salary increases for School Years (SY) 2000-2003, such increase to take the form of either a lump sum or a percentage of the tuition incremental proceeds (TIP). The CBA contained a "no strike, no lockout" clause and a grievance machinery procedure to resolve management-labor disputes, including a voluntary arbitration mechanism should the grievance committee fail to satisfactorily settle such disputes. Pursuant to the CBA, the parties commenced negotiations for the economic provisions for the remaining two years, i.e., SY2003-2004 and SY2004-2005. During the negotiations, the parties could not agree on the manner of computing the TIP, thus the need to undergo preventive mediation proceedings before the National Conciliation and Mediation Board (NCMB), Iloilo City. The impasse respecting the computation of TIP was not resolved. This development prompted the Union to declare a bargaining deadlock grounded on the parties failure to arrive at a mutually acceptable position on the manner of computing the seventy percent (70%) of the net TIP to be allotted for salary and other benefits for SY2003-2004 and SY2004-2005. Thereafter, the Union filed a Notice of Strike before the NCMB which was expectedly opposed by the University in a Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary Arbitration,3 invoking the "No strike, no lockout" clause4 of the parties CBA. The NCMB, however, failed to resolve the Universitys motion.
2

formula to be used in computing the share of the employees in the tuition fee increase for Academic Year 2003-2004, it, however, reversed the SOLEs ruling as to the legality of the September 19, 2003 strike, to wit: WHEREFORE, the foregoing premises considered, the petition is hereby partially GRANTED. The assailed Decision of the public respondent SOLE is hereby MODIFIED to the effect that the strike held by the [petitioners] on September 19, 2003 is illegal. Hence, the union officers are deemed to have lost their employment status. The assailed Decision however, is AFFIRMED in all other respects. SO ORDERED. (Word in bracket added). Both parties filed their respective motions for partial reconsideration of the aforestated decision, the University excepting from the CAs decision insofar as the latter affirmed the SOLEs resolution of the economic issues. On the other hand, the Union sought reconsideration of the CAs finding of illegality of the September 19, 2003 strike. In the meantime, on April 7, 2005, the University served notices of termination to the union officers who were declared by the CA as deemed to have lost their employment status. On the same day April 7, 2005 in response to the Universitys action, the Union filed with the NCMB a second notice of strike, this time on ground of alleged union busting. On April 22, 2005, the parties again took initial steps to negotiate the new CBA but said attempts proved futile. Hence, on April 25, 2005, the Union went on strike. In reaction, the University notified the Union that it was pulling out of the negotiations because of the strike. On August 23, 2005, the CA, acting on the parties respective motions for reconsideration, promulgated the herein challenged Partially Amended Decision. 12 Finding merit in the respondent Universitys motion for partial reconsideration, the CA ruled that the SOLE abused its discretion in resolving the economic issues on the ground that said issues were proper subject of the grievance machinery as embodied in the parties CBA. Consequently, the CA directed the parties to refer the economic issues of the CBA to voluntary arbitration. The CA, however, stood firm in its finding that the strike conducted by the petitioner Union was illegal and its officers were deemed to have lost their employment status. Dispositively, the decision reads: WHEREFORE, in view of all the foregoing premises, an amended judgment is hereby rendered by us GRANTING the petition for certiorari, SETTING ASIDE our original decision in this case which was promulgated on March 4, 2005, SETTING ASIDE also the Decision rendered by the public respondent SOLE on April 6, 2004 and DECLARING the strike held on September 19, 2003 by the [petitioner] Union as ILLEGAL. The union officers are therefore deemed to have lost their employment status. The parties are hereby DIRECTED to refer the economic issues of the CBA to VOLUNTARY ARBITRATION, where the computation and determination of the TIP shall be in the manner directed in the body of this Decision. SO ORDERED. On September 20, 2005, the Union and its dismissed officers filed the instant petition raising the following basic issues: I THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING ILLEGAL THE STRIKE OF THE PETITIONERS ON SEPTEMBER 19, 2003 AND IN DECLARING THE UNION OFFICERS AS DEEMED TO HAVE LOST THEIR EMPLOYMENT STATUS FOR THE ALLEGED FAILURE OF THE PETITIONERS TO IMMEDIATELY RETURN TO THEIR WORK WHEN THE ASSUMPTION OF JURISDICTION ORDER WAS DEEMED SERVED UPON THEM BY THE DOLE SHERIFFS AS OF 8:45 IN THE MORNING OF THAT DATE, WHEN, IN CASES WHERE THE STRIKE HAS ALREADY

COMMENCED, THE SECRETARY OF LABOR AND EMPLOYMENT (SOLE) ALWAYS GIVES TWENTY-FOUR HOURS TO THE STRIKING WORKERS WITHIN WHICH TO RETURN TO WORK, AND TAKING INTO CONSIDERATION THE TOTALITY OF THE CONDUCT OF THE STRIKERS, AS WHAT THE SOLE HAD DONE, THE PETITIONERS HAVE NOT MANIFESTED NAKED DISPLAY OF RECALCITRANCE NOR SHOWN BAD FAITH TO THE RESPONDENT UNIVERSITY. II THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DIRECTING TO REFER THE ECONOMIC ISSUES OF THE LABOR DISPUTE TO VOLUNTARY ARBITRATION WHEN IT IS SETTLED BY JURISPRUDENCE THAT "THE LABOR SECRETARYS AUTHORITY TO ASSUME JURISDICTION OVER A LABOR DISPUTE MUST INCLUDE AND EXTEND TO ALL QUESTIONS AND CONTROVERSIES ARISING THEREFROM, EVEN INCLUDING CASES OVER WHICH THE LABOR ARBITER HAS EXCLUSIVE JURISDICTION." Prefatorily, we restate the time-honored principle that in petitions for review under Rule 45 of the Rules of Court, only questions of law may be raised. It is not our function to analyze or weigh all over again evidence already considered in the proceedings below, our jurisdiction being limited to reviewing only errors of law that may have been committed by the lower court. 13 The resolution of factual issues is the function of lower courts, whose findings on these matters are received with respect. A question of law which we may pass upon must not involve an examination of the probative value of the evidence presented by the litigants. 14 Here, however, the findings of fact of the CA are not in accord with the conclusions made by the SOLE regarding the legality of the subject strike. Consequently, we are compelled to make our own assessment of the evidence on record insofar as the strike issue is concerned. We find the CAs conclusions to be well supported by evidence, particularly the Sheriffs Report.15 As we see it, the SOLE was remiss in disregarding the sheriffs report. It bears stressing that said report is an official statement by the sheriff of his acts under the writs and processes issued by the court, in this case, the SOLE, in obedience to its directive and in conformity with law. In the absence of contrary evidence, a presumption exists that a sheriff has regularly performed his official duty. To controvert the presumption arising therefrom, there must be clear and convincing evidence. The sheriffs report unequivocally stated the union officers refusal to receive the AJO when served on them in the morning of September 19, 2003. The September 16, 2003 Unions Board Resolution No. 3 which gave sole authority to its president to receive the AJO must not be allowed to circumvent the standard operating procedure of the Office of the Undersecretary for Labor Relations which considers AJOs as duly served upon posting of copies thereof on designated places. The procedure was adopted in order to prevent the thwarting of AJOs by the simple expedient of refusal of the parties to receive the same, as in this case. The Union cannot feign ignorance of this procedure because its counsel Atty. Mae M. Gellecanao-Laserna was a former Regional Director of the Department of Labor and Employment (DOLE). To be sure, the Union was not able to sufficiently dispute the truth of the narration of facts contained in the sheriffs report. Hence, it was not unreasonable for the CA to conclude that there was a deliberate intent by the Union and its officers to disregard the AJO and proceed with their strike, which, by their act of disregarding said AJO made said strike illegal. The AJO was issued by the SOLE pursuant to Article 263(g) of the Labor Code, which reads: Art. 263. Strikes, picketing, and lockouts. - (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the

time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. (Emphasis supplied). Conclusively, when the SOLE assumes jurisdiction over a labor dispute in an industry indispensable to national interest or certifies the same to the NLRC for compulsory arbitration, such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout. Moreover, if one had already taken place, all striking workers shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. In TransAsia Shipping Lines, Inc., et al. vs. CA, et al., 16 the Court declared that when the Secretary exercises these powers, he is granted great breadth of discretion in order to find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction over a labor dispute, or the certification of the same to the NLRC for compulsory arbitration, always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout. In this case, the AJO was served at 8:45 a.m. of September 19, 2003. The strikers then should have returned to work immediately. However, they persisted with their refusal to receive the AJO and waited for their union president to receive the same at 5:25 p.m. The Unions defiance of the AJO was evident in the sheriffs report: We went back to the main gate of the University and there NCMB Director Dadivas introduced us to the Union lawyer, Atty. Mae Lacerna a former DOLE Regional Director. Atty. Lacerna however refused to be officially served the Order again pointing to Board Resolution No. 3 passed by the Union officers. Atty. Lacerna then informed the undersigned Sheriffs that the Union president will accept the Order at around 5:00 oclock in the afternoon. Atty. Lacerna told the undersigned Sheriff that only when the Union president receives the Order at 5:00 p.m. shall the Union recognize the Secretary of Labor as having assumed jurisdiction over the labor dispute.17 Thus, we see no reversible error in the CAs finding that the strike of September 19, 2003 was illegal. Consequently, the Union officers were deemed to have lost their employment status for having knowingly participated in said illegal act. The Unions assertion of a well settled practice that the SOLE always gives twenty -four hours (24) to the striking workers within which to return to work, offers no refuge. Aside from the fact that this alleged well settled practice has no basis in law and jurisprudence, Article 263(g) of the Labor Code, supra, is explicit that if a strike has already taken place at the time of assumption of jurisdiction or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lock-out. This is compounded further by this Courts rulings which have never interpreted the phrase "immediately return to work" found in Article 263(g) to mean "within twenty four (24) hours." On the other hand, the tenor of these ponencias18 indicates an almost instantaneous or automatic compliance for a striker to return to work once an AJO has been duly served. We likewise find logic in the CAs directive for the herein parties to proceed with voluntary arbitration as provided in their CBA. As we see it, the issue as to the economic benefits, which included the issue on the formula in computing the TIP share of the employees, is one that arises from the interpretation or implementation of the CBA. To be sure, the parties CBA provides for a grievance machinery to resolve any "complaint or dissatisfaction arising from the interpretation or implementation of the CBA and those arising from the interpretation or enforcement of company personnel policies."19 Moreover, the same CBA provides that should the grievance machinery fail to resolve the grievance or dispute, the same shall be "referred to a Voluntary Arbitrator for arbitration and final resolution."20 However, through no fault of the

University these processes were not exhausted. It must be recalled that while undergoing preventive mediation proceedings before the NCMB, the Union declared a bargaining deadlock, filed a notice of strike and thereafter, went on strike. The University filed a Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary Arbitration 21 but the motion was not acted upon by the NCMB. As borne by the records, the University has been consistent in its position that the Union must exhaust the grievance machinery provisions of the CBA which ends in voluntary arbitration. The Universitys stance is consistent with Articles 261 and 262 of the Labor Code, as amended which respectively provide: ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a collective bargaining agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the collective bargaining agreement. For purposes of this Article, gross violations of collective bargaining agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators and shall immediately dispose and refer the same to the grievance machinery or voluntary arbitration provided in the collective bargaining agreement. ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. The grievance machinery and no strike, no lockout 22 provisions of the CBA forged by the University and the Union are founded on Articles 261 and 262 quoted above. The parties agreed that practically all disputes including bargaining deadlocks shall be referred to the grievance machinery which ends in voluntary arbitration. Moreover, no strike or no lockout shall ensue while the matter is being resolved. The University filed a Motion to Strike Out Notice of Strike and Refer the Dispute to Voluntary Arbitration23 precisely to call the attention of the NCMB and the Union to the fact that the CBA provides for a grievance machinery and the parties obligation to exhaust and honor said mechanism. Accordingly, the NCMB should have directed the Union to honor its agreement with the University to exhaust administrative grievance measures and bring the alleged deadlock to voluntary arbitration. Unfortunately, the NCMB did not resolve the Universitys motion thus paving the way for the strike on September 19, 2003 and the deliberate circumvention of the CBAs grievance machinery and voluntary arbitration provisions. As we see it, the failure or refusal of the NCMB and thereafter the SOLE to recognize, honor and enforce the grievance machinery and voluntary arbitration provisions of the parties CBA unwittingly rendered said provisions, as well as, Articles 261 and 262 of the Labor Code, useless and inoperative. As here, a union can easily circumvent the grievance machinery and a previous agreement to resolve differences or conflicts through voluntary arbitration through the simple expedient of filing a notice of strike. On the other hand, management can avoid the grievance machinery and voluntary arbitration provisions of its CBA by simply filing a notice of lockout. In Liberal Labor Union vs. Philippine Can Company,24 the Court viewed that the main purpose of management and labor in adopting a procedure in the settlement of their disputes is to prevent a strike or lockout. Thus, this procedure must be followed in its entirety if it is to achieve its objective. Accordingly, the Court in said case held:

The authorities are numerous which hold that strikes held in violation of the terms contained in a collective bargaining agreement are illegal, specially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved. It is noteworthy that in Liberal, management refused to submit names in connection with the formation of the grievance committee. Yet, the Court ruled in that case that labor still had no right to declare a strike, for its duty is to exhaust all available means within its reach before resorting to force. In the case at bench, the University, in filing its Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary Arbitration before the NCMB, was insisting that the Union abide by the parties CBAs grievance machinery and voluntary arbitration provisions. With all the more reasons then should the Union be directed to proceed to voluntary arbitration. We are not unmindful of the Courts ruling in International Pharmaceuticals, Inc. vs. Secretary of Labor, et al.,25 that the SOLE s jurisdiction over labor disputes must include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction. However, we are inclined to treat the present case as an exception to that holding. For, the NCMBs inaction on the Universitys motion to refer the dispute to voluntary arbitration veritably forced the hand of the University to seek and accordingly submit to the jurisdiction of the SOLE. Considering that the CBA contained a no strike, no lockout and grievance machinery and voluntary arbitration clauses, the NCMB, under its very own Manual of Procedures in the Settlement and Disposition of Conciliation and Preventive Mediation Cases, should have declared as not duly filed the Unions Notice of Strike and thereafter, should have referred the labor dispute to voluntary arbitration pursuant to Article 261, supra, of the Labor Code. For sure, Section 6(c)(i), Rule VI, of the NCMBs Manual specifically provides: Section 6. Action on non-strikeable issues - A strike or lockout notice anchored on grounds involving (1) inter-union or intra-union disputes (2) violation of labor standard laws (3) pending cases at the DOLE Regional Offices, BLR, NLRC and its appropriate Regional Branches, NWPC and its Regional Wage Boards, Office of the Secretary, Voluntary Arbitrator, Court of Appeals and the Supreme Court (4) execution and enforcement of final orders, decisions, resolutions or awards of no. (3) above shall be considered not duly filed and the party so filing shall be notified of such finding in writing by the Regional Branch Director. On his part, the Conciliator-Mediator shall convince the party concerned to voluntarily withdraw the notice without prejudice to further conciliation proceedings. Otherwise, he shall recommend to the Regional Branch Director that the notice be treated as a preventive mediation case. xxx xxx xxx xxx xxx xxx c. Action on Notices Involving Issues Cognizable by the Grievance Machinery, Voluntary Arbitration or the National Labor Relations Commission. i) Disputes arising from the interpretation or implementation of a collective bargaining agreement or from the interpretation or enforcement of company personnel policies shall be referred to the grievance machinery as provided for under Art. 261 of the Labor Code xxx (Emphasis supplied). As quoted earlier, Article 261 of the Labor Code mentioned in the aforequoted Section 6(c)(i), Rule VI of the NCMB Manual refers to the jurisdiction of voluntary arbitrator or panel of voluntary arbitrators "to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA and those arising from the interpretation or enforcement of company personnel policies," hence "violations of a CBA, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the CBA." The same Article further states that the "Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment (DOLE) shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the CBA."

As it were, Article 261 of the Labor Code, in relation to Section 6(c)(i), Rule VI of the NCMB Manual, provides the manner in which the NCMB must resolve notices of strike that involve nonstrikeable issues. And whether the notice of strike or lockout involves inter-union or intra-union disputes, violation of labor standards laws or issues cognizable by the grievance machinery, voluntary arbitration or the NLRC, the initial step is for the NCMB to consider the notice of strike as not duly filed. Centering on disputes arising from the interpretation or implementation of a CBA or from the interpretation or enforcement of company personnel policies, following Section 6(c)(i), Rule VI, supra, of the NCMB Manual, after the declaration that the notice of strike is "not duly filed," the labor dispute is to be referred to voluntary arbitration pursuant to Article 261, supra, of the Labor Code. In short, the peculiar facts of the instant case show that the University was deprived of a remedy that would have enjoined the Union strike and was left without any recourse except to invoke the jurisdiction of the SOLE. Following Liberal, this Court will not allow the no strike, no lockout, grievance machinery and voluntary arbitration clauses found in CBAs to be circumvented by the simple expedient of filing of a notice of strike or lockout. A similar circumvention made possible by the inaction of the NCMB on the Universitys Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary Arbitration will not be countenanced. To rule otherwise would render meaningless Articles 261 and 262 of the Labor Code, as amended, as well as the voluntary arbitration clauses found in CBAs. All told, we find no reversible error committed by the CA in rendering its assailed decision. WHEREFORE, the petition is DENIED. The Partially Amended Decision dated August 23, 2005 of the Court of Appeals in CA-G.R. SP No. 85317 is AFFIRMED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. Nos. 164302-03 January 24, 2007

Union members wore gears, red tag cloths stating "YES KAMI SA STRIKE" as headgears and on the different parts of their uniform, shoulders and chests. The Office of the Mayor issued a permit to the Union, allowing it "to conduct a mass protest action within the perimeter of the Coca-Cola plant on September 21, 1999 from 9:00 a.m. to 12:00 noon."7 Thus, the Union officers and members held a picket along the front perimeter of the plant on September 21, 1999. All of the 14 personnel of the Engineering Section of the Company did not report for work, and 71 production personnel were also absent. As a result, only one of the three bottling lines operated during the day shift. All the three lines were operated during the night shift with cumulative downtime of five (5) hours due to lack of manning, complement and skills requirement. The volume of production for the day was short by 60,000 physical case[s] versus budget.8 On October 13, 1999, the Company filed a "Petition to Declare Strike Illegal" 9 alleging, inter alia, the following: there was a deadlock in the CBA negotiations between the Union and Company, as a result of which a Notice of Strike was filed by the Union; pending resolution of the Notice of Strike, the Union members filed applications for leave on September 21, 1999 which were disapproved because operations in the plant may be disrupted; on September 20, 1999, one day prior to the mass leave, the Union staged a protest action by wearing red arm bands denouncing the alleged anti-labor practices of the company; on September 21, 1999, without observing the requirements mandated by law, the Union picketed the premises of the Company in clear violation of Article 262 of the Labor Code; because of the slowdown in the work, the Company suffered losses amounting to P2,733,366.29; the mass/protest action conducted on September 21, 1999 was clearly a strike; since the Union did not observe the requirements mandated by law, i.e., strike vote, cooling-off period and reporting requirements, the strike was therefore illegal; the Union also violated the provision of the CBA on the grievance machinery; there being a direct violation of the CBA, the Unions action constituted an unfair labor practice; and the officers who knowingly participated in the commission of illegal acts during the strike should be declared to have lost their employment status. The Company prayed that judgment be rendered as follows: 1. Declaring the strike illegal; 2. Declaring the officers of respondent Union or the individual respondents to have lost their employment status; 3. Declaring respondent Union, its officers and members guilty of unfair labor practice for violation of the CBA; and 4. Ordering the respondents to pay petitioner the following claims for damages: a. Actual Damages in the amount of P 4,733,366.29 b. Moral Damages in the amount of Five (5) Million Pesos; and c. Exemplary Damages in the amount of Two (2) Million Pesos. 10 The Union filed an Answer with a Motion to Dismiss and/or to Suspend Proceedings 11 alleging therein that the mass action conducted by its officers and members on September 21, 1999 was not a strike but just a valid exercise of their right to picket, which is part of the right of free expression as guaranteed by the Constitution; several thousands of workers nationwide had launched similar mass protest actions to demonstrate their continuing indignation over the ill effects of martial rule in the Philippines.12 It pointed out that even the officers and members of the Alyansa ng mga Unyon sa Coca-Cola had similarly organized mass protest actions. The Union insisted that officers and members filed their applications for leave for September 21, 1999 knowing fully well that there were no bottling operations scheduled on September 21 and 22, 1999; they even secured a Mayors permit for the purpose. The work ers, including the petitioners, merely marched to and fro at the side of the highway near one of the gates of the Sta. Rosa Plant, the loading bay for public vehicles. After 3 hours, everyone returned to work according to their respective shifting schedules. The Union averred that the petition filed by the Company was designed to harass and its officers and members in order to weaken the Unions position in the on-going collective bargaining negotiations.

