FIRST DIVISION

G.R. No. 169254

August 23, 2012

Baylon R. Baez (Baez faction) and to defer the elections to expedite the negotiations of the economic terms
covering the last two years of the 1995-2000 collective bargaining agreement (CBA) 7 pursuant to Article 253-A
of the Labor Code.8

LEONARDO-DE CASTRO,*

On March 19, 2001, BLR Regional Director Alex E. Maraan issued a Decision ordering the conduct of an
election of union officers to be presided by the Labor Relations Division of the Department of Labor and
Employment-National Capital Region (DOLE-NCR).9 He noted therein that the members of the Baez faction
were not elected by the general membership but were appointed by the Executive Board to their positions since
1985.10

PERLAS-BERNABE, **

The Baez faction appealed the said March 19, 2001 Decision of the BLR Regional Director.

DE LA SALLE UNIVERSITY, Petitioner,

vs.
DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEA-NAFTEU), Respondent.

DECISION
LEONARDO-DE CASTRO, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March
4, 2005 Decision 1 and August 5, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 82472,
entitled De La Salle University versus the Honorable Secretary of Labor and De La Salle University Employees
Association(DLSUEA-NAFTEU), which affirmed the November 17, 2003 Decision3 and January 20, 2004
Order4 of the Secretary of Labor in OS-AJ-0033-2003 (NCMB-NCR-NS-08-246-03). These decisions and
resolutions consistently found petitioner guilty of unfair labor practice for failure to bargain collectively with
respondent.
This petition involves one of the three notices of strike filed by respondent De La Salle University Employees
Association (DLSUEANAFTEU) against petitioner De La Salle University due to its refusal to bargain
collectively with it in light of the intra-union dispute between respondents two opposing factions. The
following narration of facts will first discuss the circumstances surrounding the said intra-union conflict
between the rival factions of respondent union and, thereafter, recite the cases relating to the aforementioned
conflict, from the complaint for unfair labor practice to the subsequent notices of strike, and to the assumption
of jurisdiction by the Secretary of Labor.
Petition for Election of Union
Officers
On May 30, 2000, some of respondents members headed by Belen Aliazas (the Aliazas faction) filed a petition
for the election of union officers in the Bureau of Labor Relations (BLR).5 They alleged therein that there has
been no election for respondents officers since 1992 in supposed violation of the respondent unions
constitution and by-laws which provided for an election of officers every three years. 6 It would appear that
respondents members repeatedly voted to approve the hold-over of the previously elected officers led by

While the appeal was pending, the Aliazas faction filed a Very Urgent Motion for Intervention in the BLR. They
alleged therein that the Baez faction, in complete disregard of the March 19, 2001 Decision, scheduled a
"regular" election of union officers without notice to or participation of the DOLE-NCR.11
In an Order dated July 6, 2001, BLR Director IV Hans Leo J. Cacdac granted the motion for intervention.12 He
held that the unilateral act of setting the date of election on July 9, 2001 and the disqualification of the Aliazas
faction by the DLSUEA-COMELEC supported the intervening factions fear of biased elections. 13
Thereafter, in a Resolution dated May 23, 2002, BLR Director Cacdac dismissed the appeal of the Baez
faction. The salient portions thereof stated:
The exercise of a union members basic liberty to choose the union leadership is guaranteed in Article X of
[respondents] constitution and by-laws. Section 4 mandates the conduct of a regular election of officers on the
first Saturday of July and on the same date every three years thereafter.
In unequivocal terms, Article 241(c) of the Labor Code states that "[t]he members shall directly elect their
officers, including those of the national union or federation, to which they or their union is affiliated, by secret
ballot at intervals of five (5) years."
[The Baez faction] admitted that no elections were conducted in 1992 and 1998, when the terms of office
of the officers expired. This Office emphasizes that even the decision to dispense with the elections and allow
the hold-over officers to continue should have been subjected to a secret ballot under Article 241(d) which
states:
The members shall determine by secret ballot, after due deliberation, any question of major policy affecting the
entire membership of the organization, unless the nature of the organization or force majeure renders such secret
ballot impractical, in which case the board of directors of the organization may make the decision in behalf of
the general membership.

With the clear and open admission that no election transpired even after the expiration of the union
officers terms of office, the call for the conduct of elections by the Regional Director was valid and
should be sustained.14 (Emphases supplied.)
Subsequently, in a memorandum dated May 16, 2003, BLR Director Cacdac stated that there was no void in the
union leadership as the March 19, 2001 Decision of Regional Director Maraan did not automatically terminate
the Baez factions tenure in office. He explained therein that "[a]s duly-elected officers of [respondent], their
leadership is not deemed terminated by the expiration of their terms of office, for they shall continue their
functions and enjoy the rights and privileges pertaining to their respective positions in a hold-over capacity,
until their successors shall have been elected and qualified."15
On August 28, 2003, an election of union officers under the supervision of the DOLE was conducted. The
Baez faction emerged as the winner thereof.16 The Aliazas faction contested the election results.

Petitioner acceded to the request of the Aliazas faction and informed the Baez faction of such fact in a letter
dated August 16, 2001. Petitioner explained:
It is evident that the intra-union dispute between the incumbent set of officers of your Union on one hand and a
sizeable number of its members on the other hand has reached serious levels. By virtue of the 19 March 2001
Decision and the 06 July 2001 Order of the Department of Labor and Employment (DOLE), the hold-over
authority of your incumbent set of officers has been considered extinguished and an election of new union
officers, to be conducted and supervised by the DOLE, has been directed to be held. Until the result of this
election [come] out and a declaration by the DOLE of the validly elected officers is made, a void in the
Union leadership exists.
In light of these circumstances, the University has no other alternative but to temporarily do the following:
1. Establish a savings account for the Union where all the collected union dues and agency fees will be
deposited and held in trust; and

On October 29, 2003, the Baez faction was formally proclaimed as the winner in the August 28, 2003 election
of union officers.17
The Complaint for Unfair Labor
Practices and Three Notices of
Strike
On March 20, 2001, despite the brewing conflict between the Aliazas and Baez factions, petitioner entered into
a five-year CBA covering the period from June 1, 2000 to May 31, 2005.18
On August 7, 2001, the Aliazas faction wrote a letter to petitioner requesting it to place in escrow the union dues
and other fees deducted from the salaries of employees pending the resolution of the intra-union conflict. We
quote the pertinent portion of the letter here:
The [BLR], in its March 19, 2001 [decision], declared that the hold-over capacity as president of Mr. Baylon
Baez, as well as that of the other officers [of respondent] has been extinguished. It was likewise stated in the
[decision] that "to further defer the holding of a local election is whimsical, capricious and is a violation of the
union members rights under Article 241 and is punishable by expulsion."

2. Discontinue normal relations with any group within the Union including the incumbent set of
officers.
We are informing you of this decision of [petitioner] not only for your guidance but also for the apparent reason
that [it] does not want itself to be unnecessarily involved in your intra-union dispute. This is the only way
[petitioner] can maintain neutrality on this matter of grave concern.20 (Emphasis supplied.)
In view of the foregoing decision of petitioner, respondent filed a complaint for unfair labor practice in the
National Labor Relations Commission (NLRC) on August 21, 2001.21 It alleged that petitioner committed a
violation of Article 248(a) and (g) of the Labor Code which provides:
Article 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization.
xxxx

This being so, we would like to request [petitioner] to please put on escrow all union dues/agency fees and
whatever money considerations deducted from salaries of the concerned co-academic personnel until such time
that an election of union officials has been scheduled and subsequent elections has been held. We fully
understand that putting the collection on escrow means the continuance of our monthly deductions but the same
will not be remitted to respondents funds.19

(d) To initiate, dominate, assist or otherwise interfere with the formation or administrator of any labor
organization, including the giving of financial or other support to it or its organizers or supporters.
Respondent union asserted that the creation of escrow accounts was not an act of neutrality as it was influenced
by the Aliazas factionss letter and was an act of interference with the internal affairs of the union. Thus,

petitioners non-remittance of union dues and discontinuance of normal relations with it constituted unfair labor
practice.
Petitioner, for its defense, denied the allegations of respondent and insisted that its actions were motivated by
good faith.
Meanwhile, on March 7, 2002, respondent filed a notice of strike in the National Conciliation and Mediation
Board (NCMB).22
Shortly thereafter, or on July 12, 2002, Labor Arbiter Felipe P. Pati dismissed the August 21, 2001 complaint for
unfair labor practice against petitioner for lack of merit in view of the May 23, 2002 decision of the BLR,
affirming the need to conduct an election of the unions officers.23 The labor arbiter, in effect, upheld the
validity of petitioners view that there was a void in the leadership of respondent.
The July 12, 2002 Decision of Labor Arbiter Pati, however, did not settle matters between respondent and
petitioner.
On March 15, 2003, respondent sent a letter to petitioner requesting for the renegotiation of the economic terms
for the fourth and fifth years of the then current CBA, to wit:
This refers to the re-negotiation of the economic provisions for the [fourth and fifth] year[s] of the 2000-2005
[CBA] that will commence sometime in March 2003.
In this regard, the [Baez faction] for and in behalf of [respondent] would like to respectfully request your good
office to provide us a copy of the latest Audited Financial Statements of [petitioner,] including its budget
performance report so that [petitioner] and [respondent through] their respective authorized representatives
could facilitate the negotiations thereof.
We are furnishing [petitioner through] your good self a copy of [our] CBA economic proposals for the [fourth
and fifth] year[s] of the 2000-2005 CBA signed by its authorized negotiating panel.
We also request [petitioner] to furnish us a copy of its counter proposals as well as a list of its negotiating panel
not later than ten (10) days from receipts of [our] CBA proposals so that [we] and [petitioner] can now proceed
with the initial conference to discuss the ground rules that will govern the CBA negotiation. 24
In a letter dated March 20, 2003,25 petitioner denied respondents request. It stated therein:
Pursuant to the [d]ecisions of appropriate government authority, and consistent with the position enunciated and
conveyed to you by [petitioner] in my letter dated August 16, 2001, there is a conclusion of fact that there is
an absolute void in the leadership of [respondent]. Accordingly, your representation as President or officer

of, as well as, that of all persons purporting to be officers and members of the board of the said employees
association [will] not [be] recognized. Normal relations with the union cannot occur until the said void in
the leadership of[respondent] is appropriately filled. Affected by the temporary suspension of normal
relations with [respondent] is the renegotiation of the economic provisions of the 2002-2005 CBA. No
renegotiation can occur given the void in the leadership of [respondent.]26
As a consequence of the aforementioned letter, respondent filed a second notice of strike on April 4,
2003.27Upon the petition filed by petitioner on April 11, 2003,28 the Secretary of Labor assumed jurisdiction
over the matter pursuant to Article 263 of the Labor Code29 as petitioner, an educational institution, was
considered as belonging to an industry indispensable to national interest and docketed the case as OS-AJ-00152003.30
On June 26, 2003, the Second Division of the NLRC affirmed the July 12, 2002 Decision of Labor Arbiter
Pati.31Respondent moved for reconsideration but it was denied by the NLRC in a Resolution dated September
30, 2003.32
Meanwhile, on July 28, 2003, the Secretary of Labor issued a Decision33 in OS-AJ-0015-2003, finding
petitioner guilty of violating Article 248(g) in relation to Article 252 of the Labor Code.34 The salient portion
thereof stated:
The University is guilty of refusal to bargain amounting to an unfair labor practice under Article 248(g) of the
Labor Code. Indeed there was a requirement on both parties of the performance of the mutual obligation to meet
and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.
Undoubtedly, both [petitioner] and [respondent] entered into a [CBA] on [March 20, 2001. The term of the said
CBA commenced on [June 1, 2000 and with the expiration of the economic provisions on the third year,
[respondent] initiated negotiation by sending a letter dated March 15, 2003, together with the CBA proposal. In
reply to the letter of [respondent], [petitioner] in its letter dated [March 20, 2003 refused.
Such an act constituted an intentional avoidance of a duty imposed by law. There was nothing in the [March 19,
2001 and July 6, 2001 orders] of Director Maraan and Cacdac which restrained or enjoined compliance by the
parties with their obligations under the CBA and under the law. The issue of union leadership is distinct and
separate from the duty to bargain.
In fact, BLR Director Cacdac clarified that there was no void in [respondents] leadership. The pertinent
decision dated March 19, 2001 x x x reads35:
We take this opportunity to clarify that there is no void in [respondents] leadership. The [March 19, 2001
decision] x x x should not be construed as an automatic termination of the incumbent officers[] tenure of office.
As duly-elected officers of [respondent], their leadership is not deemed terminated by the expiration of their

terms of office, for they shall continue their functions and enjoy the rights and privileges pertaining to their
respective positions in a hold-over capacity, until their successors shall have been elected and qualified.

you filed have been rendered moot and academic by the Secretarys Decision, otherwise you would, in effect, be
admitting that you have engaged in "forum shopping."38

It is thus very clear. x x x. This official determination by the BLR Director [Cacdac] removes whatever cloud of
doubt on the authority of the incumbent to negotiate for and in behalf of [respondent] as the bargaining agent of
all the covered employees. [Petitioner] is duty bound to negotiate collectively pursuant to Art. 252 of the Labor
Code, as amended.

Failing to secure a reconsideration of the July 28, 2003 Decision of the Secretary of Labor, petitioner assailed
the same in the Court of Appeals via a petition for certiorari docketed as CA-G.R. SP No. 81649.

xxxx
On the question: [i]s [petitioner] guilty of unfair labor practice? This office resolves the issue in the affirmative.
Citing the case of the Divine Word University of Tacloban v. Secretary of Labor, [petitioner] is guilty of unfair
labor practice in refusing to abide by its duty to bargain collectively. The refusal of [petitioner] to bargain is
tainted with bad faith amounting to unfair labor practice. There is no other way to resolve the issue given the
facts of the case and the law on the matter.
WHEREFORE, premises considered, this Office finds [petitioner] guilty of refusal to bargain collectively in
violation of Article 252 in relation to Article 248 of the Labor Code, as amended. Management is hereby
directed to cease and desist from refusing to bargain collectively. The parties are therefore directed to
commence negotiations effective immediately.36 (Citations omitted.)
On August 1, 2003, respondent reiterated its demand on petitioner to bargain collectively pursuant to the
aforementioned Decision of the Secretary of Labor.37
On August 4, 2003, petitioner sent a letter to respondent explaining that it cannot act on the latters letter. The
August 4, 2003 letter of petitioner stated:
[Petitioners] counsel is preparing a Motion for Reconsideration that would be filed with the Office of the
Secretary of Labor and Employment. Under the Rule, [petitioner] still has the remedy of filing such Motion
with the Office of the Secretary before elevating the matter to higher authorities should it become necessary.
We, therefore, regret to advise you that [petitioner] cannot accede to your demand to immediately commence
negotiations for the CBA with your group or any other group of Union members, as the case may be, until such
time that the case before the Secretary is resolved with finality. We will, therefore, continue to defer the CBA
negotiations pending final resolution of the matter.
As regards your other demands, [petitioner] is of the position that the matters subject of said demands are still
pending before the various offices of the Labor Arbiters and NLRC and, therefore, it cannot act on the same
until such time that said cases are likewise resolved with finality. It cannot be assumed that all these cases that

On August 27, 2003, respondent filed the third notice of strike,39 in the wake of petitioners August 4, 2003
letter and citing among others petitioners alleged violation of the CBA and continuing refusal to bargain in
good faith. Petitioner, on the other hand, filed a petition for assumption of jurisdiction for this third notice of
strike.40 Again, the Secretary of Labor assumed jurisdiction. This case was docketed as OS-AJ-0033-2003.
On November 17, 2003, the Secretary of Labor, in resolving OS-AJ-0033-2003, cited the July 28, 2003
Decision in OS-AJ-0015-2003, and consequently declared that petitioner committed an unfair labor practice.
The salient portions of said Decision stated:
Considering that this case, docketed as Case No. OS-AJ-0033-2003 is based on the same set of facts with
another case, involving the same parties numbered as OS-AJ-0015-2003, and based on the same factual
and legal circumstances, we have to consistently hold that the [petitioner] has indeed failed to comply
with its obligation under the law. As a matter of fact, it admits in persisting to refuse despite the fact that there
is no more legal obstacle preventing the commencement of the Collective Bargaining Negotiation between the
parties. Anent the so called void in the Union leadership, We declared that the same does not constitute a
valid ground to refuse to negotiate because [petitioners] duty to bargain under the law is due and
demandable under the law by [respondent] as a whole and not by any faction within the union.
xxxx
x x x Events have lately turned out in favor of [respondent], thereby obliterating any further justification on the
part of [petitioner] not to bargain. On October 29, 2003, the new Regional Director of DOLENCR, Ciriaco
E. Lagunzad III, issued a resolution declaring the Baez group as the duly elected officers of the Union. x
x x.
xxxx
The above election results were the outcome of a duly-held union election, supervised by the
Departments Regional Office. This was the election ordered in the [July 6, 2001 and March 19, 2001
orders of the BLR]. This was also the same election invoked by [petitioners]in trying to justify it
continuing refusal to bargain.
The [members of the Baez faction have] reportedly taken their oath of office and have qualified. [Petitioner] is
now under estoppel from recognizing them, considering that it committed in writing to recognize and

commence bargaining once a set of duly elected officers [is] proclaimed after an election duly conducted under
the supervision of the Department.

election of the union officers held on August 28, 2003, continued refusal by the University to negotiate amounts
to unfair labor practice. The non-proclamation of the newly elected union officers cannot be used as an
excuse to fulfill the duty to bargain collectively.43 (Emphasis supplied.)

