G.R. No.

164301

October 19, 2011

BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, Respondent. In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration1 of our Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust Company (FEBTC) "absorbed" by BPI pursuant to the two banks merger in 2000 were covered by the Union Shop Clause in the then existing collective bargaining agreement (CBA) 2 of BPI with respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank (the Union). To recall, the Union Shop Clause involved in this long standing controversy provided, thus: ARTICLE II Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank.3 (Emphases supplied.) The bone of contention between the parties was whether or not the "absorbed" FEBTC employees fell within the definition of "new employees" under the Union Shop Clause, such that they may be required to join respondent union and if they fail to do so, the Union may request BPI to terminate their employment, as the Union in fact did in the present case. Needless to state, BPI refused to accede to the Unions request. Although BPI won the initial battle at the Voluntary Arbitrator level, BPIs position was rejected by the Court of Appeals which ruled that the Voluntary Arbitrators interpretation of the Union Shop Clause was at war with the spirit and rationale why the Labor Code allows the existence of such provision. On review with this Court, we upheld the appellate courts ruling and disposed of the case as follows: WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to become union members but who qualify for retirement shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the CBA, as the case may be.4 Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC employees, for reasons already extensively discussed in the August 10, 2010 Decision, even now BPI continues to protest the inclusion of said employees in the Union Shop Clause. In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA clearly intended to limit the application of the Union Shop Clause only to new employees who were hired as non-regular employees but later attained regular status at some point after hiring. FEBTC employees cannot be considered new employees as BPI merely stepped into the shoes of FEBTC as an employer purely as a consequence of the merger.5 Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its contention that "the situation of absorbed employees can be likened to old employees of BPI, insofar as their full tenure with FEBTC was recognized by BPI and their salaries were maintained and safeguarded from diminution" but such absorbed employees "cannot and should not be treated in exactly the same way as old BPI employees for there are substantial differences between them."6 Although petitioner admits that there are similarities between absorbed and new employees, they insist there are marked differences between them as well. Thus, adopting Justice Brions stance, petitioner contends that the absorbed FEBTC employees should be considered "a sui generis group of employees whose classification will not be duplicated until BPI has another merger where it would be the surviving corporation."7 Apparently borrowing from Justice Carpio, petitioner propounds that the Union Shop Clause should be strictly construed since it purportedly curtails the right of the absorbed employees to abstain from joining labor organizations.8 Pursuant to our directive, the Union filed its Comment 9 on the Motion for Reconsideration. In opposition to petitioners arguments, the Union, in turn, adverts to our discussion in the August 10, 2010 Decision regarding the voluntary nature of the merger between BPI and FEBTC, the lack of an express stipulation in the Articles of Merger regarding the transfer of employment contracts to the surviving corporation, and the consensual nature of employment contracts as valid bases for the conclusion that former FEBTC employees should be deemed new employees.10 The Union argues that the creation of employment relations between former FEBTC employees and BPI (i.e., BPIs selection and engagement of former FEBTC employees, its payment of their wages, power of dismissal and of control over the employees conduct) occurred after the merger, or to be more precise, after the Securities and Exchange Commissions (SEC) approval of the merger.11 The Union likewise points out that BPI failed to offer any counterargument to the Courts reasoning that:

The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon the individual employee's right or freedom of association, is not to protect the union for the union's sake. Laws and jurisprudence promote unionism and afford certain protections to the certified bargaining agent in a unionized company because a strong and effective union presumably benefits all employees in the bargaining unit since such a union would be in a better position to demand improved benefits and conditions of work from the employer. x x x. x x x Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of constitutional values, this Court has repeatedly held that the right to abstain from joining a labor organization is subordinate to the policy of encouraging unionism as an instrument of social justice.12 While most of the arguments offered by BPI have already been thoroughly addressed in the August 10, 2010 Decision, we find that a qualification of our ruling is in order only with respect to the interpretation of the provisions of the Articles of Merger and its implications on the former FEBTC employees security of tenure. Taking a second look on this point, we have come to agree with Justice Brions view that it is more in keeping with the dictates of social justice and the State policy of according full protection to labor to deem employment contracts as automatically assumed by the surviving corporation in a merger, even in the absence of an express stipulation in the articles of merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that: To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally declared policies on work, labor and employment, and the specific FEBTC-BPI situation i.e., a merger with complete "body and soul" transfer of all that FEBTC embodied and possessed and where both participating banks were willing (albeit by deed, not by their written agreement) to provide for the affected human resources by recognizing continuity of employment should point this Court to a declaration that in a complete merger situation where there is total takeover by one corporation over another and there is silence in the merger agreement on what the fate of the human resource complement shall be, the latter should not be left in legal limbo and should be properly provided for, by compelling the surviving entity to absorb these employees. This is what Section 80 of the Corporation Code commands, as the surviving corporation has the legal obligation to assume all the obligations and liabilities of the merged constituent corporation. Not to be forgotten is that the affected employees managed, operated and worked on the transferred assets and properties as their means of livelihood; they constituted a basic component of their corporation during its existence. In a merger and consolidation situation, they cannot be treated without consideration of the applicable constitutional declarations and directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court to read and interpret the law so that they are treated in accordance with the legal requirements of mergers and consolidation, read in light of the social justice, economic and social provisions of our Constitution. Hence, there is a need for the surviving corporation to take responsibility for the affected employees and to absorb them into its workforce where no appropriate provision for the merged corporation's human resources component is made in the Merger Plan.13 By upholding the automatic assumption of the non-surviving corporations existing employment contracts by the surviving corporation in a merger, the Court strengthens judicial protection of the right to security of tenure of employees affected by a merger and avoids confusion regarding the status of their various benefits which were among the chief objections of our dissenting colleagues. However, nothing in this Resolution shall impair the right of an employer to terminate the employment of the absorbed employees for a lawful or authorized cause or the right of such an employee to resign, retire or otherwise sever his employment, whether before or after the merger, subject to existing contractual obligations. In this manner, Justice Brions theory of automatic assumption may be reconciled with the majoritys concerns with the successor employers prerogative to choose its employees and the prohibition against involuntary servitude.1avvphi1 Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the absorbed FEBTC employees are covered by the Union Shop Clause. Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on mergers (that the surviving corporation continues the corporate existence of the non-surviving corporation) is mainly a tool to adjudicate the rights and obligations between and among the merged corporations and the persons that deal with them.14 Such a legal fiction cannot be unduly extended to an interpretation of a Union Shop Clause so as to defeat its purpose under labor law. Hence, we stated in the Decision that: In any event, it is of no moment that the former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner. This fact would not remove them from the scope of the phrase "new employees" as contemplated in the Union Shop Clause of the CBA, contrary to petitioner's insistence that the term "new employees" only refers to those who are initially hired as non-regular employees for possible regular employment. The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of the CBA "may be regularly employed" by the Bank must join the union within thirty (30) days from their regularization. There is nothing in

the said clause that limits its application to only new employees who possess nonregular status, meaning probationary status, at the start of their employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from the Union Shop Clause new employees who are "absorbed" as regular employees from the beginning of their employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner's new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment. 15 Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if the former had been the employer of the latters employees from the beginning it must be emphasized that, in reality, the legal consequences of the merger only occur at a specific date, i.e., upon its effectivity which is the date of approval of the merger by the SEC. Thus, we observed in the Decision that BPI and FEBTC stipulated in the Articles of Merger that they will both continue their respective business operations until the SEC issues the certificate of merger and in the event no such certificate is issued, they shall hold each other blameless for the non-consummation of the merger.16 We likewise previously noted that BPI made its assignments of the former FEBTC employees effective on April 10, 2000, or after the SEC approved the merger. 17 In other words, the obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its right of discipline and control over them only arose with the effectivity of the merger. Concomitantly, the obligation of former FEBTC employees to render service to BPI and their right to receive benefits from the latter also arose upon the effectivity of the merger. What is material is that all of these legal consequences of the merger took place during the life of an existing and valid CBA between BPI and the Union wherein they have mutually consented to include a Union Shop Clause. From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who (a) enter the employ of BPI during the term of the CBA; (b) are part of the bargaining unit (defined in the CBA as comprised of BPIs rank and file employees); and (c) become regular employees without distinguishing as to the manner they acquire their regular status. Consequently, the number of such employees may adversely affect the majority status of the Union and even its existence itself, as already amply explained in the Decision. Indeed, there are differences between (a) new employees who are hired as probationary or temporary but later regularized, and (b) new employees who, by virtue of a merger, are absorbed from another company as regular and permanent from the beginning of their employment with the surviving corporation. It bears reiterating here that these differences are too insubstantial to warrant the exclusion of the absorbed employees from the application of the Union Shop Clause. In the Decision, we noted that: Verily, we agree with the Court of Appeals that there are no substantial differences between a newly hired non-regular employee who was regularized weeks or months after his hiring and a new employee who was absorbed from another bank as a regular employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were hired/employed only after the CBA was signed. At the time they are being required to join the Union, they are both already regular rank and file employees of BPI. They belong to the same bargaining unit being represented by the Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in effect and neither of them had the opportunity to express their preference for unionism or not. We see no cogent reason why the Union Shop Clause should not be applied equally to these two types of new employees, for they are undeniably similarly situated. 18 Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would dilute its efficacy and put the certified union that is supposedly being protected thereby at the mercy of management. For if the former FEBTC employees had no say in the merger of its former employer with another bank, as petitioner BPI repeatedly decries on their behalf, the Union likewise could not prevent BPI from proceeding with the merger which undisputedly affected the number of employees in the bargaining unit that the Union represents and may negatively impact on the Unions majority status. In this instance, we should be guided by the principle that courts must place a practical and realistic construction upon a CBA, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.19 We now come to the question: Does our affirmance of our ruling that former FEBTC employees absorbed by BPI are covered by the Union Shop Clause violate their right to security of tenure which we expressly upheld in this Resolution? We answer in the negative. In Rance v. National Labor Relations Commission,20 we held that: It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. Article 280 of the Labor Code has construed security of tenure as meaning that "the employer shall not terminate the services of an employee except for a just cause or when authorized by" the Code. x x x (Emphasis supplied.) We have also previously held that the fundamental guarantee of security of tenure and due process dictates that no worker shall be dismissed except for a just and authorized cause provided by law and after due process is observed. 21 Even as we now recognize the right to continuous, unbroken employment of workers who are absorbed into a new company pursuant to a merger, it is but logical that their

employment may be terminated for any causes provided for under the law or in jurisprudence without violating their right to security of tenure. As Justice Carpio discussed in his dissenting opinion, it is well-settled that termination of employment by virtue of a union security clause embodied in a CBA is recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v. Saldivar,23 we explained the rationale for this policy in this wise: Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by [Title I, Book Six of the Labor Code]." Admittedly, the enforcement of a closed-shop or union security provision in the CBA as a ground for termination finds no extension within any of the provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has consistently recognized, thus: "It is State policy to promote unionism to enable workers to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. For this reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis-a-vis the employer."24 (Emphasis supplied.) Although it is accepted that non-compliance with a union security clause is a valid ground for an employees dismissal, jurisprudence dictates that such a dismissal must still be done in accordance with due process. This much we decreed in General Milling Corporation v. Casio,25 to wit: The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos that: While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees' right to due process, self-organization and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and always with due process. Even on the assumption that the federation had valid grounds to expel the union officers, due process requires that these union officers be accorded a separate hearing by respondent company. The twin requirements of notice and hearing constitute the essential elements of procedural due process. The law requires the employer to furnish the employee sought to be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice apprising the employee of the particular acts or omissions for which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of the employer's decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with illegality. Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The rights of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own union are not wiped away by a union security clause or a union shop clause in a collective bargaining agreement. x x x26 (Emphases supplied.) In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period from notice of finality of the Decision given to the affected FEBTC employees to join the Union before the latter can request petitioner to terminate the formers employment, petitioner must still accord said employees the twin requirements of notice and hearing on the possibility that they may have other justifications for not joining the Union. Similar to our August 10, 2010 Decision, we reiterate that our ruling presupposes there has been no material change in the situation of the parties in the interim. WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 is AFFIRMED, subject to the qualifications that: (a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank and Trust Company (FEBTC) employees upon effectivity of the merger without break in the continuity of their employment, even without express stipulation in the Articles of Merger; and (b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010 Decision, given to former FEBTC employees to join the respondent, said employees shall be accorded full procedural due process before their employment may be terminated. [G.R. No. 135547. January 23, 2002] GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO PALAD, DENNIS R. ARANAS, DAVID SORIMA, JR., JORGE P. DELA ROSA, and ISAGANI ALDEA, petitioners, vs. HON. EDGARDO ESPIRITU in his capacity as Chairman of the PAL Inter-Agency Task Force created under Administrative Order No. 16; HON. BIENVENIDO LAGUESMA in his capacity as Secretary of Labor and Employment; PHILIPPINE AIRLINES (PAL), LUCIO TAN, HENRY SO UY, ANTONIO V. OCAMPO, MANOLO

E. AQUINO, JAIME J. BAUTISTA, and ALEXANDER O. BARRIENTOS, respondents. In this special civil action for certiorari and prohibition, petitioners charge public respondents with grave abuse of discretion amounting to lack or excess of jurisdiction for acts taken in regard to the enforcement of the agreement dated September 27, 1998, between Philippine Airlines (PAL) and its union, the PAL Employees Association (PALEA). The factual antecedents of this case are as follows: On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) went on a three-week strike, causing serious losses to the financially beleaguered flag carrier. As a result, PALs financial situation went from bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation plan and downsized its labor force by more than one-third. On July 22, 1998, PALEA went on strike to protest the retrenchment measures adopted by the airline, which affected 1,899 union members. The strike ended four days later, when PAL and PALEA agreed to a more systematic reduction in PALs work force and the payment of separation benefits to all retrenched employees. On August 28, 1998, then President Joseph E. Estrada issued Administrative Order No. 16 creating an Inter-Agency Task Force (Task Force) to address the problems of the ailing flag carrier. The Task Force was composed of the Departments of Finance, Labor and Employment, Foreign Affairs, Transportation and Communication, and Tourism, together with the Securities and Exchange Commission (SEC). Public respondent Edgardo Espiritu, then the Secretary of Finance, was designated chairman of the Task Force. It was empowered to summon all parties concerned for conciliation, mediation (for) the purpose of arriving at a total and complete solution of the problem. Conciliation meetings were then held between PAL management and the three unions representing the airlines employees, with the Task Force as mediator. On September 4, 1998, PAL management submitted to the Task Force an offer by private respondent Lucio Tan, Chairman and Chief Executive Officer of PAL, of a plan to transfer shares of stock to its employees. The pertinent portion of said plan reads: 1. From the issued shares of stock within the group of Mr. Lucio Tans holdings, the ownership of 60,000 fully paid shares of stock of Philippine Airlines with a par value of PHP5.00/share will be transferred in favor of each employee of Philippine Airlines in the active payroll as of September 15, 1998. Should any share-owning employee leave PAL, he/she has the option to keep the shares or sells (sic) his/her shares to his/her union or other employees currently employed by PAL. 2. The aggregate shares of stock transferred to PAL employees will allow them three (3) members to (sic) the PAL Board of Directors. We, thus, become partners in the boardroom and together, we shall address and find solutions to the wide range of problems besetting PAL. 3. In order for PAL to attain (a) degree of normalcy while we are tackling its problems, we would request for a suspension of the Collective Bargaining Agreements (CBAs) for 10 years. On September 10, 1998, the Board of Directors of PALEA voted to accept Tans offer and requested the Task Forces assistance in implementing the same. Union members, however, rejected Tans offer. Under intense pressure from PALEA members, the unions directors subsequently resolved to reject Tans offer. On September 17, 1998, PAL informed the Task Force that it was shutting down its operations effective September 23, 1998, preparatory to liquidating its assets and paying off its creditors. The airline claimed that given its labor problems, rehabilitation was no longer feasible, and hence, the airline had no alternative but to close shop. On September 18, 1998, PALEA sought the intervention of the Office of the President in immediately convening the parties, the PAL management, PALEA, ALPAP, and FASAP, including the SEC under the direction of the Inter-Agency Task Force, to prevent the imminent closure of PAL. On September 19, 1998, PALEA informed the Department of Labor and Employment (DOLE) that it had no objection to a referendum on the Tans offer. 2,799 out of 6,738 PALEA members cast their votes in the referendum under DOLE supervision held on September 21-22, 1998. Of the votes cast, 1,055 voted in favor of Tans offer while 1,371 rejected it. On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees. Two days later, the PALEA board wrote President Estrada anew, seeking his intervention. PALEA offered a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the existing CBA. Tan, however, rejected this counter-offer.

On September 27, 1998, the PALEA board again wrote the President proposing the following terms and conditions, subject to ratification by the general membership: 1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00, from Mr. Lucio Tans shareholdings, with three (3) seats in the PAL Board and an additional seat from government shares as indicated by His Excellency; 2. Likewise, PALEA shall, as far as practicable, be granted adequate representation in committees or bodies which deal with matters affecting terms and conditions of employment; 3. To enhance and strengthen labor-management relations, the existing LaborManagement Coordinating Council shall be reorganized and revitalized, with adequate representation from both PAL management and PALEA; 4. To assure investors and creditors of industrial peace, PALEA agrees, subject to the ratification by the general membership, (to) the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided the following safeguards are in place: a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular rank-and-file ground employees of the Company; b. The union shop/maintenance of membership provision under the PAL-PALEA CBA shall be respected. c. No salary deduction, with full medical benefits.

