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HSBC Labor Union vs HSBC

In 2001, the Bangko Sentral ng Pilipinas (BSP) issued the Manual of Regulations for Banks (MoRB).
Relevant to the instant case is Section X338 thereof which reads:

Banks may provide financial assistance to their officers and employees, as part of their fringe
benefits program, to meet housing, transportation, household and personal needs of their
officers and employees. Financing plans and amendments thereto shall be with prior
approval of the BSP.

HSBC submitted its Financial Assistance Plan (Plan) to the BSP for approval. The Plan allegedly
contained a credit checking proviso stating that "repayment defaults on existing loans and adverse
information on outside loans will be considered in the evaluation of loan applications." The BSP
approved the Plan. The Union entered into a CBA with HSBC which had an Article on Salary Loans.
During the next negotiation, HSBC wanted to ament the Art. XI to align it with the BSP approved plan.

HBILU objected to the proposed amendments, claiming that their insertions would curtail its members'
availment of salary loans. This, according to the Union, violates the existing exceptions set forth in BSP
Circular 423. In view of HBILU's objection, HSBC withdrew its proposed amendments and,
consequently, Article XI remained unchanged.

Despite the withdrawal, HSBC sent an e-mail to its employees concerning the enforcement of the
Plan, including the Credit Checking provisions thereof. Thereafter, HBILU member Mananghaya
applied for a loan under the provisions of Article XI of the CBA. His first loan application was approved,
but adverse findings from the external checks on his credit background resulted in the denial of his
subsequent application. HBILU then raised the denial as a grievance issue with the NCMB. It argued
that the imposition of an additional requirement—the external credit checking—is not sanctioned under
the CBA.

HSBC countered that the external credit check conducted in line with Mananghaya's loan application
was merely an implementation of the BSP-approved Plan. The adoption of the Plan, HSBC
stressed, is a condition sine qua non for any loan grant under Section X338 of the MoRB. Moreover,
the Credit Check policy has been in place since 2003, and is a sound practice in the banking industry
to protect the interests of the public and preserve confidence in banks.

The issue was then submitted for resolution by the NCMB Panel of Accredited Voluntary Arbitrators.

The Panel ruled for HSBC. It held that HSBC, as an employer, has the right to issue and implement
guidelines for the availment of loan accommodations under the CBA as part of its management
prerogative. The repeated use of the term "qualified employees" in Article XI of the CBA was deemed
indicative of room for the adoption of further guidelines in the availment of the benefits thereunder. The
Panel also agreed that HSBC's Plan is not a new policy as it has already been approved by the BSP
as early as 2003.

It ruled that the bank was constrained to comply with Section X338 of the MoRB. As a banking
institution, HSBC cannot divorce itself from the regulatory powers of the BSP. Observance of Section
X338 of the MoRB was then necessary before the bank could have been allowed to extend loan
accommodations to its officers and employees.

CA affirmed the Panel on the ratiocination that HSBC was merely complying with Section X338 of the
MoRB when it submitted the Plan to BSP. When BSP, in turn, approved the said Plan, HSBC became
legally bound to enforce its provisions, including the conduct of external credit checks on its loan
applicants.

Issue: W/N HSBC may enforce the credit-checking requirement of the BSP approved plan? NO.

It is crucial to stress that no less than the basic law of the land guarantees the rights of workers to
collective bargaining and negotiations as well as to participate in policy and decision-making
processes affecting their rights and benefits.

Pursuant to said guarantee, Article 211 of the Labor Code, as amended, declares it a policy of the
State:

(a) To promote and emphasize the primacy of free collective bargaining and negotiations,
including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial
disputes;

(d) To promote the enlightenment of workers concerning their rights and obligations as union
members and as employees;

(g) To ensure the participation of workers in decision and policy-making processes affecting their
rights, duties and welfare. (Emphasis ours)

Corollary thereto, Article 255 of the same Code provides:

ART. 255. EXCLUSIVE BARGAINING REPRESENTATION AND WORKERS PARTICIPATION


IN POLICY AND DECISION-MAKING.

Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such
rules and regulations as the Secretary of Labor and Employment may promulgate, to participate
in policy and decision-making process of the establishment where they are employed insofar as
said processes will directly affect their rights, benefits and welfare. For this purpose, workers
and employers may form labor-management councils: Provided, That the representatives of the
workers in such labor management councils shall be elected by at least the majority of all
employees in said establishment.

