LABOR RELATIONS

VIII. RIGHT TO SELF ORGANIZATION

CASE NO. 93
THE HERITAGE HOTEL MANILA (OWNED AND OPERATED
BY GRAND PLAZA HOTEL CORPORATION) Petitioner,
vs.
PINAG-ISANG GALING AT LAKAS NG MGA
MANGGAGAWA SA HERITAGE MANILA (PIGLASHERITAGE), Respondent

On December 6, 2004, petitioner Company filed a

petition to cancel the union registration of respondent
PIGLAS union. The company claimed that the union
made fatal misrepresentation in its application for
union registration and committed dual unionism"
which is a ground for canceling a unions registration.

This case is about a companys objections to the

registration of its rank and file union for noncompliance with the requirements of its registration.

ISSUE: Whether or not the new Union can have a valid

certification election?

FACTS: Sometime in 2000, certain rank and file

employees of petitioner Heritage Hotel Manila
(petitioner company) formed the "Heritage Hotel
Employees Union" (the HHE union). The Department of
Labor and Employment-National Capital Region (DOLENCR) later issued a certificate of registration to this
union.
Subsequently, the HHE union filed a petition for
certification election that petitioner company opposed
alleging that the HHE union misrepresented itself to be
an independent union, when it was, in truth, a local
chapter of the National Union of Workers in Hotel and
Restaurant and Allied Industries (NUWHRAIN) and the
company also filed a petition for the cancellation of the
HHE unions registration certificate.

RULING: The charge that a labor organization

committed fraud and misrepresentation in securing its
registration is a serious charge and deserves close
scrutiny. Once such charge is proved, the labor union
acquires none of the rights accorded to registered
organizations. Here, the discrepancies in the number of
union members or employees stated in the various
supporting documents that respondent PIGLAS union
submitted to labor authorities can be explained. While
it appears in the minutes of the December 10, 2003
organizational meeting that only 90 employees
responded to the roll call at the beginning, it cannot be
assumed that such number could not grow to 128 as
reflected on the signature sheet for attendance. There
is also nothing essentially mysterious or irregular about
the fact that only 127 members ratified the unions
constitution and by-laws when 128 signed the
attendance sheet. It cannot be assumed that all those
who attended approved of the constitution and bylaws. Any member had the right to hold out and refrain
from ratifying those documents or to simply ignore the
process.

The Med-Arbiter granted the HHE unions petition for

certification election. Petitioner company appealed it
and filed a motion for reconsideration which was both
denied respectively, prompting it to file a petitioin for
certiorari with the CA.On October 12, 2001 the Court of
Appeals issued a writ of injunction against the holding
of the HHE unions certification election, effective until
the petition for cancellation of that unions registration
shall have been resolved with finality. The decision of
the Court of Appeals became final when the HHE union
withdrew the petition for review that it filed with this
Court.

At any rate, the Labor Code and its implementing rules

do not require that the number of members appearing
on the documents in question should completely
dovetail. For as long as the documents and signatures
are shown to be genuine and regular and the
constitution and by-laws democratically ratified, the
union is deemed to have complied with registration
requirements.

On December 10, 2003 certain rank and file employees

of petitioner company held a meeting and formed
another union, the respondent Pinag-Isang Galing at
Lakas ng mga Manggagawa sa Heritage Manila (the
PIGLAS union). This union applied for registration with
the DOLE-NCR and got its registration certificate on
February 9, 2004. Two months later, the members of
the first union, the HHE union, adopted a resolution for
its dissolution. The HHE union then filed a petition for
cancellation of its union registration.

Petitioner company claims that respondent PIGLAS

union was required to submit the names of all its
members comprising at least 20 percent of the
employees in the bargaining unit. Yet the list it
submitted named only 100 members notwithstanding
that the signature and attendance sheets reflected a
membership of 127 or 128 employees. This omission,
said
the
company,
amounted
to
material
misrepresentation that warranted the cancellation of
the unions registration.

On September 4, 2004 respondent PIGLAS union filed a

petition for certification election that petitioner
company also opposed, alleging that the new unions
officers and members were also those who comprised
the old union. According to the company, the
employees involved formed the PIGLAS union to
circumvent the Court of Appeals injunction against the
holding of the certification election sought by the
former union. Despite the companys opposition,
however, the Med-Arbiter granted the petition for
certification election.

But, as the labor authorities held, this discrepancy is

immaterial. A comparison of the documents shows
that, except for six members, the names found in the
subject list are also in the attendance and signature
sheets. Notably, the bargaining unit that respondent
PIGLAS union sought to represent consisted of 250
employees. Only 20 percent of this number or 50
employees were required to unionize. Here, the union
more than complied with such requirement. And last,
the fact that some of respondent PIGLAS unions
members were also members of the old rank and file

union, the HHE union, is not a ground for canceling the

new unions registration. The right of any person to join
an organization also includes the right to leave that
organization and join another one.

CASE NO. 95
STA. LUCIA EAST COMMERCIAL CORP., petitioner,
vs. HON. SECRETARY OF LABOR AND
EMPLOYMENT and STA. LUCIA EAST COMMERCIAL
CORP. WORKERS ASSOCIATION, respondent.
G.R. No. 162355
FACTS: Confederated Labor Union of the
Philippines (CLUP), in behalf of its chartered
local, instituted a petition for certification
election among the regular rank-and-file
employees of Sta. Lucia East Commercial Corp.
and its Affiliates. Med-Arbiter Bactin ordered
the dismissal of the petition due to
inappropriateness of the bargaining unit. CLUPSLECC and its Affiliates Workers Union then
reorganized itself and re-registered as CLUPSta. Lucia East Commercial Corporation
Workers Association (CLUP-SLECCWA), limiting
its membership to the rank-and-file employees
of Sta. Lucia East Commercial Corporation.
CLUP-SLECCWA then filed the instant petition.
It alleged that SLECC employs about 115
employees and that more than 20% of
employees belonging to the rank-and-file
category are its members.
CLUP-SLECCWA
claimed that no certification election has been
held among them within the last 12 months
prior to the filing of the petition, and while
there is another union registered covering the
same employees, namely SMSLEC, it has not
been recognized as the exclusive bargaining
agent of SLECCs employees. Subsequently,
SLECC filed a motion to dismiss the petition. It
averred that it has voluntarily recognized
SMSLEC as the exclusive bargaining agent of
its regular rank-and-file employees, and that
collective bargaining negotiations already
commenced between them. Then a CBA
between SMSLEC and SLECC was ratified by its
rank-and-file employees and registered with
DOLE.

enumerated in Sections (a) to (c) of Article 239

of the Labor Code.1[10] Thus, CLUP-SLECC and
its affiliates workers union, having been validly
issued a certificate of registration, should be
considered as having acquired juridical
personality which may not be attacked
collaterally. The proper procedure for SLECC is
to file a petition for cancellation of certificate of
registration of CLUP-SLECC and its affiliates
workers union and not to immediately
commence voluntary recognition proceedings
with SMSLEC.
WHEREFORE, petition is denied.
CASE NO. 96

SAMAHAN NG MGA MANGGAGAWA SA SAMMALAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI

NG ALYANSA (SAMMA-LIKHA), Petitioner,
vs.
SAMMA CORPORATION, Respondent.
G.R. No. 167141

March 13, 2009

FACTS: Petitioner SAMMA-LIKHA filed a petition for

certification election in the DOLE. Respondent moved
for the dismissal of the petition. Med-arbiter Arturo V.
Cosuco ordered the dismissal of the petition. Petitioner
moved for reconsideration.

Meanwhile, respondent filed a petition for cancellation

of petitioners union registration in the DOLE. Crispin D.
Dannug, Jr., Officer-in-Charge/Regional Director of
DOLE, issued a resolution revoking the charter
certificate of petitioner as local chapter of LIKHA
Federation.

ISSUE: Whether or not certification election

must be conducted in the SLECC?
HELD: Article 212(g) of the Labor Code defines
a labor organization as any union or
association of employees which exists in whole
or in part for the purpose of collective
bargaining or of dealing with employers
concerning
terms
and
conditions
of
employment. Upon compliance with all the
documentary requirements, the Regional Office
or Bureau shall issue in favor of the applicant
labor organization a certificate indicating that it
is included in the roster of legitimate labor
organizations. Any applicant labor organization
shall acquire legal personality and shall be
entitled to the rights and privileges granted by
law to legitimate labor organizations upon
issuance of the certificate of registration. The
concepts of a union and of a legitimate labor
organization are different from, but related to,
the concept of a bargaining unit. A bargaining
unit is a group of employees of a given
employer, comprised of all or less than all of
the entire body of employees, consistent with
equity to the employer, indicated to be the
best suited to serve the reciprocal rights and
duties of the parties under the collective
bargaining provisions of the law. However,
employees in two corporations cannot be
treated as a single bargaining unit even if the
businesses of the two corporations are related.
The inclusion in the union of disqualified
employees is not among the grounds for
cancellation of registration, unless such
inclusion is due to misrepresentation, false
statement or fraud under the circumstances

Going back to the case, Acting Secretary Manuel G.

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

ISSUES: (1) whether or not a certificate for non-forum

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

HELD:

1) NO. On the first issue, the requirement for a

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

2) On the second issue, according to the implementing

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

3) On the third issue, LIKHA was granted legal

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

It was ruled that the employer, as a mere bystander,

has no legal standing in a certification election as it
cannot oppose the petition or appeal the Med-Arbiter's
orders related thereto.

CASE NO. 97
PICOP RESOURCES, INC vs TAECA, ET AL
G.R. NO. 160828,

AUGUST 9,2010

FACTS
Respondents
were
regular
rank-and-file
employees
of
PRI
and bona
fide members
of Nagkahiusang Mamumuo sa PRI Southern Philippines
Federation of Labor (NAMAPRI-SPFL), which is the
collective bargaining agent for the rank-and-file
employees of petitioner PRI. PRI has a collective
bargaining agreement (CBA) with NAMAPRI-SPFL for a
period of five (5) years from May 22, 1995 until May
22, 2000 which contained the following union security
provisions:
Article
Check-Of

