This document is a Supreme Court of the Philippines decision regarding a case between Mariano Ong, doing business as Milestone Metal Manufacturing (petitioner), and 15 respondents (former employees). The key points are:
1. The Labor Arbiter awarded the respondents over 1 million pesos for unpaid wages and benefits. The NLRC dismissed the petitioner's appeal for failing to post the required cash or surety bond.
2. The petitioner argued the NLRC abused its discretion by dismissing the appeal while a motion to reduce the bond was pending. However, posting bond is required by law, and reducing the bond amount is at the NLRC's discretion.
3. The Supreme Court upheld the NLRC
This document is a Supreme Court of the Philippines decision regarding a case between Mariano Ong, doing business as Milestone Metal Manufacturing (petitioner), and 15 respondents (former employees). The key points are:
1. The Labor Arbiter awarded the respondents over 1 million pesos for unpaid wages and benefits. The NLRC dismissed the petitioner's appeal for failing to post the required cash or surety bond.
2. The petitioner argued the NLRC abused its discretion by dismissing the appeal while a motion to reduce the bond was pending. However, posting bond is required by law, and reducing the bond amount is at the NLRC's discretion.
3. The Supreme Court upheld the NLRC
This document is a Supreme Court of the Philippines decision regarding a case between Mariano Ong, doing business as Milestone Metal Manufacturing (petitioner), and 15 respondents (former employees). The key points are:
1. The Labor Arbiter awarded the respondents over 1 million pesos for unpaid wages and benefits. The NLRC dismissed the petitioner's appeal for failing to post the required cash or surety bond.
2. The petitioner argued the NLRC abused its discretion by dismissing the appeal while a motion to reduce the bond was pending. However, posting bond is required by law, and reducing the bond amount is at the NLRC's discretion.
3. The Supreme Court upheld the NLRC
SUPREME COURT Manila FIRST DIVISION G.R. No. 152494 September 22, 2004 MARIANO ONG, doing business under the name and style MILESTONE METAL MANUFACTURING,petitioner, vs. THE COURT OF APPEALS, CONRADO DABAC, BERNABE TAYACTAC, MANUEL ABEJUELLA, LOLITO ABELONG, RONNIE HERRERO, APOLLO PAMIAS, JAIME ONGUTAN, NOEL ATENDIDO, CARLOS TABBAL, JOEL ATENDIDO, BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO ATENDIDO, JR., LODULADO FAA and JAIME LOZADA, respondents. D E C I S I O N YNARES-SANTIAGO, J.: This is a petition for review on certiorari assailing the decision 1 of the Court of Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, which dismissed the petition for certiorari for lack of merit, as well as the resolution, 2 dated March 7, 2002, denying the motion for reconsideration. Petitioner is the sole proprietor of Milestone Metal Manufacturing (Milestone), which manufactures, among others, wearing apparels, belts, and umbrellas. 3 Sometime in May 1998, the business suffered very low sales and productivity because of the economic crisis in the country. Hence, it adopted a rotation scheme by reducing the workdays of its employees to three days a week or less for an indefinite period. 4
On separate dates, the 15 respondents filed before the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave pay, 13th month pay, damages, and attorneys fees against petitioner. These were consolidated and assigned to Labor Arbiter Manuel Manasala. Petitioner claimed that 9 of the 15 respondents were not employees of Milestone but of Protone Industrial Corporation which, however, stopped its operation due to business losses. Further, he claims that respondents Manuel Abuela, Lolita Abelong, Ronnie Herrero, Carlos Tabbal, Conrado Dabac, and Lodualdo Faa were not dismissed from employment; rather, they refused to work after the rotation scheme was adopted. Anent their monetary claims, petitioner presented documents showing that he paid respondents minimum wage, 13th month pay, holiday pay, and contributions to the SSS, Medicare, and Pag-Ibig Funds. 5
On November 25, 1999, the Labor Arbiter rendered a decision awarding to the respondents the aggregate amount of P1,111,200.40 representing their wage differential, holiday pay, service incentive leave pay and 13th month pay, plus 10% thereof as attorneys fees. Further, petitioner was ordered to pay the respondents separation pay equivalent to month salary for every year of service due to the indefiniteness of the rotation scheme and strained relations caused by the filing of the complaints. 6
Petitioner filed with the NLRC a notice of appeal with a memorandum of appeal and paid the docket fees therefor. However, instead of posting the required cash or surety bond, he filed a motion to reduce the appeal bond. The NLRC, in a resolution dated April 28, 2000, denied the motion to reduce bond and dismissed the appeal for failure to post cash or surety bond within the reglementary period. 7 Petitioners motion for reconsideration was likewise denied. 8
Petitioner filed a petition for certiorari with the Court of Appeals alleging that the NLRC acted with grave abuse of discretion in dismissing the appeal for non-perfection of appeal although a motion to reduce appeal bond was seasonably filed. However, the petition was dismissed and thereafter the motion for reconsideration was likewise dismissed for lack of merit. 9
Hence, this petition for review on the following assignment of errors: I. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF THE NLRC DISMISSING THE APPEAL OF PETITIONERS (sic) FOR NON-PERFECTION WHEN A MOTION TO REDUCE APPEAL BOND WAS SEASONABLY FILED WHICH IS ALLOWED BY THE RULES OF PROCEDURE OF THE NLRC. II. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DISMISSAL BY NLRC OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER AWARDING SEPARATION PAY TO PRIVATE RESPONDENTS DESPITE THE FINDING THAT THERE WAS NO ILLEGAL DISMISSAL MADE BY MILESTONE. Page 2 of 54
III. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT PETITIONER MILESTONE HAS VIOLATED THE MINIMUM WAGE LAW AND THAT PRIVATE RESPONDENTS WERE UNDERPAID. IV. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT PETITIONER MILESTONE HAS NOT PAID PRIVATE RESPONDENTS THEIR SERVICE INCENTIVE LEAVE PAY, 13th MONTH PAY, AND HOLIDAY PAY. V. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT THE EVIDENCE SUBMITTED BY PRIVATE RESPONDENTS IN SUPPORT OF THEIR CLAIMS ARE NOT SELF- SERVING, IRRELEVANT AND IMMATERIAL TO THE FACTS AND LAW IN ISSUE IN THIS CASE. 10
The petition lacks merit. Time and again it has been held that the right to appeal is not a natural right or a part of due process, it is merely a statutory privilege, and may be exercised only in the manner and in accordance with the provisions of law. The party who seeks to avail of the same must comply with the requirements of the rules. Failing to do so, the right to appeal is lost. 11
Article 223 of the Labor Code, as amended, sets forth the rules on appeal from the Labor Arbiters monetary award: ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x. x x x x x x x x x In case of a judgment involving a monetary award, an appeal by the employer may be perfected onlyupon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours) The pertinent provisions of Rule VI of the New Rules of Procedure of the NLRC, 12 which were in effect when petitioner filed his appeal, provide: Section 1. Periods of Appeal. Decisions, awards or orders of the Labor Arbiter and the POEA Administrator shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter x x x. x x x x x x x x x Section 3. Requisites for Perfection of Appeal. (a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 5 of this Rule; 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. A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the period for perfecting an appeal. x x x x x x x x x Section 6. Bond. In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of damages and attorneys fees. The employer, his counsel, as well as the bonding company, shall submit a joint declaration under oath attesting that the surety bond posted is genuine. The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of Page 3 of 54
the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect appeal. (Emphasis ours) In the case at bar, petitioner received the decision of the Labor Arbiter on January 6, 2000. He filed his notice of appeal with memorandum of appeal and paid the corresponding appeal fees on January 17, 2000, the last day of filing the appeal. However, in lieu of the required cash or surety bond, he filed a motion to reduce bond alleging that the amount of P1,427,802,04 as bond is "unjustified and prohibitive" and prayed that the same be reduced to a "reasonable level." The NLRC denied the motion and consequently dismissed the appeal for non- perfection. Petitioner now contends that he was deprived of the chance to post bond because the NLRC took 102 days to decide his motion. Petitioners argument is unavailing. While, Section 6, Rule VI of the NLRCs New Rules of Procedure allows the Commission to reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds. 13 Petitioners motion reads: 1. The appeal bond which respondents-appellants will post in this case is P1,427,802.04. They are precisely questioning this amount as being unjustified and prohibitive under the premises. 2. The amount of this appeal bond must be reduced to a reasonable level by this Honorable Office. WHEREFORE, in view thereof, it is respectfully prayed of this Honorable Office that the appeal bond of P1,427,802.04 be reduced. 14
After careful scrutiny of the motion to reduce appeal bond, we agree with the Court of Appeals that the NLRC did not act with grave abuse of discretion when it denied petitioners motion for the same failed to either elucidate why the amount of the bond was "unjustified and prohibitive" or to indicate what would be a "reasonable level." 15
In Calabash Garments, Inc. v. NLRC, 16 it was held that "a substantial monetary award, even if it runs into millions, does not necessarily give the employer-appellant a "meritorious case" and does not automatically warrant a reduction of the appeal bond." Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond, the result would have been the same since he failed to post cash or surety bond within the prescribed period. The above-cited provisions explicitly provide that an appeal from the Labor Arbiter to the NLRC must be perfected within ten calendar days from receipt of such decisions, awards or orders of the Labor Arbiter. In a judgment involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required appeal fee; (2) posting of a cash or surety bond issued by a reputable bonding company; and (3) filing of a memorandum of appeal. A mere notice of appeal without complying with the other requisites mentioned shall not stop the running of the period for perfection of appeal. 17 The posting of cash or surety bond is not only mandatory but jurisdictional as well, and non-compliance therewith is fatal and has the effect of rendering the judgment final and executory. 18 This requirement is intended to discourage employers from using the appeal to delay, or even evade, their obligation to satisfy their employees just and lawful claims. 19
The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employers appeal may be perfected. 20
The fact that the NLRC took 102 days to resolve the motion will not help petitioners case. The NLRC Rules clearly provide that "the filing of the motion to reduce bond shall not stop the running of the period to perfect appeal."Petitioner should have seasonably filed the appeal bond within the ten-day reglementary period following the receipt of the order, resolution or decision of the NLRC to forestall the finality of such order, resolution or decision. In the alternative, he should have paid only a moderate and reasonable sum for the premium, as was held inBiogenerics Marketing and Research Corporation v. NLRC, 21 to wit: x x x The mandatory filing of a bond for the perfection of an appeal is evident from the aforequoted provision that the appeal may be perfected only upon the posting of cash or surety bond. It is not an excuse that the over P2 million award is too much for a small business enterprise, like the petitioner company, to shoulder.The law does not require its outright payment, but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate and Page 4 of 54
reasonable sum for the premium for such bond. (Emphasis ours) While the bond requirement on appeals involving monetary awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the Rules or where the appellants, at the very least, exhibited willingness to pay by posting a partial bond. 22 Petitioners reliance on the case of Rosewood Processing, Inc. v. NLRC 23 is misplaced. Petitioner in the said case substantially complied with the rules by posting a partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. while his motion to reduce appeal bond was pending before the NLRC. In the case at bar, petitioner did not post a full or partial appeal bond within the prescribed period, thus, no appeal was perfected from the decision of the Labor Arbiter. For this reason, the decision sought to be appealed to the NLRC had become final and executory and therefore immutable. Clearly, then, the NLRC has no authority to entertain the appeal, much less to reverse the decision of the Labor Arbiter. Any amendment or alteration made which substantially affects the final and executory judgment is null and void for lack of jurisdiction, including the entire proceeding held for that purpose. 24
WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, dismissing the petition for certiorari for lack of merit, isAFFIRMED. No pronouncement as to costs. SO ORDERED. Davide, Jr., Quisumbing, Carpio, and Azcuna, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC
G.R. No. 130866 September 16, 1998 ST. MARTIN FUNERAL HOME, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.
REGALADO, J.: The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein private respondent before the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was no contract of employment executed between him and petitioner nor was his name included in the semi- monthly payroll. On January 22, 1996, he was dismissed from his employment for allegedly misappropriating P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR). 1
Petitioner on the other hand claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private respondent, who was formerly working as an overseas contract worker, asked for financial assistance from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily helped the mother of Amelita in overseeing the business. In January 1996, the mother of Amelita passed away, so the latter then took over the management of the business. She then discovered that there were arrears in the payment of taxes and other government fees, although the records purported to show that the same were already paid. Amelita then made some changes in the business operation and private respondent and his wife were no longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that petitioner had illegally terminated his employment. 2
Based on the position papers of the parties, the labor arbiter rendered a decision in favor of petitioner on October 25, 1996 declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdiction over the case. 3
Not satisfied with the said decision, private respondent appealed to the NLRC contending that the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he worked as a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995 to January 23, 1996, or a period of about one year; and (3) in ruling that there was no employer- employee relationship between him and petitioner. 4
On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate proceedings. 5 Petitioner then filed a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit, 6 hence Page 5 of 54
the present petition alleging that the NLRC committed grave abuse of discretion. 7
Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and opportune to reexamine the functional validity and systemic practicability of the mode of judicial review it has long adopted and still follows with respect to decisions of the NLRC. The increasing number of labor disputes that find their way to this Court and the legislative changes introduced over the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for and warrant a reassessment of that procedural aspect. We prefatorily delve into the legal history of the NLRC. It was first established in the Department of Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable to the Secretary of Labor and, ultimately, to the President of the Philippines. On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six months after its promulgation. 8 Created and regulated therein is the present NLRC which was attached to the Department of Labor and Employment for program and policy coordination only. 9 Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended said provision and abolished such appeals. No appellate review has since then been provided for. Thus, to repeat, under the present state of the law, there is no provision for appeals from the decision of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No. 6715, instead merely provides that the Commission shall decide all cases within twenty days from receipt of the answer of the appellee, and that such decision shall be final and executory after ten calendar days from receipt thereof by the parties. When the issue was raised in an early case on the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. 11
Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under Rule 65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary period under Rule 65. 14
Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as follows: Sec. 9. Jurisdiction. The Intermediate Appellate Court shall exercise: (1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction; (2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards, or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. These provisions shall not apply to decisions and interlocutory orders issued Page 6 of 54
under the Labor Code of the Philippines and by the Central Board of Assessment Appeals. 15
Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective March 18, 1995, to wit: Sec. 9. Jurisdiction. The Court of Appeals shall exercise: (1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction; (2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. Trials or hearings in the Court of Appeals must be continuous and must be completed within, three (3) months, unless extended by the Chief Justice. It will readily be observed that, aside from the change in the name of the lower appellate court, 16 the following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A. No. 7902, viz.: 1. The last paragraph which excluded its application to the Labor Code of the Philippines and the Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting the Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction. 2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the section, such that the original exclusionary clause therein now provides "except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." (Emphasis supplied). 3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission. This, then, brings us to a somewhat perplexing impass, both in point of purpose and terminology. As earlier explained, our mode of judicial review over decisions of the NLRC has for some time now been understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a special original action limited to the resolution of jurisdictional issues, that is, lack or excess of jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion amounting to lack of jurisdiction. It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except, among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . . ." This would necessarily contradict what has been ruled and said all along that appeal does not lie from decisions of the NLRC. 17 Yet, under such excepting clause literally construed, the appeal from the NLRC cannot be brought to the Court of Appeals, but to this Court by necessary implication. The same exceptive clause further confuses the situation by declaring that the Court of Appeals has no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of B.P. No. 129, and those Page 7 of 54
specified cases in Section 17 of the Judiciary Act of 1948. These cases can, of course, be properly excluded from the exclusive appellate jurisdiction of the Court of Appeals. However, because of the aforementioned amendment by transposition, also supposedly excluded are cases falling within the appellate jurisdiction of the Supreme Court in accordance with the Labor Code. This is illogical and impracticable, and Congress could not have intended that procedural gaffe, since there are no cases in the Labor Code the decisions, resolutions, orders or awards wherein are within the appellate jurisdiction of the Supreme Court or of any other court for that matter. A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may have been an oversight in the course of the deliberations on the said Act or an imprecision in the terminology used therein. In fine, Congress did intend to provide for judicial review of the adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the term used for the intended mode of review. This conclusion which we have reluctantly but prudently arrived at has been drawn from the considerations extant in the records of Congress, more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No. 1495/H. No. 10452. 18
In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech 19 from which we reproduce the following excerpts: The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129, reorganized the Court of Appeals and at the same time expanded its jurisdiction and powers. Among others, its appellate jurisdiction was expanded to cover not only final judgment of Regional Trial Courts, but also all final judgment(s), decisions, resolutions, orders or awards of quasi-judicial agencies, instrumentalities, boards and commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of BP Blg. 129 and of subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act of 1948. Mr. President, the purpose of the law is to ease the workload of the Supreme Court by the transfer of some of its burden of review of factual issues to the Court of Appeals. However, whatever benefits that can be derived from the expansion of the appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the "decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals. Among the highest number of cases that are brought up to the Supreme Court are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions enumerated in Section 9 and, additionally, extends the coverage of appellate review of the Court of Appeals in the decision(s) of the Securities and Exchange Commission, the Social Security Commission, and the Employees Compensation Commission to reduce the number of cases elevated to the Supreme Court. (Emphases and corrections ours) xxx xxx xxx Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides the ideal situation of drastically reducing the workload of the Supreme Court without depriving the litigants of the privilege of review by an appellate tribunal. In closing, allow me to quote the observations of former Chief Justice Teehankee in 1986 in the Annual Report of the Supreme Court: . . . Amendatory legislation is suggested so as to relieve the Supreme Court of the burden of reviewing these cases which present no important issues involved beyond the particular fact and the parties involved, so that the Supreme Court may wholly devote its time to cases of public interest in the discharge of its mandated task as the guardian of the Constitution and the guarantor of the people's basic rights and additional task expressly vested on it now "to determine Page 8 of 54