xxxx
Not only has [petitioner] refused to negotiate with [respondent], it has unduly withheld the money belonging to
the bargaining agent. Both these acts are illegal and are tantamount to Unfair Labor Practice under Article
248 in relation to Article 252 of the Labor Code x x x.
ACCORDINGLY, all the foregoing premises being duly considered, this Office hereby declares that
[petitioner] committed Unfair Labor Practice in violation of [Article 248 in relation to Article 252 of the Labor
Code x x x. [Petitioner] and its duly authorized officers and personnel are therefore ordered to cease and desist
from committing said acts under pain of legal sanction.
[Petitioner] is therefore specifically directed to commence collective bargaining negotiation with [respondents]
without further delay and to immediately turn over to the Baez group the unlawfully withheld union dues and
agency fees with legal interest corresponding to the period of the unlawful withholding. All these specific
directives should be done within ten (10) days from receipt of this Decision and with sufficient proof of
compliance herewith to be submitted immediately thereafter.41
In accordance with the terms of the aforementioned Decision, petitioner turned over to respondent the collected
union dues and agency fees from employees which were previously placed in escrow amounting
to P441,924.99.42
Nonetheless, petitioner moved for the reconsideration of the November 17, 2003 Decision of the Secretary of
Labor but it was denied in an Order dated January 20, 2004.
Aggrieved, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals. Petitioner alleged therein that the Secretary of Labor committed grave abuse of discretion by holding
that it (petitioner) was liable for unfair labor practice. Taking a contrary stance to the findings of the Secretary
of Labor, petitioner stressed that it created the escrow accounts for the benefit of the winning faction and
undertook temporary measures in light of the March 19, 2001 and July 6, 2001 Orders of the BLR. Thus, it
should not be penalized for taking a hands-off stance in the intra-union controversy between the Aliazas and
Baez factions.
In a Decision dated March 4, 2005, the Court of Appeals affirmed the November 17, 2003 Decision and January
20, 2004 Order of the Secretary of Labor and dismissed the said petition. It held:
[Petitioner] finds reason to refuse to negotiate with [respondents incumbent officers] because of the alleged
"void in the union leadership" declared by the Regional Director in his March 19, 2001 decision, [but] after the

Petitioner moved for reconsideration but it was denied in a Resolution dated August 5, 2005. The Court of
Appeals noted that petitioners arguments were a mere "rehash of the issues and discussions it presented in its
petition and in the relevant pleadings submitted x x x."44
Meanwhile, the Court of Appeals dismissed CA-G.R. SP No. 81649 (which assailed the July 28, 2003 Decision
in OS-AJ-0015-2003), in a Decision dated March 18, 2005.45 The said decision likewise found that petitioner
erred in unilaterally suspending negotiations with respondent since the pendency of the intra-union dispute was
not a justifiable reason to do so.
Petitioner moved for reconsideration of the aforesaid decision in CAG. R. SP No. 81649 but it was denied in a
Resolution dated June 7, 200546 due to lack of merit.
Aggrieved, petitioner elevated both the assailed decisions and resolutions in this case and in CA-G.R. SP No.
81649, which was docketed as G.R. No. 168477, to this Court. Petitioner, in both instances, essentially argued
that it did not maliciously evade its duty to bargain. On the contrary, it asserts that it merely relied in good faith
on the March 19, 2001 Decision of the BLR that there was a void in respondents leadership.47
This Court, through its Third Division, denied G.R. No. 168477 in a minute resolution dated July 20, 2005 due
to the petitions "failure x x x to show that a reversible error had been committed by the appellate court." 48 The
motion for reconsideration was denied with finality on September 21,
200549 and entry of judgment was made on November 3, 2005.50
Meanwhile, respondent was ordered to file a comment herein, and, subsequently, this petition was given due
course.
We note that both G.R. No. 168477 and this petition are offshoots of petitioners purported temporary measures
to preserve its neutrality with regard to the perceived void in the union leadership. While these two cases arose
out of different notices to strike filed on April 3, 2003 and August 27, 2003, it is undeniable that the facts cited
and the arguments raised by petitioner are almost identical. Inevitably, G.R. No. 168477 and this petition seek
only one relief, that is, to absolve petitioner from respondents charge of committing an unfair labor
practice, or specifically, a violation of Article 248(g) in relation to Article 252 of the Labor Code.
For this reason, we are constrained to apply the law of the case doctrine in light of the finality of our July 20,
2005 and September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the
Court of Appeals finding that petitioner erred in suspending collective bargaining negotiations with the union

and in placing the union funds in escrow considering that the intra-union dispute between the Aliazas and Baez
factions was not a justification therefor is binding herein. Moreover, we note that entry of judgment in G.R.
No. 168477 was made on November 3, 2005, and that put to an end to the litigation of said issues once and for
all.51

SO ORDERED.

The law of the case has been defined as the opinion delivered on a former appeal. It means that whatever is once
irrevocably established as the controlling legal rule or decision between the same parties in the same case
continues to be the law of the case, whether correct on general principles or not, so long as the facts on which
such decision was predicated continue to be the facts of the case before the court.52
In any event, upon our review of the records of this case, we find that the Court of Appeals committed no
reversible error in its assailed Decision dated March 4, 2005 and Resolution dated August 5, 2005. Petitioners
reliance on the July 12, 2002 Decision of Labor Arbiter Pati, and the NLRCs affirmance thereof, is misplaced.
The unfair labor practice complaint dismissed by Labor Arbiter Pati questioned petitioners actions immediately
after the March 19, 2001 Decision of BLR Regional Director Maraan, finding that "the reason for the hold-over
[of the previously elected union officers] is already extinguished." The present controversy involves petitioners
actions subsequent to (1) the clarification of said March 19, 2001 Maraan Decision by BLR Director Cacdac
who opined in a May 16, 2003 memorandum that the then incumbent union officers (i.e., the Baez faction)
continued to hold office until their successors have been elected and qualified, and (2) the July 28, 2003
Decision of the Secretary of Labor in OS-AJ-0015-2003 ruling that the very same intra-union dispute (subject
of several notices of strike) is insufficient ground for the petitioner to suspend CBA negotiations with
respondent union. We take notice, too, that the aforesaid Decision of Labor Arbiter Pati has since been set aside
by the Court of Appeals and such reversal was upheld by this Courts Second Division in its Decision dated
April 7, 2009 in G.R. No. 177283, wherein petitioner was found liable for unfair labor practice.53
Neither can petitioner seek refuge in its defense that as early as November 2003 it had already released the
escrowed union dues to respondent and normalized relations with the latter. The fact remains that from its
receipt of the July 28, 2003 Decision of the Secretary of Labor in OS-AJ-0015-2003 until its receipt of the
November 17, 2003 Decision of the Secretary of Labor in OS-AJ-0033-2003, petitioner failed in its duty to
collectively bargain with respondent union without valid reason. At most, such subsequent acts of compliance
with the issuances in OS-AJ-0015-2003 and OS-AJ-0033-2003 merely rendered moot and academic the
Secretary of Labors directives for petitioner to commence collective bargaining negotiations within the period
provided.
To conclude, we hold that the findings of fact of the Secretary of Labor and the Court of Appeals, as well as the
conclusions derived therefrom, were amply supported by evidence on record. Thus, in line with jurisprudence
that such findings are binding on this Court, we see no reason to disturb the same. 54
WHEREFORE, the petition is DENIED.

SECOND DIVISION
G.R. No. 181995

July 16, 2012

BIBIANO C. ELEGIR, Petitioner,

vs.
PHILIPPINE AIRLINES, INC., Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision1 dated August 6, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 79111, which reversed and set
aside the Decision2 dated March 18, 2002 and Order3 dated June 30, 2003 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case No. 00-08-06135-97 and NLRC NCR CA No. 015030-98.
Factual Antecedents
As culled from the records, the instant case stemmed from the following factual antecedents:
Petitioner Bibiano C. Elegir (petitioner) was hired by Philippine Airlines, Inc. (PAL) as a commercial pilot,
specifically designated as HS748 Limited First Officer, on March 16, 1971.4
In 1995, PAL embarked on a refleeting program and acquired new and highly sophisticated aircrafts.
Subsequently, it sent an invitation to bid to all its flight deck crew, announcing the opening of eight (8) B747400 Captain positions that were created by the refleeting program. The petitioner, who was then holding the
position of A-300 Captain, submitted his bid and was fortunately awarded the same.5 The petitioner, together
with seven (7) other pilots, was sent for training at Boeing in Seattle, Washington, United States of America on
May 8, 1995, to acquire the necessary skills and knowledge in handling the new aircraft. He completed his
training on September 19, 1995.6
On November 5, 1996, after rendering twenty-five (25) years, eight (8) months and twenty (20) days of
continuous service, the petitioner applied for optional retirement authorized under the Collective Bargaining
Agreement (CBA) between PAL and the Airline Pilots Association of the

Philippines (ALPAP), in which he was a member of good standing. In response, PAL asked him to reconsider
his decision, asseverating that the company has yet to recover the full value of the costs of his training. It
warned him that if he leaves PAL before he has rendered service for at least three (3) years, it shall be
constrained to deduct the costs of his training from his retirement pay.7

Accrued Vacation Leave

386,546.44

1996 Unutilized days off

105,089.46

On November 6, 1996, the petitioner went on terminal leave for thirty (30) days and thereafter made effective
his retirement from service. Upon securing his clearance, however, he was informed that the costs of his
training will be deducted from his retirement pay, which will be computed at the rate of P 5,000.00 per year of
service. The petitioner, through his counsel, sent PAL a correspondence, asserting that his retirement benefits
should be based on the computation stated in Article 287 of the Labor Code, as amended by Republic Act (R.A.)
No. 7641, and that the costs of his training should not be deducted therefrom. In its Reply dated August 4, 1997,
PAL refused to yield to the petitioners demand and maintained that his retirement pay should be based on PALALPAP Retirement Plan of 1967 (PAL-ALPAP Retirement Plan) and that he should reimburse the company
with the proportionate costs of his training. Thus, on August 27, 1997, the petitioner filed a complaint for nonpayment of retirement pay, moral damages, exemplary damages and attorneys fees against PAL. 8

Unpaid Salary 12/1/-5/96

Nov. 96 Prod. Allow. (net)

1,726.92
22,416.65

1996 w/tax refund

13th month backpay for the year
1988-1991
TOTAL

2,464.42
171,262.50
P 4,150,106.20

plus legal interest of 12% per annum from November 06, 1996.

On February 6, 1998, the Labor Arbiter (LA) rendered a Decision, the pertinent portions of which read:

Finally, ten percent (10%) of all sums owing to petitioner is hereby adjudged as attorneys fees.

From the foregoing, it is manifestly clear that an employees retirement benefits under any collective bargaining
agreement shall not be less than those provided under the New Retirement Pay Law and if such benefits are
less, the employee shall pay the difference between the amount due the employee and that provided under the
CBA or individual agreement or retirement plan (Par. 3.2, Sec. 3, rules Implementing the New Retirement Pay
Law).
Thus, applying the pertinent CBA provision in correlation with the New Retirement Pay Law, complainant
should receive the following amount, to wit:
22.5 x 26 yrs. x P138,447.00= P2,700,301.50
If we were to follow the PALs computation of petitioners retirement pay, the latters retirement benefits in the
amount of P125,000.00 based on Section 2, Article VII of the Retirement Plan of the CBA at P5,000.00 per
every year of service would be much less than his monthly salary of P138,477.00 at the time of his retirement.
This was never envisioned by the law. Instead, it is the clear intention of our law makers to provide a bigger and
better retirement pay or benefits under existing laws and/or existing CBA or other agreements.

SO ORDERED.10
The LA ratiocinated that PAL had no right to withhold the payment of the petitioners retirement benefits simply
because he retired from service before the lapse of three (3) years. To begin with, there was no document
evidencing the fact that the petitioner was required to stay with PAL for three (3) years from the completion of
his training or that he was bound to reimburse the company of the costs of his training should he retire from
service before the completion of the period. The LA likewise dismissed the theory espoused by PAL that the
petitioners submission of his bid for the new position which necessarily requires training created an innominate
contract of du ut facias between him and the company since their relationship is governed by the CBA between
the management and the ALPAP.11
On appeal, the NLRC took a different stance and modified the decision of the LA in its Decision dated March
18, 2002, which pertinently states:

Considering that [petitioner] was only fifty-two (52) years when he opted to retire on November 6, 1996, he
was, strictly, not yet qualified to receive the benefits provided under said Article 287 of the Labor Code, as
amended by R.A. 7641. However, petitioner is eligible for retirement under the CBA between respondent PAL
xxxx
and ALPAP, as he had already served for more than 25 years with said respondent. This is covered by the
provision in the first paragraph of Article 287 of the Labor Code which states that an employee may be retired
WHEREFORE, in view of the foregoing, we find PAL liable to the petitioner for the payment of his retirement
upon reaching the retirement age established in the collective bargaining agreement or other applicable
benefits as follows:
employment contract, inasmuch as the CBA in question does not provide for any retirement age, but limited
itself to the number of years of service or flying hours of the employee concerned. Consequently, anytime that
Retirement Benefits
P 2,700,301.50 an employee of respondent PAL reaches twenty (20) years of service or 20,000 (flying) hours as a pilot of PAL,
then his age at that precise time would be considered as the retirement age, as far as he is concerned.
(22.5 x 26 years x P138,477.00)
Accrued Trip Leave

760,299.37

The retirement benefits of petitioner should, therefore, be computed in accordance with both Article 287 of the
Labor Code and the Retirement Plan in the CBA of PAL and ALPAP.
On the second issue, we rule that petitioner is under obligation to reimburse a portion of the expenses incurred
for his training as B747-400 Captain.
It would be grossly unfair and unjust to PAL if the petitioner would be allowed to reap the fruits of this training,
which upgraded his knowledge and skills that would enable him to demand higher pay, if he would not be made
to return said benefits in the form of service for a reasonable period of time, say three (3) years as PALs
company policy demands. x x x
xxxx
Thus, with the adjudged reimbursement for training expenses of P921,281.71 (sic), the awards due to petitioner
shall be, as follows:
Retirement Pay (P138,477.00 divided by 2 times 26)

P1,800,201.00

Service Incentive Leave (P138,477.00 divided by 30 x 5)

23,074.50

Accrued Trip Leave

386,546.44

13th Month Pay

138,477.00

1996 Unutilized days off

105,089.48

Nov. 1996 Productive Allowance (net)

1,726.92

Unpaid salary 12/1-5/96

22,416.63

1996 w/ tax refund

2,464.42

TOTAL -

[P] 2,479.996.39

LESS:
Reimbursement of training expenses

19,837.16

1996 Christmas bonus overpayment

11,539.75

PESALA
TOTAL

SO ORDERED.12
Both PAL and petitioner filed their respective motions for partial reconsideration from the decision of the
NLRC. In its Motion for Partial Reconsideration,13 PAL asseverated that the decision of the NLRC, directing the
computation of the petitioners retirement benefits based on Article 287 of the Labor Code, instead of the CBA,
was inconsistent with the disposition of this Court in Philippine Airlines, Inc. v. Airline Pilots Association of the
Philippines.14 It emphasized that in said case, this Court sustained PALs position and directed the payment of
retirement benefits of the complainant pilot in accordance with the PAL-ALPAP Retirement Plan. However, in
an Order15 dated June 30, 2003, the NLRC denied PALs motion for reconsideration.
Unyielding, PAL filed a petition for certiorari with the CA. In said petition, PAL emphasized that the
petitioners case should be decided in light of the ruling in Philippine Airlines, Inc., where this Court held that
the computation of the retirement pay of a PAL pilot who retired before reaching the retirement age of sixty (60)
should be based on the PAL-ALPAP Retirement Plan or at the rate of P5,000.00 for every year of service. 16
In its Decision dated August 6, 2007, the CA ruled that the petitioners retirement pay should be computed in
accordance with PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan as was held in
Philippine Airlines, Inc. It held, thus:
The present case squarely falls within the state of facts upon which the ruling in Philippine Airlines, Inc., vs.
Airline Pilots Association of the Philippines was enunciated. Petitioner herein applies for retirement at an age
below 60. A distinction was made between a pilot who retires at the age of sixty and another who retires earlier.
The Supreme Court was explicit when it declared:
"A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime of his
life and at the peak of his career, compared to one who retires at the age of 60 years old."
Furthermore, petitioner would not be getting less if his retirement pay is computed on the PAL-ALPAP
retirement plan rather than the formula provided by the Labor Code. Petitioner did not refute that he already got
retirement benefits from another retirement plan the PAL

981,281.71

1996 13thmonth pay overpayment

IN VIEW OF THE FOREGOING, the decision of the Labor Arbiter should be MODIFIED by increasing the
awards to the petitioner to ONE MILLION FOUR HUNDRED SIXTY SIX THOUSAND SEVEN HUNDRED
SIXTY-NINE and 84/100 (P1,466,769.84) PESOS as computed above.

Pilots Retirement Plan. It appearing that the retirement benefits amounting to P1,800,201.00 being the main
bone of contention herein, this Court proceeds to compute the balance of Capt. Elegirs retirement benefits as
follows:

567.93
-

1,013,226.55

RETIREMENT PAY STILL PAYABLE -

[P] 1,466,769.81

Retirement Pay (P5,000 x 25 years)

P125,000.00

Trip Leave Pay

757,564.04

Vacation Leave Pay

385,155.76

104,711.38 The Ruling of this Court

1996 Unutilized Day-Off

Productivity Allowance for 1996

1,726.92 The petitioners retirement pay should be computed based on PALs retirement plans.