II-

Union

Security

and

Section
6. Maintenance
of
membership.
6.1
All employees within the
appropriate bargaining unit who
are members of the UNION at the
time of the signing of this
AGREEMENT shall, as a condition
of continued employment by the
COMPANY,
maintain
their
membership in the UNION in good
standing during the effectivity of
this AGREEMENT.
6.2
Any
employee
who
may
hereinafter be employed to occupy a
position covered by the bargaining unit
shall be advised by the COMPANY that
they are required to file an application
for membership with the UNION within
thirty (30) days from the date his
appointment shall have been made
regular.
6.3
The COMPANY, upon the
written request of the UNION and
after
compliance
with
the
requirements of the New Labor
Code,
shall
give
notice
of
termination of services of any
employee who shall fail to fulfill
the condition provided in Section
6.1 and 6.2 of this Article
On May 16, 2000, Atty. Proculo P. Fuentes (Atty.
Fuentes) sent a letter to the management of PRI
demanding the termination of employees who
allegedly campaigned for, supported and signed the
Petition for Certification Election of the Federation of
Fee Workers Union (FFW) during the effectivity of the
CBA. NAMAPRI-SPFL
considered
said
act
of
campaigning for and signing the petition for
certification election of FFW as an act of disloyalty and
a valid basis for termination for a cause in accordance
with its Constitution and By-Laws, and the terms and
conditions of the CBA, specifically Article II, Sections
6.1 and 6.2 on Union Security Clause. Atty. Romero A.
Boniel
issued
a
memorandum
addressed
to
the concerned employees to explain in writing within
72 hours why their employment should not be
terminated due to acts of disloyalty as alleged by their
Union. Letters of explanation were evaluated by Atty.
Fuentes but found the member's explanations to be
unsatisfactory and reiterated the demand for
termination. On October 16, 2000, PRI served notices
of termination for causes to employees whom
NAMAPRIL-SPFL sought to be terminated on the ground
of acts of disloyalty committed against it when
respondents allegedly supported and signed the
Petition for Certification Election of FFW before the
freedom period during the effectivity of the CBA. A
Notice dated October 21, 2000 was also served on the
Department of Labor and Employment Office (DOLE),
Caraga Region.
ISSUE: Whether or not an existing CBA can be given
its full force and effect in all its terms and condition
including its union security clause, even beyond the 5year period when no new CBA has yet been entered
into.
RULING
NO. Petitioner's reliance on Article 253 is
misplaced. The provision of Article 256 of the Labor
Code is particularly enlightening. It reads: Article 256.
Representation issue in organized establishments. - In
organized establishments, when a verified petition
questioning the majority status of the incumbent
bargaining agent is filed before the Department of
Labor and Employment within the sixty-day period
before the expiration of a collective bargaining
agreement, the Med-Arbiter shall automatically order
an election by secret ballot when the verified petition
is supported by the written consent of at least twentyfive percent (25%) of all the employees in the

bargaining unit to ascertain the will of the employees

in the appropriate bargaining unit. To have a valid
election, at least a majority of all eligible voters in the
unit must have cast their votes. The labor union
receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all the
workers in the unit. When an election which provides
for three or more choices results in no choice receiving
a majority of the valid votes cast, a run-off election
shall be conducted between the labor unions receiving
the two highest number of votes: Provided, That the
total number of votes for all contending unions is at
least fifty per cent (50%) of the number of votes cast.
At the expiration of the freedom period,
the employer shall continue to recognize the
majority status of the incumbent bargaining
agent where no petition for certification election
is filed.
Applying the same provision, it can be said that while it
is incumbent for the employer to continue to recognize
the majority status of the incumbent bargaining agent
even after the expiration of the freedom period, they
could only do so when no petition for certification
election was filed. The reason is, with a pending
petition for certification, any such agreement entered
into by management with a labor organization is
fraught with the risk that such a labor union may not
be chosen thereafter as the collective bargaining
representative. The provision for status quo is
conditioned on the fact that no certification election
was filed during the freedom period. Any other view
would render nugatory the clear statutory policy to
favor certification election as the means of
ascertaining the true expression of the will of the
workers as to which labor organization would represent
them.
In the instant case, four (4) petitions were filed
as early as May 12, 2000. In fact, a petition for
certification election was already ordered by the MedArbiter of DOLE Caraga Region on August 23, 2000.
Therefore, following Article 256, at the expiration of the
freedom period, PRI's obligation to recognize NAMAPRISPFL as the incumbent bargaining agent does not hold
true when petitions for certification election were filed,
as in this case.
Moreover, the last sentence of Article 253
which provides for automatic renewal pertains only to
the economic provisions of the CBA, and does not
include representational aspect of the CBA. An existing
CBA cannot constitute a bar to a filing of a petition for
certification election. When there is a representational
issue, the status quo provision in so far as the need to
await the creation of a new agreement will not apply.
Otherwise, it will create an absurd situation where the
union members will be forced to maintain membership
by virtue of the union security clause existing under
the CBA and, thereafter, support another union when
filing a petition for certification election. If we apply it,
there will always be an issue of disloyalty whenever the
employees exercise their right to self-organization. The
holding of a certification election is a statutory policy
that should not be circumvented, or compromised.

CASE NO. 98
YOKOHAMA TIRE PHILIPPINES, INC., VS.
YOKOHAMA EMPLOYEES UNION,
G.R. No. 159553 December 10, 2007
FACTS:
On October 7, 1999, respondent Yokohama
Employees Union (Union) filed a petition for
certification
election
among
the
rank-and-file
employees of Yokohama. Upon appeal from the MedArbiters order dismissing the petition, the Secretary of
the Department of Labor and Employment (DOLE)
ordered an election with (1) Yokohama Employees
Union and (2) No Union as choices.[3] The election
held on November 23, 2001 yielded the following
result:
YOKOHAMA EMPLOYEES UNION
NO UNION
SPOILED

131
117

VOTES CHALLENGED BY [YOKOHAMA]

VOTES CHALLENGED BY [UNION]
TOTAL CHALLENGED VOTES
TOTAL VOTES CAST

250
-

RULE IX
CONDUCT OF CERTIFICATION ELECTION
Section 5. Qualification of voters; inclusion-exclusion.
. . . An employee who has been dismissed from work
but has contested the legality of the dismissal in a
forum of appropriate jurisdiction at the time of the
issuance of the order for the conduct of a certification
election shall be considered a qualified voter, unless
his/her dismissal was declared valid in a final judgment
at the time of the conduct of the certification election.
CASE NO. 99

-----

Arbiters February 28, 2003 Decision was resolved by

the NLRC only on August 29, 2003.[19]
Even the new rule has explicitly stated that without a
final judgment declaring the legality of dismissal,
dismissed employees are eligible or qualified voters.

78
73
-----151
401[4]

Yokohama challenged 78 votes cast by dismissed

employees. On the other hand, the Union challenged
68 votes cast by newly regularized rank-and-file
employees and another five (5) votes by aalleged
supervisor-trainees.
On January 21, 2002, the Med-Arbiter resolved
the parties protests, decreeing as follows:
2. The appreciation of the votes of the sixty-five (65)
dismissed employees who contested their dismissal
before the National Labor Relations Commission shall
be suspended until the final disposition of their
complaint for illegal dismissal. . . .
3. The votes of the sixty-eight (68) so-called newlyregularized
rank-and-file
employees
shall
be
appreciated in the final tabulation.
On May 22, 2002, the DOLE Acting Secretary
disposed of the appeals as follows:
2. The votes of dismissed employees who contested
their dismissal before the National Labor Relations
Commission (NLRC) shall be appreciated in the final
tabulation of the certification election results.
3. The votes of the sixty-eight (68) newly regularized
rank-and-file employees shall be excluded.
The Court of Appeals affirmed in toto the
decision of the DOLE Acting Secretary. Yokohama
appealed. Thus, the present case.
ISSUE: Whether or not THE VOTES OF ALL OF ITS
EMPLOYEES WHO WERE PREVIOUSLY DISMISSED FOR
SERIOUS MISCONDUCT AND ABANDONMENT OF WORK
WHICH
ARE
CAUSES
UNRELATED
TO
THE
CERTIFICATION ELECTION BE APPRECIATED.
RULING:
Section 2, Rule XII[16] of the rules implementing
Book V of the Labor Code allows a dismissed employee
to vote in the certification election if the case
contesting the dismissal is still pending.
Section 2, Rule XII, the rule in force during the
November 23, 2001 certification election clearly,
unequivocally and unambiguously allows dismissed
employees to vote during the certification election if
the case they filed contesting their dismissal is still
pending at the time of the election.
Here, the votes of employees with illegal dismissal
cases were challenged by petitioner although their
cases were still pending at the time of the certification
election on November 23, 2001. These cases were
filed on June 27, 2001[18] and the appeal of the Labor

NATIONAL UNION OF WORKERS IN HOTELS,

RESTAURANTS AND ALLIED INDUSTRIES- MANILA
PAVILION HOTEL CHAPTER (NUWHRAIN-MPHC),
Petitioner, vs. SECRETARY OF LABOR AND
EMPLOYMENT, BUREAU OF LABOR RELATIONS,
HOLIDAY INN MANILA PAVILION HOTEL LABOR
UNION (HIMPHLU) AND ACESITE PHILIPPINES
HOTEL CORPORATION, Respondents.
G.R. No. 181531
July 31, 2009
FACTS: A certification election was conducted among
the rank-and-file employees of respondent Holiday Inn
Manila Pavilion Hotel. In view of the significant number
of segregated votes, NUHWHRAIN-MPHC and HIMPHLU,
referred the case back to Med-Arbiter Ma. Simonette
Calabocal to decide which among those votes would be
opened and tallied. 11 votes were initially segregated
because they were cast by dismissed employees, albeit
the legality of their dismissal was still pending before
the CA. 6 other votes were segregated because the
employees who cast them were already occupying
supervisory positions at the time of the election. Still 5
other votes were segregated on the ground that they
were cast by probationary employees and, pursuant to
the existing CBA, such employees cannot vote.
ISSUES:
1) Whether employees on probationary status at the
time of the certification elections should be allowed to
vote?
2) Whether HIMPHLU was able to obtain the required
majority for it to be certified as the exclusive
bargaining agent?
RULING:
1) In a certification election, all rank and file employees
in
the
appropriate
bargaining
unit,
whether
probationary or permanent are entitled to vote.
Collective bargaining covers all aspects of the
employment relation and the resultant CBA negotiated
by the certified union binds all employees in the
bargaining unit. Hence, all rank and file employees,
probationary or permanent, have a substantial interest
in the selection of the bargaining representative. The
Code makes no distinction as to their employment
status as basis for eligibility in supporting the petition
for certification election. The law refers to "all" the
employees in the bargaining unit. All they need to be
eligible to support the petition is to belong to the
"bargaining unit."
2) It bears reiteration that the true importance of
ascertaining the number of valid votes cast is for it to
serve as basis for computing the required majority, and
not just to determine which union won the elections.
Prescinding from the Courts ruling that all the
probationary employees votes should be deemed valid
votes while that of the supervisory employees should
be excluded, it follows that the number of valid votes
cast would increase from 321 to 337. Under Art. 256
of the Labor Code, the union obtaining the majority of

the valid votes cast by the eligible voters shall be

certified as the sole and exclusive bargaining agent of
all the workers in the appropriate bargaining unit. This
majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or
at least 170. HIMPHLU obtained 169 while petitioner
received 151 votes. Clearly, HIMPHLU was not able to
obtain a majority vote. Having declared that no choice
in the certification election conducted obtained the
required majority, it follows that a run-off election must
be held to determine which between HIMPHLU and
petitioner
should
represent
the
rank-and-file
employees.
WHEREFORE, the petition is GRANTED.

CASE NO. 100

Lepanto Ceramics, Inc. vs. Lepanto Ceramics
Employees Association
G.R. No. 180866, March 2, 2010

diminished, discontinued or eliminated by the

employer. The principle of non-diminution of benefits is
founded on the constitutional mandate to protect the
rights of workers and to promote their welfare and to
afford labor full protection.

Facts:

CASE NO. 101

Petitioner Lepanto Ceramics, Inc., a corporation

primarily in the business of manufacture, makes, buy
and sell, on whole sale basis, tiles, marbles, mosaics
and other similar products. Respondent Lepanto
Ceramics Employees Association is the sole and
exclusive bargaining agent in the establishment of
petitioner.

FVC Labor Union-PTGWO vs SANAMA-FVC-SIGLO

G.R. No. 176249, November 27, 2009
Facts:

In 1998, petitioner gave P3, 000.00 as bonus to its

employees, members of the respondent Association.
Subsequently, in September 1999, petitioner and
respondent Association entered into a Collective
Bargaining Agreement (CBA) which provides for,
among others, the grant of a Christmas gift
package/bonus to the members of the respondent
Association.
In the succeeding years, 1999, 2000, 2001, petitioner
gave bonuses in a form of a certificate which is
equivalent to P3, 000.00. However, in 2002, petitioner
gave only P600.00 as cash benefit. Respondent
Association objected to the P600.00 cash benefit and
argued that it was in violation of the CBA. Petitioner
averred that the giving of extra compensation was
based on the companys available resources for a given
year and the workers are not entitled to a bonus if the
company does not make profits. Unable to amicably
settle the dispute, the case was referred to the
Voluntary Arbitrator. The Voluntary Arbitrator rendered
a decision, declaring that petitioner is bound to grant
each of its workers a Christmas bonus of P3,000.00 for
the reason that the bonus was given prior to the
effectivity of the CBA between the parties and that the
financial losses of the company is not a sufficient
reason to exempt it from granting the same. On
appeal, the Court of Appeals affirmed the ruling of the
Voluntary Arbitrator.

