FIRST DIVISION

G & M PHILIPPINES, INC., G.R. No. 162308

Petitioner,

Present:
PANGANIBAN, C.J., Chairperson,
- versus - YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

ROMIL V. CUAMBOT,* Promulgated:

Respondent.
November 22, 2006
x--------------------------------------------------x
DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision[1] of the Court of Appeals
(CA) in CA-G.R. SP No. 64744, as well as the Resolution[2] dated February 20, 2004 denying the motion for reconsideration
thereof.
The antecedent facts are as follows:

On November 7, 1994, respondent Romil V. Cuambot applied for deployment to Saudi Arabia as a car body builder with
petitioner G & M Philippines, Inc., a duly licensed placement and recruitment agency. Respondents application was duly
processed and he later signed a two-year employment contract to work at the Al Waha Workshop
in Unaizah City, Gassim, Kingdom of Saudi Arabia. He left the country on January 5, 1995. However, respondent did not
finish his contract and returned to the Philippines barely six months later, on July 24, 1995. On July 26, 1995, he filed
before the National Labor Relations Commission (NLRC) a complaint for unpaid wages, withheld salaries, refund of plane
ticket and repatriation bond, later amended to include illegal dismissal, claim for the unexpired portion of his employment
contract, actual, exemplary and moral damages, and attorneys fees. The complaint was docketed as NLRC-NCR Case No.
00-07-05252-95.

Respondent narrated that he began working for Mohd Al Motairi,[3] the President and General Manager of the
Al Waha Workshop, on January 8, 1995. Along with his Filipino co-workers, he was subjected to inhuman and unbearable
working conditions, to wit:

1. [He] was required to work from 7:00 oclock in the morning to 10:00 oclock in the evening everyday, except Friday,
or six (6) hours overtime work daily from the usual eight (8) working hours per day.

2. [He] was never paid x x x his monthly basic salary of 1,200 [Riyals] including his overtime pay for the six (6) hours
overtime work he rendered every working day during his work in Saudi Arabia except for the amount of 100 [Riyals] given
every month for his meal allowance;

3. [He] was subjected to serious insult by respondent Muthiri everytime he asked or demanded for his salary; and,

4. [S]ome of complainants letters that were sent by his family were not given by respondent Muthiri and/or his staff
x x x.[4]

When respondent asked Motairi for his salary, he was told that since a huge sum had been paid to the agency for his
recruitment and deployment, he would only be paid after the said amount had already been recovered. He was also told
that his salary was only 800 Saudi Riyals (SAR) per month, in contrast to the SAR1200 that was promised him under the
contract. Motairi warned that he would be sent home the next time he demanded for his salary. Due to his familys
incessant letters asking for financial support, however, respondent mustered the courage to again demand for his salaries
during the second week of July 1996. True to his word, Motairi ordered him to pack up and leave. He was able to purchase
his plane ticket only through the contributions of his fellow Filipinos. Motairi even accompanied him to the airport when
he bought his plane ticket. In the meantime, his wife had been making inquiries about him.
To corroborate his claims, respondent submitted the following documents: an undated letter[5] he had written addressed
to the Philippine Labor Attach in Riyadh, with Arabic translation;[6] his wifes letter[7] dated June 28, 1995 addressed to
the Gulangco Monteverde Agency, Manila Head Office, asking for a favor to help [her] husband to come home as early as
possible; a fax message[8] dated July 17, 1995 from a representative of the Land Bank of the Philippines (LBP) to a
counterpart in Riyadh, asking for assistance to locate respondent;[9] and the

reply[10] from the Riyadh LBP representative requesting for contact numbers to facilitate communication with respondent.

Respondent further claimed that his employers actuations violated Articles 83 and 103 of the Labor Code. While he was
entitled to terminate his employment in accordance with Article 285 (b) due to the treatment he received, he did not
exercise this right. He was nevertheless illegally dismissed by his employer when he tried to collect the salaries due him.
Respondent further claimed that the reduction of his monthly salary from SAR1,200 to SAR800 and petitioners failure to
furnish him a copy of the employment contract before his departure amounted to prohibited practices under Article 34
(i) and (k) of the Labor Code.

Respondent prayed for the following relief:

WHEREFORE, premises considered, complainant most respectfully prays unto this Honorable Office that the instant
complaint be given due course and that a decision be rendered in his favor and against
respondents G & M (Phils.), Inc., Alwaha (sic) Workshop and/or Muhamd (sic) Muthiri, as follows:

(1) Ordering the respondents to pay, jointly and severally, complainant the unpaid salaries and overtime pay in the
amounts of P61,560.00 and P66,484.80, respectively, including interests, until the same will be fully paid;

(2) Ordering the respondents to pay, jointly and severally, complainant[s] salary for the unexpired portion of the
contract in the amount of P184,680.00, including interests, until the same will be fully paid;

(3) Ordering the respondents to pay, jointly and severally, complainant[s] actual expenses which he incurred in
applying for the job, including expenses in leaving for the job, including expenses in leaving for Saudi Arabia and plane
ticket, as well as repatriation bond and incidental expenses in going home to the Philippines in the amounts of P49,000.00
and P20,000.00, respectively, including interests, until the same will be fully paid;

(4) Ordering the respondents to pay, jointly and severally, complainant moral damages in the amount of P150,000.00
and exemplary damages in the amount of P150,000.00, including interests, until the same will be fully paid;

(5) Ordering the respondents to pay, jointly and severally, complainant for and as attorneys fees in the amount
of P68,172.48 or the amount equivalent to 10% of the total amount of the foregoing claims and damages that may be
awarded by the Honorable Office to the complainant.[11]

In its position paper, petitioner alleged that respondent was deployed for overseas work as car body builder for its Principal
Golden Wings Est. for General Services and Recruitment in Saudi Arabia for an employment period of 24 months, with a
monthly salary of US$400.00.[12] It insisted that respondent was religiously paid his salaries as they fell due. After working
for a little over seven months, respondent pleaded with his employer to be allowed to return home since there were
family problems he had to settle personally. Respondent even submitted a resignation letter[13] dated July 23, 1995.
To support its claim that respondent had been paid his salaries as they fell due, petitioner submitted in evidence copies
of seven payslip[14] authenticated by the Philippine Labor Attach in Riyadh, Saudi Arabia. Petitioner asserted that since
respondent only worked for a little over seven months and did not finish his contract, he should pay the cost of the plane
ticket. It pointed out that according to the standard employment contract, the employer would provide the employee
with a free plane ticket for the flight home only if the worker finishes his contract.

Respondent countered that his signatures in the purported payslips were forged. He denied having received his salaries
for the said period, except only for the SAR100 as monthly allowance. He pointed out that the authentication of the alleged
pay slips and resignation letter before the labor attach in Riyadh is immaterial, since the documents themselves were
falsified.

Respondent further claimed that petitioner required him to pay a P10,000.00 placement fee and that he had to
borrow P2,000.00 from a relative. He was then told that the amount would be considered as an advance payment and
that the balance would be deducted from his salary. He was not, however, given any receipt. He insisted that the
employment contract which he signed indicated that he was supposed to receive a monthly salary of SAR1,200 for working
eight hours a day, excluding overtime pay. He was repeatedly promised to be furnished a copy of the contract and was
later told that it would be given to his wife, Minda. However, she was also given the run-around and was told that the
contract had already been given to her husband.

To counter the allegation of forgery, petitioner claimed that there was a great possibility that respondent had changed his
signature while abroad so that he could file a complaint for illegal dismissal upon his return. The argument that the stroke
and handwriting on the payslip was written by one and the same person is mere conjecture, as respondent could have
requested someone, i.e., the cashier, to prepare the resignation letter for him. While it is the employer who fills up the
pay slip, respondent could have asked another employee to prepare the resignation letter, particularly if he (respondent)
did not know how to phrase it himself. Moreover, it could not be presumed that the payslip and resignation letter were
prepared by one and the same person, as respondent is not a handwriting expert. Petitioner further pointed out that
respondent has different signatures, not only in the pleadings submitted before the Labor Arbiter, but also in respondents
personal documents.
On January 30, 1997, Labor Arbiter Jose De Vera ruled in favor of respondent on the following ratiocination:

What convinced this Arbitration Branch about the unreliability of the complainants signature in the payslip is the close
semblance of the handwritings in the payslips and the handwritings in the purported handwritten resignation of the
complainant. It unmistakably appears to this Arbitration Branch that the payslips as well as the handwritten letter-
resignation were prepared by one and the same person. If it were true that the handwritten letter-resignation was
prepared by the complainant, it follows that he also prepared the payslips because the handwritings in both documents
are exactly the same and identical. But [this] is quite unbelievable that complainant himself as the payee prepared
the payslips with the corresponding entries therein in his own handwriting. Under the circumstances, the only logical
conclusion is that both the payslips and the handwritten letter-resignation were prepared and signed by one and the same
person definitely not the complainant.

With the foregoing findings and conclusions, this Arbitration Branch is of the well-considered view that complainant was
not paid his salaries from January 5, 1995 up to July 23, 1995 and that he was unjustifiably dismissed from his employment
when he repeatedly demanded for his unpaid salaries. Respondents are, therefore, liable to pay the complainant his
salaries from January 5, 1995 up to July 23, 1995 which amount to US$2,640.00 (US$400 x 6.6 mos). Further, respondents
are also liable to the complainant for the latters salaries for the unexpired portion of his contract up to the maximum of
three (3) months pursuant to Section 10 of RA 8042, which amount to US$1,200.00. Respondents must also refund
complainants plane fare for his return flight. And finally, being compelled to litigate his claims, it is but just and x x x that
complainant must be awarded attorneys fees at the rate of ten percent (10%) of the judgment award.

WHEREFORE, all the foregoing premises considered, judgment is hereby rendered ordering the respondents to pay
complainant the aggregate sum of US$3,840.00 or its equivalent in Philippine Currency at the exchange rate prevailing at
the time of payment, and to refund complainants plane fare for his return flight. Further, respondents are ordered to pay
complainant attorneys fees at the rate of Ten percent (10%) of the foregoing judgment award.[15]

Petitioner appealed the Decision of the Labor Arbiter to the NLRC, alleging that the Labor Arbiter, not being a handwriting
expert, committed grave abuse of discretion amounting to lack of jurisdiction in finding for respondent. In its
Decision[16] dated December 9, 1997, the NLRC upheld this contention and remanded the case to the Arbitration Branch
of origin for referral to the government agency concerned for calligraphy examination of the questioned documents.[17]

The case was then re-raffled to Labor Arbiter Enrico Angelo Portillo. On September 11, 1998, the parties agreed to a
resetting to enable petitioner to secure the original copies of documents from its foreign principal. However, on December
9, 1998, the parties agreed to submit the case for resolution based on the pleadings and on the evidence on record.

This time, the complaint was dismissed for lack of merit. According to Labor Arbiter Portillo, aside from respondents bare
allegations, he failed to substantiate his claim of poor working conditions and long hours of employment. The fact that he
executed a handwritten resignation letter is enough evidence of the fact that he voluntarily resigned from work.
Moreover, respondent failed to submit any evidence to refute the pay slips duly signed and authenticated by the labor
attach in Saudi Arabia, inasmuch as their probative value cannot be impugned by mere self-serving allegations. The Labor
Arbiter concluded that as between the oral allegations of workers that they were not paid monetary benefits and the
documentary evidence presented by employer, the latter should prevail. [18]

Respondent appealed the decision before the NLRC, alleging that the Labor Arbiter failed to consider the genuineness of
the signature which appears in the purported resignation letter dated July 23, 1995, as well as those that appear in the
seven pay slips. He insisted that these documents should have been endorsed to the National Bureau of Investigation
Questioned Documents Division or the Philippine National Police Crime Laboratory for calligraphy examination.

The NLRC dismissed the appeal for lack of merit in a Resolution[19] dated December 27, 2000. It held that the questioned
documents could not be endorsed to the agency concerned since mere photocopies had been submitted in evidence. The
records also revealed that petitioner had communicated to the foreign employer abroad, who sent the original copies,
but there was no response from respondent. It also stressed that during the December 9, 1998 hearing, the parties agreed
to submit the case for resolution on the basis of the pleadings and the evidence on record; if respondent had wanted to
have the documents endorsed to the NBI or the PNP, he should have insisted that the documents be examined by a
handwriting expert of the government. Thus, respondent was estopped from assailing the Labor Arbiters ruling.

Unsatisfied, respondent elevated the matter to the CA via petition for certiorari. He pointed out that he merely acceded
to the submission of the case for resolution due to the inordinate delays in the case. Moreover, the questioned documents
were within petitioners control, and it was petitioner that repeatedly failed to produce the original copies.

The CA reversed the ruling of the NLRC. According to the appellate court, a visual examination of the questioned signatures
would instantly reveal significant differences in the handwriting movement, stroke, and structure, as well as the quality of
lines of the signatures; Labor Arbiter Portillo committed patent error in examining the signatures, and it is the decision of
Labor Arbiter De Vera which must be upheld. The CA also pointed out the initial ruling of the NLRC (Second Division) dated
December 9, 1997 which set aside the earlier decision of Labor Arbiter De Vera included a special directive to the
Arbitration Branch of origin to endorse the questioned documents for calligraphy examination. However,
respondent Cuambot failed to produce original copies of the documents; hence, Labor Arbiter Portillo proceeded with the
case and ruled in favor of petitioner G.M.Phils. The dispositive portion of the CA ruling reads:

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED. Accordingly, the assailed Resolutions dated 27
December 2000 and 12 February 2001, respectively, of the NLRC Second Division are hereby SET ASIDE and the Decision
dated 20 February 1997 rendered by Labor Arbiter Jose De Vera is hereby REINSTATED.[20]

Petitioner filed a motion for reconsideration, which the CA denied for lack of merit in its Resolution[21] dated February 20,
2004.
Hence, the present petition, where petitioner claims that

THE COURT OF APPEALS GRAVELY ERRED ON A MATTER OF LAW IN HOLDING THAT LABOR ARBITER ENRICO PORTILLO
GRAVELY ABUSED HIS DISCRETION WHEN HE HELD THAT THE SIGNATURES APPEARING ON THE QUESTIONED DOCUMENTS
ARE THOSE OF THE PETITIONER.[22]

Petitioner points out that most of the signatures which Labor Arbiter De Vera used as standards for comparison with the
signatures appearing on the questioned documents were those in the pleadings filed by the respondent long after the
questioned documents had been supposedly signed by him. It claims that respondent affixed his signatures on the
pleadings in question and intentionally made them different from his true signature so that he could later on conveniently
impugn their authenticity. Petitioner claims that had Labor Arbiter De Vera taken pains in considering these circumstances,
he could have determined that respondent may have actually intentionally given a different name and slightly changed
his signature in his application, which name and signature he used when he signed the questioned letter of resignation
and payslips, only to conveniently disown the same when he came back to the country to file the present case.[23] Thus,
according to petitioner, the CA clearly committed a palpable error of law when it reversed the ruling of the NLRC, which
in turn affirmed Labor Arbiter Portillos decision.

For his part, respondent contends that petitioners arguments were already raised in the pleadings filed before Labor
Arbiter De Vera which had already been passed upon squarely in the Labor Arbiters Decision of January 30, 1997.

The determinative issues in this case are essentially factual in nature - (a) whether the signatures of respondent in
the payslips are mere forgeries, and (b) whether respondent executed the resignation letter. Generally, it is not our
function to review findings of fact. However, in case of a divergence in the findings and conclusions of the NLRC on the
one hand, and those of the Labor Arbiter and the CA on the other, the Court may examine the evidence presented by the
parties to determine whether or not the employee was illegally dismissed or voluntarily resigned from employment.[24] The
instant case thus falls within the exception.

We have carefully examined the evidence on record and find that the petition must fail.

In its Decision[25] dated December 9, 1997, the NLRC had ordered the case remanded to the Labor Arbiter precisely so that
the questioned documents purportedly signed/executed by respondent could be subjected to calligraphy examination by
experts. It is precisely where a judgment or ruling fails to make findings of fact that the case may be remanded to the
lower tribunal to enable it to determine them.[26] However, instead of referring the questioned documents to the NBI or
the PNP as mandated by the Commissions ruling, Labor Arbiter Portillo proceeded to rule in favor of petitioner, concluding
that respondents signatures were not forged, and as such, respondents separation from employment was purely
voluntary. In fine, then, the Labor Arbiter gravely abused his discretion when he ruled in favor of petitioner without abiding
by the Commissions directive.

We note, however, that a remand of the case at this juncture would only result in unnecessary delay, especially considering
that this case has been pending since 1995. Indeed, it is this Courts duty to settle, whenever possible, the entire
controversy in a single proceeding, leaving no root or branch to bear the seeds of future litigation.[27] Hence, the case shall
be fully resolved on its merits.

We find that petitioners failure to submit the original copies of the pay slips and the resignation letter raises doubts as to
the veracity of its claim that they were actually signed/penned by respondent. The failure of a party to produce the original
copy of the document which is in issue has been taken against such party, and has even been considered as a mere
bargaining chip, a dilatory tactic so that such party would be granted the opportunity to
adduce controverting evidence.[28] In fact, petitioner did not even present in evidence the original copy of the employment
contract, much less a machine copy, giving credence to respondents claim that he was not at all given a copy of the
employment contract after he signed it. What petitioner presented was a mere photocopy of the OCW Info Sheet[29] issued
by the Philippine Overseas Employment Administration as well as the Personal Data Sheet[30] which respondent filled up.
It bears stressing that the original copies of all these documents, including the employment contract, were in the
possession of petitioner, or, at the very least, petitioners principal.

