ContentsSANTA ROSA..............................................................................................................................................50

UNION OF FILIPRO.....................................................................................................................................94

OVERSEAS WORKERS WELFARE ADMINISTRATION.................................................................................102

MARIETTA................................................................................................................................................123

NATIONAL FEDERATION..........................................................................................................................133

G.R. No. L-18364             February 28, 1963

PHILIPPINE AMERICAN CIGAR & CIGARETTE FACTORY WORKERS INDEPENDENT UNION (NLU), petitioner, vs.PHILIPPINE AMERICAN CIGAR & CIGARETTE MANUFACTURING CO., INC., respondent.

Eulogio R. Lerum for petitioner.E. B. Garcia Law Office for respondent.

CONCEPCION, J.:

Appeal by certiorari of petitioner Philippine American Cigar & Cigarette Workers Independent Union (NLU), from a decision of the Court of Industrial Relations dismissing a complaint of said petitioner for unfair labor practice, and ordering respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. to reinstate Apolonio San Jose, within five (5) days from notice of said decision, without backpay.

The pertinent facts are set forth in said decision from which we quote:

Paragraph 3, sub-paragraph (a) of the complaint states:—

a. That sometime on October 23, 1958, Apolonio San Jose's brother, Francisco San Jose, who is also a regular worker of the respondent and a member of the complainant union, filed a charge for unfair labor practice against herein respondent docketed as Case No. 1857-ULP of this Court, which case is still pending.

b. That subsequent to the filing of the said charge, or on about November 29, 1958 and also on or about December 11, 1958, the respondent herein, by its manager Chua Yiong, summoned and advised union president Lazaro Peralta that if Francisco San Jose will not withdraw his charge against the company (Case No. 1857-ULP), the company will also dismiss his brother Apolonio San Jose, to which the union president replied that that should not be the attitude of the company because Apolonio has nothing to do with his brother's case.

c. That on or about January 24, 1959, respondent, by its officers and agents, did dismiss Apolonio San Jose without just and valid cause and in gross violation of the operative collective bargaining agreement between the complainant union and respondent corporation.

The allegations in said sub-paragraphs (a), (b) and (c) of the complaint were substantiated by the oral testimony of complainant's witnesses, but the Court finds that such allegations do not constitute unfair labor practice acts on the part of respondent. In sub-paragraphs (a) and (b), the Court finds no interference, coercion and restraint against the employees in the exercise of their guaranteed rights to self-organization and discrimination against complainant Apolonio San Jose in regard to hire or tenure of his employment. In short, the complainants' charge is that if Francisco San Jose would not withdraw his unfair labor practice charge against respondent company, the manager of the latter would dismiss Apolonio San Jose, the brother of Francisco. In fact, said manager dismissed Apolonio San Jose. This may be an illegal or improper dismissal, but certainly, it does not constitute an unfair labor practice.

The Court further finds that in sub-paragraph (c), complainants allege that the dismissal of Apolonio San Jose was in gross violation of the collective bargaining agreement between complainant union and respondent corporation.

The Court of Industrial Relations found "that the moving cause of Apolonio's dismissal was the refusal of his brother Francisco San Jose, to withdraw his charge of unfair labor practice against the company. But" — it added — "be that as it may, it cannot constitute an actionable offense under the Act". Seemingly believing that, since the one dismissed by reason of said charge of unfair labor practice was, not the complainant therein, Francisco San Jose, but his brother Apolonio San Jose, the latter's dismissal does not constitute another unfair labor practice under Section 4 (a) (5) of Republic Act No. 875, which provides that:

(a) It shall be unfair labor practice for an employer:

x x x           x x x           x x x

(5) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having filed charges or for having given or being about to give testimony under this Act.

the lower court concluded that it had no jurisdiction to entertain the claim of petitioner herein. This conclusion is untenable.

Although subdivision (5) of paragraph (a) of said Section 4 would seem to refer only to the discharge of the one who preferred charges against the company as constituting unfair labor practice, the aforementioned subdivision (5) should be construed in line with the spirit and purpose of said Section 4 and of the legislation of which forms part — namely, to assure absolute freedom of the employees and laborers to establish labor organizations and unions, as well as to prefer charges before the proper organs of the Government for violation of our labor laws. Now, then, if the dismissal of an employee due to the filing by him of said charges would be and is an undue restraint upon said freedom, the dismissal of his brother owing to the non-withdrawal of the charges of the former, would be and constitute as much a restraint upon the same freedom. In fact, it may be a greater and more effective restraint thereto. Indeed, a complainant may be willing to risk the hazards of a possible and even probable retaliatory action by the employer in the form of a dismissal or another discriminatory act against him personally, considering that nobody is perfect, that everybody commits mistakes and that there is always a possibility that the employer may find in the records of any employee, particularly if he has long been in the service, some act or omission constituting a fault or negligence which may be an excuse for such dismissal or discrimination. Yet, such complainant may not withstand the pressure that would result if his brother or another member of his immediate family were threatened with such action unless the charges in question were withdrawn.

In fact, it is a well settled rule of law that what is prohibited to be done directly shall not be allowed to be accomplished indirectly. Thus in the Matter of Quidnick Dye Works, Inc. and Federation of Dyers, Finishers, Printers and Bleachers of America (2 NLRB 963) it was held that the dismissal of a laborer on account of union activities of his brother constituted an unfair labor practice. To the same effect, substantially, are the decisions in the Matter of the Fashion Piece Dye Works, Inc. and Federation of Silk and Rayon Dyers and Finishers of American, 6 NLRB p. 274; In the Matter of Ford Motor Company and H.C. McGarity, 26 NLRB, p. 322 (which refers to the union activities of the wife of the discharged employee), and Union Asbestos & Rubber Co. and United Textile Workers of America, AFL, 98 NLRB p. 1055 (involving the dismissal of a female employee, due to the union activities of her husband). Hence, Teller in his work on Labor Disputes and Collective Bargaining (Vol. 2, p. 859), says:

The discharge of relatives of an employee who was himself been discriminately discharged, for no other reason than the relation, is itself of a discriminatory discharge, in violation of Sec. 8(3) of the Act. An illustration is Memphis Furniture Co. (3 NLRB 26 [1937], enforced 2 F2d 1018 [CCA 6, 1938], cert. den. 305 US 627, 59 S Ct 91, 83 L. Ed. 402 [CCA 6, 1938])where the evidence indicated that the sole reason for the dismissal of a female employee was that she was the wife of an employee who has been discharged. It was held that the discharge under the circumstances was discriminatory and a violation of the Act, even though discharged female employee was not herself a member of any union. The Board said: "The respondent thus made union membership and activities a bar to the employment not only of the union member himself but of members of his family as well. A more effective mode of discouragement of union affiliation could hardly be found than the knowledge that such activities put not merely the union member's employment but that of those closely related to him in jeopardy. The direct cause of Mrs. Barmer's discharge was the fact that her husband had been discharged, but the indirect and antecedent cause was discrimination against union members in regard to hire and tenure

of employment with intent to discourage membership in the Union." So also the Board has held that the discharge of discriminatingly discharged employees' wives for the reason that the employer did not desire the employees to continue to live in the employer's houses, which they would do so long as their wives remained employed, is itself a discriminating discharge in violation of the Act. (Mexis Textile Mills, 11 NLRB 1167 [1939], enforced 110 F2d 565 [CCA 5, 1940].) In Mansfield Mills, Inc. (3 NLRB 901 [1937] ), the respondent alleged that the wife of an employee who had been discharged allegedly in violation of the Act was herself discharged in consequence of a company rule requiring the dismissal of all members of the family when the head of the family is discharged. The Board said: "Assuming this as the reason for Mrs. Sutton's discharge, we would necessarily find that she was the victim of discrimination in violation of the Act, if we determined that Sutton was discharged as the result of his union affiliation."

In the usual case, it is the wife who is the sufferer because of the husband's union affiliation. In I. Youlin and Company (22 NLRB No. 65 [1940]),the husband was discharged for failure to secure his wife's resignation from the union this was held violative of Section 8(3) of the Act.

In addition to violating Section 4(a) (5) of Republic Act No. 875, the discharge of Apolonio San Jose is, therefore, an unfair labor practice under subdivision (4) of said Section 4(a), which is the counterpart of Section 8(3)of the National Labor Relations Act (Wagner Act) of the United States.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1äwphï1.ñët

WHEREFORE, the decision appealed from is hereby reversed, insofar as it dismisses the complaint of petitioner herein, and another one shall be entered finding respondent Philippine American Cigar & Cigarette Manufacturing Co., Inc. guilty of unfair labor practice and ordering said respondent to reinstate Apolonio San Jose, immediately after his decision shall have become final, with backpay. It is so ordered..

CARLOS L. OCTAVIO, Petitioner, vs.PIDLIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.

D E C I S I O N

DEL CASTILLO, J.:

Every Collective Bargaining Agreement (CBA) shall provide a grievance machinery to which all disputes arising from its implementation or interpretation will be subjected to compulsory negotiations. This essential feature of a CBA provides the parties with a simple, inexpensive and

expedient system of finding reasonable and acceptable solutions to disputes and helps in the attainment of a sound and stable industrial peace.

Before us is a Petition for Review on Certiorari1 assailing the August 31, 2006 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 93578, which dismissed petitioner Carlos L. Octavio's (Octavio) Petition for Certiorari3 assailing the September 30, 2005 Resolution4 of the National Labor Relations Commission (NLRC). Said NLRC Resolution affirmed the August 30, 2004 Decision5 of the Labor Arbiter which dismissed Octavio's Complaint for payment of salary increases against respondent Philippine Long Distance Company (PLDT). Likewise assailed in this Petition is the November 15, 2006 Resolution6 which denied Octavio’s Motion for Reconsideration.7

Factual Antecedents

On May 28, 1999, PLDT and Gabay ng Unyon sa Telekominaksyon ng mga Superbisor (GUTS) entered into a CBA covering the period January 1, 1999 to December 31, 2001 (CBA of 1999-2001). Article VI, Section I thereof provides:

Section 1. The COMPANY agrees to grant the following across-theboard salary increase during the three years covered by this Agreement to all employees covered by the bargaining unit as of the given dates:

Effective January 1, 1999 – 10% of basic wage or P2,000.00 whichever is higher;

Effective January 1, 2000 – 11% of basic wage or P2,250.00 whichever is higher;

Effective January 1, 2001 – 12% of basic wage or P2,500.00 whichever is higher.8

On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a probationary status. He became a member of GUTS. When Octavio was regularized on January 1, 2001, he was receiving a monthly basic salary of P10,000.00. On February 1, 2002, he was promoted to the position of Sales System Analyst 2 and his salary was increased to P13,730.00.

On May 31, 2002, PLDT and GUTS entered into another CBA covering the period January 1, 2002 to December 31, 2004 (CBA of 2002-2004) which provided for the following salary increases: 8% of basic wage or P2,000.00 whichever is higher for the first year (2002); 10% of basic wage or P2,700.00 whichever is higher for the second year (2003); and, 10% of basic wage or P2,400.00 whichever is higher for the third year (2004).9

Claiming that he was not given the salary increases of P2,500.00 effective January 1, 2001 and P2,000.00 effective January 1, 2002, Octavio wrote the President of GUTS, Adolfo Fajardo (Fajardo).10 Acting thereon and on similar grievances from other GUTS members, Fajardo wrote the PLDT Human Resource Head to inform management of the GUTS members’ claim for entitlement to the across-the-board salary increases.11

Accordingly, the Grievance Committee convened on October 7, 2002 consisting of representatives from PLDT and GUTS. The Grievance Committee, however, failed to reach an agreement. In effect, it denied Octavio’s demand for salary increases. The Resolution (Committee Resolution), reads as follows:

October 7, 2002

UNION ISSUE :

1. Mr. Carlos L. Octavio, Sales System Analyst I, CCIM-Database, was promoted to S2 from S1 last February 01, 2002. He claimed that the whole P2,000 (1st yr. GUTS-CBA increase) was not given to him.

2. He was hired as a probationary employee on October 01, 2000 and was regularized on January 01, 2001. He claimed that Management failed to grant him the GUTS-CBA increase last January 2001.

MANAGEMENT POSITION :

Issue # 1:

A) Promotional Policy: adjustment of basic monthly salary to the minimum salary of the new position.

B) Mr. Octavio’s salary at the time of his promotion and before the conclusion of the GUTS CBA was P10,000.00.

C) Upon the effectivity of his promotion on February 1, 2002, his basic monthly salary was adjusted to P13,730.00, the minimum salary of the new position.

D) In June 2002, the GUTS-CBA was concluded and Mr. Octavio’s basic salary was recomputed to include the P2,000.00 1st year increase retroactive January 2002. The resulting basic salary was P12,000.00.

E) Applying the above-mentioned policy, Mr. Octavio’s basic salary was adjusted to the minimum salary of the new position, which is P13,730.00.

Issue # 2:

All regularized supervisory employees as of January 1 are not entitled to the GUTS CBA increase. However, as agreed with GUTS in the grievance case of 18 personnel of International & Luzon Core Network Management Center, probationary employees who were hired outside of PLDT and regularized as supervisors/management personnel on January 1, 2002 shall be entitled to GUTS CBA. This decision shall be applied prospectively and all previous similar cases are not covered.

RESOLUTION :

After protracted deliberation of these issues, the committee failed to reach an agreement. Hence, Management position deemed adopted.

MANAGEMENT UNION

_______(signed)_______WILFREDO A. GUADIA

_______(signed)_______ADOLFO L.FAJARDO

_______(signed)_______ROSALINDA S. RUIZ

_______(signed)_______CONFESOR A. ESPIRITU

_______(signed)_______ALEJANDRO C. FABIAN

_______(signed)_______CHARLITO A. AREVALO12

Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a Complaint for payment of said salary increases.

Ruling of the Labor Arbiter

Octavio claimed entitlement to salary increases per the CBAs of 1999-2001 and 2002-2004. He insisted that when he was regularized as a supervisory employee on January 1, 2001, he became entitled to receive the across-the-board increase of P2,500.00 as provided for under the CBA of 1999-2001 which took effect on January 1, 1999. Then pursuant to the CBA of 2002-2004, he should have received an additional increase of P2,000.00 apart from the merit increase of P3,730.00 which was given him due to his promotion on February 1, 2002. However, PLDT unilaterally decided to deem as included in the said P3,730.00 the P2,000.00 across-the-board increase for 2002 as stipulated in the CBA of 2002-2004. This, according to Octavio, amounts to diminution of benefits. Moreover, Octavio averred that the CBA cannot be the subject of further negotiation as it has the force of law between the parties. Finally, Octavio claimed that PLDT committed an act of unfair labor practice because, while it granted the claim for salary increase of 18 supervisory employees who were regularized on January 1, 2002 and onwards, it discriminated against him by refusing to grant him the same salary increase. He thus prayed for an additional award of damages and attorney’s fees.

PLDT countered that the issues advanced by Octavio had already been resolved by the Union-Management Grievance Committee when it denied his claims through the Committee Resolution. Moreover, the grant of across-the board salary increase for those who were regularized starting January 1, 2002 and the exclusion thereto of those who were regularized on January 1, 2001, do not constitute an act of unfair labor practice as would result in any discrimination or encourage or discourage membership in a labor organization. In fact, when the Union-Management Grievance Committee came up with the Committee Resolution, they considered the same as the most practicable and reasonable solution for both management and union. At any rate, the said Committee Resolution had already become final and conclusive

between the parties for failure of Octavio to elevate the same to the proper forum. In addition, PLDT claimed that the NLRC has no jurisdiction to hear and decide Octavio’s claims.

In a Decision dated August 30, 2004, the Labor Arbiter dismissed the Complaint of Octavio and upheld the Committee Resolution.

Ruling of the National Labor Relations Commission

Upon Octavio’s appeal, the NLRC, in its September 30, 2005 Resolution, affirmed the Labor Arbiter’s Decision. It upheld the Labor Arbiter’s finding that Octavio’s salary had already been adjusted in accordance with the provisions of the CBA. The NLRC further ruled that it has no jurisdiction to decide the issues presented by Octavio, as the same involved the interpretation and implementation of the CBA. According to it, Octavio should have brought his claim before the proper body as provided in the 2002-2004 CBA’s provision on grievance machinery and procedure.

Octavio’s Motion for Reconsideration was likewise dismissed by the NLRC in its November 21, 2005 Resolution.13

Ruling of the Court of Appeals

Octavio thus filed a Petition for Certiorari14 which the CA found to be without merit. In its August 31, 2006 Decision,15 the CA declared the Committee Resolution to be binding on Octavio, he being a member of GUTS, and because he failed to question its validity and enforceability.

In his Motion for Reconsideration,16 Octavio disclaimed his alleged failure to question the Committee Resolution by emphasizing that he filed a Complaint before the NLRC against PLDT. However, the CA denied Octavio’s Motion for Reconsideration in its November 15, 2006 Resolution.17

Issues

Hence, Octavio filed this Petition raising the following issues for our consideration:

a. Whether x x x the employer and bargaining representative may amend the provisions of the collective bargaining agreement without the consent and approval of the employees;

b. If so, whether the said agreement is binding [on] the employees;

c. Whether x x x merit increases may be awarded simultaneously with increases given in the Collective Bargaining Agreement;

d. Whether x x x damages may be awarded to the employee for violation by the employer of its commitment under its existing collective bargaining agreement.18

Octavio submits that the CA erred in upholding the Committee Resolution which denied his claim for salary increases but granted the same request of 18 other similarly situated employees. He likewise asserts that both PLDT and GUTS had the duty to strictly implement the CBA salary increases; hence, the Committee Resolution, which effectively resulted in the modification of the CBAs’ provision on salary increases, is void.

Octavio also insists that PLDT is bound to grant him the salary increase of P2,000.00 for the year 2002 on top of the merit increase given to him by reason of his promotion. It is his stance that merit increases are distinct and separate from across-the-board salary increases provided for under the CBA.

Our Ruling

The Petition has no merit.

Under Article 26019 of the Labor Code, grievances arising from the interpretation or implementation of the parties’ CBA should be resolved in accordance with the grievance procedure embodied therein. It also provides that all unsettled grievances shall be automatically referred for voluntary arbitration as prescribed in the CBA.

In its Memorandum,20 PLDT set forth the grievance machinery and procedure provided under Article X of the CBA of 2002-2004, viz:

Section 1. GRIEVANCE MACHINERY - there shall be a Union-Management Grievance Committee composed of three (3) Union representatives designated by the UNION Board of Directors and three (3) Management representatives designated by the company President. The committee shall act upon any grievance properly processed in accordance with the prescribed procedure. The Union representatives to the Committee shall not lose pay for attending meetings where Management representatives are in attendance.

Section 2. GRIEVANCE PROCEDURE - The parties agree that all disputes between labor and management may be settled through friendly negotiations; that the parties have the same interest in the continuity of work until all points in dispute shall have been discussed and settled; that an open conflict in any form involves losses to the parties; and that therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of these principles, the parties agree to observe the following grievance procedures.

Step 1. Any employee (or group of employees) who believes that he has a justifiable grievance shall present the matter initially to his division head, or if the division is involved in the grievance, to the company official next higher to the division head (the local manager in the provincial exchanges) not later that fifteen (15) days after the occurrence of the incident giving rise to the grievance. The initial presentation shall be made to the division head either by the aggrieved party himself or by the Union Steward or by any Executive Officer of the Union who is not a member of the grievance panel.1âwphi1 The initial presentation may be made orally or in writing.

Step 2. Any party who is not satisfied with the resolution of the grievance at Step 1 may appeal in writing to the Union-Management Grievance Committee within seven (7) days from the date of receipt of the department head’s decision.

Step 3. If the grievance is not settled either because of deadlock or the failure of the committee to decide the matter, the grievance shall be transferred to a Board of Arbitrators for the final decision. The Board shall be composed of three (3) arbitrators, one to be nominated by the Union, another to be nominated by the Management, and the third to be selected by the management and union nominees. The decision of the board shall be final and binding both the company and the Union in accordance with law. Expenses of arbitration shall be divided equally between the Company and the Union.21 (Emphasis supplied)

Indisputably, the present controversy involves the determination of an employee’s salary increases as provided in the CBAs. When Octavio’s claim for salary increases was referred to the Union-Management Grievance Committee, the clear intention of the parties was to resolve their differences on the proper interpretation and implementation of the pertinent provisions of the CBAs. And in accordance with the procedure prescribed therein, the said committee made up of representatives of both the union and the management convened. Unfortunately, it failed to reach an agreement. Octavio’s recourse pursuant to the CBA was to elevate his grievance to the Board of Arbitrators for final decision. Instead, nine months later, Octavio filed a Complaint before the NLRC.

It is settled that "when parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that procedure should be strictly observed."22 Moreover, we have held time and again that "before a party is allowed to seek the intervention of the court, it is a precondition that he should have availed of all the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction, then such remedy should be exhausted first before the court’s judicial power can be sought. The premature invocation of the court’s judicial intervention is fatal to one’s cause of action."23 "The underlying principle of the rule on exhaustion of administrative remedies rests on the presumption that when the administrative body, or grievance machinery, is afforded a chance to pass upon the matter, it will decide the same correctly."24

By failing to question the Committee Resolution through the proper procedure prescribed in the CBA, that is, by raising the same before a Board of Arbitrators, Octavio is deemed to have waived his right to question the same. Clearly, he departed from the grievance procedure mandated in the CBA and denied the Board of Arbitrators the opportunity to pass upon a matter over which it has jurisdiction. Hence, and as correctly held by the CA, Octavio’s failure to assail the validity and enforceability of the Committee Resolution makes the same binding upon him. On this score alone, Octavio’s recourse to the labor tribunals below, as well as to the CA, and, finally, to this Court, must therefore fail.

At any rate, Octavio cannot claim that the Committee Resolution is not valid, binding and conclusive as to him for being a modification of the CBA in violation of Article 25325 of the

Labor Code. It bears to stress that the said resolution is a product of the grievance procedure outlined in the CBA itself. It was arrived at after the management and the union through their respective representatives conducted negotiations in accordance with the CBA. On the other hand, Octavio never assailed the competence of the grievance committee to take cognizance of his case. Neither did he question the authority or credibility of the union representatives; hence, the latter are deemed to have properly bargained on his behalf since "unions are the agent of its members for the purpose of securing just and fair wages and good working conditions."26 In fine, it cannot be gainsaid that the Committee Resolution is a modification of the CBA. Rather, it only provides for the proper implementation of the CBA provision respecting salary increases.

Finally, Octavio’s argument that the denial of his claim for salary increases constitutes a violation of Article 10027 of the Labor Code is devoid of merit. Even assuming that there has been a diminution of benefits on his part, Article 100 does not prohibit a union from offering and agreeing to reduce wages and benefits of the employees as the right to free collective bargaining includes the right to suspend it.28 PLDT averred that one of the reasons why Octavio’s salary was recomputed as to include in his salary of P13,730.00 the P2,000.00 increase for 2002 is to avoid salary distortion. At this point, it is well to emphasize that bargaining should not be equated to an "adversarial litigation where rights and obligations are delineated and remedies applied."29 Instead, it covers a process of finding a reasonable and acceptable solution to stabilize labor-management relations to promote stable industrial peace.30 Clearly, the Committee Resolution was arrived at after considering the intention of both PLDT and GUTS to foster industrial peace.

All told, we find no error on the part of the Labor Arbiter, the NLRC and the CA in unanimously upholding the validity and enforceability of the Grievance Committee Resolution dated October 7, 2002.

WHEREFORE, the petition is DENIED. The August 31, 2006 Decision and November 15, 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 93578 are AFFIRMED.

SO ORDERED.

GOYA, INC., Petitioner, vs.GOYA, INC. EMPLOYEES UNION-FFW, Respondent.

D E C I S I O N

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse and set aside the June 16, 2005 Decision1 and October 12, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 87335, which sustained the October 26, 2004 Decision3 of Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring that the Company is NOT guilty of unfair labor practice in engaging the services of PESO.

The company is, however, directed to observe and comply with its commitment as it pertains to the hiring of casual employees when necessitated by business circumstances.4

The facts are simple and appear to be undisputed.

Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation engaged in the manufacture, importation, and wholesale of top quality food products, hired contractual employees from PESO Resources Development Corporation (PESO) to perform temporary and occasional services in its factory in Parang, Marikina City. This prompted respondent Goya, Inc. Employees Union–FFW (Union) to request for a grievance conference on the ground that the contractual workers do not belong to the categories of employees stipulated in the existing Collective Bargaining Agreement (CBA).5 When the matter remained unresolved, the grievance was referred to the National Conciliation and Mediation Board (NCMB) for voluntary arbitration.

During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary Arbitrator (VA) Bienvenido E. Laguesma that amicable settlement was no longer possible; hence, they agreed to submit for resolution the solitary issue of "[w]hether or not the Company is guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence."6 Both parties thereafter filed their respective pleadings.

The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers engaged have been assigned to work in positions previously handled by regular workers and Union members, in effect violating Section 4, Article I of the CBA, which provides for three categories of employees in the Company, to wit:

Section 4. Categories of Employees.– The parties agree on the following categories of employees:

(a) Probationary Employee. – One hired to occupy a regular rank-and-file position in the Company and is serving a probationary period. If the probationary employee is hired or comes from outside the Company (non-Goya, Inc. employee), he shall be required to undergo a probationary period of six (6) months, which period, in the sole judgment of management, may be shortened if the employee has already acquired the knowledge or skills required of the job. If the employee is hired from the casual pool and has worked in the same position at any time during the past two (2) years, the probationary period shall be three (3) months.

(b) Regular Employee. – An employee who has satisfactorily completed his probationary period and automatically granted regular employment status in the Company.

(c) Casual Employee, – One hired by the Company to perform occasional or seasonal work directly connected with the regular operations of the Company, or one hired for specific projects of limited duration not connected directly with the regular operations of the Company.

It was averred that the categories of employees had been a part of the CBA since the 1970s and that due to this provision, a pool of casual employees had been maintained by the Company from which it hired workers who then became regular workers when urgently necessary to employ them for more than a year. Likewise, the Company sometimes hired probationary employees who also later became regular workers after passing the probationary period. With the hiring of contractual employees, the Union contended that it would no longer have probationary and casual employees from which it could obtain additional Union members; thus, rendering inutile Section 1, Article III (Union Security) of the CBA, which states:

Section 1. Condition of Employment. – As a condition of continued employment in the Company, all regular rank-and-file employees shall remain members of the Union in good standing and that new employees covered by the appropriate bargaining unit shall automatically become regular employees of the Company and shall remain members of the Union in good standing as a condition of continued employment.

The Union moreover advanced that sustaining the Company’s position would easily weaken and ultimately destroy the former with the latter’s resort to retrenchment and/or retirement of employees and not filling up the vacant regular positions through the hiring of contractual workers from PESO, and that a possible scenario could also be created by the Company wherein it could "import" workers from PESO during an actual strike.

In countering the Union’s allegations, the Company argued that: (a) the law expressly allows contracting and subcontracting arrangements through Department of Labor and Employment (DOLE) Order No. 18-02; (b) the engagement of contractual employees did not, in any way, prejudice the Union, since not a single employee was terminated and neither did it result in a reduction of working hours nor a reduction or splitting of the bargaining unit; and (c) Section 4, Article I of the CBA merely provides for the definition of the categories of employees and does not put a limitation on the Company’s right to engage the services of job contractors or its management prerogative to address temporary/occasional needs in its operation.

On October 26, 2004, VA Laguesma dismissed the Union’s charge of ULP for being purely speculative and for lacking in factual basis, but the Company was directed to observe and comply with its commitment under the CBA. The VA opined:

We examined the CBA provision Section 4, Article I of the CBA allegedly violated by the Company and indeed the agreement prescribes three (3) categories of employees in the Company and provides for the definition, functions and duties of each. Material to the case at hand is the definition as regards the functions of a casual employee described as follows:

Casual Employee – One hired by the COMPANY to perform occasional or seasonal work directly connected with the regular operations of the COMPANY, or one hired for specific projects of limited duration not connected directly with the regular operations of the COMPANY.

While the foregoing agreement between the parties did eliminate management’s prerogative of outsourcing parts of its operations, it serves as a limitation on such prerogative particularly if it

involves functions or duties specified under the aforequoted agreement. It is clear that the parties agreed that in the event that the Company needs to engage the services of additional workers who will perform "occasional or seasonal work directly connected with the regular operations of the COMPANY," or "specific projects of limited duration not connected directly with the regular operations of the COMPANY", the Company can hire casual employees which is akin to contractual employees. If we note the Company’s own declaration that PESO was engaged to perform "temporary or occasional services" (See the Company’s Position Paper, at p. 1), then it should have directly hired the services of casual employees rather than do it through PESO.

It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit of the CBA provision in question. It must, however, be stressed that the right of management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA. Given the foregoing, the Company’s engagement of PESO for the given purpose is indubitably a violation of the CBA.7

While the Union moved for partial reconsideration of the VA Decision,8 the Company immediately filed a petition for review9 before the Court of Appeals (CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the directive to observe and comply with the CBA commitment pertaining to the hiring of casual employees when necessitated by business circumstances. Professing that such order was not covered by the sole issue submitted for voluntary arbitration, the Company assigned the following errors:

THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS EXPRESSLY GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.10

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE ERROR IN DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.11

On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of the controversy, it held:

This Court does not find it arbitrary on the part of the Hon. Voluntary Arbitrator in ruling that "the engagement of PESO is not in keeping with the intent and spirit of the CBA." The said ruling is interrelated and intertwined with the sole issue to be resolved that is, "Whether or not the Company is guilty of unfair labor practice in engaging the services of PESO, a third party service provider, under existing CBA, laws, and jurisprudence." Both issues concern the engagement of PESO by the Company which is perceived as a violation of the CBA and which constitutes as unfair labor practice on the part of the Company. This is easily discernible in the decision of the Hon. Voluntary Arbitrator when it held:

x x x x While the engagement of PESO is in violation of Section 4, Article I of the CBA, it does not constitute unfair labor practice as it (sic) not characterized under the law as a gross violation of the CBA. Violations of a CBA, except those which are gross in character, shall no longer be

treated as unfair labor practice. Gross violations of a CBA means flagrant and/or malicious refusal to comply with the economic provisions of such agreement. x x x

Anent the second assigned error, the Company contends that the Hon. Voluntary Arbitrator erred in declaring that the engagement of PESO is not in keeping with the intent and spirit of the CBA. The Company justified its engagement of contractual employees through PESO as a management prerogative, which is not prohibited by law. Also, it further alleged that no provision under the CBA limits or prohibits its right to contract out certain services in the exercise of management prerogatives.

Germane to the resolution of the above issue is the provision in their CBA with respect to the categories of the employees:

x x x x

A careful reading of the above-enumerated categories of employees reveals that the PESO contractual employees do not fall within the enumerated categories of employees stated in the CBA of the parties. Following the said categories, the Company should have observed and complied with the provision of their CBA. Since the Company had admitted that it engaged the services of PESO to perform temporary or occasional services which is akin to those performed by casual employees, the Company should have tapped the services of casual employees instead of engaging PESO.

In justifying its act, the Company posits that its engagement of PESO was a management prerogative. It bears stressing that a management prerogative refers to the right of the employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work, presupposing the existence of employer-employee relationship. On the basis of the foregoing definition, the Company’s engagement of PESO was indeed a management prerogative. This is in consonance with the pronouncement of the Supreme Court in the case of Manila Electric Company vs. Quisumbing where it ruled that contracting out of services is an exercise of business judgment or management prerogative.

This management prerogative of contracting out services, however, is not without limitation. In contracting out services, the management must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious arbitrary actions. In the case at bench, the CBA of the parties has already provided for the categories of the employees in the Company’sestablishment. These categories of employees particularly with respect to casual employees serve as limitation to the Company’s prerogative to outsource parts of its operations especially when hiring contractual employees. As stated earlier, the work to be performed by PESO was similar to that of the casual employees. With the provision on casual employees, the hiring of PESO contractual employees, therefore, is not in keeping with the spirit and intent of their CBA. (Citations omitted)12

The Company moved to reconsider the CA Decision,13 but it was denied;14 hence, this petition.

Incidentally, on July 16, 2009, the Company filed a Manifestation15 informing this Court that its stockholders and directors unanimously voted to shorten the Company’s corporate existence only until June 30, 2006, and that the three-year period allowed by law for liquidation of the Company’s affairs already expired on June 30, 2009. Referring to Gelano v. Court of Appeals,16 Public Interest Center, Inc. v. Elma,17 and Atienza v. Villarosa,18 it urged Us, however, to still resolve the case for future guidance of the bench and the bar as the issue raised herein allegedly calls for a clarification of a legal principle, specifically, whether the VA is empowered to rule on a matter not covered by the issue submitted for arbitration.

Even if this Court would brush aside technicality by ignoring the supervening event that renders this case moot and academic19 due to the permanent cessation of the Company’s business operation on June 30, 2009, the arguments raised in this petition still fail to convince Us.

We confirm that the VA ruled on a matter that is covered by the sole issue submitted for voluntary arbitration. Resultantly, the CA did not commit serious error when it sustained the ruling that the hiring of contractual employees from PESO was not in keeping with the intent and spirit of the CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA, "interrelated and intertwined with," the sole issue submitted for resolution by the parties. This being said, the Company’s invocation of Sections 4 and 5, Rule IV20 and Section 5, Rule VI21 of the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated October 15, 2004 issued by the NCMB is plainly out of order.

Likewise, the Company cannot find solace in its cited case of Ludo & Luym Corporation v. Saornido.22 In Ludo, the company was engaged in the manufacture of coconut oil, corn starch, glucose and related products. In the course of its business operations, it engaged the arrastre services of CLAS for the loading and unloading of its finished products at the wharf. The arrastre workers deployed by CLAS to perform the services needed were subsequently hired, on different dates, as Ludo’s regular rank-and-file employees. Thereafter, said employees joined LEU, which acted as the exclusive bargaining agent of the rank-and-file employees. When LEU entered into a CBA with Ludo, providing for certain benefits to the employees (the amount of which vary according to the length of service rendered), it requested to include in its members’ period of service the time during which they rendered arrastre services so that they could get higher benefits. The matter was submitted for voluntary arbitration when Ludo failed to act. Per submission agreement executed by both parties, the sole issue for resolution was the date of regularization of the workers. The VA Decision ruled that: (1) the subject employees were engaged in activities necessary and desirable to the business of Ludo, and (2) CLAS is a labor-only contractor of Ludo. It then disposed as follows: (a) the complainants were considered regular employees six months from the first day of service at CLAS; (b) the complainants, being entitled to the CBA benefits during the regular employment, were awarded sick leave, vacation leave, and annual wage and salary increases during such period; (c) respondents shall pay attorney’s fees of 10% of the total award; and (d) an interest of 12% per annum or 1% per month shall be imposed on the award from the date of promulgation until fully paid. The VA added that all separation and/or retirement benefits shall be construed from the date of regularization subject only to the appropriate government laws and other social legislation. Ludo filed a motion for reconsideration, but the VA denied it. On appeal, the CA affirmed in toto the assailed decision; hence, a petition was brought before this Court raising the issue, among others, of whether a

voluntary arbitrator can award benefits not claimed in the submission agreement. In denying the petition, We ruled:

Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement since arbitration is the final resort for the adjudication of disputes. The succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus:

In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonably assume that his powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or without back pay.

In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his authority as embracing not merely the determination of the abstract question of whether or not a performance bonus was to be granted but also, in the affirmative case, the amount thereof.

By the same token, the issue of regularization should be viewed as two-tiered issue. While the submission agreement mentioned only the determination of the date or regularization, law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason for which the law on voluntary arbitration was created – speedy labor justice. It bears stressing that the underlying reason why this case arose is to settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To require them to file another action for payment of such benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor.23

Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA Decision. Said case reaffirms the plenary jurisdiction and authority of the voluntary arbitrator to interpret the CBA and to determine the scope of his/her own authority. Subject to judicial review, the leeway of authority as well as adequate prerogative is aimed at accomplishing the rationale of the law on voluntary arbitration – speedy labor justice. In this case, a complete and final adjudication of the dispute between the parties necessarily called for the resolution of the related and incidental issue of whether the Company still violated the CBA but without being guilty of ULP as, needless to state, ULP is committed only if there is gross violation of the agreement.

Lastly, the Company kept on harping that both the VA and the CA conceded that its engagement of contractual workers from PESO was a valid exercise of management prerogative. It is

confused. To emphasize, declaring that a particular act falls within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise thereof. What the VA and the CA correctly ruled was that the Company’s act of contracting out/outsourcing is within the purview of management prerogative. Both did not say, however, that such act is a valid exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by the Company and the Union delimit the free exercise of management prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that "the right of the management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA," while the CA held that "this management prerogative of contracting out services, however, is not without limitation. x x x These categories of employees particularly with respect to casual employees serve as limitation to the Company’s prerogative to outsource parts of its operations especially when hiring contractual employees."

