G.R. Nos.

164302-03 January 24, 2007

SANTA ROSA COCA-COLA PLANT EMPLOYEES UNION, Donrico V.

Sebastian, Eulogio G. Batino, Samuel A. Atanque, Manolo C. Zabaljauregui,
Dionisio Tenorio, Edwin P. Rellores, Luis B. Natividad, Myrna
Petingco, Feliciano Tolentino, Rodolfo A. Amante, Jr., Cipriano C.
Bello, Ronaldo T. Espino, Efren Galan, and Jun Carmelito Santos,
Petitioners, vs. COCA-COLA BOTTLERS PHILS., INC., Respondent.

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

DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of

Appeals (CA) in CA-G.R. SP Nos. 74174 and 74860, which affirmed the ruling of
the National Labor Relations Commission (NLRC) in NLRC CA No. 030424-02,
and the Labor Arbiter in NLRC Case No. RAB-IV-10-11579-99-L.

The Antecedents

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

The Union and the Company had entered into a three-year Collective
Bargaining Agreement (CBA) effective July 1, 1996 to expire on June 30, 1999.
Upon the expiration of the CBA, the Union informed the Company of its desire to
renegotiate its terms. The CBA meetings commenced on July 26, 1999, where
the Union and the Company discussed the ground rules of the negotiations.
The Union insisted that representatives from the Alyansa ng mga Unyon sa
Coca-Cola be allowed to sit down as observers in the CBA meetings. The Union
officers and members also insisted that their wages be based on their work shift
rates. For its part, the Company was of the view that the members of
the Alyansa were not members of the bargaining unit. The Alyansa was a mere
aggregate of employees of the Company in its various plants; and is not a
registered labor organization. Thus, an impasse ensued.[2]
On August 30, 1999, the Union, its officers, directors and six shop
stewards filed a Notice of Strike with the National Conciliation and Mediation
Board (NCMB) Regional Office in Southern Tagalog, Imus, Cavite. The
petitioners relied on two grounds: (a) deadlock on CBA ground rules; and
(b) unfair labor practice arising from the companys refusal to bargain. The case
was docketed as NCMB-RBIV-NS-08-046-99.[3]
 The Company filed a Motion to Dismiss [4] alleging that the reasons cited by
the Union were not valid grounds for a strike. The Union then filed an Amended
Notice of Strike on September 17, 1999 on the following grounds: (a) unfair labor
practice for the companys refusal to bargain in good faith; and (b) interference
with the exercise of their right to self-organization.[5]

Meanwhile, on September 15, 1999, the Union decided to participate in a

mass action organized by the Alyansa ng mga Unyon sa Coca-Cola in front of
the Companys premises set for September 21, 1999. 106 Union members,
officers and members of the Board of Directors, and shop stewards, individually
filed applications for leave of absence for September 21, 1999. Certain that its
operations in the plant would come to a complete stop since there were no
sufficient trained contractual employees who would take over, the Company
disapproved all leave applications and notified the applicants accordingly. [6] A day
before the mass action, some Union members wore gears, red tag cloths stating
YES KAMI SA STRIKE as headgears and on the different parts of their uniform,
shoulders and chests.
The Office of the Mayor issued a permit to the Union, allowing it to
conduct a mass protest action within the perimeter of the Coca-Cola plant
on September 21, 1999 from 9:00 a.m. to 12:00 noon.[7] Thus, the Union officers
and members held a picket along the front perimeter of the plant on September
21, 1999. All of the 14 personnel of the Engineering Section of the Company did
not report for work, and 71 production personnel were also absent. As a result,
only one of the three bottling lines operated during the day shift. All the three
lines were operated during the night shift with cumulative downtime of five (5)
hours due to lack of manning, complement and skills requirement. The volume of
production for the day was short by 60,000 physical case[s] versus budget. [8]

On October 13, 1999, the Company filed a Petition to Declare Strike

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

2. Declaring the officers of respondent Union or the

individual respondents to have lost their employment status;

3. Declaring respondent Union, its officers and members

guilty of unfair labor practice for violation of the CBA; and

4. Ordering the respondents to pay petitioner the following

claims for damages:

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

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

and

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

Pesos.[10]

The Union filed an Answer with a Motion to Dismiss and/or to Suspend

Proceedings[11] alleging therein that the mass action conducted by its officers and
members on September 21, 1999 was not a strike but just a valid exercise of
their right to picket, which is part of the right of free expression as guaranteed by
the Constitution; several thousands of workers nationwide had launched similar
mass protest actions to demonstrate their continuing indignation over the ill
effects of martial rule in the Philippines. [12] It pointed out that even the officers and
members of the Alyansa ng mga Unyon sa Coca-Cola had similarly organized
mass protest actions. The Union insisted that officers and members filed their
applications for leave for September 21, 1999 knowing fully well that there were
no bottling operations scheduled on September 21 and 22, 1999; they even
secured a Mayors permit for the purpose. The workers, including the petitioners,
merely marched to and fro at the side of the highway near one of the gates of the
Sta. Rosa Plant, the loading bay for public vehicles. After 3 hours, everyone
returned to work according to their respective shifting schedules.
The Union averred that the petition filed by the Company was designed to harass
and its officers and members in order to weaken the Unions position in the on-
going collective bargaining negotiations.

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

On November 26, 1999, the Labor Arbiter rendered a Decision [15] granting
the petition of the Company. He declared that the September 21, 1999 mass
leave was actually a strike under Article 212 of the Labor Code for the following
reasons: based on the reports submitted by the Production and Engineering
Department of the Company, there was a temporary work stoppage/slowdown in
the company;[16] out of the usual three (3) lines for production for the day shift,
only one line operated by probationary employees was functional and there was
a cumulative downtime of five (5) hours attributed to the lack of manning
complement and skills requirement. The Labor Arbiter further declared:

x x x [T]he September 21, 1999 activity of the union and the

individual respondents herein fell within the foregoing definition of a
strike. Firstly, the union itself had admitted the fact that on the date
in question, respondent officers, together with their union members
and supporters from the Alyansa ng mga Unyon sa Coca-Cola, did
not report for their usual work. Instead, they all assembled in front
of the Sta. Rosa Plant and picketed the premises. Very clearly,
there was a concerted action here on the part of the respondents
brought about a temporary stoppage of work at two out of three
bottling lines at the Sta. Rosa Plant. According to Edwin Jaranilla,
the Engineering Superintendent (Annex H, petition), all of his
departments 14 engineering personnel did not report for work on
September 21, 1999, and that only Line 2 operated on the day shift.
Honorio Tacla, the Production Superintendent, testified (Annex H-
1), that 71 production personnel were likewise absent from their
respective work stations on September 21, 1999, and that only Line
2 operated on the day shift. Similarly, Federico Borja, Physical
Distribution Superintendent, stated under oath (Annex H-2) that 12
personnel from his department did not report for work
on September 21, 1999, and that no forklift servicing was done on
Lines 1 and 3. From the foregoing testimonies, it is evident that
respondents concerted activity resulted in a temporary stoppage of
work at the Sta. Rosa Plant of the company. Thirdly, such concerted
activity by respondents was by reason of a labor dispute. Earlier,
the union had filed a Notice of Strike against the company on
account of a disagreement with the latter regarding CBA ground
rules, i.e., the demand of the Union for Alyansa members from
other plants to attend as observers during the CBA negotiation, and
for the members of the negotiating panel to be paid their wages
based on their work shift rate. Moreover, on September 20, 1999,
one day before respondents mass leave from work and concerted
 action, they had worn red tag cloth materials on different parts of
their uniform which contained the words, YES kami sa strike;
Protesta kami; Sahod, karapatan, manggagawa ipaglaban; and
Union busting itigil. (Annexes G, G-1, G-2 & G-3). These indicated
that the concerted action taken by respondents against CCBPI was
a result of or on account of a labor dispute.[17]

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

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

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

Petitioners alleged the following in their respective petitions:

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

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

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

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

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS

GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS
OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF
THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS
ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED
THAT THE STRIKE CONDUCTED BY THE RESPONDENTS ON
SEPTEMBER 21, 1999 IS ILLEGAL.

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS

GRAVELY ABUSED ITS DISCRETION AMOUNTING TO EXCESS
OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF
THE LABOR ARBITER A QUO WHO COMMITTED SERIOUS
ERRORS IN HIS FINDINGS OF FACTS WHEN HE DECLARED
THAT INDIVIDUAL RESPONDENTS (NOW PETITIONERS),
INCLUDING SIX (6) UNION SHOP STEWARDS, ARE
CONSIDERED TO HAVE LOST THEIR EMPLOYMENT STATUS
(EXCEPT CHARLITA ABRIGO) FOR KNOWINGLY
PARTICIPATING IN SAID ILLEGAL STRIKE.[21]

On September 10, 2003, the CA rendered judgment dismissing the

petition for lack of merit. It also declared that petitioners, in CA-G.R. SP No.
74860, were guilty of forum shopping.

Petitioners filed a motion for reconsideration which the appellate court

denied; hence, the instant petition was filed based on the following grounds:
(1) THE HONORABLE COURT OF APPEALS HAS
GRAVELY ABUSED ITS DISCRETION IN DISMISSING THE
PETITION BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR
FROM THE EVIDENCE ON RECORD THAT THE SUBJECT MASS
ACTION WAS A VALID EXERCISE OF THE WORKERS
CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE
RIGHT TO FREE EXPRESSION.
 (2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN
AFFIRMING THE DECISION OF THE LABOR ARBITER A
QUO WHEN IT CONCLUDED THAT AS A CONSEQUENCE OF
THE ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE
OFFICERS OF THE UNION IS JUSTIFIED AND VALID, IS NOT IN
ACCORD WITH FACTS AND EVIDENCE ON RECORD.

(3) EVEN ASSUMING ARGUENDO THAT THE

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

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

On the first and second issues, petitioners maintain that the September
21, 1999 mass protest action was not a strike but a picket, a valid exercise of
their constitutional right to free expression and assembly.[23] It was a peaceful
mass protest action to dramatize their legitimate grievances against respondent.
They did not intend to have a work stoppage since they knew beforehand that no
bottling operations were scheduled on September 21, 1999 pursuant to the
Logistics Planning Services Mega Manila Production Plan dated September 15,
1999.[24] Thus, they applied for leaves of absences for September 21,
1999 which, however, were not approved. They also obtained a mayors permit to
hold the picket near the highway, and they faithfully complied with the conditions
set therein. The protesting workers were merely marching to and fro at the side
of the highway or the loading bay near one of the gates of the Company plant,
certainly not blocking in any way the ingress or egress from the Companys
premises. Their request to hold their activity was for four (4) hours, which was
reduced to three (3) hours. Thereafter, they all went back to work. The bottling
operations of the Company was not stopped, even temporarily. Since
petitioner Union did not intend to go on strike, there was no need to observe the
mandatory legal requirements for the conduct of a strike.

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

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

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

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

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

The ruling of the CA that petitioners staged a strike on September 21,

1999, and not merely a picket is correct.

It bears stressing that this is a finding made by the Labor Arbiter which
was affirmed by the NLRC[28] and the CA.[29] The settled rule is that the factual
findings and conclusions of tribunals, as long as they are based on substantial
evidence, are conclusive on this Court. [30] The raison detre is that quasi-judicial
agencies, like the Labor Arbiter and the NLRC, have acquired a unique expertise
since their jurisdictions are confined to specific matters. Besides, under Rule 45
of the Rules of Court, the factual issues raised by the petitioner are inappropriate
in a petition for review on certiorari. Whether petitioners staged a strike or not is a
factual issue.
 Petitioners failed to establish that the NLRC committed grave abuse of its
discretion amounting to excess or lack of jurisdiction in affirming the findings of
the Labor Arbiter that petitioners had indeed staged a strike.

Article 212(o) of the Labor Code defines strike as a temporary stoppage of

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

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

A labor dispute includes any controversy or matter concerning terms or

conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing or arranging the terms and conditions
of employment, regardless of whether the disputants stand in the proximate
relation of employer and employee.[36]

That there was a labor dispute between the parties, in this case, is not an
issue. Petitioners notified the respondent of their intention to stage a strike, and
not merely to picket. Petitioners insistence to stage a strike is
evident in the fact that an amended notice to strike was filed even as respondent
moved to dismiss the first notice. The basic elements of a strike are present in
this case: 106 members of petitioner Union, whose respective applications for
leave of absence on September 21, 1999 were disapproved, opted not to report
for work on said date, and gathered in front of the company premises to hold a
mass protest action. Petitioners deliberately absented themselves and instead
wore red ribbons, carried placards with slogans such as: YES KAMI SA STRIKE,
PROTESTA KAMI, SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN,
CBA-WAG BABOYIN, STOP UNION BUSTING. They marched to and fro in front
of the companys premises during working hours. Thus, petitioners engaged in a
concerted activity which already affected the companys operations. The mass
concerted activity constituted a strike.

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

A strike is the most powerful of the economic weapons of workers which

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

Since strikes cause disparity effects not only on the relationship between
labor and management but also on the general peace and progress of society,
the law has provided limitations on the right to strike. For a strike to be valid, the
following procedural requisites provided by Art. 263 of the Labor Code must be
observed: (a) a notice of strike filed with the DOLE 30 days before the intended
date thereof, or 15 days in case of unfair labor practice; (b) strike vote approved
by a majority of the total union membership in the bargaining unit concerned
obtained by secret ballot in a meeting called for that purpose, (c) notice given to
the DOLE of the results of the voting at least seven days before the intended
strike. These requirements are mandatory and the failure of a union to comply
therewith renders the strike illegal. [39] It is clear in this case that petitioners totally
ignored the statutory requirements and embarked on their illegal strike. We
quote, with approval, the ruling of the CA which affirmed the decisions of the
NLRC and of the Labor Arbiter:
Since it becomes undisputed that the mass action
was indeed a strike, the next issue is to determine whether
the same was legal or not. Records reveal that the said
strike did not comply with the requirements of Article 263 (F)
in relation to Article 264 of the Labor Code, which
specifically provides, thus:

ART. 263. STRIKES, PICKETING, AND LOCKOUTS

xxx xxx xxx xxx

(f) A decision to declare a strike must be approved by

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

ART. 264. PROHIBITED ACTIVITIES

(a) No labor organization or employer shall declare a

strike or lockout without first having bargained collectively
in accordance with Title VII of this Book or without first
having filed the notice required in the preceding article or
without the necessary strike or lockout vote first having
been obtained and reported to the Ministry.

No strike or lockout shall be declared after

assumption of jurisdiction by the President or the Minister
or after certification or submission of the dispute to
compulsory or voluntary arbitration or during the pendency
of cases involving the same grounds for the strike or
lockout.

Any worker whose employment has been terminated

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

xxx xxx xxx xxx

Applying the aforecited mandatory requirements to

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

Aside from the above infirmity, the strike staged by

respondents was, further, in violation of the CBA which
stipulated under Section 1, Article VI, thereof that,

SECTION 1. The UNION agrees that there shall

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

Here, it is not disputed that respondents had not

referred their issues to the grievance machinery as a prior
step. Instead, they chose to go on strike right away,
thereby bypassing the required grievance procedure
dictated by the CBA.[40]

On the second and third issues, the ruling of the CA affirming the
decisions of the NLRC and the Labor Arbiter ordering the dismissal of the
petitioners-officers, directors and shop stewards of petitioner Union is correct.
 It bears stressing, however, that the law makes a distinction
between union members and union officers. A worker merely participating in an
illegal strike may not be terminated from employment. It is only when he commits
illegal acts during a strike that he may be declared to have lost employment
status.[41]For knowingly participating in an illegal strike or participates in the
commission of illegal acts during a strike, the law provides that a union officer
may be terminated from employment. [42] The law grants the employer the option
of declaring a union officer who participated in an illegal strike as having lost his
employment. It possesses the right and prerogative to terminate the union
officers from service.[43]

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

As to the imposition of the penalty provided for should an

illegal strike be declared as such, We find no legal or factual reason
to digress from the following disquisition of the Labor Arbiter, to wit:

No doubt, the strike conducted by respondents

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

Union officers are duty-bound to guide their

members to respect the law. If instead of doing so, the
officers urge the members to violate the law and defy
the duly constituted authorities, their dismissal from
the service is just penalty or sanction for their unlawful
acts. The officers responsibility is greater than that of
the members.
 Here, the law required respondents to follow a set of
mandatory procedures before they could go on with their strike. But
obviously, rather than call on their members to comply therewith,
respondents were the first ones to violate the same. [44]

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

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

Neither can the petitioners find refuge in the rulings of this Court in Panay
Electric Company v. NLRC[46] or in Lapanday Workers Union v. NLRC.[47] In
the Panay case, the Court meted the suspension of the union officers, instead of
terminating their employment status since the NLRC found no sufficient proof of
bad faith on the part of the union officers who took part in the strike to protest the
dismissal of their fellow worker, Enrique Huyan which was found to be
illegal. In Lapanday, the Court actually affirmed the dismissal of the union officers
who could not claim good faith to exculpate themselves. The officers, in fact,
admitted knowledge of the law on strike, including its procedure in conducting the
same. The Court held that the officers cannot violate the law which was designed
to promote their interests.

Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie

Labayani, Ricky Ganarial, Efren Galan and Jun Carmelito Santos who were
appointed as shop stewards of the Union that they were mere members and not
the officers of petitioner Union is barren of merit.
We agree with the observation of respondent that under Section 501(a)
and (b) of the Landrum Griffin Act of 1959, [48] shop stewards are officers of
the Union:
Sec. 501 (a) The officers, agents, shop stewards, and other
representatives of a labor organization occupy positions of trust in
relation to such organization and its members as a group. It is,
therefore, the duty of each such person, taking into account the
 special problems and functions of a labor organization, to hold its
money and property solely for the benefit of the organization and its
members and to manage, invest, and expend the same in
accordance with its constitution and bylaws and any resolutions of
the governing bodies adopted thereunder, to refrain from dealing
with such organization as an adverse party in any matter connected
with his duties and from holding or acquiring any pecuniary or
personal interest which conflicts with the interest of such
organization, and to account to the organization for any profit
received by him in whatever capacity in connection with
transactions conducted by him or under his direction on behalf of
the organization. A general exculpatory resolution of a governing
body purporting to relieve any such person of liability for breach of
the duties declared by this section shall be void as against public
policy.

(b) When any officer, agent, shop steward, or representative

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

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

(q) Officer, agent, shop steward, or other representative, when used

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

Admittedly, there is no similar provision in the Labor Code of

the Philippines; nonetheless, petitioners who are shop stewards are considered
union officers.

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

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

ARTICLE VI
PRINCIPAL OFFICERS

SECTION 1. The governing body of the UNION shall be the

following officers who shall be elected through secret ballot by the
general membership:

President Auditor
Vice-President two (2) Public Relations Officer
Secretary Sergeant-at-Arms
Treasurer Board of Directors nine (9)

SECTION 2. The above officers shall administer Unions

affairs, formulate policies and implement programs to effectively
carry out the objectives of the UNION and the Labor Code of
the Philippines and manage all the monies and property of
the UNION.

SECTION 3. The officers of the UNION and the members of

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

Section 6, Article II of the CBA of petitioner Union and respondent defines

the position of shop steward, thus:

SECTION 6. Shop Stewards. The UNION shall certify a total

of eight (8) shop stewards and shall inform management of the
distribution of these stewards among the departments concerned.

Shop Stewards, union officers and members or employees

shall not lose pay for attending Union-Management Labor
dialogues, investigations and grievance meetings with
management.[53]
Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code
mentions the functions and duties of shop stewards, as follows:

Section 2. Procedures in handling grievances. In the absence of a

specific provision in the collective bargaining agreement prescribing
for the procedures in handling grievance, the following shall apply:

(a) An employee shall present this grievance or complaint orally or

in writing to the shop steward. Upon receipt thereof, the shop
steward shall verify the facts and determine whether or not the
grievance is valid.

(b) If the grievance is valid, the shop steward shall immediately

bring the complaint to the employees immediate supervisor. The
shop steward, the employee and his immediate supervisor shall
exert efforts to settle the grievance at their level.
(c) If no settlement is reached, the grievance shall be
referred to the grievance committee which shall have ten (10) days
to decide the case.

Where the issue involves or arises from the interpretation or

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

All grievance unsettled or unresolved within seven (7) calendar

days from the date of its submission to the last step in the
grievance machinery shall automatically be referred to a voluntary
arbitrator chosen in accordance with the provisions of the collective
bargaining agreement, or in the absence of such provisions, by
mutual agreement of the parties.[54]

Thus, a shop steward is appointed by the Union in a shop, department, or

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

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

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

In this case, instead of playing the role of peacemakers and grievance

solvers, the petitioners-shop stewards participated in the strike. Thus, like the
officers and directors of petitioner Union who joined the strike, petitioners-shop
stewards also deserve the penalty of dismissal from their employment.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of

merit. The Decision of the Court of Appeals is AFFIRMED. No costs.

SO ORDERED.

G.R. No. 175209 January 16, 2013

ROLANDO L. CERVANTES, Petitioner,
vs.
PAL MARITIME CORPORATION and/or WESTERN SHIPPING AGENCIES,
PTE., LTD., Respondents.

DECISION

PEREZ, J.:

This treats of the petition for rev1ew filed by petitioner Rolando Cervantes
assailing the Decision1 and Resolution of the Court of Appeals dated 14 August
2006 and 26 October 2006, respectively, in CA-G.R. SP No. 76756.

At the center of this controversy is the question whether petitioner resigned or

was terminated from his employment.

Petitioner Rolando Cervantes was hired as Master on board the vessel M/V
Themistocles by respondent PAL Maritime Corporation, the manning agent of
respondent Western Shipping Agencies, PTE., LTD., (Western Shipping) for a
10-month period effective 1 July 1995, with a basic monthly salary of United
States (US)$1,600.00, an allowance of US$240.00 per month, a fixed overtime
pay of US$640.00, and vacation leave with pay amounting to US$320.00 per
month.2

On 31 July 1995, a telex message was sent to petitioner enumerating the

complaints received from Colonial Shipping, the owner of the vessel, as follows:

1. Poor communications exist among key personnel

2. Vessels certifications and company procedures were disorganized

3. Has no awareness on purpose of key documents such as ship board oil

pollution emergency plan.

4. Has no working knowledge of grain loading calculation procedures

5. Improve operational and maintenance standards x x x. 3

On the following day, petitioner sent a telex message and imputed ill-motive on
the part of the foreign inspectors who were making false accusations against
Filipino crew members. In the same message, petitioner addressed all the
complaints raised against him.4
On 2 August 1995, petitioner sent another telex message informing Western
Shipping of the unbearable situation on board. He ended his message with these
words:

ANYHOW TO AVOID REPETITION ON MORE HARSH REPORTS TO COME.

BETTER ARRANGE MY RELIEVER AND C/O BUSTILLO RELIEVER ALSO.
UPON ARR NEXT USA LOADING PORT FOR THEIR SATISFACTION.5

In response to said message, on 20 September 1995, Western Shipping sent a

letter informing petitioner that:

OWNERS HAVE DECIDED TO RELIEVE YOU UPON PASSING PANAMA

CANAL OR NEXT CONVENIENT PORT. WE TRUST THIS PRE-MATURED
ENDING OF CONTRACT IS MUTUALLY AGREED AND FOR THE BENEFITS
OF ALL PARTIES CONCERNED.6

Petitioner replied in this wise:

HV NO CHOICE BUT TO ACCEPT YR DECISION. TKS ANYHOW FOR

RELIEVING ME IN NEXT CONVENIENT PORT WILL EASE THE BURDEN
THAT I HV FELT ONBOARD. REST ASSURE VSL WILL BE TURNED OVER
PROPERLY TO INCOMING MASTER.7

On 13 October 1995, petitioner was repatriated to Manila.

On 25 October 1996, petitioner filed a Complaint for illegal dismissal. He prayed

for actual damages in the amount of US$18,480.00 corresponding to his salaries
for the unexpired period of his contract; moral damages for an amount not less
than P200,000.00; exemplary damages for an amount not less
than P100,000.00; and attorneys fees in an amount not less than 10% of the
monetary award.8

In their Answer, respondents alleged that petitioner voluntarily and freely pre-
terminated his own contract.

On 2 July 1999, Labor Arbiter Donato G. Quinto, Jr. found that petitioner was
illegally dismissed. The dispositive portion of the Decision reads:

WHEREFORE, foregoing premises considered, judgment is hereby rendered

declaring complainant Rolando L. Cervantes to have been illegally dismissed and
ordering respondents PAL Maritime Corporation and Western Shipping Agencies
PTE, LTD to pay, jointly and severally, the amount of US$7,440.00, or its peso
equivalent at the time of payment, representing his salary for the unexpired
portion of his contract, plus 10% thereof as attorneys fees, all as discussed and
computed above.

All other claims are hereby dismissed for lack of merit. 9

The Labor Arbiter focused on two (2) correspondences: 1) the letter-

communication dated 20 September 1995 issued by respondent Western
Shipping which terminated petitioners employment, and 2) the subsequent reply
of petitioner acceding to Western Shippings decision to terminate him. The Labor
Arbiter construed these correspondences as involuntary repatriation of petitioner.

On appeal, the Labor Arbiters Decision was reversed by the First Division of the
National Labor Relations Commission (NLRC). The NLRC initially referred the
case to another Labor Arbiter, Thelma M. Concepcion (Labor Arbiter Concepcion)
for review and submission of a report pursuant to Article 218 (c) 10 of the Labor
Code. Labor Arbiter Concepcion found that petitioner was not dismissed from
service but that he opted to be relieved from his post. This finding was adopted
by the NLRC. Petitioner filed a motion for reconsideration but it was denied by
the NLRC in an Order dated 26 December 2002, prompting him to file a petition
before the Court of Appeals.

Finding that petitioner voluntarily resigned, the Court of Appeals, on 14 August

2006, denied the petition and affirmed the decision of the NLRC.

Petitioner elevated the case to this Court via a petition for review on certiorari
raising the following issues:

a) Whether the petitioner is entitled to his claims the (sic) under the POEA
Employment Contract which arose from his illegal termination and what
amount of evidence is required from the petitioner to prove their
entitlement thereto.

b) Whether or not an appeal without the joint declaration under oath is

considered perfected?11

We shall first tackle the procedural issue raised.

Petitioner points out that the failure of respondent to file the required Joint
Declaration Under Oath on the appeal bond warrants the dismissal of the appeal
for non-perfection. On the other hand, respondents brush aside the late
submission of their Joint Declaration Under Oath as a mere technicality.
The pertinent provision of the NLRC Rules of Procedure governing at the time
the appeal was made to the NLRC is Rule VI, Section 3. 12 Section 3 enumerates
the following requisites for perfection of appeal:

1. The appeal shall be filed within the reglementary period;

2. It shall be under oath with proof of payment of the required appeal fee
and the posting of a cash or surety bond; and

3. It shall be accompanied by a memorandum of appeal which shall state

the grounds relied upon and the arguments in support thereof; the relief
prayed for; and a statement of the date when the appellant received the
appealed decision, order or award and proof of service on the other party
of such appeal.

In relation to the posting of the appeal bond, Section 6 further requires the
submission by petitioner and his counsel of a Joint Declaration Under Oath
attesting that the surety bond posted is genuine and that it shall be in effect until
final disposition of the case.13

While the Rule mandates the submission of a joint declaration, this may be
liberally construed especially in cases where there is substantial compliance with
the Rule. When the NLRC issued an order directing respondents to file their Joint
Declaration, the latter immediately complied. Thus, there was only a late
submission of the Joint Declaration. There was substantial compliance when
respondents manifested their willingness to comply, and in fact complied with, the
directive of the NLRC.

The appeal may have been treated differently had respondents failed to post the
appeal bond itself. It bears mention that this Court had in numerous cases
granted even the late posting of the appeal bond. In University Plans
Incorporated v. Solano,14 the Court ratiocinated:

After all, the present case falls under those cases where the bond requirement
on appeal may be relaxed considering that (1) there was substantial compliance
with the Rules; (2) the surrounding facts and circumstances constitute
meritorious grounds to reduce the bond; and (3) the petitioner, at the very least,
exhibited its willingness and/or good faith by posting a partial bond during the
reglementary period. Also, such a procedure would be in keeping with the Labor
Codes mandate to use every and all reasonable means to ascertain the facts in
each case speedily and objectively, without regard to technicalities of law or
procedure, all in the interest of due process. 15

As correctly pointed out by the Court of Appeals, respondents had posted a

surety bond equivalent to the monetary award and had filed the notice of appeal
and appeal memorandum, all within the reglementary period. All these show
substantial compliance with the appeal requirement, considered as they must be,
together with late submission of the Joint Declaration.

Further, no less than the Labor Code directs labor officials to use reasonable
means to ascertain the facts speedily and objectively, with little regard to
technicalities or formalities and Rule VII, Section 10 of the New Rules of
Procedure of the NLRC provides that technical rules are not binding. Indeed, the
application of technical rules or procedure may be relaxed in labor cases to serve
the demand of substantial justice.16

On the substantive issue, petitioner insists that he did not resign but was
terminated from employment. Petitioner claims that he and the other Filipino crew
members were subjects of racial discrimination which resulted from the complaint
that they lodged against the vessels Greek technician, Angelo Fatorous, due to
the latters inefficiency and maltreatment of crew members. Petitioner avers that
voluntariness was lacking in his decision to write the letter on 3 August 1995
indicating his desire to be relieved from the post, because he was compelled by
extreme pressure to prevent the happening of any untoward incident on the
vessel.17

In their Comment, respondents argue that they and the owners of the vessel
never initiated the repatriation to Manila of petitioner. All the owners of the vessel
did was to advise respondents of their findings on petitioners incompetence,
negligence, and inability to render satisfactory service, and give petitioner one
month to take corrective actions on board the vessel. Respondents, on the other
hand, merely relayed to petitioner, through a telex message, said findings and
the message of the owners of the vessel.

Resignation is the voluntary act of an employee who finds himself in a situation

where he believes that personal reasons cannot be sacrificed in favor of the
exigency of the service, such that he has no other choice but to disassociate
himself from his employment.18 This is precisely what obtained in this case.

The tenor of petitioners telex message was an unmistakeable demand that he

be relieved of his assignment:
ANYHOW TO AVOID REPETITION [ON] MORE HARSH REPORTS TO COME.
BETTER ARRANGE MY RELIEVER AND C/O BUSTILLO RELIEVER ALSO.
UPON ARR NEXT USA LOADING PORT FOR THEIR SATISFACTION.

Respondents met the challenge and accepted petitioners resignation. Petitioner

even appeared resigned to his fate by stating:

HV NO CHOICE BUT TO ACCEPT YR DECISION. TKS ANYHOW FOR

RELIEVING ME IN NEXT CONVENIENT PORT WILL EASE THE BURDEN
THAT I HV FELT ONBOARD. REST ASSURE VSL WILL BE TURNED OVER
PROPERLY TO INCOMING MASTER.

The statements of petitioner were simple and straightforward. There is no merit

to his claim that he was forced to resign due to extreme pressure. Only two (2)
days had elapsed from the time petitioner received a copy of the complaint from
the owners of the vessel until his letter demanding his relief. The telex message
outlining numerous complaints against petitioner probably bruised his ego,
causing petitioner to react impulsively by resigning.

Petitioner failed to substantiate his claim that he and the Filipino crew members
were being subjected to racial discrimination on board. Petitioner presented a
letter-petition against a Greek technician who allegedly maltreated Filipino crew
members. However, there was no showing that the Greek technician
spearheaded nor had any participation in the complaint of Colonial Shipping
against petitioner.

Labor Arbiter Concepcions finding of resignation was best explained in the

NLRC Decision, to wit:

The records show that in a telefax message dated July 28, 1995, the shipowner,
Colonial Navigation Co. Inc. has made a complaint to Mr. Rodney Lim, which the
latter forwarded to the respondent PAL Maritime, regarding poor work
performance of the complainant as Master of the Vessel. The complainants
deficiencies were enumerated as follows:

a) Poor communication exist among the by[sic] personnel;

b) The vessels certificates and company procedures were disorganized;

c) The Master did not have an awareness of the purpose of the key
documents, such as the ship board oil pollution emergency plan;
 d) The Master despite on board for one month did not have any
awareness of the safety procedures that the company has set out in its
Manuals.

In connection with the aforementioned deficiencies, the complainant was given

by the owner one month to take corrective measures to improve the operational
and maintenance standards on board the vessel. x x x. Thereafter, the
complainant was informed of the aforesaid complaint by the respondent as
shown in the telefax message dated July 31, 1995 x x x. While the complainant
denied the accusations of the owners he made a counter charge that the owners
are racists x x x.

In response thereto, the owners were surprised with the accusation of the
complainant considering that they have been a principal of respondent PAL
Maritime for more than four years and have employed several Filipino seamen x
x x. Instead of complying with the request of the shipowners, the complainant
opted to be relieved from his post. His telefax message in part reads:

x x x Anyhow to avoid repetition on more harsh reports to come, better arranges

my reliever and c/o Bustillo reliever also. Upon ARR next USA loading port for
their satisfaction x x x.