Moreover, as correctly noted by the CA, the opinions of handwriting experts, although helpful in the examination of forged
documents because of the technical procedure involved in the analysis, are not binding upon the courts.[31] As such, resort
to these experts is not mandatory or indispensable to the examination or the comparison of handwriting. A finding of
forgery does not depend entirely on the testimonies of handwriting experts, because the judge must conduct an
independent examination of the questioned signature in order to arrive at a reasonable conclusion as to its
authenticity.[32] No less than Section 22, Rule 132 of the Rules of Court explicitly authorizes the court, by itself, to make a
comparison of the disputed handwriting with writings admitted or treated as genuine by the party against whom the
evidence is offered or proved to be genuine to the satisfaction of the judge. Indeed, the authenticity of signatures is not
a highly technical issue in the same sense that questions concerning, e.g., quantum physics or topology, or molecular
biology, would constitute matters of a highly technical nature. The opinion of a handwriting expert on the genuineness of
a questioned signature is certainly much less compelling upon a judge than an opinion rendered by a specialist on a highly
technical issue.[33]

Even a cursory perusal of the resignation letter[34] and the handwritten pay slips will readily show that they were written
by only one person. A mere layman will immediately notice that the strokes and letters in the documents are very similar,
if not identical, to one another. It is also quite apparent from a comparison of the signatures in the pay slips that they are
inconsistent, irregular, with uneven and faltering strokes.

We also find it unbelievable that after having waited for so long to be deployed to Saudi Arabia and with the hopes of
opportunity to earn a better living within his reach, respondent would just suddenly decide to abandon his work and go
home due to family problems. At the very least, respondent could have at least specified the reason or elaborated on the
details of such an urgent matter so as not to jeopardize future employment opportunities.

That respondent also filed the complaint immediately gives more credence to his claim that he was illegally dismissed. He
arrived in the Philippines on July 24, 1995, and immediately filed his complaint for illegal dismissal two days later, on July
26, 1995.

We are not impervious of petitioners claim that respondent could have asked another person to execute the resignation
letter for him. However, petitioner failed to present even an affidavit from a representative of its foreign principal in order
to support this allegation.

Indeed, the rule is that all doubts in the implementation and the interpretation of the Labor Code shall be resolved in
favor of labor,[35] in order to give effect to the policy of the State to afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and
employers, and to assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and
humane conditions of work.[36] We reiterate the following pronouncement in Nicario v. National Labor Relations
Commission:[37]

It is a well-settled doctrine, that if doubts exist between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between a laborer
and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should
be resolved in the formers favor. The policy is to extend the doctrine to a greater number of employees who can avail
of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and
protection of labor.
Moreover, one who pleads payment has the burden of proving it. The reason for the rule is that the pertinent personnel
files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service
incentive leave, and other claims of workers have been paid are not in the possession of the worker but in the custody
and absolute control of the employer. Thus, the burden of showing with legal certainty that the obligation has been
discharged with payment falls on the debtor, in accordance with the rule that one who pleads payment has the burden of
proving it.[38] Only when the debtor introduces evidence that the obligation has been extinguished does the burden shift
to the creditor, who is then under a duty of producing evidence to show why payment does not extinguish the
obligation.[39] In this case, petitioner was unable to present ample evidence to prove its claim that respondent had received
all his salaries and benefits in full.
IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED for lack of merit. The Decision of the Court of Appeals in CA-G.R.
SP No. 64744 is AFFIRMED. Costs against the petitioners.

SO ORDERED.
Republic of the Philippines
Supreme Court
Baguio City

SECOND DIVISION

LEYTE GEOTHERMAL POWER PROGRESSIVE G.R. No. 170351

EMPLOYEES UNIONALU TUCP,
Petitioner, Present:

CARPIO, J.,
- versus - Chairperson,
NACHURA,
PERALTA,
ABAD, and
PHILIPPINE NATIONAL OIL COMPANY ENERGY MENDOZA, JJ.
DEVELOPMENT CORPORATION,
Respondent. Promulgated:

March 30, 2011

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DECISION

NACHURA, J.:

Under review is the Decision[1] dated June 30, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 65760, which dismissed
the petition for certiorari filed by petitioner Leyte Geothermal Power Progressive Employees Union ALU―TUCP (petitioner
Union) to annul and set aside the decision[2] dated December 10, 1999 of the National Labor Relations Commission (NLRC)
in NLRC Certified Case No. V-02-99.

The facts, fairly summarized by the CA, follow.

[Respondent Philippine National Oil Corporation]-Energy Development Corporation [PNOC-EDC] is a government-owned

and controlled corporation engaged in exploration, development, utilization, generation and distribution of energy
resources like geothermal energy.

Petitioner is a legitimate labor organization, duly registered with the Department of Labor and Employment (DOLE)
Regional Office No. VIII, Tacloban City.

Among [respondents] geothermal projects is the Leyte Geothermal Power Project located at the Greater Tongonan
Geothermal Reservation in Leyte. The said Project is composed of the Tongonan 1 Geothermal Project (T1GP) and the
Leyte Geothermal Production Field Project (LGPF) which provide the power and electricity needed not only in the
provinces and cities of Central and Eastern Visayas (Region VII and VIII), but also in the island of Luzon as well. Thus, the
[respondent] hired and employed hundreds of employees on a contractual basis, whereby, their employment was only
good up to the completion or termination of the project and would automatically expire upon the completion of such
project.

Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects had become members of
petitioner. In view of that circumstance, the petitioner demands from the [respondent] for recognition of it as the
collective bargaining agent of said employees and for a CBA negotiation with it. However, the [respondent] did not heed
such demands of the petitioner. Sometime in 1998 when the project was about to be completed, the [respondent]
proceeded to serve Notices of Termination of Employment upon the employees who are members of the petitioner.

On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the [respondent] on the ground of
purported commission by the latter of unfair labor practice for refusal to bargain collectively, union busting and mass
termination. On the same day, the petitioner declared a strike and staged such strike.

To avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued the Order, dated
January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. Accordingly, all the striking workers
were directed to return to work within twelve (12) hours from receipt of the Order and for the [respondent] to accept
them back under the same terms and conditions of employment prior to the strike. Further, the parties were directed to
cease and desist from committing any act that would exacerbate the situation.

However, despite earnest efforts on the part of the Secretary of Labor and Employment to settle the dispute amicably,
the petitioner remained adamant and unreasonable in its position, causing the failure of the negotiation towards a
peaceful compromise. In effect, the petitioner did not abide by [the] assumption order issued by the Secretary of Labor.

Consequently, on January 15, 1999, the [respondent] filed a Complaint for Strike Illegality, Declaration of Loss of
Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the same time, filed a Petition for Cancellation of
Petitioners Certificate of Registration with DOLE, Regional Office No. VIII. The two cases were later on consolidated
pursuant to the New NLRC Rules of Procedure. The consolidated case was docketed as NLRC Certified Case No. V-02-99
(NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said certified case was indorsed to the NLRC 4th Division
in Cebu City on June 21, 1999 for the proper disposition thereof.[3]

In due course, the NLRC 4th Division rendered a decision in favor of respondent, to wit:

WHEREFORE, based on the foregoing premises, judgment is hereby rendered as follows:

1. Declaring the officers and members of [petitioner] Union as project employees;

2. Declaring the termination of their employment by reason of the completion of the project, or a phase or portion thereof,
to which they were assigned, as valid and legal;

3. Declaring the strike staged and conducted by [petitioner] Union through its officers and members on December 28,
1998 to January 6, 1999 as illegal for failure to comply with the mandatory requirements of the law on strike[;]

4. Declaring all the officers and members of the board of [petitioner] Union who instigated and spearheaded the illegal
strike to have lost their employment[;]

5. Dismissing the claim of [petitioner] Union against PNOC-EDC for unfair labor practice for lack of merit[;]

6. Dismissing both parties claims against each other for violation of the Assumption Order dated January 4, 1999 for lack
of factual basis[;]
7. Dismissing all other claims for lack of merit.[4]
Petitioner Union filed a motion for reconsideration of the NLRC decision, which was subsequently denied. Posthaste,
petitioner Union filed a petition for certiorari before the CA, alleging grave abuse of discretion in the decision of the NLRC.
As previously adverted to, the CA dismissed the petition for certiorari, thus:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the Petition. The assailed
Decision dated December 10, 1999 of the NLRC 4th Division in NLRC Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-
0190-98; RAB Case No. VIII-1-0019-99) and its Order dated March 30, 2001 are hereby AFFIRMED.

Costs against the Petitioner.[5]

Hence, this appeal by certiorari filed by petitioner Union, positing the following questions of law:
1. MAY THE HONORABLE COURT OF APPEALS SUSTAIN THE PROJECT CONTRACTS THAT ARE DESIGNED TO DENY AND
DEPRIVE THE EMPLOYEES THEIR RIGHT TO SECURITY OF TENURE BY MAKING IT APPEAR THAT THEY ARE MERE PROJECT
EMPLOYEES?

2. WHEN THERE ARE NO INTERVALS IN THE EMPLOYEES CONTRACT, SUCH THAT THE SO-CALLED UNDERTAKING
WAS CONTINUOUS, ARE THE EMPLOYEES PROPERLY TREATED AS PROJECT EMPLOYEES?

3. MAY THE HONORABLE COURT OF APPEALS IGNORE THE FIRMS OWN ESTIMATE OF JOB COMPLETION, PROVING THAT
THERE IS STILL 56.25% CIVIL/STRUCTURAL WORK TO BE ACCOMPLISHED, AND RULE THAT THE EMPLOYEES WERE
DISMISSED FOR COMPLETION [OF] THE PROJECT?

4. MAY A FIRM HIDE UNDER THE SPURIOUS CLOAK OF PROJECT COMPLETION TO DISMISS EN MASSE THE EMPLOYEES
WHO HAVE ORGANIZED AMONG THEMSELVES A LEGITIMATE LABOR ORGANIZATION TO PROTECT THEIR RIGHTS?

5. WHEN THERE IS NO STOPPAGE OF WORK, MAY A PROTEST ACTIVITY BE CONSIDERED AS A STRIKE CONTRARY TO ITS
CONCEPTUAL DEFINITION UNDER ARTICLE 212 (O) OF THE LABOR CODE OF THE PHILIPPINES?

6. WHEN THE DISMISSAL IS AIMED AT RIDDING THE COMPANY OF MEMBERS OF THE UNION, IS THIS UNION BUSTING?[6]

Stripped of rhetoric, the issues for our resolution are:

1. Whether the officers and members of petitioner Union are project employees of respondent; and
2. Whether the officers and members of petitioner Union engaged in an illegal strike.

On the first issue, petitioner Union contends that its officers and members performed activities that were usually
necessary and desirable to respondents usual business. In fact, petitioner Union reiterates that its officers and members
were assigned to the Construction Department of respondent as carpenters and masons, and to other jobs pursuant to
civil works, which are usually necessary and desirable to the department. Petitioner Union likewise points out that there
was no interval in the employment contract of its officers and members, who were all employees of respondent, which
lack of interval, for petitioner Union, manifests that the undertaking is usually necessary and desirable to the usual trade
or business of the employer.
We cannot subscribe to the view taken by petitioner Union.

The distinction between a regular and a project employment is provided in Article 280, paragraph 1, of the Labor Code:

ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or service
to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee
who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall continue while such actually
exists.[7]

The foregoing contemplates four (4) kinds of employees: (a) regular employees or those who have been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer; (b) project employees or those whose employment has been fixed for a specific project or undertaking[,] the
completion or termination of which has been determined at the time of the engagement of the
employee; (c) seasonal employees or those who work or perform services which are seasonal in nature, and the
employment is for the duration of the season;[8] and (d) casual employees or those who are not regular, project, or
seasonal employees. Jurisprudence has added a fifth kind a fixed-term employee.[9]

Article 280 of the Labor Code, as worded, establishes that the nature of the employment is determined by law, regardless
of any contract expressing otherwise. The supremacy of the law over the nomenclature of the contract and the stipulations
contained therein is to bring to life the policy enshrined in the Constitution to afford full protection to labor.[10] Thus, labor
contracts are placed on a higher plane than ordinary contracts; these are imbued with public interest and therefore subject
to the police power of the State.[11]

However, notwithstanding the foregoing iterations, project employment contracts which fix the employment for a specific
project or undertaking remain valid under the law:

x x x By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the
project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that
project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule,
unschooled. However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a
contract of employment. Project employment contracts are not lopsided agreements in favor of only one party thereto.
The employers interest is equally important as that of the employee[s] for theirs is the interest that propels economic
activity. While it may be true that it is the employer who drafts project employment contracts with its business interest
as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left
helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount.[12]
In the case at bar, the records reveal that the officers and the members of petitioner Union signed employment contracts
indicating the specific project or phase of work for which they were hired, with a fixed period of employment. The NLRC
correctly disposed of this issue:

A deeper examination also shows that [the individual members of petitioner Union] indeed signed and accepted the
[employment contracts] freely and voluntarily. No evidence was presented by [petitioner] Union to prove improper
pressure or undue influence when they entered, perfected and consummated [the employment] contracts. In fact, it was
clearly established in the course of the trial of this case, as explained by no less than the President of [petitioner] Union,
that the contracts of employment were read, comprehended, and voluntarily accepted by them. x x x.

xxxx

As clearly shown by [petitioner] Unions own admission, both parties had executed the contracts freely and voluntarily
without force, duress or acts tending to vitiate the worker[s] consent. Thus, we see no reason not to honor and give effect
to the terms and conditions stipulated therein. x x x.[13]
Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are supported by substantial evidence.

It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which are deemed to have
acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even
finality, and bind the Court when supported by substantial evidence.[14] Rule 133, Section 5 defines substantial evidence
as that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.

Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in labor cases.[15] We
may take cognizance of and resolve factual issues, only when the findings of fact and conclusions of law of the Labor
Arbiter or the NLRC are inconsistent with those of the CA.[16]

In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and the members of
petitioner Union were project employees. Nonetheless, petitioner Union insists that they were regular employees since
they performed work which was usually necessary or desirable to the usual business or trade of the Construction
Department of respondent.

The landmark case of ALU-TUCP v. NLRC[17] instructs on the two (2) categories of project employees:

It is evidently important to become clear about the meaning and scope of the term project in the present context. The
project for the carrying out of which project employees are hired would ordinarily have some relationship to the usual
business of the employer. Exceptionally, the project undertaking might not have an ordinary or normal relationship to the
usual business of the employer. In this latter case, the determination of the scope and parameters of the project becomes
fairly easy. x x x. From the viewpoint, however, of the legal characterization problem here presented to the Court, there
should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture
or the production of vegetables as project employees, as distinguished from ordinary or regular employees, so long as the
duration and scope of the project were determined or specified at the time of engagement of the project employees. For,
as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining
whether particular employees are properly characterized as project employees as distinguished from regular
employees, is whether or not the project employees were assigned to carry out a specific project or undertaking, the
duration (and scope) of which were specified at the time the employees were engaged for that project.

In the realm of business and industry, we note that project could refer to one or the other of at least two (2) distinguishable
types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business
of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first
type of project is a particular construction job or project of a construction company. A construction company ordinarily
carries out two or more [distinct] identifiable construction projects: e.g., a twenty-five-storey hotel in Makati; a residential
condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying
out of one of these separate projects, the scope and duration of which has been determined and made known to the
employees at the time of employment, are properly treated as project employees, and their services may be lawfully
terminated at completion of the project.

The term project could also refer to, secondly, a particular job or undertaking that is not within the regular business of the
corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and ends at determined or determinable times.[18]

Plainly, the litmus test to determine whether an individual is a project employee lies in setting a fixed period of
employment involving a specific undertaking which completion or termination has been determined at the time of the
particular employees engagement.
In this case, as previously adverted to, the officers and the members of petitioner Union were specifically hired as project
employees for respondents Leyte Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in
Leyte. Consequently, upon the completion of the project or substantial phase thereof, the officers and the members of
petitioner Union could be validly terminated.

Petitioner Union is adamant, however, that the lack of interval in the employment contracts of its officer and members
negates the latters status
as mere project employees. For petitioner Union, the lack of interval further drives home its point that its officers and
members are regular employees who performed work which was usually necessary or desirable to the usual business or
trade of respondent.

We are not persuaded.

Petitioner Unions members employment for more than a year does equate to their regular employment with respondent.
In this regard, Mercado, Sr. v. NLRC[19] illuminates:

The first paragraph [of Article 280 of the Labor Code] answers the question of who are regular employees. It states that,
regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in
necessary or desirable activities in the usual business or trade of the employer, except for project employees.

A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of the engagement of the employee, or where
the work or service to be performed is seasonal in nature and the employment is for the duration of the season, as in the
present case.

The second paragraph of Art. 280 demarcates as casual employees, all other employees who do not fall under the
definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those casual
employees who have rendered at least one year of service regardless of the fact that such service may be continuous or
broken.

Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the
Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit.

The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain
or limit the generality of the clause that it immediately follows. Thus, it has been held that a proviso is to be construed
with reference to the immediately preceding part of the provision to which it is attached, and not to the statute itself or
to other sections thereof. The only exception to this rule is where the clear legislative intent is to restrain or qualify not
only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself
as a whole.

Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual
employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers
to prevent so called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions.
The same instructions show that the proviso in the second paragraph of Art. 280 was not designed to stifle small-scale
businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial.
What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe,
to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable
only to the employees who are deemed casuals but not to the project employees nor the regular employees treated in
paragraph one of Art. 280.

Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their
employment legally ends upon completion of the project or the [end of the] season. The termination of their employment
cannot and should not constitute an illegal dismissal.
Considering our holding that the officers and the members of petitioner Union were project employees, its claim of union
busting is likewise dismissed.

On the second issue, petitioner Union contends that there was no stoppage of work; hence, they did not strike.
Euphemistically, petitioner Union avers that it only engaged in picketing,[20] and maintains that without any work
stoppage, [its officers and members] only engaged in xxx protest activity.

We are not convinced. Petitioner Union splits hairs.

To begin with, quite evident from the records is the undisputed fact that petitioner Union filed a Notice of Strike on
December 28, 1998 with the Department of Labor and Employment, grounded on respondents purported

unfair labor practices, i.e., refusal to bargain collectively, union busting and mass termination. On even date,
petitioner Union declared and staged a strike.