A collective bargaining agreement is the law between the parties:

It is 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. We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit.1âwphi1 As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control. x x x.24

In this case, Section 4, Article I (on categories of employees) of the CBA between the Company and the Union must be read in conjunction with its Section 1, Article III (on union security). Both are interconnected and must be given full force and effect. Also, these provisions are clear and unambiguous. The terms are explicit and the language of the CBA is not susceptible to any other interpretation. Hence, the literal meaning should prevail. As repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the limitations found in law, collective bargaining agreement or the general principles of fair play and justice25 Evidently, this case has one of the restrictions- the presence of specific CBA provisions-unlike in San Miguel Corporation Employees Union-PTGWO v. Bersamira,26 De Ocampo v. NLRC,27 Asian Alcohol Corporation v. NLRC,28 and Serrano v. NLRC29cited by the Company. To reiterate, the CBA is the norm of conduct between the parties and compliance therewith is mandated by the express policy of the law.30

WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the October 12, 2005 Resolution of the Court of Appeals, which sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are hereby AFFIRMED.

SO ORDERED.

ACE NAVIGATION CO., INC., VELA INTERNATIONAL MARINE LTD., and/or RODOLFO PAMINTUAN, Petitioners, vs.TEODORICO FERNANDEZ, assisted by GLENITA FERNANDEZ, Respondent.

D E C I S I O N

BRION, J.:

For resolution is the petition for review on certiorari1 which seeks to nullify the decision2 dated September 22, 2010 and the resolution3 dated May 26,2011 ofthe Court of Appeals (CA) in CA-G.R. SP No. 112081.

The Antecedents

On October 9, 2008, seaman Teodorico Fernandez (Fernandez), assisted by his wife, Glenita Fernandez, filed with the National Labor Relations Commission (NLRC) a complaint for disability benefits, with prayer for moral and exemplary damages, plus attorney’s fees, against Ace Navigation Co., Inc., Vela International Marine Ltd., and/or Rodolfo Pamintuan (petitioners).

The petitioners moved to dismiss the complaint,4 contending that the labor arbiter had no jurisdiction over the dispute. They argued that exclusive original jurisdiction is with the voluntary arbitrator or panel of voluntary arbitrators, pursuant to Section 29 of the POEA Standard Employment Contract (POEA-SEC), since the parties are covered by the AMOSUP-TCC or AMOSUP-VELA (as later cited by the petitioners) collective bargaining agreement (CBA). Under Section 14 of the CBA, a dispute between a seafarer and the company shall be settled through the grievance machinery and mandatory voluntary arbitration.

Fernandez opposed the motion.5 He argued that inasmuch as his complaint involves a money claim, original and exclusive jurisdiction over the case is vested with the labor arbiter.

The Compulsory Arbitration Rulings

On December 9, 2008, Labor Arbiter Romelita N. Rioflorido denied the motion to dismiss, holding that under Section 10 of Republic Act (R.A.) No. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, the labor arbiter has original and exclusive jurisdiction over money claims arising out of an employer-employee relationship or by virtue of any law or contract, notwithstanding any provision of law to the contrary.6

The petitioners appealed to the NLRC, but the labor agency denied the appeal. It agreed with the labor arbiter that the case involves a money claim and is within the jurisdiction of the labor arbiter, in accordance with Section 10 of R.A. No. 8042. Additionally, it declared that the denial of the motion to dismiss is an interlocutory order which is not appealable. Accordingly, it

remanded the case to the labor arbiter for further proceedings. The petitioners moved for reconsideration, but the NLRC denied the motion, prompting the petitioners to elevate the case to the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA Decision

Through its decision of September 22, 2010,7 the CA denied the petition on procedural and substantive grounds.

Procedurally, it found the petitioners to have availed of the wrong remedy when they challenged the labor arbiter’s denial of their motion to dismiss by way of an appeal to the NLRC. It stressed that pursuant to the NLRC rules,8 an order denying a motion to dismiss is interlocutory and is not subject to appeal.

On the merits of the case, the CA believed that the petition cannot also prosper. It rejected the petitioners’ submission that the grievance and voluntary arbitration procedure of the parties’ CBA has jurisdiction over the case, to the exclusion of the labor arbiter and the NLRC. As the labor arbiter and the NLRC did, it opined that under Section 10 of R.A. No. 8042, the labor arbiter has the original and exclusive jurisdiction to hear Fernandez’s money claims.

Further, the CA clarified that while the law9 allows parties to submit to voluntary arbitration other labor disputes, including matters falling within the original and exclusive jurisdiction of the labor arbiters under Article 217 of the Labor Code as this Court recognized in Vivero v. Court of Appeals,10 the parties’ submission agreement must be expressed in unequivocal language. It found no such unequivocal language in the AMOSUP/TCC CBA that the parties agreed to submit money claims or, more specifically, claims for disability benefits to voluntary arbitration.

The CA also took note of the POEA-SEC11 which provides in its Section 29 that in cases of claims and disputes arising from a Filipino seafarer’s employment, the parties covered by a CBA shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. The CA explained that the relevant POEA-SEC provisions should likewise be qualified by the ruling in the Vivero case, the Labor Code, and other applicable laws and jurisprudence.

In sum, the CA stressed that the jurisdiction of voluntary arbitrators is limited to the seafarers’ claims which do not fall within the labor arbiter’s original and exclusive jurisdiction or even in cases where the labor arbiter has jurisdiction, the parties have agreed in unmistakable terms (through their CBA) to submit the case to voluntary arbitration.

The petitioners moved for reconsideration of the CA decision, but the appellate court denied the motion, reiterating its earlier pronouncement that on the ground alone of the petitioners’ wrong choice of remedy, the petition must fail.

The Petition

The petitioners are now before this Court praying for a reversal of the CA judgment on the following grounds:

1. The CA committed a reversible error in disregarding the Omnibus Implementing Rules and Regulations (IRR) of the Migrant Workers and Overseas Filipinos Act of 1995,12 as amended by R.A. No. 10022,13 mandating that "For OFWs with collective bargaining agreements, the caseshall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code."14

The petitioners bewail the CA’s rejection of the above argument for the reason that the remedy they pursued was inconsistent with the 2005 Revised Rules of Procedure of the NLRC. Citing Municipality of Sta. Fe v. Municipality of Aritao,15 they argue that the "dismissal of a case for lack of jurisdiction may be raised at any stage of the proceedings."

In any event, they posit that the IRR of R.A. No. 10022 is in the nature of an adjective or procedural law which must be given retroactive effect and which should have been applied by the CA in resolving the present case.

2. The CA committed a reversible error in ruling that the AMOSUP-VELA CBA does not contain unequivocal wordings for the mandatory referral of Fernandez’s claim to voluntary arbitration.

The petitioners assail the CA’s failure to explain the basis "for ruling that no explicit or unequivocal wordings appeared on said CBA for the mandatory referral of the disability claim to arbitration."16 They surmise that the CA construed the phrase "either party may refer the case to a MANDATORY ARBITRATION COMMITTEE" under Section 14.7(a) of the CBA as merely permissive and not mandatory because of the use of the word "may." They contend that notwithstanding the use of the word "may," the parties unequivocally and unmistakably agreed to refer the present disability claim to mandatory arbitration.

3. The CA committed a reversible error in disregarding the NLRC memorandum prescribing the appropriate action for complaints and/or proceedings which were initially processed in the grievance machinery of existing CBAs. In their motion for reconsideration with the CA, the petitioners manifested that the appellate court’s assailed decision had been modified by the following directive of the NLRC:

As one of the measures being adopted by our agency in response to the Platform and Policy Pronouncements on Labor Employment, you are hereby directed to immediately dismiss the complaint and/or terminate proceedings which were initially processed in the grievance machinery as provided in the existing Collective Bargaining Agreements (CBAs) between parties, through the issuance of an Order of Dismissal and referral of the disputes to the National Conciliation Mediation Board (NCMB) for voluntary arbitration.

FOR STRICT COMPLIANCE.17

4. On July 31, 2012,18 the petitioners manifested before the Court that on June 13, 2012, the Court’s Second Division issued a ruling in G.R. No. 172642, entitled Estate of Nelson R. Dulay, represented by his wife Merridy Jane P. Dulay v. Aboitiz Jebsen Maritime, Inc., and General Charterers, Inc., upholding the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over a seafarer’s money claim. They implore the Court that since the factual backdrop and the issues involved in the case are similar to the present dispute, the Dulay ruling should be applied to this case and which should accordingly be referred to the National Conciliation and Mediation Board for voluntary arbitration.

The Case for Fernandez

In compliance with the Court’s directive,19 Fernandez filed on October 7, 2011 his Comment20 (on the Petition) with the plea that the petition be dismissed for lack of merit. Fernandez presents the following arguments:

1. The IRR of the Migrant Workers and Overseas Filipinos Act of 1995 (R.A. No. 8042), as amended by R.A. No. 10022,21 did not divest the labor arbiters of their original and exclusive jurisdiction over money claims arising from employment, for nowhere in said IRR is there such a divestment.

2. The voluntary arbitrators do not have jurisdiction over the present controversy as can be deduced from Articles 261 and 262 of the Labor Code. Fernandez explains that his complaint does not involve any "unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement [nor] from the interpretation or enforcement of company personnel policies[.]"22 As he never referred his claim to the grievance machinery, there is no "unresolved grievance" to speak of. His complaint involves a claim for compensation and damages which is outside the voluntary arbitrator’s jurisdiction under Article 261. Further, only disputes involving the union and the company shall be referred to the grievance machinery and to voluntary arbitration, as the Court held in Sanyo Philippines Workers Union-PSSLU v. Cañizares23 and Silva v. CA.24

3. The CA correctly ruled that no unequivocal wordings appear in the CBA for the mandatory referral of Fernandez’s disability claim to a voluntary arbitrator.

The Court’s Ruling

We first rule on the procedural question arising from the labor arbiter’s denial of the petitioners’ motion to dismiss the complaint. On this point, Section 6, Rule V of The 2005 Revised Rules of Procedure of the NLRC provides:

On or before the date set for the mandatory conciliation and mediation conference, the respondent may file a motion to dismiss. Any motion to dismiss on the ground of lack of jurisdiction, improper venue, or that the cause of action is barred by prior judgment, prescription, or forum shopping, shall be immediately resolved by the Labor Arbiter through a written order.

An order denying the motion to dismiss, or suspending its resolution until the final determination of the case, is not appealable. [underscoring ours]

Corollarily, Section 10, Rule VI of the same Rules states:

Frivolous or Dilatory Appeals. – No appeal from an interlocutory order shall be entertained. To discourage frivolous or dilatory appeals, including those taken from interlocutory orders, the Commission may censure or cite in contempt the erring parties and their counsels, or subject them to reasonable fine or penalty.

In Indiana Aerospace University v. Comm. on Higher Educ.,25 the Court declared that "[a]n order denying a motion to dismiss is interlocutory"; the proper remedy in this situation is to appeal after a decision has been rendered. Clearly, the denial of the petitioners’ motion to dismiss in the present case was an interlocutory order and, therefore, not subject to appeal as the CA aptly noted.

The petition’s procedural lapse notwithstanding, the CA proceeded to review the merits of the case and adjudged the petition unmeritorious. We find the CA’s action in order. The Labor Code itself declares that "it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process."26

We now address the focal question of who has the original and exclusive jurisdiction over Fernandez’s disability claim — the labor arbiter under Section 10 of R.A. No. 8042, as amended, or the voluntary arbitration mechanism as prescribed in the parties’ CBA and the POEA-SEC?

The answer lies in the State’s labor relations policy laid down in the Constitution and fleshed out in the enabling statute, the Labor Code. Section 3, Article XIII (on Social Justice and Human Rights) of the Constitution declares:

x x x x

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

Article 260 of the Labor Code (Grievance machinery and voluntary arbitration) states:

The parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies.

Article 261 of the Labor Code (Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators), on the other hand, reads in part:

The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies[.]

Article 262 of the Labor Code (Jurisdiction over other labor disputes) declares:

The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.

Further, the POEA-SEC, which governs the employment of Filipino seafarers, provides in its Section 29 on Dispute Settlement Procedures:

In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation Board of the Department of Labor and Employment. [emphasis ours]

We find merit in the petition.

Under the above-quoted constitutional and legal provisions, the voluntary arbitrator or panel of voluntary arbitrators has original and exclusive jurisdiction over Fernandez’s disability claim. There is no dispute that the claim arose out of Fernandez’s employment with the petitioners and that their relationship is covered by a CBA — the AMOSUP/TCC or the AMOSUP-VELA CBA. The CBA provides for a grievance procedure for the resolution of grievances or disputes which occur during the employment relationship and, like the grievance machinery created under Article 261 of the Labor Code, it is a two-tiered mechanism, with voluntary arbitration as the last step.1âwphi1

Contrary to the CA’s reading of the CBA’s Article 14, there is unequivocal or unmistakable language in the agreement which mandatorily requires the parties to submit to the grievance procedure any dispute or cause of action they may have against each other. The relevant provisions of the CBA state:

14.6 Any Dispute, grievance, or misunderstanding concerning any ruling, practice, wages or working conditions in the COMPANY or any breach of the Contract of Employment, or any dispute arising from the meaning or application of the provisions of this Agreement or a claim of violation thereof or any complaint or cause of action that any such Seaman may have against the COMPANY, as well as complaints which the COMPANY may have against such Seaman shall be brought to the attention of the GRIEVANCE RESOLUTION COMMITTEE before either party takes any action, legal or otherwise. Bringing such a dispute to the Grievance Resolution Committee shall be unwaivable prerequisite or condition precedent for bringing any action, legal or otherwise, in any forum and the failure to so refer the dispute shall bar any and all legal or other actions.

14.7a) If by reason of the nature of the Dispute, the parties are unable to amicably settle the dispute, either party may refer the case to a MANDATORY ARBITRATION COMMITTEE. The MANDATORY ARBITRATION COMMITTEE shall consist of one representative to be designated by the UNION, and one representative to be designated by the COMPANY and a third member who shall act as Chairman and shall be nominated by mutual choice of the parties. xxx

h) Referral of all unresolved disputes from the Grievance Resolution Committee to the Mandatory Arbitration Committee shall be unwaivable prerequisite or condition precedent for bringing any action, claim, or cause of action, legal or otherwise, before any court, tribunal, or panel in any jurisdiction. The failure by a party or seaman to so refer and avail oneself to the dispute resolution mechanism contained in this action shall bar any legal or other action. All parties expressly agree that the orderly resolution of all claims in the prescribed manner served the interests of reaching settlements or claims in an orderly and uniform manner, as well as preserving peaceful and harmonious labor relations between seaman, the Union, and the Company.27 (emphases ours)

What might have caused the CA to miss the clear intent of the parties in prescribing a grievance procedure in their CBA is, as the petitioners’ have intimated, the use of the auxiliary verb "may" in Article 14.7(a) of the CBA which, to reiterate, provides that "if by reason of the nature of the Dispute, the parties are unable to amicably settle the dispute, either party may refer the case to a MANDATORY ARBITRATION COMMITTEE."28

While the CA did not qualify its reading of the subject provision of the CBA, it is reasonable to conclude that it viewed as optional the referral of a dispute to the mandatory arbitration committee when the parties are unable to amicably settle the dispute.

We find this a strained interpretation of the CBA provision. The CA read the provision separately, or in isolation of the other sections of Article 14, especially 14.7(h), which, in clear, explicit language, states that the "referral of all unresolved disputes from the Grievance Resolution Committee to the Mandatory Arbitration Committee shall be unwaivable prerequisite or condition precedent for bringing any action, claim, or cause of action, legal or otherwise, before any court, tribunal, or panel in any jurisdiction"29 and that the failure by a party or seaman to so refer the dispute to the prescribed dispute resolution mechanism shall bar any legal or other action.

Read in its entirety, the CBA’s Article 14 (Grievance Procedure) unmistakably reflects the parties’ agreement to submit any unresolved dispute at the grievance resolution stage to mandatory voluntary arbitration under Article 14.7(h) of the CBA. And, it should be added that, in compliance with Section 29 of the POEA-SEC which requires that in cases of claims and disputes arising from a seafarer’s employment, the parties covered by a CBA shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators.

Since the parties used unequivocal language in their CBA for the submission of their disputes to voluntary arbitration (a condition laid down in Vivero for the recognition of the submission to voluntary arbitration of matters within the original and exclusive jurisdiction of labor arbiters), we find that the CA committed a reversible error in its ruling; it disregarded the clear mandate of the CBA between the parties and the POEA-SEC for submission of the present dispute to voluntary arbitration.

Consistent with this finding, Fernandez’s contention — that his complaint for disability benefits is a money claim that falls within the original and exclusive jurisdiction of the labor arbiter under Section 10 of R.A. No. 8042 — is untenable. We likewise reject his argument that he never referred his claim to the grievance machinery (so that no unresolved grievance exists as required under Article 261 of the Labor Code), and that the parties to the case are not the union and the employer.30 Needless to state, no such distinction exists in the parties’ CBA and the POEA-SEC.

It bears stressing at this point that we are upholding the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over the present dispute, not only because of the clear language of the parties’ CBA on the matter; more importantly, we so uphold the voluntary arbitrator’s jurisdiction, in recognition of the State’s express preference for voluntary modes of dispute settlement, such as conciliation and voluntary arbitration as expressed in the Constitution, the law and the rules.

In this light, we see no need to further consider the petitioners’ submission regarding the IRR of the Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A. No. 10022, except to note that the IRR lends further support to our ruling.

In closing, we quote with approval a most recent Court pronouncement on the same issue, thus –

It is settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that procedure should be strictly observed.31 (emphasis ours)

WHEREFORE, premises considered, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE. Teodorico Fernandez's disability claim is REFERRED to the Grievance Resolution Committee of the parties' collective bargaining agreement and/or the Mandatory Arbitration Committee, if warranted.

SO ORDERED.

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA. THERESA MONTEJO, petitioners, vs.INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND EMPLOYMENT, respondents.

KAPUNAN, J.:

Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978.

Culled from the questioned decision, the facts of the case are as follows:

Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging pharmaceutical products. They had a Collective Bargaining Agreement (CBA) effective from 01 August 1990 to 31 July 1993.

Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,1 Vice-President-Human Resources Department of respondent company, was approached by Nestor Ocampo, the union president, and Hernando Clemente, a union director. The two union officers inquired about the stand of the company regarding the duration of the CBA which was set to expire in a few months. Salazar told the union officers that the matter could be best discussed during the formal negotiations which would start soon.

In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held on 15 April 1993 where the union officers asked whether Salazar would be amenable to make the new CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it would still be premature to discuss the matter and that the company could not make a decision at the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace without sealing the containers and securing the raw materials they were working on. When Salazar inquired about the reason for their refusal to follow their normal work schedule, the employees told him to "ask the union officers." To minimize the damage the overtime boycott was causing the company, Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to their normal work schedule if the company would agree to their demands as to the effectivity and duration of the new CBA. Salazar again told the union officers that the matter could be better discussed during the formal renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company, the overtime boycott continued. In addition, the employees started to

engage in a work slowdown campaign during the time they were working, thus substantially delaying the production of the company.2

On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the latter filed its counter-proposal.

On 03 September 1993, respondent company filed with the National Labor Relations Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which, according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.

On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA negotiations.3 The parties, however, failed to arrive at an agreement and on 15 November 1993, respondent company filed with the Office of the Secretary of Labor and Employment a petition for assumption of jurisdiction.

On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor practice allegedly committed by respondent company. On 12 February 1994, the union staged a strike.

On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order4 over the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent company to "immediately accept all striking workers, including the fifty-three (53) terminated union officers, shop stewards and union members back to work under the same terms and conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its employees in 1993."5 On the other hand, petitioner union was directed to "strictly and immediately comply with the return-to-work orders issued by (the) Office x x x6 The same order pronounced that "(a)ll pending cases which are direct offshoots of the instant labor dispute are hereby subsumed herewith."7

In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an "Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings" seeking the consolidation of the case with the labor dispute pending before the Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that the issues raised would require a formal hearing and the presentation of evidentiary matters, directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases before them and to thereafter submit their report and recommendation to his office.

On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in his Order, dated 13 August 1997, hence:

WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by substantial evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as the decision in this case, and judgment is hereby rendered:

(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike;

(2) Declaring the respondent union officers namely:

Nestor Ocampo PresidentCarmelo Santos Vice-PresidentMarites Montejo Treasurer/Board

MemberRico Gonzales AuditorRod Abuan DirectorSegundino Flores DirectorHernando Clemente

Director

who spearheaded and led the overtime boycott and work slowdown, to have lost their employment status; and

(3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA which prohibits the union or any employee during the existence of the CBA from staging a strike or engaging in slowdown or interruption of work and ordering them to cease and desist from further committing the aforesaid illegal acts.

Petitioner union moved for the reconsideration of the order but its motion was denied. The union went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated on 29 December 1999, the appellate court dismissed the petition. The union's motion for reconsideration was likewise denied.

Hence, the present recourse where petitioner alleged:

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY DISREGARDED "PAROL EVIDENCE RULE" IN THE EVALUATION AND APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL

INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS ANY MISDEED COMMITTED.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE THE LABOR ARBITER.9

We sustain the questioned decision.

On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on the illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment issued the assumption order on 14 February 1994. However, it cannot be denied that the issues of "overtime boycott" and "work slowdown" amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings before him and consolidate the same with the case before the Secretary of Labor. When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday to continue with the hearing of the illegal strike case, the parties acceded and participated in the proceedings, knowing fully well that there was also a directive for Labor Arbiter Caday to thereafter submit his report and recommendation to the Secretary. As the appellate court pointed out, the subsequent participation of petitioner union in the continuation of the hearing was in effect an affirmation of the jurisdiction of the Secretary of Labor.

The appellate court also correctly held that the question of the Secretary of Labor and Employment's jurisdiction over labor and labor-related disputes was already settled in International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU)10 where the Court declared:

In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the labor arbiter has exclusive jurisdiction.

Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is evident from the opening proviso therein reading '(e)xcept as otherwise provided under this Code . . .' Plainly, Article 263(g) of the Labor Code was meant to make both the Secretary (or the various regional directors) and the labor arbiters share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be able to effectively and efficiently dispose of the primary dispute. To hold the contrary may even

lead to the absurd and undesirable result wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings. As we have said, '(i)t is fundamental that a statute is to be read in a manner that would breathe life into it, rather than defeat it.

In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same Code, taken conjointly and rationally construed to subserve the objective of the jurisdiction vested in the Secretary.11

Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record, must be accorded due respect by the Supreme Court.12 Here, the report and recommendation of Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was likewise affirmed by the Court of Appeals. We see no reason to depart from their findings.

Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the "parol evidence rule"13 when they upheld the allegation of respondent company that the work schedule of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am. According to petitioner union, the provisions of their CBA on working hours clearly stated that the normal working hours were "from 7:30 a.m. to 4:30 p.m."14 Petitioner union underscored that the regular work hours for the company was only eight (8) hours. It further contended that the Labor Arbiter as well as the Court of Appeals should not have admitted any other evidence contrary to what was stated in the CBA.

The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling.15 Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases.16 Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA.

In any event, the parties stipulated:

Section 1. Regular Working Hours — A normal workday shall consist of not more than eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the company may change the prevailing work time at its discretion, should such change be necessary in the operations of the Company. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours.17

It is evident from the foregoing provision that the working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that the employees shall observe such rules as have been laid down by the company. In the case before us, Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. It was established that the employees adhered to the said work schedule since 1988. The employees are deemed to have waived the eight-hour schedule since they followed, without any question or

complaint, the two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule effectively changed the working hours stipulated in the CBA. As the employees assented by practice to this arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours.

As Labor Arbiter Caday elucidated in his report:

Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has been going on since 1988. Proof of this is the case undisputedly filed by the union for and in behalf of its members, wherein it is claimed that the company has not been computing correctly the night premium and overtime pay for work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union Vice-President Carmelo C. Santos, demanded that the company make a recomputation of the overtime records of the employees from 1987 (Exh. "P"). Even their own witness, union Director Enrico C. Gonzales, testified that when in 1992 he was still a Quality Control Inspector at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M., sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10, 1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were passed around daily for the employees to sign, his name appeared but without his signatures, he however had rendered overtime during those dates and was paid because unlike in other departments, it has become a habit to them to sign the overtime schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The awareness of the respondent union, its officers and members about the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further shown in the discussion of the second issue.18

As to the second issue of whether or not the respondents have engaged in "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both amounting to illegal strike, the evidence presented is equally crystal clear that the "overtime boycott" and "work slowdown" committed by the respondents amounted to illegal strike.

As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-President-Human Resources Department, sometime in February, 1993, he was approached by the union President Nestor Ocampo and Union Director Hernando Clemente who asked him as to what was the stand of the company regarding the duration of the CBA between the company and which was set to expire on July 31, 1993. He answered that the matter could be best discussed during the formal renegotiations which anyway was to start soon. This query was followed up sometime in March, 1993, and his answer was the same. In early April, 1993, the union president requested for a meeting to discuss the duration and effectivity of the CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the union officers asked him if he would agree to make the new CBA effective

on August 1, 1993 and the term thereof to be valid for only two (2) years. When he answered that it was still premature to discuss the matter, the very next day, April 16, 1993, all the rank and file employees of the company refused to follow their regular two-shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place of work without sealing the containers and securing the raw materials they were working on. When he saw the workers leaving before the end of their shift, he asked them why and their reply was "asked (sic) the union officers." Alarmed by the overtime boycott and the damage it was causing the company, he requested for a meeting with the union officers. In the meeting, he asked them why the regular work schedule was not being followed by the employees, and union Director Enrico Gonzales, with the support of the other union officers, told him that if management would agree to a two-year duration for the new CBA and an effectivity date of August 1, 1993, all employees will return to the normal work schedule of two 12-hour shifts. When answered that the management could not decide on the matter at the moment and to have it discussed and agreed upon during the formal renegotiations, the overtime boycott continued and the employees at the same time employed a work slowdown campaign during working hours, causing considerable delay in the production and complaints from the clients/customers (Exh. "O", Affidavit of Alessandro G. Salazar which formed part of his direct testimony). This testimonial narrations of Salazar was, as earlier said, undisputed because the respondents' counsel waived his cross examination (t.s.n. p. 15, hearing on August 9, 1994).

Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other Department Managers pointing to the union officers as the instigators of the overtime boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union member at the time the concerted activities of the respondents took place, is quoted hereunder:

"2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na mayroon ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng Kompanya na mag-imbento ng sari-saring dahilan para lang hindi sila makapagtrabaho ng "overtime". Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi ka masabihan ng magtrabaho ng Sabado at Linggo' na siya namang araw ng "overtime" ko x x x

"3. Nakalipas ang dalawang buwan at noong unang bahagi ng Abril 1993, miniting kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky Baron. Sinabihan kami na huwag ng mag-overtime pag nagbigay ng senyas ang Unyon ng "showtime."

"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng "showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang

umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na Sabado at Linggo.

"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina:

Nestor Ocampo PresidenteCarmelo Santos Bise-PresidenteNanding Clemente

Director

TessMontejo Chief StewardSegundo Flores DirectorEnrico Gonzales AuditorBoy Alcantara Shop StewardRod Abuan Director

at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-overtime" gayong "Binigyan ka na namin ng instruction na huwag pumasok, pinilit mo pa ring pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong maibigay na dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis.

xxx           xxx           xxx

Likewise, the respondents' denial of having a hand in the work slowdown since there was no change in the performance and work efficiency for the year 1993 as compared to the previous year was even rebuffed by their witness Ma. Theresa Montejo, a Quality Control Analyst. For on cross-examination, she (Montejo) admitted that she could not answer how she was able to prepare the productivity reports from May 1993 to February 1994 because from April 1993 up to April 1994, she was on union leave. As such, the productivity reports she had earlier shown was not prepared by her since she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of February 27, 1995). Aside from this admission, the comparison made by the respondents was of no moment, because the higher production for the years previous to 1993 was reached when the employees regularly rendered overtime work. But undeniably, overtime boycott and work slowdown from April 16, 1993 up to March 7, 1994 had resulted not only in financial losses to the company but also damaged its business reputation.

Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-hour work schedule thru their concerted activities of "overtime boycott" and "work

slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company to accede to their unreasonable demands, can be classified as a strike on an installment basis, as correctly called by petitioner company x x x19

It is thus undisputed that members of the union by their own volition decided not to render overtime services in April 1993.20 Petitioner union even admitted this in its Memorandum, dated 12 April 1999, filed with the Court of Appeals, as well as in the petition before this Court, which both stated that "(s)ometime in April 1993, members of herein petitioner, on their own volition and in keeping with the regular working hours in the Company x x x decided not to render overtime".21 Such admission confirmed the allegation of respondent company that petitioner engaged in "overtime boycott" and "work slowdown" which, to use the words of Labor Arbiter Caday, was taken as a means to coerce respondent company to yield to its unreasonable demands.

More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a violation of their CBA, which prohibits the union or employee, during the existence of the CBA, to stage a strike or engage in slowdown or interruption of work.22 In Ilaw at Buklod ng Manggagawa vs. NLRC ,23 this Court ruled:

x x x (T)he concerted activity in question would still be illicit because contrary to the workers' explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of x x x (their collective bargaining) agreement."

What has just been said makes unnecessary resolution of SMC's argument that the workers' concerted refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement with the petitioner's concept of a slowdown as a "strike on the installment plan;" as a willful reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. The Court also agrees that such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees "continue to work and remain at their positions and accept the wages paid to them," they at the same time "select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they "work on their own terms." x x x24

Finally, the Court cannot agree with the proposition that respondent company, in extending substantial separation package to some officers of petitioner union during the pendency of this case, in effect, condoned the illegal acts they committed.

Respondent company correctly postured that at the time these union officers obtained their separation benefits, they were still considered employees of the company. Hence, the company was merely complying with its legal obligations.25 Respondent company could have withheld these benefits pending the final resolution of this case. Yet, considering perhaps the financial hardships experienced by its employees and the economic situation prevailing, respondent company chose to let its employees avail of their separation benefits. The Court views the gesture of respondent company as an act of generosity for which it should not be punished.

WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

NATIONAL UNION OF WORKERS IN THE HOTEL RESTAURANT AND ALLIED INDUSTRIES (NUWHRAIN-APL-IUF) DUSIT HOTEL NIKKO CHAPTER, petitioner, vs.THE HONORABLE COURT OF APPEALS (Former Eighth Division), THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), PHILIPPINE HOTELIERS INC., owner and operator of DUSIT HOTEL NIKKO and/or CHIYUKI FUJIMOTO, and ESPERANZA V. ALVEZ, respondents.

x----------------------------------------x

G.R. No. 166295             November 11, 2008

NUWHRAIN-DUSIT HOTEL NIKKO CHAPTER, petitioner, vs.SECRETARY OF LABOR AND EMPLOYMENT and PHILIPPINE HOTELIERS, INC., respondents.

D E C I S I O N

VELASCO, JR., J.:

In G.R. No. 163942, the Petition for Review on Certiorari under Rule 45 of the National Union of Workers in the Hotel Restaurant and Allied Industries Dusit Hotel Nikko Chapter (Union) seeks to set aside the January 19, 2004 Decision1 and June 1, 2004 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 76568 which affirmed the October 9, 2002 Decision3 of the National Labor Relations Commission (NLRC) in NLRC NCR CC No. 000215-02.

In G.R. No. 166295, the Petition for Certiorari under Rule 65 of the Union seeks to nullify the May 6, 2004 Decision4 and November 25, 2004 Resolution5 of the CA in CA-G.R. SP No. 70778 which affirmed the January 31, 20026 and March 15, 20027 Orders of the Secretary of Labor and Employment, Patricia A. Sto. Tomas (Secretary).

Evolution of the Present Petitions

The Union is the certified bargaining agent of the regular rank-and-file employees of Dusit Hotel Nikko (Hotel), a five star service establishment owned and operated by Philippine Hoteliers, Inc. located in Makati City. Chiyuki Fuijimoto and Esperanza V. Alvez are impleaded in their official capacities as the Hotel's General Manager and Director of Human Resources, respectively.

On October 24, 2000, the Union submitted its Collective Bargaining Agreement (CBA) negotiation proposals to the Hotel. As negotiations ensued, the parties failed to arrive at mutually acceptable terms and conditions. Due to the bargaining deadlock, the Union, on December 20, 2001, filed a Notice of Strike on the ground of the bargaining deadlock with the National Conciliation and Mediation Board (NCMB), which was docketed as NCMB-NCR-NS-12-369-01. Thereafter, conciliation hearings were conducted which proved unsuccessful. Consequently, a Strike Vote8 was conducted by the Union on January 14, 2002 on which it was decided that the Union would wage a strike.

Soon thereafter, in the afternoon of January 17, 2002, the Union held a general assembly at its office located in the Hotel's basement, where some members sported closely cropped hair or cleanly shaven heads. The next day, or on January 18, 2002, more male Union members came to work sporting the same hair style. The Hotel prevented these workers from entering the premises claiming that they violated the Hotel's Grooming Standards.

In view of the Hotel's action, the Union staged a picket outside the Hotel premises. Later, other workers were also prevented from entering the Hotel causing them to join the picket. For this reason the Hotel experienced a severe lack of manpower which forced them to temporarily cease operations in three restaurants.

Subsequently, on January 20, 2002, the Hotel issued notices to Union members, preventively suspending them and charging them with the following offenses: (1) violation of the duty to bargain in good faith; (2) illegal picket; (3) unfair labor practice; (4) violation of the Hotel's Grooming Standards; (5) illegal strike; and (6) commission of illegal acts during the illegal strike. The next day, the Union filed with the NCMB a second Notice of Strike on the ground of unfair labor practice and violation of Article 248(a) of the Labor Code on illegal lockout, which was docketed as NCMB-NCR-NS-01-019-02. In the meantime, the Union officers and members submitted their explanations to the charges alleged by the Hotel, while they continued to stage a picket just inside the Hotel's compound.

On January 26, 2002, the Hotel terminated the services of twenty-nine (29) Union officers and sixty-one (61) members; and suspended eighty-one (81) employees for 30 days, forty-eight (48) employees for 15 days, four (4) employees for 10 days, and three (3) employees for five days. On the same day, the Union declared a strike. Starting that day, the Union engaged in picketing the premises of the Hotel. During the picket, the Union officials and members unlawfully blocked the ingress and egress of the Hotel premises.

Consequently, on January 31, 2002, the Union filed its third Notice of Strike with the NCMB which was docketed as NCMB-NCR-NS-01-050-02, this time on the ground of unfair labor practice and union-busting.

On the same day, the Secretary, through her January 31, 2002 Order, assumed jurisdiction over the labor dispute and certified the case to the NLRC for compulsory arbitration, which was docketed as NLRC NCR CC No. 000215-02. The Secretary's Order partly reads:

WHEREFORE, in order to have a complete determination of the bargaining deadlock and the other incidents of the dispute, this Office hereby consolidates the two Notices of Strike - NCMB-NCR-NS-12-369-01 and NCMB-NCR-NS-01-019-02 - and CERTIFIES the entire labor dispute covered by these Notices and the intervening events, to the NATIONAL LABOR RELATIONS COMMISSION for compulsory arbitration pursuant to Article 263 (g) of the Labor Code, as amended, under the following terms:

x x x x

d. the Hotel is given the option, in lieu of actual reinstatement, to merely reinstate the dismissed or suspended workers in the payroll in light of the special circumstances attendant to their reinstatement;

x x x x

SO ORDERED. (Emphasis added.)

Pursuant to the Secretary's Order, the Hotel, on February 1, 2002, issued an Inter-Office Memorandum,9 directing some of the employees to return to work, while advising others not to do so, as they were placed under payroll reinstatement.

Unhappy with the Secretary's January 31, 2002 Order, the Union moved for reconsideration, but the same was denied per the Secretary's subsequent March 15, 2002 Order. Affronted by the Secretary's January 31, 2002 and March 15, 2002 Orders, the Union filed a Petition for Certiorari with the CA which was docketed as CA-G.R. SP No. 70778.

Meanwhile, after due proceedings, the NLRC issued its October 9, 2002 Decision in NLRC NCR CC No. 000215-02, in which it ordered the Hotel and the Union to execute a CBA within 30 days from the receipt of the decision. The NLRC also held that the January 18, 2002 concerted action was an illegal strike in which illegal acts were committed by the Union; and that the strike violated the "No Strike, No Lockout" provision of the CBA, which thereby caused the dismissal of 29 Union officers and 61 Union members. The NLRC ordered the Hotel to grant the 61 dismissed Union members financial assistance in the amount of ½ month's pay for every year of service or their retirement benefits under their retirement plan whichever was higher. The NLRC explained that the strike which occurred on January 18, 2002 was illegal because it failed to comply with the mandatory 30-day cooling-off period10 and the seven-day strike ban,11 as the strike occurred only 29 days after the submission of the notice of strike on December 20, 2001 and only four days after the submission of the strike vote on January 14, 2002. The NLRC also ruled that even if the Union had complied with the temporal requirements mandated by law, the strike would nonetheless be declared illegal because it was attended by illegal acts committed by the Union officers and members.