5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by and between PAL and PALEA, to those employees who may opt to retire or be separated from the company. 6. PALEA members who have been retrenched but have not received separation benefits shall be granted priority in the hiring/rehiring of employees. 7. In the absence of applicable Company rule or regulation, the provisions of the Labor Code shall apply. Among the signatories to the letter were herein petitioners Rivera, Ramiso, and Aranas, as officers and/or members of the PALEA Board of Directors. PAL management accepted the PALEA proposal and the necessary referendum was scheduled. On October 2, 1998, 5,324 PALEA members cast their votes in a DOLEsupervised referendum. Of the votes cast, 61% were in favor of accepting the PAL-PALEA agreement, while 34% rejected it. On October 7, 1998, PAL resumed domestic operations. On the same date, seven officers and members of PALEA filed this instant petition to annul the September 27, 1998 agreement entered into between PAL and PALEA on the following grounds: I PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR JURISDICTION IN ACTIVELY PURSUING THE CONCLUSION OF THE PAL-PALEA AGREEMENT AS THE CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING, BEING FOUNDED ON PUBLIC POLICY, MAY NOT BE WAIVED, NOR THE WAIVER, RATIFIED. II PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR JURISDICTION IN PRESIDING OVER THE CONCLUSION OF THE PAL-PALEA AGREEMENT UNDER THREAT OF ABUSIVE EXERCISE OF PALS MANAGEMENT PREROGATIVE TO CLOSE BUSINESS USED AS SUBTERFUGE FOR UNION-BUSTING. The issues now for our resolution are: (1) Is an original action for certiorari and prohibition the proper remedy to annul the PAL-PALEA agreement of September 27, 1998; (2) Is the PAL-PALEA agreement of September 27, 1998, stipulating the suspension of the PAL-PALEA CBA unconstitutional and contrary to public policy? Anent the first issue, petitioners aver that public respondents as functionaries of the Task Force, gravely abused their discretion and exceeded their jurisdiction when they actively pursued and presided over the PAL-PALEA agreement. Respondents, in turn, argue that the public respondents merely served as conciliators or mediators, consistent with the mandate of A.O. No. 16 and merely supervised the conduct of the October 3, 1998 referendum during which the PALEA members ratified the agreement. Thus, public respondents did not perform any judicial and quasi-judicial act pertaining to jurisdiction. Furthermore, respondents pray for the dismissal of the petition for violating the hierarchy of courts doctrine enunciated in People v. Cuaresma and Enrile v. Salazar.

Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules of Civil Procedure. The essential requisites for a petition for certiorari under Rule 65 are: (1) the writ is directed against a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. For writs of prohibition, the requisites are: (1) the impugned act must be that of a tribunal, corpo ration, board, officer, or person, whether exercising judicial, quasi-judicial or ministerial functions; and (2) there is no plain, speedy, and adequate remedy in the ordinary course of law. The assailed agreement is clearly not the act of a tribunal, board, officer, or person exercising judicial, quasi-judicial, or ministerial functions. It is not the act of public respondents Finance Secretary Edgardo Espiritu and Labor Secretary Bienvenido Laguesma as functionaries of the Task Force. Neither is there a judgment, order, or resolution of either public respondents involved. Instead, what exists is a contract between a private firm and one of its labor unions, albeit entered into with the assistance of the Task Force. The first and second requisites for certiorari and prohibition are therefore not present in this case. Furthermore, there is available to petitioners a plain, speedy, and adequate remedy in the ordinary course of law. While the petition is denominated as one for certiorari and prohibition, its object is actually the nullification of the PALPALEA agreement. As such, petitioners proper remedy is an ordinary civil action for annulment of contract, an action which properly falls under the jurisdiction of the regional trial courts. Neither certiorari nor prohibition is the remedy in the present case. Petitioners further assert that public respondents were partial towards PAL management. They allegedly pressured the PALEA leaders into accepting the agreement. Petitioners ask this Court to examine the circumstances that led to the signing of said agreement. This would involve review of the facts and factual issues raised in a special civil action for certiorari which is not the function of this Court. Nevertheless, considering the prayer of the parties principally we shall look into the substance of the petition, in the higher interest of justice and in view of the public interest involved, inasmuch as what is at stake here is industrial peace in the nations premier airline and flag carrier, a national concern. On the second issue, petitioners contend that the controverted PAL-PALEA agreement is void because it abrogated the right of workers to self-organization and their right to collective bargaining. Petitioners claim that the agreement was not meant merely to suspend the existing PAL-PALEA CBA, which expires on September 30, 2000, but also to foreclose any renegotiation or any possibility to forge a new CBA for a decade or up to 2008. It violates the protection to labor policy laid down by the Constitution. Article 253-A of the Labor Code reads: ART. 253-A. Terms of a Collective Bargaining Agreement. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five-year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of the retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. Under this provision, insofar as representation is concerned, a CBA has a term of five years, while the other provisions, except for representation, may be negotiated not later than three years after the execution. Petitioners submit that a 10-year CBA suspension is inordinately long, way beyond the maximum statutory life of a CBA, provided for in Article 253-A. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers constitutional right to bargain for another CBA at the mandated time. We find the argument devoid of merit.

promoting industrial peace at PAL, but preventing the latters closure. We fin d no conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same. In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground employees, that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case was the unions exercise of its right to collective bargaining. The right to free collective bargaining, after all, includes the right to suspend it. The acts of public respondents in sanctioning the 10-year suspension of the PALPALEA CBA did not contravene the protection to labor policy of the Constitution. The agreement afforded full protection to labor; promoted the shared responsibility between workers and employers; and the exercised voluntary modes in settling disputes, including conciliation to foster industrial peace." Petitioners further allege that the 10-year suspension of the CBA under the PALPALEA agreement virtually installed PALEA as a company union for said period, amounting to unfair labor practice, in violation of Article 253-A of the Labor Code mandating that an exclusive bargaining agent serves for five years only. The questioned proviso of the agreement reads: a. PAL shall continue recognizing PALEA as the duly certifiedbargaining agent of the regular rank-and-file ground employees of the Company; Said proviso cannot be construed alone. In construing an instrument with several provisions, a construction must be adopted as will give effect to all. Under Article 1374 of the Civil Code, contracts cannot be construed by parts, but clauses must be interpreted in relation to one another to give effect to the whole. The legal effect of a contract is not determined alone by any particular provision disconnected from all others, but from the whole read together. The aforesaid provision must be read within the context of the next clause, which provides: b. The union shop/maintenance of membership provision under the PAL-PALEA CBA shall be respected. The aforesaid provisions, taken together, clearly show the intent of the parties to maintain union security during the period of the suspension of the CBA. Its objective is to assure the continued existence of PALEA during the said period. We are unable to declare the objective of union security an unfair labor practice. It is State policy to promote unionism to enable workers to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. For this reason, the law has allowed stipulations for union shop and closed shop as means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis--vis the employer. Petitioners contention that the agreement installs PALEA as a virtual company union is also untenable. Under Article 248 (d) of the Labor Code, a company union exists when the employer acts [t]o initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters. The case records are bare of any showing of such acts by PAL. We also do not agree that the agreement violates the five-year representation limit mandated by Article 253-A. Under said article, the representation limit for the exclusive bargaining agent applies only when there is an extant CBA in full force and effect. In the instant case, the parties agreed to suspend the CBA and put in abeyance the limit on the representation period. In sum, we are of the view that the PAL-PALEA agreement dated September 27, 1998, is a valid exercise of the freedom to contract. Under the principle of inviolability of contracts guaranteed by the Constitution, the contract must be upheld. WHEREFORE, there being no grave abuse of discretion shown, the instant petition is DISMISSED. No pronouncement as to costs. G.R. No. 167401 July 5, 2010

A CBA is a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement. The primary purpose of a CBA is the stabilization of labor-management relations in order to create a climate of a sound and stable industrial peace. In construing a CBA, the courts must be practical and realistic and give due consideration to the context in which it is negotiated and the purpose which it is intended to serve. The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique intention of not merely

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, represented by SABINO F. GRAGANZA, Union President, and REYVILOSA TRINIDAD, Petitioners, vs. SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT and TRIUMPH INTERNATIONAL (PHILS.), INC., Respondents. Before the Court are two separate petitions1 which were consolidated pursuant to our Resolution dated June 8, 2005.2 The first,3 filed by the Bagong Pagkakaisa ng Manggagawa ng Triumph International (union), seeks to set aside the decision4 of the Court of Appeals (CA) in CA-G.R. SP No. 60516, and the subsequent resolution5 of March 10, 2005, on the parties motion for reconsideration. The

second,6 filed by Triumph International (Phils.), Inc. (company), prays for the annulment of the same decision and resolution with respect to the illegal dismissal issue. The Antecedents The relevant facts, clearly laid out in the challenged CA decision, are summarized below. The union and the company had a collective bargaining agreement (CBA) that expired on July 18, 1999. The union seasonably submitted proposals to the company for its renegotiation. Among these proposals were economic demands for a wage increase of P180.00 a day, spread over three (3) years, as follows: P70.00/day from July 19, 1999; P60.00/day from July 19, 2000, and P50.00/day from July 19, 2001. The company countered with a wage increase offer, initially at P42.00 for three years, then increased it to P45.00, also for three years. The negotiations reached a deadlock, leading to a Notice of Strike the union filed on October 15, 1999.7 The National Conciliation and Mediation Board (NCMB) exerted efforts but failed to resolve the deadlock. On November 15, 1999, the company filed a Notice of Lock-out8 for unfair labor practice due to the unions alleged work slowdown. The union went on strike three days later, or on November 18, 1999. On January 27, 2000, Secretary Bienvenido E. Laguesma (Labor Secretary) of the Department of Labor and Employment (DOLE) assumed jurisdiction over the labor dispute, pursuant to Article 263(g) of the Labor Code. 9 The Labor Secretary directed all striking workers to return to work within twenty-four (24) hours from receipt of the assumption order, while the company was directed to accept them back to work under the same terms and conditions existing before the strike. The Labor Secretary also required the parties to submit their respective position papers. On February 2 and 3, 2000, several employees attempted to report for work, but the striking employees prevented them from entering the company premises. In a petition dated February 8, 2000,10 the company asked the Labor Secretary to issue an order directing the union to allow free ingress to and egress from the company premises; to dismantle all structures obstructing free ingress and egress; and, to deputize the Philippine National Police to assist the DOLE in the peaceful implementation of the Labor Secretary's January 27, 2000 order. The Labor Secretary reiterated his directives in another order dated February 22, 2000,11 and deputized Senior Superintendent Manuel A. Cabigon, Director of the Southern Police District, "to assist in the peaceful and orderly implementation of this Order." At a conciliation meeting held on February 29, 2000, the company agreed to extend the implementation of the return-to-work order until March 6, 2000.12 The union, through a letter dated March 2, 2000,13 advised the NCMB Administrator of the union executive boards decision to return to work the following day. In a letter also dated March 2, 2000,14 the company advised the NCMB Administrator that it was willing to accept all returning employees, without prejudice to whatever legal action it may take against those who committed illegal acts. The company also stated that all the union officers and members and the union board members would be placed under preventive suspension, pending investigation of their alleged illegal acts. The striking employees returned to work on March 3 and 4, 2000 but twenty (20) union officers and a shop steward were not allowed entry into the company premises. The excluded union leaders were each served identical letters 15 directing them to explain in writing why their employment should not be terminated or why no disciplinary action should be imposed on them for defying and violating the Labor Secretarys assumption order of January 27, 2000 and the second return -towork order of February 22, 2000; for blocking and resisting the entry of returning employees on February 2, 3, and 8, 2000; for acts of violence committed on February 24 and 25, 2000; and for defying the company's return-to-work order of all employees on February 8, 2000.16 On March 6, 2000, the twenty-one (21) union officers, by motion, asked the Labor Secretary to issue a reinstatement order and to cite the company for contempt. On March 9, 2000, the Labor Secretary directed the company to accept the union officers and the shop steward back to work, without prejudice to the continuation of the investigation.17 At the conciliation meeting of March 15, 2000, the company agreed to reinstate the union officers in the payroll effective March 13, 2000 18 and withdrew its notice of lockout.19 On March 21, 2000, the union officers again received identically worded letters requiring them to explain in writing within twenty-four (24) hours why no disciplinary action, including dismissal, should be taken against them for leading, instigating, and participating in a deliberate work slowdown during the CBA negotiations.20 The union officers explained, as required, through their respective affidavits, 21 and a hearing followed on May 5, 2000. Thereafter, the union officers were each served a notice of termination of employment effective at the close of office hours on May 11, 2000.22

On June 8, 2000, the union and the officers filed a petition to cite the company and its responsible officers for contempt, and moved that a reinstatement order be issued.23 They claimed that: (1) the company officials violated the Labor Secretarys return-to-work order when these officials placed them under preventive suspension and refused them entry into the company premises; (2) the company also violated the March 9, 2000 order of the Labor Secretary when they were reinstated only in the payroll; and (3) the company committed unfair labor practice and dismissed them without basis. The LABOR Secretarys Decision The Labor Secretary resolved the bargaining deadlock24 and awarded a wage increase of P48.00 distributed over three years, as follows:25 Effective July 19, 1999 P15.00/day Effective July 19, 2000 P16.00/day Effective July 19, 2001 - P17.00/day The unions other economic demands and non -economic proposals were all denied. The union moved for the reconsideration26 of the Labor Secretarys decision, while the company moved for its own partial reconsideration. 27 The Labor Secretary denied both motions, declaring that the petition to cite the company and its responsible officers for contempt had already been rendered moot and academic.28 He also ruled that the legality of the union officers dismissal properly falls within the original and exclusive jurisdiction of the labor arbiter under Article 217 of the Labor Code. The union elevated the case to the CA, through a petition for certiorari under Rule 65 of the Rules of Court,29 on the following grounds: 1. The Labor Secretary committed grave abuse of discretion amounting to lack or excess of jurisdiction when he denied the proposals of the 1,130 union members to improve the existing CBA. 2. The Labor Secretary committed grave abuse of discretion when he declared that the issue of reinstatement of the officers of the union and the petition to cite the company and its responsible officers for contempt had become academic. The union insisted on its demanded P180.00 daily wage increase distributed over three years (1999 to 2001), arguing that the demand is just, fair and reasonable based on the company's capacity to pay and the companys bargaining history. It noted that the company gave a P55.00 increase for the years 1993-1995, and P64.00 for the years 1996 to 1998. It also objected the rejection of its other economic demands and non-economic proposals. The union also contended that the company and its responsible officers should have been held in contempt for violating the Labor Secretarys return -to-work order. It argued that the officers should have been reinstated in the absence of substantial evidence supporting the charges against them. The company responded by praying for the dismissal of the petition for lack of abuse of discretion on the part of the Labor Secretary. It posited that the P48.00 wage increase award is more than reasonable, and that the Labor Secretary properly stayed his hand on the issue of illegal dismissal as the matter was beyond his jurisdiction. The company likewise argued that any question on the award had been mooted by the workers acceptance of the wage increase. While the petition was pending, individual settlements were reached between certain individual petitioners (Cenon N. Dionisio, Catalina N. Velasquez, Nila P. Tresvalles, Vivian A. Arcos, Delia N. Soliven, Leticia S. Santos, Emerita D. Maniebo, Conchita R. Encinas, Elpidia C. Cancino, Consolacion S. Umalia, Nenette N. Gonzales, Creselita D. Rivera, and Rolando O. Madera) and the company. These petitioners executed their respective Release, Waiver and Quitclaim after receiving their separation pay and other benefits from the company.30 In light of these developments and the workers acceptance of the wage award (except for the union officers), the company moved for the dismissal of the petition.31 The union and the remaining union officers opposed the motion, contending that the workers acceptance of the awarded wage increase cannot be considered a waiver of their demand; the receipt of the P48.00 award was merely an advance on their demand. The Release, Waiver and Quitclaim executed by the 13 officers, on the other hand, cannot bind the officers who opted to maintain the petition. On December 17, 2001, two more officers Juliana D. Galo and Remedios C. Barque also executed their respective Release, Waiver and Quitclaim.32 The CA Decision

