G.R. No.

164032 January 19, 2009

LOLITA A. LOPEZ, et. al. petitioner,
vs.
QUEZON CITY SPORTS CLUB, INC., respondents.

FACTS: The Kasapiang Manggagawa sa Quezon City Sports Club (union) averred that it was ordered to
submit a new information sheet. It immediately wrote a letter addressed to the general manager to inquire
about the information sheet, only to be insulted by the latter. The members of the union were not paid
their salaries on 30 June 1997. On 4 July 1997, the union wrote a letter to the management for the
release of the members’ salaries and grant of wage increases mandated by the CBA. When its letter went
unanswered, the union filed a notice of strike and fter conducting a strike vote, it staged a strike on 12
August 1997. On 16 August 1997, the QCSC placed some of its employees under temporary lay-off
status due to redundancy. The Kasapiang Manggagawa sa Quezon City Sports Club (union) filed a
complaint for unfair labor practice against QCSC on 12 November 1997. Labor Arbiter Joel S. Lustria
promulgated a decision finding QCSC guilty of unfair labor practice and ordering it to pay the affected
employees their separation pay, backwages, and salary increase, totaling P27,504,864.46. QCSC filed an
appeal and a motion for reduction of the appeal bond to P4,000,000.00. NLRC ordered the posting of an
additional P6,000,000.00 bond and rendered a decision granting the appeal and reversing the Lustria
decision. Petitioners appealed to the Court of Appeal but it was also denied.

ISSUE: (1) Whether or not the simultaneous filing of the motion to reduce the appeal bond and posting of
the reduced amount of bond within the reglementary period for appeal constitute substantial compliance
with Article 223 of the Labor Code? (2) Whether or not the decision of the NLRC is valid?

HELD: On the first issue, the Court ruled that the posting of the amount of P4,000,000.00 simultaneously
with the filing of the motion to reduce the bond to that amount, as well as the filing of the memorandum of
appeal, all within the reglementary period, altogether constitute substantial compliance with the Rules. it is
provided on Article 223 of the Labor Code and Sections 4(a) and 6 of Rule VI of the New Rules of
Procedure of the NLRC, as amended, that appeals involving monetary awards are perfected only upon
compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of
the memorandum of appeal; and (3) payment of the required cash or surety bond; and that no motion to
reduce shall be entertained except on meritorious grounds and upon the posting of a bond in a
reasonable amount in relation to the monetary award. Furthermore, based on existing jurisprudence, the
bond requirement on appeals involving monetary awards had been and could be relaxed in meritorious
cases such as: (1) there was substantial compliance with the Rules; (2) the surrounding facts and
circumstances constitute meritorious grounds to reduce the bond; (3) a liberal interpretation of the
requirement of an appeal bond would serve the desired objective of resolving controversies on the merits;
or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial
bond during the reglementary period.

On the second issue, the Court ruled that the NLRC erred in setting aside the Lustria’s decision, as well
as in deleting the award of backwages and separation pay, despite the finding that the affected
employees had been constructively dismissed. In the notice of strike, the union did not state in particular
the acts which allegedly constitute unfair labor practice. By virtue of the "no-strike no lockout" provision in
the CBA, the union was prohibited from staging an economic strike. However, while the strike by the
union was held illegal, only the union officers were declared as having lost their employment status. In
effect, the other union members who had merely participated in the strike but had not committed any
illegal acts were not dismissed from employment. The grant of backwages and separation pay, in
Lustria’s decision, not premised on the declaration of the illegality of the strike but on the finding that
these affected employees were constructively dismissed from work, as evidenced by the layoffs effected
by the company. Therefore, the Lustria decision should be upheld and therefore reinstated except as
regards the four petitioners who were declared having lost their employment status.

G.R. No. 164856 January 20, 2009

JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,
vs.
PHILIPPINE AIRLINES, INC., Respondent.

FACTS: An administrative charge was filed by PAL against its employees-herein petitioners after they
were allegedly caught in the act of sniffing shabu when a team of company security personnel and law
enforcers raided the PAL Technical Center’s Toolroom Section. After due notice, PAL dismissed
petitioners for transgressing the PAL Code of Discipline, prompting them to file a complaint for illegal
dismissal and damages which was resolved by the Labor Arbiter in their favor, thus ordering PAL to
immediately comply with the reinstatement aspect of the decision. Prior to the promulgation of the Labor
Arbiter’s decision, the SEC placed PAL which was suffering from severe financial losses. From the Labor
Arbiter’s decision, PAL appealed to the NLRC which reversed said decision of the Labor Arbiter and
dismissed petitioners’ complaint for lack of merit. Petitioners’ Motion for Reconsideration was denied and
Entry of Judgment was issued. Subsequently, the Labor Arbiter issued a Writ of Execution respecting the
reinstatement aspect of his decision, and he issued a Notice of Garnishment. PAL thereupon moved to
quash the Writ and to lift the Notice while petitioners moved to release the garnished amount. In a related
move, PAL filed an Urgent Petition for Injunction with the NLRC which affirmed the validity of the Writ and
the Notice issued by the Labor Arbiter but suspended and referred the action to the Rehabilitation
Receiver for appropriate action. PAL elevated the matter to the appellate court which reversed the
NLRC’s decision. Hence, this petition.

ISSUES: (1) whether or not a subsequent finding of a valid dismissal removes the basis for implementing
the reinstatement aspect of a labor arbiter’s decision? and (2) whether or not the impossibility to comply
with the reinstatement order due to corporate rehabilitation provides a reasonable justification for the
failure to exercise the options under Article 223 of the Labor Code?

HELD: Since petitioners’ claim against PAL is a money claim for their wages during the pendency of
PAL’s appeal to the NLRC, this should have been suspended pending the rehabilitation proceedings. It
was then suspended while ongoing rehabilitation. In view of the termination of the rehabilitation
proceedings, the Court now proceeds to resolve the remaining issue for consideration.

As to the first issue, the court held that a subsequent finding of a valid dismissal removes the basis for
implementing the reinstatement aspect of a labor arbiter’s decision.
Based on jurisprudential trend applying par 3 of Article 223 of the Labor Code which provides that “In any
event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, pending appeal. The employee shall
either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.” The view as maintained in a
number of cases is that “Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court.” On the other hand, if the employee has been
reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is
not required to reimburse whatever salary he received for he is entitled to such, more so if he actually
rendered services during the period. The provision of Article 223 is clear that an award for reinstatement
shall be immediately executory even pending appeal and the posting of a bond by the employer shall not
stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of
reinstatement immediately enforceable, even pending appeal. To require the application for and issuance
of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray
and run counter to the very object and intent of Article 223. The reason is simple.

As to the second issue, the Court held that the peculiar predicament of a corporate rehabilitation rendered
it impossible for respondent to exercise its option under the circumstances. The spirit of the rule on
reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision
containing an order of reinstatement. Reinstatement pending appeal necessitates its immediate execution
during the pendency of the appeal, if the law is to serve its noble purpose. At the same time, any attempt
on the part of the employer to evade or delay its execution, should not be countenanced. After the labor
arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the
accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without
fault on the part of the employer. The new NLRC Rules of Procedure, now require the employer to submit
a report of compliance within 10 calendar days from receipt of the Labor Arbiter’s decision, disobedience
to which clearly denotes a refusal to reinstate. It is apparent that there was inaction on the part of
respondent to reinstate them, but whether such omission was justified depends on the onset of the
exigency of corporate rehabilitation. It is settled that upon appointment by the SEC of a rehabilitation
receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be
suspended. Case law recognizes that unless there is a restraining order, the implementation of the order
of reinstatement is ministerial and mandatory. This injunction or suspension of claims by legislative fiat
partakes of the nature of a restraining order that constitutes a legal justification for respondent’s non-
compliance with the reinstatement order. Respondent’s failure to exercise the alternative options of actual
reinstatement and payroll reinstatement was thus justified. Such being the case, respondent’s obligation
to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.

G.R. No. 178647 February 13, 2009

GENERAL SANTOS COCA-COLA PLANT FREE WORKERS UNION-TUPAS, Petitioner,
vs.
COCA-COLA BOTTLERS PHILS., INC. (GENERAL SANTOS CITY), THE COURT OF APPEALS and
THE NATIONAL LABOR RELATIONS COMMISSION, Respondents.