SANTA ROSA COCA-COLA PLANT EMPLOYEES UNION, DONRICO V. SEBASTIAN, EULOGIO G. BATINO, SAMUEL A. ATANQUE, MANOLO C. ZABALJAUREGUI, DIONISIO TENORIO, EDWIN P. RELLORES, LUIS B. NATIVIDAD, MYRNA PETINGCO, FELICIANO TOLENTINO, RODOLFO A. AMANTE, JR., CIPRIANO C. BELLO, RONALDO T. ESPINO, EFREN GALAN, and JUN CARMELITO SANTOS, Petitioners, vs. COCA-COLA BOTTLERS PHILS., INC., Respondent. DECISION CALLEJO, SR., J.: This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP Nos. 74174 and 74860, which affirmed the ruling of the National Labor Relations Commission (NLRC) in NLRC CA No. 030424-02, and the Labor Arbiter in NLRC Case No. RAB-IV-10-11579-99-L. The Antecedents The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive bargaining representative of the regular daily paid workers and the monthly paid non-commission-earning employees of the Coca-Cola Bottlers Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant. The individual petitioners are Union officers, directors, and shop stewards. The Union and the Company had entered into a three-year Collective Bargaining Agreement (CBA) effective July 1, 1996 to expire on June 30, 1999. Upon the expiration of the CBA, the Union informed the Company of its desire to renegotiate its terms. The CBA meetings commenced on July 26, 1999, where the Union and the Company discussed the ground rules of the negotiations. The Union insisted that representatives from the Alyansa ng mga Unyon sa Coca-Cola be allowed to sit down as observers in the CBA meetings. The Union officers and members also insisted that their wages be based on their work shift rates. For its part, the Company was of the view that the members of the Alyansa were not members of the bargaining unit. The Alyansa was a mere aggregate of employees of the Company in its various plants; and is not a registered labor organization. Thus, an impasse ensued.2 On August 30, 1999, the Union, its officers, directors and six shop stewards filed a "Notice of Strike" with the National Conciliation and Mediation Board (NCMB) Regional Office in Southern Tagalog, Imus, Cavite. The petitioners relied on two grounds: (a) deadlock on CBA ground rules; and (b) unfair labor practice arising from the companys refusal to bargain. The case was docketed as NCMB-RBIV-NS-08-046-99.3 The Company filed a Motion to Dismiss4 alleging that the reasons cited by the Union were not valid grounds for a strike. The Union then filed an Amended Notice of Strike on September 17, 1999 on the following grounds: (a) unfair labor practice for the companys refusal to bargain in good faith; and (b) interference with the exercise of their right to self-organization.5 Meanwhile, on September 15, 1999, the Union decided to participate in a mass action organized by the Alyansa ng mga Unyon sa Coca-Cola in front of the Companys premises set for September 21, 1999. 106 Union members, officers and members of the Board of Directors, and shop stewards, individually filed applications for leave of absence for September 21, 1999. Certain that its operations in the plant would come to a complete stop since there were no sufficient trained contractual employees who would take over, the Company disapproved all leave applications and notified the applicants accordingly.6 A day before the mass action, some

In a letter to the Union President dated October 26, 1999, the NCMB stated that based on their allegations, the real issue between the parties was not the proper subject of a strike, and should be the subject of peaceful and reasonable dialogue. The NCMB recommended that the Notice of Strike of the Union be converted into a preventive mediation case. After conciliation proceedings failed, the parties were required to submit their respective position papers. 13 In the meantime, the officers and directors of the Union remained absent without the requisite approved leaves. On October 11, 1999, they were required to submit their explanations why they should not be declared AWOL.14 On November 26, 1999, the Labor Arbiter rendered a Decision15 granting the petition of the Company. He declared that the September 21, 1999 mass leave was actually a strike under Article 212 of the Labor Code for the following reasons: based on the reports submitted by the Production and Engineering Department of the Company, there was a temporary work stoppage/slowdown in the company;16 out of the usual three (3) lines for production for the day shift, only one line operated by probationary employees was functional and there was a cumulative downtime of five (5) hours attributed to the lack of manning complement and skills requirement. The Labor Arbiter further declared: x x x [T]he September 21, 1999 activity of the union and the individual respondents herein fell within the foregoing definition of a strike. Firstly, the union itself had admitted the fact that on the date in question, respondent officers, together with their union members and supporters from the Alyansa ng mga Unyon sa Coca-Cola, did not report for their usual work. Instead, they all assembled in front of the Sta. Rosa Plant and picketed the premises. Very clearly, there was a concerted action here on the part of the respondents brought about a temporary stoppage of work at two out of three bottling lines at the Sta. Rosa Plant. According to Edwin Jaranilla, the Engineering Superintendent (Annex H, petition), all of his departments 14 engineering personnel did not report for work on September 21, 1999, and that only Line 2 operated on the day shift. Honorio Tacla, the Production Superintendent, testified (Annex H-1), that 71 production personnel were likewise absent from their respective work stations on September 21, 1999, and that only Line 2 operated on the day shift. Similarly, Federico Borja, Physical Distribution Superintendent, stated under oath (Annex H-2) that 12 personnel from his department did not report for work on September 21, 1999, and that no forklift servicing was done on Lines 1 and 3. From the foregoing testimonies, it is evident that respondents concerted activity resulted in a temporary stoppage of work at the Sta. Rosa Plant of the company. Thirdly, such concerted activity by respondents was by reason of a labor dispute. Earlier, the union had filed a Notice of Strike against the company on account of a disagreement with the latter regarding CBA ground rules, i.e., the demand of the Union for Alyansa members from other plants to attend as observers during the CBA negotiation, and for the members of the negotiating panel to be paid their wages based on their work shift rate. Moreover, on September 20, 1999, one day before respondents mass leave from work and concerted action, they had worn red tag cloth materials on different parts of their uniform which contained the words, "YES kami sa strike"; "Protesta kami"; "Sahod, karapatan, manggagawa ipaglaban"; and "Union busting itigil." (Annexes G, G-1, G-2 & G-3). These indicated that the concerted action taken by respondents against CCBPI was a result of or on account of a labor dispute.17 According to the Labor Arbiter, the strike conducted by the Union was illegal since there was no showing that the Union conducted a strike vote, observed the prescribed cooling-off period, much less, submitted a strike vote to the DOLE within the required time. Consequently, for knowingly participating in the illegal strike, the individual petitioners were considered to have lost their employment status.18 The Union appealed the decision to the NLRC. On July 31, 2002, the NLRC affirmed the decision of the Labor Arbiter with the modification that Union Treasurer Charlita M. Abrigo, who was on bereavement leave at the time, should be excluded from the list of those who participated in the illegal strike. She was thus ordered reinstated to her former position with full backwages and benefits.19 The Union and its officers, directors and the shop stewards, filed a petition for certiorari in the CA. The case was docketed as CA-G.R. SP No. 74174. Another petition was filed by Ricky G.

Ganarial and Almira Romo, docketed as CA-G.R. SP No. 74860. The two cases were consolidated in the 6th Division of the CA. Petitioners alleged the following in their respective petitions: I THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION FOR HAVING DECLARED PETITIONERS TO HAVE LOST THEIR EMPLOYMENT WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED DUE PROCESS II THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECLARING THE PEACEFUL PICKETING CONDUCTED BY THE UNION AS ILLEGAL STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON THE INTENT TO CREATE TEMPORARY WORK STOPPAGE III THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECLARING THAT PETITIONERS HAVE LOST THEIR EMPLOYMENT FOR KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE THE FACT THAT PETITIONERS ARE NOT ELECTED OFFICERS OF THE UNION AND ARE MERE SHOP STEWARDS AND DESPITE THE FACT THAT THERE WAS NO PROOF THAT THEY COMMITTED ILLEGAL ACTS.20 The petitioners, likewise, raised the following, to wit: WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT THE STRIKE CONDUCTED BY THE RESPONDENTS ON SEPTEMBER 21, 1999 IS ILLEGAL. WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT INDIVIDUAL RESPONDENTS (NOW PETITIONERS), INCLUDING SIX (6) UNION SHOP STEWARDS, ARE CONSIDERED TO HAVE LOST THEIR EMPLOYMENT STATUS (EXCEPT CHARLITA ABRIGO) FOR KNOWINGLY PARTICIPATING IN SAID ILLEGAL STRIKE.21 On September 10, 2003, the CA rendered judgment dismissing the petition for lack of merit. It also declared that petitioners, in CA-G.R. SP No. 74860, were guilty of forum shopping. Petitioners filed a motion for reconsideration which the appellate court denied; hence, the instant petition was filed based on the following grounds: (1) THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS DISCRETION IN DISMISSING THE PETITION BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR FROM THE EVIDENCE ON RECORD THAT THE SUBJECT MASS ACTION WAS A VALID EXERCISE OF THE WORKERS CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE RIGHT TO FREE EXPRESSION. (2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHEN IT CONCLUDED THAT AS A CONSEQUENCE OF THE ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE OFFICERS OF THE UNION IS JUSTIFIED AND VALID, IS NOT IN ACCORD WITH FACTS AND EVIDENCE ON RECORD.

(3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS ACTION STAGED BY PETITIONERS ON SEPTEMBER 21, 1999 CONSTITUTES A STRIKE, THE NLRC SERIOUSLY ERRED WHEN IT AFFIRMED THE LABOR ARBITERS DECISION DECLARING THE FORFEITURE OF EMPLOYMENT STATUS OF UNION OFFICERS AND SHOP STEWARDS (WHO HAVE NOT COMMITTED ANY ILLEGAL ACT DURING THE CONDUCT OF THE SAID MASS ACTION) FOR HAVING KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE.22 The threshold issues in these cases are: (a) whether the September 21, 1999 mass action staged by the Union was a strike; (b) if, in the affirmative, whether it was legal; and (c) whether the individual officers and shop stewards of petitioner Union should be dismissed from their employment. On the first and second issues, petitioners maintain that the September 21, 1999 mass protest action was not a strike but a picket, a valid exercise of their constitutional right to free expression and assembly.23 It was a peaceful mass protest action to dramatize their legitimate grievances against respondent. They did not intend to have a work stoppage since they knew beforehand that no bottling operations were scheduled on September 21, 1999 pursuant to the Logistics Planning Services Mega Manila Production Plan dated September 15, 1999. 24 Thus, they applied for leaves of absences for September 21, 1999 which, however, were not approved. They also obtained a mayors permit to hold the picket near the highway, and they faithfully complied with the conditions set therein. The protesting workers were merely marching to and fro at the side of the highway or the loading bay near one of the gates of the Company plant, certainly not blocking in any way the ingress or egress from the Companys premises. Their request to hold their activity was for four (4) hours, which was reduced to three (3) hours. Thereafter, they all went back to work. The bottling operations of the Company was not stopped, even temporarily. Since petitioner Union did not intend to go on strike, there was no need to observe the mandatory legal requirements for the conduct of a strike. Petitioners also point out that members belonging to the IBM-KMU at the San Fernando CocaCola bottling plant staged simultaneous walkout from their work assignments for two consecutive days, on October 7 and 8, 1999. However, the Secretary of Labor and Employment (SOLE) declared that the walkout was considered a mass action, not a strike, and the officers of the IBM-KMU were only meted a three-day suspension. Respondent accepted the decision of the SOLE and no longer appealed the decision. Petitioners insist that this should, likewise, apply in the resolution of the issue of whether petitioners staged a strike or not, and whether the penalty of dismissal from the employment with the respondent is just and equitable. Petitioners also insist that they were denied the right to due process because the decision of the Labor Arbiter was implemented even while their appeal was pending in the NLRC. The decision of the Labor Arbiter against them was to become final and executory only until after the NLRC shall have resolved their appeal with finality. On the third issue, petitioners aver that even assuming that they had indeed staged a strike, the penalty of dismissal is too harsh. They insist that they acted in good faith. Besides, under Article 264 of the Labor Code, the dismissal of the Union officers who participated in an illegal strike is discretionary on the employer. Moreover, six (6) of the petitioners were shop stewards who were mere members of the Union and not officers thereof. In its comment on the petition, respondent avers that the issues raised by petitioners are factual; hence, inappropriate in a petition for review on certiorari. Besides, the findings of the Labor Arbiter had been affirmed by the NLRC and the CA, and are, thus, conclusive on this Court. Respondent further avers that the law offers no discretion as to the proper penalty that should be imposed against a Union official participating in an illegal strike. Contrary to the contention of petitioners, shop stewards are also Union officers. To support its claim, respondent cited Samahan ng Manggagawa sa Moldex Products, Inc. v. National Labor Relations Commission, 25 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. Hoffa;26 and Coleman v. Brotherhood of Railway and Steamship Clerks, etc. 27 The petition is denied for lack of merit.

The ruling of the CA that petitioners staged a strike on September 21, 1999, and not merely a picket is correct. It bears stressing that this is a finding made by the Labor Arbiter which was affirmed by the NLRC28 and the CA.29 The settled rule is that the factual findings and conclusions of tribunals, as long as they are based on substantial evidence, are conclusive on this Court. 30 The raison detre is that quasi-judicial agencies, like the Labor Arbiter and the NLRC, have acquired a unique expertise since their jurisdictions are confined to specific matters. Besides, under Rule 45 of the Rules of Court, the factual issues raised by the petitioner are inappropriate in a petition for review on certiorari. Whether petitioners staged a strike or not is a factual issue. Petitioners failed to establish that the NLRC committed grave abuse of its discretion amounting to excess or lack of jurisdiction in affirming the findings of the Labor Arbiter that petitioners had indeed staged a strike. Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. In Bangalisan v. Court of Appeals,31 the Court ruled that "the fact that the conventional term strike was not used by the striking employees to describe their common course of action is inconsequential, since the substance of the situation, and not its appearance, will be deemed to be controlling." 32 The term "strike" encompasses not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy or sabotage plant equipment and facilities, and similar activities.33 Picketing involves merely the marching to and fro at the premises of the employer, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute.34 As applied to a labor dispute, to picket means the stationing of one or more persons to observe and attempt to observe. The purpose of pickets is said to be a means of peaceable persuasion.35 A labor dispute includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.36 That there was a labor dispute between the parties, in this case, is not an issue. Petitioners notified the respondent of their intention to stage a strike, and not merely to picket. Petitioners insistence to stage a strike is evident in the fact that an amended notice to strike was filed even as respondent moved to dismiss the first notice. The basic elements of a strike are present in this case: 106 members of petitioner Union, whose respective applications for leave of absence on September 21, 1999 were disapproved, opted not to report for work on said date, and gathered in front of the company premises to hold a mass protest action. Petitioners deliberately absented themselves and instead wore red ribbons, carried placards with slogans such as: "YES KAMI SA STRIKE," "PROTESTA KAMI," "SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN," "CBA-WAG BABOYIN," "STOP UNION BUSTING." They marched to and fro in front of the companys premises during working hours. Thus, petitioners engaged in a concerted activity which already affected the companys operations. The mass concerted activity constituted a strike. The bare fact that petitioners were given a Mayors permit is not conclusive evidence that their action/activity did not amount to a strike. The Mayors description of what activities petitioners were allowed to conduct is inconsequential. To repeat, what is definitive of whether the action staged by petitioners is a strike and not merely a picket is the totality of the circumstances surrounding the situation. A strike is the most powerful of the economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. It is a weapon that can either breathe life to or destroy the Union and its members in their struggle with management for a more equitable due to their labors. 37 The decision to declare a strike must therefore rest on a rational basis, free from emotionalism, envisaged by the tempers and tantrums of a few hot heads, and finally focused on the legitimate interests of the Union which

should not, however, be antithetical to the public welfare, and, to be valid, a strike must be pursued within legal bounds. The right to strike as a means of attainment of social justice is never meant to oppress or destroy the employer.38 Since strikes cause disparity effects not only on the relationship between labor and management but also on the general peace and progress of society, the law has provided limitations on the right to strike. For a strike to be valid, the following procedural requisites provided by Art. 263 of the Labor Code must be observed: (a) a notice of strike filed with the DOLE 30 days before the intended date thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose, (c) notice given to the DOLE of the results of the voting at least seven days before the intended strike. These requirements are mandatory and the failure of a union to comply therewith renders the strike illegal. 39 It is clear in this case that petitioners totally ignored the statutory requirements and embarked on their illegal strike. We quote, with approval, the ruling of the CA which affirmed the decisions of the NLRC and of the Labor Arbiter: Since it becomes undisputed that the mass action was indeed a strike, the next issue is to determine whether the same was legal or not. Records reveal that the said strike did not comply with the requirements of Article 263 (F) in relation to Article 264 of the Labor Code, which specifically provides, thus: ART. 263. STRIKES, PICKETING, AND LOCKOUTS xxx xxx xxx xxx (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. ART. 264. PROHIBITED ACTIVITIES (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. Any worker whose employment has been terminated as a consequence or an unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. xxx xxx xxx xxx Applying the aforecited mandatory requirements to the case at bench, the Labor Arbiter found, thus: In the present case, there is no evidence on record to show that respondents had complied with the above mandatory requirements of law for a valid strike. Particularly, there is no showing that

respondents had observed the prescribed cooling-off period, conducted a strike vote, much less submitted a strike vote report to the Department of Labor within the required time. This being the case, respondents strike on September 21, 1999 is illegal. In the recent ca se of CCBPI Postmix Workers Union vs. NLRC, 2999 (sic) SCRA 410, the Supreme Court had said: "It bears stressing that the strike requirements under Article 264 and 265 of the Labor Code are mandatory requisites, without which, the strike will be considered illegal. The evidence (sic) intention of the law in requiring the strike notice and strike-vote report as mandatory requirements is to reasonably regulate the right to strike which is essential to the attainment of legitimate policy objectives embodied in the law. Verily, substantial compliance with a mandatory provision will not suffice. Strict adherence to the mandate of the law is required. Aside from the above infirmity, the strike staged by respondents was, further, in violation of the CBA which stipulated under Section 1, Article VI, thereof that, SECTION 1. The UNION agrees that there shall be no strike, walkout, stoppage or slowdown of work, boycott, secondary boycott, refusal to handle any merchandise, picketing, sitdown strikes of any kind, sympathetic or general strike, or any other interference with any of the operations of the COMPANY during the term of this Agreement, so long as the grievance procedure for which provision is made herein is followed by the COMPANY. Here, it is not disputed that respondents had not referred their issues to the grievance machinery as a prior step. Instead, they chose to go on strike right away, thereby bypassing the required grievance procedure dictated by the CBA.40 On the second and third issues, the ruling of the CA affirming the decisions of the NLRC and the Labor Arbiter ordering the dismissal of the petitioners-officers, directors and shop stewards of petitioner Union is correct. It bears stressing, however, that the law makes a distinction between union members and union officers. A worker merely participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status.41 For knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike, the law provides that a union officer may be terminated from employment.42 The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service. 43 We quote, with approval, the following ruling of the Court of Appeals: As to the imposition of the penalty provided for should an illegal strike be declared as such, We find no legal or factual reason to digress from the following disquisition of the Labor Arbiter, to wit: No doubt, the strike conducted by respondents on September 21, 1999 is illegal. Under Article 264(a) of the Labor Code, it is stated that, Any union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. xxx. In the present case, CCBPI had already promptly notified respondents and their members of the disapproval of their leave. In fact, in the company notice (of the disapproval of their leave), CCBPI emphasized that "operations will come to a complete stop on September 21, 1999 if all the applications are approved." They were further informed that, there are no sufficiently trained contractual employees who can take over as replacements on that day (A nnexes "C," "C-1" to "C-18"). In other words, respondents had known beforehand that their planned mass leave would definitely result in a stoppage of the operations of the company for September 21, 1999. Still, respondents knowingly and deliberately proceeded with their mass action, unmindful of the ill effects thereof on the business operations of the company. In the case of Association of Independent Unions in the Philippines v. NLRC, 305 SCRA 219, the Supreme Court had ruled that, Union officers are duty-bound to guide their members to respect the law. If instead of doing so, the officers urge the members to violate the law and defy the duly constituted authorities, their

dismissal from the service is just penalty or sanction for their unlawful acts. The officers responsibility is greater than that of the members. Here, the law required respondents to follow a set of mandatory procedures before they could go on with their strike. But obviously, rather than call on their members to comply therewith, respondents were the first ones to violate the same.44 Petitioners cannot find solace in the Order of the Secretary of Labor and Employment (SOLE) in OS-A-J-0033-99, NCMB-RB 111-NS-10-44-99 and 11-51-99 involving the labor dispute between the Company and the Union therein (the Ilaw at Buklod ng Manggagawa Local No. 1, representing the daily paid rank and file members of the respondent, as well as the plant-based route helpers and drivers at its San Fernando Plant). In said case, the SOLE found that the simultaneous walkout staged on October 7 and 8, 1999 was indeed a mass action, initiated by the Union leaders. The acts of the Union leaders were, however, found to be illegal which warranted their dismissal, were it not for the presence of mitigating factors, i.e., the walkout was staged in support of their leaders in the course of the CBA negotiation which was pending for more than nine (9) months; the Plant was not fully disrupted as the Company was able to operate despite the severe action of the Union members, with the employment of casual and contractual workers; the Union had complied with the requirements of a strike and refrained from staging an actual strike.45 Neither can the petitioners find refuge in the rulings of this Court in Panay Electric Company v. NLRC46 or in Lapanday Workers Union v. NLRC.47 In the Panay case, the Court meted the suspension of the union officers, instead of terminating their employment status since the NLRC found no sufficient proof of bad faith on the part of the union officers who took part in the strike to protest the dismissal of their fellow worker, Enrique Huyan which was found to be illegal. In Lapanday, the Court actually affirmed the dismissal of the union officers who could not claim good faith to exculpate themselves. The officers, in fact, admitted knowledge of the law on strike, including its procedure in conducting the same. The Court held that the officers cannot violate the law which was designed to promote their interests. Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie Labayani, Ricky Ganarial, Efren Galan and Jun Carmelito Santos who were appointed as shop stewards of the Union that they were mere members and not the officers of petitioner Union is barren of merit. We agree with the observation of respondent that under Section 501(a) and (b) of the Landrum Griffin Act of 1959,48 shop stewards are officers of the Union: Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interest of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization. A general exculpatory resolution of a governing body purporting to relieve any such person of liability for breach of the duties declared by this section shall be void as against public policy. (b) When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent, shop steward, or representative in any district court of the United States or in any State court of competent jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization.49

Under said Act, Section 3(q) thereof provides, as follows: (q) "Officer, agent, shop steward, or other representative", when used with respect to a labor organization, includes elected officials and key administrative personnel, whether elected or appointed (such as business agents, heads of departments or major units, and organizers who exercise substantial independent authority), but does not include salaried non-supervisory professional staff, stenographic, and service personnel.50 Admittedly, there is no similar provision in the Labor Code of the Philippines; nonetheless, petitioners who are shop stewards are considered union officers. Officers normally mean those who hold defined offices. An officer is any person occupying a position identified as an office. An office may be provided in the constitution of a labor union or by the union itself in its CBA with the employer. An office is a word of familiar usage and should be construed according to the sense of the thing.51 Irrefragably, under its Constitution and By-Laws, petitioner Union has principal officers and subordinate officers, who are either elected by its members, or appointed by its president, including the standing committees each to be headed by a member of the Board of Directors. Thus, under Section 1, Article VI of petitioner Unions Constitution and By-Laws, the principal officers and other officers, as well as their functions/duties and terms of office, are as follows: ARTICLE VI PRINCIPAL OFFICERS SECTION 1. The governing body of the UNION shall be the following officers who shall be elected through secret ballot by the general membership: President Auditor

Vice-President two (2)

Public Relations Officer

Secretary

Sergeant-at-Arms

Treasurer

Board of Directors nine (9)

SECTION 2. The above officers shall administer Unions affairs, formulate policies and implement programs to effectively carry out the objectives of the UNION and the Labor Code of the Philippines and manage all the monies and property of the UNION. SECTION 3. The officers of the UNION and the members of the Board of Directors shall hold office for a period of five (5) years from the date of their election until their successors shall have been duly elected and qualified; provided that they remain members of the UNION in good standing.52 Section 6, Article II of the CBA of petitioner Union and respondent defines the position of shop steward, thus: SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop stewards and shall inform management of the distribution of these stewards among the departments concerned.1avvphi1.net Shop Stewards, union officers and members or employees shall not lose pay for attending Union-Management Labor dialogues, investigations and grievance meetings with management.53

Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code mentions the functions and duties of shop stewards, as follows: Section 2. Procedures in handling grievances. In the absence of a specific provision in the collective bargaining agreement prescribing for the procedures in handling grievance, the following shall apply: (a) An employee shall present this grievance or complaint orally or in writing to the shop steward. Upon receipt thereof, the shop steward shall verify the facts and determine whether or not the grievance is valid. (b) If the grievance is valid, the shop steward shall immediately bring the complaint to the employees immediate supervisor. The shop steward, the employee and his immediate supervisor shall exert efforts to settle the grievance at their level. (c) If no settlement is reached, the grievance shall be referred to the grievance committee which shall have ten (10) days to decide the case. Where the issue involves or arises from the interpretation or implementation of a provision in the collective bargaining agreement, or from any order, memorandum, circular or assignment issued by the appropriate authority in the establishment, and such issue cannot be resolved at the level of the shop steward or the supervisor, the same may be referred immediately to the grievance committee. All grievance unsettled or unresolved within seven (7) calendar days from the date of its submission to the last step in the grievance machinery shall automatically be referred to a voluntary arbitrator chosen in accordance with the provisions of the collective bargaining agreement, or in the absence of such provisions, by mutual agreement of the parties. 54 Thus, a shop steward is appointed by the Union in a shop, department, or plant serves as representative of the Union, charged with negotiating and adjustment of grievances of employees with the supervisor of the employer.55 He is the representative of the Union members in a building or other workplace. Blacks Law Dictionary defines a shop steward as a union official who represents members in a particular department. His duties include the conduct of initial negotiations for settlement of grievances.56 He is to help other members when they have concerns with the employer or other work-related issues. He is the first person that workers turn to for assistance or information. If someone has a problem at work, the steward will help them sort it out or, if necessary, help them file a complaint.57 In the performance of his duties, he has to take cognizance of and resolve, in the first instance, the grievances of the members of the Union. He is empowered to decide for himself whether the grievance or complaint of a member of the petitioner Union is valid, and if valid, to resolve the same with the supervisor failing which, the matter would be elevated to the Grievance Committee. It is quite clear that the jurisdiction of shop stewards and the supervisors includes the determination of the issues arising from the interpretation or even implementation of a provision of the CBA, or from any order or memorandum, circular or assignments issued by the appropriate authority in the establishment.1awphi1.net In fine, they are part and parcel of the continuous process of grievance resolution designed to preserve and maintain peace among the employees and their employer. They occupy positions of trust and laden with awesome responsibilities. In this case, instead of playing the role of "peacemakers" and grievance solvers, the petitionersshop stewards participated in the strike. Thus, like the officers and directors of petitioner Union who joined the strike, petitioners-shop stewards also deserve the penalty of dismissal from their employment. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of the Court of Appeals is AFFIRMED. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila G.R. No. 155844 July 14, 2008

SO ORDERED.