The CA found the petition partly meritorious. It affirmed the Labor Secretary's wage increase award, but modified his ruling on the dismissal of the union officers.33 On the wage issue and related matters, the CA found the Labor Secretarys award legally in order. It noted the following factors supportive of the award: 1. The average daily salary of an employee of P310.00 is more than the statutory minimum wage as admitted by the union itself. 2. The company grants to its employees forty-two (42) other monetary and welfare benefits. 3. The increase in the wages of the employees carries with it a corresponding increase in their salary-based benefits. 4. The wage increase granted to workers employed in the industry is less than the increase proposed by the company. 5. The Asian financial crisis. The CA also noted that, in the meantime, the parties had executed a new CBA for the years 2002 to 2005 where they freely agreed on a total P45.00/day wage increase distributed over three years. On the other hand, the CA faulted the Labor Secretary for not ruling on the dismissal of the union officers. It took exception to the Labor Secretary's view that the dismissal question is within the exclusive jurisdiction of the labor arbiter pursuant to Article 217 of the Labor Code. It invoked the ruling of this Court in Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc.,34 which, in turn, cited International Pharmaceuticals, Inc. v. Secretary of Labor, 35 where we held that the Labor Secretary has jurisdiction over all questions and controversies arising from an assumed dispute, including cases over which the labor arbiter has exclusive jurisdiction. The CA pointed out that while the labor dispute before the Labor Secretary initially involved a bargaining deadlock, a related strike ensued and charges were brought against the union officers (for defiance of the return-to-work order of the Labor Secretary, and leading, instigating, and participating in a deliberate work slowdown during the CBA negotiations) resulting in their dismissal from employment; thus, the dismissal is intertwined with the strike that was the subject of the Labor Secretarys assumption of jurisdiction. The CA, however, avoided a remand of the illegal dismissal aspect of the case to the Labor Secretary on the ground that it would compel the remaining six officers, lowly workers who had been out of work for four (4) years, to go through the "calvary" of a protracted litigation. In the CAs view, it was in keeping with justice and equity for it to proceed to resolve the dismissal issue itself. The six remaining officers of the union Reyvilosa Trinidad, Eloisa Figura, Jerry Jaicten, Rowell Frias, Margarita Patingo, and Rosalinda Olangar (shop steward) all stood charged with defying (1) the Labor Secretarys return -to-work order of January 27, 2000,36 and (2) the companys general notice for the return of all employees on February 8, 2000.37 Later, they were also charged with leading, instigating, and participating in a deliberate slowdown during the CBA negotiations. The charges were supported by the affidavits of Ernesto P. Dayag, Salvio Bayon, Victoria Sanchez, Lyndon Dinglasan, Teresita Nacion, Herman Vinoya, and Leonardo Gomez.38 The CA noted that in all these affidavits, "no mention was ever made of [anyone] of the six (6) remaining individual petitioners, save for Reyvilosa Trinidad. Also, none of the said affidavits even hinted at the culpabilities of petitioners Eloisa Figura, Jerry Jaicten, Rowell Frias, Margarita Patingo, and Rosalinda Olangar for the alleged illegal acts imputed to them."39 For failure of the company to prove by substantial evidence the charges against the remaining officers, the CA concluded that their employment was terminated without valid and just cause, making their dismissal illegal. With respect to Trinidad, the CA found that her presence in the picket line and participation in an illegal act obstructing the ingress to and egress from the company's premises were duly established by the affidavit of Bayon.40 For this reason, the CA found Trinidad's dismissal valid. The appellate court thus affirmed the May 31, 2000 41 order of the Labor Secretary and modified the resolution dated July 14, 2000.42 The CA denied the motions for reconsideration that the union and its officers, and the company filed.43 Hence, the present petitions. The Petitions G.R. No. 167401 The petition is anchored on the following grounds 1. The CA erred in sustaining the Labor Secretary's wage increase award of P48.00/day spread over three years.

2. The CA erred in finding the dismissal of Trinidad valid. The union presents the following arguments On the CBA Award The union contends that the CBA wage increases from 1994 to 1998 ranged from P16.00/day to P27.00/day for every year of the CBA period; the arguments behind the companys decreased wage offer were the same arguments it raised in previous CBA negotiations; the alleged financial crisis in the region on which the CBA award was based actually did not affect the company because it sourced its raw materials from its mother company, thereby avoiding losses; the companys leading status in the industry in terms of wages should not be used in the determination of the award; rather, it should be based on the companys financial condition and its number one rank among 7,000 corporations in the country manufacturing ladies, girls, and babies garments, and number 46 in revenues with gross revenues of P1.08B, assets of P525.5M and stockholders equity of P232.1M; in granting only a wage increase out of 44 items in its proposal, the award disregarded the factors on which its demands were based such as the peso devaluation and the daily expenditure of P1,400.00/day for a family of six (6) as found by the National Economic and Development Authority. On the Dismissal of Reyvilosa Trinidad The union seeks a reversal of the dismissal of Trinidad. It argues that she was dismissed for alleged illegal acts based solely on the self-serving affidavits executed by officers of the company; the strike had not been declared illegal for the company had not initiated an action to have it declared illegal; Trinidad was discriminated against because of the four union officers mentioned in the affidavits, three were granted one month separation pay plus other benefits to settle the dispute in regard to the three; also the same arrangement was entered into with the other officers, which resulted in the signing of the waiver, quitclaim and release; the only statement in the affidavits against Trinidad was her alleged megaphone message to the striking employees not to return to work. The union thus asks this Court to modify the assailed CA ruling through an order improving the CBA wage award and the grant of the non-wage proposals. It also asks that the dismissal of Trinidad be declared illegal, and that the company be ordered to pay the union moral and exemplary damages, litigation expenses, and attorney's fees. G.R. No. 167407 For its part, the company seeks to annul the CA rulings on the dismissal issue, on the following grounds 1. The CA erred in ruling that the Labor Secretary abused his discretion in not resolving the issue of the validity of the dismissal of the officers of the union. 2. The CA erred in resolving the factual issue of dismissal instead of remanding the case for further proceedings. 3. In resolving the issue, the company was deprived of its right to present evidence and, therefore, to due process of law. The company submits that the Labor Secretary has no authority to decide the legality or illegality of strikes or lockouts, jurisdiction over such issue having been vested on the labor arbiters pursuant to Article 217 of the Labor Code; under Article 263 of the Code, the Labor Secretarys authority over a labor dispute encompasses only the issues, not the legality or illegality of any strike that may have occurred in the meantime.44 It points out that before the Labor Secretary can take cognizance of an incidental issue such as a dismissal question, it must first be properly submitted to him, as in the case of International Pharmaceuticals, Inc. v. Secretary of Labor45 where the Labor Secretary was adjudged to have the power to assume jurisdiction over a labor dispute and its incidental issues such as unfair labor practices subject of cases already ongoing before the National Labor Relations Commission (NLRC). The company takes exception to the CA ruling that it submitted the dismissal issue to the Labor Secretary claiming that it can be seen from its opposition to the unions petition to cite the company for contempt;46 that it consistently maintained that the Labor Secretary has no jurisdiction over the dismissal issue; that the affidavits it submitted to the Labor Secretary were only intended to establish the unions violation of the return-to-work orders and, to support its petition, on February 8, 2000,47 for the issuance of a return-to-work order; and, that the CA overstepped its jurisdiction when it ruled on a factual issue, the sole office of certiorari being the corrections of errors of jurisdiction, including the commission of grave abuse of discretion. The company likewise disputes the CAs declaration that it took into consideration all the evidence on the dismissal issue, claiming that the evidence on record is deficient, for it did not have the opportunity to adduce evidence to prove the involvement of the union officers in the individual acts for which they were dismissed; had it been given the opportunity to present evidence, it could have done so. To prove its point, it included in its motion for partial reconsideration 48 a copy of the information,49 charging union officers Nenette Gonzales and Margarita Patingo of malicious mischief for stoning a company vehicle on February 25, 2000, while the strike was ongoing.

Even assuming that it could no longer submit evidence on the dismissal of the union officers, the company posits that sufficient grounds exist to uphold the dismissals. It maintains that the officers are liable to lose their employment status for knowingly staging a strike after the assumption of jurisdiction by the Labor Secretary and in defying the return-to-work mandated by the assumption, which are considered prohibited activities under Article 264(a) of the Labor Code, not to mention that without first having filed a notice, when the union officers and members engaged in and instigated a work slowdown, a form of strike, without complying with the procedural requirements for staging a strike, the union officers had engaged in an illegal strike. The parties practically reiterated these positions and the positions taken below in their respective comments to each others petition. The Court's Ruling The CBA Award We affirm the CA's disposition, upholding the Labor Secretarys award in resolving the bargaining deadlock between the union and the company for their 1999-2001 CBA. We find no compelling justification to disturb the award. We are convinced, as the appellate court was, of the reasonableness of the award. It was based on the prevailing economic indicators in the workplace, in the industry, and in the local and regional economy. As well, it took into account the comparative standing of the company in terms of employees' wages and other economic benefits. We find the following factors as sufficient justification for the award: 1. The regional financial crisis and the downturn in the economy at the time, impacting on the performance of the company as indicated in its negative financial picture in 1999. 2. The companys favorable comparison with industry standards in terms of employee benefits, especially wages. Its average daily basic wage of P310.00 is 40% higher than the statutory minimum wage of P223.50, and superior to the industrys average of P258.00. For the years prior to the 1999 negotiations, its aggregate daily wage increase of P64.00 surpassed the statutory minimum increase of P33.00. 3. The forty-two (42) non-wage benefit programs of the company which undeniably extend the reach of the employees' cash wage in enhancing the well-being of the employees and their families. The Labor Secretary's Order of May 31, 2000 fully explained these considerations as follows:50 We fully agree with the Union that relations between management and labor ought to be governed by the higher precepts of social justice as enshrined in the Constitution and in the laws. We further agree with it that the worker's over-all well-being is as much affected by his wages as by other macro-economic factors as the CPI, cost of living, the varied needs of the family. Yet, the other macroeconomic factors cited by the company such as the after-effects of the regional financial crisis, the existing unemployment rate, and the need to correlate the rate of wage increase with the CPI are equally important. Of course[,] other macroeconomic factors such as the contraction of sales and production as well as the growing lack of direct investors, are also important considerations. It is noteworthy that both the Union and Management recognize that the entire gamut of macroeconomic factors necessarily impact on the micro-economic conditions of an individual company even in terms of wage increases. The Union also makes mention of the need to factor in the industry where the employer belongs x x x. This is affirmed by the Company when it provides a comparison with the other key players in the industry. It has been properly shown that its prevailing levels of wages and other benefits are, generally, superior to its counterparts in the local garments industry. x x x But even as we agree with the Union that the Company's negative financial picture for 1999 should not be an overriding consideration in coming up with an adjudicated wage increase, We cannot make the historical wage increases as our starting point in determining the appropriate wage adjustment. The Companys losses for 1999 which, even the Union recognizes, amounts to millions of pesos, coupled with the current economic tailspin warrant a more circumspect view[.] Cognizance is likewise made of the Company's 42 non-wage benefits programs which substantially [answer] the Union's concerns with respect to the living wage and the needs of a family. It would not be amiss to mention that said benefits have their corresponding monetary valuations that in effect increase a worker's daily pay. Likewise, the needed family expenditure is answered for not solely by an individual family member's income alone, but also from other incomes derived by the entire family from all possible sources. Considering the foregoing circumstances, We deem it reasonable and fair to balance our award on wages. The conclusions of the Labor Secretary, drawn as they were from a close examination of the submissions of the parties, do not indicate any legal error, much less any grave abuse of discretion. We accord respect to these conclusions as they were made by a public official especially trained in the delicate task of

resolving collective bargaining disputes, and are on their face just and reasonable. "[U]nless there is a clear showing of grave abuse of discretion, this Court cannot, and will not, interfere with the labor expertise of the public respondent Secretary of Labor," as the Court held in Pier Arrastre and Stevedoring Services v. Ma. Nieves Roldan-Confesor, et al.51 We also note that during the pendency of the present dispute, the parties entered into a new CBA for the years 2000-2005, providing for a P45.00/day wage increase for the workers. The CA cited this agreed wage adjustment as an indication of the reasonableness of the disputed award. The Labor Secretary himself alluded to "the letter-manifestation received by this Office on 15 June 2000 containing the signatures of some 700 employees of the Company indicating the acceptance of the award rendered in the 31 May 2000 Order. "52 There was also the manifestation of the company dated February 7, 2006, advising the Court that it concluded another CBA with the union providing for a wage increase of P22.00/day effective July 19, 2005; P20.00/day for July 19, 2006; and P20.00/day for July 19, 2007.53 The successful negotiation of two collective agreements even before the parties could sit down and formalize the 1999-2001 CBA highlights the need for the parties to abide by the decision of the Labor Secretary and move on to the next phase of their collective bargaining relationship. The Illegal Dismissal Issue Before we rule on the substantive aspect of this issue, we deem it proper to resolve first the companys submission that the CA erred: (1) in ruling that the Labor Secretary gravely abused his discretion in not deciding the dismissal issue; and, (2) in deciding the factual issue itself, instead of remanding the case, thereby depriving it of the right to present evidence on the matter. We agree with the CA's conclusion that the Labor Secretary erred, to the point of abusing his discretion, when he did not resolve the dismissal issue on the mistaken reading that this issue falls within the jurisdiction of the labor arbiter. This was an egregious error and an abdication of authority on the matter of strikes the ultimate weapon in labor disputes that the law specifically singled out under Article 263 of the Labor Code by granting the Labor Secretary assumption of jurisdiction powers. Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary situation a strike or lockout in an industry indispensable to the national interest. This grant is not limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term "assume jurisdiction" connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to the dispute, including cases over which the labor arbiter has exclusive jurisdiction. 54 In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment that resulted from the strike. Article 264 significantly dwells on this exact subject matter by defining the circumstances when a union officer or member may be declared to have lost his employment. We find from the records that this was an issue that arose from the strike and was, in fact, submitted to the Labor Secretary, through the unions motion for the issuance of an order for immediate reinstatement of the dismissed officers and the companys opposition to the motion. Thus, the dismissal issue was properly brought before the Labor Secretary and this development in fact gave rise to his mistaken ruling that the matter is legally within the jurisdiction of the labor arbiter to decide. We cannot disagree with the CAs sympathies when it stated that a remand of the case "would only compel the individual petitioners, x x x lowly workers who have been out of work for more than four (4) years, to tread once again the [calvary] of a protracted litigation."55 The dismissal issue and its resolution, however, go beyond the realm of sympathy as they are governed by law and procedural rules. The recourse to the CA was through the medium of a petition for certiorari under Rule 65 an extraordinary but limited remedy. The CA was correct in declaring that the Labor Secretary had seriously erred in not ruling on the dismissal issue, but was totally out of place in proceeding to resolve the dismissal issue; its action required the prior and implied act of suspending the Rules of Court a prerogative that belongs to this Court alone. In the recent case of Marcos-Araneta v. Court of Appeals,56 we categorically ruled that the CA cannot resolve the merits of the case on a petition for certiorari under Rule 65 and must confine itself to the jurisdictional issues raised. Let this case be another reminder to the CA of the limits of its certiorari jurisdiction. But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would result if a remand would be ordered under a situation where we are in the position to resolve the case based on the records before us. As we said in Roman Catholic Archbishop of Manila v. Court of Appeals:57 [w]e have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case.58 Thus, we shall directly rule on the dismissal issue. And while we rule that the CA could not validly rule on the merits of this issue, we shall not hesitate to refer back to its dismissal ruling, where appropriate.

The first question to resolve is the sufficiency of the evidence and records before us to support a ruling on the merits. We find that the union fully expounded on the merits of the dismissal issue while the companys positions find principal support from the affidavits of Dayag, Bayon, Sanchez, Dinglasan, Nacion, Vinoya, and Gomez. The affidavits became the bases of the individual notices of termination of employment sent to the union officers. The parties affi davits and their submitted positions constitute sufficient bases to support a decision on the merits of the dismissal issue. The dismissed union officers of the union originally numbered twenty-one (21), twenty (20) of whom led by union President Cenon Dionisio were executive officers and members of the union board. Completing the list was shop steward Olangar. As mentioned earlier, fifteen (15) of the dismissed officers, including Dionisio, executed a Release, Waiver and Quitclaim and readily accepted their dismissal.59 Those who remained to contest their dismissal were Reyvilosa N. Trinidad, 2nd Vice-President; Eloisa Figura, Asst. Secretary; Jerry Jaicten, PRO; Rowell Frias, Board Member; Margarita Patingo, Board Member; and Rosalinda Olangar, Shop Steward. The officers of the union subject of the petition were dismissed from the service for allegedly committing illegal acts (1) during the CBA negotiations and (2) during the strike declared by the union, shortly after the negotiations reached a deadlock. The acts alluded to under the first category60 involved "leading, instigating, participating in a deliberate slowdown during the CBA negotiations" and, under the second,61 the alleged defiance and violation by the union officers of the assumption of jurisdiction and the return-to-work order of the Labor Secretary dated January 27, 2000, as well as the second return-to-work order dated February 22, 2000. More specifically, in the course of the strike, the officers were charged with blocking and preventing the entry of returning employees on February 2, 3, and 8, 2000; and on February 24 and 25, 2000, when acts of violence were committed. They likewise allegedly defied the company's general return-to-work notice for the return of all employees on February 8, 2000.62 The CA erred in declaring that except for Trinidad, the company failed to prove by substantial evidence the charges against the remaining union officers, thus making this dismissal illegal. The appellate court noted that in all the affidavits the company submitted as evidence "no mention was ever made of [anyone] of the six (6) remaining individual petitioners, save for Reyvilosa Trinidad. Also, none of the said affidavits even hinted at the culpabilities of petitioners Eloisa Figuna, Jerry Jaicten, Rowell Frias, Margarita Patingo and Rosalinda Olangar for the alleged illegal acts imputed to them."63 The charges on which the company based its decision to dismiss the union officers and the shop steward may be grouped into the following three categories: (1) defiance of the return-to-work order of the Labor Secretary, (2) commission of illegal acts during the strike, and (3) leading, instigating and participating in a deliberate work slowdown during the CBA negotiations. While it may be true that the affidavits the company submitted to the Labor Secretary did not specifically identify Figuna, Jaiden, Frias, Patingo and Olangar to have committed individual illegal acts during the strike, there is no dispute that the union defied the return-to-work orders the Labor Secretary handed down on two occasions, first on January 27, 2000 (more than two months after the union struck on November 18, 1999) and on February 22, 2000. In decreeing a return-towork for the second time, the Labor Secretary noted: To date, despite the lapse of the return-to-work period indicated in the Order, the Union continues with its strike. A report submitted by NCMB-NCR even indicated that all gates of the Company are blocked thereby preventing free ingress and egress to the premises.64 Under the law,65 the Labor Secretary's assumption of jurisdiction over the dispute or its certification to the National Labor Relations Commission for compulsory arbitration shall have the effect of automatically enjoining the intended or impending strike or lockout and 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 before the strike or lockout. The union and its officers, as well as the workers, defied the Labor Secretary's assumption of jurisdiction, especially the accompanying return-to-work order within twenty-four (24) hours; their defiance made the strike illegal under the law66 and applicable jurisprudence.67 Consequently, it constitutes a valid ground for dismissal.68 Article 264(a), paragraph 3 of the Labor Code provides that "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." The union officers were answerable not only for resisting the Labor Secretary's assumption of jurisdiction and return-to-work orders; they were also liable for leading and instigating and, in the case of Figura, for participating in a work slowdown (during the CBA negotiations), a form of strike69 undertaken by the union without complying with the mandatory legal requirements of a strike notice and strike vote. These acts are similarly prohibited activities.70 There is sufficient indication in the case record that the union officers, collectively, save for shop steward Olangar, were responsible for the work slowdown, the illegal strike, and the violation of the Labor Secretary's assumption order, that started with the slowdown in July 1999 and lasted up to March 2000 (or for about ten (10) months).71 These illegal concerted actions could not have happened at the spur of the moment and could not have been sustained for several months without the sanction and encouragement of the union and its officers; undoubtedly, they resulted from a collective decision of the entire union leadership and constituted a