We deem it necessary to remind HSBC of the basic and well- entrenched rule that although
jurisprudence recognizes the validity of the exercise by an employer of its management prerogative
and will ordinarily not interfere with such, this prerogative is not absolute and is subject to limitations
imposed by law, collective bargaining agreement, and general principles of fair play and justice.

A CBA is 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.
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. This finds basis
under Article 253 of the Labor Code, which states:

ARTICLE 253. Duty to bargain collectively when there exists a CBA. – When there is a CBA, the
duty to bargain collectively shall also mean that neither party shall terminate nor modify such
agreement during its lifetime. x x x It shall be the duty of both parties to keep the status quo and
to continue in full force and effect the terms and conditions of the existing agreement during the
60-day period and/or until a new agreement is reached by the parties.

The Plan was never made part of the CBA. As a matter of fact, HBILU vehemently rejected the Plan's
incorporation into the agreement. Due to this lack of consensus, the bank withdrew its proposal and
agreed to the retention of the original provisions of the CBA. The subsequent implementation of the
Plan's external credit check provisions in relation to employee loan applications under Article XI of the
CBA was then an imposition solely by HSBC.

Tolerating HSBC's conduct would be tantamount to allowing a blatant circumvention of Article 253 LC.
It would contravene the express prohibition against the unilateral modification of a CBA during its
subsistence and even thereafter until a new agreement is reached. It would unduly license HSBC to
add, modify, and ultimately further restrict the grant of Salary Loans beyond the terms of the CBA by
simply adding stringent requirements in its Plan, and having the said Plan approved by BSP in the guise
of compliance with the MoRB.

HSBC's defense, that there was no modification of the CBA since the external credit check has been a
long-standing policy of the Bank applied to all of its employees, is inconvincing. As for the manner in
which said credit checking will be done, as well as any additional requirements that will be imposed for
the purpose, the 2006 Plan and even its later 2011 version are silent thereon.

What further convinces Us that the external credit check as well as the manner of its enforcement is a
new imposition by HSBC is the fact that the bank made no attempt to rebut HBILU's evidence that the
former's requirements for the grant of salary loans changed only after the April 20, 2012 email
blast. HBILU sufficiently proved that prior to the April 20, 2012 email, members of the bargaining
unit were using only four (4) documents in applying for a loan, to wit: 1) Application for Personal
Loan Form; 2) Authority to Deduct Form; 3) Set-Off of Retirement Fund Form; and 4) Promissory Note
Form.28 Thereafter, management imposed a new set of requirements, which includes the "Authority
to Conduct Checks Form."29 As testified to by Mananghaya, he only signed the first four (4)
requirements for his March 2012 loan. However, for the September 2012 loan, he was asked to
complete a new set of documents which included the Authority to Conduct Checks Form. Too, even
the email itself states that said credit checking requirement, among others, is to be strictly
enforced effective May 2012. Though HSBC claims that credit checking has been the bank's long-
standing policy, it failed to show that it indeed required such before its covered employees could
avail of a salary loan under the CBA prior to April 20, 2012—the date of the email blast.

Based on its actuations, HSBC never intended to apply the credit checking item under the Plan to
salary loans under the CBA. Otherwise, it would have enforced such requirement from the moment
the salary loans provisions under the old CBA were implemented, which it did not. It may be that said
requirement was being applied to other types of loans under the Plan, but based on the evidence
presented, We cannot say the same for salary loans under the CBA.

Furthermore, Salary loans subject of this case are not covered by the credit checking requirement under
the MORB:

In specifying that "all loans or other credit accommodations to bank officers and employees, except
those granted under the fringe benefit program of the bank, shall be subject to the same terms and
conditions imposed on the regular lending operations of the bank," Sec. X338.3 clearly excluded
loans and credit accommodations under the bank's fringe benefits program from the operation
of Sec. X304.1.
It may also be argued that HSBC, being a bank, is statutorily required to conduct a credit check on all
of its borrowers, even though it be made under a loan accommodation scheme, applying Section 40[33
of Republic Act No. (RA) 8791 (General Banking Law of 2000). A reading of RA 8791, however, reveals
that loan accommodations to employees are not covered by said statute.