6 7

The Court of Appeals likewise denied the petitioners motion for reconsideration. Hence, this petition which raises the following issues: I.

NATIONWIDE SECURITY and ALLIED SERVICES, INC., Petitioner, vs. THE COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and JOSEPH DIMPAZ, HIPOLITO LOPEZ, EDWARD ODATO, FELICISIMO PABON and JOHNNY AGBAY, Respondents. RESOLUTION QUISUMBING, J.: This petition for certiorari seeks the reversal and setting aside of the Decision dated 2 January 31, 2002 and the Resolution dated September 12, 2002 of the Court of Appeals in CA-G.R. SP No. 65465. The appellate court had affirmed the January 30, 3 2001 and April 20, 2001 Resolutions of the National Labor Relations Commission (NLRC). The factual antecedents of this case are as follows. Labor Arbiter Manuel M. Manansala found petitioner Nationwide Security and Allied Services, Inc., a security agency, not liable for illegal dismissal in NLRC NCR 00-0100833-96 and 00-02-01129-96 involving eight security guards who were employees of the petitioner. However, the Labor Arbiter directed the petitioner to pay the aforementioned security guards P81,750.00 in separation pay, P8,700.00 in unpaid salaries, P93,795.68 for underpayment and 10% attorneys fees based on the total 4 monetary award. Dissatisfied with the decision, petitioner appealed to the NLRC which dismissed its appeal for two reasons first, for having been filed beyond the reglementary period within which to perfect the appeal and second, for filing an insufficient appeal bond. It disposed as follows: WHEREFORE, in the light of the foregoing, it is hereby ordered that: 1. the instant appeal be considered DISMISSED; and, 2. the Decision appealed from be deemed FINAL and EXECUTORY. SO ORDERED.
5 1

WHETHER OR NOT TECHNICALITIES IN LABOR CASES MUST PREVAIL OVER THE SPIRIT AND INTENTION OF THE LABOR CODE UNDER ARTICLE 221 THEREOF WHICH STATES: "In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of Law or equity shall not be controlling and it is the spirit and [i]ntention of this Code that the Commission and its members and Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without [regard] to technicalities of law or procedure, all [i]n the interest of due process." Emphasis added. II. WHETHER OR NOT THE DOCTRINE IN THE CASE OF STAR ANGEL HANDICRAFT vs. NLRC, et al., 236 SCRA 580 AND ROSEWOOD PROCESSING, INC. VS. NLRC, G.R. [No.] 116476, May 21, 1998 FINDS APPLICATION IN THE INSTANT CASE [;] III. WHETHER OR NOT SEPARATION PAY IS JUSTIFIED AS AWARD IN CASES WHERE THE EMPLOYEE IS TERMINATED DUE TO CONTRACT EXPIRATION AS IN THE INSTANT CASE; AND IV. WHETHER OR NOT THE REQUIREMENT ON CERTIFICATION AGAINST FORUM SHOPPING WHICH WAS RAISED BEFORE THE NLRC IS 8 ENFORCEABLE IN THE INSTANT CASE. Petitioner contends that the Court of Appeals erred when it dismissed its case based on technicalities while the private respondents contend that the appeal to the NLRC had not been perfected, since the appeal was filed outside the reglementary period, 9 and the bond was insufficient. After considering all the circumstances in this case and the submission by the parties, we are in agreement that the petition lacks merit. At the outset it must be pointed out here that the petition for certiorari filed with the Court by petitioner under Rule 65 of the Rules of Court is inappropriate. The proper remedy is a petition for review under Rule 45 purely on questions of law. There being a remedy of appeal via petition for review under Rule 45 of the Rules of Court available to the petitioner, the filing of a petition for certiorari under Rule 65 is improper.1avvphi1 But even if we bend our Rules to allow the present petition for certiorari, still it will not prosper because we do not find any grave abuse of discretion amounting to lack of or excess of jurisdiction on the part of the Court of Appeals when it dismissed the petition of the security agency. We must stress that under Rule 65, the abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or

Its motion for reconsideration having been denied, petitioner then appealed to the Court of Appeals to have the appeal resolved on the merits rather than on pure technicalities in the interest of due process. The Court of Appeals dismissed the case, holding that in a special action for certiorari, the burden is on petitioner to prove not merely reversible error, but grave abuse of discretion amounting to lack of or excess of jurisdiction on the part of public respondent NLRC. The dispositive portion of its decision states: WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED. The questioned Resolutions dated 30 January 2001 and 20 April 2001 of the National Labor Relations Commission are accordingly AFFIRMED.

to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by 10 reason of passion or personal hostility. No such abuse of discretion happened here. The assailed decision by the Court of Appeals was certainly not capricious nor arbitrary, nor was it a whimsical exercise of judgment amounting to a lack of 11 jurisdiction. The Labor Code provides as follows: ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law, and (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. xxxx The New Rules of Procedure of the NLRC states: Section 1. Periods of appeal. Decisions, resolutions or orders of the Labor Arbiter shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt thereof; and in case of decisions, resolutions or orders of the Regional Director of the Department of Labor and Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days from receipt thereof. If the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall be the first working day following such Saturday, Sunday or holiday. No motion or request for extension of the period within which to perfect an appeal shall be allowed. In the instant case, both the NLRC and the Court of Appeals found that petitioner received the decision of the Labor Arbiter on July 16, 1999. This factual finding is 12 supported by sufficient evidence, and we take it as binding on us. Petitioner then simultaneously filed its "Appeal Memorandum", "Notice of Appeal" and "Motion to Reduce Bond", by registered mail on July 29, 1999, under Registry Receipt No. 13 14 003098. These were received by the NLRC on July 30, 1999. The appeal to the NLRC should have been perfected, as provided by its Rules, within a period of 10 days from receipt by petitioner of the decision on July 16, 1999. Clearly, the filing of the appeal--three days after July 26, 1999--was already beyond the reglementary period and in violation of the NLRC Rules and the pertinent Article on Appeal in the Labor Code.

Failure to perfect an appeal renders the decision final and executory. The right to appeal is a statutory right and one who seeks to avail of the right must comply with the statute or the rules. The rules, particularly the requirements for perfecting an appeal within the reglementary period specified in the law, must be strictly followed as they are considered indispensable interdictions against needless delays and for the 16 orderly discharge of judicial business. It is only in highly meritorious cases that this Court will opt not to strictly apply the rules and thus prevent a grave injustice from 17 being done. The exception does not obtain here. Thus, we are in agreement that the decision of the Labor Arbiter already became final and executory because petitioner failed to file the appeal within 10 calendar days from receipt of the decision. Clearly, the NLRC committed no grave abuse of discretion in dismissing the appeal before it. It follows that the Court of Appeals, too, did not err, nor gravely abuse its discretion, in sustaining the NLRC Order, by dismissing the petition for certiorari before it. Hence, with the primordial issue resolved, we find no need to tarry on the other issues raised by petitioner. WHEREFORE, the Decision dated January 31, 2002 and the Resolution dated September 12, 2002 of the Court of Appeals in CA- G.R. SP No. 65465 are AFFIRMED. Costs against petitioner. SO ORDERED.

15

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 162089 July 9, 2008 xxxx

b. Ordering respondent to pay complainants their respective full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time complainants were separated from service up to the date of this decision; c. Ordering respondent to pay complainants their respective 13th month pays subject to the three (3) years prescriptive period.
4

SILVESTRE P. ILAGAN doing business under the name and style "Infantry Surveillance Investigation Security Agency," Petitioner, vs. HON. COURT OF APPEALS (12th Division), NATIONAL LABOR RELATIONS COMMISSION (3rd Division), and PETER B. ORIAS, DOLORES PEREGRINO AND ROMELITO PUEBLO, SR., Respondents. DECISION QUISUMBING, J.: For review on certiorari are the January 27, 2003 Decision and the February 4, 2004 2 Resolution of the Court of Appeals in CA-G.R. SP No. 69878, which had affirmed the 3 Decision dated November 29, 2001, of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 025192-2000. The NLRC decision upheld the Labor Arbiters finding of illegal dismissal against herein petitioner. The facts are uncomplicated. Petitioner Silvestre P. Ilagan is the president and proprietor of Infantry Surveillance Investigation Security Agency. The agency hired as security guards private respondents Peter B. Orias and Romelito Pueblo, Sr. on November 6, 1992 and October 4, 1995, respectively; and as head guard, private respondent Dolores Peregrino in December 1996. On separate occasions in 1998, they were orally informed by petitioner not to report for work anymore. Private respondents filed with the Labor Arbiter separate complaints against petitioner for illegal dismissal. They claimed that they reported for work at their assigned workplaces for twelve-hour shifts; however, their salaries were below the minimum wage, they were not given 13th month pay, overtime pay, holiday pay, night shift differential, and the monthly P50 cash bond petitioner promised at the start of their employment. In the course of the mandatory conciliation and mediation conference, the parties agreed that the only issue left was the payment of money claims. However, the parties later moved for the submission of their respective position papers, thereby terminating the conciliation and mediation conference. Acting on the complaint for illegal dismissal and money claims, on April 28, 2000, the Labor Arbiter ruled against petitioner, thus: WHEREFORE, judgment is hereby rendered in favor of complainants Peter B. Orias, Dolores Peregrino and Romelito Pueblo, Sr., and against respondent Infantry Surveillance Investigation Security Agency and/or Silvestre P. Ilagan, thus: a. Ordering respondent to immediately reinstate complainants to their former position without loss of seniority rights and other privileges, or at the option of respondent, payroll reinstatement;
1

SO ORDERED.

The NLRC affirmed the ruling of the Labor Arbiter, to wit: WHEREFORE, the appeal filed by respondents is hereby DENIED for lack of merit. The [D]ecision dated 28 April 2000 is AFFIRMED. SO ORDERED.
5

Petitioners motion for reconsideration was denied for lack of merit. Undaunted, petitioner filed in the Court of Appeals a petition for certiorari, which was likewise dismissed, thus: WHEREFORE, in view of all the foregoing, the instant petition is DENIED. The November 29, 2001 Decision of the NLRC, Third Division, as well as its January 31, 2002 Resolution denying the Motion for Reconsideration of the petitioner are hereby AFFIRMED. SO ORDERED.
6

Petitioners motion for reconsideration was denied. Hence, the instant petition raising the following issues: I. WHETHER OR NOT THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AND THEREFORE A REVERSIBLE ERROR IN AFFIRMING THE INCLUSION OF THE ISSUE OF ILLEGAL DISMISSAL IN THIS CASE; II. WHETHER OR NOT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION, AND THEREFORE A REVERSIBLE ERROR IN AFFIRMING THAT PRIVATE RESPONDENTS WERE ILLEGALLY DISMISSED; [AND] III. WHETHER OR NOT THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN AWARDING SERVICE INCENTIVE LEAVE TH 7 PAY AND 13 MONTH PAY TO PRIVATE RESPONDENTS. Petitioner contends the issue of illegal dismissal was already mooted by the parties agreement, limiting the issue to money claims, allegedly arrived at during the conciliation and mediation conference. Petitioner insists absent proof of a positive act of dismissal, a complaint for illegal dismissal could not prosper. Petitioner claims private respondents simply resigned from their jobs, but he no longer presented the resignation letters to the Labor Arbiter simply because he thought the issue of illegal

dismissal was already moot. Petitioner further avers that the awards of service incentive leave pay and 13th month pay are without basis. Private respondents, for their part, counter that the issue of illegal dismissal was not amicably resolved. They stress that no compromise agreement or any actual settlement of the case ever materialized before the Labor Arbiter. They aver that they have substantially proven the fact of their illegal dismissal. Private respondents point out that it is now too late for petitioner to allege their supposed resignation. The petition lacks merit. Section 2, Rule V of the then New Rules of Procedure of the NLRC provides: Section 2. Mandatory Conciliation/Mediation Conference. . Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be reduced to writing and signed by the parties and their respective counsels, if any[,] before the Labor Arbiter. In order to be valid, any agreement arrived at in the course of the mandatory conciliation and mediation conference should be in writing and signed by the parties, or their counsel, before the Labor Arbiter. In this case, no such written and duly signed evidence of any amicable settlement of the dispute, whether in whole or in part, was ever adduced. Thus, petitioner has no basis for claiming that the issue of illegal dismissal has been amicably settled. It may be true that in the course of the mandatory conciliation and mediation conference, the parties agreed that the only issue left was the payment of money claims. However, the parties later moved for the submission of their respective position papers on the issues of both illegal dismissal and money claims, thereby terminating the conciliation and mediation conference. Clearly then, no amicable settlement at all was reached by the parties. Anent the second issue, petitioners belated submission that private respondents voluntarily resigned deserves no consideration. It should have been raised in the hearing before the Labor Arbiter. We are not prepared to indulge petitioners defense that he thought illegal dismissal was no longer an issue. He could not have been unaware that during the conciliation and mediation conference, no agreement on either of the two issues was ever forged. Concededly, employers have the right to terminate the services of an employee for a just or authorized cause. However, the dismissal of employees must be made in accordance with law. The burden of proof is always on the employer to prove that the 8 dismissal was for a just or authorized cause. In this case, petitioner failed to prove (1) that the dismissal of private respondents was for a valid cause and (2) that he complied with the two- notice requirement of procedural due process. Hence, we are constrained to agree that this case is a matter of illegal dismissal. As for the third issue, Article 279 of the Labor Code, as amended by Section 34 of 9 Republic Act No. 6715, states that: ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled

to reinstatement without 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. (Emphasis supplied.) Thus, having been illegally dismissed, private respondents should be reinstated to their former positions without loss of seniority rights and other privileges. They should also be paid their full backwages, inclusive of allowances, and the monetary equivalent of other benefits, computed from the time their compensation was withheld from them up to the time of their actual reinstatement. WHEREFORE, the petition is DENIED. The assailed January 27, 2003 Decision and the February 4, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 69878, are AFFIRMED. The Decision dated April 28, 2000 of the Labor Arbiter is REINSTATED with MODIFICATION. Petitioner SILVESTRE P. ILAGAN, doing business under the name and style "Infantry Surveillance Investigation Security Agency" is ORDERED to: 1. REINSTATE private respondents PETER B. ORIAS, ROMELITO PUEBLO, SR., and DOLORES PEREGRINO to their former positions without loss of seniority rights and other privileges; and 2. PAY private respondents their respective full backwages, inclusive of allowances, and the monetary equivalent of other benefits, computed from the time compensation was withheld up to the time of their actual reinstatement. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 149273 June 5, 2009

For the past several weeks, I have been burdened by serious personal and financial problems. I have tried to put these problems out of my mind but they still keep on bothering me that my physical condition and capacity to concentrate with my work are affected. Because of these, I have decided to go back to the Philippines and face these problems. It is, therefore, with deep regret that I should tender my irrevocable resignation effective 15 May 1993. Thank you for giving me the opportunity to work with a great team. On May 11, 1993, Gilles left India.15 On May 14, 1993, Schou faxed a Letter16 to Abores, informing him of the abrupt departure of Gilles from the Project and its attendant consequences. The letter reads: We have on 10 May 1993 received Mr. Gilles resignation, dated 5 May 1993, which was incorrectly addressed to us, and we understand that he left India on 11 May 1993. We regret that his personal problems caused this to happen. His decision has resulted in a very serious and critical situation as regards our contractual obligations towards the Min. of Agric. in India, and Aquatic Farms Ltd. (AFL) has informed that Biens work has been very unsatisfactory for several weeks before his departure. In order to ensure that we meet the deadlines for design, AFL has brought in a temporary substitute for Bien, but this substitute is not billable to the project. You are kindly requested to inform what actions you propose to take regarding replacement of Bien. An Inter-Office Memorandum,17 dated May 18, 1993, was sent to Gilles requesting him to attend the Board of Directors meeting scheduled on May 19, 1993 at 2:00 p.m., at which the matter of his resignation would be discussed. At the board meeting on May 19, 1993, Abores explained that the meeting was called precisely to discuss the resignation of Gilles from his assignment in India. Abores read before the Members of the Board the Letter18 of Gilles dated May 15, 1993, pertinent portions of which state: Resigning from my assignment in India as a Carl Bro employee was one of the most difficult and painful decisions I made in my life. I did not only give up the chance to be better off financially but most of all end my career as a consultant. The following has created a very discouraging and depressing working environment for me in India which pushed me to make such decision. 1) In our contract with Carl Bro (page 3/6, Annex 1 which is the same Annex in the contract between Aquatic Farms and the Indian Government), it is stated that design works for the 13 proposed prawn farms are to be undertaken from the 5th month (May 1993) to the 27th month. The attached memorandum of Mr. Clyde Simon supported the aforementioned schedule by recommending that construction of only three farms be started this year. In this memorandum, Mr. Clyde emphasized that quality of work should never be compromised. In our initial review of the design undertaken by CICEF on all 13 proposed farms (the design costs the Indian Government approximately 8.0 million Rupees), we found that major changes on the design criteria should be made (pages 12 to 18 of the Inception Report). Although these changes necessitate redesign for all proposed farms, the original work schedule can still be made applicable with only slight modifications. However, on April 1 during a meeting in Delhi attended by our Project Advisor, he committed the completion of the design (including construction drawings, cost estimates, feasibility and design reports, technical specifications and other documents necessary for tendering) of three proposed farms by the end of May and the completion of the design for the other 10 sites by the end of 1993. This means that we have to finish the design for 1.5 sites per month (the farm area ranges

BIENVENIDO C. GILLES, Petitioner, vs. COURT OF APPEALS, SCHEMA KONSULT, and EDGARDO ABORES, Respondents. DECISION NACHURA, J.: Before the Court is a petition for certiorari under Rule 65 of the Rules of Court assailing the Decision1 dated January 29, 2001 and the Resolution dated June 14, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 58467. The Facts The antecedents of the case are as follows: Respondent Schema Konsult, Inc. (SKI) is a company engaged in all phases of project consulting, management, and supervision of services, including investment studies, feasibility studies, micro-processing analysis, and detailed scheme formulation, for all types of industrial plants, and installation, infrastructure, and development projects. 2 Respondent Edgardo C. Abores (Abores) was the President of SKI at the time material to the case. 3 On the other hand, petitioner Bienvenido C. Gilles (Gilles) was an incorporator, stockholder, and member of the Board of Directors from 1987 to March 1993, Vice-President for Finance and Administration from 1992 to 1993 and Principal Engineer of SKI from 1987 to March 1993. 4 In 1993, SKI entered into an Agreement Regarding Staff Provision5 (Agreement) with Carl Bro International (CBI), a corporation organized under the laws of Denmark. CBI entered into a joint venture with Aquatic Farms, Ltd., a foreign corporation under contract with the government of India for the provision of consultancy assistance on the "Shrimp and Fish Culture Project" (Project).6 The Project involved the development of shrimp farms in different parts of India, funded from a loan extended to the Government of India, particularly its Ministry of Agriculture, by the International Bank for Reconstruction and Development. 7 The Ministry of Agriculture signed a contract with Aquatic Farms, Ltd., in association with CBI, for provision of consultancy assistance to the Project. CBI contracted SKI to provide a qualified aquaculture engineer for the Project.8 Gilles applied for, and was accepted as, Water Systems/Irrigation Engineer of the Project for a period of two (2) years, commencing on January 24, 1993. 9 The Agreement provided that: (1) CBI would pay SKI a monthly fee of US$4,000.00; (2) Gilles basic salary of US$2,500.00 would be taken from the said fee; and (3) during Gilles first sixty (60) days in India, he would receive a subsistence allowance of US$87.00 per calendar day to defray his expenses for accommodation, board and lodging, and hotel room accommodation during project travels away from the duty station.10 For the duration of Gilles assignment in India, he would be considered as a regular employee of SKI, but all the conditions in the Agreement between SKI and CBI would apply.11 In January 1993, prior to Gilles departure for India, he received US$5,000.00 from SKI as an advance of his subsistence allowance to sustain him during his initial months in India. 12 While in India, he twice received 43,000 Indian Rupees (INR), equivalent to Php43,000.00, to cover his expenses from April 1-30, 1993 and from May 1-15, 1993.13 On May 10, 1993, Gilles tendered his Resignation Letter14 to Mr. Torben R. Schou (Schou) of CBI. The pertinent portions of the letter read:

from 52 to 1,671 ha.) This commitment was made by our Senior Project Advisor to the World Bank, Indias Central Government and State Officials. Since I was the water systems engineer in the group, much of the pressure of keeping up with our Senior Project Advisors commitment was passed on to me. I had to work 18 hours on the average every day seven days a week. xxxx 4) I was made to expect when I left for this assignment that I will be better off financially. However, for the last three and a half months now, Carl Bro has not paid my salary (3.5 months) and my subsistence allowance for my first 60 days stay in Bangalore. How could I be expected to fulfill my financial obligations here in the Philippines? I have an 80-year old mother to support, loans to amortize, relatives to help with their medical expenses, etc. Although, SCHEMA was kind to have given me an advance of US$5,000. During my first sixty days in Bangalore, as consultants, we were made to stay in five star hotel. I spent on the average US$70 per day for a total of US$4,200 in 60 days. Several times I have made personal long distance calls to SCHEMA to follow-up on my salary and to talk to management about the other items mentioned above. RMS, EEA and EAV were so kind to listen to my problems as well as do something within the limits of their positions. However, the person who could have helped me most refused to talk to me. I felt that I was abandoned by SCHEMA management. I was already in a very discouraged, depressed, exhausted and dejected state hence, I decided to leave Bangalore before my replacement was found. I wrote this letter to explain the reasons why I left my post in India before my replacement was found. This is not intended to ask management for reconsideration on its decision of terminating my services with SCHEMA. My request to management is to be kind enough to grant me separation benefits of one month per year of service and other benefits normally given to leaving employees. I am also requesting management to facilitate the payment of my 3.5 months salary by Carl Bro. I can claim, with a clear conscience, that I have earned, up to the last cent, my wage in India. As I have already mentioned in the earlier part of this letter that my resignation from my assignment in India has ended my career as a consultant. Hence, the granting of my aforementioned request would help me in venturing into new sources of livelihood. Abores explained that the management was unaware of the difficulties encountered by Gilles in India, as no communication, official or otherwise, was received from Gilles. He said that Gilles never submitted any written progress report on the Project, contrary to the companys standard operating procedures.19 The Board of Directors then decided to terminate the services of Gilles effective June 7, 1993,20 and a notice of termination was sent to him.21 On September 6, 1993, Gilles filed a complaint for illegal dismissal against respondents, seeking reinstatement, moral damages, and other monetary claims.22 Gilles alleged that there was a deliberate scheme to ease him out of the Project and ultimately out of SKI. He believed that Abores was behind it. He said that while he was in India, his salary from the Project was not given to him on time. He claimed that he tried to communicate with SKI representatives, particularly with Abores, relative to the difficulties he encountered in India, but his calls were ignored. Moreover, the March 20, 1993 election of officers of SKI was not relayed to him on time, which resulted in his failure to attend the meeting or to send a proxy and, thus, was not elected officer of the company, a position that he consistently held in the past. 23 He also challenged the May 19, 1993 Board of Directors meeting as a hoax. He alleged that the meeting did not take place. He claimed that he talked to two (2) or three (3) members of the Board of Directors and they confirmed to him that his termination from employment was not the subject of the said meeting. However, to his disbelief, Abores was able to produce minutes of the alleged meeting where his termination by the Board was the principal item in the agenda. 24