FACTS: Sometime in the late 1990s, CCBPI experienced a significant decline in profitability due to the
Asian economic crisis, decrease in sales, and tougher competition. To curb the negative effects on the
company, it implemented three (3) waves of an Early Retirement Program and also there was an inter-
office memorandum mandating to put on hold all requests for hiring to fill in vacancies in both regular and
temporary positions in Head Office and in the Plants. This prompted petitioner to negotiate with the Labor
Management Committee for filling up the vacancies with permanent employees. No resolution was
reached on the matter. Faced with the "freeze hiring" directive, CCBPI Gen San engaged the services of
JLBP Services Corporation, a company in the business of providing labor and manpower services,
including janitorial services, messengers, and office workers to various private and government offices.
Petitioner then filed with the National Conciliation and Mediation Board a Notice of Strike on the ground of
alleged unfair labor practice committed by CCBPI Gen San for contracting-out services regularly
performed by union members. The Secretary of Labor issued an Order enjoining the threatened strike
and certifying the dispute to the NLRC for compulsory arbitration. The NLRC ruled that CCBPI was not
guilty of unfair labor practice for contracting out jobs to JLBP. Petitioner filed a motion for reconsideration
which the NLRC denied. The CA also denied the petition for certiorari as well as the motion for
reconsideration. Hence, this petition.

ISSUE: Whether or not the act of contracting-out services from JLBP constitutes unfair labor practices?

HELD: Under Rule 45 of the Revised Rules on Civil Procedure, only questions of law may be raised in a
Petition for Review on Certiorari. There is a question of law if the issue raised is capable of being resolved
without need of reviewing the probative value of the evidence. An examination of the issues raised by
petitioner reveals that they are questions of fact. The issues raised, i.e., whether JLBP is an independent
contractor, whether CCBPI’s contracting-out of jobs to JLBP amounted to unfair labor practice, and
whether such action was a valid exercise of management prerogative, call for a re-examination of
evidence, which is not within the ambit of SC’s jurisdiction. Moreover, factual findings of the NLRC, an
administrative agency deemed to have acquired expertise in matters within its jurisdiction, are generally
accorded not only respect but finality especially when such factual findings are affirmed by the CA.

Furthermore, the court found no reversible error in the assailed Decision. It is true that the NLRC
erroneously concluded that the contracting- out of jobs in CCBPI Gen San was due to the “Going-to-
Market” system, which actually affected CCBPI’s sales and marketing departments, and had nothing to do
with petitioner’s complaint. However, this does not diminish the NLRC’s finding that JLBP was a
legitimate, independent contractor and that CCBPI Gen San engaged the services of JLBP to meet
business exigencies created by the freeze-hiring directive of the CCBPI Head Office.
The lower court found, based on the evidence, that CCBPI did not engage in labor-only contracting and
that the company’s action to contract-out the services and functions performed by Union members was
not directed at the members’ right to self-organization; therefore, it was not guilty of unfair labor practice.
Article 248 of the Labor Code provides that unfair labor practice refers to acts that violate the workers’
right to organize. The prohibited acts are related to the workers’ right to self-organization and to the
observance of a CBA. Without that element, the acts, even if unfair, are not unfair labor practices.

G.R. No. 167141 March 13, 2009

SAMAHAN NG MGA MANGGAGAWA SA SAMMA-LAKAS SA INDUSTRIYA NG KAPATIRANG
HALIGI NG ALYANSA (SAMMA-LIKHA), Petitioner,
vs.
SAMMA CORPORATION, Respondent.

FACTS: Petitioner SAMMA-LIKHA filed a petition for certification election in the DOLE. Respondent
moved for the dismissal of the petition. Med-arbiter Arturo V. Cosuco ordered the dismissal of the petition.
Petitioner moved for reconsideration.

Meanwhile, respondent filed a petition for cancellation of petitioner’s union registration in the DOLE.
Crispin D. Dannug, Jr., Officer-in-Charge/Regional Director of DOLE, issued a resolution revoking the
charter certificate of petitioner as local chapter of LIKHA Federation.

Going back to the case, Acting Secretary Manuel G. Imson, treating the motion for reconsideration as an
appeal, rendered a decision reversing the order of the med-arbiter. Thus, he directed the holding of a
certification election among the rank-and-file employees of respondent. Respondent then filed its
comment on the motion for reconsideration of petitioner, asserting that the order of the med-arbiter could
only be reviewed by way of appeal and not by a motion for reconsideration. Respondent filed its motion
for reconsideration which was denied. Respondent filed a petition for certiorari in the CA which was
reversed by the latter as well as the motion for reconsideration. Hence, this petition.

ISSUES: (1) whether or not a certificate for non-forum shopping is required in a petition for certification
election?; (2) whether or not petitioner’s motion for reconsideration which was treated as an appeal
should not have been given due course for failure to attach proof of service on respondent?; and (3)
whether or not petitioner had the legal personality to file the petition for certification election?

HELD: On the first issue, the requirement for a certificate of non-forum shopping refers to complaints,
counter-claims, cross-claims, petitions or applications where contending parties litigate their respective
positions regarding the claim for relief of the complainant, claimant, petitioner or applicant. A certification
proceeding, even though initiated by a "petition," is not a litigation but an investigation of a non-
adversarial and fact-finding character. Therefore, there is no requirement for a certificate of non-forum
shopping in a petition for certification election.

On the second issue, according to the implementing rules as amended by D.O. No. 9, “the appeal shall
be under oath and shall consist of a memorandum of appeal specifically stating the grounds relied upon
by the appellant with the supporting arguments and evidence. The appeal shall be deemed not filed
unless accompanied by proof of service thereof to appellee.” The motion for reconsideration was properly
treated as an appeal because it substantially complied with the formal requisites of the latter. The lack of
proof of service was not fatal as respondent had actually received a copy of the motion.

On the third issue, LIKHA was granted legal personality as a federation under certificate of registration no.
92-1015-032-11638-FED-LC. Subsequently, petitioner as its local chapter was issued its charter
certificate no. 2-01. With certificates of registration issued in their favor, they are clothed with legal
personality as legitimate labor organizations. Such legal personality cannot thereafter be subject to
collateral attack, but may be questioned only in an independent petition for cancellation of certificate of
registration. Even though the petitioner’s charter certificate was initially revoked by the DOLE, the
Petitioner still moved for the reconsideration and the resolution does not attained finality yet. Thus,
Petitioner still has its legal personality.

It was ruled that the employer, as a mere bystander, has no legal standing in a certification election as it
cannot oppose the petition or appeal the Med-Arbiter's orders related thereto.

G.R. Nos. 171618-19 March 20, 2009

JACKBILT INDUSTRIES, INC., Petitioner,
vs.
JACKBILT EMPLOYEES WORKERS UNION-NAFLU-KMU, Respondent.

FACTS: Due to the adverse effects of the Asian economic crisis on the construction industry, petitioner
Jackbilt Industries, Inc. decided to temporarily stop its business of producing concrete hollow blocks,
compelling most of its employees to go on leave for six months. Respondent Jackbilt Employees Workers
Union-NAFLU-KMU immediately protested the temporary shutdown. Because its collective bargaining
agreement with petitioner was expiring during the period of the shutdown, respondent claimed that
petitioner halted production to avoid its duty to bargain collectively. Accordingly, respondent went on
strike. Its officers and members picketed petitioner’s main gates and deliberately prevented persons and
vehicles from going into and out of the compound. The petitioner filed a petition for injunction with a
prayer for the issuance of a TRO in the NLRC. The NLRC issued a TRO directing the respondents to
refrain from preventing access to petitioner’s property. However, the respondent union violated order.
Thus, the NLRC ordered the issuance of a writ of preliminary injunction. Meanwhile, petitioner dismissed
the concerned officers and members and barred them from entering its premises. Respondent then filed
complaints for illegal lockout, runaway shop and damages, unfair labor practice, illegal dismissal and
attorney’s fees, and refusal to bargain. Petitioner, on the other hand, asserted that because respondent
conducted a strike without observing the procedural requirements provided in Article 263 of the Labor
Code, the strike was illegal. The labor arbiter dismissed the complaints for illegal lockout and unfair labor
practice for lack of merit. However, because petitioner did not file a petition to declare the strike illegal
before terminating respondent’s officers and employees, it was found guilty of illegal dismissal. The
NLRC, on appeal, modified the decision of the labor arbiter. It held that only petitioner should be liable for
monetary awards granted to respondent’s officers and members. Both petitioner and respondent moved
for reconsideration but they were denied for lack of merit. Petitioner assailed decision of the NLRC via a
petition for certiorari in the CA. The CA dismissed the petition but modified the decision of the NLRC.
Because most of affected employees were union members, the CA held that the temporary shutdown was
moved by anti-union sentiments. Petitioner was therefore guilty of unfair labor practice and, consequently,
was ordered to pay respondent’s officers and employees backwages and separation pay. Petitioner
moved for reconsideration but it was denied. Hence, this petition.