whether or not there has been a grave abuse of discretion amounting to lack of jurisdiction on the part of any branch or instrumentality of the Government. We used to have 500,000 cases pending all over the land, Mr. President. It has been cut down to 300,000 cases some five years ago. I understand we are now back to 400,000 cases. Unless we distribute the work of the appellate courts, we shall continue to mount and add to the number of cases pending. In view of the foregoing, Mr. President, and by virtue of all the reasons we have submitted, the Committee on Justice and Human Rights requests the support and collegial approval of our Chamber. xxx xxx xxx Surprisingly, however, in a subsequent session, the following Committee Amendment was introduced by the said sponsor and the following proceedings transpired: 20
Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with the Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising from the Labor Code will still be appealable to the Supreme Court. The President. Is there any objection? (Silence) Hearing none, the amendment is approved. Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was also discussed with our Colleagues in the House of Representatives and as we understand it, as approved in the House, this was also deleted, Mr. President. The President. Is there any objection? (Silence) Hearing none, the amendment is approved. Senator Roco. There are no further Committee amendments, Mr. President. Senator Romulo. Mr. President, I move that we close the period of Committee amendments. The President. Is there any objection? (Silence) Hearing none, the amendment is approved. (Emphasis supplied). xxx xxx xxx Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second reading and being a certified bill, its unanimous approval on third reading followed. 21 The Conference Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been approved by the House of Representatives, the same was likewise approved by the Senate on February 20, 1995, 22 inclusive of the dubious formulation on appeals to the Supreme Court earlier discussed. The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme Court were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The use of the word "appeal" in relation thereto and in the instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action for certiorari are both modes of judicial review addressed to the appellate courts. The important distinction between them, however, and with which the Court is particularly concerned here is that the special civil action ofcertiorari is within the concurrent original jurisdiction of this Court and the Court of Appeals; 23 whereas to indulge in the assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495. Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically emphasized, that procedure would be advantageous to the aggrieved party on this reasoning: On the other hand, Mr. President, to allow these cases to be appealed to the Court of Appeals would give litigants the advantage to have all the evidence on record be reexamined and reweighed after which the findings of facts and conclusions of said bodies are correspondingly affirmed, modified or reversed. Page 9 of 54
Under such guarantee, the Supreme Court can then apply strictly the axiom that factual findings of the Court of Appeals are final and may not be reversed on appeal to the Supreme Court. A perusal of the records will reveal appeals which are factual in nature and may, therefore, be dismissed outright by minute resolutions. 24
While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law, on this score we add the further observations that there is a growing number of labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose, aside from the increased number of its component divisions; and that there is undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional protection to labor. Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired. Apropos to this directive that resort to the higher courts should be made in accordance with their hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into account: One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only because of the imposition upon the precious time of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction. WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals for appropriate action and disposition consistent with the views and ruling herein set forth, without pronouncement as to costs. SO ORDERED. Narvasa, C.J., Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban Martinez, Quisumbing and Purisima, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 152550 June 8, 2005 BORJA ESTATE AND/OR THE HEIRS OF MANUEL AND PAULA BORJA and ATTY. MILA LAUIGAN IN HER CAPACITY AS THE ESTATE ADMINISTRATOR, petitioners, vs. SPOUSES ROTILLO BALLAD and ROSITA BALLAD, respondents. D E C I S I O N TINGA, J.: In this petition for review 1 under Rule 45 of the Rules of Court, petitioners Borja Estate and/or the Heirs of Manuel and Paula Borja and Atty. Mila Lauigan, in her capacity as the estate administrator (the Borjas) assail theResolution 2 of the Court of Appeals Thirteenth Division denying their motion for reconsideration and the D E C I S I O N 3 of the same division in CA-G.R. SP No. 60700, the dispositive portion of which states: WHEREFORE, foregoing considered, the assailed Resolutions dated April 14, 2000 and May 31, 2000 are herebyAFFIRMED in toto. The present petition is hereby DISMISSED for lack of merit. Page 10 of 54
SO ORDERED. 4
The above ruling of the Court of Appeals affirmed the Resolution 5 of the National Labor Relations Commission (NLRC), the decretal portion of which reads: WHEREFORE, premises considered, respondents Motion for Reduction of Bond is hereby DISMISSED for lack of merit. The instant Appeal is hereby DISMISSED for failure to post a cash or surety bond within the reglementary period. SO ORDERED. 6
The Borjass motion for reconsideration of the above- quoted NLRC Resolution was likewise dismissed in anotherResolution. 7
As the Borjass appeal was not given due course, the Labor Arbiters D E C I S I O N 8 was in effect affirmed, the dispositive portion of which states: WHEREFORE, with all the foregoing considerations, judgment is hereby rendered declaring the Spouses Rotillo and Rosita Ballad as illegally and unjustly dismissed in a whimsical and capricious manner which is oppressive to labor and respondents are jointly and severally ordered to reinstate complainants to their position as overseers without loss of seniority rights with full backwages, allowances and other benefits, computed as of the promulgation of this decision, as follows: 1. P25,245.00 - Backwages, June to October 30, 1999 x 2 (P166 x 365 over 12 x 5 months)
P50,490.00 Backwages for both complainants 2. P 5,0490.00 13th month pay x 3 years P15,147.00 x 2
P30,294.00 - 13th month pay for both complainants 3. P100,000.00 - Moral damages, for both complainants 4. P50,000.00 Exemplary damages, for both complainants
P230,784.00
5. P272,646.00 - Separation pay, in case reinstatement is no longer feasible(P5049 x 27 years x 2 for both complainants) 6. Money equivalent of 12 cavans of shelled corn per harvest, transportations expenses, allowances and other benefits being enjoyed as overseers from the time these were withheld from them until actual payment, to be computed in the pre-execution hearing. 7. Plus one percent interest per month and ten percent attorneys fees. All other claims are hereby dismissed. SO ORDERED. 9
The case arose out of the complaint filed by private respondents Spouses Rotillo and Rosita Ballad (Ballad spouses) against the Borjas for illegal dismissal, non payment of 13th month pay, separation pay, incentive pay, holiday and premiums pay plus differential pay, and moral and exemplary damages with the Regional Arbitration Branch No. II of the NLRC in Tuguegarao, Cagayan, on 8 June 1999. 10
The Ballad spouses had been employed as overseers of the Borja Estate by its owners, the spouses Manuel Borja and Paula Borja, since 1972. Their appointment as such was later made in writing per the certification of appointment issued by Paula Borja. 11
The Borja Estate comprises around two hundred (200) hectares of agricultural lands located in the towns of Iguig, Amulung, Enrile, Solana and Baggao, Cagayan Province. It includes two apartment buildings consisting of eleven Page 11 of 54
doors for rent, both located at Caritan, Tuguegarao, Cagayan. 12
As overseers, the Ballad spouses duties included the collection of owners share of the harvest from the tenants and the delivery of such share to the estate administrator, as well as to account for it. They also collected monthly rentals from the lessees of the apartment and tendered the same to the administrator. They were tasked to oversee the lands and buildings entrusted to them and were instructed to report any untoward incident or incidents affecting said properties to the administrator. They were allegedly required to work all day and night each week including Saturdays, Sundays and holidays. 13
For their compensation, the Ballad spouses received a monthly salary of P1,000.00 for both of them, or P500.00 each. They were provided residential quarters plus food and traveling allowances equivalent to twelve (12) cavans of shelled corn every crop harvest. 14 In the year 1980, said salary was increased to P2,500.00 for each of them by Paula Borja when she came from abroad. Until the time before their dismissal, the Ballad spouses received the same amount. 15
The Ballad spouses further alleged that they were appointed as the attorney-in-fact of the owners to represent the latter in courts and/or government offices in cases affecting the titling of the Borjas unregistered lands, and to institute and prosecute recovery of possession thereof, as well as in ejectment cases. 16
They narrated that when the spouses Manuel and Paula Borja went to the United States of America, their children Lumen, Leonora and Amelia succeeded to the ownership and management of the Borja Estate. On 16 October 1986, the Ballad spouses claimed that Amelia or Mely, then residing in Rochester, New York, wrote then administrator Mrs. Lim informing her that the heirs had extended the services of the Ballad spouses and ordered Mrs. Lim to pay the hospitalization expenses of Rotillo Ballad which accrued to Ten Thousand Pesos (P10,000.00). It is also alleged that Mely had instructed Mrs. Lim to cause the registration of the Ballad spouses as Social Security System (SSS) members so that in case any of the latter gets sick, SSS will shoulder their medical expenses and not the Borjas. 17
On 10 November 1996, according to the Ballad spouses, when Francisco Borja, brother of the late Manuel Borja, was appointed the new administrator, he issued immediately a memorandum to all the tenants and lessees of the Borja Estate to transact directly with him and to pay their monthly rentals to him or to his overseers, the Ballad spouses. 18
Upon his appointment, Francisco Borja allegedly promised to give the Ballad spouses their food and traveling allowances aforestated but not the twelve (12) cavans per harvest which he reduced to two (2) cavans per harvest. Francisco Borja also stopped giving the Ballad spouses their allowances. For twenty-seven (27) years that the Ballad spouses were in the employ of the Borjas they were purportedly not paid holiday pay, overtime pay, incentive leave pay, premiums and restday pay, 13th month pay, aside from the underpayment of their basic salary. 19
In June 1999, the Ballad spouses alleged that Francisco Borja unceremoniously dismissed them and caused this dismissal to be broadcast over the radio, which caused the former to suffer shock and physical and mental injuries such as social humiliation, besmirched reputation, wounded feelings, moral anxiety, health deterioration and sleepless nights. 20
Thus, the filing of a case against petitioners before the Labor Arbiter. The Borjas interposed the defense that respondents had no cause of action against them because the latter were not their employees. The Borjas insisted that the Ballad spouses were allowed to reside within the premises of the Borja Estate only as a gesture of gratitude for Rosita Ballads assistance in the registration of a parcel of land; and that they were merely utilized to do some errands from time to time. As to the money claims, the Borjas claimed the defense of prescription. 21
As aforestated, the Labor Arbiter ruled that the Ballad spouses had been illegally dismissed, after concluding that they had been employees of the Borjas. 22
Aggrieved by the decision, the Borjas filed their appeal on 26 November 1999 before the NLRC together with aMotion for Reduction of Bond. 23
In a Resolution dated 14 April 2000, the NLRC dismissed the petitioners Motion for Reduction of Bond.Petitioners appeal was likewise dismissed in the same Resolution for failure to post a cash or surety bond within the reglementary period. 24 Petitioners Motion for Reconsideration was also denied for lack of merit in anotherResolution. 25
Petitioners elevated the case to the Court of Appeals by way of a special civil action of certiorari. On 31 October 2001, the Court of Appeals affirmed the Resolutions of the NLRC holding that the filing of a cash or surety bond issine qua non to the perfection of appeal from the labor monetarys award. The Court of Appeals noted that the Borjas received a copy of the Labor Arbiters D E C I S I O N 26 on 18 November 1999. They thereafter filed their Notice of Appeal and Appeal on 26 November 1999. On even date, Page 12 of 54
they also filed a Motion for Reduction of Bond. However, no proof was shown that the Borjas were able to post the required bond during the same period of time to appeal. 27
The Court of Appeals observed that petitioners were able to post a bond only on 17 December 1999 in the amount of Forty Thousand Pesos (P40,000.00) when the same should have been done during the same period of appeal. As this was not done and as no justifiable reason was given for the late filing, the Court of Appeals ruled that the decision of the Labor Arbiter had become final and executory. 28
The Court of Appeals likewise relied on the Labor Arbiters finding that the Ballad spouses were employees of the petitioners. 29
Hence, the instant petition. In this petition, petitioners in essence assert that the Court of Appeals erred in agreeing with the NLRC that the posting of a cash or surety bond during the period of time to file an appeal is mandatory and the failure to do so would have the effect of rendering the appealed decision final and executory. Petitioners further insist that they never hired the Ballad spouses as employees. 30
In a Resolution 31 dated 24 April 2002, the Court initially resolved to deny the petition for failure of the petitioners to show any reversible error in the decisions and resolution of the Labor Arbiter, the NLRC and the Court of Appeals. However, the Court in a Resolution 32 dated 11 November 2002 decided to reinstate the petition after considering petitioners arguments contained in their Motion for Reconsideration, 33 in which the Borjas stressed that the only issue sought to be resolved by their Petition is the correct interpretation of the rule requiring the posting of a bond for the perfection of an appeal. They implored the Court to contrive a definitive ruling on the matter which in their estimation has sowed confusion among practitioners as well as to those exercising quasi-judicial and judicial functions. 34
There is no merit in the petition. The appeal bond is required under Article 223 of the Labor Code which provides: ART. 223. Appeal. - Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. . . . In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission, in the amount equivalent to the monetary award in the judgment appealed from. . . . . Rule VI of the New Rules of Procedure of the NLRC implements this Article with its Sections 1, 3, 5, 6 and 7 providing pertinently as follows: Section. 1. Periods of Appeal.- Decisions, awards, or orders of the Labor Arbiter and the POEA Administrator shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter or of the Administrator, and in case of a decision of the Regional Director or his duly authorized Hearing Officer within five (5) calendar days from receipt of such decisions, awards or orders . . . Section 3. Requisites for Perfection of Appeal.(a) The appeal shall be filed within the reglementary period as provided in Sec. 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Sec. 5 of this Rule; shall be accompanied by 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. A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the period for perfecting an appeal. Section 5. Appeal Fee. The appellant shall pay an appeal fee of One hundred (P100.00) pesos to the Regional Arbitration Branch, Regional Office, or to the Philippine Overseas Employment Administration and the official receipt of such payment shall be attached to the records of the case. Section 6. Bond. In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of damages and attorneys fees. . . . . Page 13 of 54
The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect appeal. Section 7. No extension of Period.- No motion or request for extension of the period within which to perfect an appeal shall be allowed. Thus, it is clear from the foregoing that the appeal from any decision, award or order of the Labor Arbiter to the NLRC shall be made within ten (10) calendar days from receipt of such decision, award or order, and must be under oath, with proof of payment of the required appeal fee accompanied by a memorandum of appeal. In case the decision of the Labor Arbiter involves a monetary award, the appeal is deemed perfected only upon the posting of a cash or surety bond also within ten (10) calendar days from receipt of such decision in an amount equivalent to the monetary award. 35 1avvphi1 The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employers appeal may be considered completed. 36 The law however does not require its outright payment, but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate and reasonable sum for the premium of such bond. 37
The word "may", on the other hand refers to the perfection of an appeal as optional on the part of the defeated party, but not to the posting of an appeal bond, if he desires to appeal. 38
Evidently, the posting of a cash or surety bond is mandatory. And the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional. 39 To extend the period of the appeal is to delay the case, a circumstance which would give the employer the chance to wear out the efforts and meager resources of the worker to the point that the latter is constrained to give up for less than what is due him. 40 As ratiocinated in the case of Viron Garments Mftg. v. NLRC: 41
The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employers appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees just and lawful claims. 42
In the case at bar, while the petitioners Appeal Memorandum and Motion for Reduction of Bond, which was annexed thereto, were both filed on time, 43 the appeal was not perfected by reason of the late filing and deficiency of the amount of the bond for the monetary award with no explanation offered for such delay and inadequacy. As there was no appeal bond filed together with the Appeal Memorandum within the ten (10)-day period provided by law for the perfection of appeal, it follows that no appeal from the decision of the Labor Arbiter had been perfected. 44 Accordingly, the Decision of the Labor Arbiter became final and executory upon the expiration of the reglementary period. While it is true that this Court has relaxed the application of the rules on appeal in labor cases, it has only done so where the failure to comply with the requirements for perfection of appeal was justified or where there was substantial compliance with the rules. Hence, the Supreme Court has allowed tardy appeals in judicious cases,e.g., where the presence of any justifying circumstance recognized by law, such as fraud, accident, mistake or excusable negligence, properly vested the judge with discretion to approve or admit an appeal filed out of time; where on equitable grounds, a belated appeal was allowed as the questioned decision was served directly upon petitioner instead of her counsel of record who at the time was already dead; 45 where the counsel relied on the footnote of the notice of the decision of the labor arbiter that the aggrieved party may appeal . . . within ten (10) working days; in order to prevent a miscarriage of justice or unjust enrichment such as where the tardy appeal is from a decision granting separation pay which was already granted in an earlier final decision; or where there are special circumstances in the case combined with its legal merits or the amount and the issue involved. 46
Here, no justifiable reason was put forth by the petitioners for the non-filing of the required bond, or the late filing of the defective bond for that matter as in fact the bond they filed late on 17 December 1999 in the amount of Forty Thousand Pesos (P40,000.00) was not even equivalent to the reduced amount of bond they prayed for in their Motion for Reduction of Bond. 47 The Court then is not prepared to hold that the petitioners Motion for Reduction of Bond was substantial compliance with the Labor Code for failure to demonstrate willingness to abide by their prayer in said Motion. Page 14 of 54
In addition, no exceptional circumstances obtain in the case at bar which would warrant the relaxation of the bond requirement as a condition for perfecting the appeal. It bears stressing that the bond is sine qua non to the perfection of appeal from the labor arbiters monetary award. The requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business. The failure of the petitioners to comply with the requirements for perfection of appeal had the effect of rendering the decision of the labor arbiter final and executory and placing it beyond the power of the NLRC to review or reverse it.1avvphi1 As a losing party has the right to file an appeal within the prescribed period, so also the winning party has the correlative right to enjoy the finality of the resolution of his/her case. 48
WHEREFORE, in view of the foregoing considerations, the petition is DENIED for lack of merit. Costs against petitioners. SO ORDERED. Austria-Martinez, (Acting Chairman), Callejo, Sr., and Chico-Nazario, JJ., concur. Puno, (Chairman), on official leave. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 87530 June 13, 1990 GERONIMO SADOL, petitioner, vs. PILIPINAS KAO, INC., REQUITO VEGA, BELEN GOMEZ, ARTURO GOMEZ & NLRC SECOND DIVISION,respondents. Oliver A. Luproso for petitioner. Cayetano W. Paderanga for private respondent.