The foregoing exchange of communications clearly shows that complainant was

not dismissed from the service but he opted to be relieved from his post as
master. While it is true that his resignation was an offshoot of the complaint of the
shipowners but the latter were merely requesting the complainant and the chief
officers to improve in their performance. The dismissal aspect was not dismissed
at all. It was complainant who brought out the idea and which was accepted by
the shipowner as shown in the telefax message elated September 20, 1995 x x x.

This x x x Commission finds the reply dated September 21, 1995 of the
complainant misleading.1wphi1 His statement that "IIV no choice but to accept
yr Decision," is not accurate inasmuch as it was he who opted to be relieved at
the next loading port. His request which was favorably acted upon by the
respondents certainly negates his claims that he was illegally dismissed. 19

The rule that filing of a complaint for illegal dismissal is inconsistent with
resignation does not hold true in this case. The filing of the complaint one year
after his alleged termination, coupled with the clear tenor or his resignation letter
should be taken to mean that petitioner's filing or the illegal dismissal case was a
mere afterthought.
In fine, we do not find any persuasive or cogent reason to deviate from the
findings of the NLRC, as affirmed by the appellate court.

WHEREFORE, the petition is DENIED. The 14 August 2006 Decision and the 26
October 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 76756 are
hereby AFFIRMED.

SO ORDERED.

G.R. No. 199338 January 21, 2013

ELEAZAR S. PADILLO,** Petitioner

vs.
RURAL BANK OF NABUNTURAN, INC. and MARK S.
OROPEZA, Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a Petition for Review on Certiorari 1 assailing the June 28,
2011 Decision2 and October 27, 2011 Resolution 3 of the Cagayan de Oro City
Court of Appeals (CA) in CA-G.R. SP No 03669-MIN which revoked and set
aside the National Labor Relations Commission's (NLRCs) Resolutions dated
December 29, 20094 and March 31, 20105 and reinstated the Labor Arbiter's
(LA's) Decision dated March 13, 20096 with modification.

The Facts
On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed
by respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due
to liquidity problems which arose sometime in 2003, the Bank took out
retirement/insurance plans with Philippine American Life and General Insurance
Company (Philam Life) for all its employees in anticipation of its possible closure
and the concomitant severance of its personnel. In this regard, the Bank
procured Philam Plan Certificate of Full Payment No. 88204, Plan Type
02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of Padillo for
a benefit amount of P100,000.00 and which was set to mature on July 11, 2009. 7

On October 14, 2004, respondent Mark S. Oropeza (Oropeza), the President of

the Bank, bought majority shares of stock in the Bank and took over its
management which brought about its gradual rehabilitation. The Banks finances
improved and eventually, its liquidity was regained. 8

During the latter part of 2007, Padillo suffered a mild stroke due to hypertension
which consequently impaired his ability to effectively pursue his work. In
particular, he was diagnosed with Hypertension S/P CVA (Cerebrovascular
Accident) with short term memory loss, the nature of which had been classified
as a total disability.9 On September 10, 2007, he wrote a letter addressed to
respondent Oropeza expressing his intention to avail of an early retirement
package. Despite several follow-ups, his request remained unheeded.

On October 3, 2007, Padillo was separated from employment due to his poor and
failing health as reflected in a Certification dated December 4, 2007 issued by the
Bank. Not having received his claimed retirement benefits, Padillo filed on
September 23, 2008 with the NLRC Regional Arbitration Branch No. XI of Davao
City a complaint for the recovery of unpaid retirement benefits. He asserted,
among others, that the Bank had adopted a policy of granting its aging
employees early retirement packages, pointing out that one of his co-employees,
Nenita Lusan (Lusan), was accorded retirement benefits in the amount
of P348,672.7210 when she retired at the age of only fifty-three (53). The Bank
and Oropeza (respondents) countered that the claim of Padillo for retirement
benefits was not favorably acted upon for lack of any basis to grant the same. 11

The LA Ruling

On March 13, 2009, the LA issued a Decision 12 dismissing Padillos complaint but
directed the Bank to pay him the amount of P100,000.00 as financial assistance,
treated as an advance from the amounts receivable under the Philam Life
Plan.13 It found Padillo disqualified to receive any benefits under Article 300
(formerly, Article 287) of the Labor Code of the Philippines (Labor Code) 14 as he
was only fifty-five (55) years old when he resigned, while the law specifically
provides for an optional retirement age of sixty (60) and compulsory retirement
age of sixty-five (65). Dissatisfied with the LAs ruling, Padillo elevated the matter
to the NLRC.

The NLRC Ruling

On December 29, 2009, the NLRCs Fifth Division reversed and set aside the
LAs ruling and ordered respondents to pay Padillo the amount of P164,903.70 as
separation pay, on top of the P100,000.00 Philam Life Plan benefit. 15Relying on
the case of Abaquin Security and Detective Agency, Inc. v. Atienza
(Abaquin),16 the NLRC applied the Labor Code provision on termination on the
ground of disease particularly, Article 297 thereof (formerly, Article 323)
holding that while Padillo did resign, he did so only because of his poor health
condition.17 Respondents moved for reconsideration but the same was denied by
the NLRC in its Resolution dated March 31, 2010. 18Aggrieved, respondents filed
a petition for certiorari with the CA.

The CA Ruling

On June 28, 2011, the CA granted respondents petition for certiorari and
rendered a decision setting aside the NLRCs December 29, 2009 and March 31,
2010 Resolutions, thereby reinstating the LAs March 13, 2009 Decision but with
modification. It directed the respondents to pay Padillo the amount of P50,000.00
as financial assistance exclusive of the P100,000.00 Philam Life Plan benefit
which already matured on July 11, 2009.

The CA held that Padillo could not, absent any agreement with the Bank, receive
any retirement benefits pursuant to Article 300 of the Labor Code considering
that he was only fifty-five (55) years old when he retired. 19 It likewise found the
evidence insufficient to prove that the Bank has an existing company policy of
granting retirement benefits to its aging employees. Finally, citing the case of
Villaruel v. Yeo Han Guan (Villaruel),20 it pronounced that separation pay on the
ground of disease under Article 297 of the Labor Code should not be given to
Padillo because he was the one who initiated the severance of his employment
and that even before September 10, 2007, he already stopped working due to his
poor and failing health. 21

Nonetheless, Padillo was still awarded the amount of P50,000.00 as financial

assistance, in addition to the benefits accruing under the Philam Life Plan,
considering his twenty-nine (29) years of service with no derogatory record and
that he was severed not by reason of any infraction on his part but because of his
failing physical condition.22

Displeased with the CAs ruling, Padillo (now substituted by his legal heirs due to
his death on February 24, 2012) filed the instant petition contending that the CA
erred when it: (a) deviated from the factual findings of the NLRC; (b) misapplied
the case of Villaruel vis--vis the factual antecedents of this case; (c) drastically
reduced the computation of financial assistance awarded by the NLRC; (d) failed
to rule on the consequences of respondents bad faith; and (e) reversed and set
aside the NLRCs December 29, 2009 Resolution.23

The Ruling of the Court

The petition is partly meritorious.

At the outset, it must be maintained that the Labor Code provision on termination
on the ground of disease under Article 297 24 does not apply in this case,
considering that it was the petitioner and not the Bank who severed the
employment relations. As borne from the records, the clear import of Padillos
September 10, 2007 letter25 and the fact that he stopped working before the
foregoing date and never reported for work even thereafter show that it was
Padillo who voluntarily retired and that he was not terminated by the Bank.

As held in Villaruel,26 a precedent which the CA correctly applied, Article 297 of

the Labor Code contemplates a situation where the employer, and not the
employee, initiates the termination of employment on the ground of the latters
disease or sickness, viz:

A plain reading of the [Article 297 of the Labor Code] clearly presupposes that it
is the employer who terminates the services of the employee found to be
suffering from any disease and whose continued employment is prohibited by law
or is prejudicial to his health as well as to the health of his co-employees. It does
not contemplate a situation where it is the employee who severs his or her
employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of
the Omnibus Rules Implementing the Labor Code, directs that an employer shall
not terminate the services of the employee unless there is a certification by a
competent public health authority that the disease is of such nature or at such a
stage that it cannot be cured within a period of six (6) months even with proper
medical treatment. (Emphasis, underscoring and words in brackets supplied)
Thus, given the inapplicability of Article 297 of the Labor Code to the case at bar,
it necessarily follows that petitioners claim for separation pay anchored on such
provision must be denied.

Further, it is noteworthy to point out that the NLRCs application of Abaquin 27 was
gravely misplaced considering its dissimilar factual milieu with the present case.

To elucidate, a careful reading of Abaquin shows that the Court merely awarded
termination pay on the ground of disease in favor of security guard 28 Antonio
Jose because he belonged to a "special class of employees x x x deprived of the
right to ventilate demands collectively." 29 Thus, notwithstanding the fact that it
was Antonio Jose who voluntarily resigned because of his sickness and it was
not the security agency which terminated his employment, the Court held that
Jose "deserve[d] the full measure of the laws benevolence" and still granted him
separation pay because of his situation, particularly, the fact that he could not
have organized with other employees belonging to the same class for the
purpose of bargaining with their employer for greater benefits on account of the
prohibition under the old law.

In this case, it cannot be said that Padillo belonged to the same class of
employees prohibited to self-organize which, at present, consist of: (1)
managerial employees;30 and (2) confidential employees who assist persons who
formulate, determine, and effectuate management policies in the field of labor
relations.31 Therefore, absent this equitable peculiarity, termination pay on the
ground of disease under Article 297 of the Labor Code and the Courts ruling in
Abaquin should not be applied.

What remains applicable, however, is the Labor Code provision on retirement. In

particular, Article 300 of the Labor Code as amended by Republic Act Nos.
764132 and 855833 partly provides:

Art. 300. 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
employee's retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein.1wphi1
In the absence of a retirement plan or agreement 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 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.

Unless the parties provide for broader inclusions, the term one half (1/2) month
salary shall mean 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. (Emphasis and underscoring supplied)

Simply stated, in the absence of any applicable agreement, an employee must

(1) retire when he is at least sixty (60) years of age and (2) serve at least (5)
years in the company to entitle him/her to a retirement benefit of at least one-half
(1/2) month salary for every year of service, with a fraction of at least six (6)
months being considered as one whole year.

Notably, these age and tenure requirements are cumulative and non-compliance
with one negates the employees entitlement to the retirement benefits under
Article 300 of the Labor Code altogether.

In this case, it is undisputed that there exists no retirement plan, collective

bargaining agreement or any other equivalent contract between the parties which
set out the terms and condition for the retirement of employees, with the sole
exception of the Philam Life Plan which premiums had already been paid by the
Bank.

Neither was it proven that there exists an established company policy of giving
early retirement packages to the Banks aging employees. In the case of
Metropolitan Bank and Trust Company v. National Labor Relations Commission,
it has been pronounced that to be considered a company practice, the giving of
the benefits should have been done over a long period of time, and must be
shown to have been consistent and deliberate. 34 In this relation, petitioners bare
allegation of the solitary case of Lusan cannot assuming such fact to be true
sufficiently establish that the Banks grant of an early retirement package to her
(Lusan) evolved into an established company practice precisely because of the
palpable lack of the element of consistency. As such, petitioners reliance on the
Lusan incident cannot bolster their claim.
All told, in the absence of any applicable contract or any evolved company policy,
Padillo should have met the age and tenure requirements set forth under Article
300 of the Labor Code to be entitled to the retirement benefits provided therein.
Unfortunately, while Padillo was able to comply with the five (5) year tenure
requirement as he served for twenty-nine (29) years he, however, fell short
with respect to the sixty (60) year age requirement given that he was only fifty-
five (55) years old when he retired. Therefore, without prejudice to the proceeds
due under the Philam Life Plan, petitioners claim for retirement benefits must be
denied.

Nevertheless, the Court concurs with the CA that financial assistance should be
awarded but at an increased amount. With a veritable understanding that the
award of financial assistance is usually the final refuge of the laborer, considering
as well the supervening length of time which had sadly overtaken the point of
Padillos death an employee who had devoted twenty-nine (29) years of
dedicated service to the Bank the Court, in light of the dictates of social justice,
holds that the CAs financial assistance award should be increased
from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 benefit
receivable by the petitioners under the Philam Life Plan which remains
undisputed.1wphi1

Finally, the Court finds no bad faith in any of respondents actuations as they
were within their right, absent any proof of its abuse, to ignore Padillos
misplaced claim for retirement benefits. Respondents obstinate refusal to accede
to Padillos request is precisely justified by the fact that there lies no basis under
any applicable agreement or law which accords the latter the right to demand any
retirement benefits from the Bank. While the Court mindfully notes that damages
may be recoverable due to an abuse of right under Article 21 35 in conjunction with
Article 19 of the Civil Code of the Philippines, 36 the following elements must,
however, obtain: ( 1) there is a legal right or duty; (2) exercised in bad faith; and
(3) for the sole intent of prejudicing or injuring another. 37 Records reveal that
none of these elements exists in the case at bar and thus, no damages on
account of abuse of right may he recovered.

Neither can the grant of an early retirement package to Lusan show that Padillo
was unfairly discriminated upon. Records show that the same was merely an
isolated incident and petitioners have failed to show that any had faith or motive
attended such disparate treatment between Lusan and Padillo. lrrefragably also,
there is no showing that other Bank employees were accorded the same benefits
as that of Lusan which thereby dilutes the soundness of petitioners' imputation of
discrimination and bad faith. Verily, it is axiomatic that held f8ith can never be
presumed it must be proved by clear and convincing evidence. 38 This
petitioners were unable to prove in the case at bar.

WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the assailed

Court of Appeals' Decision dated June 28, 2011 Decision and October 27, 2011
Resolution in CA-G.R. SP No. 03669-MIN are hereby MODIFIED, increasing the
8Ward of financial assist8nce of F50,000.00 to P75,000.00, exclusive of the P
100,000.00 benefit under the Phil am Life Plan.

SO ORDERED.

G.R. No. 181738 January 30, 2013

GENERAL MILLING CORPORATION, Petitioner,

vs.
VIOLETA L. VIAJAR, Respondent.

DECISION

REYES, J.:

This is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court
filed by petitioner General Milling Corporation (GMC), asking the Court to set
aside the Decision2 dated September 21, 2007 and the Resolution 3dated January
30, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 01734; and to reinstate
the Decision4dated October 28, 2005 and Resolution 5 dated January 31, 2006 of
the National Labor Relations Commission (NLRC) in NLRC Case No. V-000416-
05.

The antecedent facts are as follows:

GMC is a domestic corporation with principal office in Makati City and a

manufacturing plant in Lapu-Lapu City.

In October 2003, GMC terminated the services of thirteen (13) employees for
redundancy, including herein respondent, Violeta Viajar (Viajar). GMC alleged
that it has been gradually downsizing its Vismin (Visayas-Mindanao) Operations
in Cebu where a sizeable number of positions became redundant over a period
of time.6

On December 2, 2003, Viajar filed a Complaint 7 for Illegal Dismissal with

damages against GMC, its Human Resource Department (HRD) Manager,
Johnny T. Almocera (Almocera), and Purchasing Manager, Joel Paulino before
the Regional Arbitration Branch (RAB) No. VII, NLRC, Cebu City.
In her Position Paper,8 Viajar alleged that she was employed by GMC on August
6, 1979 as Invoicing Clerk. Through the years, the respondent held various
positions in the company until she became Purchasing Staff.

On October 30, 2003, Viajar received a Letter-Memorandum dated October 27,

2003 from GMC, through Almocera, informing her that her services were no
longer needed, effective November 30, 2003 because her position as Purchasing
Staff at the Purchasing Group, Cebu Operations was deemed redundant.
Immediately thereafter, the respondent consulted her immediate superior at that
time, Thaddeus Oyas, who told her that he too was shocked upon learning about
it.9

When Viajar reported for work on October 31, 2003, almost a month before the
effectivity of her severance from the company, the guard on duty barred her from
entering GMCs premises. She was also denied access to her office computer
and was restricted from punching her daily time record in the bundy clock. 10

On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was
asked to sign certain documents, which turned out to be an "Application for
Retirement and Benefits." The respondent refused to sign and sought clarification
because she did not apply for retirement and instead asserted that her services
were terminated for alleged redundancy. Almocera told her that her signature on
the Application for Retirement and Benefits was needed to process her
separation pay. The respondent also claimed that between the period of July 4,
2003 and October 13, 2003, GMC hired fifteen (15) new employees which
aroused her suspicion that her dismissal was not necessary.11 At the time of her
termination, the respondent was receiving the salary rate of P19,651.41 per
month.12

For its part, the petitioner insisted that Viajars dismissal was due to the
redundancy of her position. GMC reasoned out that it was forced to terminate the
services of the respondent because of the economic setbacks the company was
suffering which affected the companys profitability, and the continuing rise of its
operating and interest expenditures. Redundancy was part of the petitioners
concrete and actual cost reduction measures. GMC also presented the required
"Establishment Termination Report" which it filed before the Department of Labor
and Employment (DOLE) on October 28, 2003, involving thirteen (13) of its
employees, including Viajar. Subsequently, GMC issued to the respondent two
(2) checks respectively amounting to P440,253.02 and P21,211.35 as her
separation pay.13

On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City,
rendered a Decision, the decretal portion of which reads:

WHEREFORE, foregoing considered, judgment is hereby rendered declaring that

respondents acted in good faith in terminating the complainant from the service
due to redundancy of works, thus, complainants refusal to accept the payment of
her allowed separation pay and other benefits under the law is NOT JUSTIFIED
both in fact and law, and so, therefore complainants case for illegal dismissal
against the herein respondents and so are complainants monetary claims are
hereby ordered DISMISSED for lack of merit.

SO ORDERED.14

The LA found that the respondent was properly notified on October 30, 2003
through a Letter-Memorandum dated October 27, 2003, signed by GMCs HRD
Manager Almocera, that her position as Purchasing Staff had been declared
redundant. It also found that the petitioner submitted to the DOLE on October 28,
2003 the "Establishment Termination Report." The LA even faulted the
respondent for not questioning the companys action before the DOLE Regional
Office, Region VII, Cebu City so as to compel the petitioner to prove that Viajars
position was indeed redundant. It ruled that the petitioner complied with the
requirements under Article 283 of the Labor Code, considering that the nation
was then experiencing an economic downturn and that GMC must adopt
measures for its survival.15

Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the
NLRC promulgated its decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring

the validity of complainants termination due to redundancy is hereby AFFIRMED.
Respondent General Milling Corporation is hereby ordered to pay complainants
separation pay in the amount of P461,464.37.

SO ORDERED.16

The NLRC, however, stated that it did not agree with the LA that Viajar should be
faulted for failing to question the petitioners declaration of redundancy before the
DOLE Regional Office, Region VII, Cebu City. It was not imperative for Viajar to
challenge the validity of her termination due to redundancy.17 Notwithstanding,
the NLRC affirmed the findings of the LA that Viajars dismissal was legal
considering that GMC complied with the requirements provided for under Article
283 of the Labor Code and existing jurisprudence, particularly citing Asian
Alcohol Corporation v. NLRC.18 The NLRC further stated that Viajar was aware of
GMCs "reduction mode," as shown in the GMC Vismin Manpower Complement,
as follows:

Year Manpower Profile No. of Employees

Terminated (Redundancy)
2000 795
2001 782
2002 736 41
 2003 721 24
2004 697 16
2005 696 (As of June 2005) 0619

The NLRC stated that the characterization of positions as redundant is an

exercise of the employers business judgment and prerogative. It also ruled that
the petitioner did not exercise this prerogative in bad faith and that the payment
of separation pay in the amount of P461,464.37 was in compliance with Article
283 of the Labor Code.20

Respondent Viajar filed a Motion for Reconsideration which was denied by the
NLRC in its Resolution dated January 31, 2006.

Undaunted, Viajar filed a petition for certiorari before the CA. In the now assailed
Decision dated September 21, 2007, the CA granted the petition, reversing the
decision of the NLRC in the following manner:

WHEREFORE, premises considered, this Petition for Certiorari is GRANTED.

The Decision, dated 28 October 2005, and Resolution, dated 31 January 2006
respectively, of public respondent National Labor Relations Commission-Fourth
Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-12-2495-03) are
SET ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and
ordering respondent to reinstate petitioner without loss of seniority rights and
other privileges with full backwages inclusive of allowances and other benefits
computed from the time she was dismissed on 30 November 2003 up to the date
of actual reinstatement. Further, moral and exemplary damages, in the amount of
Fifty Thousand Pesos ([P]50,000.00) each; and attorneys fees equivalent to ten
percent (10%) of the total monetary award, are awarded.

Costs against respondent. SO ORDERED.21

Aggrieved by the reversal of the NLRC decision, GMC filed a motion for
reconsideration. However, in its Resolution dated January 30, 2008, the CA
denied the same; hence, this petition.

The petitioner raises the following issues, to wit:

I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION

OF JANUARY 30, 2008 OF THE COURT OF APPEALS ARE CONTRARY
TO LAW AND ESTABLISHED JURISPRUDENCE.

II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION

OF JANUARY 30, 2008 OF THE COURT OF APPEALS VIOLATE THE
LAW AND ESTABLISHED JURISPRUDENCE ON THE OBSERVANCE
OF RESPECT AND FINALITY TO FACTUAL FINDINGS OF THE
NATIONAL LABOR RELATIONS COMMISSION.
 III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN ITS DECISION OF SEPTEMBER 21, 2007 AND
RESOLUTION OF JANUARY 30, 2008 AS THE SAME ARE CONTRARY
TO THE EVIDENCE ON RECORD.22

The petition is denied.

The petitioner argues that the factual findings of the NLRC, affirming that of the
LA must be accorded respect and finality as it is supported by evidence on
record. Both the LA and the NLRC found the petitioners evidence sufficient to
terminate the employment of respondent on the ground of redundancy. The
evidence also shows that GMC has complied with the procedural and substantive
requirements for a valid termination. There was, therefore, no reason for the CA
to disturb the factual findings of the NLRC.23

The rule is that factual findings of quasi-judicial agencies such as the NLRC are
generally accorded not only respect, but at times, even finality because of the
special knowledge and expertise gained by these agencies from handling
matters falling under their specialized jurisdiction. 24 It is also settled that this
Court is not a trier of facts and does not normally embark in the evaluation of
evidence adduced during trial.25 This rule, however, allows for exceptions. One of
these exceptions covers instances when the findings of fact of the trial court, or
of the quasi-judicial agencies concerned, are conflicting or contradictory with
those of the CA. When there is a variance in the factual findings, it is incumbent
upon the Court to re-examine the facts once again. 26

Furthermore, another exception to the general rule is when the said findings are
not supported by substantial evidence or if on the basis of the available facts, the
inference or conclusion arrived at is manifestly erroneous. 27Factual findings of
administrative agencies are not infallible and will be set aside when they fail the
test of arbitrariness.28 In the instant case, the Court agrees with the CA that the
conclusions arrived at by the LA and the NLRC are manifestly erroneous.

GMC claims that Viajar was validly dismissed on the ground of redundancy which
is one of the authorized causes for termination of employment. The petitioner
asserts that it has observed the procedure provided by law and that the same
was done in good faith. To justify the respondents dismissal, the petitioner
presented: (i) the notification Letter-Memorandum dated October 27, 2003
addressed to the respondent which was received on October 30, 2003; 29 (ii) the
"Establishment Termination Report" as prescribed by the DOLE; 30 (iii) the two (2)
checks issued in the respondents name amounting to P440,253.02
and P21,211.35 as separation pay;31 and (iv) the list of dismissed employees as
of June 6, 2006 to show that GMC was in a "reduction mode." 32 Both the LA and
the NLRC found these sufficient to prove that the dismissal on the ground of
redundancy was done in good faith.
The Court does not agree.

Article 283 of the Labor Code provides that redundancy is one of the authorized
causes for dismissal. It reads:

Article 283. Closure of establishment and reduction of personnel. The employer

may also terminate the employment of any employee due to the installment of
labor-saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written
notice on the worker and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or
reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction
of at least six (6) months shall be considered one (1) whole year. (Emphasis
supplied)

From the above provision, it is imperative that the employer must comply with the
requirements for a valid implementation of the companys redundancy program,
to wit: (a) the employer must serve a written notice to the affected employees
and the DOLE at least one (1) month before the intended date of retrenchment;
(b) the employer must pay the employees a separation pay equivalent to at least
one month pay or at least one month pay for every year of service, whichever is
higher; (c) the employer must abolish the redundant positions in good faith; and
(d) the employer must set fair and reasonable criteria in ascertaining which
positions are redundant and may be abolished. 33

In Smart Communications, Inc., v. Astorga,34 the Court held that:

The nature of redundancy as an authorized cause for dismissal is explained in

the leading case of Wiltshire File Co., Inc. v. National Labor Relations
Commission, viz:

"x x x redundancy in an employers personnel force necessarily or even ordinarily

refers to duplication of work. That no other person was holding the same position
that private respondent held prior to termination of his services does not show
that his position had not become redundant. Indeed, in any well organized
business enterprise, it would be surprising to find duplication of work and two (2)
or more people doing the work of one person. We believe that redundancy, for
purposes of the Labor Code, exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number of factors,
such as overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken
by the enterprise."

The characterization of an employees services as superfluous or no longer

necessary and, therefore, properly terminable, is an exercise of business
judgment on the part of the employer. The wisdom and soundness of such
characterization or decision is not subject to discretionary review provided, of
course, that a violation of law or arbitrary or malicious action is not
shown.35 (Emphasis supplied and citations omitted)

While it is true that the "characterization of an employees services as

superfluous or no longer necessary and, therefore, properly terminable, is an
exercise of business judgment on the part of the employer," 36 the exercise of
such judgment, however, must not be in violation of the law, and must not be
arbitrary or malicious. The Court has always stressed that a company cannot
simply declare redundancy without basis. To exhibit its good faith and that there
was a fair and reasonable criteria in ascertaining redundant positions, a company
claiming to be over manned must produce adequate proof of the same.

We reiterate what was held in Caltex (Phils.), Inc. v. NLRC: 37

In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a
company to merely declare that it has become overmanned (sic). It must produce
adequate proof of such redundancy to justify the dismissal of the affected
employees.

In Panlilio v. National Labor Relations Commission, we held that evidence must

be presented to substantiate redundancy such as but not limited to the new
staffing pattern, feasibility studies/proposal, on the viability of the newly created
positions, job description and the approval by the management of the
restructuring.38 (Emphasis supplied and citations omitted)

In the instant case, the Court agrees with the CA when it held that the petitioner
failed to present substantial proof to support GMCs general allegations of
redundancy. As shown from the records, the petitioner simply presented as its
evidence of good faith and compliance with the law the notification letter to
respondent Viajar;39 the "Establishment Termination Report" it submitted to the
DOLE Office;40 the two (2) checks issued in the respondents name amounting
to P440,253.02 and P21,211.35;41 and the list of terminated employees as of
June 6, 2006.42 We agree with the CA that these are not enough proof for the
valid termination of Viajars employment on the ground of redundancy.
The letter-memorandum which contains general allegations is not enough to
convince this Court that Viajars termination of employment due to redundancy
was warranted under the circumstances. There is no showing that GMC made an
evaluation of the existing positions and their effect to the company. Neither did
GMC exert efforts to present tangible proof that it was experiencing business
slow down or over hiring. The "Establishment Termination Report" it submitted to
the DOLE Office did not account for anything to justify declaring the positions
redundant. The Court notes that the list of terminated employees presented by
GMC was a list taken as of June 6, 2006 or almost three years after the
respondent was illegally dismissed and almost a year after the LA promulgated
its decision. While the petitioner had been harping that it was on a "reduction
mode" of its employees, it has not presented any evidence (such as new staffing
pattern, feasibility studies or proposal, viability of newly created positions, job
description and the approval of the management of the restructuring, 43 audited
financial documents like balance sheets, annual income tax returns and
others)44 which could readily show that the companys declaration of redundant
positions was justified. Such proofs, if presented, would suffice to show the good
faith on the part of the employer or that this business prerogative was not
whimsically exercised in terminating respondents employment on the ground of
redundancy. Unfortunately, these are wanting in the instant case. The petitioner
only advanced a self-serving general claim that it was experiencing business
reverses and that there was a need to reduce its manpower complement.

On the other hand, the respondent presented proof that the petitioner had been
hiring new employees while it was firing the old ones, 45 negating the claim of
redundancy. It must, however, be pointed out that in termination cases, like the
one before us, the burden of proving that the dismissal of the employees was for
a valid and authorized cause rests on the employer. It was incumbent upon the
petitioner to show by substantial evidence that the termination of the employment
of the respondent was validly made and failure to discharge that duty would
mean that the dismissal is not justified and therefore illegal. 46

Furthermore, the Court cannot overlook the fact that Viajar was prohibited from
entering the company premises even before the effectivity date of termination;
and was compelled to sign an "Application for Retirement and Benefits." These
acts exhibit the petitioners bad faith since it cannot be denied that the
respondent was still entitled to report for work until November 30, 2003. The
demand for her to sign the "Application for Retirement and Benefits" also
contravenes the fact that she was terminated due to redundancy. Indeed, there is
a difference between voluntary retirement of an employee and forced termination
due to authorized causes.

In Quevedo v. Benguet Electric Cooperative, Incorporated, 47 this Court explained

the difference between retirement and termination due to redundancy, to wit:
While termination of employment and retirement from service are common
modes of ending employment, they are mutually exclusive, with varying juridical
bases and resulting benefits. Retirement from service is contractual (i.e. based
on the bilateral agreement of the employer and employee), while termination of
employment is statutory (i.e. governed by the Labor Code and other related laws
as to its grounds, benefits and procedure). The benefits resulting from
termination vary, depending on the cause. For retirement, Article 287 of the Labor
Code gives leeway to the parties to stipulate above a floor of benefits.

The line between voluntary and involuntary retirement is thin but it is one which
this Court has drawn. Voluntary retirement cuts employment ties leaving no
residual employer liability; involuntary retirement amounts to a discharge,
rendering the employer liable for termination without cause. The employees
intent is the focal point of analysis. In determining such intent, the fairness of the
process governing the retirement decision, the payment of stipulated benefits,
and the absence of badges of intimidation or coercion are relevant
parameters.48 (Emphasis supplied and citations omitted)

Clearly, the instant case is not about retirement since the term has its peculiar
meaning and is governed by Article 287 of the Labor Code. Rather, this is a case
of termination due to redundancy under Article 283 of the Labor Code. Thus, the
demand of GMC for the respondent to sign an "Application for Retirement and
Benefits" is really suspect.

Finally, the Court agrees with the CA that the award of moral and exemplary
damages is proper.1wphi1 The Court has awarded moral damages in
termination cases when bad faith, malice or fraud attend the employees
dismissal or where the act oppresses labor, or where it was done in a manner
contrary to morals, good customs or public policy.49 We quote with favor the
findings of the CA:

We also award moral and exemplary damages to petitioner. While it is true that
good faith is presumed, the circumstances surrounding the dismissal of petitioner
negate its existence. Moral damages may be recovered only where the dismissal
of the employee was tainted by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to morals, good customs or
public policy while exemplary damages are recoverable only if the dismissal was
done in a wanton, oppressive, or malevolent manner. To reiterate, immediately
after receipt of her termination letter which was effective on 30 November 2003,
petitioner was no longer treated as an employee of respondent as early as the
31st of October 2003; she was already barred from entering the company
premises; she was deprived access to her office computer; and she was
excluded from the bandy [sic] clock. She was also made to sign documents,
including an "APPLICATION FOR RETIREMENT AND BENEFITS" in the guise
of payment of her separation pay. When petitioner confronted her immediate
superior regarding her termination, the latters shock aggravated her confusion
and suffering. She also learned about the employment of a number of new
employees, several of whom were even employed in her former department.
Petitioner likewise suffered mental torture brought about by her termination even
though its cause was not clear and substantiated. 50 (Citations omitted)

WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007
of the Court of Appeals, as well as its Resolution dated January 30, 2008 in CA-
G.R. SP No. 01734, are hereby AFFIRMED.

SO ORDERED.

G.R. No. 160138 January 16, 2013

AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL,

LOURDES T. INDUCIL, JOCELYN T. INDUCIL and MA. CONCEPCION I.
DONATO, Petitioners,
vs.
PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD
VILLOTA, FELINO E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S.
BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B.
MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V.
BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA, WILLIAM
A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED,
ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO
LUMBAO, JR., and RENATO SARABUNO, Respondents.

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

G.R. No. 160192

PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD

VILLOTA, FELINO E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S.
BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B.
MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V.
BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA, WILLIAM
A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED,
ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO
LUMBAO, JR., and RENA TO SARABUNO, Petitioners,
vs.
AUTOMOTIVE ENGINEREBUILDERS, INC., and ANTONIO T.
INDUCIL, Respondents.