On the other hand, SKI dismissed the allegations of Gilles as mere fabrication. SKI averred that Gilles was well provided in India; that his resignation from CBI and his departure from India were not known nor approved by SKI; that the May 19, 1993 board meeting was real and Gilles was informed of such meeting at which his side was heard, but he was asked to step out of the meeting for displaying a temper; that the proceedings were properly recorded in the minutes; that the Board of Directors decided to terminate Gilles services effective June 7, 1993; and that SKI paid Gilles what was due him from the Project in India even if CBI had yet to pay the consultancy fees.25 On July 10, 1997, the Labor Arbiter rendered a Decision,26 the dispositive portion of which reads: WHEREFORE, the respondents are hereby ordered, jointly and severally: 1.) To reinstate the complainant to his former position as Vice-President for Finance/Administration, with full backwages from the date his salary was withheld until he is actually reinstated which as of date has reached P1,274,000.00. If reinstatement should become improbable, then, the complainant should be paid separation pay equivalent to one-half month salary for every year of service rendered in addition to the grant of backwages; [and] 2.) To pay the complainant the sum of P500,000.00 as moral damages. The respondents are, likewise, assessed the sum of P127,400.00 representing 10% of the benefits awarded as attorneys fees. SO ORDERED.27 On appeal, the National Labor Relations Commission (NLRC) affirmed the decision of the Labor Arbiter with modification in a Resolution28 dated November 29, 1999. The fallo of the resolution reads: WHEREFORE, the decision appealed from is AFFIRMED, with modification deleting the award of attorneys fee and reducing the award of moral damages to P100,000.00. SO ORDERED.29 SKI moved for reconsideration. The motion was denied in a Resolution dated January 31, 2000.30 Unsatisfied, SKI filed a petition for certiorari and prohibition under Rule 65 of the Rules of Court before the CA, raising the following issues: (a) the controversy was an intra-corporate dispute exclusively cognizable by the Securities and Exchange Commission (SEC), and beyond the jurisdiction of the NLRC; and (b) the finding of the Labor Arbiter that Gilles was illegally dismissed was bereft of merit. On January 29, 2001, the CA rendered a Decision granting the petition of SKI, 31 disposing, as follows: WHEREFORE, foregoing premises considered, the petition having merit, in fact and in law, is hereby GIVEN DUE COURSE. ACCORDINGLY, the decision/judgment of the Labor Arbiter and public respondent National Labor Relations Commission (3rd Division), are hereby SET ASIDE and ANNULLED for having been rendered without jurisdiction, and the complaint of private respondent ordered DISMISSED. Public respondents or any of their agent/s are hereby permanently enjoined/restrained from executing their judgment. No costs. SO ORDERED.32 The CA ratiocinated that the removal of Gilles as Vice-President of SKI was an intra-corporate controversy that was within the jurisdiction of the SEC. Furthermore, Gilles was not illegally dismissed from service, considering that he resigned from his assignment in India even before a replacement was found.33 Gilles filed a motion for reconsideration. On June 14, 2001, the CA issued a Resolution dismissing the motion. Hence, this petition.

The Issues Gilles raises the following issues for our resolution: I WHETHER [OR] NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE LABOR ARBITER HAS NO JURISDICTION OVER THE ILLEGAL DISMISSAL CASE OF HEREIN PETITIONER? II WHETHER OR NOT THE DISPOSITIVE PORTION OF THE LABOR ARBITERS DECISION CONTAINING REINSTATEMENT FOR THE POSITION OF VICE-PRESIDENT INSTEAD OF HIS REGULAR EMPLOYMENT AS PRINCIPAL ENGINEER WOULD DIVEST THE JURISDICTION OF NLRC OVER THE ILLEGAL DISMISSAL CASE OF HEREIN PETITIONER? III WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE IN DISTURBING THE FINDING OF THE LABOR ARBITER AND AFFIRMED BY THE NATIONAL LABOR RELATIONS COMMISSION (3rd DIVISION) THAT THE PETITIONER WAS ILLEGALLY DISMISSED FROM HIS REGULAR EMPLOYMENT?34 These issues may be reduced to the following: (1) whether the NLRC has jurisdiction over the illegal dismissal case; and (2) whether Gilles was illegally dismissed from employment. The Ruling of the Court I Article 217 of the Labor Code vests in Labor Arbiters and the NLRC exclusive jurisdiction to hear and decide cases involving termination disputes and all other cases arising from employeremployee relations, as it provides: ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; [and] 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation [or implementation] of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. Based on this provision, the NLRC has jurisdiction over the illegal dismissal case filed by Gilles. Contrary to the stance of SKI, the case is not an intra-corporate dispute but a labor controversy. Gilles sought reinstatement; he wanted to recover his position as Principal Engineer of SKI. He also prayed for backwages, moral damages, and attorneys fees. However, the Labor Arbiter committed an error when, in the dispositive portion of the July 10, 1997 Decision, he ordered the reinstatement of Gilles to his former position as Vice-President for Finance of SKI. That ruling finds no legal support in the ratio decidendi of the Decision itself, which reads: Respondents, through counsel, moved for the dismissal of the case on the ground that this Office lacks the jurisdiction to arbitrate the same. It is argued that the complainant is not an ordinary employee, being the Vice-President for Finance/Administration and Treasurer, in addition to his job position as Principal Engineer. It is[,] likewise[,] claimed that the issue involved is an intra-corporate controversy which falls under the exclusive jurisdiction of the Securities and Exchange Commission. The motion must be denied. The complainant lost his position as VP-Finance/Administration and Treasurer when he was not voted in the 20 March 1993 stockholders meeting. His remaining relationship with the respondent firm after that date was his job position of Principal Engineer. Moreover, the issue here is one of termination of employment, arising from circumstances on complainants assignment in India. No incident of intra-corporate character has been linked to the employment issue. It appears, therefore, that the element of intra-corporate controversy is absent [in the case which gives this Office the jurisdiction] to arbitrate the termination issue. 35 Based on the records of the case, Gilles never sought to regain his seat in the Board of Directors; he actually claimed reinstatement as Principal Engineer of SKI. The Labor Arbiters decision was muddled with a lengthy discussion on the Board of Directors positions that Gilles held in the past, his failure to participate in the March 19, 1993 SKI Board of Directors elections due to the delayed receipt of the notice of the meeting, and the circumstances which led him to believe that there was an overt plan to oust him from the company. Nonetheless, despite the tangled web of premises in the Labor Arbiters disquisition, what emerges is a clear case of a labor dispute, properly cognizable by the NLRC. II Employment may be severed either by the employee or by the employer. An employer-initiated termination must be based on just or authorized causes enumerated in Articles 282, 283, 36 284,37 and 28738 of the Labor Code. On the other hand, an employee may terminate his employment with or without just cause for any of the grounds enumerated under Article 285 39 of the Labor Code. A valid termination of employment by the employer must comply with two requisites, namely: (1) the dismissal must be for any of the causes provided under Article 282 of the Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend himself. Substantively, the employer can terminate the services of an employee for just and valid causes, which must be supported by clear and convincing evidence; and procedurally, the employee must be given notice and an adequate opportunity to be heard before his actual dismissal for cause.40 In this case, Gilles questions the validity of his dismissal as the Principal Engineer of SKI. He contends that he only resigned as a consultant for the Project in India and not as a regular employee of SKI. Furthermore, he contests the genuineness of the May 19, 1993 board meeting and denies that he was given the opportunity to explain his side.

SKI maintains that Gilles was terminated for willful disobedience and gross neglect of his duties, just causes recognized in Article 282 of the Labor Code, viz.: Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing. Willful disobedience of the employers lawful orders, as a just cause for dismissal of an employee, requires the concurrence of two (2) elements: (1) the employees assailed conduct must have been willful, i.e., characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.41 Gilles resignation from CBI and sudden departure from India was not approved by SKI. When he asked the companys permission to return to Manila, the management instructed him to stay in India until a suitable replacement was found.42 He knew of the critical stage of the Project due to the accelerated period of its completion.43 Thus, when he left the Project, despite the clear and lawful instructions of the management for him to stay, his act constituted willful disobedience and gross neglect of duty under Article 282 of the Labor Code. But SKI was guilty of violating Article 103 of the Labor Code. SKI was remiss in paying the compensation of Gilles as Aquaculture Engineer of the Project on time. Based on the findings of fact of the Labor Arbiter, as confirmed by the NLRC, Gilles was not paid his salaries for the three and half (3) months of his stay in India. Article 103 of the Labor Code mandates that wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days and that no employer shall make payment with less frequency than once a month. Gilles departure from India, despite the instruction of SKI for him to stay, was impelled by the financial difficulties he encountered thereat. The money given to him before he left for India was already spent. Rickie Sarque, the Chief Accountant of SKI, admitted on the witness stand that Gilles was paid his salaries for the 3 months when he was already back in Manila. 44 Added to this were the problems he encountered due to the acceleration of the job completion period, the obligations he had to meet at home for his aged mother at that time, now deceased, and the relatives who needed his financial support. Clearly, Gilles had a valid reason to leave India. It should be noted that all the time Gilles was employed as Aquaculture Engineer of the Project, he remained a regular employee of SKI.45 This is borne out by the Agreement which pertinently reads: Based on these TOR [Terms of Reference], SK [Schema Konsult, Inc.] has selected Mr. Bienvenido C. Gilles as the qualified Aquaculture (Water Systems) Engineer, and [the] MOA [Ministry of Agriculture] has accepted his assignment as a member of the AFL/CBI [Aquatic Farms Ltd./Carl Bro International] team. B.C. Gilles shall be employed by SK. 46 SKI, as the principal employer of Gilles, had the responsibility to pay Gilles his salaries and to defray his expenses while he was engaged in the Project in India. Again, the Agreement explicitly covers this obligation, viz.:

4. Remuneration and Expenses During the period of assignment, CBI shall pay to SK a total monthly rate of USD4,000.00, broken down as follows: USD Basic Salary to B.C. Gilles SK Office overhead and profit Total monthly rate 2,500.00 1,500.00 4,000.00

In case B.C. Gilles assignment commences or terminates during a month, a daily rate of USD 140.00/per working day shall be used for calculating the payment to SK. The total monthly or daily rate is the full remuneration to SK for the services of B.C. Gilles, and includes: Salary to B.C. Gilles Social charges All personal insurances, including: Health insurance Travel insurance Personal belongings insurance Accident and life insurance Employers liability and workers compensation insurance Leave pay and sick leave pay Leave on official Indian Holidays and on non-Indian holidays Taxes and duties Relocation costs All living expenses beyond the subsistence allowance Third party motor vehicle liability insurance xxxx The total monthly rate, the USD subsistence allowance, the international travel per diem and expenses to be reimbursed by CBI shall be invoiced monthly and paid by CBI to SK not later than 30 days after CBIs receipt from SK of invoice and documentation acceptable to CBI including copies of receipts and filled in timesheets approved by the AFL/CBI SPA. Payment shall be effected by a bank transfer to a bank account informed by SK. CBI shall pay only for the bank charges payable to CBIs bank. Reimbursement of eligible expenses in INR shall be effected directly to B.C. Gilles in India by the AFL/CBI SPA on behalf of CBI against presentation of receipts. 47 SKIs failure to pay Gilles salary on time was intolerable. For neglecting its duties as an employer, SKI may, thus, be considered to have acted in bad faith. It may be deemed as utter disregard by SKI of the welfare and well-being of its employee, especially at a time when he was far away from home.

We, therefore, find that Gilles was constructively dismissed from employment. Constructive dismissal exists when the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when there is clear discrimination, insensibility, or disdain by an employer and this becomes unbearable to the employee. 48 Invariably, the law recognizes and resolves such a situation in favor of the employees in order to protect their rights from the coercive acts of the employer. Resignation contemplates a voluntary act; thus, an employee who is forced to relinquish his position due to the employer's unfair or unreasonable treatment is deemed to have been illegally terminated or discharged. The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his position under the circumstances. 49 The disobedience committed by Gilles cannot be characterized as wrongful or perverse per se, given the conditions he was subjected to while in India. He left the Project primarily because of the financial difficulties he encountered, owing to his failure to receive his salary and because of the adverse working conditions in India.50 The Senior Project Advisor accelerated the time schedule of the Project, and Gilles had to work on the job at an average of eighteen (18) hours daily.511awphil Further, SKI alleges neglect of duty as a ground for dismissing Gilles, saying Gilles unceremonious return to the Philippines constituted abandonment. The contention is untenable. As a just cause for an employees dismissal, neglect of duty must not only be gross but also habitual. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Prior to his abrupt departure from India, Gilles had no derogatory record in the company. Besides, if it was true that the performance of Gilles was unsatisfactory or if he habitually neglected his duties, SKI or CBI should have initiated his removal prior to his departure from India. The Agreement52 contains an adequate provision for the removal or replacement of Gilles if the employers are dissatisfied with his performance. The said provision reads: 15. Removal and/or Replacement of Personnel If CBI (i) finds that B.C. Gilles has conducted serious misconduct or has been charged with having committed a criminal action, or (ii) has reasonable cause to be dissatisfied with the performance of B.C. Gilles, then SK shall, at CBIs written request specifying the ground thereof, forthwith provide a replacement with qualifications and experience similar to B.C. Gilles or better and acceptable to CBI, AFL and MOA.53 Article 279 of the Labor Code mandates that an employee who was unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, as well as to other benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of his actual reinstatement. Since the circumstances obtaining in this case do not warrant Gilles reinstatement due to his strained relations with the company, an award of separation pay, in lieu of reinstatement, equivalent to one month pay for every year of service, in addition to full backwages, allowances, and other benefits or the monetary equivalent thereof, is in order. As to the liability of Abores as President of SKI, it is basic that a corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith. 54 In the case at bar, malice or bad faith on the part of Abores in the constructive dismissal of Gilles was not sufficiently proven to justify holding him solidarily liable with SKI. WHEREFORE, the assailed Decision dated January 29, 2001 and Resolution dated June 14, 2001 of the Court of Appeals in CA-G.R. SP No. 58467 are hereby SET ASIDE. Petitioner Bienvenido C. Gilles is awarded separation pay equivalent to one month pay for every year of service and full backwages, other privileges and benefits, or the monetary equivalent thereof, computed from the date of his illegal dismissal on June 7, 1993 until the finality of this decision. Respondent Edgardo C. Abores is ABSOLVED from any liability adjudged against co-

respondent Schema Konsult, Inc. Respondent Schema Konsult, Inc. is likewise ORDERED to pay Gilles One Hundred Thousand Pesos (Php100,000.00) as moral damages. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila G.R. No. 160859 July 30, 2008

due to the amount of the claims involved. They added that their right to due process was also denied because the order was issued without them being furnished copies of the complaint and the inspection report and without being notified of the hearings held in the case.6 On June 16, 1998, the DOLE-NCR Assistant Regional Director, acting for the Regional Director, issued an Order granting petitioners' motion for reconsideration as he found merit in petitioners' allegation of absence of due process in the issuance of the first order. 7 The order, however, stated that the DOLE had jurisdiction over the case, pursuant to the Labor Code, as amended by Republic Act (R.A.) No. 7730, that intends to strengthen the visitorial and enforcement powers of the Secretary of Labor and Employment. 8 Consequently, another hearing for the case was set. During the hearing on September 14, 1998, petitioners submitted their Position Paper attaching thereto payroll sheets and waivers and quitclaims allegedly signed by the respondents to prove that petitioner properly paid respondents the amounts due them. 9 Respondents Florentino Abuan, Francisco Abentajado, Mario Guray, Juan Villaruz, Jerry Asense and Joselito Razon, however, outrightly denied the validity of the payroll sheets and quitclaims. In their Joint Affidavit dated October 29, 1998, respondents claimed that the actual daily pay they received was much smaller than the amounts stated in the payroll and they denied having received the cash amount stated in the quitclaims. 10 They added that they were merely forced to sign the payrolls and quitclaims in blank and in one sitting after they were accepted as applicants for their positions. 11 On December 29, 1998, the DOLE-NCR Regional Director, giving credence to the affidavit of the respondents denying the validity of the payroll sheets and quitclaims, issued an Order denying petitioners' motion for reconsideration of the Order dated November 7, 1997.12 The Order held petitioners New Bay Haven Restaurant, Bay Haven, Inc., its President Johnny T. Co, and/or Vivian Te as the ones liable as employers of respondents. However, the liability of petitioners was reduced to P468,444.16.13 On January 18, 1999, petitioners filed a Motion for Reconsideration of the Order dated December 29, 1998.14 In the motion, petitioners insisted that their documentary evidence proved that their obligations to respondents had been discharged and that the DOLE had no jurisdiction over the case.15 Treating the motion for reconsideration as an appeal, the DOLE Undersecretary issued a Resolution dated April 18, 2000, denying the appeal filed by petitioners, 16 upholding the Regional Director's finding that the quitclaims could not be relied upon to deny respondents' claims, and reiterating that the DOLE had jurisdiction to decide the case. 17 On May 12, 2000, petitioners filed a Motion for Reconsideration 18 of the April 18, 2000 Resolution which was denied by DOLE Secretary Sto. Tomas in a Resolution 19 dated September 19, 2001. Aggrieved, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of Court with the CA, seeking to annul and set aside the April 18, 2000 Resolution and the September 19, 2001 Resolution,20 docketed as CA-G.R. No. 68397.

BAY HAVEN, INC., JOHNNY T. CO, and VIVIAN TE-FERNANDEZ, Petitioners, vs. FLORENTINO ABUAN, JOSELITO RAZON, JERRY ASENSE, HERCULES RICAFUENTE, MARIO GURAY, ROLANDO NAELGA, JUAN VILLARUZ, MARIO SANTIAGO, ROGELIO MOCORRO, CALPITO MENDOLES, RENE CORALES, FRANCISCO ABENTAJADO, BONNIE ESPAOLA, ERNESTO DE JESUS and RODRIGO RUZGAL, Respondents. DECISION AUSTRIA-MARTINEZ, J.: Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking a reversal of the Decision1 of the Court of Appeals (CA) dated July 15, 2003, which denied the petition for certiorari filed by Bay Haven, Inc., Johnny T. Co and Vivian Te-Fernandez (Te) (petitioners) seeking the annulment of the Resolutions dated April 18, 2000 and September 19, 2001, issued by Undersecretary Jose M. Espaol, Jr. (DOLE Undersecretary) and Secretary Patricia Sto. Tomas (DOLE Secretary), respectively, of the Department of Labor and Employment (DOLE), as well as the Resolution 2 dated November 5, 2003 of the CA, which denied petitioners' motion for reconsideration. The following are the antecedent facts. Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the exercise of its visitorial, inspection and enforcement powers, through its Regional Director for the National Capital Region (NCR), issued an Order dated November 7, 1997 commanding petitioners to pay respondents a total of P638,187.15 corresponding to the latter's claims for underpayment as petitioners' workers. 3 The Regional Director based his Order on the results of the inspection conducted on April 23, 1997 by one of its inspectors who found that petitioner New Bay Haven Restaurant, located at the Army and Navy Club, Kalaw St., Manila, under the ownership or management of petitioner Te, committed the following violations: Labor Standards Law: 1. Underpayment of minimum wage. 2. Underpayment of thirteenth month pay. 3. Underpayment of regular holiday pay. 4. Underpayment of special holiday pay. 5. Non-payment of night shift differential pay. Occupational Safety and Health Standards. 1. Non-registration of the firm under Rule 1020 of OSHS.
4

On July 15, 2003, the CA rendered its Decision, 21 dismissing the petition, ruling that the DOLE had jurisdiction over the labor standards case and that petitioners did not present enough evidence to refute the claims made by respondents. Petitioners filed a Motion for Reconsideration of the Decision which the CA denied in its Resolution22 dated November 5, 2003. Hence, herein petition assigning the following errors of the CA:

On December 18, 1997, New Bay-Haven Restaurant and its co-petitioner Te filed with the DOLE-NCR Regional Office a Motion for Reconsideration of the November 7, 1997 order, alleging that the office had no jurisdiction over the case and that the order was issued in denial of petitioners' right to due process.5 They argued that jurisdiction over the case was lodged with the National Labor Relations Commission (NLRC), and not the DOLE-NCR,

1. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE JURISDICTION OF THE REGIONAL DIRECTOR FOR THE NATIONAL CAPITAL REGION OF THE DEPARTMENT OF LABOR AND EMPLOYMENT IN CASE NO. NCR-00-9703-RI-048-SPL ENTITLED FLORENTINO ABUAN, ET AL., COMPLAINANTS VERSUS NEW BAY HAVEN RESTAURANT, ET AL., RESPONDENTS; AND THE APPELLATE JURISDICTION OF THE OFFICE OF THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT IN CASE NO. OS-LS-005-019-099. 2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED THE RULING OF THE REGIONAL DIRECTOR OF DOLE-NCR AND THE OFFICE OF THE SECRETARY OF THE DOLE WHICH DECLARED THAT RESPONDENTS CALPITO MENDOLES AND RENE CORALES ARE EMPLOYEES OF BAY HAVEN, INC., DESPITE LACK OF EVIDENCE TO SUPPORT THE RULING ON THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP. 3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE MONETARY AWARD OF P25,952.83 TO RESPONDENT ROLANDO NAELGA WHO WAS NOT ONE OF THOSE WHOSE CLAIMS WAS [sic] MADE THE SUBJECT OF THE FINDINGS OF THE LABOR AND [sic] EMPLOYMENT AND ENFORCEMENT OFFICER OF THE DEPARTMENT OF LABOR AND EMPLOYMENT. 4. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED THE AWARD OF OVERTIME PAY DESPITE ABSENCE OF EVIDENCE TO SHOW THAT OVERTIME WORK HAD INDEED BEEN RENDERED. Respondents did not file a comment on the petition, but instead filed a Memorandum 23 simultaneous with petitioners' filing of their Memorandum. 24 In their Memorandum, respondents aver that the decision of the DOLE-NCR, as upheld by the DOLE Secretary, was rendered in the exercise of its jurisdiction, specifically its visitorial and enforcement powers as conferred by law. 25 They also allege that petitioners were given the opportunity to present evidence to refute respondents' claims, but failed to do so.26 We summarize the issues as follows: 1) whether the DOLE Secretary and her authorized representatives have jurisdiction to impose the monetary liability against petitioners; and 2) whether the DOLE-NCR, as upheld by the DOLE Secretary and the CA committed an error in awarding the claims of respondents. We deny the petition. The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional Director, have jurisdiction to enforce compliance with labor standards laws under the broad visitorial and enforcement powers conferred by Article 128 of the Labor Code, and expanded by R.A. No. 7730, to wit: Art. 128. Visitorial and Enforcement Power. (a) The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employer's records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection . The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment and Employment in the amount equivalent to the monetary award in the order appealed from. (Emphasis supplied) The Court has held that the visitorial and enforcement powers of the Secretary, exercised through his representatives, encompass compliance with all labor standards laws and other labor legislation, regardless of the amount of the claims filed by workers. 27 This has been the rule since R.A. No. 7730 was enacted on June 2, 1994, amending Article 128(b) of the Labor Code, to expand the visitorial and enforcement powers of the DOLE Secretary. Under the former rule, the DOLE Secretary had jurisdiction only in cases where the amount of the claim does not exceed P5,000.00. Petitioners argue, however, that DOLE-NCR should not have taken jurisdiction of the case, because in respondent Abuan's complaint, one of the entries reads as follows: Is there anything that the Department of Labor and Employment can do to be of further assistance to you? [Answer:] Illegal dismissal, no overtime, no holiday pay.28 Petitioners contend that the complaint's own allegation of more employer-employee relationship existed between depriving DOLE-NCR and the Secretary of Labor and entertain the complaint.29 This allegedly is a requirement Code, hereinbefore quoted. illegal dismissal meant that no petitioners and respondents, Employment of jurisdiction to under Art. 128(b) of the Labor

Petitioners' contentions are untenable. While it may be true that as far as respondent Abuan is concerned, his allegation of illegal dismissal had deprived the DOLE of jurisdiction as per Art. 217 of the Labor Code, 30 the same does not hold for the rest of the respondents, who do not claim to have been illegally dismissed. For one, petitioners failed to raise this matter with the Regional Director or even the DOLE Secretary, thus, preventing the issue from being clarified. The records also clearly indicate that the Regional Director and the DOLE Secretary resolved the case based only on the following violations found by the labor inspection officer, which do not include illegal dismissal, thus: 1. Underpayment of minimum wage. 2. Underpayment of thirteenth month pay. 3. Underpayment of regular holiday pay.

