G.R. No.

156635, January 11, 2016

THE HONGKONG & SHANGHAI BANKING CORPORATION
EMPLOYEES UNION, et. al. v. NATIONAL LABOR RELATIONS
COMMISSION AND THE HONGKONG & SHANGHAI BANKING
CORPORATION, LTD.,
Labor Law: Limitations on the exercise of the right to strike. The right to
strike is a constitutional and legal right of all workers because the strike,
which seeks to advance their right to improve the terms and conditions of
their employment, is recognized as an effective weapon of labor in their
struggle for a decent existence. However, the right to strike as a means for
the attainment of social justice is never meant to oppress or destroy the
employers. Thus, the law prescribes limits on the exercise of the right to
strike.
Labor Law: Individual Liability over Illegal Strike. Conformably with Article
264, we need to distinguish between the officers and the members of the
union who participate in an illegal strike. The officers may be deemed
terminated from their employment upon a finding of their knowing
participation in the illegal strike, but the members of the union shall suffer
the same fate only if they are shown to have knowingly participated in the
commission of illegal acts during the strike. Article 264 expressly requires
that the officer must have knowingly participated in the illegal strike.
Same: Non-compliance with due process resulted in illegal dismissal. While
Article 264 authorizes the termination of the union officers and employees,
it does not remove from the employees their right to due process.
Regardless of their actions during the strike, the employees remain entitled
to an opportunity to explain their conduct and why they should not be
penalized.
Same: Rules of Interpretation. Verba legis non est recedendum. The words
of a statute, when they are clear, plain and free from ambiguity, must be
given their literal meaning and must be applied without interpretation
BERSAMIN, J.:
FACTS: Petitioner Hongkong & Shanghai Banking Corporation Employees
Union (Union) was the duly recognized collective bargaining agent of the
rank-and-file employees of respondent Hongkong & Shanghai Banking
Corporation (HSBC). HSBC announced its implementation of a job
evaluation program (JEP) which consisted of a job designation per grade
level with the accompanying salary scale providing for the minimum and
maximum pay the employee could receive per salary level. The Union
demanded the suspension of the JEP, which it labeled as an unfair labor

practice (ULP) and subsequently informed HSBC that it would exercise its
right to concerted action. The Union members started picketing during
breaktime.
The Union's concerted activities persisted for 11 months, notwithstanding
that both sides had meanwhile started the re-negotiation of the economic
provisions of their CBA. The continued concerted actions impelled HSBC to
suspend the negotiations.
On December 22, 1993, the Union's officers and members walked out and
gathered outside the premises of HSBC's offices on Ayala Avenue, Makati
and Ortigas Center, Pasig. According to HSBC, the Union members blocked
the entry and exit points of the bank premises, preventing the bank officers
from entering and/or leaving the premises. With this, HSBC filed its
complaint to declare the strike illegal. In the meantime, HSBC issued
return-to-work notices to the striking employees; however, only 25
employees complied and returned to work. Due to the continuing concerted
actions, HSBC terminated the individual petitioners.
Labor Arbiter (LA) Felipe P. Pati declared the 22 December 1993 strike
illegal for failure of the Union to file the notice of strike with the
Department of Labor and Employment (DOLE); to observe the cooling-off
period; and to submit the results of the strike vote to the National
Conciliation and Mediation Board (NCMB) pursuant to Article 263 of the
Labor Code. He concluded that because of the illegality of the strike the
Union members and officers were deemed to have lost their employment
status.
On appeal, the NLRC modified the ruling of LA Pati, and pronounced the
dismissal of 18 Union members unlawful for failure of HSBC to accord
procedural due process to them. NLRC considered that they have remained
silent spectators in the illegal strike and therefore, NLRC find the award of
separation pay to each of the 18 respondents equivalent to one-half (1/2)
month salary for every year of service as equitable and proper. The
petitioners filed their motion for reconsideration, but the NLRC denied their
motion.
On certiorari, the CA, through the assailed judgment of NLRC deleted the
award of indemnity, but ordered HSBC to pay backwages to the 18
employees On motion for reconsideration, the CA reiterated its judgment,
and denied HSBC's motion to delete the award of backwages.
ISSUE: Whether or not the petitioners were illegally dismissed.
HELD: AFFIRMATIVE. As a general rule, the mere finding of the illegality
of the strike does not justify the wholesale termination of the strikers from