ISSUE: Whether or not the filing of a petition with the labor arbiter to declare a strike illegal is a condition
sine qua non for the valid termination of employees who commit an illegal act in the course of such strike?

HELD: The principle of conclusiveness of judgment, embodied in the Rules of Court, holds that the parties
to a case are bound by the findings in a previous judgment with respect to matters actually raised and
adjudged therein. Article 264(e) of the Labor Code prohibits any person engaged in picketing from
obstructing the free ingress to and egress from the employer’s premises. Since respondent was found in
to have prevented the free entry into and exit of vehicles from petitioner’s compound, respondent’s
officers and employees clearly committed illegal acts in the course of the strike. The use of unlawful
means in the course of a strike renders such strike illegal. Therefore, pursuant to the principle of
conclusiveness of judgment, strike was ipso facto illegal and a petition to declare the strike illegal was
thus unnecessary. Consequently, the Court held the legality of the dismissal of respondent’s officers and
employees based on Article 264 of the Labor Code which provides that an employer may terminate
employees found to have committed illegal acts in the course of a strike.

G.R. No. 167614 March 24, 2009

ANTONIO M. SERRANO, Petitioner,
vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

FACTS: Petitioner Serrano was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract of
Employment with the following terms and conditions: (1) Duration of Contract: 12 months; (2) Position:
Chief Officer; (3) Basic monthly salary: US$ 1,400.00; (4) Hours of work: 48 hrs/week; (5) Overtime:
US$700.00/month; and (6) Vacation leave with pay: 7 days/month. On the date of his departure, petitioner
was constrained to accept a downgraded employment contract for the position of Second Officer with a
monthly salary of US$1,000.00, upon the assurance and representation of respondents that he would be
made Chief Officer by the end of April 1998. Respondents did not deliver on their promise to make
petitioner Chief Officer. Hence, petitioner refused to stay on as Second Officer and was repatriated to the
Philippines. Petitioner's employment contract was for a period of 12 months but at the time of his
repatriation, he had served only 2 months and 7 days of his contract, leaving an unexpired portion of 9
months and 23 days. Petitioner filed a Complaint against respondents for constructive dismissal and for
payment of his money claims in the total amount of US$26,442.73 as well as moral and exemplary
damages and attorney's fees. The LA rendered a Decision declaring the dismissal of petitioner illegal and
awarding him monetary benefits. In awarding petitioner a lump-sum salary of US$8,770.00, the LA based
his computation on the salary period of three months only -- rather than the entire unexpired portion of 9
months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA
applied the salary rate based on basic, overtime, and vacation leave pay provided in the contract.
Respondents appealed to the NLRC on the legality of the dismissal. While petitioner also appealed to the
NLRC on the sole issue that the LA erred in not applying the ruling that in case of illegal dismissal, OFWs
are entitled to their salaries for the unexpired portion of their contracts. The NLRC modified the LA
Decision on the lump-sum salary awarded to the petitioner. Petitioner filed a Motion for Partial
Reconsideration, but this time he questioned the constitutionality of the subject clause. The NLRC denied
the motion. Petitioner filed a Petition for Certiorari with the CA which was granted. The CA affirmed the
NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional
issue raised by petitioner. His Motion for Reconsideration having been denied by the CA, petitioner brings
his cause to the SC.

ISSUES: (1) Whether or not the court shall grant migrant workers back wages equal to the unexpired
portion of his contract?; (2) Whether or not the court should have decided on the constitutional issue
raised by the petitioner?; and (3) Whether or not the court shall include the award of overtime and
vacation pay provided in the contract?

HELD: On the first and second issues, when the Court is called upon to exercise its power of judicial
review of the acts of its co-equals, such as the Congress, it does so only when these conditions obtain:
(1) that there is an actual case or controversy involving a conflict of rights susceptible of judicial
determination; (2) that the constitutional question is raised by a proper party and at the earliest
opportunity; and (3) that the constitutional question is the very lis mota of the case, otherwise the Court
will dismiss the case or decide the same on some other ground. Without a doubt, there exists in this case
an actual controversy directly involving petitioner who is personally aggrieved that the labor tribunals and
the CA computed his monetary award based on the salary period of three months only as provided under
the subject clause. The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity entails the interposition of the
issue in the pleadings before a competent court, such that, if the issue is not raised in the pleadings
before that competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot
be considered on appeal. Records disclose that the issue on the constitutionality of the subject clause
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with
said labor tribunal, and reiterated in his Petition for Certiorari before the CA. Nonetheless, the issue is
deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve
the constitutional issue. The CA was therefore remiss in failing to take up the issue in its decision. The
third condition that the constitutional issue be critical to the resolution of the case likewise obtains
because the monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-
month employment contract, and not just for a period of three months, strikes at the very core of the
subject clause.

On the issue of constitutionality of RA 8042, the Court held that it is unconstitutional.

The prohibition on Section 10, Article III of the Constitution is aligned with the general principle that laws
newly enacted have only a prospective operation, and cannot affect acts or contracts already perfected;
however, as to laws already in existence, their provisions are read into contracts and deemed a part
thereof. The enactment of RA No. 8042 in 1995 preceded the execution of the employment contract
between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly
the subject clause, impaired the employment contract of the parties. Furthermore, the law was enacted in
the exercise of the police power of the State to regulate a business, profession or calling, particularly the
recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and
well-being of OFWs wherever they may be employed. The Court held that RA 8042 does not violate the
non-impairment clause provided in the constitution.

Rights provided in Section 1, Article II of the Constitution are not absolute but subject to the inherent
power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however,
to be valid, the classification must comply with these requirements: 1) it is based on substantial
distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and
4) it applies equally to all members of the class. Based on existing jurisprudence, it was held that
Congress retains its wide discretion in providing for a valid classification, and its policies should be
accorded recognition and respect by the courts of justice except when they run afoul of the Constitution.
The deference stops where the classification violates a fundamental right, or prejudices persons accorded
special protection by the Constitution. When these violations arise, the Court must discharge its primary
role as the vanguard of constitutional guaranties, and require a stricter and more exacting adherence to
constitutional limitations. Rational basis should not suffice. Imbued with the obligation to afford protection
to labor, the Court in the present case employs the standard of strict judicial scrutiny, for it perceives in
the subject clause a suspect classification prejudicial to OFWs. A closer examination reveals that the
subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels: (1)
OFWs with fixed-period employment contracts of less than one year; which in case of illegal dismissal,
they are entitled to their salaries for the entire unexpired portion of their contract; and (2) OFWs with
fixed-period employment contracts of one year or more; which in case of illegal dismissal, they are
entitled to monetary award equivalent to only 3 months of the unexpired portion of their contracts. To
illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment
contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an
employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced
work on the same day and under the same employer, and were illegally dismissed after one month of
work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the
remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to
his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the
unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount. In sum, prior to
R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were
treated alike in terms of the computation of their money claims: they were uniformly entitled to their
salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042,
specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one
year or more in their employment contract have since been differently treated in that their money claims
are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term
employment. The Court concludes that the subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a
3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but
none on the claims of other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage. There being a
suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects
the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest
through the least restrictive means. What constitutes compelling state interest is measured by the scale of
rights and powers arrayed in the Constitution and calibrated by history. It is akin to the paramount interest
of the state for which some individual liberties must give way, such as the public interest in safeguarding
health or maintaining medical standards, or in maintaining access to information on matters of public
concern. In the present case, the Court dug deep into the records but found no compelling state interest
that the subject clause may possibly serve. The Government has failed to discharge its burden of proving
the existence of a compelling state interest that would justify the perpetuation of the discrimination against
OFWs under the subject clause. Assuming that the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier
rationale will have to be rejected. There can never be a justification for any form of government action that
alleviates the burden of one sector, but imposes the same burden on another sector, especially when the
favored sector is composed of private businesses such as placement agencies, while the disadvantaged
sector is composed of OFWs whose protection no less than the Constitution commands. The idea that
private business interest can be elevated to the level of a compelling state interest is odious. Moreover,
even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vis
their foreign principals, there are mechanisms already in place that can be employed to achieve that
purpose without infringing on the constitutional rights of OFWs.