GANCAYCO, J.: The issue posed in this case is whether or not a party who failed to appeal from a decision of the labor arbiter to the National Labor Relations Commission (NLRC) within the ten (10) day reglementary period can still participate in a separate appeal timely interposed by the adverse party by filing a motion for reconsideration of a decision of the NLRC on such appeal. Petitioner was recruited as a laborer by private respondents Requito Vega, Antonio Gomez and Belen Gomez, who are the owners of Vega & Co., a private recruitment agency, with assignment at respondent Pilipinas Kao, Inc. (PKI for brevity), particularly at the Pit Burning area. Sometime on April 16, 1984, he was allegedly summarily dismissed. Hence, on July 24, 1986, he filed a complaint for reinstatement and backwages with Region X of the Department of Labor and Employment in Cagayan de Oro City. On November 13, 1986, the labor arbiter ordered all parties to submit their position papers. Only petitioner complied. On December 17, 1986, petitioner filed an urgent motion that the failure of respondent to file their position papers is a waiver and so judgment should be rendered in favor of petitioner. Similar motions were filed by petitioner on January 23, 1987 and May 15, 1987. On June 26, 1987, the labor arbiter rendered a decision ordering private respondents to jointly and solidarity pay petitioner his separation pay computed at one month for every year of service within the reglementary period. Petitioner appealed to the NLRC. Said respondents also appealed but it was filed out of time. On August 26, 1988, the Second Division of the NLRC promulgated a decision modifying the appealed decision in that respondent PKI was ordered to reinstate petitioner to his former position without loss of seniority rights and other accrued benefits and with full backwages from the time of dismissal up to his actual reinstatement, and in case reinstatement is impossible, payment of full backwages and separation pay of one (1) month salary for every year of service. The appeal of respondent Pig was dismissed for having been filed out of time. The PKI allegedly received a copy of the decision of the NLRC only on September 13, 1988. A motion for reconsideration of said decision dated September 22, 1988 was filed by said respondent and a similar motion was filed by Samahang Kabuhayan ng Barangay Luz Banzon (SKLB for brevity) to which an opposition was filed by petitioner. On September 30, 1988, a resolution was promulgated by the same division of the NLRC, setting aside its decision and dismissing the case for lack of merit. A motion for reconsideration thereof filed by petitioner who besides questioning its findings of facts raised the issue that said respondent's appeal having been filed out of time its motion for reconsideration of the decision should not have been entertained as it raised issues for the first on appeal which were not raised before the labor arbiter. This motion was denied on November 27, 1988. Page 15 of 54
Hence, the herein petition for certiorari wherein petitioner recites the following assignment of errors: I THE HONORABLE COMMISSION, SECOND DIVISION, SERIOUSLY ERRED IN FINDING THAT RESPONDENTS REQUITO VEGA, ARTURO GOMEZ AND BELEN GOMEZ IS A LAWFUL INDEPENDENT LABOR CONTRACTOR; II THE HONORABLE COMMISSION, SECOND DIVISION, SERIOUSLY ERRED IN FINDING IN ITS RESOLUTION THAT COMPLAINANT- APPELLANT VOLUNTARILY ABANDONED HIS JOB; III THE HONORABLE COMMISSION, SECOND DIVISION, SERIOUSLY ERRED AND/OR COMMITTED GRAVE ABUSE OF DISCRETION IN GIVING DUE COURSE AND/OR ENTERTAINING THE MOTION FOR RECONSIDERATION FILED BY RESPONDENT-APPELLANTS AND REVERSING ITS OWN DECISION/RESOLUTION DATED AUGUST 26, 1988; IV THE HONORABLE COMMISSION, SECOND DIVISION, SERIOUSLY ERRED IN FAILING TO GIVE DUE CONSIDERATION OF COMPLAINANT-APPELLANT'S OPPOSITION TO MOTION FOR RECONSIDERATION DATED SEPTEMBER 27, 1988. 1
The third and fourth assignment of errors shall first be resolved. There is no question that private respondents failed to file a timely appeal from the derision of the labor arbiter while the petitioner was able to interpose his appeal within the reglementary period. It is also an accepted postulate that issues not raised in the lower court or the labor arbiter may not be raised for the first time on appeal. Note is taken of the fact that even the Solicitor General refused to represent the NLRC in this proceeding as it shares the view of petitioner that the decision of the labor arbiter having become final by the failure to respondent PKI to appeal on time the NLRC may no longer amend, modify, much less set aside the same. 2
This posture is correct insofar as respondent PKI is concerned. However, as petitioner had filed a timely appeal the NLRC had jurisdiction to give due se to his appeal and render the decision of August 28, 1988, a copy of which was furnished respondents. Having lost the right to appeal can respondent PKI file a motion for reconsideration of said decision? The Court resolves the question in the affirmative. The rules of technicality must yield to the broader interest of justice. It is only by giving due course to the motion for reconsideration that was timely filed that the NLRC may be able, to equitably evaluate the conflicting versions of facts presented by the parties. In the now questioned resolution of the NLRC dated September 30,1988, the following findings and conclusions were made: Respondent SKLB assails the finding of the Commission that it is engaged in labor- only contracting. In support thereof, respondent submitted a Clearance Certificate issued by the Department of Labor and Employment, Regional Office No. 10 situated in Cagayan de Oro City, certifying to its being cleared for issuance of a permit as a labor contractor. It also submitted payrolls showing that it indeed operated as such independent labor contractor in accordance with Article 106 of the Labor Code. Attached to respondent SKLB's motion likewise is the joint affidavit of one Mario T. Ecarnum and Benito U. Ecarnum who jointly stated that they were neighbors and co- workers of the complainant in the pit burning area, in a work contracted by aforesaid respondent with respondent Pilipinas Kao, Inc.; that complainant abandoned his work starting April 19,1984 when he went to Manila to apply for work abroad and it wall only about eight (8) months later that he returned when he failed to secure an overseas employment; that complainant's prolonged absence was without prior permission or leave of absence. Respondent SKLB further contends that it meets all requirements set by law and jurisprudence pertaining to an independent labor contractor, citing the case of Vda. de Eustaquio vs. Workmen's Compensation Commission, 97 SCRA 255, thus: Page 16 of 54
An independent contractor is one who, in rendering services, exercise an independent employment or occupation and represents the will of his employer only as to the results of his work; and who is engaged to perform a certain service to another according to his own manner and methods, free from control and direction of his employer in all matters connected with the performance of the service, except as to the result of the work. To further buttress respondent SKLB's claim of being an independent labor contractor and employer of complainant, it submitted a copy of a Memorandum dated April 21, 1984 sent to complainant requiring the latter to report to its office immediately otherwise he would be deemed to have abandoned his work. It does strike Us as odd that if indeed complainant was dismissed sometime in April 1984 it took him almost three (3) years before filing the instant case for illegal dismissal . This circumstance adds a significant dimension to respondent's position that indeed complainant abandoned his job to look for greener pastures and it was only when he failed to find such opportunity that he came back to demand that he be allowed to resume the employment which he unceremoniously abandoned. All the foregoing undisputed taken together, preponderate in favor of respondent SKLB's claim of being a lawful independent labor contractor which employed complainant who unjustifiably abandoned his employment. WHEREFORE, the derision sought to be reconsidered is hereby SET ASIDE and a new one entered, dismissing the case for lack of merit. 3
The factual findings of the NLRC are conclusive on this Court because the same appear to be supported by substantial evidence. WHEREFORE, the petition is DISMISSED for lack of merit. No costs. SO ORDERED. Narvasa (Chairman), Cruz and Medialdea, JJ., concur. Grio-Aquino, J., is on leave. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 126322 January 16, 2002 YUPANGCO COTTON MILLS, INC., petitioner, vs. COURT OF APPEALS, HON. URBANO C. VICTORIO, SR., Presiding Judge, RTC Branch 50, Manila, RODRIGO SY MENDOZA, SAMAHANG MANGGAGAWA NG ARTEX (SAMAR-ANGLO) represented by its Local President RUSTICO CORTEZ, and WESTERN GUARANTY CORPORATION, respondents. PARDO, J.: The Case The case is a petition for review on certiorari of the decision of the Court of Appeals 1 dismissing the petition ruling that petitioner was guilty of forum shopping and that the proper remedy was appeal in due course, not certiorari or mandamus. In its decision, the Court of Appeals sustained the trial court's ruling that the remedies granted under Section 17, Rule 39 of the Rules of Court are not available to the petitioner because the Manual of Instructions for Sheriffs of the NLRC does not include the remedy of an independent action by the owner to establish his right to his property. The Facts The facts, as found by the Court of Appeals, are as follows: "From the records before us and by petitioner's own allegations and admission, it has taken the following actions in connection with its claim that a sheriff of the National Labor Relations Commission "erroneously and unlawfully levied" upon certain properties which it claims as its own. Page 17 of 54
"1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995. "2. It filed an Affidavit of Adverse Claim with the National Labor Relations Commission (NLRC) on July 4, 1995, which was dismissed on August 30, 1995, by the labor Arbiter. "3. It filed a petition for certiorari and prohibition with the Regional Trial Court of Manila, Branch 49, docketed as Civil Case No. 95-75628 on October 6, 1995. The Regional Trial Court dismissed the case on October 11, 1995 for lack of merit. "4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which dismissed the appeal for lack of merit on December 8, 1995. "5. It filed an original petition for mandatory injunction with the NLRC on November 16, 1995. This was docketed as Case No. NLRC-NCR-IC. 0000602-95. This case is still pending with that Commission. "6. It filed a complaint in the Regional Trial Court in Manila which was docketed as Civil Case No. 95- 76395. The dismissal of this case by public respondent triggered the filing of the instant petition. "In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner of the properties located in the compound and buildings of Artex Development Corporation, which were erroneously levied upon by the sheriff of the NLRC as a consequence of the decision rendered by the said Commission in a labor case docketed as NLRC- NCR Case No. 00-05-02960-90." 2
On March 29, 1996, the Court of Appeals promulgated a decision 3 dismissing the petition on the ground of forum shopping and that petitioner's remedy was to seek relief from this Court. On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration of the decision. 4 Petitioner argued that the filing of a complaint for accion reinvindicatoria with the Regional Trial Court was proper because it is a remedy specifically granted to an owner (whose properties were subjected to a writ of execution to enforce a decision rendered in a labor dispute in which it was not a party) by Section 17 (now 16), Rule 39, Revised Rules of Court and by the doctrines laid down in Sy v. Discaya, 5 Santos v. Bayhon 6 and Manliguez v. Court of Appeals. 7
In addition, petitioner argued that the reliefs sought and the issues involved in the complaint for recovery of property and damages filed with the Regional Trial Court of Manila, presided over by respondent judge, were entirely distinct and separate from the reliefs sought and the issues involved in the proceedings before the Labor Arbiter and the NLRC. Besides, petitioner pointed out that neither the NLRC nor the Labor Arbiter is empowered to adjudicate matters involving ownership of properties. On August 27, 1996, the Court of Appeals denied petitioner's motion for reconsideration. 8
Hence, this appeal. 9
The Issues The issues raised are (1) whether the Court of Appeals erred in ruling that petitioner was guilty of forum shopping, and (2) whether the Court of Appeals erred in dismissing the petitioner's accion reinvindicatoria on the ground of lack of jurisdiction of the trial court. The Court's Ruling On the first issue raised, we rule that there was no forum shopping: In Golangco v. Court of Appeals, 10 we held: "What is truly important to consider in determining whether forum shopping exists or not is the vexation caused the courts and parties- litigant by a party who asks different courts and/or administrative agencies to rule on the same on related caused and/or grant the same or substantially the same reliefs, in the process creating possibility of conflicting decisions being rendered by the different for a upon the same issues. "xxx xxx xxx "There is no forum-shopping where two different orders were questioned, two distinct causes of action and issues were raised, and two objectives were sought." (Underscoring ours) In the case at bar, there was no identity of parties, rights and causes of action and reliefs sought. The case before the NLRC where Labor Arbiter Reyes issued a labor dispute between Artex and Samar-Anglo. Petitioner was not a party to the case. The only issue petitioner raised before the NLRC was whether or not the writ of execution issued by the labor arbiter could be satisfied against the property of petitioner, not a party to the labor case. Page 18 of 54
On the other hand, the accion reinvindicatoria filed by petitioner in the trial court was to recover the property illegally levied upon and sold at auction. Hence, the causes of action in these cases were different. The rule is that "for forum-shopping to exist both actions must involve the same transactions, the same circumstances. The actions must also raise identical causes of action, subject matter and issues. 11
In Chemphil Export & Import Corporation v. Court of Appeals, 12 we ruled that: "Forum-shopping or the act of a party against whom an adverse judgment has been rendered in one forum, of seeking another (and possible) opinion in another forum (other than by appeal or the special civil action of certiorari), or the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other would make a favorable disposition." On the second issue, a third party whose property has been levied upon by a sheriff to enforce a decision against a judgment debtor is afforded with several alternative remedies to protect its interests. The third party may avail himself of alternative remedies cumulatively, and one will not preclude the third party from availing himself of the other alternative remedies in the event he failed in the remedy first availed of. Thus, a third party may avail himself of the following alternative remedies: a) File a third party claim with the sheriff of the Labor Arbiter, and b) If the third party claim is denied, the third party may appeal the denial to the NLRC. 13
Even if a third party claim was denied, a third party may still file a proper action with a competent court to recover ownership of the property illegally seized by the sheriff. This finds support in Section 17 (now 16), Rule 39, Revised Rules of Court, to wit: "SEC. 17 (now 16). Proceedings where property claimed by third person. - If property claimed by any other person than the judgment debtor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serve the same upon the officer making the levy, and a copy thereof upon the judgment creditor, the officer shall not be bound to keep the property, unless such judgment creditor or his agent, on demand of the officer, indemnify the officer against such claim by a bond in a sum not greater than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. 1wphi1.nt "The officer is not liable for damages, for the taking or keeping of the property, to any third- party claimant unless a claim is made by the latter and unless an action for damages is brought by him against the officer within one hundred twenty (120) days from the date of the filing of the bond. But nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property by any proper action. "When the party in whose favor the writ of execution runs, is the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose." (Underscoring ours) In Sy v. Discaya, 14 we ruled that: "The right of a third-party claimant to file an independent action to vindicate his claim of ownership over the properties seized is reserved by Section 17 (now 16), Rule 39 of the Rules of Court, x x x : "xxx xxx xxx "As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a third person whose property was seized by a sheriff to answer for the obligation of a judgment debtor may invoke the supervisory power of the court which authorized such execution. Upon due application by the third person and after summary hearing, the court may command that the property be released from the mistaken levy and restored to the rightful owner or possession. What said court do in these instances, however, is limited to a determination of whether the sheriff has acted rightful or wrongly in the performance of his duties in the execution of judgment, more specifically, if he has indeed take hold of property not belonging to the judgment debtor. The court does not and cannot pass upon the question of title to the property, with any character of finality. Page 19 of 54
It can treat of the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. It can require the sheriff to restore the property to the claimant's possession if warranted by the evidence. However, if the claimant's proof do not persuade the court of the validity of his title or right of possession thereto, the claim will be denied. "Independent of the above-stated recourse, a third-party claimant may also avail of the remedy known as "terceria', provided in Section 17 (now 16), Rule 39, by serving on the officer making the levy an affidavit of his title and a copy thereof upon the judgment creditor. The officer shall not be bound to keep the property, unless such judgment creditor or his agent, on demand of the officer, indemnifies the officer against such claim by a bond in a sum not greater than the value of the property levied on. An action for damages may be brought against the sheriff within one hundred twenty (120) days from the filing of the bond. "The aforesaid remedies are nevertheless without prejudice to 'any proper action' that a third-party claimant may deem suitable to vindicate 'his claim to the property.' Such a 'proper action' is, obviously, entirely distinct from that explicitly prescribed in Section 17 of Rule 39, which is an action for damages brought by a third-party claimant against the officer within one hundred twenty (120) days from the date of the filing of the bond for the taking or keeping of the property subject of the 'terceria'. "Quite obviously, too, this 'proper action' would have for its object the recovery of ownership or possession of the property seized by the sheriff, as well as damages resulting from the allegedly wrongful seizure and detention thereof despite the third-party claim; and it may be brought against the sheriff and such other parties as may be alleged to have colluded with him in the supposedly wrongful execution proceedings, such as the judgment creditor himself. Such 'proper action', as above pointed out, is and should be an entirely separate and distinct action from that in which execution has issued, if instituted by a stranger to the latter suit. "The remedies above mentioned are cumulative and may be resorted to by a third-party claimant independent of or separately from and without need of availing of the others. If a third-party claimant opted to file a proper action to vindicate his claim of ownership, he must institute an action, distinct and separate from that in which the judgment is being enforced, with the court of competent jurisdiction even before or without need of filing a claim in the court which issued the writ, the latter not being a condition sine qua non for the former. In such proper action, the validity and sufficiency of the title of the third-party claimant will be resolved and a writ of preliminary injunction against the sheriff may be issued." (Emphasis and underscoring ours) In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC did not preclude the petitioner from filing a subsequent action for recovery of property and damages with the Regional Trial Court. And, the institution of such complaint will not make petitioner guilty of forum shopping. 15
In Santos v. Bayhon, 16 wherein Labor Arbiter Ceferina Diosana rendered a decision in NLRC NCR Case No. 1-313- 85 in favor of Kamapi, the NLRC affirmed the decision. Thereafter, Kamapi obtained a writ of execution against the properties of Poly-Plastic Products or Anthony Ching. However, respondent Priscilla Carrera filed a third-party claim alleging that Anthony Ching had sold the property to her. Nevertheless, upon posting by the judgment creditor of an indemnity bond, the NLRC Sheriff proceeded with the public auction sale. Consequently, respondent Carrera filed with Regional Trial Court, Manila an action to recover the levied property and obtained a temporary restraining order against Labor Arbiter Diosana and the NLRC Sheriff from issuing a certificate of sale over the levied property. Eventually, Labor Arbiter Santos issued an order allowing the execution to proceed against the property of Poly- Plastic Products. Also, Labor Arbiter Santos and the NLRC Sheriff filed a motion to dismiss the civil case instituted by respondent Carrera on the ground that the Regional Trial Court did not have jurisdiction over the labor case. The trial court issued an order enjoining the enforcement of the writ of execution over the properties claimed by respondent Carrera pending the determination of the validity of the sale made in her favor by the judgment debtor Poly-Plastic Products and Anthony Ching. In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled that: "x x x. The power of the NLRC to execute its judgments extends only to properties unquestionably belonging to the judgment debtor (Special Servicing Corp. v. Centro La Paz, 121 SCRA 748). "The general rule that no court has the power to interfere by injunction with the judgments or decrees of another court with concurrent or coordinate jurisdiction possessing equal power to grant injunctive relief, applies only when no third- Page 20 of 54
party claimant is involved (Traders Royal Bank v. Intermediate Appellate Court, 133 SCRA 141 [1984]). When a third-party, or a stranger to the action, asserts a claim over the property levied upon, the claimant may vindicate his claim by an independent action in the proper civil court which may stop the execution of the judgment on property not belonging to the judgment debtor." (Underscoring ours) in Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158 [1991], we ruled that: "The well-settled doctrine is that a 'proper levy' is indispensable to a valid sale on execution. A sale unless preceded by a valid levy is void. Therefore, since there was no sufficient levy on the execution in question, the private respondent did not take any title to the properties sold thereunder x x x. "A person other than the judgment debtor who claims ownership or right over the levied properties is not precluded, however, from taking other legal remedies." (Underscoring ours) Jurisprudence is likewise replete with rulings that since the third-party claimant is not one of the parties to the action, he could not, strictly speaking, appeal from the order denying his claim, but should file a separate reinvindicatory action against the execution creditor or the purchaser of the property after the sale at public auction, or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff. 17
And in Lorenzana v. Cayetano, 18 we ruled that: "The rights of a third-party claimant should not be decided in the action where the third-party claim has been presented, but in a separate action to be instituted by the third person. The appeal that should be interposed if the term 'appeal' may properly be employed, is a separate reinvidincatory action against the execution creditor or the purchaser of the property after the sale at public auction, or complaint for damages to be charged against the bond filed by the judgment creditor in favor of the sheriff. Such reinvindicatory action is reserved to the third- party claimant." A separate civil action for recovery of ownership of the property would not constitute interference with the powers or processes of the Arbiter and the NLRC which rendered the judgment to enforce and execute upon the levied properties. The property levied upon being that of a stranger is not subject to levy. Thus, a separate action for recovery, upon a claim and prima-facie showing of ownership by the petitioner, cannot be considered as interference. The Fallo WHEREFORE, the Court REVERSES the decision of the Court of Appeals and the resolution denying reconsideration. 19 In lieu thereof, the Court renders judgment ANNULLING the sale on execution of the subject property conducted by NLRC Sheriff Anam Timbayan in favor of respondent SAMAR-ANGLO and the subsequent sale of the same to Rodrigo Sy Mendoza. The Court declares the petitioner to be the rightful owner of the property involved and remands the case to the trial court to determine the liability of respondents SAMAR-ANGLO, Rodrigo Sy Mendoza, and WESTERN GUARANTY CORPORATION to pay actual damages that petitioner claimed. Costs against respondents, except the Court of Appeals.1wphi1.nt SO ORDERED. Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION
G.R. No. 87297 August 5, 1991 ALFREDO VELOSO and EDITO LIGUATON petitioners, vs. DEPARTMENT OF LABOR AND EMPLOYMENT, NOAH'S ARK SUGAR CARRIERS AND WILSON T. GO,respondents.