4. Underpayment of special holiday pay. 5. Non-payment of night shift differential pay. 6. Non-registration of the firm under Rule 1020 of OSHS. The above-mentioned violations are within the jurisdiction of the DOLE Secretary and his representatives to address. The questioned Orders dated December 29, 1998, April 18, 2000 and September 19, 2001 did not mention illegal dismissal, and properly so, because there was no such finding in the inspector's report.31 Being in the nature of compliance orders, said orders, under Art. 128(b) of the Labor Code, are strictly based on "the findings of labor employment and enforcement officers x x x made in the course of inspection," and not on any complaint filed. Though a complaint may initiate the case or an inspection, its allegations may not necessarily be upheld by the labor inspector or the Regional Director. Moreover, Abuan's allegation of illegal dismissal was his personal accusation, and did not necessarily apply to all the other employees. The records also do not support a contrary finding. But Abuan's other allegations of underpayment and other potential violations of labor laws and regulations were within the obligation of the Regional Director to investigate, especially insofar as they affect Abuan's remaining co-workers. Under Art. 128, the Regional Director can conduct inspections and check all violations of labor laws, and enforce compliance measures for the benefit of all employees, without being compelled to rely on a complaint that has been filed or its allegations. In fact, the article is silent on whether the filing of a complaint is even required to initiate the exercise of the inspection and enforcement powers. Petitioners also insinuate that they were effectively denied due process at the earlier stages of the controversy, as they claim that during the inspection, the inspector "did not even bother to talk to any them."32 Again, petitioners are raising serious, factual allegations in this late stage of their appeal. They never mentioned this alleged infraction in the very first motion they filed or in their Motion for Reconsideration 33 of the Regional Director's Order dated November 7, 1997. Neither did they raise it in their Position Paper 34 dated September 14, 1998, depriving the concerned officer, that is, the labor inspector, of the chance to deny or refute such serious allegations. Petitioners themselves cannot deny that due process was afforded them after the inspection. For one thing, their motion for reconsideration of the Order dated November 7, 1997 was granted, which resulted in the re-opening of the proceedings and the holding of subsequent hearings. In these hearings, petitioners were given the chance to air their side. Petitioners also submitted their position paper, in which they summarized all their arguments and presented their documentary evidence, such as a contract of lease, payroll sheets and quitclaims, to refute the respondents' claims, as well as the inspector's findings. In the petition now before us, petitioners themselves claim that they seasonably contested the findings of the labor inspector. 35 Taking all these into consideration, the ineluctable conclusion is that the demands of due process were satisfied, as petitioners had been given all the opportunity to be heard. It has been held that where opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of due process.36 Next, petitioners argue that the regional director was divested of jurisdiction because petitioners contested the findings of the labor inspection officer. This, allegedly, is in accordance with Art. 128(b) of the Labor Code, which states: Art. 128. Visitorial and Enforcement Power. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue

compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. x x x x (Emphasis supplied) Again, petitioners fail to persuade. The mere disagreement by the employer with the findings of the labor officer, or the simple act of presenting controverting evidence, does not automatically divest the DOLE Secretary or any of his authorized representatives such as the regional directors, of jurisdiction to exercise their visitorial and enforcement powers under the Labor Code. Under prevailing jurisprudence, the so-called exception clause in Art. 128(b) of the Labor Code has the following elements, which must all concur to divest the regional director of jurisdiction over workers' claims: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. 37 Thus, in SSK Parts Corporation v. Camas,38 in which the employer contested the Regional Director's finding of violations of labor standards, but such issue was resolved by an examination of evidentiary matters which were verifiable in the ordinary course of inspection, it was held that there was no more need to indorse the case to the arbitration branch of the NLRC. In Ex-Bataan Veterans Security Agency, Inc. v. Secretary of Labor,39 the Court held: The Court notes that EBVSAI did not contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. It was only in its supplemental motion for reconsideration before the Regional Director that EBVSAI questioned the findings of the labor regulations officer and presented documentary evidence to controvert the claims of private respondents. But even if this was the case, the Regional Director and the Secretary of Labor still looked into and considered EBVSAIs documentary evidence and found that such did not warrant the reversal of the Regional Directors order. The Secretary of Labor also doubted the veracity and authenticity of EBVSAIs documentary evidence. Moreover, the pieces of evidence presented by EBVSAI were verifiable in the normal course of inspection because all employment records of the employees should be kept and maintained in or about the premises of the workplace, which in this case is in Ambuklao Plant, the establishment where private respondents were regularly assigned. 40 (Emphasis supplied) Thus, the key requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters are not verifiable in the course of inspection. Where the evidence presented was verifiable in the normal course of inspection, even if presented belatedly by the employer, the Regional Director, and later the DOLE Secretary, may still examine them; and these officers are not divested of jurisdiction to decide the case. In the present case, petitioners' pieces of evidence of the alleged contract of lease, payroll sheets, and quitclaims were all verifiable in the normal course of inspection and, granting that they were not examined by the labor inspector, they have nevertheless been

thoroughly examined by the Regional Director and the DOLE Secretary. For these reasons, the exclusion clause of Art. 128(b) does not apply. In addition, the findings of the said officers on the invalidity or low probative value of these documents are findings of a factual nature which this Court will accord with great respect. 41 As to the quitclaims, we need only to reiterate the policy laid down in AFP Mutual Benefit Association, Inc. v. AFP-MBAI-EU,42 which states: In labor jurisprudence, it is well established that quitclaims and/or complete releases executed by the employees do not estop them from pursuing their claims arising from the unfair labor practice of the employer. The basic reason for this is that such quitclaims and/or complete releases are against public policy and, therefore, null and void. The acceptance of termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice acts. ( Cario vs. ACCFA, L-19808, September 29, 1966, 18 SCRA 163; Philippine Sugar Institute vs. CIR, L-13475, September 29, 1960, 109 Phil. 452; Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA 694, 704) In the Cario case, supra, the Supreme Court, speaking thru Justice Sanchez, said: Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim. They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non praesumitur. The principle enunciated above, however, should benefit only the respondents in the present case who outrightly denied the quitclaims' validity, because it may be supposed that those who did not protest petitioners' presentation of the quitclaims in evidence have admitted the same by their silence.43 In such instance, only respondents Francisco Abentajado, Mario Guray, Juan Villaruz, Jerry Asense and Joselito Razon are deemed to have blocked the quitclaims' applicability against them. 44 Anent the second issue, petitioners contend that the Regional Director and the DOLE Secretary committed error in their award of the various claims of respondents, specifically citing the award to certain respondents whom they deny having worked as their employees.1avvphi1 Here, there is merit in petitioners' contentions. Although the basic rule is that questions of facts like this may not be addressed in a petition for review, there are certain exceptions, such as when the judgment is based on a misapprehension of facts.45 At the earliest possible opportunity, that is, as early as the position paper filed on September 14, 1998, petitioners already denied being the employers of the respondents Calpito Mendoles and Rene Corales. Later, in their Motion for Reconsideration 46 dated January 8, 2004, petitioners also disclaimed liability to Rolando Naelga, who was not in the labor inspector's and Regional Director's original list of petitioners' workers and against whom petitioners were not afforded the chance to present countervailing evidence. Since then, petitioners have consistently denied liability as employers of these respondents. These respondents, however, not only failed to controvert this denial by petitioners, they also did not participate in the proceedings of the case, as shown by the records. Thus, there was a failure to prove the existence of an employer-employee relationship between petitioners and these particular respondents. Respondents could have easily proven their relationship by presenting any of the following: their appointment letters or employment contracts, payrolls, organization charts, Social Security System registration, personnel list, as well as the testimonies of co-employees to confirm their status,47 but failed to do so. We can only

conclude, therefore, that there is no substantial evidence to prove petitioners' obligations to these respondents. However, we do not sustain petitioners' allegation that the Regional Director and the DOLE Secretary erroneously awarded overtime pay to the respondents, despite the lack of proof that overtime work had been rendered. Suffice it to state that petitioners' own evidence, which are the payroll sheets they submitted to the Regional Director, 48 show that respondents indeed rendered overtime work. This amounts to an admission by petitioners, which may be used in evidence against them. 49 Aptly, this then became one of the bases of the Regional Director's award of overtime pay to respondents. In summary, we hold that only the awards granted to the following respondents be affirmed: 1. Juan Villaruz 2. Francisco Abentajado 3. Jerry Asense 4. Mario Guray 5. Joselito Razon The award in favor of Florentino Abuan is deleted, as his claim for illegal dismissal is within the original and exclusive jurisdiction of the Labor Arbiter, and outside of the jurisdiction of the DOLE Secretary and the Regional Director. The awards granted to the rest of the respondents are likewise deleted for lack of evidence to prove petitioners' liability as to them. WHEREFORE, the decision appealed from is AFFIRMED, with the MODIFICATION that only respondents Juan Villaruz, Francisco Abentajado, Jerry Asense, Mario Guray, and Joselito Razon be GRANTED their monetary awards while the awards given to the rest of the respondents are DELETED. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 165407 June 5, 2009

HERMINIGILDO INGUILLO and ZENAIDA BERGANTE, Petitioners, vs. FIRST PHILIPPINE SCALES, Inc. and/or AMPARO POLICARPIO, Manager, Respondents. DECISION PERALTA, J.: Assailed in this petition for review under Rule 45 of the Rules of Court are the Court of Appeals (1) Decision1 dated March 11, 2004 in CA-G.R. SP No. 73992, which dismissed the Petition for Certiorari of petitioners Zenaida Bergante (Bergante) and Herminigildo Inguillo (Inguillo); and (2) Resolution2 dated September 17, 2004 denying petitioners' Motion for Reconsideration. The appellate court sustained the ruling of the National Labor Relations Commission (NLRC) that petitioners were validly dismissed pursuant to a Union Security Clause in the collective bargaining agreement. The facts of the case are as follows: First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the manufacturing of weighing scales, employed Bergante and Inguillo as assemblers on August 15, 1977 and September 10, 1986, respectively. In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU) 3 entered into a Collective Bargaining Agreement (CBA), 4 the duration of which was for a period of five (5) years starting on September 12, 1991 until September 12, 1996. On September 19, 1991, the members of FPSILU ratified the CBA in a document entitled RATIPIKASYON NG KASUNDUAN.5 Bergante and Inguillo, who were members of FPSILU, signed the said document.6 During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees joined another union, the Nagkakaisang Lakas ng Manggagawa (NLM), which was affiliated with a federation called KATIPUNAN (NLM-KATIPUNAN, for brevity). Subsequently, NLMKATIPUNAN filed with the Department of Labor and Employment (DOLE) an intra-union dispute7 against FPSILU and FPSI. In said case, the Med-Arbiter decided8 in favor of FPSILU. It also ordered the officers and members of NLM-KATIPUNAN to return to FPSILU the amount of P90,000.00 pertaining to the union dues erroneously collected from the employees. Upon finality of the Med-Arbiter's Decision, a Writ of Execution9 was issued to collect the adjudged amount from NLM-KATIPUNAN. However, as no amount was recovered, notices of garnishment were issued to United Coconut Planters Bank (Kalookan City Branch)10 and to FPSI11 for the latter to hold for FPSILU the earnings of Domingo Grutas, Jr. (Grutas) and Inguillo, formerly FPSILU's President and Secretary for Finance, respectively, to the extent of P13,032.18. Resultantly, the amount of P5,140.55 was collected,12 P1,695.72 of which came from the salary of Grutas, while the P3,444.83 came from that of Inguillo. Meanwhile, on March 29, 1996, the executive board and members of the FPSILU addressed a document dated March 18, 1996 denominated as "Petisyon" 13 to FPSI's general manager, Amparo Policarpio (Policarpio), seeking the termination of the services of the following employees, namely: Grutas, Yolanda Tapang, Shirley Tapang, Gerry Trinidad, Gilbert Lucero, Inguillo, Bergante, and Vicente Go, on the following grounds: 14 (1)

disloyalty to the Union by separating from it and affiliating with a rival Union, the NLMKATIPUNAN; (2) dereliction of duty by failing to call periodic membership meetings and to give financial reports; (3) depositing Union funds in the names of Grutas and former VicePresident Yolanda Tapang, instead of in the name of FPSILU, care of the President; (4) causing damage to FPSI by deliberately slowing down production, preventing the Union to even attempt to ask for an increase in benefits from the former; and ( 5) poisoning the minds of the rest of the members of the Union so that they would be enticed to join the rival union. On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI and/or Policarpio (respondents) for illegal withholding of salary and damages, docketed as NLRC-NCRCase No. 00-05-03036-96.15 On May 16, 1996, respondents terminated the services of the employees mentioned in the "Petisyon." The following day, two (2) separate complaints for illegal dismissal, reinstatement and damages were filed against respondents by: (1) NLM-KATIPUNAN, Grutas, Trinidad, Bergante, Yolanda Tapang, Go, Shirley Tapang and Lucero 16 (Grutas complaint, for brevity); and (2) Inguillo17 (Inguillo complaint). Both complaints were consolidated with Inguillo's prior complaint for illegal withholding of salary, which was pending before Labor Arbiter Manuel Manansala. After the preliminary mandatory conference, some of the complainants agreed to amicably settle their cases. Consequently, the Labor Arbiter issued an Order18 dated October 1, 1996, dismissing with prejudice the complaints of Go, Shirley Tapang, Yolanda Tapang, Grutas, and Trinidad. 19 Lucero also settled the case after receiving his settlement money and executing a Quitclaim and Release in favor of FPSI and Policarpio.20 Bergante and Inguillo, the remaining complainants, were directed to submit their respective position papers, after which their complaints were submitted for resolution on February 20, 1997.21 In their Position Paper,22 Bergante and Inguillo claimed that they were not aware of a petition seeking for their termination, and neither were they informed of the grounds for their termination. They argued that had they been informed, they would have impleaded FPSILU in their complaints. Inguillo could not think of a valid reason for his dismissal except the fact that he was a very vocal and active member of the NLM-KATIPUNAN. Bergante, for her part, surmised that she was dismissed solely for being Inguillo's sister-inlaw. She also reiterated the absence of a memorandum stating that she committed an infraction of a company rule or regulation or a violation of law that would justify her dismissal.1avvphi1 Inguillo also denounced respondents' act of withholding his salary, arguing that he was not a party to the intra-union dispute from which the notice of garnishment arose. Even assuming that he was, he argued that his salary was exempt from execution. In their Position Paper,23 respondents maintained that Bergante and Inguillo's dismissal was justified, as the same was done upon the demand of FPSILU, and that FPSI complied in order to avoid a serious labor dispute among its officers and members, which, in turn, would seriously affect production. They also justified that the dismissal was in accordance with the Union Security Clause in the CBA, the existence and validity of which was not disputed by Bergante and Inguillo. In fact, the two had affixed their signatures to the document which ratified the CBA. In his Decision24 dated November 27, 1997, the Labor Arbiter dismissed the remaining complaints of Bergante and Inguillo and held that they were not illegally dismissed. He explained that the two clearly violated the Union Security Clause of the CBA when they

joined NLM-KATIPUNAN and committed acts detrimental to the interests of FPSILU and respondents. The dispositive portion of the said Decision states: WHEREFORE, premises considered, judgment is hereby rendered: 1. Declaring respondents First Philippines Scales, Inc. (First Philippine Scales Industries [FPSI] and Amparo Policarpio, in her capacity as President and General Manager of respondent FPSI, not guilty of illegal dismissal as above discussed. However, considering the length of services rendered by complainants Herminigildo Inguillo and Zenaida Bergante as employees of respondent FPSI, plus the fact that the other complainants in the above-entitled cases were previously granted financial assistance/separation pay through amicable settlement, the afore-named respondents are hereby directed to pay complainants Herminigildo Inguillo and Zenaida Bergante separation pay and accrued legal holiday pay, as earlier computed, to wit: Herminigildo Inguillo Separation pay ................ Legal Holiday Pay........... Total Zenaida Bergante Separation pay................. Legal Holiday Pay........... Total P43,225.00 839.00 44,064.00 P22,490.00 839.00 23,329.00

complainant Inguillo the amount representing his withheld salary for the period March 15, 1998 to April 16, 1998. The sum corresponding to ten percent (10%) of the total judgment award by way of attorney's fees is likewise ordered. All other claims are ordered dismissed for lack of merit. SO ORDERED.27 In reversing the Labor Arbiter, the NLRC28 ratiocinated that respondents failed to present evidence to show that Bergante and Inguillo committed acts inimical to FPSILU's interest. It also observed that, since the two (2) were not informed of their dismissal, the justification given by FPSI that it was merely constrained to dismiss the employees due to persistent demand from the Union clearly proved the claim of summary dismissal and violation of the employees' right to due process. Respondents filed a Motion for Reconsideration, which was referred by the NLRC to Executive Labor Arbiter Vito C. Bose for report and recommendation. In its Resolution29 dated August 26, 2002, the NLRC adopted in toto the report and recommendation of Arbiter Bose which set aside its previous Resolution reversing the Labor Arbiter's Decision. This time, the NLRC held that Bergante and Inguillo were not illegally dismissed as respondents merely put in force the CBA provision on the termination of the services of disaffiliating Union members upon the recommendation of the Union. The dispositive portion of the said Resolution provides: WHEREFORE, the resolution of the Commission dated June 8, 2001 is set aside. Declaring the dismissal of the complainants as valid, [t]his complaint for illegal dismissal is dismissed. However, respondents are hereby directed to pay complainant Inguillo the amount representing his withheld salary for the period March 15, 1998 to April 16, 1998, plus ten (10%) percent as attorney's fees. All other claims are ordered dismissed for lack of merit. SO ORDERED.30 Not satisfied with the disposition of their complaints, Bergante and Inguillo filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals (CA). The CA dismissed the petition for lack of merit 31 and denied the subsequent motion for reconsideration.32 In affirming the legality of the dismissal, the CA ratiocinated, thus: x x x on the merits, we sustain the view adopted by the NLRC that: x x x it cannot be said that the stipulation providing that the employer may dismiss an employee whenever the union recommends his expulsion either for disloyalty or for any violation of its by-laws and constitution is illegal or constitutive of unfair labor practice, for such is one of the matters on which management and labor can agree in order to bring about the harmonious relations between them and the union, and cohesion and integrity of their organization. And as an act of loyalty, a union may certainly require its members not to affiliate with any other labor union and to consider its infringement as a reasonable cause for separation. The employer FPSI did nothing but to put in force their agreement when it separated the disaffiliating union members, herein complainants, upon the recommendation of the union. Such a stipulation is not only necessary to maintain loyalty and preserve the integrity of the union, but is allowed by the Magna Carta of Labor when it provided that while it is recognized that an employee shall have the right of self-organization, it is at the same time postulated that such rights shall not injure the right of the labor organization to prescribe its own rules with respect to the acquisition or retention of membership therein. Having ratified their CBA and being then members of FPSILU, the complainants owe fealty and are required under the Union Security clause to maintain their membership in good standing with it during the term thereof, a requirement which ceases to be binding only during the

2. Directing the afore-named respondents to pay ten (10%) percent attorney's fees based on the total monetary award to complainants Inguillo and Bergante. 3. Dismissing the claim for illegal withholding of salary of complainant Inguillo for lack of merit as above discussed. 4. Dismissing the other money claims and/or other charges of complainants Inguillo and Bergante for lack of factual and legal basis. 5. Dismissing the complaint of complainant Gilberto Lucero with prejudice for having executed a Quitclaim and Release and voluntary resignation in favor of respondents FPSI and Amparo Policarpio as above-discussed where the former received the amount of P23,334.00 as financial assistance/separation pay and legal holiday pay from the latter. SO ORDERED.
25

Bergante and Inguillo appealed before the NLRC, which reversed the Labor Arbiter's Decision in a Resolution26 dated June 8, 2001, the dispositive portion of which provides: WHEREFORE, the assailed decision is set aside. Respondents are hereby ordered to reinstate complainants Inguillo and Bergante with full backwages from the time of their dismissal up [to] their actual reinstatement. Further, respondents are also directed to pay

60-day freedom period immediately preceding the expiration of the CBA, which was not present in this case. x x x the dismissal of the complainants pursuant to the demand of the majority union in accordance with their union security [clause] agreement following the loss of seniority rights is valid and privileged and does not constitute unfair labor practice or illegal dismissal. Indeed, the Supreme Court has for so long a time already recognized a union security clause in the CBA, like the one at bar, as a specie of closed-shop arrangement and trenchantly upheld the validity of the action of the employer in enforcing its terms as a lawful exercise of its rights and obligations under the contract. The collective bargaining agreement in this case contains a union security clause-a closed-shop agreement. A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of the contracting union who must continue to remain members in good standing to keep their jobs. It is "the most prized achievement of unionism." It adds membership and compulsory dues. By holding out to loyal members a promise of employment in the closedshop, it welds group solidarity. (National Labor Union v. Aguinaldo's Echague Inc., 97 Phil. 184). It is a very effective form of union security agreement. This Court has held that a closed-shop is a valid form of union security, and such a provision in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. (Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 87; Manalang v. Artex Development Company, Inc., 21 SCRA 561.) 33 Hence, the present petition. Essentially, the Labor Code of the Philippines has several provisions under which an employee may be validly terminated, namely: (1) just causes under Article 282; 34 (2) authorized causes under Article 283;35 (3) termination due to disease under Article 284; 36 and (4) termination by the employee or resignation under Article 285. 37 While the said provisions did not mention as ground the enforcement of the Union Security Clause in the CBA, the dismissal from employment based on the same is recognized and accepted in our jurisdiction.38 "Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership" or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment.39 There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. 40 A closed-shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. 41 In their Petition, Bergante and Inguillo assail the legality of their termination based on the Union Security Clause in the CBA between FPSI and FPSILU. Article II 42 of the CBA pertains to Union Security and Representatives, which provides: The Company hereby agrees to a UNION SECURITY [CLAUSE] with the following terms:

1. All bonafide union members as of the effective date of this agreement and all those employees within the bargaining unit who shall subsequently become members of the UNION during the period of this agreement shall, as a condition to their continued employment, maintain their membership with the UNION under the FIRST PHIL. SCALES INDUSTRIES LABOR UNION Constitution and By-laws and this Agreement; 2. Within thirty (30) days from the signing of this Agreement, all workers eligible for membership who are not union members shall become and to remain members in good standing as bonafide union members therein as a condition of continued employment; 3. New workers hired shall likewise become members of the UNION from date they become regular and permanent workers and shall remain members in good standing as bonafide union members therein as a condition of continued employment; 4. In case a worker refused to join the Union, the Union will undertake to notify workers to join and become union members. If said worker or workers still refuses, he or they shall be notified by the Company of his/her dismissal as a consequence thereof and thereafter terminated after 30 days notice according to the Labor Code. 5. Any employee/union member who fails to retain union membership in good standing may be recommended for suspension or dismissal by the Union Directorate and/or FPSILU Executive Council for any of the following causes: a) Acts of Disloyalty; b) Voluntary Resignation or Abandonment from the UNION; c) Organization of or joining another labor union or any labor group that would work against the UNION; d) Participation in any unfair labor practice or violation of the Agreement, or activity derogatory to the UNION decision; e) Disauthorization of, or Non-payment of, monthly membership dues, fees, fines and other financial assessments to the Union; f) Any criminal violation or violent conduct or activity against any UNION member without justification and affecting UNION rights or obligations under the said Agreement. Verily, the aforesaid provision requires all members to maintain their membership with FPSILU during the lifetime of the CBA. Failing so, and for any of the causes enumerated therein, the Union Directorate and/or FPSILU Executive Council may recommend to FPSI an employee/union member's suspension or dismissal. Records show that Bergante and Inguillo were former members of FPSILU based on their signatures in the document which ratified the CBA. It can also be inferred that they disaffiliated from FPSILU when the CBA was still in force and subsisting, as can be gleaned from the documents relative to the intra-union dispute between FPSILU and NLM-KATIPUNAN. In view of their disaffiliation, as well as other acts allegedly detrimental to the interest of both FPSILU and FPSI, a "Petisyon" was submitted to Policarpio, asking for the termination of the services of employees who failed to maintain their Union membership. The Court is now tasked to determine whether the enforcement of the aforesaid Union Security Clause justified herein petitioners' dismissal from the service.