The Court, therefore, held that the subject clause violates petitioner's right to substantive due process, for
it deprives him of property, consisting of monetary benefits, without any existing valid governmental
purpose. The subject clause also does not state or imply any definitive governmental purpose; and it is for
that precise reason that the clause violates not just petitioner's right to equal protection, but also her right
to substantive due process under Section 1, Article III of the Constitution. The subject clause being
unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23
days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No.
8042.

On the Third Issue, the Court held that the claim for the day's leave pay for the unexpired portion of the
contract is unwarranted. The word salaries in Section 10(5) does not include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series 1996 provides a Standard Employment
Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay
and other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the
regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days
and holidays. By the foregoing definition alone, there is no basis for the automatic inclusion of overtime
and holiday pay in the computation of petitioner's monetary award, unless there is evidence that he
performed work during those periods.

G.R. No. 109002 April 12, 2000

DELA SALLE UNIVERSITY, petitioner, vs. DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION
(DLSUEA) and BUENAVENTURA MAGSALIN, respondents.

G.R. No. 110072 April 12, 2000

DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION-NATIONAL FEDERATION OF TEACHERS
AND EMPLOYEES UNION (DLSUEA-NAFTEU), petitioner, vs. DELA SALLE UNIVERSITY and
BUENAVENTURA MAGSALIN, respondents.

FACTS: Dela Salle University and Dela Salle University Employees Association — National Federation of
Teachers and Employees Union (DLSUEA-NAFTEU), which is composed of regular non-academic rank
and file employees, entered into a CBA with a life span of 3 years. During the freedom period, the Union
initiated negotiations with the University for a new CBA which, however, turned out to be unsuccessful.
Hence, the Union filed a Notice of Strike. After several conciliation-mediation meetings, a partial CBA was
thereafter executed by the parties. The parties then entered into a Submission Agreement, identifying the
remaining unresolved issues for arbitration. The voluntary arbitrator then rendered decision which was
assailed by both parties. They both filed their respective motions for reconsideration which, however,
were not entertained by the voluntary arbitrator. The University then filed a petition for certiorari with
temporary restraining order and/or preliminary injunction assailing the decision of the voluntary arbitrator.
The Union also filed a petition for certiorari.

ISSUES: (1) Whether or not the CSC, disciple officers & CSB’s employees are included in the University’s
rank-and-file bargaining unit? (2) Whether or not a union shop clause should be included in the parties’
CBA? (3) Whether or not Last-in-First-out is valid in cases of retrenchment? (4) Whether or not the
University may be required to grant a second round of wage increase? (5) Whether or not the University
should approve the deloading of union president, leave benefits and indefinite union leave with pay? (6)
Whether or not the multi-sectoral committee in the University is the legitimate group which determines
and scrutinizes the annual salary increases and fringe benefits of the employees of the University? and
(7) whether or not the 70% share in the incremental tuition proceeds is the only source of salary increases
and fringe benefits of the employees?

HELD: (1) The court ruled that the said CSC and discipline officers are not confidential employees. The
service record of a computer operator reveals that his duties are basically clerical and non-confidential in
nature. As to the discipline officers, based on the nature of their duties, they are not confidential
employees and should therefore be included in the bargaining unit of rank-and-file employees. But the
employees of the College of St. Benilde should be excluded from the bargaining unit of the rank-and-file
employees of Dela Salle University, because the two educational institutions have their own separate
juridical personality and no sufficient evidence was shown to justify the piercing of the veil of corporate
fiction.

(2) It was held that a union shop provision in addition to the existing maintenance of membership clause
in the collective should be included. The legal protection granted to a right to refrain from joining a union
is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by
virtue of which the employer may employ only members of the collective bargaining union, and the
employees must continue to be members of the union for the duration of the contract in order to keep
their jobs.

(3) It was ruled that as an exercise of management prerogative, the University has the right to adopt valid
and equitable grounds as basis for terminating or transferring employees. A valid exercise of
management prerogative is one which, among others, covers: work assignment, working methods, time,
supervision of workers, transfer of employees, work supervision, and the discipline, dismissal and recall of
workers. Except as provided for, or limited by special laws, an employer is free to regulate, according to
his own discretion and judgment, all aspects of employment."

(4) The Court found that the voluntary arbitrator committed grave abuse of discretion amounting to lack or
excess of jurisdiction. The standard proof of a company's financial standing is its financial statements duly
audited by independent and credible external auditors. The financial capability of a company cannot be
based on its proposed budget because a proposed budget does not reflect the true financial condition of a
company and more importantly, the use of a proposed budget as proof of a company's financial condition
would be susceptible to abuse by scheming employers who might be merely feigning dire financial
condition in their business ventures in order to avoid granting salary increases and fringe benefits to their
employees.

(5) It was ruled that there being no justifiable reason for the granting of the deloading of union president,
leave benefits and indefinite union leave with pay.

(6) During the parties' negotiations for a new CBA, the Union demanded for a 25% and 40% salary
increase for the second and third years, respectively. The University's counter-proposal was for a 10%
increase for the third year. After the meeting of the multi-sectoral committee on budget, which is
composed of students, parents, faculty, administration and union, the University granted across-the-board
salary increases of 11.3% and 19% for the second and third years, respectively. Assuming for the sake of
argument that the said committee is the group responsible for determining wage increases and fringe
benefits, the committee's determination must still be based on duly audited financial statements.
(7) The Court deemed that any determination of this issue is unnecessary and irrelevant, in view of the
rulings on the 4th and preceding issues and there being no evidence presented before the voluntary
arbitrator that the University held incremental tuition fee proceeds from which any wage increase or fringe
benefit may be satisfied.

G.R. No. 89920 October 18, 1990

UNIVERSITY OF STO. TOMAS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, UST
FACULTY UNION, respondents.

FACT: The University of Sto. Tomas (UST) terminated the employment of all 16 union officers and
directors of respondent UST Faculty Union on the ground that in publishing or causing to be published in
Strike the libelous and defamatory attacks against the Father Rector, has committed the offenses of grave
misconduct, serious disrespect to a superior and conduct unbecoming a faculty member. As a result of
the dismissal of said employees, some faculty members staged mass leaves of absence and several
days thereafter, disrupting classes in all levels at the University. The faculty union filed a complaint for
illegal dismissal and unfair labor practice with the DOLE. The labor arbiter certified the matter to the
Secretary of Labor and Employment for a possible suspension of the effects of termination. Secretary
Franklin Drilon subsequently issued an order suspending the termination of the 16 employees. Petitioner
UST filed a motion for reconsideration. Secretary Drilon issued another order modifying his previous
order, ordering UST to readmit all its faculty members under the same terms and conditions prevailing
prior to the present dispute. The NLRC subsequently caned the parties to a conference. The respondent
union filed before the NLRC a motion to implement the orders of the Honorable Secretary of Labor and
Employment; while petitioner filed its opposition to the private respondent's motion. The NLRC issued a
resolution, which is the subject of this petition for certiorari.

ISSUES: Whether or not the order of the alternative remedies of actual reinstatement or payroll
reinstatement of the dismissed faculty members is proper? Whether or not the University can be required
to pay full backwages of the dismissed employees? Whether or not NLRC is correct when it arrogated
upon itself the exercise of the right and prerogatives reposed by law to the petitioner university in the
latter’s capacity as employer?