CRUZ, J.:p The law looks with disfavor upon quitclaims and releases by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities. On the other hand, there are legitimate waivers that represent a voluntary settlement of laborer's claims that should be respected by the courts as the law between the parties. In the case at bar, the petitioners claim that they were forced to sign their respective releases in favor of their employer, the herein private respondent, by reason of Page 21 of 54
their dire necessity. The latter, for its part, insists that the petitioner entered into the compromise agreement freely and with open eyes and should not now be permitted to reject their solemn commitments. The controversy began when the petitioners, along with several co-employees, filed a complaint against the private respondent for unfair labor practices, underpayment, and non-payment of overtime, holiday, and other benefits. This was decided in favor of the complainants on October 6,1987. The motion for reconsideration, which was treated as an appeal, was dismissed in a resolution dated February 17, 1988, the dispositive portion of which read as follows: WHEREFORE, the instant appeal is hereby DISMISSED and the questioned Order affirmed with the modification that the monetary awards to Jeric Dequito, Custodio Ganuhay Conrado Mori and Rogelio Veloso are hereby deleted for being settled. Let execution push through with respect to the awards to Alfredo Veloso and Edito Liguaton. On February 23, 1988, the private respondent filed a motion for reconsideration and recomputation of the amount awarded to the petitioners. On April 15, 1988, while the motion was pending, petitioner Alfredo Veloso, through his wife Connie, signed a Quitclaim and Release for and in consideration of P25,000.00, 1 and on the same day his counsel, Atty. Gaga Mauna, manifested "Satisfaction of Judgment" by receipt of the said sum by Veloso. 2 For his part, petitioner Liguaton filed a motion to dismiss dated July 16, 1988, based on a Release and Quitclaim dated July 19,1988 , 3 for and in consideration of the sum of P20,000.00 he acknowledged to have received from the private respondent. 4
These releases were later impugned by the petitioners on September 20, 1988, on the ground that they were constrained to sign the documents because of their "extreme necessity." In an Order dated December 16, 1988, the Undersecretary of Labor rejected their contention and ruled: IN VIEW THEREOF, complainants Motion to Declare Quitclaim Null and Void is hereby denied for lack of merit and the compromise agreements/settlements dated April 15, 1988 and July 19, 1988 are hereby approved. Respondents' motion for reconsideration is hereby denied for being moot and academic. Reconsideration of the order having been denied on March 7, 1989, the petitioners have come to this Court oncertiorari. They ask that the quitclaims they have signed be annulled and that writs of execution be issued for the sum of P21,267.92 in favor of Veloso and the sum of P26,267.92 in favor of Liguaton in settlement of their claims. Their petition is based primarily on Pampanga Sugar Development Co., Inc. v. Court of Industrial Relations, 5 where it was held: ... while rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. (Art. 6, New Civil Code) ... ... The above-quoted provision renders the quitclaim agreements void ab initio in their entirety since they obligated the workers concerned to forego their benefits, while at the same time, exempted the petitioner from any liability that it may choose to reject. This runs counter to Art. 22 of the new Civil Code which provides that no one shall be unjustly enriched at the expense of another. The Court had deliberated on the issues and the arguments of the parties and finds that the petition must fail. The exception and not the rule shall be applied in this case. The case cited is not apropos because the quitclaims therein invoked were secured by the employer after it had already lost in the lower court and were subsequently rejected by this Court when the employer invoked it in a petition for certiorari. By contrast, the quitclaims in the case before us were signed by the petitioners while the motion for reconsideration was still pending in the DOLE, which finally deemed it on March 7, 1989. Furthermore, the quitclaims in the cited case were entered into without leave of the lower court whereas in the case at bar the quitclaims were made with the knowledge and approval of the DOLE, which declared in its order of December 16, 1988, that "the compromise agreement/settlements dated April 15, 1988 and July 19, 1988 are hereby approved." It is also noteworthy that the quitclaims were voluntarily and knowingly made by both petitioners even if they may now deny this. In the case of Veloso, the quitclaim he had signed carried the notation that the sum stated therein had been paid to him in the presence of Atty. Gaga Mauna, his counsel, and the document was attested by Atty. Ferdinand Magabilin, Chief of the Industrial Relations Division of the National Capitol Region of the DOLE. In the case of Liguaton, his quitclaim was made with the Page 22 of 54
assistance of his counsel, Atty. Leopoldo Balguma, who also notarized it and later confirmed it with the filing of the motion to dismiss Liguaton's complaint. The same Atty. Balguma is the petitioners' counsel in this proceeding. Curiously, he is now challenging the very same quitclaim of Liguaton that he himself notarized and invoked as the basis of Liguaton's motion to dismiss, but this time for a different reason. whereas he had earlier argued for Liguaton that the latter's signature was a forgery, he has abandoned that contention and now claims that the quitclaim had been executed because of the petitioners' dire necessity. "Dire necessity" is not an acceptable ground for annulling the releases, especially since it has not been shown that the employees had been forced to execute them. It has not even been proven that the considerations for the quitclaims were unconscionably low and that the petitioners had been tricked into accepting them. While it is true that the writ of execution dated November 24, 1987, called for the collection of the amount of P46,267.92 each for the petitioners, that amount was still subject to recomputation and modification as the private respondent's motion for reconsideration was still pending before the DOLE. The fact that the petitioners accepted the lower amounts would suggest that the original award was exorbitant and they were apprehensive that it would be adjusted and reduced. In any event, no deception has been established on the part of the Private respondent that would justify the annulment of the Petitioners' quitclaims. The applicable law is Article 227 of the Labor Code providing clearly as follows: Art. 227. Compromise agreements. Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation or coercion. The petitioners cannot renege on their agreement simply because they may now feel they made a mistake in not awaiting the resolution of the private respondent's motion for reconsideration and recomputation. The possibility that the original award might have been affirmed does not justify the invalidation of the perfectly valid compromise agreements they had entered into in good faith and with full voluntariness. In General Rubber and Footwear Corp. vs. Drilon, 6 we "made clear that the Court is not saying that accrued money claims can never be effectively waived by workers and employees." As we later declared in Periquet v. NLRC: 7
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. As in this case. We find that the questioned quitclaims were voluntarily and knowingly executed and that the petitioners should not be relieved of their waivers on the ground that they now feel they were improvident in agreeing to the compromise. What they call their "dire necessity" then is no warrant to nullify their solemn undertaking, which cannot be any less binding on them simply because they are laborers and deserve the protection of the Constitution. The Constitution protects the just, and it is not the petitioners in this case. WHEREFORE, the petition is DISMISSED, with costs against the petitioners. It is so ordered. Narvasa (Chairman), Gancayco, Grio-Aquino and Medialdea, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 161003 May 6, 2005 FELIPE O. MAGBANUA, CARLOS DE LA CRUZ, REMY ARNAIZ, BILLY ARNAIZ, ROLLY ARNAIZ, DOMINGO SALARDA, JULIO CAHILIG and NICANOR LABUEN, petitioners, Page 23 of 54
vs. RIZALINO UY, respondent. D E C I S I O N PANGANIBAN, J.: Rights may be waived through a compromise agreement, notwithstanding a final judgment that has already settled the rights of the contracting parties. To be binding, the compromise must be shown to have been voluntarily, freely and intelligently executed by the parties, who had full knowledge of the judgment. Furthermore, it must not be contrary to law, morals, good customs and public policy. The Case Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, assailing the May 31, 2000 Decision 2 and the October 30, 2003 Resolution 3 of the Court of Appeals (CA) in CA-GR SP No. 53581. The challenged Decision disposed as follows: "WHEREFORE, having found that public respondent NLRC committed grave abuse of discretion, the Court hereby SETS ASIDE the two assailed Resolutions and REINSTATES the order of the Labor Arbiterdated February 27, 1998." 4
The assailed Resolution denied reconsideration. The Facts The CA relates the facts in this wise: "As a final consequence of the final and executory decision of the Supreme Court in Rizalino P. Uy v. National Labor Relations Commission, et. al. (GR No. 117983, September 6, 1996) which affirmed with modification the decision of the NLRC in NLRC Case No. V-0427-93, hearings were conducted [in the National Labor Relations Commission Sub- Regional Arbitration Branch in Iloilo City] to determine the amount of wage differentials due the eight (8) complainants therein, now [petitioners]. As computed, the award amounted to P1,487,312.69 x x x. "On February 3, 1997, [petitioners] filed a Motion for Issuance of Writ of Execution. "On May 19, 1997, [respondent] Rizalino Uy filed a Manifestation requesting that the cases be terminated and closed, stating that the judgment award as computed had been complied with to the satisfaction of [petitioners]. Said Manifestation was also signed by the eight (8) [petitioners]. Together with the Manifestation is a Joint Affidavit dated May 5, 1997 of [petitioners], attesting to the receipt of payment from [respondent] and waiving all other benefits due them in connection with their complaint. x x x x x x x x x "On June 3, 1997, [petitioners] filed an Urgent Motion for Issuance of Writ of Execution wherein they confirmed that each of them received P40,000 from [respondent] on May 2, 1997. "On June 9, 1997, [respondent] opposed the motion on the ground that the judgment award had been fully satisfied. In their Reply, [petitioners] claimed that they received only partial payments of the judgment award. x x x x x x x x x "On October 20, 1997, six (6) of the eight (8) [petitioners] filed a Manifestation requesting that the cases be considered closed and terminated as they are already satisfied of what they have received (a total ofP320,000) from [respondent]. Together with said Manifestation is a Joint Affidavit in the local dialect, dated October 20, 1997, of the six (6) [petitioners] attesting that they have no more collectible amount from [respondent] and if there is any, they are abandoning and waiving the same. "On February 27, 1998, the Labor Arbiter issued an order denying the motion for issuance of writ of execution and [considered] the cases closed and terminated x x x. "On appeal, the [National Labor Relations Commission (hereinafter NLRC)] reversed the Labor Arbiter and directed the immediate issuance of a writ of execution, holding that a final and executory judgment can no longer be altered and that quitclaims and releases are normally frowned upon as contrary to public policy." 5
Ruling of the Court of Appeals The CA held that compromise agreements may be entered into even after a final judgment. 6 Thus, petitioners validly released respondent from any claims, upon the voluntary execution of a waiver pursuant to the compromise agreement. 7
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The appellate court denied petitioners motion for reconsideration for having been filed out of time. 8
Hence, this Petition. 9
The Issues Petitioners raise the following issues for our consideration: "1. Whether or not the final and executory judgment of the Supreme Court could be subject to compromise settlement; "2. Whether or not the petitioners affidavit waiving their awards in [the] labor case executed without the assistance of their counsel and labor arbiter is valid; "3. Whether or not the ignorance of the jurisprudence by the Court of Appeals and its erroneous counting of the period to file [a] motion for reconsideration constitute a denial of the petitioners right to due process." 10
The Courts Ruling The Petition has no merit. First Issue: Validity of the Compromise Agreement A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve their differences and thus avoid or put an end to a lawsuit. 11 They adjust their difficulties in the manner they have agreed upon, disregarding the possible gain in litigation and keeping in mind that such gain is balanced by the danger of losing. 12 Verily, the compromise may be either extrajudicial (to prevent litigation) or judicial (to end a litigation). 13
A compromise must not be contrary to law, morals, good customs and public policy; and must have been freely and intelligently executed by and between the parties. 14 To have the force of law between the parties, 15 it must comply with the requisites and principles of contracts. 16 Upon the parties, it has the effect and the authority of res judicata, once entered into. 17
When a compromise agreement is given judicial approval, it becomes more than a contract binding upon the parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the force and effect of a judgment. 18 It is immediately executory and not appealable, except for vices of consent or forgery. 19 The nonfulfillment of its terms and conditions justifies the issuance of a writ of execution; in such an instance, execution becomes a ministerial duty of the court. 20
Following these basic principles, apparently unnecessary is a compromise agreement after final judgment has been entered. Indeed, once the case is terminated by final judgment, the rights of the parties are settled. There are no more disputes that can be compromised. Compromise Agreements after Final Judgment The Court is tasked, however, to determine the legality of a compromise agreement after final judgment, not theprudence of entering into one. Petitioners vehemently argue that a compromise of a final judgment is invalid under Article 2040 of the Civil Code, which we quote: 21
"Art. 2040. If after a litigation has been decided by a final judgment, a compromise should be agreed upon, either or both parties being unaware of the existence of the final judgment, the compromise may berescinded. "Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a compromise." (Bold types supplied) The first paragraph of Article 2040 refers to a scenario in which either or both of the parties are unaware of a courts final judgment at the time they agree on a compromise. In this case, the law allows either of them to rescindthe compromise agreement. It is evident from the quoted paragraph that such an agreement is not prohibited or void or voidable. Instead, a remedy to impugn the contract, which is an action for rescission, is declared available. 22 The law allows a party to rescind a compromise agreement, because it could have been entered into in ignorance of the fact that there was already a final judgment. Knowledge of a decisions finality may affect the resolve to enter into a compromise agreement. The second paragraph, though irrelevant to the present case, refers to the instance when the courts decision is still appealable or otherwise subject to modification. Under this paragraph, ignorance of the decision is not a ground to rescind a compromise agreement, because the parties are still unsure of the final outcome of the case at this time. Petitioners argument, therefore, fails to convince. Article 2040 of the Civil Code does not refer to the validity of a compromise agreement entered into after final judgment. Moreover, an important requisite, which is lack of Page 25 of 54
knowledge of the final judgment, is wanting in the present case. Supported by Case Law The issue involving the validity of a compromise agreement notwithstanding a final judgment is not novel. Jesalva v. Bautista 23 upheld a compromise agreement that covered cases pending trial, on appeal, and with final judgment. 24 The Court noted that Article 2040 impliedly allowed such agreements; there was no limitation as to when these should be entered into. 25 Palanca v. Court of Industrial Relations 26 sustained a compromise agreement, notwithstanding a final judgment in which only the amount of back wages was left to be determined. The Court found no evidence of fraud or of any showing that the agreement was contrary to law, morals, good customs, public order, or public policy. 27
Gatchalian v. Arlegui 28 upheld the right to compromise prior to the execution of a final judgment. The Court ruled that the final judgment had been novated and superseded by a compromise agreement. 29 Also, Northern Lines, Inc. v. Court of Tax Appeals 30 recognized the right to compromise final and executory judgments, as long as such right was exercised by the proper party litigants. 31
Rovero v. Amparo, 32 which petitioners cited, did not set any precedent that all compromise agreements after final judgment were invalid. In that case, the customs commissioner imposed a fine on an importer, based on the appraised value of the goods illegally brought to the country. The latters appeal, which eventually reached this Court, was denied. Despite a final judgment, the customs commissioner still reappraised the value of the goods and effectively reduced the amount of fine. Holding that he had no authority to compromise a final judgment, the Court explained: "It is argued that the parties to a case may enter into a compromise about even a final judgment rendered by a court, and it is contended x x x that the reappraisal ordered by the Commissioner of Customs and sanctioned by the Department of Finance was authorized by Section 1369 of the [Revised Administrative Code]. The contention may be correct as regards private parties who are the owners of the property subject-matter of the litigation, and who are therefore free to do with what they own or what is awarded to them, as they please, even to the extent of renouncing the award, or condoning the obligation imposed by the judgment on the adverse party. Not so, however, in the present case. Here, the Commissioner of Customs is not a private party and is not the owner of the money involved in the fine based on the original appraisal. He is a mere agent of the Government and acts as a trustee of the money or property in his hands or coming thereto by virtue of a favorable judgment. Unless expressly authorized by his principal or by law, he is not authorized to accept anything different from or anything less than what is adjudicated in favor of the Government." 33 (Bold types supplied) Compliance with the Rule on Contracts There is no justification to disallow a compromise agreement, solely because it was entered into after final judgment. The validity of the agreement is determined by compliance with the requisites and principles of contracts, not by when it was entered into. As provided by the law on contracts, a valid compromise must have the following elements: (1) the consent of the parties to the compromise, (2) an object certain that is the subject matter of the compromise, and (3) the cause of the obligation that is established. 34
In the present factual milieu, compliance with the elements of a valid contract is not in issue. Petitioners do not challenge the factual finding that they entered into a compromise agreement with respondent. There are no allegations of vitiated consent. Neither was there any proof that the agreement was defective or could be characterized as rescissible, 35 voidable, 36 unenforceable, 37 or void. 38 Instead, petitioners base their argument on the sole fact that the agreement was executed despite a final judgment, which the Court had previously ruled to be allowed by law. Petitioners voluntarily entered into the compromise agreement, as shown by the following facts: (1) they signed respondents Manifestation (filed with the labor arbiter) that the judgment award had been satisfied; 39 (2) they executed a Joint Affidavit dated May 5, 1997, attesting to the receipt of payment and the waiver of all other benefits due them; 40 and (3) 6 of the 8 petitioners filed a Manifestation with the labor arbiter on October 20, 1997, requesting that the cases be terminated because of their receipt of payment in full satisfaction of their claims. 41 These circumstances also reveal that respondent has already complied with its obligation pursuant to the compromise agreement. Having already benefited from the agreement, estoppel bars petitioners from challenging it. Advantages of Compromise A reciprocal concession inherent in a compromise agreement assures benefits for the contracting parties. For the defeated litigant, obvious is the advantage of a compromise after final judgment. Liability arising from the Page 26 of 54