RESOLUTION

MENDOZA, J.:

For resolution is the Motion for Partial Reconsideration filed by Progresibong

Unyon Ng Mga Manggagawa Sa AER (Unyon) which questioned the Courts July
13, 2011 Decision insofar as it failed to award backwages to fourteen (14) of its
members. The decretal portion of the decision reads:

WHEREFORE, the petitions are DENIED. Accordingly, the complaining

employees should be reinstated without backwages. If reinstatement is no longer
feasible, the concerned employees should be given separation pay up to the date
set for their return in lieu of reinstatement. 1

In arriving at said determination, the Court found out both parties were at fault or
in pari delicto and must bear the consequences of their own wrongdoing. 2 Thus,
it decreed that the striking employees must be restored to their respective
positions prior to the illegal strike and illegal lockout.

Records disclose that this labor controversy started when both parties filed
charges against each other, blaming the other party for violating labor laws.
Thirty-two (32) employees filed and signed a complaint, 3 dated February 18,
1999, against Automotive Engine Rebuilders, Inc. (AER). The complaint prayed
that AER be declared guilty of Unfair Labor Practices, Illegal Dismissal, Illegal
Suspension, and Run-away shop; that the complainants be reinstated; and that
they be paid "full backwages and without loss of seniority rights and privileges,
payment of wages during suspension, plus moral and exemplary damages and
attorneys fees."4

The names of the 32 complaining employees are as follows:

1. Felino Agustin

2. Ruperto Mariano II

3. Eduardo Brizuela

4. Otilio Rabino
5. Arnold Rodriguez

6. Froilan Madamba

7. Ferdinand Flores

8. Jonathan Taborda

9. Rodolfo Mainit, Jr.

10. Danilo Quiboy

11. Christopher Nolasco

12. Roger Belatcha

13. Claud Moncel

14. Cleofas dela Buena, Jr.

15. Edwin Mendoza

16. Herminio Papa

17. Oscar Macaranas

18. William Ritual

19. Roberto Caldeo

20. Rafael Gacad

21. James Caampued

22. Esperidion Lopez, Jr.

23. Frisco Lorenzo, Jr.

24. Bernardino Acosta, Jr.

25. Benson Pingol

26. Tammy Punsalan

 27. Edward Ferrancol

28. Crisanto Lumbao, Jr.

29. Arnold Villota

30. Menching Mariano, Jr.

31. Carlos Carolino

32. Renato Sarabuno

Out of the 32, six (6) resigned and signed waivers and quitclaims, namely:

1. Oscar Macaranas

2. Bernardino Acosta

3. Ferdinand Flores

4. Benson Pingol

5. Otillo Rabino

6. Jonathan Taborda

On the other hand, the earlier complaint 5 filed by AER against Unyon and
eighteen (18) of its members for illegal concerted activities prayed that, after
notice and hearing, judgment be rendered as follows:

1. Finding respondents guilty of unfair labor practice and illegal concerted

activity;

2. Finding respondents guilty of abandonment of work, serious

misconduct, gross disrespect, commission of felonies against the
complainant and their respective officers, threats, coercion and
intimidation;

3. Penalizing complainants with dismissal and/or termination of

employment; and
 4. Adjudging respondents to be jointly and solidarily liable to complainant
for moral damages in the sum of P500,000.00, exemplary damages in the
sum of P500,000.00 and attorneys fees and costs.

The names of the 18 workers charged with illegal strike by AER are as follows:

1. Felino Agustin

2. Eduardo Brizuela

3. Otilio Rabino

4. Ferdinand Flores

5. Jonathan Taborda

6. Rodolfo Mainit, Jr.

7. Christopher Nolasco

8. Claud Moncel

9. Cleofas dela Buena

10. Herminio Papa

11. Oscar Macaranas

12. William Ritual

13. Rafael Gacad

14. James Caampued

15. Benson Pingol

16. Frisco Lorenzo, Jr.

17. Bernardino Acosta, Jr.

18. Esperidion Lopez, Jr.

AER likewise suspended seven (7) union members who tested positive for illegal
drugs, namely:

1. Froilan Madamba

2. Arnold Rodriguez

3. Roberto Caldeo

4. Roger Bilatcha

5. Ruperto Mariano

6. Edwin Fabian

7. Nazario Madala

Out of the seven (7) suspended employees, only Edwin Fabian and Nazario
Madala were allowed by AER to report back to work. The other five (5)
suspended employees were not admitted by AER without first submitting the
required medical certificate attesting to their fitness to work.

On August 9, 2001, after the parties submitted their respective position

papers,6 the Labor Arbiter (LA) rendered a decision 7 in favor of Unyon by
directing AER to reinstate the concerned employees but without backwages
effective October 16, 2001. Both parties filed their respective appeals 8 with the
National Labor Relations Commission (NLRC).

On March 5, 2002, the NLRC issued its Resolution 9 modifying the LA decision by
setting aside the order of reinstatement as it ruled out illegal dismissal. The
NLRC likewise ruled that the concerned employees had no valid basis in
conducting a strike. On April 19, 2002, Unyon filed a motion for
reconsideration10 insisting, among others, that AER was guilty of unfair labor
practice, illegal suspension and illegal dismissal. Unyon also argued that since
AER charged only 18 of the 32 employees with illegal strike, the employees who
were not included in the said charge should have been admitted back to work by
AER. Unyon also claimed that there was no allegation that these employees,
who were not included in AERs charge for illegal strike, were involved in the
January 28, 1999 incident.11

After the denial of their motion for reconsideration, Unyon and the concerned
employees filed a petition12 before the Court of Appeals (CA). Unyon reiterated its
argument that AER should admit back to work those excluded from its list of 18
employees charged with illegal strike.13

On June 27, 2003, the CA rendered a decision, 14 the dispositive portion of which
reads, as follows:

WHEREFORE, premises considered, the petition is GRANTED. Respondents

are hereby directed to reinstate the petitioners effective immediately but without
backwages, except those who were tested positive for illegal drugs and have
failed to submit their respective medical certificates.

On October 1, 2003, ruling on the motion for partial reconsideration filed by

Unyon, the CA rendered the assailed Amended Decision, 15 ordering the
immediate reinstatement of all the suspended employees without backwages.
Thus,

WHEREFORE, the partial motion for reconsideration is GRANTED insofar as the

reinstatement of the suspended employees is concerned. This Courts decision
dated June 27, 2003 is hereby MODIFIED. Private respondents are hereby
directed to reinstate all petitioners immediately without backwages.

Unsatisfied, both parties filed the present consolidated petitions. Unyon argued
that the CA erred in not awarding backwages to the suspended employees who
were ordered reinstated. AER, on the other hand, argued that the CA erred in
ordering the reinstatement of the suspended employees.

On July 13, 2011, this Court rendered a decision, 16 the dispositive portion of
which reads, as follows:

WHEREFORE, the petitions are DENIED. Accordingly, the complaining

employees should be reinstated without backwages. If reinstatement is no longer
feasible, the concerned employees should be given separation pay up to the date
set for their return in lieu of reinstatement.

Unyon filed the subject Motion for Partial Reconsideration 17 questioning the
Courts July 13, 2011 Decision insofar as it failed to award backwages to fourteen
(14) of its members.

Unyon argues that backwages should have been awarded to the 14 employees
who were excluded from the complaint filed by AER and that the latter should
have reinstated them immediately because they did not have any case at all.
AER was directed to file its comment. Its Comment, 18 however, failed to address
the issue except to say that the motion for partial reconsideration was pro-forma.

After going over the records again, the Court holds that only nine (9) of the
fourteen (14) excluded employees deserve to be reinstated immediately with
backwages.

Records disclose that thirty-two (32) employees filed a complaint for illegal
suspension and unfair labor practice against AER. Out of these 32 workers, only
eighteen (18) of them were charged by AER with illegal strike leaving fourteen
(14) of them excluded from its complaint. The names of these 14 employees are
as follows:

1. Ruperto Mariano II

2. Arnold Rodriguez

3. Froilan Madamba

4. Danilo Quiboy

5. Roger Belatcha

6. Edwin Mendoza

7. Roberto Caldeo

8. Tammy Punsalan

9. Edward Ferrancol

10. Crisanto Lumbao, Jr.

11. Arnold Villota

12. Menching Mariano, Jr.

13. Carlos Carolino

14. Renato Sarabuno

Technically, as no charges for illegal strike were filed against these 14
employees, they cannot be among those found guilty of illegal strike. They
cannot be considered in pari delicto. They should be reinstated and given their
backwages.

Out of these 14 employees, however, five (5) failed to write their names and affix
their signatures in the Membership Resolution 19 attached to the petition filed
before the CA, authorizing Union President Arnold Villota to represent them. It
must be noted that Arnold Villota signed as the Affiant in the Verification and
Certification by virtue of the Membership Resolution. 20 The names of these 5
employees are:

1. Edwin Mendoza

2. Tammy Punzalan

3. Edward Ferrancol

4. Menching Mariano, Jr.

5. Carlos Carolina

Because of their failure to affix their names and signatures in the Membership
Resolution, Edwin Mendoza, Tammy Punzalan, Edward Ferrancol, Menching
Mariano, Jr. and Carlos Carolina cannot be granted the relief that Unyon wanted
for them in its Motion for Partial Reconsideration.

Only the following nine (9) employees who signed their names in the petition can
be granted the relief prayed for therein, namely:

1. Ruperto Mariano II

2. Arnold Rodriguez

3. Froilan Madamba

4. Danilo Quiboy

5. Roger Belatcha

6. Roberto Caldeo
 7. Crisanto Lumbao, Jr.

8. Arnold Villota

9. Renato Sarabuno

These excluded nine (9) workers, who signed their names in their petition before
the CA, deserve to be reinstated immediately and gra:1ted backwages. It is basic
in jurisprudence that illegally dismissed workers are entitled to reinstatement with
back wages pi us interest at the legal rate. 21

As stated in the Amended Decision of the CA, which the Court effectively
affirmed after denying the petition of both parties, the reinstatement shall be
"without prejudice to the right of private respondent AER to subject them for
further medical check-up to determine if subject petitioners are drug
dependents."22

WHEREFORE, the Motion for Pa1iial Reconsideration filed by Progresibong

Unyon Ng Mga Manggagawa Sa AER is GRANTED only insofar as the nine (9)
employees are concerned, namely: Ruperto Mariano II, Arnold Rodriguez, Froilan
Madamba, Danilo Quiboy, Roger Belateha, Roberto Caldeo, Crisanto Lumbao,
Jr., Arnold Villota, and Renato Sarabuno.1wphi1

Accordingly, the July 13, 2011 Decision is hereby MODIFIED in that the
aforementioned nine (9) workers are entitled to be reinstated and granted
backwages with interest at the rate of six percent (6%) per annum which shall be
increased to twelve percent (12%) after the finality of this judgment.

SO ORDERED.
G.R. No. 170054 January 21, 2013

GOYA, INC., Petitioner,

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

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure
seeks to reverse and set aside the June 16, 2005 Decision 1 and October 12,
2005 Resolution2 of the Court of Appeals in CA-G.R. SP No. 87335, which
sustained the October 26, 2004 Decision 3 of Voluntary Arbitrator Bienvenido E.
Laguesma, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring that the Company is NOT

guilty of unfair labor practice in engaging the services of PESO.

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

The facts are simple and appear to be undisputed.

Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic

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

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

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

Section 4. Categories of Employees. The parties agree on the following

categories of employees:

(a) Probationary Employee. One hired to occupy a regular rank-and-file

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

(b) Regular Employee. An employee who has satisfactorily completed his

probationary period and automatically granted regular employment status in the
Company.

(c) Casual Employee, One hired by the Company to perform occasional or

seasonal work directly connected with the regular operations of the Company, or
one hired for specific projects of limited duration not connected directly with the
regular operations of the Company.

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

Section 1. Condition of Employment. As a condition of continued employment

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

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

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

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

We examined the CBA provision Section 4, Article I of the CBAallegedly violated

by the Company and indeed the agreement prescribes three (3) categories of
employees in the Company and provides for the definition, functions and duties
of each. Material to the case at hand is the definition as regards the functions of
a casual employee described as follows:

Casual Employee One hired by the COMPANY to perform occasional or

seasonal work directly connected with the regular operations of the COMPANY,
or one hired for specific projects of limited duration not connected directly with
the regular operations of the COMPANY.

While the foregoing agreement between the parties did eliminate managements
prerogative of outsourcing parts of its operations, it serves as a limitation on such
prerogative particularly if it involves functions or duties specified under the
aforequoted agreement. It is clear that the parties agreed that in the event that
the Company needs to engage the services of additional workers who will
perform "occasional or seasonal work directly connected with the regular
operations of the COMPANY," or "specific projects of limited duration not
connected directly with the regular operations of the COMPANY", the Company
can hire casual employees which is akin to contractual employees. If we note the
Companys own declaration that PESO was engaged to perform "temporary or
occasional services" (See the Companys Position Paper, at p. 1), then it should
have directly hired the services of casual employees rather than do it through
PESO.

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

While the Union moved for partial reconsideration of the VA Decision, 8 the
Company immediately filed a petition for review 9 before the Court of Appeals
(CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the
directive to observe and comply with the CBA commitment pertaining to the hiring
of casual employees when necessitated by business circumstances. Professing
that such order was not covered by the sole issue submitted for voluntary
arbitration, the Company assigned the following errors:

THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER

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

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND

PALPABLE ERROR IN DECLARING THAT THE ENGAGEMENT OF PESO IS
NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.11
On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of
the controversy, it held:

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

x x x x While the engagement of PESO is in violation of Section 4, Article I of the

CBA, it does not constitute unfair labor practice as it (sic) not characterized under
the law as a gross violation of the CBA. Violations of a CBA, except those which
are gross in character, shall no longer be treated as unfair labor practice. Gross
violations of a CBA means flagrant and/or malicious refusal to comply with the
economic provisions of such agreement. x x x

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

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

xxxx

A careful reading of the above-enumerated categories of employees reveals that

the PESO contractual employees do not fall within the enumerated categories of
employees stated in the CBA of the parties. Following the said categories, the
Company should have observed and complied with the provision of their CBA.
Since the Company had admitted that it engaged the services of PESO to
perform temporary or occasional services which is akin to those performed by
casual employees, the Company should have tapped the services of casual
employees instead of engaging PESO.
In justifying its act, the Company posits that its engagement of PESO was a
management prerogative. It bears stressing that a management prerogative
refers to the right of the employer to regulate all aspects of employment, such as
the freedom to prescribe work assignments, working methods, processes to be
followed, regulation regarding transfer of employees, supervision of their work,
lay-off and discipline, and dismissal and recall of work, presupposing the
existence of employer-employee relationship. On the basis of the foregoing
definition, the Companys engagement of PESO was indeed a management
prerogative. This is in consonance with the pronouncement of the Supreme Court
in the case of Manila Electric Company vs. Quisumbing where it ruled that
contracting out of services is an exercise of business judgment or management
prerogative.

This management prerogative of contracting out services, however, is not without

limitation. In contracting out services, the management must be motivated by
good faith and the contracting out should not be resorted to circumvent the law or
must not have been the result of malicious arbitrary actions. In the case at bench,
the CBA of the parties has already provided for the categories of the employees
in the Companysestablishment. These categories of employees particularly with
respect to casual employees serve as limitation to the Companys prerogative to
outsource parts of its operations especially when hiring contractual employees.
As stated earlier, the work to be performed by PESO was similar to that of the
casual employees. With the provision on casual employees, the hiring of PESO
contractual employees, therefore, is not in keeping with the spirit and intent of
their CBA. (Citations omitted)12

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

Incidentally, on July 16, 2009, the Company filed a Manifestation 15 informing this
Court that its stockholders and directors unanimously voted to shorten the
Companys corporate existence only until June 30, 2006, and that the three-year
period allowed by law for liquidation of the Companys affairs already expired on
June 30, 2009. Referring to Gelano v. Court of Appeals, 16 Public Interest Center,
Inc. v. Elma,17 and Atienza v. Villarosa,18 it urged Us, however, to still resolve the
case for future guidance of the bench and the bar as the issue raised herein
allegedly calls for a clarification of a legal principle, specifically, whether the VA is
empowered to rule on a matter not covered by the issue submitted for arbitration.

Even if this Court would brush aside technicality by ignoring the supervening
event that renders this case moot and academic 19 due to the permanent
cessation of the Companys business operation on June 30, 2009, the arguments
raised in this petition still fail to convince Us.

We confirm that the VA ruled on a matter that is covered by the sole issue
submitted for voluntary arbitration. Resultantly, the CA did not commit serious
error when it sustained the ruling that the hiring of contractual employees from
PESO was not in keeping with the intent and spirit of the CBA. Indeed, the
opinion of the VA is germane to, or, in the words of the CA, "interrelated and
intertwined with," the sole issue submitted for resolution by the parties. This
being said, the Companys invocation of Sections 4 and 5, Rule IV 20 and Section
5, Rule VI21 of the Revised Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings dated October 15, 2004 issued by the NCMB is plainly
out of order.

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

Generally, the arbitrator is expected to decide only those questions expressly

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

In general, the arbitrator is expected to decide those questions expressly stated

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

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

By the same token, the issue of regularization should be viewed as two-tiered

issue. While the submission agreement mentioned only the determination of the
date or regularization, law and jurisprudence give the voluntary arbitrator enough
leeway of authority as well as adequate prerogative to accomplish the reason for
which the law on voluntary arbitration was created speedy labor justice. It bears
stressing that the underlying reason why this case arose is to settle, once and for
all, the ultimate question of whether respondent employees are entitled to higher
benefits. To require them to file another action for payment of such benefits
would certainly undermine labor proceedings and contravene the constitutional
mandate providing full protection to labor.23
Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA
Decision. Said case reaffirms the plenary jurisdiction and authority of the
voluntary arbitrator to interpret the CBA and to determine the scope of his/her
own authority. Subject to judicial review, the leeway of authority as well as
adequate prerogative is aimed at accomplishing the rationale of the law on
voluntary arbitration speedy labor justice. In this case, a complete and final
adjudication of the dispute between the parties necessarily called for the
resolution of the related and incidental issue of whether the Company still
violated the CBA but without being guilty of ULP as, needless to state, ULP is
committed only if there is gross violation of the agreement.

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

A collective bargaining agreement is the law between the parties:

It is familiar and fundamental doctrine in labor law that the CBA is the law
between the parties and they are obliged to comply with its provisions. We said
so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:

A collective bargaining agreement or CBA refers to the negotiated contract

between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a bargaining
unit.1wphi1 As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs, public order or
public policy. Thus, where the CBA is clear and unambiguous, it becomes the law
between the parties and compliance therewith is mandated by the express policy
of the law.

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

In this case, Section 4, Article I (on categories of employees) of the CBA between
the Company and the Union must be read in conjunction with its Section 1,
Article III (on union security). Both are interconnected and must be given full
force and effect. Also, these provisions are clear and unambiguous. The terms
are explicit and the language of the CBA is not susceptible to any other
interpretation. Hence, the literal meaning should prevail. As repeatedly held, the
exercise of management prerogative is not unlimited; it is subject to the
limitations found in law, collective bargaining agreement or the general principles
of fair play and justice 25 Evidently, this case has one of the restrictions- the
presence of specific CBA provisions-unlike in San Miguel Corporation Employees
Union-PTGWO v. Bersamira,26 De Ocampo v. NLRC,27 Asian Alcohol Corporation
v. NLRC,28 and Serrano v. NLRC29cited by the Company. To reiterate, the CBA is
the norm of conduct between the parties and compliance therewith is mandated
by the express policy of the law.30

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

SO ORDERED.
G.R. No. 196156 January 15, 2014

VISAYAS COMMUNITY MEDICAL CENTER (VCMC), Formerly known as

METRO CEBU COMMUNITY HOSPITAL (MCCH), Petitioner,
vs.
ERMA YBALLE, NELIA ANGEL, ELEUTERIA CORTEZ and EVELYN
ONG, Respondents.

DECISION

VILLARAMA, JR., J.:

The present petition was included in the four consolidated cases previously
decided by this Court.1 However, its reinstatement and separate disposition
became necessary due to oversight in the issuance of the order of consolidation.

The Facts

Respondents were hired as staff nurses (Ong and Angel) and midwives (Yballe
and Cortez) by petitioner Visayas Community Medical Center (VCMC), formerly
the Metro Cebu Community Hospital, Inc. (MCCHI). MCCHI is a non-stock, non-
profit corporation which operates the Metro Cebu Community Hospital (MCCH), a
tertiary medical institution owned by the United Church of Christ in the
Philippines (UCCP).

Considering the similar factual setting, we quote the relevant portions of the
narration of facts in our Decision dated December 7, 2011 in Abaria v. NLRC 2:

The National Federation of Labor (NFL) is the exclusive bargaining

representative of the rank-and-file employees of MCCHI. Under the 1987 and
1991 Collective Bargaining Agreements (CBAs), the signatories were Ciriaco B.
Pongasi, Sr. for MCCHI, and Atty. Armando M. Alforque (NFL Legal Counsel) and
Paterno A. Lumapguid as President of NFL-MCCH Chapter. In the CBA effective
from January 1994 until December 31, 1995, the signatories were Sheila E. Buot
as Board of Trustees Chairman, Rev. Iyoy as MCCH Administrator and Atty.
Fernando Yu as Legal Counsel of NFL, while Perla Nava, President of
Nagkahiusang Mamumuo sa MCCH (NAMA-MCCH-NFL) signed the Proof of
Posting.

On December 6, 1995, Nava wrote Rev. Iyoy expressing the unions desire to
renew the CBA, attaching to her letter a statement of proposals signed/endorsed
by 153 union members. Nava subsequently requested that the following
employees be allowed to avail of one-day union leave with pay on December 19,
1995: Celia Sabas, Jesusa Gerona, Albina Baez, Eddie Villa, Roy Malazarte,
Ernesto Canen, Jr., Guillerma Remocaldo, Catalina Alsado, Evelyn Ong, Melodia
Paulin, Sofia Bautista, Hannah Bongcaras, Ester Villarin, Iluminada Wenceslao
and Perla Nava. However, MCCHI returned the CBA proposal for Nava to secure
first the endorsement of the legal counsel of NFL as the official bargaining
representative of MCCHI employees.

Meanwhile, Atty. Alforque informed MCCHI that the proposed CBA submitted by
Nava was never referred to NFL and that NFL has not authorized any other legal
counsel or any person for collective bargaining negotiations. By January 1996,
the collection of union fees (check-off) was temporarily suspended by MCCHI in
view of the existing conflict between the federation and its local affiliate.
Thereafter, MCCHI attempted to take over the room being used as union office
but was prevented to do so by Nava and her group who protested these actions
and insisted that management directly negotiate with them for a new CBA.
MCCHI referred the matter to Atty. Alforque, NFLs Regional Director, and
advised Nava that their group is not recognized by NFL.

In his letter dated February 24, 1996 addressed to Nava, Ernesto Canen, Jr.,
Jesusa Gerona, Hannah Bongcaras, Emma Remocaldo, Catalina Alsado and
Albina Baez, Atty. Alforque suspended their union membership for serious
violation of the Constitution and By-Laws. Said letter states:

xxxx

On February 26, 1996, upon the request of Atty. Alforque, MCCHI granted one-
day union leave with pay for 12 union members. The next day, several union
members led by Nava and her group launched a series of mass actions such as
wearing black and red armbands/headbands, marching around the hospital
premises and putting up placards, posters and streamers. Atty. Alforque
immediately disowned the concerted activities being carried out by union
members which are not sanctioned by NFL. MCCHI directed the union officers
led by Nava to submit within 48 hours a written explanation why they should not
be terminated for having engaged in illegal concerted activities amounting to
strike, and placed them under immediate preventive suspension. Responding to
this directive, Nava and her group denied there was a temporary stoppage of
work, explaining that employees wore their armbands only as a sign of protest
and reiterating their demand for MCCHI to comply with its duty to bargain
collectively. Rev. Iyoy, having been informed that Nava and her group have also
been suspended by NFL, directed said officers to appear before his office for
investigation in connection with the illegal strike wherein they reportedly uttered
slanderous and scurrilous words against the officers of the hospital, threatening
other workers and forcing them to join the strike. Said union officers, however,
invoked the grievance procedure provided in the CBA to settle the dispute
between management and the union.

On March 13 and 19, 1996, the Department of Labor and Employment (DOLE)
Regional Office No. 7 issued certifications stating that there is nothing in their
records which shows that NAMA-MCCH- NFL is a registered labor organization,
and that said union submitted only a copy of its Charter Certificate on January
31, 1995. MCCHI then sent individual notices to all union members asking them
to submit within 72 hours a written explanation why they should not be
terminated for having supported the illegal concerted activities of NAMA-MCCH-
NFL which has no legal personality as per DOLE records. In their collective
response/statement dated March 18, 1996, it was explained that the picketing
employees wore armbands to protest MCCHIs refusal to bargain; it was also
contended that MCCHI cannot question the legal personality of the union which
had actively assisted in CBA negotiations and implementation.

On March 13, 1996, NAMA-MCCH-NFL filed a Notice of Strike but the same was
deemed not filed for want of legal personality on the part of the filer. The National
Conciliation and Mediation Board (NCMB) Region 7 office likewise denied their
motion for reconsideration on March 25, 1996. Despite such rebuff, Nava and her
group still conducted a strike vote on April 2, 1996 during which an overwhelming
majority of union members approved the strike.

Meanwhile, the scheduled investigations did not push through because the
striking union members insisted on attending the same only as a group. MCCHI
again sent notices informing them that their refusal to submit to investigation is
deemed a waiver of their right to explain their side and management shall
proceed to impose proper disciplinary action under the circumstances. On March
30, 1996, MCCHI sent termination letters to union leaders and other members
who participated in the strike and picketing activities. On April 8, 1996, it also
issued a cease-and-desist order to the rest of the striking employees stressing
that the wildcat concerted activities spearheaded by the Nava group is illegal
without a valid Notice of Strike and warning them that non-compliance will
compel management to impose disciplinary actions against them. For their
continued picketing activities despite the said warning, more than 100 striking
employees were dismissed effective April 12 and 19, 1996.
Unfazed, the striking union members held more mass actions. The means of
ingress to and egress from the hospital were blocked so that vehicles carrying
patients and employees were barred from entering the premises. Placards were
placed at the hospitals entrance gate stating:

"Please proceed to another hospital" and "we are on protest." Employees and
patients reported acts of intimidation and harassment perpetrated by union
leaders and members. With the intensified atmosphere of violence and animosity
within the hospital premises as a result of continued protest activities by union
members, MCCHI suffered heavy losses due to low patient admission rates. The
hospitals suppliers also refused to make further deliveries on credit.

With the volatile situation adversely affecting hospital operations and the
condition of confined patients, MCCHI filed a petition for injunction in the NLRC
(Cebu City) on July 9, 1996 (Injunction Case No. V-0006-96). A temporary
restraining order (TRO) was issued on July 16, 1996. MCCHI presented 12
witnesses (hospital employees and patients), including a security guard who was
stabbed by an identified sympathizer while in the company of Navas group.
MCCHIs petition was granted and a permanent injunction was issued on
September 18, 1996 enjoining the Nava group from committing illegal acts
mentioned in Art. 264 of the Labor Code.

On August 27, 1996, the City Government of Cebu ordered the demolition of the
structures and obstructions put up by the picketing employees of MCCHI along
the sidewalk, having determined the same as a public nuisance or nuisance per
se.

Thereafter, several complaints for illegal dismissal and unfair labor practice were
filed by the terminated employees against MCCHI, Rev. Iyoy, UCCP and
members of the Board of Trustees of MCCHI.3

On August 4, 1999, Executive Labor Arbiter Reynoso A. Belarmino rendered his

Decision4 in the consolidated cases which included NLRC Case No. RAB-VII-02-
0309-98 filed by herein respondents. The dispositive portion of said decision
reads:

WHEREFORE, premises considered, judgment is hereby rendered dismissing

the claim of unfair labor practice and illegal dismissal and declaring the
termination of the following as an offshoot of the illegal strike: Perla Nava,
Catalina Alsado, Albina Baez, Hannah Bongcaras, Ernesto Canen, Jesusa
Gerona and Guillerma Remocaldo but directing the respondent Metro Cebu
Community Hospital to pay the herein complainants separation pay in the sum of
THREE MILLION EIGHTY FIVE THOUSAND EIGHT HUNDRED NINETY
SEVEN and [40]/100 (P3,085,897.40) detailed as follows:

xxxx

79. Erma Yballe

6/11/83 4/19/96: 12 years, 10 mos. (13 years)

P5,000.00 2 x 13 = 32,500.00

80. Eleuteria Cortez

12/13/[74]5 4/12/96: 21 years, 4 mos. (21 years)

P5,000.00 2 x 21 = 52,500.00

81. Nelia Angel

6/01/88 4/12/96: 7 years, 10 mos. (8 years)

P5,000.00 2 x 8 = 20,000.00

82. Evelyn Ong

7/07/86 4/12/96: 9 years, 9 mos. (10 years)

P5,000.00 2 x 10 = 25,000.00

xxxx

SO ORDERED.6

Executive Labor Arbiter Belarmino ruled that MCCHI and its administrators were
not guilty of unfair labor practice. He likewise upheld the termination of
complainants union officers who conducted the illegal strike. The rest of the
complainants were found to have been illegally dismissed, thus:

We, however, see that the NAMA members deserve a different treatment. As the
Court said, members of a union cannot be held responsible for an illegal strike on
the sole basis of such membership, or even on an account of their affirmative
vote authorizing the same. They become liable only if they actually participated
therein (ESSO Phil., Inc. vs. Malayang Manggagawa sa Esso 75 SCRA 73). But
the illegality of their participation is placed in a state of doubt they, being merely
followers. Under the circumstances, We resort to Art. 4 of the Labor Code
favoring the workingman in case of doubt in the interpretation and
implementation of laws.

Obviously swayed by the actuations of their leaders, herein complainants ought

to be reinstated as a matter of policy but without backwages for they cannot be
compensated having skipped work during the illegal strike (National Federation
of Sugar Workers vs. Overseas et al. 114 SCRA 354). But with their positions
already taken over by their replacements and with strained relations between the
parties having taken place, We deem it fair that complainants except for the
seven officers, should be paid separation pay of one-half (1/2) month for every
year of service by the respondent hospital.7

Respondents and their co-complainants filed their respective appeals before the
National Labor Relations Commission (NLRC) Cebu City. On February 15, 2001,
respondents and MCCHI jointly moved to defer resolution of their appeal (NLRC
Case No. V-001042-99) in view of a possible compromise. Consequently, in its
Decision8dated March 14, 2001, the NLRCs Fourth Division (Cebu City) resolved
only the appeals filed by respondents co-complainants. The dispositive portion of
said decision reads:

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter

dismissing the complaint for unfair labor practice and illegal dismissal is
AFFIRMED with MODIFICATIONS declaring the dismissal of all the complainants
in RAB Case No. 07-02-0394-98 and RAB Case No. 07-03-0596-98 valid and
legal. Necessarily, the award of separation pay and attorneys fees are hereby
Deleted.

Resolution on RAB Case No. 07-02-0309-98 is hereby Deferred upon Joint

Motion of the parties.

SO ORDERED.9

The NLRC denied the motion for reconsideration of the above decision under its
Resolution10 dated July 2, 2001.
Having failed to reach a settlement, respondents counsel filed a motion to
resolve their appeal on January 2, 2003. Thus, on March 12, 2003, the NLRC-
Cebu City Fourth Division rendered its Decision, 11 as follows:

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter

dismissing the complaint for unfair labor practice and illegal dismissal is
AFFIRMED with MODIFICATIONS declaring all the complainants to have been
validly dismissed. Necessarily, the award of separation pay and attorneys fees
are hereby Deleted.

SO ORDERED.12

In deleting the award of separation pay and attorneys fees, the NLRC
emphasized that respondents and their co-complainants are guilty of
insubordination, having persisted in their illegal concerted activities even after
MCCHI had sent them individual notices that the strike was illegal as it was filed
by NAMA-MCCH-NFL which is not a legitimate labor organization. It held that
under the circumstances where the striking employees harassed, threatened and
prevented non-striking employees and doctors from entering hospital premises,
blocked vehicles carrying patients to the hospital premises and caused anxiety to
recuperating patients by displaying placards along the corridors of the hospital,
and the resulting decrease in hospital admission, refusal of suppliers to make
further deliveries due to fears of violence erupting as a result of picketing, and
diminished income due to low admission rates, it would be unfair to saddle
MCCHI with the burden of paying separation pay to complainants who were
validly dismissed. Respondents motion for reconsideration was denied by the
NLRC under its Resolution13dated April 13, 2004.