HELD: (1) It was held that it was error for the NLRC to order the alternative remedies of payroll
reinstatement or actual reinstatement. However, the order did not amount to grave abuse of discretion.
Such error is merely an error of judgment which is not correctible by a special civil action for certiorari.
The NLRC was only trying its best to work out a satisfactory ad hoc solution to a festering and serious
problem. The payroll reinstatement will actually minimize the petitioners’ problems in the payment of full
backwages.

(2) A return-to-work order is immediately effective and executory despite the filing of a motion for
reconsideration by the petitioner. Additionally, although the Secretary's order was modified, the return-to-
work portion of the earlier order which states that "the faculty members should be admitted under the
same terms and conditions prevailing prior to the dispute" was affirmed. Since the factual findings of
quasi-judicial agencies like the NLRC are generally accorded not only respect but even finality if such
findings are supported by substantial evidence. There is no showing that such substantial evidence is not
present. The reinstated faculty members' refusal to assume their substantially equivalent academic
assignments does not contravene the Secretary's return-to-work order. They were merely insisting on
being given actual teaching loads, on the return-to-work order being followed. It was found that their
persistence justified as they are rightfully and legally entitled to actual reinstatement. Since the petitioner
failed to comply with the Secretary's order of actual reinstatement, it was adjudged that the NLRC's award
of backwages until actual reinstatement is correct.

(3) The hiring, firing, transfer, demotion and promotion of employees are traditionally Identified as
management prerogatives. However, these are not absolute prerogatives. They are subject to limitations
found in law, a CBA, or general principles of fair play and justice. Article 263(g) is one such limitation
provided by law. To the extent that Art. 263(g) calls for the admission of all workers under the same terms
and conditions prevailing before the strike, the petitioner University is restricted from exercising its
generally unbounded right to transfer or reassign its employees. The petitioner manifests the fear that if
the temporarily reinstated faculty members will be allowed to handle actual teaching assignments in the
classroom, the latter would take advantage of the situation by making the classroom the forum not for the
purpose of imparting knowledge to the students but for the purpose of assailing and lambasting the
administration. There may be a basis for such a fear. However, such a fear is speculative and does not
warrant a deviation from the principle that the dismissed faculty members must be actually reinstated
pending resolution of the labor dispute.

G.R. No. 155639 April 22, 2009

JANUARIA A. RIVERA, Petitioner, vs. UNITED LABORATORIES, INC., Respondent.

FACTS: Rivera commenced employment with respondent UNILAB as senior manufacturing pharmacist.
She later became Director of UNILAB's Manufacturing Division. UNILAB then adopted a comprehensive
retirement plan supported by a retirement fund, consisting of Trust Fund A where it would put in its
contributions for the account of the member-employee and Trust Fund B consisting of the contributions of
the members themselves. A member is compulsorily retired upon reaching the normal retirement date
which is the date when the member has reached age 60 or has completed 30 years of service, whichever
comes first. In 1988, Rivera completed 30 years of service and UNILAB retired her pursuant to the terms
of the plan. Based on her monthly salary and at one month's terminal basic salary for every year of
service, Rivera's total retirement benefits amounted to P1,047,331.33. Rivera's accrued retirement
benefits under Trust Fund A and Trust Fund B were withdrawn from the retirement fund and deposited in
Trust Fund C, a special account from which she could make withdrawals as she pleased. At Rivera's
request, UNILAB allowed her to continue working for the company; she was even promoted to the
position of Asst. Vice-President. She rendered service to the company until the end of 1992, at which
time, Rivera retired from employment with the company. The company then amended its retirement plan,
providing, among others, for an increase in retirement benefits from 1 month to 1.5 months of terminal
basic salary for every year of service. The amendment also provides that the effective date of normal or
mandatory retirement from the Plan is 30 days after an employee reaches his/her 60th birthday. Rivera
then asked that her retirement benefits be increased in accordance with the amended retirement program
based on her terminal basic salary, multiplied by her thirty four (34) years of service with the company.
UNILAB denied Rivera’s request explaining that the upgrade of the retirement benefit formula which
occurred after her retirement shall not be applied to her.

ISSUE: Whether or not Rivera is entitled to the upgraded retirement benefit?

HELD: Retirement in its ordinary signification is the termination of an employee’s service upon reaching
retirement age. Prior to the Retirement Pay Law (R.A. 7641), Article 287 of the Labor Code simply
provided that - Any employee may be retired upon reaching the retirement age established in the CBA or
other applicable employment contract;… the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining or other agreement.
Section 13 of the Rules to Implement the Labor Code, on the other hand, provided that – In the absence
of any CBA or other applicable agreement concerning terms and conditions of employment which
provides for retirement at an older age, an employee may be retired upon reaching the age of sixty (60)
years. Thus, her retirement was governed by the applicable agreement which was the UNILAB retirement
plan. Under the terms of this pre-1992 plan, her retirement was mandatory as she had reached 30 years
of service. A twist in Rivera’s case is that she continued working beyond the compulsory separation from
service that resulted from her retirement. Whether she could or could not resume working with the
company is, as a rule, a consensual matter for the parties to agree upon, limited only by company policies
and the applicable terms of the retirement plan. Her employment terms under this renewed employment
are based on what she and the company agreed upon. Whether these terms included renewed coverage
in the retirement plan is an evidentiary gap that could have been conclusively shown by evidence of
deductions of contributions to the plan after 1988. Two indicators, however, tell us that no such coverage
took place. The first is that the terms of the retirement plan, before and after its 1992 amendment,
continued to exclude those who have rendered 30 years of service or have reached 60 years of age.
Therefore, the plan could not have covered her. The second is the absence of evidence of, or of any
demand for, any reimbursement of what Rivera would have paid as contributions to the plan had her
coverage and deductions continued after 1988. Thus, we conclude that her renewed service did not have
the benefit of any retirement plan coverage.

G.R. No. 165407 June 5, 2009

HERMINIGILDO INGUILLO and ZENAIDA BERGANTE, Petitioners, vs. FIRST PHILIPPINE SCALES,
Inc. and/or AMPARO POLICARPIO, Manager, Respondents.

FACTS: First Philippine Scales, Inc. (FPSI) employed Bergante and Inguillo as assemblers. In 1991, FPSI
and First Philippine Scales Industries Labor Union (FPSILU) entered into a CBA. Bergante and Inguillo,
who were members of FPSILU. During the lifetime of the CBA, Bergante, Inguillo and several FPSI
employees joined another union, the Nagkakaisang Lakas ng Manggagawa (NLM), which was affiliated
with a federation called KATIPUNAN. NLM-KATIPUNAN allegedly erroneously collected P90,000.00 from
the employees. Notices of garnishment were issued to United Coconut Planters Bank and to FPSI for the
latter to hold for FPSILU the earnings of Grutas and Inguillo to the extent of P13,032.18. Resultantly, the
amount of P5,140.55 was collected. Inguillo then filed with the NLRC a complaint against FPSI and/or
Policarpio for illegal withholding of salary and damages. Respondents then terminated the services of 8
employees including Grutas, Inguillo and Bergante. Subsequently, 2 separate complaints for illegal
dismissal, reinstatement and damages were filed against respondents.

ISSUE: Whether or not the termination of the employees is legal and valid?

HELD: The Labor Code of the Philippines has several provisions under which an employee may be validly
terminated, namely: (1) just causes under Article 282; (2) authorized causes under Article 283; (3)
termination due to disease under Article 284; and (4) termination by the employee or resignation under
Article 285. While the said provisions did not mention as ground the enforcement of the Union Security
Clause in the CBA, the dismissal from employment based on the same is recognized and accepted by the
court. "Union security" is a generic term, which is applied to and comprehends "closed shop," "union
shop," "maintenance of membership" or any other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition affecting employment. In terminating the
employment of an employee by enforcing the Union Security Clause, the employer needs only to
determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the
union's decision to expel the employee from the union or company. It was found that all the requisites
have been sufficiently met.

However, it was emphasized that the enforcement of union security clauses is authorized by law,
provided such enforcement is not characterized by arbitrariness, and always with due process. There are
two (2) aspects which characterize the concept of due process: substantive and procedural. Procedural
due process in the dismissal of employees requires notice and hearing. The employer must furnish the
employee two written notices before termination may be effected. The first notice apprises the employee
of the particular acts or omissions for which his dismissal is sought, while the second notice informs the
employee of the employer’s decision to dismiss him. The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing
was conducted. In this case, the required two notices that must be given to herein petitioners Bergante
and Inguillo were lacking. The records are bereft of any notice that would have given a semblance of
substantial compliance on the part of herein respondents. As for the requirement of a hearing or
conference, it was held that respondents also failed to substantially comply with the same.