The Union then filed a Motion for Reconsideration of the NLRC's Decision which was denied in the February 7, 2003 NLRC Resolution. Unfazed, the Union filed a Petition for Certiorari under Rule 65 with the CA, docketed as CA-G.R. SP No. 76568, and assailed both the October 9, 2002 Decision and the February 7, 2003 Resolution of the NLRC.

Soon thereafter, the CA promulgated its January 19, 2004 Decision in CA-G.R. SP No. 76568 which dismissed the Union's petition and affirmed the rulings of the NLRC. The CA ratiocinated that the Union failed to demonstrate that the NLRC committed grave abuse of discretion and capriciously exercised its judgment or exercised its power in an arbitrary and despotic manner.

For this reason, the Union filed a Motion for Reconsideration which the CA, in its June 1, 2004 Resolution, denied for lack of merit.

In the meantime, the CA promulgated its May 6, 2004 Decision in CA-G.R. SP No. 70778 which denied due course to and consequently dismissed the Union's petition. The Union moved to reconsider the Decision, but the CA was unconvinced and denied the motion for reconsideration in its November 25, 2004 Resolution.

Thus, the Union filed the present petitions.

The Union raises several interwoven issues in G.R. No. 163942, most eminent of which is whether the Union conducted an illegal strike. The issues presented for resolution are:

-A-

WHETHER OR NOT THE UNION, THE 29 UNION OFFICERS AND 61 MEMBERS MAY BE ADJUDGED GUILTY OF STAGING AN ILLEGAL STRIKE ON JANUARY 18, 2002 DESPITE RESPONDENTS' ADMISSION THAT THEY PREVENTED SAID OFFICERS AND MEMBERS FROM REPORTING FOR WORK FOR ALLEGED VIOLATION OF THE HOTEL'S GROOMING STANDARDS

-B-

WHETHER OR NOT THE 29 UNION OFFICERS AND 61 MEMBERS MAY VALIDLY BE DISMISSED AND MORE THAN 200 MEMBERS BE VALIDLY SUSPENDED ON THE BASIS OF FOUR (4) SELF-SERVING AFFIDAVITS OF RESPONDENTS

-C-

WHETHER OR NOT RESPONDENTS IN PREVENTING UNION OFFICERS AND MEMBERS FROM REPORTING FOR WORK COMMITTED AN ILLEGAL LOCK-OUT12

In G.R. No. 166295, the Union solicits a riposte from this Court on whether the Secretary has discretion to impose "payroll" reinstatement when he assumes jurisdiction over labor disputes.

The Court's Ruling

The Court shall first dispose of G.R. No. 166295.

According to the Union, there is no legal basis for allowing payroll reinstatement in lieu of actual or physical reinstatement. As argued, Art. 263(g) of the Labor Code is clear on this point.

The Hotel, on the other hand, claims that the issue is now moot and any decision would be impossible to execute in view of the Decision of the NLRC which upheld the dismissal of the Union officers and members.

The Union's position is untenable.

The Hotel correctly raises the argument that the issue was rendered moot when the NLRC upheld the dismissal of the Union officers and members. In order, however, to settle this relevant and novel issue involving the breadth of the power and jurisdiction of the Secretary in assumption of jurisdiction cases, we now decide the issue on the merits instead of relying on mere technicalities.

We held in University of Immaculate Concepcion, Inc. v. Secretary of Labor:

With respect to the Secretary's Order allowing payroll reinstatement instead of actual reinstatement for the individual respondents herein, an amendment to the previous Orders issued by her office, the same is usually not allowed. Article 263(g) of the Labor Code aforementioned states that all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout. The phrase "under the same terms and conditions" makes it clear that the norm is actual reinstatement. This is consistent with the idea that any work stoppage or slowdown in that particular industry can be detrimental to the national interest.13

Thus, it was settled that in assumption of jurisdiction cases, the Secretary should impose actual reinstatement in accordance with the intent and spirit of Art. 263(g) of the Labor Code. As with most rules, however, this one is subject to exceptions. We held in Manila Diamond Hotel Employees' Union v. Court of Appeals that payroll reinstatement is a departure from the rule, and special circumstances which make actual reinstatement impracticable must be shown.14 In one case, payroll reinstatement was allowed where the employees previously occupied confidential positions, because their actual reinstatement, the Court said, would be impracticable and would only serve to exacerbate the situation.15 In another case, this Court held that the NLRC did not commit grave abuse of discretion when it allowed payroll reinstatement as an option in lieu of actual reinstatement for teachers who were to be reinstated in the middle of the first term.16 We held that the NLRC was merely trying its best to work out a satisfactory ad hoc solution to a festering and serious problem.17

The peculiar circumstances in the present case validate the Secretary's decision to order payroll reinstatement instead of actual reinstatement. It is obviously impracticable for the Hotel to actually reinstate the employees who shaved their heads or cropped their hair because this was

exactly the reason they were prevented from working in the first place. Further, as with most labor disputes which have resulted in strikes, there is mutual antagonism, enmity, and animosity between the union and the management. Payroll reinstatement, most especially in this case, would have been the only avenue where further incidents and damages could be avoided. Public officials entrusted with specific jurisdictions enjoy great confidence from this Court. The Secretary surely meant only to ensure industrial peace as she assumed jurisdiction over the labor dispute. In this case, we are not ready to substitute our own findings in the absence of a clear showing of grave abuse of discretion on her part.

The issues raised in G.R. No. 163942, being interrelated, shall be discussed concurrently.

To be determined whether legal or not are the following acts of the Union:

(1) Reporting for work with their bald or cropped hair style on January 18, 2002; and

(2) The picketing of the Hotel premises on January 26, 2002.

The Union maintains that the mass picket conducted by its officers and members did not constitute a strike and was merely an expression of their grievance resulting from the lockout effected by the Hotel management. On the other hand, the Hotel argues that the Union's deliberate defiance of the company rules and regulations was a concerted effort to paralyze the operations of the Hotel, as the Union officers and members knew pretty well that they would not be allowed to work in their bald or cropped hair style. For this reason, the Hotel argues that the Union committed an illegal strike on January 18, 2002 and on January 26, 2002.

We rule for the Hotel.

Art. 212(o) of the Labor Code defines a strike as "any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute."

In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, we cited the various categories of an illegal strike, to wit:

Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz.:

(1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing governmental functions; or

(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on the requisites of a valid strike]; or

(3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or

(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or

(5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or

(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration clause.18

With the foregoing parameters as guide and the following grounds as basis, we hold that the Union is liable for conducting an illegal strike for the following reasons:

First, the Union's violation of the Hotel's Grooming Standards was clearly a deliberate and concerted action to undermine the authority of and to embarrass the Hotel and was, therefore, not a protected action. The appearances of the Hotel employees directly reflect the character and well-being of the Hotel, being a five-star hotel that provides service to top-notch clients. Being bald or having cropped hair per se does not evoke negative or unpleasant feelings. The reality that a substantial number of employees assigned to the food and beverage outlets of the Hotel with full heads of hair suddenly decided to come to work bald-headed or with cropped hair, however, suggests that something is amiss and insinuates a sense that something out of the ordinary is afoot. Obviously, the Hotel does not need to advertise its labor problems with its clients. It can be gleaned from the records before us that the Union officers and members deliberately and in apparent concert shaved their heads or cropped their hair. This was shown by the fact that after coming to work on January 18, 2002, some Union members even had their heads shaved or their hair cropped at the Union office in the Hotel's basement. Clearly, the decision to violate the company rule on grooming was designed and calculated to place the Hotel management on its heels and to force it to agree to the Union's proposals.

In view of the Union's collaborative effort to violate the Hotel's Grooming Standards, it succeeded in forcing the Hotel to choose between allowing its inappropriately hair styled employees to continue working, to the detriment of its reputation, or to refuse them work, even if it had to cease operations in affected departments or service units, which in either way would disrupt the operations of the Hotel. This Court is of the opinion, therefore, that the act of the Union was not merely an expression of their grievance or displeasure but, indeed, a calibrated and calculated act designed to inflict serious damage to the Hotel's finances or its reputation. Thus, we hold that the Union's concerted violation of the Hotel's Grooming Standards which resulted in the temporary cessation and disruption of the Hotel's operations is an unprotected act and should be considered as an illegal strike.

Second, the Union's concerted action which disrupted the Hotel's operations clearly violated the CBA's "No Strike, No Lockout" provision, which reads:

ARTICLE XXII - NO STRIKE/WORK STOPPAGE AND LOCKOUT

SECTION 1. No Strikes

The Union agrees that there shall be no strikes, walkouts, stoppage or slow-down of work, boycott, refusal to handle accounts, picketing, sit-down strikes, sympathy strikes or any other form of interference and/or interruptions with any of the normal operations of the HOTEL during the life of this Agreement.

The facts are clear that the strike arose out of a bargaining deadlock in the CBA negotiations with the Hotel. The concerted action is an economic strike upon which the afore-quoted "no strike/work stoppage and lockout" prohibition is squarely applicable and legally binding.19

Third, the Union officers and members' concerted action to shave their heads and crop their hair not only violated the Hotel's Grooming Standards but also violated the Union's duty and responsibility to bargain in good faith. By shaving their heads and cropping their hair, the Union officers and members violated then Section 6, Rule XIII of the Implementing Rules of Book V of the Labor Code.20 This rule prohibits the commission of any act which will disrupt or impede the early settlement of the labor disputes that are under conciliation. Since the bargaining deadlock is being conciliated by the NCMB, the Union's action to have their officers and members' heads shaved was manifestly calculated to antagonize and embarrass the Hotel management and in doing so effectively disrupted the operations of the Hotel and violated their duty to bargain collectively in good faith.

Fourth, the Union failed to observe the mandatory 30-day cooling-off period and the seven-day strike ban before it conducted the strike on January 18, 2002. The NLRC correctly held that the Union failed to observe the mandatory periods before conducting or holding a strike. Records reveal that the Union filed its Notice of Strike on the ground of bargaining deadlock on December 20, 2001. The 30-day cooling-off period should have been until January 19, 2002. On top of that, the strike vote was held on January 14, 2002 and was submitted to the NCMB only on January 18, 2002; therefore, the 7-day strike ban should have prevented them from holding a strike until January 25, 2002. The concerted action committed by the Union on January 18, 2002 which resulted in the disruption of the Hotel's operations clearly violated the above-stated mandatory periods.

Last, the Union committed illegal acts in the conduct of its strike. The NLRC ruled that the strike was illegal since, as shown by the pictures21 presented by the Hotel, the Union officers and members formed human barricades and obstructed the driveway of the Hotel. There is no merit in the Union's argument that it was not its members but the Hotel's security guards and the police officers who blocked the driveway, as it can be seen that the guards and/or police officers were just trying to secure the entrance to the Hotel. The pictures clearly demonstrate the tense and highly explosive situation brought about by the strikers' presence in the Hotel's driveway.

Furthermore, this Court, not being a trier of facts, finds no reason to alter or disturb the NLRC findings on this matter, these findings being based on substantial evidence and affirmed by the CA.22 Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence.23 Likewise, we are not duty-bound to delve

into the accuracy of the factual findings of the NLRC in the absence of clear showing that these were arrived at arbitrarily and/or bereft of any rational basis.24

What then are the consequent liabilities of the Union officers and members for their participation in the illegal strike?

Regarding the Union officers and members' liabilities for their participation in the illegal picket and strike, Art. 264(a), paragraph 3 of the Labor Code provides that "[a]ny 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 x x x." The law makes a distinction between union officers and mere union members. Union officers may be validly terminated from employment for their participation in an illegal strike, while union members have to participate in and commit illegal acts for them to lose their employment status.25 Thus, it is necessary for the company to adduce proof of the participation of the striking employees in the commission of illegal acts during the strikes.26

Clearly, the 29 Union officers may be dismissed pursuant to Art. 264(a), par. 3 of the Labor Code which imposes the penalty of dismissal on "any union officer who knowingly participates in an illegal strike." We, however, are of the opinion that there is room for leniency with respect to the Union members. It is pertinent to note that the Hotel was able to prove before the NLRC that the strikers blocked the ingress to and egress from the Hotel. But it is quite apparent that the Hotel failed to specifically point out the participation of each of the Union members in the commission of illegal acts during the picket and the strike. For this lapse in judgment or diligence, we are constrained to reinstate the 61 Union members.

Further, we held in one case that union members who participated in an illegal strike but were not identified to have committed illegal acts are entitled to be reinstated to their former positions but without backwages.27 We then held in G & S Transport Corporation v. Infante:

With respect to backwages, the principle of a "fair day's wage for a fair day's labor" remains as the basic factor in determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. While it was found that respondents expressed their intention to report back to work, the latter exception cannot apply in this case. In Philippine Marine Officer's Guild v. Compañia Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar.28

In this light, we stand by our recent rulings and reinstate the 61 Union members without backwages.

WHEREFORE, premises considered, the CA's May 6, 2004 Decision in CA-G.R. SP No. 70778 is hereby AFFIRMED.

The CA's January 19, 2004 Decision in CA-G.R. SP No. 76568 is hereby SET ASIDE. The October 9, 2002 Decision of the NLRC in NLRC NCR CC No. 000215-02 is hereby AFFIRMED with MODIFICATIONS, as follows:

The 29 Union officials are hereby declared to have lost their employment status, to wit:

1. LEO ANTONIO ATUTUBO2. EDWIN E. BALLESTEROS3. LORETTA DIVINA DE LUNA4. INISUSAN DE VELEZ5. DENNIS HABER6. MARITES HERNANDEZ7. BERNARD HUGO8. NORZAMIA INTAL9. LAURO JAVIER10. SHANE LAUZ11. MAY BELEN LEANO12. EDGAR LINGHON13. MILAGROS LOPEZ14. JOSE MUZONES15. RAY NERVA16. JESUS NONAN17. MARLYN OLLERO18. CATHY ORDUNA19. REYNALDO RASING20. JUSTO TABUNDA21. BARTOLOME TALISAYON22. JUN TESORO23. LYNDON TESORO24. SALVADOR TIPONES25. SONNY UY26. WILFREDO VALLES, JR.27. MEL VILLAHUCO28. EMMA Q. DANAO29. JORDAN ALEJANDRO

The 61 Union members are hereby REINSTATED to their former positions without backwages:

1. DANILO AGUINALDO2. CLARO ABRANTE3. FELIX ARRIESGADO4. DAN BAUTISTA5. MA. THERESA BONIFACIO6. JUAN BUSCANO7. ELY CHUA8. ALLAN DELAGON

9. FRUMENCIO DE LEON10. ELLIE DEL MUNDO11. EDWIN DELOS CIENTOS12. SOLOMON DIZON13. YLOTSKI DRAPER14. ERLAND COLLANTES15. JONAS COMPENIDO16. RODELIO ESPINUEVA17. ARMANDO ESTACIO18. SHERWIN FALCES19. JELA FRANZUELA20. REY GEALOGO21. ALONA GERNOMINO22. VINCENT HEMBRADOR23. ROSLYN IBARBIA24. JAIME IDIOMA, JR.25. OFELIA LLABAN26. RENATON LUZONG27. TEODULO MACALINO28. JAKE MACASAET29. HERNANIE PABILONIA30. HONORIO PACIONE31. ANDREA VILLAFUERTE32. MARIO PACULAN33. JULIO PAJINAG34. JOSELITO PASION35. VICENTE PASIOLAN36. HAZEL PENA37. PEDRO POLLANTE38. EDUARDO RAMOS39. IMELDA RASIN40. DELFIN RAZALAN41. EVANGELINE REYES42. RODOLFO REYES43. BRIGILDO RUBIO44. RIO SALCEDO45. JUANITO SANCHEZ46. MA. THERESA SANCHEZ47. DONATO SAN AGUSTIN48. RICARDO SOCORRO49. VALERIO SOLIS50. DOMINADOR SUAREZ51. ORLANDO TABUGOCA52. HELEN TALEON53. ROBERT TANEGRA54. LOURDES TAYAG

55. ROLANDO TOLENTINO56. REYNALDO TRESNADO57. RICHARD SABLADA58. MAE YAP-DIANGCO59. GILBERTO VEDASTO60. DOMINGO VIDAROZAGA61. DAN VILLANUEVA

In view of the possibility that the Hotel might have already hired regular replacements for the afore-listed 61 employees, the Hotel may opt to pay SEPARATION PAY computed at one (1) month's pay for every year of service in lieu of REINSTATEMENT, a fraction of six (6) months being considered one year of service.

SO ORDERED.

CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON, Petitioners, vs.BENJAMIN BAUTISTA, RONIE SUALOG, JOEL CALIDA, JOHNNY ARINTO AND ROBERTO DE GUZMAN,1 Respondents.

R E S O L U T I O N

CORONA, J.:

Petitioner Club Filipino, Inc. (the company) 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).

The union and the company had a collective bargaining agreement (CBA) which expired on May 31, 2000. Prior to the expiration of the CBA and within the freedom period,2 the union made several demands for negotiation but the company replied that it could not muster a quorum, thus no CBA negotiations could be held.

Sometime in 2000, the union submitted its formal CBA proposal to the company’s negotiating panel and repeatedly asked for the start of negotiations. No negotiations, however, took place for various reasons proffered by the company, among them the illness of the chairman of the management panel.

In order to compel the company to negotiate, respondents, as officers of the union, filed a request for preventive mediation with the National Conciliation and Mediation Board (NCMB). Their strategy, however, failed to bring the management to the negotiating table. The union and management only met on April 5, 2001, but the meeting concluded with a declaration by both parties of a deadlock in their negotiations.

On April 6, 2001, the union filed a notice of strike with the NCMB on the grounds of bargaining deadlock and failure to bargain. On April 22, 2001, 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 Department of Labor and Employment.

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.

On May 31, 2001, the company filed before the National Labor Relations Commission (NLRC) a petition to declare the strike illegal. The company further prayed that all union officers who participated in the illegal strike be considered separated from the service.3

In a decision dated November 28, 2001, the labor arbiter4 declared the strike "procedurally [infirm] and therefore illegal."5 The labor arbiter noted that the union failed to attach its written CBA proposal and the company’s counter-proposal to the notice of strike and to provide proof of a request for a conference to settle the dispute. Thus, the notice to strike was deemed not to have been filed and the strike illegal. As a consequence, all the officers of the union were deemed terminated from service. However, these employees were entitled to separation pay equivalent to that granted to employees affected by the retrenchment program which the company had earlier launched.6

Respondents appealed but on September 30, 2002, the NLRC in a decision7 affirmed the labor arbiter. The NLRC did not see fit to pass upon the issues raised by respondents because, by the time they appealed on December 20, 2001, they had either resigned from the company or were no longer part of the union because of the election of new set of officers.8

Respondents’ motion for reconsideration was consequently denied.9 Aggrieved, they elevated the matter to the Court of Appeals (CA) via a petition for certiorari.10

On May 31, 2005, the CA issued its assailed decision,11 holding that the labor arbiter and the NLRC "took a selective view of the attendant facts of the case" and in "negating thereby the effects of the notice of strike the union filed."12 What was more, the NLRC’s reasoning was flawed because "a worker ordered dismissed under a tribunal’s decision has every right to question his or her dismissal."13 The labor arbiter’s ruling was likewise wrong because it was based on a "flimsy technicality" that conveniently booted out the union officers from the company.14

Thus, the CA set aside the rulings of the NLRC and the labor arbiter as far as respondents Sualog, Calida, De Guzman and Arinto were concerned and ordered petitioners to pay them full backwages and benefits from the time of their dismissal up to the finality of its decision, plus separation pay computed at one month salary per year of service from the time they were hired

up to the finality of its decision.15 On the other hand, the CA dismissed the petition as far as Laureano Fegalquin,16 Bautista and Precentacion were concerned.17

Petitioners then sought redress from this Court by filing a petition for review on certiorari18 hoisting the issue of whether or not the strike staged by respondents on May 26, 2001 was legal.

We rule in the affirmative.

It is undisputed that the notice of strike was filed by the union without attaching the counter-proposal of the company. This, according to petitioners and the labor arbiter, made the ensuing strike of respondents illegal because the notice of strike of the union was defective.

The contention is untenable.

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.1avvphi1

Any notice which does not conform with the requirements of this and the foregoing section shall be deemed as not having been filed and the party concerned shall be so informed by the regional branch of the Board. (emphasis supplied)

In the instant case, the union cannot be faulted for its omission. The union could not have attached 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 proved futile. It was only on April 22, 2001, or after two weeks, when the company formally responded to the union by submitting the first part of its counter-proposal. Worse, it took the company another three weeks to complete it by submitting on May 11, 2001 the second part of its counter-proposal. This was almost a year after the expiration of the CBA sought to be renewed.

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. It was absurd to expect the union to produce the company’s counter-proposal which it did not have. One cannot give what one does not have. 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.

Another error committed by the labor arbiter was his declaration that respondents, as union officers, automatically severed their employment with the company due to the alleged illegal strike. In the first place, there was no illegal strike. 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.19

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.20 (emphasis supplied)

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.21 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 constitutional22 and statutory23 mandate to protect the rights of employees to self-organization.

Nowhere in the ruling of the labor arbiter can we find any discussion of how respondents, as union officers, knowingly participated in the alleged illegal strike. Thus, even assuming arguendo that the strike was illegal, their automatic dismissal had no basis.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioners.

SO ORDERED.

SANTA ROSA COCA-COLA PLANT EMPLOYEES UNION, DONRICO V. SEBASTIAN, EULOGIO G. BATINO, SAMUEL A. ATANQUE, MANOLO C. ZABALJAUREGUI, DIONISIO TENORIO, EDWIN P. RELLORES, LUIS B. NATIVIDAD, MYRNA PETINGCO, FELICIANO TOLENTINO, RODOLFO A. AMANTE, JR., CIPRIANO C. BELLO, RONALDO T. ESPINO, EFREN GALAN, and JUN CARMELITO SANTOS, Petitioners, vs.COCA-COLA BOTTLERS PHILS., INC., Respondent.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP Nos. 74174 and 74860, which affirmed the ruling of the National Labor Relations Commission (NLRC) in NLRC CA No. 030424-02, and the Labor Arbiter in NLRC Case No. RAB-IV-10-11579-99-L.

The Antecedents

The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive bargaining representative of the regular daily paid workers and the monthly paid non-commission-earning employees of the Coca-Cola Bottlers Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant. The individual petitioners are Union officers, directors, and shop stewards.

The Union and the Company had entered into a three-year Collective Bargaining Agreement (CBA) effective July 1, 1996 to expire on June 30, 1999. Upon the expiration of the CBA, the Union informed the Company of its desire to renegotiate its terms. The CBA meetings commenced on July 26, 1999, where the Union and the Company discussed the ground rules of the negotiations. The Union insisted that representatives from the Alyansa ng mga Unyon sa Coca-Cola be allowed to sit down as observers in the CBA meetings. The Union officers and members also insisted that their wages be based on their work shift rates. For its part, the Company was of the view that the members of the Alyansa were not members of the bargaining unit. The Alyansa was a mere aggregate of employees of the Company in its various plants; and is not a registered labor organization. Thus, an impasse ensued.2

On August 30, 1999, the Union, its officers, directors and six shop stewards filed a "Notice of Strike" with the National Conciliation and Mediation Board (NCMB) Regional Office in Southern Tagalog, Imus, Cavite. The petitioners relied on two grounds: (a) deadlock on CBA ground rules; and (b) unfair labor practice arising from the company’s refusal to bargain. The case was docketed as NCMB-RBIV-NS-08-046-99.3

The Company filed a Motion to Dismiss4 alleging that the reasons cited by the Union were not valid grounds for a strike. The Union then filed an Amended Notice of Strike on September 17, 1999 on the following grounds: (a) unfair labor practice for the company’s refusal to bargain in good faith; and (b) interference with the exercise of their right to self-organization.5

Meanwhile, on September 15, 1999, the Union decided to participate in a mass action organized by the Alyansa ng mga Unyon sa Coca-Cola in front of the Company’s premises set for September 21, 1999. 106 Union members, officers and members of the Board of Directors, and shop stewards, individually filed applications for leave of absence for September 21, 1999. Certain that its operations in the plant would come to a complete stop since there were no sufficient trained contractual employees who would take over, the Company disapproved all leave applications and notified the applicants accordingly.6 A day before the mass action, some Union members wore gears, red tag cloths stating "YES KAMI SA STRIKE" as headgears and on the different parts of their uniform, shoulders and chests.

The Office of the Mayor issued a permit to the Union, allowing it "to conduct a mass protest action within the perimeter of the Coca-Cola plant on September 21, 1999 from 9:00 a.m. to 12:00 noon."7 Thus, the Union officers and members held a picket along the front perimeter of the plant on September 21, 1999. All of the 14 personnel of the Engineering Section of the Company did not report for work, and 71 production personnel were also absent. As a result, only one of the three bottling lines operated during the day shift. All the three lines were operated during the night shift with cumulative downtime of five (5) hours due to lack of manning, complement and skills requirement. The volume of production for the day was short by 60,000 physical case[s] versus budget.8

On October 13, 1999, the Company filed a "Petition to Declare Strike Illegal"9 alleging, inter alia, the following: there was a deadlock in the CBA negotiations between the Union and Company, as a result of which a Notice of Strike was filed by the Union; pending resolution of the Notice of Strike, the Union members filed applications for leave on September 21, 1999 which were disapproved because operations in the plant may be disrupted; on September 20, 1999, one day prior to the mass leave, the Union staged a protest action by wearing red arm bands denouncing the alleged anti-labor practices of the company; on September 21, 1999, without observing the requirements mandated by law, the Union picketed the premises of the Company in clear violation of Article 262 of the Labor Code; because of the slowdown in the work, the Company suffered losses amounting to P2,733,366.29; the mass/protest action conducted on September 21, 1999 was clearly a strike; since the Union did not observe the requirements mandated by law, i.e., strike vote, cooling-off period and reporting requirements, the strike was therefore illegal; the Union also violated the provision of the CBA on the grievance machinery; there being a direct violation of the CBA, the Union’s action constituted an unfair labor practice; and the officers who knowingly participated in the commission of illegal acts during the strike should be declared to have lost their employment status. The Company prayed that judgment be rendered as follows:

1. Declaring the strike illegal;

2. Declaring the officers of respondent Union or the individual respondents to have lost their employment status;

3. Declaring respondent Union, its officers and members guilty of unfair labor practice for violation of the CBA; and

4. Ordering the respondents to pay petitioner the following claims for damages:

a. Actual Damages in the amount of P 4,733,366.29

b. Moral Damages in the amount of Five (5) Million Pesos; and

c. Exemplary Damages in the amount of Two (2) Million Pesos.10

The Union filed an Answer with a Motion to Dismiss and/or to Suspend Proceedings11 alleging therein that the mass action conducted by its officers and members on September 21, 1999 was not a strike but just a valid exercise of their right to picket, which is part of the right of free expression as guaranteed by the Constitution; several thousands of workers nationwide had launched similar mass protest actions to demonstrate their continuing indignation over the ill effects of martial rule in the Philippines.12 It pointed out that even the officers and members of the Alyansa ng mga Unyon sa Coca-Cola had similarly organized mass protest actions. The Union insisted that officers and members filed their applications for leave for September 21, 1999 knowing fully well that there were no bottling operations scheduled on September 21 and 22, 1999; they even secured a Mayor’s permit for the purpose. The workers, including the petitioners, merely marched to and fro at the side of the highway near one of the gates of the Sta. Rosa Plant, the loading bay for public vehicles. After 3 hours, everyone returned to work

according to their respective shifting schedules. The Union averred that the petition filed by the Company was designed to harass and its officers and members in order to weaken the Union’s position in the on-going collective bargaining negotiations.

In a letter to the Union President dated October 26, 1999, the NCMB stated that based on their allegations, the real issue between the parties was not the proper subject of a strike, and should be the subject of peaceful and reasonable dialogue. The NCMB recommended that the Notice of Strike of the Union be converted into a preventive mediation case. After conciliation proceedings failed, the parties were required to submit their respective position papers.13 In the meantime, the officers and directors of the Union remained absent without the requisite approved leaves. On October 11, 1999, they were required to submit their explanations why they should not be declared AWOL.14

On November 26, 1999, the Labor Arbiter rendered a Decision15 granting the petition of the Company. He declared that the September 21, 1999 mass leave was actually a strike under Article 212 of the Labor Code for the following reasons: based on the reports submitted by the Production and Engineering Department of the Company, there was a temporary work stoppage/slowdown in the company;16 out of the usual three (3) lines for production for the day shift, only one line operated by probationary employees was functional and there was a cumulative downtime of five (5) hours attributed to the lack of manning complement and skills requirement. The Labor Arbiter further declared:

x x x [T]he September 21, 1999 activity of the union and the individual respondents herein fell within the foregoing definition of a strike. Firstly, the union itself had admitted the fact that on the date in question, respondent officers, together with their union members and supporters from the Alyansa ng mga Unyon sa Coca-Cola, did not report for their usual work. Instead, they all assembled in front of the Sta. Rosa Plant and picketed the premises. Very clearly, there was a concerted action here on the part of the respondents brought about a temporary stoppage of work at two out of three bottling lines at the Sta. Rosa Plant. According to Edwin Jaranilla, the Engineering Superintendent (Annex H, petition), all of his department’s 14 engineering personnel did not report for work on September 21, 1999, and that only Line 2 operated on the day shift. Honorio Tacla, the Production Superintendent, testified (Annex H-1), that 71 production personnel were likewise absent from their respective work stations on September 21, 1999, and that only Line 2 operated on the day shift. Similarly, Federico Borja, Physical Distribution Superintendent, stated under oath (Annex H-2) that 12 personnel from his department did not report for work on September 21, 1999, and that no forklift servicing was done on Lines 1 and 3. From the foregoing testimonies, it is evident that respondents’ concerted activity resulted in a temporary stoppage of work at the Sta. Rosa Plant of the company. Thirdly, such concerted activity by respondents was by reason of a labor dispute. Earlier, the union had filed a Notice of Strike against the company on account of a disagreement with the latter regarding CBA ground rules, i.e., the demand of the Union for Alyansa members from other plants to attend as observers during the CBA negotiation, and for the members of the negotiating panel to be paid their wages based on their work shift rate. Moreover, on September 20, 1999, one day before respondents’ mass leave from work and concerted action, they had worn red tag cloth materials on different parts of their uniform which contained the words, "YES kami sa strike"; "Protesta kami"; "Sahod, karapatan, manggagawa ipaglaban"; and "Union busting itigil."

(Annexes G, G-1, G-2 & G-3). These indicated that the concerted action taken by respondents against CCBPI was a result of or on account of a labor dispute.17

According to the Labor Arbiter, the strike conducted by the Union was illegal since there was no showing that the Union conducted a strike vote, observed the prescribed cooling-off period, much less, submitted a strike vote to the DOLE within the required time. Consequently, for knowingly participating in the illegal strike, the individual petitioners were considered to have lost their employment status.18

The Union appealed the decision to the NLRC. On July 31, 2002, the NLRC affirmed the decision of the Labor Arbiter with the modification that Union Treasurer Charlita M. Abrigo, who was on bereavement leave at the time, should be excluded from the list of those who participated in the illegal strike. She was thus ordered reinstated to her former position with full backwages and benefits.19

The Union and its officers, directors and the shop stewards, filed a petition for certiorari in the CA. The case was docketed as CA-G.R. SP No. 74174. Another petition was filed by Ricky G. Ganarial and Almira Romo, docketed as CA-G.R. SP No. 74860. The two cases were consolidated in the 6th Division of the CA.

Petitioners alleged the following in their respective petitions:

I

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION FOR HAVING DECLARED PETITIONERS TO HAVE LOST THEIR EMPLOYMENT WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED DUE PROCESS

II

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECLARING THE PEACEFUL PICKETING CONDUCTED BY THE UNION AS ILLEGAL STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON THE INTENT TO CREATE TEMPORARY WORK STOPPAGE

III

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECLARING THAT PETITIONERS HAVE LOST THEIR EMPLOYMENT FOR KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE THE FACT THAT PETITIONERS ARE NOT ELECTED OFFICERS OF THE UNION AND ARE MERE SHOP STEWARDS AND DESPITE THE FACT THAT THERE WAS NO PROOF THAT THEY COMMITTED ILLEGAL ACTS.20

The petitioners, likewise, raised the following, to wit:

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT THE STRIKE CONDUCTED BY THE RESPONDENTS ON SEPTEMBER 21, 1999 IS ILLEGAL.

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING

THE DECISION OF THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED THAT INDIVIDUAL

RESPONDENTS (NOW PETITIONERS), INCLUDING SIX (6) UNION SHOP STEWARDS, ARE CONSIDERED TO HAVE LOST THEIR EMPLOYMENT STATUS (EXCEPT

CHARLITA ABRIGO) FOR KNOWINGLY PARTICIPATING IN SAID ILLEGAL STRIKE.21

On September 10, 2003, the CA rendered judgment dismissing the petition for lack of merit. It also declared that petitioners, in CA-G.R. SP No. 74860, were guilty of forum shopping.

Petitioners filed a motion for reconsideration which the appellate court denied; hence, the instant petition was filed based on the following grounds:

(1) THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS DISCRETION IN DISMISSING THE PETITION BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR FROM THE EVIDENCE ON RECORD THAT THE SUBJECT MASS ACTION WAS A VALID EXERCISE OF THE WORKERS’ CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE RIGHT TO FREE EXPRESSION.

(2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO WHEN IT CONCLUDED THAT AS A CONSEQUENCE OF THE ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE OFFICERS OF THE UNION IS JUSTIFIED AND VALID, IS NOT IN ACCORD WITH FACTS AND EVIDENCE ON RECORD.

(3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS ACTION STAGED BY PETITIONERS ON SEPTEMBER 21, 1999 CONSTITUTES A STRIKE, THE NLRC SERIOUSLY ERRED WHEN IT AFFIRMED THE LABOR ARBITER’S DECISION DECLARING THE FORFEITURE OF EMPLOYMENT STATUS OF UNION OFFICERS AND SHOP STEWARDS (WHO HAVE NOT COMMITTED ANY ILLEGAL ACT DURING THE CONDUCT OF THE SAID MASS ACTION) FOR HAVING KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE.22

The threshold issues in these cases are: (a) whether the September 21, 1999 mass action staged by the Union was a strike; (b) if, in the affirmative, whether it was legal; and (c) whether the individual officers and shop stewards of petitioner Union should be dismissed from their employment.

On the first and second issues, petitioners maintain that the September 21, 1999 mass protest action was not a strike but a picket, a valid exercise of their constitutional right to free expression and assembly.23 It was a peaceful mass protest action to dramatize their legitimate grievances against respondent. They did not intend to have a work stoppage since they knew beforehand that no bottling operations were scheduled on September 21, 1999 pursuant to the Logistics Planning Services Mega Manila Production Plan dated September 15, 1999.24 Thus, they applied for leaves of absences for September 21, 1999 which, however, were not approved. They also obtained a mayor’s permit to hold the picket near the highway, and they faithfully complied with the conditions set therein. The protesting workers were merely marching to and fro at the side of the highway or the loading bay near one of the gates of the Company plant, certainly not blocking in any way the ingress or egress from the Company’s premises. Their request to hold their activity was for four (4) hours, which was reduced to three (3) hours. Thereafter, they all went back to work. The bottling operations of the Company was not stopped, even temporarily. Since petitioner Union did not intend to go on strike, there was no need to observe the mandatory legal requirements for the conduct of a strike.

Petitioners also point out that members belonging to the IBM-KMU at the San Fernando Coca-Cola bottling plant staged simultaneous walkout from their work assignments for two consecutive days, on October 7 and 8, 1999. However, the Secretary of Labor and Employment (SOLE) declared that the walkout was considered a mass action, not a strike, and the officers of the IBM-KMU were only meted a three-day suspension. Respondent accepted the decision of the SOLE and no longer appealed the decision. Petitioners insist that this should, likewise, apply in the resolution of the issue of whether petitioners staged a strike or not, and whether the penalty of dismissal from the employment with the respondent is just and equitable.

Petitioners also insist that they were denied the right to due process because the decision of the Labor Arbiter was implemented even while their appeal was pending in the NLRC. The decision of the Labor Arbiter against them was to become final and executory only until after the NLRC shall have resolved their appeal with finality.

On the third issue, petitioners aver that even assuming that they had indeed staged a strike, the penalty of dismissal is too harsh. They insist that they acted in good faith. Besides, under Article 264 of the Labor Code, the dismissal of the Union officers who participated in an illegal strike is discretionary on the employer. Moreover, six (6) of the petitioners were shop stewards who were mere members of the Union and not officers thereof.

In its comment on the petition, respondent avers that the issues raised by petitioners are factual; hence, inappropriate in a petition for review on certiorari. Besides, the findings of the Labor Arbiter had been affirmed by the NLRC and the CA, and are, thus, conclusive on this Court.