Meanwhile, the petition for certiorari filed by respondents co-complainants in the

Court of Appeals (CA) Cebu Station (CA-G.R. SP No. 66540) was initially
dismissed by the CAs Eighth Division on the ground that out of 88 petitioners
only 47 have signed the certification against forum shopping. On motion for
reconsideration filed by said petitioners, the petition was reinstated but only with
respect to the 47 signatories. Said ruling was challenged by complainants before
this Court via a petition for review on certiorari, docketed as G.R. No. 154113
(Abaria, et al. v. NLRC, et al.).14

On October 17, 2008, the CA dismissed the petition in CA-G.R. SP No. 66540,
as follows:
WHEREFORE, premises considered, judgment is hereby rendered AFFIRMING
the Decision of the National Labor Relations Commission (NLRC) Fourth
Division dated March 14, 2001 in NLRC Case No. V-001042-99, WITH
MODIFICATIONS to the effect that (1) the petitioners, except the union officers,
shall be awarded separation pay equivalent to one-half (1/2) month pay for every
year of service, and (2) petitioner Cecilia Sabas shall be awarded overtime pay
amounting to sixty-three (63) hours.

SO ORDERED.15

The motion for reconsideration and motion for partial reconsideration respectively
filed by the complainants and MCCHI in CA-G.R. SP No. 66540 were likewise
denied by the CA.16 Both parties elevated the case to this Court in separate
petitions: G.R. No. 187778 (Perla Nava, et al. v. NLRC, et al.) and G.R. No.
187861 (Metro Cebu Community Hospital v. Perla Nava, et al.). Herein
respondents also filed in the CA a petition for certiorari assailing the March 12,
2003 Decision and April 13, 2004 Resolution of the NLRC, docketed as CA-G.R.
SP No. 84998 (Cebu City). By Decision17 dated November 7, 2008, the CA
granted their petition, as follows:

WHEREFORE, the challenged Decision of public respondent dated March 12,

2003 and its Resolution dated April 13, 2004 are herebyREVERSED AND SET
ASIDE. Private respondent Metro Cebu Community Hospital is ordered to
reinstate petitioners Erma Yballe, Eleuteria Cortes, Nelia Angel and Evelyn Ong
without loss of seniority rights and other privileges; to pay them their full
backwages inclusive of their allowances and other benefits computed from the
time of their dismissal up to the time of their actual reinstatement.

No pronouncement as to costs.

SO ORDERED.18

Petitioner filed a motion for reconsideration which the CA denied in its February
22, 2011 Resolution.19

The Case

The present petition (G.R. No. 196156) was filed on April 27, 2011. Records
showed that as early as August 3, 2009, G.R. Nos. 187861 and 187778 were
consolidated with G.R. No. 154113 pending with the Third Division. 20As to the
present petition, it was initially denied under the June 8, 2011 Resolution 21 issued
by the Second Division for failure to show any reversible error committed by the
CA. Petitioner filed a motion for reconsideration to which respondents filed an
opposition. Said motion for reconsideration of the earlier dismissal (June 8, 2011)
remained unresolved by the Second Division which, on June 29, 2011, issued a
resolution ordering the transfer of the present case to the Third Division. 22

It is further recalled that on June 23, 2011, petitioner moved to consolidate the
present case with G.R. Nos. 154113, 187861 and 187778 which was opposed by
respondents. Under Resolution dated August 1, 2011, the Third Division denied
the motion for consolidation, citing the earlier dismissal of the petition on June 8,
2011.23However, on motion for reconsideration filed by petitioner, said resolution
was set aside on October 19, 2011 and the present case was ordered
consolidated with G.R. Nos. 154113, 187778 and 187861 and transferred to the
First Division where the latter cases are pending.24

On December 7, 2011, the Decision 25 in the consolidated cases (G.R. Nos.

154113, 187778, 187861 and 196156) was rendered, the dispositive portion of
which states:

WHEREFORE, the petition for review on certiorari in G.R. No. 187861 is

DENIED while the petitions in G.R. Nos. 154113, 187778 and 196156 are
PARTLY GRANTED. The Decision dated October 17, 2008 of the Court of
Appeals in CA-G.R. SP No. 66540 is hereby AFFIRMED with MODIFICATIONS
in that MCCHI is ordered to pay the petitioners in G.R. Nos. 154113 and 187778,
except the petitioners who are union officers, separation pay equivalent to one
month pay for every year of service, and reasonable attorneys fees in the
amount of P50,000.00. The Decision dated November 7, 2008 is likewise
AFFIRMED with MODIFICATIONS in that MCCHI is ordered to pay the private
respondents in G.R. No. 196156 separation pay equivalent to one month pay for
every year of service, and that the award of back wages is DELETED.

The case is hereby remanded to the Executive Labor Arbiter for the
recomputation of separation pay due to each of the petitioners union members in
G.R. Nos. 154113, 187778 and 196156 except those who have executed
compromise agreements approved by this Court.

No pronouncement as to costs.

SO ORDERED.26
On February 7, 2012, respondents filed a Motion for Reconsideration with Motion
for Severance and Remand27asserting that they were denied due process as
they had no opportunity to file a comment on the petition prior to the rendition of
the Decision dated December 7, 2011. They also point out that the issues in the
present case are different from those raised in the petitions filed by their co-
complainants.

On June 18, 2012, this Court issued a Resolution (1) reinstating the petition and
requiring the respondents to file their comment on the petition; and (2) denying
the motion for remand to the Second Division. 28 Respondents thus filed their
Comment, to which petitioner filed its Reply. Thereafter, the parties submitted
their respective memoranda.

Issues

In their Memorandum, respondents submit that since the Decision dated

December 7, 2011 in the consolidated cases of Abaria v. NLRC have already
declared the dismissal of complainants union members as illegal but awarded
separation pay and reasonable attorneys fees, the remaining issue to be
resolved in this case is whether respondents are entitled to back wages and
damages.

Petitioner, however, further assail the CA in (a) allowing respondents to change

their theory on appeal, (b) finding that respondents did not commit illegal acts
during the strike and (c) increasing the award of separation pay to one month pay
for every year of service as held in the December 7, 2011 Decision in view of the
damages suffered by petitioner.

Respondents Argument

Respondents maintain that there was no iota of evidence presented by petitioner

that they took part in the illegal strike conducted by the Nava group or committed
illegal acts like the blocking of ingress and egress in the hospital premises. They
claim that they were never involved in work stoppage but instead were locked out
by petitioner as they were unable to resume work because hospital security
personnel prevented them from entering the hospital upon petitioners
instructions.

Claiming that they have consistently manifested their non- participation in the
illegal strike before the regional arbitration branch, NLRC and the CA,
respondents argue that there is absolutely no reason to delete the awards of
back wages and separation pay in lieu of reinstatement.

Petitioners Argument

Petitioner contends that respondents have surreptitiously changed their position

from admitting in their pleadings before the NLRC their participation in the illegal
strike to that of mere wearing of arm bands and alleged non-receipt of the notices
in their appeal before the CA. They stress the established facts on record that:
(1) respondents signed the March 18, 1996 collective reply of the union officers
and members to the notices sent by petitioner regarding their illegal concerted
activities, thus proving that they received the said notices; (2) acknowledged
Perla Nava as their union leader which belies respondents belated attempt to
distance themselves from the Nava group who led the illegal strike; and (3)
respondents did not, in their motion for reconsideration of the NLRC Decision
dated March 12, 2003, make any denial of their participation in the illegal strike
but even justified their resort thereto due to the prevailing labor dispute.

With the Decision in the consolidated cases (Abaria v. NLRC) having already
upheld the consistent rule that dismissed employees who participated in an
illegal strike are not entitled to back wages, petitioner prays that the previous
rulings in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v.
Manila Diamond Hotel Employees Union,29 G & S Transport Corporation v.
Infante,30 Philippine Marine Officers Guild v. Compaia Maritima, et al., 31 and
Escario v. National Labor Relations Commission (Third Division) 32 be likewise
applied in this case.

Our Ruling

The petition is partly meritorious.

Paragraph 3, Article 264(a) of the Labor Code provides that ". . .any union officer
who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status . . ." In the Decision dated
December 7, 2011, we declared as invalid the dismissal of MCCH employees
who participated in the illegal strike conducted by NAMA-MCCH-NFL which is not
a legitimate labor organization. Since there was no showing that the
complainants committed any illegal act during the strike, they may not be
deemed to have lost their employment status by their mere participation in the
illegal strike. On the other hand, the union leaders (Nava group) who conducted
the illegal strike despite knowledge that NAMA-MCCH-NFL is not a duly
registered labor union were declared to have been validly terminated by
petitioner.

We stress that the law makes a distinction between union members and union
officers. A worker merely participating in an illegal strike may not be terminated
from employment. It is only when he commits illegal acts during a strike that he
may be declared to have lost employment status. 33 In contrast, a union officer
may be terminated from employment for knowingly participating in an illegal
strike or participates in the commission of illegal acts during a strike. The law
grants the employer the option of declaring a union officer who participated in an
illegal strike as having lost his employment. It possesses the right and
prerogative to terminate the union officers from service. 34

In this case, the NLRC affirmed the finding of the Labor Arbiter that respondents
supported and took part in the illegal strike and further declared that they were
guilty of insubordination. It noted that the striking employees were determined to
force management to negotiate with their union and proceeded with the strike
despite knowledge that NAMA-MCCH-NFL is not a legitimate labor organization
and without regard to the consequences of their acts consisting of displaying
placards and marching noisily inside the hospital premises, and blocking the
entry of vehicles and persons.

On appeal, the CA reversed the rulings of the Labor Arbiter and NLRC, ordered
the reinstatement of respondents and the payment of their full back wages. The
CA found that respondents participation was limited to the wearing of armband
and thus, citing Bascon v. CA, 35 declared respondents termination as invalid in
the absence of any evidence that they committed any illegal act during the strike.

In the Decision dated December 7, 2011, we likewise ruled that the mass
termination of complainants was illegal, notwithstanding the illegality of the strike
in which they participated. However, since reinstatement was no longer feasible,
we ordered MCCHI to pay the dismissed employees separation pay equivalent to
one month pay for every year of service. The claim for back wages was denied,
consistent with existing law and jurisprudence. Respondents argue that the CA
correctly awarded them back wages because while they "supported the protest
action" they were not part of the Nava group who were charged with blocking the
free ingress and egress of the hospital, threatening and harassing persons
entering the premises, and making boisterous and unpleasant remarks. They
deny any participation in the illegal strike and assert that no evidence of their
actual participation in the strike was shown by petitioner.
We are not persuaded by respondents attempt to dissociate themselves from the
Nava group who led the illegal strike. In their motion for reconsideration filed
before the NLRC, respondents no longer denied having participated in the strike
but simply argued that no termination of employment in connection with the strike
"staged by complainants" cannot be legally sustained because MCCHI "did not
file a complaint or petition to declare the strike of complainants illegal or declare
that illegal acts were committed in the conduct of the strike." Respondents further
assailed the NLRCs finding that they were guilty of insubordination since "the
proximate cause of the acts of complainants was the prevailing labor dispute and
the consequent resort by complainants of [sic] a strike action." 36When the case
was elevated to the CA, respondents shifted course and again insisted that they
did not participate in the strike nor receive the March 15, 1996 individual notices
sent by petitioner to the striking employees.

Respondents inconsistent posture cannot be sanctioned. While there was indeed

no evidence of any illegal act committed by respondents during the strike, the
Labor Arbiter and NLRC were one in finding that respondents actively supported
the concerted protest activities, signed the collective reply of union members
manifesting that they launched the mass actions to protest managements refusal
to negotiate a new CBA, refused to appear in the investigations scheduled by
petitioner because it was the unions stand that they would only attend these
investigations as a group, and failed to heed petitioners final directive for them to
desist from further taking part in the illegal strike. The CA, on the other hand,
found that respondents participation in the strike was limited to the wearing of
armbands. Since an ordinary striking worker cannot be dismissed for such mere
participation in the illegal strike, the CA correctly ruled that respondents were
illegally dismissed. However, the CA erred in awarding respondents full back
wages and ordering their reinstatement despite the prevailing circumstances.

As a general rule, back wages are granted to indemnify a dismissed employee

for his loss of earnings during the whole period that he is out of his job.
Considering that an illegally dismissed employee is not deemed to have left his
employment, he is entitled to all the rights and privileges that accrue to him from
the employment.37 The grant of back wages to him is in furtherance and
effectuation of the public objectives of the Labor Code, and is in the nature of a
command to the employer to make a public reparation for his illegal dismissal of
the employee in violation of the Labor Code.38

Are respondents then entitled to back wages? This Court, in G & S Transport
Corporation v. Infante,39 ruled in the negative:
With respect to backwages, the principle of a "fair days wage for a fair days
labor" remains as the basic factor in determining the award thereof. If there is no
work performed by the employee there can be no wage or pay unless, of course,
the laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed or otherwise illegally prevented from working. x x x In
Philippine Marine Officers Guild v. Compaia Maritima, as affirmed in Philippine
Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court
stressed that for this exception to apply, it is required that the strike be legal, a
situation that does not obtain in the case at bar. (Emphasis supplied)

The alternative relief for union members who were dismissed for having
participated in an illegal strike is the payment of separation pay in lieu of
reinstatement under the following circumstances: (a) when reinstatement can no
longer be effected in view of the passage of a long period of time or because of
the realities of the situation; (b) reinstatement is inimical to the employers
interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve
the best interests of the parties involved; (e) the employer is prejudiced by the
workers continued employment; (f) facts that make execution unjust or
inequitable have supervened; or (g) strained relations between the employer and
employee.40

In the Decision dated December 7, 2011, we held that the grant of separation pay
to complainants is the appropriate relief under the circumstances, thus:

Considering that 15 years had lapsed from the onset of this labor dispute, and in
view of strained relations that ensued, in addition to the reality of replacements
already hired by the hospital which had apparently recovered from its huge
losses, and with many of the petitioners either employed elsewhere, already old
and sickly, or otherwise incapacitated, separation pay without back wages is the
appropriate relief. x x x41

In fine, we sustain the CA in ruling that respondents who are mere union
members were illegally dismissed for participating in the illegal strike conducted
by the Nava group. However, we set aside the order for their reinstatement and
payment of full back wages.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated

November 7, 2008 and Resolution dated February 22, 2011 of the Court of
Appeals in CA-G.R. SP No. 84998 are hereby AFFIRMED with
MODIFICATIONS. In lieu of reinstatement, petitioner Visayas Community
Medical Center formerly known as the Metro Cebu Community Hospital) is
ordered to PAY respondents Erma Yballe, Evelyn Ong, Nelia Angel and Eleuteria
Cortez separation pay equivalent to one month pay for every year of service. The
award of back wages to the said respondents is DELETED.

The case is hereby remanded to the Executive Labor Arbiter for the
recomputation of separation pay due to each of the respondents.

SO ORDERED.

G.R. No. 186439 January 15, 2014

UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE

CABATI, Petitioners,
vs.
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA, RENE
ABELLAR, DIOMEDES ALICOS, MIGUEL ALICOS, ROGELIO AMAHIT,
LARRY AMASCO, FELIPE BALANSAG, ROMEO BALANSAG, MANUEL
BANGOT, ANDY BANJAO, DIONISIO BENDIJO, JR., JOVENTINO BROCE,
ENRICO LITERAL, RODGER RAMIREZ, BIENVENIDO RODRIGUEZ, DIOCITO
PALAGTIW, ERNIE SABLAN, RICHARD PANCHO, RODRIGO ESTRABELA,
DANNY KADUSALE and ALLYROBYL OLPUS, Respondents.

DECISION

BRION, J.:

We resolve in this petition for review on certiorari 1 the challenge to the November
29, 2007 decision2 and the January 22, 2009 resolution 3 of the Court of Appeals
(CA) in CA-G.R. CEB-SP No. 02028. This CA decision affirmed with modification
the July 22, 2005 decision4 and the April 28, 2006 resolution5 of the National
Labor Relations Commission (NLRC) in NLRC Case No. V-00006-03 which, in
turn, reversed the October 9, 2002 decision 6 of the Labor Arbiter (LA). The LAs
decision dismissed the complaint filed by complainants Ferdinand Acibo, et
al.7 against petitioners Universal Robina Sugar Milling Corporation (URSUMCO)
and Rene Cabati.

The Factual Antecedents

URSUMCO is a domestic corporation engaged in the sugar cane milling

business; Cabati is URSUMCOs Business Unit General Manager.

The complainants were employees of URSUMCO. They were hired on various

dates (between February 1988 and April 1996) and on different capacities, 8 i.e.,
drivers, crane operators, bucket hookers, welders, mechanics, laboratory
attendants and aides, steel workers, laborers, carpenters and masons, among
others. At the start of their respective engagements, the complainants signed
contracts of employment for a period of one (1) month or for a given season.
URSUMCO repeatedly hired the complainants to perform the same duties and,
for every engagement, required the latter to sign new employment contracts for
the same duration of one month or a given season.

On August 23, 2002,9 the complainants filed before the LA complaints for
regularization, entitlement to the benefits under the existing Collective Bargaining
Agreement (CBA),and attorneys fees.

In the decision10 dated October 9, 2002, the LA dismissed the complaint for lack
of merit. The LA held that the complainants were seasonal or project workers and
not regular employees of URSUMCO. The LA pointed out that the complainants
were required to perform, for a definite period, phases of URSUMCOs several
projects that were not at all directly related to the latters main operations. As the
complainants were project employees, they could not be regularized since their
respective employments were coterminous with the phase of the work or special
project to which they were assigned and which employments end upon the
completion of each project. Accordingly, the complainants were not entitled to the
benefits granted under the CBA that, as provided, covered only the regular
employees of URSUMCO.

Of the twenty-two original complainants before the LA, seven appealed the LAs
ruling before the NLRC, namely: respondents Ferdinand Acibo, Eddie Baldoza,
Andy Banjao, Dionisio Bendijo, Jr., Rodger Ramirez, Diocito Palagtiw, Danny
Kadusale and Allyrobyl Olpus.

The Ruling of the NLRC

In its decision11 of July 22, 2005, the NLRC reversed the LAs ruling; it declared
the complainants as regular URSUMCO employees and granted their monetary
claims under the CBA. The NLRC pointed out that the complainants performed
activities which were usually necessary and desirable in the usual trade or
business of URSUMCO, and had been repeatedly hired for the same undertaking
every season. Thus, pursuant to Article 280 of the Labor Code, the NLRC
declared that the complainants were regular employees. As regular employees,
the NLRC held that the complainants were entitled to the benefits granted, under
the CBA, to the regular URSUMCO employees.

The petitioners moved to reconsider this NLRC ruling which the NLRC denied in
its April 28, 2006 resolution. 12 The petitioners elevated the case to the CA via a
petition for certiorari.13

The Ruling of the CA

In its November 29, 2007 decision, 14 the CA granted in part the petition; it
affirmed the NLRCs ruling finding the complainants to be regular employees of
URSUMCO, but deleted the grant of monetary benefits under the CBA.

The CA pointed out that the primary standard for determining regular
employment is the reasonable connection between a particular activity performed
by the employee vis--vis the usual trade or business of the employer. This
connection, in turn, can be determined by considering the nature of the work
performed and the relation of this work to the business or trade of the employer
in its entirety.
In this regard, the CA held that the various activities that the complainants were
tasked to do were necessary, if not indispensable, to the nature of URSUMCOs
business. As the complainants had been performing their respective tasks for at
least one year, the CA held that this repeated and continuing need for the
complainants performance of these same tasks, regardless of whether the
performance was continuous or intermittent, constitutes sufficient evidence of the
necessity, if not indispensability, of the activity to URSUMCOs business.

Further, the CA noted that the petitioners failed to prove that they gave the
complainants opportunity to work elsewhere during the off-season, which
opportunity could have qualified the latter as seasonal workers. Still, the CA
pointed out that even during this off-season period, seasonal workers are not
separated from the service but are simply considered on leave until they are re-
employed. Thus, the CA concluded that the complainants were regular
employees with respect to the activity that they had been performing and while
the activity continued.

On the claim for CBA benefits, the CA, however, ruled that the complainants
were not entitled to receive them. The CA pointed out that while the complainants
were considered regular, albeit seasonal, workers, the CBA-covered regular
employees of URSUMCO were performing tasks needed by the latter for the
entire year with no regard to the changing sugar milling season. Hence, the
complainants did not belong to and could not be grouped together with the
regular employees of URSUMCO, for collective bargaining purposes; they
constitute a bargaining unit separate and distinct from the regular employees.
Consequently, the CA declared that the complainants could not be covered by
the CBA.

The petitioners filed the present petition after the CA denied their motion for
partial reconsideration15 in the CAs January 22, 2009 resolution.16

The Issues

The petition essentially presents the following issues for the Courts resolution:
(1) whether the respondents are regular employees of URSUMCO; and (2)
whether affirmative relief can be given to the fifteen (15) of the complainants who
did not appeal the LAs decision.17

The Courts Ruling

We resolve to partially GRANT the petition.

On the issue of the status of the respondents employment

The petitioners maintain that the respondents are contractual or project/seasonal

workers and not regular employees of URSUMCO. They thus argue that the CA
erred in applying the legal parameters and guidelines for regular employment to
the respondents case. They contend that the legal standards length of the
employees engagement and the desirability or necessity of the employees work
in the usual trade or business of the employer apply only to regular employees
under paragraph 1, Article 280 of the Labor Code, and, under paragraph 2 of the
same article, to casual employees who are deemed regular by their length of
service.

The respondents, the petitioners point out, were specifically engaged for a fixed
and predetermined duration of, on the average, one (1) month at a time that
coincides with a particular phase of the companys business operations or sugar
milling season. By the nature of their engagement, the respondents employment
legally ends upon the end of the predetermined period; thus, URSUMCO was
under no legal obligation to rehire the respondents.

In their comment,18 the respondents maintain that they are regular employees of
URSUMCO. Relying on the NLRC and the CA rulings, they point out that they
have been continuously working for URSUMCO for more than one year,
performing tasks which were necessary and desirable to URSUMCOs business.
Hence, under the above-stated legal parameters, they are regular employees.

We disagree with the petitioners position.1wphi1 We find the respondents to be

regular seasonal employees of URSUMCO.

As the CA has explained in its challenged decision, Article 280 of the Labor Code
provides for three kinds of employment arrangements, namely: regular,
project/seasonal and casual. Regular employment refers to that arrangement
whereby the employee "has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer[.]" 19 Under
the definition, the primary standard that determines regular employment is the
reasonable connection between the particular activity performed by the employee
and the usual business or trade of the employer; 20 the emphasis is on the
necessity or desirability of the employees activity. Thus, when the employee
performs activities considered necessary and desirable to the overall business
scheme of the employer, the law regards the employee as regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also
considers regular a casual employment arrangement when the casual
employees engagement has lasted for at least one year, regardless of the
engagements continuity. The controlling test in this arrangement is the length of
time during which the employee is engaged.

A project employment, on the other hand, contemplates on arrangement whereby

"the employment has been fixed for a specific project or undertaking whose
completion or termination has been determined at the time of the engagement of
the employee[.]"21 Two requirements, therefore, clearly need to be satisfied to
remove the engagement from the presumption of regularity of employment,
namely: (1) designation of a specific project or undertaking for which the
employee is hired; and (2) clear determination of the completion or termination of
the project at the time of the employees engagement. 22 The services of the
project employees are legally and automatically terminated upon the end or
completion of the project as the employees services are coterminous with the
project.

Unlike in a regular employment under Article 280 of the Labor Code, however,
the length of time of the asserted "project" employees engagement is not
controlling as the employment may, in fact, last for more than a year, depending
on the needs or circumstances of the project. Nevertheless, this length of time (or
the continuous rehiring of the employee even after the cessation of the project)
may serve as a badge of regular employment when the activities performed by
the purported "project" employee are necessary and indispensable to the usual
business or trade of the employer.23 In this latter case, the law will regard the
arrangement as regular employment.24

Seasonal employment operates much in the same way as project employment,

albeit it involves work or service that is seasonal in nature or lasting for the
duration of the season.25 As with project employment, although the seasonal
employment arrangement involves work that is seasonal or periodic in nature, the
employment itself is not automatically considered seasonal so as to prevent the
employee from attaining regular status. To exclude the asserted "seasonal"
employee from those classified as regular employees, the employer must show
that: (1) the employee must be performing work or services that are seasonal in
nature; and (2) he had been employed for the duration of the season. 26 Hence,
when the "seasonal" workers are continuously and repeatedly hired to perform
the same tasks or activities for several seasons or even after the cessation of the
season, this length of time may likewise serve as badge of regular
employment.27 In fact, even though denominated as "seasonal workers," if these
workers are called to work from time to time and are only temporarily laid off
during the off-season, the law does not consider them separated from the service
during the off-season period. The law simply considers these seasonal workers
on leave until re-employed.28

Casual employment, the third kind of employment arrangement, refers to any

other employment arrangement that does not fall under any of the first two
categories, i.e., regular or project/seasonal.

Interestingly, the Labor Code does not mention another employment

arrangement contractual or fixed term employment (or employment for a term)
which, if not for the fixed term, should fall under the category of regular
employment in view of the nature of the employees engagement, which is to
perform an activity usually necessary or desirable in the employers business.

In Brent School, Inc. v. Zamora,29 the Court, for the first time, recognized and
resolved the anomaly created by a narrow and literal interpretation of Article 280
of the Labor Code that appears to restrict the employees right to freely stipulate
with his employer on the duration of his engagement. In this case, the Court
upheld the validity of the fixed-term employment agreed upon by the employer,
Brent School, Inc., and the employee, Dorotio Alegre, declaring that the
restrictive clause in Article 280 "should be construed to refer to the substantive
evil that the Code itself x x x singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where
[the] fixed period of employment was agreed upon knowingly and voluntarily by
the parties x x x absent any x x x circumstances vitiating [the employees]
consent, or where [the facts satisfactorily show] that the employer and [the]
employee dealt with each other on more or less equal terms[.]" 30 The
indispensability or desirability of the activity performed by the employee will not
preclude the parties from entering into an otherwise valid fixed term employment
agreement; a definite period of employment does not essentially contradict the
nature of the employees duties 31 as necessary and desirable to the usual
business or trade of the employer.

Nevertheless, "where the circumstances evidently show that the employer

imposed the period precisely to preclude the employee from acquiring tenurial
security, the law and this Court will not hesitate to strike down or disregard the
period as contrary to public policy, morals, etc." 32 In such a case, the general
restrictive rule under Article 280 of the Labor Code will apply and the employee
shall be deemed regular.
Clearly, therefore, the nature of the employment does not depend solely on the
will or word of the employer or on the procedure for hiring and the manner of
designating the employee. Rather, the nature of the employment depends on the
nature of the activities to be performed by the employee, considering the nature
of the employers business, the duration and scope to be done, 33 and, in some
cases, even the length of time of the performance and its continued existence.

In light of the above legal parameters laid down by the law and applicable
jurisprudence, the respondents are neither project, seasonal nor fixed-term
employees, but regular seasonal workers of URSUMCO. The following factual
considerations from the records support this conclusion:

First, the respondents were made to perform various tasks that did not at all
pertain to any specific phase of URSUMCOs strict milling operations that would
ultimately cease upon completion of a particular phase in the milling of sugar;
rather, they were tasked to perform duties regularly and habitually needed in
URSUMCOs operations during the milling season. The respondents duties as
loader operators, hookers, crane operators and drivers were necessary to haul
and transport the sugarcane from the plantation to the mill; laboratory attendants,
workers and laborers to mill the sugar; and welders, carpenters and utility
workers to ensure the smooth and continuous operation of the mill for the
duration of the milling season, as distinguished from the production of the
sugarcane which involves the planting and raising of the sugarcane until it ripens
for milling. The production of sugarcane, it must be emphasized, requires a
different set of workers who are experienced in farm or agricultural work.
Needless to say, they perform the activities that are necessary and desirable in
sugarcane production. As in the milling of sugarcane, the plantation workers
perform their duties only during the planting season.

Second, the respondents were regularly and repeatedly hired to perform the
same tasks year after year. This regular and repeated hiring of the same workers
(two different sets) for two separate seasons has put in place, principally through
jurisprudence, the system of regular seasonal employment in the sugar industry
and other industries with a similar nature of operations.

Under the system, the plantation workers or the mill employees do not work
continuously for one whole year but only for the duration of the growing of the
sugarcane or the milling season. Their seasonal work, however, does not detract
from considering them in regular employment since in a litany of cases, this
Court has already settled that seasonal workers who are called to work from time
to time and are temporarily laid off during the off-season are not separated from
the service in said period, but are merely considered on leave until re-
employment.34 Be this as it may, regular seasonal employees, like the
respondents in this case, should not be confused with the regular employees of
the sugar mill such as the administrative or office personnel who perform their
tasks for the entire year regardless of the season. The NLRC, therefore, gravely
erred when it declared the respondents regular employees of URSUMCO without
qualification and that they were entitled to the benefits granted, under the CBA,
to URSUMCOS regular employees.

Third, while the petitioners assert that the respondents were free to work
elsewhere during the off-season, the records do not support this assertion. There
is no evidence on record showing that after the completion of their tasks at
URSUMCO, the respondents sought and obtained employment elsewhere.

Contrary to the petitioners position, Mercado, Sr. v. NLRC, 3rd Div.35 is not
applicable to the respondents as this case was resolved based on different
factual considerations. In Mercado, the workers were hired to perform phases of
the agricultural work in their employers farm for a definite period of time;
afterwards, they were free to offer their services to any other farm owner. The
workers were not hired regularly and repeatedly for the same phase(s) of
agricultural work, but only intermittently for any single phase. And, more
importantly, the employer in Mercado sufficiently proved these factual
circumstances. The Court reiterated these same observations in Hda. Fatima v.
Natl Fed. of Sugarcane Workers-Food and Gen. Trade 36 and Hacienda
Bino/Hortencia Starke, Inc. v. Cuenca.37

At this point, we reiterate the settled rule that in this jurisdiction, only questions of
law are allowed in a petition for review on certiorari. 38 This Courts power of
review in a Rule 45 petition is limited to resolving matters pertaining to any
perceived legal errors, which the CA may have committed in issuing the assailed
decision.39 In reviewing the legal correctness of the CAs Rule 65 decision in a
labor case, we examine the CA decision in the context that it determined, i.e., the
presence or absence of grave abuse of discretion in the NLRC decision before it
and not on the basis of whether the NLRC decision on the merits of the case was
correct.40 In other words, we have to be keenly aware that the CA undertook a
Rule 65 review, not a review on appeal, of the NLRC decision challenged before
it.41

Viewed in this light, we find the need to place the CAs affirmation, albeit with
modification, of the NLRC decision of July 22, 2005 in perspective. To recall, the
NLRC declared the respondents as regular employees of URSUMCO. 42With such
a declaration, the NLRC in effect granted the respondents prayer for
regularization and, concomitantly, their prayer for the grant of monetary benefits
under the CBA for URSUMCOs regular employees. In its challenged ruling, the
CA concurred with the NLRC finding, but with the respondents characterized as
regular seasonal employees of URSUMCO.

The CA misappreciated the real import of the NLRC ruling. The labor agency did
not declare the respondents as regular seasonal employees, but as regular
employees. This is the only conclusion that can be drawn from the NLRC
decisions dispositive portion, thus:

WHEREFORE, premises considered, the appeal is hereby GRANTED.

Complainants are declared regular employees of respondent.1wphi1 As such,
they are entitled to the monetary benefits granted to regular employees of
respondent company based on the CBA, reckoned three (3) years back from the
filing of the above-entitled case on 23 August 2002 up to the present or to their
entire service with respondent after the date of filing of the said complaint if they
are no longer connected with respondent company.43

It is, therefore, clear that the issue brought to the CA for resolution is whether the
NLRC gravely abused its discretion in declaring the respondents regular
employees of URSUMCO and, as such, entitled to the benefits under the CBA for
the regular employees.

Based on the established facts, we find that the CA grossly misread the NLRC
ruling and missed the implications of the respondents regularization. To reiterate,
the respondents are regular seasonal employees, as the CA itself opined when it
declared that "private respondents who are regular workers with respect to their
seasonal tasks or activities and while such activities exist, cannot automatically
be governed by the CBA between petitioner URSUMCO and the authorized
bargaining representative of the regular and permanent employees." 44 Citing
jurisprudential standards,45 it then proceeded to explain that the respondents
cannot be lumped with the regular employees due to the differences in the nature
of their duties and the duration of their work vis-a-vis the operations of the
company.

The NLRC was well aware of these distinctions as it acknowledged that the
respondents worked only during the milling season, yet it ignored the distinctions
and declared them regular employees, a marked departure from existing
jurisprudence. This, to us, is grave abuse of discretion, as it gave no reason for
disturbing the system of regular seasonal employment already in place in the
sugar industry and other industries with similar seasonal operations. For
upholding the NLRCs flawed decision on the respondents employment status,
the CA committed a reversible error of judgment.

In sum, we find the complaint to be devoid of merit. The issue of granting

affirmative relief to the complainants who did not appeal the CA ruling has
become academic.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED.