Second, then Secretary of Labor, Bienvenido E. Laguesma, intervened and issued a Return-to-Work Order[21] dated January
4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. The Order narrates the facts leading to the
labor dispute, to wit:

On 28 December 1998, [petitioner Union] filed a Notice of Strike against [respondent] citing unfair labor practices,
specifically: refusal to bargain collectively, union busting and mass termination as the grounds [therefor]. On the same
day, [petitioner] Union went on strike and took control over [respondents] facilities of its Leyte Geothermal Project.

Attempts by the National Conciliation and Mediation Board RBVIII to forge a mutually acceptable solution proved futile.

In the meantime, the strike continues with no settlement in sight placing in jeopardy the supply of much needed power
supply in the Luzon and Visayas grids.

xxxx

The on-going strike threatens the availability of continuous electricity to these areas which is critical to day-to-day life,
industry, commerce and trade. Without doubt, [respondents] operations [are] indispensable to the national interest and
falls (sic) within the purview of Article 263 (g) of the Labor Code, as amended, which warrants (sic) the intervention of this
Office.

Third, petitioner Union itself, in its pleadings, used the word strike.

Ultimately, petitioner Unions asseverations are belied by the factual findings of the NLRC, as affirmed by the CA:

The failure to comply with the mandatory requisites for the conduct of strike is both admitted and clearly shown on record.
Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off period was not observed and that the
7-day strike ban after the submission of the strike vote was not complied with since there was no strike vote taken.

xxxx

The factual issue of whether a notice of strike was timely filed by [petitioner] Union was resolved by the evidence on
record. The evidence revealed that [petitioner] Union struck even before it could file the required notice of strike. Once
again, this relied on [petitioner] Unions proof. [Petitioner] Union[s] witness said:

Atty. Sinsuat : You stated that you struck on 28 December 1998 is that correct?
Witness : Early in the morning of December 1998.
xxxx
Atty. Sinsuat : And you went there to conduct the strike did you not?

Witness : Our plan then was to strike at noon of December 28 and the strikers will be positioned at their respective
areas.[22]

Article 263 of the Labor Code enumerates the requisites for holding a strike:

Art. 263. Strikes, picketing, and lockouts. (a) x x x.

x 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 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.
(d) The notice must be in accordance with such implementing rules and regulations as the Department of Labor and
Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the Department to exert all efforts at mediation and conciliation
to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from
the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout.
(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 Department the results of the voting at least seven days before the intended
strike or lockout, subject to the cooling-off period herein provided.

In fine, petitioner Unions bare contention that it did not hold a strike cannot trump the factual findings of the NLRC that
petitioner Union indeed struck against respondent. In fact, and more importantly, petitioner Union failed to comply with
the requirements set by law prior to holding a strike.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 65760 is AFFIRMED. Costs
against petitioner Union.

SO ORDERED.
THIRD DIVISION
[G.R. No. 125340. September 17, 1998]
EMELITA NICARIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MANCAO SUPERMARKET INC., AND/OR
MANAGER, ANTONIO MANCAO, respondents.
DECISION
ROMERO, J.:
For resolution before this Court is a special civil action for certiorari under Ruled 65 of the Rules of Court which seeks to
set aside the resolution of the National Labor Relations Commission (Fifth Division, Cagayan de Oro City) dated December
21, 1995 in NLRC CA No. M-002047-94 entitled Emelita Nicario v. Mancao Supermarket Inc. and/or Manager which ruled
that petitioner, Emelita Nicario, is not entitled to overtime pay. Nor is private respondent, Antonio Mancao jointly and
severally liable with the respondent company for thirteenth month pay, service incentive leave pay, and rest day pay.[1]
Petitioner, Emelita Nicario, was employed with respondent company Mancao Supermarket, on June 6, 1986 as a salesgirl
and was later on promoted as sales supervisor. However, private respondent terminated her services on February 7, 1989.
A complaint for illegal dismissal with prayer for backwages, wage differential, service incentive leave pay, overtime pay,
13th month pay and unpaid wages was filed by petitioner before the National Labor Relations Commission, Sub-Regional
Arbitration Branch X in Butuan City.
On July 25, 1989, Labor Arbiter Amado M. Solamo dismissed the complaint for lack of merit. Petitioner appealed to the
National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City. In a resolution dated July 25, 1989, the
NLRC set aside the labor arbiters decision for lack of due process. It ruled that since petitioner assailed her supposed
signatures appearing on the payrolls presented by the company as a forgery, the labor arbiter should not have merely
depended on the xerox copies of the payrolls, as submitted in evidence by the private respondent but ordered a formal
hearing on the issue. Thus, the Commission ordered the case remanded to the arbitration branch for appropriate
proceedings.The case was assigned to Labor Arbiter Marissa Macaraig-Guillen.[2]
In a decision dated May 23, 1994, Labor Arbiter Macaraig-Guillen awarded petitioners claims for unpaid service incentive
leave pay, 13th month pay, overtime pay and rest day pay for the entire period of her employment, but dismissed her
claims for holiday premium pay and unpaid salaries from February 3 to 5, 1989. The dispositive portion of the decision
read as follows:
WHEREFORE, in view of the foregoing, judgment is rendered directing respondent Mancao Supermarket, Inc., and/or Mr.
Antonio Mancao to pay complainant Emelita Nicario the sum of forty thousand three hundred ninety pesos and fifteen
centavos (P40,393.15) representing unpaid services incentive leave pay, thirteenth month pay, overtime pay, and rest day
for the entire period of employment.
All other claims are dismissed for lack of merit.
SO ORDERED.[3]
Not satisfied with the decision, private respondent appealed to the NLRC, and in a resolution dated August 16, 1995,[4] the
Commission affirmed in toto Labor Arbiter Macaraig-Guillens decision. Private respondent then filed a motion for
reconsideration. In a resolution dated December 21, 1995, public respondent NLRC modified its earlier resolution by
deleting the award for overtime pay and ruling that private respondent Antonio Mancao is not jointly and severally liable
with Mancao Supermarket to pay petitioner the monetary award adjudged.
Petitioner now comes before this Court alleging grave abuse of discretion on the part of the public respondent NLRC in
ruling that (a) she is not entitled to overtime pay and (b) private respondent, Antonio Mancao cannot be held jointly and
severally liable with respondent supermarket as to the monetary award.
The Solicitor General, in a manifestation and motion in lieu of comment[5] stated that public respondent NLRC acted with
grave abuse of discretion in modifying its earlier resolution (dated August 16, 1995) and thus recommends that the
December 21, 1995 resolution be set aside, and its August 16, 1995 resolution be reinstated.
Public respondent NLRC, on the other hand, filed its own comment[6] praying for the dismissal of the petition and for the
December 21, 1995 resolution to be affirmed with finality.
The petition is partly impressed with merit.
In her claim for payment of overtime pay, petitioner alleged that during her period of employment, she worked twelve
(12) hours a day from 7:30 a.m. to 7:30 p.m., thus rendering overtime work for four hours each day. Labor Arbiter
Macaraig-Guillen, in her decision dated May 23, 1994, awarded overtime pay to petitioner by taking judicial notice of the
fact that all Mancao establishments open at 8:00 a.m. and close at 8:00 p.m.. Upon appeal, this particular finding was
affirmed by the Commission. However, when private respondent filed a motion for reconsideration from the resolution
dated August 16, 1995, the NLRC modified its earlier ruling and deleted the award for overtime pay. Public respondent
NLRC instead gave credence to the daily time records (DTRs) presented by respondent corporation showing that petitioner
throughout her employment from June 6, 1986 to February 1989, worked only for eight hours a day from 9:00 a.m. to
12:00 p.m. and 2:00 p.m. to 7:00 p.m., and did not render work on her rest days.
Public respondents reliance on the daily time records submitted by private respondent is misplaced. As aptly stated by
the Solicitor General in lieu of comment, the DTRs presented by respondent company are unreliable based on the
following observations:
a) the originals thereof were not presented in evidence; petitioners allegation of forgery should have prompted
respondent to submit the same for inspection; evidence wilfully suppressed would be adverse if produced (Sec. 3(e), Rule
131, Rules of Court)
xxx xxx xxx
e) they would make it appear that petitioner has a two-hour rest period from 12:00 to 2:00 p.m., this is highly unusual for
a store establishment because employees should attend to customers almost every minute as well as contrary to the
judicial notice that no noon break is observed.
f) petitioner never reported earlier or later than 9:00 a.m., likewise she never went home earlier or later than 8:00 pm; all
entries are suspiciously consistent.[7]
Labor Arbiter Macaraig-Guillen, in taking judicial cognizance of the fact that private respondent company opens twelve
(12) hours a day, the same number of hours worked by petitioner everyday, applied Rule 129, Section 2 of the Rules of
Court which provides that a court may take judicial notice of matters which are of public knowledge, or are capable of
unquestionable demonstration, or ought to be known because of their judicial functions. In awarding overtime pay to
petitioner, the labor arbiter ruled:
However, it is of judicial notice that all Mancao establishments open at eight a.m. and close at eight p.m. with no noon
break, so it is believable that employees rendered 4-1/2 hours of overtime everyday, 7 days a week.[8]
Generally, findings of facts of quasi-judicial agencies like the NLRC are accorded great respect and at times even finality if
supported by substantial evidence.[9] Substantial evidence is such amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. However in cases where there is a conflict between the factual findings
of the NLRC and the labor arbiter, a review of such factual findings is necessitated.[10]
While private respondent company submitted the daily time records of the petitioner to show that she rendered work for
only eight (8) hours a day, it did not refute nor seek to disprove the judicial notice taken by Labor Arbiter Macaraig-Guillen
that Mancao establishments, including the establishment where petitioner worked, opens twelve hours a day, opening at
8:00 a.m. and closing at 8:00 p.m.
This Court, in previously evaluating the evidentiary value of daily time records, especially those which show uniform
entries with regard to the hours of work rendered by an employee, has ruled that such unvarying recording of a daily time
record is improbable and contrary to human experience. It is impossible for an employee to arrive at the workplace and
leave at exactly the same time, day in day out. The uniformity and regularity of the entries are badges of untruthfulness
and as such indices of dubiety.[11] The observations made by the Solicitor General regarding the unreliability of the daily
time records would therefore seem more convincing. On the other hand, respondent company failed to present
substantial evidence, other than the disputed DTRs, to prove that petitioner indeed worked for only eight hours a day.
It is a well-settled doctrine, that if doubts exist between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between a laborer and
his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be
resolved in the formers favor.[12] The policy is to extend the doctrine to a greater number of employees who can avail of
the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection
of labor.[13] This rule should be applied in the case at bar, especially since the evidence presented by the private
respondent company is not convincing. Accordingly, we uphold the finding that petitioner rendered overtime work,
entitling her to overtime pay.
As to the liability of private respondent Antonio Mancao, petitioner contends that as manager of Mancao establishment,
he should be jointly and severally liable with respondent corporation as to the monetary award adjudged.
The general rule is that officers of a corporation are not personally liable for their official acts unless it is shown that they
have exceeded their authority. However, the legal fiction that a corporation has a personality separate and distinct from
stockholders and members may be disregarded if it is used as a means to perpetuate fraud or an illegal act or as a vehicle
for the evasion of an existing obligation, the circumvention of statutes, or to confuse legitimate issues.[14]
In this case, there is no showing that Antonio Mancao, as manager of respondent company, deliberately and maliciously
evaded the respondent's company financial obligation to the petitioner. Hence, there appearing to be no evidence on
record that Antonio Mancao acted maliciously or deliberately in the non-payment of benefits to petitioner, he cannot be
held jointly and severally liable with Mancao supermarket.
WHEREFORE, in view of the foregoing, the instant petition is hereby PARTIALLY GRANTED. Accordingly, the resolution of
the NLRC dated December 21, 1995 in NLRC NCR CA No. M-002047-94 is hereby MODIFIED by awarding petitioner, Emelita
Nicario her overtime pay and relieving private respondent, Antonio Mancao, of any liability as manager of Mancao
Supermarket and further holding Mancao Supermarket solely liable. No costs.
SO ORDERED.
SECOND DIVISION

January 25, 2016

G.R. No. 201595

ALLAN M. MENDOZA, Petitioner,

vs.
OFFICERS OF MANILA WATER EMPLOYEES UNION (MWEU), namely, EDUARDO B. BORELA, BUENAVENTURA
QUEBRAL, ELIZABETH COMETA, ALEJANDRO TORRES, AMORSOLO TIERRA, SOLEDAD YEBAN, LUIS RENDON, VIRGINIA
APILADO, TERESITA BOLO, ROGELIO BARBERO, JOSE CASAÑAS, ALFREDO MAGA, EMILIO FERNANDEZ, ROSITA BUENA
VENTURA, ALMENIO CANCINO, ADELA IMANA, MARIO MANCENIDO, WILFREDO MANDILAG, ROLANDO MANLAP AZ,
EFREN MONTEMAYOR, NELSON PAGULAYAN, CARLOS VILLA, RIC BRIONES, and CHITO BERNARDO, Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the April 24, 2012 Decision2 of the Court of Appeals (CA) which dismissed
the Petition for Certiorari3 in CA-G.R. SP No. 115639.

Factual Antecedents

Petitioner was a member of the Manila Water Employees Union (MWEU), a Department of Labor and Employment
(DOLE)-registered labor organization consisting of rank-and-file employees within Manila Water Company (MWC). The
respondents herein named – Eduardo B. Borela (Borela), Buenaventura Quebral (Quebral), Elizabeth Cometa (Cometa),
Alejandro Torres (Torres), Amorsolo Tierra (Tierra), Soledad Yeban (Yeban), Luis Rendon (Rendon), Virginia Apilado
(Apilado), Teresita Bolo (Bolo), Rogelio Barbero (Barbero), Jose Casañas (Casañas), Alfredo Maga (Maga), Emilio
Fernandez (Fernandez), Rosita Buenaventura (Buenaventura), Almenio Cancino (Cancino), Adela Imana, Mario
Mancenido (Mancenido), Wilfredo Mandilag (Mandilag), Rolando Manlapaz (Manlapaz), Efren Montemayor
(Montemayor), Nelson Pagulayan, Carlos Villa, Ric Briones, and Chito Bernardo – were MWEU officers during the period
material to this Petition, with Borela as President and Chairman of the MWEU Executive Board, Quebral as First Vice-
President and Treasurer, and Cometa as Secretary.4

In an April 11, 2007 letter,5 MWEU through Cometa informed petitioner that the union was unable to fully deduct the
increased P200.00 union dues from his salary due to lack of the required December 2006 check-off authorization from
him. Petitioner was warned that his failure to pay the union dues would result in sanctions upon him. Quebral informed
Borela, through a May 2, 2007 letter,6 that for such failure to pay the union dues, petitioner and several others violated
Section 1(g), Article IX of the MWEU’s Constitution and By-Laws.7 In turn, Borela referred the charge to the MWEU
grievance committee for investigation.

On May 21, 2007, a notice of hearing was sent to petitioner, who attended the scheduled hearing. On June 6, 2007, the
MWEU grievance committee recommended that petitioner be suspended for 30 days.

In a June 20, 2007 letter,8 Borela informed petitioner and his corespondents of the MWEU Executive Board’s
"unanimous approval"9 of the grievance committee’s recommendation and imposition upon them of a penalty of 30
days suspension, effective June 25, 2007.

In a June 26, 2007 letter10 to Borela, petitioner and his co-respondents took exception to the imposition and indicated
their intention to appeal the same to the General Membership Assembly in accordance with Section 2(g), Article V of the
union’s Constitution and By-Laws,11 which grants them the right to appeal any arbitrary resolution, policy and rule
promulgated by the Executive Board to the General Membership Assembly. In a June 28, 2007 reply,12 Borela denied
petitioner’s appeal, stating that the prescribed period for appeal had expired.
Petitioner and his co-respondents sent another letter13 on July 4, 2007, reiterating their arguments and demanding that
the General Membership Assembly be convened in order that their appeal could be taken up. The letter was not acted
upon.

Petitioner was once more charged with non-payment of union dues, and was required to attend an August 3, 2007
hearing.14 Thereafter, petitioner was again penalized with a 30-day suspension through an August 21, 2007 letter15by
Borela informing petitioner of the Executive Board’s "unanimous approval"16 of the grievance committee
recommendation to suspend him effective August 24, 2007, to which he submitted a written reply,17 invoking his right to
appeal through the convening of the General Membership Assembly. However, the respondents did not act on
petitioner’s plea.

Meanwhile, MWEU scheduled an election of officers on September 14, 2007. Petitioner filed his certificate of candidacy
for Vice-President, but he was disqualified for not being a member in good standing on account of his suspension.

On October 2, 2007, petitioner was charged with non-payment of union dues for the third time. He did not attend the
scheduled hearing. This time, he was meted the penalty of expulsion from the union, per "unanimous approval"18 of the
members of the Executive Board. His pleas for an appeal to the General Membership Assembly were once more
unheeded.19

In 2008, during the freedom period and negotiations for a new collective bargaining agreement (CBA) with MWC,
petitioner joined another union, the Workers Association for Transparency, Empowerment and Reform, All-Filipino
Workers Confederation (WATER-AFWC). He was elected union President. Other MWEU members were inclined to join
WATER-AFWC, but MWEU director Torres threatened that they would not get benefits from the new CBA.20

The MWEU leadership submitted a proposed CBA which contained provisions to the effect that in the event of
retrenchment, non-MWEU members shall be removed first, and that upon the signing of the CBA, only MWEU members
shall receive a signing bonus.21

Ruling of the Labor Arbiter

On October 13, 2008, petitioner filed a Complaint22 against respondents for unfair labor practices, damages, and
attorney’s fees before the National Labor Relations Commission (NLRC), Quezon City, docketed as NLRC Case No. NCR-
10-14255-08. In his Position Paper and other written submissions,23 petitioner accused the respondents of illegal
termination from MWEU in connection with the events relative to his non-payment of union dues; unlawful
interference, coercion, and violation of the rights of MWC employees to self-organization – in connection with the
proposed CBA submitted by MWEU leadership, which petitioner claims contained provisions that discriminated against
non-MWEU members. Petitioner prayed in his Supplemental Position Paper that respondents be held guilty of unfair
labor practices and ordered to indemnify him moral damages in the amount of P100,000.00, exemplary damages
amounting to P50,000.00, and 10% attorney’s fees.