Unpaid Salary for December 1-5, 1996

22,335.00

1996 Withholding Tax Refund

Less Accountabilities:
Training Cost

P981,281.71

1996 13th Month Pay Overpayment

19,837.16

1996 Christmas Bonus

11,539.75

The petitioner maintains that it is Article 287 of the Labor Code which should be applied in the computation of
2,464.42 his retirement pay since the same provides for higher benefits. He contends that the CA erroneously resorted to
the ruling in Philippine Airlines, Inc. since the circumstances in the said case, which led this Court to rule in
favor of the applicability of PALs retirement plans in computing retirement benefits, are unavailing in the
P1,398,957.52 present case. Specifically, he pointed out that the pilot in Philippine Airlines, Inc. retired at the age of forty-five
(45), while he opted to retire at fifty-two (52). He further emphasized that the ruling was anchored on a finding
that the retirement benefits that the pilot would get under Article 287 of the Labor Code are less than those he
would get under PALs retirement plans.19

Apparently, the petitioner failed to appreciate the heart behind the ruling in Philippine Airlines, Inc. To
recapitulate, the case stemmed from PALs unilateral act of retiring airline pilot Captain Albino Collantes
(Collantes) under the authority of Section 2, Article VII of the PAL-ALPAP Retirement Plan. Thereafter,
PESALA
567.93
1,013,226.55 ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE), asseverating that the
retirement of Collantes constituted illegal dismissal and union busting. The Secretary of Labor assumed
BALANCE
P 385,730.97 jurisdiction and eventually upheld PALs action of retiring Collantes as a valid exercise of its option under
Section 2, Article VII of the PAL-ALPAP Retirement Plan. It further directed for the computation of Collantes
retirement benefits on the basis of Article 287 of the Labor Code. 20 Acting on Collantes petition for certiorari,
pursuant to the ruling in G.R. No. 143686.
the CA held that the pilots retirement benefits should be based on Article 287 of the Labor Code and not on the
PAL-ALPAP Retirement Plan. On appeal to this Court, we reversed the CA and ruled that Collantes retirement
benefits should be computed based on the PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit
xxxx
Plan and not on Article 287 of the Labor Code since the benefits under the two (2) plans are substantially higher
than the latter. The dispositive portion of the decision reads:
WHEREFORE, the petition is GRANTED. The Decision of public respondent dated March 18, 2002 and its
Order of June 30, 2003 are REVERSED and SET ASIDE. The retirement benefits of petitioner Capt. Bibiano
WHEREFORE, in view of all the foregoing, the petition is GRANTED. The March 2, 2000 Decision and the
Elegir shall be based on the 1967 PAL-ALPAP Retirement Plan andthe PAL Pilots Retirement Benefit Plan and
June 19, 2000 Resolution of the Court of Appeals in CA-G.R. SP No. 54403 are REVERSED and SET ASIDE.
the balance still due him, pegged at P385,730.97.
The Order of the Secretary of Labor in NCMB-NCR-N.S. 12-514-97 dated June 13, 1998, is MODIFIED as
follows: The retirement benefits to be awarded to Captain Albino Collantes shall be based on the 1967 PAL17
SO ORDERED. (Citation omitted and emphasis supplied)
ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The directive contained in subparagraph
(2) of the dispositive portion thereof, which required petitioner to consult the pilot involved before exercising its
The petitioner filed a motion for reconsideration but the same was denied in a Resolution18 dated February 21,
option to retire him, is DELETED. The said Order is AFFIRMED in all other respects.
2008. Aggrieved, the petitioner appealed to this Court.
Essentially, we are called upon to rule on the following issues:
1. Whether the petitioners retirement benefits should be computed based on Article 287 of the Labor
Code or on PALs retirement plans;
2. Whether the petitioner should reimburse PAL with the proportionate costs of his training; and
3. Whether interest should be imposed on the monetary award in favor of the petitioner.

SO ORDERED.21 (Emphasis supplied)

It bears reiterating that there are only two retirement schemes at point in this case: (1) Article 287 of the Labor
Code, and; (2) the PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two
retirement schemes are alternative in nature such that the retired pilot can only be entitled to that which provides
for superior benefits.
Article 287 of the Labor Code states:

Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements: provided, however, that an
employees retirement benefits under any collective bargaining and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared as the compulsory retirement age, who has served at least five (5) years in the
said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Section 2. Late Retirement. Any member who remains in the service of the company after his normal retirement
date may retire either at his option or at the option of the Company, and when so retired he shall be entitled
either: (a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to
such termination pay benefits to which he may be entitled under existing laws, whichever is the greater
amount.24
Apart from the abovementioned benefit, the petitioner is also entitled to the equity of the retirement fund under
PAL Pilots Retirement Benefit Plan, which pertains to the retirement fund raised from contributions exclusively
from PAL of amounts equivalent to 20% of each pilots gross monthly pay. Each pilot stands to receive the full
amount of the contribution upon his retirement which is equivalent to 240% of his gross monthly income for
every year of service he rendered to PAL. This is in addition to the amount of not less than P100,000.00 that he
shall receive under the PAL-ALPAP Retirement Plan.25
In sum, therefore, the petitioner will receive the following retirement benefits:

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shallmean fifteen (15)
days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves. x x x (Emphasis supplied)
It can be clearly inferred from the language of the foregoing provision that it is applicable only to a situation
where (1) there is no CBA or other applicable employment contract providing for retirement benefits for an
employee, or (2) there is a CBA or other applicable employment contract providing for retirement benefits for
an employee, but it is below the requirement set by law. The rationale for the first situation is to prevent the
absurd situation where an employee, deserving to receive retirement benefits, is denied them through the
nefarious scheme of employers to deprive employees of the benefits due them under existing labor laws. On the
other hand, the second situation aims to prevent private contracts from derogating from the public law.22
The primary application of existing CBA in computing retirement benefits is implied in the title of R.A. No.
7641 which amended Article 287 of the Labor Code. The complete title of R.A. No. 7641 reads: "An Act
Amending Article 287 of Presidential Decree No. 442, As Amended, otherwise known as the Labor Code of the
Philippines, By Providing for Retirement Pay to Qualified Private Sector in the Absence of Any Retirement
Plan in the Establishment."23

(1) P125,000.00 (25 years x P5,000.00) for his 25 years of service to PAL under the PAL-ALPAP
Retirement Plan, and;
(2) 240% of his gross monthly salary for every year of his employment or, more specifically, the
summation of PALs monthly contribution of an amount equivalent to 20% of his actual monthly
salary, under the PAL Pilots Retirement Benefit Plan.
As stated in the records, the petitioner already received the amount due to him under the PAL Pilots Retirement
Benefit Plan.26 As much as we would like to demonstrate with specificity the amount of the petitioners
entitlement under said plan, we are precluded from doing so because there is no record of the petitioners salary,
including increments thereto, attached to the records of this case. To reiterate, the benefit under the PAL Pilots
Retirement Benefit Plan pertains to the totality of PALs monthly contribution for every pilot, which amounts to
20% of the actual monthly salary. Necessarily, the computation of this benefit requires a record of the
petitioners salary, which was unfortunately not submitted by either of the parties. At any rate, the petitioner did
not dispute the fact that he already received his entitlement under the PAL Pilots Retirement Benefit Plan nor
did he question the propriety of the amount tendered. Thus, we can reasonably assume that he received the
rightful amount of his entitlement under the plan.

Emphasis must be placed on the fact that the purpose of the amendment is not merely to establish precedence in
application or accord blanket priority to existing CBAs in computing retirement benefits. The determining
factor in choosing which retirement scheme to apply is still superiority in terms of benefits provided. Thus, even
if there is an existing CBA but the same does not provide for retirement benefits equal or superior to that which
is provided under Article 287 of the Labor Code, the latter will apply. In this manner, the employee can be
assured of a reasonable amount of retirement pay for his sustenance.

On the other hand, under Article 287 of the Labor Code, the petitioner would only be receiving a retirement pay
equivalent to at least one-half (1/2) of his monthly salary for every year of service, a fraction of at least six (6)
months being considered as one whole year. To stress, one-half (1/2) month salary means 22.5 days: 15 days
plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for service
incentive leave.27

Consistent with the purpose of the law, the CA correctly ruled for the computation of the petitioners retirement
benefits based on the two (2) PAL retirement plans because it is under the same that he will reap the most
benefits. Under the PAL-ALPAP Retirement Plan, the petitioner, who qualified for late retirement after
rendering more than twenty (20) years of service as a pilot, is entitled to a lump sum payment of P125,000.00
for his twenty-five (25) years of service to PAL. Section 2, Article VII of the PAL-ALPAP Retirement Plan
provides:

Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5 days
worth of salary for every year of service provided under Article 287 of the Labor Code cannot match the 240%
of salary or almost two and a half worth of monthly salary per year of service provided under the PAL Pilots
Retirement Benefit Plan, which will be further added to the P125,000.00 to which the petitioner is entitled under
the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioners advantage that PALs retirement plans
were applied in the computation of his retirement benefits.

The petitioner should reimburse PAL with the costs of his training.
As regards the issue of whether the petitioner should be obliged to reimburse PAL with the costs of his training,
the ruling in Almario v. Philippine Airlines, Inc.28 is controlling. Essentially, in the mentioned case, this Court
recognized the right of PAL to recoup the costs of a pilots training in the form of service for a period of at least
three (3) years. This right emanated from the CBA between PAL and ALPAP, which must be complied with
good faith by the parties. Thus:
"The CBA is the law between the contracting parties the collective bargaining representative and the
employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In
the same vein, CBA provisions should be "construed liberally rather than narrowly and technically, and the
courts must place a practical and realistic construction upon it, giving due consideration to the context in which
it is negotiated and purpose which it is intended to serve." This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest. It goes without saying, however, that only provisions
embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting
party does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its
implementation."
In N.S. Case No. 11-506-87, "In re Labor Dispute at the Philippine Airlines, Inc.," the Secretary of the
Department of Labor and Employment (DOLE), passing on the failure of PAL and ALPAP to agree on the terms
and conditions for the renewal of their CBA which expired on December 31, 1987 and construing Section 1 of
Article XXIII of the 1985-1987 CBA, held:
xxxx

ALPAP opposed the proposal and argued that the training cost is offset by the pilots maturity, expertise and
experience.
By way of compromise, we rule that a pilot should remain in the position where he is upon reaching age fiftyseven (57), irrespective of whether or not he has previously qualified in the Companys turbo-jet operations.
The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60) should no longer be
burdened with training for a new position. But if a pilot is only at age fifty-five (55), and promotional positions
are available, he should still be considered and promoted if qualified, provided he has previously qualified in
any company turbo-jet aircraft. In the latter case, the prohibitive training costs are more than offset by the
maturity, expertise, and experience of the pilot.
Thus, the provision on age limit should now read:
Pilots fifty-seven (57) years of age shall be frozen in their positions.1wphi1 Pilots fifty-five (55) [sic] years of
age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any
position in the companys turbo-jet fleet.29 (Citations omitted and emphasis supplied)
Further, we considered PALs act of sending its crew for training as an investment which expects an equitable
return in the form of service within a reasonable period of time such that a pilot who decides to leave the
company before it is able to regain the full value of the investment must proportionately reimburse the latter for
the costs of his training. We ratiocinated:
It bears noting that when Almario took the training course, he was about 39 years old, 21 years away from the
retirement age of 60. Hence, with the maturity, expertise, and experience he gained from the training course, he
was expected to serve PAL for at least three years to offset "the prohibitive costs" thereof.

Section 1, Article XXIII of the 1985-1987 CBA provides:

Pilots fifty-five (55) years of age or over who have not previously qualified in any Company turbo-jet aircraft
shall not be permitted to bid into the Companys turbo-jet operations. Pilots fifty-five (55) years of age or over
who have previously qualified in the companys turbo-jet operations may be by-passed at Company option,
however, any such pilot shall be paid the by-pass pay effective upon the date a junior pilot starts to occupy the
bidded position.
x x x PAL x x x proposed to amend the provision in this wise:
The compulsory retirement age for all pilots is sixty (60) years. Pilots who reach the age of fifty-five (55) years
and over without having previously qualified in any Company turbo-jet aircraft shall not be permitted to occupy
any position in the Companys turbo-jet fleet. Pilots fifty-four (54) years of age and over are ineligible for
promotion to any position in Group I. Pilots reaching the age of fifty-five (55) shall be frozen in the position
they currently occupy at that time and shall be ineligible for any further movement to any other positions.
PALs contention is basically premised on prohibitive training costs. The return on this investment in the form
of the pilot promoted is allegedly five (5) years. Considering the pilots age, the chances of full recovery are
asserted to be quite slim.

The pertinent provision of the CBA and its rationale aside, contrary to Almarios claim, Article 22 of the Civil
Code which reads:
"Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes
into possession of something at the expense of the latter without just or legal ground, shall return the same to
him," applies.
This provision on unjust enrichment recognizes the principle that one may not enrich himself at the expense of
another. An authority on Civil Law writes on the subject, viz:
"Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it is
appreciable in money. It may consist of some positive pecuniary value incorporated into the patrimony of the
defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the benefits from service rendered
by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal; (4) the increase of value
of property of the defendant; (5) the improvement of a right of the defendant, such as the acquisition of a right
of preference; (6) the recognition of the existence of a right in the defendant; and (7) the improvement of the
conditions of life of the defendant.

x x x x"
Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill,
proficiency, or technical competence so that he could efficiently discharge the position of A-300 First Officer.
Given that, PAL expected to recover the training costs by availing of Almarios services for at least three years.
The expectation of PAL was not fully realized, however, due to Almarios resignation after only eight months of
service following the completion of his training course. He cannot, therefore, refuse to reimburse the costs of
training without violating the principle of unjust enrichment.30 (Citation omitted and emphasis supplied)
After perusing the records of this case, we fail to find any significant fact or circumstance that could warrant a
departure from the established jurisprudence. The petitioner admitted that as in Almario, the prevailing CBA
between PAL and ALPAP at the time of his retirement incorporated the same stipulation in Section 1, Article
XXIII of the 1985-1987 CBA31 which provides:
Pilots fifty-seven (57) years of age shall be frozen in their positions. Pilots fifty-five (55) [sic] years of age
provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any
position in the companys turbo-jet fleet.32
As discussed in Almario, the above provision initially set the age of fifty-five (55) years as the reckoning point
when a pilot becomes disqualified to bid for a higher position. The age of disqualification was set at 55 years
old to enable PAL to fully recover the costs of the pilots training within a period of five (5) years before the
pilot reaches the compulsory retirement age of sixty (60). The DOLE Secretary however lowered the age to
fifty-seven (57), thereby cutting the supposed period of recovery of investment to three (3) years. The DOLE
Secretary justified the amendment in that the "prohibitive training costs are more than offset by the maturity,
expertise and the experience of the pilot."33
By carrying over the same stipulation in the present CBA, both PAL and ALPAP recognized that the companys
effort in sending pilots for training abroad is an investment which necessarily expects a reasonable return in the
form of service for a period of at least three (3) years. This stipulation had been repeatedly adopted by the
parties in the succeeding renewals of their CBA, thus validating the impression that it is a reasonable and
acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently disregard this
stipulation by simply raising the absence of a contract expressly requiring the pilot to remain within PALs
employ within a period of 3 years after he has been sent on training. The supposed absence of contract being
raised by the petitioner cannot stand as the CBA clearly covered the petitioners obligation to render service to
PAL within 3 years to enable it to recoup the costs of its investment.
Further, to allow the petitioner to leave the company before it has fulfilled the reasonable expectation of service
on his part will amount to unjust enrichment. Pertinently, Article 22 of the New Civil Code states:
Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes
into possession of something at the expense of the latter without just or legal ground, shall return the same to
him.
There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or when a person
retains the money or property of another against the fundamental principles of justice, equity and good

conscience. Two conditions must concur: (1) a person is unjustly benefited; and (2) such benefit is derived at the
expense of or with damages to another. The main objective of the principle of unjust enrichment is to prevent
one from enriching oneself at the expense of another. It is commonly accepted that this doctrine simply means
that a person shall not be allowed to profit or enrich himself inequitably at anothers expense. 34 The enrichment
may consist of a patrimonial, physical, or moral advantage, so long as it is appreciable in money.35 It must have
a correlative prejudice, disadvantage or injury to the plaintiff which may consist, not only of the loss of the
property or the deprivation of its enjoyment, but also of the non-payment of compensation for a prestation or
service rendered to the defendant without intent to donate on the part of the plaintiff, or the failure to acquire
something what the latter would have obtained.36
As can be gathered from the facts, PAL invested a considerable amount of money in sending the petitioner
abroad to undergo training to prepare him for his new appointment as B747-400 Captain. In the process, the
petitioner acquired new knowledge and skills which effectively enriched his technical know-how. As all other
investors, PAL expects a return on investment in the form of service by the petitioner for a period of 3 years,
which is the estimated length of time within which the costs of the latters training can be fully recovered. The
petitioner is, thus, expected to work for PAL and utilize whatever knowledge he had learned from the training
for the benefit of the company. However, after only one (1) year of service, the petitioner opted to retire from
service, leaving PAL stripped of a necessary manpower.
Undeniably, the petitioner was enriched at the expense of PAL. After undergoing the training fully shouldered
by PAL, he acquired a higher level of technical competence which, in the professional realm, translates to a
higher compensation. To prove this point, his monthly salary of P125,692.00 was increased to P131,703.00
while he was still undergoing training. After his training, his salary was further increased to
P137,977.00.37 Further, his training broadened his opportunities for a better employment as in fact he was able
to transfer to another airline company immediately after he left PAL. 38 To allow the petitioner to simply leave
the company without reimbursing it for the proportionate amount of the expenses it incurred for his training will
only magnify the financial disadvantage sustained by PAL. Reason and fairness dictate that he must return to
the company a proportionate amount of the costs of his training.
Award of interest not warranted under the circumstances.
The petitioner claims that the CA should have imposed interest on the monetary award in his favor. To support
his claim, he cited the case of Eastern Shipping Lines, Inc. v. Court of Appeals,39 where this Court summarized
the rules in the imposition of the proper interest rates:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasidelicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII
on "Damages" of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages,
the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated
in writing. Furthermore, the interest due shall itself earn legal interest from the time it is

judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum
to be computed from default, i.e., from judicial or extrajudicial demand under and subject to
the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court at
the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil
Code) but when such certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of the court is made (at
which time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this interim period being deemed to be
by then an equivalent to a forbearance of credit.40 (Citations omitted and emphasis supplied)
The petitioner, however, took the foregoing guidelines out of context and entertained a misplaced supposition
that all judgments which include a monetary award must be imposed with interest. The jurisprudential guideline
clearly referred to breach of an obligation consisting of a forbearance of money, goods or credit before the
imposition of a legal interest of 12% can be warranted. Such essential element is nowhere to be found in the
facts of this case. Even granting that an interest of 6% may be imposed in cases of breached obligations not
constituting loan or forbearance of money, loan or credit, such depends upon the discretion of the court. If at all,
the monetary award in favor of the petitioner will earn legal interest from the time the judgment becomes final
and executory until the same is fully satisfied, regardless of the nature of the breached obligation. The
imposition is justified considering that the interim period from the finality of judgment, awarding a monetary
claim and until payment thereof, is deemed to be equivalent to a forbearance of credit.41
WHEREFORE, in view of the foregoing disquisitions, the petition is DENIED. The Decision dated August 6,
2007 of the Court of Appeals in CA-G.R. SP No. 79111 is AFFIRMED. The Labor Arbiter is hereby
DIRECTED to compute Bibiano C. Elegir's retirement pay based on the 1967 PAL-ALPAP Retirement Plan and
the PAL Pilots' Retirement Benefit Plan, crediting Philippine Airlines, Inc. for the amount it had already paid the
petitioner under the mentioned plans.
SO ORDERED.