their employment. To avoid rendering the recognition of the workers' right

to strike illusory, the responsibility for the illegal strike is individual instead
of collective. The last paragraph of Article 264(a) of the Labor Code defines
the norm for terminating the workers participating in an illegal strike: Any
union officer who knowingly participates in an illegal strike and any worker
or union officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status.
Conformably with Article 264, the Court need to distinguish between the
officers and the members of the union who participate in an illegal strike.
The officers may be deemed terminated from their employment upon a
finding of their knowing participation in the illegal strike, but the members
of the union shall suffer the same fate only if they are shown to have
knowingly participated in the commission of illegal acts during the strike.
Article 264 expressly requires that the officer must have "knowingly
participated" in the illegal strike.
The Court declare the illegality of the termination of the employment of the
18 members of the Union for failure of HSBC to prove that they had
committed illegal acts during the strike. The Court cannot subscribe to the
view that the striking employees should be dismissed for having seriously
hampered and damaged HSBC's operations. In this aspect of the case,
HSBC did not discharge its burden to prove that the acts of the employees
constituted any of the just causes under the Labor Code or were prohibited
under the company's code of conduct as to warrant their dismissal.
While Article 264 authorizes the termination of the union officers and
employees, it does not remove from the employees their right to due
process. Regardless of their actions during the strike, the employees remain
entitled to an opportunity to explain their conduct and why they should not
be penalized. Consequently, failure of the employer to accord due process to
its employees prior to their termination results in illegal dismissal.
G.R. No. 211015/G.R. No. 213835. June 20, 2016
CAGAYAN ELECTRIC POWER & LIGHT COMPANY, INC. (CELPALCO),
et al. Vs. CEPALCO EMPLOYEE'S LABOR UNION-ASSOCIATED
LABOR UNIONS-TRADE UNION CONGRESS OF THE PHILIPPINES
(TUCP)
Labor Code: Labor-only contracting as a form of ULP. Under Article 106 of
the Labor Code, as amended, labor-only contracting is an arrangement
where the contractor, who does not have substantial capital or investment
in the form of tools, equipment, machineries, work p:(emises, among others,
supplies workers to an employer and the workers recruited are performing
activities which are directly related to the principal business of such

employer. Labor-only contracting is considered as a form of ULP when the

same is devised by the employer to "interfere with, restrain or coerce
employees in the exercise of their rights to self-organization."
PERLAS-BERNABE, J.:
FACTS: Respondent is the duly certified bargaining representative of
CEPALCO's regular rank-and-file employees. On the other hand, CEPALCO
is a domestic corporation engaged in electric distribution in Cagayan de Oro
and other municipalities in Misamis Oriental; while CESCO is a business
entity engaged in trading and services.
CEPALCO and CESCO (petitioners) entered into a Contract for Meter
Reading Work where CESCO undertook to perform CEPALCO's meterreading activities. As a result, several employees and union members of
CEPALCO were relieved, assigned in floating positions, and replaced with
CESCO workers, prompting respondent to file a complaint for unfair labor
practice ULP against petitioners.
Respondent alleged that when CEPALCO engaged CESCO to perform its
meter-reading activities, its intention was to evade its responsibilities under
the Collective Bargaining Agreement (CBA) and labor laws, and that it
would ultimately result in the dissipation of respondent's membership in
CEPALCO. Thus, respondent claimed that CEPALCO's act of contracting out
services, which used to be part of the functions of the regular union
members, is a violation of Article 259 (c) 12 of the Labor Code, as amended,
governing ULP of employers. It further averred that for engaging in laboronly contracting, the workers placed by CESCO must be deemed regular
rank-and-file employees of CEPALCO, and that the Contract for Meter
Reading Work be declared null. In defense, petitioners averred that CESCO
is an independent job contractor and that the contracting out of the meterreading services did not interfere with CEPALCO's regular workers' right to
self-organize, denying that none of respondent's members was put on
floating status.
The Labor Arbiter (LA) dismissed the complaint for lack of merit. The LA
found that petitioners have shown by substantial evidence that CESCO
carries on an independent business of contracting services, in this case for
CEPALCO' s meter-reading work. As an independent contractor, CESCO is
the statutory employer of the workers it supplied to CEPALCO pursuant to
their contract.
On appeal by respondent, the National Labor Relations Commission (NLRC)
affirmed the LA's ruling on the ground that the evidence submitted by
respondent proved inadequate in establishing that the service contract