Respondent further avers that the law offers no discretion as to the proper penalty that should be imposed against a Union official participating in an illegal strike. Contrary to the contention of petitioners, shop stewards are also Union officers. To support its claim, respondent cited Samahan ng Manggagawa sa Moldex Products, Inc. v. National Labor Relations Commission,25 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. Hoffa;26 and Coleman v. Brotherhood of Railway and Steamship Clerks, etc.27

The petition is denied for lack of merit.

The ruling of the CA that petitioners staged a strike on September 21, 1999, and not merely a picket is correct.

It bears stressing that this is a finding made by the Labor Arbiter which was affirmed by the NLRC28 and the CA.29 The settled rule is that the factual findings and conclusions of tribunals, as long as they are based on substantial evidence, are conclusive on this Court.30 The raison d’etre is that quasi-judicial agencies, like the Labor Arbiter and the NLRC, have acquired a unique expertise since their jurisdictions are confined to specific matters. Besides, under Rule 45 of the Rules of Court, the factual issues raised by the petitioner are inappropriate in a petition for review on certiorari. Whether petitioners staged a strike or not is a factual issue.

Petitioners failed to establish that the NLRC committed grave abuse of its discretion amounting to excess or lack of jurisdiction in affirming the findings of the Labor Arbiter that petitioners had indeed staged a strike.

Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. In Bangalisan v. Court of Appeals,31 the Court ruled that "the fact that the conventional term ‘strike’ was not used by the striking employees to describe their common course of action is inconsequential, since the substance of the situation, and not its appearance, will be deemed to be controlling."32 The term "strike" encompasses not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy or sabotage plant equipment and facilities, and similar activities.33

Picketing involves merely the marching to and fro at the premises of the employer, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute.34 As applied to a labor dispute, to picket means the stationing of one or more persons to observe and attempt to observe. The purpose of pickets is said to be a means of peaceable persuasion.35

A labor dispute includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.36

That there was a labor dispute between the parties, in this case, is not an issue. Petitioners notified the respondent of their intention to stage a strike, and not merely to picket. Petitioners’ insistence to stage a strike is evident in the fact that an amended notice to strike was filed even as respondent moved to dismiss the first notice. The basic elements of a strike are present in this case: 106 members of petitioner Union, whose respective applications for leave of absence on September 21, 1999 were disapproved, opted not to report for work on said date, and gathered in front of the company premises to hold a mass protest action. Petitioners deliberately absented themselves and instead wore red ribbons, carried placards with slogans such as: "YES KAMI SA STRIKE," "PROTESTA KAMI," "SAHOD, KARAPATAN NG MANGGAGAWA

IPAGLABAN," "CBA-‘WAG BABOYIN," "STOP UNION BUSTING." They marched to and fro in front of the company’s premises during working hours. Thus, petitioners engaged in a concerted activity which already affected the company’s operations. The mass concerted activity constituted a strike.

The bare fact that petitioners were given a Mayor’s permit is not conclusive evidence that their action/activity did not amount to a strike. The Mayor’s description of what activities petitioners were allowed to conduct is inconsequential. To repeat, what is definitive of whether the action staged by petitioners is a strike and not merely a picket is the totality of the circumstances surrounding the situation.

A strike is the most powerful of the economic weapons of workers which they unsheathe to force management to agree to an equitable sharing of the joint product of labor and capital. It is a weapon that can either breathe life to or destroy the Union and its members in their struggle with management for a more equitable due to their labors.37 The decision to declare a strike must therefore rest on a rational basis, free from emotionalism, envisaged by the tempers and tantrums of a few hot heads, and finally focused on the legitimate interests of the Union which should not, however, be antithetical to the public welfare, and, to be valid, a strike must be pursued within legal bounds. The right to strike as a means of attainment of social justice is never meant to oppress or destroy the employer.38

Since strikes cause disparity effects not only on the relationship between labor and management but also on the general peace and progress of society, the law has provided limitations on the right to strike. For a strike to be valid, the following procedural requisites provided by Art. 263 of the Labor Code must be observed: (a) a notice of strike filed with the DOLE 30 days before the intended date thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose, (c) notice given to the DOLE of the results of the voting at least seven days before the intended strike. These requirements are mandatory and the failure of a union to comply therewith renders the strike illegal.39 It is clear in this case that petitioners totally ignored the statutory requirements and embarked on their illegal strike. We quote, with approval, the ruling of the CA which affirmed the decisions of the NLRC and of the Labor Arbiter:

Since it becomes undisputed that the mass action was indeed a strike, the next issue is to determine whether the same was legal or not. Records reveal that the said strike did not comply with the requirements of Article 263 (F) in relation to Article 264 of the Labor Code, which specifically provides, thus:

ART. 263. STRIKES, PICKETING, AND LOCKOUTS

xxx xxx xxx xxx

(f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of

directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided.

ART. 264. PROHIBITED ACTIVITIES

(a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout.

Any worker whose employment has been terminated as a consequence or an unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike.

xxx xxx xxx xxx

Applying the aforecited mandatory requirements to the case at bench, the Labor Arbiter found, thus:

In the present case, there is no evidence on record to show that respondents had complied with the above mandatory requirements of law for a valid strike. Particularly, there is no showing that respondents had observed the prescribed cooling-off period, conducted a strike vote, much less submitted a strike vote report to the Department of Labor within the required time. This being the case, respondents’ strike on September 21, 1999 is illegal. In the recent case of CCBPI Postmix Workers Union vs. NLRC, 2999 (sic) SCRA 410, the Supreme Court had said: "It bears stressing that the strike requirements under Article 264 and 265 of the Labor Code are mandatory requisites, without which, the strike will be considered illegal. The evidence (sic) intention of the law in requiring the strike notice and strike-vote report as mandatory requirements is to reasonably regulate the right to strike which is essential to the attainment of legitimate policy objectives embodied in the law. Verily, substantial compliance with a mandatory provision will not suffice. Strict adherence to the mandate of the law is required.

Aside from the above infirmity, the strike staged by respondents was, further, in violation of the CBA which stipulated under Section 1, Article VI, thereof that,

SECTION 1. The UNION agrees that there shall be no strike, walkout, stoppage or slowdown of work, boycott, secondary boycott, refusal to handle any merchandise, picketing, sitdown strikes of any kind, sympathetic or general strike, or any other interference with any of the operations of the COMPANY during the term of this Agreement, so long as the grievance procedure for which provision is made herein is followed by the COMPANY.

Here, it is not disputed that respondents had not referred their issues to the grievance machinery as a prior step. Instead, they chose to go on strike right away, thereby bypassing the required grievance procedure dictated by the CBA.40

On the second and third issues, the ruling of the CA affirming the decisions of the NLRC and the Labor Arbiter ordering the dismissal of the petitioners-officers, directors and shop stewards of petitioner Union is correct.

It bears stressing, however, that the law makes a distinction between union members and union officers. A worker merely participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status.41 For knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike, the law provides that a union officer may be terminated from employment.42 The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service.43

We quote, with approval, the following ruling of the Court of Appeals:

As to the imposition of the penalty provided for should an illegal strike be declared as such, We find no legal or factual reason to digress from the following disquisition of the Labor Arbiter, to wit:

No doubt, the strike conducted by respondents on September 21, 1999 is illegal. Under Article 264(a) of the Labor Code, it is stated that, ‘Any union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. xxx.’ In the present case, CCBPI had already promptly notified respondents and their members of the disapproval of their leave. In fact, in the company notice (of the disapproval of their leave), CCBPI emphasized that "operations will come to a complete stop on September 21, 1999 if all the applications are approved." They were further informed that, ‘there are no sufficiently trained contractual employees who can take over as replacements on that day’ (Annexes "C," "C-1" to "C-18"). In other words, respondents had known beforehand that their planned mass leave would definitely result in a stoppage of the operations of the company for September 21, 1999. Still, respondents knowingly and deliberately proceeded with their mass action, unmindful of the ill effects thereof on the business operations of the company. In the case of Association of Independent Unions in the Philippines v. NLRC, 305 SCRA 219, the Supreme Court had ruled that,

Union officers are duty-bound to guide their members to respect the law. If instead of doing so, the officers urge the members to violate the law and defy the duly constituted authorities, their dismissal from the service is just penalty or sanction for their unlawful acts. The officers’ responsibility is greater than that of the members.

Here, the law required respondents to follow a set of mandatory procedures before they could go on with their strike. But obviously, rather than call on their members to comply therewith, respondents were the first ones to violate the same.44

Petitioners cannot find solace in the Order of the Secretary of Labor and Employment (SOLE) in OS-A-J-0033-99, NCMB-RB 111-NS-10-44-99 and 11-51-99 involving the labor dispute between the Company and the Union therein (the Ilaw at Buklod ng Manggagawa Local No. 1, representing the daily paid rank and file members of the respondent, as well as the plant-based route helpers and drivers at its San Fernando Plant). In said case, the SOLE found that the simultaneous walkout staged on October 7 and 8, 1999 was indeed a mass action, initiated by the Union leaders. The acts of the Union leaders were, however, found to be illegal which warranted their dismissal, were it not for the presence of mitigating factors,

i.e., the walkout was staged in support of their leaders in the course of the CBA negotiation which was pending for more than nine (9) months; the Plant was not fully disrupted as the Company was able to operate despite the severe action of the Union members, with the employment of casual and contractual workers; the Union had complied with the requirements of a strike and refrained from staging an actual strike.45

Neither can the petitioners find refuge in the rulings of this Court in Panay Electric Company v. NLRC46 or in Lapanday Workers Union v. NLRC.47 In the Panay case, the Court meted the suspension of the union officers, instead of terminating their employment status since the NLRC found no sufficient proof of bad faith on the part of the union officers who took part in the strike to protest the dismissal of their fellow worker, Enrique Huyan which was found to be illegal. In Lapanday, the Court actually affirmed the dismissal of the union officers who could not claim good faith to exculpate themselves. The officers, in fact, admitted knowledge of the law on strike, including its procedure in conducting the same. The Court held that the officers cannot violate the law which was designed to promote their interests.

Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie Labayani, Ricky Ganarial, Efren Galan and Jun Carmelito Santos who were appointed as shop stewards of the Union that they were mere members and not the officers of petitioner Union is barren of merit.

We agree with the observation of respondent that under Section 501(a) and (b) of the Landrum Griffin Act of 1959,48 shop stewards are officers of the Union:

Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group. It is, therefore, the duty of each such person, taking into account the special problems and functions of a labor organization, to hold its money and property solely for the benefit of the organization and its members and to manage, invest, and expend the same in accordance with its constitution and

bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or personal interest which conflicts with the interest of such organization, and to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization. A general exculpatory resolution of a governing body purporting to relieve any such person of liability for breach of the duties declared by this section shall be void as against public policy.

(b) When any officer, agent, shop steward, or representative of any labor organization is alleged to have violated the duties declared in subsection (a) of this section and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer, agent, shop steward, or representative in any district court of the United States or in any State court of competent jurisdiction to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization.49

Under said Act, Section 3(q) thereof provides, as follows:

(q) "Officer, agent, shop steward, or other representative", when used with respect to a labor organization, includes elected officials and key administrative personnel, whether elected or appointed (such as business agents, heads of departments or major units, and organizers who exercise substantial independent authority), but does not include salaried non-supervisory professional staff, stenographic, and service personnel.50

Admittedly, there is no similar provision in the Labor Code of the Philippines; nonetheless, petitioners who are shop stewards are considered union officers.

Officers normally mean those who hold defined offices. An officer is any person occupying a position identified as an office. An office may be provided in the constitution of a labor union or by the union itself in its CBA with the employer. An office is a word of familiar usage and should be construed according to the sense of the thing.51

Irrefragably, under its Constitution and By-Laws, petitioner Union has principal officers and subordinate officers, who are either elected by its members, or appointed by its president, including the standing committees each to be headed by a member of the Board of Directors. Thus, under Section 1, Article VI of petitioner Union’s Constitution and By-Laws, the principal officers and other officers, as well as their functions/duties and terms of office, are as follows:

ARTICLE VIPRINCIPAL OFFICERS

SECTION 1. The governing body of the UNION shall be the following officers who shall be elected through secret ballot by the general membership:

President Auditor

Vice-President– two (2) Public Relations Officer

Secretary Sergeant-at-Arms

Treasurer Board of Directors – nine (9)

SECTION 2. The above officers shall administer Union’s affairs, formulate policies and implement programs to effectively carry out the objectives of the UNION and the Labor Code of the Philippines and manage all the monies and property of the UNION.

SECTION 3. The officers of the UNION and the members of the Board of Directors shall hold office for a period of five (5) years from the date of their election until their successors shall have been duly elected and qualified; provided that they remain members of the UNION in good standing.52

Section 6, Article II of the CBA of petitioner Union and respondent defines the position of shop steward, thus:

SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop stewards and shall inform management of the distribution of these stewards among the departments concerned.1avvphi1.net

Shop Stewards, union officers and members or employees shall not lose pay for attending Union-Management Labor dialogues, investigations and grievance meetings with management.53

Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code mentions the functions and duties of shop stewards, as follows:

Section 2. Procedures in handling grievances. – In the absence of a specific provision in the collective bargaining agreement prescribing for the procedures in handling grievance, the following shall apply:

(a) An employee shall present this grievance or complaint orally or in writing to the shop steward. Upon receipt thereof, the shop steward shall verify the facts and determine whether or not the grievance is valid.

(b) If the grievance is valid, the shop steward shall immediately bring the complaint to the employee’s immediate supervisor. The shop steward, the employee and his immediate supervisor shall exert efforts to settle the grievance at their level.

(c) If no settlement is reached, the grievance shall be referred to the grievance committee which shall have ten (10) days to decide the case.

Where the issue involves or arises from the interpretation or implementation of a provision in the collective bargaining agreement, or from any order, memorandum, circular or assignment issued by the appropriate authority in the establishment, and such issue cannot be resolved at the level of the shop steward or the supervisor, the same may be referred immediately to the grievance committee.

All grievance unsettled or unresolved within seven (7) calendar days from the date of its submission to the last step in the grievance machinery shall automatically be referred to a voluntary arbitrator chosen in accordance with the provisions of the collective bargaining agreement, or in the absence of such provisions, by mutual agreement of the parties.54

Thus, a shop steward is appointed by the Union in a shop, department, or plant serves as representative of the Union, charged with negotiating and adjustment of grievances of employees with the supervisor of the employer.55 He is the representative of the Union members in a building or other workplace. Black’s Law Dictionary defines a shop steward as a union official who represents members in a particular department. His duties include the conduct of initial negotiations for settlement of grievances.56 He

is to help other members when they have concerns with the employer or other work-related issues. He is the first person that workers turn to for assistance or information. If someone has a problem at work, the steward will help them sort it out or, if necessary, help them file a complaint.57 In the performance of his duties, he has to take cognizance of and resolve, in the first instance, the grievances of the members of the Union. He is empowered to decide for himself whether the grievance or complaint of a member of the petitioner Union is valid, and if valid, to resolve the same with the supervisor failing which, the matter would be elevated to the Grievance Committee.

It is quite clear that the jurisdiction of shop stewards and the supervisors includes the determination of the issues arising from the interpretation or even implementation of a provision of the CBA, or from any order or memorandum, circular or assignments issued by the appropriate authority in the establishment.1awphi1.net In fine, they are part and parcel of the continuous process of grievance resolution designed to preserve and maintain peace among the employees and their employer. They occupy positions of trust and laden with awesome responsibilities.

In this case, instead of playing the role of "peacemakers" and grievance solvers, the petitioners-shop stewards participated in the strike. Thus, like the officers and directors of petitioner Union who joined the strike, petitioners-shop stewards also deserve the penalty of dismissal from their employment.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of the Court of Appeals is AFFIRMED. No costs.

SO ORDERED.

MSF TIRE AND RUBBER, INC., petitioner, vs.COURT OF APPEALS and PHILTREAD TIRE WORKERS' UNION, respondents.

MENDOZA, J.:

Petitioner seeks a review of the decision1 of the Court of Appeals, dated March 20, 1997, which set aside the order of the Regional Trial Court of Makati, dated July 2, 1996, in Civil Case No. 95-770, granting petitioner's application for a writ of preliminary injunction.

The facts are as follows:

A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private respondent, Philtread Tire Workers' Union (Union), as a result of which the Union filed on May 27, 1994 a notice of strike in the National Conciliation and Mediation Board — National Capital Region charging Philtread with unfair labor practices for allegedly engaging in union-busting for violation of the provisions of the collective bargaining agreement. This was followed by picketing and the holding of assemblies by the Union outside the gate of Philtread's plant at Km. 21, East Service Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15, 1994.

In an order, dated September 4, 1994,2 then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and certified it for compulsory arbitration. She enjoined the Union from striking and Philtread from locking out members of the Union.

On December 9, 1994, during the pendency of the labor dispute, entered into a Memorandum of Agreement with Siam Tyre Public Company Limited (Siam Tyre), a subsidiary of Siam Cement. Under the Memorandum of Agreement, Philtread's plant and equipment would be sold to a new company (petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which the plant was located would be sold to another company (Sucat Land Corporation), 60% of which would be owned by Philtread and 40% by Siam Tyre.

This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then asked the Union to desist from picketing outside its plant and to remove the banners, streamers, and tent which it had placed outside the plant's fence.

As the Union refused petitioner's request, petitioner filed on May 25, 1995 a complaint for injunction with damages against the Union and the latter's officers and directors before the Regional Trial Court of Makati, Branch 59 where the case was docketed as Civil Case No. 95-770.

On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court. It insisted that the parties were involved in a labor dispute and that petitioner, being a mere "alter ego" of Philtread, was not an "innocent bystander."

After petitioner made its offer of evidence as well as the submission of the parties' respective memoranda, the trial court, in an order, dated March 25, 1996, denied petitioner's application for injunction and dismissed the complaint. However, on petitioner's motion, the trial court, on July 2, 1996, reconsidered its order, and granted an injunction. Its order read:3

Considering all that has been stated, the motion for reconsideration is granted. The Order dated March 25, 1996 is reconsideration and set aside. Plaintiff's complaint is reinstated and defendant's motion to dismiss is DENIED.

As regards plaintiff's application for the issuance of a writ of preliminary injunction, the Court finds that the plaintiff has established a clear and sustaining right to the injunctive relief, hence, the same is GRANTED. Upon posting by the plaintiff and approval by the Court of a bond in the amount of One Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may suffer by reason of the injunction in the event that the Court may finally adjudge that the plaintiff is not entitled thereto, let a writ of preliminary injunction issue ordering the defendants and any other persons acting with them and/or on their behalf to desist immediately from conducting their assembly in the area immediately outside the plaintiff's plant at Km. 21 East Service Road, South Superhighway, Muntinlupa, Metro Manila, and from placing and/or constructing banners, streamers, posters and placards, and/or tents/shanties or any other structure, on the fence of, and/or along the sidewalk outside, the said plant premises until further from this Court.

SO ORDERED.4

Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and prohibition before the Court of Appeals.

On March 20, 1997, the appellate court rendered a decision granting the Union's petition and ordering the trial court to dismiss the civil case for lack of jurisdiction. Hence, this petition for review. Petitioner makes the following arguments in support of its petition:

a. The Court of Appeals erred in not summarily dismissing the Union's petition for its false certification of non-forum shopping and the Union's failure to file a motion for reconsideration before going up to the Court of Appeals on a petition for certiorari.

b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit on the alleged grounds that MSF did not have a clear and unmistakable right to entitle it to a writ of preliminary injunction.

c. The Court of Appeals' pronouncement that it has not touched upon the issue of whether or not private respondent is a mere innocent bystander to the labor dispute between Philtread and the Union or upon the issue of whether or not private respondent is a mere dummy or continuity of Philtread is contrary to its own conclusions in the body of the decision, which conclusions are erroneous.

d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on Philtread's remaining operations in the country and allowed the Union to exercise its right to communicate the facts of its labor dispute within MSF's premises, given the percentage of interest Philtread has in both MSF and the corporation which owns the land bearing said plant.

The issues are (1) whether the Union's failure to disclose the pendency of NCMB-NCR-NS-05-167-96 in its certification of non-forum shopping and its failure to file a motion for reconsideration of the order, dated July 2, 1996, of the trial court were fatal to its petition for review before the Court of Appeals; and (2) whether petitioner has shown a clear legal right to the issuance of a writ of injunction under the "innocent bystander" rule.

First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.5 It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes.6 As held in Executive Secretary v. Gordon:7

Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, it has been held that there is forum-shopping —

(1) whenever as a result of an adverse decision one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another, or

(2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of Appeals since in such case he deliberately splits appeals "in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open, or

(3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the same from the original court.

In determining whether or not there is forum-shopping, what is important is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues.8

Petitioner asserts that the Court of Appeals should have dismissed the Union's petition for review on the ground that the certification of non-forum shopping was false and perjurious as a result of the Union's failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving the same parties and pending before the National Conciliation and Mediation Board.

The argument is without merit. Petitioner was a party to the proceedings before the National Conciliation and Mediation Board in which an order, dated September 8, 1994, was issued by then Secretary of Labor Nieves Confesor, enjoining any strike or lock-out by the parties.9 It was

petitioner which initiated the action for injunction before the trial court. Aggrieved by the injunctive order issued by the lower court, the Union was forced to file a petition for review before the Court of Appeals. We cannot understand why petitioner should complain that no mention of the pendency of the arbitration case before the labor department was made in the certificate of non-forum shopping attached to the Union's petition in the Court of Appeals. The petition of the Union in the Court of Appeals was provoked by petitioner's action in seeking injunction from the trial court when it could have obtained the same relief from the Secretary of Labor.

Indeed, by focusing on the Union's certification before the appellate court, petitioner failed to notice that its own certification before the lower court suffered from the same omission for which it faults the Union. Although the body of petitioner's complaint mentions NCMB-NCR-NS-05-167-96, its own certification is silent concerning this matter.10 It is not in keeping with the requirements of fairness for petitioner to demand strict application of the prohibition against forum-shopping, when it, too, is guilty of the same omission.

Second. Petitioner asserts that its status as an "innocent bystander" with respect to the labor dispute between Philtread and the Union entitles it to a writ of injunction from the civil courts and that the appellate court erred in not upholding its corporate personality as independent of Philtread's.

In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel, 11 this Court, through Justice J.B.L. Reyes, stated the "innocent bystander" rule as follows:

The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-employee relationship.

The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or "innocent bystanders" if it appears that the inevitable result of its is to create an impression that a labor dispute with which they have no connection or interest exists between them and the picketing union or constitute an invasion of their rights. In one case decided by this Court, we upheld a trial court's injunction prohibiting the union from blocking the entrance to a feed mill located within the compound of a flour mill with which the union had a dispute. Although sustained on a different ground, no connection was found between the two mills owned by two different corporations other than their being situated in the same premises. It is to be noted that in the instances cited, peaceful picketing has not been totally banned but merely regulated. And in one American case, a picket by a labor union in front of a motion picture

theater with which the union had a labor dispute was enjoined by the court from being extended in front of the main entrance of the building housing the theater wherein other stores operated by third persons were located.12 (Emphasis added)

Thus, an "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. For instance, in PAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate entities, different from, and without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike was directed, other than the incidental fact that they are the bank's landlord and co-lessee housed in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent Concrete Workers Union,13 this Court ruled that Liwayway was an "innocent bystander" and thus entitled to enjoin the union's strike because Liwayway's only connection with the employer company was the fact that both were situated in the same premises.

In the case at bar, petitioner cannot be said not to have such on to the dispute. As correctly observed by the appellate court:

Coming now to the case before us, we find that the "negotiation, contract of sale, and the post transaction" between Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal relation between them which, in the interest of petitioner, we cannot ignore. To be sure, the transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights over its sold assets. On the contrary, Philtread remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation which was likewise incorporated in accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns the land were subject plant is located. This, together with the fact that private respondent uses the same plant or factory; similar or substantially the same working conditions; same machinery, tools, and equipment; and manufacture the same products as Philtread, lead us to safely conclude that private respondent's personality is so closely linked to Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread, we find no clear and unmistakable right on the part of private respondent to entitle it to the writ of preliminary injunction it prayed for below.

x x x           x x x           x x x

We stress that in so ruling, we have not touched on the issue of . . . whether or not private is a mere dummy or continuation of Philtread . . . .14

Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat public convenience, justify wrong, protect fraud, defend crime, or where

the corporation is used as a mere alter-ego or business conduit,15 it is not these standards but those of the "innocent bystander" rule which govern whether or not petitioner is to an injunctive writ. Since petitioner is not an "innocent bystander", the trial court's order, dated July 2, 1996, is a patent nullity, the trial court having no jurisdiction to issue the writ of injunction. No motion for reconsideration need be filed where the order is null and void.16

WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED.1âwphi1.nêt

SO ORDERED.

PHILIPPINE LONG DISTANCE TELEPHONE CO. INC., Petitioners, vs.MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS and the COURT OF APPEALS, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Before Us is a petition for review on certiorari which seeks the reversal and setting aside of the Decision1 and Resolution2 of the Court of Appeals dated 25 November 2003 and 19 March 2004, respectively. The said Decision and Resolution nullified the Order of the Secretary of the Department of Labor and Employment (the Secretary) dated 02 January 2003 in NCMB-NCR-NS-11-405-02 and NCMB-NCR-NS-11-412-02 which enjoined the strike staged by the private respondent, and ordered the striking workers to return to work within twenty-four (24) hours, except those who were terminated from service due to redundancy. The exemption of the employees who were terminated from service due to redundancy from the return-to-work order is the hub of the controversy.

THE FACTS

Petitioner Philippine Long Distance Telephone Co., Inc. (PLDT) is a domestic corporation engaged in the telecommunications business. Private respondent Manggagawa ng Komunikasyon sa Pilipinas (MKP) is a labor union of rank and file employees in PLDT.

The members of respondent union learned that a redundancy program would be implemented by the petitioner. Thereupon it filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) on 04 November 2002 (NCMB-NCR-NS-11-405-02).3 The Notice fundamentally contained the following:

UNFAIR LABOR PRACTICES, to wit:

1. PLDT’s abolition of the Provisioning Support Division. Such action together with the consequent redundancy of PSD employees and the farming out of the jobs to casuals and contractuals, violates the duty to bargain collectively with MKP in good faith.

2. PLDT’s unreasonable refusal to honor its commitment before this Honorable Office that it will provide MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and closure of exchanges. Such refusal violates its duty to bargain collectively with MKP in good faith.

3. PLDT’s continued hiring of "contractual", "temporary", "project" and "casual" employees for regular jobs performed by union members, resulting in the decimation of the union membership and in the denial of the right to self-organization to the concerned employees.

4. PLDT’s gross violation of the legal and CBA provisions on overtime work and compensation.

5. PLDT’s gross violation of the CBA provisions on promotions and job grade re-evaluation or reclassification.

On 11 November 2002, another Notice of Strike was filed by the private respondent (NCMB-NCR-NS-11-412-02), which contained the following:

UNFAIR LABOR PRACTICES, to wit:

1. PLDT’s alleged restructuring of its GMM Operation Services effective December 31, 2002 and its closure [o]f traffic operations at the Batangas, Calamba, Davao, Iloilo, Lucena, Malolos and Tarlac Regional Operator Services effective December 31, 2002. These twin moves unjustly imperil the job security of 503 of MKP’s members and will substantially decimate the parties’ bargaining unit. And in the light of PLDT’s previous commitment before this Honorable Office that it will provide MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and closure of exchanges and of its more recent declaration that the Davao operator services will not be closed, these moves are treacherous and are thus violative of PLDT’s duty to bargain collectively with MKP in good faith. That these moves were effected with PLDT paying only lip service to its duties under Art. Iii, Section 9 of the parties’ CBA signifies PLDT’s gross violation of said CBA.

A number of conciliation meetings, conducted by the NCMB, National Capital Region, were held between the parties. However, these efforts proved futile.

On 23 December 2002, the private respondent staged a strike. On 31 December 2002, three hundred eighty three (383) union members were terminated from service pursuant to PLDT’s redundancy program.

On 02 January 2003, the Secretary, Patricia Sto. Tomas, issued an Order4 in NCMB-NCR-NS-11-405-02 and NCMB-NCR-NS-11-412-02. Portions of the Order are reproduced hereunder:

PLDT is the largest telecommunications entity in the Philippines whose operations are closely linked with the country’s other telecommunication companies. It operates the country’s international gateway system through which overseas telecommunications are made. Its operations are also vital to the services of cellular phone companies. The Company employs more or less 13,000 employees, about 7,000 of whom are members of the union. A work stoppage at PLDT, without doubt, will adversely affect the smooth operations of PLDT as well as those other telecommunication companies dependent upon the continuous operations of PLDT to the detriment of the public.

Undoubtedly, PLDT’s operations is impressed with public and national interest as communication plays a vital role in furtherance of trade, commerce, and industry specially at this time of globalized economy where information is vital to economic survival. Work stoppage at PLDT will also adversely effect the ordinary day-to-day life of the public in areas of its franchise. Communication is also a component of state security.

. . .

These considerations have in the past guided this Office in consistently exercising its powers under Article 263(g) of the Labor Code, as amended, in handling labor disputes involving the Philippine Long Distance Telephone Company and other telecommunications companies.

WHEREFORE, FOREGOING PREMISES CONSIDERED, this Office hereby CERTIFIES the labor dispute at the Philippine Long Distance Telephone Company to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to Article 263(g) of the Labor Code as amended.

Accordingly, the strike staged by the Union is hereby enjoined. All striking workers are hereby directed to return to work within twenty four (24) hours from receipt of this Order, except those who were terminated due to redundancy.5 The employer is hereby enjoined to accept the striking workers under the same terms and conditions prevailing prior to the strike. The parties are likewise directed to cease and desist from committing any act that might worsen the situation.

A Motion for Partial Reconsideration6 dated 13 January 2003 was filed by the private respondent with the Office of the Secretary. It alleged that the Order dated 02 January 2003 was issued by the Secretary with grave abuse of discretion. It contended that the petitioner should have been ordered to admit all workers under the same terms and conditions prevailing before the strike. Those who were dismissed pursuant to the petitioner’s redundancy program should not have been excluded. In doing so, the Secretary, in consequence, prejudged the case and effectively

declared the dismissal as valid.

The petitioner filed an Opposition to the "Motion for Partial Reconsideration"7 dated 24 January 2003. It asserted that Article 263(g) of the Labor Code refers to a discretionary power on the part of the Secretary, and thus recognizes that the Secretary has broad powers and wide discretion to do as may be necessary to resolve the labor dispute.

On 24 February 2003, the Secretary issued another Order,8 quoted hereunder:

In the interest of expeditious labor justice and pursuant to the Order of this Office dated January 2, 2003 certifying the instant labor dispute to the National Labor Relations Commission (NLRC), and in order to avoid any splitting the cause of action and multiplicity of suits, which are obnoxious to the orderly administration of justice, the Motion for Partial Reconsideration filed by the Union, Manggagawa ng Komunikasyon sa Pilipinas (MKP) is merely NOTED without action.

WHEREFORE, premises considered, let the Motion for Partial Reconsideration, together with documents filed in connection thereto, be immediately referred to the NLRC for its appropriate action.

Henceforth, this Office shall no longer entertain any motions of similar nature. The parties are hereby directed to address all their pleadings and motions to the NLRC.

As the private respondent had no other plain, speedy and adequate remedy in the ordinary course of law, it filed a petition for certiorari and mandamus9 under Rule 65 of the 1997 Rules on Civil Procedure before the Court of Appeals. In the main, it argued that Article 263(g) of the Labor Code is very clear that once a strike is certified to the National Labor Relations Commission (NLRC) for compulsory arbitration, it is the direct mandate of the law that an employer should readmit all striking workers under the same terms and conditions prevailing before the strike. It prayed that the Orders of the Secretary dated 02 January 2003 and 24 February 2003 be set aside and, in their place, a new order be rendered directing PLDT to immediately readmit the alleged redundant employees under the same terms and conditions prevailing prior to the strike.

The petitioner filed its Comment10 with the Court of Appeals and contended that there was no abuse of discretion when the Secretary issued the two assailed Orders. The Secretary, it asserted, validly exercised the plenary powers granted by Article 263(g) of the Labor Code. This proviso, it pointed out, refers to a discretionary power on the part of the Secretary, and recognizes that the latter has broad powers and wide discretion to do as may be necessary to resolve the labor dispute.

On 25 November 2003, the Court of Appeals promulgated its Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the Petition is GRANTED and the assailed Order[s] of respondent Secretary in NCMB-NCR-NS-11-405-02 and NCMB-NCR-NS-11-412-02 [are] hereby SET ASIDE and NULLIFIED for being contrary to law. No costs.11

A Motion for Reconsideration12 was filed by the petitioner before the Court of Appeals, which was, however, denied in a Resolution13 dated 19 March 2004.

The petitioner then filed a Petition for Review on Certiorari under Rule 4514 before this Court. The private respondent was thereafter required to file its Comment, which it did.

On 01 June 2005, the Court gave due course to the petition, and the case was subsequently submitted for decision.

ASSIGNMENT OF ERRORS

The petitioner assigns as errors the following:

I

THE COURT OF APPEALS DID NOT RULE IN ACCORD WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT, WHICH RECOGNIZE THAT THE

SECRETARY’S EXERCISE OF ART. 263(G), LABOR CODE POWERS IS BROAD, PLENARY AND ENTITLED TO RESPECT.

II

THE COURT OF APPEALS DEPARTED FROM THE USUAL COURSE OF PROCEEDINGS WHEN IT ISSUED THE WRIT OF CERTIORARI DESPITE (A) THE ABSENCE OF

"GRAVE ABUSE OF DISCRETION" BY THE SECRETARY OF LABOR; AND (B) THE AVAILABILITY OF OTHER RELIEF TO MKP.

III

THE MANIFEST AND GRAVE ERROR OF THE COURT OF APPEALS IS EVIDENT FROM THE DECISION’S INTERNAL INCONSISTENCIES.

1V

CONTRARY TO MKP’S ALLEGATIONS THAT IT WAS RENDERED WITH GRAVE ABUSE OF DISCRETION, THE SECRETARY’S ASSUMPTION ORDER IS PRACTICAL, PRESERVES THE PARTIES’ RIGHTS TO REDRESS, AND IS NOT UNPRECEDENTED.15

ISSUES

Culled from the above assignment of errors, the issues that must be addressed by this Court are:

I

WHETHER OR NOT THE SPECIAL CIVIL ACTION FOR CERTIORARI INSTITUTED BY THE RESPONDENT BEFORE THE COURT OF APPEALS WAS PROCEDURALLY

PRECISE, and

II

WHETHER THE SUBJECT ORDERS OF THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT EXCLUDING FROM THE RETURN-TO-WORK ORDER

THE WORKERS DISMISSED DUE TO THE REDUNDANCY PROGRAM OF PETITIONER, ARE VALID OR NOT.

THE COURT’S RULINGS

On the procedural issue

The petitioner is of the view that a special civil action for certiorari which was instituted by the private respondent before the Court of Appeals was not the proper remedy. It maintained that the Court of Appeals should have recognized that the Secretary did not abuse her discretion in any way, much less in a grave and patent, or an arbitrary or despotic manner, or that she somehow exercised her judgment in a capricious and whimsical way, which is required for the certiorari writ to issue. It also averred that the private respondent had other available reliefs, and that its plainer, speedier and adequate recourse is the proceedings now underway before the NLRC, to which the Secretary referred the parties’ labor dispute. 16

In its answer, the private respondent averred that the special civil action for certiorari filed with the Court of Appeals was not barred by the supposed other remedy available to MKP. The petitioner, in propositioning that the private respondent should have pursued its relevant claim before the NLRC, is in fact wrongly suggesting that the NLRC can decide whether the Secretary had indeed acted in grave abuse of discretion when she excluded 383 of its members from returning to work in her certification order.17

We rule that the institution of the special civil action for certiorari before the Court of Appeals was procedurally sound.

Section 1, Rule 65 of the 1997 Rules on Civil Procedure provides:

Section 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

It is the position of the private respondent that the Secretary committed an error of jurisdiction when she excluded from her return-to-work order the alleged redundant strikers, which should be corrected by a special civil action for certiorari. While she has the power to certify the strike to the NLRC for compulsory arbitration, she did not have the power to exclude a certain class of strikers from returning to work. Further, the private respondent contended that in issuing her assailed orders, the Secretary exceeded her authority.18

The position taken by the private respondent is correct. The special civil action for certiorari was justly availed of by the private respondent.

In a special civil action of certiorari, the only question that may be raised is whether or not the respondent has acted without or in excess of jurisdiction or with grave abuse of discretion.19 This was precisely what was raised by the private respondent in its petition before the Court of

Appeals. The respondent asserted in the court a quo that the Secretary violated the law and jurisprudence, and exceeded her authority when she expressly prevented from returning to work those who were terminated due to alleged redundancy while the strike was ongoing.20

The remedy of an aggrieved party in a Decision or Resolution of the Secretary is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a special civil action for certiorari under Rule 65 of the 1997 Rules on Civil Procedure.21

This was precisely done by the private respondent.