In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union's decision to expel the employee from the union or company.43 We hold that all the requisites have been sufficiently met and FPSI was justified in enforcing the Union Security Clause, for the following reasons: First. FPSI was justified in applying the Union Security Clause, as it was a valid provision in the CBA, the existence and validity of which was not questioned by either party. Moreover, petitioners were among the 93 employees who affixed their signatures to the document that ratified the CBA. They cannot now turn their back and deny knowledge of such provision. Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal of the members who failed to maintain their membership with the Union. Aside from joining another rival union, FPSILU cited other grounds committed by petitioners and the other employees which tend to prejudice FPSIs interests, i.e., dereliction of duty - by failing to call periodic membership meetings and to give financial reports; depositing union funds in the names of Grutas and former Vice-President Yolanda Tapang, instead of in the name of FPSILU care of the President; causing damage to FPSI by deliberately slowing down production, preventing the Union from even attempting to ask for an increase in benefits from the former; and poisoning the minds of the rest of the members of the Union so that they would be enticed to join the rival union. Third. FPSILU's decision to ask for the termination of the employees in the "Petisyon" was justified and supported by the evidence on record. Bergante and Inguillo were undisputably former members of FPSILU. In fact, Inguillo was the Secretary of Finance, the underlying reason why his salary was garnished to satisfy the judgment of the Med-Arbiter who ordered NLM-KATIPUNAN to return the Union dues it erroneously collected from the employees. Their then affiliation with FPSILU was also clearly shown by their signatures in the document which ratified the CBA. Without a doubt, they committed acts of disloyalty to the Union when they failed not only to maintain their membership but also disaffiliated from it. They abandoned FPSILU and even joined another union which works against the former's interests. This is evident from the intra-union dispute filed by NLM-KATIPUNAN against FPSILU. Once affiliated with NLM-KATIPUNAN, Bergante and Inguillo proceeded to recruit other employees to disaffiliate from FPSILU and even collected Union dues from them. In Del Monte Philippines,44 the stipulations in the CBA authorizing the dismissal of employees are of equal import as the statutory provisions on dismissal under the Labor Code, since a CBA is the law between the company and the Union, and compliance therewith is mandated by the express policy to give protection to labor. In Caltex Refinery Employees Association (CREA) v. Brillantes ,45 the Court expounded on the effectiveness of union security clause when it held that it is one intended to strengthen the contracting union and to protect it from the fickleness or perfidy of its own members. For without such safeguards, group solidarity becomes uncertain; the union becomes gradually weakened and increasingly vulnerable to company machinations. In this security clause lies the strength of the union during the enforcement of the collective bargaining agreement. It is this clause that provides labor with substantial power in collective bargaining. Nonetheless, while We uphold dismissal pursuant to a union security clause, the same is not without a condition or restriction. For to allow its untrammeled enforcement would encourage arbitrary dismissal and abuse by the employer, to the detriment of the employees. Thus, to safeguard the rights of the employees, We have said time and again that dismissals pursuant to union security clauses are valid and legal, subject only to the

requirement of due process, that is, notice and hearing prior to dismissal. 46 In like manner, We emphasized that the enforcement of union security clauses is authorized by law, provided such enforcement is not characterized by arbitrariness, and always with due process.47 There are two (2) aspects which characterize the concept of due process under the Labor Code: one is substantivewhether the termination of employment was based on the provisions of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural - the manner in which the dismissal was effected. The second aspect of due process was clarified by the Court in King of Kings Transport v. Mamac,48 stating, thus: (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. x x x (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. Corollarily, procedural due process in the dismissal of employees requires notice and hearing. The employer must furnish the employee two written notices before termination may be effected. The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the employee of the employers decision to dismiss him.49 The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.50 In the present case, the required two notices that must be given to herein petitioners Bergante and Inguillo were lacking. The records are bereft of any notice that would have given a semblance of substantial compliance on the part of herein respondents. Respondents, however, aver that they had furnished the employees concerned, including petitioners, with a copy of FPSILU's "Petisyon." We cannot consider that as compliance with the requirement of either the first notice or the second notice. While the "Petisyon" enumerated the several grounds that would justify the termination of the employees mentioned therein, yet such document is only a recommendation by the Union upon which the employer may base its decision. It cannot be considered a notice of termination. For as agreed upon by FPSI and FPSILU in their CBA, the latter may only recommend to the former a Union member's suspension or dismissal. Nowhere in the controverted Union Security Clause was there a mention that once the union gives a recommendation, the employer is bound outright to proceed with the termination. Even assuming that the "Petisyon" amounts to a first notice, the employer cannot be deemed to have substantially complied with the procedural requirements. True, FPSILU

enumerated the grounds in said "Petisyon." But a perusal of each of them leads Us to conclude that what was stated were general descriptions, which in no way would enable the employees to intelligently prepare their explanation and defenses. In addition, the "Petisyon" did not provide a directive that the employees are given opportunity to submit their written explanation within a reasonable period. Finally, even if We are to assume that the "Petisyon" is a second notice, still, the requirement of due process is wanting. For as We have said, the second notice, which is aimed to inform the employee that his service is already terminated, must state that the employer has considered all the circumstances which involve the charge and the grounds in the first notice have been established to justify the severance of employment. After the claimed dialogue between Policarpio and the employees mentioned in the "Petisyon," the latter were simply told not to report for work anymore. These defects are bolstered by Bergante and Inguillo who remain steadfast in denying that they were notified of the specific charges against them nor were they given any memorandum to that effect. They averred that had they been informed that their dismissal was due to FPSILU's demand/petition, they could have impleaded the FPSILU together with the respondents. The Court has always underscored the significance of the two-notice rule in dismissing an employee and has ruled in a number of cases that non-compliance therewith is tantamount to deprivation of the employees right to due process. 51 As for the requirement of a hearing or conference, We hold that respondents also failed to substantially comply with the same. Policarpio alleged that she had a dialogue with the concerned employees; that she explained to them the demand of FPSILU for their termination as well as the consequences of the "Petisyon"; and that she had no choice but to act accordingly. She further averred that Grutas even asked her to pay all the involved employees one (1)-month salary for every year of service, plus their accrued legal holiday pay, but which she denied. She informed them that it has been FPSI's practice to give employees, on a case-to-case basis, only one-half () month salary for every year of service and after they have tendered their voluntary resignation. The employees refused her offer and told her that they will just file their claims with the DOLE. 52 Policarpio's allegations are self-serving. Except for her claim as stated in the respondent's Position Paper, nowhere from the records can We find that Bergante and Inguillo were accorded the opportunity to present evidence in support of their defenses. Policarpio relied heavily on the "Petisyon" of FPSILU. She failed to convince Us that during the dialogue, she was able to ascertain the validity of the charges mentioned in the "Petisyon." In her futile attempt to prove compliance with the procedural requirement, she reiterated that the objective of the dialogue was to provide the employees "the opportunity to receive the act of grace of FPSI by giving them an amount equivalent to one-half () month of their salary for every year of service." We are not convinced. We cannot even consider the demand and counter-offer for the payment of the employees as an amicable settlement between the parties because what took place was merely a discussion only of the amount which the employees are willing to accept and the amount which the respondents are willing to give. Such non-compliance is also corroborated by Bergante and Inguillo in their pleadings denouncing their unjustified dismissal. In fine, We hold that the dialogue is not tantamount to the hearing or conference prescribed by law. We reiterate, FPSI was justified in enforcing the Union Security Clause in the CBA. However, We cannot countenance respondents' failure to accord herein petitioners the due process they deserve after the former dismissed them outright "in order to avoid a serious labor dispute among the officers and members of the bargaining agent." 53 In enforcing the Union Security Clause in the CBA, We are upholding the sanctity and inviolability of contracts. But in doing so, We cannot override an employees right to due process. 54 In Carino v. National Labor Relations Commission,55 We took a firm stand in holding that:

The power to dismiss is a normal prerogative of the employer. However, this is not without limitation. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement x x x. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor." Thus, as held in that case, "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."56 In fine, We hold that while Bergante and Inguillo's dismissals were valid pursuant to the enforcement of Union Security Clause, respondents however did not comply with the requisite procedural due process. As in the case of Agabon v. National Labor Relations Commission,57 where the dismissal is for a cause recognized by the prevailing jurisprudence, the absence of the statutory due process should not nullify the dismissal or render it illegal, or ineffectual. Accordingly, for violating Bergante and Inguillo's statutory rights, respondents should indemnify them the amount of P30,000.00 each as nominal damages. In view of the foregoing, We see no reason to discuss the other matters raised by petitioners. WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated March 11, 2004 and Resolution dated September 17, 2004, in CA-G.R. SP No. 73992, are hereby AFFIRMED WITH MODIFICATION in that while there was a valid ground for dismissal, the procedural requirements for termination, as mandated by law and jurisprudence, were not observed. Respondents First Philippine Scales, Inc. and/or Amparo Policarpio are hereby ORDERED to PAY petitioners Zenaida Bergante and Herminigildo Inguillo the amount of P30,000.00 each as nominal damages. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 181688 June 5, 2009

On January 15, 2005, the labor arbiter, on the finding that Albertos dismiss al was predicated, among others, on offenses he was neither apprised of nor charged with, rendered judgment for Alberto, disposing as follows: WHEREFORE, finding the complainants dismissal unlawful, respondents are hereby directed to reinstate complainant to his former position without loss of seniority rights and other benefits and further ordered solidarily to pay complainant backwages from the time of his dismissal up to actual reinstatement minus the salary corresponding to the suspension period of twelve days, plus 10% of the total award for attorneys fees, computed as follows: FULL BACKWAGES A. Basic Pay From 8/14/03 to 1/14/05 P12,000 x 17.03 B. 13th month pay P 204,360/12 C. Service Incentive Leave Pay P12,000/30 x 5 days x 17.03/12 = 2,838.33 ---------------P 224,228.33 = 4,800.00 ---------------P 219,428.33 = 17,030.00 = P 204,360.00

DAIKOKU ELECTRONICS PHILS., INC., Petitioner, vs. ALBERTO J. RAZA, Respondent. DECISION VELASCO, JR., J.: In this petition for review under Rule 45, Daikoku Electronics Phils., Inc. (Daikoku) 1 assails and seeks to set aside the Decision dated September 26, 2007 and 2 Resolution dated February 7, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 96282, effectively dismissing Daikokus appeal from the resolutions dated May 31, 3 4 2006 and July 31, 2006, respectively, of the National Labor Relations Commission (NLRC) in NLRC CA No. 044001-05. The Facts In January 1999, Daikoku hired respondent Alberto J. Raza as company driver, eventually assigning him to serve as personal driver to its president, Mamuro Ono (Ono, hereafter). By arrangement, Alberto, at the end of each working day which usually starts early morning and ends late at night, parks the car at an assigned slot outside of Onos place of residence at Pacific Plaza Condominium in Makati City. On July 21, 2003, at around 8:00 p.m., Alberto, after being let off by Ono, took the company vehicle to his own place also in Makati City. This incident did not go unnoticed, as Ono asked Alberto the following morning where he parked the car the night before. In response, Alberto said that he parked the car in the usual condominium parking area but at the wrong slot. On July 24, 2003, Alberto received a show-cause notice why he should not be disciplined for dishonesty. A day after, Alberto submitted his written explanation of the incident, owning up to the lie he told Ono and apologizing and expressing his regret for his mistake. Following an investigation, the investigation committee recommended that Alberto be suspended for 12 days without pay for the infraction of parking the company vehicle at his residence and for deliberately lying about it. The committee considered Albertos voluntary admission of guilt and apology as mit igating circumstances. Daikokus general affairs manager, however, was unmoved and ordered Alberto dismissed from the service effective August 14, 2003. "Dishonesty" and "other work related performance offenses" appeared in the corresponding notice of termination as grounds for the dismissal action. Alberto sought reconsideration but to no avail, prompting him to file a case for illegal dismissal. The Ruling of the Labor Arbiter

Less: P12,000/30 x 12 days TOTAL

=========== Attorneys fee of P219,428.33 x 10% P 21,942.83 =========== SO ORDERED. The labor arbiter also determined that while some form of sanction against Alberto was indicated, the ultimate penalty of dismissal was not commensurate to the offense actually committed and charged. From the labor arbiters ruling, Daikoku appealed to the NLRC, its recourse docketed as NLRC CA No. 044001-05. For his part, Alberto, thru counsel, wrote Daikoku demanding reinstatement, either actual or payroll, as decreed in the labor arbiters appealed decision. Daikoku then asked Alberto to report back to work on May 10, 2005 which the company later moved to June 6, 2005. On July 11, 2005, pending resolution of Daikokus appeal, Alberto filed before the NLRC a Motion to Cite Respondents in Contempt and to Compel Them to Pay Complainant for the companys alleged refusal to reinstate him. In his accompanying affidavit, Alberto alleged, among other things, that he reported back to work on June

24, 2005. But instead of being given back his old job or an equivalent position, he was asked to attend an orientation seminar and undergo medical examination, at his expense. To compound matters, the company deferred payment of his backwages and some other benefits. These impositions, according to Alberto, impelled him to stop reporting for work. The Ruling of the NLRC Initially, the NLRC, by resolution of August 31, 2005, dismissed Daikokus appeal for failure to perfect it in the manner and formalities prescribed by law. Acting on Daikokus motion for reconsideration, however, the NLRC issued a Resolution dated May 31, 2006, reinstating Daikokus appeal, setting aside the arbiters January 15, 2005 appealed decision, and denying Albertos motion to cite the company for contempt. But for Daikokus failure to reinstate Alberto pending appeal, the NLRC ordered the payment of Albertos backwages, at the basic rate of PhP 8,790 a month, corresponding the period indicated in the resolution of May 31, 2006 which dispositively reads: WHEREFORE, premises considered, [Daikokus] Motion for Reconsideration is GRANTED. [Albertos] Motion to Cite Respondents in Contempt is DENIED for lack of merit. The assailed Decision dated January 15, 2005 of the Labor Arbiter is REVERSED and SET ASIDE and a new one is hereby entered declaring that complainant was validly dismissed from his employment. Nevertheless, for failure to reinstate complainant Alberto J. Raza pursuant to the Labor Arbiters Decision, respondent DAIKOKU ELECTRONICS PHILS., INC. is hereby ordered to pay him his wages from 11 March 2005 up to the promulgation of this Resolution, provisionally computed as follows: [Basic] pay: (3/11/05 5/11/06) (P8,790.00 x 14 months) 13th month pay: (P123,060.00 / 12 mos.) Service Incentive Leave Pay: (P8,790 / 30 x 5 days x 14 mos./12) = 1,709.17 TOTAL SO ORDERED. (Emphasis added.) Alberto sought reconsideration of the above ruling. Daikoku also moved for reconsideration on the backwages aspect of the NLRC resolution. On July 31, 2006, the NLRC issued a resolution explicitly denying only Albertos motion. Obviously on the belief that the NLRCs July 31, 2006 resolution also constituted a denial of its own motion for reconsideration, Daikoku went to the CA via a petition for certiorari, docketed as CA-G.R. SP No. 96282, to assail the NLRC Resolutions dated May 31, 2006 and July 31, 2006. The same NLRC resolutions were also assailed in Albertos similar petition to the appellate court, docketed as CA -G.R. SP No. 100714. P 135,024.72 = 10,255.55 = P 123,060.00

Both petitions, while involving the same parties and practically the same subject and issues, were not consolidated in the CA. Meanwhile, on October 30, 2006, Alberto filed before the CA a Motion for Summary Dismissal and to Cite Petitioner in Direct Contempt, alleging that the assailed NLRC resolutions of May 31 and July 31, 2006 have become final as against Daikoku which filed out of time a prohibited second motion for reconsideration. The Ruling of the CA On September 26, 2007, the appellate court rendered the assailed decision dismissing Daikokus appeal as well as denying Albertos contempt motion. The fallo reads: WHEREFORE, premises considered, the petition is DENIED and is, accordingly, DISMISSED. The motion to cite petitioner in contempt is, likewise, DENIED for lack of merit.lavvphi1 SO ORDERED. The CA anchored its denial of Daikokus petition on the interplay of the following stated grounds or premises: (1) prematurity of the petition for certiorari, the NLRC not having yet resolved Daikokus motion for reconsideration of the NLRCs May 31, 2 006 resolution; (2) even if the matter of prematurity is to be disregarded, the NLRC May 31, 2006 resolution has become final and executory as to Daikoku as its motion for reconsideration was filed out of time; and (3) there is no compelling reason for the relaxation of procedural rules. Following the CAs denial on February 7, 2008 of its motion for reconsideration, Daikoku interposed this petition. The Issues I. THE [CA] GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT STATED THAT THE DECISION OF THE NLRC AGAINST THE RESPONDENTS ALREADY ATTAINED ITS FINALITY. II. UPHOLDING THE GRANT OF BACKWAGES TO THE RESPONDENT IS 5 UNJUST, BASELESS AND INEQUITABLE. The Courts Ruling The key issue, as the appellate court aptly put it, boils down to the question of timeliness of Daikokus motion for reconsideration of the May 31, 2006 NLRC Resolution. Motion for Reconsideration Belatedly Filed As the records show, Daikoku admitted receiving a copy of the May 31, 2006 NLRC resolution on June 16, 2006. It only filed its motion for reconsideration on July 3, 2006, or 17 days after the receipt of the May 31, 2006 resolution. Section 15, Rule VII of the NLRC 2005 Rules of Procedure pertinently provides: SECTION 15. MOTIONS FOR RECONSIDERATION.Motions for reconsideration of any decision, resolution or order of the Commission shall not be entertained except when based on palpable or patent errors; provided that the motion is x x x filed within ten (10) calendar days from receipt of decision, resolution or order , with proof of service that a copy of the same has been furnished, within the reglementary

period, the adverse party; and provided further, that only one such motion from the same party shall be entertained. (Emphasis ours.) Applying the above provision to the case at bench, Daikoku had 10 days from June 16, 2006 when it received the May 31, 2006 NLRC resolution, or until June 26, 2006, to be precise, within which to file a motion for reconsideration. As it were, Daikoku filed its motion for reconsideration of the May 31, 2006 NLRC resolution on the 17th day from its receipt of the said resolution. The motion for reconsideration was doubtless filed out of time, as the CA determined. To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of 6 substantive justice. Daikoku urges a less rigid application of procedural rules to give way for the resolution of the case on its merits. The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse. The appellate court saw no compelling need meriting the relaxation of the rules. Neither does the Court. We must stress that the bare invocation of "the interest of substantial justice" line is not some magic wand that will automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled, let alone dismissed simply because 7 their non-observance may have resulted in prejudice to a partys substantial rights. Utter disregard of the rules cannot be justly rationalized by harping on the policy of 8 liberal construction. Daikokus substantial rights, if any, may still be amply addressed in the appellate proceedings Alberto instituted and pending before the CA, docketed as CA-G.R. SP 9 No. 100714. As to Alberto, his appeal opens de novo his action for illegal dismissal vis--vis the decision of the NLRC. At the very least, Daikoku still had the opportunity to be heard in opposition to Albertos appeal. Be that as it may, it behooves the Cour t to refrain from taking any dispositive action that will likely preempt the CA in its 10 disposition of Albertos appeal. Indeed, the issue as to whether or not there was a 11 valid ground for the dismissal of workers is factual in nature, best threshed out before the appellate court which has jurisdiction to rule over controversies traversing both issues or questions of fact and law. While not determinative of the final outcome of this case, we are inclined to agree with Daikokus treatment of the July 31, 2006 NLRC Resolution as an action denying its motion for reconsideration of the May 31, 2006 NLRC Resolution. Two factors point to such conclusion: (1) Daikoku filed its motion for reconsideration on July 3, 2006, way before the issuance of the July 31, 2006 NLRC Resolution; and (2) while the NLRC only mentioned Albertos motion in the July 31, 2006 Resolution, the tenor of this issuance conveys the impression that it was the final ruling of the entire controversy, one that puts to a final rest the clashing interests of the parties. Consider the following NLRC lines: For want of grave abuse of discretion and serious error, this Commission now write finis to this labor controversy. WHEREFORE, the assailed Resolution of 31 May 2006 STAND undisturbed. SO ORDERED. (Emphasis supplied.)