THIRD DIVISION
G.R. No. 185335

June 13, 2012

PRUDENTIAL GUARANTEE AND ASSURANCE EMPLOYEE LABOR UNION and SANDY T.

VALLOTA,Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, PRUDENTIAL GUARANTEE AND ASSURANCE
INC., and/or JOCELYN RETIZOS, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 filed by petitioners Prudential Guarantee and Assurance
Employee Labor Union (Union) and Sandy T. Vallota (Vallota) seeking to set aside the September 16, 2008
Decision1 and November 10, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 102699.
The Facts
Vallota commenced his employment with respondent Prudential Guarantee and Assurance, Inc. (PGAI) on May
16, 1995 as a Junior Programmer assigned to the Electronic Data Processing (EDP) Department. He reported
directly to Gerald Dy Victory, then head of the EDP, until his replacement by respondent Jocelyn
Retizos (Retizos)sometime in 1997.
In August of 2005, Vallota was elected to the Board of Directors of the Union.
On November 11, 2005, PGAIs Human Resource Manager, Atty. Joaquin R. Rillo (Atty. Rillo), invited Union
President, Mike Apostol (Apostol) to his office. Atty. Rillo informed Apostol that PGAI was going to conduct an
on-the-spot security check in the Information and Technology (IT) Department. Atty. Rillo also requested that
Union representatives witness the inspection to which Apostol agreed.
The inspection team proceeded to the IT Department, and the EDP head, through PGAI network administrator
Angelo Gutierrez (Gutierrez), initiated the spot check of IT Department computers, beginning with the one
assigned to Vallota. After exploring the contents of all the folders and subfolders in the "My Documents" folder,
Gutierrez apparently did not find anything unusual with Vallotas computer and said "Wala naman, saan dito?"
Retizos insisted, "Nandyan yan," and took over the inspection until she found a folder named "MAA." She then
exclaimed, "Heto oh! Ano to? Bakit may MAA dito?" Retizos asked Vallota, "Are you working for MAA?"
Vallota replied, "Hindi po, MAA mutual life po yan na makikita po sa internet." Gutierrez saved a copy of the
contents of the MAA folder in a floppy disk.3
Sensing that Vallota was being singled out, Apostol insisted that all the computers in the IT Department,
including that of Retizos, be also subjected to a spot security check. Later, at Retizos office, and in the presence
of Atty. Rillo, Vallota was informed that Retizos and Atty. Rillo would print the files found in his computer

under the folder "MAA." Vallota did not object. After the files were printed, Vallota and the Union Secretary
were asked to sign each page of the printout. Vallota, however, was not given a copy of the printed file.
On November 14, 2005, Vallota received a memorandum4 directing him to explain within 72 hours why highly
confidential files were stored in his computer. The case was assigned Reference No. AC-05-02. The same
memorandum also informed him that he was being placed under preventive suspension for 30 days effective
upon receipt of the said notice. A second memorandum,5 also dated November 14, 2005, notified Vallota of the
extension of his preventive suspension for another 30 days, in view of the fact that the management needed
more time to evaluate the administrative case against him.
Vallota responded in writing on November 21, 2005.6 Three days later, on November 24, 2005, PGAI sent him
another memorandum7 requesting further details on some of the matters he raised in his response. In a
letter8dated December 6, 2005, Vallota requested a conference, to be attended by a Union representative and
counsel. In reply, PGAI sent Vallota another memorandum9 dated December 7, 2005, which, among others, set a
new deadline for Vallota to submit his reply and evidence in his defense.
In compliance with the deadline set, Vallota submitted his reply-memorandum10 dated December 12, 2005,
outlining his response to the charges.
Meanwhile, the Union sent a letter11 to PGAI President Philip K. Rico (Rico) requesting that a grievance
committee be convened and that the contents of the computers of other IT personnel be similarly produced. The
request for the convening of a grievance committee was ignored. On December 21, 2005, Vallota was given a
notice of termination of his employment effective January 10, 2006 on the ground of loss of trust and
confidence. The decision (AC-05-02) was embodied in a memorandum12 dated December 21, 2005.
Thus, the petitioners filed a complaint for illegal dismissal with claims for full backwages, moral and exemplary
damages, and attorneys fees. The case was docketed as NLRC-NCR Case No. 00-01-00387-06.

The LA held that PGAI failed to meet its burden of evidence, and the conflicting claims of the parties were
resolved in favor of Vallota for failure of PGAI to adduce substantial evidence to support its claim. The LA
further held that the dismissal was not commensurate to the misconduct complained of, especially considering
that it was Vallotas first offense.15
On the matter of the blank gate pass stored in Vallotas computer, the LA found as satisfactory his explanation
that Joseph Tolentino (Tolentino), a PGAI employee, requested him, from time to time, to print a gate pass
whenever he had to bring tools outside of the company premises. The LA cited Vallotas argument that "it is
quite odd [that] despite the fact that the gate pass form was admitted by the respondents in [their] Reply as their
exclusive property, complainants possession of the same was not considered x x x Possession of Company
property without authorization."16
The LA further found that the respondents were not able to establish that Vallota used company property for his
personal benefit. Nothing on record could show that he made an attempt to defraud his employer. With regard to
the charge that, without authorization, he misused or removed company documents, the LA opined that if this
were true, the respondents should have conducted a thorough investigation to determine the liable persons. 17
Finally, the LA ruled that Vallota was denied due process since the respondents refused to conduct a hearing,
despite Vallotas request, to thresh out the matters raised by him in his memoranda. 18
The respondents filed their Memorandum of Appeal19 dated May 19, 2006. The case was docketed as NLRC
NCR CA No. 049107-06(7).
On June 30, 2006, the National Labor Relations Commission (NLRC) issued its Resolution20 dismissing the
appeal on the ground that the respondents failed to submit a certificate of non-forum shopping in accordance
with the Rules of Procedure of the NLRC.
The respondents filed their Motion for Reconsideration21 dated July 17, 2006,22 which the Union opposed.

13

On March 31, 2006, Labor Arbiter Aliman D. Mangandog (LA) rendered a decision in favor of the petitioners,
the dispositive portion of which reads:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered, declaring the dismissal of
complainant Vallota illegal and holding the respondents for the following:
1. to reinstate complainant Vallota to his former position without loss of benefits and seniority rights.

On October 31, 2007, the NLRC granted the respondents motion for reconsideration and reversed and set aside
the decision of the LA.23 The dispositive portion of the resolution reads:
WHEREFORE, premises considered, respondents Motion for Reconsideration from the Resolution of June 30,
2006 is GRANTED. The appealed decision is hereby REVERSED and SET ASIDE. However, respondent is
hereby ordered to pay complainant financial assistance equivalent to one-half (1/2) month pay for every year of
service or xx the amount of ninety two thousand pesos (P 92,000.00.)

2. to pay complainant Vallota full backwages from the time of his dismissal until actual reinstatement
partially computed as of this date amount[ing] to P 60,856.00 (P 18,400/mo. x 3 mos. & 8 days).
3. to pay complainants attorneys fee equivalent to 10% of the total monetary award.
SO ORDERED.14

10 yrs.
P 18,400 x

= P 92,000.00
2

SO ORDERED.

The NLRC reasoned out that the respondents had submitted substantial and sufficient evidence to prove that
there existed grounds for the PGAI to lose trust and confidence in Vallota. The NLRC also found grave abuse of
discretion on the part of the LA to disregard the affidavits of Tolentino, Retizos and Allan Unson, as the LA
himself did not set a hearing for the purpose of cross-examining the said witnesses or verifying the statements
made in their affidavits. As reflected in the decretal portion, although the NLRC ruled that the dismissal was
valid, it still directed the respondents to grant Vallota financial assistance of one-half (1/2) month pay for every
year of his ten (10) years of service.24
The petitioners moved for a reconsideration25 of the decision, but their motion was denied in a resolution26 dated
December 28, 2007.
Dejected, the petitioners filed a petition for certiorari27 with the CA which was docketed as CA-G.R. SP. No.
102699. On September 16, 2008, the CA denied the petition for lack of merit, and sustained the award of the
NLRC.
The petitioners motion for reconsideration was denied in a resolution dated November 10, 2008.
Hence, this petition.
ISSUES
The petitioners raise the following issues:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN GIVING LIBERALITY TO PRIVATE RESPONDENTS['] FOUR
BLATANT VIOLATIONS OF THE NLRC RULES OF PROCEDURE.
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS GROSSLY
MISAPPRECIATED THE FACT THAT NO SUBSTANTIAL EVIDENCE EXIST[S] TO
JUSTIFY THE DISMISSAL OF PETITIONER VALLOTA. 28
RULING OF THE COURT
First, the allegation of grave abuse of discretion is misplaced, as this is an issue appropriate for a petition for
certiorari under Rule 65, not a petition for review on certiorari under Rule 45. There is no question that grave
abuse of discretion or errors of jurisdiction may be corrected only by the special civil action of certiorari. Such
special remedy does not avail in instances of error of judgment which can be corrected by appeal or by a
petition for review. Because the petitioners availed of the remedy under Rule 45, recourse to Rule 65 cannot be
allowed either as an add-on or as a substitute for appeal.29

Regarding illegal dismissal, the core issues to be resolved here are: (1) whether Vallota was validly dismissed
on the ground of loss of trust and confidence; and (2) whether the requirements of procedural due process for
termination were observed.
Whether the petitioner was validly dismissed on the ground of loss of trust and confidence
The Courts discussion in Mabeza v. National Labor Relations Commission30 is instructive:
Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check
for terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly
given the seal of approval by this Court, could readily reduce to barren form the words of the constitutional
guarantee of security of tenure. Having this in mind, loss of confidence should ideally apply only to cases
involving employees occupying positions of trust and confidence or to those situations where the employee is
routinely charged with the care and custody of the employer's money or property. To the first class belong
managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians,
etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of
money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other hotel property
from the property custodian each day and who has to account for each and every towel or bedsheet utilized by
the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which
loss of confidence, if ably supported by evidence, would normally apply. Illustrating this distinction, this Court,
in Marina Port Services, Inc. vs. NLRC, has stated that:
To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one
reason why he was employed in the first place. One certainly does not employ a person he distrusts. Indeed,
even the lowly janitor must enjoy that trust and confidence in some measure if only because he is the one who
opens the office in the morning and closes it at night and in this sense is entrusted with the care or protection of
the employer's property. The keys he holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the trust and confidence of his
employer, whose property he is safeguarding. Like the janitor, he has access to this property. He too, is charged
with its care and protection.
Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that
property. The employer's trust and confidence in him is limited to that ministerial function. He is not entrusted,
in the Labor Arbiter's words, 'with the duties of safekeeping and safeguarding company policies, management
instructions, and company secrets such as operation devices.' He is not privy to these confidential matters,
which are shared only in the higher echelons of management. It is the persons on such levels who, because they
discharge these sensitive duties, may be considered holding positions of trust and confidence. The security
guard does not belong in such category.
More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify
what would otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a

subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to
justify an earlier action taken in bad faith."31
(Citations omitted. Emphases supplied.)
In Bristol Myers Squibb (Phils.), Inc. v. Baban,32 the Court discussed the requisites for a valid dismissal on the
ground of loss of trust and confidence:
It is clear that Article 282(c) of the Labor Code allows an employer to terminate the services of an employee for
loss of trust and confidence. The right of employers to dismiss employees by reason of loss of trust and
confidence is well established in jurisprudence.
The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned
must be one holding a position of trust and confidence. Verily, We must first determine if respondent holds such
a position.
There are two (2) classes of positions of trust. The first class consists of managerial employees. They are
defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer
suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial
actions. The second class consists of cashiers, auditors, property custodians, etc. They are defined as those who
in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.
xxx
The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of
trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on
clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof
beyond reasonable doubt is not necessary.33
(Citations omitted. Emphases supplied.)
Thus, the first question to be addressed is whether Vallota held a position of trust and confidence. In previous
cases, the following positions were classified under the second class of holders of positions of trust and
confidence: a pharmaceutical companys district manager employed to handle pharmaceutical products for
distribution to medical practitioners and sale to drug outlets,34 a bank manager,35 and an employee tasked with
purchasing supplies and equipment.36 The position of a contract claims assistant tasked with monitoring
enforcement of contracts involving large sums of money was also classified to be analogous to this second class
of holders of positions of trust and confidence.37
Vallota was employed by PGAI as a Junior Programmer assigned to the EDP Department. His functions
included the following:
- Installation of PGAI System38 on all designated branches
- Development of internal programs as required by the organization

- Handling and maintenance of all programs as per advise.

- Conduct[s] operation training on PGAI systems on all PGAI branches
- Generates and handles renewal list of all applicable lines.
- Generates and produces renewal notice of all lines as required.
- Generates paid premium production of all agents.
- Generates outstanding production reports of all agents.
- Generates report on top account executive per I.T. supervisor instruction.
- Generates and handle[s] data on top agents per AE premium production.
- Handles and maintains uploading system, accounting data per advise, account receivable system,
motor car policy system, claims motor car system, check disbursement system, cash call system, R.I.
outgoing and incoming system, facultative systems.
- All other task[s] as may be assigned to him from time to time.39
Based on the standards set by previous jurisprudence, Vallotas position as Junior Programmer is analogous to
the second class of positions of trust and confidence. Though he did not physically handle money or property,
he became privy to confidential data or information by the nature of his functions. At a time when the most
sensitive of information is found not printed on paper but stored on hard drives and servers, an employee who
handles or has access to data in electronic form naturally becomes the unwilling recipient of confidential
information.
Having addressed the nature of his position, the next question is whether the act complained of justified the loss
of trust and confidence of Vallotas employer so as to constitute a valid cause for dismissal. It must, thus, be
determined whether the alleged basis for dismissal was based on clearly established facts.
The act alleged to have caused the loss of trust and confidence of PGAI in Vallota was the presence in his
computers hard drive of a folder named "MAA" allegedly containing files with information on MAA Mutual
Life Philippines, a domestic corporation selling life insurance policies to the buying public, and files relating to
PGAIs internal affairs:
1. MAA Mutualife Philippines, Inc. prospectus consisting of five (5) pages
2. MAA Mutualife Philippines, Inc. corporate profile consisting of six (6) pages
3. PGAI clients (sic) questionnaire consisting of five (5) pages
4. PGAI values and strategy
5. PGAI Client Servising (sic): Proposed Service Standard consisting of seven (7) pages
6. PGAI Marketing Department Division consisting of twenty (20) pages
6.1 Marketing Department present set-up
6.2 Present Table of Organization
6.3 How is the market evolving? How does it affect PGAI?
6.4 The strategy of change
6.5 Segmentation
6.6 Proposed Table of Organization
6.7 Proposed PGA Super Branch
6.7.a Objectives
6.7.b Accounts to be service
6.8 Proposed Chart for the Retail Division
6.8.a Dual Objective