major component of the unions strategy to obtain concessions from the company management during the CBA negotiations. That the work slowdown happened is confirmed by the affidavits72 and the documentary evidence submitted by the company. Thus, Ernesto P. Dayag, a security officer of the agency servicing the company (Tamaraw Security Service, Inc.) stated under oath that in October 1999, the union members were engaging in a noise-barrage everyday and when it was time to go back to work at noontime, they would mill around the production area or were at the toilet discussing the ongoing CBA negotiations (among others), and were slow in their movements; in late October (October 27, 1999), they did the same thing at about seven oclock in the morning which was already time for work; even those who were already working were deliberately slow in their movements. On November 12, 1999, when union officer Lisa Velasquez talked to the union members at lunchtime regarding the CBA negotiations, only about 50% of the union members returned to their work stations. Victoria P. Sanchez, a sewer in the company's production department, deposed that sometime in the middle of September 1999, the sewers were told by the shop stewards to reduce their efficiency below 75%. They followed the order as it came from a decision of the union officers at a meeting. It was not difficult to comply with the order because they only had to slow down at the pre-production and early segments of the production line so that the rest of the line would suffer. Teresita T. Nacion, another sewer, corroborated Sanchez's deposition stating that in mid-September 1999, during the CBA negotiations, the sewers were told by the shop stewards to reduce their efficiency below 75% pursuant to the union decision to slow down production so that the company would suffer losses. The work slowdown resulted in production losses to the company which it documented and submitted in evidence73 before the Labor Secretary and was summarized in the affidavit74 of Leonardo T. Gomez, who testified on the impact of the decrease of the workers production efficiency that peaked in September, October, and November 1999, resulting in a financial loss to the company of P69.277M. Specifically, the companys efficiency record for the year 1999 75 posted Eloisa C. Figuras76 work performance from April to June 1999 at 77.19% and from July to November 1999 at 51.77%, a substantial drop in her efficiency. The unions two-pronged strategy to soften the companys stance in the CBA negotiations culminated in its declaration of a strike on November 18, 1999, which prompted the Labor Secretarys intervention through an assumption of jurisdiction. Judging from the manner the union staged the strike, it is readily apparent that the unions objective was to paralyze the company and to maintain the work stoppage for as long as possible. This is the economic war that underlies the Labor Codes strike p rovisions, and which the same Code also tries to temper by regulation. Thus, even with the assumption of jurisdiction and its accompanying return-to-work order, the union persisted with the strike and prevented the entry to the company premises of workers who wanted to report back for work. In particular, Salvio Bayon, a company building technician and a member of the union, deposed that at about seven o'clock in the morning of February 3, 2000, he and ten (10) of his coemployees attempted to enter the company premises, but they were prevented by a member of the strikers, led by union President Cenon Dionisio and other officers of the union; the same thing happened on February 8, 24 and 28, 2000. 77 In the face of the union's defiance of his first return-to-work order, the Labor Secretary issued a second return-to-work directive on February 22, 2000 where the labor official noted that despite the lapse of the return-to-work period indicated in the order, the union continued with its strike. 78 At a conciliation meeting on February 29, 2000, the company agreed to extend the implementation of the return-to-work order to March 6, 2000.79 The union, through a letter dated March 2, 2000,80 advised the NCMB administrator of the decision of the union executive board for the return to work of all striking workers the following day. In a letter also dated March 2, 2000,81 the company also advised the NCMB Administrator that it was willing to accept all returning employees, without prejudice to whatever legal action it may take against those who committed illegal acts. The above union letter clearly shows the involvement of the entire union leadership in defying the Labor Secretary's assumption of jurisdiction order as well as return-to-work orders. From the illegal work slowdown to the filing of the strike notice, the declaration of the strike, and the defiance of the Labor Secretary's orders, it was the union officers who were behind the every move of the striking workers; and collectively deciding the twists and turns of the strike which even became violent as the striking members prevented and coerced returning workers from gaining entry into the company premises. To our mind, all the union officers who knowingly participated in the illegal strike knowingly placed their employment status at risk. In a different vein, the union faulted the company for having dismissed the officers, there being no case filed on the legality or illegality of the strike. We see no merit in this argument. In Gold City Integrated Port Service, Inc. v. NLRC, 82 we held that "[t]he law, in using the word may, grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment." We reiterated this principle in San Juan De Dios Educational Foundation Employees Union-Alliance of Filipino Workers v. San Juan De Dios Educational Foundation, Inc.,83 where we stated that "Despite the receipt of an order from the SOLE to return to their respective jobs, the Union officers and members refused to do so and defied the same. Consequently, then, the strike staged by the Union is a prohibited activity under Article 264 of the Labor Code. Hence, the dismissal of its officers is in order. The respondent Foundation was, thus, justified in terminating the employment of the petitioner Union's officers."

The union attempted to divert attention from its defiance of the return-to-work orders with the specious submission that it was the company which violated the Labor Secretary's January 27, 2000 order, by not withdrawing its notice of lockout.841avvphi1 The evidence indicates otherwise. The Labor Secretary himself, in his order of February 22, 2000,85 noted that the union continued its strike despite the lapse of the return-to-work period specified in his January 27, 2000 order. There is also the report of the NCMB-NCR clearly indicating that all gates of the company were blocked, thereby preventing free ingress to and egress from the company premises. There, too, was the letter of the company personnel manager, Ralph Funtila, advising the union that the company will comply with the Labor Secretary's January 27, 2000 order; Funtila appealed to the striking employees and the officers to remove all the obstacles and to lift their picket line to ensure free ingress and egress.86 Further, as we earlier noted, the union itself, in its letter of March 2, 2000, advised the NCMB that the union board of directors had decided to return to work on March 3, 2000 indicating that they had been on strike since November 18, 1999 and were defiant of the return-to-work orders since January 28, 2000. As a final point, the extension of the return-to-work order and the submission of all striking workers, by the company, cannot in any way be considered a waiver that the union officers can use to negate liability for their actions, as the CA opined in its assailed decision.87 In the first place, as clarified by Funtila's letter to the NCMB dated March 2, 2000,88 the company will accept all employees who will report for work up to March 6, 2000, without prejudice to whatever legal action it may take against those who committed illegal acts. He also clarified that it extended the return-to-work, upon request of the union and the DOLE to accommodate employees who were in the provinces, who were not notified, and those who were sick. As a point of law, we find that the company did not waive the right to take action against the erring officers, and this was acknowledged by the Labor Secretary himself in his order of March 9, 2000,89 when he directed the company "to accept back to work the twenty (20) union officers and one (1) shop steward[,] without prejudice to the Company's exercise of its prerogative to continue its investigation." The order was issued upon complaint of the union that the officers were placed under preventive suspension. For having participated in a prohibited activity not once, but twice, the union officers, except those our Decision can no longer reach because of the amicable settlement they entered into with the company, legally deserve to be dismissed from the service. For failure of the company, however, to prove by substantial evidence the illegal acts allegedly committed by Rosalinda Olangar, who is a shop steward but not a union officer, we find her dismissal without a valid cause. WHEREFORE, premises considered, judgment is hereby rendered AFFIRMING with MODIFICATION the challenged decision and resolution of the Court of Appeals in CA-G.R. SP No. 60516, as follows: 1. The collective bargaining award of DOLE Secretary Bienvenido E. Laguesma, contained in his order dated May 31, 2000, is fully AFFIRMED; 2. The dismissal of REYVILOSA TRINIDAD, union 2nd VicePresident, is likewise AFFIRMED; 3. The dismissal of ELOISA FIGURA, Assistant Secretary; JERRY JAICTEN, Press Relations Officer; and ROWELL FRIAS, Board Member, is declared VALID and for a just cause; and 4. The dismissal of ROSALINDA OLANGAR is declared illegal. The CA award is SUSTAINED in her case. G.R. No. 172642 June 13, 2012

Nelsons widow, Merridy Jane, thereafter claimed for death benefits through the grievance procedure of the Collective Bargaining Agreement (CBA) between AMOSUP and GCI. However, on January 29, 2001, the grievance procedure was "declared deadlocked" as petitioners refused to grant the benefits sought by the widow. On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board in General Santos City against GCI for death and medical benefits and damages. On March 8, 2001, Joven Mar, Nelsons brother, received P20,000.00 from [respondents] pursuant to article 20(A)2 of the CBA and signed a "Certification" acknowledging receipt of the amount and releasing AMOSUP from further liability. Merridy Jane contended that she is entitled to the aggregate sum of Ninety Thousand Dollars ($90,000.00) pursuant to [A]rticle 20 (A)1 of the CBA x xx Merridy Jane averred that the P20,000.00 already received by Joven Mar should be considered advance payment of the total claim of US$90,000.[00]. [Herein respondents], on the other hand, asserted that the NLRC had no jurisdiction over the action on account of the absence of employer-employee relationship between GCI and Nelson at the time of the latters death. Nelson also had no claims against petitioners for sick leave allowance/medical benefit by reason of the completion of his contract with GCI. They further alleged that private respondent is not entitled to death benefits because petitioners are only liable for such "in case of death of the seafarer during the term of his contract pursuant to the POEA contract" and the cause of his death is not work-related. Petitioners admitted liability only with respect to article 20(A)2 [of the CBA]. x x However, as petitioners stressed, the same was already discharged. The Labor Arbiter ruled in favor of private respondent. It took cognizance of the case by virtue of Article 217 (a), paragraph 6 of the Labor Code and the existence of a reasonable causal connection between the employer-employee relationship and the claim asserted. It ordered the petitioner to pay P4,621,300.00, the equivalent of US$90,000.00 less P20,000.00, at the time of judgment x x x The Labor Arbiter also ruled that the proximate cause of Nelsons death was not work-related. On appeal, [the NLRC] affirmed the Labor Arbiters decision as to the grant of death benefits under the CBA but reversed the latters ruling as to the proximate cause of Nelsons death.3 Herein respondents then filed a special civil action for certiorari with the CA contending that the NLRC committed grave abuse of discretion in affirming the jurisdiction of the NLRC over the case; in ruling that a different provision of the CBA covers the death claim; in reversing the findings of the Labor Arbiter that the cause of death is not work-related; and, in setting aside the release and quitclaim executed by the attorney-in-fact and not considering the P20,000.00 already received by Merridy Jane through her attorney-in-fact. On July 11, 2005, the CA promulgated its assailed Decision, the dispositive portion of which reads as follows: WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the case is REFERRED to the National Conciliation and Mediation Board for the designation of the Voluntary Arbitrator or the constitution of a panel of Voluntary Arbitrators for the appropriate resolution of the issue on the matter of the applicable CBA provision. SO ORDERED.4 The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically involves the interpretation and application of the provisions in the subject CBA. As such, jurisdiction belongs to the voluntary arbitrator and not the labor arbiter. Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of April 18, 2006. Hence, the instant petition raising the sole issue of whether or not the CA committed error in ruling that the Labor Arbiter has no jurisdiction over the case. Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, vests jurisdiction on the appropriate branches of the NLRC to entertain disputes regarding the interpretation of a collective bargaining agreement involving migrant or overseas Filipino workers. Petitioner argues that the abovementioned Section amended Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary arbitrators over interpretation or implementation of collective bargaining agreements and interpretation or enforcement of company personnel policies. The pertinent provisions of Section 10 of R.A. 8042 provide as follows:

ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P. DULAY, Petitioner, vs. ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC., Respondents. Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision 1 and Resolution2 dated July 11, 2005 and April 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 76489. The factual and procedural antecedents of the case, as summarized by the CA, are as follows: Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent] General Charterers Inc. (GCI), a subsidiary of co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as an ordinary seaman and later as bosun on a contractual basis. From September 3, 1999 up to July 19, 2000, Nelson was detailed in petitioners vessel, the MV Kickapoo Belle. On August 13, 2000, or 25 days after the completion of his employment contract, Nelson died due to acute renal failure secondary to septicemia. At the time of his death, Nelson was a bona fide member of the Associated Marine Officers and Seamans Union of the Philippines (AMOSUP), GCIs collective bargaining agent.

SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90)

calendar days after filing of the complaint, the claims arising out of an employeremployee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. Article 217(c) of the Labor Code, on the other hand, states that: (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. On their part, respondents insist that in the present case, Article 217, paragraph (c) as well as Article 261 of the Labor Code remain to be the governing provisions of law with respect to unresolved grievances arising from the interpretation and implementation of collective bargaining agreements. Under these provisions of law, jurisdiction remains with voluntary arbitrators. Article 261 of the Labor Code reads, thus: ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. The petition is without merit. It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a careful reading of this special law would readily show that there is no specific provision thereunder which provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042, which is cited by petitioner, simply speaks, in general, of "claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages." On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or implementation of collective bargaining agreements. Stated differently, the instant case involves a situation where the special statute (R.A. 8042) refers to a subject in general, which the general statute (Labor Code) treats in particular. 5 In the present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. The Court agrees with the CA in holding that this issue clearly involves the interpretation or implementation of the said CBA. Thus, the specific or special provisions of the Labor Code govern. In any case, the Court agrees with petitioner's contention that the CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between respondent GCI and AMOSUP, the union to which petitioner belongs, provides as follows: The Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration. The Company and the Union further agree that they will use their best endeavor to ensure that any dispute will be discussed, resolved and settled amicably by the parties hereof within ninety (90) days from the date of filing of the dispute or conflict and in case of failure to settle thereof any of the parties retain their freedom to take appropriate action.6 (Emphasis supplied) From the foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntary arbitration any dispute or conflict in the interpretation or application of the provisions of their CBA. It is settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that procedure should be strictly observed.7 It may not be amiss to point out that the abovequoted provisions of the CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that "[f]or OFWs with collective bargaining agreements, the case shall be submitted for voluntary

arbitration in accordance with Articles 261 and 262 of the Labor Code." The Court notes that the said Omnibus Rules and Regulations were promulgated by the Department of Labor and Employment (DOLE) and the Department of Foreign Affairs (DFA) and that these departments were mandated to consult with the Senate Committee on Labor and Employment and the House of Representatives Committee on Overseas Workers Affairs. In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels, promulgated by the Philippine Overseas Employment Administration (POEA), provides as follows: Section 29. Dispute Settlement Procedures. In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation Board of the Department of Labor and Employment. The Philippine Overseas Employment Administration (POEA) shall exercise original and exclusive jurisdiction to hear and decide disciplinary action on cases, which are administrative in character, involving or arising out of violations of recruitment laws, rules and regulations involving employers, principals, contracting partners and Filipino seafarers. (Emphasis supplied) It is clear from the above that the interpretation of the DOLE, in consultation with their counterparts in the respective committees of the Senate and the House of Representatives, as well as the DFA and the POEA is that with respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary arbitration. It is elementary that rules and regulations issued by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great respect.8 Such rules and regulations partake of the nature of a statute and are just as binding as if they have been written in the statute itself.9 In the instant case, the Court finds no cogent reason to depart from this rule.1wphi1 The above interpretation of the DOLE, DFA and POEA is also in consonance with the policy of the state to promote voluntary arbitration as a mode of settling labor disputes.10 No less than the Philippine Constitution provides, under the third paragraph, Section 3, Article XIII, thereof that "[t]he State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace." Consistent with this constitutional provision, Article 211 of the Labor Code provides the declared policy of the State "[t]o promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes." On the basis of the foregoing, the Court finds no error in the ruling of the CA that the voluntary arbitrator has jurisdiction over the instant case. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76489 dated July 11, 2005 and April 18, 2006, respectively, are AFFIRMED. G.R. No. 185665 February 8, 2012

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., Petitioner, vs. EASTERN TELECOMS EMPLOYEES UNION, Respondent. Before the Court is a petition for review on certiorari seeking modification of the June 25, 2008 Decision1 of the Court of Appeals (CA) and its December 12, 2008 Resolution,2 in CA-G.R. SP No. 91974, annulling the April 28, 2005 Resolution3 of the National Labor Relations Commission (NLRC) in NLRC-NCR-CC-00027304 entitled "In the Matter of the Labor Dispute in Eastern Telecommunications, Philippines, Inc." The Facts As synthesized by the NLRC, the facts of the case are as follows, viz: Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the business of providing telecommunications facilities, particularly leasing international date lines or circuits, regular landlines, internet and data services, employing approximately 400 employees.