The power to dismiss is a normal prerogative of the employer. However, this is not without limitation. The
employer is bound to exercise caution in terminating the services of his employees especially so when it
is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals
must not be arbitrary and capricious. Due process must be observed in dismissing an employee because
it affects not only his position but also his means of livelihood. Employers should respect and protect the
rights of their employees, which include the right to labor.

G.R. No. 165756 June 5, 2009

HOTEL ENTERPRISES OF THE PHILIPPINES, INC. (HEPI), owner of Hyatt Regency Manila,
Petitioner, vs. SAMAHAN NG MGA MANGGAGAWA SA HYATT-NATIONAL UNION OF WORKERS IN
THE HOTEL AND RESTAURANT AND ALLIED INDUSTRIES (SAMASAH-NUWHRAIN), Respondent.

FACTS: Respondent Union is the certified collective bargaining agent of the rank-and-file employees of
Hyatt Regency Manila. In 2001, HEPI’s hotel business suffered a slump due to the local and international
economic slowdown. An audited financial report made by Sycip Gorres Velayo (SGV) & Co. indicated that
the hotel suffered a gross operating loss amounting to P16,137,217.00 in 2001, a staggering decline
compared to its P48,608,612.00 gross operating profit in year 2000. Allegedly, the management initially
decided to cost-cut by implementing energy-saving schemes: prioritizing acquisitions/purchases; reducing
work weeks in some of the hotel’s departments; directing the employees to avail of their vacation leaves;
and imposing a moratorium on hiring employees for the year 2001 whenever practicable. The Union then
filed a notice of strike due to a bargaining deadlock before the National Conciliation Mediation Board
(NCMB). In the course of the proceedings, HEPI submitted its economic proposals for the rank-and-file
employees included manning and staffing standards for the 248 regular rank-and-file employees which
was accepted by the Union. Hence, a new CBA was signed.

Subsequently, HEPI decided to implement a downsizing scheme after studying the operating costs of its
different divisions to determine the areas where it could obtain significant savings. The some positions
were identified as redundant or in excess of what was required for the hotel’s actual operation given the
prevailing poor business condition. The effect was to be a reduction of the hotel’s rank-and file employees
from the agreed number of 248 down to just 150 but it would generate estimated savings of around
P9,981,267.00 per year. However, it was opposed by the Union. Despite its opposition, a list of the
positions declared redundant and to be contracted out was given by the management to the Union.
Notices of termination were, likewise, sent to 48 employees whose positions were to be retrenched or
declared as redundant. A notice of termination was also submitted by the management to the DOLE
indicating the names, positions, addresses, and salaries of the employees to be terminated. Thereafter,
the hotel management engaged the services of independent job contractors. Some employees, including
one Union officer, who were affected by the downsizing plan were transferred to other positions in order
to save their employment. The Union then filed a notice of strike based on unfair labor practice (ULP)
against HEPI and when into strike on May 10, 2002.

ISSUE: Whether or not the strike conducted by the Labor Union due to ULP is valid?

HELD: Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut
down costs for operation particularly on salaries and wages. Redundancy, on the other hand, exists
where the number of employees is in excess of what is reasonably demanded by the actual requirements
of the enterprise. Both are forms of downsizing and are often resorted to by the employer during periods
of business recession, industrial depression, or seasonal fluctuations, and during lulls in production
occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program,
or introduction of new methods or more efficient machinery or automation. Retrenchment and redundancy
are valid management prerogatives, provided they are done in good faith and the employer faithfully
complies with the substantive and procedural requirements laid down by law and jurisprudence. For a
valid retrenchment, the following requisites must be complied with: (1) the retrenchment is necessary to
prevent losses and such losses are proven; (2) written notice to the employees and to the DOLE at least
one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to
one-month pay or at least one-half month pay for every year of service, whichever is higher. In case of
redundancy, the employer must prove that: (1) a written notice was served on both the employees and
the DOLE at least one month prior to the intended date of retrenchment; (2) separation pay equivalent to
at least one month pay or at least one month pay for every year of service, whichever is higher, has been
paid; (3) good faith in abolishing the redundant positions; and (4) adoption of fair and reasonable criteria
in ascertaining which positions are to be declared redundant and accordingly abolished. It is the employer
who bears the onus of proving compliance with these requirements, retrenchment and redundancy being
in the nature of affirmative defenses. Otherwise, the dismissal is not justified. In the case at bar, petitioner
justifies the downsizing scheme on the ground of serious business losses it suffered in 2001. Some
positions had to be declared redundant to cut losses. Our labor laws only allow retrenchment or
downsizing as a valid exercise of management prerogative if all other else fail. But in this case, petitioner
did implement various cost-saving measures and even transferred some of its employees to other viable
positions just to avoid the premature termination of employment of its affected workers. It was when the
same proved insufficient and the amount of loss became certain that petitioner had to resort to drastic
measures to stave off P9,981,267.00 in losses, and be able to survive. If we see reason in allowing an
employer not to keep all its employees until after its losses shall have fully materialized, with more reason
should we allow an employer to let go of some of its employees to prevent further financial slide.

In any event, it was held that an employer’s good faith in implementing a redundancy program is not
necessarily destroyed by availment of the services of an independent contractor to replace the services of
the terminated employees. We have previously ruled that the reduction of the number of workers in a
company made necessary by the introduction of the services of an independent contractor is justified
when the latter is undertaken in order to effectuate more economic and efficient methods of production.

Procedurally, a strike to be valid must comply with the following requisites: (a) a notice of strike filed with
the DOLE 30 days before the intended date thereof or 15 days in case of ULP; (b) a strike vote approved
by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a
meeting called for that purpose; and (c) a notice to the DOLE of the results of the voting at least seven (7)
days before the intended strike. The requirements are mandatory and failure of a union to comply
therewith renders the strike illegal. In this case, respondent fully satisfied the procedural requirements
prescribed by law. Substantively, however, there appears to be a problem. A valid and legal strike must
be based on "strikeable" grounds, because if it is based on a "non-strikeable" ground, it is generally
deemed an illegal strike. Corollarily, a strike grounded on ULP is illegal if no acts constituting ULP actually
exist. As an exception, even if no such acts are committed by the employer, if the employees believe in
good faith that ULP actually exists, then the strike held pursuant to such belief may be legal. Here,
respondent Union went on strike in the honest belief that petitioner was committing ULP. Thus, even if
technically there was no legal ground to stage a strike based on ULP, since the attendant circumstances
support the belief in good faith that petitioner’s retrenchment scheme was structured to weaken the
bargaining power of the Union, the strike, by exception, may be considered legal.

G.R. No. 174316 June 23, 2009

TEODORICO S. MIRANDA, JR., Petitioner, vs. ASIAN TERMINALS, INC. (ATI) and COURT OF
APPEALS, Respondents.

FACTS: Petitioner Miranda was employed by respondent ATI as Checker I. He also became a member of
the Associated Port Checkers and Workers Union (APCWU). The petitioner, who was then the Vice
President of the union, was appointed to the position of Shop Steward. The Shop Steward is a field
representative of both the company and the union and acts as an independent arbiter of all complaints
brought to his attention. Roger P. Silva, the President of APCWU, wrote a letter to the petitioner regarding
the recall of his designation as the union Shop Steward due to loss of trust and confidence in him,
pursuant to the "Agreement Amending the MPSI (Marina Port Services, Inc.) - APCWU CBA" due to
refusing to heed the union president’s reminders concerning his "chronic absenteeism" that "is hurting the
interest of the Union members as they are left with no responsible union officer when summoned for
investigation concerning alleged infractions of company rules. Upon the conclusion of the investigation,
the grievance committee issued its report recommending to ATI the recall of the petitioner as Shop
Steward and for his reversion to his former position of Checker I, in accordance with the CBA. Then the
management effective immediately recalls the designation of Miranda as Shop Steward.