judgment may be reduced. As to the prevailing party, a compromise agreement assures receipt of payment. Litigants are sometimes deprived of their winnings because of unscrupulous mechanisms meant to delay or evade the execution of a final judgment. The advantages of a compromise agreement appear to be recognized by the NLRC in its Rules of Procedure. As part of the proceedings in executing a final judgment, litigants are required to attend a pre-execution conference to thresh out matters relevant to the execution. 42 In the conference, any agreement that would settle the final judgment in a particular manner is necessarily a compromise. Novation of an Obligation The principle of novation supports the validity of a compromise after final judgment. Novation, a mode of extinguishing an obligation, 43 is done by changing the object or principal condition of an obligation, substituting the person of the debtor, or surrogating a third person in the exercise of the rights of the creditor. 44
For an obligation to be extinguished by another, the law requires either of these two conditions: (1) the substitution is unequivocally declared, or (2) the old and the new obligations are incompatible on every point. 45 A compromise of a final judgment operates as a novation of the judgment obligation, upon compliance with either requisite. 46 In the present case, the incompatibility of the final judgment with the compromise agreement is evident, because the latter was precisely entered into to supersede the former. Second Issue: Validity of the Waiver Having ruled on the validity of the compromise agreement in the present suit, the Court now turns its attention to the waiver of claims or quitclaim executed by petitioners. The subject waiver was their concession when they entered into the agreement. They allege, however, that the absence of their counsel and the labor arbiter when they executed the waiver invalidates the document. Not Determinative of the Waivers Validity The presence or the absence of counsel when a waiver is executed does not determine its validity. There is no law requiring the presence of a counsel to validate a waiver. The test is whether it was executed voluntarily, freely and intelligently; and whether the consideration for it was credible and reasonable. 47 Where there is clear proof that a waiver was wangled from an unsuspecting or a gullible person, the law must step in to annul such transaction. 48 In the present case, petitioners failed to present any evidence to show that their consent had been vitiated. The law is silent with regard to the procedure for approving a waiver after a case has been terminated. 49 Relevant, however, is this reference to the NLRCs New Rules of Procedure: "Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be reduced to writing and signed by the parties and their respective counsel, or authorized representative, if any, 50 before the Labor Arbiter. "The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered into by the parties and after having explained to them the terms and consequences thereof. "A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the case is pending shall be approved by him, if after confronting the parties, particularly the complainants, he is satisfied that they understand the terms and conditions of the settlement and that it was entered into freely and voluntarily by them and the agreement is not contrary to law, morals, and public policy." 51
This provision refers to proceedings in a mandatory/conciliation conference during the initial stage of the litigation. Such provision should be made applicable to the proceedings in the pre-execution conference, for which the procedure for approving a waiver after final judgment is not stated. There is no reason to make a distinction between the proceedings in mandatory/conciliation and those in pre-execution conferences. The labor arbiters absence when the waivers were executed was remedied upon compliance with the above procedure. The Court observes that the arbiter made searching questions during the pre-execution conference to ascertain whether petitioners had voluntarily and freely executed the waivers. 52 Likewise, there was evidence that they made an intelligent choice, considering that the contents of the written waivers had been explained to them. 53 The labor arbiters absence when those waivers were executed does not, therefore, invalidate them. The Court declines to rule on the allegation that respondents counsels encroached upon the professional employment of petitioners lawyer when they facilitated the waivers. 54 The present action is not the proper forum in which to raise any charge of professional misconduct. More important, petitioners failed to present any supporting evidence. Page 27 of 54
The third issue, which refers to the timely filing of petitioners Motion for Reconsideration filed with the CA, will no longer be discussed because this Courts decision has resolved the case on the merits. WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED. Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 76427 February 21, 1989 JOHNSON AND JOHNSON LABOR UNION-FFW, DANTE JOHNSON MORANTE, MYRNA OLOVEJA AND ITS OTHER INDIVIDUAL UNION MEMBERS, petitioners vs. DIRECTOR OF LABOR RELATIONS, AND OSCAR PILI, respondents. Rogelio R. Udarbe for petitioners. The Solicitor General for public respondent. Manuel V. Nepomuceno for private respondent.
GUTIERREZ, JR., J.: The sole issue in this petition for review on certiorari is whether or not the public respondent committed grave abuse of discretion in ruling that the private respondent is entitled to the financial aid from the compulsory contributions of the petitioner-union afforded to its members who have been suspended or terminated from work without reasonable cause. The provision for the grant of financial aid in favor of a union member is embodied in the petitioner-union's Constitution and By-laws, Article XIII, Section 5, of which reads: A member who have (sic) been suspended or terminated without reasonable cause shall be extended a financial aid from the compulsory contributions in the amount of SEVENTY FIVE CENTAVOS (P0. 75) from each member weekly. (p. 18, Rollo) On May 6, 1985, the private respondent, a member of the petitioner-union was dismissed from his employment by employer Johnson & Johnson (Phil.) Inc., for non- disclosure in his job application form of the fact that he had a relative in the company in violation of company policies. On July 1985, a complaint was filed by the private respondent against the officers of the petitioner-union docketed as NRC- LRD-M-7-271-85 alleging, among others, that the union officers had refused to provide the private respondent the financial aid as provided in the union constitution despite demands for payment thereof The petitioner-union and its officers counter-alleged, in their answer, that the said financial aid was to be given only in cases of termination or suspension without any reasonable cause; that the union's executive board had the prerogative to determine whether the suspension or termination was for a reasonable cause or not; and that the union, in a general membership meeting, had resolved not to extend financial aid to the private respondent. While the grievance procedure as contained in the union's collective bargaining agreement was being undertaken, the private respondent, on August 26, 1985, filed a case for unfair labor practice and illegal dismissal against his employer docketed as NLRC-NCR Case No. 6-1912-85. On September 27, 1985, Med-Arbiter Anastacio L. Bactin issued an order dismissing for lack of merit the complaint of the private respondent against the petitioners for alleged violation of the union constitution and by-laws. On appeal, the then public respondent Director Cresenciano B. Trajano, on April 17, 1986, rendered the decision assailed in this petition. The dispositive portion of the said decision reads: WHEREFORE, premises considered, the appeal of complainant Oscar Pili is hereby granted and the Order appealed from is hereby set aside. Appellees, therefore, are hereby ordered to pay the complainant the sum of P0.75/week per union member to be computed from the time of the complainant's termination from employment to the time he acquired another employment should his complaint for illegal dismissal against the company be resolved in his favor; provided, that if his complaint against the company be dismissed, appellees are absolved from paying the complainant anything. (p. 115, Records) Page 28 of 54
Both parties moved for reconsideration. The petitioners reiterated that since the private respondent's termination was for a reasonable cause, it would be unjust and unfair if financial aid were to be given in the event that the latter's case for illegal dismissal is decided against him. The private respondent, on the other hand, prayed for the amendment of the dispositive portion in order that the grant of financial aid be made without any qualifications. On June 16, 1986, a Manifestation and/or Opposition to the Motion for Reconsideration filed by the petitioners was filed by the private respondent stating that he was being discriminated against considering that one Jerwin Taguba, another union member, was terminated for dishonesty and loss of confidence but was granted financial aid by the petitioners while Taguba's complaint against the company was still pending with the National Labor Relation Commission. The public respondent separately resolved the above motions. On June 26, 1986, an order was issued denying the petitioners' motion for reconsideration. On August 19, 1986, the public respondent modified its decision dated April 17, 1986 and its aforestated order as follows: Considering that complainant Pili is similarly situated as Jerwin Taguba coupled with the need to obviate any discriminating treatment to the former, it is only just and appropriate that our Decision dated 17 April 1986 be modified in such a manner that respondents immediately pay the complainant the sum of P0.75/ week per union member to be computed from the time of his dismissal from the company, without prejudice to refund of the amount that shall be paid to Pili in the event the pending case is finally resolved against him. WHEREFORE, and as above qualified, this Bureau's Decision dated 17 April 1986 and the Order dated 26 June 1986 are hereby modified to the extent that the respondents are directed to immediately pay complainant the sum of P0.75/week per union member to be computed from the time of his termination from his employment until his case against the employer company shall have been finally resolved and/or disposed. (p. 53, Rollo) Meanwhile, on July 25, 1986, a motion for issuance of a writ of execution was filed by the private respondent in order to collect from the petitioners the amount of financial aid to which the former was entitled. On September 1, 1986, the petitioners moved for a reconsideration of the public respondent's resolution dated August 19, 1986 on the grounds that Taguba's affidavit cannot support the private respondent's claim that he is also entitled to the financial aid provided in the union's constitution and that the union cannot be compelled to grant the said aid in the absence of a special fund for the purpose. On October 28, 1986, the public respondent through Director Pura Ferrer-Calleja denied the petitioners' motion for reconsideration stating that Article XIII, Section 5 of the union's constitution and by-laws does not require a special fund so that all union members similarly situated as the private respondent must be entitled to the same right and privilege regarding the grant of financial aid as therein provided. On December 18, 1986, a writ of execution was issued by the public respondent in the following tenor: NOW THEREFORE, you are hereby directed to proceed to the premises of Johnson and Johnson (FFW) located at Edison Road, Bo. Ibayo, Paranaque, Metro Manila to collect from the said union through its Treasurer, Myrna Oloveja or to any responsible officer of the union the amount of Twenty Thousand Five Hundred Twenty Pesos (P20,520.00), more or less representing financial assistance to complainant under the union's constitution and by-laws. In case you fail to collect said amount in cash, you are to cause the satisfaction of the same on the union's movable or immovable properties not exempt from execution. You are to return this writ within fifteen (15) days from your compliance hereby together with your report thereon. You may collect your legal fees from the respondent union. (p. 55, Rollo) On December 24, 1986, the instant petition was filed with prayer for a preliminary injunction. The temporary restraining order issued by the Chief Justice on December 24, 1986 was confirmed in our resolution dated January 7, 1987. The grounds relied upon by the petitioners are as follows: A. THAT THE DECISION/ORDER IN QUESTION IS CONTRARY TO LAW. Page 29 of 54
B. THAT RESPONDENT OFFICIAL ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION. C. THAT WITH RESPECT TO PETITIONING MEMBERS, THEY HAVE BEEN DEPRIVED OF THEIR CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW. (P. 13, Rollo) We find unmeritorious the contention of the petitioners that the questioned decision and order are contrary to law for being tantamount to compelling the union to disburse it funds without the authority of the general membership and to collect from its members without the benefit of individual payroll authorization. Section 5, Article XIII of the petitioner-union's constitution and by-laws earlier aforequoted is self-executory. The financial aid extended to any suspended or terminated union member is realized from the contributions declared to be compulsory under the said provision in the amount of seventy-five centavos due weekly from each union member. The nature of the said contributions being compulsory and the fact that the purpose as stated is for financial aid clearly indicate that individual payroll authorizations of the union members are not necessary. The petitioner-union's constitution and by-laws govern the relationship between and among its members. As in the interpretation of contracts, if the terms are clear and leave no doubt as to the intention of the parties, the literal meaning of the stipulations shall control. (See Government Service Insurance System v. Court of Appeals, 145 SCRA 311 [1986]). Section 5, Article XIII of the said constitution and by-laws is in line with the petitioner- union's aims and purposes which under Sec. 2, Article II include To promote, establish and devise schemes of mutual assistance among the members in labor disputes. Thus, there is no doubt that the petitioner-union can be ordered to release its funds intended for the promotion of mutual assistance in favor of the private respondent. We likewise find untenable the argument of the petitioners that the public respondent, in granting financial aid to the private respondent, in effect, substituted the decision of the petitioner-union to do otherwise and that in so doing, the public respondent gravely abused its discretion amounting to lack of jurisdiction. The union constitution is a covenant between the union and its members and among the members. There is nothing in their constitution which leaves the legal interpretation of its terms unilaterally to the union or its officers or even the general membership. It is noteworthy to quote the ruling made by the public respondent in this respect, to wit: The union constitution and by-laws clearly show that any member who is suspended or terminated from employment without reasonable cause is entitled to financial assistance from the union and its members. The problem, however, is that the constitution does not indicate which body has the power to determine whether a suspension or dismissal is for reasonable cause or not. To our mind, the constitution's silence on this matter is a clear recognition of the labor arbiter's exclusive jurisdiction over dismissal cases. After all, the union's constitution and by- laws is valid only insofar as it is not inconsistent with existing laws. ... . (BLR decision, p. 2; p. 115, Records) An aggrieved member has to resort to a government agency or tribunal. Considering that quasi-judicial agencies like the public respondent's office have acquired expertise since their jurisdiction is confined to specific matter, their findings of fact in connection with their rulings are generally accorded not only respect but at times even finality if supported by substantial evidence. (See Manila Mandarin Employees Union v. National Labor Relations Commission, 154 SCRA 368 [1987]) Riker v. Ople, 155 SCRA 85 [1987]; and Palencia v. National Labor Relations Commission, 153 SCRA 247 [1987]. We note from the records that the petitioners have conflicting interpretations of the same disputed provision one in favor of Jerwin Taguba and another against the private respondent. On the ancillary issue presented by the petitioners whether or not the petitioning union members have been deprived of their right to due process of law because they were never made parties to the case under consideration, we rule that the fact that the union officers impleaded since the inception of the case acted in a representative capacity on behalf of the entire union's membership substantially meets the requirements of due process with respect to the said union members. Moreover, the complaint filed against the union involves the interpretation of its constitution favoring an aggrieved member. The members are bound by the terms of their own constitution. A suit to enforce a union constitution does not have to be brought against each individual member, especially where several thousand members form the membership. If there is any violation of the right to due process in the case at bar it is as regards the private respondent since the petitioners-union has dispensed with due process in deciding not to extend financial aid to the Page 30 of 54
private respondent in the absence yet of a ruling by the labor arbiter on whether his dismissal was for a reasonable cause or not. The remedy of the petitioners is to strike out or amend the objectionable features of their constitution. They cannot expect the public respondent to assist them in its non- enforcement or violation. WHEREFORE, PREMISES CONSIDERED, the instant petition is hereby DISMISSED in the absence of a showing of grave abuse of discretion on the part of the public respondent. The decision of the public respondent dated April 17, 1986 as modified in a resolution dated August 17, 1986 is AFFIRMED. The temporary restraining order issued by the Court on December 24,1986 is SET ASIDE. SO ORDERED. Fernan C.J., Feliciano, Bidin and Cortes, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION
G.R. No. L-43495-99 January 20, 1990 TROPICAL HUT EMPLOYEES' UNION-CGW, JOSE ENCINAS, JOSE LUIS TRIBINO, FELIPE DURAN, MANUEL MANGYAO, MAMERTO CAHUCOM, NEMESIO BARRO, TEODULFO CAPAGNGAN, VICTORINO ABORRO, VIDAL MANTOS, DALMACIO DALDE, LUCIO PIASAN, CANUTO LABADAN, TERESO ROMERDE, CONRADO ENGALAN, SALVADOR NERVA, BERNARDO ENGALAN, BONIFACIO CAGATIN, BENEDICTO VALDEZ, EUSEBIO SUPILANAS, ALFREDO HAMAYAN, ASUERO BONITO, GAVINO DEL CAMPO, ZACARIAS DAMING, PRUDENCIO LADION, FULGENCIO BERSALUNA, ALBERTO PERALES, ROMEO MAGRAMO, GODOFREDO CAMINOS, GILDARDO DUMAS, JORGE SALDIVAR, GENARO MADRIO, SEGUNDINO KUIZON, LUIS SANDOVAL, NESTOR JAPAY, ROGELIO CUIZON, RENATO ANTIPADO, GREGORIO CUEVO, MARTIN BALAZUELA, CONSTANCIO CHU, CRISPIN TUBLE, FLORENCIO CHIU, FABIAN CAHUCOM, EMILIANO VILLAMOR, RESTITUTO HANDAYAN, VICTORINO ESPEDILLA, NOEL CHUA, ARMANDO ALCORANO, ELEUTERIO TAGUIK, SAMSON CRUDA, DANILO CASTRO, CENON VALLENAS, DANILO CAWALING, SIMPLICIO GALLEROS, PERFECTO CUIZON, PROCESO LAUROS, ANICETO BAYLON, EDISON ANDRES, REYNALDO BAGOHIN, IRENEO SUPANGAN, RODRIGO CAGATIN, TEODORO ORENCIO, ARMANDO LUAYON, JAIME NERVA, NARCISO CUIZON, ALFREDO DEL ROSARIO, EDUARDO LORENZO, PEDRO ARANGO, VICENTE SUPANGAN, JACINTO BANAL AND BONIFACIO PUERTO, petitioners, vs. TROPICAL HUT FOOD MARKET, INC., ESTELITA J. QUE, ARTURO DILAG, MARCELINO LONTOK JR., NATIONAL ASSOCIATION OF TRADE UNIONS (NATU), NATIONAL LABOR RELATIONS COMMISSION (NLRC), HON. DIEGO P. ATIENZA, GERONIMO Q. QUADRA, FEDERICO C. BORROMEO, AND HON. BLAS F. OPLE,respondents. Pacifico C. Rosal for petitioners. Marcelino Lontok, Jr. for private respondents. Dizon, Vitug & Fajardo Law Office for Tropical Hut Food Market, Inc. and Que.