On December 22, 1997, the petitioner FVCLU-PTGWO

the recognized bargaining agent of the rank-and-file
employees of the FVC Philippines, Incorporated
signed a five-year collective bargaining agreement with
the company. The five-year CBA period was from
February 1, 1998 to January 30, 2003. At the end of the
3rd year of the five-year term and pursuant to the CBA,
FVCLU-PTGWO and the company entered into the
renegotiation of the CBA and modified, among other
provisions, the CBAs duration. Article XXV, Section 2
of the renegotiated CBA provides that this renegotiation agreement shall take effect beginning
February 1, 2001 and until May 31, 2003 thus
extending the original five-year period of the CBA by
four (4) months. On January 21, 2003, nine (9) days
before the January 30, 2003 expiration of the originallyagreed five-year CBA term (and four [4] months and
nine [9] days away from the expiration of the amended
CBA
period),
the
respondent
Sama-Samang
Nagkakaisang Manggagawa sa FVC-Solidarity of
Independent
and
General
Labor
Organizations
(SANAMA-SIGLO) filed before the Department of Labor
and Employment (DOLE) a petition for certification
election for the same rank-and-file unit covered by the
FVCLU-PTGWO CBA. FVCLU-PTGWO moved to dismiss
the petition on the ground that the certification
election petition was filed outside the freedom period
or outside of the sixty (60) days before the expiration
of the CBA on May 31, 2003.
Issue:
Was the certification election filed within the freedom
period?

Issue:
Ruling:
Is petitioner obliged to give a Christmas bonus to
respondent Association?
Ruling:
Yes. Generally, a bonus is not a demandable and
enforceable obligation. For a bonus to be enforceable,
it must have been promised by the employer and
expressly agreed upon by the parties. Given that the
bonus in this case is integrated in the CBA, the same
partakes the nature of a demandable obligation. Verily,
by virtue of its incorporation in the CBA, the Christmas
bonus due to respondent Association has become more
than just an act of generosity on the part of the
petitioner but a contractual obligation it has
undertaken.
A reading of the provision of the CBA reveals that the
same provides for the giving of a "Christmas gift
package/bonus" without qualification. The said
provision did not state that the Christmas package
shall be made to depend on the petitioners financial
standing. The records are also bereft of any showing
that the petitioner made it clear during CBA
negotiations that the bonus was dependent on any
condition. Indeed, if the petitioner and respondent
Association intended that the P3,000.00 bonus would
be dependent on the company earnings, such intention
should have been expressed in the CBA.
All given, business losses are a feeble ground for
petitioner to repudiate its obligation under the CBA.
The rule is settled that any benefit and supplement
being enjoyed by the employees cannot be reduced,

Yes. While the parties may agree to extend the CBAs

original five-year term together with all other CBA
provisions, any such amendment or term in excess of
five years will not carry with it a change in the unions
exclusive collective bargaining status. By express
provision of Article 253-A, the exclusive bargaining
status cannot go beyond five years and the
representation status is a legal matter not for the
workplace parties to agree upon. In other words,
despite an agreement for a CBA with a life of more
than five years, either as an original provision or by
amendment,
the
bargaining
unions
exclusive
bargaining status is effective only for five years and
can be challenged within sixty (60) days prior to the
expiration of the CBAs first five years.
In the present case, the CBA was originally signed for
a period of five years, i.e., from February 1, 1998 to
January 30, 2003, with a provision for the renegotiation
of the CBAs other provisions at the end of the 3rd year
of the five-year CBA term. Thus, prior to January 30,
2001 the workplace parties sat down for renegotiation
but instead of confining themselves to the economic
and non-economic CBA provisions, also extended the
life of the CBA for another four months, i.e., from the
original expiry date on January 30, 2003 to May 30,
2003.
This negotiated extension of the CBA term has no legal
effect on the FVCLU-PTGWOs exclusive bargaining
representation status which remained effective only for
five years ending on the original expiry date of January
30, 2003. Thus, sixty days prior to this date, or starting

December 2, 2002, SANAMA-SIGLO could properly file a

petition for certification election. Its petition, filed on
January 21, 2003 or nine (9) days before the expiration
of the CBA and of FVCLU-PTGWOs exclusive bargaining
status, was seasonably filed.

CASE NO. 102

STANDARD CHARTERED BANK EMPLOYEES UNION vs.
CONFESOR
G.R. No. 114974June 16, 2004
FOR:
SURFACE
BARGAINING

BARGAINING

AND

BLUE-SKY

Facts:
Standard Chartered Bank is foreign Banking
Corporation doing business in the Philippines. The
exclusive bargaining agent is the Standard Chartered
Bank Employees Union.
In August 1990, the bank and the union signed
a five year CBA and renegotiate after 3 years. Prior to
the expiration of the three year period and before the
60 day freedom period, the union initiated the
negotiations. The bank gave a counter-proposal. The
parties agreed to settle the differences in a meeting.
The non-economic provisions were noted as deferred
however it was manifested that it should be changed to
deadlock to indicate that it is not yet resolved. The
negotiations of the economic provisions were
commenced. Umali, the president of the Union, said
that the means on how the Union got what it wanted
during the first negotiation of the 1987 will be applied
again if needed in order to get what it wanted.
The Union insisted the economic provisions.
However, the union proposed that the Bank make a
revision of itemized proposal. On June 15, 1993 the
union said that it would be best if they seek third party
assistance if the counter proposal was not revised.
Afterwards, the Bank presented a counter-proposal.
The Union then declared a deadlock and filed a
notice of strike before NCMB. The Bank filed a
complaint for ULP alleging that the union did not
bargain in good faith, violated the no strike-no lockout
clause, and that the bank suffered nominal and actual
damages and was forced to litigate and hire the
services of a lawyer.
The Secretary of Labor assumed jurisdiction
over the labor dispute and ordered the parties to
execute a CBA incorporating the dispositions: CBA shall
be retroactive to April 1, 1993; effective for two years;
the provisions which are not expressly repealed or
modified are retained and without prejudice to the
agreements as the parties may arrive at in the
meantime. The banks complaint for ULP was dismissed
for lack of merit. Both parties filed for MR to no avail.
Issues:
1. Whether or not the Bank violated its duty to
bargain by committing Surface Bargaining and
therefore committed ULP under Article 248(g)
when it engaged in surface bargaining.
2. Whether or not the Union committed ULP
through Blue Sky Bargaining.
Ruling:
1.
No. It was held that the Union failed to show
that the Bank committed such acts. Surface bargaining
is the going through the motions of negotiating without
any legal intent to reach an agreement. The resolution
of surface bargaining allegations never presents an
easy issue. The determination of whether a party has
engaged in unlawful surface bargaining is usually a
difficult one because it involves, at bottom, a question
of the intent of the party in question, and usually such
intent can only be inferred from the totality of the
challenged partys conduct both at and away from the
bargaining table. It involves the question of whether an
employers conduct demonstrates an unwillingness to
bargain in good faith or is merely hard bargaining.
The minutes of meetings from March 12, 1993
to June 15, 1993 do not show that the Bank had any
intention of violating its duty to bargain with the Union.
Records show that after the Union sent its proposal to
the Bank on February 17, 1993, the latter replied with a

list of its counter-proposals on February 24, 1993.

Thereafter, meetings were set for the settlement of
their differences. The minutes of the meetings show
that both the Bank and the Union exchanged economic
and non-economic proposals and counter-proposals.
The Union has not been able to show that the
Bank had done acts, both at and away from the
bargaining table, which tend to show that it did not
want to reach an agreement with the Union or to settle
the differences between it and the Union. Admittedly,
the parties were not able to agree and reached a
deadlock. However, it is herein emphasized that the
duty to bargain "does not compel either party to agree
to a proposal or require the making of a concession."
Hence, the parties failure to agree did not amount to
ULP under Article 248(g) for violation of the duty to
bargain.
2.
No. The Union did not engage in blue sky
bargaining. The Bank failed to show that the economic
demands made by the Union were exaggerated or
unreasonable. The minutes of the meeting show that
the Union based its economic proposals on data of rank
and file employees and the prevailing economic
benefits received by bank employees from other
foreign banks doing business in the Philippines and
other branches of the Bank in the Asian region.
In sum, we find that the public respondent did
not act with grave abuse of discretion amounting to
lack or excess of jurisdiction when it issued the
questioned order and resolutions. While the approval of
the CBA and the release of the signing bonus did not
estop the Union from pursuing its claims of ULP against
the Bank, we find the latter did not engage in ULP. We,
likewise, hold that the Union is not guilty of ULP.
CASE NO. 103
San Miguel Corporation Employees UNIONPTGWO, represented by its President Raymundo
Hipolito, Jr., petitioner,
vs.
Hon. Ma. Nieves D. Confesor
G.R. No. 111262 September 19, 1996

Facts:
Petitioner UNION-PTGWO entered into a CBA
with private respondent San Miguel Corp. to take effect
upon the expiration of the previous CBA or on June 30,
1989.
SMC management in a letter, informed its
employees of its intention for restructuring. SMC was
composed of four operating divisions namely: (1) Beer,
(2) Packaging, (3) Feeds and Livestocks, (4)
Magnolia and Agri-business. Thereafter, Magnolia and
Feeds and Livestock Division were spun off and
became two separate and distinct corporations
(Magnolia and SMFI). However, the CBA remained in
effect.
CBA was renegotiated. PTGWO insisted that the
SMCs bargaining unit should still include the
employees of the spun-off corporations: Magnolia and
SMFI; and that the renegotiated terms of the CBA shall
be effective only for the remaining period of two years.
SMC contended that the members/employees who had
moved to Magnolia and SMFI, automatically ceased to
be part of the bargaining unit at the SMC. Furthermore,
the CBA should be effective for three years in
accordance with Art. 253-A of the Labor Code.
Subsequently unable to agree on these issues with
respect to the bargaining unit and duration of the CBA,
petitioner-union declared a deadlock and filed a notice
of strike.
Issue: Whether or not employees of the spun off
corporations were still considered as part of the
appropriate bargaining unit.

Ruling:
NO. SC held that, in determining an appropriate
bargaining unit, the test of grouping is mutuality or
commonality of interests. The employees sought to be
represented by the collective bargaining agent must
have substantial mutual interests in terms of
employment and working conditions as evinced by the
type of work they performed. Considering the spin-offs,
the companies would consequently have their
respective and distinctive concerns in terms of the
nature of work, wages, hours of work and other
conditions of employment. Interests of employees in
the different companies perforce differ. The different
companies may have different volumes of work and
different working conditions. For such reason, the
employees of the different companies see the need to
group themselves together and organize themselves
into distinctive and different groups. It would then be
best to have separate bargaining units for the different
companies where the employees can bargain
separately according to their needs and according to
their own working conditions.