Eastern Telecoms Employees Union (ETEU) is the certified exclusive bargaining agent of the companys rank and file employees with a strong f ollowing of 147 regular members. It has an existing collecti[ve] bargaining agreement with the company to expire in the year 2004 with a Side Agreement signed on September 3, 2001. In essence, the labor dispute was a spin-off of the companys plan to defer payment of the 2003 14th, 15th and 16th month bonuses sometime in April 2004. The companys main ground in postponing the payment of bonuses is due to allege continuing deterioration of companys financial position which started in the year 2000. However, ETPI while postponing payment of bonuses sometime in April 2004, such payment would also be subject to availability of funds. Invoking the Side Agreement of the existing Collective Bargaining Agreement for the period 2001-2004 between ETPI and ETEU which stated as follows: "4. Employment Related Bonuses. The Company confirms that the 14th, 15th and 16th month bonuses (other than 13th month pay) are granted." The union strongly opposed the deferment in payment of the bonuses by filing a preventive mediation complaint with the NCMB on July 3, 2003, the purpose of which complaint is to determine the date when the bonus should be paid. In the conference held at the NCMB, ETPI reiterated its stand that payment of the bonuses would only be made in April 2004 to which date of payment, the union agreed. Thus, considering the agreement forged between the parties, the said agreement was reduced to a Memorandum of Agreement. The union requested that the President of the company should be made a signatory to the agreement, however, the latter refused to sign. In addition to such a refusal, the company made a sudden turnaround in its position by declaring that they will no longer pay the bonuses until the issue is resolved through compulsory arbitration. The companys change in position was contained in a letter dated April 14, 2004 written to the union by Mr. Sonny Javier, Vice-President for Human Resources and Administration, stating that "the deferred release of bonuses had been superseded and voided due to the unions filing of the issue to the NCMB on July 18, 2003." He declared that "until the matter is resolved in a compulsory arbitration, the company cannot and will not pay any bonuses to any and all union members." Thus, on April 26, 2004, ETEU filed a Notice of Strike on the ground of unfair labor practice for failure of ETPI to pay the bonuses in gross violation of the economic provision of the existing CBA. On May 19, 2004, the Secretary of Labor and Employment, finding that the company is engaged in an industry considered vital to the economy and any work disruption thereat will adversely affect not only its operation but also that of the other business relying on its services, certified the labor dispute for compulsory arbitration pursuant to Article 263 (q) of the Labor Code as amended. Acting on the certified labor dispute, a hearing was called on July 16, 2004 wherein the parties have submitted that the issues for resolution are (1) unfair labor practice and (2) the grant of 14th, 15th and 16th month bonuses for 2003, and 14th month bonus for 2004. Thereafter, they were directed to submit their respective position papers and evidence in support thereof after which submission, they agreed to have the case considered submitted for decision.4 In its position paper,5 the Eastern Telecoms Employees Union (ETEU) claimed that Eastern Telecommunications Philippines, Inc. (ETPI) had consistently and voluntarily been giving out 14th month bonus during the month of April, and 15th and 16th month bonuses every December of each year (subject bonuses) to its employees from 1975 to 2002, even when it did not realize any net profits. ETEU posited that by reason of its long and regular concession, the payment of these monetary benefits had ripened into a company practice which could no longer be unilaterally withdrawn by ETPI. ETEU added that this long-standing company practice had been expressly confirmed in the Side Agreements of the 1998-2001 and 2001-2004 Collective Bargaining Agreements (CBA) which provided for the continuous grant of these bonuses in no uncertain terms. ETEU theorized that the grant of the subject bonuses is not only a company practice but also a contractual obligation of ETPI to the union members. ETEU contended that the unjustified and malicious refusal of the company to pay the subject bonuses was a clear violation of the economic provision of the CBA and constitutes unfair labor practice (ULP). According to ETEU, such refusal was nothing but a ploy to spite the union for bringing the matter of delay in the payment of the subject bonuses to the National Conciliation and Mediation Board (NCMB). It prayed for the award of moral and exemplary damages as well as attorneys fees for the unfair labor practice allegedly committed by the company. On the other hand, ETPI in its position paper, 6 questioned the authority of the NLRC to take cognizance of the case contending that it had no jurisdiction over the issue which merely involved the interpretation of the economic provision of the 2001-2004 CBA Side Agreement. Nonetheless, it maintained that the complaint for nonpayment of 14th, 15th and 16th month bonuses for 2003 and 14th month bonus for 2004 was bereft of any legal and factual basis. It averred that the subject bonuses were not part of the legally demandable wage and the grant thereof to its employees was an act of pure gratuity and generosity on its part, involving the exercise of management prerogative and always dependent on the financial performance and realization of profits. It posited that it resorted to the discontinuance of payment of the bonuses due to the unabated huge losses that the

company had continuously experienced. It claimed that it had been suffering serious business losses since 2000 and to require the company to pay the subject bonuses during its dire financial straits would in effect penalize it for its past generosity. It alleged that the non-payment of the subject bonuses was neither flagrant nor malicious and, hence, would not amount to unfair labor practice. Further, ETPI argued that the bonus provision in the 2001-2004 CBA Side Agreement was a mere affirmation that the distribution of bonuses was discretionary to the company, premised and conditioned on the success of the business and availability of cash. It submitted that said bonus provision partook of the nature of a "one-time" grant which the employees may demand only during the year when the Side Agreement was executed and was never intended to cover the entire term of the CBA. Finally, ETPI emphasized that even if it had an unconditional obligation to grant bonuses to its employees, the drastic decline in its financial condition had already legally released it therefrom pursuant to Article 1267 of the Civil Code. On April 28, 2005, the NLRC issued its Resolution dismissing ETEUs complaint and held that ETPI could not be forced to pay the union members the 14th, 15th and 16th month bonuses for the year 2003 and the 14th month bonus for the year 2004 inasmuch as the payment of these additional benefits was basically a management prerogative, being an act of generosity and munificence on the part of the company and contingent upon the realization of profits. The NLRC pronounced that ETPI may not be obliged to pay these extra compensations in view of the substantial decline in its financial condition. Likewise, the NLRC found that ETPI was not guilty of the ULP charge elaborating that no sufficient and substantial evidence was adduced to attribute malice to the company for its refusal to pay the subject bonuses. The dispositive portion of the resolution reads: WHEREFORE, premises considered, the instant complaint is hereby DISMISSED for lack of merit. SO ORDERED.7 Respondent ETEU moved for reconsideration but the motion was denied by the NLRC in its Resolution dated August 31, 2005. Aggrieved, ETEU filed a petition for certiorari8 before the CA ascribing grave abuse of discretion on the NLRC for disregarding its evidence which allegedly would prove that the subject bonuses were part of the union members wages, salaries or compensations. In addition, ETEU asserted that the NLRC committed grave abuse of discretion when it ruled that ETPI is not contractually bound to give said bonuses to the union members. In its assailed June 25, 2008 Decision, the CA declared that the Side Agreements of the 1998 and 2001 CBA created a contractual obligation on ETPI to confer the subject bonuses to its employees without qualification or condition. It also found that the grant of said bonuses has already ripened into a company practice and their denial would amount to diminution of the employees benefits. It held that ETPI could not seek refuge under Article 1267 of the Civil Code because this provision would apply only when the difficulty in fulfilling the contractual obligation was manifestly beyond the contemplation of the parties, which was not the case therein. The CA, however, sustained the NLRC finding that the allegation of ULP was devoid of merit. The dispositive portion of the questioned decision reads: WHEREFORE, premises considered, the instant petition is GRANTED and the resolution of the National Labor Relations Commission dated April 28, 2005 is hereby ANNULLED and SET ASIDE. Respondent Eastern Telecommunications Philippines, Inc. is ordered to pay the members of petitioner their 14th, 15th and 16th month bonuses for the year 2003 and 14th month for the year 2004. The complaint for unfair labor practice against said respondent is DISMISSED. SO ORDERED.9 ISSUES Dissatisfied, ETPI now comes to this Court via Rule 45, raising the following errors allegedly committed by the CA, to wit: I. THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT ANNULLED AND SET ASIDE THE R E S O L U T I O NS OF THE NLRC DISREGARDING THE WELL SETTLED RULE THAT A WRIT OF CERTIORARI (UNDER RULE 65) ISSUES ONLY FOR CORRECTION OF ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION. II. THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT DISREGARDED THE RULE THAT FINDINGS OF FACTS OF QUASI-JUDICIAL BODIES ARE ACCORDED FINALITY IF THEY ARE SUPPORTED BY SUBSTANTIAL EVIDENCE CONSIDERING THAT THE CONCLUSIONS OF THE NLRC WERE BASED ON SUBSTANTIAL AND OVERWHELMING EVIDENCE AND UNDISPUTED FACTS.

III. IT WAS A GRAVE ERROR OF LAW FOR THE COURT OF APPEALS TO CONSIDER THAT THE BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES IS NOT DEPENDENT ON THE REALIZATION OF PROFITS. IV. THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN IT DISREGARDED THE UNDISPUTED FACT THAT EASTERN COMMUNICATIONS IS SUFFERING FROM TREMENDOUS FINANCIAL LOSSES, AND ORDERED EASTERN COMMUNICATIONS TO GRANT THE BONUSES REGARDLESS OF THE FINANCIAL DISTRESS OF EASTERN COMMUNICATIONS. V. THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN IT ARRIVED AT THE CONCLUSION THAT THE GRANT OF BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES HAS RIPENED INTO A COMPANY PRACTICE.10 A careful perusal of the voluminous pleadings filed by the parties leads the Court to conclude that this case revolves around the following core issues: 1. Whether or not petitioner ETPI is liable to pay 14th, 15th and 16th month bonuses for the year 2003 and 14th month bonus for the year 2004 to the members of respondent union; and 2. Whether or not the CA erred in not dismissing outright ETEUs petition for certiorari. ETPI insists that it is under no legal compulsion to pay 14th, 15th and 16th month bonuses for the year 2003 and 14th month bonus for the year 2004 contending that they are not part of the demandable wage or salary and that their grant is conditional based on successful business performance and the availability of company profits from which to source the same. To thwart ETEUs moneta ry claims, it insists that the distribution of the subject bonuses falls well within the companys prerogative, being an act of pure gratuity and generosity on its part. Thus, it can withhold the grant thereof especially since it is currently plagued with economic difficulties and financial losses. It alleges that the companys fiscal situation greatly declined due to tremendous and extraordinary losses it sustained beginning the year 2000. It claims that it cannot be compelled to act liberally and confer upon its employees additional benefits over and above those mandated by law when it cannot afford to do so. It posits that so long as the giving of bonuses will result in the financial ruin of an already distressed company, the employer cannot be forced to grant the same. ETPI further avers that the act of giving the subject bonuses did not ripen into a company practice arguing that it has always been a contingent one dependent on the realization of profits and, hence, the workers are not entitled to bonuses if the company does not make profits for a given year. It asseverates that the 1998 and 2001 CBA Side Agreements did not contractually afford ETEU a vested property right to a perennial payment of the bonuses. It opines that the bonus provision in the Side Agreement allows the giving of benefits only at the time of its execution. For this reason, it cannot be said that the grant has ripened into a company practice. In addition, it argues that even if such traditional company practice exists, the CA should have applied Article 1267 of the Civil Code which releases the obligor from the performance of an obligation when it has become so difficult to fulfill the same. It is the petitioners stance that the CA should have dismissed outright the respondent unions petition for certiorari alleging that no question of jurisdiction whatsoever was raised therein but, instead, what was being sought was a judicial re-evaluation of the adequacy or inadequacy of the evidence on record. It claims that the CA erred in disregarding the findings of the NLRC which were based on substantial and overwhelming evidence as well as on undisputed facts. ETPI added that the CA court should have refrained from tackling issues of fact and, instead, limited itself on issues of jurisdiction and grave abuse of jurisdiction amounting to lack or excess of it. The Courts Ruling As a general rule, in petitions for review under Rule 45, the Court, not being a trier of facts, does not normally embark on a re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court. The rule, however, admits of several exceptions, one of which is when the findings of the appellate court are contrary to those of the trial court or the lower administrative body, as the case may be.11 Considering the incongruent factual conclusions of the CA and the NLRC, this Court finds Itself obliged to resolve it. The pivotal question determinative of this controversy is whether the members of ETEU are entitled to the payment of 14th, 15th and 16th month bonuses for the year 2003 and 14th month bonus for year 2004.

After an assiduous assessment of the record, the Court finds no merit in the petition. From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right. 12 The grant of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employees basic salaries or wages.13 A bonus, however, becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the employee.14 Particularly instructive is the ruling of the Court in Metro Transit Organization, Inc. v. National Labor Relations Commission,15 where it was written: Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. The consequential question that needs to be settled, therefore, is whether the subject bonuses are demandable or not. Stated differently, can these bonuses be considered part of the wage, salary or compensation making them enforceable obligations? The Court believes so. In the case at bench, it is indubitable that ETPI and ETEU agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side Agreement,16 as well as in the 2001-2004 CBA Side Agreement,17 which was signed on September 3, 2001. The provision, which was similarly worded, states: Employment-Related Bonuses The Company confirms that the 14th, 15th and 16th month bonuses (other than the 13th month pay) are granted. A reading of the above provision reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification. The wording of the provision does not allow any other interpretation. There were no conditions specified in the CBA Side Agreements for the grant of the benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by the company. Terse and clear, the said provision does not state that the subject bonuses shall be made to depend on the ETPIs financial standing or that their payment was contingent upon the realization of profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the employees. In fine, the payment of these bonuses was not related to the profitability of business operations. The records are also bereft of any showing that the ETPI made it clear before or during the execution of the Side Agreements that the bonuses shall be subject to any condition. Indeed, if ETPI and ETEU intended that the subject bonuses would be dependent on the company earnings, such intention should have been expressly declared in the Side Agreements or the bonus provision should have been deleted altogether. In the absence of any proof that ETPIs consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the Side Agreements voluntarily, that it had full knowledge of the contents thereof and that it was aware of its commitment under the contract. Verily, by virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month bonuses has become more than just an act of generosity on the part of ETPI but a contractual obligation it has undertaken. Moreover, the continuous conferment of bonuses by ETPI to the union members from 1998 to 2002 by virtue of the Side Agreements evidently negates its argument that the giving of the subject bonuses is a management prerogative. From the foregoing, ETPI cannot insist on business losses as a basis for disregarding its undertaking. It is manifestly clear that although it incurred business losses of P 149,068,063.00 in the year 2000, it continued to distribute 14th, 15th and 16th month bonuses for said year. Notwithstanding such huge losses, ETPI entered into the 2001-2004 CBA Side Agreement on September 3, 2001 whereby it contracted to grant the subject bonuses to ETEU in no uncertain terms. ETPI continued to sustain losses for the succeeding years of 2001 and 2002 in the amounts of P 348,783,013.00 and P 315,474,444.00, respectively. Still and all, this did not deter it from honoring the bonus provision in the Side Agreement as it continued to give the subject bonuses to each of the union members in 2001 and 2002 despite its alleged precarious financial condition. Parenthetically, it must be emphasized that ETPI even agreed to the payment of the 14th, 15th and 16th month bonuses for 2003 although it opted to defer the actual grant in April 2004. All given, business losses could not be cited as grounds for ETPI to repudiate its obligation under the 2001-2004 CBA Side Agreement. The Court finds no merit in ETPIs contention that the bonus provision confirms the grant of the subject bonuses only on a single instance because if this is so, the parties should have included such limitation in the agreement. Nowhere in the Side Agreement does it say that the subject bonuses shall be conferred once during the

year the Side Agreement was signed. The Court quotes with approval the observation of the CA in this regard: ETPI argues that assuming the bonus provision in the Side Agreement of the 20012004 CBA entitles the union members to the subject bonuses, it is merely in the nature of a "one-time" grant and not intended to cover the entire term of the CBA. The contention is untenable. The bonus provision in question is exactly the same as that contained in the Side Agreement of the 1998-2001 CBA and there is no denying that from 1998 to 2001, ETPI granted the subject bonuses for each of those years. Thus, ETPI may not now claim that the bonus provision in the Side Agreement of the 2001-2004 CBA is only a "one-time" grant.18 ETPI then argues that even if it is contractually bound to distribute the subject bonuses to ETEU members under the Side Agreements, its current financial difficulties should have released it from the obligatory force of said contract invoking Article 1267 of the Civil Code. Said provision declares: Article 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. The Court is not persuaded. The parties to the contract must be presumed to have assumed the risks of unfavorable developments. It is, therefore, only in absolutely exceptional changes of circumstances that equity demands assistance for the debtor. 19 In the case at bench, the Court determines that ETPIs claimed depressed financial sta te will not release it from the binding effect of the 2001-2004 CBA Side Agreement. ETPI appears to be well aware of its deteriorating financial condition when it entered into the 2001-2004 CBA Side Agreement with ETEU and obliged itself to pay bonuses to the members of ETEU. Considering that ETPI had been continuously suffering huge losses from 2000 to 2002, its business losses in the year 2003 were not exactly unforeseen or unexpected. Consequently, it cannot be said that the difficulty in complying with its obligation under the Side Agreement was "manifestly beyond the contemplation of the parties." Besides, as held in Central Bank of the Philippines v. Court of Appeals, 20 mere pecuniary inability to fulfill an engagement does not discharge a contractual obligation. Contracts, once perfected, are binding between the contracting parties. Obligations arising therefrom have the force of law and should be complied with in good faith. ETPI cannot renege from the obligation it has freely assumed when it signed the 20012004 CBA Side Agreement. Granting arguendo that the CBA Side Agreement does not contractually bind petitioner ETPI to give the subject bonuses, nevertheless, the Court finds that its act of granting the same has become an established company practice such that it has virtually become part of the employees salary or wage. A bonus may be granted on equitable consideration when the giving of such bonus has been the companys long and regular practice. In Philippine Appliance Corporation v. Court of Appeals,21 it was pronounced: To be considered a "regular practice," however, the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. The records show that ETPI, aside from complying with the regular 13th month bonus, has been further giving its employees 14th month bonus every April as well as 15th and 16th month bonuses every December of the year, without fail, from 1975 to 2002 or for 27 years whether it earned profits or not. The considerable length of time ETPI has been giving the special grants to its employees indicates a unilateral and voluntary act on its part to continue giving said benefits knowing that such act was not required by law. Accordingly, a company practice in favor of the employees has been established and the payments made by ETPI pursuant thereto ripened into benefits enjoyed by the employees.1wphi1 The giving of the subject bonuses cannot be peremptorily withdrawn by ETPI without violating Article 100 of the Labor Code: Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.22 Interestingly, ETPI never presented countervailing evidence to refute ETEUs claim that the company has been continuously paying bonuses since 1975 up to 2002 regardless of its financial state. Its failure to controvert the allegation, when it had the opportunity and resources to do so, works in favor of ETEU. Time and again, it has been held that should doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.23