In their joint Position Paper and other pleadings,24 respondents claimed that the Labor Arbiter had no jurisdiction over
the dispute, which is intra-union in nature; that the Bureau of Labor Relations (BLR) was the proper venue, in accordance
with Article 226 of the Labor Code25 and Section 1, Rule XI of Department Order 40-03, series of 2003, of the DOLE;26 and
that they were not guilty of unfair labor practices, discrimination, coercion or restraint.

On May 29, 2009, Labor Arbiter Virginia T. Luyas-Azarraga issued her Decision27 which decreed as follows:

Indeed the filing of the instant case is still premature. Section 5, Article X-Investigation Procedures and Appeal Process of
the Union Constitution and By-Laws provides that:

Section 5. Any dismissed and/or expelled member shall have the rights to appeal to the Executive Board within seven (7)
days from the date of notice of the said dismissal and/or expulsion, which in [turn] shall be referred to the General
Membership Assembly. In case of an appeal, a simple majority of the decision of the Executive Board is imperative. The
same shall be approved/disapproved by a majority vote of the general membership assembly in a meeting duly called
for the purpose.

On the basis of the foregoing, the parties shall exhaust first all the administrative remedies before resorting to
compulsory arbitration. Thus, instant case is referred back to the Union for the General Assembly to act or deliberate
complainant’s appeal on the decision of the Executive Board.

WHEREFORE PREMISES CONSIDERED, instant case is referred back to the Union level for the General Assembly to act on
complainant’s appeal.

SO ORDERED.28

Ruling of the National Labor Relations Commission

Petitioner appealed before the NLRC, where the case was docketed as NLRC LAC No. 07-001913-09. On March 15, 2010,
the NLRC issued its Decision,29 declaring as follows:

Complainant30 imputes serious error to the Labor Arbiter when she decided as follows:

a. Referring back the subject case to the Union level for the General Assembly to act on his appeal.

b. Not ruling that respondents are guilty of ULP as charged.

c. Not granting to complainant moral and exemplary damages and attorney’s fees.

Complainant, in support of his charges, claims that respondents restrained or coerced him in the exercise of his right as a
union member in violation of paragraph "a", Article 249 of the Labor Code,31particularly, in denying him the explanation
as to whether there was observance of the proper procedure in the increase of the membership dues from P100.00 to
P200.00 per month. Further, complainant avers that he was denied the right to appeal his suspension and expulsion in
accordance with the provisions of the Union’s Constitution and By-Laws. In addition, complainant claims that
respondents attempted to cause the management to discriminate against the members of WATER-AFWC thru the
proposed CBA.

Pertinent to the issue then on hand, the Labor Arbiter ordered that the case be referred back to the Union level for the
General Assembly to act on complainant’s appeal. Hence, these appeals.

After a careful look at all the documents submitted and a meticulous review of the facts, We find that this Commission
lacks the jurisdictional competence to act on this case.

Article 217 of the Labor Code,32 as amended, specifically enumerates the cases over which the Labor Arbiters and the
Commission have original and exclusive jurisdiction. A perusal of the record reveals that the causes of action invoked by
complainant do not fall under any of the enumerations therein. Clearly, We have no jurisdiction over the same.

Moreover, pursuant to Section 1, Rule XI, as amended, DOLE Department Order No. 40-03 in particular, Item A,
paragraphs (h) and (j) and Item B, paragraph (a)(3), respectively, provide:

"A. Inter-Intra-Union disputes shall include:

"(h) violation of or disagreements over any provision of the Constitution and By-Laws of a Union or workers’ association.

"(j) violation of the rights and conditions of membership in a Union or workers’ association.

"B. Other Labor Relations disputes, not otherwise covered by Article 217 of the Labor Code, shall include –

"3. a labor union and an individual who is not a member of said union."

Clearly, the above-mentioned disputes and conflict fall under the jurisdiction of the Bureau of Labor Relations, as these
are inter/intra-union disputes.
WHEREFORE, the decision of the Labor Arbiter a quo dated May 29, 2009 is hereby declared NULL and VOID for being
rendered without jurisdiction and the instant complaint is DISMISSED.

SO ORDERED.33

Petitioner moved for reconsideration,34 but in a June 16, 2010 Resolution,35 the motion was denied and the NLRC
sustained its Decision.

Ruling of the Court of Appeals

In a Petition for Certiorari36 filed with the CA and docketed as CA-G.R. SP No. 115639, petitioner sought to reverse the
NLRC Decision and be awarded his claim for damages and attorney’s fees on account of respondents’ unfair labor
practices, arguing among others that his charge of unfair labor practices is cognizable by the Labor Arbiter; that the fact
that the dispute is inter- or intra-union in nature cannot erase the fact that respondents were guilty of unfair labor
practices in interfering and restraining him in the exercise of his right to self-organization as member of both MWEU and
WATER-AFWC, and in discriminating against him and other members through the provisions of the proposed 2008 CBA
which they drafted; that his failure to pay the increased union dues was proper since the approval of said increase was
arrived at without observing the prescribed voting procedure laid down in the Labor Code; that he is entitled to an
award of damages and attorney’s fees as a result of respondents’ illegal acts in discriminating against him; and that in
ruling the way it did, the NLRC committed grave abuse of discretion.

On April 24, 2012, the CA issued the assailed Decision containing the following pronouncement:

The petition lacks merit.

Petitioner’s causes of action against MWEU are inter/intra-union disputes cognizable by the BLR whose functions and
jurisdiction are largely confined to union matters, collective bargaining registry, and labor education. Section 1, Rule XI
of Department Order (D.O.) No. 40-03, Series of 2003, of the Department of Labor and Employment enumerates
instances of inter/intra-union disputes, viz:

Section 1. Coverage. – Inter/intra-union disputes shall include:

xxxx

(b) conduct of election of union and workers’ association officers/nullification of election of union and workers’
association officers;

(c) audit/accounts examination of union or workers’ association funds;

xxxx

(g) validity/invalidity of impeachment/ expulsion of union and workers’ association officers and members;

xxxx

(j) violations of or disagreements over any provision in a union or workers’ association constitution and by-laws;

xxxx

(l) violations of the rights and conditions of union or workers’ association membership;

xxxx

(n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining
–

(1) between and among legitimate labor organizations;

(2) between and among members of a union or workers’ association.

In brief, "Inter-Union Dispute" refers to any conflict between and among legitimate labor unions involving
representation questions for purposes of collective bargaining or to any other conflict or dispute between legitimate
labor unions. "Intra-Union Dispute" refers to any conflict between and among union members, including grievances
arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of
the union’s constitution and by-laws, or disputes arising from chartering or affiliation of union. On the other hand, the
circumstances of unfair labor practices (ULP) of a labor organization are stated in Article 249 of the Labor Code, to wit:

Article 249. Unfair labor practices of labor organizations. It shall be unlawful for labor organization, its officers, agents,
or representatives to commit any of the following unfair labor practices:

(a) To restrain or coerce employees in the exercise of their right to self-organization; Provided, That the labor
organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership;

(b) To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an
employee with respect to whom membership in such organization has been denied or terminated on any ground other
than the usual terms and conditions under which membership or continuation of membership is made available to other
members;

xxxx

Applying the aforementioned rules, We find that the issues arising from petitioner’s right to information on the
increased membership dues, right to appeal his suspension and expulsion according to CBL provisions, and right to vote
and be voted on are essentially intra-union disputes; these involve violations of rights and conditions of union
membership. But his claim that a director of MWEU warned that non-MWEU members would not receive CBA benefits is
an inter-union dispute. It is more of an "interference" by a rival union to ensure the loyalty of its members and to
persuade non-members to join their union. This is not an actionable wrong because interfering in the exercise of the
right to organize is itself a function of self-organizing.37 As long as it does not amount to restraint or coercion, a labor
organization may interfere in the employees’ right to self-organization.38 Consequently, a determination of validity or
illegality of the alleged acts necessarily touches on union matters, not ULPs, and are outside the scope of the labor
arbiter’s jurisdiction.

As regards petitioner’s other accusations, i.e., discrimination in terms of meting out the penalty of expulsion against him
alone, and attempt to cause the employer, MWC, to discriminate against non-MWEU members in terms of
retrenchment or reduction of personnel, and signing bonus, while We may consider them as falling within the concept of
ULP under Article 249(a) and (b), still, petitioner’s complaint cannot prosper for lack of substantial evidence. Other than
his bare allegation, petitioner offered no proof that MWEU did not penalize some union members who failed to pay the
increased dues. On the proposed discriminatory CBA provisions, petitioner merely attached the pages containing the
questioned provisions without bothering to reveal the MWEU representatives responsible for the said proposal. Article
249 mandates that "x x x only the officers, members of the governing boards, representatives or agents or members of
labor associations or organizations who have actually participated in, authorized or ratified unfair labor practices shall be
held criminally liable." Plain accusations against all MWEU officers, without specifying their actual participation, do not
suffice. Thus, the ULP charges must necessarily fail.

In administrative and quasi-judicial proceedings, only substantial evidence is necessary to establish the case for or
against a party. Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. Petitioner failed to discharge the burden of proving, by substantial evidence, the
allegations of ULP in his complaint. The NLRC, therefore, properly dismissed the case.

FOR THESE REASONS, the petition is DISMISSED.

SO ORDERED.39

Thus, the instant Petition.

Issue

In an August 28, 2013 Resolution,40 this Court resolved to give due course to the Petition, which claims that the CA
erred:

A. IN DECLARING THAT THE PRESENCE OF INTER/INTRA-UNION CONFLICTS NEGATES THE COMPLAINT FOR UNFAIR
LABOR PRACTICES AGAINST A LABOR ORGANIZATION AND ITS OFFICERS, AND IN AFFIRMING THAT THE NLRC PROPERLY
DISMISSED THE CASE FOR ALLEGED LACK OF JURISDICTION.

B. IN NOT RULING THAT RESPONDENTS ARE GUILTY OF UNFAIR LABOR PRACTICES UNDER ARTICLE 249(a) AND (b) OF
THE LABOR CODE.

C. IN DECLARING THAT THE THREATS MADE BY A UNION OFFICER AGAINST MEMBERS OF A RIVAL UNION IS (sic) MERELY
AN "INTERFERENCE" AND DO NOT AMOUNT TO "RESTRAINT" OR "COERCION".

D. IN DECLARING THAT PETITIONER FAILED TO PRESENT SUBSTANTIAL EVIDENCE IN PROVING RESPONDENTS’ SPECIFIC
ACTS OF UNFAIR LABOR PRACTICES.

E. IN NOT RULING THAT RESPONDENTS ARE SOLIDARILY LIABLE TO PETITIONER FOR MORAL AND EXEMPLARY DAMAGES,
AND ATTORNEY’S FEES.41

Petitioner’s Arguments

Praying that the assailed CA dispositions be set aside and that respondents be declared guilty of unfair labor practices
under Article 249(a) and (b) and adjudged liable for damages and attorney’s fees as prayed for in his complaint,
petitioner maintains in his Petition and Reply42 that respondents are guilty of unfair labor practices which he clearly
enumerated and laid out in his pleadings below; that these unfair labor practices committed by respondents fall within
the jurisdiction of the Labor Arbiter; that the Labor Arbiter, the NLRC, and the CA failed to rule on his accusation of
unfair labor practices and simply dismissed his complaint on the ground that his causes of action are intra- or inter-union
in nature; that admittedly, some of his causes of action involved intra- or inter-union disputes, but other acts of
respondents constitute unfair labor practices; that he presented substantial evidence to prove that respondents are
guilty of unfair labor practices by failing to observe the proper procedure in the imposition of the increased monthly
union dues, and in unduly imposing the penalties of suspension and expulsion against him; that under the union’s
constitution and by-laws, he is given the right to appeal his suspension and expulsion to the general membership
assembly; that in denying him his rights as a union member and expelling him, respondents are guilty of malice and
evident bad faith; that respondents are equally guilty for violating and curtailing his rights to vote and be voted to a
position within the union, and for discriminating against non-MWEU members; and that the totality of respondents’
conduct shows that they are guilty of unfair labor practices.

Respondent’s Arguments

In their joint Comment,43 respondents maintain that petitioner raises issues of fact which are beyond the purview of a
petition for review on certiorari; that the findings of fact of the CA are final and conclusive; that the Labor Arbiter, NLRC,
and CA are one in declaring that there is no unfair labor practices committed against petitioner; that petitioner’s other
allegations fall within the jurisdiction of the BLR, as they refer to intra- or inter-union disputes between the parties; that
the issues arising from petitioner’s right to information on the increased dues, right to appeal his suspension and
expulsion, and right to vote and be voted upon are essentially intra-union in nature; that his allegations regarding
supposed coercion and restraint relative to benefits in the proposed CBA do not constitute an actionable wrong; that all
of the acts questioned by petitioner are covered by Section 1, Rule XI of Department Order 40-03, series of 2003 as
intra-/inter-union disputes which do not fall within the jurisdiction of the Labor Arbiter; that in not paying his union
dues, petitioner is guilty of insubordination and deserved the penalty of expulsion; that petitioner failed to petition to
convene the general assembly through the required signature of 30% of the union membership in good standing
pursuant to Article VI, Section 2(a) of MWEU’s Constitution and By-Laws or by a petition of the majority of the general
membership in good standing under Article VI, Section 3; and that for his failure to resort to said remedies, petitioner
can no longer question his suspension or expulsion and avail of his right to appeal.

Our Ruling

The Court partly grants the Petition.

In labor cases, issues of fact are for the labor tribunals and the CA to resolve, as this Court is not a trier of facts.
However, when the conclusion arrived at by them is erroneous in certain respects, and would result in injustice as to the
parties, this Court must intervene to correct the error. While the Labor Arbiter, NLRC, and CA are one in their conclusion
in this case, they erred in failing to resolve petitioner’s charge of unfair labor practices against respondents.

It is true that some of petitioner’s causes of action constitute intra-union cases cognizable by the BLR under Article 226
of the Labor Code.

An intra-union dispute refers to any conflict between and among union members, including grievances arising from any
violation of the rights and conditions of membership, violation of or disagreement over any provision of the union’s
constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of
Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union
disputes x x x.44

However, petitioner’s charge of unfair labor practices falls within the original and exclusive jurisdiction of the Labor
Arbiters, pursuant to Article 217 of the Labor Code. In addition, Article 247 of the same Code provides that "the civil
aspects of all cases involving unfair labor practices, which may include claims for actual, moral, exemplary and other
forms of damages, attorney’s fees and other affirmative relief, shall be under the jurisdiction of the Labor Arbiters."

Unfair labor practices may be committed both by the employer under Article 248 and by labor organizations under
Article 249 of the Labor Code,45 which provides as follows:

ART. 249. Unfair labor practices of labor organizations. - It shall be unfair labor practice for a labor organization, its
officers, agents or representatives:

(a) To restrain or coerce employees in the exercise of their right to self-organization. However, a labor organization shall
have the right to prescribe its own rules with respect to the acquisition or retention of membership;

(b) To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an
employee with respect to whom membership in such organization has been denied or to terminate an employee on any
ground other than the usual terms and conditions under which membership or continuation of membership is made
available to other members;

(c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the representative of the
employees;

(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of
value, in the nature of an exaction, for services which are not performed or not to be performed, including the demand
for fee for union negotiations;

(e) To ask for or accept negotiation or attorney’s fees from employers as part of the settlement of any issue in collective
bargaining or any other dispute; or

(f) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers, members of governing boards,
representatives or agents or members of labor associations or organizations who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable. (As amended by Batas Pambansa Bilang 130,
August 21, 1981).
Petitioner contends that respondents committed acts constituting unfair labor practices – which charge was particularly
laid out in his pleadings, but that the Labor Arbiter, the NLRC, and the CA ignored it and simply dismissed his complaint
on the ground that his causes of action were intra- or inter-union in nature. Specifically, petitioner claims that he was
suspended and expelled from MWEU illegally as a result of the denial of his right to appeal his case to the general
membership assembly in accordance with the union’s constitution and by-laws. On the other hand, respondents counter
that such charge is intra-union in nature, and that petitioner lost his right to appeal when he failed to petition to
convene the general assembly through the required signature of 30% of the union membership in good standing
pursuant to Article VI, Section 2(a) of MWEU’s Constitution and By-Laws or by a petition of the majority of the general
membership in good standing under Article VI, Section 3.

Under Article VI, Section 2(a) of MWEU’s Constitution and By-Laws, the general membership assembly has the power to
"review revise modify affirm or repeal [sic] resolution and decision of the Executive Board and/or committees upon
petition of thirty percent (30%) of the Union in good standing,"46 and under Section 2(d), to "revise, modify, affirm or
reverse all expulsion cases."47 Under Section 3 of the same Article, "[t]he decision of the Executive Board may be
appealed to the General Membership which by a simple majority vote reverse the decision of said body. If the general
Assembly is not in session the decision of the Executive Board may be reversed by a petition of the majority of the
general membership in good standing."48 And, in Article X, Section 5, "[a]ny dismissed and/or expelled member shall
have the right to appeal to the Executive Board within seven days from notice of said dismissal and/or expulsion which,
in [turn] shall be referred to the General membership assembly. In case of an appeal, a simple majority of the decision of
the Executive Board is imperative. The same shall be approved/disapproved by a majority vote of the general
membership assembly in a meeting duly called for the purpose."49

In regard to suspension of a union member, MWEU’s Constitution and By-Laws provides under Article X, Section 4
thereof that "[a]ny suspended member shall have the right to appeal within three (3) working days from the date of
notice of said suspension. In case of an appeal a simple majority of vote of the Executive Board shall be necessary to
nullify the suspension."