On the substantive issue

Article 263(g) of the Labor Code, as amended, which is pertinent to the resolution of the case at bar, provides:

Art 263. Strikes, picketing, and lockouts. –

. . .

(g) When in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may

assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically

enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all

striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions

prevailing before the strike or lockout. (Emphasis supplied.)

In deciding the case, the Court of Appeals made the following observation:

The phrase "all striking or locked out employees" and "readmit all workers" does not distinguish or qualify and emphatically is a catch all embracing enumeration of who should be returned to work. "Where the law does not distinguish, courts should not distinguish (Recaña v. Court of Appeals, 349 SCRA 24 [2001] )."22

In the main, the petitioner contends that the Court of Appeals gave a narrow and too literal interpretation of Article 263(g) to justify its reversal of the Secretary’s "qualified" return-to-work Order. The Court of Appeals erroneously favored a rule of statutory construction: ubi lex non distinguit nec nos distinguere debemos. Where the law does not distinguish, courts should not distinguish.23

The Secretary’s power, according to the petitioner, is broad and plenary, and is granted great breadth of discretion. Secretary Sto. Tomas, in issuing the assailed orders, acted with appropriate

discretion, because she was secure in the knowledge that the courts have recognized her broad and plenary powers under Art. 263(g).

The private respondent, in its Comment, contended that it is untenable for PLDT to stubbornly argue that the Secretary has such great breadth of discretion that even encompasses her questioned directives.24 While conceding that the Secretary’s powers under Art. 263(g) may undoubtedly be plenary and discretionary, the same are not absolute and still subject to the limitations set by law.25

The petition must fail.

When the Secretary exercises the powers granted by Article 263(g) of the Labor Code, he is, indeed, granted great breadth of discretion. However, the application of this power is not without limitation, lest the Secretary would be above the law. Discretion is defined as the act or the liberty to decide, according to the principles of justice and one’s ideas of what is right and proper under the circumstances, without wilfullness or favor.26 Where anything is left to any person to be done according to his discretion, the law intends it must be done with a sound discretion, and according to law. The discretion conferred upon officers by law is not a capricious or arbitrary discretion, but an impartial discretion guided and controlled in its exercise by fixed legal principles. It is not a mental discretion to be exercised ex gratia, but a legal discretion to be exercised in conformity with the spirit of the law, and in a manner to subserve and not to impede or defeat the ends of substantial justice.27 From the foregoing, it is quite apparent that no matter how broad the exercise of discretion is, the same must be within the confines of law. Thus, the wide latitude of discretion given the Secretary under Art. 263(g) shall and must be within the sphere of law.

Our ruling in the case of Phimco Industries, Inc. v. Brillantes28 was most appropriately and auspiciously alluded to by the private respondent. In this case we held:

. . . This is precisely why the law sets and defines the standard: even in the exercise of his power of compulsory arbitration under Article 263(g) of the Labor Code, the Secretary must follow the law. For "when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded."

As Article 263(g) is clear and unequivocal in stating that ALL striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit ALL workers under the same terms and conditions prevailing before the strike or lockout, then the unmistakable mandate must be followed by the Secretary.

In the case of Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor Unions (Tasli-Alu) v. Court of Appeals,29 we held:

. . . Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to the NLRC for compulsory arbitration, always co-exists with an order for workers to return to

work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout.

Time and again, this Court has held that when an official bypasses the law on the asserted ground of attaining a laudable objective, the same will not be maintained if the intendment or purpose of the law would be defeated.30

One last piece. Records would show that the strike occurred on 23 December 2002. Article 263(g) directs that the employer must readmit all workers under the same terms and conditions prevailing before the strike. Since the strike was held on the aforementioned date, then the condition prevailing before it, which was the condition present on 22 December 2002, must be maintained.

Undoubtedly, on 22 December 2002, the members of the private respondent who were dismissed due to alleged redundancy were still employed by the petitioner and holding their respective positions. This is the status quo that must be maintained.

WHEREFORE, finding no reversible error in the assailed Decision and Resolution of the Court of Appeals dated 25 November 2003 and 19

March 2004, respectively, both are hereby AFFIRMED. Costs against petitioner.

CAPITOL MEDICAL CENTER, INC., petitioner, vs.HON. CRESENCIANO B. TRAJANO, in his capacity as Secretary of the Department of Labor and Employment, and CAPITOL MEDICAL CENTER EMPLOYEES ASSOCIATION-AFW, respondents.

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 dated September 20, 2001 and the Resolution2 dated October 18, 2002 rendered by the Court of Appeals in CA-G.R. SP No. 53479, entitled "Capitol Medical Center, Inc. vs. Hon. Cresenciano B. Trajano, in his capacity as Secretary of the Department of Labor and Employment and Capitol Medical Center Employees Association-AFW."

The factual antecedents as gleaned from the records are:

Capitol Medical Center, Inc., petitioner, is a hospital with address at Panay Avenue corner Scout Magbanua Street, Quezon City. Upon the other hand, Capitol Medical Center Employees Association-Alliance of Filipino Workers, respondent, is a duly registered labor union acting as the certified collective bargaining agent of the rank-and-file employees of petitioner hospital.

On October 2, 1997, respondent union, through its president Jaime N. Ibabao, sent petitioner a letter requesting a negotiation of their Collective Bargaining Agreement (CBA).

In its reply dated October 10, 1997, petitioner, challenging the union’s legitimacy, refused to bargain with respondent. Subsequently or on October 15, 1997, petitioner filed with the Bureau of Labor Relations (BLR), Department of Labor and Employment, a petition for cancellation of respondent’s certificate of registration, docketed as NCR-OD-9710-006-IRD.3

For its part, on October 29, 1997, respondent filed with the National Conciliation and Mediation Board (NCMB), National Capital Region, a notice of strike, docketed as NCMB-NCR-NS-10-453-97. Respondent alleged that petitioner’s refusal to bargain constitutes unfair labor practice. Despite several conferences and efforts of the designated conciliator-mediator, the parties failed to reach an amicable settlement.

On November 28, 1997, respondent staged a strike.

On December 4, 1997, former Labor Secretary Leonardo A. Quisumbing, now Associate Justice of this Court, issued an Order assuming jurisdiction over the labor dispute and ordering all striking workers to return to work and the management to resume normal operations, thus:

"WHEREFORE, this Office assumes jurisdiction over the labor disputes at Capitol Medical Center pursuant to Article 263 (g) of the Labor Code, as amended. Consequently, all striking workers are directed to return to work within twenty-four (24) hours from the receipt of this Order and the management to resume normal operations and accept back all striking workers under the same terms and conditions prevailing before the strike. Further, parties are directed to cease and desist from committing any act that may exacerbate the situation.

Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and counter-proposals leading to the conclusion of the collective bargaining agreement in compliance with aforementioned Resolution of the Office as affirmed by the Supreme Court.

SO ORDERED."

Petitioner then filed a motion for reconsideration but was denied in an Order dated April 27, 1998.

On June 23, 1998, petitioner filed with this Court a petition for certiorari assailing the Labor Secretary’s Orders. Pursuant to our ruling in St. Martin Funeral Home vs.The National Labor Relations Commission, et al.,4 we referred the petition to the Court of Appeals for its appropriate action and disposition.

Meantime, on October 1, 1998, the Regional Director, in NCR-OD-9710-006-IRD, issued an Order denying the petition for cancellation of respondent union’s certificate of registration.5

On September 20, 2001, the Appellate Court rendered a Decision affirming the Orders of the Secretary of Labor. The Court of Appeals held:

"Anent the first issue raised by the petitioner, We find the same untenable. The public respondent acted well within his duty to order the petitioner hospital to bargain collectively, for it was the

surest way to end the dispute. In LMG Chemicals Corporation vs. Secretary of the Department of Labor and Employment, the Hon. Leonardo A. Quisumbing and Chemical Worker’s Union (G.R. No. 127422, April 17, 2001), the Supreme Court made the following pronouncement, to wit:

‘It is well settled in our jurisprudence that the authority of the Secretary of Labor to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to national interest includes and extends to all questions and controversies arising therefrom. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose of the primary dispute.

x x x x x x

Indeed, We find no grave abuse of discretion on the part of respondent Secretary of Labor whose power is plenary and includes the resolution of all controversies arising from the labor dispute. In fact, he was merely following the directive laid down by the Supreme Court (Decision dated February 4, 1997) in the case of Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers (CMC-ACE-UFSW) vs. Hon. Bienvenido E. Laguesma, Undersecretary of the Department of Labor and Employment, Capitol Medical Center Employees Association-Alliance of Filipino Workers and Capitol Medical Center Incorporated and Dra. Thelma Clemente, President, ordering petitioner hospital to collectively bargain with the Capitol Medical Center Employees Association-Alliance of Filipino Workers (private respondent herein) – the certified bargaining agent.

As earlier mentioned, the petition for cancellation was dismissed by the regional director in a decision dated September 30, 1998. x x x.

x x x x x x

Said decision by the regional director was affirmed by the Director of the Bureau of Labor Relations in a resolution dated December 29, 1998, dismissing the appeal of the petitioner hospital from the said DOLE-NCR’s decision.

Finally, the petition for certiorari (docketed as CA-G.R. SP No. 52736) entitled – Capitol Medical Center, Inc. vs. Hon. Benedictor R. Bitonio, Jr., in his capacity as Director of the Bureau of Labor Relations, Department of Labor and Employment; Hon. Maximo B. Lim in his capacity as Regional Director, National Capital Region, Department of Labor and Employment and Capitol Medical Center Employees Association (CMCEA-AFW), was dismissed in a decision dated January 11, 2001. The motion for reconsideration which was subsequently filed was denied on March 23, 2001.

x x x x x x

In order to allow an employer to validly suspend the bargaining process, there must be a valid petition for certification election. The mere filing of a petition does not ipso facto justify the suspension of negotiation by the employer (Colegio de San Juan de Letran vs. Association of Employees and Faculty of Letran and Eleanor Ambas, G.R. No. 141471, September 18, 2000). If

pending a petition for certification, the collective bargaining is allowed by the Supreme Court to proceed, with more reason should the collective bargaining (in this case) continue since the High Court had recognized the respondent as the certified bargaining agent in spite of several petitions for cancellation filed against it.

x x x x x x

Secondly, We are inclined to agree with the public respondent’s statement that ‘the primary assumption of jurisdiction may be exercised by this Office even without the necessity of prior notice or hearing given to any of the parties disputants.’ (page 56 of the Rollo).

x x x x x x

We are also not convinced by the arguments raised by the petitioner with respect to its third assigned error. This Court fails to see any supervening event that would render the execution of the decision of public respondent impossible. The petitioner asserts that the respondent union has lost its legitimacy, but at every turn it has been ruled by the various labor administrative officials that the respondent union is legitimate. It has failed to convince the labor administrative officials, We are likewise not persuaded. Unless and until the Certificate of Registration of the union is cancelled, it (union) remains the certified bargaining agent and the Hospital has the duty to enter into a collective bargaining agreement with it.

x x x x x x

WHEREFORE, premises considered, the instant petition is DENIED, hereby AFFIRMING the two assailed orders, dated December 4, 1997 and April 27, 1998, of the public respondent in OS-AJ-0024-97 (NCMB-NCR-NS-10-453-97).

SO ORDERED."

On October 18, 2002, the Court of Appeals issued a Resolution denying petitioner’s motion for reconsideration.

Hence, this petition for review on certiorari.

Petitioner contends that its petition for the cancellation of respondent union’s certificate of registration involves a prejudicial question that should first be settled before the Secretary of Labor could order the parties to bargain collectively.

We are not persuaded.

As aptly stated by the Solicitor General in his comment on the petition, the Secretary of Labor correctly ruled that the pendency of a petition for cancellation of union registration does not preclude collective bargaining, thus:

"That there is a pending cancellation proceedings against the respondent Union is not a bar to set in motion the mechanics of collective bargaining. If a certification election may still be ordered despite the pendency of a petition to cancel the union’s registration certificate (National Union of Bank Employees vs. Minister of Labor, 110 SCRA 274), more so should the collective bargaining process continue despite its pendency. We must emphasize that the majority status of the respondent Union is not affected by the pendency of the Petition for Cancellation pending against it. Unless its certificate of registration and its status as the certified bargaining agent are revoked, the Hospital is, by express provision of the law, duty bound to collectively bargain with the Union. Indeed, no less than the Supreme Court already ordered the Hospital to collectively bargain with the Union when it affirmed the resolution of this Office dated November 18, 1994 directing the management of the Hospital to negotiate a collective bargaining agreement with the Union. That was the categorical directive of the High Court in its Resolution dated February 4, 1997 in Capitol Medical Center Alliance of Concerned Employees-United Filipino Service Worker vs. Hon. Bienvenido E. Laguesma, et al., G.R. No. L-118915."

Moreover, as mentioned earlier, during the pendency of this case before the Court of Appeals, the Regional Director, in NCR-OD-9710-006-IRD, issued an Order on October 1, 1998 denying the petition for cancellation of respondent’s certificate of registration. This Order became final and executory and recorded in the BLR’s Book of Entries of Judgments on June 3, 1999.

Petitioner also maintains that the Secretary of Labor cannot exercise his powers under Article 263 (g) of the Labor Code without observing the requirements of due process.

Article 263 (g) of the Labor Code, as amended, provides:

"ART. 263. Strikes, Picketing and Lockouts. –

x x x x x x

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.

x x x. In labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency

cases, for the duration of the strike or lockout. In such cases, therefore, the Secretary of Labor and Employment is mandated to immediately assume, within twenty-four (24) hours from knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the Commission for compulsory arbitration. For this purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal prosecution against either or both of them.

The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same.

x x x x x x."

In Magnolia Poultry Employees Union vs. Sanchez,6 we held that the discretion to assume jurisdiction may be exercised by the Secretary of Labor and Employment without the necessity of prior notice or hearing given to any of the parties. The rationale for his primary assumption of jurisdiction can justifiably rest on his own consideration of the exigency of the situation in relation to the national interests.

In sum, petitioner’s submissions are bereft of merit.

WHEREFORE, the petition is DENIED. The assailed Decision dated September 20, 2001 and the Resolution dated October 18, 2002 of the Court of Appeals in CA-G.R. SP No. 53479 are AFFIRMED. Costs against petitioner.

SO ORDERED.

PHIMCO INDUSTRIES, INC., petitioner, vs.HONORABLE ACTING SECRETARY OF LABOR JOSE BRILLANTES and PHIMCO INDUSTRIES LABOR ASSOCIATION, respondents.

 

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, seeking to set aside the July 7, 1995 Order 1 of the then Acting Secretary Jose Brillantes of the Department of Labor and Employment, in NCMB-NCR-NS-03-122-95, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction.

The antecedent facts are, as follows:

On March 9, 1995, the private respondent, Phimco Industries Labor Association (PILA), duly certified collective bargaining representative of the daily paid workers of the petitioner, Phimco Industries Inc. (PHIMCO), filed a notice of strike with the National Conciliation and Mediation Board, NCR, against PHIMCO, a corporation engaged in the production of matches, after a deadlock in the collective

bargaining and negotiation. On April 21, 1995, when the several conciliation conferences called by the contending parties failed to resolve their differences PILA, composed of 352 2 members, staged a strike.

On June 7, 1995, PILA presented a petition for the intervention of the Secretary of Labor in the resolution of the labor dispute, to which petition PHIMCO opposed. Pending resolution of the said petition or on June 26, 1995, to be precise, PHIMCO sent notice of termination to some 47 3 workers including several union officers.

On July 7, 1995, the then Acting Secretary of Labor Jose Brillantes assumed jurisdiction over the labor dispute and issued his Order ruling, thus:

WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this office hereby assumes jurisdiction over the dispute at, Phimco industries, Inc.

Accordingly, all the striking workers, except those who have been handed down termination papers on June 26, 1995, are hereby directed to return to work with twenty-four (24) hours from receipt of this Order and for the Company to accept them back under the same terms and conditions prevailing prior to the strike.

The parties are further ordered to cease and desist from committing any act that will aggravate the situation.

To expedite the resolution of this dispute, the parties are directed to submit their position papers and evidence within ten (10) days from receipt of this Order.

SO ORDERED. 4

On July 12, 1995, petitioner brought the present petition; theorizing, that:

I

THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER.

II

THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE WENT BEYOND THE BASIS FOR ASSUMPTION OF JURISDICTION UNDER ART. 263 OF THE LABOR CODE. 5

On July 31, 1995, two weeks after the filing of the Petition, the public respondent issued another Order 6 temporarily holding in abeyance the implementation of the questioned Order dated July 7, 1995 for a period of thirty (30) day; directing, as follows:

WHEREFORE PREMISES CONSIDERED, the implementation of our Order dated 7 July 1995 hereby temporarily held in abeyance for a period of thirty (30) days effective from receipt thereof pending the private negotiations of the parties for the settlement of their labor dispute. Thereafter, both the Union and the Company are directed to submit to this Office the result of their negotiations for our evaluation and appropriate action.

SO ORDERED. 7

The pivotal issue here is: whether or not the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction in assuming jurisdiction over subject labor dispute.

The petition is impressed with merit.

Art. 263, paragraph (g) of the Labor Code, provides:

(g) When, in his opinion, there exist a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration . . .

The Labor Code vests in the Secretary of Labor the discretion to determine what industries are indispensable to the national interest. Accordingly, upon the determination by the Secretary of Labor that such industry is indispensable to the national interest, he will assume jurisdiction over the labor dispute in the said industry. 8 This power, however, is not without any limitation. In upholding the constitutionality of B.P. 130 insofar as it amends Article 264 (g) 9 of the Labor Code, it stressed in the case of Free telephone Workers Union vs. Honorable Minister of Labor and Employment, et al., 10 the limitation set by the legislature on the power of the Secretary of Labor to assume jurisdiction over a labor dispute, thus:

Batas Pambansa Blg. 130 cannot be any clearer, the coverage being limited to "strikes or lockouts adversely affecting the national interest. 11

In this case at bar, however, the very admission by the public respondent draws the labor dispute in question out of the ambit of the Secretary's prerogative, to wit.

While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this office believes that the obtaining circumstances warrant the exercise of the powers under Article 263 (g) of the Labor Code, as amended. 12

The private respondent did not even make any effort to touch on the indispensability of the match factory to the national interest. It must have been aware that a match factory, though of value, can scarcely be considered as an industry "indispensable to the national interest" as it cannot be in the same category as "generation and distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries." 13 Yet, the public respondent assumed jurisdiction thereover, ratiocinating as follows:

For one, the prolonged work disruption has adversely affected not only the protagonists, i.e., the workers and the Company, but also those directly and indirectly dependent upon the unhampered and continued operations of the Company for their means of livelihood and existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the unemployment problem of the country.

Thus we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved, particularly when alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein. 14

It is thus evident from the foregoing that the Secretary's assumption of jurisdiction grounded on the alleged "obtaining circumstances" and not on a determination that the industry involved in the labor dispute is one indispensable to the "national interest", the standard set by the legislature, constitutes grave abuse of discretion amounting to lack of or excess of jurisdiction. To uphold the action of the public

respondent under the premises would be stretching too far the power of the Secretary of Labor as every case of a strike or lockout where there are inconveniences in the community, or work disruptions in an industry though not indispensable to the national interest, would then come within the Secretary's power. It would be practically allowing the Secretary of Labor to intervene in any Labor dispute at his pleasure. This is precisely why the law sets and defines the standard: even in the exercise of his power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must follow the law. For "when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded" 15

In light of the foregoing, we hold that the public respondent gravely abused his discretion in assuming jurisdiction over the labor dispute sued upon in the case.

WHEREFORE, the petition is hereby GRANTED; and the assailed Order, dated July 7, 1995, of the Acting Secretary of Labor SET ASIDE. No pronouncement as to costs.

SO ORDERED.

FAR EASTERN UNIVERSITY - DR. NICANOR REYES MEDICAL FOUNDATION (FEU-NRMF) and LILIA P. LUNA. M.D., petitioners, vs.FEU-NRMF EMPLOYEES ASSOCIATION-ALLIANCE OF FILIPINO WORKERS (FEU-NRMFEA-AFW), union officers DANTE F. SUCGANG, VIRGILIO P. BLANCO, FERNANDO S.P. VILLAPANDO, LORNA M. MELECIO, FLORENCIA O. REYES, MERCEDITA P. MENDOZA, LEONOR B. VIAJAR, union members DORIS ABOLENCIA, SUSAN ADRIANO, AVELINO AGUILAR, REYNALDO AGUSTIN, SERGIO ALINGOD, MARSHA EILEEN ALMAZAN, ELOISA ALONZO, LILIAN AMBITO, FERDINAND ANGELES, PABLOITO ARGUIL, RAYMUNDO ATAYDE, RANULFO AUSTRIA, JOHNNY BALABBO, DELIA BALINGIT, DAISY BANGUIS, CRISPIN BARANGAN, EVELYN BARCENAS, JONATHAN BASILIO, ROMULO BLANCO, ALFREDO CABALLES, NOLAN FERNANDEZ, VICENTE FERRER, ALLAN FLORES, MANUEL GALANG, ESTELA CABANA, WILFREDO CABANTOG, VIRGINIA CABRERA, MEDI GRACE CACHO, CLARA CANDELARIA, NELIA CHIU, ANTONIA CHOZAS, IGNACIO CHUA, RUTH CUARTERO, AMELITA DECICATORIA, VICTORINO DELOS SANTOS, YOLANDA DEL ROSARIO, JOSE ANTHONY DEL ROSARIO, FE DIZON, RENATO DUAÑO, ANTONIO DUARTE, GERTRUDES DUNGO, DEOGRACIAS ESPAÑO, GREGORIO ESPINOSA, ELEANOR M. FAJARDO, EMILIA FAJARDO, EDUARDO FRAMIL, DITCHER GARCIA, HILDA GARLITOS, JUSTINA GOOT, JOSEFINA GRIMALDO, GERARDO GUTIERREZ, PRECILA IMPERIAL, MELLYN INSERTO, MICHELLE IRAELA, DIVINE GRACE JEREZO, RAMERO JUSPICIO, LORENA GRACE LAO, DEXTER LA TORRE, RONALD LANUZA, OFELIO LAZARO, CARMELITA LIPANA, JESUS LIBERES, ZAIL BENNET LIM, MERLIE LIWANAG, ROSENDO LOBERIANO, DELIO LOTERTE, MA. SHEILA LOTERTE, FELIX LUBAO, DENNIS LUCE, ANASTACIO LUZON, ARACELI MAGLANTAY, NELIA MAGSINO, MA. TERESA MALALUAN, REMUS MAPULA, MYRNA MARCENA, ROSEMARIE MANGONON, PANCHO MANUCOM, GENARO MARASIGAN, MARIO MARCOS, WILDA MARTINEZ, DONALYN MENDOZA, TERESITA MENDOZA, VIVIAN MENDOZA, FELIZA MERCADO, TOMAS MERCADO, ROSITA MESINA, ADORA MEJICA, CRISANTO MONIS, HUBERTO NIEVA, JOHN NORCIO, HERMAN OBRERO, JR., CRISTINA

ONG, FLORDELIZA ORBIEN, LUCILA PAGLINAWAN, ROMEO PAPIO, ROSARIO PACIAL, ALFREDO PARREÑAS, CHRISTINE PEREZ, RODOLFO PEREZ, FRANCISCO PIDLAOAN, EDUARDO PUSING, FELIMON QUITALEG, BERNADETH RADOC, HERMES RAQUEÑO, JASMIN RAZON, ELISA REYES, AGNES RIEGO, GLENDA RIVERA, JONEL ROMERO, RODEL ROPEREZ, ELENITA RUAN, MARISA RUIZ, MARIO SANTOS, ARSENIA SAOI, ROSIE SARAOSOS, DESIRE SARGADE, EDGAR SIM, LOLITA SISON, GERTRUDES TALLADOR, ZENAIDA TAN, EVANGELINE TRINIDAD, VILMA TULABOT, MARIE TULLA, MARY ANN VILLAFANIA, RODOLFO VILLEGAS, GLENDA VALLANO, DELSA WARQUEZ, the ALLIANCE OF FILIPINO WORKERS (AFW), federation officers GREGORIO C. DEL PRADO and JOSE UMALI, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, as amended, assailing the 22 March 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 86690 and its 22 June 2005 Resolution2 denying the Motion for Reconsideration of petitioner Far Eastern University - Dr. Nicanor Reyes Medical Foundation’s (FEU-NRMF) Motion for Reconsideration. The challenged Decision disposed thus:

WHEREFORE, finding grave abuse of discretion, committed by public respondent NLRC, the instant petition is GRANTED. The assailed Resolution, dated 23 September 2002, and Order, dated 30 June 2004, are hereby REVERSED and SET ASIDE in so far as the illegality of the strike and loss of employment status of individual petitioners are concerned. All other respects are AFFIRMED. No costs at this instance.3

Petitioner FEU-NRMF is a medical institution duly organized and existing under the Philippine laws. On the other hand, respondent union is a legitimate labor organization and is the duly recognized representative of the rank and file employees of petitioner FEU-NRMF.

In 1994, petitioner FEU-NRMF and respondent union entered into a Collective Bargaining Agreement (CBA) that will expire on 30 April 1996.

In view of the forthcoming expiry, respondent union, on 21 March 1996, sent a letter-proposal4 to petitioner FEU-NRMF stating therein their economic and non-economic proposals for the negotiation of the new CBA.

On 8 May 1996, petitioner FEU-NRMF sent a letter-reply5 flatly rejecting respondent union’s demands and proposed to maintain the same provisions of the old CBA. Petitioner FEU-NRMF reasoned that due to financial constraints, it cannot afford to accede to a number of their

demands for educational and death benefits, uniforms, longetivity pay, meal allowance and special pay, but nevertheless gave an assurance that it will seriously consider their proposal on salary increase.

In an effort to arrive at a compromise, subsequent conciliation proceedings were conducted before the National Conciliation and Mediation Board - National Capital Region (NCMB-NCR) but because of the unyielding stance of both parties, the negotiation failed.

On 6 August 1996, respondent union filed a Notice of Strike before NCMB-NCR on the ground of bargaining deadlock. A strike vote was conducted on 23 August 1996 and the result thereof was submitted to NCMB-NCR on 26 August 1996. After the expiration of the thirty-day cooling off period and the seven-day strike ban, respondent union, on 6 September 1996, staged a strike.6

Before the strike was conducted, respondent union, on 4 September 1996, offered a skeletal force of nursing and health personnel who will man the hospital’s operation for the duration of the strike. For reasons unknown to respondent union, however, petitioner FEU-NRMF failed or refused to accept the offer.

For its part, petitioner FEU-NRMF, on 29 August 1996, filed a Petition for the Assumption of Jurisdiction or for Certification of Labor Dispute with the National Labor Relations Commission (NLRC), underscoring the fact that it is a medical institution engaged in the business of providing health care for its patients.7

Acting on the petition, the Secretary of Labor, on 5 September 1996, granted the petition and thus issued an Order8 assuming jurisdiction over the labor dispute, thereby prohibiting any strike or lockout whether actual or impending, and enjoining the parties from committing any acts which may exacerbate the situation.

On 6 September 1996, Francisco Escuadra, the NLRC process server, certified that, on 5 September 1996 at around 4:00 P.M., he attempted to serve a copy of the Assumption of Jurisdiction Order to the union officers but since no one was around at the strike area, he just posted copies of the said Order at several conspicuous places within the premises of the hospital.

Claiming that they had no knowledge that the Secretary of Labor already assumed jurisdiction over the pending labor dispute as they were not able to receive a copy of the Assumption of Jurisdiction Order, striking employees continued holding a strike until 12 September 1996.

On 12 September 1996, the Secretary of Labor issued another Order9 directing all the striking employees to return to work and the petitioner FEU-NRMF to accept them under the same terms and conditions prevailing before the strike. Accordingly, on 13 September 1996, a Return to Work Agreement was executed by the disputing parties, whereby striking employees agreed to return to their work and the petitioner FEU-NRMF undertook to accept them under status pro ante. On the same day, the striking employees returned to their respective stations.

Subsequently, petitioner FEU-NRMF filed a case before the NLRC, contending that respondent union staged the strike in defiance of the Assumption of Jurisdiction Order; hence, it was illegal.

Further, the said strike was conducted in a deleterious and prejudicial manner, endangering the lives of the patients confined at the hospital. In its complaint docketed as NLRC-NCR No. 10-11-0733-96, petitioner FEU-NRMF specifically alleged that the striking employees effectively barricaded the ingress and egress of the hospital, thus, preventing trucks carrying the supplies of medicines and food for the patients from entering the hospital’s premises. In one instance, an ambulance carrying a patient in critical condition was likewise prevented from passing through the blockade. Finally, respondent union also prevented patients from seeking medical assistance by blocking their way into the hospital. In order to redress the wrongful and illegal acts of the respondent union, petitioner FEU-NRMF prayed for the declaration that the strike is illegal and, resultantly, for the dismissal of the striking employees and decertification of the respondent union, plus damages.

In contrast, respondent union avers that petitioner FEU-NRMF refused to bargain collectively despite hefty financial gains and, thus, guilty of surface bargaining. Before staging a strike, respondent union complied with the procedural requirements by filing a notice of strike and strike vote with the NCMB-NCR. The thirty-day cooling off period and the seven-day strike ban was also fully observed. Respondent union also offered a skeletal work force but it was refused by petitioner FEU-NRMF. The strike was conducted in a peaceful and orderly manner where striking employees merely sat down outside the hospital’s premises with their placards airing their grievances. Petitioner FEU-NRMF’s allegation of sabotage, therefore, was merely concocted. Finally, respondent maintained that they did not defy any order of the Secretary of Labor because neither its officers nor its members were able to receive a copy of the same.

On 27 May 1998, the Labor Arbiter rendered a Decision10 declaring the strike illegal and dismissing the union officers for conducting the strike in defiance of the Assumption of Jurisdiction Order. The dispositive portion of the decision reads:

WHEREFORE, a decision is hereby rendered cast in favor of complainants and against the respondents declaring the strike conducted by the latter last September 5-14, [1996] illegal and the following individual respondents officers of union employed by complainant hospital to have lost their employment status, Dante F. Sugcang, Virgilio P. Blanco, Fernando S.P. Villapando, Lorna M. Melecio, Florencia O. Reyes, Mercedita P. Mendoza and Leonor P. Vajar.

The prayer for decertification is hereby denied for lack of jurisdiction and the prayer for damages is likewise denied for lack of sufficient evidence.

Aggrieved, the respondent union filed a Partial Appeal11 before the NLRC asserting that the Labor Arbiter gravely abused its discretion in denying a formal trial and in holding that the Assumption of Jurisdiction Order dated 5 September 1996 was properly served. In its Partial Appeal Memorandum12 filed on 29 July 1998, respondent union claimed that the Labor Arbiter erred in declaring the strike illegal and in adjudging that the union officers have lost their employment status.

On 23 September 2002, the NLRC handed down a Resolution13 affirming in toto the Decision of the Labor Arbiter dated 27 May 1998 and, thus, upheld the illegality of the strike and loss of

employment status of the union officers. The NLRC found that during the conciliation proceedings before the NCMB-NCR, the union officers admitted that they were aware that the Secretary of Labor issued an Assumption of Jurisdiction Order which enjoined the strike they were conducting. There was, therefore, an utter defiance of the said Order, making the strike illegal. The union officers’ dismissal is thus warranted.

Undaunted, the respondent union filed a Motion for Reconsideration14 which was likewise denied by the NLRC in its Resolution15 dated 30 June 2004, for failure to present positive averment that the Resolution16 dated 11 October 2002 contains palpable or patent errors as required by the NLRC Revised Rules of Procedure.

Consequently, the respondent union brought a Petition for Certiorari under Rule 65 before the Court of Appeals seeking to annul the NLRC Resolution dated 23 September 2002, affirming the Decision of the Labor Arbiter dated 27 May 1998 and the Resolution dated 30 June 2004, denying its Motion for Reconsideration. In its Petition17 docketed as CA-G.R. SP No. 86690, FEU-NRMF Employees Association-Alliance of Filipino Workers (FEU-NRMFEA-AFW), Dante Sugcang, Virgilio Blanco, Norma Melencio and Florencia Reyes v. National Labor Relations Commission, and Far Eastern University – Dr. Nicanor Reyes Medical Foundation (FEU-NRMF), respondent union alleged that the public respondents committed grave abuse of discretion amounting to lack or excess of jurisdiction in rendering the aforesaid judgments which are contrary to law and established jurisprudence.

On 22 March 2005, the Court of Appeals rendered a Decision granting the Petition and reversing the assailed Resolution dated 23 September 2002, and Order dated 30 June 2004, as they were made with grave abuse of discretion amounting to lack or excess of jurisdiction. The appellate court found that no personal service was validly effected by the process server that could bind the striking employees.

Similarly ill-fated was petitioner FEU-NRMF’s motion for reconsideration which was denied through the Court of Appeals’ Resolution promulgated on 22 June 2005.18

Petitioners are now before this Court assailing the aforementioned decision and resolution of the Court of Appeals on the ground that the appellate court erred in reversing both the decisions of the Labor Arbiter and the NLRC.19

For our resolution are the following issues:

I.

WHETHER OR NOT SERVICE OF THE ASSUMPTION OF JURISDICTION ORDER WAS VALIDLY EFFECTED.

II.

WHETHER OR NOT THE STRIKE CONDUCTED BY THE RESPONDENT UNION WAS ILLEGAL.

III.

WHETHER OR NOT THE DISMISSAL OF THE UNION OFFICERS WAS VALID.

The crucial question for the determination of this Court, however, is whether the service of the Assumption of Jurisdiction Order was validly effected by the process server so as to bind the respondent union and hold them liable for the acts committed subsequent to the issuance of the said Order.

The certification/proof of service of the process server, Francisco A. Escuadra, dated 6 September 1996, reads:

CERTIFICATION/PROOF OF SERVICE

This is to certify that on September 5, 1996 at around 4:00 P.M., I attempted to serve a copy of the Order of Assumption of Jurisdiction issued by the Secretary of Labor and Employment, to the officials of the FEU-NRMF Employees Association-AFL.

Since none of the officials of the said union was available to receive a copy of the said Order, I posted copies of the same at several conspicuous places within the premises of Far Eastern University Nicanor Reyes Medical Foundation (FEU-NRMF).

The copies of the Order were posted on September 5, 1996 at around 4:30 PM.

Manila, Philippines, 6 September 1996.20

It can be inferred from the foregoing that the process server resorted to posting the Order when personal service was rendered impossible since the striking employees were not present at the strike area. This mode of service, however, is not sanctioned by either the NLRC Revised Rules of Procedure or the Revised Rules of Court.

The pertinent provisions of the NLRC Revised Rules of Procedure21 read:

Section 6. Service of Notices and Resolutions.

(a) Notices or summons and copies of orders, shall be served on the parties to the case personally by the Bailiff or duly authorized public officer within three (3) days from receipt thereof or by registered mail; Provided that in special circumstances, service of summons may be effected in accordance with the pertinent provisions of the Rules of Court; Provided further, that in cases of decisions and final awards, copies thereof shall be served on both parties and their counsel or representative by registered mail; Provided further, that in cases where a party to a case or his counsel on record personally seeks service of the decision upon inquiry thereon, service to said party shall be deemed effected upon actual receipt thereof; Provided finally, that where parties are so numerous, service shall be made on counsel and upon such number of

complainants, as may be practicable, which shall be considered substantial compliance with Article 224(a) of the Labor Code, as amended. (Emphasis supplied.)

An Order issued by the Secretary of Labor assuming jurisdiction over the labor dispute is not a final judgment for it does not dispose of the labor dispute with finality. 22 Consequently, the rule on service of summons and orders, and not the proviso on service of decisions and final awards, governs the service of the Assumption of Jurisdiction Order.

Under the NLRC Revised Rules of Procedure, service of copies of orders should be made by the process server either personally or through registered mail. However, due to the urgent nature of the Assumption of Jurisdiction Order and the public policy underlying the injunction carried by the issuance of the said Order, service of copies of the same should be made in the most expeditious and effective manner, without any delay, ensuring its immediate receipt by the intended parties as may be warranted under the circumstances. Accordingly, in this case, personal service is the proper mode of serving the Assumption of Jurisdiction Order.

It is also provided under the same rules that in special circumstances, service of summons may be effected in accordance with the pertinent provisions of the Rules of Court.23

Parenthetically, the manner upon which personal service may be made is prescribed by the following provisions of the Revised Rules of Court:

Rule 13. Filing and Service of Pleadings, Judgments And Other Papers.

Section 6. Personal service. – Service of the papers may be made by delivering personally a copy to the party or his counsel, or by leaving it in his office with his clerk or with a person having charge thereof. if no person is found in his office, or his office is not known, or he has no office, then by leaving a copy, between the hours of eight in the morning and six in the evening, at the party’s or counsel’s residence, if known, with a person of sufficient age and discretion then residing therein.