WHEREFORE, the petition is DENIED. The June 25, 2008 Decision of the Court of Appeals and its December 12, 2008 Resolution are AFFIRMED. G.R. No. 127598 August 1, 2000

MANILA ELECTRIC COMPANY, petitioner, vs. HON. SECRETARY OF LABOR LEONARDO QUISUMBING and MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents. On February 22, 2000, this Court promulgated a Resolution with the following decretal portion: WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision is MODIFIED as follows: (1) the arbitral award shall retroact from December 1, 1995 to November 30, 1997; and (2) the award of wage is increased from the original amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 1995 and 1996. This Resolution is subject to the monetary advances granted by petitioner to its rankand-file employees during the pendency of this case assuming such advances had actually been distributed to them. The assailed Decision is AFFIRMED in all other respects. SO ORDERED. Petitioner Manila Electric Company filed with this Court, on March 17, 2000, a "Motion for Partial Modification (Re: Resolution Dated 22 February 2000)" anchored on the following grounds: I With due respect, this Honorable Courts ruling on the retroactivity issue: (a) fails to account for previous rulings of the Court on the same issue; (b) fails to indicate the reasons for reversing the original ruling in this case on the retroactivity issue; and (c) is internally inconsistent. II With due respect, the Honorable Courts ruling on the retroactivity issue does not take into account the huge cost that this award imposes on petitioner, estimated at no less than P800 Million. In the assailed Resolution, it was held: Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary (of Labor and Employment) had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact. In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the day immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties. On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual agreement of the parties but by intervention of the government. Despite the silence of the law, the Court rules herein that CBA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the Secretarys determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall control. Petitioner specifically assails the foregoing portion of the Resolution as being logically flawed, arguing, first, that while it alludes to the Secretarys discretionary powers only in the absence of a CBA, Article 253-A of the Labor Code always presupposes the existence of a prior or subsisting CBA; hence the exercise by the Secretary of his discretionary powers will never come to pass. Second, petitioner claims that the Resolution contravenes the jurisprudential rule laid down in the cases of Union of Filipro Employees v. NLRC,1 Pier 8 Arrastre and Stevedoring Services v. Roldan-Confesor2 and St. Luke s Medical Center v. Torres.3 Third, petitioner contends that this Court erred in holding that the effectivity of CBA provisions are automatically retroactive. Petitioner invokes, rather, this Courts ruling in the Decision dated January 27, 1999, which was modified in the assailed Resolution, that in the absence of an agreement between the parties, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award; it operates and may be executed only prospectively unless there are legal justifications for its retroactive application. Fourth, petitioner assigns as error this Courts interpretation of certain acts of petitioner as consent to the retroactive application of the arbitral award. Fifth, petitioner contends that the Resolution is internally flawed because when it held that the award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA, the reckoning date should have been June 1, 1996, not December 1, 1995, which is the last day of the three-year lifetime of the economic provisions of the CBA. Anent the second ground, petitioner alleges that the retroactive application of the arbitral award will cost it no less than P800 Million. Thus, petitioner prays that the two-year term of the CBA be fixed from December 28, 1996 to December 27, 1998. Petitioner also seeks this Courts declaration that the award of P2,000.00 be paid to petitioners rank-and-file employees during this two-year period. In the alternative, petitioner prays that the award of P2,000.00 be made to retroact to June 1, 1996 as the effectivity date of the CBA. Private respondent MEWA filed its Comment on May 19, 2000, contending that the Motion for Partial Modification was unauthorized inasmuch as Mr. Manuel M.

Lopez, President of petitioner corporation, has categorically stated in a memorandum to the rank-and-file employees that management will comply with this Courts ruling and will not file any motion for reconsideration; and that the assailed Resolution should be modified to conform to the St. Lukes ruling, to the effect that, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, he is deemed vested with plenary and discretionary powers to determine the effectivity thereof. This Court has re-examined the assailed portion of the Resolution in this case vis-vis the rulings cited by petitioner. Invariably, these cases involve Articles 253-A in relation to Article 263 (g)4 of the Labor Code. Article 253-A is hereunder reproduced for ready reference: ART. 253-A. Terms of a collective bargaining agreement. --- Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code.5 The parties respective positions are both well supported by jurisprudence. For its part, petitioner invokes the ruling in Union of Filipro Employees6 , wherein this Court upheld the NLRCs act of giving prospective effect to the CBA, and argues that the two-year arbitral award in the case at bar should likewise be applied prospectively, counted from December 28, 1996 to December 27, 1998. Petitioner maintains that there is nothing in Article 253-A of the Labor Code which states that arbitral awards or renewals of a collective bargaining agreement shall always have retroactive effect. The Filipro case was applied more recently in Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-Confesor7 thus: In Union of Filipro Employees v. NLRC, 192 SCRA 414 (1990), this Court interpreted the above law as follows: "In light of the foregoing, this Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the assailed resolution. It is clear and explicit from Article 253-A that any agreement on such other provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. If the agreement was entered into outside the six (6) month period, then the parties shall agree on the duration of the retroactivity thereof. "The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the expiry date of the past CBA. Based on the provision of Section 253A, its retroactivity should be agreed upon by the parties. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by existing laws." In the case of Lopez Sugar Corporation v. Federation of Free Workers, 189 SCRA 179 (1991), this Court reiterated the rule that although a CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered into. It is the duty of both parties to the CBA to keep the status quo, and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day freedom period and/or until a new agreement is reached by the parties (National Congress of Unions in the Sugar Industry of the Philippines v. Ferrer-Calleja, 205 SCRA 478 [1992]). Applied to the case at bench, the legal effects of the immediate past CBA between petitioner and private respondent terminated, and the effectivity of the new CBA began, only on March 4, 1993, when public respondent resolved their dispute.8 On the other hand, respondent MEWA invokes the ruling in St. Lukes Medical Center, Inc. v. Torres,9 which held that the Secretary of Labor has plenary and discretionary powers to determine the effectivity of arbitral awards. 10 Thus, respondent maintains that the arbitral award in this case should be made effective from December 1, 1995 to November 30, 1997. The ruling in the St. Lukes case was restated in the 1998 case of Manila Central Line Corporation v. Manila Central Line Free Workers Union-National Federation of Labor, et al.,11 where it was held that: Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their mutual agreement. The CBA in this case, on the other hand, is part of an arbitral award. As such, it may be made retroactive to the date of expiration of the previous agreement. As held in St. Lukes Medical Center, Inc. v. Torres: Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A cannot be properly applied to herein case. As correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing petitioners Motion for Reconsideration

Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by and between the parties, and not arbitral awards . . . (p. 818 Rollo). Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof (223 SCRA 779, 792-793 [1993]; reiterated in Philippine Airlines, Inc. v. Confessor 231 SCRA 41 [1994]). Indeed, petitioner has not shown that the question of effectivity was not included in the general agreement of the parties to submit their dispute for arbitration. To the contrary, as the order of the labor arbiter states, this question was among those submitted for arbitration by the parties: As regards the "Effectivity and Duration" clause, the company proposes that the collective bargaining agreement shall take effect only upon its signing and shall remain in full force and effect for a period of five years. The union proposes that the agreement shall take effect retroactive to March 15, 1989, the expiration date of the old CBA. And after an evaluation of the parties respective contention and argument thereof, it is believed that that of the union is fair and reasonable. It is the observation of this Arbitrator that in almost subsequent CBAs, the effectivity of the renegotiated CBA, usually and most often is made effective retroactive to the date when the immediately preceding CBA expires so as to give a semblance of continuity. Hence, for this particular case, it is believed that there is nothing wrong adopting the stand of the union, that is that this CBA be made retroactive effective March 15, 1989.12 Parenthetically, the Decision rendered in the case at bar on January 27, 199913 ordered that the CBA should be effective for a term of two years counted from December 28, 1996 (the date of the Secretary of Labors disputed Order on the parties motion for reconsideration) up to December 27, 1998.14 That is to say, the arbitral award was given prospective effect. Upon a reconsideration of the Decision, this Court issued the assailed Resolution which ruled that where an arbitral award granted beyond six months after the expiration of the existing CBA, and there is no agreement between the parties as to the date of effectivity thereof, the arbitral award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA. In the dispositive portion, however, the period to which the award shall retroact was inadvertently stated as beginning on December 1, 1995 up to November 30, 1997. In resolving the motions for reconsideration in this case, this Court took into account the fact that petitioner belongs to an industry imbued with public interest. As such, this Court can not ignore the enormous cost that petitioner will have to bear as a consequence of the full retroaction of the arbitral award to the date of expiry of the CBA, and the inevitable effect that it would have on the national economy. On the other hand, under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law. 15 Balancing these two contrasting interests, this Court turned to the dictates of fairness and equitable justice and thus arrived at a formula that would address the concerns of both sides. Hence, this Court held that the arbitral award in this case be made to retroact to the first day after the six-month period following the expiration of the last day of the CBA, i.e., from June 1, 1996 to May 31, 1998. This Court, therefore, maintains the foregoing rule in the assailed Resolution pro hac vice. It must be clarified, however, that consonant with this rule, the two-year effectivity period must start from June 1, 1996 up to May 31, 1998, not December 1, 1995 to November 30, 1997.1wphi1 During the interregnum between the expiration of the economic provisions of the CBA and the date of effectivity of the arbitral award, it is understood that the holdover principle shall govern, viz: "[I]t shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60day freedom period and/or until a new agreement is reached by the parties." Despite the lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed.16 Finally, this Court finds that petitioners prayer, that the award of Two Thousand Pesos shall be paid to rank-and-file employees during the two-year period, is welltaken. The award does not extend to supervisory employees of petitioner. WHEREFORE, the Motion for Partial Modification is GRANTED. The Resolution of February 22, 2000 is PARTIALLY MODIFIED as follows: (a) the arbitral award shall retroact to the two-year period from June 1, 1996 to May 31, 1998; (b) the increased wage award of Two Thousand Pesos (P2,000.00) shall be paid to the rank-and-file employees during the said two-year period. This Resolution is subject to the monetary advances granted by petitioner to said employees during the pendency of this case, assuming such advances had actually been distributed to them. G.R. No. 154113 December 7, 2011

EDEN GLADYS ABARIA, ROMULO ALFORQUE, ELENA ALLA, EVELYN APOSTOL, AMELIA ARAGON, BEATRIZ ALBASTRO, GLORIA ARDULLES, GLENDA BANTILAN, VIRGILIE BORINAGA, ROLDAN CALDERON, ILDEBRANDO CUTA, ROMEO EMPUERTO, LANNIE FERNANDEZ, LUCINELL GABAYERON, JESUSA GERONA, JOSE GONZAGA, TEOFILO HINAMPAS, JOSEFINA IBUNA, MARLYN LABRA, MARIA CARMENCITA LAO, ERA CANEN, RODNEY REX LERIAS, ERNIE MANLIGAS, JOHANNE DEL MAR, RUBY ORIMACO, CONSTANCIO PAGADOR, MARVELOUS PANAL, NOLAN PANAL, LILLAN PETALLAR, GERNA PATIGDAS, MELODIA PAULIN, SHIRLEY ROSE REYES, JOSEFINA REYES, OSCAR DE LOS SANTOS, SOLOMON DE LOS SANTOS, RAMON TAGNIPIS, BERNADETTE TIBAY, RONALD TUMULAK, LEONCIO VALLINAS, EDELBERTO VILLA and the NAGKAHIUSANG MAMUMUO SA METRO CEBU COMMUNITY HOSPITAL, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, METRO CEBU COMMUNITY HOSPITAL, INC., ITS BOARD OF TRUSTEES, REV. GREGORIO IYOY, SHIELA BUOT, REV. LORENZO GENOTIVA, RUBEN CARABAN, RUBEN ESTOYE, LILIA SAURO, REV. ELIZER BERTOLDO, RIZALINA VILLAGANTE, DRA. LUCIA FLORENDO, CONCEPCION VILLEGAS, REV. OLIVER CANEN, DRA. CYD RAGAS, REV. MIKE CAMBA, AVEDNIGO VALIENTE, RIZALINO TAGANAS, CIRIACO PONGASI, ISIAS WAGAS, REV. ESTER GELOAGAN, REV. LEON MANIWAN, CRESENTE BAOAS, WINEFREDA BARLOSO, REV. RUEL MARIGA AND THE UNITED CHURCH OF CHRIST IN THE PHILIPPINES, REV. HILARIO GOMEZ, REV. ELMER BOLOCON, THE NATIONAL FEDERATION OF LABOR AND ARMAND ALFORQUE, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 187778 PERLA NAVA, DANIELA YOSORES, AGUSTIN ALFORNON, AILEEN CATACUTAN, ROLANDO REDILOSA, CORNELIO MARIBOJO, VIRGENCITA CASAS, CRISANTA GENEGABOAS, EMILIO LAO, RICO GASCON, ALBINA BAEZ, PEDRO CABATINGAN, PROCOMIO SALUPAN, ELIZABETH RAMON, DIOSCORO GABUNADA, ROY MALAZARTE, FELICIANITA MALAZARTE, NORBERTA CACA, MILAGROS CASTILLO, EDNA ALBO, BERNABE LUMAPGUID, CELIA SABAS, SILVERIO LAO, DARIO LABRADOR, ERNESTO CANEN, JR., ELSA BUCAO, HANNAH BONGCARAS, NEMA BELOCURA, PEPITO LLAGAS, GUILLERMA REMOCALDO, ROGELIO DABATOS, ROBERTO JAYMA, RAYMUNDO DELATADO, MERLYN NODADO, NOEL HORTELANO, HERMELO DELA TORRE, LOURDES OLARTE, DANILO ZAMORA, LUZ CABASE, CATALINA ALSADO, RUTH BANZON AND THE NAGKAHIUSANG MAMUMUO SA METRO CEBU COMMUNITY HOSPITAL, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), METRO CEBU COMMUNITY HOSPITAL, INC., BOARD OF TRUSTEES, REV. GREGORIO IYOY, SHIELA BUOT, REV. LORENZO GENOTIVA, RUBEN CABABAN, ROSENDO ESTOYE, LILIA SAURO, REV. ELIZER BERTOLDO, RIZALINA VILLAGANTE, DRA. LUCIA FLORENDO, CONCEPCION VILLEGAS, REV. OLIVER CANEN, DRA. CYD RAAGAS, REV. MIKE CAMBA, AVIDNIGO VALIENTE, RIZALINO TAGANAS, CIRIACO PONGASI, ISIAS WAGAS, REV. ESTER GELOAGAN, REV. LEON MANIWAN, CRESENTE BAOAS, WINIFREDA BARLOSO, REV. RUEL MARIGA, THE UNITED CHURCH OF CHRIST IN THE PHILIPPINES, REV. HILARIO GOMEZ, REV. ELMER BOLOCON, THE NATIONAL FEDERATION OF LABOR AND ARMANDO ALFORQUE, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 187861 METRO CEBU COMMUNITY HOSPITAL, presently known as Visayas Community Medical Center (VCMC), Petitioner, vs. PERLA NAVA, DANIELA YOSORES, AGUSTIN ALFORNON, AILEEN CATACUTAN, ROLANDO REDILOSA, CORNELIO MARIBOJO, VIRGENCITA CASAS, CRISANTA GENEGABOAS, EMILIO LAO, RICO GASCON, ALBINA BANEZ, PEDRO CABATINGAN, PROCOMIO SALUPAN, ELIZABETH RAMON, DIOSCORO GABUNADA, ROY MALAZARTE, FELICIANITA MALAZARTE, NORBERTA CACA, MILAGROS CASTILLO, EDNA ALBO, BERNABE LUMABGUID, CELIA SABAS, SILVERIO LAO, DARIO LABRADOR, ERNESTO CANEN, JR., ELSA BUCAO, HANNAH BONGCARAS, NEMA BELOCURA, PEPITO LLAGAS, GUILLERMA REMOCALDO, ROGELIO DABATOS, ROBERTO JAYMA, RAYMUNDO DELATADO, NOEL HORTELANO, HERMELO DE LA TORRE, LOURDES OLARTE, DANILO ZAMORA, LUZ CABASE, CATALINA ALSADO AND RUTH BANZON, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 196156 VISAYAS COMMUNITY MEDICAL CENTER (VCMC) formerly known as METRO CEBU COMMUNITY HOSPITAL (MCCH), Petitioner, vs.