6.9 Marketing Administration

6.10 Analysis of Statistics
6.11 Proposed Corporate Accounts Servicing Division
6.11.a Facts
6.11.b 2003 and 2004 Dealership Production Statistics
6.11.c 2003 -2004 Budget Analysis
7. PGAI Marketing Division: An Analysis & Proposed Solution consisting of seven (7) pages
8. PGAI Customer Service Commitment consisting of six (6) pages
9. PGAI Gate Pass Form40
Following such discovery, Vallota was charged with the following violations of Company Rules on Company
Property:
1. Possession of company property without authorization;
2. Securing or obtaining Prudential materials or supplies fraudulently;
3. Using Company equipment, property, or material to perform or create something for personal gain
or purpose; and
4. Misuse or removal from company premises without proper authorization of Prudential records or
confidential information of any nature.41
Vallota and the Union argue, among others, that (1) the respondents failed to prove by substantial evidence that
Vallotas position did not allow him to access confidential information and that the data found in his computer
had been used for his personal gain; (2) Vallota did not deliberately get the files from other departments;
instead, such files were acquired in the process of fixing diskettes and printing information as requested by his
co-employees; (3) no evidence was presented to prove that Vallota sold or was about to sell corporate
documents to MAA Mutual Life Corporation or to any company; and (4) the respondents refusal to convene a
grievance machinery was a clear abuse of management prerogative.42
The respondents, on the other hand, counter that Vallota admitted ownership of the files found in his computer.
They also argue that it was the Data Center Technical Support Staff, and not the Junior Programmer, who
handled recovery/fixing/printing of files of the nature of those found in Vallotas possession; that it was a
remote possibility that the Junior Programmer would be directly requested to assist employees, since the
Methods Analyst would have been the designee for such task; that Vallotas functions as Junior Programmer did
not include matters relating to web development; that under standard IT procedure and company practice, the
employees who requested assistance from the IT Department were required to fill up a Job Request Form (JRF),
which was then submitted for prior approval by the IT Head; that Retizos, as IT Head, could not recall signing
or approving any request pertaining to the recovered PGAI files; that Vallota could not produce a single JRF
when he was asked to do so and explained the lack of JRFs by stating that such file repairs, file recovery, or
printing jobs were merely "little favors" and that such were considered as company "practice"; and that he,
however, refused to reveal the names of the employees who had sought assistance in the
fixing/printing/recovery of the PGAI files.43
The respondents aver that Vallota also had in his computer the PGAI Gate Pass Form template, 44 a company
property that could not be copied, stored, or reproduced without company permission. They also claim that
Vallota was guilty of using company equipment, property or material to perform or create something for

personal gain or purpose. MAA files, alleged to be highly confidential and sensitive, were found in Vallotas
computer which he explained were downloaded from the MAA website outside of company premises merely
for information. Upon searching the MAA website, however, they (respondents) did not find any of the said
files. They also found that the MAA website was accessible only to certain users and was not open to the public
as claimed by Vallota. Given all of these, the respondents concluded that Vallotas possession of the PGAI and
MAA files appeared to be part of a plan to take advantage of the said documents for personal gain.45
While the law and this Court recognize the right of an employer to dismiss an employee based on loss of trust
and confidence, the evidence of the employer must clearly and convincingly establish the facts upon which the
loss of trust and confidence in the employee is based.46
To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and
founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.47 It must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or
suspicion; otherwise, the employee would remain eternally at the mercy of the employer.48 Further, in order to
constitute a just cause for dismissal, the act complained of must be work-related and show that the employee
concerned is unfit to continue working for the employer.49 Such ground for dismissal has never been intended to
afford an occasion for abuse because of its subjective nature.50
It must also be remembered that in illegal dismissal cases like the one at bench, the burden of proof is upon the
employer to show that the employees termination from service is for a just and valid cause. 51 The employers
case succeeds or fails on the strength of its evidence and not the weakness of that adduced by the employee, 52in
keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the
evidence presented by them.53 Often described as more than a mere scintilla,54 the quantum of proof is
substantial evidence which is understood as such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other equally reasonable minds might conceivably opine
otherwise.55Failure of the employer to discharge the foregoing onus would mean that the dismissal is not
justified and, therefore, illegal.56
In this case, there was no other evidence presented to prove fraud in the manner of securing or obtaining the
files found in Vallotas computer. In fact, aside from the presence of these files in Vallotas hard drive, there was
no other evidence to prove any gross misconduct on his part. There was no proof either that the presence of
such files was part of an attempt to defraud his employer or to use the files for a purpose other than that for
which they were intended. If anything, the presence of the files reveals some degree of carelessness or neglect
in his failure to delete them, but it is an extremely farfetched conclusion bordering on paranoia to state that it is
part of a larger conspiracy involving corporate espionage.
Moreover, contrary to the respondents allegations, the MAA files found in Vallotas computer, the prospectus
and corporate profile, are not sensitive corporate documents. These are documents routinely made available to
the public, and serve as means to inform the public about the company and to disseminate information about the
products it sells or the services it provides, in order that potential clients may make a sound and informed
decision whether or not to purchase or avail of such goods and services.

If anything, the presence of the files would merely merit the development of some suspicion on the part of the
employer, but should not amount to a loss of trust and confidence such as to justify the termination of his
employment. Such act is not of the same class, degree or gravity as the acts that have been held to be of such
character. While Vallotas act or omission may have been done carelessly, it falls short of the standard required
for termination of employment. It does not manifest either that the employee concerned is unfit to continue
working for his employer.
Termination of employment is a drastic measure reserved for the most serious of offenses. When the act
complained of is not so grave as to result in a complete loss of trust and confidence, a lower penalty such as
censure, warning, or even suspension, would be more circumspect. This is of particular significance here where
during Vallotas ten years of service to PGAI, not once was he ever warned or reprimanded for such printing
services.

In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases:
(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and reasonable way.
(b) a formal hearing or conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when
similar circumstances justify it.
(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or
conference" requirement in the implementing rules and regulations.

Whether the procedural due process requirements for termination were observed

(Emphasis original. Underscoring supplied.)60

The petitioners allege that Vallota was denied due process of law, as the records of the case clearly show that his
request for an administrative hearing was denied without reason by PGAI. Citing Rule 1, Section 2(d) of the
Implementing Rules of Book VI of the Labor Code, the petitioners argue that a hearing or conference must be
conducted to afford the employee an opportunity to respond to the charge, and to present or rebut evidence
presented against him. The petitioners are of the position that the unjustified refusal of PGAI to conduct a
hearing violated the said provision of the Rules implementing the Labor Code, as well as Vallotas right to
defend himself before an impartial investigating body.57

In this case, the two-notice requirement was complied with. By the petitioners own admission, PGAI issued to
Vallota a written Notice of Charges & Preventive Suspension (Ref. No. AC-05-02) dated November 14, 2005.
After an exchange of memoranda, PGAI then informed Vallota of his dismissal in its decision dated December
21, 2005.

The Court explained the concept of the opportunity to be heard in the case of Perez v. Philippine Telegraph and
Telephone Company:58
After receiving the first notice apprising him of the charges against him, the employee may submit a written
explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence
in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn
statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance
of a representative or counsel. He may also ask the employer to provide him copy of records material to his
defense.1wphi1 His written explanation may also include a request that a formal hearing or conference be held.
In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist
substantial evidentiary disputes59 or where company rules or practice requires an actual hearing as part of
employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this
point of law.
This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably
implements the "ample opportunity to be heard" standard under Article 277(b) of the Labor Code without
unduly restricting the language of the law or excessively burdening the employer. This not only respects the
power vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down
the guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of
Article 4 of the Labor Code that "[a]ll doubts in the implementation and interpretation of the provisions of [the
Labor Code], including its implementing rules and regulations shall be resolved in favor of labor."

Given, however, that the petitioners expressly requested a conference or a convening of a grievance committee,
following the Courts ruling in the Perez case, which was later cited in the recent case of Lopez v. Alturas Group
of Companies,61 such formal hearing became mandatory. After PGAI failed to affirmatively respond to such
request, it follows that the hearing requirement was not complied with and, therefore, Vallota was denied his
right to procedural due process.
In light of the above discussion, Vallota is entitled to reinstatement and backwages, reckoned from the date he
was illegally dismissed until the finality of this decision in accordance with jurisprudence. 62
In view of the strained relations between Vallota and PGAI, however, it is not in the best interest of the parties,
nor is it advisable or practical to order reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative.
It must be stressed, however, that an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement, which are separate and distinct. In Golden Ace Builders v. Tagle,63 it was written:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two
reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of
strained relations between the employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay

equivalent to one (1) month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages. (emphasis, italics and underscoring
supplied)
Velasco v. National Labor Relations Commission, emphasizes:
The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no
longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be
awarded if the employee decides not to be reinstated. (Emphasis in the original; italics supplied)
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative
to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it releases the
employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer
trust.64
(Emphasis, underscoring and comments in the original.)
This has been the consistent ruling in the award of separation pay to illegally dismissed employees in lieu of
reinstatement, in addition to the award of backwages.

SECOND DIVISION
G.R. No. L-25246 September 12, 1974
BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS' UNION, defendant-appellant.
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of the Court of First Instance of Manila in its
Civil Case No. 58894.
The undisputed facts that spawned the instant case follow:

Finally, Vallota, having been compelled to litigate in order to seek redress, is entitled, as he had prayed early on,
to the award of attorneys fees equivalent to 10% of the total monetary award.
WHEREFORE, the petition is GRANTED. The September 16, 2008 Decision and November 10, 2008
Resolution of the Court of Appeals in CA-G.R. SP No. 102699 are REVERSED and SET ASIDE, and the
Decision of the Labor Arbiter dated March 31, 2006 is REINSTATED but MODIFIED to the effect that, in
addition to backwages, petitioner Sandy T. Vallota is entitled to be awarded separation pay equivalent to one (1)
month salary for every year of service in lieu of reinstatement.
SO ORDERED.

Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the "Iglesia
ni Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since
1958. As such employee, he was a member of the Elizalde Rope Workers' Union (hereinafter referred to as
Union) which had with the Company a collective bargaining agreement containing a closed shop provision
which reads as follows:
Membership in the Union shall be required as a condition of employment for all permanent
employees workers covered by this Agreement.
The collective bargaining agreement expired on March 3, 1964 but was renewed the following day, March 4,
1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No. 3350,
the employer was not precluded "from making an agreement with a labor organization to require as a condition
of employment membership therein, if such labor organization is the representative of the employees." On June
18, 1961, however, Republic Act No. 3350 was enacted, introducing an amendment to paragraph (4)
subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover members
of any religious sects which prohibit affiliation of their members in any such labor organization".

Being a member of a religious sect that prohibits the affiliation of its members with any labor organization,
Appellee presented his resignation to appellant Union in 1962, and when no action was taken thereon, he
reiterated his resignation on September 3, 1974. Thereupon, the Union wrote a formal letter to the Company
asking the latter to separate Appellee from the service in view of the fact that he was resigning from the Union
as a member. The management of the Company in turn notified Appellee and his counsel that unless the
Appellee could achieve a satisfactory arrangement with the Union, the Company would be constrained to
dismiss him from the service. This prompted Appellee to file an action for injunction, docketed as Civil Case
No. 58894 in the Court of First Instance of Manila to enjoin the Company and the Union from dismissing
Appellee. 1 In its answer, the Union invoked the "union security clause" of the collective bargaining agreement;
assailed the constitutionality of Republic Act No. 3350; and contended that the Court had no jurisdiction over
the case, pursuant to Republic Act No. 875, Sections 24 and 9 (d) and (e). 2 Upon the facts agreed upon by the
parties during the pre-trial conference, the Court a quo rendered its decision on August 26, 1965, the dispositive
portion of which reads:
IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant Elizalde
Rope Factory, Inc. from dismissing the plaintiff from his present employment and sentencing
the defendant Elizalde Rope Workers' Union to pay the plaintiff P500 for attorney's fees and
the costs of this action.3
From this decision, the Union appealed directly to this Court on purely questions of law, assigning the following
errors:

Union's rights as it deprives the union of dues from members who, under the Act, are relieved from the
obligation to continue as such members. 7
Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those religious sects which
ban their members from joining labor unions, in violation of Article Ill, Section 1 (7) of the 1935 Constitution;
and while said Act unduly protects certain religious sects, it leaves no rights or protection to labor
organizations. 8
Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no religious test
shall be required for the exercise of a civil right," in that the laborer's exercise of his civil right to join
associations for purposes not contrary to law has to be determined under the Act by his affiliation with a
religious sect; that conversely, if a worker has to sever his religious connection with a sect that prohibits
membership in a labor organization in order to be able to join a labor organization, said Act would violate
religious freedom. 9
Fifthly, the Union contended that Republic Act No. 3350, violates the "equal protection of laws" clause of the
Constitution, it being a discriminately legislation, inasmuch as by exempting from the operation of closed shop
agreement the members of the "Iglesia ni Cristo", it has granted said members undue advantages over their
fellow workers, for while the Act exempts them from union obligation and liability, it nevertheless entitles them
at the same time to the enjoyment of all concessions, benefits and other emoluments that the union might secure
from the employer. 10

I. That the lower court erred when it did not rule that Republic Act No. 3350 is
unconstitutional.

Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision regarding the
promotion of social justice. 11

II. That the lower court erred when it sentenced appellant herein to pay plaintiff the sum of
P500 as attorney's fees and the cost thereof.

Appellant Union, furthermore, asserted that a "closed shop provision" in a collective bargaining agreement
cannot be considered violative of religious freedom, as to call for the amendment introduced by Republic Act
No. 3350;12 and that unless Republic Act No. 3350 is declared unconstitutional, trade unionism in this country
would be wiped out as employers would prefer to hire or employ members of the Iglesia ni Cristo in order to do
away with labor organizations. 13

In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented, firstly, that the Act
infringes on the fundamental right to form lawful associations; that "the very phraseology of said Republic Act
3350, that membership in a labor organization is banned to all those belonging to such religious sect prohibiting
affiliation with any labor organization" 4 , "prohibits all the members of a given religious sect from joining any
labor union if such sect prohibits affiliations of their members thereto" 5 ; and, consequently, deprives said
members of their constitutional right to form or join lawful associations or organizations guaranteed by the Bill
of Rights, and thus becomes obnoxious to Article III, Section 1 (6) of the 1935 Constitution. 6
Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for impairing the obligation of
contracts in that, while the Union is obliged to comply with its collective bargaining agreement containing a
"closed shop provision," the Act relieves the employer from its reciprocal obligation of cooperating in the
maintenance of union membership as a condition of employment; and that said Act, furthermore, impairs the

Appellee, assailing appellant's arguments, contended that Republic Act No. 3350 does not violate the right to
form lawful associations, for the right to join associations includes the right not to join or to resign from a labor
organization, if one's conscience does not allow his membership therein, and the Act has given substance to
such right by prohibiting the compulsion of workers to join labor organizations; 14 that said Act does not impair
the obligation of contracts for said law formed part of, and was incorporated into, the terms of the closed shop
agreement; 15that the Act does not violate the establishment of religion clause or separation of Church and State,
for Congress, in enacting said law, merely accommodated the religious needs of those workers whose religion
prohibits its members from joining labor unions, and balanced the collective rights of organized labor with the
constitutional right of an individual to freely exercise his chosen religion; that the constitutional right to the free

exercise of one's religion has primacy and preference over union security measures which are merely
contractual 16 ; that said Act does not violate the constitutional provision of equal protection, for the
classification of workers under the Act depending on their religious tenets is based on substantial distinction, is
germane to the purpose of the law, and applies to all the members of a given class; 17 that said Act, finally, does
not violate the social justice policy of the Constitution, for said Act was enacted precisely to equalize
employment opportunities for all citizens in the midst of the diversities of their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is necessary to premise that there are some
thoroughly established principles which must be followed in all cases where questions of constitutionality as
obtains in the instant case are involved. All presumptions are indulged in favor of constitutionality; one who
attacks a statute, alleging unconstitutionality must prove its invalidity beyond a reasonable doubt, that a law
may work hardship does not render it unconstitutional; that if any reasonable basis may be conceived which
supports the statute, it will be upheld, and the challenger must negate all possible bases; that the courts are not
concerned with the wisdom, justice, policy, or expediency of a statute; and that a liberal interpretation of the
constitution in favor of the constitutionality of legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans the members of such religious
sects that forbid affiliation of their members with labor unions from joining labor unions appears nowhere in the
wording of Republic Act No. 3350; neither can the same be deduced by necessary implication therefrom. It is
not surprising, therefore, that appellant, having thus misread the Act, committed the error of contending that
said Act is obnoxious to the constitutional provision on freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of Article III of
the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973, provide that the right to
form associations or societies for purposes not contrary to law shall not be abridged. Section 3 of Republic Act
No. 875 provides that employees shall have the right to self-organization and to form, join of assist labor
organizations of their own choosing for the purpose of collective bargaining and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid or protection. What the Constitution and
the Industrial Peace Act recognize and guarantee is the "right" to form or join associations. Notwithstanding the
different theories propounded by the different schools of jurisprudence regarding the nature and contents of a
"right", it can be safely said that whatever theory one subscribes to, a right comprehends at least two broad
notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act for
himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join or
refrain from Joining an association. It is, therefore, the employee who should decide for himself whether he
should join or not an association; and should he choose to join, he himself makes up his mind as to which
association he would join; and even after he has joined, he still retains the liberty and the power to leave and
cancel his membership with said organization at any time. 20 It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union. 21 Inasmuch as what both the Constitution and the Industrial
Peace Act have recognized, and guaranteed to the employee, is the "right" to join associations of his choice, it

would be absurd to say that the law also imposes, in the same breath, upon the employee the duty to join
associations. The law does not enjoin an employee to sign up with any association.
The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is,
however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of
law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may
employ only member of the collective bargaining union, and the employees must continue to be members of the
union for the duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace
Act, before its amendment by Republic Act No. 3350, provides that although it would be an unfair labor
practice for an employer "to discriminate in regard to hire or tenure of employment or any term or condition of
employment to encourage or discourage membership in any labor organization" the employer is, however, not
precluded "from making an agreement with a labor organization to require as a condition of employment
membership therein, if such labor organization is the representative of the employees". By virtue, therefore, of a
closed shop agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his
religious beliefs, wishes to be employed or to keep his employment, he must become a member of the collective
bargaining union. Hence, the right of said employee not to join the labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an
exception, when it added to Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but such
agreement shall not cover members of any religious sects which prohibit affiliation of their members in any
such labor organization". Republic Act No. 3350 merely excludes ipso jure from the application and coverage
of the closed shop agreement the employees belonging to any religious sects which prohibit affiliation of their
members with any labor organization. What the exception provides, therefore, is that members of said religious
sects cannot be compelled or coerced to join labor unions even when said unions have closed shop agreements
with the employers; that in spite of any closed shop agreement, members of said religious sects cannot be
refused employment or dismissed from their jobs on the sole ground that they are not members of the collective
bargaining union. It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on
freedom of association, upholds and reinforces it. It does not prohibit the members of said religious sects from
affiliating with labor unions. It still leaves to said members the liberty and the power to affiliate, or not to
affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious sects prefer
to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they refuse to
sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them from joining;
and neither may the employer or labor union compel them to join. Republic Act No. 3350, therefore, does not
violate the constitutional provision on freedom of association.
2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its contract,
specifically, the "union security clause" embodied in its Collective Bargaining Agreement with the Company, by
virtue of which "membership in the union was required as a condition for employment for all permanent
employees workers". This agreement was already in existence at the time Republic Act No. 3350 was enacted
on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated into the agreement. But by