Thus, when an MWEU member is suspended, he is given the right to appeal such suspension within three working days
from the date of notice of said suspension, which appeal the MWEU Executive Board is obligated to act upon by a simple
majority vote. When the penalty imposed is expulsion, the expelled member is given seven days from notice of said
dismissal and/or expulsion to appeal to the Executive Board, which is required to act by a simple majority vote of its
members. The Board’s decision shall then be approved/ disapproved by a majority vote of the general membership
assembly in a meeting duly called for the purpose.1avvphi1

The documentary evidence is clear that when petitioner received Borela’s August 21, 2007 letter informing him of the
Executive Board’s unanimous approval of the grievance committee recommendation to suspend him for the second
time effective August 24, 2007, he immediately and timely filed a written appeal. However, the Executive Board – then
consisting of respondents Borela, Tierra, Bolo, Casañas, Fernandez, Rendon, Montemayor, Torres, Quebral, Pagulayan,
Cancino, Maga, Cometa, Mancenido, and two others who are not respondents herein – did not act thereon. Then again,
when petitioner was charged for the third time and meted the penalty of expulsion from MWEU by the unanimous vote
of the Executive Board, his timely appeal was again not acted upon by said board – this time consisting of respondents
Borela, Quebral, Tierra, Imana, Rendon, Yeban, Cancino, Torres, Montemayor, Mancenido, Mandilag, Fernandez,
Buenaventura, Apilado, Maga, Barbero, Cometa, Bolo, and Manlapaz.

Thus, contrary to respondents’ argument that petitioner lost his right to appeal when he failed to petition to convene
the general assembly through the required signature of 30% of the union membership in good standing pursuant to
Article VI, Section 2(a) of MWEU’s Constitution and By-Laws or by a petition of the majority of the general membership
in good standing under Article VI, Section 3, this Court finds that petitioner was illegally suspended for the second time
and thereafter unlawfully expelled from MWEU due to respondents’ failure to act on his written appeals. The required
petition to convene the general assembly through the required signature of 30% (under Article VI, Section 2[a]) or
majority (under Article VI, Section 3) of the union membership does not apply in petitioner’s case; the Executive Board
must first act on his two appeals before the matter could properly be referred to the general membership. Because
respondents did not act on his two appeals, petitioner was unceremoniously suspended, disqualified and deprived of his
right to run for the position of MWEU Vice-President in the September 14, 2007 election of officers, expelled from
MWEU, and forced to join another union, WATER-AFWC. For these, respondents are guilty of unfair labor practices
under Article 249 (a) and (b) – that is, violation of petitioner’s right to self-organization, unlawful discrimination, and
illegal termination of his union membership – which case falls within the original and exclusive jurisdiction of the Labor
Arbiters, in accordance with Article 217 of the Labor Code.

The primary concept of unfair labor practices is stated in Article 247 of the Labor Code, which states:

Article 247. Concept of unfair labor practice and procedure for prosecution thereof. –– Unfair labor practices violate the
constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor
and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-
management relations.

"In essence, [unfair labor practice] relates to the commission of acts that transgress the workers’ right to
organize."50"[A]ll the prohibited acts constituting unfair labor practice in essence relate to the workers’ right to self-
organization."51 "[T]he term unfair labor practice refers to that gamut of offenses defined in the Labor Code which, at
their core, violates the constitutional right of workers and employees to self-organization."52

Guaranteed to all employees or workers is the ‘right to self-organization and to form, join, or assist labor organizations
of their own choosing for purposes of collective bargaining.’ This is made plain by no less than three provisions of the
Labor Code of the Philippines. Article 243 of the Code provides as follows:

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

Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to ‘interfere with, restrain or
coerce employees in the exercise of their right to self-organization.’ Similarly, Article 249 (a) makes it an unfair labor
practice for a labor organization to ‘restrain or coerce employees in the exercise of their rights to self-organization . . .’

xxxx

The right of self-organization includes the right to organize or affiliate with a labor union or determine which of two or
more unions in an establishment to join, and to engage in concerted activities with co-workers for purposes of collective
bargaining through representatives of their own choosing, or for their mutual aid and protection, i.e., the protection,
promotion, or enhancement of their rights and interests.53

As members of the governing board of MWEU, respondents are presumed to know, observe, and apply the union’s
constitution and by-laws. Thus, their repeated violations thereof and their disregard of petitioner’s rights as a union
member – their inaction on his two appeals which resulted in his suspension, disqualification from running as MWEU
officer, and subsequent expulsion without being accorded the full benefits of due process – connote willfulness and bad
faith, a gross disregard of his rights thus causing untold suffering, oppression and, ultimately, ostracism from MWEU.
"Bad faith implies breach of faith and willful failure to respond to plain and well understood obligation."54This warrants
an award of moral damages in the amount of P100,000.00. Moreover, the Civil Code provides:

Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or
in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter
for damages:
xxxx

(12) The right to become a member of associations or societies for purposes not contrary to law;

In Vital-Gozon v. Court of Appeals,55 this Court declared, as follows:

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury. They may be recovered if they are the proximate result of
the defendant’s wrongful act or omission. The instances when moral damages may be recovered are, inter alia, ‘acts and
actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the Civil Code,’ which, in turn, are found in the
Chapter on Human Relations of the Preliminary Title of the Civil Code. x x x

Under the circumstances, an award of exemplary damages in the amount of P50,000.00, as prayed for, is likewise
proper. "Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious
consequences, and their imposition is required by public policy to suppress the wanton acts of the offender."56 This
should prevent respondents from repeating their mistakes, which proved costly for petitioner.1âwphi1

Under Article 2229 of the Civil Code, ‘[e]xemplary or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate, liquidated or compensatory damages.’ As this court has stated
in the past: ‘Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially
deleterious in its consequence by creating negative incentives or deterrents against such behaviour.’57

Finally, petitioner is also entitled to attorney’s fees equivalent to 10 per cent (10%) of the total award. The unjustified
acts of respondents clearly compelled him to institute an action primarily to vindicate his rights and protect his interest.
Indeed, when an employee is forced to litigate and incur expenses to protect his rights and interest, he is entitled to an
award of attorney’s fees.58

WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed April 24, 2012 Decision of the Court of Appeals in CA-
G.R. SP No. 115639 is hereby MODIFIED, in that all of the respondents - except for Carlos Villa, Ric Briones, and Chito
Bernardo - are declared guilty of unfair labor practices and ORDERED TO INDEMNIFY petitioner Allan M. Mendoza the
amounts of Pl00,000.00 as and by way of moral damages, PS0,000.00 as exemplary damages, and attorney's fees
equivalent to 10 per cent (10%) of the total award.

SO ORDERED.
SECOND DIVISION
G.R. No. 194884 October 22, 2014
IMASEN PHILIPPINE MANUFACTURING CORPORATION, Petitioner,
vs.
RAMONCHITO T. ALCON and JOANN S. PAPA, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the June 9, 2010 decision2 and the December 22, 2010
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 110327. This CA decision nullified the December 24, 2008
decision4 of the National Labor Relations Commission (NLRC) in NLRC CA No. 043915-05 (NLRC CASE No. RAB IV-12-1661-
02-L). The NLRC ruling, in turn, affirmed the December 10, 2004 decision5 of the Labor Arbiter (LA), dismissing the illegal
dismissal complaint filed by respondents Ramonchito T. Alcon and Joann S. Papa (collectively referred to as respondents).
The Factual Antecedents
Petitioner Imasen Philippine Manufacturing Corporation is a domestic corporation engaged in the manufacture of auto
seat-recliners and slide-adjusters. It hired the respondents as manual welders in 2001.
On October 5, 2002, the respondents reported for work on the second shift – from 8:00 pm to 5:00 am of the following
day. At around 12:40 am, Cyrus A. Altiche, Imasen’s security guard on duty, went to patrol and inspect the production
plant’s premises. When Altiche reached Imasen’s Press Area, he heard the sound of a running industrial fan. Intending to
turn the fan off, he followed the sound that led him to the plant’s "Tool and Die" section.
At the "Tool and Die" section, Altiche saw the respondents having sexual intercourse on the floor, using a piece of carton
as mattress. Altiche immediately went back to the guard house and relayed what he saw to Danilo S. Ogana, another
security guard on duty.
On Altiche’s request, Ogana madea follow-up inspection. Ogana went to the "Tool and Die" section and saw several
employees, including the respondents, already leaving the area. He noticed, however, that Alcon picked up the carton
that Altiche claimed the respondents used as mattress during their sexual act, and returned it to the place where the
cartons were kept. Altiche then submitted a handwritten report6 of the incident to Imasen’s Finance and Administration
Manager.
On October 14, 2002, Imasen issued the respondents separate interoffice memoranda7 informing them of Altiche’sreport
on the October 5, 2002 incident and directing them to submit their individual explanation. The respondents complied with
the directive; they claimed that they were merely sleeping in the "Tool and Die" section at the time of the incident. They
also claimed that other employees were near the area, making the commission of the act charged impossible.
On October 22, 2002, Imasen issued the respondents another interoffice memorandum8 directing them to appear atthe
formal hearing of the administrative charge against them. The hearing was conducted on October 30, 2002, 9presided by
a mediator and attended by the representatives of Imasen, the respondents, Altiche and Ogana. Altiche and Ogana
reiterated the narrations in Altiche’s handwritten report.
On December 4, 2002, Imasen issued the respondents separate interoffice memoranda10 terminating their services. It
found the respondents guilty of the act charged which it considered as "gross misconduct contrary to the existing policies,
rules and regulations of the company."
On December 5, 2002, the respondents filed before the LA the Complaint11 for illegal dismissal. The respondents
maintained their version of the incident.
In the December 10, 2004 decision,12 the LA dismissed the respondents’ complaint for lack of merit. The LA found the
respondents’ dismissal valid, i.e., for the just cause of gross misconduct and with due process. The LA gave weight to
Altiche’s account of the incident, which Ogana corroborated, over the respondents’mere denial of the incident and the
unsubstantiated explanation that other employees were present near the "Tool and Die" section, making the sexual act
impossible. The LA additionally pointed out that the respondents did not show any ill motive or intent on the part of
Altiche and Ogano sufficient to render their accounts of the incident suspicious.
The NLRC’s ruling
In its December 24, 2008 decision,13 the NLRC dismissed the respondents’ appeal14 for lack of merit. In affirming the LA’s
ruling, the NLRC declared that Imasen substantially and convincingly proved just cause for dismissing the respondents and
complied with the required due process.
The respondents filed before the CA a petition for certiorari15 after the NLRC denied their motion for reconsideration16 in
its May 29, 2009 resolution.17
The CA’s ruling
In its June 9, 2010 decision,18 the CA nullified the NLRC’s ruling. The CA agreed with the labor tribunals’ findings regarding
the infraction charged – engaging in sexual intercourse on October 5, 2002 inside company premises – and Imasen’s
observance of due process in dismissing the respondents from employment.
The CA, however, disagreed with the conclusion that the respondents’ sexual intercourse inside company premises
constituted serious misconduct that the Labor Code considers sufficient tojustify the penalty of dismissal. The CA pointed
out that the respondents’ act, while provoked by "reckless passion in an inviting environment and time," was not done
with wrongful intent or with the grave or aggravated character that the law requires. To the CA, the penalty of dismissal
is not commensurate to the respondents’ act, considering especially that the respondents had not committed any
infraction in the past.
Accordingly, the CA reduced the respondents’ penalty to a threemonth suspension and ordered Imasen to: (1) reinstate
the respondents to their former position without loss of seniority rights and other privileges; and (2) pay the respondents
backwages from December 4, 2002 until actual reinstatement, less the wages corresponding to the three-month
suspension.
Imasen filed the present petition after the CA denied its motion for Reconsideration19 in the CA’s December 22, 2010
resolution.20
The Petition
Imasen argues in this petition that the act of engaging in sexual intercourse inside company premises during work hours
is serious misconduct by whatever standard it is measured. According to Imasen, the respondents’ infraction is an affront
to its core values and high ethical work standards, and justifies the dismissal. When the CA reduced the penalty from
dismissal to three-month suspension, Imasen points out that the CA, in effect, substituted its own judgment with its
(Imasen’s) own legally protected management prerogative.
Lastly, Imasen questions the CA’s award of backwages in the respondents’ favor. Imasen argues that the respondents
would virtually gain from their infraction as they would be paid eight years worth of wages without having rendered any
service; eight (8) years, in fact, far exceeds their actual period of service prior to their dismissal.
The Case for the Respondents
The respondents argue in their comment21 that the elements of serious misconduct that justifies an employee’s dismissal
are absent in this case, adopting thereby the CA’s ruling. Hence, to the respondents, the CA correctly reversed the NLRC’s
ruling; the CA, in deciding the case, took a wholistic consideration of all the attendant facts, i.e., the time, the place, the
persons involved, and the surrounding circumstances before, during, and after the sexual intercourse, and not merely the
infraction committed.
The Issue
The sole issue for this Court’s resolution is whether the respondents’ infraction – engaging in sexual intercourse inside
company premises during work hours – amounts to serious misconduct within the terms of Article 282 (now Article 296)
of the Labor Code justifying their dismissal.
The Court’s Ruling
We GRANT the petition.
We find that the CA reversibly erred when it nullified the NLRC’s decision for grave abuse of discretion the NLRC’s decision.
Preliminary considerations: tenurial security vis-à-vis management prerogative
The law and jurisprudence guaranteeto every employee security of tenure. This textual and the ensuing jurisprudential
commitment to the cause and welfare of the working class proceed from the social justice principles of the Constitution
that the Court zealously implements out of its concern for those with less in life. Thus, the Court will not hesitate to strike
down as invalid any employer act that attempts to undermine workers’ tenurial security. All these the State undertakes
under Article 279 (now Article 293)22 of the Labor Code which bar an employer from terminating the services of an
employee, except for just or authorized cause and upon observance of due process.
In protecting the rights of the workers, the law, however, does not authorize the oppression or self-destruction of the
employer.23 The constitutional commitment to the policy of social justice cannot be understood to mean that every labor
dispute shall automatically be decided in favor of labor.24 The constitutional and legal protection equally recognize the
employer’s right and prerogative to manage its operation according to reasonable standards and norms of fair play.
Accordingly, except as limited by special law, an employer is free to regulate, according to his own judgment and
discretion, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of
work, tools to beused, processes to be followed, supervision of workers, working regulations, transfer of employees,
worker supervision, layoff of workers and the discipline, dismissal and recall of workers.25 As a general proposition, an
employer has free reign over every aspect of its business, including the dismissal of his employees as long as the exercise
of its management prerogativeis done reasonably, in good faith, and in a manner not otherwise intended to defeat or
circumvent the rights of workers.
In these lights, the Court’s task inthe present petition is to balance the conflicting rights of the respondents to security of
tenure, on one hand, and of Imasen to dismiss erring employees pursuant to the legitimate exercise of its management
prerogative, on the other.
Management’s right to dismiss an employee; serious misconduct as just cause for the dismissal
The just causes for dismissing an employee are provided under Article 28226 (now Article 296)27 of the Labor Code. Under
Article 282(a), serious misconduct by the employee justifies the employer in terminating his or her employment.
Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment.28 To constitute a valid cause for the dismissal within the text and meaning of Article 282 of the Labor Code, the
employee’s misconduct must be serious, i.e., of such grave and aggravated character and not merely trivial or
unimportant.29
Additionally, the misconduct must be related to the performance of the employee’s duties showing him tobe unfit to
continue working for the employer.30 Further, and equally important and required, the act or conduct must have been
performed with wrongful intent.31
To summarize, for misconduct or improper behavior to be a just cause for dismissal, the following elements must concur:
(a) the misconduct must be serious; (b) it must relate to the performance of the employee’s duties showing that the
employee has become unfit to continue working for the employer;32 and (c) it must have been performed with wrongful
intent.
The respondents’ infraction amounts to serious misconduct within the terms of Article 282 (now Article296) of the Labor
Code justifying their dismissal
Dismissal situations (on the ground of serious misconduct) involving sexual acts, particularly sexual intercourse committed
by employees inside company premises and during workhours, are not usual violations33 and are not found in abundance
under jurisprudence. Thus, in resolving the present petition, we are largely guided by the principles we discussed above,
as applied to the totality of the circumstances that surrounded the petitioners’ dismissal.
In other words, we view the petitioners’ act from the prism of the elements that must concur for an act to constitute
serious misconduct, analyzed and understood within the context of the overall circumstances of the case. In taking this
approach, weare guided, too, by the jurisdictional limitations that a Rule 45 review of the CA’s Rule 65 decision in labor
cases imposes on our discretion.34
In addressing the situation that we are faced with in this petition, we determine whether Imasen validly exercised its
prerogative as employer to dismiss the respondents-employees who, within company premises and during work hours,
engaged in sexual intercourse. As framed within our limited Rule 45 jurisdiction, the question that we ask is: whether the
NLRC committed grave abuse of discretion in finding that the respondents’ act amounted to what Article 282 of the Labor
Code textually considers as serious misconduct to warrant their dismissal.
After due consideration, we find the NLRC legally correct and well within its jurisdiction when it affirmed the validity of
the respondents’ dismissal on the ground of serious misconduct.
Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to the realm of purely private
relations.1âwphi1 Whether aroused by lust or inflamed by sincere affection, sexual acts should be carried out at such
place, time and circumstance that, by the generally accepted norms of conduct, will not offend public decency nor disturb
the generally held or accepted social morals. Under these parameters, sexual acts between two consenting adults do not
have a place in the work environment.
Indisputably, the respondents engaged in sexual intercourse inside company premisesand during work hours. These
circumstances, by themselves, are already punishablemisconduct. Added to these considerations, however, is the
implication that the respondents did not only disregard company rules but flaunted their disregard in a manner that could
reflect adversely on the status of ethics and morality in the company.
Additionally, the respondents engaged in sexual intercourse in an area where co-employees or other company personnel
have ready and available access. The respondents likewise committed their act at a time when the employees were
expected to be and had, in fact, been at their respective posts, and when they themselves were supposed to be, as all
other employees had in fact been, working.
Under these factual premises and inthe context of legal parameters we discussed, we cannot help but consider the
respondents’ misconduct to be of grave and aggravated character so that the company was justified in imposing the
highest penalty available ― dismissal. Their infraction transgressed the bounds of sociallyand morally accepted human
public behavior, and at the same time showedbrazen disregard for the respect that their employer expected of them as
employees. By their misconduct, the respondents, in effect, issued an open invitation for othersto commit the same
infraction, with like disregard for their employer’s rules, for the respect owed to their employer, and for their co-
employees’ sensitivities. Taken together, these considerations reveal a depraved disposition that the Court cannot but
consider as a valid cause for dismissal. In ruling as we do now, we considered the balancing between the respondents’
tenurial rights and the petitioner’s interests – the need to defend their management prerogative and to maintain as well
a high standard of ethics and morality in the workplace. Unfortunately for the respondents, in this balancing under the
circumstances ofthe case, we have to rule against their tenurial rights in favor of the employer’s management rights.
All told, the respondents’ misconduct,under the circumstances of this case, fell within the terms of Article 282 (now Article
296) of the Labor Code. Consequently, we reverse the CA’s decision for its failure to recognize that no grave abuse of
discretion attended the NLRC’s decision to support the respondents’ dismissal for serious misconduct.
WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE the decision dated June 9, 2010
and the resolution dated December 22, 2010 of the Court of Appeals in CA-G.R. SP No. 110327 and REINSTATE the decision
dated December 24, 2008 of the National Labor Relations Commission in NLRC CA No. 043915-05 (NLRC Case No. RAB IV-
12-1661-02-L).
SO ORDERED.
EN BANC
G.R. Nos. L-22951 and L-22952 January 31, 1967
ALLIED FREE WORKERS' UNION (PLUM), petitioner,
vs.
COMPAÑIA MARITIMA, Manager JOSE C. TEVES, and COURT OF INDUSTRIAL RELATIONS, respondents.
-----------------------------
G.R. No. L-22971 January 31, 1967
COMPAÑIA MARITIMA and Manager JOSE C. TEVES, petitioners,
vs.
ALLIED FREEWORKERS' (PLUM) and COURT OF INDUSTRIAL RELATIONS, respondents.
L-22951 and 22952:
Vicente A. Rafael and Associates for petitioner.
Rafael Dinglasan for respondents.
Mariano B. Tuason for respondent Court of Industrial Relations.
L-22971:
Rafael Dinglasan for petitioner.
Vicente A. Rafael and Associates for respondents.
Mariano B. Tuason for respondent Court of Industrial Relations.
BENGZON, J.P., J.:
The three cases before this Court are the respective appeals separately taken by the parties hereto from an order 1of the
Court of Industrial Relations en banc affirming its trial judge's decision, rendered on November 4, 1963, in CIR Case 175-
MC and CIR Case 426-ULP. Thus L-22971 is the appeal of MARITIMA2 in CIR Case 175-MC; L-22952 is AFWU's appeal in the
same case; and L-22951 refers to AFWU's3 appeal in CIR Case 426-ULP. Since these cases were jointly tried and decided
in the court a quo and they involve the same fundamental issue — the presence or absence of employer-employee
relationship — they are jointly considered herein.
MARITIMA is a local corporation engaged in the shipping business. Teves is its branch manager in the port of Iligan City.
And AFWU is duly registered legitimate labor organization with 225 members.
On August 11, 1952, MARITIMA, through Teves, entered into a CONTRACT 4 with AFWU the terms of which We reproduce:
— ARRASTRE AND STEVEDORING CONTRACT —
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT made and executed this 11th day of August, 1952, in the City of Iligan, Philippines, by and between the
COMPAÑIA MARITIMA Iligan Branch, represented by its Branch Manager in Iligan City, and the ALLIED FREE WORKERS'
UNION, a duly authorized labor union, represented by its President:
WITNESSETH.
1. That the Compañia MARITIMA hereby engage the services of the Allied Free Workers' Union to do and perform all the
work of stevedoring and arrastre services of all its vessels or boats calling in the port of Iligan City, beginning August 12,
1952.
2. That the Compañia MARITIMA shall not be liable for the payment of the services rendered by the Allied Free Workers'
Union, for the loading, unloading and deliveries of cargoes as same is payable by the owners and consignees of cargoes,
as it has been the practice in the port of Iligan City.
3. That the Allied Free Workers' Union shall be responsible for the damages that may be caused to the cargoes in the
course of their handling.
4. That this CONTRACT is good and valid for a period of one (1) month from August 12, 1952, but same may be renewed
by agreement of the parties; however Compañia MARITIMA reserves the right to revoke this CONTRACT even before the
expiration of the term, if and when the Allied Free Workers' Unionfails to render good service.
IN WITNESS WHEREOF, we hereunto sign this presents in the City of Iligan, Philippines, this 11th day of August, 1952.