MEDIALDEA, J.: This is a petition for certiorari under Rule 65 seeking to set aside the decisions of the public respondents Secretary of Labor and National Labor Relations Commission which reversed the Arbitrators rulings in favor of petitioners herein. The following factual background of this case appears from the record: On January 2, 1968, the rank and file workers of the Tropical Hut Food Market Incorporated, referred to herein as respondent company, organized a local union called the Tropical Hut Employees Union, known for short as the THEU, elected their officers, adopted their constitution and by-laws and immediately sought affiliation with the National Association of Trade Unions (NATU). On January 3, 1968, the NATU accepted the THEU application for affiliation. Following such affiliation with NATU, Registration Certificate No. 5544-IP was issued by the Department of Labor in the name of the Tropical Hut Employees Union NATU. It appears, however, that NATU itself as a labor federation, was not registered with the Department of Labor. After several negotiations were conducted between THEU- NATU, represented by its local president and the national officers of the NATU, particularly Ignacio Lacsina, President, Pacifico Rosal, Executive Vice-President and Marcelino Lontok, Jr., Vice President, and respondent Tropical Hut Food Market, Incorporated, thru its President and General Manager, Cesar Azcona, Sr., a Collective Bargaining Agreement was concluded between the parties on April 1, 1968, the term of which expired on March 31, 1971. Said agreement' contained these clear and unequivocal terms: Page 31 of 54
This Agreement made and entered into this __________ day of ___________, 1968, by and between: The Tropical Hut Food Market, Inc., a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal office at Quezon City, represented in this Act by its President, Cesar B. Azcona (hereinafter referred to as the Company) and The Tropical Hut Employees Union NATU, a legitimate labor organization duly organized and existing in accordance with the laws of the Republic of the Philippines, and affiliated with the National Association of Trade Unions, with offices at San Luis Terraces, Ermita, Manila, and represented in this Act by its undersigned officers (hereinafter referred to as the UNION) Witnesseth: xxx xxx xxx Article I Coverage and Effectivity Sec. 1. The COMPANY recognizes the UNION as the sole and exclusive collective bargaining agent for all its workers and employees in all matters concerning wages, hours of work, and other terms and conditions of employment. xxx xxx xxx Article III Union Membership and Union Check-off Sec. 1 . . . Employees who are already members of the UNION at the time of the signing of this Agreement or who become so thereafter shall be required to maintain their membership therein as a condition of continued employment. xxx xxx xxx Sec. 3Any employee who is expelled from the UNION for joining another federation or forming another union, or who fails or refuses to maintain his membership therein as required, . . . shall, upon written request of the UNION be discharged by the COMPANY. (Rollo, pp. 667-670) And attached to the Agreement as Appendix "A" is a check-off Authorization Form, the terms of which are as follows: We, the undersigned, hereby designate the NATIONAL Association of Trade Unions, of which the TROPICAL HUT EMPLOYEES UNION is an affiliate as sole collective bargaining agent in all matters relating to salary rates, hours of work and other terms and conditions of employment in the Tropical Hut Food Market, Inc. and we hereby authorize the said company to deduct the amount of Four (P 4.00) Pesos each every month as our monthly dues and to deliver the amount to the Treasurer of the Union or his duly authorized representatives. (Rollo, pp. 680-684) On May 21, 1971, respondent company and THEU-NATU entered into a new Collective Bargaining Agreement which ended on March 31, 1974. This new CBA incorporated the previous union-shop security clause and the attached check-off authorization form. Sometime in July, 1973, Arturo Dilag, incumbent President of THEU-NATU, was appointed by the respondent company as Assistant Unit Manager. On July 24, 1973, he wrote the general membership of his union that for reason of his present position, he was resigning as President of the THEU-NATU effective that date. As a consequence thereof, his Vice-President, Jose Encinas, assumed and discharged the duties of the presidency of the THEU- NATU. On December 19,1973, NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers of the local union informing the NATU that THEU was disaffiliating from the NATU federation. On December 20, 1973, the Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the general membership of the THEU, concerning the latter's disaffiliation from the NATU and its affiliation with the Confederation of General Workers (CGW). The letter was passed around among the members of the THEU-NATU, to which around one hundred and thirty-seven (137) signatures appeared as having given their consent to and Page 32 of 54
acknowledgment of the decision to disaffiliate the THEU from the NATU. On January 1, 1974, the general membership of the so- called THEU-CGW held its annual election of officers, with Jose Encinas elected as President. On January 3, 1974, Encinas, in his capacity as THEU-CGW President, informed the respondent company of the result of the elections. On January 9, 1974, Pacifico Rosal, President of the Confederation of General Workers (CGW), wrote a letter in behalf of complainant THEU-CGW to the respondent company demanding the remittance of the union dues collected by the Tropical Hut Food Mart, Incorporated to the THEU-CGW, but this was refused by the respondent company. On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the latter to assume immediately the position of President of the THEU-NATU in place of Jose Encinas, but the position was declined by Mantos. On the same day, Lontok, Jr., informed Encinas in a letter, concerning the request made by the NATU federation to the respondent company to dismiss him (Encinas) in view of his violation of Section 3 of Article III of the Collective Bargaining Agreement. Encinas was also advised in the letter that NATU was returning the letter of disaffiliation on the ground that: 1. Under the restructuring program NOT of the Bureau of Labor but of the Philippine National Trade Union Center in conjunction with the NATU and other established national labor centers, retail clerks and employees such as our members in the Tropical Hut pertain to Industry II which by consensus, has been assigned already to the jurisdiction of the NATU; 2. The right to disaffiliate belongs to the union membership who on the basis of verified reports received by have not even been consulted by you regarding the matter; 3. Assuming that the disaffiliation decision was properly reached; your letter nevertheless is unacceptable in view of Article V, Section 1, of the NATU Constitution which provides that "withdrawal from the organization shall he valid provided three (3) months notice of intention to withdraw is served upon the National Executive Council." (p. 281, Rollo) In view of NATU's request, the respondent company, on the same day, which was January 11, 1974, suspended Encinas pending the application for clearance with the Department of Labor to dismiss him. On January 12, 1974, members of the THEU-CGW passed a resolution protesting the suspension of Encinas and reiterated their ratification and approval of their union's disaffiliation from NATU and their affiliation with the Confederation of General Workers (CGW). It was Encinas' suspension that caused the filing of NLRC Case No. LR-2511 on January 11, 1974 against private respondents herein, charging them of unfair labor practice. On January 15,1974, upon the request of NATU, respondent company applied for clearance with the Secretary of Labor to dismiss the other officers and members of THEU-CGW. The company also suspended them effective that day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual complainants against private respondents for unfair labor practices. On January 19, 1974, Lontok, acting as temporary chairman, presided over the election of officers of the remaining THEU-NATU in an emergency meeting pending the holding of a special election to be called at a later date. In the alleged election, Arturo Dilag was elected acting THEU-NATU President together with the other union officers. On February 14, 1974, these temporary officers were considered as having been elected as regular officers for the year 1974. On January 30, 1974, petitioner THEU-CGW wrote a letter to Juan Ponce Enrile, Secretary of National Defense, complaining of the unfair labor practices committed by respondent company against its members and requesting assistance on the matter. The aforementioned letter contained the signatures of one hundred forty-three (143) members. On February 24,1974, the secretary of THEU-NATU, notified the entire rank and file employees of the company that they will be given forty-eight (48) hours upon receipt of the notice within which to answer and affirm their membership with THEU-NATU. When the petitioner employees failed to reply, Arturo Dilag advised them thru letters dated February 26, March 2 and 5, 1974, that the THEU-NATU shall enforce the union security clause set forth in the CBA, and that he had requested respondent company to dismiss them. Respondent company, thereafter, wrote the petitioner employees demanding the latter's comment on Dilag's charges before action was taken thereon. However, no comment or reply was received from petitioners. In view of this, Estelita Que, President/General Manager of respondent company, upon Dilag's request, suspended twenty four (24) workers on March 5, 1974, another thirty seven (37) on March 8, 1974 and two (2) more on March Page 33 of 54
11, 1974, pending approval by the Secretary of Labor of the application for their dismissal. As a consequence thereof, NLRC Case Nos. LR-2971, LR- 3015 and an unnumbered case were filed by petitioners against Tropical Hut Food Market, Incorporated, Estelita Que, Hernando Sarmiento and Arturo Dilag. It is significant to note that the joint letter petition signed by sixty-seven (67) employees was filed with the Secretary of Labor, the NLRC Chairman and Director of Labor Relations to cancel the words NATU after the name of Tropical Hut Employee Union under Registration Certificate No. 5544 IP. Another letter signed by one hundred forty-six (146) members of THEU-CGW was sent to the President of the Philippines informing him of the unfair labor practices committed by private respondents against THEU-CGW members. After hearing the parties in NLRC Cases Nos. 2511 and 2521 jointly filed with the Labor Arbiter, Arbitrator Daniel Lucas issued an order dated March 21, 1974, holding that the issues raised by the parties became moot and academic with the issuance of NLRC Order dated February 25, 1974 in NLRC Case No. LR-2670, which directed the holding of a certification election among the rank and file workers of the respondent company between the THEU- NATU and THEU-CGW. He also ordered: a) the reinstatement of all complainants; b) for the respondent company to cease and desist from committing further acts of dismissals without previous order from the NLRC and for the complainant Tropical Hut Employees UNION-CGW to file representation cases on a case to case basis during the freedom period provided for by the existing CBA between the parties (pp. 91-93, Rollo). With regard to NLRC Case Nos. LR-2971, LR-3015, and the unnumbered case, Arbitrator Cleto T. Villatuya rendered a decision dated October 14, 1974, the dispositive portion of which states: Premises considered, a DECISION is hereby rendered ordering respondent company to reinstate immediately the sixty three (63) complainants to their former positions with back wages from the time they were illegally suspended up to their actual reinstatement without loss of seniority and other employment rights and privileges, and ordering the respondents to desist from further committing acts of unfair labor practice. The respondent company's application for clearance filed with the Secretary of Labor to terminate the subject complainants' services effective March 20 and 23, 1974, should be denied. SO ORDERED. (pp. 147-148, Rollo) From the orders rendered above by Abitrator Daniel Lucas in NLRC Cases No. LR-2511 and LR-2521 and by Arbitrator Cleto Villatuya in NLRC Cases Nos. LR-2971, LR-3015, and the unnumbered case, all parties thereto, namely, petitioners herein, respondent company, NATU and Dilag appealed to the National Labor Relations Commission. In a decision rendered on August 1, 1975, the National Labor Relations Commission found the private respondents' appeals meritorious, and stated, inter alia: WHEREFORE, in view of the foregoing premises, the Order of Arbitrator Lucas in NLRC CASE NOS. LR-2511, 2521 and the decision of Arbitrator Villatuya in NLRC CASE NOS. LR-2971, 3015 and the unnumbered Case are hereby REVERSED. Accordingly, the individual complainants are deemed to have lost their status as employees of the respondent company. However, considering that the individual complainants are not presumed to be familiar with nor to have anticipated the legal mesh they would find themselves in, after their "disaffiliation" from National Association of Trade Unions and the THEU- NATU, much less the legal consequences of the said action which we presume they have taken in all good faith; considering, further, that the thrust of the new orientation in labor relations is not towards the punishment of acts violative of contractual relations but rather towards fair adjustments of the resulting complications; and considering, finally, the consequent economic hardships that would be visited on the individual complainants, if the law were to be strictly enforced against them, this Commission is constrained to be magnanimous in this instant, notwithstanding its obligation to give full force and effect to the majesty of the law, and hereby orders the respondent company, under pain of being cited for contempt for failure to do so, to give the individual complainants a second chance by reemploying them upon their voluntary reaffirmation of membership and loyalty to the Tropical Hut Employees Union-NATU and the National Association of Trade Unions in the event it hires additional personnel. SO ORDERED. (pp. 312-313, Rollo) Page 34 of 54
The petitioner employees appealed the decision of the respondent National Labor Relations Commission to the Secretary of Labor. On February 23, 1976, the Secretary of Labor rendered a decision affirming the findings of the Commission, which provided inter alia: We find, after a careful review of the record, no sufficient justification to alter the decision appealed from except that portion of the dispositive part which states: . . . this Commission . . . hereby orders respondent company under pain of being cited for contempt for failure to do so, to give the individual complainants a second chance by reemploying them upon their voluntary reaffirmation of membership and loyalty to the Tropical Hut Employees UNION-NATU and the National Association of Trade Union in the event it hires additional personnel. Compliance by respondent of the above undertaking is not immediately feasible considering that the same is based on an uncertain event, i.e., reemployment of individual complainants "in the event that management hires additional personnel," after they shall have reaffirmed their loyalty to THEU-NATU, which is unlikely. In lieu of the foregoing, and to give complainants positive relief pursuant to Section 9, Implementing Instruction No. 1. dated November 9, 1972, respondent is hereby ordered to grant to all the individual complainants financial assistance equivalent to one (1) month salary for every year of service. WHEREFORE, with the modification as above indicated, the Decision of the National Labor Relations Commission is hereby affirmed. SO ORDERED.(pp. 317-318, Rollo) From the various pleadings filed and arguments adduced by petitioners and respondents, the following issues appear to be those presented for resolution in this petition to wit: 1) whether or not the petitioners failed to exhaust administrative remedies when they immediately elevated the case to this Court without an appeal having been made to the Office of the President; 2) whether or not the disaffiliation of the local union from the national federation was valid; and 3) whether or not the dismissal of petitioner employees resulting from their unions disaffiliation for the mother federation was illegal and constituted unfair labor practice on the part of respondent company and federation. We find the petition highly meritorious. The applicable law then is the Labor Code, PD 442, as amended by PD 643 on January 21, 1975, which states: Art. 222. Appeal . . . xxx xxx xxx Decisions of the Secretary of Labor may be appealed to the President of the Philippines subject to such conditions or limitations as the President may direct. (Emphasis ours) The remedy of appeal from the Secretary of Labor to the Office of the President is not a mandatory requirement before resort to courts can be had, but an optional relief provided by law to parties seeking expeditious disposition of their labor disputes. Failure to avail of such relief shall not in any way served as an impediment to judicial intervention. And where the issue is lack of power or arbitrary or improvident exercise thereof, decisions of the Secretary of Labor may be questioned in a certiorari proceeding without prior appeal to the President (Arrastre Security Association TUPAS v. Ople, No. L-45344, February 20, 1984, 127 SCRA 580). Since the instant petition raises the same issue of grave abuse of discretion of the Secretary of Labor amounting to lack of or in excess of jurisdiction in deciding the controversy, this Court can properly take cognizance of and resolve the issues raised herein. This brings Us to the question of the legality of the dismissal meted to petitioner employees. In the celebrated case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, L-33187, September 4, 1975, 66 SCRA 512, We held that the validity of the dismissals pursuant to the union security clause in the collective bargaining agreement hinges on the validity of the disaffiliation of the local union from the federation. The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when circumstances warrant. This right is consistent with the Page 35 of 54
constitutional guarantee of freedom of association (Volkschel Labor Union v. Bureau of Labor Relations, No. L- 45824, June 19, 1985, 137 SCRA 42). All employees enjoy the right to self organization and to form and join labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for their mutual aid or protection. This is a fundamental right of labor that derives its existence from the Constitution. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or rules or regulations, We have always adopted the liberal approach which favors the exercise of labor rights. Relevant on this point is the basic principle We have repeatedly in affirmed in many rulings: . . . The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members in the economic struggle for the fruits of the joint productive effort of labor and capital; and the association of the locals into the national union (PAFLU) was in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their member. The essential purpose was the affiliation of the local unions into a common enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it into existence. (Adamson & Adamson, Inc. v. CIR, No. L-35120, January 31, 1984, 127 SCRA 268; Elisco-Elirol Labor Union (NAFLU) v. Noriel, No. L-41955, December 29, 1977, 80 SCRA 681; Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., supra). The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of Labor is merely to stress that the THEU is NATU's affiliate at the time of the registration. It does not mean that the said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests independently of the federation. A local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs. When the local union withdrew from the old federation to join a new federation, it was merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. In the absence of enforceable provisions in the federation's constitution preventing disaffiliation of a local union a local may sever its relationship with its parent (People's Industrial and Commercial Employees and Workers Organization (FFW) v. People's Industrial and Commercial Corporation, No. 37687, March 15, 1982, 112 SCRA 440). There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly forbidden to disaffiliate from the federation (pp. 62, 281, Rollo), The alleged non-compliance of the local union with the provision in the NATU Constitution requiring the service of three months notice of intention to withdraw did not produce the effect of nullifying the disaffiliation for the following grounds: firstly, NATU was not even a legitimate labor organization, it appearing that it was not registered at that time with the Department of Labor, and therefore did not possess and acquire, in the first place, the legal personality to enforce its constitution and laws, much less the right and privilege under the Labor Code to organize and affiliate chapters or locals within its group, and secondly, the act of non-compliance with the procedure on withdrawal is premised on purely technical grounds which cannot rise above the fundamental right of self-organization. Respondent Secretary of Labor, in affirming the decision of the respondent Commission, concluded that the supposed decision to disaffiliate was not the subject of a free and open discussion and decision on the part of the THEU- NATU general membership (p. 305, Rollo). This, however, is contradicted by the evidence on record. Moreover, We are inclined to believe Arbitrator Villatuya's findings to the contrary, as follows: . . . . However, the complainants refute this allegation by submitting the following: a) Letter dated December 20, 1.973 signed by 142 members (Exhs. "B to B-5") resolution dated January 12, 1974, signed by 140 members (Exhs. "H to H-6") letter dated February 26, 1974 to the Department of Labor signed by 165 members (Exhs. "I to I-10"); d) letter dated January 30, 1974 to the Secretary of the National Defense signed by 144 members (Exhs. "0 to 0-5") and; e) letter dated March 6, 1974 signed by 146 members Page 36 of 54