reason of this amendment, Appellee, as well as others similarly situated, could no longer be dismissed from his
job even if he should cease to be a member, or disaffiliate from the Union, and the Company could continue
employing him notwithstanding his disaffiliation from the Union. The Act, therefore, introduced a change into
the express terms of the union security clause; the Company was partly absolved by law from the contractual
obligation it had with the Union of employing only Union members in permanent positions, It cannot be denied,
therefore, that there was indeed an impairment of said union security clause.
According to Black, any statute which introduces a change into the express terms of the contract, or its legal
construction, or its validity, or its discharge, or the remedy for its enforcement, impairs the contract. The extent
of the change is not material. It is not a question of degree or manner or cause, but of encroaching in any respect
on its obligation or dispensing with any part of its force. There is an impairment of the contract if either party is
absolved by law from its performance. 22 Impairment has also been predicated on laws which, without
destroying contracts, derogate from substantial contractual rights. 23
It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute
and unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the
details. The prohibition is not to be read with literal exactness like a mathematical formula, for it prohibits
unreasonable impairment only. 24 In spite of the constitutional prohibition, the State continues to possess
authority to safeguard the vital interests of its people. Legislation appropriate to safeguarding said interests may
modify or abrogate contracts already in effect. 25 For not only are existing laws read into contracts in order to fix
the obligations as between the parties, but the reservation of essential attributes of sovereign power is also read
into contracts as a postulate of the legal order. All contracts made with reference to any matter that is subject to
regulation under the police power must be understood as made in reference to the possible exercise of that
power. 26 Otherwise, important and valuable reforms may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting contracts
against impairment presupposes the maintenance of a government by virtue of which contractual relations are
worthwhile a government which retains adequate authority to secure the peace and good order of society. The
contract clause of the Constitution must, therefore, be not only in harmony with, but also in subordination to, in
appropriate instances, the reserved power of the state to safeguard the vital interests of the people. It follows
that not all legislations, which have the effect of impairing a contract, are obnoxious to the constitutional
prohibition as to impairment, and a statute passed in the legitimate exercise of police power, although it
incidentally destroys existing contract rights, must be upheld by the courts. This has special application to
contracts regulating relations between capital and labor which are not merely contractual, and said labor
contracts, for being impressed with public interest, must yield to the common good. 27
In several occasions this Court declared that the prohibition against impairing the obligations of contracts has no
application to statutes relating to public subjects within the domain of the general legislative powers of the state
involving public welfare. 28 Thus, this Court also held that the Blue Sunday Law was not an infringement of the
obligation of a contract that required the employer to furnish work on Sundays to his employees, the law having

been enacted to secure the well-being and happiness of the laboring class, and being, furthermore, a legitimate
exercise of the police power.29
In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging
yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be
measured or determined, has been fashioned, but every case must be determined upon its own circumstances.
Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the
general good of the people, and when the means adopted to secure that end are reasonable. Both the end sought
and the means adopted must be legitimate, i.e., within the scope of the reserved power of the state construed in
harmony with the constitutional limitation of that power. 30
What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom
of belief and religion, and to promote the general welfare by preventing discrimination against those members
of religious sects which prohibit their members from joining labor unions, confirming thereby their natural,
statutory and constitutional right to work, the fruits of which work are usually the only means whereby they can
maintain their own life and the life of their dependents. It cannot be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said religious sects against two aggregates of group
strength from which the individual needs protection. The individual employee, at various times in his working
life, is confronted by two aggregates of power collective labor, directed by a union, and collective capital,
directed by management. The union, an institution developed to organize labor into a collective force and thus
protect the individual employee from the power of collective capital, is, paradoxically, both the champion of
employee rights, and a new source of their frustration. Moreover, when the Union interacts with management, it
produces yet a third aggregate of group strength from which the individual also needs protection the
collective bargaining relationship. 31
The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to House Bill No.
5859, which later became Republic Act No. 3350, as follows:
It would be unthinkable indeed to refuse employing a person who, on account of his religious
beliefs and convictions, cannot accept membership in a labor organization although he
possesses all the qualifications for the job. This is tantamount to punishing such person for
believing in a doctrine he has a right under the law to believe in. The law would not allow
discrimination to flourish to the detriment of those whose religion discards membership in any
labor organization. Likewise, the law would not commend the deprivation of their right to
work and pursue a modest means of livelihood, without in any manner violating their
religious faith and/or belief. 32
It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose exempting the
members of said religious sects from coverage of union security agreements is reasonable.

It may not be amiss to point out here that the free exercise of religious profession or belief is superior to
contract rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court of the
United States has also declared on several occasions that the rights in the First Amendment, which include
freedom of religion, enjoy a preferred position in the constitutional system. 33 Religious freedom, although not
unlimited, is a fundamental personal right and liberty, 34 and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is only where unavoidably necessary to
prevent an immediate and grave danger to the security and welfare of the community that infringement of
religious freedom may be justified, and only to the smallest extent necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union averred
that said Act discriminates in favor of members of said religious sects in violation of Section 1 (7) of Article Ill
of the 1935 Constitution, and which is now Section 8 of Article IV of the 1973 Constitution, which provides:
No law shall be made respecting an establishment of religion, or prohibiting the free exercise
thereof, and the free exercise and enjoyment of religious profession and worship, without
discrimination and preference, shall forever be allowed. No religious test shall be required for
the exercise of civil or political rights.
The constitutional provision into only prohibits legislation for the support of any religious tenets or the modes
of worship of any sect, thus forestalling compulsion by law of the acceptance of any creed or the practice of any
form of worship, 35 but also assures the free exercise of one's chosen form of religion within limits of utmost
amplitude. It has been said that the religion clauses of the Constitution are all designed to protect the broadest
possible liberty of conscience, to allow each man to believe as his conscience directs, to profess his beliefs, and
to live as he believes he ought to live, consistent with the liberty of others and with the common good. 36 Any
legislation whose effect or purpose is to impede the observance of one or all religions, or to discriminate
invidiously between the religions, is invalid, even though the burden may be characterized as being only
indirect. 37 But if the stage regulates conduct by enacting, within its power, a general law which has for its
purpose and effect to advance the state's secular goals, the statute is valid despite its indirect burden on religious
observance, unless the state can accomplish its purpose without imposing such burden. 38
39

In Aglipay v. Ruiz , this Court had occasion to state that the government should not be precluded from
pursuing valid objectives secular in character even if the incidental result would be favorable to a religion or
sect. It has likewise been held that the statute, in order to withstand the strictures of constitutional prohibition,
must have a secular legislative purpose and a primary effect that neither advances nor inhibits
religion. 40 Assessed by these criteria, Republic Act No. 3350 cannot be said to violate the constitutional
inhibition of the "no-establishment" (of religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or religious or holy and
eternal. It was intended to serve the secular purpose of advancing the constitutional right to the free exercise of
religion, by averting that certain persons be refused work, or be dismissed from work, or be dispossessed of

their right to work and of being impeded to pursue a modest means of livelihood, by reason of union security
agreements. To help its citizens to find gainful employment whereby they can make a living to support
themselves and their families is a valid objective of the state. In fact, the state is enjoined, in the 1935
Constitution, to afford protection to labor, and regulate the relations between labor and capital and
industry. 41 More so now in the 1973 Constitution where it is mandated that "the State shall afford protection to
labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex,
race or creed and regulate the relation between workers and employers. 42
The primary effects of the exemption from closed shop agreements in favor of members of religious sects that
prohibit their members from affiliating with a labor organization, is the protection of said employees against the
aggregate force of the collective bargaining agreement, and relieving certain citizens of a burden on their
religious beliefs; and by eliminating to a certain extent economic insecurity due to unemployment, which is a
serious menace to the health, morals, and welfare of the people of the State, the Act also promotes the wellbeing of society. It is our view that the exemption from the effects of closed shop agreement does not directly
advance, or diminish, the interests of any particular religion. Although the exemption may benefit those who are
members of religious sects that prohibit their members from joining labor unions, the benefit upon the religious
sects is merely incidental and indirect. The "establishment clause" (of religion) does not ban regulation on
conduct whose reason or effect merely happens to coincide or harmonize with the tenets of some or all
religions. 43 The free exercise clause of the Constitution has been interpreted to require that religious exercise be
preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the
constitutional provision. It acted merely to relieve the exercise of religion, by certain persons, of a burden that is
imposed by union security agreements. It was Congress itself that imposed that burden when it enacted the
Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems advisable, could take away the
same burden. It is certain that not every conscience can be accommodated by all the laws of the land; but when
general laws conflict with scrupples of conscience, exemptions ought to be granted unless some "compelling
state interest" intervenes.45 In the instant case, We see no such compelling state interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves no
right to, and is silent as to the protection of, labor organizations. The purpose of Republic Act No. 3350 was not
to grant rights to labor unions. The rights of labor unions are amply provided for in Republic Act No. 875 and
the new Labor Code. As to the lamented silence of the Act regarding the rights and protection of labor unions,
suffice it to say, first, that the validity of a statute is determined by its provisions, not by its silence 46 ; and,
second, the fact that the law may work hardship does not render it unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel persons to join and remain members of a
union to keep their jobs in violation of their religious scrupples, would hurt, rather than help, labor unions,
Congress has seen it fit to exempt religious objectors lest their resistance spread to other workers, for religious
objections have contagious potentialities more than political and philosophic objections.

Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori to a labor union
assuming that such unity and loyalty can be attained through coercion is not a goal that is constitutionally
obtainable at the expense of religious liberty. 48 A desirable end cannot be promoted by prohibited means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates the constitutional prohibition against
requiring a religious test for the exercise of a civil right or a political right, is not well taken. The Act does not
require as a qualification, or condition, for joining any lawful association membership in any particular religion
or in any religious sect; neither does the Act require affiliation with a religious sect that prohibits its members
from joining a labor union as a condition or qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act No. 3350 only exempts members with
such religious affiliation from the coverage of closed shop agreements. So, under this Act, a religious objector is
not required to do a positive act to exercise the right to join or to resign from the union. He is exempted ipso
jure without need of any positive act on his part. A conscientious religious objector need not perform a positive
act or exercise the right of resigning from the labor union he is exempted from the coverage of any closed
shop agreement that a labor union may have entered into. How then can there be a religious test required for the
exercise of a right when no right need be exercised?
We have said that it was within the police power of the State to enact Republic Act No. 3350, and that its
purpose was legal and in consonance with the Constitution. It is never an illegal evasion of a constitutional
provision or prohibition to accomplish a desired result, which is lawful in itself, by discovering or following a
legal way to do it.49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch as it
grants to the members of certain religious sects undue advantages over other workers, thus violating Section 1
of Article III of the 1935 Constitution which forbids the denial to any person of the equal protection of the
laws. 50
The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all
citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against
inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of
statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require
that things which are different in fact be treated in law as though they were the same. The equal protection
clause does not forbid discrimination as to things that are different. 51 It does not prohibit legislation which is
limited either in the object to which it is directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the
other departments of knowledge or practice, is the grouping of things in speculation or practice because they
agree with one another in certain particulars. A law is not invalid because of simple inequality. 52 The very idea
of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner

determines the matter of constitutionality. 53 All that is required of a valid classification is that it be reasonable,
which means that the classification should be based on substantial distinctions which make for real differences;
that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that
it must apply equally to each member of the class. 54 This Court has held that the standard is satisfied if the
classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. 55
In the exercise of its power to make classifications for the purpose of enacting laws over matters within its
jurisdiction, the state is recognized as enjoying a wide range of discretion. 56 It is not necessary that the
classification be based on scientific or marked differences of things or in their relation. 57 Neither is it necessary
that the classification be made with mathematical nicety. 58 Hence legislative classification may in many cases
properly rest on narrow distinctions, 59 for the equal protection guaranty does not preclude the legislature from
recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies employees
and workers, as to the effect and coverage of union shop security agreements, into those who by reason of their
religious beliefs and convictions cannot sign up with a labor union, and those whose religion does not prohibit
membership in labor unions. Tile classification rests on real or substantial, not merely imaginary or whimsical,
distinctions. There is such real distinction in the beliefs, feelings and sentiments of employees. Employees do
not believe in the same religious faith and different religions differ in their dogmas and cannons. Religious
beliefs, manifestations and practices, though they are found in all places, and in all times, take so many varied
forms as to be almost beyond imagination. There are many views that comprise the broad spectrum of religious
beliefs among the people. There are diverse manners in which beliefs, equally paramount in the lives of their
possessors, may be articulated. Today the country is far more heterogenous in religion than before, differences
in religion do exist, and these differences are important and should not be ignored.
Even from the phychological point of view, the classification is based on real and important differences.
Religious beliefs are not mere beliefs, mere ideas existing only in the mind, for they carry with them practical
consequences and are the motives of certain rules. of human conduct and the justification of certain
acts. 60 Religious sentiment makes a man view things and events in their relation to his God. It gives to human
life its distinctive character, its tone, its happiness or unhappiness its enjoyment or irksomeness. Usually, a
strong and passionate desire is involved in a religious belief. To certain persons, no single factor of their
experience is more important to them than their religion, or their not having any religion. Because of differences
in religious belief and sentiments, a very poor person may consider himself better than the rich, and the man
who even lacks the necessities of life may be more cheerful than the one who has all possible luxuries. Due to
their religious beliefs people, like the martyrs, became resigned to the inevitable and accepted cheerfully even
the most painful and excruciating pains. Because of differences in religious beliefs, the world has witnessed
turmoil, civil strife, persecution, hatred, bloodshed and war, generated to a large extent by members of sects
who were intolerant of other religious beliefs. The classification, introduced by Republic Act No. 3350,
therefore, rests on substantial distinctions.

The classification introduced by said Act is also germane to its purpose. The purpose of the law is precisely to
avoid those who cannot, because of their religious belief, join labor unions, from being deprived of their right to
work and from being dismissed from their work because of union shop security agreements.
Republic Act No. 3350, furthermore, is not limited in its application to conditions existing at the time of its
enactment. The law does not provide that it is to be effective for a certain period of time only. It is intended to
apply for all times as long as the conditions to which the law is applicable exist. As long as there are closed
shop agreements between an employer and a labor union, and there are employees who are prohibited by their
religion from affiliating with labor unions, their exemption from the coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects; this is evident from its provision. The fact
that the law grants a privilege to members of said religious sects cannot by itself render the Act unconstitutional,
for as We have adverted to, the Act only restores to them their freedom of association which closed shop
agreements have taken away, and puts them in the same plane as the other workers who are not prohibited by
their religion from joining labor unions. The circumstance, that the other employees, because they are
differently situated, are not granted the same privilege, does not render the law unconstitutional, for every
classification allowed by the Constitution by its nature involves inequality.
The mere fact that the legislative classification may result in actual inequality is not violative of the right to
equal protection, for every classification of persons or things for regulation by law produces inequality in some
degree, but the law is not thereby rendered invalid. A classification otherwise reasonable does not offend the
constitution simply because in practice it results in some inequality. 61 Anent this matter, it has been said that
whenever it is apparent from the scope of the law that its object is for the benefit of the public and the means by
which the benefit is to be obtained are of public character, the law will be upheld even though incidental
advantage may occur to individuals beyond those enjoyed by the general public. 62
6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on social
justice is also baseless. Social justice is intended to promote the welfare of all the people. 63 Republic Act No.
3350 promotes that welfare insofar as it looks after the welfare of those who, because of their religious belief,
cannot join labor unions; the Act prevents their being deprived of work and of the means of livelihood. In
determining whether any particular measure is for public advantage, it is not necessary that the entire state be
directly benefited it is sufficient that a portion of the state be benefited thereby.
Social justice also means the adoption by the Government of measures calculated to insure economic stability of
all component elements of society, through the maintenance of a proper economic and social equilibrium in the
inter-relations of the members of the community. 64 Republic Act No. 3350 insures economic stability to the
members of a religious sect, like the Iglesia ni Cristo, who are also component elements of society, for it insures
security in their employment, notwithstanding their failure to join a labor union having a closed shop agreement
with the employer. The Act also advances the proper economic and social equilibrium between labor unions and
employees who cannot join labor unions, for it exempts the latter from the compelling necessity of joining labor

unions that have closed shop agreements and equalizes, in so far as opportunity to work is concerned, those
whose religion prohibits membership in labor unions with those whose religion does not prohibit said
membership. Social justice does not imply social equality, because social inequality will always exist as long as
social relations depend on personal or subjective proclivities. Social justice does not require legal equality
because legal equality, being a relative term, is necessarily premised on differentiations based on personal or
natural conditions. 65 Social justice guarantees equality of opportunity 66 , and this is precisely what Republic
Act No. 3350 proposes to accomplish it gives laborers, irrespective of their religious scrupples, equal
opportunity for work.
7. As its last ground, appellant contends that the amendment introduced by Republic Act No. 3350 is not called
for in other words, the Act is not proper, necessary or desirable. Anent this matter, it has been held that a
statute which is not necessary is not, for that reason, unconstitutional; that in determining the constitutional
validity of legislation, the courts are unconcerned with issues as to the necessity for the enactment of the
legislation in question. 67 Courts do inquire into the wisdom of laws. 68 Moreover, legislatures, being chosen by
the people, are presumed to understand and correctly appreciate the needs of the people, and it may change the
laws accordingly. 69 The fear is entertained by appellant that unless the Act is declared unconstitutional,
employers will prefer employing members of religious sects that prohibit their members from joining labor
unions, and thus be a fatal blow to unionism. We do not agree. The threat to unionism will depend on the
number of employees who are members of the religious sects that control the demands of the labor market. But
there is really no occasion now to go further and anticipate problems We cannot judge with the material now
before Us. At any rate, the validity of a statute is to be determined from its general purpose and its efficacy to
accomplish the end desired, not from its effects on a particular case. 70 The essential basis for the exercise of
power, and not a mere incidental result arising from its exertion, is the criterion by which the validity of a
statute is to be measured. 71
II. We now pass on the second assignment of error, in support of which the Union argued that the decision of the
trial court ordering the Union to pay P500 for attorney's fees directly contravenes Section 24 of Republic Act
No. 875, for the instant action involves an industrial dispute wherein the Union was a party, and said Union
merely acted in the exercise of its rights under the union shop provision of its existing collective bargaining
contract with the Company; that said order also contravenes Article 2208 of the Civil Code; that, furthermore,
Appellee was never actually dismissed by the defendant Company and did not therefore suffer any damage at
all . 72
In refuting appellant Union's arguments, Appellee claimed that in the instant case there was really no industrial
dispute involved in the attempt to compel Appellee to maintain its membership in the union under pain of
dismissal, and that the Union, by its act, inflicted intentional harm on Appellee; that since Appellee was
compelled to institute an action to protect his right to work, appellant could legally be ordered to pay attorney's
fees under Articles 1704 and 2208 of the Civil Code. 73
The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by appellant provides that:

No suit, action or other proceedings shall be maintainable in any court against a labor
organization or any officer or member thereof for any act done by or on behalf of such
organization in furtherance of an industrial dispute to which it is a party, on the ground only
that such act induces some other person to break a contract of employment or that it is in
restraint of trade or interferes with the trade, business or employment of some other person or
with the right of some other person to dispose of his capital or labor. (Emphasis supplied)

The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027) hereinafter referred
to as "TUPAS," seeks a review of the resolution dated January 27, 1988 (Annex D) of public respondent Pura
Ferrer-Calleja, Director of the Bureau of Labor Relations, dismissing its appeal from the Order dated November
17, 1987 (Annex C) of the Med-Arbiter Rasidali C. Abdullah ordering a certification election to be conducted
among the regular daily paid rank and file employees/workers of Universal Robina Corporation-Meat and
Canning Division to determine which of the contending unions:

That there was a labor dispute in the instant case cannot be disputed for appellant sought the discharge of
respondent by virtue of the closed shop agreement and under Section 2 (j) of Republic Act No. 875 a question
involving tenure of employment is included in the term "labor dispute". 74 The discharge or the act of seeking it
is the labor dispute itself. It being the labor dispute itself, that very same act of the Union in asking the
employer to dismiss Appellee cannot be "an act done ... in furtherance of an industrial dispute". The mere fact
that appellant is a labor union does not necessarily mean that all its acts are in furtherance of an industrial
dispute. 75 Appellant Union, therefore, cannot invoke in its favor Section 24 of Republic Act No. 875. This case
is not intertwined with any unfair labor practice case existing at the time when Appellee filed his complaint
before the lower court.

a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or "TUPAS" for
brevity);

Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield. The article provides that
attorney's fees and expenses of litigation may be awarded "when the defendant's act or omission has compelled
the plaintiff ... to incur expenses to protect his interest"; and "in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be recovered". In the instant case, it cannot be
gainsaid that appellant Union's act in demanding Appellee's dismissal caused Appellee to incur expenses to
prevent his being dismissed from his job. Costs according to Section 1, Rule 142, of the Rules of Court, shall be
allowed as a matter of course to the prevailing party. WHEREFORE, the instant appeal is dismissed, and the
decision, dated August 26, 1965, of the Court of First Instance of Manila, in its Civil Case No. 58894, appealed
from is affirmed, with costs against appellant Union. It is so ordered.
FIRST DIVISION
G.R. No. 82914 June 20, 1988
KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No. 1027), petitioner,
vs.
THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND CANNING DIVISION
UNIVERSAL ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW EMPLOYEES
AND WORKERS UNITED LABOR ORGANIZATION, respondents.
RESOLUTION
GRIO-AQUINO, J.:

b) Meat and Canning Division New Employees and Workers United Labor Organization (or
"NEW ULO" for brevity);
c) No union.
shall be the bargaining unit of the daily wage rank and file employees in the Meat and Canning Division of the
company.
From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of the workers in the
Meat and Canning Division of the Universal Robina Corporation, with a 3-year collective bargaining agreement
(CBA) which was to expire on November 15, 1987.
Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS filed an amended notice of
strike on September 28, 1987 as a means of pressuring the company to extend, renew, or negotiate a new CBA
with it.
On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI KRISTO sect,
registered as a labor union.
On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an injunction against the strike, resulting in
an agreement to return to work and for the parties to negotiate a new CBA.
The next day, October 13, 1987, NEW ULO, claiming that it has "the majority of the daily wage rank and file
employees numbering 191," filed a petition for a certification election at the Bureau of Labor Relations (Annex
A).
TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW ULO were
mostly members of the Iglesia ni Kristo sect which three (3) years previous refused to affiliate with any labor
union. It also accused the company of using the NEW ULO to defeat TUPAS' bargaining rights (Annex B).

On November 17, 1987, the Med-Arbiter ordered the holding of a certification election within 20 days (Annex
C).
TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it was able to negotiate a new 3-year
CBA with ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990.
On January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D).
TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On April 30, 1988, it
filed this petition alleging that the public respondent acted in excess of her jurisdiction and with grave abuse of
discretion in affirming the Med-Arbiter's order for a certification election.
After deliberating on the petition and the documents annexed thereto, We find no merit in the Petition. The
public respondent did not err in dismissing the petitioner's appeal in BLR Case No. A-12-389-87. This Court's
decision inVictoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the
IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the
members of that sect from forming their own union. The public respondent correctly observed that the
"recognition of the tenets of the sect ... should not infringe on the basic right of self-organization granted by the
constitution to workers, regardless of religious affiliation."
The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the
existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to
majority status, by filing a timely petition for certification election on October 13, 1987 before TUPAS' old
CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3, 1987.
As pointed out by Med-Arbiter Abdullah, a "certification election is the best forum in ascertaining the majority
status of the contending unions wherein the workers themselves can freely choose their bargaining
representative thru secret ballot." Since it has not been shown that this order is tainted with unfairness, this
Court will not thwart the holding of a certification election (Associated Trade Unions [ATU] vs. Noriel, 88
SCRA 96).
WHEREFORE, the petition for certiorari is denied, with costs against the petitioner.
SO ORDERED.
THIRD DIVISION
ALEX Q. NARANJO, DONNALYN DE GUZMAN, RONALD V. CRUZ, ROSEMARIE P. PIMENTEL, and
ROWENA B. BARDAJE, Petitioners, - versus - G.R. No. 193789 Present: VELASCO, JR., J., Chairperson,
PERALTA, ABAD, * PEREZ, and MENDOZA, JJ. BIOMEDICA HEALTH CARE, INC. Promulgated: and
CARINA "KAREN" J. MOTOL, Respondents. 19 September 2012 {jf(~ F

X-----------------------------------------------------------------------------------------X DECISION VELASCO, JR.,].:

The Case This Petition for Review on Certiorari under Rule 45 seeks to annul the June 25, 20101 Decision and
September 20, 20102 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 108205, finding that
petitioners were validly dismissed. The CA Decision overturned the Decision dated November 21, 20083 of the
National Labor Relations Commission (NLRC) and reinstated the Decision dated March 31, 20084 of Labor
Arbiter Ligerio V. Ancheta. 'Additional member per Special Order K'. 1299 dated August 28, 2012. 1 Rollo, pp.
55-63. Penned by Associate Justice Florito S. Macalino and concurred in by Associate Justices Juan Q. Enriquez
and Ramon M. Bato, Jr. 2 ld. at 64. 3 Id. at 314-329. Penned by Commissioner Gregorio 0. Bilog, III and
concurred in by Commissioners Lourdes C. Javier and Pablo C. Espiritu. 4 Id. at 265-282. I Decision G.R. No.
193789 2 The Facts Respondent Biomedica Health Care, Inc. (Biomedica) was, during the material period,
engaged in the distribution of medical equipment. Respondent Carina Karen J. Motol (Motol) was then its
President. Petitioners were former employees of Biomedica holding the following positions: Alex Q. Naranjo
(Naranjo) - Liaison Officer Ronald Allan V. Cruz (Cruz) - Service Engineer Rowena B. Bardaje (Bardaje) Administration Clerk Donnalyn De Guzman (De Guzman) - Sales Representative Rosemarie P. Pimentel
(Pimentel) - Accounting Clerk5 On November 7, 2006, which happened to be Motols birthday, petitioners
with two (2) other employees, Alberto Angeles (Angeles) and Rodolfo Casimiro (Casimiro)were all absent
for various personal reasons. De Guzman was allegedly absent due to loose bowel movement,6 Pimentel for an
ophthalmology check-up,7 Bardaje due to migraine,8 Cruz for not feeling well,9 and Naranjo because he had to
attend a meeting at his childs school.10 Notably, these are the same employees who filed a letter-complaint
dated October 31, 200611 addressed to Director Lourdes M. Transmonte, National Director, National Capital
Region-Department of Labor and Employment (DOLE) against Biomedica for lack of salary increases, failure
to remit Social Security System and Pag-IBIG contributions, and violation of the minimum wage law, among
other grievances. Per available records, the complaint has not been acted upon. 5 Id. at 266-267. 6 Id. at 113. 7
Id. at 118. 8 Id. at 110. 9 Id. at 107. 10 Id. at 103. 11 Id. at 174. Decision G.R. No. 193789 3 Later that day,
petitioners reported for work after receiving text messages for them to proceed to Biomedica. They were,
however, refused entry and told to start looking for another workplace.12 The next day, November 8, 2006,
petitioners allegedly came in for work but were not allowed to enter the premises.13 Motol purportedly
informed petitioners, using foul language, to just find other employment. Correspondingly, on November 9,
2006, Biomedica issued a notice of preventive suspension and notices to explain within 24 hours (Notices)14 to
petitioners. In the Notices, Biomedica accused the petitioners of having conducted an illegal strike and were
accordingly directed to explain why they should not be held guilty of and dismissed for violating the company
policy against illegal strikes under Article XI, Category Four, Sections 6, 8, 12, 18 and 25 of the Company
Policy. The individual notice reads: Subject: Notice of Preventive Suspension & Notice to explain within 24
hours Effective upon receipt hereof, you are placed under preventive suspension for willfully organizing and/or
engaging in illegal strike on November 7, 2006. Your said illegal act-in conspiracy with your other
coemployees, paralyzed the company operation on that day and resulted to undue damage and prejudice to the
company and is direct violation of Article XI, Category Four Section 6, 8, 12, 18 & 25 of our Company Policy,
which if found guilty, you will be meted a penalty of dismissal. Please explain in writing within 24 hours from
receipt hereof why you should not be held guilty of violating the company policy considering further that you
committed and timed such act during the birthday of our Company president. On November 15, 2006,
petitioners were required to proceed to the Biomedica office where they were each served their Notices.15 Only

Angeles and Casimiro submitted their written explanation for their absence wherein 12 Id. at 315. 13 Id. at 316.
14 Id. at 142. 15 Id. at 104, 107, 111, 114 & 119. Decision G.R. No. 193789 4 they alleged that petitioners
forced them to go on a mass leave while asking Biomedica for forgiveness for their actions. On November 20,
2006, petitioners filed a Complaint with the NLRC for constructive dismissal and nonpayment of salaries,
overtime pay, 13th month pay as well as non-remittance of SSS, Pag-IBIG and Philhealth contributions as well
as loan payments. The case was docketed as Case No. 00-09597-06. Thereafter, Biomedica served Notices of
Termination on petitioners. All dated November 29, 2006,16 the notices uniformly stated: We regret to inform
you that since you did not submit the written letter of explanation as requested in your preventive suspension
notice dated November 9, 2006, under Article XI, Category Four, Section 6, 8, 12, 18 and 25 you are hereby
dismissed from service effective immediately. On March 31, 2008, the Labor Arbiter issued a Decision,17 the
dispositive portion of which reads: WHEREFORE, the foregoing premises considered, judgment is hereby
rendered dismissing for lack of merit the instant complaint for illegal dismissal. However, the respondents are
hereby ORDERED, jointly and severally, to pay the complainants the following: Unpaid salary for the period
08-15 November 2006; Pro-rated 13th month pay for 2006; and Service Incentive Leave for 2006 (except for
complainant Bardaje). From the monetary award given to complainant Naranjo, the amount of PhP4,750.00
shall be deducted. From the monetary award given to complainant Pimentel, the amount of PhP4,500.00 shall
be deducted. 16 Id. at 143, 145, 147 & 149. 17 Id. at 264-284. Decision G.R. No. 193789 5 A detailed
computation of the monetary awards, as of the date of this Decision, is embodied in Annex A which is hereby
made an integral part hereof. SO ORDERED.18 The Labor Arbiter found that, indeed, petitioners engaged in a
mass leave akin to a strike. He added that, assuming that petitioners were not aware of the company policies on
illegal strikes, such mass leave can sufficiently be deemed as serious misconduct under Art. 282 of the Labor
Code. Thus, the Labor Arbiter concluded that petitioners were validly dismissed. Petitioners appealed the Labor
Arbiters Decision to the NLRC which rendered a modificatory Decision dated November 21, 2008.19 Unlike
the Labor Arbiter, the NLRC found and so declared petitioners to have been illegally dismissed and disposed as
follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered modifying the assailed Decision
dated April 11, 2008 [sic];20 (a) DECLARING the Complainants to have been illegally dismissed for lack of
just cause; (b) ORDERING Respondents to pay separation pay in lieu of reinstatement and payment of
backwages computed on the basis of one (1) month pay for every year of service up to the date of complainants
illegal dismissal; (c) ORDERING the respondents to pay complainant De Guzman and Cruz their unpaid
commission on the basis of their sale for year 2005-2006; (d) Sustaining the monetary award as stated in the
Decision dated April 11, 2008; (e) ORDERING the respondents to pay attorneys fees in the amount of 10% of
the total award of monetary claims. All other claims and counterclaims are dismissed for lack of factual and
legal basis. SO ORDERED.21 18 Id. at 282. 19 Id. at 314-329. 20 This should be March 31, 2008. April 11,
2008 refers to the date of the Notice of Judgment/Decision for the March 31, 2008 Decision of the Labor
Arbiter. 21 Rollo, pp. 328-329. Decision G.R. No. 193789 6 Thereafter, Biomedica moved but was denied
reconsideration per the NLRCs Resolution dated January 30, 2009.22 From the Decision and Resolution of the
NLRC, Biomedica appealed the case to the CA which rendered the assailed Decision dated June 25, 2010, the
dispositive portion of which reads: WHEREFORE, premises considered, the assailed Decision and Resolution
of public respondent National Labor Relations Commission (NLRC) dated November 21, 2008 and January 30,
2009 respectively in NLRC NCR CN 00-11-09597-06 are hereby ANNULLED and SET ASIDE. Decision of
the labor arbiter is hereby REINSTATED. SO ORDERED.23 In its assailed Resolution dated September 20,

2010, the CA denied petitioners Motion for Reconsideration. The CA ruled that, indeed, petitioners staged a
mass leave in violation of company policy. This fact, coupled with their refusal to explain their actions,
constituted serious misconduct that would justify their dismissal. Hence, the instant appeal. The Issues I. The
Court of Appeals, with all due respect, gravely erred in concluding facts in the case which were neither rebutted
nor proved as to its truthfulness. II. The Court of Appeals, with all due respect, gravely erred in ruling that grave
abuse of discretion was committed by the NLRC and by reason of the same, it upheld the Decision of the Labor
Arbiter stating that petitioners were not illegally dismissed. III. The Court of Appeals, with all due respect,
gravely erred in ruling that grave abuse of discretion was committed by the NLRC and by reason of 22 Id. at
344-345. 23 Id. at 63. Decision G.R. No. 193789 7 the same, it upheld the Decision of the Labor Arbiter in
relation to petitioners[] money claims.24 The Courts Ruling This petition is meritorious. Petitioners were
illegally dismissed The fundamental law of the land guarantees security of tenure, thus: Sec. 3. The State shall
afford full protection to labor x x x. x x x They shall be entitled to security of tenure, humane conditions of
work and a living wage.25 x x x On the other hand, the Labor Code promotes the right of the worker to security
of tenure protecting them against illegal dismissal: ARTICLE 279. Security of Tenure. - In cases of regular
employment, the employer shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An Employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement. It bears pointing out that in the dismissal of an employee, the law
requires that due process be observed. Such due process requirement is twofold, procedural and substantive, that
is, the termination of employment must be based on a just or authorized cause of dismissal and the dismissal
must be effected after due notice and hearing.26 In the instant case, petitioners were not afforded both
procedural and substantive due process. 24 Id. at 24-25. 25 CONSTITUTION, Art. XIII, Sec. 3. 26 Mansion
Printing Center v. Bitara, Jr., G.R. No. 168120, January 25, 2012. Decision G.R. No. 193789 8 Petitioners were
not afforded procedural due process Art. 277(b) of the Labor Code contains the procedural due process
requirements in the dismissal of an employee: Art. 277. Miscellaneous Provisions. x x x (b) Subject to the
constitutional right of workers to security of tenure and their right to be protected against dismissal except for a
just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought to be terminated a written notice containing a
statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision
taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of
his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized cause shall rest on the employer. On the
other hand, Rule XIII, Book V, Sec. 2 I (a) of the Implementing Rules and Regulations of the Labor Code states:
SEC. 2. Standards of due process; requirements of notice.In all cases of termination of employment, the
following standards of due process shall be substantially observed: I. For termination of employment based on
just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the
ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his
side. (b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so

desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented
against him. (c) A written notice of termination served on the employee, indicating that upon due consideration
of all the circumstances, grounds have been established to justify his termination. (Emphasis supplied.)
Decision G.R. No. 193789 9 Thus, the Court elaborated in King of Kings Transport, Inc. v. Mamac27 that a
mere general description of the charges against an employee by the employer is insufficient to comply with the
above provisions of the law: x x x Moreover, in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly,
the notice should specifically mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees. x x x x x x x We observe from the irregularity
reports against respondent for his other offenses that such contained merely a general description of the charges
against him. The reports did not even state a company rule or policy that the employee had allegedly violated.
Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor
Code. Thus, KKTIs standard charge sheet is not sufficient notice to the employee. (Emphasis supplied.) In
the instant case, the notice specifying the grounds for termination dated November 9, 2006 states: Effective
upon receipt hereof, you are placed under preventive suspension for willfully organizing and/or engaging in
illegal strike on November 7, 2006. Your said illegal act-in conspiracy with your other co-employees, paralyzed
the company operation on that day and resulted to undue damage and prejudice to the company and is direct
violation of Article XI, Category Four Section 6, 8, 12, 18 & 25 of our Company Policy, which if found guilty,
you will be meted a penalty of dismissal. Please explain in writing within 24 hours from receipt hereof why you
should not be held guilty of violating the company policy considering further that you committed and timed
such act during the birthday of our Company president.28 Clearly, petitioners were charged with conducting an
illegal strike, not a mass leave, without specifying the exact acts that the company considers as constituting an
illegal strike or violative of company policies. Such allegation falls short of the requirement in King of Kings
Transport, Inc. of a detailed narration of the facts and circumstances that will serve as basis 27 G.R. No.
166208, June 29, 2007, 526 SCRA 116, 123-127. 28 Rollo, p. 142. Decision G.R. No. 193789 10 for the charge
against the employees. A bare mention of an illegal strike will not suffice. Further, while Biomedica cites the
provisions of the company policy which petitioners purportedly violated, it failed to quote said provisions in the
notice so petitioners can be adequately informed of the nature of the charges against them and intelligently file
their explanation and defenses to said accusations. The notice is bare of such description of the company
policies. Moreover, it is incumbent upon respondent company to show that petitioners were duly informed of
said company policies at the time of their employment and were given copies of these policies. No such proof
was presented by respondents. There was even no mention at all that such requirement was met. Worse,
respondent Biomedica did not even quote or reproduce the company policies referred to in the notice as pointed
out by the CA stating: It must be noted that the company policy which the petitioner was referring to was not
quoted or reproduced in the petition, a copy of which is not also appended in the petition, as such we cannot
determine the veracity of the existence of said policy.29 Without a copy of the company policy being presented
in the CA or the contents of the pertinent policies being quoted in the pleadings, there is no way by which one
can determine whether or not there was, indeed, a violation of said company policies. Moreover, the period of
24 hours allotted to petitioners to answer the notice was severely insufficient and in violation of the
implementing rules of the Labor Code. Under the implementing rule of Art. 277, an employee should be given

reasonable opportunity to file a response to the notice. King of Kings Transport, Inc. elucidates in this wise:
29 Id. at 60. Decision G.R. No. 193789 11 To clarify, the following should be considered in terminating the
services of employees: (1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules
means every kind of assistance that management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt
of the notice to give the employees an opportunity to study the accusation against them, consult a union official
or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. 30
(Emphasis supplied.) Following King of Kings Transport, Inc., the notice sent out by Biomedica in an attempt
to comply with the first notice of the due process requirements of the law was severely deficient. In addition,
Biomedica did not set the charges against petitioners for hearing or conference in accordance with Sec. 2, Book
V, Rule XIII of the Implementing Rules and Regulations of the Labor Code and in line with ruling in King of
Kings Transport, Inc., where the Court explained: (2) After serving the first notice, the employers should
schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1)
explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to
come to an amicable settlement.31 While petitioners did not submit any written explanation to the charges, it is
incumbent for Biomedica to set the matter for hearing or conference to hear the defenses and receive evidence
of the employees. More importantly, Biomedica is duty-bound to exert efforts, during said hearing or
conference, to hammer out a settlement of its differences with petitioners. These prescriptions Biomedica failed
to satisfy. 30 Supra note 27, at 125. 31 Id. at 125-126. Decision G.R. No. 193789 12 Lastly, Biomedica again
deviated from the dictated contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII
of the Implementing Rules that it should embody the facts and circumstances to support the grounds justifying
the termination. As amplified in King of Kings Transport, Inc.: (3) After determining that termination of
employment is justified, the employers shall serve the employees a written notice of termination indicating that:
(1) all circumstances involving the charge against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment.32 The November 26, 2006 Notice of Termination
issued by Biomedica miserably failed to satisfy the requisite contents of a valid notice of termination, as it
simply mentioned the failure of petitioners to submit their respective written explanations without discussing
the facts and circumstances to support the alleged violations of Secs. 6, 8, 12, 18 and 25 of Category Four, Art.
XI of the alleged company rules. All told, Biomedica made mincemeat of the due process requirements under
the Implementing Rules and the King of Kings Transport, Inc. ruling by simply not following any of their
dictates, to the extreme prejudice of petitioners. Petitioners were denied substantive due process In any event,
petitioners were also not afforded substantive due process, that is, they were illegally dismissed. The just causes
for the dismissal of an employee are exclusively found in Art. 282(a) of the Labor Code, which states:
ARTICLE 282. Termination by employer. An employer may terminate an employment for any of the
following causes: 32 Id. at 126. Decision G.R. No. 193789 13 (a) Serious misconduct or willful disobedience by
the employee of the lawful orders of his employer or representative in connection with his work. It was on this

ground that the CA upheld the dismissal of petitioners from their employment. Serious misconduct, as a
justifying ground for the dismissal of an employee, has been explained in Aliviado v. Procter & Gamble, Phils.,
Inc.: 33 Misconduct has been defined as improper or wrong conduct; the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and
not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and
not merely trivial and unimportant. To be a just cause for dismissal, such misconduct (a) must be serious; (b)
must relate to the performance of the employees duties; and (c) must show that the employee has become unfit
to continue working for the employer. Clearly, to justify the dismissal of an employee on the ground of serious
misconduct, the employer must first establish that the employee is guilty of improper conduct, that the
employee violated an existing and valid company rule or regulation, or that the employee is guilty of a
wrongdoing. In the instant case, Biomedica failed to even establish that petitioners indeed violated company
rules, failing to even present a copy of the rules and to prove that petitioners were made aware of such
regulations. In fact, from the records of the case, Biomedica has failed to prove that petitioners are guilty of a
wrongdoing that is punishable with termination from employment. Art. 277(b) of the Labor Code states, The
burden of proving that the termination was for a valid or authorized cause shall rest on the employer. In the
instant case, Biomedica failed to overcome such burden. As will be shown, petitioners absence on November 7,
2006 cannot be considered a mass leave, much less a strike and, thus, cannot justify their dismissal from
employment. 33 G.R. No. 160506, March 9, 2010,614 SCRA 563, 583-584. Decision G.R. No. 193789 14
Petitioners did not stage a mass leave The accusation is for engaging in a mass leave tantamount to an illegal
strike. The term Mass Leave has been left undefined by the Labor Code. Plainly, the legislature intended that
the terms ordinary sense be used. Mass is defined as participated in, attended by, or affecting a large number
of individuals; having a large-scale character.34 While the term Leave is defined as an authorized absence
or vacation from duty or employment usually with pay.35 Thus, the phrase mass leave may refer to a
simultaneous availment of authorized leave benefits by a large number of employees in a company. It is
undeniable that going on leave or absenting ones self from work for personal reasons when they have leave
benefits available is an employees right. In Davao Integrated Port Stevedoring Services v. Abarquez, 36 the
Court acknowledged sick leave benefits as a legitimate economic benefit of an employee, carrying a purpose
that is at once legal as it is practical: Sick leave benefits, like other economic benefits stipulated in the CBA
such as maternity leave and vacation leave benefits, among others, are by their nature, intended to be
replacements for regular income which otherwise would not be earned because an employee is not working
during the period of said leaves. They are non-contributory in nature, in the sense that the employees contribute
nothing to the operation of the benefits. By their nature, upon agreement of the parties, they are intended to
alleviate the economic condition of the workers. In addition to sick leave, the company, as a policy or practice
or as agreed to in a CBA, grants vacation leave to employees. Lastly, even the Labor Code grants a service
incentive leave of 5 days to employees. 34 WEBSTERS THIRD NEW INTERNATIONAL DICTIONARY
(1981). 35 Id. at 1287. 36 G.R. No. 102132, March 19, 1993, 220 SCRA 197, 207. Decision G.R. No. 193789
15 Moreover, the company or the CBA lays down the procedure in the availment of the vacation leave, sick
leave or service incentive leave. In the factual milieu at bar, Biomedica did not submit a copy of the CBA or a
company memorandum or circular showing the authorized sick or vacation leaves which petitioners can avail
of. Neither is there any document to show the procedure by which such leaves can be enjoyed. Absent such
pertinent documentary evidence, the Court can only conclude that the availment of petitioners of their

respective leaves on November 7, 2006 was authorized, valid and in accordance with the company or CBA rules
on entitlement to and availment of such leaves. The contention of Biomedica that the enjoyment of said leaves
is in reality an illegal strike does not hold water in the absence of strong controverting proof to overturn the
presumption that a person is innocent of x x x wrong.37 Thus, the individual leaves of absence taken by the
petitioners are not such absences that can be regarded as an illegal mass action. Moreover, a mass leave
involves a large number of people or in this case, workers. Here, the five (5) petitioners were absent on
November 7, 2006. The records are bereft of any evidence to establish how many workers are employed in
Biomedica. There is no evidence on record that 5 employees constitute a substantial number of employees of
Biomedica. And, as earlier stated, it is incumbent upon Biomedica to prove that petitioners were dismissed for
just causes, this includes the duty to prove that the leave was large-scale in character and unauthorized. This,
Biomedica failed to prove. Having failed to show that there was a mass leave, the Court concludes that there
were only individual availment of their leaves by petitioners and they cannot be held guilty of any wrongdoing,
much less 37 RULES OF COURT, Rule 131(a). Decision G.R. No. 193789 16 anything to justify their dismissal
from employment. On this ground alone, the petition must be granted. Petitioners did not go on strike Granting
for the sake of argument that the absence of the 5 petitioners on November 7, 2006 is considered a mass leave,
still, their actions cannot be considered a strike. Art. 212(o) of the Labor Code defines a strike as any
temporary stoppage of work by the concerted action of employees as a result of any industrial or labor dispute.
Concerted is defined as mutually contrived or planned or performed in unison.38 In the case at bar, the 5
petitioners went on leave for various reasons. Petitioners were in different places on November 7, 2006 to
attend to their personal needs or affairs. They did not go to the company premises to petition Biomedica for
their grievance. To demonstrate their good faith in availing their leaves, petitions reported for work and were at
the company premises in the afternoon after they received text messages asking them to do so. This shows that
there was NO intent to go on strike. Unfortunately, they were barred from entering the premises and were told
to look for new jobs. Surely the absence of petitioners in the morning of November 7, 2006 cannot in any way
be construed as a concerted action, as their absences are presumed to be for valid causes, in good faith, and in
the exercise of their right to avail themselves of CBA or company benefits. Moreover, Biomedica did not prove
that the individual absences can be considered as temporary stoppage of work. Biomedicas allegation that the
mass leave paralyzed the company operation on that day has remained unproved. It is erroneous, therefore, to
liken the alleged 38 WEBSTERS THIRD NEW INTERNATIONAL DICTIONARY 470 (1981). Decision G.R.
No. 193789 17 mass leave to an illegal strike much less to terminate petitioners services for it. Notably, the CA
still ruled that petitioners went on strike as evidenced by the explanation letters of Angeles and Casimiro sent by
Biomedica. They stated in the letters that they, along with petitioners, agreed to go on leave on the birthday on
Motol to stress their demands against the company. These statements do not deserve much weight and credit.
Sec. 11(c) of the 2011 NLRC Rules of Procedure relevantly provides: SECTION 11. SUBMISSION OF
POSITION PAPER AND REPLY. x x x x x x x c) The position papers of the parties shall cover only those
claims and causes of action stated in the complaint or amended complaint, accompanied by all supporting
documents, including the affidavits of witnesses, which shall take the place of their direct testimony, excluding
those that may have been amicably settled. (Emphasis supplied.) In the instant case, the CA accepted as
evidence the explanation letters issued by Angeles and Casimiro when these are not notarized. While
notarization may seem to be an inconsequential requirement considering that the Labor Arbiter and the NLRC
are not strictly bound by technical rules of evidence, however, mere explanation letters submitted to the

company that the authors issued even before the case was filed before the NLRC cannot be accepted as direct
testimony of the authors. The requirement that the direct testimony can be contained in an affidavit is to ensure
that the affiant swore under oath before an administering officer that the statements in the affidavit are true. The
affiant knows that he or she can be charged criminally for perjury under solemn affirmation or at least he or she
is bound to his or her oath. Thus, the affidavits or sworn statements of these employees should have been
presented. At the very least, the workers should have been Decision G.R. No. 193789 18 summoned to testify
on such letters. Ergo, these letters cannot be the sole basis for the finding that petitioners conducted a strike
against Biomedica and for the termination of their employment. Lastly, the explanation letters cannot overcome
the clear and categorical statements made by the petitioners in their verified positions papers. As between the
verified statements of petitioners and the unsworn letters of Angeles and Casimiro, clearly, the former must
prevail and are entitled to great weight and value. Finally, it cannot be overemphasized that in case of doubt, a
case should be resolved in favor of labor. As aptly stated in Century Canning Corporation v. Ramil: 39 x x x
Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for
dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social
justice policy of labor laws and the Constitution. Biomedica has failed to adduce substantial evidence to prove
that petitioners dismissal from their employment was for a just or authorized cause. The conclusion is
inescapable that petitioners were illegally dismissed. Dismissal is not the proper penalty But setting aside from
the nonce the facts established above, the most pivotal argument against the dismissal of petitioners is that the
penalty of dismissal from employment cannot be imposed even if we assume that petitioners went on an illegal
strike. It has not been shown that petitioners are officers of the Union. On this issue, the NLRC correctly cited
Gold City Integrated Port Service, Inc. v. NLRC, 40 wherein We ruled that: An ordinary striking worker
cannot be terminated for mere participation in an 39 G.R. No. 171630, August 8, 2010, 627 SCRA 192, 202. 40
G.R. No. 103560, July 6, 1995, 245 SCRA 627, 637. Decision G.R. No. 193789 19 illegal strike. There must be
proof that he committed illegal acts during a strike. In the instant case, Biomedica has not alleged, let alone,
proved the commission by petitioners of any illegal act during the alleged mass leave. There being none, the
mere fact that petitioners conducted an illegal strike cannot be a legal basis for their dismissal. Petitioners are
entitled to separation pay in lieu of reinstatement, backwages and nominal damages Given the illegality of their
dismissal, petitioners are entitled to reinstatement and backwages as provided in Art. 279 of the Labor Code,
which states: An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. Thus, the Court ruled in Golden Ace Builders v. Talde, 41 citing Macasero
v. Southern Industrial Gases Philippines: 42 Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations between the employee and the employer,
separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable,
or separation pay if reinstatement is no longer viable, and backwages. The normal consequences of respondents
illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed
from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no

longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in addition to payment of backwages. (Emphasis
supplied.) 41 G.R. No. 187200, May 5, 2010, 620 SCRA 283, 289. 42 G.R. No. 178524, January 30, 2009, 577
SCRA 500, 507. Decision G.R. No. 193789 20 Petitioners were absent from work on Motols birthday.
Respondent Motol, in the course of denying entry to them on November 8, 2006, uttered harsh, degrading and
bad words. Petitioners were terminated in swift fashion and in gross violation of their right to due process
revealing that they are no longer wanted in the company. The convergence of these facts coupled with the filing
by petitioners of their complaint with the DOLE shows a relationship governed by antipathy and antagonism as
to justify the award of separation pay in lieu of reinstatement. Thus, in addition to backwages, owing to the
strained relations between the parties, separation pay in lieu of reinstatement would be proper. In Golden Ace
Builders, We explained why: Under the doctrine of strained relations, the payment of separation pay is
considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On
one hand, such payment liberates the employee from what could be a highly oppressive work environment. On
the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust. Strained relations must be demonstrated as a fact, however, to be adequately
supported by evidence substantial evidence to show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the judicial controversy.43 And in line with
prevailing jurisprudence,44 petitioners are entitled to nominal damages in the amount of PhP 30,000 each for
Biomedicas violation of procedural due process. WHEREFORE, the Decision dated June 25, 2010 and the
Resolution dated September 20, 2010 of the CA in CA-G.R. SP No. 108205 are hereby REVERSED and SET
ASIDE. The Decision dated November 21, 2008 of the NLRC in NLRC LAC No. 08-002836-08 is hereby
REINSTATED with MODIFICATION. As modified, the November 21, 2008 NLRC Decision shall read, as
follows: 43 Supra note 41. 44 Aliling v. Feliciano, G.R. No. 185829, April 25, 2012. Decision 21 G.R. No.
193789 WHEREFORE, in view of the foregoing, judgment is hereby rendered modifying the assailed Decision
[of the Labor Arbiter] dated [March 31, 2008]; (a) DECLARING the Complainants to have been illegally
dismissed for lack of just cause; (b) ORDERING Respondents jointly and solidarily to pay Complainants
separation pay in lieu of reinstatement computed on the basis of one (1) month pay for every year of service
from date of employment up to November 29, 2006 (the date of complainants illegal dismissal); (c)
ORDERING Respondents jointly and solidarily to pay Complainants backwages from November 29, 2006 up to
the finality of this Decision; (d) ORDERING the Respondents jointly and solidarily to pay Complainants the
following: 1. Unpaid salary for the period 08-15 November 2006; 2. Pro-rated 13th month pay for 2006; 3.
Service Incentive Leave for 2006 (except for complainant Bardaje ); 4. Unpaid commissions based on their
sales for the years 2005 and 2006; and 5. Nominal damages in the amount of PhP 30,000 each. (e) ORDERING
the Respondents jointly and solidarily to pay Complainants attorney's fees in the amount of I 0% of the total
award of monetary claims. All other claims and counterclaims are dismissed for lack of factual and legal basis.
The NLRC is ordered to recompute the monetary awards due to petitioners based on the aforelisted dispositions
deducting from the awards to Naranjo and Pimentel their cash advances of PhP4,750.00 and PhP4,500.00,
respectively. SO ORDERED. No costs. SO ORDERED.