(SGD) SALVADOR T. LLUCH (SGD) JOSE C. TEVES

President Branch Manager
Allied Free Workers' Union Compañia Maritima
Iligan City Iligan City

SIGNED IN THE PRESENCE OF:

1. (SGD) JOSE CUETO
2. (SGD) SERGIO OBACH.
During the first month of the existence of the CONTRACT , AFWU rendered satisfactory service. So, MARITIMA, through
Teves, verbally renewed the same. This harmonious relations between MARITIMA and AFWU lasted up to the latter part
of 1953 when the former complained to the latter of unsatisfactory and inefficient service by the laborers doing the
arrastre and stevedoring work. This deteriorating situation was admitted as a fact by AFWU's president. To remedy the
situation since MARITIMA's business was being adversely affected — Teves was forced to hire extra laborers from among
"stand-by" workers not affiliated to any union to help in the stevedoring and arrastre work. The wages of these extra
laborers were paid by MARITIMA through separate vouchers and not by AFWU. Moreover, said wages were not charged
to the consignees or owners of the cargoes.
On July 23, 1954, AFWU presented to MARITIMA a written proposal5 for a collective bargaining agreement.
This demand embodied certain terms and conditions of employment different from the provisions of the CONTRACT . No
reply was made by MARITIMA.
On August 6, 1954, AFWU instituted proceedings in the Industrial Court6 praying that it be certified as the sole and
exclusive bargaining agent in the bargaining unit composed of all the laborers doing the arrastre and stevedoring work in
connection with MARITIMA's vessels in Iligan City. MARITIMA answered, alleging lack of employer-employee relationship
between the parties.
On August 24, 1954, MARITIMA informed AFWU of the termination of the CONTRACT because of the inefficient service
rendered by the latter which had adversely affected its business. The termination was to take effect as of September 1,
1954. MARITIMA then contracted with the Iligan Stevedoring Union for the arrastre and stevedoring work. The latter
agreed to perform the work subject to the same terms and conditions of the CONTRACT . The new agreement was to be
carried out on September 1, 1954.
On August 26, 1954, upon the instance of AFWU, MARITIMA found itself charged before the Industrial Court7 of unfair
labor practices under Sec. 4(a), (1), (3), (4) and (6) of Rep. Act No. 875. MARITIMA answered, again denying the employer-
employee relationship between the parties.
On September 1, 1954, members of AFWU, together with those of the Mindanao Workers Alliance — a sister union —
formed a picket line at the wharf of Iligan City, thus preventing the Iligan Stevedoring Union from carrying out the arrastre
and stevedoring work it contracted for.8 This picket lasted for nine days.
On September 9, 1954, MARITIMA filed an action9 to rescind the CONTRACT , enjoin AFWU members from doing arrastre
and stevedoring work in connection with its, vessels, and for recovery of damages against AFWU and its officers.
Incidentally, this civil case has been the subject of three proceedings already which have reached this Court. The
first 10 involved a preliminary injunction issued therein on September 9, 1954, by the trial court prohibiting AFWU from
interfering in any manner with the loading and unloading of cargoes from MARITIMA's vessels. This injunction was lifted
that very evening upon the filing of a counter bond by AFWU. Subsequently, a motion to dissolve said counterbond was
filed by MARITIMA but the hearing on this incident was enjoined by Us on March 15, 1955, upon the institution of the
petition for prohibition and injunction in said L-8876. 11 Meanwhile, AFWU members-laborers were able to continue the
arrastre and stevedoring work in connection with MARITIMA's vessels.
On December 5, 1960, the CFI decision in the civil case was promulgated. It ordered the rescission of the CONTRACT and
permanently enjoined AFWU members from performing work in connection with MARITIMA's vessels. AFWU then filed
its notice of appeal, appeal bond and record on appeal. 12 The subsequent incidents thereto gave rise to the two other
proceedings which have previously reached Us here.
On January 6, 1961, upon motion of MARITIMA ,an order of execution pending appeal and a writ of injunction
against AFWU was issued by the trial court in the civil case. This enabled MARITIMA to engage the services of the
Mindanao Arrastre Service to do the arrastre and stevedoring work on January 8, 1961. However, AFWU filed a petition
for certiorari, injunction and prohibition 13 here and on January 18, 1961, was able to secure a writ of preliminary
injunction ordering the maintenance of the status quo prior to January 6, 1961. Thus, after January 18,
1961, AFWU laborers were again back doing the same work as before.
The third incident that reached US 14 involved an order of the same trial court in the same civil case, dated January 11,
1961, which amended some clerical errors in the original decision of December 5, 1960. Upon motion of MARITIMA, the
trial court, on March 24, 1962, issued an order for the execution of the decision of January 11, 1961, since AFWU did not
appeal therefrom, and on March 31, 1962, a writ of execution ousting the 225 AFWU members-laborers from their work
in connection with the loading and unloading of cargoes was issued and a levy on execution upon the properties
of AFWU was effected. Accordingly, on April 1, 1962, MARITIMA was again able to engage the services of the Mindanao
Arrastre Service.
On April 16, 1962, upon the institution of the petition for certiorari, injunction, prohibition and mandamus, a preliminary
injunction was issued by Us against the orders of March 24 and 31, 1962. But then, on May 16, 1962, upon motion
of MARITIMA this preliminary injunction was lifted by Us insofar as it related to the execution of the order ousting
the AFWU laborers from the stevedoring and arrastre work in connection with the MARITIMA vessels. 15 Such then was
the status of things.
On November 4, 1963, after almost 10 years of hearing the two cases jointly, the Industrial Court finally rendered its
decision. The dispositive part provided:
IN VIEW OF ALL THE FOREGOING CIRCUMSTANCES, the complaint of the union for unfair labor practices against the
Compañia MARITIMA and/or its agent Jose C. Teves and the Iligan Stevedoring Union and/or Sergio Obach is hereby
dismissed for lack of substantial evidence and merit.
In pursuance of the provisions of Section 12 of Republic Act 875 and the Rules of this court on certification election, the
Honorable, the Secretary of Labor or any of his authorized representative is hereby requested to conduct certification
election among all the workers and/or stevedores working in the wharf of Iligan City who are performing stevedoring and
arrastre service aboard Compañia MARITIMA vessels docking at Iligan City port in order to determine their representative
for collective bargaining with the employer, whether their desire to be represented by the petitioner Allied Free Workers
Union or neither [sic]; and upon termination of the said election, the result thereof shall forthwith be submitted to this
court for further consideration. The union present payroll may be utilized in determining the qualified voters, with the
exclusion of all supervisors.
SO ORDERED.
As already indicated, the fundamental issue involved in these cases before Us consists in whether there is an employer-
employee relationship between MARITIMA, on the one hand, and AFWU and/or its members-laborers who do the actual
stevedoring and arrastre work on the other hand.
THE UNFAIR LABOR PRACTICE CASE
(L-22951 * [CIR Case 426-ULP])
Petitioner AFWU's proposition is that the court a quo erred (1) in concluding that MARITIMA had not refused to bargain
collectively with it, as the majority union; (2) in not finding that MARITIMA had committed acts of discrimination,
interferences and coercions upon its members-laborers, and (3) in concluding that the CONTRACT may not be interferred
with even if contrary to law or public policy.
It is true that MARITIMA admits that it did not answer AFWU's proposal for a collective bargaining agreement. From this
it does not necessarily follow that it is guilty of unfair labor practice. Under the law 16 the duty to bargain collectively arises
only between the "employer" and its "employees". Where neither party is an "employer" nor an "employee" of the other,
no such duty would exist. Needless to add, where there is no duty to bargain collectively the refusal to bargain violates no
right. So, the question is: Under the CONTRACT , was MARITIMA the "employer" and AFWU and/or its members the
"employees" with respect to one another?
The court a quo held that under the CONTRACT , AFWU was an independent contractor of MARITIMA. This conclusion was
based on the following findings of fact, which We can no longer disturb, stated in the CIR decision:
7. ... The petitioner union operated as a labor contractor under the so-called "cabo" system; and as such it has a complete
set of officers and office personnel (Exhs. "F" and "F-1") and its organizational structure includes the following: General
President, with the following under him — one vice-president, legal counsel, general treasurer, general manager and the
board of directors. Under the general manager is the secretary, the auditor, and the office staff composing of the general
foreman, general checker, general timekeeper, and the respective subordinates like assistant foreman, capataz, assistant
general checker, field checker, office timekeeper, and field timekeeper all appointed by the general manager of the union
and are paid in accordance with the union payroll exclusively prepared by the union in the office. (See t.s.n. pp. 32-36, June
9, 1960; pp. 78-80, February 16, 1961; pp. 26-28, August 9, 1960). The payrolls where laborers are listed and paid were
prepared by the union itself without the intervention or control of the respondent company and/or its agent at Iligan City.
The respondent never had any knowledge of the individual names of laborers and/or workers listed in the union payroll or
in their roster of membership.
8. The union engaged the services of their members in undertaking the work of arrastre and stevedoringeither to haul
shippers' goods from their warehouses in Iligan City to the MARITIMA boat or from the boat to the different
consignees. The charges for such service were known by the union and collected by them through their bill collector. This
is shown by the preparation of the union forms known as "conduci" or delivery receipts. These "conduci" or receipts
contain informations as to the number and/or volume of cargoes handled by the union, the invoice number, the name of
the vessel and the number of bills of lading covering the cargoes to be delivered. Those delivery receipts are different and
separate from the bills of lading and delivery receipts issued by the company to the consignees or shippers. Cargoes carried
from the warehouses to the boat or from the boat to the consignees were always accompanied by the union checker who
hand-carry the "conduci". Once goods are delivered to their destination the union through its bill collectors prepare the
bills of collection and the charges thereon are collected by the union bill collectors who are employees of the union and not
of the respondent. The respondent had no intervention whatsoever in the collection of those charges as the same are
clearly indicated and described in the labor CONTRACT , Exhibit "A". There were, however, instances when the
respondents were requested to help the union in the collection of charges for services rendered by members of the union
when fertilizers and gasoline drums were loaded aboard the Compañia MARITIMA boats. This was necessary in order to
facilitate the collection of freight and handling charges from the government for auditing purposes. When cargoes are to
be loaded, the shipper usually notifies the petitioner union when to load their cargoes aboard Compañia MARITIMA boats
calling in the port of Iligan City; and when a boat docks in said port, the union undertakes to haul the said shipper's goods
to the boat. In doing this work, the union employs their own trucks or other vehicles or conveyance from shipper's
warehouse to the boat or vice-versa. The respondent has no truck of any kind for the service of hauling cargoes because
such service is included in the CONTRACT executed between the parties. (See Exh. "A").
9. The union members who were hired by the union to perform arrastre and stevedoring work on respondents' vessels at
Iligan port were being supervised and controlled by the general foreman of the petitioner union or by any union assistant
or capataz responsible for the execution of the labor CONTRACT when performing arrastre and/or stevedoring work
aboard vessels of the Compañia MARITIMA docking at Iligan City. The foreman assigned their laborers to perform the
required work aboard vessels of the respondent. For instance, when a boat arrives, the general foreman requests the
cargo report from the chief mate of the vessel in order to determine where the cargoes are located in the hold of the boat
and to know the destination of these cargoes. All the laborers and/or workers hired for said work are union members and
are only responsible to their immediate chief who are officers and/or employees of the union. The respondent firm have
their own separate representatives like checkers who extend aid to the union officers and members in checking the
different cargoes unloaded or loaded aboard vessels of the Compañia MARITIMA. There were no instances where offices
and employees of the respondent Compañia MARITIMA and/or its agent had interferred in the giving of instructions to the
laborers performing the arrastre and/or stevedoring work either aboard vessels or at the wharf of Iligan City. As contractor,
the union does not receive instructions as to what to do, how to do, and works without specific instructions. They have no
fixed hours of work required by the MARITIMA.
10. While cargoes were in transit either from the warehouse to the boat or from the boat to the different consignees, any
losses or damages caused with the said cargoes were charged to the account of the union; and the union likewise imposed
the penalty or fine to any employee who caused or committed the damages to cargoes in transit. Other disciplinary
measures imposed on laborers performing the said work were exercised by the general foreman of the union who has
blanket authority from the union general manager to exercise disciplinary control over their members who were assigned
to perform the work in a group of laborers assigned by the union to perform loading or unloading cargoes when a Compañia
MARITIMA boat docked at Iligan City. The respondents have not at any time interferred in the imposition of disciplinary
action upon the laborers who are members of the union. In one instance, under this situation, the president of the union
himself dismissed one inefficient laborer found to have been performing inefficient service at the time(t.s.n. pp. 17-18,
February 15, 1961).
xxx xxx xxx
13. Erring laborers and/or workers who are affiliates of the union were directly responsible to the union and never to the
respondent. Respondent cannot, therefore, discipline and/or dismiss these erring workers of the union. (Emphasis
supplied)
And in absolving MARITIMA of the unfair labor charge on this point, the court a quo concluded:
From the foregoing circumstances and findings, the Court is of the opinion that no substantial evidence has been
presented to sustain the charge of unfair labor practice acts as alleged to have been committed by herein respondent. The
Court finds no interference in the union activities, if any, of the members of the Allied Free Workers Union as these persons
engaged in the stevedoring and arrastre service were employed by the Allied Free Workers Union as independent
contractor subject to the terms and conditions of their then existing labor CONTRACT Exhibit "A". To construe
the CONTRACT otherwise would tend to disregard the rights and privileges of the parties intended by them in
their CONTRACT . (Exhibit "A"). This Court believes that it may not interfere in the implementation of the said
labor CONTRACT in the absence of abuse by one party to the prejudice of the other. ...
Further, the Court finds that the petitioner, aside from its labor CONTRACT (See Exhibit "A") with the respondent Compañia
MARITIMA also has other labor contracts with other shipping firms on the stevedoring and arrastre work; and that this
CONTRACT obligated the petitioner as an independent labor contractor to undertake the arrastre and stevedoring service
on Compañia MARITIMA boats docking at Iligan City Port. The petitioner is an independent contractor as defined in
the CONTRACT Exhibit "A" and in the evidence submitted by the parties. "An independent contractor is one who, in
rendering services, exercises an independent employment or occupation and represents the will of his employer only as
to the results of his work and not as to the means whereby it is accomplished; one who exercising an independent
employment, contracts to do a piece of work according to his own methods, without being subject to the control of his
employer except as to the result of his work; and who engaged to perform a certain service for another, according to his
own manner and methods, free from the control and direction of his employer in all matters connected with the
performance of the service except as to the result of the work." (see 56 C.J.S. pp. 41-43; Cruz, et al. vs. Manila Hotel et al.,
G.R. No. L-9110, April 30, 1957). These factors were present in the relation of the parties as described in their CONTRACT
Exhibit "A".
xxx xxx xxx
In Viaña vs. Al Lagadan et al., G.R. No. L-8967, May 31, 1956, the Supreme Court states the rule as follows.
'In determining the existence of employer-employee relationship, the following elements are generally considered,
namely: (1) the selection and engagement of the employees; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee's conduct — although the latter is the most important element (35 Am. Jur. 445).
Assuming that the share received by the deceased could partake of the nature of wages — on which we need not and do
not express our view — and that the second element, therefore, exists in the case at bar, the record does not contain any
specific data regarding the third and fourth elements.'
The clear implication of the decision of the Supreme Court is that if the defendant has no power of control — which,
according to the Supreme Court, is the "most important element" — there is no employer-employee relationship.
(Emphasis supplied)
The conclusion thus reached by the court a quo is in full accord with the facts and the applicable jurisprudence. We totally
agree with the court a quo that AFWU was an independent contractor. And an independent contractor is not an
"employee".17