amounted to the interference of the right of the union members to selforganization and collective bargaining.
Respondent's motion for reconsideration was denied; hence, it filed a
petition for certiorari before the Court of Appeals. However, pending
resolution of first case, CEPALCO and CESCO entered into another Contract
of Service, this time for the warehousing works of CEPALCO. The decision
of the LA and NLRC with regards to this contract is also the same with the
first case regarding the meter reading contract.
The CA found out that CESCO was a labor-only contractor as it had no
substantial capitalization, as well as tools, equipment, and machineries used
in the work contracted out by CEPALCO. As such, it stated that CESCO is
merely an agent of CEPALCO, and that the latter is still responsible to the
workers recruited by CESCO in the same manner and extent as if those
workers were directly employed by CEPALCO. However, Nonetheless, the
CA found that CEPALCO committed no ULP for lack of substantial evidence
to establish the same.
ISSUE: Whether or not CEPALCO was engaged in unfair labor practice.
HELD: NEGATIVE. Under Article 106 of the Labor Code, as amended,
labor-only contracting is an arrangement where the contractor, who does
not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, supplies workers to an
employer and the workers recruited are performing activities which are
directly related to the principal business of such employer. Labor-only
contracting is considered as a form of ULP when the same is devised by the
employer to "interfere with, restrain or coerce employees in the exercise of
their rights to self-organization."
The Court agrees with the CA that CEPALCO was engaged in labor-only
contracting as its Contract for Meter-Reading Work and Contract of Service
to Perform Warehousing Works. To be specific, petitioners failed to show
that CESCO has substantial capital or investment which relates to the job,
work or service to be performed. As the CA aptly pointed out, the tools and
equipment utilized by CESCO in the meter-reading activities are owned by
CEPALCO, emphasizing the fact that CESCO has no basic equipment to
carry out the service contracted out by CEPALCO. No evidence has been
offered to establish that CESCO exercised control with respect to the
manner and methods of achieving the warehousing works, or that it
supervised the workers assigned to perform the same.
The foregoing findings notwithstanding, the Court, similar to the CA and the
labor tribunals, finds that CEPALCO's contracting arrangements with
CESCO did not amount to ULP. This is because respondent was not able to

present any evidence to show that such arrangements violated CEPALCO's

workers' right to self-organization, which, as abovementioned, constitutes
the core of ULP. Records do not show that this finding was further appealed
by respondent. Thus, the complaints filed by respondent should be
dismissed with finality.
The Court also observes that while respondent did ask for the nullification
of the subject contracts between petitioners, and even sought that the
employees provided by CESCO to CEPALCO be declared as the latter's own
employees, petitioners correctly argue that respondent is not a real partyin-interest and hence, had no legal standing insofar as these matters are
concerned. This is because respondent failed to demonstrate how it stands
to be benefited or injured by a judgment on the same, or that any personal
or direct injury would be sustained by it if these reliefs were not granted.
G.R. No. 198889, January 20, 2016
UFC PHILIPPINES, INC. (NOW MERGED WITH NUTRI-ASIA, INC.,
WITH NUTRI-ASIA, INC. AS THE SURVIVING ENTITY) v. FIESTA
BARRIO MANUFACTURING CORPORATION
Intellectual Property Rights: Dominancy Test. The essential element of
infringement under R.A. No. 8293 is that the infringing mark is likely to
cause confusion. In determining similarity and likelihood of confusion,
jurisprudence has developed tests the Dominancy Test and the Holistic or
Totality Test. The Dominancy Test focuses on the similarity of the prevalent
or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public.
Duplication or imitation is not necessary; neither is it required that the
mark sought to be registered suggests an effort to imitate. Given more
consideration are the aural and visual impressions created by the marks on
the buyers of goods, giving little weight to factors like prices, quality, sales
outlets, and market segments.
LEONARDO-DE CASTRO, J.:
FACTS: Respondent Fiesta Barrio Manufacturing Corporation filed
application for the mark "PAPA BOY & DEVICE" for goods under Class 30,
specifically for lechon sauce. Petitioner Nutri-Asia opposed the application,
inasmuch as the former incorporates the term "PAPA," which is the
dominant feature of petitioner's "PAPA" marks. The "PAPA BOY & DEVICE"
is confusingly similar with its "PAPA" marks, considering that its ketchup
product and respondent's lechon sauce product are related articles that fall
under the same Class 30.