At this point, We deem it proper to recall the basics in resolving issues relating to the provisions and
enforcement of CBAs. In United Kimberly-Clark Employees Union Philippine Transport General
Workers Organization (UKCEU-PTGWO) v. Kimberly-Clark Philippines:

As a general proposition, an arbitrator is confined to the interpretation and application of the


CBA. He does not sit to dispense his own brand of industrial justice: his award is legitimate only
in so far as it draws its essence from the CBA, i.e., when there is a rational nexus between the
award and the CBA under consideration. It is said that an arbitral award does not draw its
essence from the CBA; hence, there is an unauthorized amendment or alteration thereof, if:

It is so unfounded in reason and fact;


It is so unconnected with the working and purpose of the agreement;
It is without factual support in view of its language, its context, and any other indicia of the parties'
intention;
It ignores or abandons the plain language of the contract;
It is mistakenly based on a crucial assumption which concededly is a nonfact;
It is unlawful, arbitrary or capricious; and
It is contrary to public policy.

If the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that the
hirees must be presumed of employment qualification standards but fail to state such qualification
standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full
agreement intended by the parties. Recognizing the inability of the parties to anticipate or address
all future problems, gaps may be left to be filled in by reference to the practices of the industry, and the
step which is equally a part of the CBA although not expressed in it. In order to ascertain the intention
of the contracting parties, their contemporaneous and subsequent acts shall be principally considered
The VA may also consider and rely upon negotiating and contractual history of the parties, evidence of
past practices interpreting ambiguous provisions. The VA has to examine such practices to determine
the scope of their agreement, as where the provision of the CBA has been loosely formulated.
Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must
place a practical and realistic construction upon it.

University of the Immaculate Conception vs Sec of Labor

Facts:

This case stemmed from the collective bargaining negotiations between petitioner University of
Immaculate Concepcion, Inc. (UNIVERSITY) and respondent The UIC Teaching and Non- Teaching
Personnel and Employees Union (UNION). The UNION, as the certified bargaining
agent of all rank and file employees of the UNIVERSITY, submitted its collective bargaining proposals
to the latter on February 16, 1994. However, one item was left unresolved and this was the inclusion
or exclusion of some positions in the scope of the bargaining unit (Secretaries, Registrars, Accounting
Personnel, Guidance Councilors)
The matter was submitted for VA. CA excluded the positions from the Bargaining Unit. It filed MR, but
pending resolution, it filed a notice of strike on the grounds of bargaining deadlock and ULP with the
NCMB. During the thirty (30) day cooling-off period, two union members were dismissed
by petitioner. Consequently, the UNION went on strike.

The then SOLE Confessor, issued an Order assuming jurisdiction over the labor dispute and ordered
the workers to return to work. eanwhile, VA denied the MR.

Thereafter, the UNIVERSITY gave the individual respondents two choices: to resign from the UNION
and remain employed as confidential employees or resign from their confidential positions and
remain members of the UNION. The UNIVERSITY relayed to these employees that they could not
remain as confidential employees and at the same time as members or officers of the Union. However,
the individual respondents remained steadfast in their claim that they could still retain their confidential
positions while being members or officers of the Union. Hence, the UNIVERSITY sent notices of
termination to the individual respondents.

The UNION filed another notice of strike, this time citing as a reason the UNIVERSITY’s termination of
the individual respondents. The UNION alleged that the UNIVERSITY’s act of terminating the individual
respondents is in violation of the Order of the Secretary of Labor.

SOLE issued another Order reiterating the directives contained in the previos Order. Hence, the
UNIVERSITY was directed to reinstate the individual respondents under the same terms and
conditions prevailing prior to the labor dispute.

The UNIVERSITY, thereafter, MR. It argued that SOLE’s Order directing the reinstatement of the
individual respondents would render nugatory the decision of the VA to exclude them from the collective
bargaining unit. The UNIVERSITYs motion was denied, Secretary declared that the decision of VA to
exclude the individual respondents from the collective bargaining unit did not authorize the
UNIVERSITY to terminate their employment.

CA affirmed.

Issue: whether or not the SOLE, after assuming jurisdiction over a labor dispute involving an employer
and the certified bargaining agent of a group of employees in the workplace, may legally order said
employer to reinstate employees terminated by the employer even if those terminated employees are
not part of the bargaining unit?