Except for the denial of the respondents' claim for CBA benefits, the November
29, 2007 decision and the January 22, 2009 resolution of the Court of Appeals
are SET ASIDE. The complaint is DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 199388 September 3, 2014

OMNI HAULING SERVICES, INC., LOLITA FRANCO, and ANICETO

FRANCO, Petitioners,
vs.
BERNARDO BON, ROBERTO TORTOLES, ROMEO TORRES,
RODELLO* RAMOS, RICARDO DELOS SANTOS, JUANITO BON, ELENCIO
ARTASTE,** CARLITO VOLOSO, ROMEL TORRES, ROBERT A VILA,
EDUARDO BAUTISTA, MARTY VOLOSO, OSCAR JABEL, RICKY
AMORANTO, BERNARD OSINAGA, EDUARDO BON, JERRY EDU ARCE,
and FEDERICO BRAZIL, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari 1 are the Decision2 dated May 27,
2011 and the Resolution3 dated November 11, 2011 of the Court of Appeals (CA)
in CA-G.R. SP. No. 111413 which reversed and set aside the Decision 4 dated
May 18, 2009 and the Resolution5 dated August 28, 2009 of the National Labor
Relations Commission (NLRC) in NLRC CA No. 043217-05 and NLRC NCR
Case Nos. 00-11-12889-03, 00-03-03935-04, and 00-11-13591-03, declaring the
dismissal of respondents Bernardo Bon, Roberto Tortoles, Romeo Torres,
Rodello Ramos, Ricardo Delos Santos, Juanito Bon, Elencio Artaste, Carlito
Voloso, Romel Torres, Robert Avila, Eduardo Bautista, Marty Voloso, Oscar
Jabel, Ricky Amoranto, Bernard Osinaga, Eduardo Bon, Jerry Eduarce, and
Federico Brazil (respondents) illegal.

The Facts

Petitioner Omni Hauling Services, Inc. (Omni), a company owned by petitioners

Lolita and Aniceto Franco (petitioners), was awarded a one (1) year service
contract6 by the local government of Quezon City to provide garbage hauling
services for the period July 1, 2002 to June 30, 2003. For this purpose, Omni
hired respondents as garbage truck drivers and paleros who were then paid on a
per trip basis.7

When the service contract was renewed for another year, 8 or for the period July
1, 2003 to June 30, 2004, petitioners required each of the respondents to sign
employment contracts which provided that they will be "re-hired" only for the
duration of the same period. However, respondents refused to sign the
employment contracts,claiming that they were regular employees since they
were engaged to perform activities which were necessary and desirable to
Omnis usual business or trade. 9 For this reason, Omni terminated the
employment of respondents which, in turn, resulted in the filing of cases 10 for
illegal dismissal, nonpayment of Emergency Cost of Living Allowance (ECOLA)
and 13th month pay, and actual, moral, and exemplary damages. During the
mandatory conference before the Labor Arbiter (LA), Omni offered to re-employ
respondents on the condition that they sign the employment contracts
butrespondents refused such offer.11

The LA Ruling

In a Decision12 dated December 29, 2004, the LA ruled in favor of petitioners,

finding that respondents were not illegally dismissed.

The LA found that respondents, at the time of their engagement, were informed
that their employment will be limited for a specific period of one year and was co-
terminus with the service contract with the Quezon City government. 13 Thus,
respondents were not regular but merely project employees whose hiring was
solely dependent on the aforesaid service contract. As a result, respondents
contracts with Omni expired upon the service contracts expiration on June 30,
2003.14

Dissatisfied with the LAs ruling, respondents filed an appeal before the NLRC. 15

The NLRC Ruling

In a Decision16 dated May 18, 2009, the NLRC affirmed the LAs ruling in toto.

It sustained the LAs finding that respondents were only project employees whose
employment was co-terminus with Omnis service contract with the Quezon City
government. Thus, when respondents refused to sign the employment contracts
for the subsequent period, there was no dismissal to speak of, but rather, a
mereexpiration of respondents previous contracts. 17 Unconvinced, respondents
filed a motion for reconsideration18 which was, however, denied in a
Resolution19 dated August 28, 2009, leading them to file a petition for
certiorari20 before the CA.

The CA Ruling

In a Decision21 dated May 27, 2011, the CA reversed and set aside the NLRCs
earlier pronouncements.

It held that the NLRC failed to consider the glaring fact that no contract of
employment exists to support petitioners allegation that respondents are fixed-
term (or properly speaking, project) employees. 22 Petitioners claim that
respondents were properly apprised regarding the fixed period of their
employment at the time of their engagement is nothing but a mere allegation
which is bereft of substantiation. In view of the fact that no other evidence was
offered to prove the supposed project employment, petitioners failure to present
an employment contract puts into serious doubt the allegation that the
employees, i.e., respondents, were properly informed at the onset of their
employment status as project employees. 23 Besides, the CA pointed out that at
the time respondents were asked to sign the employment contracts, they already
became regular employees by operation of law. It added that in order to be
deemed as project employees, it is not enough that an employee is hired for a
specific project or phase of work; there must also be a determination of, or a
clear agreement on, the completion or termination of the project at the time the
employee was engaged.24 Accordingly, the CA ruled that respondents were
illegally dismissed, and therefore, ordered their reinstatement or the payment of
separation pay if such reinstatement is no longer feasible, with full backwages in
either case.25 Further, it remanded the instant case to the Computation and
Examination Unit of the NLRC for an updated computation of the above-
mentioned monetary awards in accordance with its Decision. 26

Aggrieved, petitioners filed a motion for reconsideration 27 which was, however,

denied by the CA in a Resolution28dated November 11, 2011, hence, this petition.

The Issue Before the Court

The core issue raised in the present petition is whether or not the CA erred in
granting respondents petition for certiorari, thereby setting aside the NLRCs
Decision holding that respondents were project employees.

The Courts Ruling

To justify the grant of the extraordinary remedy of certiorari, petitioners must

satisfactorily show thatthe court or quasi-judicial authority gravely abused the
discretion conferred upon it. Grave abuse of discretion connotes judgment
exercised in a capricious and whimsical manner that is tantamount to lack of
jurisdiction. To be considered "grave," discretion must be exercised in a despotic
manner by reason of passion or personal hostility, and must be so patent and
gross as toamount to an evasion of positive duty or to a virtual refusal to perform
the duty enjoined by or to act at all in contemplation of law.29

In labor disputes, grave abuse of discretion may be ascribed to the NLRC when,
inter alia, its findings and the conclusions reached thereby are not supported by
substantial evidence.30 This requirement of substantial evidence is clearly
expressed in Section 5, Rule 133 of the Rules of Court which provides that "[i]n
cases filed before administrative or quasi-judicial bodies, a fact may be deemed
established if it is supported by substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a
conclusion."

Guided by these considerations, the Court finds that the CA correctly granted
respondents certioraripetition since the NLRC gravely abused its discretion when
it held that respondents were project employees despite petitioners failure to
establish their project employment status through substantial evidence.

Article 280 of the Labor Code distinguishes a "project employee" from a "regular
employee" in this wise:

Art. 280. Regular and casual employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties,
an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable inthe
usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which
has been determined at the time ofthe engagement of the employeeor where the
work or service to be performed is seasonal in nature and the employment is for
the duration of the season.

x x x x (Emphasis and underscoring supplied)

A project employee is assigned to a project which begins and ends at determined

or determinable times.31 Unlike regular employees who may only be dismissed
for just and/or authorized causes under the Labor Code, the services of
employees who are hired as "project employees" may be lawfully terminated at
the completion of the project.32

According to jurisprudence, the principal test for determining whether particular

employees are properly characterized as "project employees" as distinguished
from "regular employees,"is whether or not the employees were assigned to
carry out a "specific project or undertaking," the duration (and scope) of which
were specified at the time they were engaged for that project. The project could
either be (1) a particular job or undertaking that is within the regular or usual
business ofthe employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or (2) a
particular job or undertaking that is not within the regular business of the
corporation.1wphi1 In order to safeguard the rights of workers against the
arbitrary use of the word "project" to prevent employees from attaining a regular
status, employers claiming that their workers are project employees should not
only prove that the duration and scope of the employment was specified at the
time they were engaged, but also that there was indeed a project. 33

Even though the absence of a written contract does not by itself grant regular
status to respondents, such a contract is evidence that respondents were
informed of the duration and scopeof their work and their status as project
employees.34 As held in Hanjin Heavy Industries and Construction Co., Ltd. v.
Ibaez,35 citing numerous precedents on the matter, where no other evidence
was offered, the absence of the employment contracts raises a serious question
of whether the employees were properly informed of their employment status as
project employeesat the time of their engagement, viz.:

While the absence of a written contract does not automatically confer regular
status, it has been construed by this Court as a red flag in cases involving the
question of whether the workers concerned are regular or project employees. In
Grandspan Development Corporation v. Bernardoand Audion Electric Co., Inc. v.
National Labor Relations Commission, this Court took note of the fact that the
employer was unable to present employment contracts signed by the workers,
which stated the duration of the project. In another case, Raycor v. Aircontrol
Systems, Inc. v. National Labor Relations Commission, this Court refused to give
any weight to the employment contracts offered by the employers as evidence,
which contained the signature of the president and general manager, but not the
signatures of the employees.1wphi1 In cases where this Court ruled that
construction workers repeatedly rehired retained their status as project
employees, the employers were ableto produce employment contracts clearly
stipulatingthat the workers employment was coterminous with the project to
support their claims that the employees were notified of the scope and duration
of the project.

Hence, even though the absence of a written contract does not by itself grant
regular status to respondents, such a contract is evidence that respondents were
informedof the duration and scope of their work and their status as project
employees. In this case, where no other evidence was offered, the absence of an
employment contract puts into serious question whether the employees were
properly informed at the onset of their employment status as project employees.
It is doctrinally entrenched that in illegal dismissal cases, the employer has the
burden of proving with clear, accurate, consistent and convincing evidence that a
dismissal was valid. x x x.36 (Emphases supplied; citations omitted)
In this case, records are bereftof any evidence to show that respondents were
made to sign employment contracts explicitly stating that they were going to be
hired as project employees, with the period of their employment to be co-
terminus with the original period of Omnis service contract with the Quezon City
government. Neither is petitioners allegation that respondents were duly
apprised ofthe project-based nature of their employment supported by any other
evidentiary proof. Thus, the logical conclusion is that respondents were not
clearly and knowingly informed of their employment status as mere project
employees, with the duration and scope of the project specified at the time they
were engaged. As such, the presumption of regular employment should be
accorded in their favor pursuant to Article 280 of the Labor Code which provides
that "[employees] who have rendered at least one year of service, whether such
service is continuous or broken [ as respondents in this case ] shall be
considered as [regular employees]with respect to the activity in which [they] are
employed and [their] employment shall continue while such activity actually
exists." Add to this the obvious fact that respondents have been engaged to
perform activities which are usually necessary or desirable in the usual business
or trade of Omni, i.e., garbage hauling, thereby confirming the strength of the
aforesaid conclusion.

The determination that respondents are regular and not merely project
employees resultantly means that their services could not have been validly
terminated at the expiration of the project, or, in this case, the service contract of
Omni with the Quezon City government. As regular employees, it is incumbent
upon petitioners to establish that respondents had been dismissed for a just
and/or authorizedcause. However, petitioners failed in this respect; hence,
respondents wereillegally dismissed.

For its contrary ruling left unsupported by any substantial evidence, it then
ultimately follows that the NLRC gravely abused its discretion in dismissing
respondents complaints for illegal dismissal. The CA Decision reversing and
setting aside the NLRCs ruling on certiorarimust perforce be made to stand.

WHEREFORE, the petition is DENIED. The Decision dated May 27, 2011 and
the Resolution dated November 11, 2011 of the Court of Appeals in CA-G.R. SP.
No. 111413 are hereby AFFIRMED.

SO ORDERED.
 G.R. No. 209822, July 08, 2015

DIONISIO DACLES,*Petitioner, v. MILLENIUM ERECTORS CORPORATION

AND/OR RAGAS TIU, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated April 8,
2013. and the Resolution3 dated October 11, 2013 of the Court of Appeals (CA)
inCA-GR. SP No. 122928, which annulled and set aside the Decision 4 dated
October 17, 2011 and the Resolution5 dated December 2, 2011 of the National
Labor Relations Commission (NLRC) in NLRC Case No. NCR 06-07985-10,
thereby reinstating the Decision 6 dated April 4, 2010 of the Labor Arbiter (LA)
dismissing petitioner Dionisio Dacles's (petitioner) illegal dismissal complaint.

The Facts

Respondent Millenium Erectors Corporation (MEC) is a domestic corporation

engaged in the construction business.7 On October 6, 2010, petitioner instituted a
complaint8 for illegal dismissal with money claims against MEC and its
owner/manager, respondent Ragas Tiu 9 (respondents), before the NLRC,
National Capital Region, docketed as NLRC-NCR-06-07985-10.

Petitioner claimed that he was hired by respondents as a mason in 1998. On

June 7, 2010, while he was working on a project in Malakas Street, Quezon City
(QC), he was advised by respondent's officer, Mr. Bongon, to move to another
project in Robinson's Cubao, QC. However, upon arrival at the site, he was
instructed to return to his former job site and, thereafter, was given a run-around
for the two (2) succeeding days. When he requested to be given a post or
assigned to a new project, he was told by the paymaster not to report for work
anymore, prompting him to file the illegal dismissal complaint, with claims for
service incentive leave (SIL) pay, overtime pay, holiday pay, 13 th month pay, rest
day and premium pay, and salary differentials. 10redarclaw

For their part, respondents denied having illegally dismissed petitioner, claiming
that he was a mere project employee whose contract expired on June 4, 2010
upon the completion of his masonry work assignment in the Residential &
Commercial Building Project (RCB Malakas Project) along East Avenue,
QC.11 Respondents further denied having employed petitioner since 1998
because it was only organized and started business operations in February
2000.12 They averred that petitioner applied and was hired as a mason on
October 8, 2009 and assigned to the Newport Entertainment and Commercial
Center Project in Pasay City (NECC Project), which was completed on March 3,
2010. Thereafter, petitioner applied anew and was hired as a mason on April 15,
2010 to work on the RCB-Malakas Project. 13 Petitioner's termination from both
projects was then duly reported to the Department of Labor and Employment
(DOLE) Makati/Pasay Field Office.14redarclaw

The LA Ruling

In a Decision15 dated April 4, 2010, the LA dismissed the illegal dismissal

complaint, finding that petitioner is a project employee given that: (a) the
employment contracts between MEC and petitioner show that the latter, although
repeatedly rehired, was engaged in particular projects and for specific periods;
(b) the periods of employment were determinable with a known beginning and
termination; and (c) the DOLE was notified of petitioner's termination at the end
of each project. Consequently, the LA held that petitioner cannot validly claim that
he was illegally dismissed because his separation was a consequence of the
completion of his contract.16 The LA likewise denied petitioner's money claims for
lack of evidentiary support.17redarclaw

Aggrieved, petitioner appealed18 to the NLRC, docketed as NLRC LAC No. 05-
001356-11.

The NLRC Ruling

In a Decision19 dated October 17, 2011, the NLRC reversed the LA ruling and
instead, declared that petitioner was a regular employee. At the outset, the NLRC
denied respondents' assertion that respondents could not have employed
petitioner in 199820 since it was only registered with the Securities and Exchange
Commission on February 1, 2000, as evinced by its Certificate of
Incorporation,21 ruling that the said document only proves that MEC has been
operating as such without the benefit of registration; thus, the same should not
be taken against petitioner's positive assertion that he was employed way back in
1998.

Accordingly, the NLRC ruled that petitioner was a regular employee since he was
originally employed in 1998 without a fixed period to perform tasks that were
necessary and desirable to MEC's business, and which status cannot be altered
by a subsequent contract stating otherwise. To this end, it pointed out that
petitioner cannot be lawfully dismissed based on the completion of the last two
(2) projects to which he was assigned and that the employment contracts and
termination reports submitted by MEC were merely issued to circumvent the law
on regularization of the employment of construction workers. 22 The NLRC,
however, denied petitioner's other money claims for lack of legal basis. 23 In fine,
respondents were ordered to reinstate petitioner with full back wages, plus
attorney's fees.24redarclaw

Dissatisfied, respondents moved for reconsideration 25 which was denied in a

Resolution26 dated December 2, 2011. Hence, they filed a petition for review
on certiorari27 before the CA.

The CA Ruling

In a Decision28 dated April 8, 2013, the CA annulled and set aside the NLRC's
ruling and reinstated the LA's ruling. 29 It held that petitioner has not presented
evidence to substantiate his claim of illegal dismissal. In this relation, it observed
that the NLRC made a hasty conclusion that MEC has been operating without
the benefit of registration as early as 1998, and in so doing, erroneously relied on
the self-serving and unsubstantiated statement of petitioner. Therefore, the CA
upheld the LA's finding that petitioner is a project employee who was first hired
as a mason for the NECC Project from October 8, 2009 until its completion on
March 3, 2010, and second, for the RCB-Malakas Project from April 15, 2010
also until its completion. It further gave emphasis on the fact that petitioner's
termination was duly reported by respondents to the DOLE. 30redarclaw

Petitioner moved for reconsideration 31 but was denied in a Resolution 32 dated

October 11, 2013; hence, this petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not theCA committed
reversible error in holding that the NLRC gravely abused its discretion in
declaring that petitioner was a regular employee, and not a project employee.
 The Court's Ruling

The petition is without merit.

First, it must be stressed that to justify the grant of the extraordinary remedy
of certiorari, petitioner must satisfactorily show that the court or quasi-judicial
authority gravely abused the discretion conferred upon it. Grave abuse of
discretion connotes judgment exercised in a capricious and whimsical manner
that is tantamount to lack of jurisdiction. To be considered "grave," discretion
must be exercised in a despotic manner by reason of passion or personal
hostility, and must be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined by or to act at all in
contemplation oflaw.33

In labor disputes, grave abuse of discretion may be ascribed to the NLRC when,
inter alia, its findings and the conclusions reached thereby are not supported by
substantial evidence,34 "or that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion." 35redarclaw

Tested against these considerations, the Court finds that the CA correctly granted
respondents' certiorari petition before it, since the NLRC gravely abused its
discretion in ruling that petitioner was a regular employee of MEC when the latter
had established by substantial evidence that petitioner was merely a project
employee. On the other hand, there is no evidence on record to substantiate
petitioner's claim that he was employed as early as 1998. Article 294 36 of the
Labor Code,37 as amended, distinguishes a project-based employee from a
regular employee as follows:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Art. 294. Regular and casual employment. - The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.

x x x x (Emphasis and underscoring supplied)

Thus, for an employee to be considered project-based, the employer must show
that: (a) the employee was assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time
the employee was engaged for such project. 38 Being assigned to a project or a
phase thereof which begins and ends at determined or determinable times, the
services of project employees may be lawfully terminated at the completion of
such project or phase.39 Consequently, in order to safeguard the rights of workers
against the arbitrary use of the word "project" to prevent them from attaining
regular status, employers claiming that their workers are project employees
should prove that: (a) the duration and scope of the employment was specified at
the time they were engaged; and (b) there was indeed a project.40redarclaw

In this case, records reveal that petitioner was adequately informed of his
employment status (as project employee) at the time of his engagement for the
NECC and RCB-Malakas Projects. This is clearly substantiated by the latter's
employment contracts41 duly signed by him, explicitly stating that: (a) he was
hired as a project employee; and (b) his employment was for the indicated
starting dates therein "and will end on completion/phase of work of project." 42 To
the Court's mind, said contracts sufficiently apprised petitioner that his security of
tenure with MEC would only last as long as the specific project or a phase
thereof to which he was assigned was subsisting. Hence, when the project or
phase was completed, he was validly terminated from employment, his
engagement being co-terminus only with such project or phase.

Further, pursuant to Department Order No. 19, or the "Guidelines Governing the
Employment of Workers in the Construction Industry," respondent duly submitted
the required Establishment Employment Reports 43 to the DOLE Makati/Pasay
Field Office regarding the "permanent termination" of petitioner from both of the
projects for which he was engaged (i.e., the NECC and RCB-Malakas Projects).
As aptly pointed out by the CA, such submission is an indication of project
employment. In Tomas Lao Construction v. NLRC,44 the Court elucidated:

Moreover, if private respondents were indeed employed as "project employees,"

petitioners should have submitted a report of termination to the nearest public
employment office every time their employment was terminated due to
completion of each construction project. The records show that they did not.
Policy Instruction No. 20 is explicit that employers of project employees are
exempted from the clearance requirement but not from the submission of
termination report. We have consistently held that failure of the employer to file
termination reports after every project completion proves that the employees are
not project employees. Nowhere in the New Labor Code is it provided that the
reportorial requirement is dispensed with. The fact is that Department Order
No. 19 superseding Policy Instruction No. 20 expressly provides that the
report of termination is one of the indicators of project
employment. (Emphasis supplied)

On the other hand, the records are bereft of any substantial evidence to support
petitioner's claim that he had been continuously rehired by respondent as a
mason for 22 years45 as to accord him with a regular employment status.
Petitioner proffered a bare and self-serving claim that he has been employed by
respondent since 1998.46 It is well-settled that a party alleging a critical fact must
support his allegation with substantial evidence as allegation is not
evidence.47 Ultimately, nothing on record evinces the existence of an employer-
employee relationship48 between him and respondent prior to his employment as
a project employee in the NECC Project.

At any rate, the repeated and successive rehiring of project employees does not,
by and of itself, qualifY them as regular employees. Case law states that length
of service (through rehiring) is not the controlling determinant of the employment
tenure, but whether the employment has been fixed for a specific project or
undertaking, with its completion having been determined at the time of the
engagement of the employee.49 While generally, length of service provides a fair
yardstick for determining when an employee initially hired on a temporary basis
becomes a permanent one, entitled to the security and benefits of regularization,
this standard will not be fair, if applied to the construction industry because
construction firms cannot guarantee work and funding for its payrolls beyond the
life of each project as they have no control over the decisions and resources of
project proponents or owners.50 Thus, once the project is completed it would be
unjust to require the employer to maintain these employees in their payroll since
this would be tantamount to making the employee a privileged retainer who
collects payment from his employer for work not done, and amounts to labor
coddling at the expense of management. 51redarclaw

All told, since respondents have duly proven by substantial evidence that
petitioner, although rehired, was engaged for specific projects, the duration and
scope of which were specified at the times he was engaged, and that he was
apprised of his status as a project employee at the onset, the NLRC gravely
abused its discretion in ruling that petitioner was a regular employee. Therefore,
the affirmance of the CA's ruling is in order.

WHEREFORE, the petition is DENIED. The Decision dated April 8, 2013 and the
Resolution dated October 11, 2013 of the Court of Appeals in CA-G.R. SP No.
122928 are hereby AFFIRMED.

SO ORDERED.
G.R. No. 177937 January 19, 2011

ROBINSONS GALLERIA/ROBINSONS SUPERMARKET CORPORATION

and/or JESS MANUEL, Petitioners, vs. IRENE R. RANCHEZ, Respondent

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court, assailing the Decision[1] dated August 29, 2006 and the
Resolution[2] dated May 16, 2007 of the Court of Appeals (CA) in CA-G.R. SP No.
91631.
The Facts

The facts of the case are as follows.

Respondent was a probationary employee of petitioner Robinsons

Galleria/Robinsons Supermarket Corporation (petitioner Supermarket) for a
period of five (5) months, or from October 15, 1997 until March 14, 1998. [3] She
underwent six (6) weeks of training as a cashier before she was hired as such on
October 15, 1997.[4]
Two weeks after she was hired, or on October 30, 1997, respondent reported to
her supervisor the loss of cash amounting to Twenty Thousand Two Hundred
Ninety-Nine Pesos (P20,299.00) which she had placed inside the company
locker. Petitioner Jess Manuel (petitioner Manuel), the Operations Manager of
petitioner Supermarket, ordered that respondent be strip-searched by the
company guards. However, the search on her and her personal belongings
yielded nothing.[5]

Respondent acknowledged her responsibility and requested that she be allowed

to settle and pay the lost amount. However, petitioner Manuel did not heed her
request and instead reported the matter to the police. Petitioner Manuel likewise
requested the Quezon City Prosecutors Office for an inquest. [6]

On November 5, 1997, an information for Qualified Theft was filed with the
Quezon City Regional Trial Court. Respondent was constrained to spend two
weeks in jail for failure to immediately post bail in the amount of Forty Thousand
Pesos (P40,000.00).[7]

On November 25, 1997, respondent filed a complaint for illegal dismissal and
damages.[8]

On March 12, 1998, petitioners sent to respondent by mail a notice of termination

and/or notice of expiration of probationary employment dated March 9, 1998. [9]

On August 10, 1998, the Labor Arbiter rendered a decision, [10] the fallo of which
reads:

CONFORMABLY WITH THE FOREGOING, judgment is hereby

rendered dismissing the claim of illegal dismissal for lack of merit.

Respondents are ordered to accept complainant to her former or

equivalent work without prejudice to any action they may take in the
premises in connection with the missing money of P20,299.00.

SO ORDERED.[11]

In dismissing the complaint for illegal dismissal, the Labor Arbiter ratiocinated
that at the time respondent filed the complaint for illegal dismissal, she was not
yet dismissed by petitioners. When she was strip- searched by the security
personnel of petitioner Supermarket, the guards were merely conducting an
investigation. The subsequent referral of the loss to the police authorities might
be considered routine. Respondents non-reporting for work after her release from
detention could be taken against her in the investigation that petitioner
supermarket would conduct.[12]

On appeal, the National Labor Relations Commission (NLRC) reversed the

decision of the Labor Arbiter in a decision [13] dated October 20, 2003. The
dispositive portion of the decision reads:

WHEREFORE, the appealed decision is SET ASIDE. The

respondents are hereby ordered to immediately reinstate
complainant to her former or equivalent position without loss of
seniority rights and privileges and to pay her full backwages
computed from the time she was constructively dismissed on
October 30, 1997 up to the time she is actually reinstated.

SO ORDERED.[14]

In reversing the decision of the Labor Arbiter, the NLRC ruled that respondent
was denied due process by petitioners. Strip-searching respondent and sending
her to jail for two weeks certainly amounted to constructive dismissal because
continued employment had been rendered impossible, unreasonable, and
unlikely. The wedge that had been driven between the parties was impossible to
ignore.[15] Although respondent was only a probationary employee, the
subsequent lapse of her probationary contract of employment did not have the
effect of validly terminating her employment because constructive dismissal had
already been effected earlier by petitioners.[16]

Petitioners filed a motion for reconsideration, which was denied by the NLRC in a
resolution[17] dated July 21, 2005.

Petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before
the CA. On August 29, 2006, the CA rendered a Decision, the dispositive portion
of which reads:

WHEREFORE, premises considered, the challenged Decision of

the National Labor Relations Commission
is AFFIRMED with MODIFICATION in that should reinstatement be
no longer possible in view of the strained relation between the
parties, Petitioners are ordered to pay Respondent separation pay
equivalent to one (1) month pay in addition to backwages from the
date of dismissal until the finality of the assailed decision.

SO ORDERED.[18]
Petitioners filed a motion for reconsideration. However, the CA denied the same
in a Resolution dated May 16, 2007.

Hence, this petition.

Petitioners assail the reinstatement of respondent, highlighting the fact that she
was a probationary employee and that her probationary contract of employment
lapsed on March 14, 1998. Thus, her reinstatement was rendered moot and
academic. Furthermore, even if her probationary contract had not yet expired, the
offense that she committed would nonetheless militate against her regularization.
[19]

On the other hand, respondent insists that she was constructively

dismissed by petitioner Supermarket when she was strip-searched, divested of
her dignity, and summarily thrown in jail. She could not have been expected to go
back to work after being allowed to post bail because her continued employment
had been rendered impossible, unreasonable, and unlikely. She stresses that, at
the time the money was discovered missing, it was not with her but locked in the
company locker. The company failed to provide its cashiers with strong locks and
proper security in the work place. Respondent argues that she was not caught in
the act and even reported that the money was missing. She claims that she was
denied due process.[20]
The Issue

The sole issue for resolution is whether respondent was illegally terminated from
employment by petitioners.

The Ruling of the Court

We rule in the affirmative.

There is probationary employment when the employee upon his engagement is

made to undergo a trial period during which the employer determines his fitness
to qualify for regular employment based on reasonable standards made known to
him at the time of engagement.[21]

A probationary employee, like a regular employee, enjoys security of tenure.

[22]
However, in cases of probationary employment, aside from just or authorized
causes of termination, an additional ground is provided under Article 281 of the
Labor Code, i.e., the probationary employee may also be terminated for failure to
qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of the engagement. Thus, the
services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (1) a just or (2) an authorized cause; and (3)
when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.[23]

Article 277(b) of the Labor Code mandates that subject to the constitutional right
of workers to security of tenure and their right to be protected against dismissal,
except for just and authorized cause and without prejudice to the requirement of
notice under Article 283 of the same Code, the employer shall furnish the worker,
whose employment is sought to be terminated, a written notice containing a
statement of the causes of termination, and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of a
representative if he so desires, in accordance with company rules and
regulations pursuant to the guidelines set by the Department of Labor and
Employment.

In the instant case, based on the facts on record, petitioners failed to accord
respondent substantive and procedural due process. The haphazard manner in
the investigation of the missing cash, which was left to the determination of the
police authorities and the Prosecutors Office, left respondent with no choice but
to cry foul. Administrative investigation was not conducted by petitioner
Supermarket. On the same day that the missing money was reported by
respondent to her immediate superior, the company already pre-judged her guilt
without proper investigation, and instantly reported her to the police as the
suspected thief, which resulted in her languishing in jail for two weeks.

As correctly pointed out by the NLRC, the due process requirements under the
Labor Code are mandatory and may not be supplanted by police investigation or
court proceedings. The criminal aspect of the case is considered independent of
the administrative aspect. Thus, employers should not rely solely on the findings
of the Prosecutors Office. They are mandated to conduct their own separate
investigation, and to accord the employee every opportunity to defend
himself. Furthermore, respondent was not represented by counsel when she was
strip-searched inside the company premises or during the police investigation,
and in the preliminary investigation before the Prosecutors Office.

Respondent was constructively dismissed by petitioner Supermarket effective

October 30, 1997. It was unreasonable for petitioners to charge her with
abandonment for not reporting for work upon her release in jail. It would be the
height of callousness to expect her to return to work after suffering in jail for two
weeks. Work had been rendered unreasonable, unlikely, and definitely
impossible, considering the treatment that was accorded respondent by
petitioners.

As to respondents monetary claims, Article 279 of the Labor Code provides that
an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges, to full
backwages, inclusive of allowances, and to other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up
to the time of his actual reinstatement. However, due to the strained relations of
the parties, the payment of separation pay has been considered an acceptable
alternative to reinstatement, when the latter option is no longer desirable or
viable. On the one hand, such payment liberates the employee from what could
be a highly oppressive work environment. On the other, the payment releases
the employer from the grossly unpalatable obligation of maintaining in its employ
a worker it could no longer trust.[24]

Thus, as an illegally or constructively dismissed employee, respondent is entitled

to: (1) either reinstatement, if viable, or separation pay, if reinstatement is no
longer viable; and (2) backwages. These two reliefs are separate and distinct
from each other and are awarded conjunctively.[25]

In this case, since respondent was a probationary employee at the time

she was constructively dismissed by petitioners, she is entitled to separation pay
and backwages. Reinstatement of respondent is no longer viable considering the
circumstances.

However, the backwages that should be awarded to respondent shall be

reckoned from the time of her constructive dismissal until the date of the
termination of her employment, i.e., from October 30, 1997 to March 14,
1998. The computation should not cover the entire period from the time her
compensation was withheld up to the time of her actual reinstatement. This is
because respondent was a probationary employee, and the lapse of her
probationary employment without her appointment as a regular employee of
petitioner Supermarket effectively severed the employer-employee relationship
between the parties.
In all cases involving employees engaged on probationary basis, the employer
shall make known to its employees the standards under which they will qualify as
regular employees at the time of their engagement. Where no standards are
made known to an employee at the time, he shall be deemed a regular
employee,[26] unless the job is self-descriptive, like maid, cook, driver, or
messenger. However, the constitutional policy of providing full protection to labor
is not intended to oppress or destroy management. [27] Naturally, petitioner
Supermarket cannot be expected to retain respondent as a regular employee
considering that she lost P20,299.00 while acting as a cashier during the
probationary period. The rules on probationary employment should not be used
to exculpate a probationary employee who acts in a manner contrary to basic
knowledge and common sense, in regard to which, there is no need to spell out a
policy or standard to be met.[28]

WHEREFORE, in view of the foregoing, the petition is DENIED. The

Decision of the Court of Appeals in CA-G.R. SP No. 91631 is
hereby AFFIRMED with the MODIFICATION that petitioners are hereby ordered
to pay respondent Irene R. Ranchez separation pay equivalent to one (1) month
pay and backwages from October 30, 1997 to March 14, 1998.

Costs against petitioners.

SO ORDERED.

G.R. No. 165381 February 9, 2011

NELSON A. CULILI, Petitioner vs. EASTERN TELECOMMUNICATIONS

PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive
Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA
(Vice President) and STELLA GARCIA (Assistant Vice President),
Respondents

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a petition for review on certiorari[1] of the February 5, 2004

Decision[2] and September 13, 2004 Resolution[3] of the Court of Appeals in CA-
G.R. SP No. 75001,wherein the Court of Appeals set aside the March 1, 2002
Decision[4] and September 24, 2002 Resolution[5] of the National Labor Relations
Commission (NLRC), which affirmed the Labor Arbiters Decision [6] dated April 30,
2001.

Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a

telecommunications company engaged mainly in the business of establishing
commercial telecommunications systems and leasing of international datalines or
circuits that pass through the international gateway facility (IGF). [7] The other
respondents are ETPIs officers: Salvador Hizon, President and Chief Executive
Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President;
and Stella Garcia, Assistant Vice President.

Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician

in its Field Operations Department on January 27, 1981. On December 12, 1996,
Culili was promoted to Senior Technician in the Customer Premises Equipment
Management Unit of the Service Quality Department and his basic salary was
increased.[8]

As a telecommunications company and an authorized IGF operator, ETPI

was required, under Republic Act. No. 7925 and Executive Order No. 109, to
establish landlines in Metro Manila and certain provinces. [9] However, due to
interconnection problems with the Philippine Long Distance Telephone Company
(PLDT), poor subscription and cancellation of subscriptions, and other business
difficulties, ETPI was forced to halt its roll out of one hundred twenty-nine
thousand (129,000) landlines already allocated to a number of its employees. [10]

In 1998, due to business troubles and losses, ETPI was compelled to

implement a Right-Sizing Program which consisted of two phases: the first
phase involved the reduction of ETPIs workforce to only those employees that
were necessary and which ETPI could sustain; the second phase entailed a
company-wide reorganization which would result in the transfer, merger,
absorption or abolition of certain departments of ETPI. [11]

As part of the first phase, ETPI, on December 10, 1998, offered to its
employees who had rendered at least fifteen years of service, the Special
Retirement Program, which consisted of the option to voluntarily retire at an
earlier age and a retirement package equivalent to two and a half (2) months
salary for every year of service. [12] This offer was initially rejected by the Eastern
Telecommunications Employees Union (ETEU), ETPIs duly recognized
bargaining agent, which threatened to stage a strike. ETPI explained to ETEU
the exact details of the Right-Sizing Program and the Special Retirement
Program and after consultations with ETEUs members, ETEU agreed to the
implementation of both programs.[13] Thus, on February 8, 1999, ETPI re-offered
the Special Retirement Program and the corresponding retirement package to
the one hundred two (102) employees who qualified for the program. [14] Of all the
employees who qualified to avail of the program, only Culili rejected the offer.[15]
 After the successful implementation of the first phase of the Right-Sizing
Program, ETPI, on March 1, 1999 proceeded with the second phase which
necessitated the abolition, transfer and merger of a number of ETPIs
departments.[16]

Among the departments abolished was the Service Quality

Department. The functions of the Customer Premises Equipment Management
Unit, Culilis unit, were absorbed by the Business and Consumer Accounts
Department. The abolition of the Service Quality Department rendered the
specialized functions of a Senior Technician unnecessary. As a result, Culilis
position was abolished due to redundancy and his functions were absorbed by
Andre Andrada, another employee already with the Business and Consumer
Accounts Department.[17]

On March 5, 1999, Culili discovered that his name was omitted in ETPIs
New Table of Organization. Culili, along with three of his co-employees who were
similarly situated, wrote their union president to protest such omission. [18]

In a letter dated March 8, 1999, ETPI, through its Assistant Vice President
Stella Garcia, informed Culili of his termination from employment effective April 8,
1999. The letter reads:
March 8, 1999
To: N. Culili
Thru: S. Dobbin/G. Ebue
From: AVP-HRD
------------------------------------------------------------------------------------------

As you are aware, the current economic crisis has adversely

affected our operations and undermined our earlier plans to put in
place major work programs and activities. Because of this, we have
to implement a Rightsizing Program in order to cut
administrative/operating costs and to avoid losses. In line with this
program, your employment with the company shall terminate
effective at the close of business hours on April 08, 1999. However,
to give you ample time to look for other employment, provided you
have amply turned over your pending work and settled your
accountabilities, you are no longer required to report to work
starting tomorrow. You will be considered on paid leave until April
08, 1999.
 You will likewise be paid separation pay in compliance with legal
requirements (see attached), as well as other benefits accruing to
you under the law, and the CBA. We take this opportunity to thank
you for your services and wish you well in your future endeavors.

(Signed)
Stella J. Garcia[19]

This letter was similar to the memo shown to Culili by the union president
weeks before Culili was dismissed. The memo was dated December 7, 1998,
and was advising him of his dismissal effective January 4, 1999 due to the Right-
Sizing Program ETPI was going to implement to cut costs and avoid losses. [20]

Culili alleged that neither he nor the Department of Labor and Employment
(DOLE) were formally notified of his termination. Culili claimed that he only found
out about it sometime in March 1999 when Vice President Virgilio Garcia handed
him a copy of the March 8, 1999 letter, after he was barred from entering ETPIs
premises by its armed security personnel when he tried to report for work. [21] Culili
believed that ETPI had already decided to dismiss him even prior to the March 8,
1999 letter as evidenced by the December 7, 1998 version of that
letter.Moreover, Culili asserted that ETPI had contracted out the services he used
to perform to a labor-only contractor which not only proved that his functions had
not become unnecessary, but which also violated their Collective Bargaining
Agreement (CBA) and the Labor Code. Aside from these, Culili also alleged that
he was discriminated against when ETPI offered some of his co-employees an
additional benefit in the form of motorcycles to induce them to avail of the Special
Retirement Program, while he was not.[22]

ETPI denied singling Culili out for termination. ETPI claimed that while it is
true that they offered the Special Retirement Package to reduce their workforce
to a sustainable level, this was only the first phase of the Right-Sizing Program to
which ETEU agreed. The second phase intended to simplify and streamline the
functions of the departments and employees of ETPI.The abolition of Culilis
department - the Service Quality Department - and the absorption of its functions
by the Business and Consumer Accounts Department were in line with the
programs goals as the Business and Consumer Accounts Department was more
economical and versatile and it was flexible enough to handle the limited
functions of the Service Quality Department.ETPI averred that since Culili did not
avail of the Special Retirement Program and his position was subsequently
declared redundant, it had no choice but to terminate Culili. [23] Culili, however,
continued to report for work. ETPI said that because there was no more work for
Culili, it was constrained to serve a final notice of termination [24] to Culili, which
Culili ignored.ETPI alleged that Culili informed his superiors that he would agree
to his termination if ETPI would give him certain special work tools in addition to
the benefits he was already offered.ETPI claimed that Culilis counter-offer was
unacceptable as the work tools Culili wanted were worth almost a million
pesos. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of
Eight Hundred Fifty-Nine Thousand Thirty-Three and 99/100 Pesos
(P859,033.99) consisting of his basic salary, leaves, 13 th month pay and
separation pay.[25] ETPI claimed that Culili refused to accept his termination and
continued to report for work.[26] ETPI denied hiring outside contractors to perform
Culilis work and denied offering added incentives to its employees to induce
them to retire early. ETPI also explained that the December 7, 1998 letter was
never given to Culili in an official capacity. ETPI claimed that it really needed to
reduce its workforce at that time and that it had to prepare several letters in
advance in the event that none of the employees avail of the Special Retirement
Program. However, ETPI decided to wait for a favorable response from its
employees regarding the Special Retirement Program instead of terminating
them.[27]

On February 8, 2000, Culili filed a complaint against ETPI and its officers
for illegal dismissal, unfair labor practice, and money claims before the Labor
Arbiter.

On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI
guilty of illegal dismissal and unfair labor practice, to wit:

WHEREFORE, decision is hereby rendered declaring the dismissal

of complainant Nelson A. Culili illegal for having been made through
an arbitrary and malicious declaration of redundancy of his position
and for having been done without due process for failure of the
respondent to give complainant and the DOLE written notice of
such termination prior to the effectivity thereof.

In view of the foregoing, respondents Eastern Telecommunications

Philippines and the individual respondents are hereby found guilty
of unfair labor practice/discrimination and illegal dismissal and
ordered to pay complainant backwages and such other benefits
due him if he were not illegally dismissed, including moral and
exemplary damages and 10% attorneys fees. Complainant likewise
is to be reinstated to his former position or to a substantially
equivalent position in accordance with the pertinent provisions of
the Labor Code as interpreted in the case of Pioneer texturing
[Pioneer Texturizing Corp. v. National Labor Relations
Commission], G.R. No. 11865[1], 16 October 1997. Hence,
Complainant must be paid the total amount of TWO MILLION
SEVEN HUNDRED FORTY[-]FOUR THOUSAND THREE
[HUNDRED] SEVENTY[-] NINE and 41/100 (P2,744,379.41),
computed as follows:

I. Backwages (from 16 March 1999 to 16 March 2001)

a. Basic Salary (P29,030 x 24 mos.) P696,720.96

b. 13th Month Pay (P692,720.96/12) 58,060.88

c. Leave Benefits

1. Vacation Leave (30 days/annum)

P1,116.54 x 60 days 66,992.40

2. Sick Leave (30 days/annum)

P1,116.54 x 60 days 66,992.40

3. Birthday Leave (1 day/annum)

P1,116.54 x 2 days 2,233.08

d. Rice and Meal Subsidy

16 March 31 July 1999
(P1,750 x 4.5 mos. = P7,875.00)

01 August 1991 31 July 2000

(P1,850 x 12 mos. = P22,200.00)

01 August 2000 16 March 2001

(P1,950 x 7.5 mos. = P14,625.00) 44,700.00

e. Uniform Allowance
P7,000/annum x 2 years __14,000.00
 P949,699.72

II. Damages

a. MoralP500,000.00
b. ExemplaryP250,000.00

III. Attorneys Fees (10% of award) __94,969.97

GRAND TOTAL: P2,744,379.41[28]

The Labor Arbiter believed Culilis claim that ETPI intended to dismiss him
even before his position was declared redundant. He found the December 7,
1998 letter to be a telling sign of this intention. The Labor Arbiter held that a
reading of the termination letter shows that the ground ETPI was actually
invoking was retrenchment and not redundancy, but ETPI stuck to redundancy
because it was easier to prove than retrenchment. He also did not believe that
Culilis functions were as limited as ETPI made it appear to be, and held that
ETPI failed to present any reasonable criteria to justify the declaration of Culilis
position as redundant. On the issue of unfair labor practice, the Labor Arbiter
agreed that the contracting out of Culilis functions to non-union members violated
Culilis rights as a union member. Moreover, the Labor Arbiter said that ETPI was
not able to dispute Culilis claims of discrimination and subcontracting, hence,
ETPI was guilty of unfair labor practice.

On appeal, the NLRC affirmed the Labor Arbiters decision but modified the
amount of moral and exemplary damages awarded, viz:
WHEREFORE, the Decision appealed from is AFFIRMED granting
complainant the money claims prayed for including full backwages,
allowances and other benefits or their monetary equivalent
computed from the time of his illegal dismissal on 16 March 1999
up to his actual reinstatement except the award of moral and
exemplary damages which is modified to P200,000.00 for moral
and P100,000.00 for exemplary damages. For this purpose, this
case is REMANDED to the Labor Arbiter for computation of
backwages and other monetary awards to complainant. [29]
ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure
before the Court of Appeals on the ground of grave abuse of discretion. ETPI
prayed that a Temporary Restraining Order be issued against the NLRC from
implementing its decision and that the NLRC decision and resolution be set
aside.

The Court of Appeals, on February 5, 2004, partially granted ETPIs petition. The
dispositive portion of the decision reads as follows:
WHEREFORE, all the foregoing considered, the petition
is PARTIALLY GRANTED. The assailed Decision of public
respondent National Labor Relations Commission is MODIFIED in
that petitioner Eastern Telecommunications Philippines Inc. (ETPI)
is hereby ORDERED to pay respondent Nelson Culili full
backwages from the time his salaries were not paid until the finality
of this Decision plus separation pay in an amount equivalent to one
(1) month salary for every year of service. The awards for moral
and exemplary damages are DELETED. The Writ of Execution
issued by the Labor Arbiter dated September 8, 2003
is DISSOLVED.[30]

The Court of Appeals found that Culilis position was validly abolished due to
redundancy. The Court of Appeals said that ETPI had been very candid with its
employees in implementing its Right-Sizing Program, and that it was highly
unlikely that ETPI would effect a company-wide reorganization simply for the
purpose of getting rid of Culili. The Court of Appeals also held that ETPI cannot
be held guilty of unfair labor practice as mere contracting out of services being
performed by union members does not per se amount to unfair labor practice
unless it interferes with the employees right to self-organization. The Court of
Appeals further held that ETPIs officers cannot be held liable absent a showing
of bad faith or malice. However, the Court of Appeals found that ETPI failed to
observe the standards of due process as required by our laws when it failed to
properly notify both Culili and the DOLE of Culilis termination. The Court of
Appeals maintained its position in its September 13, 2004 Resolution when it
denied Culilis Motion for Reconsideration and Urgent Motion to Reinstate the
Writ of Execution issued by the Labor Arbiter, and ETPIs Motion for Partial
Reconsideration.
Culili is now before this Court praying for the reversal of the Court of Appeals
decision and the reinstatement of the NLRCs decision based on the following
grounds:
I

THE COURT OF APPEALS DECIDED A QUESTION OF

SUBSTANCE NOT IN ACCORD WITH THE APPLICABLE LAW
AND JURISPRUDENCE WHEN IT REVERSED THE DECISIONS
OF THE NLRC AND THE LABOR ARBITER HOLDING THE
DISMISSAL OF PETITIONER ILLEGAL IN THAT:

A. CONTRARY TO THE FINDINGS OF THE

COURT OF APPEALS, RESPONDENTS
CHARACTERIZATION OF PETITIONERS
POSITION AS REDUNDANT WAS TAINTED
BY BAD FAITH.

B. THERE WAS NO ADEQUATE

JUSTIFICATION TO DECLARE PETITIONERS
POSITION AS REDUNDANT.

II
THE COURT OF APPEALS DECIDED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW AND
JURISPRUDENCE IN FINDING THAT NO UNFAIR LABOR
PRACTICE ACTS WERE COMMITTED AGAINST THE
PETITIONER.

III

THE COURT OF APPEALS DECIDED A QUESTION OF

SUBSTANCE NOT IN ACCORD WITH LAW AND
JURISPRUDENCE IN DELETING THE AWARD OF MORAL AND
EXEMPLARY DAMAGES AND ATTORNEYS FEES IN FAVOR OF
PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION
DATED 8 SEPTEMBER 2003 ISSUED BY THE LABOR ARBITER.
 IV

THE COURT OF APPEALS DECIDED A QUESTION OF

SUBSTANCE NOT IN ACCORD WITH LAW AND
JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL
RESPONDENTS OF PERSONAL LIABILITY.

CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE

COURT OF APPEALS, IN A CERTIORARI PROCEEDING,
REVIEWED THE FACTUAL FINDINGS OF THE NLRC WHICH
AFFIRMED THAT OF THE LABOR ARBITER AND, THEREAFTER,
ISSUED A WRIT OF CERTIORARI REVERSING THE DECISIONS
OF THE NLRC AND THE LABOR ARBITER EVEN IN THE
ABSENCE OF GRAVE ABUSE OF DISCRETION.[31]

Procedural Issue: Court of Appeals

Power to Review Facts in a Petition

For Certiorari under Rule 65

Culili argued that the Court of Appeals acted in contravention of applicable law
and jurisprudence when it reexamined the facts in this case and reversed the
factual findings of the Labor Arbiter and the NLRC in a special civil action
for certiorari.

This Court has already confirmed the power of the Court of Appeals, even on a
Petition for Certiorari under Rule 65,[32] to review the evidence on record, when
necessary, to resolve factual issues:
The power of the Court of Appeals to review NLRC decisions via
Rule 65 or Petition for Certiorari has been settled as early as in our
decision in St. Martin Funeral Home v. National Labor Relations
Commission. This Court held that the proper vehicle for such
review was a Special Civil Action for Certiorari under Rule 65 of the
Rules of Court, and that this action should be filed in the Court of
Appeals in strict observance of the doctrine of the hierarchy of
courts. Moreover, it is already settled that under Section 9 of Batas
 Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An
Act Expanding the Jurisdiction of the Court of Appeals, amending
for the purpose of Section Nine of Batas Pambansa Blg. 129 as
amended, known as the Judiciary Reorganization Act of 1980), the
Court of Appeals pursuant to the exercise of its original jurisdiction
over Petitions for Certiorari is specifically given the power to pass
upon the evidence, if and when necessary, to resolve factual
issues.[33]

While it is true that factual findings made by quasi-judicial and

administrative tribunals, if supported by substantial evidence, are accorded great
respect and even finality by the courts, this general rule admits of
exceptions. When there is a showing that a palpable and demonstrable mistake
that needs rectification has been committed [34] or when the factual findings were
arrived at arbitrarily or in disregard of the evidence on record, these findings may
be examined by the courts.[35]

In the case at bench, the Court of Appeals found itself unable to

completely sustain the findings of the NLRC thus, it was compelled to review the
facts and evidence and not limit itself to the issue of grave abuse of discretion.

With the conflicting findings of facts by the tribunals below now before us,
it behooves this Court to make an independent evaluation of the facts in this
case.
Main Issue: Legality of Dismissal

Culili asserted that he was illegally dismissed because there was no valid
cause to terminate his employment. He claimed that ETPI failed to prove that his
position had become redundant and that ETPI was indeed incurring losses. Culili
further alleged that his functions as a Senior Technician could not be considered
a superfluity because his tasks were crucial and critical to ETPIs business.

Under our laws, an employee may be terminated for reasons involving

measures taken by the employer due to business necessities. Article 283 of
the Labor Code provides:
 Art. 283. Closure of establishment and reduction of
personnel. - The employer may also terminate the employment of
any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and the Department
of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation
of labor-saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his one
(1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year.

There is redundancy when the service capability of the workforce is

greater than what is reasonably required to meet the demands of the business
enterprise. A position becomes redundant when it is rendered superfluous by any
number of factors such as over-hiring of workers, decrease in volume of
business, or dropping a particular product line or service activity previously
manufactured or undertaken by the enterprise.[36]

This Court has been consistent in holding that the determination of

whether or not an employees services are still needed or sustainable properly
belongs to the employer. Provided there is no violation of law or a showing that
the employer was prompted by an arbitrary or malicious act, the soundness or
wisdom of this exercise of business judgment is not subject to the discretionary
review of the Labor Arbiter and the NLRC.[37]

However, an employer cannot simply declare that it has become overmanned

and dismiss its employees without producing adequate proof to sustain its claim
of redundancy.[38] Among the requisites of a valid redundancy program are: (1)
the good faith of the employer in abolishing the redundant position; and (2) fair
and reasonable criteria in ascertaining what positions are to be declared
redundant,[39] such as but not limited to: preferred status, efficiency, and seniority.
[40]

This Court also held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/ proposal on the viability
of the newly created positions, job description and the approval by the
management of the restructuring.[41]

In the case at bar, ETPI was upfront with its employees about its plan to
implement a Right-Sizing Program. Even in the face of initial opposition from and
rejection of the said program by ETEU, ETPI patiently negotiated with ETEUs
officers to make them understand ETPIs business dilemma and its need to
reduce its workforce and streamline its organization.This evidently rules out bad
faith on the part of ETPI.

In deciding which positions to retain and which to abolish, ETPI chose on

the basis of efficiency, economy, versatility and flexibility. It needed to reduce its
workforce to a sustainable level while maintaining functions necessary to keep it
operating. The records show that ETPI had sufficiently established not only its
need to reduce its workforce and streamline its organization, but also the
existence of redundancy in the position of a Senior Technician. ETPI explained
how it failed to meet its business targets and the factors that caused this, and
how this necessitated it to reduce its workforce and streamline its
organization. ETPI also submitted its old and new tables of organization and
sufficiently described how limited the functions of the abolished position of a
Senior Technician were and how it decided on whom to absorb these functions.

In his affidavit dated April 10, 2000, [42] Mr. Arnel D. Reyel, the Head of both
the Business Services Department and the Finance Department of ETPI,
described how ETPI went about in reorganizing its departments. Mr. Reyel said
that in the course of ETPIs reorganization, new departments were created, some
were transferred, and two were abolished. Among the departments abolished
was the Service Quality Department. Mr. Reyel said that ETPI felt that the
functions of the Service Quality Department, which catered to both corporate and
small and medium-sized clients, overlapped and were too large for a single
department, thus, the functions of this department were split and simplified into
two smaller but more focused and efficient departments. In arriving at the
decision to abolish the position of Senior Technician, Mr. Reyel explained:

11.3. Thus, in accordance with the reorganization of the

different departments of ETPI, the Service Quality Department was
abolished and its functions were absorbed by the Business and
Consumer Accounts Department and the Corporate and Major
Accounts Department.

11.4. With the abolition and resulting simplification of the Service

Quality Department, one of the units thereunder, the Customer
Premises Equipment Maintenance (CPEM) unit was transferred to
the Business and Consumer Accounts Department. Since the
Business and Consumer Accounts Department had to remain
economical and focused yet versatile enough to meet all the needs
of its small and medium sized clients, it was decided that, in the
judgment of ETPI management, the specialized functions of a
Senior Technician in the CPEM unit whose sole function was
essentially the repair and servicing of ETPIs telecommunications
equipment was no longer needed since the Business and
Consumer [Accounts] Department had to remain economical and
focused yet versatile enough to meet all the multifarious needs of
its small and medium sized clients.

11.5. The business reason for the abolition of the position of Senior
Technician was because in ETPIs judgment, what was needed in
the Business and Consumer Accounts Department was a versatile,
yet economical position with functions which were not limited to the
mere repair and servicing of telecommunications equipment. It was
determined that what was called for was a position that could also
perform varying functions such as the actual installation of
telecommunications products for medium and small scale clients,
handle telecommunications equipment inventory monitoring,
evaluation of telecommunications equipment purchased and the
preparation of reports on the daily and monthly activation of
telecommunications equipment by these small and medium scale
clients.

11.6. Thus, for the foregoing reasons, ETPI decided that the
position of Senior Technician was to be abolished due to
redundancy. The functions of a Senior Technician was to be
abolished due to redundancy.The functions of a Senior Technician
would then be absorbed by an employee assigned to the Business
and Consumer Accounts Department who was already performing
the functions of actual installation of telecommunications products
 in the field and handling telecommunications equipment inventory
monitoring, evaluation of telecommunications equipment purchased
and the preparation of reports on the daily and monthly activation of
telecommunications equipment. This employee would then simply
add to his many other functions the duty of repairing and servicing
telecommunications equipment which had been previously
performed by a Senior Technician.[43]

In the new table of organization that the management approved, one

hundred twelve (112) employees were redeployed and nine (9) positions were
declared redundant.[44] It is inconceivable that ETPI would effect a company-wide
reorganization of this scale for the mere purpose of singling out Culili and
terminating him. If Culilis position were indeed indispensable to ETPI, then it
would be absurd for ETPI, which was then trying to save its operations, to abolish
that one position which it needed the most. Contrary to Culilis assertions that
ETPI could not do away with his functions as long as it is in the
telecommunications industry, ETPI did not abolish the functions performed by
Culili as a Senior Technician. What ETPI did was to abolish the position itself for
being too specialized and limited. The functions of that position were then added
to another employee whose functions were broad enough to absorb the tasks of
a Senior Technician.

Culili maintains that ETPI had already decided to dismiss him even before
the second phase of the Right-Sizing Program was implemented as evidenced
by the December 7, 1998 letter.

The December 7, 1998 termination letter signed by ETPIs AVP Stella

Garcia hardly suffices to prove bad faith on the part of the company. The fact
remains that the said letter was never officially transmitted and Culili was not
terminated at the end of the first phase of ETPIs Right-Sizing Program. ETPI had
given an adequate explanation for the existence of the letter and considering that
it had been transparent with its employees, through their union ETEU, so much
so that ETPI even gave ETEU this unofficial letter, there is no reason to
speculate and attach malice to such act. That Culili would be subsequently
terminated during the second phase of the Right-Sizing Program is not evidence
of undue discrimination or singling out since not only Culilis position, but his
entire unit was abolished and absorbed by another department.
Unfair Labor Practice
Culili also alleged that ETPI is guilty of unfair labor practice for violating
Article 248(c) and (e) of the Labor Code, to wit:

Art. 248. Unfair labor practices of employers. - It shall be

unlawful for an employer to commit any of the following unfair labor
practice:

xxxx

c. To contract out services or functions being performed by

union members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization;

xxxx

e. To discriminate in regard to wages, hours of work, and

other terms and conditions of employment in order to encourage or
discourage membership in any labor organization. Nothing in this
Code or in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as a
condition for employment, except those employees who are already
members of another union at the time of the signing of the
collective bargaining agreement. Employees of an appropriate
collective bargaining unit who are not members of the recognized
collective bargaining agent may be assessed a reasonable fee
equivalent to the dues and other fees paid by members of the
recognized collective bargaining agent, if such non-union members
accept the benefits under the collective agreement: Provided, that
the individual authorization required under Article 242, paragraph
(o) of this Code shall not apply to the non-members of the
recognized collective bargaining agent.

Culili asserted that ETPI is guilty of unfair labor practice because his
functions were sourced out to labor-only contractors and he was
discriminated against when his co-employees were treated differently when
they were each offered an additional motorcycle to induce them to avail of the
Special Retirement Program. ETPI denied hiring outside contractors and
averred that the motorcycles were not given to his co-employees but were
purchased by them pursuant to their Collective Bargaining Agreement, which
 allowed a retiring employee to purchase the motorcycle he was assigned
during his employment.

The concept of unfair labor practice is provided in Article 247 of the Labor
Code which states:
Article 247. Concept of unfair labor practice and
procedure for prosecution thereof. -- Unfair labor practices
violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interest of both labor and
management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and
mutual respect, disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations.

In the past, we have ruled that unfair labor practice refers to acts that
violate the workers' right to organize. The prohibited acts are related to the
workers' right to self-organization and to the observance of a CBA. [45] We have
likewise declared that there should be no dispute that all the prohibited acts
constituting unfair labor practice in essence relate to the workers' right to self-
organization.[46] Thus, an employer may only be held liable for unfair labor
practice if it can be shown that his acts affect in whatever manner the right of his
employees to self-organize.[47]

There is no showing that ETPI, in implementing its Right-Sizing Program,

was motivated by ill will, bad faith or malice, or that it was aimed at interfering
with its employees right to self-organize. In fact, ETPI negotiated and consulted
with ETEU before implementing its Right-Sizing Program.

Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor
practice because of its failure to dispute Culilis allegations.

According to jurisprudence, basic is the principle that good faith is

presumed and he who alleges bad faith has the duty to prove the same. [48] By
imputing bad faith to the actuations of ETPI, Culili has the burden of proof to
present substantial evidence to support the allegation of unfair labor
practice. Culili failed to discharge this burden and his bare allegations deserve no
credit.

Observance of Procedural Due Process

Although the Court finds Culilis dismissal was for a lawful cause and not
an act of unfair labor practice, ETPI, however, was remiss in its duty to observe
procedural due process in effecting the termination of Culili.

We have previously held that there are two aspects which characterize the
concept of due process under the Labor Code: one is substantive whether the
termination of employment was based on the provision of the Labor Code or in
accordance with the prevailing jurisprudence; the other is procedural the manner
in which the dismissal was effected.[49]

Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code
provides:
(d) In all cases of termination of employment, the following
standards of due process shall be substantially observed:

xxxx

For termination of employment as defined in Article 283 of

the Labor Code, the requirement of due process shall be deemed
complied with upon service of a written notice to the employee and
the appropriate Regional Office of the Department of Labor and
Employment at least thirty days before effectivity of the termination,
specifying the ground or grounds for termination.

In Mayon Hotel & Restaurant v. Adana,[50] we observed:

The requirement of law mandating the giving of notices was

intended not only to enable the employees to look for another
employment and therefore ease the impact of the loss of their jobs
and the corresponding income, but more importantly, to give the
Department of Labor and Employment (DOLE) the opportunity to
ascertain the verity of the alleged authorized cause of termination.
[51]

ETPI does not deny its failure to provide DOLE with a written notice regarding
Culilis termination. It, however, insists that it has complied with the requirement to
serve a written notice to Culili as evidenced by his admission of having received
it and forwarding it to his union president.

In Serrano v. National Labor Relations Commission,[52] we noted that a job is

more than the salary that it carries. There is a psychological effect or a stigma in
immediately finding ones self laid off from work. [53] This is exactly why our labor
laws have provided for mandating procedural due process clauses. Our laws,
while recognizing the right of employers to terminate employees it cannot
sustain, also recognize the employees right to be properly informed of the
impending severance of his ties with the company he is working for. In the case
at bar, ETPI, in effecting Culilis termination, simply asked one of its guards to
serve the required written notice on Culili. Culili, on one hand, claims in his
petition that this was handed to him by ETPIs vice president, but previously
testified before the Labor Arbiter that this was left on his table. [54] Regardless of
how this notice was served on Culili, this Court believes that ETPI failed to
properly notify Culili about his termination. Aside from the manner the written
notice was served, a reading of that notice shows that ETPI failed to properly
inform Culili of the grounds for his termination.

The Court of Appeals, in finding that Culili was not afforded procedural due
process, held that Culilis dismissal was ineffectual, and required ETPI to pay
Culili full backwages in accordance with our decision in Serrano v. National Labor
Relations Commission.[55] Over the years, this Court has had the opportunity to
reexamine the sanctions imposed upon employers who fail to comply with the
procedural due process requirements in terminating its employees. In Agabon v.
National Labor Relations Commission,[56] this Court reverted back to the doctrine
in Wenphil Corporation v. National Labor Relations Commission [57] and held that
where the dismissal is due to a just or authorized cause, but without observance
of the due process requirements, the dismissal may be upheld but the employer
must pay an indemnity to the employee. The sanctions to be imposed however,
must be stiffer than those imposed in Wenphil to achieve a result fair to both the
employers and the employees.[58]

In Jaka Food Processing Corporation v. Pacot,[59] this Court, taking a cue

from Agabon, held that since there is a clear-cut distinction between a dismissal
due to a just cause and a dismissal due to an authorized cause, the legal
implications for employers who fail to comply with the notice requirements must
also be treated differently:
Accordingly, it is wise to hold that: (1) if the dismissal is
based on a just cause under Article 282 but the employer failed to
comply with the notice requirement, the sanction to be imposed
upon him should be tempered because the dismissal process was,
 in effect, initiated by an act imputable to the employee; and (2) if
the dismissal is based on an authorized cause under Article 283 but
the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was
initiated by the employer's exercise of his management prerogative.
[60]

Hence, since it has been established that Culilis termination was due to an
authorized cause and cannot be considered unfair labor practice on the part of
ETPI, his dismissal is valid.However, in view of ETPIs failure to comply with the
notice requirements under the Labor Code, Culili is entitled to nominal damages
in addition to his separation pay.

Personal Liability of ETPIs Officers

And Award of Damages

Culili asserts that the individual respondents, Salvador Hizon, Emiliano

Jurado, Virgilio Garcia, and Stella Garcia, as ETPIs officers, should be held
personally liable for the acts of ETPI which were tainted with bad faith and
arbitrariness. Furthermore, Culili insists that he is entitled to damages because of
the sufferings he had to endure and the malicious manner he was terminated.

As a general rule, a corporate officer cannot be held liable for acts done in
his official capacity because a corporation, by legal fiction, has a personality
separate and distinct from its officers, stockholders, and members. To pierce this
fictional veil, it must be shown that the corporate personality was used to
perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse
a legitimate issue. In illegal dismissal cases, corporate officers may be held
solidarily liable with the corporation if the termination was done with malice or
bad faith.[61]

In illegal dismissal cases, moral damages are awarded only where the
dismissal was attended by bad faith or fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs or public policy.
[62]
Exemplary damages may avail if the dismissal was effected in a wanton,
oppressive or malevolent manner to warrant an award for exemplary damages. [63]

It is our considered view that Culili has failed to prove that his dismissal
was orchestrated by the individual respondents herein for the mere purpose of
getting rid of him. In fact, most of them have not even dealt with Culili
personally. Moreover, it has been established that his termination was for an
authorized cause, and that there was no bad faith on the part of ETPI in
implementing its Right-Sizing Program, which involved abolishing certain
positions and departments for redundancy. It is not enough that ETPI failed to
comply with the due process requirements to warrant an award of damages,
there being no showing that the companys and its officers acts were attended
with bad faith or were done oppressively.

WHEREFORE, the instant petition is DENIED and the assailed February

5, 2004 Decision and September 13, 2004 Resolution of the Court of Appeals
in CA-G.R. SP No. 75001 are AFFIRMED with
the MODIFICATION that petitioner Nelson A. Culilis dismissal is declared valid
but respondent Eastern Telecommunications Philippines, Inc. is ordered to pay
petitioner Nelson A. Culili the amount of Fifty Thousand Pesos
(P50,000.00) representing nominal damages for non-compliance with statutory
due process, in addition to the mandatory separation pay required under Article
283 of the Labor Code.
SO ORDERED.