addressed to the President of the Philippines (Exhs. "HH to HH-5"), to show that in several instances, the members of the THEU-NATU have acknowledged their disaffiliation from NATU. The letters of the complainants also indicate that an overwhelming majority have freely and voluntarily signed their union's disaffiliation from NATU, otherwise, if there was really deception employed in securing their signatures as claimed by NATU/ Dilag, it could not be possible to get their signatures in five different documents. (p. 144, Rollo) We are aware of the time-honored doctrine that the findings of the NLRC and the Secretary of Labor are binding on this Court if supported by substantial evidence. However, in the same way that the findings of facts unsupported by substantial and credible evidence do not bind this Court, neither will We uphold erroneous conclusions of the NLRC and the Secretary of Labor when We find that the latter committed grave abuse of discretion in reversing the decision of the labor arbiter (San Miguel Corporation v. NLRC, L-50321, March 13, 1984, 128 SCRA 180). In the instant case, the factual findings of the arbitrator were correct against that of public respondents. Further, there is no merit in the contention of the respondents that the act of disaffiliation violated the union security clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the collective bargaining agreements shows that the THEU-NATU, and not the NATU federation, was recognized as the sole and exclusive collective bargaining agent for all its workers and employees in all matters concerning wages, hours of work and other terms and conditions of employment (pp. 667- 706, Rollo). Although NATU was designated as the sole bargaining agent in the check-off authorization form attached to the CBA, this simply means it was acting only for and in behalf of its affiliate. The NATU possessed the status of an agent while the local union remained the basic principal union which entered into contract with the respondent company. When the THEU disaffiliated from its mother federation, the former did not lose its legal personality as the bargaining union under the CBA. Moreover, the union security clause embodied in the agreements cannot be used to justify the dismissals meted to petitioners since it is not applicable to the circumstances obtaining in this case. The CBA imposes dismissal only in case an employee is expelled from the union for joining another federation or for forming another union or who fails or refuses to maintain membership therein. The case at bar does not involve the withdrawal of merely some employees from the union but of the whole THEU itself from its federation. Clearly, since there is no violation of the union security provision in the CBA, there was no sufficient ground to terminate the employment of petitioners. Public respondents considered the existence of Arturo Dilag's group as the remaining true and valid union. We, however, are inclined to agree instead with the Arbitrator's findings when he declared: . . . . Much more, the so-called THEU-NATU under Dilag's group which assumes to be the original THEU-NATU has a very doubtful and questionable existence not to mention that the alleged president is performing supervisory functions and not qualified to be a bona fide member of the rank and file union. (p. 146, Rollo) Records show that Arturo Dilag had resigned in the past as President of THEU-NATU because of his promotion to a managerial or supervisory position as Assistant Unit Manager of respondent Company. Petitioner Jose Encinas replaced Dilag as President and continued to hold such position at the time of the disaffiliation of the union from the federation. It is therefore improper and contrary to law for Dilag to reassume the leadership of the remaining group which was alleged to be the true union since he belonged to the managerial personnel who could not be expected to work for the betterment of the rank and file employees. Besides, managers and supervisors are prohibited from joining a rank and file union (Binalbagan Isabela Sugar Co., Inc. (BISCOM) v. Philippine Association of Free Labor Unions (PAFLU), et al., L-18782, August 29, 1963, 8 SCRA 700). Correspondingly, if a manager or supervisor organizes or joins a rank and file union, he will be required to resign therefrom (Magalit, et al. v. Court of Industrial Relations, et al., L-20448, May 25, 1965,14 SCRA 72). Public respondents further submit that several employees who disaffiliate their union from the NATU subsequently retracted and reaffirmed their membership with the THEU-NATU. In the decision which was affirmed by respondent Secretary of Labor, the respondent Commission stated that: . . . out of the alleged one hundred and seventy-one (171) members of the THEU- CGW whose signatures appeared in the "Analysis of Various Documents Signed by Majority Members of the THEU-CGW, (Annex "T", Complainants), which incidentally was relied upon by Arbitrator Villatuya in holding that complainant THEU-CGW commanded the majority of employees in respondent company, Page 37 of 54
ninety-three (93) of the alleged signatories reaffirmed their membership with the THEU-NATU and renounced whatever connection they may have had with other labor unions, (meaning the complainant THEU-CGW) either through resolution or membership application forms they have unwittingly signed." (p. 306, Rollo) Granting arguendo, that the fact of retraction is true, the evidence on record shows that the letters of retraction were executed on various dates beginning January 11, 1974 to March 8, 1974 (pp. 278-280, Rollo). This shows that the retractions were made more or less after the suspension pending dismissal on January 11, 1974 of Jose Encinas, formerly THEU-NATU President, who became THEU-CGW President, and the suspension pending their dismissal of the other elected officers and members of the THEU-CGW on January 15, 1974. It is also clear that some of the retractions occurred after the suspension of the first set of workers numbering about twenty-four (24) on March 5, 1974. There is no use in saying that the retractions obliterated the act of disaffiliation as there are doubts that they were freely and voluntarily done especially during such time when their own union officers and co-workers were already suspended pending their dismissal. Finally, with regard to the process by which the workers were suspended or dismissed, this Court finds that it was hastily and summarily done without the necessary due process. The respondent company sent a letter to petitioners herein, advising them of NATU/Dilag's recommendation of their dismissal and at the same time giving them forty-eight (48) hours within which to comment (p. 637, Rollo). When petitioners failed to do so, respondent company immediately suspended them and thereafter effected their dismissal. This is certainly not in fulfillment of the mandate of due process, which is to afford the employee to be dismissed an opportunity to be heard. The prerogative of the employer to dismiss or lay-off an employee should be done without abuse of discretion or arbitrainess, for what is at stake is not only the employee's name or position but also his means of livelihood. Thus, the discharge of an employee from his employment is null and void where the employee was not formally investigated and given the opportunity to refute the alleged findings made by the company (De Leon v. NLRC, L- 52056, October 30, 1980, 100 SCRA 691). Likewise, an employer can be adjudged guilty of unfair labor practice for having dismissed its employees in line with a closed shop provision if they were not given a proper hearing (Binalbagan-Isabela Sugar Co., Inc.,(BISCOM) v. Philippine Association of Free Labor Unions (PAFLU) et al., L-18782, August 29, 1963, 8 SCRA 700). In view of the fact that the dispute revolved around the mother federation and its local, with the company suspending and dismissing the workers at the instance of the mother federation then, the company's liability should be limited to the immediate reinstatement of the workers. And since their dismissals were effected without previous hearing and at the instance of NATU, this federation should be held liable to the petitioners for the payment of their backwages, as what We have ruled in the Liberty Cotton Mills Case (supra). ACCORDINGLY, the petition is hereby GRANTED and the assailed decision of respondent Secretary of Labor is REVERSED and SET ASIDE, and the respondent company is hereby ordered to immediately reinstate all the petitioner employees within thirty (30) days from notice of this decision. If reinstatement is no longer feasible, the respondent company is ordered to pay petitioners separation pay equivalent to one (1) month pay for every year of service. The respondent NATU federation is directed to pay petitioners the amount of three (3) years backwages without deduction or qualification. This decision shall be immediately executory upon promulgation and notice to the parties. SO ORDERED. Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION
G.R. No. 131235 November 16, 1999 UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON QUI, NORMA CALAGUAS, IRMA POTENCIANO, LUZ DE GUZMAN, REMEDIOS GARCIA, RENE ARNEJO, EDITHA OCAMPO, CESAR REYES, CELSO NIERRA, GLICERIA BALDRES, MA. LOURDES MEDINA, HIDELITA GABO, MAFEL YSRAEL, LAURA ABARA, NATIVIDAD SANTOS, FERDINAND LIMOS, CARMELITA ESPINA, ZENAIDA FAMORCA, PHILIP AGUINALDO, BENEDICTA ALAVA and LEONCIO CASAL, petitioners, vs. Dir. BENEDICTO ERNESTO R. BITONIO JR. of the Bureau of Labor Relations, Med-Arbiter TOMAS F. FALCONITIN of The National Capital Region, Department of Labor and Employment (DOLE), EDUARDO J. MARIO JR., MA. MELVYN ALAMIS, NORMA COLLANTES, URBANO ALABAGIA, RONALDO ASUNCION, ZENAIDA BURGOS, ANTHONY CURA, FULVIO M. GUERRERO, MYRNA Page 38 of 54
HILARIO, TERESITA MEER, FERNANDO PEDROSA, NILDA REDOBLADO, RENE SISON, EVELYN TIROL and ROSIE ALCANTARA,respondents.
PANGANIBAN, J.: There is a right way to do the right thing at the right time for the right reasons, 1 and in the present case, in the right forum by the right parties. While grievances against union leaders constitute legitimate complaints deserving appropriate redress, action thereon should be made in the proper forum at the proper time and after observance of proper procedures. Similarly, the election of union officers should be conducted in accordance with the provisions of the union's constitution and bylaws, as well as the Philippine Constitution and the Labor Code. Specifically, while all legitimate faculty members of the University of Santo Tomas (UST) belonging to a collective bargaining unit may take part in a duly convened certification election, only bona fide members of the UST Faculty Union (USTFU) may participate and vote in a legally called election for union officers. Mob hysteria, however well- intentioned, is not a substitute for the rule of law. The Case The Petition for Certiorari before us assails the August 15, 1997 Resolution 2 of Director Benedicto Ernesto R. Bitonio Jr. of the Bureau of Labor Relations (BLR) in BLR Case No. A-8-49-97, which affirmed the February 11, 1997 Decision of Med-Arbiter Tomas F. Falconitin. The med-arbiters Decision disposed as follows: WHEREFORE, premises considered, judgment is hereby rendered declaring the election of USTFU officers conducted on October 4, 1996 and its election results as null and void ab initio. Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and desist from acting and performing the duties and functions of the legitimate officers of [the] University of Santo Tomas Faculty Union (USTFU) pursuant to [the] union's constitution and by-laws (CBL). The Temporary Restraining Order (TRO) issued by this Office on December 11, 1996 in connection with the instant petition, is hereby made and declared permanent. 3
Likewise challenged is the October 30, 1997 Resolution 4 of Director Bitonio, which denied petitioners' Motion for Reconsideration. The Facts The factual antecedents of the case are summarized in the assailed Resolution as follows: Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees) are duly elected officers of the UST Faculty Union (USTFU). The union has a subsisting five-year Collective Bargaining Agreement with its employer, the University of Santo Tomas (UST). The CBA was registered with the Industrial Relations Division, DOLE- NCR, on 20 February 1995. It is set to expire on 31 May 1998. On 21 September 1996, appellee Collantes, in her capacity as Secretary General of USTFU, posted a notice addressed to all USTFU members announcing a general assembly to be held on 05 October 1996. Among others, the general assembly was called to elect USTFU's next set of officers. Through the notice, the members were also informed of the constitution of a Committee on Elections (COMELEC) to oversee the elections. (Annex "B", petition) On 01 October 1996, some of herein appellants filed a separate petition with the Med-Arbiter, DOLE-NCR, directed against herein appellees and the members of the COMELEC. Docketed as Case No. NCR-OD-M-9610-001, the petition alleged that the COMELEC was not constituted in accordance with USTFU's constitution and by-laws (CBL) and that no rules had been issued to govern the conduct of the 05 October 1996 election. On 02 October 1996, the secretary general of UST, upon the request of the various UST faculty club presidents (See paragraph VI, Respondents' Comment and Motion to Dismiss), issued notices allowing all faculty members to hold a convocation on 04 October 1996 (See Annex "C" Petition; Annexes "4" to "10", Appeal). Denominated as [a] general faculty assembly, the convocation was supposed to discuss the "state of the unratified UST- USTFU CBA" and "status and election of USTFU officers" (Annex "11", Appeal) Page 39 of 54
On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a temporary restraining order against herein appellees enjoining them from conducting the election scheduled on 05 October 1996. Also on 04 October 1996, and as earlier announced by the UST secretary general, the general faculty assembly was held as scheduled. The general assembly was attended by members of the USTFU and, as admitted by the appellants, also by "non-USTFU members [who] are members in good standing of the UST Academic Community Collective Bargaining Unit" (See paragraph XI, Respondents' Comment and Motion to Dismiss). On this occasion, appellants were elected as USTFU's new set of officers by acclamation and clapping of hands (See paragraphs 40 to 50, Annex "12", Appeal). The election of the appellants came about upon a motion of one Atty. Lopez, admittedly not a member of USTFU, that the USTFU CBL and "the rules of the election be suspended and that the election be held [on] that day" (See paragraph 39, Idem.) On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and the nullification of the results of the 04 October 1996 election. Appellees alleged that the holding of the same violated the temporary restraining order issued in Case No. NCR-OD-M-9610-001. Accusing appellants of usurpation, appellees characterized the election as spurious for being violative of USTFU's CBL, specifically because the general assembly resulting in the election of appellants was not called by the Board of Officers of the USTFU; there was no compliance with the ten-day notice rule required by Section 1, Article VIII of the CBL; the supposed elections were conducted without a COMELEC being constituted by the Board of Officers in accordance with Section 1, Article IX of the CBL; the elections were not by secret balloting as required by Section 1, Article V and Section 6, Article IX of the CBL, and, the general assembly was convened by faculty members some of whom were not members of USTFU, so much so that non- USTFU members were allowed to vote in violation of Section 1, Article V of the CBL. On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary restraining order, this time alleging that appellants had served the former a notice to vacate the union office. For their part, appellants moved to dismiss the original petition and the subsequent motion on jurisdictional grounds. Both the petition and the motion were captioned to be for "Prohibition, Injunction with Prayer for Preliminary Injunction and Temporary Restraining Order." According to the appellants, the med-arbiter has no jurisdiction over petitions for prohibition, "including the ancillary remedies of restraining order and/or preliminary injunction, which are merely incidental to the main petition for PROHIBITION" (Paragraph XVIII3, Respondents' Comment and Motion to Dismiss). Appellants also averred that they now constituted the new set of union officers having been elected in accordance with law after the term of office of appellees had expired. They further maintained that appellees' scheduling of the 5 October 1996 elections was illegal because no rules and regulations governing the elections were promulgated as required by USTFU's CBL and that one of the members of the COMELEC was not a registered member of USTFU. Appellants likewise noted that the elections called by the appellees should have been postponed to allow the promulgation of rules and regulations and to "insure a free, clean, honest and orderly elections and to afford at the same time the greater majority of the general membership to participate" (See paragraph V, Idem). Finally, appellants contended that the holding of the general faculty assembly on 04 October 1996 was under the control of the Council of College/Faculty Club Presidents in cooperation with the USTFU Reformist Alliance and that they received the Temporary Restraining Order issued in Case No. NCR-OD-M-9610-001 only on 07 October 1996 and were not aware of the same on 04 October 1996. On 03 December 1996, appellants and UST allegedly entered into another CBA covering the period from 01 June 1996 to Page 40 of 54
31 May 2001 (Annex 11, appellants' Rejoinder to the Reply and Opposition). Consequently, appellees again moved for the issuance of a temporary restraining order to prevent appellants from making further representations that [they] had entered into a new agreement with UST. Appellees also reiterated their earlier stand that appellants were usurping the former's duties and functions and should be stopped from continuing such acts. On 11 December 1996, over appellants' insistence that the issue of jurisdiction should first be resolved, the med-arbiter issued a temporary restraining order directing the respondents to cease and desist from performing any and all acts pertaining to the duties and functions of the officers and directors of USTFU. In the meantime, appellants claimed that the new CBA was purportedly ratified by an overwhelming majority of UST's academic community on 12 December 1996 (Annexes 1 to 10, Idem). For this reason, appellants moved for the dismissal of what it denominated as appellees' petition for prohibition on the ground that this had become moot and academic. 5
Petitioners appealed the med-arbiter's Decision to the labor secretary, 6 who transmitted the records of the case to the Bureau of Labor Relations which, under Department Order No. 9, was authorized to resolve appeals of intra- union cases, consistent with the last paragraph of Article 241 of the Labor Code. 7