ERMA YBALLE, NELIA ANGEL, ELEUTERIA CORTEZ and EVELYN ONG, Respondents. DECISION VILLARAMA, JR., J.: The consolidated petitions before us involve the legality of mass termination of hospital employees who participated in strike and picketing activities. The factual antecedents: Metro Cebu Community Hospital, Inc. (MCCHI), presently known as the Visayas Community Medical Center (VCMC), is a non-stock, non-profit corporation organized under the laws of the Republic of the Philippines. It operates the Metro Cebu Community Hospital (MCCH), a tertiary medical institution located at Osmea Boulevard, Cebu City. MCCH is owned by the United Church of Christ in the Philippines (UCCP) and Rev. Gregorio P. Iyoy is the Hospital Administrator. The National Federation of Labor (NFL) is the exclusive bargaining representative of the rank-and-file employees of MCCHI. Under the 1987 and 1991 Collective Bargaining Agreements (CBAs), the signatories were Ciriaco B. Pongasi, Sr. for MCCHI, and Atty. Armando M. Alforque (NFL Legal Counsel) and Paterno A. Lumapguid as President of NFL-MCCH Chapter. In the CBA effective from January 1994 until December 31, 1995, the signatories were Sheila E. Buot as Board of Trustees Chairman, Rev. Iyoy as MCCH Administrator and Atty. Fernando Yu as Legal Counsel of NFL, while Perla Nava, President of Nagkahiusang Mamumuo sa MCCH (NAMA-MCCH-NFL) signed the Proof of Posting.1 On December 6, 1995, Nava wrote Rev. Iyoy expressing the unions desire to renew the CBA, attaching to her letter a statement of proposals signed/endorsed by 153 union members. Nava subsequently requested that the following employees be allowed to avail of one-day union leave with pay on December 19, 1995: Celia Sabas, Jesusa Gerona, Albina Baez, Eddie Villa, Roy Malazarte, Ernesto Canen, Jr., Guillerma Remocaldo, Catalina Alsado, Evelyn Ong, Melodia Paulin, Sofia Bautista, Hannah Bongcaras, Ester Villarin, Iluminada Wenceslao and Perla Nava. However, MCCHI returned the CBA proposal for Nava to secure first the endorsement of the legal counsel of NFL as the official bargaining representative of MCCHI employees.2 Meanwhile, Atty. Alforque informed MCCHI that the proposed CBA submitted by Nava was never referred to NFL and that NFL has not authorized any other legal counsel or any person for collective bargaining negotiations. By January 1996, the collection of union fees (check-off) was temporarily suspended by MCCHI in view of the existing conflict between the federation and its local affiliate. Thereafter, MCCHI attempted to take over the room being used as union office but was prevented to do so by Nava and her group who protested these actions and insisted that management directly negotiate with them for a new CBA. MCCHI referred the matter to Atty. Alforque, NFLs Regional Director, and advised Nava that their group is not recognized by NFL.3 In his letter dated February 24, 1996 addressed to Nava, Ernesto Canen, Jr., Jesusa Gerona, Hannah Bongcaras, Emma Remocaldo, Catalina Alsado and Albina Baez, Atty. Alforque suspended their union membership for serious violation of the Constitution and By-Laws. Said letter states: During the last General Membership Meeting of the union on February 20, 1996, you openly declared that you recognized the officers of the KMU not those of the NFL, that you submit to the stuctures [sic] and authority of the KMU not of the NFL, and that you are loyal only to the KMU not to the NFL. Also, in the same meeting, you admitted having sent a proposal for a renewed collective bargaining agreement to the management without any consultation with the NFL. In fact, in your letter dated February 21, 1996 addressed to Rev. Gregorio Iyoy, the Administrator of the hospital, you categorically stated as follows: "We do not need any endorsement from NFL, more particularly from Atty. Armando Alforque to negotiate our CBA with MCCH." You did not only ignore the authority of the undersigned as Regional Director but you maliciously prevented and bluntly refused my request to join the union negotiating panel in the CBA negotiations. Your above flagrant actuations, made in the presence of the union membership, constitute the following offenses: 1. Willful violation of the Constitution and By-Laws of the Federation and the orders and decisions of duly constituted authorities of the same (Section 4 (b), Article III), namely: a) Defying the decision of the organization disaffiliating from the KMU; and b) Section 9 (b), Article IX which pertains to the powers and responsibilities of the Regional Director, particularly, to negotiate and sign collective bargaining agreement together with the local negotiating panel subject to prior ratification by the general membership;

2. Joining or assisting another labor organization or helping in the formation of a new labor organization that seeks or tends to defeat the purpose of the Federation (Section 4 (d), Article III) in relation to the National Executive Boards Resolution No. 8, September 26 -27, 1994, to wit: "Pursuant to the NEB Resolution disaffiliating from the KMU dated September 11, 1993, the NEB in session hereby declare that KMU is deemed an organization that seeks to defeat the objective of establishing independent and democratic unions and seeks to replace the Federation as exclusive representative of its members. Committing acts that tend to alienate the loyalty of the members to the Federation, subvert its duly constituted authorities, and divide the organization in any level with the objective of establishing a pro-KMU faction or independent union loyal to the KMU shall be subject to disciplinary action, suspension or expulsion from union membership, office or position in accordance with paragraph[s] d and f of Section 4, Article III, and paragraph h, Section 6, Article VI, paragraph d, Section 9, Article IX." You are, therefore, directed to submit written explanation on the above charges within five (5) days from receipt hereof. Failure on your part shall be considered a waiver of your right to be heard and the Federation will act accordingly. Considering the gravity of the charges against you, the critical nature of the undertaking to renew the collective bargaining agreement, and the serious threat you posed to the organization, you are hereby placed under temporary suspension from your office and membership in the union immediately upon receipt hereof pending investigation and final disposition of your case in accordance with the unions constitution and by-laws. For your guidance and compliance.4 On February 26, 1996, upon the request of Atty. Alforque, MCCHI granted oneday union leave with pay for 12 union members. 5 The next day, several union members led by Nava and her group launched a series of mass actions such as wearing black and red armbands/headbands, marching around the hospital premises and putting up placards, posters and streamers. Atty. Alforque immediately disowned the concerted activities being carried out by union members which are not sanctioned by NFL. MCCHI directed the union officers led by Nava to submit within 48 hours a written explanation why they should not be terminated for having engaged in illegal concerted activities amounting to strike, and placed them under immediate preventive suspension. Responding to this directive, Nava and her group denied there was a temporary stoppage of work, explaining that employees wore their armbands only as a sign of protest and reiterating their demand for MCCHI to comply with its duty to bargain collectively. Rev. Iyoy, having been informed that Nava and her group have also been suspended by NFL, directed said officers to appear before his office for investigation in connection with the illegal strike wherein they reportedly uttered slanderous and scurrilous words against the officers of the hospital, threatening other workers and forcing them to join the strike. Said union officers, however, invoked the grievance procedure provided in the CBA to settle the dispute between management and the union.6 On March 13 and 19, 1996, the Department of Labor and Employment (DOLE) Regional Office No. 7 issued certifications stating that there is nothing in their records which shows that NAMA-MCCH-NFL is a registered labor organization, and that said union submitted only a copy of its Charter Certificate on January 31, 1995.7 MCCHI then sent individual notices to all union members asking them to submit within 72 hours a written explanation why they should not be terminated for having supported the illegal concerted activities of NAMA-MCCH-NFL which has no legal personality as per DOLE records. In their collective response/statement dated March 18, 1996, it was explained that the picketing employees wore armbands to protest MCCHIs refusal to bargain; it was also contended that MCCHI cannot question the legal personality of the union which had actively assisted in CBA negotiations and implementation.8 On March 13, 1996, NAMA-MCCH-NFL filed a Notice of Strike but the same was deemed not filed for want of legal personality on the part of the filer. The National Conciliation and Mediation Board (NCMB) Region 7 office likewise denied their motion for reconsideration on March 25, 1996. Despite such rebuff, Nava and her group still conducted a strike vote on April 2, 1996 during which an overwhelming majority of union members approved the strike.9 Meanwhile, the scheduled investigations did not push through because the striking union members insisted on attending the same only as a group. MCCHI again sent notices informing them that their refusal to submit to investigation is deemed a waiver of their right to explain their side and management shall proceed to impose proper disciplinary action under the circumstances. On March 30, 1996, MCCHI sent termination letters to union leaders and other members who participated in the strike and picketing activities. On April 8, 1996, it also issued a cease-and-desist order to the rest of the striking employees stressing that the wildcat concerted activities spearheaded by the Nava group is illegal without a valid Notice of Strike and warning them that non-compliance will compel management to impose disciplinary actions against them. For their continued picketing activities despite the said warning, more than 100 striking employees were dismissed effective April 12 and 19, 1996. Unfazed, the striking union members held more mass actions. The means of ingress to and egress from the hospital were blocked so that vehicles carrying patients and employees were barred from entering the premises. Placards were placed at the hospitals entrance gate stating: "Please proceed to another hospital"

and "we are on protest." Employees and patients reported acts of intimidation and harassment perpetrated by union leaders and members. With the intensified atmosphere of violence and animosity within the hospital premises as a result of continued protest activities by union members, MCCHI suffered heavy losses due to low patient admission rates. The hospitals suppli ers also refused to make further deliveries on credit. With the volatile situation adversely affecting hospital operations and the condition of confined patients, MCCHI filed a petition for injunction in the NLRC (Cebu City) on July 9, 1996 (Injunction Case No. V-0006-96). A temporary restraining order (TRO) was issued on July 16, 1996. MCCHI presented 12 witnesses (hospital employees and patients), including a security guard who was stabbed by an identified sympathizer while in the company of Navas group. MCCHIs petition was granted and a permanent injunction was issued on September 18, 1996 enjoining the Nava group from committing illegal acts mentioned in Art. 264 of the Labor Code.10 On August 27, 1996, the City Government of Cebu ordered the demolition of the structures and obstructions put up by the picketing employees of MCCHI along the sidewalk, having determined the same as a public nuisance or nuisance per se.11 Thereafter, several complaints for illegal dismissal and unfair labor practice were filed by the terminated employees against MCCHI, Rev. Iyoy, UCCP and members of the Board of Trustees of MCCHI. On August 4, 1999, Executive Labor Arbiter Reynoso A. Belarmino rendered his decision12 dismissing the complaints for unfair labor practice in NLRC Case Nos. RAB-VII-02-0309-98, RAB-VII-02-0394-98 and RAB-VII-03-0596-98 filed by Nava and 90 other complainants. Executive Labor Arbiter Belarmino found no basis for the charge of unfair labor practice and declared the strike and picketing activities illegal having been conducted by NAMA-MCCH-NFL which is not a legitimate labor organization. The termination of union leaders Nava, Alsado, Baez, Bongcaras, Canen, Gerona and Remocaldo were upheld as valid but MCCHI was directed to grant separation pay equivalent to one-half month for every year of service, in the total amount of P3,085,897.40 for the 84 complainants.13 Complainants appealed to the Commission. On March 14, 2001, the NLRCs Fourth Division rendered its Decision,14 the dispositive portion of which reads: WHEREFORE, premises considered, the decision of the Executive Labor Arbiter dismissing the complaint for unfair labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring the dismissal of all the complainants in RAB Case No. 07-02-0394-98 and RAB Case No. 07-03-0596-98 valid and legal. Necessarily, the award of separation pay and attorneys fees are hereby Deleted. Resolution on RAB Case No. 07-02-0309-98 is hereby Deferred upon Joint Motion of the parties. SO ORDERED.15 In its Resolution dated July 2, 2001, the NLRC denied complainants motion for reconsideration.16 Complainants elevated the case to the Court of Appeals (CA) (Cebu Station) via a petition for certiorari, docketed as CA-G.R. SP No. 66540.17 In its Resolution dated November 14, 2001, the CAs E ighth Division dismissed the petition on the ground that out of 88 petitioners only 47 have signed the certification against forum shopping.18 Petitioners moved to reconsider the said dismissal arguing that the 47 signatories more than constitute the principal parties as the petition involves a matter of common concern to all the petitioning employees.19 By Resolution20 dated May 28, 2002, the CA reinstated the case only insofar as the 47 petitioners who signed the petition are concerned. Petitioners challenged the validity of the November 14, 2001 and May 28, 2002 resolutions before this Court in a petition for review on certiorari, docketed as G.R. No. 154113. Meanwhile, the NLRCs Fourth Division (Cebu City) rendered its Decision21 dated March 12, 2003 in RAB Case Nos. 07-02-0309-98 (NLRC Case No. V-00104299) pertaining to complainants Erma Yballe, Evelyn Ong, Nelia Angel and Eleuteria Cortez as follows: WHEREFORE, premises considered, the decision of the Executive Labor Arbiter dismissing the complaint for unfair labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring all complainants to have been validly dismissed. Necessarily, the award of separation pay and attorneys fees are hereby Deleted. SO ORDERED.22 The NLRC likewise denied the motion for reconsideration filed by complainants Yballe, et al. in its Resolution dated April 13, 2004.23 On October 17, 2008, the CA rendered its Decision 24 in CA-G.R. SP No. 66540, the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered AFFIRMING the Decision of the National Labor Relations Commission (NLRC) Fourth Division dated March 14, 2001 in NLRC Case No. V-001042-99, WITH MODIFICATIONS to the effect that (1) the petitioners, except the union officers, shall be awarded separation pay equivalent to one-half (1/2) month pay for every year of service, and (2) petitioner Cecilia Sabas shall be awarded overtime pay amounting to sixty-three (63) hours. SO ORDERED.25 Petitioners filed a motion for reconsideration while private respondents filed a motion for partial reconsideration questioning the award of separation pay. The former also invoked the decision of this Court in Bascon v. Court of Appeals, 26 while the latter argued for the application of the ruling in decision rendered by the CA (Cebu City) in Miculob v. NLRC, et al. (CA-G.R. SP No. 84538),27 both involving similar complaints filed by dismissed employees of MCCHI. By Resolution28 dated April 17, 2009, the CA denied both motions: WHEREFORE, the petitioners Motion for Reconsideration and the private respondent[s] Motion for Partial Reconsideration of the October 17, 2008 Decision are both DENIED for lack of merit. The Motions for Substitution of Counsel and Compromise Agreements submitted by petitioners Bernardito Lawas, Avelina Bangalao, Dailenda Hinampas and Daylinda Tigo are hereby approved. Consequently, said petitioners are ordered dropped from the list of petitioners and the case is deemed dismissed as to them. SO ORDERED.29 Complainants Yballe, et al. also challenged before the CA the March 12, 2003 Decision and April 13, 2004 Resolution of the NLRC in a petition for certiorari, docketed as CA-G.R. SP No. 84998 (Cebu City). By Decision30 dated November 7, 2008, the CA granted their petition, as follows: WHEREFORE, the challenged Decision of public respondent dated March 12, 2003 and its Resolution dated April 13, 2004 are hereby REVERSED AND SET ASIDE. Private respondent Metro Cebu Community Hospital is ordered to reinstate petitioners Erma Yballe, Eleuteria Cortes, Nelia Angel and Evelyn Ong without loss of seniority rights and other privileges; to pay them their full backwages inclusive of their allowances and other benefits computed from the time of their dismissal up to the time of their actual reinstatement. No pronouncement as to costs. SO ORDERED.31 Private respondents (MCCHI, et al.) moved to reconsider the above decision but the CA denied their motion on February 22, 2011. 32 Both petitioners and private respondents in CA-G.R. SP No. 66540 appealed to this Court. Private respondent MCCHI in CA-G.R. SP No. 84998, under its new name Visayas Community Medical Center (VCMC), filed a petition for certiorari in this Court. In G.R. No. 187778, petitioners Nava, et al. prayed that the CA decision be set aside and a new judgment be entered by this Court (1) declaring private respondents guilty of unfair labor practice and union busting; (2) directing private respondents to cease and desist from further committing unfair labor practices against the petitioners; (3) imposing upon MCCH the proposed CBA or, in the alternative, directing the hospital and its officers to bargain with the local union; (4) declaring private respondents guilty of unlawfully suspending and illegally dismissing the individual petitioners-employees; (5) directing private respondents to reinstate petitioners-employees to their former positions, or their equivalent, without loss of seniority rights with full backwages and benefits until reinstatement; and (6) ordering private respondents to pay the petitioners moral damages, exemplary damages, legal interests, and attorneys fees.33 On the other hand, petitioner MCCHI in G.R. No. 187861 prayed for the modification of the CA decision by deleting the award of separation pay and reinstating the March 14, 2001 decision of the NLRC. 34 In G.R. No. 196156, MCCHI/VCMC prayed for the annulment of the November 7, 2008 Decision and February 22, 2011 Resolution of the CA, for this Court to declare the dismissal of respondents Yballe, et al. as valid and legal and to reinstate the March 12, 2003 Decision and April 13, 2004 Resolution of the NLRC. G.R. No. 187861 was consolidated with G.R. Nos. 154113 and 187778 as they involve similar factual circumstances and identical or related issues. G.R. No. 196156 was later also consolidated with the aforesaid cases. The issues are: (1) whether the CA erred in dismissing the petition for certiorari (CA-G.R. SP No. 66540) with respect to the petitioners in G.R. No. 154113 for their failure to sign the certification against forum shopping; (2) whether MCCHI is guilty of unfair labor practice; (3) whether petitioning employees were illegally dismissed; and (4) if their termination was illegal, whether petitioning employees are entitled to separation pay, backwages, damages and attorneys fees.