CASE NO. 104

CASE NO. 105
Tabigue, et. al. vs International Copra Export Corp.,
G.R. 183335, December 23, 2009
FACTS:
Petitioners filed a Notice of Preventive
Mediation with the DOLE-NCMB against the respondent
for violation of the CBA and failure to sit on the
grievance conference/meeting. For failure to reach a
settlement, petitioners elevated the case to voluntary
arbitration. Respondent presented a letter of Tan,
president of the INTERCO Employees/Laborers Union
(the union) of which petitioners are members,
addressed to respondents plant manager Tangente,
stating that petitioners are not duly authorized by the
board or the officers to represent the union.
Respondents moved to dismiss the complaint. The
NCMB Director dismissed the complaint due to lack of
willingness of the parties to submit the case for
voluntary arbitration and that the union had not
authorized the petitioners to represent it. The NCMB
Director subsequently dismissed the motion for
reconsideration of the petitioner on the ground that the
NCMB has no rule-making power to decide on issues as
it only facilitates settlement among the parties to labor
disputes. The CA as well dismissed the petition for
review for the reason that the NCMB is not a quasijudicial agency but merely a conciliatory body and its
decisions cannot be appealed.
ISSUE: Whether or not the NCMB, when exercising
adjudicative powers, act as a quasi-judicial agency and,
thus, its decision are appealable by petition for review
to the CA.
RULING:
No. The NCMBs following functions, as
enumerated in Section 22 of Executive Order No. 126
(the Reorganization Act of the Ministry of Labor and
Employment) are, viz:
(a)
Formulate
policies,
programs,
standards,
procedures, manuals of operation and guidelines
pertaining to effective mediation and conciliation of
labor disputes;
(b)
Perform preventive mediation and conciliation
functions;
(c)
Coordinate and maintain linkages with other
sectors or institutions, and other government
authorities concerned with matters relative to the
prevention and settlement of labor disputes;
(d) Formulate policies, plans, programs, standards,
procedures, manuals of operation and guidelines
pertaining to the promotion of cooperative and nonadversarial schemes, grievance handling, voluntary
arbitration and other voluntary modes of dispute
settlement;
(e)
Administer the voluntary arbitration program;
maintain/update a list of voluntary arbitrations;
compile arbitration awards and decisions;
(f)
Provide counseling and preventive mediation
assistance particularly in the administration of
collective agreements;
(g)
Monitor and exercise technical supervision over
the Board programs being implemented in the regional
offices; and
(h)
Perform such other functions as may be provided
by law or assigned by the Minister
Petitioners have not, however, been duly authorized to
represent the union. In Atlas Farms, Inc. v. National
Labor Relations Commission, viz:
x x x Pursuant to Article 260 of the Labor Code, the
parties to a CBA shall name or designate their
respective representatives to the grievance machinery
and if the grievance is unsettled in that level, it shall
automatically be referred to the voluntary arbitrators
designated
in
advance
by
parties
to
a
CBA. Consequently only disputes involving the
union and the company shall be referred to the
grievance machinery or voluntary arbitrators.

G.R. No. 182836

October 13, 2009
CONTINENTAL STEEL MANUFACTURING
CORPORATION, Petitioner, vs. HON. ACCREDITED
VOLUNTARY ARBITRATOR ALLAN S. MONTAO
and NAGKAKAISANG MANGGAGAWA NG CENTRO
STEEL CORPORATION-SOLIDARITY OF UNIONS IN
THE PHILIPPINES FOR EMPOWERMENT AND
REFORMS (NMCSC-SUPER), Respondents.
FACTS: Hortillano, an employee of petitioner
Continental Steel and a member of respondent Union
filed on 9 January 2006, a claim for Paternity Leave,
Bereavement Leave and Death and Accident Insurance
for dependent, pursuant to the CBA concluded between
Continental and the Union. The claim was based on the
death of Hortillanos unborn child. Hortillanos wife had
a premature delivery while she was in the 38th week of
pregnancy. According to the Certificate of Fetal Death,
the female fetus died during labor due to fetal Anoxia
secondary to uteroplacental insufficiency. Continental
Steel immediately granted Hortillanos claim for
paternity leave but denied his claims for bereavement
leave and other death benefits, consisting of the death
and accident insurance.
ISSUE: Whether or not the CBA is clear and
unambiguous so that the literal and legal meaning of
death should be applied such that only one with
juridical personality can die and a dead fetus never
acquired a juridical personality?
HELD: As identified, the elements for bereavement
leave under Article X, Section 2 of the CBA are: (1)
death; (2) the death must be of a dependent; and (3)
legitimate relations of the dependent to the employee.
The requisites for death and accident insurance under
Article XVIII, Section 4(3) of the CBA are same with the
above
elements
with
additional
element
of
presentation of the proper legal document to prove
such death.
Death has been defined as the cessation of life. Life is
not synonymous with civil personality. One need not
acquire civil personality first before he/she could die.
Even a child inside the womb already has life. As such,
then the cessation thereof even prior to the child being
delivered, qualifies as death. A dependent is "one who
relies on another for support; one not able to exist or
sustain oneself without the power or aid of someone
else." Under said general definition, even an unborn
child is a dependent of its parents. Additionally, the
CBA did not provide a qualification for the child
dependent. Therefore, child shall be understood in its
more general sense, which includes the unborn fetus in
the mothers womb. The term legitimate merely
addresses the dependent childs status in relation to
his/her parents. A legitimate child is a product of, and,
therefore, implies a valid and lawful marriage. The
children conceived or born during the marriage of the
parents are legitimate. Hortillano and his wife were
validly married and that their child was conceived
during said marriage, hence, making said child
legitimate upon her conception. Hortillano was also
able to comply with the fourth element entitling him to
death and accident insurance under the CBA or the
presentation of the death certificate of his unborn
child. Given the existence of all the requisites for
bereavement leave and other death benefits under the
CBA, Hortillanos claims for the same should have been
granted by Continental Steel.

CASE NO. 106

CASIANO NAVARRO vs DAMASCO & BUSCO
SUGAR MILLING CO
G.R. No. 101875. July 14, 1995
FACTS: Petitioner Navarro, a typist of BUSCO SUGAR
MILLING CO, went to visit Mercie Baylas, whom he was
courting, in the companys ladies dormitory. Upon
seeing him, Baylas ran towards her room but lost her
balance; petitioner overcame her, embraced her, put
himself on top of her and started kissing her until other
employees responded to Baylas' flee for help. The
company put Navarro under preventive suspension
because of the incident and he was meted out the
penalty of dismissal upon the recommendation of the
investigator for violating the company's Code of
Conduct against acts of immorality and gross
discourtesy to a co-employee inside company
premises.
The President of the Mindanao Sugar Workers
Union, for and in behalf of petitioner, and the Personnel
Officer of the company agreed to submit the case of
petitioner to voluntary arbitration. Counsel for
petitioner, during the initial conference with the
Voluntary Arbitrator, questioned whether the grievance
procedure in the CBA before bringing the case before
the Voluntary Arbitrator had been followed. The
parties, however, also agreed to submit the case for
decision based on their position papers. The Voluntary
Arbitrator rendered a decision dismissing petitioner
from employment and holding that the company did
not violate the provisions of the grievance procedure
under the CBA.
Petitioner contends that the grievance procedure
provided for in the CBA was not followed; hence, the
Voluntary Arbitrator exceeded his authority when he
took cognizance of the labor case. Petitioner also
claims that he was denied due process of law because
no hearing was held and he was not given an
opportunity to cross-examine the witnesses.
ISSUES:
1. WON the case of petitioner should have been
brought to the companys grievance machinery prior to
the Voluntary Arbitrator.
2. WON petitioner was denied due process.
RULING:
1. It is the policy of the State to promote voluntary
arbitration as a mode of settling labor disputes. The
instant case is not a grievance that must be submitted
to the grievance machinery. What are subject of the
grievance procedure for adjustment and resolution are
grievances arising from the interpretation or
implementation of the CBA. The acts of petitioner
involved a violation of the Code of Employee Discipline,
particularly the provision penalizing the immoral
conduct of employees. Consequently, there was no
justification for petitioner to invoke the grievance
machinery provisions of the Collective Bargaining
Agreement.
Also, the case of petitioner was submitted to
voluntary arbitration by agreement of the president of
the labor union to which petitioner belongs, and his
employer, through its personnel officer. Petitioner
himself voluntarily submitted to the jurisdiction of the
Voluntary Arbitrator when he, through his counsel, filed
his position paper with the Voluntary Arbitrator and
even submitted additional documentary evidence.
2. Petitioner was not denied due process. Due process
in administrative proceedings is an opportunity to
explain ones side or an opportunity to seek a
reconsideration of the action or ruling complained of. A
formal or trial-type hearing is not at all times and in all
instances essential. The requirements are satisfied
where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at
hand.
Concerning the allegation that petitioner was not
allowed to cross-examine the witnesses, the record

shows that the parties had agreed not to crossexamine their witnesses anymore.
WHEREFORE, the Decision of the respondent Voluntary
Arbitrator is AFFIRMED.

CASE NO. 107

SANYO PHILIPPINES WORKERS UNION-PSSLU vs.
CANIZARES
G.R. No. 101619 July 8, 1992
FACTS:
PSSLU had an existing CBA with Sanyo. The
CBA contained a union security clause. PSSLU wrote
Sanyo that the private respondents/employees were
notified that their membership with PSSLU were
cancelled for anti-union, activities, economic sabotage,
threats, coercion and intimidation, disloyalty and for
joining another union called KAMAO. In accordance with
the security clause of the CBA, Sanyo dismissed the
employees. The dismissed employees filed a complaint
with the NLRC for illegal dismissal. Named respondent
were PSSLU and Sanyo. PSSLU filed a motion to dismiss
the complaint alleging that the Labor Arbiter was
without jurisdiction over the case, relying on Article
217(c) of the Labor Code which provides that cases
arising from the interpretation or implementation of
the CBA shall be disposed of by the labor arbiter by
referring the same to the grievance machinery and
voluntary arbitration. Nevertheless, the Labor Arbiter
assumed jurisdiction. Public respondent through the Sol
Gen, argued that the case at bar does not involve an
"interpretation or implementation" of a collective
bargaining
agreement
or
"interpretation
or
enforcement" of company policies but involves a
"termination." Where the dispute is just in the
interpretation, implementation or enforcement stage, it
may be referred to the grievance machinery set up in
the CBA or by voluntary arbitration. Where there was
already actual termination, i.e., violation of rights, it is
already cognizable by the Labor Arbiter.
ISSUE:
Whether or not the Labor Arbiter has jurisdiction over
the case.
HELD:
The Court held that the Labor Arbiter and not
the Grievance Machinery provided for in the CBA has
the jurisdiction to hear and decide the case. While it
appears that the dismissal of the private respondents
was made upon the recommendation of PSSLU
pursuant to the union security clause provided in the
CBA, the Court is in the opinion that these facts do not
come within the phrase "grievances arising from the
interpretation or implementation of (their) Collective
Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel
policies," the jurisdiction of which pertains to the
Grievance Machinery or thereafter, to a voluntary
arbitrator or panel of voluntary arbitrators. No
grievance between them exists which could be brought
to a grievance machinery. The problem or dispute in
the present case is between the union and the
company on the one hand and some union and nonunion members who were dismissed, on the other
hand. The dispute has to be settled before an impartial
body. The grievance machinery with members
designated by the union and the company cannot be
expected to be impartial against the dismissed
employees. Due process demands that the dismissed
workers grievances be ventilated before an impartial

body. Since there has already been an actual

termination, the matter falls within the jurisdiction of
the Labor Arbiter.