Held:

In Metrolab Industries, this Court declared that it recognizes the exercise of MP. This is in keeping with
the general principle embodied in Article XIII, Section 3 of the Constitution, which is further echoed in
Article 211 LC. However, as expressed in PAL v. NLRC, this privilege is not absolute, but subject to
exceptions. One of these exceptions is when the SOLE assumes jurisdiction over labor disputes
involving industries indispensable to the national interest under Article 263(g) LC:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the SOLE may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of automatically enjoining the intended or
impending strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out employees
shall immediately return to work and the employer shall immediately resume operations and
readmit all workers under the same terms and conditions prevailing before the strike or lockout.

When the SOLE ordered the UNIVERSITY to suspend the effect of the termination of the individual
respondents, the Secretary did not exceed her jurisdiction. It must be pointed out that one of the
substantive evils which Article 263(g) LC seeks to curb is the exacerbation of a labor dispute to the
further detriment of the national interest.

The University’s act of suspending and terminating union members and the Unions act of filing another
Notice of Strike after this Office has assumed jurisdiction are certainly in conflict with the status quo
ante. These acts will not in any way help in the early resolution of the labor dispute. It is clear that the
actions of both parties merely served to complicate and aggravate the already strained labor-
management relations.

Indeed, it is clear that the act of the UNIVERSITY of dismissing the individual respondents from their
employment became the impetus for the UNION to declare a second notice of strike. It is not a
question anymore of whether or not the terminated employees are part of the bargaining unit.
Any act committed during the pendency of the dispute that tends to give rise to further contentious
issues or increase the tensions between the parties should be considered an act of exacerbation and
should not be allowed.

With respect to SOLE’s Order allowing payroll reinstatement instead of actual reinstatement, the
same is usually not allowed. Article 263(g) LC states that all workers must immediately return to
work and all employers must readmit all of them under the same terms and conditions prevailing before
the strike or lockout. This is consistent with the idea that any work stoppage or slowdown in that
particular industry can be detrimental to the national interest.

In ordering payroll reinstatement in lieu of actual reinstatement, then Acting SOLE Brillantes said:

Anent the Unions Motion, we find that superseding circumstances would not warrant the physical
reinstatement of the twelve (12) terminated employees. Hence, they are hereby ordered placed
under payroll reinstatement until the validity of their termination is finally resolved.

As an exception to the rule, payroll reinstatement must rest on special circumstances that render
actual reinstatement impracticable or otherwise not conducive to attaining the purposes of the law.

The superseding circumstances mentioned by the Acting SOLE no doubt refer to the final decision of
the panel of arbitrators as to the confidential nature of the positions of the twelve private respondents,
thereby rendering their actual and physical reinstatement impracticable and more likely to exacerbate
the situation. The payroll reinstatement in lieu of actual reinstatement ordered in these cases, therefore,
appears justified as an exception to the rule until the validity of their termination is finally resolved.

Estate of Nelson Dulay vs Aboitiz Jebsen Maritime

FACTS:

Nelson Dulay was employed by R General Charters Inc. (subsidiary of P Aboitiz Jebsen Maritime Inc)
since 1986, intially as an ordinary seaman and later as bosun on a contractual basis. He was detailed
in P's vessel, MV Kickapoo Belle, from 3 Sept 1999 to 19 July 2000.
 13 August 2000: 25 days after the completion of his employment contract, Nelson died due to
acute renal failure secondary to septicemia. At the time of his death, Nelson was a bona fide
member of the Associated Marine Officers and Seaman’s Union of the Philippines (AMOSUP),
GCI’s collective bargaining agent. Nelson’s widow, Merridy Jane, thereafter claimed for death
benefits through the grievance procedure of the CBA between AMOSUP and GCI. However,
the grievance procedure was “declared deadlocked” as petitioners refused to grant the
benefits sought by the widow.
 5 March 2001: Merridy Jane filed a complaint with the NLRC against GCI for death and medical
benefits and damages.
 8 March 2001: Joven Mar, Nelson’s brother, received P20,000.00 from R pursuant to article
20(A)2 of the CBA and signed a “Certification” acknowledging receipt of the amount and
releasing AMOSUP from further liability. Merridy Jane contended that she is entitled to the
aggregate sum of 90,000 pursuant to Article 20 (A)1 of the CBA. Merridy Jane averred that the
P20,000 already received by Joven Mar should be considered advance payment of the total
claim of US$90,000.