The petitioner first filed a complaint against Roger Silva praying for his reinstatement as Shop Steward.
The petitioner likewise filed a series of complaints for unfair labor practice, which was later amended to
illegal demotion with a claim for reduction or diminution in pay, against respondent ATI and APCWU.
While the cases filed by the petitioner were pending, the petitioner was re-assigned from the position of
Checker I to Checker I Mobile, which is lower in rank than Checker I. He was further re-assigned to
Vessel Operation Checker, which is designated only to Checker Grades II and III and which positions
were only assigned to casual Checkers. The petitioner then filed a second complaint against the
respondent for unfair labor practice, illegal demotion and reduction and diminution of pay. A third
complaint for Unfair Labor Practice and Illegal Demotion was then filed by the petitioner which was later
amended to illegal demotion in rank and discrimination, amounting to constructive dismissal.

ISSUES: (1) whether the petitioner should be reinstated to the position of Shop Steward and (2) whether
the case has been rendered moot and academic.

HELD: The premise that the union Shop Steward is a position within the respondent company provides a
faulty foundation to an already convoluted case. A cursory look at the responsibilities of a shop steward
leads to the conclusion that it is a position within the union, and not within the company. A shop steward
is appointed by the union in a shop, department, or plant and serves as representative of the union,
charged with negotiating and adjustment of grievances of employees with the supervisor of the employer.
Even in Section 2 of Rule XIX of the Implementing Rules of Book V of the Labor Code, as amended, the
shop steward is understood to be a union officer who plays an important role in the grievance procedure.
In the case at bar, the duties and responsibilities of the Shop Steward stated in the CBA between the
union and the respondent company, as well as the manner of the appointment and designation of the
Shop Steward show that the shop steward is a union position and not a position within the company.
Since the Shop Steward is a union position, the controversy surrounding his recall from his position as
Shop Steward becomes a dispute within the union. An "Internal Union Dispute" or intra-union conflict”
refers to a conflict within or inside a labor union. It includes all disputes or grievances arising from any
violation of or disagreement over any provision of the constitution and by-laws of a union, including any
violation of the rights and conditions of union membership provided for in the Code. The records show
that sometime after the appointment of the petitioner to union Shop Steward, the petitioner, along with
other union members, had complaints with the manner in which the union leadership was handling the
affairs of the union. At the same time, there were also complaints about the petitioner’s habitual
absenteeism and his inability to perform his duties as union Shop Steward. When a grievance committee
was created to investigate these complaints, the petitioner refused to participate. This led to the recall of
petitioner as the union Shop Steward. The Med-Arbiter, as affirmed by the Secretary of Labor, ruled that
there was neither cause nor due process in the recall of the petitioner from the position of union Shop
Steward. He found that the claim of loss of trust and confidence due to the petitioner’s alleged
absenteeism was not substantiated and that the recall was not approved by the Board of Directors of the
union, as required by the APCWU Constitution and By-Laws. The facts and findings of the Med-Arbiter
and the Secretary of Labor are generally conclusive on appeal. This Court is not a trier of facts and it is
not its function to examine and evaluate the probative value of all evidence presented to the concerned
tribunal which formed the basis of its impugned decision, resolution or order. Petitioner cannot be
reinstated to Shop Steward because his eventual separation from respondent ATI made reinstatement
unfeasible. Employment with respondent ATI and membership in the union are required in order to
occupy the position of Shop Steward. But the petitioner is neither a member of the union nor employed
with respondent ATI. He was already retrenched from respondent ATI and his retrenchment was finally
settled through the execution of a Quit Claim and Release which was executed. It may seem that the
outcome of this case provides no relief for the petitioner despite his invalid removal from the position of
union Shop Steward, but the reinstatement of the petitioner could not be forced into the present
circumstances because the petitioner is no longer employed by the respondent company. It is a fact that
we cannot avoid and must consider in resolving this case. He was already compensated for his
retrenchment from ATI, and he released respondent ATI from any and all claims or liability with respect to
his separation from employment due to retrenchment. To order the respondent company to reinstate the
petitioner to his employment in ATI would render the Quit Claim and Release nugatory. The events which
have taken place during the pendency of the case have rendered the present petition moot and
academic.
A.C. No. 4763 March 20, 2003
DR. GIL Y. GAMILLA, NORMA S. CALAGUAS, IRMA E. POTENCIANO, EDITHA OCAMPO, LUZ DE
GUZMAN, GLICERIA BALDRES, FERDINAND LIMOS, MA. LOURDES C. MEDINA, HIDELITA GABO,
CORAZON CUI, REMEDIOS T. GARCIA, RENE ARNEJO, RENE LUIS TADLE, LAURA ABARA,
PHILIP AGUINALDO, BENEDICTA ALAVA, LEONCIO CASAL, CARMELITA ESPINA, ZENAIDA
FAMORCA, CELSO NIERA, CESAR REYES, NATIVIDAD SANTOS and MAFEL YSRAEL,
complainants, vs. ATTY. EDUARDO J. MARIÑO JR., respondent.

FACTS: Sometime in 1986 respondent Atty. Mariño Jr. as president of the UST Faculty Union and other
union officers entered into a CBA with the management of UST for the provision of economic benefits
amounting to P35 million. The 1986 CBA expired in 1988 but efforts to forge a new one unfortunately
failed. In 1989 the faculty members of UST went on strike and as a counter-measure UST terminated the
employment of 16 officers and directors of the UST Faculty Union including respondent. The
administration of UST and the UST Faculty Union entered into a compromise agreement for the payment
of P7M from which P5M was intended to settle the back wages and other claims of the dismissed
employees who were earlier ordered reinstated by the Court, and the sum of P2M to satisfy the remaining
obligations of UST under the 1986 CBA. In 1992 UST and the UST Faculty Union executed a
memorandum of agreement to settle the salary increases and other benefits under the CBA effective
1988 for a total of P42M. It was agreed that the benefits accruing from 1 June 1991 to 31 October 1992
were to be taken from the sum of P42M which UST would release directly to the faculty members, while
the remainder of the P42M package would be ceded by UST to the UST Faculty Union which would then
disburse the balance to cover the benefits from 1 November 1992 to 31 May 1993. The memorandum of
agreement also charged the amount of P2M agreed upon in the 1990 compromise agreement as well as
the attorney's fees of Atty. Mariño worth P4.2M against the P42M outlay. Complainants as members of
the UST Faculty Union questioned the alleged lack of transparency among the officers and directors of
the union in the management and disbursement of the monetary benefits for the faculty members.
Complainants filed the instant complaint for disbarment against Atty. Mariño accusing him of (a)
compromising their entitlements under the 1986 CBA without the knowledge, consent or ratification of the
union members, and worse, for only P2,000,000.00 when they could have received more than
P9,000,000.00; (b) failing to account for the P7,000,000.00 received by him and other officers and
directors in the UST Faculty Union under the 1990 compromise agreement; (c) lack of transparency in the
administration and distribution of the remaining balance of the P42,000,000.00 package under the 1992
memorandum of agreement; (d) refusal to remit and account for the P4,200,000.00 in favor of the faculty
members although the amount was denominated as attorney's fees.

ISSUE: Whether or not Respondent must be reprimanded from practice of law due to misconduct?

HEDL: There are ethical lapses on the part of respondent Atty. Eduardo J. Mariño Jr. in the manner by
which he secured the P7M by virtue of the compromise agreement and the P4.2 attorney's fees under the
memorandum of agreement. Although the record shows that the Bureau of Labor Relations found
respondent as having adequately accounted for the disbursement of the funds which the UST Faculty
Union received through the series of agreements with the management of UST, the Court believes that
Atty. Mariño failed to avoid conflict of interests, first, when he negotiated for the compromise agreement
wherein he played the diverse roles of union president, union attorney and interested party being one of
the dismissed employees seeking his own restitution, and thereafter, when he obtained the attorney's
fees of P4,200,000.00 without full prior disclosure of the circumstances justifying such claim to the
members of the UST Faculty Union. As one of the sixteen (16) union officers and directors seeking
compensation from the University of Santo Tomas for their illegal dismissal, respondent was involved in
obvious conflict of interests when in addition he chose to act as concurrent lawyer and president of the
UST Faculty Union in forging the compromise agreement. The test of conflict of interest among lawyers is
"whether the acceptance of a new relation will prevent an attorney from the full discharge of his duty of
undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double-dealing in the
performance thereof."15 In the same manner, it is undoubtedly a conflict of interests for an attorney to put
himself in a position where self-interest tempts, or worse, actually impels him to do less than his best for
his client.
Thus it has been held that an attorney or any other person occupying fiduciary relations respecting
property or persons is utterly disabled from acquiring for his own benefit the property committed to his
custody for management.16 This rule is entirely independent of whether fraud has intervened as in fact no
fraud need be shown; no excuse will be heard from an attorney because the rule stands on the moral
obligation to refrain from placing oneself in positions that ordinarily excite conflict between self-interest
and integrity. Necessarily, a lawyer cannot continue representing a client in an action or any proceeding
against a party even with the client's consent after the lawyer brings suit in his own behalf against the
same defendant if it is uncertain whether the defendant will be able to satisfy both judgments. No doubt, a
lawyer is not authorized to have financial stakes in the subject matter of the suit brought in behalf of his
client.