CASE NO. 109

PHILCOM EMPLOYEES UNION vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM
CORPORATION
G.R. No. 144315
July 17, 2006
Facts:
Upon the expiration of the Collective Bargaining Agreement
(CBA) between petitioner Philcom Employees Union (PEU)and
private respondent Philippine Global Communications, Inc.
(Philcom) on June 30, 1997, the parties started negotiations
for the renewal of their CBA in July 1997. While negotiations
were ongoing, PEU filed on October 21, NCMB National
Capital Region, a Notice of Strike perceived unfair labor
practice committed by the company. In view of the filing of
the Notice of Strike, the company suspended negotiations on
the CBA which moved the union to file on November 4, 1997
another Notice of Strike on the ground of bargaining
deadlock.
On November 11, 1997, at a conciliation conference held at
the NCMB-NCR office, the parties agreed to consolidate the
two (2) Notices of Strike filed by the union and to maintain
the status quo during the pendency of the proceedings.
On November 17, 1997, however, while the union and the
company officers and representatives were meeting, the
remaining union officers and members staged a strike at the
company premises. The following day, the company
immediately filed a petition for the Secretary of Labor and
Employment to assume jurisdiction over the labor dispute in
accordance with Article 263(g) of the Labor Code.
On November 19, 1997, then Acting Labor Secretary
Cresenciano B. Trajano issued an Order assuming jurisdiction
over the dispute, enjoining any strike or lockout, whether
threatened or actual, directing the parties to cease and
desist from committing any act that may exacerbate the
situation, directing the striking workers to return to work
within twenty-four (24) hours from receipt of the Secretary's
Order and for management to resume normal operations, as
well as accept the workers back under the same terms and
conditions prior to the strike. The parties were likewise
required to submit their respective position papers and
evidence within ten (10) days from receipt of said order.
On November 27, 1997, the union filed a Motion for
Reconsideration assailing the authority of then Acting
Secretary Trajano to assume jurisdiction over the labor
dispute but was denied.
As directed, the parties submitted their respective position
papers. In its position paper, the union raised the issue of the
alleged unfair labor practice of the company. The company,
on the other hand, raised in its position paper the sole issue
of the illegality of the strike staged by the union.
In opposition to PEU's Manifestation/Motion, the company
argued that it was precisely due to the strike suddenly
staged by the union on November 17, 1997 that the dispute
was assumed by the Labor Secretary. Hence, the case would
necessarily include the issue of the legality of the strike.
On October 2, 1998, the Secretary of Labor and Employment
("Secretary") rendered judgement:
The Union's Manifestation/Motion to Implead Philcom
Corporation is hereby granted.
The Union's Manifestation/Motion to Strike Out Portions of
and Attachments in Philcom's Position Paper is hereby denied
for lack of merit.
The Union's charges of unfair labor practice against the
Company are hereby dismissed.
Pending resolution of the issues of illegal strike and
bargaining deadlock which are yet to be heard, all the
striking workers are directed to return to work within twentyfour (24) hours from receipt of this Order and Philcom and/or
Philcom Corporation are hereby directed to unconditionally
accept back to work all striking Union officers and members
under the same terms and conditions prior to the strike. The
parties are directed to cease and desist from committing any
acts that may aggravate the situation.
Philcom Corporation filed a motion for reconsideration while
PEU filed a Motion for Partial Reconsideration.
The Secretary denied both motions for reconsideration of
Philcom and PEU.
PEU filed with this Court a petition for certiorari and
prohibition under Rule 65 of the Rules of Court assailing the

Secretary's Orders of October 2, 1998 and November 27,

1998.
On July 31 2000, the Court of Appeals denied the petition.
Hence, this petition.
Issues:
1. WON the Secretary of Labor has jurisdiction over the issue
of illegal strike out.
2. WON the company has committed several unfair labor
practices.
3. WON the strike was illegal.
HELD:
1. YES.
The Secretary properly took cognizance of the issue on the
legality of the strike. As the Court of Appeals correctly
pointed out, since the very reason of the Secretary's
assumption of jurisdiction was PEU's declaration of the strike,
any issue regarding the strike is not merely incidental to, but
is essentially involved in, the labor dispute itself.
Article 263(g) of the Labor Code provides:
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 x x x x.
In this case, the Secretary assumed jurisdiction over the
dispute because it falls in an industry indispensable to the
national interest. As noted by the Secretary:
The
Company
has
been
a
vital
part
of
the
telecommunications industry for 73 years. It is particularly
noted for its expertise and dominance in the area of
international telecommunications. Thus, it performs a vital
role in providing critical services indispensable to the
national interest. It is for this very reason that this Office
strongly opines that any concerted action, particularly a
prolonged work stoppage is fraught with dire consequences.
The operational viability of the company is likewise adversely
affected, especially its expansion program for which it has
incurred debts in the approximate amount of P2 Billion. Any
prolonged work stoppage will also bring about substantial
losses in terms of lost tax revenue for the government and
would surely pose a serious set back in the company's
modernization program.
The authority of the Secretary 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
from such labor dispute. The power is plenary and
discretionary in nature to enable him to efectively
and efficiently dispose of the dispute.
2. No.
A review of the acts complained of as unfair labor practices
of Philcom do not fall under any of the prohibited acts
defined and enumerated in Article 248 of the Labor Code.
The issues of misimplementation or non-implementation of
employee benefits, non-payment of overtime and other
monetary claims, inadequate transportation allowance,
water, and other facilities, are all a matter of implementation
or interpretation of the economic provisions of the CBA
between Philcom and PEU subject to the grievance
procedure.
A reading of private respondent's justification for the acts
complained of would reveal that they were actually
legitimate reasons and not in anyway related to union
busting. Hence, as to compelling employees to render
flexible labor and additional work without additional
compensation, it is the company's explanation that the
employees themselves voluntarily took on work pertaining to
other assignments but closely related to their job description
when there was slack in the business which caused them to
be idle.
Moreover, the Court has always respected a company's
exercise of its prerogative to devise means to improve its
operations. Thus, the management is free to regulate,
according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, supervision
and transfer of employees, working methods, time, place and

manner of work. This is so because the law on unfair labor

practices is not intended to deprive employers of their
fundamental right to prescribe and enforce such rules as
they honestly believe to be necessary to the proper,
productive and profitable operation of their business.
Even assuming arguendo that Philcom had violated some
provisions in the CBA, there was no showing that the same
was a flagrant or malicious refusal to comply with its
economic provisions. The law mandates that such violations
should not be treated as unfair labor practices.
3. Yes.
The strike and the strike activities that PEU had undertaken
were patently illegal for the following reasons:
1. Philcom is engaged in a vital industry (communication)
protected by Presidential Decree No. 823 (PD 823), as
amended by Presidential Decree No. 849, from strikes and
lockouts. PD 823, as amended, provides:
Sec. 1. It is the policy of the State to encourage free trade
unionism and free collective bargaining within the framework
of compulsory and voluntary arbitration. Therefore, all forms
of strikes, picketings and lockouts are hereby strictly
prohibited in vital industries, such as in public utilities,
including transportation and communications, x x x.
2. The Secretary had already assumed jurisdiction over the
dispute. Despite the issuance of the return-to-work
orders dated 19 November and 28 November 1997,
the striking employees failed to return to work and
continued with their strike.
Regardless of their motives, or the validity of their claims,
the striking employees should have ceased or desisted from
all acts that would undermine the authority given the
Secretary under Article 263(g) of the Labor Code. They could
not defy the return-to-work orders by citing Philcom's alleged
unfair labor practices to justify such defiance.
PEU could not have validly anchored its defiance to the
return-to-work orders on the motion for reconsideration that
it had filed on the assumption of jurisdiction order. A returnto-work order is immediately efective and executory
despite the filing of a motion for reconsideration. It
must be strictly complied with even during the
pendency of any petition questioning its validity.
3. PEU staged the strike using unlawful means and methods.
Even if the strike in the present case was not illegal per se,
the strike activities that PEU had undertaken, especially the
establishment of human barricades at all entrances to and
egresses from the company premises and the use of coercive
methods to prevent company officials and other personnel
from leaving the company premises, were definitely illegal.
4. PEU declared the strike during the pendency of preventive
mediation proceedings at the NCMB.
On 17 November 1997, while a conciliation meeting was
being held at the NCMB, PEU went on strike. It should be
noted that in their meeting on 11 November 1997, both
Philcom and PEU were even "advised to maintain the status
quo." Such disregard of the mediation proceedings was a
blatant violation of Section 6, Book V, Rule XXII of the
Omnibus Rules Implementing the Labor Code, which
explicitly obliges the parties to bargain collectively in good
faith and prohibits them from impeding or disrupting the
proceedings.
5. PEU staged the strike in utter disregard of the grievance
procedure established in the CBA.
PEU should have immediately resorted to the grievance
machinery provided for in the CBA. In disregarding this
procedure, the union leaders who knowingly participated in
the strike have acted unreasonably. A strike declared on the
basis of grievances which have not been submitted to the
grievance committee as stipulated in the CBA of the parties
is premature and illegal.

CASE NO. 112

GENERAL MILLING CORPORATION vs CA
G.R. No. 146728. February 11, 2004
FACTS
In its two plants located at Cebu City and Lapu-Lapu
City, petitioner General Milling Corporation (GMC)
employed 190 workers who were members of a union
which is a duly certified bargaining agent. On April 28,
1989, GMC and the union concluded a CBA which
included the issue of representation effective for a
term of three years which would November 30, 1991. A
day before the expiration of the CBA, the union sent
GMC a proposed CBA, with a request that a counterproposal be submitted within ten (10) days. However,
GMC had received collective and individual letters from
workers who stated that they had withdrawn from their
union membership, on grounds of religious affiliation
and personal differences. Believing that the union no
longer had standing to negotiate a CBA, GMC did not
send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the
unions
officers,
Rito
Mangubat
and
Victor
Lastimoso. The letter stated that it felt there was no
basis to negotiate with a union which no longer
existed, but that management was nonetheless always
willing to dialogue with them on matters of common
concern and was open to suggestions on how the
company may improve its operations. In answer, the
union officers wrote a letter disclaiming any massive
disaffiliation or resignation from the union and
submitted a manifesto, signed by its members, stating
that they had not withdrawn from the union. On
January 13, 1992, GMC dismissed an employee who is
a union member, on the ground of incompetence. The
union protested and requested GMC to submit the
matter to the grievance procedure provided in the CBA.
However, GMC refused to negotiate referring to their
letter dated December 16, 1991. Thus, the union filed
a complaint against GMC with the NLRC, Arbitration
Division, Cebu City alleging unfair labor practice but
the labor arbiter dismissed the case and recommended
that a petition for certification election be held to
determine if the union still enjoyed the support of the
workers.
ISSUE
Whether or not GMC is guilty of unfair labor practice for
violating its duty to bargain collectively and/or for
interfering with the right of its employees to selforganization.
RULING
The law mandates (Art. 253-A) that the representation
provision of a CBA should last for five years. The
relation between labor and management should be
undisturbed until the last 60 days of the fifth year.
Hence, it is indisputable that when the union requested
for a renegotiation of the economic terms of the CBA
on November 29, 1991, it was still the certified
collective bargaining agent of the workers, because it
was seeking said renegotiation within five (5) years
from the date of effectivity of the CBA on December 1,
1988. The unions proposal was also submitted within
the prescribed 3-year period from the date of
effectivity of the CBA, albeit just before the last day of
said period. It was obvious that GMC had no valid
reason to refuse to negotiate in good faith with the
union. For refusing to send a counter-proposal to the
union and to bargain anew on the economic terms of
the CBA, the company committed an unfair labor
practice under Article 248 of the Labor Code.
Under Article 252, both parties are required to perform
their mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of
negotiating an agreement. The union lived up to this
obligation when it presented proposals for a new CBA
to GMC within three (3) years from the effectivity of the
original CBA. But GMC failed in its duty under Article
252. What it did was to devise a flimsy excuse, by