Aboitiz, on the other hand, asserted that the NLRC had no jurisdiction over the action on account of
the absence of EER between GCI and Nelson at the time of the latter’s death. Nelson also had no
claims against petitioners for sick leave allowance/medical benefit by reason of the completion of his
contract with GCI. They further alleged that private respondent is not entitled to death benefits
because petitioners are only liable for such in case of death of the seafarer during the term of his
contract pursuant to the POEA contract and the cause of his death is not work-related. Petitioners
admitted liability only with respect to article 20(A)2 of the CBA.

LA took cognizance of the case by virtue of LC 217(a), par. 6 and the existence of a reasonable causal
connection between the EER & claim asserted. It ordered payment of P4,621,3000 (equivalent of
$90,000 less P20,000) at the time of judgment. It also ruled that proximate cause of Nelson's death
was not work-related.

NLRC affirmed LA's grant of death benefits under the CBA, but reversed the ruling re: proximate cause
of Nelson's death.

Special civil action for certiorari with CA, contending that NLRC committed GAD in affirming jurisdiction
its jurisdiction over the case; ruling that a diff. provision of the CBA covers the death claim; reversing
LA findings that cause of work is not work-related; setting aside the release & quitclaim executed by
the attorney-in-fact; and not considering the P20,000 already received by Merridy Jane through her
attorney-in-fact.

CA: granted petition and referred case to the NCMB for the designation of the VA or constitution of a
panel of VAs for the appropriate resolution of the issue on the matter of the applicable CBA provision.
It ruled that while the suit filed by Merridy Jane is a money claim, the same basically involves the
interpretation and application of the provisions in the subject CBA. As such, jurisdiction belongs
to the voluntary arbitrator and not the labor arbiter; MR denied

ISSUE: W/N LA had jurisdiction over the case

HELD: No.

Arguments
 Petitioner: Sec. 10 of RA 8042 (Migrant Workers & Overseas Filipinos Act of 1995) vests
jurisdiction on the appropriate branches of the NLRC to entertain disputes regarding the
interpretation of a collective bargaining agreement involving migrant or overseas Filipino
workers; while Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary
arbitrators over interpretation or implementation of collective bargaining agreements and
interpretation or enforcement of company personnel policies.
 Respondents: Article 217, paragraph (c) as well as Article 261 of the Labor Code remain to be
the governing provisions of law with respect to unresolved grievances arising from the
interpretation and implementation of collective bargaining agreements. Under these provisions
of law, jurisdiction remains with voluntary arbitrators.

RATIO:

A careful reading of RA8042 would show that there is no specific provision which provides for
jurisdiction over disputes or unresolved grievances regarding the interpretation or
implementation of a CBA. Section 10 simply speaks, in general, of “claims arising out of an EER or
by virtue of any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.”

On the other hand, Articles 217(c) and 261 LC are very specific in stating that voluntary arbitrators
have jurisdiction over cases arising from the interpretation or implementation of collective bargaining
agreements.

In the present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is:
which provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are
concerned. The Court agrees with the CA in holding that this issue clearly involves the interpretation
or implementation of the said CBA. Thus, the specific or special provisions of the Labor Code
govern.

CBA is the law between the parties. Article 13.1 of the CBA between GCI and AMOSUP provides: "The
Company and the Union agree that in case of dispute or conflict in the interpretation or
application of any of the provisions of this Agreement, or enforcement of Company policies, the
same shall be settled through negotiation, conciliation or voluntary arbitration.”

From the foregoing, it is clear that the parties really intended to bring to conciliation or VA any dispute
or conflict in the interpretation or application of the provisions of their CBA. It is settled that when the
parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary
arbitration then that procedure should be strictly observed.

Also, the above-quoted provisions of the CBA are in consonance with Rule VII, Section 7 of the present
Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of
1995, as amended by Republic Act No. 10022, which states that “[f]or OFWs with CBAs, the case shall
be submitted for VA in accordance with Articles 261 and 262 of the Labor Code.”

Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean Going Vessels, promulgated by the Philippine Overseas Employment
Administration (POEA), provides as follows:

Section 29. Dispute Settlement Procedures. − In cases of claims and disputes arising from
this employment, the parties covered by a collective bargaining agreement shall submit
the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator
or panel of arbitrators. If the parties are not covered by a collective bargaining agreement, the
parties may at their option submit the claim or dispute to either the original and exclusive
jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA)
8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the
original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If there is no
provision as to the voluntary arbitrators to be appointed by the parties, the same shall be
appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation
Board of the Department of Labor and Employment.