Let it be recalled that the process server merely posted copies of the Assumption of Jurisdiction Order in conspicuous places in the hospital. Such posting is not prescribed by the rules, nor is it even referred to when the said rules enumerated the different modes of effecting substituted service, in case personal service is impossible by the absence of the party concerned.

Clearly, personal service effectively ensures that the notice desired under the constitutional requirement of due process is accomplished. If, however, efforts to find the party concerned personally would make prompt service impossible, service may be completed by substituted service, that is, by leaving a copy, between the hours of eight in the morning and six in the evening, at the party’s or counsel’s residence, if known, with a person of sufficient age and discretion then residing therein.

Substituted service derogates the regular method of personal service. It is therefore required that statutory restrictions for effecting substituted service must be strictly, faithfully and fully observed. Failure to comply with this rule renders absolutely void the substituted service along

with the proceedings taken thereafter.24 The underlying principle of this rigid requirement is that the person, to whom the orders, notices or summons are addressed, is made to answer for the consequences of the suit even though notice of such action is made, not upon the party concerned, but upon another whom the law could only presume would notify such party of the pending proceedings.25

Applying this principle in the case at bar, presumption of receipt of the copies of the Assumption of Jurisdiction Order could not be lightly inferred from the circumstances considering the adverse effect in case the parties failed to heed to the injunction directed by such Order. Worthy to note that in a number of cases, we have ruled that defiance of the assumption and return-to-work orders of the Secretary of Labor after he has assumed jurisdiction is a valid ground for the loss of employment status of any striking union officer or member.26 Employment is a property right of which one cannot be deprived of without due process.27 Due process here would demand that the respondent union be properly notified of the Assumption of Jurisdiction Order of the Secretary of Labor enjoining the strike and requiring its members to return to work. Thus, there must be a clear and unmistakable proof that the requirements prescribed by the Rules in the manner of effecting personal or substituted service had been faithfully complied with. Merely posting copies of the Assumption of Jurisdiction Order does not satisfy the rigid requirement for proper service outlined by the above stated rules. Needless to say, the manner of service made by the process server was invalid and irregular. Respondent union could not therefore be adjudged to have defied the said Order since it was not properly apprised thereof. Accordingly, the strike conducted by the respondent union was valid under the circumstances.

For a strike to be valid, the following requisites must concur: (1) the thirty-day notice or the fifteen-day notice, in case of unfair labor practices; (2) the two-thirds (2/3) required vote to strike done by secret ballot; and (3) the submission of the strike vote to the Department of Labor and Employment at least seven days prior to the strike.28 In addition, in case of strikes in hospitals, clinics and medical institutions, it shall be the duty of the striking employees to provide and maintain an effective and skeletal workforce of medical and other health personnel in order to insure the proper and adequate protection of the life and health of its patients.29 These procedural requirements, along with the mandatory cooling off and strike ban periods had been fully observed by the respondent union.

It is true that the strike may still be declared invalid where the means employed are illegal even if the procedural requisites before staging a strike were satisfied.30 However, in the absence of evidence to support the allegations that the respondent union did not commit illegal acts during the strike, we are constrained to dismiss the allegations and uphold the strike as a valid exercise of the worker’s constitutional right to self-organization and collective bargaining.

The affidavits presented by the petitioner FEU-NRMF and relied upon by the Labor Arbiter and the NLRC, in arriving at the conclusion that the respondent union committed illegal acts during the strike, could not be given probative value by this Court as the adverse party was not given a chance to cross-examine the affiants. In a catena of labor cases, this Court has consistently held that where the adverse party is deprived of the opportunity to cross-examine the affiants, affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on

the witness stand to testify thereon.31 Neither can this Court rely on the photographs supporting these allegations without verifying its authenticity.

Verily, this Court is not bound to uphold the erroneous findings of the administrative bodies. While it is well-settled that findings of facts of the Labor Arbiter, when affirmed by the NLRC, are entitled to great respect and are generally binding on this Court, it is equally settled that this Court will not uphold erroneous conclusions of the said bodies as when we find insufficient or insubstantial evidence on record to support these factual findings. The same holds true when it is perceived that far too much is concluded, inferred or deduced from the bare allegations or insufficient evidence appearing on the record.

Prescinding from the above, as the strike conducted by the respondent union is valid and legal, there is therefore no cogent reason to dismiss the union officers.

WHEREFORE, premises considered, the instant Petition is DENIED. Costs against the petitioner.

SO ORDERED.

UNION OF FILIPRO EMPLOYEES, Petitioner, vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION and NESTLE PHILIPPINES, INC., Respondents.

 R E S O L U T I O N

 MEDIALDEA, J.:

 This special civil action of Certiorari assails the resolution (dated June 5, 1989) of the National Labor Relations Commission (NLRC) relative to Certified Case No. 0522, and the resolution denying the motion for reconsideration (dated August 8, 1989).The antecedents are:On June 22, 1988, the petitioner Union of the Filipro Employees, the sole and exclusive bargaining agent of all rank-and-file employees of Nestle Philippines, (private respondent) filed a Notice of Strike at the Department of Labor raising the issues of CBA deadlock and unfair labor practice.The National Conciliation and Mediation Board (NCMB) invited the parties for a conference on February 4, 1988 for the purpose of settling the dispute. The private respondent however, assailed the legal personality of the proponents of the said notice of strike to represent the Nestle employees. This notwithstanding, the NCMB proceeded to invite the parties to attend the conciliation meetings and to which private respondent failed to attend contending that it will deal only with a negotiating panel duly constituted and mandated in accordance with the UFE Constitution and By-laws.The records show that before the filing of said notice of strike, or on June 30, 1987, the respective CBAs in the four (4) units of Nestle, in Alabang-Cabuyao, Makati, Cagayan de Oro and Cebu/Davao work locations had all expired. Under the said CBAs, Alabang/Cabuyao and Makati units were represented by the UFE; the Cagayan de Oro unit was represented by WATU; while the Cebu-Davao was represented by TUPAS. Prior to the expiration of the CBAs

for Makati and Alabang/Cabuyao, UFE submitted to the company a list of CBA proposals. The company, on the other hand, expressed its readiness to negotiate a new CBA for Makati and Alabang/Cabuyao units but reserved the negotiation for Cagayan de Oro and Cebu-Davao considering that the issue of representation for the latter units was not yet settled. On June 10, 1987 and July 28, 1987, UFE was certified as the sole and exclusive bargaining representative of Cagayan de Oro and Cebu/Davao units, respectively.On September 14, 1987, the Company terminated from employment all UFE Union officers, headed by its president, Mr. Manuel Sarmiento, and all the members of the negotiating panel for instigating and knowingly participating in a strike staged at the Makati, Alabang, Cabuyao and Cagayan de Oro on September 11, 1987 without any notice of strike filed and a strike vote obtained for the purpose.On September 21, 1987, the union filed a complaint for illegal dismissal. The Labor Arbiter, in a decision dated January 12, 1988, upheld the validity of the dismissal of said union officers. The decision was later on affirmed by the respondent NLRC en banc, on November 2, 1988.Respondent company contends that, "with the dismissal of UFE officers including all the members of the union negotiating panel as later on confirmed by the NLRC en banc, said union negotiating panel thus ceased to exist and its former members divested of any legal personality, standing and capacity to act as such or represent the union in any manner whatsoever."The union officers, on the other hand, asserted their authority to represent the regular rank-and-file employees of Nestle, Philippines, being the duly elected officers of the union.In the meantime, private respondent sought guidelines from the Department of Labor on how it should treat letters from several splinter groups claiming to have possessed authority to negotiate in behalf of the UFE. It is noteworthy that aside from the names of the negotiating panel submitted by one UFE officials, three (3) other groups in the Nestle plant in Cabuyao and two groups in the Makati office have expressed a desire to bargain with management professing alleged authorization from and by the general membership. These groups however, it must be noted, belong to just one (1) union, the UFE.In a letter dated August 20, 1988, BLR Director Pura Ferrer-Calleja advised:

"Any attempt on the part of management to directly deal with any of the factions claiming to have the imprimatur of the majority of the employees, or to recognize any act by a particular group to adopt the deadlock counter proposal of the management, at this stage, would be most unwise. It may only fan the fire." (Rollo, pp. 61-62)

On March 20, 1988 and August 5, 1988, the company concluded separate CBAs with the general membership of the union at Cebu/Davao and Cagayan de Oro units, respectively. The workers thereat likewise conducted separate elections of their officers.Assailing the validity of these agreements, the union filed a case of ULP against the company with the NLRC-NCR Arbitration Branch on November 16, 1988.Efforts to resolve the dispute amicably were taken by the NCMB but yielded negative result because of the irreconcilable conflicts of the parties on the matter of who should represent and negotiate for the workers. : nad

On October 18, 1988, petitioner filed a motion asking the Secretary of Labor to assume jurisdiction over the dispute of deadlock in collective bargaining between the parties. On October 28, 1988, Labor Secretary Franklin Drilon certified to the NLRC the said dispute between the UFE and Nestle, Philippines, the relevant portion of which reads as follows:

"WHEREFORE, above premises considered, this office hereby certifies the sole issue of deadlock in CBA negotiations affecting the Makati, Alabang and Cabuyao units to the National Labor Relations Commission for compulsory arbitration."The NLRC is further directed to call all the parties immediately and resolve the CBA deadlock within twenty (20) days from submission of the case for resolution." (Rollo, p. 225)

On June 5, 1989, the Second Division of the NLRC promulgated a resolution granting wage increase and other benefits to Nestle's employees, ruling on non-economic issues, as well as absolving the private respondent of the Unfair Labor Practice charge. The dispositive portion states as follows:

"WHEREFORE, as aforestated, the parties are hereby ordered to execute and implement through their duly authorized representatives a collective bargaining agreement for a duration of five (5) years from promulgation of this Resolution."SO ORDERED." (Rollo, p. 180)

Petitioner finds said resolution to be inadequate and accordingly, does not agree therewith. It filed a motion for reconsideration, which was, however, denied on August 8, 1989.Hence, this petition for Certiorari.Petitioner originally raised 13 errors committed by the public respondent. However, in its Urgent Manifestation and Motion dated September 24, 1990, petitioner limited the issues to be resolved into six (6). Thus, only the following shall be dealt with in this resolution:

1. WHETHER OR NOT THE SECOND DIVISION OF THE NLRC ACTED WITHOUT JURISDICTION IN RENDERING THE ASSAILED RESOLUTION, THE SAME BEING RENDERED ONLY BY A DIVISION OF THE PUBLIC RESPONDENT AND NOT BY EN BANC;2. WHETHER OR NOT THE RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING THAT THE CBA TO BE SIGNED BY THE PARTIES SHALL COVER SOLELY THE BARGAINING UNIT CONSISTING OF ALL REGULAR RANK-AND-FILE EMPLOYEES OF THE RESPONDENT COMPANY AT MAKATI, ALABANG AND CABUYAO;3. WHETHER OR NOT THE RESPONDENT NLRC HAD ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED SERIOUS ERRORS IN FACT AND IN LAW WHEN IT RULED THAT THE CBA IS EFFECTIVE ONLY UPON THE PROMULGATION OF THE ASSAILED RESOLUTION;4. WHETHER OR NOT PUBLIC RESPONDENT HAD SERIOUSLY ERRED IN DENYING PETITIONER'S DEMAND FOR A CONTRACT SIGNING BONUS AND IN TOTALLY DISREGARDING THE LONG PRACTICE AND TRADITION IN THE COMPANY WHICH AMOUNT TO DIMINUTION OF EMPLOYEES BENEFITS;5. WHETHER OR NOT PUBLIC RESPONDENT SERIOUSLY ERRED IN NOT GRANTING THE UNION'S DEMAND FOR A "MODIFIED UNION SHOP" SECURITY CLAUSE IN THE CBA AS ITS RULING CLEARLY COLLIDES WITH SETTLED JURISPRUDENCE ON THE MATTER;6. WHETHER OR NOT PUBLIC RESPONDENT ERRED IN ENTIRELY ABSOLVING THE COMPANY FROM THE UNFAIR LABOR PRACTICE CHARGE AND IN DISREGARDING THE SUBSTANTIAL INCRIMINATORY EVIDENCE RELATIVE THERETO; (p. 9, Petitioner's Urgent Manifestation and Motion dated September 24, 1990).

Counsel for the private respondent company filed a motion for leave of court to oppose the aforesaid urgent manifestation and motion. It appearing that the allowance of said opposition would necessarily delay the early disposition of this case, the Court Resolved to DISPENSE with the filing of the same. :-cralaw

We affirm the public respondent's findings and rule as regards the issue of jurisdiction.

This case was certified on October 28, 1988 when existing rules prescribed that, it is incumbent upon the Commission en banc to decide or resolve a certified dispute. However, R.A. 6715 took effect during the pendency of this case. Aside from vesting upon each division the power to adjudicate cases filed before the Commission, said Act further provides that the divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction.Section 5 of RA 6715 provides as follows:

"Section 5. Article 213 of the Labor Code of the Philippines, as amended, is further amended to read as follows:Art. 213. National Labor Relations Commission. — There shall be a National Labor Relations Commission which shall be attached to the Department of Labor and Employment for program and policy coordination only, composed of (a) Chairman and fourteen (14) Members.Five (5) members each shall be chosen from among the nominees of the workers and employers organization, respectively. The Chairman and the four (4) remaining members shall come from the public sector, with the latter to be chosen from among the recommendees of the Secretary of Labor and Employment.Upon assumption into office, the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong.The Commission may sit en banc or in five (5) divisions, each composed of three (3) members. The Commission shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations. The Commission shall exercise its adjudicatory and all other powers, functions and duties through its divisions. Of the five (5) divisions, the first and second divisions shall handle cases coming from the National Capital Region and the third, fourth and fifth divisions, cases from other parts of Luzon, from the Visayas and Mindanao, respectively. The divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction.The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. Whenever the required membership in a division is not complete and the concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary.The conclusions of a division on any case submitted to it for decision shall be reached in consultation before the case is assigned to a member for the writing of the opinion. It shall be mandatory for the division to meet for purposes of the consultation ordained therein. A certification to this effect signed by the Presiding Commissioner of the division shall be issued, and a copy thereof attached to the record of the case and served upon the parties.The Chairman shall be the Presiding Commissioner of the first division, and the four (4) other members from the public sector shall be the Presiding Commissioners of the second, third, fourth and fifth divisions, respectively. In case of the effective absence or incapacity of the Chairman, the Presiding Commissioner of the second division shall be the Acting Chairman.The Chairman, aided by the Executive Clerk of the Commission, shall have administrative supervision over the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters.

The Commission when sitting en banc, shall be assisted by the same Executive Clerk, and, when acting thru its Divisions, by said Executive Clerk for its First Division and four (4) other Deputy Executive Clerks for the Second, Third, Fourth, and Fifth Divisions, respectively, in the performance of such similar or equivalent functions and duties as are discharged by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals." (Emphasis supplied)

In view of the enactment of Republic Act 6715, the aforementioned rules requiring the Commission en banc to decide or resolve a certified dispute have accordingly been repealed. This is supported by the fact that on March 21, 1989, the Secretary of Labor, issued Administrative Order No. 36 (Series of 1989), which reads:

"2. Effective March 21, 1989, the date of the effectivity of Republic Act 6715, the Commission shall cease holding en banc sessions for purposes of adjudicating cases and shall discharge their adjudicatory functions and powers through their respective Divisions."

Contrary to the claim of the petitioner, the above-cited Administrative Order is valid, having been issued in accordance with existing legislation as the Secretary of Labor is clothed with the power to promulgate rules for the implementation of the said amendatory law. :-cralaw

Section 36 of R.A. 6715 provides:Section 36. Rule-Making Authority. — The Secretary of Labor and Employment is hereby authorized to promulgate such rules and regulations as may be necessary to implement the provisions of this Act."

Moreover, it is to be emphasized and it is a matter of judicial notice that since the effectivity of R.A. 6715, many cases have already been decided by the five (5) divisions of the NLRC. We find no legal justification in entertaining petitioner's claim considering that the clear intent of the amendatory provision is to expedite the disposition of labor cases filed before the Commission. To rule otherwise would not be congruous to the proper administration of justice.As to the second issue, the Court is convinced that the public respondent committed no grave abuse of discretion in resolving only the sole issue certified to by the Secretary and formulating a CBA which covers the bargaining units consisting of all regular rank-and-file employees of the respondent company at Makati, Alabang and Cabuyao only.In its assailed resolution, public respondent stated:

"A perusal of the records and proceedings of this case reveals that after the issuance by the Secretary of Labor of his Order dated 28 October 1988 certifying the dispute to Us, the Union filed an Urgent Manifestation seeking the modification of the certification order to include the Cebu Davao and Cagayan de Oro divisions, the employees/workers therein being all bonafide members of the Union which is the sole and exclusive bargaining representative of all the regular rank-and-file workers of the company nationwide. Their non-inclusion in the certification order, the union argues, would give premium to the alleged unlawful act of the Company in entering into separate 'Collective Bargaining Agreements' directly with the workers thereat."In the same vein, the union manifested its intention to file a complaint for ULP against the company and its officers responsible for such act, which it eventually did."Considering that the Union had reserved the right to prosecute the Company and its officers responsible for the alleged unlawful execution of the CBA directly with the union members in Cagayan de Oro and Cebu/Davao units, as it has in fact filed a case which is now pending with our Arbitration Branch, the issue as to whether such acts constitute ULP is best heard and decided separately from the certified case, not

only because of the evidentiary need to resolve the issue, but also because of the delay that may ensue in the resolution of the present conflict."Furthermore, the consolidation of the issue with the instant case poses complicated questions regarding venue and joinder of parties. We feel that each of the issues propounded by the parties shall be better dealt with separately according to its own merits."Thus, We rule to resolve the sole issue in dispute certified to this Commission, i.e., the deadlock in the collective bargaining negotiations in Cabuyao/Alabang and Makati units." (Rollo, pp. 174-176)

We agree. Public respondent's resolution is proper and in full compliance with the order of the Secretary of Labor. The concomitant delay that will result in resolving petitioner's motion for the modification of the certification order to determine whether to include Cebu/Davao and Cagayan de Oro Divisions or not will defeat the very purpose of the Secretary of Labor's assumption of jurisdiction and his subsequent certification order for compulsory arbitration.The assumption of jurisdiction by the Secretary of Labor over labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest is in the nature of a police power measure. It cannot be denied that the private respondent is engaged in an undertaking affected with public interest being one of the largest manufacturers of food products. The compelling consideration of the Secretary's assumption of jurisdiction is the fact that a prolonged strike or lockout is inimical to the national economy and thus, the need to implement some measures to suppress any act which will hinder the company's essential productions is indispensable for the promotion of the common good. Under this situation, the Secretary's certification order for compulsory arbitration which was intended for the immediate formulation of an already delayed CBA was proper.Corollarily, the NLRC was thereby charged with the task of implementing the certification order for compulsory arbitration. As the implementing body, its authority did not include the power to amend the Secretary's order (University of Santo Tomas v. National Labor Relations Commission, UST Faculty Union, G.R. No. 89920, October 18, 1990). :- nad

For the same reason, We rule that the prayer to declare the respondent company guilty of acts of unfair labor practice when it allegedly resorted to practices designed to delay the collective bargaining negotiations cannot be subsumed in this petition, it being beyond the scope of the certification order.Petitioner argues that because of the public respondent's actuation in this regard, it committed grave abuse of discretion as it allowed multiplicity of suits and splitting causes of action which are barred by procedural rule.We cannot subscribe to this argument. In the recent case of the Philippine Airlines, Inc. v. National Labor Relations Commission, this Court had occasion to define what a compulsory arbitration is. In said case, this Court stated:

"When the consent of one of the parties is enforced by statutory provisions, the proceeding is referred to as compulsory arbitration In labor cases, compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties. (G.R. No. 55159, 22 Dec. 89)."

When sitting in a compulsory arbitration certified to by the Secretary of Labor, the NLRC is not sitting as a judicial court but as an administrative body charged with the duty to implement the order of the Secretary. Its function only is to formulate the terms and conditions of the CBA and cannot go beyond the scope of the order. Moreover, the Commission is further tasked to act within the earliest time possible and with the end in view that its action would not only serve the interests of the parties alone, but would also

have favorable implications to the community and to the economy as a whole. This is the clear intention of the legislative body in enacting Art. 263 paragraph (g) of the Labor Code, as amended by Section 27 of R.A. 6175, which provides:

(g) When in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or lockout employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.nad(Emphasis supplied)

In view of the avowed but limited purpose of respondent's assumption of jurisdiction over this compulsory arbitration case, it cannot be faulted in not taking cognizance of other matters that would defeat this purpose.As regards the third issue raised by petitioner, this Court finds the provisions of Article 253 and Article 253-A of the Labor Code as amended by R.A. 6715 as the applicable laws, thus:

"Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. — When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.Art. 253-A. Terms of a collective bargaining agreement. — Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code." Chanrobles virtuallawlibrary(Emphasis supplied)

In the light of the foregoing, this Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the assailed resolution. It is clear and explicit from Article 253-A that any agreement on such other provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. If the agreement was entered into outside the six (6) month period, then the parties shall agree on the duration of the retroactivity thereof. - nad

The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the

expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the parties. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by existing laws.In assailing the public respondent's actuation, the Union cited the case of Villar v. Inciong (121 SCRA 444) where this Court ruled:

". . . While petitioners were charged for alleged commission of acts of disloyalty inimical to the interests of the Amigo Employees Union-PAFLU in the Resolution of February 14, 1977 of the Amigo-Employees Union-PAFLU and on February 15, 1977, PAFLU and the company entered into and concluded a new collective bargaining agreement, petitioners may not escape the effects of the security clause under either the old CBA or the new CBA by claiming that the old CBA had expired and that the new CBA cannot be given retroactive enforcement. To do so would be to create a gap during which no agreement would govern, from the time the old contract expired to the time a new agreement shall have been entered into with the union . . ."

In the aforecited case, the Court only pointed out that, it is not right for union members to argue that they cannot be covered by the past and the new CBAs both containing the same closed-shop agreement for acts committed during the interregnum. What was emphasized by this Court is that in no case should there be a period in which no agreement would govern at all. But nowhere in the said pronouncement did We rule that every CBA contracted after the expiry date of the previous CBA must retroact to the day following such date. Hence, it is proper to rule that in the case at bar, the clear and unmistakable terms of Articles 253 and 253-A must be deemed controlling.Articles 253 and 253-A mandate the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. Consequently, there being no new agreement reached, the automatic renewal clause provided for by the law which is deemed incorporated in all CBAs, provides the reason why the new CBA can only be given a prospective effect.Petitioner claims that because of the prospective effect of the CBA, union members were deprived of substantial amount of monetary benefits which they could have enjoyed had the CBA be given retroactive effect. This would include backwages, the immediate effects of the mandated wage increase on the fringe benefits such as the 13th and 14th month pay, overtime premium, and right to differential pay, leaves, etc. This Court, is not unmindful of these. Nevertheless, We are convinced that the CBA formulated by public respondent is fair, reasonable and just. Even if prospective in effect, said CBA still entitles the Nestle workers and employees reasonable compensation and benefits which, in the opinion of this Court, is one of the highest, if not the highest in the industry. Petitioner did not succeed in overcoming the presumption of regularity in the performance of the public respondent's functions. Even if the resolution fell short of meeting the numerous demands of the union, the petitioner failed to establish that public respondent committed grave abuse of discretion in not giving the CBA a retrospective effect.The fourth and fifth assignment of errors should be resolved jointly considering that they are the terms and conditions of the CBA.According to petitioner, the terms and conditions thereof are inadequate, unreasonable, incompetitive and thus, prejudicial to the workers. It further decries public respondent's alleged taking side with the private respondent. Petitioner contends that in issuing the assailed resolutions, public respondent considered only the position of the private respondent and totally disregarded that of the petitioner. It further avers that the awards are bereft of any factual and legal basis.

Petitioner made so many claims and statements which were adopted and asserted without good ground. It fails to substantiate why, in not granting its demands for the inclusion in the CBA of a "Contract Signing Bonus" and a "Modified Union Shop Agreement," the assailed resolutions were erroneous and were drawn up arbitrarily and whimsically. chanrobles virtual law library

In the case of Palencia v. National Labor Relations Commission, G.R. No. 75763, August 21, 1987, 153 SCRA 247, We ruled that the findings of fact of the then Court of Industrial Relations (now NLRC), are conclusive and will not be disturbed. Thus:"Following a long line of decisions this Court has consistently declined to disturb the findings of fact of the then Court of Industrial Relations whose functions the NLRC now performs. [Pambusco Employees Union Inc. v. Court of Industrial Relations, 68 Phil. 591 (1939); nad

Manila Electric Co. v. National Labor Union, 70 Phil. 617 (1940); San Carlos Milling Co. v. Court of Industrial Relations, 111 Phil. 323 (1961),1 SCRA 734; Philippine Educational Institution v. MLQSEA Faculty Assn., 135 Phil. 282 (1968), 26 SCRA 272; University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. L-63122, February 20, 1984, 127 SCRA 691]. The findings of fact are conclusive and will not be disturbed in the absence of a showing that there has been grave abuse of discretion. [Philippine Educational Institution v. MLQSEA Faculty Association, 26 SCRA 272, 276] and there being no indication that the findings are unsubstantiated by evidence [University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. 63122, February 20, 1984, 127 SCRA 694, 704]."Moreover, the NLRC is in the best position to formulate a CBA which is equitable to all concerned. Because of its expertise in settling labor disputes, it is imbued with competence to appraise and evaluate the evidence and positions presented by the parties. In the absence of a clear showing of grave abuse of discretion, the findings of the respondent NLRC on the terms of the CBA should not be disturbed.Taken as a whole, the assailed resolutions are after all responsive to the call of compassionate justice observed in labor law and the dictates of reason which is considered supreme in every adjudication.ACCORDINGLY, PREMISES CONSIDERED, the petition is DISMISSED. The Resolutions of the NLRC, dated June 5, 1989 and August 8, 1989 are AFFIRMED, except insofar as the ruling absolving the private respondent of unfair labor practice which is declared SET ASIDE. :-cralaw

SO ORDERED.

OVERSEAS WORKERS WELFARE ADMINISTRATION, represented by Administrator Marianito D. Roque, petitioner, vs.ATTY. CESAR L. CHAVEZ, OPHELIA N. ALMENARIO, ELVIRA ADOR, REYNALDO TAYAG, TORIBIO ROBLES, JR., ROSSANE BAHIA, RACQUEL LLAGAS-KUNTING, MA. STELLA A. DULCE, ROSSANA SIRAY, EDUARDO MENDOZA, JR., PRISCILLA BARTOLO, ROSE VILLANUEVA, CHERRY MOLINA, MARY ROSE RAMOS, MA. MINERVA PAISO, RODERIC DELOS REYES, RENATO DELA CRUZ, MARIVIC DIGMA, JESSIE BALLESTEROS, DONATO DAGDAG, MARK TUMIBAY, CYNTHIA FRUEL, DEMETRIO SORIANO, MILAGROS GUEVARRA, ANGELITA LACSON, BERT BUQUID, JUN SAMORANAS, TEODORO TUTAY, LEAH YOGYOG, MARIE CRUZ and CONCEPCION BRAGAS REGALADO, respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

The Case

Petitioner Overseas Workers Welfare Administration (OWWA), comes to this Court via the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the 22 September 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 87702, which affirmed the Order2 dated 30 September 2004, of the Regional Trial Court (RTC), Pasay City, Branch 117, in Civil Case No. 04-0415-CFM. The RTC granted the issuance of a writ of preliminary injunction restraining OWWA from implementing its new organizational structure.

Factual Antecedents

OWWA is a government agency tasked primarily to protect the interest and promote the welfare of overseas Filipino workers (OFWs).3 OWWA traces its beginnings to 1 May 1977, when the Welfare and Training Fund for Overseas Workers in the Department of Labor and Employment (DOLE) was created by virtue of Letter of Instructions No. 537, with the main objective, inter alia, of providing social and welfare services to OFW, including insurance coverage, social work, legal and placement assistance, cultural and remittances services, and the like. On 1 May 1980, Presidential Decree No. 1694 was signed into law, formalizing the operations of a comprehensive Welfare Fund (Welfund), as authorized and created under Letter of Instructions No. 537. Presidential Decree No. 1694 further authorized that contributions to the Welfare and Training Fund collected pursuant to Letter of Instructions No. 537 be transferred to the Welfund. On 16 January 1981, Presidential Decree No. 1809 was promulgated, amending certain provisions of Presidential Decree No. 1694.4 Subsequently, Executive Order No. 126 was passed which reorganized the Ministry of Labor and Employment. Executive Order No. 126 also renamed the Welfare Fund as the OWWA.

From the records, it is undisputed that on 9 January 2004, as there was yet no formal OWWA structure duly approved by the Department of Budget and Management (DBM) and the Civil Service Commission (CSC), the OWWA Board of Trustees passed Resolution No. 001,5 Series of 2004, bearing the title "Approving the Structure of the Overseas Workers Welfare Administration," and depicting the organizational structure and staffing pattern of the OWWA, as approved by Patricia A. Sto. Tomas (Sto. Tomas), then Chair of the OWWA Board of Trustees and then Secretary of the DOLE. According to Resolution No. 001, the structuring of the OWWA will stabilize the internal organization and promote careerism among the employees. It will also ensure a more efficient and effective delivery of programs and services to member-OFWs. Resolution No. 001 resolved, thus:

RESOLVED therefore, to approve as it is hereby approved, the OWWA Structure which is hereto attached and made an integral part of this Resolution, comprising mainly of the approved organizational chart, functional descriptions and staffing pattern, subject to the following:

a. There will be no displacement of existing regular employees;

b. There will be no temporary appointments; and

c. There will be no hiring of casuals, contractuals or consultants in the new structure.

RESOLVED further, that the OWWA Structure be immediately submitted for the appropriate actions of competent authorities, particularly the DBM and CSC.6

On 24 March 2004, DBM Secretary Emilia T. Boncodin (Boncodin), approved the organizational structure and staffing pattern of the OWWA.7 In her approval thereof, she stated that the total funding requirements for the revised organizational structure shall be P107,546,379 for four hundred (400) positions. Moreover, DBM Secretary Boncodin underscored that the funding shall come solely from the OWWA funds and that no government funds shall be released for the implementation of the changes made.

On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued Advisory No. 01,8 advising the officials and employees of the OWWA that the DBM had recently approved OWWA’s organizational chart, functional statements, and the staffing pattern. Advisory No. 01 also announced that a Placement Committee will be created to evaluate and recommend placement of all regular/permanent incumbents of OWWA in the new organizational chart and staffing pattern. All employees were asked to indicate in writing their interest or preference in any of the approved plantilla item, especially for promotion to the Human Resources Management Division, not later than 11 June 2004. Further, Advisory No. 01 emphasized that the OWWA Board of Trustees, thru its Resolution No. 001, Series of 2004, had declared the policy that there will be no displacement of existing regular/permanent employees. Qualified casual and contractual personnel may apply for any vacant item only after all regular/permanent employees of OWWA had been placed.

Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued Administrative Order No. 171, Series of 2004, creating a Placement Committee to evaluate qualifications of employees; and to recommend their appropriate placement in the new organizational chart, functional statements and staffing pattern of the OWWA. Administrative Order No. 171 was partially amended by Administrative Order No. 171-A, issued by DOLE Acting Secretary Manuel G. Imson (Imson), authorizing the Placement Committee to recommend to the OWWA Administrator their evaluations, which shall thereafter be endorsed to the DOLE Secretary for consideration.9

The Placement Committee was directed to comply with the pertinent CESB/CSC/DBM rules and regulations on its recommended placement of all personnel of OWWA based on the following parameters, to wit10 :

1. There would be no diminution nor displacement of permanent/regular employees of OWWA.

2. Qualified casuals and contractual personnel may likewise be considered in the staffing pattern only after ensuring that the regular(s)/permanent employees of OWWA have already been placed.

3. Decentralization of functions to bring OWWA services closer to the public shall be adopted. Thus, priority in some promotions shall be given to those who opt to be assigned in the regional offices, aside from performance.

4. Deployment in the overseas posts shall be made on rotation basis from both the frontline and the administrative staff, based on performance.

5. Regular/permanent incumbents interested for promotion should indicate their interest in writing to the Placement Committee: Attn: The Chairperson.

6. Those who may opt to retire should submit to the HRMD, their application for retirement, copy furnished the Budget Division for budget allocation purposes.

The Placement Committee should complete its task not later than June 30, 2004.

On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting OWWA officials and employees to an orientation on the new structure, functions and staffing pattern of the OWWA. Moreover, Advisory No. 02 required the holding of elections for the First and Second Level Representatives who will elect from among themselves the regular official representatives and alternates in the Placement Committee deliberations. On 11 June 2004, Advisory No. 03 was issued, announcing the conduct of an election for representatives and alternates representing the employees in the first [Salary Grades (SG) 1-9] and second level (SG 10-24), pursuant to Administrative Order No. 171, dated 3 June 2004, as amended by Administrative Order No. 171-A.

On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order No. 186, Series of 2004,11 prescribing the guidelines on the placement of personnel in the new staffing pattern of the OWWA.

On 29 June 2004, herein respondents filed with the RTC, a Complaint for Annulment of the Organizational Structure of the OWWA, as approved by OWWA Board Resolution No. 001, Series of 2004, with Prayer for the Issuance of a Writ of Preliminary Injunction12 against herein petitioner OWWA and its Board of Trustees.13 The case was docketed as Civil Case No. 04-0415-CFM.

In their Complaint, respondents alleged that the OWWA has around 24 consultants, 29 casual employees, 76 contractual workers, and 356 officers and employees, which number does not include the 85 contractual employees in the Office of the Secretariat of the OWWA Medicare.14 Respondents posited that the approved Organizational Structure and Staffing Pattern of the OWWA increases the number of regular plantilla positions from 356 to 400; however, the increase of 42 positions will not absorb the aforementioned consultants and casual and contractual workers. They further averred that the plantilla positions in the Central Office will be reduced from 250 to 140, while the regional offices will have an increase of 164 positions. According to the respondents, the resulting decrease in the number of employees in the Central Office will result in the constructive dismissal of at least 110 employees. Meanwhile, the

deployment of the regular central office personnel to the regional offices will displace the said employees, as well as their families.

Respondents challenged the validity of the new organizational structure of the OWWA. In fine, they contended that the same is null and void; hence, its implementation should be prohibited.

Respondents prayed for the issuance of a writ of preliminary injunction to restrain petitioners from: 1) implementing its organizational structure as approved by the OWWA Board of Trustees in its Resolution dated 9 January 2004; and 2) advertising and proceeding with the recruitment and placement of new employees under the new organizational structure.15

Further, respondents prayed that after trial on the merits, OWWA’s organizational structure be declared as unconstitutional and contrary to law; and the OWWA Board of Trustees be declared as having acted contrary to the Constitution and existing laws, and with grave abuse of discretion in approving Resolution No. 001, dated 9 January 2004.16

The Ruling of the RTC

On 30 September 2004, the RTC rendered an Order17 granting respondents’ prayer for a writ of preliminary injunction upon the filing of a bond in the sum of P100,000.00. In the grant thereof, the RTC reasoned that any move to reorganize the structure of the OWWA requires an amendatory law. It deemed Resolution No. 001 was not merely a "formalization of the organizational structure and staffing pattern of the OWWA," but a disruption of the existing organization which disturbs and displaces a number of regular employees, including consultants and casual and contractual employees.

The RTC ratiocinated in this wise:

x x x All told, what is being done now at OWWA is a reorganization of its structure as originally conceived under P.D. No. 1694 [Organization and Administration of the Welfare for Overseas Workers] and P.D. No. 1809 [Amending Certain Provisions of Presidential Decree 1694, Creating the "Welfare Fund for Overseas Workers"]. In the (sic) light of Section 11 of R.A. No. 6656 which provides that "the executive branch of the government shall implement reorganization schemes within a specified period of time authorized by law", this court doubts whether a reorganization of OWWA can be effected without an enabling law.

Further, defendants do not dispute the fact that while the mechanics of the reorganization is still being forged, the DOLE already processed applications and eventually hired employees not from among the existing employees of the OWWA. This appears to be in contravention of Section 4 of R.A. No. 6656 which provides:

"Sec. 4. Officers and employees holding permanent appointments shall be given preference for appointment to the new positions in the approved staffing pattern comparable to their former position or in case there are not enough comparable positions, to positions next lower in rank.

"No new employees shall be taken in until all permanent officers and employees have been appointed, including temporary and casual employees who possess the necessary qualification requirements, among which is the appropriate civil service eligibility for permanent appointment to positions in the approved staffing pattern, in case there are still positions to be filled, unless such positions are policy-determining, primarily confidential or highly technical in nature."