questioning the existence of the union and the status

of its membership to prevent any negotiation.
It bears stressing that the procedure in collective
bargaining prescribed by the Code [Art.250 (a)] is
mandatory because of the basic interest of the state in
ensuring lasting industrial peace. GMCs failure to
make a timely reply to the proposals presented by the
union is indicative of its utter lack of interest in
bargaining with the union. Its excuse that it felt the
union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless. We hold
that GMCs refusal to make a counter-proposal to the
unions proposal for CBA negotiation is an indication of
its bad faith. Where the employer did not even bother
to submit an answer to the bargaining proposals of the
union, there is a clear evasion of the duty to bargain
collectively. Failing to comply with the mandatory
obligation to submit a reply to the unions proposals,
GMC violated its duty to bargain collectively, making it
liable for unfair labor practice.
The Supreme Court considered the act of presenting
the letters between February to June 1993 by 13 union
members signifying their resignation from the union
clearly indicated that GMC exerted pressure on its
employees. The records show that GMC presented
these letters to prove that the union no longer enjoyed
the support of the workers. The fact that the
resignations of the union members occurred during the
pendency of the case before the labor arbiter shows
GMCs desperate attempts to cast doubt on the
legitimate status of the union. The ill-timed letters of
resignation from the union members indicate that GMC
had interfered with the right of its employees to selforganization. Thus, it is guilty of unfair labor practice
for interfering with the right of its employees to selforganization.
CASE NO. 113
HACIENDA FATIMA and/or PATRICIO VILLEGAS,
ALFONSO VILLEGAS and CRISTINE SEGURA,
petitioners, vs. NATIONAL FEDERATION OF
SUGARCANE WORKERS-FOOD AND GENERAL
TRADE, respondents.
DECISION
G.R. No. 149440. January 28, 2003
Facts:
The petitioner disfavored the fact that the
private respondent employees have formed a union.
When the union became the collective bargaining
representative in the certification election, the
petitioner refused to sit down to negotiate a CBA.
Moreover, the respondents were not given work for a
month amounting to unjustified dismissal. As a result,
the complainants staged a strike to protest but was
settled through a memorandum of agreement which
contained a list of those considered as regular
employees for the payroll.
The CA affirmed that while the work of
respondents was seasonal in nature, they were
considered to be merely on leave during the off-season
and were therefore still employed by petitioners.
Moreover, the workers enjoyed security of tenure.
The appellate court found neither rhyme nor
reason in petitioners argument that it was the workers
themselves who refused to or were choosy in their
work. As found by the NLRC, the record of this case is
replete with complainants persistence and dogged
determination in going back to work.
The CA likewise concurred with the NLRCs
finding that petitioners were guilty of unfair labor
practice.
Issue: W/N the employees are regular workers
RULING: Yes, they are regular and not seasonal
employees. For them to be excluded as regulars, it is
not enough that they perform work that is seasonal in
nature but they also are employed for the duration of
one
season.
Evidently,
petitioners
employed

respondents for more than one season. Therefore, the

general rule of regular employment is applicable.
On the other hand, herein respondents, having
performed the same tasks for petitioners every season
for several years, are considered the latters regular
employees for their respective tasks. Petitioners
eventual refusal to use their services -- even if they
were ready, able and willing to perform their usual
duties whenever these were available -- and hiring of
other workers to perform the tasks originally assigned
to respondents amounted to illegal dismissal of the
latter.
The ruling in Mercado v. NLRC is not applicable
since in that case, the workers were merely required to
perform phases of agricultural work for a definite
period of time, after which, their services are available
to other employers. The management's sudden change
of assignment reeks of bad faith, it is likewise guilty of
ULP.
Indeed, from respondents refusal to bargain,
to their acts of economic inducements resulting in the
promotion of those who withdrew from the union, the
use of armed guards to prevent the organizers to come
in, and the dismissal of union officials and members,
one cannot but conclude that respondents did not want
a union in their haciendaa clear interference in the
right of the workers to self-organization.
Indeed, 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.
The finding of unfair labor practice done in bad
faith carries with it the sanction of moral and
exemplary damages.
CASE NO. 115

ST. JOHN COLLEGES, INC., petitioner,

vs.
ST. JOHN ACADEMY FACULTY AND EMPLOYEES
UNION, respondent.
G.R. No. 167892

October 27, 2006

FACTS:

Petitioner St. John Colleges, Inc. (SJCI) is a domestic

corporation which owns and operates the St. Johns
Academy (later renamed St. John Colleges) in Calamba,
Laguna. Prior to 1998, the Academy offered a
secondary course only. The high school then employed
about 80 teaching and non-teaching personnel who
were members of the St. John Academy Faculty &
Employees Union (Union).Prior to the closure of the
high school by SJCI, the parties agreed to refer the
1997 CBA deadlock to the SOLE for assumption of
jurisdiction under Article 263 of the Labor Code. As a
result, the strike ended and classes resumed. After the
SOLE assumed jurisdiction, it required the parties to
submit their respective position papers. However,
instead of filing its position paper, SJCI closed its high
school, allegedly because of the "irreconcilable
differences between the school management and the
Academys Union particularly the safety of our students
and the financial aspect of the ongoing CBA
negotiations." Thereafter, SJCI moved to dismiss the
pending labor dispute with the SOLE contending that it
had become moot because of the closure.
Nevertheless, a year after said closure, SJCI reopened
its high school and did not rehire the previously
terminated employees.
The 25 employees filed a
complaint for unfair labor practice (ULP), illegal
dismissal and non-payment of monetary benefits
against SJCI before the NLRC . The Union members
alleged that the closure of the high school was done in
bad faith in order to get rid of the Union and render

useless any decision

deadlocked issues.

of

the

SOLE

on

the

CBA

ISSUES:
1) whether or not the SJCI is liable for ULP and
illegal dismissal when it closed down the high
school
2) whether or not the Union is liable for illegal
strike due to the protest actions which its 25
members undertook within the high schools
perimeter
RULING:
1) Yes. Under Article 283 of the Labor Code, the
following requisites must concur for a valid closure of
the business: (1) serving a written notice on the
workers at least one (1) month before the intended
date thereof; (2) serving a notice with the DOLE one
month before the taking effect of the closure; (3)
payment of separation pay equivalent to one (1) month
or at least one half (1/2) month pay for every year of
service, whichever is higher, with a fraction of at least
six (6) months to be considered as a whole year; and
(4) cessation of the operation must be bona fide.12 It is
not disputed that the first two requisites were satisfied.
The third requisite would have been satisfied were it
not for the refusal of the herein private respondents to
accept the separation compensation package. The
instant case, thus, revolves around the fourth
requisite, i.e., whether SJCI closed the high school in
good faith. Whether or not the closure of the high
school was done in good faith is a question of fact and
is not reviewable by this Court in a petition for review
on certiorari save for exceptional circumstances. In
fine, the finding of the NLRC, which was affirmed by the
Court of Appeals, that SJCI closed the high school in
bad faith is supported by substantial evidence and is,
thus, binding on this Court. Consequently, SJCI is liable
for ULP and illegal dismissal.
By admitting that the closure was due to
irreconcilable differences between the Union and
school management, specifically, the financial aspect
of the ongoing CBA negotiations, SJCI in effect
admitted that it wanted to end the bargaining deadlock
and eliminate the problem of dealing with the demands
of the Union. This is precisely what the Labor Code
abhors and punishes as unfair labor practice
since the net efect is to defeat the Unions right
to collective bargaining.
2) No. The findings of the NLRC and CA that the protest
actions of the Union cannot be considered a strike
because, by then, the employer-employee relationship
has long ceased to exist because of the previous
closure of the high school on March 31, 1998.
CASE NO. 116
Purefoods Corp. vs Nagkakaisang
Samahang Manggagawa ng Purefoods
GR No. 150896 August 28, 2008
FACTS:
Nagkakaisang Samahang Manggagawa Ng
Purefoods
Rank-And-File (NAGSAMA-Purefoods),
St.
Thomas Free Workers Union (STFWU), and Purefoods
Grandparent Farm Workers Union (PGFWU) are the
labor organizations respondent in this case. These
organizations were affiliates of the respondent
federation, Purefoods Unified Labor Organization
(PULO).
NAGSAMA-Purefoods manifested to petitioner
corporation its desire to re-negotiate the CBA. Together
with its demands and proposal, the organization
submitted to the company its unions affiliation with
PULO. Purefoods acknowledged receipt of the unions

proposals, but it refused to recognize PULO.

The
negotiation of the terms of the CBA resulted in a
deadlock. A notice of strike was filed by NAGSAMAPurefoods and in the subsequent conciliation
conference, the deadlock issues were settled except
the companys recognition of the unions affiliation with
PULO.
STFWU and PGFWU also submitted their
respective proposals for CBA renewal, and their general
membership resolutions including affirmation of the
two organizations affiliation with PULO. Again,
Purefoods refused to negotiate with the unions should
a PULO representative be in the panel.
The petitioner company concluded a new CBA
with another union in its farm in Malvar, Batangas. Five
days thereafter, company employees facilitated the
transfer of chickens from the Sto. Tomas farm poultry
farm where STFWU was the exclusive bargaining agent
to that in Malvar. The following day, the regular rankand-file workers in the Sto. Tomas farm were refused
entry in the company premises and 22 STFWU
members were terminated from employment. The
workers of the Sto. Tomas farm, who were members of
another union, were nevertheless retained by the
company in its employ.
Thus, the four respondent labor organizations
jointly instituted a complaint for unfair labor practice
(ULP), illegal lockout/dismissal and damages.
The LA rendered a decision dismissing the
complaint, and declaring that the company neither
committed ULP nor illegally dismissed the employees.
On appeal, the NLRC reversed the ruling of the LA. The
petitioner companys refusal to recognize the labor
organizations affiliation with PULO was unjustified
considering that the latter had been granted the status
of a federation by the Bureau of Labor Relations. The
CA dismissed outright the companys petition
for certiorari on the ground that the verification and
certification of non-forum shopping was defective.
ISSUE:
Whether
or
not
the
employer
committed unfair labor practice and illegally dismissed
the concerned union members.
RULING:
The closure of the Sto. Tomas farm was made
in bad faith. Badges of bad faith are evident from the
following acts of the petitioner: it unjustifiably refused
to recognize the STFWUs and the other unions
affiliation with PULO; it concluded a new CBA with
another union in another farm during the agreed
indefinite suspension of the collective bargaining
negotiations;
it
surreptitiously
transferred
and
continued its business in a less hostile environment;
and it suddenly terminated the STFWU members, but
retained and brought the non-members to the Malvar
farm. Petitioner presented no evidence to support the
contention that it was incurring losses or that the
subject farms lease agreement was pre-terminated.
The closure of the Sto. Tomas farm circumvented the
labor organizations right to collective bargaining and
violated the members right to security of tenure.
The sudden termination of the STFWU
members is tainted with ULP because it was done to
interfere with, restrain or coerce employees in the
exercise of their right to self-organization. Thus, the
petitioner company is liable for the payment of the
moral and exemplary damages.
As to the order of reinstatement, if it is no
longer feasible considering the length of time that the
employees have been out of petitioners employ, the
company is ordered to pay the illegally dismissed
STFWU members separation pay.