The Philippine Overseas Employment Administration (POEA) shall exercise original and
exclusive jurisdiction to hear and decide disciplinary action on cases, which are administrative
in character, involving or arising out of violations of recruitment laws, rules and regulations
involving employers, principals, contracting partners and Filipino seafarers.

With respect to disputes involving claims of Filipino seafarers wherein the parties are covered
by a CBA, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator
or panel of arbitrators. It is only in the absence of a CBA that parties may opt to submit the
dispute to either the NLRC or to voluntary arbitration.

The above interpretation of the DOLE, DFA and POEA is also in consonance with the policy of the state
to promote voluntary arbitration as a mode of settling labor disputes (Section 3, Article XIII and LC 211).
No less than the Constitution provides, under the third paragraph, Section 3, Article XIII, thereof that
[t]he State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.

Nueva Ecija Electric Coop Employees (NEECO) Assn. Pres Jimenez, et al vs NLRC, NEECO, Dela Pena

Petitioners Fajardo et al were permanent employees of NEECO I) They were members of NEECO I Employees
Association, a labor organization established for the mutual aid and protection of its members. Jimenez was
the president of the association.

NEECO I is an electric cooperative under the general supervision and control of the National Electrification
Administration (NEA). The management of NEECO I is vested on the Board of Directors. Dela Pea was NEECOs
general manager on detail from NEA.

The Board of Directors adopted Policy No. 3-33, which set the guidelines for NEECO’s retirement benefits. All
regular employees were ordered by NEECO I to accomplish Form 87, which were applications for either
retirement, resignation, or separation from service.

The applications of Petitioners Baguisa and Guevarra were approved and were paid the appropriate separation
pay.

These successive events, followed by the promotion of certain union officers to supervisory rank, caused
apprehension in the labor association. They were considered as harassment threatening the union members,
and circumventing the employees’ security of tenure. To strengthen and neutralize managements arbitrary
moves, the union held a "snap election" of officers. Petitioner Fajardo was elected Treasurer, while Petitioners
Guevarra, Carillo and Marin were elected Public Relations Officers for Jaen, Gapan A and Gapan B, respectively.

The association then passed a resolution withdrawing the applications for retirement for all its members.
Subsequently, Marin, Fajardo, and Carillo were compulsorily retired by management and received their
separation pay under protest, while Javate was terminated allegedly due to misappropriation of funds and
dishonesty.
Thus, Fajardo et al instituted a complaint for illegal dismissal and damages with the NLRC alleging they were
purposely singled out for retirement from a listing of employees who were made to submit retirement forms, even
if they were not on top of the list because they were union officers, past officers or active members of the
association. Further, they claimed that their acceptance of the money did not constitute estoppel nor waiver,
since their acceptances were with vehement objections and without prejudice to all their rights resulting from an
illegal dismissal. Additionally, Javate averred he was framed up and dismissed without due process.

LA ruled for Fajardo et al and declared NEECO guilty of illegal dismissal and ULP. It ordered the reinstatement
with backwages of petitioners. It also awarded moral and exemplary damages.

NEECO appealed to NLRC, but Fajardo et al filed an omnibus motion to dismiss on the ground of late appeal,
claiming that insufficient bond was filed by NEECO I only on January 5, 1993. NLRC still gave due course to the
appeal. It affirmed deleted the award for damages and applied the amounts their received as retirement
benefits to the backwages due them.

Issue Ratio
W W/N the award of YES
moral and exemplary
damages was To warrant an award of moral damages, it must be shown that the dismissal of the
proper? employee was attended to by bad faith, or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public policy. The Labor
Arbiter ruled that there was ULP:

The complainants pointed out that the approval of the employees’ application
for retirement was not done in succession according to the list, but according
to the choice of NEECO, and for which, complainants were singled out from
the list because they were union officers, past officers and active members of
the complainant Association."

Unfair Labor Practices violate the constitutional rights of workers and employees
to self-organization, are inimical to the legitimate interests 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; and disrupt industrial peace
and hinder the promotion of healthy and stable labor-management relations.