Furthermore, defendant’s (sic) do not dispute the fact that the Placement Committee was hastily constituted, that its members were not educated of their task of job placement, that there was no real to goodness (sic) personnel evaluation and, finally, the Chairman of the Committee was simply hand-picked by the DOLE Secretary contrary to the explicit injunction of Section 8 of the Implementing Rules of R.A .No. 6656 that "the members shall elect their Chairman."18

The RTC also cited the protection afforded by the Constitution to workers, specifically, officers or employees of the Civil Service in ruling that the existing organization of the OWWA need not be disturbed in any way and no single worker will be removed or displaced. Thus:

This court entertains no doubt that as workers, plaintiffs enjoy a right that is protected both by the Constitution and statutes. Thus, "(n)o officer or employee of the civil service shall be removed or suspended except for cause provided by law. "(Sec. 2, par. 3, Art. IX, Constitution). "No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws." (Sec. 1, Art. III; ibid.). A person’s job is his property. In many cases, as in the Philippine setting, one’s job also means one’s life and the lives of those who depended on him. Hence, it is a policy of the State to "free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all." (Sec. 8, Art. II, ibid.) Any act that, contrary to law, tends to deprive a worker of his work, violates his rights.19

Finally, the RTC defended its jurisdiction over the controversy despite petitioner’s protestations that jurisdiction over respondents’ complaint is lodged in the administrative agencies tasked to implement the new OWWA structure. It ruled that the doctrine of primary jurisdiction is applicable only where the administrative agency exercises its quasi-judicial or administrative function; but, where what is challenged is the constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasi-legislative functions, regular courts have jurisdiction over the matter.20

Therefore, the RTC, in its Order, dated 30 September 2004, granted respondents’ prayer for a writ of preliminary injunction, to wit:

WHEREFORE, upon plaintiff’s (sic) filing of a bond in the sum of P100,000.00, let a writ of preliminary injunction issue in: 1) restraining the defendants from implementing the new organizational structure of OWWA approved by the Board of Trustees on January 9, 2004 and 2) restraining the defendants from advertising and proceeding with the recruitment and placement of new employees under the new organizational structure.21

Without filing a Motion for Reconsideration, petitioner, thru the Office of the Solicitor General (OSG),22 filed with the Court of Appeals, a Petition for Certiorari and Prohibition with Prayer for

Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction under Rule 65 of the Rules of Court, assailing the RTC Order of 30 September 2004.23

The Ruling of the Appellate Court

On 22 September 2005, the Court of Appeals rendered the assailed Decision, which dismissed the petition. It affirmed the court a quo’s findings that respondents possess a clear and legal right to the immediate issuance of the writ. It resolved that it was proper for the RTC to restrain, for the meantime, the implementation of OWWA’s reorganization to prevent injury until after the main case is heard and decided.24 It found respondents’ allegations sufficient to prove the existence of a right that should be protected by a writ of preliminary injunction. Thus:

Petitioner averred, too, that majority of the casuals, contractuals and consultants have been employed for more than ten (10) years, if not twenty (20) years, and were not regularized simply due to lack of regular positions in the plantilla or the freezing of recruitment thereto.

To be sure, private respondents have convincingly adduced evidence of specific acts to substantiate their claim of impending injury and not merely allegations of facts and conclusions of law, but factual evidence of a clear and unmistakable right of being displaced or dismissed by the planned reorganization. These allegations are substantial enough to prove the right in esse. At best, the anxiety of being dismissed or displaced is not premature, speculative and purely anticipatory, but based on real fear which shows a threatened or direct injury[,] it appearing that the reorganization of the OWWA is already slowly being put into motion.

Apropos, having successfully established a direct and personal injury as a consequence of the new reorganization[al] structure, it was only proper for the court a quo to grant the writ of preliminary injunction to restrain, for the meantime, the implementation of the reorganization to prevent injury on respondents until after the main case is heard and decided. Truly, as correctly observed by the trial court, private respondents enjoy a right that is protected both by the Constitution and statutes. A person’s job is not only his property but his very life. The constitutional protection of the right to life is not just a protection of the right to be alive or to the security of one’s limb against physical harm. The right to life is also a right to a good life (Bernas, The Constitution of the Republic of the Philippines, A Commentary, Volume I, First Edition, 1997) which includes the right to earn a living or the right to a livelihood. A fortiori, the requisites for preliminary injunction to issue have adequately been established: the existence of a clear and unmistakable right, and the acts violative of said right.

While the evidence to be submitted at the hearing on the motion for preliminary injunction need not be conclusive and complete, We find that private respondents have adequately shown that they are in clear danger of being irreparably injured unless the status quo is observed, in the meantime x x x.25

The appellate court was likewise of the opinion that the substantial issues raised before the court a quo anent the validity of the organizational structure of the OWWA; the alleged lack of authority of the DBM to approve the same including the alleged violation by the OWWA of relevant statutes; the lack of consultation prior to the reorganization; and the supposed illegal

constitution of the Placement Committee, are matters which the RTC is behooved to resolve. In finding no error on the part of the RTC, the Court of Appeals said that without an injunctive relief, any decision that may be rendered in the suit would already be ineffective, moot and academic.26

Aggrieved, petitioner through the OSG,27 filed the instant petition.

In the instant petition, petitioner prays that the appealed Decision of the Court of Appeals be reversed and set aside, and that Civil Case No. 04-0415-CFM before the RTC be dismissed for lack of merit.28

The Issue

The issue to be resolved is, whether the court a quo gravely abused its discretion in issuing the writ of preliminary injunction. Stated otherwise, the issue is whether the Court of Appeals erred in affirming the RTC in its grant of the assailed writ of preliminary injunction. Clearly, we are thus confined to the matter of the propriety of the issuance of the writ of preliminary injunction by the trial court, and not to the merits of the case which is still pending before the latter.

The Case for the Petitioner

First, in support of their petition, petitioner posits that the OWWA has already implemented the new organizational structure as the advertisement, recruitment, and placement of OWWA employees have been accomplished; and in the process, none of the respondents have been dismissed. Moreover, the act sought to be prevented has long been consummated; hence, the remedy of injunction should no longer be entertained.

Second, petitioner adduces the proposition that the reorganization of the OWWA does not require an amendatory law contrary to the holding of the court a quo. The OSG maintains that there was no previous OWWA structure in the first place; and neither did Presidential Decree No. 169429 nor Presidential Decree No. 1809,30 provide for an organizational structure for the OWWA.

Third, petitioner disputes the existence of the rights of respondents to be protected by the preliminary injunctive writ sought on the ground that the latter did not shown any legal right which needs the protection thereof, nor did they show that any such right was violated to warrant the issuance of a preliminary injunction. Petitioner asserts that respondents did not claim that they are the consultants or casual or contractual workers who would allegedly be displaced; and neither did respondents show that there is only one right or cause of action pertaining to all of them. Neither was there a violation of their rights because respondents have all been given appointments in the new OWWA organizational structure.31

Finally, on respondents’ allegation that the reorganization of the OWWA will reassign permanent employees to its regional offices, and consequently, displace them and their families, petitioner counters that an employee may be reassigned from one organizational unit to another

in the same agency, provided that such reassignment shall not involve a reduction in rank, status or salary.32

The Case for the Respondents

Respondents argue that the petitioner railroaded and raced against time to implement the new OWWA organizational structure. They claim that in the process, petitioner exhibited manifest

bad faith and injustice. What existed was a hasty reorganization and restructuring of the OWWA without adequate study and consultation, which was thereafter submitted and immediately

approved by the Board of Trustees. They insist that the creation of an organizational structure of the OWWA would require a presidential fiat or a legislative enactment pursuant to Republic Act

No. 6656.33

Further, respondents maintain that their right in esse was established during the proceedings for the issuance of the writ of preliminary injunction, as their complaint sufficiently showed the rights and interests of the parties. They alleged that at no stage in the proceedings did petitioner question such rights. In fact, petitioner made a waiver in open court to the effect that it was not presenting testimonial evidence. According to the respondents, such an act was constitutive of an admission by petitioner of the existence of a right in esse in their favor.

The Ruling of the Court

Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an order granted at any stage of an action prior to the judgment or final order requiring a party or a court, an agency or a person to refrain from a particular act or acts.34 Section 3, Rule 58 of the Rules of Court, enumerates the grounds for the issuance of a writ of preliminary injunction as follows:

Sec. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may be granted when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.

A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final order.35 It persists until it is dissolved or until the termination of the action without the court issuing a final injunction.36 To be entitled to an injunctive writ, petitioner must show, inter

alia, the existence of a clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious damage.37 A writ of preliminary injunction is generally based solely on initial and incomplete evidence.38 The evidence submitted during the hearing on an application for a writ of preliminary injunction is not conclusive or complete for only a "sampling" is needed to give the trial court an idea of the justification for the preliminary injunction pending the decision of the case on the merits.39 In fact, the evidence required to justify the issuance of a writ of preliminary injunction in the hearing thereon need not be conclusive or complete.40 It must also be stressed that it does not necessarily proceed that when a writ of preliminary injunction is issued, a final injunction will follow.41

Moreover, the grant or denial of a preliminary injunction is discretionary on the part of the trial court.42 Thus, the rule is, the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, unless the court commits grave abuse of discretion.43 In Toyota Motor Phils. Corporation Workers’ Association (TMPCWA) v. Court of Appeals,44 this Court pronounced that grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law. It is clear that the assessment and evaluation of evidence in the issuance of the writ of preliminary injunction involve findings of facts ordinarily left to the trial court for its conclusive determination.45 The duty of the court taking cognizance of a prayer for a writ of preliminary injunction is to determine whether the requisites necessary for the grant of an injunction are present in the case before it.46 However, as earlier stated, if the court commits grave abuse of its discretion in the issuance of the writ of preliminary injunction, such that the act amounts to excess or lack of jurisdiction, the same may be nullified through a writ of certiorari or prohibition.

More significantly, a preliminary injunction is merely a provisional remedy, an adjunct to the main case subject to the latter’s outcome, the sole objective of which is to preserve the status quo until the trial court hears fully the merits of the case.47 The status quo should be that existing at the time of the filing of the case.48 The status quo usually preserved by a preliminary injunction is the last actual, peaceable and uncontested status which preceded the actual controversy.49 The status quo ante litem is, ineluctably, the state of affairs which is existing at the time of the filing of the case. Indubitably, the trial court must not make use of its injunctive power to alter such status.50

We hold that the RTC, in granting the assailed writ of preliminary injunction, committed grave abuse of discretion amounting to lack of jurisdiction.

In the case at bar, the RTC did not maintain the status quo when it issued the writ of preliminary injunction. Rather, it effectively restored the situation prior to the status quo, in effect, disposing the issue of the main case without trial on the merits. What was preserved by the RTC was the state of affairs before the issuance of Resolution No. 001, which approved the structure of the OWWA, and the subsequent administrative orders pursuant to its passing. The RTC forgot that what is imperative in preliminary injunction cases is that the writ can not be effectuated to establish new relations between the parties. Hence, we find herein an application of the lessons

that can be learned from Rualo v. Pitargue.51 In Rualo, this Court determined, among others, the propriety of the writ of preliminary injunction which was issued restraining the Bureau of Internal Revenue from further implementing its reorganization, and enforcing the orders52 pursuant thereto. This Court, in lifting the therein assailed writ, underscored the legal proscription which states that courts should avoid issuing a writ of preliminary injunction which would in effect dispose of the main case without trial.53 According to the Court in Rualo, the trial court, in issuing the writ of preliminary injunction, did not maintain the status quo but restored the situation before the status quo, that is, the situation before the issuance of the Revenue Travel Assignment Orders.54 The Court further declared that what existed was an acceptance of therein respondents’ premise of the illegality of the reorganization, and a prejudgment on the constitutionality of the assailed issuances.55 As in Rualo, we find herein a similar case where the RTC admitted hook, line and sinker the mere allegations of respondents that the reorganization as instituted was unlawful without the benefit of a full trial on the merits. It also did not maintain the status quo but restored the landscape before the implementation of OWWA’s reorganization. In thus issuing the writ of preliminary injunction, the substantive issues of the main case were resolved by the trial court. What was done by the RTC was quite simply a disposition of the case without trial. This is an error in law and an exercise of grave abuse of discretion. Furthermore, we find that the RTC similarly prejudged the validity of the issuances released by the OWWA Board of Trustees, as well as the other governmental bodies (i.e., DBM, DOLE), which approved the organizational structure and staffing pattern of the OWWA. In Rualo, this Court asserted the presumption of regularity of the therein assailed government issuances. In this case, we accentuate the same presumption.

Ineluctably, this Court is compelled to rule against the propriety of the grant of the assailed ancillary writ of preliminary injunction on the material ground that the records do not support respondents’ entitlement thereto.

We do not find attendant the requisites for the issuance of a preliminary injunctive writ. This Court is not convinced that respondents were able to show a clear and unmistakable legal right to warrant their entitlement to the writ. A mere blanket allegation that they are all officers and employees of the OWWA without a showing of how they stand to be directly injured by the implementation of its questioned organizational structure does not suffice to prove a right in esse. As was aptly raised by the petitioner, respondents did not show that they were dismissed due to the challenged reorganization. There was no showing that they are the employees who are in grave danger of being displaced. Respondents were similarly wanting in proving that they are the consultants and contractual and casual employees, who will allegedly suffer by reason of the re-organization. This Court is consistently adamant in demanding that a clear and positive right especially calling for judicial protection must be established.56 As has been reiterated, injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an action which did not give rise to a cause of action.57 In contrast, the rights of OWWA are accorded to it by law. The importance of the reorganization within the body and the benefits that will accrue thereto were accentuated by the Board of Trustees in its Resolution No. 001. The aforesaid resolution declared, inter alia, that the structuring of the OWWA will stabilize the internal organization and promote careerism among the employees, as well as ensure a more efficient and effective delivery of programs and services to member-OFWs’.58 However, we go further to opine that

even the question of whether the OWWA requires an amendatory law for its reorganization is one that should be best threshed out in the disposition of the merits of the case. Indeed, the question as to the validity of the OWWA reorganization remains the subject in the main case pending before the trial court. Its annulment is outside the realm of the instant Petition.

Assuming arguendo that respondents stand to be in danger of being transferred due to the reorganization, under the law, any employee who questions the validity of his transfer should appeal to the CSC.59 Even then, administrative remedies must be exhausted before resort to the regular courts can be had.

Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had been accomplished. Injunction will not lie where the acts sought to be enjoined have already been accomplished or consummated.60 The wheels of OWWA’s reorganization started to run upon the approval by the Board of Trustees of its Resolution No. 001 entitled, "Approving the Structure of the Overseas Workers Welfare Administration." Subsequently, a series of issuances which approved the organizational structure and staffing pattern of the agency was issued by the DBM, the OWWA Administrator, and by the DOLE. Resolution No. 001 has already been implemented. Case law has it that a writ of preliminary injunction will not issue if the act sought to be enjoined is a fait accompli.1avvphi1

A writ of preliminary injunction being an extraordinary event,61 one deemed as a strong arm of equity or a transcendent remedy,62 it must be granted only in the face of actual and existing substantial rights. In the absence of the same, and where facts are shown to be wanting in bringing the matter within the conditions for its issuance, the ancillary writ must be struck down for having been rendered in grave abuse of discretion.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals, dated 22 September 2005 in CA-G.R. SP No. 87702, is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the Regional Trial Court pursuant to its Order, dated 30 September 2004, in Civil Case No. 04-0415-CFM is LIFTED and SET ASIDE.

SO ORDERED.

UNIVERSITY of IMMACULATE, CONCEPCION, INC., petitioner, vs.The HONORABLE SECRETARY OF LABOR, THE UIC TEACHING and NON-TEACHING PERSONNEL AND EMPLOYEES UNION, LELIAN CONCON, MARY ANN DE RAMOS, JOVITA MAMBURAM, ANGELINA ABADILLA, MELANIE DE LA ROSA, ZENAIDA CANOY, ALMA VILLACARLOS, JOSIE BOSTON, PAULINA PALMA GIL, GEMMA GALOPE, LEAH CRUZA, DELFA DIAPUEZ, respondent.

D E C I S I O N

AZCUNA, J.:

This is a petition for review of a decision of the Court of Appeals and the resolution denying reconsideration thereof. The principal issue to be resolved in this recourse is whether or not the Secretary of Labor, after assuming jurisdiction over a labor dispute involving an employer and the certified bargaining agent of a group of employees in the workplace, may legally order said employer to reinstate employees terminated by the employer even if those terminated employees are not part of the bargaining unit.

This case stemmed from the collective bargaining negotiations between petitioner University of Immaculate Concepcion, Inc. (UNIVERSITY) and respondent The UIC Teaching and Non-Teaching Personnel and Employees Union (UNION). The UNION, as the certified bargaining agent of all rank and file employees of the UNIVERSITY, submitted its collective bargaining proposals to the latter on February 16, 1994. However, one item was left unresolved and this was the inclusion or exclusion of the following positions in the scope of the bargaining unit:

a. Secretaries

b. Registrars

c. Accounting Personnel

d. Guidance Counselors 1

This matter was submitted for voluntary arbitration. On November 8, 1994, the panel of voluntary arbitrators rendered a decision, the dispositive portion of which states:

WHEREFORE, premises considered, the Panel hereby resolves to exclude the above-mentioned secretaries, registrars, chief of the accounting department, cashiers and guidance counselors from the coverage of the bargaining unit. The accounting clerks and the accounting staff member are hereby ordered included in the bargaining unit.2

The UNION moved for the reconsideration of the above decision. Pending, however, the resolution of its motion, on December 9, 1994, it filed a notice of strike with the National Conciliation and Mediation Board (NCMB) of Davao City, on the grounds of bargaining deadlock and unfair labor practice. During the thirty (30) day cooling-off period, two union members were dismissed by petitioner. Consequently, the UNION went on strike on January 20, 1995.

On January 23, 1995, the then Secretary of Labor, Ma. Nieves R. Confessor, issued an Order assuming jurisdiction over the labor dispute. The dispositive portion of the said Order states:

WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this Office hereby assumes jurisdiction over the entire labor dispute at the University of the Immaculate Concepcion College.

Accordingly, all workers are directed to return to work within twenty-four (24) hours upon receipt of this Order and for Management to accept them back under the same terms and conditions prevailing prior to the strike.

Parties are further directed to cease and desist from committing any or all acts that might exacerbate the situation.

Finally, the parties are hereby directed to submit their respective position papers within ten (10) days from receipt hereof.

SO ORDERED.3

On February 8, 1995, the panel of voluntary arbitrators denied the motion for reconsideration filed by the UNION. The UNIVERSITY then furnished copies of the panel’s denial of the motion for reconsideration and the Decision dated November 8, 1995 to the individual respondents herein:

1. Lelian Concon – Grade School Guidance Counselor

2. Mary Ann de Ramos – High School Guidance Counselor

3. Jovita Mamburam – Secretary to [the] Vice President for Academic Affairs/ Dean of College

4. Angelina Abadilla – Secretary to [the] Vice President for Academic Affairs/ Dean of College

5. Melanie de la Rosa – Secretary to [the] Dean of [the] College of Pharmacy/ Academic Affairs/ Dean of College

6. Zenaida Canoy – Secretary to [the] Vice President for Academic Affairs/ Dean of College

7. Alma Villacarlos – Guidance Counselor (College)

8. Josie Boston – Grade School Psychometrician

9. Paulina Palma Gil – Cashier

10. Gemma Galope – High School Registrar

11. Leah Cruza – Guidance Counselor (College)

12. Delfa Diapuez – High School Psychometrician 4

Thereafter, the UNIVERSITY gave the abovementioned individual respondents two choices: to resign from the UNION and remain employed as confidential employees or resign from their confidential positions and remain members of the UNION. The UNIVERSITY relayed to these employees that they could not remain as confidential employees and at the same time as members or officers of the Union. However, the individual respondents remained steadfast in their claim that they could still retain their confidential positions while being members or officers of the Union. Hence, on February 21, 1995, the UNIVERSITY sent notices of termination to the individual respondents.1a\^/phi1.net

On March 10, 1995, the UNION filed another notice of strike, this time citing as a reason the UNIVERSITY’s termination of the individual respondents. The UNION alleged that the UNIVERSITY’s act of terminating the individual respondents is in violation of the Order of the Secretary of Labor dated January 23, 1995.

On March 28, 1995, the Secretary of Labor issued another Order reiterating the directives contained in the January 23, 1995 Order. The Secretary also stated therein that the effects of the termination from employment of these individual respondents be suspended pending the determination of the legality thereof. Hence, the UNIVERSITY was directed to reinstate the individual respondents under the same terms and conditions prevailing prior to the labor dispute.

The UNIVERSITY, thereafter, moved to reconsider the aforesaid Order on March 28, 1995. It argued that the Secretary’s Order directing the reinstatement of the individual respondents would render nugatory the decision of the panel of voluntary arbitrators to exclude them from the collective bargaining unit. The UNIVERSITY’s motion was denied by the Secretary in an Order dated June 16, 1995, wherein the Secretary declared that the decision of the panel of voluntary arbitrators to exclude the individual respondents from the collective bargaining unit did not authorize the UNIVERSITY to terminate their employment. The UNIVERSITY filed a second motion for reconsideration, which was again denied in an Order dated July 19, 1995. Undeterred, the UNIVERSITY filed a third motion for reconsideration. In the Order dated August 18, 1995, then Acting Secretary Jose S. Brilliantes denied the third motion for reconsideration, but modified the two previous Orders by adding:

x x x

Anent the Union’s Motion, we find that superseding circumstances would not warrant the physical reinstatement of the twelve (12) terminated employees. Hence, they are hereby ordered placed under payroll reinstatement until the validity of their termination is finally resolved.5

x x x

Still unsatisfied with the Order of the Secretary of Labor, the UNIVERSITY filed a petition for certiorari with this Court on September 15, 1995. However, its petition was referred to the Court of Appeals, following the ruling in St. Martin Funeral Homes v. Court of Appeals . 6

On October 8, 2001, the Court of Appeals promulgated its Decision, affirming the questioned Orders of the Secretary of Labor. The dispositive portion of the Decision states:

WHEREFORE, the instant petition is DISMISSED for lack of merit.7

The UNIVERSITY then moved for the reconsideration of the abovementioned Decision,8 but on January 10, 2002, the Court of Appeals denied the motion on the ground that no new matters were raised therein that would warrant a reconsideration.9

Hence, this petition.

The UNIVERSITY assigns the following error:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN AFFIRMING THE ORDERS OF THE SECRETARY OF LABOR THAT SUSPENDED THE EFFECTS OF THE TERMINATION OF TWELVE EMPLOYEES WHO WERE NOT PART OF THE BARGAINING UNIT INVOLVED IN A LABOR DISPUTE OVER WHICH THE SECRETARY OF LABOR ASSUMED JURISDICTION.10

The Court of Appeals relied upon the doctrine in St. Scholastica’s College v. Torres.11 In the case therein, this Court, citing International Pharmaceuticals Incorporated v. the Secretary of Labor,12 declared that:

x x x [T]he Secretary was explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, the authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction.

The UNIVERSITY contends that the Secretary cannot take cognizance of an issue involving employees who are not part of the bargaining unit. It insists that since the individual respondents had already been excluded from the bargaining unit by a final and executory order by the panel of voluntary arbitrators, then they cannot be covered by the Secretary’s assumption order.

This Court finds no merit in the UNIVERSITY’s contention. In Metrolab Industries, Inc. v. Roldan-Confessor ,13 this Court declared that it recognizes the exercise of management prerogatives and it often declines to interfere with the legitimate business decisions of the employer. This is in keeping with the general principle embodied in Article XIII, Section 3 of the Constitution,14 which is further echoed in Article 211 of the Labor Code.15 However, as expressed in PAL v. National Labor Relations Commission,16 this privilege is not absolute, but subject to exceptions. One of these exceptions is when the Secretary of Labor assumes jurisdiction over labor disputes involving industries indispensable to the national interest under Article 263(g) of the Labor Code. This provision states:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically

enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. x x x

When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the termination of the individual respondents, the Secretary did not exceed her jurisdiction, nor did the Secretary gravely abuse the same. It must be pointed out that one of the substantive evils which Article 263(g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. In her Order dated March 28, 1995, the Secretary of Labor rightly held:

It is well to remind both parties herein that the main reason or rationale for the exercise of the Secretary of Labor and Employment’s power under Article 263(g) of the Labor Code, as amended, is the maintenance and upholding of the status quo while the dispute is being adjudicated. Hence, the directive to the parties to refrain from performing acts that will exacerbate the situation is intended to ensure that the dispute does not get out of hand, thereby negating the direct intervention of this office.l^vvphi1.net

The University’s act of suspending and terminating union members and the Union’s act of filing another Notice of Strike after this Office has assumed jurisdiction are certainly in conflict with the status quo ante. By any standards[,] these acts will not in any way help in the early resolution of the labor dispute. It is clear that the actions of both parties merely served to complicate and aggravate the already strained labor-management relations.17

Indeed, it is clear that the act of the UNIVERSITY of dismissing the individual respondents from their employment became the impetus for the UNION to declare a second notice of strike. It is not a question anymore of whether or not the terminated employees, the individual respondents herein, are part of the bargaining unit. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act of exacerbation and should not be allowed.

With respect to the Secretary’s Order allowing payroll reinstatement instead of actual reinstatement for the individual respondents herein, an amendment to the previous Orders issued by her office, the same is usually not allowed. Article 263(g) of the Labor Code aforementioned states that all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout.l^vvphi1.net The phrase "under the same terms and conditions" makes it clear that the norm is actual reinstatement. This is consistent with the idea that any work stoppage or slowdown in that particular industry can be detrimental to the national interest.

In ordering payroll reinstatement in lieu of actual reinstatement, then Acting Secretary of Labor Jose S. Brillantes said:

Anent the Union’s Motion, we find that superseding circumstances would not warrant the physical reinstatement of the twelve (12) terminated employees. Hence, they are hereby ordered placed under payroll reinstatement until the validity of their termination is finally resolved.18

As an exception to the rule, payroll reinstatement must rest on special circumstances that render actual reinstatement impracticable or otherwise not conducive to attaining the purposes of the law.19

The "superseding circumstances" mentioned by the Acting Secretary of Labor no doubt refer to the final decision of the panel of arbitrators as to the confidential nature of the positions of the twelve private respondents, thereby rendering their actual and physical reinstatement impracticable and more likely to exacerbate the situation. The payroll reinstatement in lieu of actual reinstatement ordered in these cases, therefore, appears justified as an exception to the rule until the validity of their termination is finally resolved. This Court sees no grave abuse of discretion on the part of the Acting Secretary of Labor in ordering the same. Furthermore, the issue has not been raised by any party in this case.

WHEREFORE, the Decision of the Court of Appeals dated October 8, 2001 and its Resolution dated January 10, 2002 in CA-G.R. SP No. 61693 are AFFIRMED.

No costs.

SO ORDERED.

MANILA DIAMOND HOTEL EMPLOYEES’ UNION, petitioner, vs.THE HON. COURT OF APPEALS, THE SECRETARY OF LABOR AND EMPLOYMENT, and THE MANILA DIAMOND HOTEL, respondents.

D E C I S I O N

AZCUNA, J.:

This petition for review of a decision of the Court of Appeals arose out of a dispute between the Philippine Diamond Hotel and Resort, Inc. ("Hotel"), owner of the Manila Diamond Hotel, and the Manila Diamond Hotel Employees’ Union ("Union"). The facts are as follows:

On November 11, 1996, the Union filed a petition for a certification election so that it may be declared the exclusive bargaining representative of the Hotel’s employees for the purpose of collective bargaining. The petition was dismissed by the Department of Labor and Employment (DOLE) on January 15, 1997. After a few months, however, on August 25, 1997, the Union sent a letter to the Hotel informing it of its desire to negotiate for a collective bargaining agreement.1

In a letter dated September 11, 1997, the Hotel’s Human Resources Department Manager, Mary Anne Mangalindan, wrote to the Union stating that the Hotel cannot recognize it as the employees’ bargaining agent since its petition for certification election had been earlier dismissed by the DOLE.2 On that same day, the Hotel received a letter from the Union stating that they were not giving the Hotel a notice to bargain, but that they were merely asking for the Hotel to engage in collective bargaining negotiations with the Union for its members only and not for all the rank and file employees of the Hotel.3

On September 18, 1997, the Union announced that it was taking a strike vote. A Notice of Strike was thereafter filed on September 29, 1997, with the National Conciliation and Mediation Board (NCMB) for the Hotel’s alleged "refusal x x x to bargain" and for alleged acts of unfair labor practice. The NCMB summoned both parties and held a series of dialogues, the first of which was on October 6, 1997.

On November 29, 1997, however, the Union staged a strike against the Hotel. Numerous confrontations between the two parties followed, creating an obvious strain between them. The Hotel claims that the strike was illegal and it had to dismiss some employees for their participation in the allegedly illegal concerted activity. The Union, on the other hand, accused the Hotel of illegally dismissing the workers. What is pertinent to this case, however, is the Order issued by the then Secretary of Labor and Employment Cresenciano B. Trajano assuming jurisdiction over the labor dispute. A Petition for Assumption of Jurisdiction was filed by the Union on April 2, 1998. Thereafter, the Secretary of Labor and Employment issued an Order dated April 15, 1998, the dispositive portion of which states:

WHEREFORE, premises considered[,] this Office CERTIFIES the labor dispute at the Manila Diamond Hotel to the National Labor Relations Commission, for compulsory arbitration, pursuant to Article 263 (g) of the Labor Code, as amended.

Accordingly, the striking officers and members of the Manila Diamond Hotel Employees Union --- NUWHRAIN are hereby directed to return to work within twenty-four (24) hours upon receipt of this Order and the Hotel to accept them back under the same terms and conditions prevailing prior to the strike. The parties are enjoined from committing any act that may exacerbate the situation.

The Union received the aforesaid Order on April 16, 1998 and its members reported for work the next day, April 17, 1998. The Hotel, however, refused to accept the returning workers and instead filed a Motion for Reconsideration of the Secretary’s Order.

On April 30, 1998, then Acting Secretary of Labor Jose M. Español, issued the disputed Order, which modified the earlier one issued by Secretary Trajano. Instead of an actual return to work, Acting Secretary Español directed that the strikers be reinstated only in the payroll.4 The Union moved for the reconsideration of this Order, but its motion was denied on June 25, 1998. Hence, it filed before this Court on August 26, 1998, a petition for certiorari under Rule 65 of the Rules of Court alleging grave abuse of discretion on the part of the Secretary of Labor for modifying its earlier order and requiring instead the reinstatement of the employees in the payroll. However, in

a resolution dated July 12, 1999, this Court referred the case to the Court of Appeals, pursuant to the principle embodied in National Federation of Labor v. Laguesma.5

On October 19, 1999, the Court of Appeals rendered a Decision dismissing the Union’s petition and affirming the Secretary of Labor’s Order for payroll reinstatement. The Court of Appeals held that the challenged order is merely an error of judgment and not a grave abuse of discretion and that payroll reinstatement is not prohibited by law, but may be "called for" under certain circumstances.6

Hence, the Union now stands before this Court maintaining that:

THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED IN RULING THAT THE SECRETARY OF LABOR’S UNAUTHORIZED ORDER OF MERE "PAYROLL REINSTATEMENT" IS NOT GRAVE ABUSE OF DISCRETION7

The petition has merit.

The Court of Appeals based its decision on this Court’s ruling in University of Santo Tomas (UST) v. NLRC.8 There, the Secretary assumed jurisdiction over the labor dispute between striking teachers and the university. He ordered the striking teachers to return to work and the university to accept them under the same terms and conditions. However, in a subsequent order, the NLRC provided payroll reinstatement for the striking teachers as an alternative remedy to actual reinstatement. True, this Court held therein that the NLRC did not commit grave abuse of discretion in providing for the alternative remedy of payroll reinstatement. This Court found that it was 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.

However, this Court notes that the UST ruling was made in the light of one very important fact: the teachers could not be given back their academic assignments since the order of the Secretary for them to return to work was given in the middle of the first semester of the academic year. The NLRC was, therefore, faced with a situation where the striking teachers were entitled to a return to work order, but the university could not immediately reinstate them since it would be impracticable and detrimental to the students to change teachers at that point in time.

In the present case, there is no showing that the facts called for payroll reinstatement as an alternative remedy. A strained relationship between the striking employees and management is no reason for payroll reinstatement in lieu of actual reinstatement. Petitioner correctly points out that labor disputes naturally involve strained relations between labor and management, and that in most strikes, the relations between the strikers and the non-strikers will similarly be tense.9 Bitter labor disputes always leave an aftermath of strong emotions and unpleasant situations. Nevertheless, the government must still perform its function and apply the law, especially if, as in this case, national interest is involved.

After making the distinction between UST and the present case, this Court now addresses the issue of whether the Court of Appeals erred in ruling that the Secretary did not commit any grave

abuse of discretion in ordering payroll reinstatement in lieu of actual reinstatement. This question is answered by the nature of Article 263(g). As a general rule, the State encourages an environment wherein employers and employees themselves must deal with their problems in a manner that mutually suits them best. This is the basic policy embodied in Article XIII, Section 3 of the Constitution,10 which was further echoed in Article 211 of the Labor Code.11 Hence, a voluntary, instead of compulsory, mode of dispute settlement is the general rule.

However, Article 263, paragraph (g) of the Labor Code, which allows the Secretary of Labor to assume jurisdiction over a labor dispute involving an industry indispensable to the national interest, provides an exception:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. x x x

This provision is viewed as an exercise of the police power of the State. A prolonged strike or lockout can be inimical to the national economy and, therefore, the situation is imbued with public necessity and involves the right of the State and the public to self-protection.12

Under Article 263(g), all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout. This Court must point out that the law uses the precise phrase of "under the same terms and conditions," revealing that it contemplates only actual reinstatement. This is in keeping with the rationale that any work stoppage or slowdown in that particular industry can be inimical to the national economy. It is clear that Article 263(g) was not written to protect labor from the excesses of management, nor was it written to ease management from expenses, which it normally incurs during a work stoppage or slowdown. It was an error on the part of the Court of Appeals to view the assumption order of the Secretary as a measure to protect the striking workers from any retaliatory action from the Hotel. This Court reiterates that this law was written as a means to be used by the State to protect itself from an emergency or crisis. It is not for labor, nor is it for management.

It is, therefore, evident from the foregoing that the Secretary’s subsequent order for mere payroll reinstatement constitutes grave abuse of discretion amounting to lack or excess of jurisdiction. Indeed, this Court has always recognized the "great breadth of discretion" by the Secretary once he assumes jurisdiction over a labor dispute. However, payroll reinstatement in lieu of actual reinstatement is a departure from the rule in these cases and there must be showing of special circumstances rendering actual reinstatement impracticable, as in the UST case aforementioned, or otherwise not conducive to attaining the purpose of the law in providing for assumption of

jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest. None appears to have been established in this case. Even in the exercise of his discretion under Article 236(g), the Secretary must always keep in mind the purpose of the law. Time and again, this Court has held that when an official by-passes the law on the asserted ground of attaining a laudable objective, the same will not be maintained if the intendment or purpose of the law would be defeated.13

WHEREFORE, the petition is GRANTED and the assailed Decision of the Court of Appeals dated October 19, 1999 is REVERSED and SET ASIDE. The Order dated April 30, 1998 issued by the Secretary of Labor and Employment modifying the earlier Order dated April 15, 1998, is likewise SET ASIDE. No pronouncement as to costs.

SO ORDERED.

MARIETTA N. PORTILLO, Petitioner, vs.RUDOLF LIETZ, INC., RUDOLF LIETZ and COURT OF APPEALS Respondents.

D E C I S I O N

PEREZ, J.:

Before us is a petition for certiorari assailing the Resolution 1 dated 14 October 2010 of the Court of Appeals in CA-G.R. SP No. I 065g I which modified its Decision2 dated 31 March 2009, thus allowing the legal compensation or petitioner Marietta N. Portillo's (Portillo) monetary claims against respondent corporation Rudolf Lietz, Inc.'s (Lietz Inc.)3 claim for liquidated damages arising from Portillo’s alleged violation of the "Goodwill Clause" in the employment contract executed by the parties.

The facts are not in dispute.

In a letter agreement dated 3 May 1991, signed by individual respondent Rudolf Lietz (Rudolf) and conformed to by Portillo, the latter was hired by the former under the following terms and conditions:

A copy of [Lietz Inc.’s] work rules and policies on personnel is enclosed and an inherent part of the terms and conditions of employment.

We acknowledge your proposal in your application specifically to the effect that you will not engage in any other gainful employment by yourself or with any other company either directly or indirectly without written consent of [Lietz Inc.], and we hereby accept and henceforth consider your proposal an undertaking on your part, a breach of which will render you liable to [Lietz Inc.] for liquidated damages.