CASE NO. 117

ISAGANI ECAL, et.al. vs. NLRC
G.R. No. 92777-78
March 13, 1991

FOR: LABOR-ONLY CONTRACTING

FACTS:
This case traces its origin from two
consolidated complaints for illegal dismissal and
money claims filed by petitioners Isagani Ecal,
Crisologo Ecal, Nelson Buenaobra, Narding Bandogelio,
Wilmer Echague, Rogelio Castillo, Alfredo Fernando,
Oligario Bigata, Roberto Ferrer and Honesto Tanael
against private respondents Hi-Line Timber, Inc.
(hereinafter referred to as Hi-Line) and Jimmy
Matchuka, the company foreman, with the Department
of Labor and Employment. n their complaints/position
papers, petitioners alleged, among others, that they
have been employed by Hi-Line as follows: Isagani
Ecal, from February, 1986; Crisologo Ecal, Buenaobra,
Bandogelio, Fernando, Bigata, Ferrer and Tanael, from
March 3, 1986; and Castillo and Echague, from May 1,
1986; that except for Isagani Ecal, they were all
receiving a salary of P 35.00 a day; that they were
required to report for work 7 days a week including rest
days, legal holidays, except Christmas and Good Friday
from 7:00 A.M. to 7:00 P.M.; that they were not given
living allowance, overtime pay, premium pay for rest
days and legal holidays, 13th month pay and service
incentive leave pay; and, that on June 6, 1987, they
were not allowed to work and instead were informed
that their services were no longer needed.
Private respondents, on the other hand, denied
the existence of an employer-employee relationship
between the company and the petitioners claiming that
the latter are under the employ of an independent
contractor, petitioner Isagani Ecal, an employee of the
company until his resignation on February 4, 1987.
ISSUE:
Is there an employer-employee relationship
between petitioners and private respondent Hi-Line
Timber, Inc. or merely an employer-independent
contractor
relationship
between
said
private
respondent and petitioner Isagani Ecal with the other
petitioners being mere contract workers of Ecal? In the
case of the latter, is Ecal engaged in "job" contracting
or "labor-only" contracting? What then is the extent of
the liability of private respondent?
RULING:
Ecal is engaged in labor-only contracting.
Petitioners were illegally dismissed.
Under the provisions of Article 106, paragraphs
1 and 2, an employer who enters into a contract with a
contractor for the performance of work for the
employer does not thereby establish an employeremployee relationship between himself and the
employees of the contractor. The law itself, however,
creates such a relationship when a contractor fails to
pay the wages of his employees in accordance with the
Labor Code, and only for this limited purpose, i.e. to
ensure that the latter will be paid the wages due them.
On the other hand, the legal effect of a finding that a
contractor is merely a "labor only" contractor was
explained in Philippine Bank of Communications vs.
National Labor Relations Commission, et al.,
. . . The "labor-only" contractor i.e., "the person or
intermediary" is considered "merely as an agent of
the employer." The employer is made by the statute
responsible to the employees of the "labor only"
contractor as if such employee had been directly
employed by the employer. Thus, where "labor-only"
contracting exists in a given case, the statute itself
implies
or
establishes
an
employer-employee
relationship between the employer (the owner of the
project) and the employees of the "labor-only"
contractor, this time for a comprehensive purpose:
"employer for purposes of this Code, to prevent any
violation or circumvention of any provision of this
Code." The law in effect holds both the employer and
the 'labor-only' contractor responsible to the latter's
employees for the more effective safeguarding of the
employees' rights under the Labor Code.

Sections 8 and 9, Rule VIII, Book III of the Omnibus

Rules implementing the Labor Code set forth the
distinctions between "job" contracting and "labor-only"
contracting
Sec. 8. Job contracting. There is job contracting
permissible under the Code if the following conditions
are met:
(1)
The contractor carries on an independent
business and undertakes the contract work on his own
account under his own responsibility according to his
own manner and method, free from control and
direction of his employer or principal in all matters
connected with the performance of the work except as
to the results thereof, and
(2)
The contractor has substantial capital or
investment in the form of tools, equipments,
machineries, work premises, and other materials which
are necessary in the conduct of his business.
Sec. 9. Labor-only contracting (a) Any person who
undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where
such person:
(1)
Does not have substantial capital or
investment in the form of tools, equipments,
machineries, work premises and other materials; and
(2)
The workers recruited and placed by such
person are performing activities which are directly
related to the principal business or operations of the
employer in which workers are habitually employed.
(b)
Labor-only contracting as defined herein is
hereby prohibited and the person acting as contractor
shall be considered merely as an agent or intermediary
of the employer who shall be responsible to the
workers in the same manner and extent as if the latter
were directly employed by him.
Applying the foregoing provisions, the Court
finds petitioner Isagani Ecal to be a "labor-only"
contractor, a mere supplier of manpower to Hi-Line.
Isagani Ecal was only poor laborer at the time of his
resignation on February 4, 1987 who cannot even
afford to have his daughter treated for malnutrition. By
the very allegations of private respondents, it is quite
clear that Isagani Ecal only supplies manpower to HiLine within the context of "labor-only" contracting as
defined by law. A finding that Isagani Ecal is a "laboronly" contractor is equivalent to a finding that an
employer-employee relationship exists between the
company and Ecal including the latter's "contract
workers" herein petitioners, the relationship being such
as provided by the law itself.
Indeed,
the
law
prohibits
"labor-only"
contracting and creates an employer- employee
relationship for the protection of the laborers. The
Court had in fact observed that businessmen, with the
aid of lawyers, have tried to avoid the bringing about of
an employer-employee relationship in some of their
enterprises because that juridical relation spawns
obligations connected with workmen's compensation,
social security, medicare, minimum wage, termination
pay and unionism. This unscrupulous practice is quite
evident in the case at bar. It is company policy that
once an employee is assigned to the kiln drying
section, he is no longer included in the payroll and is
then paid on a task basis, even if he had long been
employed with the company. Since the employee will
no longer be included in the payroll, it becomes easy
for the company to deny the regular employment of
such a worker and is able to avoid whatever obligations
it may have under an employer-employee relationship.
Moreover, Hi-Line limits the period of undertaking to
only four days presumably to make termination of the
services of petitioners easier and to prevent them from
attaining regular status. The company had no doubt
taken advantage of these laborers in order to escape
liability for benefits and privileges accruing to one
holding a regular employment. Without a law
prohibiting "labor-only" contracting to protect the

rights of labor, these poor workers will always be at the

mercy of the employer.
Since petitioners perform tasks which are usually
necessary or desirable in the main business of Hi-Line,
they should be deemed regular employees of the latter
13 and as such are entitled to all the benefits and
rights appurtenant to regular employment. Being
regular employees, they should have been afforded
due process prior to their dismissal. 14 Instead they
were unceremoniously dismissed on June 6, 1987 when
they were not allowed to enter the company's premises
by the security guards. The argument of private
respondents that the contract of Ecal with the company
expired cannot be sustained. Petitioners may only be
dismissed for an authorized or just cause and after due
process. Petitioners, having been illegally dismissed on
June 6, 1987, are entitled to backwages equivalent to
three years without qualifications and deductions in
line with prevailing jurisprudence.

CASE NO. 118

KIMBERLY INDEPENDENT LABOR UNION FOR

SOLIDARITY, ACTIVISM AND NATIONALISMORGANIZED LABOR ASSOCIATION IN LINE
INDUSTRIES AND AGRICULTURE (KILUSANOLALIA), ROQUE JIMENEZ, MARIO C.
RONGALEROS and OTHERS, petitioners,
vs.
HON. FRANKLIN M. DRILON, KIMBERLY-CLARK
PHILIPPINES, INC., RODOLFO POLOTAN, doing
business under the firm name "Rank Manpower
Co." and UNITED KIMBERLY-CLARK EMPLOYEES
UNION-PHILLIPPINE TRANSPORT AND GENERAL
WORKERS ORGANIZATION (UKCEUPTGWO), respondents.

employees, by operation of law, one year after they

were employed by KIMBERLY through RANK.
As a consequence of their status as regular
employees, those workers not perforce janitorial and
yard maintenance service were performance entitled to
the payment of salary differential, cost of living
allowance, 13th month pay, and such other benefits
extended to regular employees under the CBA, from
the day immediately following their first year of service
in the company. These regular employees are likewise
entitled to vote in the certification election held in July
1, 1986. Consequently, the votes cast by those
employees not performing janitorial and yard
maintenance services, which form part of the 64
challenged votes, should be opened, counted and
considered for the purpose of determining the certified
bargaining representative.

G.R. No. L-77629 May 9, 1990

Facts:
KIMBERLY executed a three-year CBA with
United Kimberly-Clark Employees Union - Philippine
Transport and General Workers' Organization (UKCEUPTGWO) which expired on June 30, 1986. Within the
60-day freedom period prior to the expiration of and
during the negotiations for the renewal of said CBA,
some members of the bargaining unit formed another
union called "Kimberly Independent Labor Union for
Solidarity, Activism and Nationalism- Organized Labor
Association in Line Industries and Agriculture (KILUSANOLALIA).
KILUSAN-OLALIA filed a petition for certification
election in the Ministry of Labor and Employment
(MOLE). KIMBERLY and (UKCEU-PTGWO) did not object
to the holding of a certification election but objected to
the inclusion of the so-called contractual workers
whose employment with KIMBERLY was coursed
through an independent contractor, Rank Manpower
Company (RANK), as among the qualified voters.
During the pre-election conference, 64 casual workers
were challenged by KIMBERLY and (UKCEU-PTGWO) on
the ground that they are not employees, of KIMBERLY
but of RANK. It was agreed by all the parties that the
64 voters shall be allowed to cast their votes but that
their ballots shall be segregated and subject to
challenge proceedings.
KILUSAN-OLALIA filed with the med-arbiter a
"Protest and Motion to Open and Count Challenged
Votes" on the ground that the 64 workers are
employees of KIMBERLY within the meaning of Article
212(e) of the Labor Code. KIMBERLY asserting that
there is no employer-employee relationship between
the casual workers and the company.

Issue: Whether or not the 64 casual workers, whose

votes are being challenged, were entitled to vote in the
certification election.

Ruling:
YES. Under 280 of Labor Code [now 286], the
64 employees herein are deemed regular. It is not
disputed that these workers have been in the employ
of KIMBERLY for more than one year at the time of the
filing of the Petition for certification election by
KILUSAN-OLALIA. Owing to their length of service with
the company, these workers became regular

CASE NO. 119

Virginia Neri vs NLRC
G.R. No. 97008-09, July 23, 1993
FACTS:
Respondents Far East Bank & Trust Company (FEBTC)
and Building Care Corporation (BCC) are sued by
petitioners, employees of BCC who provide janitorial
and other specific services to various firms, to compel
FEBTC to recognize them as its regular employees.
Petitioners vehemently contend that BCC in engaged in
"labor-only" contracting because it failed to adduce
evidence purporting to show that it invested in the
form of tools, equipment, machineries, work premises
and other materials which are necessary in the conduct
of its business. Moreover, petitioners argue that they
perform duties which are directly related to the
principal business or operation of FEBTC.
ISSUE: Are
FEBTC?

petitioners

employees

of

respondent

RULING:
No. It is well-settled that there is "labor-only"
contracting where: (a) the person supplying workers to
an employer does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others; and, (b)
the workers recruited and placed by such person are
performing activities which are directly related to the
principal business of the employer. Based on the
foregoing, BCC cannot be considered a "labor-only"
contractor because it has substantial capital. While
there may be no evidence that it has investment in the
form of tools, equipment, machineries, work premises,
among others, it is enough that it has substantial
capital, as was established before the Labor Arbiter as
well as the NLRC. In other words, the law does not
require both substantial capital and investment in the
form of tools, equipment, machineries, etc.
Besides, petitioners do not deny that they were
selected and hired by BCC before being assigned to
work in the Cagayan de Oro Branch of FFBTC. BCC
likewise acknowledges that petitioners are its
employees. The record is replete with evidence
disclosing that BCC maintained supervision and control

over petitioners through its Housekeeping and Special

Services Division: petitioners reported for work wearing
the prescribed uniform of BCC; leaves of absence were
filed directly with BCC; and, salaries were drawn only
from BCC.

must be undertaken by the employer before losses are

actually sustained. We have, however, interpreted the
law to mean that the employer need not keep all his
employees until after his losses shall have
materialized. Otherwise, the law could be vulnerable
of attack as undue taking of property for the benefit of
another.