For this reason, we find it proper in this case to impose moral and exemplary
damages on NEECO. H

owever, the damages awarded by the LA are excessive. We are cognizant that a
cooperative promotes the welfare of its own members. The economic benefits filter to
the cooperative members. Either equally or proportionally, they are distributed among
members in correlation with the resources of the association utilized. Under these
circumstances, we deem it proper to reduce moral damages to only P10,000.00
payable by NEECO I to each individual petitioner. We also deem it sufficient for private
respondent NEECO I to pay each individual petitioner P5,000.00 to answer for
exemplary damages, based on the provisions of Articles 2229 and 2232 of the Civil
Code.

[Other issue] YES, but there was substantial compliance


W/N the appeal of
NEECO was filed Indisputable is the legal doctrine that the appeal of a decision involving a monetary
late for not filing the award in labor cases may be perfected "only upon the posting of a cash or surety bond”
necessary pursuant to Art. 223 of the Labor Code.
supersedeas bond
within the time
prescribed by law?
Also, the perfection of an appeal within the reglementary period and in the manner
prescribed by law is jurisdictional, and noncompliance with such legal requirement
is fatal and effectively renders the judgment final and executory.

However, in a number of cases. this Court relaxed the rule to resolve controversies on
the merits, specifically, when there are special meritorious circumstances and issues.

In the case before us, the decision of the LA was issued on December 21, 1992.
NEECO filed their appeal on December 28, 1992, barely 7 days from receipt thereof.
The bonding company issued the bond dated Jan 4, 1993, the last day for filing an
appeal. However, it was forwarded to NLRC only on the following day, Jan 5, 1993.
Considering these circumstances and the holiday season, we find it equitable to ease
the rules and consider that there was substantial compliance with the requirements
of the law.
What are they
entitled to? Having been illegally dismissed, individual petitioners are entitled to reinstatement
from the time they were illegally dismissed, until they were reinstated. For that period
they are likewise entitled to backwages minus the amount they were forced to receive
as "retirement" pay. In the event that the amount of "retirement" pay received by an
individual petitioner exceeds the amount of his backwages, then the excess should be
deemed as advances of salary which should be refundable until fully repaid by him.

Reyes et al (138 others) vs CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor


Relations, Med. Arbiter PATERNO ADAP, and TRI-UNION EMPLOYEES UNION, Et. Al.

BRIEF

The officer-in-charge of the Bureau of Labor Relations (Hon. Trajano) sustained the denial by the Med Arbiter
of the right to vote of 141 members of the "Iglesia ni Kristo" (INK), all employed in the same company, at a
certification election at which 2 labor organizations were contesting the right to be the exclusive representative
of the employees in the bargaining unit. That denial is assailed as having been done with GAOD in the special
civil action of certiorari at bar, commenced by the INK members adversely affected thereby.

FACTS

The certification election was authorized to be conducted by the Bureau of Labor Relations on Oct 20, 1987. Of
the 348 workers initially deemed to be qualified voters, only 240 actually took part in the election, conducted
under the provision of the Bureau of Labor Relations. Among the 240 employees who cast their votes were 141
members of the INK.

TUPAS 1
TUEU-OLALIA 95
NO UNION 1
SPOILED 1
CHALLENGED 141

The “CHALLENGED” votes of 141 INK members were segregated and excluded from the final count in virtue
of an agreement between the competing unions, reached at the pre-election conference, that the INK members
should not be allowed to vote "because they are not members of any union and refused to participate in the
previous certification elections.

INK members filed a petition to cancel the election alleging that it "was not fair" and the result thereof did "not
reflect the true sentiments of the majority of the employees.
Med-Arbiter saw no merit on the petition because INK members do not possess any legal personality to institute
this present cause of action since they were not parties to the petition for certification election. INK members
appealed to Bureau of Labor Relations.

Bureau of Labor Relations sustained the decision of Med-Arbiter. Trajano opined that the petitioners are "bereft
of legal personality to protest their alleged disenfranchisement" since they "are not constituted into a duly
organized labor union, hence, not one of the unions which vied for certification as sole and exclusive bargaining
representative." He also pointed out that the petitioners "did not participate in previous certification elections in
the company for the reason that their religious beliefs do not allow them to form, join or assist labor
organizations."

ISSUE: Whether or not the INK members have the right to vote in the certification election? YES. The INK
members have the right to vote in the certification election (for labor union).

Guaranteed to all employees or workers is the "right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining.