If you are in agreement with these terms and conditions of employment, please signify your conformity below.4

On her tenth (10th) year with Lietz Inc., specifically on 1 February 2002, Portillo was promoted to Sales Representative and received a corresponding increase in basic monthly salary and sales quota. In this regard, Portillo signed another letter agreement containing a "Goodwill Clause:"

It remains understood and you agreed that, on the termination of your employment by act of either you or [Lietz Inc.], and for a period of three (3) years thereafter, you shall not engage directly or indirectly as employee, manager, proprietor, or solicitor for yourself or others in a similar or competitive business or the same character of work which you were employed by [Lietz Inc.] to do and perform. Should you breach this good will clause of this Contract, you shall pay [Lietz Inc.] as liquidated damages the amount of 100% of your gross compensation over the last 12 months, it being agreed that this sum is reasonable and just.5

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview, Portillo declared that she intended to engage in business—a rice dealership, selling rice in wholesale.

On 15 June 2005, Lietz Inc. accepted Portillo’s resignation and reminded her of the "Goodwill Clause" in the last letter agreement she had signed. Upon receipt thereof, Portillo jotted a note thereon that the latest contract she had signed in February 2004 did not contain any "Goodwill Clause" referred to by Lietz Inc. In response thereto, Lietz Inc. categorically wrote:

Please be informed that the standard prescription of prohibiting employees from engaging in business or seeking employment with organizations that directly or indirectly compete against [Lietz Inc.] for three (3) years after resignation remains in effect.

The documentation you pertain to is an internal memorandum of your salary increase, not an employment contract. The absence of the three-year prohibition clause in this document (or any document for that matter) does not cancel the prohibition itself. We did not, have not, and will not issue any cancellation of such in the foreseeable future[.] [T]hus[,] regretfully, it is erroneous of you to believe otherwise.6

In a subsequent letter dated 21 June 2005, Lietz Inc. wrote Portillo and supposed that the exchange of correspondence between them regarding the "Goodwill Clause" in the employment contract was a moot exercise since Portillo’s articulated intention to go into business, selling rice, will not compete with Lietz Inc.’s products.

Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz Inc.

Meanwhile, Portillo’s demands from Lietz Inc. for the payment of her remaining salaries and commissions went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions were still being computed.

On 14 September 2005, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for non-payment of 1½ months’ salary, two (2) months’ commission, 13th month pay, plus moral, exemplary and actual damages and attorney’s fees.

In its position paper, Lietz Inc. admitted liability for Portillo’s money claims in the total amount of P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillo’s money claims should be offset against her liability to Lietz Inc. for liquidated damages in the amount of ₱869,633.097 for Portillo’s alleged breach of the "Goodwill Clause" in the employment contract when she became employed with Ed Keller Philippines, Limited.

On 25 May 2007, Labor Arbiter Daniel J. Cajilig granted Portillo’s complaint:

WHEREFORE, judgment is hereby rendered ordering respondents Rudolf Lietz, Inc. to pay complainant Marietta N. Portillo the amount of Php110,662.16, representing her salary and commissions, including 13th month pay.8

On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling of Labor Arbiter Daniel J. Cajilig. On motion for reconsideration, the NLRC stood pat on its ruling.

Expectedly, respondents filed a petition for certiorari before the Court of Appeals, alleging grave abuse of discretion in the labor tribunals’ rulings.

As earlier adverted to, the appellate court initially affirmed the labor tribunals:

WHEREFORE, considering the foregoing premises, judgment is hereby rendered by us DENYING the petition filed in this case. The Resolution of the National Labor Relations Commission (NLRC), Second Division, in the labor case docketed as NLRC NCR Case No. 00-09- 08113-2005 [NLRC LAC No. 07-001965-07(5)] is hereby AFFIRMED.9

The disposition was disturbed. The Court of Appeals, on motion for reconsideration, modified its previous decision, thus:

WHEREFORE, in view of the foregoing premises, we hereby MODIFY the decision promulgated on March 31, 2009 in that, while we uphold the monetary award in favor of the [petitioner] in the aggregate sum of ₱110,662.16 representing the unpaid salary, commission and 13th month pay due to her, we hereby allow legal compensation or set-off of such award of monetary claims by her liability to [respondents] for liquidated damages arising from her violation of the "Goodwill Clause" in her employment contract with them.10

Portillo’s motion for reconsideration was denied.

Hence, this petition for certiorari listing the following acts as grave abuse of discretion of the Court of Appeals:

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY EVADING TO RECOGNIZE (sic) THAT THE RESPONDENTS’ EARLIER PETITION IS FATALLY DEFECTIVE;

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY OVERSTEPPING THE BOUNDS OF APPELLATE JURISDICTION[;]

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY MODIFYING ITS PREVIOUS DECISION BASED ON AN ISSUE THAT WAS RAISED ONLY ON THE FIRST INSTANCE AS AN APPEAL BUT WAS NEVER AT THE TRIAL COURT AMOUNTING TO DENIAL OF DUE PROCESS[;]

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY EVADING THE POSITIVE DUTY TO UPHOLD THE RELEVANT LAWS[.]11

Simply, the issue is whether Portillo’s money claims for unpaid salaries may be offset against respondents’ claim for liquidated damages.

Before anything else, we address the procedural error committed by Portillo, i.e., filing a petition for certiorari, a special civil action under Rule 65 of the Rules of Court, instead of a petition for review on certiorari, a mode of appeal, under Rule 45 thereof. On this score alone, the petition should have been dismissed outright.

Section 1, Rule 45 of the Rules of Court expressly provides that a party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals may file a verified petition for review on certiorari. Considering that, in this case, appeal by certiorari was available to Portillo, that available recourse foreclosed her right to resort to a special civil action for certiorari, a limited form of review and a remedy of last recourse, which lies only where there is no appeal or plain, speedy and adequate remedy in the ordinary course of law.12

A petition for review on certiorari under Rule 45 and a petition for certiorari under Rule 65 are mutually exclusive remedies. Certiorari cannot co-exist with an appeal or any other adequate remedy.13 If a petition for review is available, even prescribed, the nature of the questions of law intended to be raised on appeal is of no consequence. It may well be that those questions of law will treat exclusively of whether or not the judgment or final order was rendered without or in excess of jurisdiction, or with grave abuse of discretion. This is immaterial. The remedy is appeal, not certiorari as a special civil action.14

Be that as it may, on more than one occasion, to serve the ultimate purpose of all rules of procedures—attaining substantial justice as expeditiously as possible15—we have accepted procedurally incorrect petitions and decided them on the merits. We do the same here.

The Court of Appeals anchors its modified ruling on the ostensible causal connection between Portillo’s money claims and Lietz Inc.’s claim for liquidated damages, both claims apparently arising from the same employment relations. Thus, did it say:

x x x This Court will have to take cognizance of and consider the "Goodwill Clause" contained [in] the employment contract signed by and between [respondents and Portillo]. There is no gainsaying the fact that such "Goodwill Clause" is part and parcel of the employment contract extended to [Portillo], and such clause is not contrary to law, morals and public policy. There is thus a causal connection between [Portillo’s] monetary claims against [respondents] and the latter’s claim for liquidated damages against the former. Consequently, we should allow legal compensation or set-off to take place. [Respondents and Portillo] are both bound principally and, at the same time, are creditors of each other. [Portillo] is a creditor of [respondents] in the sum of ₱110,662.16 in connection with her monetary claims against the latter. At the same time, [respondents] are creditors of [Portillo] insofar as their claims for liquidated damages in the sum of ₱980,295.2516 against the latter is concerned.17

We are not convinced.

Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the Court of Appeals on the "causal connection between [Portillo’s] monetary claims against [respondents] and the latter’s claim from liquidated damages against the former."

Art. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as otherwise provided under this code, the Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following case involving all workers, whether agricultural or nonagricultural:

x x x x

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; (Underscoring supplied)

Evidently, the Court of Appeals is convinced that the claim for liquidated damages emanates from the "Goodwill Clause of the employment contract and, therefore, is a claim for damages arising from the employeremployee relations."

As early as Singapore Airlines Limited v. Paño,18 we established that not all disputes between an employer and his employee(s) fall within the jurisdiction of the labor tribunals. We differentiated between abandonment per se and the manner and consequent effects of such abandonment and ruled that the first, is a labor case, while the second, is a civil law case.

Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to the civil Courts. While seemingly petitioner's claim for damages arises from employer-employee relations, and the latest amendment to Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-employee relationship are cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim for damages is grounded on the "wanton failure and refusal" without just cause of private respondent Cruz to report for duty despite repeated notices served upon him of the disapproval of his application for leave of absence without pay. This, coupled with the further averment that Cruz

"maliciously and with bad faith" violated the terms and conditions of the conversion training course agreement to the damage of petitioner removes the present controversy from the coverage of the Labor Code and brings it within the purview of Civil Law.

Clearly, the complaint was anchored not on the abandonment per se by private respondent Cruz of his job—as the latter was not required in the Complaint to report back to work—but on the manner and consequent effects of such abandonment of work translated in terms of the damages which petitioner had to suffer.

Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer & Plywood, Inc. [citation omitted], the pertinent portion of which reads:

"Although the acts complained of seemingly appear to constitute 'matter involving employee-employer' relations as Quisaba's dismissal was the severance of a pre-existing employee-employer relations, his complaint is grounded not on his dismissal per se, as in fact he does not ask for reinstatement or backwages, but on the manner of his dismissal and the consequent effects of such dismissal.

"Civil law consists of that 'mass of precepts that determine or regulate the relations . . . that exist between members of a society for the protection of private interest (1 Sanchez Roman 3).

"The 'right' of the respondents to dismiss Quisaba should not be confused with the manner in which the right was exercised and the effects flowing therefrom. If the dismissal was done anti-socially or oppressively as the complaint alleges, then the respondents violated Article 1701 of the Civil Code which prohibits acts of oppression by either capital or labor against the other, and Article 21, which makes a person liable for damages if he wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy, the sanction for which, by way of moral damages, is provided in article 2219, No. 10. [citation omitted]"

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.19 (Emphasis supplied)

Subsequent rulings amplified the teaching in Singapore Airlines. The reasonable causal connection rule was discussed. Thus, in San Miguel Corporation v. National Labor Relations Commission,20 we held:

While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4 (claims relating to household services, a

particular species of employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to employers). It is evident that there is a unifying element which runs through paragraph 1 to 5 and that is, that they all refer to cases or disputes arising out of or in connection with an employer-employee relationship. This is, in other words, a situation where the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the terms themselves of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer-employee relations, [citation omitted]" which clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationship, and which would therefore fall within the general jurisdiction of regular courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship.21 (Emphasis supplied)

We thereafter ruled that the "reasonable causal connection with the employer-employee relationship" is a requirement not only in employees’ money claims against the employer but is, likewise, a condition when the claimant is the employer.

In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,22 which reiterated the San Miguel ruling and allied jurisprudence, we pronounced that a non-compete clause, as in the "Goodwill Clause" referred to in the present case, with a stipulation that a violation thereof makes the employee liable to his former employer for liquidated damages, refers to post-employment relations of the parties.

In Dai-Chi, the trial court dismissed the civil complaint filed by the employer to recover damages from its employee for the latter’s breach of his contractual obligation. We reversed the ruling of the trial court as we found that the employer did not ask for any relief under the Labor Code but sought to recover damages agreed upon in the contract as redress for its employee’s breach of contractual obligation to its "damage and prejudice." We iterated that Article 217, paragraph 4 does not automatically cover all disputes between an employer and its employee(s). We noted that the cause of action was within the realm of Civil Law, thus, jurisdiction over the controversy belongs to the regular courts. At bottom, we considered that the stipulation referred to post-employment relations of the parties.

That the "Goodwill Clause" in this case is likewise a postemployment issue should brook no argument. There is no dispute as to the cessation of Portillo’s employment with Lietz Inc.23 She simply claims her unpaid salaries and commissions, which Lietz Inc. does not contest. At that juncture, Portillo was no longer an employee of Lietz Inc.24 The "Goodwill Clause" or the "Non-

Compete Clause" is a contractual undertaking effective after the cessation of the employment relationship between the parties. In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case.

It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim that arises out of or in connection with an employer-employee relationship, Lietz Inc.’s claim against Portillo for violation of the goodwill clause is a money claim based on an act done after the cessation of the employment relationship. And, while the jurisdiction over Portillo’s claim is vested in the labor arbiter, the jurisdiction over Lietz Inc.’s claim rests on the regular courts. Thus:

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages based on the parties' contract of employment as redress for respondent's breach thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present case, what with the reality that the stipulation refers to the postemployment relations of the parties.

For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter is one of claim for damages arising from a breach of contract, which is within the ambit of the regular court's jurisdiction. [citation omitted]

It is basic that jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim asserted therein, which is a matter resolved only after and as a result of a trial. Neither can jurisdiction of a court be made to depend upon the defenses made by a defendant in his answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the defendant.25 [citation omitted]

x x x x

Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees [citation omitted], we hold that by the designating clause "arising from the employer-employee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal dismissal case.26

x x x x

This is, of course, to distinguish from cases of actions for damages where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation. Thus, the jurisdiction of regular courts was upheld where the damages, claimed for were based on tort [citation omitted], malicious prosecution [citation omitted], or breach of contract, as when the claimant seeks to recover a debt from a former employee [citation omitted] or seeks liquidated damages in enforcement of a prior employment contract. [citation omitted]

Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor Code or other labor laws, the dispute is intrinsically civil. Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee relations─in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code.27 (Emphasis supplied)

In the case at bar, the difference in the nature of the credits that one has against the other, conversely, the nature of the debt one owes another, which difference in turn results in the difference of the forum where the different credits can be enforced, prevents the application of compensation. Simply, the labor tribunal in an employee’s claim for unpaid wages is without authority to allow the compensation of such claims against the post employment claim of the former employer for breach of a post employment condition. The labor tribunal does not have jurisdiction over the civil case of breach of contract.

We are aware that in Bañez v. Hon. Valdevilla, we mentioned that:

Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees [citation omitted], we hold that by the designating clause "arising from the employer-employee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal dismissal case.28

While on the surface, Bañez supports the decision of the Court of Appeals, the facts beneath premise an opposite conclusion. There, the salesman-employee obtained from the NLRC a final favorable judgment of illegal dismissal. Afterwards, the employer filed with the trial court a complaint for damages for alleged nefarious activities causing damage to the employer. Explaining further why the claims for damages should be entered as a counterclaim in the illegal dismissal case, we said:

Even under Republic Act No. 875 (the ‘Industrial Peace Act,’ now completely superseded by the Labor Code), jurisprudence was settled that where the plaintiff’s cause of action for damages arose out of, or was necessarily intertwined with, an alleged unfair labor practice committed by the union, the jurisdiction is exclusively with the (now defunct) Court of Industrial Relations, and the assumption of jurisdiction of regular courts over the same is a nullity. To allow otherwise would be "to sanction split jurisdiction, which is prejudicial to the orderly administration of justice." Thus, even after the enactment of the Labor Code, where the damages separately claimed by the employer were allegedly incurred as a consequence of strike or picketing of the union, such complaint for damages is deeply rooted from the labor dispute between the parties, and should be dismissed by ordinary courts for lack of jurisdiction. As held by this Court in National Federation of Labor vs. Eisma, 127 SCRA 419:

Certainly, the present Labor Code is even more committed to the view that on policy grounds, and equally so in the interest of greater promptness in the disposition of labor matters, a court is

spared the often onerous task of determining what essentially is a factual matter, namely, the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations.29

Evidently, the ruling of the appellate court is modeled after the basis used in Bañez which is the "intertwined" facts of the claims of the employer and the employee or that the "complaint for damages is deeply rooted from the labor dispute between the parties." Thus, did the appellate court say that:

There is no gainsaying the fact that such "Goodwill Clause" is part and parcel of the employment contract extended to [Portillo], and such clause is not contrary to law, morals and public policy. There is thus a causal connection between [Portillo’s] monetary claims against [respondents] and the latter’s claim for liquidated damages against the former. Consequently, we should allow legal compensation or set-off to take place.30

The Court of Appeals was misguided. Its conclusion was incorrect.

There is no causal connection between the petitioner employees’ claim for unpaid wages and the respondent employers’ claim for damages for the alleged "Goodwill Clause" violation. Portillo’s claim for unpaid salaries did not have anything to do with her alleged violation of the employment contract as, in fact, her separation from employment is not "rooted" in the alleged contractual violation. She resigned from her employment. She was not dismissed. Portillo’s entitlement to the unpaid salaries is not even contested. Indeed, Lietz Inc.’s argument about legal compensation necessarily admits that it owes the money claimed by Portillo.

The alleged contractual violation did not arise during the existence of the employer-employee relationship. It was a post-employment matter, a post-employment violation. Reminders are apt. That is provided by the fairly recent case of Yusen Air and Sea Services Phils., Inc. v. Villamor,31

which harked back to the previous rulings on the necessity of "reasonable causal connection" between the tortious damage and the damage arising from the employer-employee relationship. Yusen proceeded to pronounce that the absence of the connection results in the absence of jurisdiction of the labor arbiter. Importantly, such absence of jurisdiction cannot be remedied by raising before the labor tribunal the tortious damage as a defense. Thus:

When, as here, the cause of action is based on a quasi-delict or tort, which has no reasonable causal connection with any of the claims provided for in Article 217, jurisdiction over the action is with the regular courts. [citation omitted]

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages based on the parties’ contract of employment as redress for respondent’s breach thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present case, what with the reality that the stipulation refers to the postemployment relations of the parties.

For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter is one of claim for damages arising from a breach of contract, which is within the ambit of the regular court’s jurisdiction. [citation omitted]

It is basic that jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim asserted therein, which is a matter resolved only after and as a result of a trial. Neither can jurisdiction of a court be made to depend upon the defenses made by a defendant in his answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the defendant.32 (Underscoring supplied).

The error of the appellate court in its Resolution of 14 October 2010 is basic. The original decision, the right ruling, should not have been reconsidered.1âwphi1

Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code which prohibits wage deductions except in three circumstances:

ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any deduction from wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals in CA-G.R. SP No. I 06581 dated 14 October 20 I 0 is SET ASIDE. The Decision of the Court of Appeals in CA-G.R. SP No. I 06581 dated 3 I March :2009 is REINSTATED. No costs.

SO ORDERED.

NATIONAL FEDERATION OF LABOR (NFL), petitioner, vs.HON. BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, AND ALLIANCE OF NATIONALIST GENUINE LABOR ORGANIZATION-KILUSANG MAYO UNO (ANGLO-KMU), respondents.

 

KAPUNAN, J.:

Before us is a petition for certiorari under Rule 65 assailing the Resolution in OS-A-7-142-93 (RO700-9412-RU-037) dated August 8, 1995 of Undersecretary Bienvenido E. Laguesma, by authority of the Secretary of Labor and Employment, setting aside the Resolution of the Med-Arbiter dated March 13, 1995.

The antecedents are summarized in the assailed Resolution of Undersecretary Laguesma as follows:

Records show that on 27 December 1994, a petition for certification election among the rank and file employees of Cebu Shipyard and Engineering Work, Inc. was filed by the Alliance of Nationalist and Genuine Labor Organization (ANGLO-KMU), alleging among others, that it is a legitimate labor organization; that respondent Cebu Shipyard and Engineering Work, Inc. is a company engaged in the business of shipbuilding and repair with more or less, four hundred (400) rank and file employees; that the Nagkahiusang Mamumuo sa Baradero — National Federation of Labor is the incumbent bargaining agent of the rank and file employees of the respondent company; that the petition is supported by more than twenty-five percent (25%) of all the employees in the bargaining unit; that the petition is filed within the sixty (60) day period prior to the expiry date of the collective bargaining agreement (CBA) entered into by and between the Nagkahiusang Mamumuo sa Baradero-NFL and Cebu Shipyard Engineering Work, Inc. which is due to expire on 31 December 1994; and, that there is no bar to its bid to be certified as the sole and exclusive bargaining agent of all the rank and file employees of the respondent company.

On 2 January 1995, the Med-Arbiter issued an Order, the pertinent portion of which reads as follows:

The petitioner is given five days from receipt of this Order to present proofs that it has created a local in the appropriate bargaining unit where it seeks to operate as the bargaining agent and that, relative thereto, it has submitted to the Bureau of Labor Relations or the Industrial Relations Division of this Office the following: 1) A charter certificate; 2) the constitution and by-laws, a statement on the set of officers, and the books of accounts all of which are certified under oath by the Secretary or Treasurer, as the case may be, of such local or chapter and attested to by its President, OTHERWISE, this case will be dismissed.

SO ORDERED.

On 9 January 1995, forced-intervenor National Federation of Labor (NFL) moved for the dismissal of the petition on grounds that petitioner has no legal personality to file the present petition for certification election and that it failed to comply with the twenty-five percent (25%) consent requirement. It averred among others, that settled is the rule that when a petition for certification election is filed by the federation which is merely an agent, the petition is deemed to be filed by the local/chapter, the principal, which must be a legitimate labor organization; that for a local to be vested with the status a legitimate labor organization, it must submit to the Bureau of Labor Relations (BLR) or the Industrial Relations Division of the Regional Office of the Department of Labor and Employment the following: a) charter certificate, indicating the creation or establishment of a local or chapter; b) constitution and by-laws; c) set of officers, and d) books of accounts; that petitioner failed to submit the aforesaid requirements necessary for its acquisition of legal personality; that compliance with the aforesaid requirements must be made at the time of the filing of the petition within the freedom period; that the submission of the aforesaid requirements beyond the freedom period will not operate to allow the defective petition to prosper; that contrary to the allegation of the petitioner, the number of workers in the subject bargaining unit is 486, twenty-five percent (25%) of which is 122; that the consent signatures submitted by the petitioner is 120 which is below the required 25% consent requirement; that of the 120 employees who allegedly supported the petition, one (1) executed a certification stating that the signature, Margarito Cabalhug, does not belong to him, 15 retracted, 9 of which were made before the filing of the petition while 6 were made after the filing of the petition; and, that the remaining 104 signatures are way below the 25% consent requirement.

On 16 January 1995, forced-intervenor filed an Addendum/Supplement to its Motion to Dismiss, together with the certification issued by the Regional Office No. VII, this Department, attesting to the fact that the mandatory requirements necessary for the petitioner to acquire the requisite legal personality were submitted only on 6 January 1995 and the certification issued by the BLR, this Department, stating that as of 11 January 1995, the ANGLO-Cebu Shipyard and Engineering Work has not been reported as one of the affiliates of the Alliance of Nationalist and Genuine Labor Organization (ANGLO). Forced intervenor alleged that it is clear from the said certification that when the present petition was filed on 27 December 1994, petitioner and its alleged local/chapter have no legal personality to file the same. It claimed that the fatal defect in the instant petition cannot be cured with the submission of the requirements in question as the local/chapter may be accorded the status of a legitimate labor organization only on 6 January 1995 which is after the freedom period expired on 31 December 1994. Forced intervenor further claimed that the documents submitted by the petitioner were procured thru misrepresentation, and fraud, as there was no meeting on 13 November 1994 for the purpose of ratifying a constitution and by-laws and there was no election of officers that actually took place.

On 15 February 1995, petitioner filed its opposition to the respondent's motion to dismiss. It averred among others, that in compliance with the order of the Med-Arbiter, it submitted to the Regional Office No. VII, this Department, the following documents; charter certificate, constitution and by-laws; statement on the set of officers and treasurer's affidavit in lieu of the books of accounts; that the submission of the aforesaid document, as ordered, has cured whatever defect the petition may have at the time of the filing of the petition, that at the time of the filing of petition, the total number of rank and file employees in the respondent company was about 400 and that the petition was supported by 120 signatures which are more than the 25% required by law; that granting without admitting that it was not able to secure the signatures of at least 25% of the rank and file employees in the bargaining unit, the Med-Arbiter is still empowered to order for the conduct of a certification election precisely for the purpose of ascertaining which of the contending unions shall be the exclusive bargaining agent pursuant to the ruling of the Supreme Court in the case of California Manufacturing Corporation vs. Hon. Undersecretary of Labor, et al., G.R. No. 97020, June 8, 1992.

On 20 February 1995, forced-intervenor filed its reply, reiterating all its arguments and allegations contained in its previous pleadings. It stressed that petitioner is not a legitimate labor organization at the time of the filing of the petition

and that the petitioner's submission of the mandatory requirements after the freedom period would not cure the defect of the petition.

On 13 March 1995, the Med-Arbiter issued the assailed Resolution dismissing the petition, after finding that the submission of the required documents evidencing the due creation of a local was made after the lapse of the freedom period. 1

The Alliance of Nationalist Genuine Labor Organization-Kilusang Mayo Uno (ANGLO-KMU) filed an appeal from the March 13, 1995 Med-Arbiter's resolution insisting that it is a legitimate labor organization at the time of the filing of the petition for certification election, and claiming that whatever defect the petition may have had was cured by the subsequent submission of the mandatory requirements.

In a Resolution dated August 8, 1995, respondent Undersecretary Bienvenido E. Laguesma, by authority of the Secretary of Labor and Employment, set aside the Med-Arbiter's resolution and entered in lieu thereof a new order "finding petitioner [ANGLO-KMU] as having complied with the requirements of registration at the time of filing of the petition and remanding the records of this case to the Regional Office of origin . . . ." 2

The National Federation of Labor thus filed this special civil action for certiorari under Rule 65 of the Rules of Court raising the following grounds:

A. RESOLUTION OF PUBLIC RESPONDENT HON. BIENVENIDO E. LAGUESMA DATED 8 AUGUST 1995 AND HIS ORDER DATED 14 SEPTEMBER 1995 WERE ISSUED IN DISREGARD OF EXISTING LAWS AND JURISPRUDENCE; AND

B. GRAVELY ABUSED HIS DISCRETION IN APPLYING THE RULING IN THE CASE OF FUR V. LAGUESMA, G.R. NO. 109251, MAY 26, 1993, IN THE PRESENT CASE.

We will not rule on the merits of the petition. Instead, we will take this opportunity to lay the rules on the procedure for review of decisions or rulings of the Secretary of Labor and Employment under the Labor Code and its Implementing Rules. (P.D. No. 442 as amended)

In St. Martin Funeral Homes v. National Labor Relations Commission and Bienvenido Aricayos, G.R. No. 130866, September 16, 1998, the Court re-examined the mode of judicial review with respect to decisions of the National Labor Relations Commission.

The course taken by decisions of the NLRC and those of the Secretary of Labor and Employment are tangent, but all are within the umbra of the Labor Code of the Philippines and its implementing rules. On this premise, we find that the very same rationale in St. Martin Funeral Homes v. NLRC finds application here, leading ultimately to the same disposition as in that leading case.

We have always emphatically asserted our power to pass upon the decisions and discretionary acts of the NLRC well as the Secretary of Labor in the face of the contention that no judicial review is provided by the Labor Code. We stated in San Miguel Corporation v. Secretary of Labor 3 thus:

. . . It is generally understood that as to a administrative agencies exercising quasi-judicial or legislative power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute (73 C.J.S. 506, note 56).

The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decision (73 C.J.S. 507, Sec. 165). It is part of the system of checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications.

Considering the above dictum and as affirmed by decisions of this Court, St. Martin Funeral Homes v. NLRC succinctly pointed out, the remedy of an aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.

The propriety of Rule 65 as a remedy was highlighted in St. Martin Funeral Homes v. NLRC, where the legislative history of the pertinent statutes on judicial review of cases decided under the Labor Code was traced, leading to and supporting the thesis that "since appeals from the NLRC to the Supreme Court were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the proper vehicle for judicial review of decision of the NLRC" 4 and consequently "all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65." 5

Proceeding therefrom and particularly considering that the special civil action of certiorari under Rule 65 is within the concurrent original jurisdiction of the Supreme Court and the Court of Appeals, St. Martin Funeral Homes v. NLRC concluded and directed that all such petitions should be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts.

In the original rendering of the Labor Code, Art. 222 thereof provided that the decisions of the NLRC are appealable to the Secretary of Labor on specified grounds. 6 The decisions of the Secretary of Labor may be appealed to the President of the Philippines subject to such conditions or limitations as the President may direct.

Thus under the state of the law then, this Court had ruled that original actions for certiorari and prohibition filed with this Court against the decision of the Secretary of Labor passing upon the decision of the NLRC were unavailing for mere error of judgment as there was a plain, speedy and adequate remedy in the ordinary course of law, which was an appeal to the President. We said in the 1975 case, Scott v. Inciong, 7quoting Nation Multi Service Labor Union v. Acgoaili: 8 "It is also a matter of significance that there was an appeal to the President. So it is explicitly provided by the Decree. That was a remedy both adequate and appropriate. It was in line with the executive determination, after the proclamation of martial law, to leave the solution of labor disputes as much as possible to administrative agencies and correspondingly to limit judicial participation." 9

Significantly, we also asserted in Scott v. Inciong that while appeal did not lie, the corrective power of this Court by a writ of certiorari was available whenever a jurisdictional issue was raised or one of grave abuse of discretion amounting to a lack or excess thereof, citing San Miguel Corporation v. Secretary of Labor. 10

P.D. No. 1367 11 amending certain provisions of the Labor Code eliminated appeals to the President, but gave the President the power to assume jurisdiction over any cases which he considered national interest cases. The subsequent P.D. No. 1391, 12 enacted "to insure speedy labor justice and further stabilize industrial peace", further eliminated appeals from the NLRC to the Secretary of Labor but the President still continued to exercise his power to assume jurisdiction over any cases which he considered national interest cases. 13

Though appeals from the NLRC to the Secretary of Labor were eliminated, presently there are several instances in the Labor Code and its implementing and related rules where an appeal can be filed with the Office of the Secretary of Labor or the Secretary of Labor issues a ruling, to wit:

(1) Under the Rules and Regulations Governing Recruitment and Placement Agencies for Local Employment 14 dated June 5, 1997 superseding certain provisions of Book I (Pre-Employment) of the implementing rules, the decision of the Regional Director on complaints against agencies is appealable to the Secretary of Labor within ten (10) working days from receipt of a copy of the order, on specified grounds, whose decision shall be final and inappealable.

(2) Art. 128 of the Labor Code provides that an order issued by the duly authorized representative of the Secretary of Labor in labor standards cases pursuant to his visitorial and enforcement power under said article may be appealed to the Secretary of Labor.

Sec. 2 in relation to Section 3 (a), Rule X, Book III (Conditions of Employment) of the implementing rules gives the Regional Director the power to order and administer compliance with the labor standards provisions of the Code and other labor legislation. Section 4 gives the Secretary the power to review the order of the Regional Director, and the Secretary's decision shall be final and executory.

Sec. 1, Rule IV (Appeals) of the Rules on the Disposition of Labor Standards Cases in the Regional Offices dated September 16, 1987 15 provides that the order of the Regional Director in labor standards cases shall be final and executory unless appealed to the Secretary of Labor.

Sec. 5, Rule V (Execution) provides that the decisions, orders or resolutions of the Secretary of Labor and Employment shall become final and executory after ten (10) calendar days from receipt of the case records. The filing of a petition for certiorari before the Supreme Court shall not stay the execution of the order or decision unless the aggrieved party secures a temporary restraining order from the Court within fifteen (15) calendar days from the date of finality of the order or decision or posts a supersedeas bond.

Sec. 6 of Rule VI (Health and Safety Cases) provides that the Secretary of Labor at his own initiative or upon the request of the employer and/or employee may review the order of the Regional Director in occupational health and safety cases. The Secretary's order shall be final and executory.

(2) Art. 236 provides that the decision of the Labor Relations Division in the regional office denying an applicant labor organization, association or group of unions or workers' application for registration may be appealed by the applicant union to the Bureau of Labor Relations within ten (10) days from receipt of notice thereof.

Sec. 4, Rule V, Book V (Labor Relations), as amended by Department Order No. 9 dated May 1, 1997 16 provides that the decision of the Regional Office denying the application for registration of a workers association whose place of operation is confined to one regional jurisdiction, or the Bureau of Labor Relations denying the registration of a federation, national or industry union or trade union center may be appealed to the Bureau or the Secretary as the case may be who shall decide the appeal within twenty (20) calendar days from receipt of the records of the case.

(3) Art. 238 provides that the certificate of registration of any legitimate organization shall be canceled by the Bureau of Labor Relations if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements prescribed by law.

Sec. 4, Rule VIII, Book V provides that the decision of the Regional Office or the Director of the Bureau of Labor Relations may be appealed within ten (10) days from receipt thereof by the aggrieved party to the Director of the Bureau or the Secretary of Labor, as the case may be, whose decision shall be final and executory.

(4) Art. 259 provides that any party to a certification election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor who shall decide the same within fifteen (15) calendar days.

Sec. 12, Rule XI, Book V provides that the decision of the Med-Arbiter on the petition for certification election may be appealed to the Secretary.

Sec. 15, Rule XI, Book V provides that the decision of the Secretary of Labor on an appeal from the Med-Arbiter's decision on a petition for certification election shall be final and executory. The implementation of the decision of the Secretary affirming the decision to conduct a certification election shall not be stayed unless restrained by the appropriate court.

Sec. 15, Rule XII, Book V provides that the decision of the Med-Arbiter on the results of the certification election may be appealed to the Secretary within ten (10) days from receipt by the parties of a copy thereof, whose decision shall be final and executory.

Sec. 7, Rule XVIII (Administration of Trade Union Funds and Actions Arising Therefrom), Book V provides that the decision of the Bureau in complaints filed directly with said office pertaining to administration of trade union funds may be appealed to the Secretary of Labor within ten (10) days from receipt of the parties of a copy thereof.

Sec. 1, Rule XXIV (Execution of Decisions, Awards, or Orders), Book V provides that the decision of the Secretary of Labor shall be final and executory after ten (10) calendar days from receipt thereof by the parties unless otherwise specifically provided for in Book V.

(5) Art. 263 provides that the Secretary of Labor shall decide or resolve the labor dispute over which he assumed jurisdiction within thirty (30) days from the date of the assumption of jurisdiction. His decision shall be final and executory ten (10) calendar days after receipt thereof by the parties.

From the foregoing we see that the Labor Code and its implementing and related rules generally do not provide for any mode for reviewing the decision of the Secretary of Labor. It is further generally provided that the decision of the Secretary of Labor shall be final and executory after ten (10) days from notice. Yet, like decisions of the NLRC which under Art. 223 of the Labor Code become final after ten (10) days, 17 decisions of the Secretary of Labor come to this Court by way of a petition for certiorari even beyond the ten-day period provided in the Labor Code and the implementing rules but within the reglementary period set for Rule 65 petitions under the 1997 Rules of Civil Procedure. For example, in M. Ramirez Industries v. Secretary of Labor, 18 assailed was respondent's order affirming the Regional Director's having taken cognizance of a case filed pursuant to his visitorial powers under Art. 128 (a) of the Labor Code; in Samahang Manggagawa sa Permex v. Secretary of Labor, 19 assailed was respondent's order setting aside the Med-Arbiter's dismissal a petition for certification election; Samahan ng Manggagawa sa Pacific Plastic v. Laguesma, 20 assailed was respondent's order affirming the Med-Arbiter's decision on the results of a certification election; in Philtread Workers Union v. Confessor, 21 assailed was respondent's order issued under Art. 263 certifying a labor dispute to the NLRC for compulsory arbitration.

In two instances, however, there is specific mention of a remedy from the decision of the Secretary of Labor, thus:

(1) Section 15, Rule XI, Book V of the amended implementing rules provides that the decision of the Secretary of Labor on appeal from the Med-Arbiter's decision on a petition for certification election shall be final and executory, but that the implementation of the Secretary's decision affirming the Med-Arbiter's decision to conduct a certification election "shall not be stayed unless restrained by the appropriate court."

(2) Section 5, Rule V (Execution) of the Rules on the Disposition of Labor Standards Cases in Regional Offices provides that "the filing of a petition for certiorari before the Supreme Court shall not stay the execution of the [appealed] order or decision unless the aggrieved party secures a temporary restraining order from the Court."

We perceive no conflict with our pronouncements on the proper remedy which is Rule 65 and which should be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts. Accordingly, we read "the appropriate court" in Section 15, Rule XI, Book V of the Implementing Rules to refer to the Court of Appeals.

Sec. 5, Rule V of the Rules on the Disposition of Labor Standards Cases in Regional Offices specifying the Supreme Court as the forum for filing the petition for certiorari is not infirm in like manner or similarly as is the statute involved in Fabian v. Desierto. 22 And Section 5 cannot be read to mean that the petition for certiorari can only be filed exclusively and solely with this Court, as the provision must invariably be read in relation to the pertinent laws on the concurrent original jurisdiction of this Court and the Court of Appeals in Rule 65 petitions.

In fine, we find that it is procedurally feasible as well as practicable that petitions for certiorari under Rule 65 against the decision of the Secretary of Labor rendered under the Labor Code and its implementing and related rules be filed initially in the Court of Appeals. Paramount consideration is strict observance of the doctrine on the hierarchy of the courts, emphasized in St. Martin Funeral Homes v. NLRC, on "the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our preliminary jurisdiction." 23

WHEREFORE, in view of the foregoing, certiorari, together with all pertinent records REFERRED to the Court of Appeals for disposition.

SO ORDERED.