Neither is there any direct employment relationship between MARITIMA and the laborers. The latter have no separate
individual contracts with MARITIMA. In fact, the court a quo found that it was AFWU that hired them. Their only possible
connection with MARITIMA is through AFWU which contracted with the latter. Hence, they could not possibly be in a
better class than AFWU which dealt with MARITIMA.18
In this connection, it is interesting to note that the facts as found by the court a quo strongly indicate that it is AFWU itself
who is the "employer" of those laborers. The facts very succinctly show that it was AFWU, through its officers, which (1)
selected and hired the laborers, (2) paid their wages, (3) exercised control and supervision over them, and (4) had the
power to discipline and dismiss them. These are the very elements constituting an employer-employee relationship.19
Of course there is no legal impediment for a union to be an "employer". 20 Under the particular facts of this case,
however, AFWU appears to be more of a distinct and completely autonomous business group or association. Its
organizational structure and operational system is no different from other commercial entities on the same line. It even
has its own bill collectors and trucking facilities. And that it really is engaged in business is shown by the fact that it had
arrastre and stevedoring contracts with other shipping firms in Iligan City.
Now, in its all-out endeavor to make an "employer" out of MARITIMA, AFWU citing an impressive array of jurisprudence,
even goes to the extent of insisting that it be considered a mere "agent" of MARITIMA. Suffice it to say on this point that
an agent can not represent two conflicting interests that are diametrically opposed. And that the cases sought to be relied
upon did not involve representatives of opposing interests.
Anent the second point raised: AFWU claims that the court a quo found that acts of interferences and discriminations
were committed by MARITIMA against the former's members simply for their union affiliation. 21However, nowhere in the
32-page decision of the court a quo can any such finding be found. On the contrary, said court made the following finding:
18. There is no showing that this new union, the Iligan Stevedoring Union, was organized with the help of the branch
manager Jose C. Teves. The organizer of the union like Messrs. Sergio Obach, Labayos and Atty. Obach and their colleagues
have never sought the intervention, help or aid of the respondent Compañia MARITIMA or its branch manager Teves in
the formation and/or organization of the said Iligan Stevedoring Union. It appears that these people have had previous
knowledge and experience in handling stevedoring and in the arrastre service prior to the employment of the Allied Free
Workers Union in the Iligan port. The charge of union interference and domination finds no support from the evidence.
(Emphasis supplied)
More worthy of consideration is the suggestion that the termination of the CONTRACT was in bad faith. First of all, contrary
to AFWU's sweeping statement, the court a quo did not find that the termination of the CONTRACT was "in retaliation
to AFWU's demand for collective bargaining. On the contrary, the court a quo held that MARITIMA's authority to
terminate the CONTRACT was rightfully exercised:
21. The evidence does not show substantially any act of interference in the union membership or activities of the petitioner
union. The rescission of their CONTRACT is not a union interference contemplated in the law.
xxx xxx xxx
x x x Further, the Court is satisfied that there is no act or acts of discrimination as claimed by herein petitioner to have been
committed by the respondent firm or its branch manager Teves. Evidence is clear that Teves, in representation of the
principal, the respondent Compañia MARITIMA, has also acted, in good faith in implementing the provisions of their
existent CONTRACT (Exhibit "A"), and when he advised the union of the rescission of the said CONTRACT effective August
31, 1954, he did so in the concept that the employer firm may so terminate their contract pursuant to paragraph 4 of
Exhibit "A" which at the time was the law controlling between them. ... (Emphasis supplied)
We are equally satisfied that the real reason for the termination of the CONTRACT was AFWU's inefficient service. The
court a quo drew its conclusion from the following findings:
11. During the first month of the existence of the labor CONTRACT Exhibit 'A', the petitioner union rendered satisfactory
service. Under this situation, the Compañia MARITIMA's representative at Iligan City was authorized to renew verbally
with the extension of the CONTRACT Exhibit "A" from month to month basis after the first month of its expiration. This
situation of harmony lasted up to the latter part of 1953 when the Compañia MARITIMA and its branch manager agent
complained to the union of the unsatisfactory service of the union laborers hired to load and unload cargoes aboard
Compañia MARITIMA boats. This deteriorating situation was admitted as a fact by the union president (See Exhs. "3", "3-
A" and "3-B"; See also t.s.n. pp. 65-66, August 9, 1960).
12. There was a showing that the laborers employed by the union were inefficient in performing their jobs, and the business
of the respondent company in Iligan City suffered adversely during the year 1954; and this was due to the fact that
respondents' vessels were forced to leave cargoes behind in order not to disrupt the schedule of departures. The Union
laborers were slow in loading and/or unloading freight from which the respondent Compañia MARITIMA secured its income
and/or profits. At times, cargoes were left behind because of the union's failure to load them before vessel's departure.
In order to solve this inefficiency of the complaining union, the branch manager of the Compañia MARITIMA was forced
to hire extra laborers from among 'stand-by' workers not affiliated to any union for the purpose of helping in the
stevedoring and arrastre work on their vessels because, at that time, the union was not performing and/or rendering
efficient service in the loading and unloading of cargoes. ...
xxx xxx xxx
14. Because of the deterioration of the Service rendered to the respondent, the branch manager of the respondent
Compañia MARITIMA informed the union of its intention to rescind the CONTRACT Exhibit "A" because the company had
been suffering losses for such inefficient service. (See Exhibit "N").
Respondent Teves reported to the MARITIMA's head office on the financial losses of the company in its operations. (See
Exhibits 'Y', 'Y-1' to 'X-5').
15. On August 24, 1954, branch manager Jose C. Teves of the Iligan City MARITIMA Branch, wrote the petitioner union
informing them of the termination of their CONTRACT , Exhibit "A". (See Exhibit "N"). This step was taken after the
company found the union lagging behind their work under the CONTRACT , so much so that MARITIMA boats have to leave
on schedule without loading cargoes already contacted to be transported. (Emphasis supplied)
Perhaps, AFWU might say that this right to terminate appearing in paragraph 4 of the CONTRACT is contrary to law,
morals, good customs, public order, or public policy. 22 However, it has not adduced any argument to demonstrate such
point. Moreover, there is authority to the effect that the insertion in a CONTRACT for personal services of a resolutory
condition permitting the cancellation of the CONTRACT by one of the contracting parties is valid. 23Neither would the
termination constitute "union-busting". Oceanic Air Products vs. CIR, 24 cited by AFWU is not in point. That case
presupposes an employer-employee relationship between the parties disputants — a basis absolutely wanting in this case.
AFWU's third point is again that MARITIMA's act of terminating the CONTRACT constituted union interference. As stated,
the court a quo found as a fact that there is no sufficient evidence of union interference. And no reason or argument has
been advanced to show that the fact of said termination alone constituted union interference.
THE CERTIFICATION ELECTION CASE
(L-22952 ** & L-22971 [CIR Case No. 175-MC]).
In the certification ejection case, the court a quo directed the holding of a certification election among the laborers then
doing arrastre and stevedoring work. Both MARITIMA and AFWU have appealed from that ruling. The latter maintains
that the lower court should have directly certified it as the majority union, entitled to represent all the workers in the
arrastre and stevedoring work unit, whereas MARITIMA contends that said court could not even have correctly ordered a
certification election considering that there was an absence of employer-employee relationship between it and said
laborers.
There is no question that certification election could not have been proper during the existence of the CONTRACT in view
of the court a quo's finding that there was no employment relationship thereunder between the parties. But after the
termination of the CONTRACT on August 31, 1954, what was the nature of the relationship between MARITIMA and the
laborers-members of AFWU?
From the finding that after the rescission of the CONTRACT , MARITIMA continued to avail of the services of AFWUthe
court a quo concluded that there came about an implied employer-employee relationship between the parties. This
conclusion cannot be sustained.
First of all, it is contradicted by the established facts. In its findings of fact, the court a quo observed that after the
rescission, the AFWU laborers continued working in accordance with the "cabo" system, which was the prevailing custom
in the place. Said the court:
20. After the rescission of the CONTRACT Exhibit "A" on August 31, 1954, the Allied Free Workers Union and its members
were working or performing the work of arrastre and stevedoring service aboard 'vessels of the Compañia MARITIMA
docking at Iligan City port under the 'cabo system' then prevailing in that teritory; and the customs and conditions then
prevailing were observed by the parties without resorting to the conditions of the former labor contract Exhibit "A".
(Emphasis supplied)
Under the "Cabo" system, the union was an independent contractor. This is shown by the court a quo's own finding that
prior to the CONTRACT between MARITIMA and AFWU, the former had an oral arrastre and stevedoring agreement with
another union. This agreement was also based on the "cabo" system. As found by the court a quo:
4. That prior to the execution of Exhibit "A", the arrastre and stevedoring work was performed by the Iligan Wharf Laborers
Union headed by one Raymundo Labayos under a verbal agreement similar to the nature and contents of Exhibit "A"; and
this work continued from 1949 to 1952.
5. Under the oral CONTRACT , the Iligan Laborers Union acting as an independent labor contractor engaged [in] the services
of its members as laborers to perform the contract work of arrastre and stevedoring service aboard vessels of the Compañia
MARITIMA calling and docking at Iligan City; and for the services therein rendered the union charged shippers and/or
consignees in accordance with the consignment or place, and the proceeds thereof shall be shared by the union members
in accordance with the union's internal rules and regulations. This system of work is locally known as the 'cabo system'.
The laborers who are members of the union and hired for the arrastre and stevedoring work were paid on union payrolls
and the Compañia MARITIMA has had nothing to do with the preparation of the same.
6. Because of unsatisfactory service rendered by the Iligan Wharf Labor Union headed by Labayos, the
Compañia MARITIMA through its agent in Iligan City cancelled their oral contractor and entered into a new contractor,
Exhibit "A" with the Allied Free Workers Union (PLUM) now petitioner in this case. The terms and conditions of the same
continued and was similar to the oral contractor entered into with the union headed by Labayos. ...
7. The cancellation of the oral contract with the Iligan Wharf Labor Union headed by Labayos was due to the inefficient
service rendered by the said union. The labor contract entered into by the petitioner herein (Exh. "A") was negotiated
through the intervention of Messrs. Salvador Lluch, Mariano Ll Badelles, Laurentino Ll. Badelles, Nicanor T. Halivas and
Raymundo Labayos. The contract was prepared by their legal panel and after several negotiations, respondent Teves
reluctantly signed the said written contract with the union with the assurance however that the same arrange previously
had with the former union regarding the performance and execution of the arrastre and stevedoring contract be followed
in accordance with the custom of such kind of work at Iligan City. The petitioner union, operated as a labor contractor
under the so-called "cabor" system; ... (Emphasis supplied)
From the above findings, it is evident that, insofar as the working arrangement was concerned, there was no real
difference between the CONTRACT and the prior oral agreement. Both were based on the "cabo" system. Under both, (1)
the union was an independent contractor which engaged the services of its members as laborers; (2) the charges against
the consignees and owners of cargoes were made directly by the union; and (3) the laborers were paid on union payrolls
and MARITIMA had nothing to do with the preparation of the same. These are the principal characteristics of the "cabo"
system on which the parties based their relationship after the termination of the CONTRACT.
Hence, since the parties observed the "cabo" system after the rescission of the CONTRACT, and since the characteristics
of said system show that the contracting union was an independent contractor, it is reasonable to assume
that AFWU continued being an independent contractor of MARITIMA. And, being an independent contractor, it could not
qualify as an "employee". With more reason would be true with respect to the laborers.
Moreover, there is no evidence at all regarding the characteristics of the working arrangement
between AFWU and MARITIMA after the termination of the CONTRACT. All we have to go on is the court a quo's finding
that the "cabo" system was observed — a system that negatives employment relationship. The four elements generally
regarded as indicating the employer-employee relationship — or at the very least, the element of "control" — must be
shown to sustain the conclusion that there came about such relationship. The lack of such a showing in the case at bar is
fatal to AFWU's contention.
Lastly, to uphold the court a quo's conclusion would be tantamount to the imposition of an employer-employee
relationship against the will of MARITIMA. This cannot be done, since it would violate MARITIMA's exclusive prerogative
to determine whether it should enter into an employment CONTRACT or not, i.e, whether it should hire others or
not. 25 In Pampanga Bus Co. vs. Pambusco Employees' Union, 26 We said:
x x x The general right to make a contract in relation to one's business is an essential part of the liberty of the citizens
protected by the due process clause of the constitution. The right of a laborer to sell his labor to such person as he may
choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The
employer and the employee have thus an equality of right guaranteed by the constitution. 'If the employer can compel
the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work
against the employer's will, this is oppression (Emphasis supplied) .
Therefore, even if the AFWU laborers continued to perform arrastre and stevedoring work after August 31, 1954, it cannot
be correctly concluded — as did the court a quo — that an employer-employee relationship — even impliedly at that —
arose when before there never had been any. Indeed, it would appeal unreasonable and unjust to force such a relationship
upon MARITIMA when it had clearly and continuously manifested its intention not to have any more business relationship
whatsoever with AFWU because of its inefficient service. It was only to comply with injunctions and other judicial
mandates that MARITIMA continued to abide by the status quo, extending in fact and in effect the operation of
the MARITIMA contract.
The only remaining question now is whether, in the particular context of what We have said, the lower court's ruling
ordering a certification election can be sustained. As already stated, the duty to bargain collectively exists only between
the "employer" and its "employees". However, the actual negotiations — which may possibly culminate in a concrete
collective bargaining contract — are carried on between the "employer" itself and the official representative of the
"employees" 27 — in most cases, the majority labor union. Since the only function of a certification election is to determine,
with judicial sanction, who this official representative or spokesman of the "employees" will be, 28 the order for
certification election in question cannot be sustained. There being no employer-employee relationship between the
parties disputants, there is neither a "duty to bargain collectively" to speak of. And there being no such duty, to hold
certification elections would be pointless. There is no reason to select a representative to negotiate when there can be no
negotiations in the first place. We therefore hold that where — as in this case — there is no duty to bargain collectively,
it is not proper to hold certification elections in connection therewith.
The court a quo's objective in imposing the employer-employee relationship may have been to do away with the "cabo"
system which, although not illegal, is in its operation regarded as disadvantageous to the laborers and stevedores. The
rule however remains that the end cannot justify the means. For an action to be sanctioned by the courts, the purpose
must not only be good but the means undertaken must also be lawful.
A true and sincere concern for the welfare of AFWU members-laborers would call for reforms within AFWU itself, if the
evil of the so-called "cabo" system is to be eliminated. As We suggested in Bermiso vs. Hijos de Escaño, 29 the remedy
against the "cabo" system need not be sought in the courts but in the laborers themselves who should organize into a
closely-knit union "which would secure the privileges that the members desire thru the election of officers among
themselves who would not exploit them."
Wherefore, the appealed decision of the Court of Industrial Relations is hereby affirmed insofar as it dismissed the charge
of unfair labor practice in CIR Case 426-ULP, but reversed and set aside insofar as it ordered the holding of a certification
election in CIR Case No. 175-MC, and the petition for certification in said case should be, as it is hereby, dismissed. No
costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.
THIRD DIVISION
G.R. No. L-52824 March 16, 88
REYNALDO BAUTISTA, petitioner,
vs.
HON. AMADO C. INCIONG, in his capacity as Deputy Minister of Labor and ASSOCIATED LABOR UNIONS
(ALU), respondents.