G.R. No. 170351 March 30, 2011

LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNIONALU

TUCP, Petitioner, vs. PHILIPPINE NATIONAL OIL COMPANY ENERGY
DEVELOPMENT CORPORATION, Respondent

DECISION

NACHURA, J.:

Under review is the Decision[1] dated June 30, 2005 of the Court of
Appeals (CA) in CA-G.R. SP No. 65760, which dismissed the petition
for certiorari filed by petitioner Leyte Geothermal Power Progressive Employees
Union ALUTUCP (petitioner Union) to annul and set aside the decision [2] dated
December 10, 1999 of the National Labor Relations Commission (NLRC) in
NLRC Certified Case No. V-02-99.

The facts, fairly summarized by the CA, follow.

[Respondent Philippine National Oil Corporation]-Energy

Development Corporation [PNOC-EDC] is a government-owned
and controlled corporation engaged in exploration, development,
utilization, generation and distribution of energy resources like
geothermal energy.

Petitioner is a legitimate labor organization, duly registered with the

Department of Labor and Employment (DOLE) Regional Office No.
VIII, Tacloban City.

Among [respondents] geothermal projects is the Leyte Geothermal

Power Project located at the Greater Tongonan Geothermal
Reservation in Leyte. The said Project is composed of the
Tongonan 1 Geothermal Project (T1GP) and the Leyte Geothermal
Production Field Project (LGPF) which provide the power and
electricity needed not only in the provinces and cities of Central and
Eastern Visayas (Region VII and VIII), but also in the island of
Luzon as well. Thus, the [respondent] hired and employed
hundreds of employees on a contractual basis, whereby, their
employment was only good up to the completion or termination of
the project and would automatically expire upon the completion of
such project.

Majority of the employees hired by [respondent] in its Leyte

Geothermal Power Projects had become members of petitioner. In
view of that circumstance, the petitioner demands from the
[respondent] for recognition of it as the collective bargaining agent
of said employees and for a CBA negotiation with it. However, the
[respondent] did not heed such demands of the petitioner.
Sometime in 1998 when the project was about to be completed, the
[respondent] proceeded to serve Notices of Termination of
Employment upon the employees who are members of the
petitioner.

On December 28, 1998, the petitioner filed a Notice of Strike with

DOLE against the [respondent] on the ground of purported
commission by the latter of unfair labor practice for refusal to
bargain collectively, union busting and mass termination. On the
same day, the petitioner declared a strike and staged such strike.
 To avert any work stoppage, then Secretary of Labor Bienvenido E.
Laguesma intervened and issued the Order, dated January 4, 1999,
certifying the labor dispute to the NLRC for compulsory arbitration.
Accordingly, all the striking workers were directed to return to work
within twelve (12) hours from receipt of the Order and for the
[respondent] to accept them back under the same terms and
conditions of employment prior to the strike. Further, the parties
were directed to cease and desist from committing any act that
would exacerbate the situation.

However, despite earnest efforts on the part of the Secretary of

Labor and Employment to settle the dispute amicably, the petitioner
remained adamant and unreasonable in its position, causing the
failure of the negotiation towards a peaceful compromise. In effect,
the petitioner did not abide by [the] assumption order issued by the
Secretary of Labor.

Consequently, on January 15, 1999, the [respondent] filed a

Complaint for Strike Illegality, Declaration of Loss of Employment
and Damages at the NLRC-RAB VIII in Tacloban City and at the
same time, filed a Petition for Cancellation of Petitioners Certificate
of Registration with DOLE, Regional Office No. VIII. The two cases
were later on consolidated pursuant to the New NLRC Rules of
Procedure. The consolidated case was docketed as NLRC Certified
Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No.
VIII-1-0019-99). The said certified case was indorsed to the NLRC
4th Division in Cebu City on June 21, 1999 for the proper disposition
thereof.[3]

In due course, the NLRC 4th Division rendered a decision in favor of respondent,
to wit:
WHEREFORE, based on the foregoing premises, judgment is
hereby rendered as follows:

1. Declaring the officers and members of

[petitioner] Union as project employees;

2. Declaring the termination of their employment by reason

of the completion of the project, or a phase or portion
thereof, to which they were assigned, as valid and legal;

3. Declaring the strike staged and conducted by [petitioner]

Union through its officers and members on December 28,
1998 to January 6, 1999 as illegal for failure to comply
with the mandatory requirements of the law on strike[;]
 4. Declaring all the officers and members of the board of
[petitioner] Union who instigated and spearheaded the
illegal strike to have lost their employment[;]

5. Dismissing the claim of [petitioner] Union against PNOC-

EDC for unfair labor practice for lack of merit[;]

6. Dismissing both parties claims against each other for

violation of the Assumption Order dated January 4, 1999
for lack of factual basis[;]

7. Dismissing all other claims for lack of merit.[4]

Petitioner Union filed a motion for reconsideration of the NLRC decision,
which was subsequently denied. Posthaste, petitioner Union filed a petition
for certiorari before the CA, alleging grave abuse of discretion in the decision of
the NLRC. As previously adverted to, the CA dismissed the petition for certiorari,
thus:

WHEREFORE, in view of the foregoing premises, judgment is

hereby rendered by us DISMISSING the Petition. The assailed
Decision dated December 10, 1999 of the NLRC 4 th Division in
NLRC Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-
98; RAB Case No. VIII-1-0019-99) and its Order dated March 30,
2001 are hereby AFFIRMED.

Costs against the Petitioner.[5]

Hence, this appeal by certiorari filed by petitioner Union, positing the following
questions of law:
1. MAY THE HONORABLE COURT OF APPEALS SUSTAIN
THE PROJECT CONTRACTS THAT ARE DESIGNED TO DENY
AND DEPRIVE THE EMPLOYEES THEIR RIGHT TO SECURITY
OF TENURE BY MAKING IT APPEAR THAT THEY
ARE MERE PROJECT EMPLOYEES?

2. WHEN THERE ARE NO INTERVALS IN THE

EMPLOYEES CONTRACT, SUCH THAT THE SO-CALLED
UNDERTAKING WAS CONTINUOUS, ARE THE EMPLOYEES
PROPERLY TREATED AS PROJECT EMPLOYEES?

3. MAY THE HONORABLE COURT OF

APPEALS IGNORE THE FIRMS OWN ESTIMATE OF JOB
COMPLETION, PROVING THAT THERE IS STILL 56.25%
CIVIL/STRUCTURAL WORK TO BE ACCOMPLISHED, AND RULE
 THAT THE EMPLOYEES WERE DISMISSED FOR COMPLETION
[OF] THE PROJECT?

4. MAY A FIRM HIDE UNDER THE SPURIOUS CLOAK OF

PROJECT COMPLETION TO DISMISS EN MASSE THE
EMPLOYEES WHO HAVE ORGANIZED AMONG THEMSELVES A
LEGITIMATE LABOR ORGANIZATION TO PROTECT THEIR
RIGHTS?

5. WHEN THERE IS NO STOPPAGE OF WORK, MAY A

PROTEST ACTIVITY BE CONSIDERED AS
A STRIKE CONTRARY TO ITS CONCEPTUAL DEFINITION
UNDER ARTICLE 212 (O) OF THE LABOR CODE OF
THE PHILIPPINES?

6. WHEN THE DISMISSAL IS AIMED AT RIDDING THE

COMPANY OF MEMBERS OF THE UNION, IS
[6]
THIS UNION BUSTING?

Stripped of rhetoric, the issues for our resolution are:

1. Whether the officers and members of petitioner Union are project employees
of respondent; and
2. Whether the officers and members of petitioner Union engaged in an illegal
strike.

On the first issue, petitioner Union contends that its officers and members
performed activities that were usually necessary and desirable to respondents
usual business. In fact, petitioner Union reiterates that its officers and members
were assigned to the Construction Department of respondent as carpenters and
masons, and to other jobs pursuant to civil works, which are usually necessary
and desirable to the department. Petitioner Union likewise points out that there
was no interval in the employment contract of its officers and members, who
were all employees of respondent, which lack of interval, for petitioner Union,
manifests that the undertaking is usually necessary and desirable to the usual
trade or business of the employer.
We cannot subscribe to the view taken by petitioner Union.

The distinction between a regular and a project employment is provided in Article

280, paragraph 1, of the Labor Code:

ART. 280. Regular and Casual Employment. The provisions of

written agreement to the contrary notwithstanding and regardless of
 the oral agreement of the parties, an employment shall be deemed
to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the
time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment
is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by

the preceding paragraph: Provided, That, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such actually exists.[7]

The foregoing contemplates four (4) kinds of employees: (a) regular employees
or those who have been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the
employer; (b) project employees or those whose employment has been fixed for
a specific project or undertaking[,] the completion or termination of which has
been determined at the time of the engagement of the
employee; (c) seasonal employees or those who work or perform services which
are seasonal in nature, and the employment is for the duration of the season;
[8]
and (d) casual employees or those who are not regular, project, or seasonal
employees. Jurisprudence has added a fifth kind a fixed-term employee. [9]

Article 280 of the Labor Code, as worded, establishes that the nature of
the employment is determined by law, regardless of any contract expressing
otherwise. The supremacy of the law over the nomenclature of the contract and
the stipulations contained therein is to bring to life the policy enshrined in the
Constitution to afford full protection to labor.[10] Thus, labor contracts are placed
on a higher plane than ordinary contracts; these are imbued with public interest
and therefore subject to the police power of the State. [11]

However, notwithstanding the foregoing iterations, project employment

contracts which fix the employment for a specific project or undertaking remain
valid under the law:

x x x By entering into such a contract, an employee is deemed to

understand that his employment is coterminous with the project. He
may not expect to be employed continuously beyond the
completion of the project. It is of judicial notice that project
 employees engaged for manual services or those for special skills
like those of carpenters or masons, are, as a rule, unschooled.
However, this fact alone is not a valid reason for bestowing special
treatment on them or for invalidating a contract of employment.
Project employment contracts are not lopsided agreements in favor
of only one party thereto. The employers interest is equally
important as that of the employee[s] for theirs is the interest that
propels economic activity. While it may be true that it is the
employer who drafts project employment contracts with its business
interest as overriding consideration, such contracts do not, of
necessity, prejudice the employee. Neither is the employee left
helpless by a prejudicial employment contract. After all, under the
law, the interest of the worker is paramount. [12]
In the case at bar, the records reveal that the officers and the members of
petitioner Union signed employment contracts indicating the specific project or
phase of work for which they were hired, with a fixed period of employment. The
NLRC correctly disposed of this issue:

A deeper examination also shows that [the individual members of

petitioner Union] indeed signed and accepted the [employment
contracts] freely and voluntarily. No evidence was presented by
[petitioner] Union to prove improper pressure or undue influence
when they entered, perfected and consummated [the employment]
contracts. In fact, it was clearly established in the course of the trial
of this case, as explained by no less than the President of
[petitioner] Union, that the contracts of employment were read,
comprehended, and voluntarily accepted by them. x x x.

xxxx

As clearly shown by [petitioner] Unions own admission, both parties

had executed the contracts freely and voluntarily without force,
duress or acts tending to vitiate the worker[s] consent. Thus, we
see no reason not to honor and give effect to the terms and
conditions stipulated therein. x x x.[13]

Thus, we are hard pressed to find cause to disturb the findings of the NLRC
which are supported by substantial evidence.

It is well-settled in jurisprudence that factual findings of administrative or quasi-

judicial bodies, which are deemed to have acquired expertise in matters within
their respective jurisdictions, are generally accorded not only respect but even
finality, and bind the Court when supported by substantial evidence. [14] Rule 133,
Section 5 defines substantial evidence as that amount of relevant evidence which
a reasonable mind might accept as adequate to justify a conclusion.

Consistent therewith is the doctrine that this Court is not a trier of facts,
and this is strictly adhered to in labor cases. [15] We may take cognizance of and
resolve factual issues, only when the findings of fact and conclusions of law of
the Labor Arbiter or the NLRC are inconsistent with those of the CA. [16]

In the case at bar, both the NLRC and the CA were one in the conclusion that the
officers and the members of petitioner Union were project employees.
Nonetheless, petitioner Union insists that they were regular employees since
they performed work which was usually necessary or desirable to the usual
business or trade of the Construction Department of respondent.

The landmark case of ALU-TUCP v. NLRC[17] instructs on the two (2) categories
of project employees:

It is evidently important to become clear about the meaning and

scope of the term project in the present context. The project for the
carrying out of which project employees are hired would ordinarily
have some relationship to the usual business of the employer.
Exceptionally, the project undertaking might not have an ordinary or
normal relationship to the usual business of the employer. In this
latter case, the determination of the scope and parameters of the
project becomes fairly easy. x x x. From the viewpoint, however, of
the legal characterization problem here presented to the Court,
there should be no difficulty in designating the employees who are
retained or hired for the purpose of undertaking fish culture or the
production of vegetables as project employees, as distinguished
from ordinary or regular employees, so long as the duration and
scope of the project were determined or specified at the time of
engagement of the project employees. For, as is evident from the
provisions of Article 280 of the Labor Code, quoted earlier, the
principal test for determining whether particular employees
are properly characterized as project employees as
distinguished from regular employees, is whether or not the
project employees were assigned to carry out a specific
project or undertaking, the duration (and scope) of which were
specified at the time the employees were engaged for that
project.

In the realm of business and industry, we note that project

could refer to one or the other of at least two (2) distinguishable
types of activities. Firstly, a project could refer to a particular job or
 undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project
is a particular construction job or project of a construction company.
A construction company ordinarily carries out two or more [distinct]
identifiable construction projects: e.g., a twenty-five-storey hotel
in Makati; a residential condominium building in Baguio City; and a
domestic air terminal in Iloilo City. Employees who are hired for the
carrying out of one of these separate projects, the scope and
duration of which has been determined and made known to the
employees at the time of employment, are properly treated as
project employees, and their services may be lawfully terminated at
completion of the project.

The term project could also refer to, secondly, a particular

job or undertaking that is not within the regular business of the
corporation. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and
ends at determined or determinable times. [18]

Plainly, the litmus test to determine whether an individual is a project employee

lies in setting a fixed period of employment involving a specific undertaking which
completion or termination has been determined at the time of the particular
employees engagement.

In this case, as previously adverted to, the officers and the members of petitioner
Union were specifically hired as project employees for respondents Leyte
Geothermal Power Project located at the Greater Tongonan Geothermal
Reservation in Leyte. Consequently, upon the completion of the project or
substantial phase thereof, the officers and the members of petitioner Union could
be validly terminated.

Petitioner Union is adamant, however, that the lack of interval in the

employment contracts of its officer and members negates the latters status
as mere project employees. For petitioner Union, the lack of interval further
drives home its point that its officers and members are regular employees who
performed work which was usually necessary or desirable to the usual business
or trade of respondent.

We are not persuaded.

 Petitioner Unions members employment for more than a year does equate
to their regular employment with respondent. In this regard, Mercado, Sr. v.
NLRC[19] illuminates:

The first paragraph [of Article 280 of the Labor Code] answers the
question of who are regular employees. It states that, regardless of
any written or oral agreement to the contrary, an employee is
deemed regular where he is engaged in necessary or desirable
activities in the usual business or trade of the employer, except for
project employees.

A project employee has been defined to be one whose employment

has been fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time of the
engagement of the employee, or where the work or service to be
performed is seasonal in nature and the employment is for the
duration of the season, as in the present case.

The second paragraph of Art. 280 demarcates as casual

employees, all other employees who do not fall under the definition
of the preceding paragraph. The proviso, in said second paragraph,
deems as regular employees those casual employees who have
rendered at least one year of service regardless of the fact that
such service may be continuous or broken.

Petitioners, in effect, contend that the proviso in the second

paragraph of Art. 280 is applicable to their case and that the Labor
Arbiter should have considered them regular by virtue of said
proviso. The contention is without merit.

The general rule is that the office of a proviso is to qualify or modify

only the phrase immediately preceding it or restrain or limit the
generality of the clause that it immediately follows. Thus, it has
been held that a proviso is to be construed with reference to the
immediately preceding part of the provision to which it is attached,
and not to the statute itself or to other sections thereof. The only
exception to this rule is where the clear legislative intent is to
restrain or qualify not only the phrase immediately preceding it (the
proviso) but also earlier provisions of the statute or even the statute
itself as a whole.

Policy Instruction No. 12 of the Department of Labor and

Employment discloses that the concept of regular and casual
employees was designed to put an end to casual employment in
regular jobs, which has been abused by many employers to prevent
 so called casuals from enjoying the benefits of regular employees
or to prevent casuals from joining unions. The same instructions
show that the proviso in the second paragraph of Art. 280 was not
designed to stifle small-scale businesses nor to oppress agricultural
land owners to further the interests of laborers, whether agricultural
or industrial. What it seeks to eliminate are abuses of employers
against their employees and not, as petitioners would have us
believe, to prevent small-scale businesses from engaging in
legitimate methods to realize profit. Hence, the proviso is applicable
only to the employees who are deemed casuals but not to the
project employees nor the regular employees treated in paragraph
one of Art. 280.

Clearly, therefore, petitioners being project employees, or, to use

the correct term, seasonal employees, their employment legally
ends upon completion of the project or the [end of the] season. The
termination of their employment cannot and should not constitute
an illegal dismissal.
Considering our holding that the officers and the members of
petitioner Union were project employees, its claim of union busting is likewise
dismissed.

On the second issue, petitioner Union contends that there was no

stoppage of work; hence, they did not strike. Euphemistically,
petitioner Union avers that it only engaged in picketing, [20] and maintains that
without any work stoppage, [its officers and members] only engaged in xxx
protest activity.

We are not convinced. Petitioner Union splits hairs.

To begin with, quite evident from the records is the undisputed fact that
petitioner Union filed a Notice of Strike on December 28, 1998 with the
Department of Labor and Employment, grounded on respondents purported
unfair labor practices, i.e., refusal to bargain collectively, union busting and mass
termination. On even date, petitioner Union declared and staged a strike.

Second, then Secretary of Labor, Bienvenido E. Laguesma, intervened

and issued a Return-to-Work Order[21] dated January 4, 1999, certifying the labor
dispute to the NLRC for compulsory arbitration. The Order narrates the facts
leading to the labor dispute, to wit:

On 28 December 1998, [petitioner Union] filed a Notice of Strike

against [respondent] citing unfair labor practices, specifically:
refusal to bargain collectively, union busting and mass termination
 as the grounds [therefor]. On the same day, [petitioner] Union went
on strike and took control over [respondents] facilities of its Leyte
Geothermal Project.

Attempts by the National Conciliation and Mediation Board

RBVIII to forge a mutually acceptable solution proved futile.

In the meantime, the strike continues with no settlement in sight

placing in jeopardy the supply of much needed power supply in
the Luzon and Visayas grids.

xxxx

The on-going strike threatens the availability of continuous

electricity to these areas which is critical to day-to-day life, industry,
commerce and trade. Without doubt, [respondents] operations [are]
indispensable to the national interest and falls (sic) within the
purview of Article 263 (g) of the Labor Code, as amended, which
warrants (sic) the intervention of this Office.

Third, petitioner Union itself, in its pleadings, used the word strike.

Ultimately, petitioner Unions asseverations are belied by the factual

findings of the NLRC, as affirmed by the CA:

The failure to comply with the mandatory requisites for the conduct
of strike is both admitted and clearly shown on record. Hence, it is
undisputed that no strike vote was conducted; likewise, the cooling-
off period was not observed and that the 7-day strike ban after the
submission of the strike vote was not complied with since there was
no strike vote taken.

xxxx

The factual issue of whether a notice of strike was timely filed by

[petitioner] Union was resolved by the evidence on record. The
evidence revealed that [petitioner] Union struck even before it could
file the required notice of strike. Once again, this relied on
[petitioner] Unions proof. [Petitioner] Union[s] witness said:

Atty. Sinsuat : You stated that you struck on 28 December

1998 is that correct?
Witness : Early in the morning of December 1998.
xxxx
 Atty. Sinsuat : And you went there to conduct the strike did
you not?

Witness : Our plan then was to strike at noon of December

28 and the strikers will be positioned at
their respective areas.[22]

Article 263 of the Labor Code enumerates the requisites for holding a strike:

Art. 263. Strikes, picketing, and lockouts. (a) x x x.

x x x x.

(c) In cases of bargaining deadlocks, the duly certified or

recognized bargaining agent may file a notice of strike or the
employer may file a notice of lockout with the Department at least
30 days before the intended date thereof. In cases of unfair labor
practice, the period of notice shall be 15 days and in the absence of
a duly certified bargaining agent, the notice of strike may be filed by
any legitimate labor organization in behalf of its members.
However, in case of dismissal from employment of union officers
duly elected in accordance with the union constitution and by-laws,
which may constitute union busting, where the existence of the
union is threatened, the 15-day cooling-off period shall not apply
and the union may take action immediately.
(d) The notice must be in accordance with such
implementing rules and regulations as the Department of Labor and
Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the
Department to exert all efforts at mediation and conciliation to effect
a voluntary settlement. Should the dispute remain unsettled until
the lapse of the requisite number of days from the mandatory filing
of the notice, the labor union may strike or the employer may
declare a lockout.
(f) A decision to declare a strike must be approved by a
majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda
called for that purpose. A decision to declare a lockout must be
approved by a majority of the board of directors of the corporation
or association or of the partners in a partnership, obtained by secret
ballot in a meeting called for that purpose. The decision shall be
valid for the duration of the dispute based on substantially the same
grounds considered when the strike or lockout vote was taken. The
Department may, at its own initiative or upon the request of any
affected party, supervise the conduct of the secret balloting. In
 every case, the union or the employer shall furnish the Department
the results of the voting at least seven days before the intended
strike or lockout, subject to the cooling-off period herein provided.

In fine, petitioner Unions bare contention that it did not hold a strike cannot
trump the factual findings of the NLRC that petitioner Union indeed struck against
respondent. In fact, and more importantly, petitioner Union failed to comply with
the requirements set by law prior to holding a strike.

WHEREFORE, the petition is DENIED. The Decision of the Court of

Appeals in CA-G.R. SP No. 65760 is AFFIRMED. Costs against petitioner Union.

SO ORDERED.

G.R. No. 156635, January 11, 2016

THE HONGKONG & SHANGHAI BANKING CORPORATION EMPLOYEES

UNION, MA. DALISAY P. DELA CHICA, MARVILON B. MILITANTE, DAVID Z.
ATANACIO, JR., CARMINA C. RIVERA, MARIO T. FERMIN(T), ISABELO E.
MOLO, RUSSEL M. PALMA, IMELDA G. HERNANDEZ, VICENTE M.
LLACUNA, JOSEFINA A. ORTIGUERRO, MA. ASUNCION G. KIMSENG,
MIGUEL R. SISON, RAUL P. GERONIMO, MARILOU E. CADENA, ANA N.
TAMONTE, AVELINO Q. RELUCIO, JORALYN R. GONGORA, CORAZON E.
ALBOS, ANABELLA J. GONZALES, MA. CORAZON Q. BALTAZAR, MARIA
LUZ I. JIMENEZ, ELVIRA A. ORLINA, SAMUEL B. ELLARMA, ROSARIO A.
FLORES, EDITHA L. BROQUEZA, REBECCA T. FAJARDO, MA. VICTORIA C.
LUNA, MA. THERESA G. GALANG, BENIGNO V. AMION, GERARDO J. DE
LEON, ROWENA T. OCAMPO, MALOU P. DIZON, RUBEN DE C. ATIENZA,
MELO E. GABA, HERNAN B. CAMPOSANTO, NELIA D. M. DERIADA,
LOLITO L. HILIS, GRACE C. MABUNAY, FE ESPERANZA C. GERONG,
MANUEL E. HERRERA, JOSELITO J. GONZAGA, ULDARTCO D. PEDIDA,
ROSALINA JULIET B. LOQUELLANO, MARCIAL F. GONZAGA, MERCEDES
R. PAULE, JOSE TEODORO A. MOTUS, BLANCHE D. MOTUS, DAISY M.
FAGUTAO, ANTONIO A. DEL ROSARIO, EMMANUEL JUSTIN S. GREY,
 FRANCISCA DEL MUNDO, JULIETA A. CRUZ, RODRIGO J. DURANO,
CATALINA R. YEE, MENANDRO CALIGAGAN, MAIDA M. SACRO
MILITANTE, LEONILA M. PEREZ, AND EMMA
MATEO, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION AND
THE HONGKONG & SHANGHAI BANKING CORPORATION,
LTD., Respondents.

DECISION

BERSAMIN, J.:

A strike staged without compliance with the requirements of Article 263 1 of

the Labor Code is illegal, and may cause the termination of the employment of
the participating union officers and members. However, the liability for the illegal
strike is individual, not collective. To warrant the termination of an officer of the
labor organization on that basis, the employer must show that the officer
knowingly participated in the illegal strike. An ordinary striking employee cannot
be terminated based solely on his participation in the illegal strike, for the
employer must further show that the employee committed illegal acts during the
strike.

The Case

Under appeal is the decision promulgated on January 31, 2002 by the Court of
Appeals (CA) in CA-GR. SP No. 56797 entitled The Hongkong & Shanghai
Banking Corporation Employees Union, et al. v. National Labor Relations
Commission and The Hongkong & Shanghai Banking Corporation, Ltd.,2 which
disposed as follows:

WHEREFORE, the instant petition is DISMISSED and the questioned decision of

the National Labor Relations Commission is AFFIRMED with MODIFICATION.

Private respondent Hongkong & Shanghai Banking Corporation is ordered to pay

each of the following: Isabelo Molo, Elvira Orlina, Samuel Ellarma, Rosario
Flores, Rebecca Fajardo, Ma. Victoria Luna, Malou Dizon, Ruben Atienza, Melo
Gaba, Nelia Deriada, Fe Esperanza Gerong, Manuel Herrera, Rosalina Juliet
Loquellano, Mercedes Paule, Binche Motus, Antonio del Rosario, Francisca del
Mundo and Maida Militante:

(a) full backwages from the time of their dismissal in 1993 up to the time this
decision becomes final; and

(b) separation pay equivalent to one-half (1/2) month salary for every year of
service up to 1993.
SO ORDERED.3
Also under review is the resolution promulgated on December 9, 2002 whereby
the CA denied the petitioners' motion for reconsideration. 4

Antecedents

In the period material to this case, petitioner Hongkong & Shanghai Banking
Corporation Employees Union (Union) was the duly recognized collective
bargaining agent of the rank-and-file employees of respondent Hongkong &
Shanghai Banking Corporation (HSBC). A collective bargaining agreement (CBA)
governed the relations between the Union and its members, on one hand, and
HSBC effective April 1, 1990 until March 31, 1993 for the non-representational
(economic) aspect, and effective April 1, 1990 until March 31, 1995 for the
representational aspect.5 The CBA included a salary structure of the employees
comprising of grade levels, entry level pay rates and the individual pays
depending on the length of service. 6

On January 18, 1993, HSBC announced its implementation of a job evaluation

program (JEP) retroactive to January 1, 1993. The JEP consisted of a job
designation per grade level with the accompanying salary scale providing for the
minimum and maximum pay the employee could receive per salary level. 7 By
letter dated January 20, 1993,8 the Union demanded the suspension of the JEP,
which it labeled as an unfair labor practice (ULP). In another letter dated January
22, 1993, the Union informed HSBC that it would exercise its right to concerted
action. On the same day of January 22, 1993, the Union members started
picketing during breaktime while wearing black hats and black bands on their
arms and other appendages.9 In its letter dated January 25, 1993, HSBC
responded by insisting that the JEP was an express recognition of its obligation
under the CBA.10 The Union's concerted activities persisted for 11
months,11 notwithstanding that both sides had meanwhile started the re-
negotiation of the economic provisions of their CBA 12 on March 5, 1993.13 The
continued concerted actions impelled HSBC to suspend the negotiations on
March 19, 1993,14 and to issue memoranda, warnings and reprimands to remind
the members of the Union to comply with HSBC's Code of Conduct.

Due to the sustained concerted actions, HSBC filed a complaint for ULP in the
Arbitration Branch of the National Labor Relations Commission (NLRC),
docketed as NLRC-NCR Case No. 00-04-02481-93. The Labor Arbiter's decision
was appealed to the NLRC whose disposition to remand the case to the Labor
Arbiter for further proceedings was in turn assailed. Ultimately, in G.R. No.
125038 entitled The Hongkong & Shanghai Banking Corporation Employees
Union v. National Labor Relations Commission and The Hongkong & Shanghai
Banking Corporation, Ltd., the Court affirmed the disposition of the NLRC, and
directed the remand of the case to the Labor Arbiter for further proceedings. 15

The Union conducted a strike vote on December 19, 1993 after HSBC accorded
regular status to Patrick King, the first person hired under the JEP. The majority
of the members of the Union voted in favor of a strike. 16 The following day, the
Union served its letter on HSBC in protest of the continued implementation of the
JEP, and insisted that HSBC's modification of the salary structure under the JEP
constituted ULP.

On December 22, 1993, at around 12:30 p.m., the Union's officers and members
walked out and gathered outside the premises of HSBC's offices on Ayala
Avenue, Makati and Ortigas Center, Pasig.17According to HSBC, the Union
members blocked the entry and exit points of the bank premises, preventing the
bank officers, including the chief executive officer, from entering and/or leaving
the premises.18 This prompted HSBC to resort to a petition for habeas corpus on
behalf of its officials and employees thus prevented from leaving the premises,
whom it airlifted on December 24, 1993 to enable them to leave the bank
premises.19

On December 24, 1993, HSBC filed its complaint to declare the strike
illegal.20 The HSBC also petitioned for injunction (with prayer for temporary
restraining order (TRO)/writ of prohibitory injunction) in the NLRC, which issued
the TRO on January 6, 1994, and the writ of preliminary injunction on January
31, 1994.21 On November 22, 2001, the Court upheld the actions taken in that
case in The Hongkong and Shanghai Banking Corporation Employees Union v.
National Labor Relations Commission and The Hongkong and Shanghai Banking
Corporation Limited.22

In the meantime, HSBC issued return-to-work notices to the striking employees

on December 22, 1993. Only 25 employees complied and returned to work. Due
to the continuing concerted actions, HSBC terminated the individual petitioners
on December 27, 1993.23 The latter, undeterred, and angered by their separation
from work, continued their concerted activities.

Ruling of the Labor Arbiter

On August 2, 1998, Labor Arbiter (LA) Felipe P. Pati declared the strike illegal for
failure of the Union to file the notice of strike with the Department of Labor and
Employment (DOLE); to observe the cooling-off period; and to submit the results
of the strike vote to the National Conciliation and Mediation Board (NCMB)
pursuant to Article 263 of the Labor Code. He concluded that because of the
illegality of the strike the Union members and officers were deemed to have lost
their employment status. Lie disposed thusly:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

chanRoblesvirtualLawlibrary
1. The 22 December 1993 strike conducted by the union is hereby declared
illegal;

2. The following Union officers and members who participated in the 22

December 1993 strike are hereby deemed to have lost their employment status
as of that date, namely: Dalisay Dela Chica, Isabelo Molo, Danilo Alonso, Alvar
Rosales, Russel Palma, Imelda Hernandez, Vicente Llacuna, Josefina Ortiguero,
Agustin Iligan, Ma. Asuncion Kimseng, Miguel Sison, Raul Geronimo, Marilou
Cadena, Ana Tamonte, Yolanda Enciso, Avelino Relucio, Joralyn Gongora,
Corazon Albos, Anabella Gozales, Ma. Corazon Baltazar, Maria Luz Jimenez,
Concordio Madayag, Elvira Orlina, Ma. Lourdes Austria, Josephine Landas,
Samuel Ellarma, Rosario Flores, Editha Broqueza, Marina Sal vac ion, Ma.
Cecilia Ocampo, Rebecca Fajardo, Ma. Victoria Luna, Ma. Theresa Ofelia
Galang, Benigno Amion, Mercedes Castro, Gerardo de Leon, Rowena Ocampo,
Malou Dizon, Juliet Dacumos, Blandina dela Pena, Ruben Atienza, Ma. Fe
Temporal, Mcllo Gaba, Herman Camposanto, Nelia Deriada, Lolito Hilis, Ma.
Dulce Abellar, Grace Mabunay, Fe Esperanza Gerong, Romeo Tumlos, Sonia
Argos, Manuel Herrera, Joselito Gonzaga, Uldarico Pedida, Cynthia Calangi,
Rosalina Loquellano, Marcial Gonzaga, Mercedes Paule, Jess Nicolas, Teodoro
Motus, Blanche Motus, Daisy Martinez Fagutao, Antonio del Rosario, Emmanuel
Justin Grey, Francisca del Mundo, Juliet Cruz, Rodrigo Durano, Carmina Rivera,
David Atanacio, Jr., Ofelia Rabuco, Alfred Tan Jr., Catalina Yee, Menandro
Caligaga, Melorio Maida Militante, Antonio Marilon, and Leonila Peres, Emma
Mateo, Felipe Vital, Jr., Mario Fermin, and Virgilio Reli;

3. The Union, its officers and members are hereby held jointly and severally liable
to pay the Bank the amount of P45,000.00 as actual damages.
All the other claims for moral and exemplary damages are denied for lack of
merit.