G.R. No. 168406 July 13, 2009

CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON, Petitioners, vs. BENJAMIN BAUTISTA,
RONIE SUALOG, JOEL CALIDA, JOHNNY ARINTO AND ROBERTO DE GUZMAN, Respondents.

FACTS: Petitioner Club Filipino, Inc. is a non-stock, non profit corporation duly formed, organized and
existing under Philippine laws, with petitioner Atty. Roberto F. de Leon as its president. Respondents
Ronnie Sualog, Joel Calida, Johnny Arinto and Roberto de Guzman, on the other hand, were former
officers and members of the Club Filipino Employees Association. The union and the company had a
CBA which expired on May 31, 2000. Prior to the expiration of the CBA and within the freedom period, the
union made several demands for negotiation. No negotiations, however, took place for various reasons
proffered by the company, among them the illness of the chairman of the management panel. The union
then filed a notice of strike on the grounds of bargaining deadlock and failure to bargain. The company
formally responded to the demands of the union when it submitted the first part of its economic counter-
proposal; the second part was submitted on May 11, 2001. Meanwhile, on May 4, 2001, the union
conducted a strike vote under the supervision of the DOLE. In response to the company’s counter-
proposal, the union sent the company its improved proposal, but the company refused to improve on its
offer. This prompted the union to stage a strike on May 26, 2001 on the ground of a CBA bargaining
deadlock. The company then filed a petition to declare the strike illegal.

ISSUE: whether or not the strike staged by respondents was legal?

HELD: Rule XXII, Section 4 of the Omnibus Rules Implementing the Labor Code states: In cases of
bargaining deadlocks, the notice shall, as far as practicable, further state the unresolved issues in the
bargaining negotiations and be accompanied by the written proposals of the union, the counter-proposals
of the employer and the proof of a request for conference to settle differences. In cases of unfair labor
practices, the notice shall, as far as practicable, state the acts complained of, and efforts taken to resolve
the dispute amicably. In the instant case, the union cannot be faulted for its omission of not attaching the
counter-proposal of the company in the notice of strike it submitted to the NCMB as there was no such
counter-proposal. To recall, the union filed a notice of strike on April 6, 2001 after several requests to start
negotiations but it was only on April 22, 2001 when the company formally responded to the union by
submitting the first part of its counter-proposal. Worse, it took the company another 3 weeks to complete it
by submitting on May 11, 2001 the second part of its counter-proposal. The Implementing Rules use the
words "as far as practicable." In this case, attaching the counter-proposal of the company to the notice of
strike of the union was not practicable. Indeed, compliance with the requirement was impossible because
no counter-proposal existed at the time the union filed a notice of strike. The law does not exact
compliance with the impossible. Nemo tenetur ad impossibile.

Moreover, it is hornbook doctrine that a mere finding of the illegality of the strike should not be
automatically followed by the wholesale dismissal of the strikers from employment. The law is clear: 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. Note that the verb "participates" is preceded by the adverb "knowingly." This reflects
the intent of the legislature to require "knowledge" as a condition sine qua non before a union officer can
be dismissed from employment for participating in an illegal strike. The provision is worded in such a way
as to make it very difficult for employers to circumvent the law by arbitrarily dismissing employees in the
guise of exercising management prerogative. This is but one aspect of the State’s constitutional and
statutory mandate to protect the rights of employees to self-organization.

G.R. No. 177594 July 23, 2009

UNIVERSITY OF SAN AGUSTIN, INC. Petitioners, vs. UNIVERSITY OF SAN AGUSTIN EMPLOYEES
UNION- FFW, Respondent.

FACTS: Petitioner forged with the University of San Agustin Employees Union-FFW a CBA effective for 5
years. Among other things, the parties agreed to include a provision on salary increases based on the
incremental tuition fee increases or tuition incremental proceeds (TIP) and pursuant to Republic Act No.
6728, The Tuition Fee Law. It appears that for the School Year 2001-2002, the parties disagreed on the
computation of the salary increases. Respondent refused to accept petitioner’s proposed across-the-
board salary increase of P1,500 per month and its subtraction from the computation of the TIP of the
scholarships and tuition fee discounts it grants to deserving students and its employees and their
dependents. Respondent likewise rejected petitioner’s interpretation of the term "salary increases" as
referring not only to the increase in salary but also to corresponding increases in other benefits.
Respondent argued that the provision in question referred to "salary increases" alone, hence, the phrase
"P1,500.00 or 80% of the TIP, whichever is higher," should apply only to salary increases and should not
include the other increases in benefits received by employees.
Resort to the existing grievance machinery having failed, the parties agreed to submit the case to
voluntary arbitration.

ISSUE: Whether or not the salary increase of P1500 or 80% of the TIP is correct?

HELD: Sec. 3, Art. VIII of the 2000-20005 CBA reads: “Salary Increases. The following shall be the
increases under this Agreement:
SY 2000-2001 – P2,000.00 per month, across the board.
SY 2001-2002 – P1,500.00 per month or 80% of the TIP, whichever is higher, across the board.
SY 2002-2003 – P1,500.00 per month or 80% of the TIP, whichever is higher, across the board.
(Emphasis supplied)
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they
are obliged to comply with its provisions. If the terms of a contract, in this case the CBA, are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall
control. A reading of the above-quoted provision of the CBA shows that the parties agreed that 80% of the
TIP or at the least the amount of P1,500 is to be allocated for individual salary increases. The CBA does
not speak of any other benefits or increases which would be covered by the employees’ share in the TIP,
except salary increases. The CBA reflects the incorporation of different provisions to cover other benefits
such as Christmas bonus (Art. VIII, Sec. 1), service award (Art. VIII, Sec.5), leaves (Article IX),
educational benefits (Sec.2, Art. X), medical and hospitalization benefits (Secs. 3, 4 and 5, Art. 10),
bereavement assistance (Sec. 6, Art. X), and signing bonus (Sec. 8, Art. VIII), without mentioning that
these will likewise be sourced from the TIP. Thus, petitioner’s belated claim that the 80% TIP should be
taken to mean as covering ALL increases and not merely the salary increases as categorically stated in
Sec. 3, Art. VIII of the CBA does not lie. In the present case, petitioner could have, during the CBA
negotiations, opposed the inclusion of or renegotiated the provision allotting 80% of the TIP to salary
increases alone, as it was and is not under any obligation to accept respondent’s demands hook, line and
sinker. Art. 252 of the Labor Code is clear on the matter: The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to wages, hours, of work and all other terms and
conditions of employment including proposals for adjusting any grievances or questions arising under
such agreement and executing a contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any concession. The records are
thus bereft of any showing that petitioner had made it clear during the CBA negotiations that it intended to
source not only the salary increases but also the increases in other employee benefits from the 80% of
the TIP. Absent any proof that petitioner’s consent was vitiated by fraud, mistake or duress, it is presumed
that it entered into the CBA voluntarily, had full knowledge of the contents thereof, and was aware of its
commitments under the contract. Even a perusal of the law will show that it does not make 70% as the
mandated ceiling. Unmistakably, what the law sets is the minimum, not the maximum percentage, and
there is even a 10% portion the disposition of which the law does not regulate. Hence, if academic
institutions wish to allot a higher percentage for salary increases and other benefits, nothing in the law
prohibits them from doing so.