Dropping of petitioners who did not sign the certification against forum shopping improper The Court has laid down the rule in Altres v. Empleo35 as culled from "jurisprudential pronouncements", that the certification against forum shopping must be signed by all the plaintiffs or petitioners in a case; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest and invoke a common cause of action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the Rule. In the case at bar, the signatures of 47 out of 88 petitioning employees in the certification against forum shopping constitute substantial compliance with the rule. There is no question that they shared a common interest and invoked a common cause of action when they filed suit before the Labor Arbiter and NLRC questioning the validity of their termination and charging MCCHI with unfair labor practice. Thus, when they appealed their case to the CA, they pursued the same as a collective body, raising only one argument in support of their cause of action, i.e., the illegal dismissal allegedly committed by MCCHI when union members resorted to strike and mass actions due to MCCHIs refusal to bargain with officers of the local chapter. There is sufficient basis, therefore, for the 47 signatories to the petition, to speak for and in behalf of their co-petitioners and to file the Petition for Certiorari in the appellate court. 36 Clearly, the CA erred in dropping as parties-petitioners those who did not sign the certification against forum shopping.lavvphil However, instead of remanding the case to the CA for it to resolve the petition with respect to the herein petitioners in G.R. No. 154113, and as prayed for, the Court shall consider them parties-petitioners in CA-G.R. SP No. 66540,which case has already been decided and now subject of appeal in G.R. No. 187778. MCCHI not guilty of unfair labor practice Art. 248 (g) of the Labor Code, as amended, makes it an unfair labor practice for an employer "[t]o violate the duty to bargain collectively" as prescribed by the Code. The applicable provision in this case is Art. 253 which provides: ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. NAMA-MCCH-NFL charged MCCHI with refusal to bargain collectively when the latter refused to meet and convene for purposes of collective bargaining, or at least give a counter-proposal to the proposed CBA the union had submitted and which was ratified by a majority of the union membership. MCCHI, on its part, deferred any negotiations until the local unions dispute with the national union federation (NFL) is resolved considering that the latter is the exclusive bargaining agent which represented the rank-and-file hospital employees in CBA negotiations since 1987. We rule for MCCHI. Records of the NCMB and DOLE Region 7 confirmed that NAMA-MCCH-NFL had not registered as a labor organization, having submitted only its charter certificate as an affiliate or local chapter of NFL. 37 Not being a legitimate labor organization, NAMA-MCCH-NFL is not entitled to those rights granted to a legitimate labor organization under Art. 242, specifically: (a) To act as the representative of its members for the purpose of collective bargaining; (b) To be certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining; Aside from the registration requirement, it is only the labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit which is the exclusive representative of the employees in such unit for the purpose of collective bargaining, as provided in Art. 255. 38 NAMA-MCCH-NFL is not the labor organization certified or designated by the majority of the rank-and-file hospital employees to represent them in the CBA negotiations but the NFL, as evidenced by CBAs concluded in 1987, 1991 and 1994. While it is true that a local union has the right to disaffiliate from the national federation, NAMA-MCCH-NFL has not done so as there was no any effort on its part to comply with the legal requisites for a valid disaffiliation during the "freedom period"39 or the last 60 days of the last year of the CBA, through a majority vote in a secret balloting in accordance with Art. 241 (d).40 Nava and her group simply demanded that MCCHI directly negotiate with the local union which has not even registered as one. To prove majority support of the employees, NAMA-MCCH-NFL presented the CBA proposal allegedly signed by 153 union members. However, the petition signed by said members showed that the signatories endorsed the proposed terms and conditions without stating that they were likewise voting for or designating the

NAMA-MCCH-NFL as their exclusive bargaining representative. In any case, NAMA-MCCH-NFL at the time of submission of said proposals was not a duly registered labor organization, hence it cannot legally represent MCCHIs rankand-file employees for purposes of collective bargaining. Hence, even assuming that NAMA-MCCH-NFL had validly disaffiliated from its mother union, NFL, it still did not possess the legal personality to enter into CBA negotiations. A local union which is not independently registered cannot, upon disaffiliation from the federation, exercise the rights and privileges granted by law to legitimate labor organizations; thus, it cannot file a petition for certification election.41 Besides, the NFL as the mother union has the right to investigate members of its local chapter under the federations Constitution and By-Laws, and if found guilty to expel such members.42 MCCHI therefore cannot be faulted for deferring action on the CBA proposal submitted by NAMA-MCCH-NFL in view of the union leaderships conflict with the national federation. We have held that the issue of disaffiliation is an intra-union dispute43 which must be resolved in a different forum in an action at the instance of either or both the federation and the local union or a rival labor organization, not the employer.44 Not being a legitimate labor organization nor the certified exclusive bargaining representative of MCCHIs rank-and-file employees, NAMA-MCCH-NFL cannot demand from MCCHI the right to bargain collectively in their behalf. 45 Hence, MCCHIs refusal to bargain then with NAMA-MCCH-NFL cannot be considered an unfair labor practice to justify the staging of the strike. 46 Strike and picketing activities conducted by union officers and members were illegal Art. 263 (b) of the Labor Code, as amended, provides: ART. 263. Strikes, picketing and lockouts. x x x (b) Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. However, no labor union may strike and no employer may declare a lockout on grounds involving inter-union and intra-union disputes. x x x x (Emphasis supplied.) As borne by the records, NAMA-MCCH-NFL was not a duly registered or an independently registered union at the time it filed the notice of strike on March 13, 1996 and when it conducted the strike vote on April 2, 1996. It could not then legally represent the union members. Consequently, the mandatory notice of strike and the conduct of the strike vote report were ineffective for having been filed and conducted by NAMA-MCCH-NFL which has no legal personality as a legitimate labor organization, in violation of Art. 263 (c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code.47 Art. 263 of the Labor Code provides: ART. 263. Strikes, picketing and lockouts. (a) x x x (c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Department at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting, where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union may take action immediately. (As amended by Executive Order No. 111, December 24, 1986.) (d) The notice must be in accordance with such implementing rules and regulations as the Department of Labor and Employment may promulgate. (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 Department 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 voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. (As amended by Batas Pambansa Bilang 130, August 21, 1981 and further amended by Executive Order No. 111, December 24, 1986.) (Emphasis supplied.) Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code reads: RULE CONCILIATION, STRIKES AND LOCKOUTS XXII

SEC. 6. Who may declare a strike or lockout. Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the establishment may declare a strike but only on grounds of unfair labor practice. (Emphasis supplied.) Furthermore, the strike was illegal due to the commission of the following prohibited activities48 : (1) violence, coercion, intimidation and harassment against non-participating employees; and (2) blocking of free ingress to and egress from the hospital, including preventing patients and their vehicles from entering the hospital and other employees from reporting to work, the putting up of placards with a statement advising incoming patients to proceed to another hospital because MCCHI employees are on strike/protest. As shown by photographs49 submitted by MCCHI, as well as the findings of the NCMB and Cebu City Government, the hospital premises and sidewalk within its vicinity were full of placards, streamers and makeshift structures that obstructed its use by the public who were likewise barraged by the noise coming from strikers using megaphones.50 On the other hand, the affidavits51 executed by several hospital employees and patients narrated in detail the incidents of harassment, intimidation, violence and coercion, some of these witnesses have positively identified the perpetrators. The prolonged work stoppage and picketing activities of the striking employees severely disrupted hospital operations that MCCHI suffered heavy financial losses. The findings of the Executive Labor Arbiter and NLRC, as sustained by the appellate court, clearly established that the striking union members created so much noise, disturbance and obstruction that the local government authorities eventually ordered their removal for being a public nuisance. This was followed by an injunction from the NCMB enjoining the union leaders from further blocking the free ingress to and egress from the hospital, and from committing threats, coercion and intimidation against non-striking employees and patients/vehicles desiring to enter for the purpose of seeking medical treatment/confinement. By then, the illegal strike had lasted for almost five months. Consequences of illegal strike to union officers and members Art. 264 (a) of the Labor Code, as amended, provides for the consequences of an illegal strike to the participating workers: x x x Any union officer who knowingly participates in illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. The above provision makes a distinction between workers and union officers who participate in an illegal strike: an ordinary striking worker cannot be terminated for mere participation in an illegal strike. There must be proof that he or she committed illegal acts during a strike. A union officer, on the other hand, may be terminated from work when he knowingly participates in an illegal strike, and like other workers, when he commits an illegal act during a strike. 52 Considering their persistence in holding picketing activities despite the declaration by the NCMB that their union was not duly registered as a legitimate labor organization and the letter from NFLs legal counsel informing that their acts constitute disloyalty to the national federation, and their filing of the notice of strike and conducting a strike vote notwithstanding that their union has no legal personality to negotiate with MCCHI for collective bargaining purposes, there is no question that NAMA-MCCH-NFL officers knowingly participated in the illegal strike. The CA therefore did not err in ruling that the termination of union officers Perla Nava, Catalina Alsado, Albina Baez, Hannah Bongcaras, Ernesto Canen, Jesusa Gerona and Guillerma Remocaldo was valid and justified. With respect to the dismissed union members, although MCCHI submitted photographs taken at the picket line, it did not individually name those striking employees and specify the illegal act committed by each of them. As to the affidavits executed by non-striking employees, they identified mostly union officers as the persons who blocked the hospital entrance, harassed hospital employees and patients whose vehicles were prevented from entering the premises. Only some of these witnesses actually named a few union members who committed similar acts of harassment and coercion. Consequently, we find no error committed by the CA in CA-G.R. SP No. 66540 when it modified the decision of the NLRC and ruled that the dismissal of union members who merely participated in the illegal strike was illegal. On the other hand, in CA-G.R. SP No. 84998, the CA did not err in ruling that the dismissal of Yballe, et al. was illegal; however, it also ordered their reinstatement with full back wages. Dismissed union members not entitled to backwages but should be awarded separation pay in lieu of reinstatement Since there is no clear proof that union members actually participated in the commission of illegal acts during the strike, they are not deemed to have lost their employment status as a consequence of a declaration of illegality of the strike. Petitioners in G.R. Nos. 154113 and 187778 assail the CA in not ordering their reinstatement with back wages. Invoking stare decisis, they cited the case of Bascon v. Court of Appeals53 decided by this Court in 2004 and which involved two former hospital employees who likewise sued MCCHI after the latter terminated their employment due to their participation in the same illegal strike led by NAMA-MCCH-NFL. In said case we ruled that petitioners Cole and Bascon

were illegally dismissed because MCCHI failed to prove that they committed illegal acts during the strike. We thus ordered the reinstatement of petitioners Bascon and Cole without loss of seniority rights and other privileges and payment of their back wages inclusive of allowances, and other benefits computed from the time they were dismissed up to the time of their actual reinstatement. Bascon was also the basis of the award of back wages in CA-G.R. SP No. 84998. Stare decisis et non quieta movere. Stand by the decision and disturb not what is settled. Under the doctrine of stare decisis, once a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same, 54 even though the parties may be different. It proceeds from the first principle of justice that, absent any powerful countervailing considerations, like cases ought to be decided alike. Thus, where the same questions relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.55 The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular case override the great benefits derived by our judicial system from the doctrine of stare decisis, the Court is justified in setting it aside.56 For the Court, as the highest court of the land, may be guided but is not controlled by precedent. Thus, the Court, especially with a new membership, is not obliged to follow blindly a particular decision that it determines, after re-examination, to call for a rectification.57 Although the Bascon case involved the very same illegal strike in MCCHI which led to the termination of herein petitioners, its clearly erroneous application of the law insofar only as the award of back wages warrants setting aside the doctrine. Indeed, the doctrine of stare decisis notwithstanding, the Court has abandoned or overruled precedents whenever it realized that the Court erred in the prior decisions. "Afterall, more important than anything else is that this Court should be right."58 In G & S Transport Corporation v. Infante,59 the Court explained the rationale for its recent rulings deleting back wages awarded to the dismissed workers if the strike was found to be illegal. Considering that they did not render work for the employer during the strike, they are entitled only to reinstatement. With respect to backwages, the principle of a "fair days wage for a fair days labor" remains as the basic factor in determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. While it was found that respondents expressed their intention to report back to work, the latter exception cannot apply in this case. In Philippine Marine Officers Guild v. Compaia Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar. Under the circumstances, respondents reinstatement without backwages suffices for the appropriate relief. If reinstatement is no longer possible, given the lapse of considerable time from the occurrence of the strike, the award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order. 60 (Emphasis supplied.) The CA decision in CA-G.R. SP No. 66540 ordering the payment of separation pay in lieu of reinstatement without back wages is thus in order, to conform to the policy of a fair days wage for a fair days labor. The amount of separation pay is increased to one month pay for every year of service, consistent with jurisprudence. Accordingly, the decision in CA-G.R. SP No. 84998 is modified by deleting the award of back wages and granting separation pay in lieu of reinstatement. It is to be noted that as early as April 8, 1996, union members who took part in the concerted activities have been warned by management that NAMA-MCCH-NFL is not a legitimate labor organization and its notice of strike was denied by the NCMB, and directed to desist from further participating in such illegal activities. Despite such warning, they continued with their picketing activities and held more mass actions after management sent them termination notices. The prolonged work stoppage seriously disrupted hospital operations, which could have eventually brought MCCHI into bankruptcy had the City Government of Cebu not issued a demolition order and the NLRC Region 7 not formally enjoined the prohibited picketing activities. Also, the illegal dismissal complaints subsequently filed by the terminated employees did not obliterate the fact that they did not suffer loss of earnings by reason of the employers unjustified acts, there being no unfair labor practice committed by MCCHI. Hence, fairness and justice dictate that back wages be denied the said employees who participated in the illegal concerted activities to the great detriment of the employer. Separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, like: (a) when reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of the situation; (b) reinstatement is inimical to the employers interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the workers continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee.61

Considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered from its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or otherwise incapacitated, separation pay without back wages is the appropriate relief. We note that during the pendency of the cases in this Court, some of the petitioners have entered into compromise agreements with MCCHI, all of which were duly approved by this Court. Thus, excluded from the herein monetary awards are the following petitioners whose compromise agreements have been approved by this Court and judgment having been entered therein: Gloria Arguilles, Romulo Alforque, Gerna Patigdas-Barte, Daylinda Tigo Merlyn Nodado, Ramon Tagnipis, Bernabe Lumapguid, Romeo Empuerto, Marylen Labra, Milagros Castillo Bernadette Pontillas-Tibay, Constancio Pagador, Nolan Alvin Panal, Edilberto Villa, Roy Malazarte, Felecianita Malazarte and Noel Hortelano. Attorneys fees The dismissed employees having been compelled to litigate in order to seek redress and protect their rights, they are entitled to reasonable attorneys fees pursuant to Art. 2208 (2) of the Civil Code. In view of the attendant circumstances of this case, we hold that attorneys fees in the amount of P50,000.00 is reasonable and justified. However, the respondents in G.R. No. 196156 are not entitled to the same relief since they did not appeal from the CA decision which did not include the award of attorneys fees. WHEREFORE, the petition for review on certiorari in G.R. No. 187861 is DENIED while the petitions in G.R. Nos. 154113, 187778 and 196156 are PARTLY GRANTED. The Decision dated October 17, 2008 of the Court of Appeals in CA-G.R. SP No. 66540 is hereby AFFIRMED with MODIFICATIONS in that MCCHI is ordered to pay the petitioners in G.R. Nos. 154113 and 187778, except the petitioners who are union officers, separation pay equivalent to one month pay for every year of service, and reasonable attorneys fees in the amount of P50,000.00. The Decision dated November 7, 2008 is likewise AFFIRMED with MODIFICATIONS in that MCCHI is ordered to pay the private respondents in G.R. No. 196156 separation pay equivalent to one month pay for every year of service, and that the award of back wages is DELETED. The case is hereby remanded to the Executive Labor Arbiter for the recomputation of separation pay due to each of the petitioners union members in G.R. Nos. 154113, 187778 and 196156 except those who have executed compromise agreements approved by this Court. No pronouncement as to costs.