CASE NO. 120

In the case at bar, Prior Holdings took over the

operations of Asian Alcohol in October 1991. Plain to
see, the last quarter losses in 1991 were already
incurred under the new management. There were no
signs that these losses would abate. Irrefutable was the
fact that losses have bled Asian Alcohol incessantly
over a span of several years. They were incurred under
the management of the Parsons family and continued
to be suffered under the new management of Prior
Holdings. Ultimately, it is Prior Holdings that will absorb
all the losses, including those incurred under the
former owners of the company. The law gives the new
management every right to undertake measures to
save the company from bankruptcy.

ASIAN ALCOHOL CORPORATION vs NLRC

FACTS: In September, 1991, the Parsons family, who
originally owned the controlling stocks in Asian Alcohol,
were driven by mounting business losses to sell their
majority rights to Prior Holdings, Inc. The next month,
Prior Holdings took over its management and
operation. To thwart further losses, Prior Holding
implemented are organizational plan and other costsaving measures. Some one hundred seventeen (117)
employees out of a total workforce of three hundred
sixty (360) were separated. Seventy two (72) of them
occupied redundant positions that were abolished. Of
these positions, twenty one (21) held by union
members and fifty one (51) by non-union members.
The six (6) private respondents are among those union
members whose positions were abolished due to
redundancy.
In October, 1992, they received individual notices of
termination effective November 30, 1992. They were
paid the equivalent of one month salary for every year
of service as separation pay, the money value of their
unused sick, vacation, emergency and seniority leave
credits, thirteenth (13th) month pay for the year 1992,
medicine allowance, tax refunds, and goodwill cash
bonuses for those with at least ten (10) years of
service. All of them executed sworn releases, waivers
and quitclaims.
On December 18, 1992 the six (6) private respondents
filed complaints for illegal dismissal with a prayer for
reinstatement with backwages, moral damages and
attorney's fees. They alleged that Asian Alcohol used
the retrenchment program as a subterfuge for union
busting. They claimed that they were singled out for
separation by reason of their active participation in the
union. They also asseverated that Asian Alcohol was
not bankrupt as it has engaged in an aggressive
scheme of contractual hiring.
ISSUE # 1: Was the retrenchment due to business
losses validly opted by the company?
RULING: In the instant case, private respondents
never contested the veracity of the audited financial
documents proffered by Asian Alcohol before the
Executive Labor Arbiter. Neither did they object to their
admissibility.
They
show
that
petitioner
has
accumulated losses amounting to P306,764,349.00 and
showing nary a sign of abating in the near future. The
allegation of union busting is bereft of proof. Union and
non-union members were treated alike. The records
show that the positions of fifty one (51) other nonunion members were abolished due to business losses.
In rejecting petitioner's claim of business
losses, the NLRC stated that "the alleged
deficits, of the corporation did not prove
anything for the [petitioner]" since they were
incurred before the take over of Prior Holdings.
Theorizing that proof of losses before the take
over is no proof of losses after the take over, it
faulted Asian Alcohol for retrenching private
respondents on the ground of mere "possible
future losses."
The court does not agree. It should be observed that
Article 283 of the Labor Code uses the phrase
"retrenchment to prevent losses". In its ordinary
connotation, this phrase means that retrenchment

The court finds that the reorganizational plan and

comprehensive cost-saving program to turn the
business around were not designed to bust the union of
the private respondents. Retrenched were one hundred
seventeen (117) employees. Seventy two (72) of them
including private respondents were separated because
their positions had become redundant. In this context,
what may technically be considered as redundancy
may verily be considered as retrenchment measures.
ISSUE
# 2: Was the redundancy program
implemented by the company destroyed by the latters
act of availing services of independent contractors to
replace the terminated employees?
RULING:
NO.
An employer's good faith in
implementing a redundancy program is not necessarily
destroyed by availment of the services of an
independent contractor to replace the services of the
terminated employees. We have previously ruled that
the reduction of the number of workers in a company
made necessary by the introduction of an independent
contractor is justified when the latter is undertaken in
order to effectuate more economic and efficient
methods of production. 51 In the case at bar, private
respondents failed to proffer any proof that the
management acted in a malicious or arbitrary manner
in engaging the services of an independent contractor
to operate the Laura wells. Absent such proof, the
Court has no basis to interfere with the bona
fide decision of management to effect more economic
and efficient methods of production.

CASE NO. 121

CECILE DE OCAMPO, et al vs NLRC & BALIWAG
MAHOGANY CORPORATION
G.R. No. 101539. September 4, 1992.
Facts: Petitioners, members and officers of Baliwag
Mahogany Corporation's existing collective bargaining
agent of the rank and file employees, and the company
executed a CBA providing for conversion into cash of
unused vacation and sick leaves: grievance machinery
procedure; and the right of the company to schedule
work on Sundays and holidays. The company granted
the union's request to allow payment of unused
vacation and sick leaves for the period of 1987-1988
but disallowed cash conversion of the 1988-1989
unused leaves. It also issued suspension orders
affecting 20 employees for failure to render overtime
work. Thereupon, the union filed a notice of strike on
the grounds of unfair labor practice particularly the

violation of the CBA provisions on non-payment of

unused leaves and illegal dismissal of 7 employees.
Later, the company issued a notice of termination to 3
employees or union members, including Cecile de
Ocampo, of the machinery department, to effect cost
reduction and redundancy as the company hired the
services of Gemac Machineries in the maintenance and
repair of its industrial machinery, prompting the
members of the union to picket at the main gate of the
company.
After filing the notice of strike and the legality of the
dismissal with the NCMB, the union members favored a
strike and the union thus staged a strike. On the same
day, the company filed a petition to declare the strike
illegal with prayer for injunction against the union and
the dismissed employees. However, the union
conducted an election on the following day and Cecile
de Ocampo was elected as president. The company
then filed a petition with the Sec of DOLE to assume
jurisdiction and prayed for the strike to be declared
illegal, there being no genuine strikeable issue and for
violation of the no-strike clause of the existing CBA
between the parties.
The SOLE then certified the entire labor dispute to the
NLRC for compulsory arbitration and directed all
striking workers, including the dismissed employees, to
return to work and the management to accept them
back. The workers, however, continued with their strike
and picketing. With the assistance of the PC/INP of San
Rafael, the Sherif, upon direction of the SOLE 8 days
after the return to work order, removed the barricades
and opened the main gate of the company. The
company then caused the publication in newspapers of
the return to work order.
NLRC then declared the strike illegal and the Union
officers/members who participated in said strike
committed prohibited acts are deemed to have lost
their status of employment.
Issue: Whether or not there is legal basis for declaring
the loss of employment status by petitioners on
account of the strike in respondent Company.
RULING: Art 264 of the Labor Code provides, "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.xxx . 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." A strike that is undertaken
despite the issuance by the Secretary of Labor of an
assumption or certification order becomes a prohibited
activity and thus illegal. Unrebutted evidence shows
that the individual petitioners defied the return-to-work
order of the Secretary of Labor. It was only after 8 days
when the barricades were removed and the main gate
of the company was opened. Hence, the termination of
the services of the individual petitioners is justified on
this ground alone.
Turning to the legality of the termination of 3 of the
individual
petitioners,
We
sustain
respondent
Commissions finding that petitioners dismissal was
justified by redundancy due to superfluity and hence
legal. The reduction of the number of workers in a
company made necessary by the introduction of the
services of a contractor in the maintenance and repair
of its industrial machinery is justified. There can be no
question as to the right of the company to hire a
contractor to replace the services rendered by the
terminated mechanics with a view to effecting more
economic and efficient methods of production.

CASE NO. 122

PHILIPPINE BANK OF COMMUNICATIONS vs. NLRC

G.R. No. L-66598 December 19, 1986

FACTS:
Petitioner Philippine Bank of Communications
and the Corporate Executive Search Inc. (CESI) entered
into a letter agreement dated January 1976 under
which CES) undertook to provide "Tempo[rary]
Services" to petitioner Consisting of the "temporary
services" of eleven (11) messengers. The contract
period is described as being "from January 1976."
Attached to the letter agreement was a "List of
Messengers
assigned
at
Philippine
Bank
of
Communications" which list included, as item No. 5
thereof, the name of private respondent Ricardo
Orpiada.
Ricardo Orpiada was thus assigned to work
with the petitioner bank. As such, he rendered services
to the bank, within the premises of the bank and
alongside other people also rendering services to the
bank. There was some question as to when Ricardo
Orpiada commenced rendering services to the bank. As
noted above, the letter agreement was dated January
1976. However, the position paper submitted by CESI
to the National Labor Relations Commission (NLRC)
stated that CES) hired Ricardo Orpiada on 25 June 1975
as a Tempo Service employee, and assigned him to
work with the petitioner bank "as evidenced by the
appointment memo issued to him on 25 June 1975. Be
that as it may, on or about October 1976, the
petitioner requested CESI to withdraw Orpiada's
assignment because, in the allegation of the bank,
Orpiada's services "were no longer needed."
On 29 October 1976, Orpiada instituted a
complaint in the Department of Labor (now Ministry of
Labor and Employment) against the petitioner for
illegal dismissal and failure to pay the 13th month pay
provided for in Presidential Decree No. 851.
ISSUE:
WON an employer-employee relationship
existed between the petitioner Phil. Bank of
Communications and private respondent Ricardo
Orpiada.
HELD: Yes, because CESI is a labor-only contractor.
It is in necessary in this case to confront the task of
determining the appropriate characterization of the
relationship between the bank and CESI was that
relationship one of employer and job (independent)
contractor or one of employer and "labor-only"
contractor to resolve the issue.
Under the general rule set out in the 1st and
2nd paragraphs of Article 106, an employer who enters
into a contract with a contractor for the performance of
work for the employer, does not thereby create an
employer-employee relationship between himself and
the employees of the contractor. Thus, the employees
of the contractor remain the contractor's employees
and his alone. Nonetheless when a contractor fails to
pay the wages of his employees in accordance with the
Labor Code, the employer who contracted out the job
to the contractor becomes jointly and severally liable
with his contractor to the employees of the latter "to
the extent of the work performed under the contract"
as such employer were the employer of the
contractor's employees. The law itself, in other words,
establishes
an
employer-employee
relationship
between the employer and the job contractor's
employees for a limited purpose, i.e., in order to ensure
that the latter get paid the wages due to them.
A similar situation obtains where there is "labor
only" contracting. The "labor-only" contractor-i.e "the
person or intermediary" is considered "merely as an
agent of the employer. " The employer is made by the
statute responsible to the employees of the "labor
only" contractor as if such employees had been
directly employed by the employer. Thus, where "labor
only" contracting exists in a given case, the statute
itself implies or establishes an employer-employee
relationship between the employer (the owner of the
project) and the employees of the "labor only"
contractor, this time for a comprehensive purpose:
"employer for purposes of this Code, to prevent any
violation or circumvention of any provision of this

Code. " The law in effect holds both the employer and
the "labor-only" contractor responsible to the latter's
employees for the more effective safeguarding of the
employees' rights under the Labor Code.