GUTIERREZ, JR., J.:

This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein petitioner principally
on the ground that no employer-employee relationship existed between the petitioner and respondent Associated Labor
Unions (ALU).
The facts as found by the National Capital Region Director of the then ministry of Labor (MOL) Region IV are as follows:
Complainant (petitioner) was employed by ALU as 'Organizer' in 1972 with a starting salary of P250.00 a month. As such
he paid his monthly SSS contributions, with the respondent as his employer. On March 15, 1979, He was left in the office
of ALU while his other co-organizers were in Cainta, Rizal attending a certification election at Chrysler Philippines, as he
was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for ten (10) days. His SSS
sickness benefit application form signed by ALU's physician was given to ALU for submission to the SSS. On March 16,
1979, complainant reported back for work upon expiration of his leave but was informed by ALU's Area Vice-President for
Luzon of his termination effective March 15, 1979. Hence, this complaint filed on March 28, 1979. On April 18, 1979,
however, ALU filed a clearance application to terminate complainant's services effective March 16, 1979 on the ground of
abandonment of work. (p. 48, Rollo)
Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate the
petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and to refund
his Mutual Aid Fund Deposit in the amount of P 370.00
Respondent ALU appealed to the Ministry of Labor. On October 23,1979, the respondent Deputy Minister set aside the
order of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister found
that the petitioner was merely accomodated by the respondent union after he was dismissed by his former employer
sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is the one paying
the employer's share in the premiums is not conclusive proof that respondent is the petitioner's employer because such
payments were performed by the respondent as a favor for all those who were performing full time union activities with
it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an employer-employee
relationship between the parties is bolstered by the fact that respondent ALU is not an entity for profit but a duly
registered labor union whose sole purpose is the representation of its bona fide organization units where it is certified as
such.
In this petition, the petitioner contends that the respondent Deputy minister committed grave abuse of discretion in
holding that there was no employer-employee relationship between him and the respondent union so much so that he is
not entitled to the benefits that he is praying for.
We agree with the petitioner.
There is nothing in the records which support the Deputy minister's conclusion that the petitioner is not an employee of
respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be considered an
employer of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as
labor organization. In case of es v. Brotherhood Labor Unity Movement in the Phillipines Zamora, ,(147 SCRA 49, 54), we
outlined the factors in ascertaining an employer-employee realtionship:
In determining the existence of an employer-employee relationship, the elements that are generally considered are the
following : (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employer's power to control the employee with respect to the means and methods by which the work is to be
accomplished. It is the so-called 'control test' that is the most important element (Investment Planning Corp. of the Phils.
v. The Social Security System, 21 SCRA 492; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131
SCRA 72)
In the case at bar, the Regional director correctly found that the petitioner was an employee of the respondent union as
reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System
(SSS) and the respondent union's share of remittances in the petitioner's favor. Even more significant, is the respondent
union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista was selected and
hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And
definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal
basis got deputy Minister Inciong's decision.
We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show that
antipathy and antagonism between the petitioner and the respondent union militate against the former's reinstatement.
ALU would not want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize
commercial and industrial establishments. Severance pay, therefore, is more proper in order. As we have ruled in the case
of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23, 1987) quoting the cast of Balaquezon
EWTU v. Zamora, (97 SCRA 5,8):
It should be underscored that the backwages are being awarded on the basis of equity or in the nature of severance pay.
This means that a monetary award is to be paid to the employees as an alternative to reinstatement which can no longer
be effected in view of the long passage of time or because of the realities of the situation. (Emphasis supplied)
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is ANNULLED and SET
ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and ordered executed but instead of returning
the petitioner to his former position, the private respondent is ordered to pay him an amount equal to his backwages for
only three years and the separation pay to which he may be entitled as of the end of the three year period under the
applicable law or collective bargaining agreement.
SO ORDERED.
THIRD DIVISION
[G.R. No. 129076. November 25, 1998]
ORLANDO FARM GROWERS ASSOCIATION/GLICERIO AOVER, petitioner, vs. THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION (FIFTH DIVISION), ANTONIO PAQUIT, ESTHER BONGGOT, FRANCISCO BAUG, LEOCADIO
ORDONO, REBECCA MOREN, MARCELINA HONTIVEROS, MARTIN ORDONO, TITO ORDONO, FE ORDONO, ERNIE COLON,
EUSTIQUIO GELDO, DANNY SAM, JOEL PIAMONTE, FEDERICO PASTOLERO, VIRGINIA BUSANO, EDILMIRO ALDION,
EUGENIO BETICAN, JR. and BERNARDO OPERIO, respondents.
DECISION
ROMERO, J.:
It is a settled doctrine that an employer-employee relationship can be deduced from the existence of the following
elements: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee's conduct.
The principal issue to be resolved in the instant petition is whether or not an unregistered association may be an employer
independent of the respective members it represents.
The evidence reveals the ensuing facts:
Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Aover as its President, is an association of
landowners engaged in the production of export quality bananas located in Kinamayan, Sto. Tomas, Davao del Norte,
established for the sole purpose of dealing collectively with Stanfilco on matters concerning technical services, canal
maintenance, irrigation and pest control, among others. Respondents, on the other hand, were hired as farm workers by
several member-landowners but, nonetheless, were made to perform functions as packers and harvesters in the
plantation of petitioner association.
After respondents were dismissed on various dates from January 8, 1993 to July 30, 1994, several complaints were filed
against petitioner for illegal dismissal and monetary benefits. Based on similar grounds, the same were consolidated in
the office of Labor Arbiter Newton R. Sancho who, in a decision dated September 6, 1995, ordered their reinstatement, viz:
"WHEREFORE, judgment is hereby rendered declaring the dismissal of the 20 above-named complainants ILLEGAL, and
ordering respondents Orlando Farms Growers Association/Glicerio Anover to REINSTATE them immediately to their
former or equivalent positions, and to PAY individual complainants their respective backwages and other benefits (wage
differentials, 13th month pay and holiday pay) appearing opposite their names above set forth, including moral damages
and attorney's fees, in the total amount of P1,047,720.92 only.
All other claims are dismissed for lack of merit.
As becoming a collective association, respondents liabilities to complainants are joint and solidary, with its responsible
officers.
The case of Loran Paquit and Lovilla Dorlones[1] is dropped for having been amicably settled.
In case of appeal, backwages and other benefits shall accrue but in no case exceeding 3 years, without any qualification
or deduction.
SO ORDERED."[2]
On appeal, the National Labor Relations Commission (NLRC) affirmed the same in toto in a decision dated December 26,
1996. Its motion for reconsideration having been denied on February 25, 1997, petitioner filed the instant petition
for cetiorari.
Petitioner alleged that the NLRC erred in finding that respondents were its employees and not of the individual
landownners which fact can easily be deduced from the payments made by the latter of respondent's Social Security
System (SSS) contributions. Moreover, it could have never exercised the power of control over them with regard to the
manner and method by which the work was to be accomplished, which authority remain vested with the landowners
despite becoming members thereof.
The arguments adduced before us do not warrant the nullification of the findings made by the Labor Arbiter and the NLRC
as the determination of the existence of an employer-employee relationship between the party-litigants, being a question
of fact, is amply supported by substantial evidence, as can be gathered from a perfunctory reading, not only of the
pleadings submitted, but from the assailed decision, as well. Thus, the authority of this Court to review the findings of the
NLRC is limited to allegations of lack of jurisdiction or grave abuse of discretion.
The contention that petitioner, being an unregistered association and having been formed solely to serve as an effective
medium for dealing collectively with Stanfilco, does not exist in law and, therefore, cannot be considered an employer, is
misleading. This assertion can easily be dismissed by reference to Article 212(e) of the Labor Code, as amended, which
defines an employer as any person acting in the interest of an employer, directly or indirectly. Following a careful scrutiny
of the said provision, the Court concludes that the law does not require an employer to be registered before he may come
within the purview of the Labor Code, consistent with the established rule in statutory construction that when the law
does not distinguish, we should not distinguish. To do otherwise would bring about a situation whereby employees are
denied, not only redress of their grievances, but, more importantly, the protection and benefits accorded to them by law
if their employer happens to be an unregistered association.
To reiterate, as held in the case of Filipinas Broacasting Network, Inc. v. NLRC,[3] the following are generally considered in
the determination of the existence of an employer-employee relationship: (1) the manner of selection and engagement;
(2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the
power of control; of these four, the last one being the most important.
In the instant case, the following circumstances which support the existence of employer-employee relations cannot be
denied. During the subsistence of the association, several circulars and memoranda were issued concerning, among other
things, absences without formal request, loitering in the work area and disciplinary measures with which every worker is
enjoined to comply. Furthermore, the employees were issued identification cards which the Court, in the case of Domasig
v. NLRC,[4] construed, not only as a security measure but mainly to identify the holder as a bonafide employee of the
firm. However, what makes the relationship explicit is the power of the petitioner to enter into compromise agreements
involving money claims filed by three employees, namely: Lorna Paquit, Lovella Dorlones and Jasmine Espanola. If
petitioner's disclaimer were to believed, what benefit would accrue to it in settling an employer-employee dispute to
which it allegedly lay no claim?
In spite of the overwhelming evidence sufficient to justify a conclusion that respondents were indeed employees of
petitioner, the latter, nevertheless, maintain the preposterous claim that the ID card, circulars and memoranda were
issued merely to facilitate the efficient use of common resources, as well as to promote uniform rules in the work
establishment. On this score, we defer to the observations made by the NLRC when it ruled that, while the original purpose
of the formation of the association was merely to provide the landowners a unified voice in dealing with Stanfilco,
petitioner however exceeded its avowed intentions when its subsequent actions reenforced only too clearly its admitted
role of employer. As reiterated all too often, factual findings of the NLRC, particularly when they coincide with those of
the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are supported
by substantial evidence.[5]
Prescinding from the foregoing, we now address the issue of whether or not petitioner had a valid ground to dismiss
respondents from their respective employment.
It is settled that in termination disputes, the employer bears the burden of proving that the dismissal is for just cause,
failing which it would mean that the dismissal is not justified and the employer is entitled to reinstatement.[6] The dismissal
of employees must be made within the parameters of the law and pursuant to the basic tenets of equity, justice and fair
play.[7] In Brahm Industries, Inc. v. NLRC,[8] the Court explained that there are two (2) facets of valid termination of
employment: (a) the legality of the act of dismissal, i.e., the dismissal must be under any of the just causes provided under
Art. 282[9] of the Labor Code; and (b) the legality of the manner of dismissal, which means that there must be observance
of the requirements of due process, otherwise known as the two-notice rule. Thus, "the employer is required to furnish
the employee with a written notice containing a statement of the cause for termination and to afford said employee ample
opportunity to be heard and to defend himself with the assistance of his representative, if he so desires. The employer is
also required to notify the worker in writing of the decision to dismiss him, stating clearly the reasons therefore."[10]
In the instant case, petitioner severed employment relations when it whimsically dismissed the respondents in utter
disregard of the safeguards underscored in the Constitution, as well as in the Labor Code. Petitioner failed to controvert
the allegation that it was responsible for the dismissal of the employees. Instead of denying the same or otherwise
imputing liability on its member-landowner by naming the employees allegedly in his employ, petitioner was silent on the
issue and harped on the non-existence of employer-employee relationship between the parties, which contention we find
to be tangential. However related the issue might seem, it would have been more relevant for the petitioner to have
presented ample evidence before the NLRC and this Court to justify its exoneration from liability. Having failed in this
respect, we deem it fatal to its defense.
For having been dismissed without a valid cause and for non-observance of the due process requirement, respondents,
consistent with recent jurisprudence laid down in the case of Bustamante v. NLRC,[11] are entitled to receive full backwages
from the date of their dismissal up to the time of their reinstatement. The order, therefore, of the labor arbiter limiting
backwages to a period of three (3) years in the event of an appeal, is erroneous.
WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of the National Labor Relations
Commission dated September 6, 1995 is AFFIRMED subject to the deletion of the award of moral damages and attorney's
fees. The Court, however, is remanding this case to Labor Arbiter Newton R. Sancho to specify in the dispositive portion
of his decision the names of the respondents and the amount that each is entitled to.
SO ORDERED.
G.R. No. L-21120 February 28, 1967
PHILIPPINE AIR LINES, INC., petitioner,
vs.
PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION and COURT OF INDUSTRIAL RELATIONS, respondents.
Paredes, Poblador, Cruz & Nazareno for petitioner.
Tañada, Lerum & Cinco and Beltran & Lacson for respondents.
Mariano B. Tuason for respondent Court of Industrial Relations.
CONCEPCION, C.J.:
Appeal by certiorari , taken by the Philippine Air Lines, Inc. — hereinafter referred to as the PAL from an order of the Court
of Industrial Relations — hereinafter referred to as the CIR — the dispositive part of reads:
WHEREFORE , THE Philippine Air Lines is hereby ordered to pay the four claimants, Messrs. Fortuno Biangco, Hernando
Guevarra, Bernardino Abarrientos and 140 days each, sick leave which the two may use or enjoy according to existing
company rules, and regulations regarding this privilege, and to allow the four claimants the enjoyment of their earned and
accumulated free trip passes both here and aboard subject to the above-mentioned plan the company may adopt. In order
to effect early payment of the Christmas bonus, the Chief Examiner of the Court or his duly authorized representatives is
hereby directed to examine; pertinent records of the company, to compute and determine the Christmas bonus due each
of the four claimant and to submit a report therefore immediately upon completion of the same.
It appears that on May 4, 1950, PAL dismissed its above named four (4) employees, who are member of the Philippine Air
Lines Employees Association — hereinafter referred to as PALEA — and that on July 13, 1954, the CIR en banc passed
resolution, in Case No. 465-V thereof, directing the reinstatement of said employess "to their former or equivalent position
in the company, with back wages from the date of their reinstatement, and without prejudice to their seniority or other
rights and privileges. This resolution was affirmed by the Supreme Court, in G.R. No. L-8197, on October 31, 1958.
On January 14, 1959, said employees were reinstated and subsequently their backwages, computed at the rate of their
compensation at the time of the aforementioned dismissal, less the wages and salaries earned by them elsewhere during
the lay-off period, were paid to them. The employees objected to this deduction and the CIR sustained them, in a
Resolution dated May 22, 1960, which was reversed by the Supreme Court, on July 26, 1960, in G.R. No. L-15544. Soon
later, or on November 10, 1960, the PALEA moved for the execution of the CIR resolution of July 13, 1954, as regards the
"other rights and privileges" therein mentioned, referring, more specifically to: (1) Christmas bonus from 1950 to 1958;
(2) accumulated sick leave; (3) transportation allowance during lay-off period; and (4) accumulated free trip passes, both
domestic and international. By an order dated October 8, 1962, the CIR granted this motion, except as regards the sick
leave of Onofre Griño and Bernardino Abarrientos, and the transportation allowance, which were denied. Hence this
appeal.
PAL maintains that the CIR has erred in acting as it did, because : (1) the aforementioned privileges were not specifically
mentioned in the CIR resolution of July 13, 1954; (2) the order of the CIR dated October 8, 1962, had, allegedly, the effect
of amending said resolution; and (3) the clause therein "without prejudice to their seniority or other rights and privileges"
should be construed prospectively, not retroactively.
Insofar as the Christmas bonus, the accumulated sick leave privileges and the transportation allowance during the lay-off
period, the PAL's contention is clearly devoid of merit. The aforementioned clause must be considered in the light of the
entire context of the resolution of July 13, 1954 and of its dispositive part. In ordering therein the "reinstatement" of said
employees with "back wages from the date of their dismissal to the date of their reinstatement, and without prejudice to
their seniority or other rights and privileges," it is obvious that the resolution intended to restore the employees to their
status immediately prior to their dismissal.
Hence, it directed , not only their reinstatement, but, also, the payment of their back wages during the period of their lay-
off — thus referring necessarily to a period of time preceding their reinstatement — and the retention of "their seniority
or other rights and privileges". Rights reinstatement, but at the time? Certainly, not after their reinstatement, but at the
time of their aforementioned dismissal. In other words, the reinstatement was with back wages for the lay-off period,
coupled with "seniority or other rights and privileges", attached to the status of the employees when they were dismissed.
To put it differently, the CIR treated said employees as if they had not been absent form work and had been
uninterruptedly working during the lay-off period.1äwphï1.ñët
Thus, in Republic Steel Corporation vs. NLRB (114 F. 2d. 820), it was held that, under a decree of the Circuit Court of Appeals
and Order of the National Labor Relations Board directing the employer to reinstate the striking employees without
prejudice to their seniority or other rights or privileges, it was the intention of the Board and Court to provide that, upon
reinstatement the employees were to be treated in matters involving seniority and continuity of employment as though
they had not been absent from work, and hence the reinstated employees were entitled to the benefits of the employer's
vacation plan for the year in which they were reinstated and subsequent years upon the basis of continuity of service
computed as though they had been actually at during the entire period from the date of strike to the date of reinstatement.
As a consequence, the employees involved in the case at bar are entitled to the Christmas bonus that PAL had given to all
of its employees during said period, for said bonus, having been paid regularly, has become part of the compensation of
the employees.1 Said employees are, likewise, entitled to transportation allowance and the corresponding sick leave
privileges. These sick leave privileges are subject, however, to the following qualifications, namely: (1) that the
accumulated sick leave cannot exceed 140 days, pursuant to the collective bargaining agreement between the PAL and
the PALEA, effective in 1959; and (2) that, pursuant to the same agreement, which denies sick leave privileges to retired
employees, Onofre Griño and Bernardino Abarrientos, who have retired, are not entitled to said privileges.
The PAL's appeal as regards the free trip passes is, however, well taken, for the employees had no absolute right thereto,
even if they had actually rendered services during the lay-off period. The free trip passes were given, neither automatically,
nor indiscriminately. The employees had to apply therefore and their applications were subject PAL's approval.
Wherefore, except as to the free trip passes for the lay-off period, which should not be deemed included in the "rights
and privileges" awarded in the resolution of July 13, 1954, and subject to the qualification that the accumulated sick leave
privileges cannot exceed 140 days, the appealed resolution of October 8, 1962, is hereby affirmed in all other respects,
without pronouncement as to costs. It is so ordered.
Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, Sanchez and Castro, JJ., concur.