Art 243 of Labor Code provides All persons employed in commercial, industrial and agricultural enterprises and
in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right
to self organization and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without
any definite employers may form labor organizations for their mutual aid and protection.

Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to "interfere with, restrain
or coerce employees in the exercise of their right to self-organization.

Article 249 (a) makes it an unfair labor practice for a labor organization to "restrain or coerce employees in the
exercise of their rights to self-organization. The same legal proposition is set out in the Omnibus Rules
Implementing the Labor Code, as amended, as might be expected Section 1, Rule II (Registration of Unions),
Book V (Labor Relations) of the Omnibus Rules provides as follows; 4

Sec. 1. Who may join unions; exception. — All persons employed in commercial, industrial and
agricultural enterprises, including employees of government corporations established under the
Corporation Code as well as employees of religious, medical or educational institutions, whether operating
for profit or not, except managerial employees, shall have the right to self-organization and to form, join
or assist labor organizations for purposes of collective bargaining. Ambulant, intermittent and without any
definite employers people, rural workers and those without any definite employers may form labor
organizations for their mutual aid and protection.

Neither law, administrative rule nor jurisprudence requires that only employees affiliated with any labor
organization may take part in a certification election. On the contrary, the plainly discernible intendment of the
law is to grant the right to vote to all bona fide employees in the bargaining unit, whether they are members
of a labor organization or not.

The right of self-organization includes the right to organize or affiliate with a labor union or determine which of
two or more unions in an establishment to join, and to engage in concerted activities with co-workers for purposes
of collective bargaining through representatives of their own choosing, or for their mutual aid and protection, i.e.,
the protection, promotion, or enhancement of their rights and interests.

Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor
organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain
membership therein. The right to form or join a labor organization necessarily includes the right to refuse or
refrain from exercising said right. It is self-evident that just as no one should be denied the exercise of a right
granted by law, so also, no one should be compelled to exercise such a conferred right.

The right to refuse to join or be represented by any labor organization is recognized not only by law but also in
the rules drawn up for implementation thereof. The original Rules on Certification promulgated by the defunct
Court of Industrial Relations required that the ballots to be used at a certification election to determine which of
two or more competing labor unions would represent the employees in the appropriate bargaining unit should
contain, aside from the names of each union, an alternative choice of the employee voting, to the effect that
he desires not to which of two or more competing labor unions would represent the employees in the
appropriate bargaining unit should contain, aside from the names of each union, an alternative choice of
the employee voting, to the effect that he desires not to be represented by any union. And where only one
union was involved, the ballots were required to state the question — "Do you desire to be represented by said
union?" — as regards which the employees voting would mark an appropriate square, one indicating the answer,
"Yes" the other, "No."

To be sure, the present implementing rules no longer explicitly impose the requirement that the ballots at a
certification election include a choice for "NO UNION" Section 8 (rule VI, Book V of the Omnibus Rules)
entitled "Marketing and canvassing of votes," pertinently provides that:

. . . (a) The voter must write a cross (X) or a check (/) in the square opposite the union of his choice.
If only one union is involved, the voter shall make his cross or check in the square indicating "YES"
or "NO."

xxx xxx xxx

Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules expressly bars the inclusion
of the choice of "NO UNION" in the ballots. Indeed it is doubtful if the employee's alternative right NOT to form, join
or assist any labor organization or withdraw or resign from one may be validly eliminated and he be consequently
coerced to vote for one or another of the competing unions and be represented by one of them. Besides, the
statement in the quoted provision that "(i)f only one union is involved, the voter shall make his cross or check in the
square indicating "YES" or "NO," is quite clear acknowledgment of the alternative possibility that the "NO" votes may
outnumber the "YES" votes — indicating that the majority of the employees in the company do not wish to be
represented by any union — in which case, no union can represent the employees in collective bargaining. And
whether the prevailing "NO" votes are inspired by considerations of religious belief or discipline or not is beside the
point, and may not be inquired into at all.

The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the employees
in the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case,
by which particular labor organization. If the results of the election should disclose that the majority of the workers
do not wish to be represented by any union, then their wishes must be respected.

That the INK employees, as employees in the same bargaining unit in the true sense of the term, do have the right
of self-organization, is also in truth beyond question, as well as the fact that when they voted that the employees in
their bargaining unit should be represented by "NO UNION," they were simply exercising that right of self-
organization, albeit in its negative aspect.