Given the foregoing consideration, it may validly be concluded that Daikokus motion for reconsideration of the May 31, 2006 NLRC Resolution had, in effect, been denied, on the ground of belated filing. In a very real sense, therefore, the CA was correct in its holding that the May 31, 2006 NLRC Resolution is final and executory as to Daikoku. To obviate any misunderstanding, however, we wish to stress that this disposition does not purport to pass upon the correctness of, much more sustain, the NLRCs May 31, 2006 Resolution. Neither should this Decision be taken as affirming or negating the propriety of Albertos dismissal from the service and the consequent money award granted by the NLRC. That kind of adjudication could very well come later should Alberto opt to pursue his cause further with the CA in CA-G.R. SP No. 100714. For the moment, we are mainly concerned, as we should be, with what Daikoku has raised before us: the propriety of the assailed September 26, 2007 CA Decision, as reiterated in its resolution of February 7, 2008. WHEREFORE, the instant petition is hereby DENIED for lack of merit. Accordingly, the CA Decision dated September 26, 2007 and Resolution dated February 7, 2008 in CA-G.R. SP No. 96282 are hereby AFFIRMED.Costs against petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 168475 July 4, 2007

prayed, inter alia, for the nullification of the order of the COMELEC which disallowed their candidacy.5 They further prayed that petitioners be directed to render an accounting of funds with full and detailed disclosure of expenditures and financial transactions; and that a representative from the Bureau of Labor Relations (BLR) be designated to act as chairman of the COMELEC in lieu of petitioner Dante M. Tong.6 On 30 April 2003, DOLE-NCR Regional Director Alex E. Maraan issued an Order 7 directing DOLE personnel to observe the conduct of the FLAMES election on 7 May 2003. 8 On 2 May 2003, petitioners filed a Petition9 with the COMELEC seeking the disqualification of private respondents Edgardo Daya, Pablo Lucas, Leandro Tabilog, Reynaldo Espiritu, Jose Vito, Antonio de Luna, Armando Yalung, Edwin Layug, Nards Pabilona, Reynaldo Reyes, Evangeline Escall, Alberto Alcantara, Rogelio Cervitillo, Marcelino Morelos, and Faustino Ermino (Daya, et al.). Petitioners alleged that Daya, et al., allowed themselves to be assisted by non-union members, and committed acts of disloyalty which are inimical to the interest of FLAMES. In their campaign, they allegedly colluded with the officers of the Meralco Savings and Loan Association (MESALA) and the Meralco Mutual Aid and Benefits Association (MEMABA) and exerted undue influence on the members of FLAMES. On 6 May 2003, the COMELEC issued a Decision, 10 declaring Daya, et al., officially disqualified to run and/or to participate in the 7 May 2003 FLAMES elections. The COMELEC also resolved to exclude their names from the list of candidates in the polls or precincts, and further declared that any vote cast in their favor shall not be counted. According to the COMELEC, Daya, et al., violated Article IV, Section 4(a)(6) 11 of the FLAMES Constitution and By-Laws (CBL) by allowing non-members to aid them in their campaign. Their acts of solicitation for support from non-union members were deemed inimical to the interest of FLAMES. On 7 May 2003, the COMELEC proclaimed the following candidates, including some of herein petitioners as winners of the elections, to wit12 : 1avvphi1 NAME Emilio E. Diokno Vicente P. Alcantara Antonio Z. Vergara, Jr. Alberto L. Mabugat Roberto D. Masiglat, Jr. Leandro C. Atienza Felito C. Macasaet Edgardo R. Villanueva President Executive Vice President External Executive Vice President Internal Vice-President Organizing Vice-President Education Vice-President Chief Steward Secretary Asst. Secretary POSITION

EMILIO E. DIOKNO, VICENTE R. ALCANTARA, ANTONIO Z. VERGARA, JR., DANTE M. TONG, JAIME C. MENDOZA, ROMEO M. MACAPULAY, ROBERTO M. MASIGLAT, LEANDRO C. ATIENZA, ROMULO AQUINO, JESUS SAMIA, GAUDENCIO CAMIT, DANTE PARAO, ALBERTO MABUGAT, EDGARDO VILLANUEVA, JR., FRANCISCO ESCOTO, EDGARDO SEVILLA, FELICITO MACASAET, and JOSE Z. TULLO, Petitioners, vs. HON. HANS LEO J. CACDAC, in his capacity as Director of the Bureau of Labor Relations, DOLE, MANILA, MED-ARBITER TRANQUILINO C. REYES, EDGARDO DAYA, PABLO LUCAS, LEANDRO M. TABILOG, REYNALDO ESPIRITU, JOSE VITO, ANTONIO DE LUNA, ARMANDO YALUNG, EDWIN LAYUG, NARDS PABILONA, REYNALDO REYES, EVANGELINE ESCALL, ALBERTO ALCANTARA, ROGELIO CERVITILLO, MARCELINO MORELOS, FAUSTINO ERMINO, JIMMY S. ONG, ALFREDO ESCALL, NARDITO C. ALVAREZ, JAIME T. VALERIANO, JOHNSON S. REYES, GAUDENCIO JIMENEZ, JR., GAVINO R. VIDANES, ARNALDO G. TAYAO, BONIFACIO F. CIRUJANO, EDGARDO G. CADVONA, MAXIMO A. CAOC, JOSE O. MACLIT, JR., LUZMINDO D. ACORDA, JR., LEMUEL R. RAGASA, and GIL G. DE VERA, Respondents. DECISION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, seeking the nullification of the Decision 1 and Resolution2 of the Court of Appeals in CA-G.R. SP No. 83061, dated 17 June 2004 and 10 June 2005, respectively, which dismissed petitioners Petition for Certiorari and denied their Motion for Reconsideration thereon. The Facts The First Line Association of Meralco Supervisory Employees (FLAMES) is a legitimate labor organization which is the supervisory union of Meralco. Petitioners and private respondents are members of FLAMES. On 1 April 2003, the FLAMES Executive Board created the Committee on Election (COMELEC) for the conduct of its union elections scheduled on 7 May 2003. 3 The COMELEC was composed of petitioner Dante M. Tong as its chairman, and petitioners Jaime C. Mendoza and Romeo M. Macapulay as members. Subsequently, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano filed their respective certificates of candidacy. On 12 April 2003, the COMELEC rejected Jimmy S. Ongs candidacy on the ground that he was not a member of FLAMES. Meanwhile, the certificates of candidacy of Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano were similarly rejected on the basis of the exclusion of their department from the scope of the existing collective bargaining agreement (CBA). The employees assigned to the aforesaid department are allegedly deemed disqualified from membership in the union for being confidential employees. On 24 April 2003, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, Jaime T. Valeriano (Ong, et al.), and a certain Leandro M. Tabilog filed a Petition 4 before the Med-Arbitration Unit of the Department of Labor and Employment (DOLE). They

Romulo C. Aquino Jesus D. Samia Asst. Gaudencio C. Camit Rodante B. [Parao] Jose Z. Tullo Bernardo C. Sevilla Francis B. Escoto

Treasurer Treasurer Auditor Asst. Auditor Central Coordinator North Coordinator South Coordinator

same. Moreover, he found that the COMELEC erred in relying on Article IV, Section 4(a) (6) of the CBL as basis for their disqualification. The Med-Arbiter read the aforesaid provision to refer to the dismissal and/or expulsion of a member from FLAMES, but not to the disqualification of a member as a candidate in a union election. He rationalized that the COMELEC cannot disqualify a candidate on the same grounds for expulsion of members, which power is vested by the CBL on the Executive Board. The Med-Arbiter also held that there was a denial of due process because the COMELEC failed to receive private respondents Daya, et al.s motion for reconsideration of the order of their disqualification. The COMELEC was also found to have refused to receive their written protest in violation of the unions CBL.18 Lastly, the Med-Arbiter defended his jurisdiction over the case. He concluded that even as the election of union officers is an internal affair of the union, his office has the right to inquire into the merits and conduct of the election when its jurisdiction is sought. 19 The decretal portion of the Med-Arbiters Decision states, viz: WHEREFORE, premises considered, the [P]etition to Nullify the Order of Disqualification; Nullify Election proceedings and counting of Votes; and Declare a Failure of Elections is hereby granted. The disqualification of [private respondent] Ed[gardo] Daya, et al., is hereby considered as null and void. Perforce, the election of union officers of FLAMES on May 7, 2003 is declared a failure and a new election is ordered conducted under the supervision of the Department of Labor and Employment. The [P]etition to conduct an accounting of union funds and to stop the release of funds to [petitioner] Diokno, et al., is ordered dismissed for lack of merit. And the Petition to Declare [private respondents] Jimmy Ong, Alfredo [E]scall, Nardito Alvarez, and Jaime Valeriano as members of FLAMES is hereby ordered dismissed for lack of merit. The [P]etition to Nullify the election filed by [private respondents] Gaudencio Jimenez, et al., is likewise ordered dismissed.20 Aggrieved, petitioners filed an appeal before the Director of the BLR. The Ruling of the BLR Director On 3 December 2003, the Director of the BLR issued a Resolution, 21 affirming in toto the assailed Decision of the Med-Arbiter. Public respondent Director Hans Leo J. Cacdac ruled, inter alia, that the COMELECs reliance on Article IV, Section 4(a) (6) of the CBL, as a ground for disqualifying private respondents Daya, et al., was premature. He echoed the interpretation of the Med-Arbiter that the COMELEC erroneously resorted to the aforecited provision which refers to the expulsion of a member from the union on valid grounds and with due process, along with the requisite 2/3 vote of the Executive Board. Hence, the COMELEC cut short the expulsion proceedings in disqualifying private respondents Daya, et al. 22 The BLR Director further held that the case involves a question of disqualification on account of the alleged commission by private respondents Daya, et al., of illegal campaign acts, which acts were not specifically mentioned in the guidelines for the conduct of election as issued by the COMELEC. Likewise, on the alleged refusal of private respondents Daya, et al., to submit to the jurisdiction of the COMELEC by failing to file a petition to nullify its order of disqualification, the BLR Director deemed the same as an exception to the rule on exhaustion of administrative remedies. Thus: By themselves, such acts could not be taken as repugnant of COMELECs authority. Sensing that they were prejudiced by the disqualification order, it was only incumbent upon [private respondents Daya, et al.] to seek remedy before a body, which they thought has a

On 8 May 2003, private respondents Daya, et al., along with Ong, et al., filed with the MedArbitration Unit of the DOLE-NCR, a Petition13 to: a) Nullify Order of Disqualification; b) Nullify Election Proceedings and Counting of Votes; c) Declare Failure of Election; and d) Declare Holding of New Election to be Controlled and Supervised by the DOLE. The Petition was docketed as Case No. NCR-OD-0304-002-LRD. On 14 May 2003, another group led by private respondent Gaudencio Jimenez, Jr., along with private respondents Johnson S. Reyes, Gavino R. Vidanes, Arnaldo G. Tayao, Bonifacio F. Cirujano, Edgardo G. Cadavona, Maximo A. Caoc, Jose O. Maclit, Jr., Luzmindo D. Acorda, Jr., Lemuel R. Ragasa and Gil G. de Vera (Jimenez, et al.) filed a Petition with the Med-Arbitration Unit of the DOLE-NCR against petitioners to nullify the 7 May 2003 election on the ground that the same was not free, orderly, and peaceful. It was docketed as Case No. NCR-OD-0305-004-LRD, which was subsequently consolidated with the Petition of Daya, et al. and the earlier Petition of Ong, et al. Meanwhile, the records show that a subsequent election was held on 30 June 2004, which was participated in and won by herein private respondents Daya, et al. The validity of the 30 June 2004 elections was assailed by herein petitioners before the DOLE14 and taken to the Court of Appeals in CA-G.R. SP No. 88264 on certiorari, which case does not concern us in the instant Petition. The Court of Appeals, in the aforesaid case, rendered a Decision15 dated 12 January 2007, upholding the validity of the 30 June 2004 elections, and the declaration of herein private respondents Daya, et al., as the duly elected winners therein. The Decision of the Med-Arbiter On 7 July 2003, Med-Arbiter Tranquilino B. Reyes, Jr. issued a Decision16 in favor of private respondents, Daya, et al. However, the petition of Jimenez, et al., was dismissed because it was premature, it appearing that the COMELEC had not yet resolved their protest prior to their resort to the Med-Arbiter. Finally, the Petition of Ong, et al., seeking to declare themselves as bona fide members of FLAMES was ordered dismissed. The Med-Arbiter noted in his decision that during a conference which was held on 15 May 2003, the parties agreed that the issue anent the qualifications of private respondents Ong, et al. had been rendered moot and academic.17 The Med-Arbiter reversed the disqualification imposed by the COMELEC against private respondents Daya, et al. He said that the COMELEC accepted all the allegations of petitioners against private respondents Daya, et al., sans evidence to substantiate the

more objective perspective over the situation. In short, they opted to bypass the administrative remedies within the union. Such a move could not be taken against [private respondents Daya, et al.] considering that non-exhaustion of administrative remedies is justified in instances where it would practically amount to a denial of justice, or would be illusory or vain, as in the present controversy. 23 The BLR Director disposed in this wise: WHEREFORE, the appeal is DISMISSED for lack of merit. The Decision of Med-Arbiter Tranquilino B. Reyes, DOLE-NCR, dated 7 July 2003 is AFFIRMED in its entirety. Let the records of this case be returned to the DOLE-NCR for the immediate conduct of election of officers of the First Line Association of Meralco Supervisory Employees (FLAMES) under the supervision of DOLE-NCR personnel.24 Subsequently, petitioners sought a reversal of the 3 December 2003 Resolution, but the BLR Director issued a Resolution dated 10 February 2003, 25 refusing to reverse his earlier Resolution for lack of merit. Petitioners elevated the case to the Court of Appeals via a Petition for Certiorari. The Ruling of the Court of Appeals The Court of Appeals found petitioners appeal to be bereft of merit. The appellate court held that the provision relied upon by the COMELEC concerns the dismissal and/or expulsion of union members, which power is vested in the FLAMES Executive Board, and not the COMELEC. It affirmed the finding of the BLR Director that the COMELEC, in disqualifying private respondents Daya, et al., committed a procedural shortcut. It held: Without the requisite two-thirds (2/3) vote of the Executive Board dismissing and/or expelling private respondents for acts contemplated thereunder, the COMELEC was clearly violating the unions constitution and bylaws (sic) by utilizing the aforequoted provision in its said May 6, 2003 decision and, in the process, arrogating unto itself a power it did not possess. As the document embodying the covenant between a union and its members and the fundamental law governing the members rights and obligations, it goes without saying that the constitution and bylaws (sic) should be upheld for as long as they are not contrary to law, good morals or public policy. 26 On the matter of the failure of private respondents Daya, et al. to come up with 30 percent (30%) members support in filing the Petition to Nullify the COMELECs Decision before the Med-Arbiter, the Court of Appeals said that the petition did not involve the entire membership of FLAMES, so there was no need to comply with the aforesaid requirement. Furthermore, the appellate court applied the exception to the rule on exhaustion of administrative remedies on the ground, inter alia, that resort to such a remedy would have been futile, illusory or vain.27 Indeed, the Court of Appeals emphasized that private respondents Daya, et al., were directed by the COMELEC to file their Answer to the petition for their disqualification only on 5 May 2003. Private respondents Daya, et al., filed their Answer on 6 May 2003. On the same day, the COMELEC issued its Decision disqualifying them. A day after, the 7 May 2003 election was held. The Court of Appeals further stressed that private respondents Daya, et al.s efforts to have their disqualification reconsidered were rebuffed by the COMELEC; hence, they were left with no choice but to seek the intervention of the BLR,28 which was declared to have jurisdiction over intra-union disputes even at its own initiative under Article 22629 of the Labor Code. Petitioners sought a reconsideration of the 17 June 2004 Decision of the Court of Appeals, but the same was denied in a Resolution30 dated 10 June 2005.

Hence, the instant Petition. At the outset, petitioners contend that the instant Petition falls under the exceptions to the rule that the Supreme Court is not a trier of facts. They implore this Court to make factual determination anent the conduct of the 7 May 2003 elections. They also question the jurisdiction of the BLR on the case at bar because of the failure of private respondents Daya, et al., to exhaust administrative remedies within the union. It is the stance of petitioner that Article 22631 of the Labor Code which grants power to the BLR to resolve inter-union and intra-union disputes is dead law, and has been amended by Section 14 of Republic Act No. 6715, whereby the conciliation, mediation and voluntary arbitration functions of the BLR had been transferred to the National Conciliation and Mediation Board. Petitioners similarly assert that the 7 May 2003 election was conducted in a clean, honest, and orderly manner, and that private respondents, some of whom are not bona fide members of FLAMES, were validly disqualified by the COMELEC from running in the election. They also rehashed their argument that non-members of the union were allowed by private respondents Daya, et al., to participate in the affair. They challenge the finding of the BLR Director that the reliance by the COMELEC on Article IV, Section 4(a)(6) of the CBL, was premature. Petitioners insist that the COMELEC had the sole and exclusive power to pass upon the qualification of any candidate, and therefore, it has the correlative power to disqualify any candidate in accordance with its guidelines. For their part, private respondents Daya, et al., maintain that the Petition they filed before the DOLE-NCR Med-Arbiter questioning the disqualification order of the COMELEC and seeking the nullification of the 7 May 2003 election involves an intra-union dispute which is within the jurisdiction of the BLR. They further claim that the COMELEC, in disqualifying them, mistakenly relied on a provision in the FLAMES CBL that addresses the expulsion of members from the union, and no expulsion proceedings were held against them. Finally, they underscore the finding of the appellate court that there was disenfranchisement among the general membership of FLAMES due to their wrongful disqualification which restricted the members choices of candidates. They reiterate the conclusion of the Court of Appeals that had the COMELEC tabulated the votes cast in their favor, there would have been, at least, a basis for the declaration that they lost in the elections. Issues Petitioners attribute to the Court of Appeals several errors to substantiate their Petition. 32 They all boil down, though, to the question of whether the Court of Appeals committed grave abuse of discretion when it affirmed the jurisdiction of the BLR to take cognizance of the case and then upheld the ruling of the BLR Director and Med-Arbiter, nullifying the COMELECs order of disqualification of private respondents Daya et al., and annulling the 7 May 2003 FLAMES elections. The Courts Ruling The Petition is devoid of merit. We affirm the finding of the Court of Appeals upholding the jurisdiction of the BLR. Article 226 of the Labor Code is hereunder reproduced, to wit: ART. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or 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. The amendment to Article 226, as couched in Republic Act No. 6715, 33 which is relied upon by petitioners in arguing that the BLR had been divested of its jurisdiction, simply reads, thus: Sec. 14. The second paragraph of Article 226 of the same Code is likewise hereby amended to read as follows: "The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by agreement of the parties." This Court in Bautista v. Court of Appeals, 34 interpreting Article 226 of the Labor Code, was explicit in declaring that the BLR has the original and exclusive jurisdiction on all interunion and intra-union conflicts. We said that since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive authority to act on all inter-union and intra-union conflicts, there should be no more doubt as to its jurisdiction. As defined, an intra-union conflict would refer to a conflict within or inside a labor union, while an interunion controversy or dispute is one occurring or carried on between or among unions. 35 More specifically, an intra-union dispute is defined under Section (z), Rule I of the Rules Implementing Book V of the Labor Code, viz: (z) "Intra-Union Dispute" refers to any conflict between and among union members, and includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including cases arising from chartering or affiliation of labor organizations or from any violation of the rights and conditions of union membership provided for in the Code. The controversy in the case at bar is an intra-union dispute. There is no question that this is one which involves a dispute within or inside FLAMES, a labor union. At issue is the propriety of the disqualification of private respondents Daya, et al., by the FLAMES COMELEC in the 7 May 2003 elections. It must also be stressed that even as the dispute involves allegations that private respondents Daya, et al., sought the help of non-members of the union in their election campaign to the detriment of FLAMES, the same does not detract from the real character of the controversy. It remains as one which involves the grievance over the constitution and bylaws of a union, and it is a controversy involving members of the union. Moreover, the non-members of the union who were alleged to have aided private respondents Daya, et al., are not parties in the case. We are, therefore, unable to understand petitioners persistence in placing the controversy outside of the jurisdiction of the BLR. The law is very clear. It requires no further interpretation. The Petition which was initiated by private respondents Daya, et al., before the BLR was properly within its cognizance, it being an intra-union dispute. Indubitably, when private respondents Daya, et al., brought the case to the BLR, it was an invocation of the power and authority of the BLR to act on an intra-union conflict. After having settled the jurisdiction of the BLR, we proceed to determine if petitioners correctly raised the argument that private respondents Daya, et al., prematurely sought the BLRs jurisdiction on the ground that they failed to exhaust administrative remedies within the union. On this matter, we affirm the findings of the Court of Appeals which upheld the application by the BLR Director of the exception to the rule of exhaustion of administrative remedies. In this regard, this Court is emphatic that "before a party is allowed to seek the intervention of the court, it is a pre-condition that he should have availed of all the means of

administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction when such remedy should be exhausted first before the courts judicial power can be sought. The premature invocation of courts judicial intervention is fatal to ones cause of action."36 Verily, there are exceptions to the applicability of the doctrine. 37 Among the established exceptions are: 1) when the question raised is purely legal; 2) when the administrative body is in estoppel; 3) when the act complained of is patently illegal; 4) when there is urgent need for judicial intervention; 5) when the claim involved is small; 6) when irreparable damage will be suffered; 7) when there is no other plain, speedy, and adequate remedy; 8) when strong public interest is involved; 9) when the subject of the proceeding is private land; 10) in quo warranto proceedings;38 and 11) where the facts show that there was a violation of due process.39 As aptly determined by the BLR Director, private respondents Daya, et al., were prejudiced by the disqualification order of the COMELEC. They endeavored to seek reconsideration, but the COMELEC failed to act thereon.40 The COMELEC was also found to have refused to receive their written protest. 41 The foregoing facts sustain the finding that private respondents Daya, et al., were deprived of due process. Hence, it becomes incumbent upon private respondents Daya, et al., to seek the aid of the BLR. To insist on the contrary is to render their exhaustion of remedies within the union as illusory and vain.42 These antecedent circumstances convince this Court that there was proper application by the Med-Arbiter of the exception to the rule of exhaustion of administrative remedies, as affirmed by the BLR Director, and upheld by the Court of Appeals. We cannot accept, and the Court of Appeals rightfully rejected, the contention of petitioners that the private respondents Daya, et al.s complaint filed before the Med Arbiter failed to comply with the jurisdictional requirement because it was not supported by at least thirty percent (30%) of the members of the union. Section 1 of Rule XIV of the Implementing Rules of Book V mandates the thirty percent (30%) requirement only in cases where the issue involves the entire membership of the union, which is clearly not the case before us. The issue is obviously limited to the disqualification from participation in the elections by particular union members. Having resolved the jurisdictional cobwebs in the instant case, it is now apt for this Court to address the issue anent the disqualification of private respondents and the conduct of the 7 May 2003 elections. On this matter, petitioners want this Court to consider the instant case as an exception to the rule that the Supreme Court is not a trier of facts; hence, importuning that we make findings of fact anew. It bears stressing that in a petition for review on certiorari, the scope of this Courts judicial review of decisions of the Court of Appeals is generally confined only to errors of law,43 and questions of fact are not entertained. We elucidated on our fidelity to this rule, and we said: Thus, only questions of law may be brought by the parties and passed upon by this Court in the exercise of its power to review. Also, judicial review by this Court does not extend to a reevaluation of the sufficiency of the evidence upon which the proper labor tribunal has based its determination.44 It is aphoristic that a re-examination of factual findings cannot be done through a petition for review on certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts; it reviews only questions of law. 45 The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below.46 This is already outside the province of the instant Petition for Certiorari. While there may be exceptions to this rule, petitioners miserably failed to show why the exceptions should be applied here. With greater force must this rule be applied in the