SO ORDERED.24

Decision of the NLRC

On appeal, the NLRC modified the ruling of LA Pati, and pronounced the
dismissal of the 18 Union members unlawful for failure of LISBC to accord
procedural due process to them, viz.:

xxx [W]e note, however, that as per the submission of the parties, not all the
respondents (members) have been identified by complainant as having violated
the law on free ingress and egress (i.e., Article 264[e]). A meticulous review of
the testimonies given during trial and a comparison of the same show that 25
respondents were not named by complainant's witnesses.

Of the 25, 6 of them (Rabuco, Salvacion, Castro, Dacumos, Calangi and Nicolas)
have already settled with the complainant during the pendency of the appeal. Of
the remaining 19, one respondent is a union officer (Rivera) while the remaining
18 respondents (Molo, Orlina, Ellarma, Flores, Fajardo, Luna, Dizon, Atienza,
Gaba, Deriada, Gerong, Herrera, Loquellano, Paule, Motus, Del Rosario, Mundo
and Militante) are neither officers nor members who have been pinpointed as
having committed illegal act[s]. We, therefore, disagree with the Labor Arbiter's
generalization that these 18 respondents have similarly lost their employment
status simply because they participated in or acquiesced to the holding of the
strike.

xxxx

Only insofar as the xxx 18 respondents are concerned, We rule that complainant
did fail to give them sufficient opportunity to present their side and adequate
opportunity to answer the charges against them. More was expected from
complainant and its observance of due process may not be dispensed with no
matter how brazen and blatant the violation or its rules and regulations may have
perceived. The twin requirement of notice and hearing in termination cases are
as much indispensable and mandatory as the procedural requirements
enumerated in Article 262 of the Labor Code. In this case, We cannot construe
complainant's notice to return-to-work as substantial compliance with due
process requirement.

Contrary however to respondents' insistence that complainant failed to observe

due process in the case of the 18 respondents does not mean that they are
automatically entitled to backwages or reinstatement. Consistent with decided
cases, these respondents are entitled only to indemnity for complainant's
omission, specifically to the amount of P5,000.00 each, xxx

As a final word, and only as regard these 18 respondents, We take note of the
fact that they have remained silent spectators, if not mere bystanders, in the
illegal strike and illegal acts committed by the other individual respondents, and
since the grounds for which they have been terminated do not involve moral
turpitude, the consequences for their acts must nevertheless be tempered with
some sense of compassion. Consistent with prevailing jurisprudence and in the
interest of social justice, We find the award of separation pay to each of the 18
respondents equivalent to one-half (1/2) month salary for every year of service as
equitable and proper.

XXXX

WHEREFORE, the decision dated 26 August 1998 is hereby AFFIRMED with the
modification that complainant is ordered to pay (a) P5,000.00 and (b) one-half
(1/2) month salary for every year of service up to December 1993 to each of the
following respondents: Isabelo Molo, Elvira Orlina, Samuel Ellarma, Rosario
Flores, Rebecca Fajardo, Ma. Victoria Luna, Malou Dizon, Ruben Atienza, Melo
Gaba, Nelia Deriada, Fe Esperanza Gerong, Manuel Herrera, Rosalina Juliet
Loquellano, Mercedes Paule. Binche Motus, Antonio del Rosario, Francisca del
Mundo and Maida Militante.

SO ORDERED.25ChanRoblesVirtualawlibrary
The petitioners filed their motion for reconsideration, but the NLRC denied their
motion.26

Judgment of the CA

On certiorari, the CA, through the assailed judgment promulgated on January 31,
2002,27 deleted the award of indemnity, but ordered HSBC to pay baekwages to
the 18 employees in accordance with Serrano v. National Labor Relations
Commission,28 to wit:

In Ruben Serrano v. NLRC and Isetcmn Department Store xxx, the Court ruled
that an employee who is dismissed, whether or not for just or authorized cause
but without prior notice of his termination, is entitled to full baekwages from the
time he was terminated until the decision in his case becomes final, when the
dismissal was for cause; and in case the dismissal was without just or valid
cause, the backwages shall be computed from the time of his dismissal until his
actual reinstatement. In the case at bar, where the requirement of notice and
hearing was not complied with, the aforecited doctrine laid down in
the Serrano case applies.29

On motion for reconsideration, the CA reiterated its judgment, and denied

HSBC's motion to delete the award of backwages. 30

Hence, this appeal by petition for review on certiorari.

Pending the appeal, petitioners Elvira A. Orlina, Rosario A. Flores, Ma. Victoria
C. Luna, Malou Dizon, Fe Esperanza Gerong, Francisca del Mundo, and Ruben
Atienza separately presented motions to withdraw as petitioners herein by virtue
of their having individually executed compromise agreements/quitclaims with
HSBC.31 The Court granted all the motions to withdraw; 32 hence, this adjudication
relates only to the remaining petitioners.

Issues

The remaining petitioners raise the following grounds in support of their appeal,
namely:

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN

HOLDING THAT ALL THE PETITIONERS WERE VALIDLY DISMISSED

A
The Court of Appeals cannot selectively apply the right to due process in
determining the validity of the dismissal of the employee
 B
The refusal to lift the strike upon orders of the HSBC is not just cause for the
dismissal of the employees

C
The HSBC is liable for damages for having acted in utter bad faith by dismissing
the petitioners after having previously submitted the dispute to the NLRC

D
Union officers who did not knowingly participate in the strike do not lose their
employment status

E
The responsibility for illegal acts committed in the course of a strike is individual
and not collective

F
The January 5, 1994 incident does not warrant the dismissal of the petitioners
involved thereat

G
The penalty, if any, imposable on union officers should be suspension and not
dismissal

II

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN

HOLDING THAT THE STRIKE WAS ILLEGAL
A
The test of good faith laid down by this Honorable Court is whether the union is
of the reasonable belief that the management was committing an unfair labor
practice

B
The decision as to when to declare the strike is wholly dependent on the union,
and the same cannot negate good faith

C
The Court of Appeals committed grave error in concluding that this Court had
already ruled on the validity of the implementation of the Job Evaluation Program
and no longer considered the evidence presented by petitioners to establish
unfair labor practice on the part of the HSBC

D
The doctrine automatically making a strike illegal due to non-compliance with the
mandatory procedural requirements needs to be revisited
The petitioners argue that they were illegally dismissed; that the CA erred in
selectively applying the twin notice requirement; that in the case of the Union
officers, there must be a prior showing that they had participated in the illegal
strike before they could be terminated from employment, but that HSBC did not
make such showing, as, in fact, petitioners Carmina C. Rivera and Mario T.
Fermin were on leave during the period of the strike; 33 that they could not be
dismissed on the ground of insubordination or abandonment in view of
participation in a concerted action being a guaranteed right; that their
participation in the concerted activities out of their sincere belief that HSBC had
committed ULP in implementing the JEP constituted good faith to be appreciated
in their favor; that their actions merited only their suspension at most, not the
extreme penalty of dismissal; and that the prevailing rule that non-compliance
with the procedural requirements under the Labor Code before staging a strike
would invalidate the strike should be revisited because the amendment under
Batas Pambansa Blg. 227 indicated the legislative intent to ease the restriction
on the right to strike.

HSBC counters that the appeal raises factual issues already settled by the CA,
NLRC, and the LA, rendering such issues inappropriate for determination in this
appeal; that it was not liable for illegal dismissal because the petitioners had
willfully staged their illegal strike without prior compliance with Article 263 of
the Labor Code;34 that the procedural requirements of Article 263 of the Labor
Code were mandatory and indispensable conformably with Article 264 35 of
the Labor Code, which, in relation to Article 263(c), (d) and (f), expressly made
such non-compliance a prohibited activity; that for this reason Article 264
penalized the Union officers who had participated in the illegal strike with loss of
their employment status;36 that good faith could not be accorded to the petitioners
because aside from the non-compliance with the mandatory procedure, they did
not present proof to show that the strike had been held for a lawful purpose, or
that the JEP had amounted to ULP, or that they had made a sincere effort to
settle the disagreement;37 and that as far as the 18 employees were concerned,
they were entitled only to nominal damages, not backwages, following the ruling
in Agabon v. National Labor Relations Commission38 that meanwhile modified the
doctrine in Serrano v. National Labor Relations Commission.39

Two main issues to be resolved are, therefore, namely: (1) whether the strike
commenced on December 22, 1993 was lawfully conducted; and (2 whether the
petitioners were illegally dismissed.

Ruling of the Court

We PARTLY GRANT the petition for review on certiorari.

I
Non-compliance with Article 263 of the
Labor Code renders a labor strike illegal
The right to strike is a constitutional and legal right of all workers because the
strike, which seeks to advance their right to improve the terms and conditions of
their employment, is recognized as an effective weapon of labor in their struggle
for a decent existence. However, the right to strike as a means for the attainment
of social justice is never meant to oppress or destroy the employers. Thus, the
law prescribes limits on the exercise of the right to strike. 40cralawred

Article 263 of the Labor Code specifies the limitations on the exercise of the right
to strike, viz.:

Article 263. Strikes, picketing, and lockouts, x x x

xxxx

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining

agent may file a notice of strike or the employers may file a notice of lockout with
the [Department] at least 30 days before the intended date thereof. In cases of
unfair labor practices, the period of notice shall be 15 days and in the absence of
a duly certified or recognized bargaining agent, the notice of strike may be filed
by any legitimate labor organization in behalf of its members. However, in case of
dismissal from employment of union officers duly elected in accordance with the
union constitution and by-laws, which may constitute union busting, where the
existence of the union is threatened, the 15-day cooling off period shall not apply
and the union may take action immediately.

(d) The notice must be in accordance with such implementing rules and
regulations as the [Secretary] of Labor and Employment may promulgate.

(e) During the cooling-off period, it shall be the duty of the [Department] to exert
all efforts at mediation and conciliation to effect a voluntary settlement. Should
the dispute remain unsettled until the lapse of the requisite number of clays from
the mandatory filing of the notice, the labor union may strike or the employer may
declare a lockout.

(f) A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in
meetings or referenda called for that purpose. A decision to declare a lockout
must be approved by a majority of the board of directors of the corporation or
association or of the partners in a partnership, obtained by secret ballot in a
meeting called for that purpose. The decision shall be valid for the duration of the
dispute based on substantially the same grounds considered when the strike or
lockout vote was taken. The [Department] may, at its own initiative or upon
request of any affected party, supervise the conduct of the secret balloting. In
every case, the union or the employer shall furnish the [Department] the results
of the voting at least seven days before the intended strike or lockout, subject to
the cooling-off period herein provided.
xxxx

The procedural requirements for a valid strike are, therefore, the following, to wit:
(1) a notice of strike filed with the DOLE at least 30 days before the intended
date thereof, or 15 days in case of ULP; (2) a strike vote approved by the
majority of the total union membership in the bargaining unit concerned, obtained
by secret ballot in a meeting called for that purpose; and (3) a notice of the
results of the voting at least seven days before the intended strike given to the
DOLE. These requirements are mandatory, such that non-compliance therewith
by the union will render the strike illegal.41

According to the CA, the petitioners neither filed the notice of strike with the
DOLE, nor observed the cooling-off period, nor submitted the result of the strike
vote. Moreover, although the strike vote was conducted, the same was done by
open, not secret, balloting,42 in blatant violation of Article 263 and Section 7, Rule
XIII of the Omnibus Rules Implementing the Labor Code. 43 It is not amiss to
observe that the evident intention of the requirements for the strike-notice and
the strike-vote report is to reasonably regulate the right to strike for the
attainment of the legitimate policy objectives embodied in the law.44 As such, the
petitioners committed a prohibited activity under Article 264(a) of the Labor Code,
and rendered their strike illegal.

We underscore that the language of the law itself unmistakably bears out the
mandatory character of the limitations it has prescribed, to wit:

Art. 264. Prohibited activities. - (a) No labor organization or employer shall

declare a strike or lockout without first having bargained collectively in
accordance with Title VII of this Book or without first having filed the notice
required in the preceding Article or without the necessary strike or lockout
vote first having been obtained and reported to the [Department], (emphasis
supplied)

xxxx

Accordingly, the petitioners' plea for the revisit of the doctrine to the effect that
the compliance with Article 263 was mandatory was entirely unwarranted. It is
significant to remind that the doctrine has not been established by judicial
declaration but by congressional enactment. Verba legis non est
recedendum. The words of a statute, when they are clear, plain and free from
ambiguity, must be given their literal meaning and must be applied without
interpretation.45 Had the legislators' intention been to relax this restriction on the
right of labor to engage in concerted activities, they would have stated so plainly
and unequivocally.
 II
Commission of unlawful acts during
the strike further rendered the same illegal

The petitioners insist that all they did was to conduct an orderly, peaceful, and
moving picket. They deny employing any act of violence or obstruction of HSBC's
entry and exit points during the period of the strike.

The contrary was undeniably true. The strike was far from orderly and peaceful.
HSBC's claim that from the time when the strike was commenced on December
22, 1993 the petitioners had on several instances obstructed the ingress into and
egress from its offices in Makati and in Pasig was not competently disputed, and
should thus be accorded credence in the light of the records. We agree with
HSBC, for all the affidavits46 and testimonies of its witnesses,47 as well as the
photographs48 and the video recordings49 reviewed by LA Pati depicted the acts
of obstruction, violence and intimidation committed by the petitioners during their
picketing. It was undeniable that such acts of the strikers forced HSBC's officers
to resort to unusual means of gaining access into its premises at one point. 50In
this connection, LA Pati even observed as follows:

[I]t must be pointed out that the Bank has shown by clear and indubitable
evidence that most of the respondents have actually violated the prescription
provided for in paragraph (b) of Article 264 on free ingress and egress. The
incident depicted in the video footage of 05 January 1994, which has been
viewed several times during the trial and even privately, demonstrates beyond
doubt that the picket was a non-moving, stationary one - nothing less but a
barricade. This office is more than convinced that the respondents, at least
on that day, have demonstrated an abnormally high degree of hatred and
anger at the Bank and its officers (including the Bank's chief executive
officer who fell to the ground as a result of the pushing and shoving)
leading them to do anything to carry out their resolve not to let anymore
inside the Bank. Additionally, as observed by this Labor Arbiter, the tensed and
disquieting relation between the parties became all the more apparent during the
actual hearings as clearly evident from the demeanor and actuations of the
respondents.51 (Emphasis supplied)

The situation during the strike actually went out of hand because of the
petitioners' illegal conduct, compelling HSBC to secure an injunction from the
NLRC as well as to file its petition for habeas corpus in the proper court in the
interest of its trapped officers and employees; and at one point to lease an
helicopter to extract its employees and officers from its premises on the eve of
Christmas Day of 1993.

For sure, the petitioners could not justify their illegal strike by invoking the
constitutional right of labor to concerted actions. Although the Constitution
recognized and promoted their right to strike, they should still exercise the
right within the bounds of law.52 Those bounds had been well-defined and well-
known. Specifically, Article 264(e) of the Labor Code expressly enjoined the
striking workers engaged in picketing from committing any act of violence,
coercion or intimidation, or from obstructing the free ingress into or egress from
the employer's premises for lawful purposes, or from obstructing public
thoroughfares.53 The employment of prohibited means in carrying out concerted
actions injurious to the right to property of others could only render their strike
illegal. Moreover, their strike was rendered unlawful because their picketing
which constituted an obstruction to the free use of the employer's property or the
comfortable enjoyment of life or property, when accompanied by intimidation,
threats, violence, and coercion as to constitute nuisance, should be
regulated.54 In fine, the strike, even if justified as to its ends, could become illegal
because of the means employed, especially when the means came within the
prohibitions under Article 264(e) of the Labor Code:55

III
Good faith did not avail because of the
patent violation of Article 263 of the Labor Code

The petitioners assert their good faith by maintaining that their strike was
conducted out of their sincere belief that HSBC had committed ULP in
implementing the JEP. They had also hoped that HSBC would be willing to
negotiate matters related to the JEP considering that the economic aspect of the
CBA was set to expire on March 31, 1993.

We rule out good faith on the part of the petitioners.

The petitioners' disregard of the procedural requirements for conducting a valid

strike negated their claim of good faith. For their claim to be upheld, it was not
enough for them to believe that their employer was guilty of ULP, for they must
also sufficiently show that the strike was undertaken with a modicum of
obeisance to the restrictions on their exercise of the right to strike prior to and
during its execution as prescribed by the law. They did not establish their
compliance with the requirements specifically for the holding of the strike vote
and the giving of the strike notice.56

The petitioners should entirely bear the consequence of their non-compliance

with the legal requirements. As we said in Pilipino Telephone Corporation v.
Pilipino Telephone Employees Association (PILTEA):57

[W]e do not find any reason to deviate from our rulings in Gold City Integrated
Port Service, Inc. and Nissan Motors Philippines, Inc. It bears emphasis that the
strike staged by the Union in the instant case was illegal for its procedural
infirmities and for defiance of the Secretary's assumption order. The CA, the
NLRC and the Labor Arbiter were unanimous in finding that bad faith existed in
the conduct of the subject strike. The relevant portion of the CA Decision states:
chanRoblesvirtualLawlibrary
xxx We cannot go to the extent of ascribing good faith to the means taken
in conducting the strike. The requirement of the law is simple, that is 1. Give
a Notice of Strike; 2. Observe the cooling period; 3. Observe the mandatory
seven day strike ban; 3. If the act is union busting, then the union may strike
doing away with the cooling-off period, subject only to the seven-day strike ban.
To be lawful, a strike must simply have a lawful purpose and should be executed
through lawful means. Here, the union cannot claim good faith in the conduct
of the strike because, as can be gleaned from the findings of the Labor
Arbiter, this was an extensively coordinated strike having been conducted
all throughout the offices of PILTEL all over the country. Evidently, the
strike was planned. Verily, they cannot now come to court hiding behind the
shield of "good faith." Be that as it may, petitioners claim good faith only in so far
as their grounds for the strike but not on the conduct of the strike. Consequently,
they still had to comply with the procedural requirements for a strike, which, in
this case, they failed to do so.58ChanRoblesVirtualawlibrary

IV
The finding on the illegal strike did not justify the
wholesale termination of the strikers from employment

The next issue to resolve is whether or not HSBC lawfully dismissed the
petitioners for joining the illegal strike.

As a general rule, the mere finding of the illegality of the strike does not justify the
wholesale termination of the strikers from their employment. 59 To avoid rendering
the recognition of the workers' right to strike illusory, the responsibility for the
illegal strike is individual instead of collective.60 The last paragraph of Article
264(a) of the Labor Code defines the norm for terminating the workers
participating in an illegal strike, viz.:

Article 264. Prohibited Activities -xxx

xxxx

Any worker whose employment has been terminated as a consequence of any

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

Conformably with Article 264, we need to distinguish between the officers and the
members of the union who participate in an illegal strike. The officers may
be deemed terminated from their employment upon a finding of their knowing
participation in the illegal strike, but the members of the union shall suffer the
same fate only if they are shown to have knowingly participated in the
commission of illegal acts during the strike. Article 264 expressly requires that the
officer must have knowingly participated in the illegal strike. We have explained
this essential element in Club Filipino, Inc. v. Bautista,61 thusly:

Note that the verb "participates" is preceded by the adverb "knowingly." This
reflects the intent of the legislature to require "knowledge" as a condition sine
qua non before a union officer can be dismissed from employment for
participating in an illegal strike. The provision is worded in such a way as to make
it very difficult for employers to circumvent the law by arbitrarily dismissing
employees in the guise of exercising management prerogative. This is but one
aspect of the State's constitutional and statutory mandate to protect the rights of
employees to self-organization.62

The petitioners assert that the CA erroneously affirmed the dismissal of Carmina
Rivera and Mario Fermin by virtue of their being officers of the Union despite lack
of proof of their having participated in the strike.

The assertion is partly correct.

In the case of Fermin, HSBC did not satisfactorily prove his presence during the
strike, much less identify him as among the strikers. In contrast, Union president
Ma. Dalisay dela Chica testified that Fermin was not around when the Union's
Board met after the strike vote to agree on the date of the strike. 63 In that regard,
Corazon Fermin, his widow, confirmed the Union president's testimony by
attesting that her husband had been on leave from work prior to and during the
strike because of his heart condition.64 Although Corazon also attested that her
husband had fully supported the strike, his extending moral support for the
strikers did not constitute sufficient proof of his participation in the strike in the
absence of a showing of any overt participation by him in the illegal strike. The
burden of proving the overt participation in the illegal strike by Fermin solely
belonged to HSBC, which did not discharge its burden. Accordingly, Fermin,
albeit an officer of the Union, should not be deemed to have lost his employment
status.

However, the dismissal of Rivera and of the rest of the Union's officers, namely:
Ma. Dalisay dela Chica, Marvilon Militante and David Atanacio, is upheld. Rivera
admitted joining the picket line on a few occasions.65 Dela Chica, the Union
president, had instigated and called for the strike on December 22, 1993. 66 In
addition, HSBC identified Dela Chica67 and Militante68 as having actively
participated in the strike. Their responsibility as the officers of the Union who led
the illegal strike was greater than the responsibility of the members simply
because the former had the duty to guide their members to obey and respect the
law.69 When said officers urged and made their members violate the law, their
dismissal became an appropriate penalty for their unlawful act. 70 The law granted
to HSBC the option to dismiss the officers as a matter of right and prerogative. 71
Unlike the Union's officers, the ordinary striking members could not be terminated
for merely taking part in the illegal strike. Regardless of whether the strike was
illegal or not, the dismissal of the members could be upheld only upon proof that
they had committed illegal acts during the strike. They must be specifically
identified because the liability for the prohibited acts was determined on an
individual basis.72 For that purpose, substantial evidence available under the
attendant circumstances justifying the penalty of dismissal sufficed. 73

We declare the illegality of the termination of the employment of the 18 members

of the Union for failure of HSBC to prove that they had committed illegal acts
during the strike. We also declare that Daisy Fagutao was unlawfully dismissed
because HSBC did not adduce substantial evidence establishing her presence
and her commission of unlawful acts during the strike.

We clarify that the 18 employees, including Fagutao and Union officer Fermin,
were illegally dismissed because of lack of any valid ground to dismiss them, and
for deprivation of procedural due process. Thus, we take exception to that portion
of the NLRC ruling that held:

We here note that all of the herein named respondents were terminated by
complainant for reasons other than their holding of an participation in the illegal
strike. Specifically, the grounds for their termination were enumerated in the
notices of termination sent out by complainant as follows: abandonment,
insubordination and seriously hampering operations. To Our mind, the
complainant in the exercise of its management prerogative, had every reason to
discipline these respondents for their disregard of the complainant's return-to-
work order and for the damage sustained by reason thereof. Although these 18
respondents did not commit any illegal act during the strike, We can not simply
ignore the fact that they nonetheless breached complainant's rules and
regulations and which acts serve as valid causes to terminate their employment.
These respondents took a risk when they refused to heed complainant's lawful
order and knowingly caused damage and prejudice to complainant's operations;
they should be prepared to take the consequences and be held accountable for
their actions. Whether or not complainant observed due process prior to the
termination of these respondents is however a totally different
matter.74ChanRoblesVirtualawlibrary

We hold that said employees' right to exercise their right to concerted activities
should not be defeated by the directive of HSBC for them to report back to work.
Any worker who joined the strike did so precisely to assert or improve the terms
and conditions of his work.75 Otherwise, the mere expediency of issuing the
return to work memorandum could suffice to stifle the constitutional right of labor
to concerted actions. Such practice would vest in the employer the functions of a
strike breaker,76 which is prohibited under Article 264(c) of the Labor Code.

The petitioners' refusal to leave their cause against HSBC constituted neither
insubordination nor abandonment. For insubordination to exist, the order must
be: (1) reasonable and lawful; (2) sufficiently known to the employee; and (3) in
connection to his duties.77 None of these elements existed in this case.

As to abandonment, two requirements need to be established, namely: (1) the

failure to report for work or absence must be without valid or justifiable reason;
and (2) there must be a clear intention to sever the employer-employee
relationship. The second element is the more decisive factor and must be
manifested by overt acts.78 In that regard, the employer carries the burden of
proof to show the employee's deliberate and unjustified refusal to resume his
employment without any intention of returning.79 However, the petitioners
unquestionably had no intention to sever the employer-employee relationship
because they would not have gone to the trouble of joining the strike had their
purpose been to abandon their employment. 80

Moreover, we cannot subscribe to the view that the striking employees should be
dismissed for having seriously hampered and damaged HSBC's operations. In
this aspect of the case, HSBC did not discharge its burden to prove that the acts
of the employees constituted any of the just causes under the Labor Code or
were prohibited under the company's code of conduct as to warrant their
dismissal.

V
Non-compliance with due process resulted
in illegal dismissal; the employer's liability
depended on the availing circumstances

While Article 264 authorizes the termination of the union officers and employees,
it does not remove from the employees their right to due process. Regardless of
their actions during the strike, the employees remain entitled to an opportunity to
explain their conduct and why they should not be penalized. In Suico v. National
Labor Relations Commission,81 we have reiterated the need for the employers to
comply with the twin-notice requirement despite the cause for the termination
arising from the commission of the acts prohibited by Article 264, thus:

Art. 277(b) in relation to Art. 264(a) and (e) recognizes the right to due process of
all workers, without distinction as to the cause of their termination. Where no
distinction is given, none is construed. Hence, the foregoing standards of due
process apply to the termination of employment of Suico, et al. even if the cause
therefor was their supposed involvement in strike-related violence prohibited
under Art. 264 (a) and (e).82

Consequently, failure of the employer to accord due process to its employees

prior to their termination results in illegal dismissal.

The petitioners maintain that the CA applied the twin-notice requirement in favor
of the 18 employees. HSBC disagrees, claiming instead that the award of
backwages in favor of said employees should be modified following Agabon.

We partially agree with both parties.

Article 277(b)83 of the Labor Code mandates compliance with the twin-notice
requirement in terminating an employee, viz.:

Article 277. Miscellaneous Provisions. -

xxxx

(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 and
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, x x x (Emphasis
supplied)

In King of Kings Transport, Inc. v. Mamac,84 we have laid down the contents of
the notices to be served upon an employee prior to termination, as follows:

(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. 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.

xxxx

(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.85 (Emphasis supplied)

HSBC admitted issuing two pro forma notices to the striking employees. The first
notice, sent on December 22, 1993, reads as follows:

Re: NOTICE OF RETURN TO WORK

__________________________________________________

On ___________________ at ________ o'clock in the morning/afternoon, you

"walked-out" by leaving your assigned work station without prior permission/leave
during work hours.

You arc hereby directed to report back for work at the start of banking hours
on the day immediately following knowledge or receipt of this notice.
Should you report for work no disciplinary action shall be imposed on you. Ibis is
without prejudice to any action the Bank may take against the Union.

Should you fail to report back for work within the period abovestated, the Bank
shall be forced to terminate your employment and take all appropriate measures
to continue serving its clients.86

As the notice indicates, HSBC did not fully apprise the strikers of the ground
under the Labor Code that they had supposedly violated. It also thereby deprived
them the ample opportunity to explain and justify their actions. Instead, it
manifested therein its firm resolve to impose the extreme penalty of termination
should they not comply with the order. Plainly, the tenor of the notice was short of
the requirements of a valid first notice.

The second notice was as follows:

Re: NOTICE OF TERMINATION

__________________________________________________________

On_________ , 1993, you and a majority of the rank-and-file staff "walked out" by
leaving your respective work stations without prior leave and failed to return.

You were directed to report back for work when a copy of the Bank's
Memorandum/Notice to Return to Work dated________________ 1993 was:

1. [ ] Posted on the Bank's premises on_______________

2. [ ] served on your (sic) personally on____________________.
3. [ ] delivered to your last known address on file with the Bank and received by
you (your representative) on

Despite being directed to return to work, you have failed to comply.

Your "walk-out" is an illegal act amounting to abandonment, insubordination, and
seriously hampering and damaging the bank's operations. Consequently, your
employment with the Bank is terminated effective ____________________,
1993.87

The second notice merely ratified the hasty and unilateral decision to terminate
the petitioners without the benefit of a notice and hearing. Hence, this notice
should be struck down for having violated the right of the affected employees to
due process.

The failure by HSBC to strictly observe the twin-notice requirement resulted in

the illegal dismissal. However, the extent of its liability should depend on the
distinct circumstances of the employees.

HSBC should be held liable for two types of illegal dismissal the first type was
made without both substantive and procedural due process, while the other was
based on a valid cause but lacked compliance with procedural due process. To
the first type belonged the dismissal of Fermin, Fagutao and the 18 employees
initially identified by the NLRC, while the second type included the rest of the
petitioners.

HSBC maintains that the dismissed 18 employees should not be entitled to

backwages in conformity with Agabon.

We disagree. Agabon involved the second type of dismissal, not the first type to
which the 18 employees belonged. The rule for employees unlawfully terminated
without substantive and procedural due process is to entitle them to the reliefs
provided under Article 27988 of the Labor Code, that is, reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the
time the compensation was withheld up to the time of actual reinstatement.
However, the award of baekwages is subject to the settled policy that when
employees voluntarily go on strike, no baekwages during the strike shall be
awarded.89

As regards reinstatement, the lapse of 22 years since the strike now warrants the
award of separation pay in lieu of reinstatement, the same to be equivalent of
one (1) month for every year of service.90Accordingly, Fermin who did not
participate in the strike, should be paid full baekwages plus separation pay of one
(1) month per year of service, while petitioners Isabelo Molo, Samuel Ellarma,
Rebecca Fajardo, Melo Gaba, Nelia Deriada, Manuel Herrera, Rosalina Juliet
Loquellano, Mercedes Paule, Blanche Motus, Antonio del Rosario, Maida
Militante and Daisy Fagutao, who admitted their participation in the strike, were
entitled to baekwages except during the period of the strike, and to separation
pay of one (1) month per year of service in lieu of reinstatement.
In Agabon, we said that a dismissal based either on a just or authorized cause
but effected without due process should be upheld. The employer should be
nonetheless liable for non-compliance with procedural due process by paying
indemnity in the form of nominal damages amounting to P30,000.00.

In view of the non-observance of procedural due process by HSBC, the following

petitioners should be entitled to nominal damages of P30,000.00 each, 91 namely:
Ma. Dalisay dela Chica, Marvilon Militante, David Atanacio, Carmina Rivera,
Russel Palma, Imelda Hernandez, Vicente Llacuna, Josefina A. Ortiguerro, Ma.
Asuncion Kimseng, Miguel R. Sison, Raul P. Geronimo, Marilou Cadena, Ana
Tamonte, Avelino Relucio, Joralyn Gongora, Corazon Albos, Anabella Gonzales,
Ma. Corazon Baltazar, Maria Luz Jimenez, Editha Broqueza, Ma. Theresa
Galang, Benigno Amoin, Gerardo de Leon, Rowena Ocampo, Hernan
Camposanto, Lolito Hilis, Grace Mabunay, Joselito Gonzaga, Uldarico Pedida,
Marcial Gonzaga, Jose Teodoro Motus, Emmanuel Justin Grey, Julieta Cruz,
Rodrigo Durano, Catalina Yee, Menandro Caligagan, Leonila Perez, and Emma
Mateo.

ACCORDINGLY, the Court AFFIRMS the decision promulgated on January 31,

2002 in CA-G.R. SP No. 56797 with MODIFICATION that respondent Hongkong
& Shanghai Banking Corporation (HSBC) shall pay:

1. Mario S. Fermin, full backwages and separation pay equivalent to one (1)
month per year of service in lieu of reinstatement;

2. Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo Gaba, Nelia

Deriada, Manuel Herrera, Rosalina Juliet Loquellano, Mercedes Paule,
Blanche Motus, Antonio del Rosario, Maida Militante and Daisy Fagutao,
backwages except during the period of the strike, and separation pay
equivalent to one (1) month per year of service in lieu of reinstatement;
and

3. Ma. Dalisay dela Chica, Marvilon Militante, David Atanacio, Carmina

Rivera, Russel Palma, Imelda Hernandez, Vicente Llacuna, Josefina A.
Ortiguerro, Ma. Asuncion Kimseng, Miguel R. Sison, Raul P. Geronimo,
Marilou Cadena, Ana Tamonte, Avelino Relucio, Joralyn Gongora,
Corazon Albos, Anabella Gonzales, Ma. Corazon Baltazar, Maria Luz
Jimenez, Editha Broqueza, Ma. Theresa Galang, Benigno Amion, Gerardo
de Leon, Rowena Ocampo, Hernan Camposanto, Lolito Hilis, Grace
Mabunay, Joselito Gonzaga, Uldarico Pedida, Marcial Gonzaga, Jose
Teodoro Motus, Emmanuel Justin Grey, Julieta Cruz, Rodrigo Durano,
Catalina Yee, Menandro Caligagan, Leonila Perez and Emma Mateo,
indemnity in the form of nominal damages in the amount of P30,000.00
each.
No pronouncement as to costs.

SO ORDERED.