Petitioner alleged that the registration of respondent's challenged mark was

also likely to damage the petitioner, considering that its former sister
company, Southeast Asia Food, Inc., and the latter's predecessors-ininterest, had been major manufacturers and distributors of lechon and other
table sauces since 1965, such as products employing the registered "Mang
Tomas" mark.
The IPO Bureau of Legal Affairs (IPO-BLA) rendered a Decision on March
26, 2008 sustaining petitioner's Opposition and rejecting respondent's
application for "PAPA BOY & DEVICE." Respondent filed an appeal before
the IPO Director General, who found it unmeritorious, and disposed of the
case.
With this, respondent then filed a petition with the Court of Appeals. The
CA, after considering the trademarks involved as a whole or using the
Holistic Test, is of the view that petitioner's trademark "PAPA BOY &
DEVICE" is not confusingly similar to respondent's "PAPA KETSARAP" and
"PAPA BANANA CATSUP" trademark. Although on its label the word "PAPA"
is prominent, the trademark should be taken as a whole and not piecemeal.
The difference between the two marks are conspicuous and noticeable.
While respondent's products are both labeled as banana sauces, that of
petitioner Barrio Fiesta is labeled as lechon sauce. Admittedly, while "PAPA"
is a surname, it is more widely known as a term of endearment for one's
father. Respondent cannot, therefore, claim exclusive ownership over and
singular use of the term.
ISSUE:
1. Whether or not the respondents mark can be registered on the basis
that there is no likelihood of confusion between the contending marks
given that the "PAPA BOY & DEVICE" mark is used on lechon sauce,
as opposed to ketchup products.
2. Whether or not the Petitioner cannot claim exclusive ownership and
use of the "PAPA" mark for its sauce products because "PAPA" is
supposedly a common term of endearment for one's father.
HELD:
1. NEGATIVE. The respondent's mark cannot be registered.
Respondent's mark is related to a product, lechon sauce, an everyday
all-purpose condiment and sauce, that is not subjected to great
scrutiny and care by the casual purchaser, who knows from regular
visits to the grocery store under what aisle to find it, in which bottle it
is contained, and approximately how much it costs. Since petitioner's
product, catsup, is also a household product found on the same
grocery aisle, in similar packaging, the public could think that
petitioner had expanded its product mix to include lechon sauce, and
that the "PAPA BOY" lechon sauce is now part of the "PAPA" family of

sauces, which is not unlikely considering the nature of business that

petitioner is in.
Thus, if allowed registration, confusion of business may set in, and
petitioner's goodwill may be associated to the newer product
introduced by respondent. The words "Barrio Fiesta" are not included
in the mark, and although printed on the label of respondent's lechon
sauce packaging, still do not remove the impression that "PAPA BOY"
is a product owned by the manufacturer of "PAPA" catsup, by virtue of
the use of the dominant feature. It is possible that petitioner could
expand its business to include lechon sauce, and that would be well
within petitioner's rights, but the existence of a "PAPA BOY" lechon
sauce would already eliminate this possibility and deprive petitioner
of its rights as an owner of a valid mark included in the Intellectual
Property Code.
CA erred in applying the holistic test and that the proper test under
the circumstances is the dominancy test, which was correctly applied
by the IPO-BLA and the Director General. Under the Dominancy Test,
the dominant features of the competing marks are considered in
determining whether these competing marks are confusingly similar.
Greater weight is given to the similarity of the appearance of the
products arising from the adoption of the dominant features of the
registered mark, disregarding minor differences. Duplication or
imitation is not necessary; nor is it necessary that the infringing label
should suggest an effort to imitate. Actual confusion is not required:
Only likelihood of confusion on the part of the buying public is
necessary so as to render two marks confusingly similar so as to deny
the registration of the junior mark.
2. NEGATIVE. The Court of Appeals likewise erred in finding that

"PAPA," being a common term of endearment for one's father, is a

word over which petitioner could not claim exclusive use and
ownership. What was registered was not the word "Papa" as defined
in the dictionary, but the word "Papa" as the last name of the original
owner of the brand, who started the brand several decades ago.
Respondent had an infinite field of words and combinations of words
to choose from to coin a mark for its lechon sauce. While its claim as
to the origin of the term "PAPA BOY" is plausible, it is not a strong
enough claim to overrule the rights of the owner of an existing and
valid mark. Furthermore, the Court cannot equitably allow respondent
to profit by the name and reputation carefully built by petitioner
without running afoul of the basic demands of fair play.