instant case where the factual findings of the Med-Arbiter were affirmed by the BLR Director, and then, finally, by the Court of Appeals. The findings below had sufficient bases both in fact and in law. The uniform conclusion was that private respondents Daya, et al., were wrongfully disqualified by the COMELEC; consequently, the FLAMES election should be annulled. On the issue of disqualification, there was a blatant misapplication by the COMELEC of the FLAMES CBL. As has been established ad nauseam, the provision47 relied upon by the COMELEC in disqualifying private respondents Daya, et al., applies to a case of expulsion of members from the union. In full, Article IV, Section 4 (a) (6) of the FLAMES CBL, provides, to wit: Section 4(a). Any member may be DISMISSED and/or EXPELLED from the UNION, after due process and investigation, by a two-thirds (2/3) vote of the Executive Board, for any of the following causes: xxxx (6) Acting in a manner harmful to the interest and welfare of the UNION and/or its MEMBERS.48 We highlight five points, thus: First, Article IV, Section 4(a)(6) of the FLAMES CBL, embraces exclusively the case of dismissal and/or expulsion of members from the union. Even a cursory reading of the provision does not tell us that the same is to be automatically or directly applied in the disqualification of a candidate from union elections, which is the matter at bar. It cannot be denied that the COMELEC erroneously relied on Article IV, Section 4(a)(6) because the same does not contemplate the situation of private respondents Daya, et al. The latter are not sought to be expelled or dismissed by the Executive Board. They were brought before the COMELEC to be disqualified as candidates in the 7 May 2003 elections. Second, the aforecited provision evidently enunciates with clarity the procedural course that should be taken to dismiss and expel a member from FLAMES. The CBL is succinct in stating that the dismissal and expulsion of a member from the union should be after due process and investigation, the same to be exercised by two-thirds (2/3) vote of the Executive Board for any of the causes 49 mentioned therein. The unmistakable directive is that in cases of expulsion and dismissal, due process must be observed as laid down in the CBL. Third, nevertheless, even if we maintain a lenient stance and consider the applicability of Article IV, Section 4(a)(6) in the disqualification of private respondents Daya, et al., from the elections of 7 May 2003, still, the disqualification made by the COMELEC pursuant to the subject provision was a rank disregard of the clear due process requirement embodied therein. Nowhere do we find that private respondents Daya, et al. were investigated by the Executive Board. Neither do we see the observance of the voting requirement as regards private respondents Daya, et al. In all respects, they were denied due process. 1avvphi1 Fourth, the Court of Appeals, the BLR Director, and the Med-Arbiter uniformly found that due process was wanting in the disqualification order of the COMELEC. We are in accord with their conclusion. If, indeed, there was a violation by private respondents Daya, et al., of the FLAMES CBL that could be a ground for their expulsion and/or dismissal from the union, which in turn could possibly be made a ground for their disqualification from the elections, the procedural requirements for their expulsion should have been observed. In any event, therefore, whether the case involves dismissal and/or expulsion from the union or disqualification from the elections, the proper procedure must be observed. The disqualification ruled by the COMELEC against private respondents Daya, et al., must not be allowed to abridge a clear procedural policy established in the FLAMES CBL. If we

uphold the COMELEC, we are countenancing a clear case of denial of due process which is anathema to the Constitution of the Philippines which safeguards the right to due process. Fifth, from another angle, the erroneous disqualification of private respondents Daya, et al., constituted a case of disenfranchisement on the part of the member-voters of FLAMES. By wrongfully excluding them from the 7 May 2003 elections, the options afforded to the union members were clipped. Hence, the mandate of the union cannot be said to have been rightfully determined. The factual irregularities in the FLAMES elections clearly provide proper bases for the annulment of the union elections of 7 May 2003. On a final note, as it appears that the question of the qualifications of private respondents Ong, et al. had been rendered moot and academic, 50 we do not find any reason for this Court to rule on the matter. As borne out by the records, the question had been laid to rest even when the case was still before the Med-Arbiter.51 WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 17 June 2004, and its Resolution dated 10 June 2005 in CA-G.R. SP No. 83061 are AFFIRMED. Costs against petitioners. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 159372 July 27, 2007

of the company, hence, the employees may be considered as constructively terminated by reason thereof. Respondents were accordingly ordered to jointly pay petitioners separation pay (computed on the basis of one month salary per year of service, a fraction of six months to be considered as one year) until October 31, 2001. Noting respondents failure to deny the allegation of nonpayment of wage increase or to submit proof of due compliance with Wage Order No. 8, they were further adjudged to pay the dismissed workers wage differentials of P16 a day effective November 16, 2000 to December 31, 2001, as well as back wages from February 5, 2000 to October 31, 2001, plus 10 percent of the total monetary award as attorneys fees. The total award amounted to Fifty One Million Nine Hundred Fifty Six Thousand and Three Hundred Fourteen Pesos (P51,956,314). On December 14, 2001, respondents appealed the labor arbiters Decision to the NLRC with a Manifestation and Motion11 to reduce the bond to P10 million, for which they posted a surety bond, because of their allegedly dire financial condition. Petitioners countered by filing a Manifestation with Motion to Require Appellants (herein respondents) To Complete Bond, with an alternative prayer for the dismissal of the appeal for non-filing of the required bond equivalent to the monetary award of P51,956,314. The NLRC, by Order of March 25, 2002, denied respondents motion for the reduction of its appeal bond, it holding that the motion could not be decided without passing upon the issue of the financial status of the corporation which was intertwined with the merits of the case. The NLRC thus ordered respondents to post an additional appeal bond in the amount of P41,956,314 in cash or surety within an inextendible period of 10 days upon receipt of the Order, failing which the appeal would be dismissed for not having been duly perfected. From the foregoing Order, respondents filed a Motion for Reconsideration. They argued that when the reduction of the bond can be determined by looking at the veracity of the financial status of the beleaguered respondent company or even when it is intertwined with the disposition of the main case, the motion should not in the first place be denied. Likewise, respondents manifested to the NLRC that during the pendency of the appeal, the claims of 153 individual complainants had already been settled for which they had executed quitclaims in favor of petitioners; and that 795 other former employees had received their separation pay/financial assistance, leaving only about 241 workers with claims yet to be satisfied. By Order of May 6, 2002,12 respondents Motion for Reconsideration was denied by the NLRC. On the quitclaims and release papers of the employees mentioned by Footjoy, the NLRC held that although the documents appeared to have been notarized, they were not subscribed before the labor arbiter. The complainants who executed the release documents should have, the NLRC declared, been presented before it for verification of the signatures and the legitimacy of the settlement. Finally, the NLRC noted that respondents failed to address the allegation that they were operating several run-away factories in Guiguinto and Pulilan, Bulacan,13 hiring thousands of workers on a contractual basis, and using machineries pulled out from the burned-down factory. As Footjoy failed to post the additional P41 million plus bond within the period allowed by its previous Order, the NLRC dismissed respondents appeal for non-perfection thereof. Respondents assailed the NLRC dismissal of their appeal before the CA via certiorari 14 with prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction. By Resolution of July 1, 2002,15 the CA granted respondents plea for a TRO, thereby enjoining the NLRC from enforcing its order.

RONALDO NICOL, ET AL.,* Petitioners, vs. FOOTJOY INDUSTRIAL CORP., ANTONIO TAN, ROBERT LIM, TERESITA GAMBOA, DANILO DOMINGO and CHUEN FONG HUI, Respondents. DECISION CARPIO MORALES, J.: Two hundred seventeen (217) former rank-and-file employees of respondent Footjoy Industrial Corporation (Footjoy or the company)1 bring this petition for review on certiorari, assailing the November 29, 2002 Decision2 and the August 4, 20033 Resolution of the Court of Appeals (CA) in CA G.R. SP No. 71126. The assailed CA Decision annulled and set aside the March 25, 2002 Resolution4 of the National Labor Relations Commission (NLRC) which denied herein respondents moti on to reduce their appeal bond and consequently dismissed their appeal for non-perfection. The assailed CA Resolution, on the other hand, denied petitioners motion for reconsideration. The present controversy dates back to February 2, 2001, when news of a temporary shutdown of operations was first announced by Footjoy to its employees effective the following day, February 3, 2001, until February 10, 2001.5 The true reason for the announced closure remains an issue. Two days after the temporary shutdown, however, a fire razed the company and its premises. In a Memorandum of February 12, 2001,6 the company declared the total closure and cessation of its business operations allegedly because of severe losses and financial reverses. It gave notice to the workers that their employment would be terminated 30 days from that date. On March 19, 2001, Footjoys former employees filed with the NLRC Regional Arbitration Branch in San Fernando, Pampanga two separate complaints 7 for illegal closure resulting in illegal dismissal as well as for nonpayment of wage increase per Wage Order No. 8 against herein respondents.8 Prior to the severance of their employment from Footjoy, petitioners had served the company for periods ranging from one year to 15 years. In their Complaints, petitioners contended that the February 2, 2001 announcement of closure was made after negotiations between the union and management were deadlocked on the latters proposal to consolidate the workforce of Footjoy Main and three other factory annexes 9 allegedly being operated by Footjoy also in Guiguinto, Bulacan. Petitioners likewise contended that the proposed consolidation was rejected by the union which saw it as a scheme to terminate the majority, if not all, of its officers and members who were long time regular employees of Footjoy Main and Footjoy-Annex A. They thus averred that the fire that burned down the main plant was a convenient excuse for the permanent closure of the company. With respect to the claim for wage differential, the workers maintained that they were paid only P192 a day, which was below the P208 per day minimum wage prescribed under the aforementioned wage order. By Decision of November 29, 2001, the labor arbiter10 found for petitioners. He held that the determination of whether the intended permanent closure of the company was valid on the ground of business losses was not called for considering that the same did not take place, nor was it ever implemented because of the fire which occurred on February 5, 2001. He thus concluded that the burning down of the company premises proximately caused the total closure

Subsequently, by the assailed Decision, the CA gave due course to respondents peti tion, annulling and setting aside the challenged Resolution and Order of the NLRC. In the assailed Decision, the CA held that the NLRC could have determined the truth or falsity and merit of respondents grounds for the reduction of its appeal bond through the reception of evidence; and that the NLRC should not have just insisted on requiring respondents to put up a bond in the equivalent amount of the award without any regard to the reasons and arguments of respondents and without determining for itself what amount would be reasonable under the circumstances. Citing several cases16 in which the Supreme Court relaxed the requirement of a supersedeas bond to bring about a resolution of controversies on the merits, the appellate court held that respondents had substantially complied with the rule because both their Appeal and the Motion to Reduce Bond were filed seasonably, and the amount of P10 million, which was not minimal, was tendered with due explanation and justification therefor. The CA thus directed the NLRC "to consider [respondents] motion to reduce bond after receiving evidence thereon and upon the putting up of the required reasonable supersedeas bond within the period provided, to give due course to the appeal and to determine the merits of the case thereof."17 Petitioners moved for reconsideration of the above Decision, which motion was denied by the CA by Resolution of August 4, 2003. Hence, this present petition for review on certiorari. In issue is whether a motion to reduce the appeal bond can be given due course even if it is not accompanied by a bond in a "reasonable amount"; and whether this Courts ruling in Mers Shoes Manufacturing v. NLRC18 is applicable to the present case. The petition fails. Article 223 of the Labor Code, as amended, clearly provides: ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law; and (d) If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to the appellant. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis and underscoring supplied) Similarly, Sections 4(a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended, provide: SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. (a) The Appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this Rule; shall be accompanied by a memorandum of appeal in three (3) legibly typewritten copies which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the

appealed decision, resolution or order and a certificate of non-forum shopping with proof of service on the other party of such appeal. A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period of perfecting an appeal. SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorneys fees. xxxx No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the period to perfect an appeal. (Emphasis and underscoring supplied) The necessary import of the foregoing provisions is that in the case of an employer appealing the labor arbiters decision to the NLRC, the posting of a cash or surety bond to perfect an appeal of a monetary judgment is not only mandatory but also jurisdictional, non-compliance with which has the effect of rendering the judgment final and executory. 19 Ong v. Court of Appeals20 stressed: The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employers appeal may be perfected. 21 Be that as it may, Section 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended, allows the reduction of the appeal bond. This practice-evolved rule22 has been made explicit by Resolution 01-02, series of 2002,23 subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal. There is no dispute that respondents filed a Notice of Appeal and complied with the other requirements for perfecting an appeal, save for the posting of the full amount of the bond, on December 20, 2001 or nine days after receipt of the labor arbiters decision. And admittedly, respondents Motion to Reduce Bond was accompanied by an actual tender of a P10 million surety bond executed by the Security Pacific Assurance Corporation.24 Was the P10 million surety bond posted by the employer Footjoy a "reasonable amount" in relation to the monetary award of about P51 million so as to perfect an appeal before the NLRC? Revolving around this question is petitioners contention that P10 million, which is roughly 20% or one-fifth of the total award, is a pittance; 25 and respondents submission that it was sizable and sufficient given their dire economic condition. This Court rules at the outset that the CA committed no error in ruling that the NLRC committed grave abuse of discretion when it denied the motion to reduce the bond peremptorily without considering evidence to justify the reduction. This Court notes in particular the NLRCs precipitate haste in dismissing the quitclaims and release documents presented by respondents to support the reduction of the monetary award due (and consequently, the amount of the appeal bond) when it could easily have required the verification of the signatures and of the legitimacy of the settlement. The purpose of the appeal bond, being to assure the payment of workers claims in the event of their victory on appeal,26 the verification of the legitimacy of the alleged settlements was clearly material in determining the merit of reducing the bond to an amount sufficient to cover the award still owing or, at the very least, to a reasonable level.

Upon the other hand, while respondents motion to reduce the bond hinged on the purportedly unhealthy state of their finances due to business reverses, the NLRC was not precluded from making a preliminary determination of their financial capability to post the required bond, without necessarily passing upon the merits. Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the purpose would necessarily be less than the evidence required for a ruling on the merits. Indeed, it only bears stressing that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. 27 On the contrary, the Labor Code explicitly mandates it 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."28 Moreover, implicit in Section 6, Rule VI of the NLRC New Rules of Procedure of the NLRC is its authority to determine whether the motion to reduce bond is based on meritorious grounds and whether the amount offered or tendered is reasonable in relation to the award. Admittedly, reduction of the bond is not a matter of right on the part of the movant. Its grant lies within the sound discretion of the NLRC upon showing of meritorious grounds 29 and the reasonableness of the bond tendered under the circumstances. A review of jurisprudence30 which could shed light on the bond requirement for perfecting an appeal before the NLRC is in order. The case of Star Angel Handicraft v. NLRC,31 which respondents cited in support of their Motion to Reduce Bond, arose from the dismissal by the NLRC of an employers appeal for failure to put up a bond, the amount of which was contested because the monetary award of the labor arbiter was based allegedly on an erroneous daily-minimum wage. In dismissing the appeal, the NLRC held that the appeal bond must first be posted before the Commission could act on the motion to reduce it. Reversing the NLRC, this Court ruled: Inasmuch as the NLRC in practice allowed the reduction of the appeal bond upon motion of appellant and on meritorious grounds, it follows that a motion to that effect may be filed within the reglementary period for appealing. Such motion may be filed in lieu of a bond which amount is being contested. In the meantime, the appeal is not deemed perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has acted on the motion and appellant had filed the bond as fixed by the NLRC."32 (Underscoring supplied) The distinction made in Star Angel between the filing of an appeal within the reglementary period and its perfection is now invoked by respondents to excuse the posting of the required bond within the period allowed by the NLRC. Apropos are this Courts following observations in Computer Innovations Center v. NLRC:33 x x x [T]he reference in Star Angel to the distinction between the period to file the appeal and to perfect the appeal has been pointedly made only once by this Court in Gensoli v. NLRC 34 thus, it has not acquired the sheen of venerability reserved for repeatedly-cited cases. The distinction, if any, is not particularly evident or material in the Labor Code; hence, the reluctance of the Court to adopt such doctrine. Moreover, the present provision in the NLRC Rules of Procedure, that "the filing of a motion to reduce bond shall not stop the running of the period to perfect appeal" flatly contradicts the notion expressed in Star Angel that there is a distinction between the filing an appeal and perfecting an appeal. Ultimately, the disposition of Star Angel was premised on the ruling that a motion for reduction of the appeal bond necessarily stays the period for perfecting the appeal, and that the employer cannot be expected to perfect the appeal by posting the proper bond until such time the said motion for reduction is resolved. The unduly stretched-out distinction between the period to file an appeal and to perfect an appeal was not material to the resolution of Star Angel, and this could be properly considered as obiter dictum. (Emphasis and underscoring supplied)

The dismissal of an appeal for failure to post an appeal bond was likewise assailed in Rural Bank of Coron (Palawan), Inc. v. Cortes.35 Notably, while this Court upheld the dismissal, it made the following pronouncement: It bears emphasis that all that is required to perfect the appeal is the posting of a bond to ensure that the award is eventually paid should the appeal be dismissed. Petitioners should thus have posted a bond, even if it were only partial, but they did not. No relaxation of the Rule may thus be considered. (Emphasis supplied) In the recent case of Postigo v. Philippine Tuberculosis Society, Inc. (PTSI), 36 this Court sustained the ruling of the CA that PTSI substantially complied with the required posting of a cash or surety bond not only because the filing of its motion for reduction of the bond was justified, but also because it immediately submitted a bond which it attached to its motion for reconsideration of the NLRC resolution dismissing its appeal. PTSI had initially deferred the posting of the surety bond in view of the alleged erroneous computation of the monetary award. At issue in Rosewood Processing, Inc. v. NLRC37 was a motion to reduce the required bond amounting to P789,154.39. Ruling that the posting of a partial surety bond of P50,000 during the pendency before the NLRC of the employers motion to reduce appeal bond was substantial compliance. This Court stressed that the letter perfect rules must yield to the broader interest of substantial justice. This ruling reiterated earlier pronouncements in Blancaflor v. NLRC,38 Rada v. NLRC,39 and YBL (Your Bus Line) v. NLRC,40 in which the NLRC was cautioned to give Article 223 of the Labor Code, particularly the provisions on requiring a bond on appeals involving monetary awards, a liberal interpretation in line with the desired objective of resolving controversies on the merits. The case of Nationwide Security and Allied Services, Inc. v. NLRC, 41 meanwhile, arose from the denial by the NLRC of a motion to reduce the appeal bond in the amount which the therein petitioner was ordered to jointly and severally pay the complainant therein. Ruling out grave abuse of discretion on the part of the NLRC, this Court held that the therein petitioners contentions that it "cannot afford to post the bond of P397,990.19 because it does not have that sum earned from the business with Guani Marketing, Inc." and that "to use the funds from sources other than that earned from Guani Marketing, Inc. would not be a sound business judgment," constituted an admission that it had funds to post the required bond, although not from its business with Guani Marketing, Inc. 42 In lieu of the required cash or surety bond, the petitioner in Ong v. Court of Appeals 43 filed a motion to reduce bond. Alleging that the posting of the full amount of the award of P1,427,802,04 was "unjustified and prohibitive," petitioner prayed that the same be reduced to a "reasonable level." Sustaining the CA, this Court ruled that the NLRC did not act with grave abuse of discretion when it denied petitioners motion because the same failed to either elucidate why the amount of the bond was "unjustified and prohibitive" or to indicate what would be a "reasonable level." In addition, we observed that "petitioner did not post a full or partial appeal bond within the prescribed period, thus, no appeal was perfected from the decision of the Labor Arbiter." 44 (Emphasis supplied) In Calabash Garments, Inc. v. NLRC,45 it was held that "a substantial monetary award, even if it runs into millions, does not necessarily give the employer-appellant a meritorious case and does not automatically warrant a reduction of the appeal bond." Similarly, we ruled in Biogenerics Marketing and Research Corporation v. NLRC 46 that since the filing of a bond for the perfection of an appeal is mandatory, it was "not an excuse that the over P2 million award is too much for a small business enterprise, like the petitioner company, to shoulder for the law does not require its outright payment, but only the payment of a moderate and reasonable sum for the premium for the bond."

Ciudad Fernandina Food Corporation (CFFC) Employees Union-Associated Labor Unions v. Court of Appeals47 presented a challenge to a CA Decision setting aside the NLRCs dismissal of CCFCs appeal, which was filed alongside its Motion for Reduction of Supersedeas Bond. Distinguishing CCFCS case with other cases in which the Court relaxed the requirement on the posting of the supersedeas bond, the Court noted that CCFC absolutely failed to comply with the compulsory and explicit requirement of posting an appeal bond. Having merely alleged the satisfaction of the workers claims, closure of the business and substantial justice, without more, CCFC failed to convince the Court that meritorious grounds existed for the relaxation of the rule regarding posting of an appeal bond.48 ALL TOLD, the bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases.49 These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.1avvphi1 Conversely, the reduction of the bond is not warranted when no meritorious ground is shown to justify the same; the appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or when circumstances show the employers unwillingness to ensure the satisfaction of its workers valid claims. By the above guidelines must NLRC exercise its discretion in considering herein petitioners motion for reduction of its bond. A remand of the case to it for determination of the merits of the motion is thus in order. The other question presented in the present petition is the applicability of Mers Shoes Manufacturing v. NLRC.50 To recall, the aggrieved employer in that case simultaneously filed before the NLRC an appeal and a motion to reduce the bond (which at the equivalent amount of the monetary award would have totaled P806,252.40) to P200,000. The Commission partially granted the motion by an Order directing the therein petitioners to post a cash or surety bond of P403,126.20, or half the amount of the required bond, within ten days from receipt of its Order. Instead, however, of posting the reduced bond, the employer filed a motion for reconsideration from the above Order, which the NLRC treated as a motion for extension of time to perfect an appeal, a prohibited pleading under the New Rules of Procedure of the NLRC. Consequently, ruling that the 10-day reglementary period within which to post the appeal bond had lapsed, the NLRC dismissed the employers appeal. Upholding the NLRCs dismissal of the employers appeal in Mers Shoes, this Court ruled that perfection of an appeal within the period and in the manner prescribed by Article 223 of the Labor Code is jurisdictional, non-compliance with which is fatal and has the effect of rendering the judgment final and executory. The factual milieus of the instant case and that of Mers Shoes are significantly different in a number of points. For one, while both cases pertained to motions for reduction of the appeal bond, the motion in Mers Shoes was partially granted by the NLRC as it allowed a 50% reduction of the required bond; whereas herein petitioners motion was totally denied. Furthermore, there was no showing in Mers Shoes that the employer had posted an appeal bond in any amount, while herein petitioners motion to reduce the bond was accompanied by a P10 million surety bond. More importantly, no grave abuse of discretion was found to have attended the dismissal of the appeal in Mers Shoes for the employers failure to post the reduced amount of the bond. In sharp contrast, the NLRC in the present case gravely abused its discretion when it dismissed Footjoys appeal, without even receiving evidence from which it could have determined the merit or lack of it of the motion to reduce the appeal bond.

The inapplicability of Mers Shoes to the instant case having been ruled, respondent s invocation of it for a ruling herein that petitioners motion for reconsideration should also be treated as a motion for extension of time to perfect an appeal deserves short shrift. It suffices to emphasize that in labor cases, rules of procedure should not be applied in a very rigid and technical sense especially when their strict application would result in the frustration rather than promotion of substantial justice.51 Moreover, Section 14 of Rule VII of the New Rules of Procedure of the NLRC specifically provides that the aggrieved party may file a motion for reconsideration within ten (10) calendar days from receipt of any order, resolution, or decision of the NLRC. WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against petitioners. SO ORDERED.