The Assailed Ruling Agreeing with the med-arbiter that the USTFU officers' purported election held on October 4, 1994 was void for having been conducted in violation of the union's Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners' contention that it was a legitimate exercise of their right to self-organization. He ruled that the CBL, which constituted the covenant between the union and its members, could not be suspended during the October 4, 1996 general assembly of all faculty members, since that assembly had not been convened or authorized by the USTFU. Director Bitonio likewise held that the October 4, 1996 election could not be legitimized by the recognition of the newly "elected" set of officers by UST or by the alleged ratification of the new CBA by the general membership of the USTFU. Ruled Respondent Bitonio: This submission is flawed. The issue at hand is not collective bargaining representation but union leadership, a matter that should concern only the members of USTFU. As pointed out by the appellees, the privilege of determining who the union officers will be belongs exclusively to the members of the union. Said privilege is exercised in an election proceeding in accordance with the union's CBL and applicable law. To accept appellants' claim to legitimacy on the foregoing grounds is to invest in appellants the position, duties, responsibilities, rights and privileges of USTFU officers without the benefit of a lawful electoral exercise as defined in USTFU's CBL and Article 241(c) of the Labor Code. Not to mention the fact that labor laws prohibit the employer from interfering with the employees in the latter' exercise of their right to self- organization. To allow appellants to become USTFU officers on the strength of management's recognition of them is to concede to the employer the power of determining who should be USTFU's leaders. This is a clear case of interference in the exercise by USTFU members of their right to self-organization. 8
Hence, this Petition. 9
The Issues The main issue in this case is whether the public respondent committed grave abuse of discretion in refusing to recognize the officers "elected" during the October 4, 1996 general assembly. Specifically, petitioners in their Memorandum urge the Court to resolve the following questions: 10
(1) Whether the Collective Bargaining Unit of all the faculty members in that General Faculty Assembly had the right in that General Faculty Assembly to suspend the provisions of the Constitution and By-Laws of the USTFU regarding the elections of officers of the union[.] (2) Whether the suspension of the provisions of the Constitution and By-Laws of the USTFU in that General Faculty Assembly is valid pursuant to the constitutional right of the Collective Page 41 of 54
Bargaining Unit to engage in "peaceful concerted activities" for the purpose of ousting the corrupt regime of the private respondents[.] (3) Whether the overwhelming ratification of the Collective Bargaining Agreement executed by the petitioners in behalf of the USTFU with the University of Santo Tomas has rendered moot and academic the issue as to the validity of the suspension of the Constitution and By- Laws and the elections of October 4, 1996 in the General Faculty Assembly[.] The Courts Ruling The petition is not meritorious. Petitioners fail to convince this Court that Director Bitonio gravely abused his discretion in affirming the med-arbiter and in refusing to recognize the binding effect of the October 4, 1996 general assembly called by the UST administration. First Issue: Right to Self-Organization and Union Membership At the outset, the Court stresses that National Federation of Labor (NFL) v. Laguesma 11 has held that challenges against rulings of the labor secretary and those acting on his behalf, like the director of labor relations, shall be acted upon by the Court of Appeals, which has concurrent jurisdiction with this Court over petitions for certiorari. However, inasmuch as the memoranda in the instant case have been filed prior to the promulgation and finality of our Decision in NFL, we deem it proper to resolve the present controversy directly, instead of remanding it to the Court of Appeals. Having disposed of the foregoing procedural matter, we now tackle the issues in the present case seriatim. Self-organization is a fundamental right guaranteed by the Philippine Constitution and the Labor Code. Employees have the right to form, join or assist labor organizations for the purpose of collective bargaining or for their mutual aid and protection. 12 Whether employed for a definite period or not, any employee shall be considered as such, beginning on his first day of service, for purposes of membership in a labor union. 13
Corollary to this right is the prerogative not to join, affiliate with or assist a labor union. 14 Therefore, to become a union member, an employee must, as a rule, not only signify the intent to become one, but also take some positive steps to realize that intent. The procedure for union membership is usually embodied in the union's constitution and bylaws. 15 An employee who becomes a union member acquires the rights and the concomitant obligations that go with this new status and becomes bound by the union's rules and regulations. When a man joins a labor union (or almost any other democratically controlled group), necessarily a portion of his individual freedom is surrendered for the benefit of all members. He accepts the will of the majority of the members in order that he may derive the advantages to be gained from the concerted action of all. Just as the enactments of the legislature bind all of us, to the constitution and by- laws of the union (unless contrary to good morals or public policy, or otherwise illegal), which are duly enacted through democratic processes, bind all of the members. If a member of a union dislikes the provisions of the by-laws, he may seek to have them amended or may withdraw from the union; otherwise, he must abide by them. It is not the function of courts to decide the wisdom or propriety of legitimate by-laws of a trade union. On joining a labor union, the constitution and by-laws become a part of the member's contract of membership under which he agrees to become bound by the constitution and governing rules of the union so far as it is not inconsistent with controlling principles of law. The constitution and by-laws of an unincorporated trade union express the terms of a contract, which define the privileges and rights secured to, and duties assumed by, those who have become members. The agreement of a member on joining a union to abide by its laws and comply with the will of the lawfully constituted majority does not require a member to submit to the determination of the union any question involving his personal rights. 16
Petitioners claim that the numerous anomalies allegedly committed by the private respondents during the latter's incumbency impelled the October 4, 1996 election of the new set of USTFU officers. They assert that such exercise was pursuant to their right to self-organization. Petitioners' frustration over the performance of private respondents, as well as their fears of a "fraudulent" election to be held under the latter's supervision, could Page 42 of 54
not justify the method they chose to impose their will on the union. Director Bitonio aptly elucidated: 17
The constitutional right to self- organization is better understood in the context of ILO Convention No. 87 (Freedom of Association and Protection of Right to Organize), to which the Philippines is signatory. Article 3 of the Convention provides that workers' organizations shall have the right to draw up their constitution and rules and to elect their representatives in full freedom, free from any interference from public authorities. The freedom conferred by the provision is expansive; the responsibility imposed on union members to respect the constitution and rules they themselves draw up equally so. The point to be stressed is that the union's CBL is the fundamental law that governs the relationship between and among the members of the union. It is where the rights, duties and obligations, powers, functions and authority of the officers as well as the members are defined. It is the organic law that determines the validity of acts done by any officer or member of the union. Without respect for the CBL, a union as a democratic institution degenerates into nothing more than a group of individuals governed by mob rule. Union Election vs. Certification Election A union election is held pursuant to the union's constitution and bylaws, and the right to vote in it is enjoyed only by union members. A union election should be distinguished from a certification election, which is the process of determining, through secret ballot, the sole and exclusive bargaining agent of the employees in the appropriate bargaining unit, for purposes of collective bargaining. 18 Specifically, the purpose of a certification election is to ascertain whether or not a majority of the employees wish to be represented by a labor organization and, in the affirmative case, by which particular labor organization. 19
In a certification election, all employees belonging to the appropriate bargaining unit can vote. 20 Therefore, a unionmember who likewise belongs to the appropriate bargaining unit is entitled to vote in said election. However, the reverse is not always true; an employee belonging to the appropriate bargaining unit but who is not a member of the union cannot vote in the union election, unless otherwise authorized by the constitution and bylaws of the union. Verily, union affairs and elections cannot be decided in a non-union activity. In both elections, there are procedures to be followed. Thus, the October 4, 1996 election cannot properly be called a union election, because the procedure laid down in the USTFU's CBL for the election of officers was not followed. It could not have been a certification election either, because representation was not the issue, and the proper procedure for such election was not followed. The participation of non-union members in the election aggravated its irregularity. Second Issue: USTFU's Constitution and By Laws Violated The importance of a union's constitution and bylaws cannot be overemphasized. They embody a covenant between a union and its members and constitute the fundamental law governing the members' rights and obligations. 21 As such, the union's constitution and bylaws should be upheld, as long as they are not contrary to law, good morals or public policy. We agree with the finding of Director Bitonio and Med- Arbiter Falconitin that the October 4, 1996 election was tainted with irregularities because of the following reasons. First, the October 4, 1996 assembly was not called by the USTFU. It was merely a convocation of faculty clubs, as indicated in the memorandum sent to all faculty members by Fr. Rodel Aligan, OP, the secretary general of the University of Santo Tomas. 22 It was not convened in accordance with the provision on general membership meetings as found in the USTFU's CBL, which reads: ARTICLE VIII-MEETINGS OF THE UNION Sec. 1. The Union shall hold regular general membership meetings at least once every three (3) months. Notices of the meeting shall be sent out by the Secretary-General at least ten (10) days prior to such meetings by posting in conspicuous places, preferably inside Company premises, said notices. The date, time and place for the meetings shall be determined by the Board of Officers. 23
Unquestionably, the assembly was not a union meeting. It was in fact a gathering that was called and participated in Page 43 of 54
by management and non-union members. By no legal fiat was such assembly transformed into a union activity by the participation of some union members. Second, there was no commission on elections to oversee the election, as mandated by Sections 1 and 2 of Article IX of the USTFU's CBL, which provide: ARTICLE IX - UNION ELECTION Sec. 1. There shall be a Committee on Election (COMELEC) to be created by the Board of Officers at least thirty (30) days before any regular or special election. The functions of the COMELEC include the following: a) Adopt and promulgate rules and regulations that will ensure a free, clean, honest and orderly election, whether regular or special; b) Pass upon qualifications of candidates; c) Rule on any question or protest regarding the conduct of the election subject to the procedure that may be promulgated by the Board of Officers; and d) Proclaim duly elected officers. Sec. 2. The COMELEC shall be composed of a chairman and two members all of whom shall be appointed by the Board of Officers. xxx xxx xxx 24
Third, the purported election was not done by secret balloting, in violation of Section 6, Article IX of the USTFU's CBL, as well as Article 241 (c) of the Labor Code. The foregoing infirmities considered, we cannot attribute grave abuse of discretion to Director Bitonio's finding and conclusion. In Rodriguez v. Director, Bureau of Labor Relations, 25 we invalidated the local union elections held at the wrong date without prior notice to members and conducted without regard for duly prescribed ground rules. We held that the proceedings were rendered void by the lack of due process undue haste, lack of adequate safeguards to ensure integrity of the voting, and the absence of the notice of the dates of balloting. Third Issue: Suspension of USTFU's CBL Petitioners contend that the October 4, 1996 assembly "suspended" the union's CBL. They aver that the suspension and the election that followed were in accordance with their "constituent and residual powers as members of the collective bargaining unit to choose their representatives for purposes of collective bargaining." Again they cite the numerous anomalies allegedly committed by the private respondents as USTFU officers. This argument does not persuade. First, as has been discussed, the general faculty assembly was not the proper forum to conduct the election of USTFU officers. Not all who attended the assembly were members of the union; some, apparently, were even disqualified from becoming union members, since they represented management. Thus, Director Bitonio correctly observed: Further, appellants cannot be heard to say that the CBL was effectively suspended during the 04 October 1996 general assembly. A union CBL is a covenant between the union and its members and among members (Johnson and Johnson Labor Union-FFW, et al. v. Director of Labor Relations, 170 SCRA 469). Where ILO Convention No. 87 speaks of a union's full freedom to draw up its constitution and rules, it includes freedom from interference by persons who are not members of the union. The democratic principle that governance is a matter for the governed to decide upon applies to the labor movement which, by law and constitutional mandate, must be assiduously insulated against intrusions coming from both the employer and complete strangers if the "protection to labor clause" of the constitution is to be guaranteed. By appellant's own evidence, the general faculty assembly of 04 October 1996 was not a meeting of USTFU. It was attended by members and non-members alike, and therefore was not a forum appropriate for transacting union matters. Page 44 of 54
The person who moved for the suspension of USTFU's CBL was not a member of USTFU. Allowing a non-union member to initiate the suspension of a union's CBL, and non-union members to participate in a union election on the premise that the union's CBL had been suspended in the meantime, is incompatible with the freedom of association and protection of the right to organize. If there are members of the so-called "academic community collective bargaining unit" who are not USTFU members but who would nevertheless want to have a hand in USTFU's affairs, the appropriate procedure would have been for them to become members of USTFU first. The procedure for membership is very clearly spelled out in Article IV of USTFU's CBL. Having become members, they could then draw guidance from Ang Malayang Manggagawa Ng Ang Tibay v. Ang Tibay, 103 Phil. 669. Therein the Supreme Court held that "if a member of the union dislikes the provisions of the by- laws he may seek to have them amended or may withdraw from the union; otherwise he must abide by them." Under Article XVII of USTFU's CBL, there is also a specific provision for constitutional amendments. What is clear therefore is that USTFU's CBL provides for orderly procedures and remedies which appellants could have easily availed [themselves] of instead of resorting to an exercise of their so-called "residual power". 26
Second, the grievances of the petitioners could have been brought up and resolved in accordance with the procedure laid down by the union's CBL 27 and by the Labor Code. 28 They contend that their sense of desperation and helplessness led to the October 4, 1996 election. However, we cannot agree with the method they used to rectify years of inaction on their part and thereby ease bottled-up frustrations, as such method was in total disregard of the USTFU's CBL and of due process. The end never justifies the means. We agree with the solicitor general's observation that "the act of suspending the constitution when the questioned election was held is an implied admission that the election held on that date [October 4, 1996] could not be considered valid under the existing USTFU constitution . . .." 29
The ratification of the new CBA executed between the petitioners and the University of Santo Tomas management did not validate the void October 4, 1996 election. Ratified were the terms of the new CBA, not the issue of union leadership a matter that should be decided only by union members in the proper forum at the proper time and after observance of proper procedures. Epilogue In dismissing this Petition, we are not passing upon the merits of the mismanagement allegations imputed by the petitioners to the private respondents; these are not at issue in the present case. Petitioners can bring their grievances and resolve their differences with private respondents in timely and appropriate proceedings. Courts will not tolerate the unfair treatment of union members by their own leaders. When the latter abuse and violate the rights of the former, they shall be dealt with accordingly in the proper forum after the observance of due process. WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED. Costs against petitioners. SO ORDERED. Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION
G.R. No. 100898 July 5, 1993 ALEX FERRER, RAFAEL FERRER HENRY DIAZ, DOMINGO BANCOLITA, GIL DE GUZMAN, and FEDERATION OF DEMOCRATIC LABOR UNIONS, (FEDLU), petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), HUI KAM CHANG (In his capacity as General Manager of Occidental Foundry Corporation), OCCIDENTAL FOUNDRY CORPORATION, MACEDONIO S. VELASCO (In his capacity as representative of the Federation of Free Workers), GENARO CAPITLE, JESUS TUMAGAN, ERNESTO BARROGA, PEDRO LLENA, GODOFREDO PACHECO, MARCELINO CASTILLO, GEORGE IGNAS, PIO DOMINGO, and JAIME BAYNADO, respondents. Genrosa P. Jacinto and Raymundo D. Mallilin for private respondents. Page 45 of 54
MELO, J.: The petition for certiorari before us seeks to annul and set aside: (a) the decision dated June 20, 1991 of the Second Division of the National Labor Relations Commission (NLRC) (Penned by Commissioner Rustico L. Diokno and concurred in by Presiding Commissioner Edna Bonto-Perez and Commissioner Domingo H. Zapanta) which affirmed in toto the decision of April 5, 1990 of Labor Arbiter Eduardo J. Carpio dismissing the complaint for illegal dismissal and unfair labor practice on the ground that both the company and the union merely complied with the collective bargaining agreement provision sanctioning the termination of any employee who fails to retain membership in good standing with the union; and (b) the NLRC resolution denying the motion for the reconsideration of said decision (NLRC NCR Case No. 00- 10-04855-89). Petitioners were regular and permanent employees of the Occidental Foundry Corporation (OFC) in Malanday, Valenzuela, Metro Manila which was under the management of Hui Kam Chang. As piece workers, petitioners' earnings ranged from P110 to P140 a day. They had been in the employ of OFC for about ten years at the time of their dismissal in 1989 (p. 38, Rollo). On January 5, 1989, the Samahang Manggagawa ng Occidental Foundry Corporation-FFW (SAMAHAN) and the OFC entered into a collective bargaining agreement (CBA) which would be effective for the three-year period between October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui Kam Chang, p. 6, Rollo; p. 551). Article II thereof provides for a union security clause thus: Sec. 1 The company agrees that all permanent and regular factory workers in the company who are members in good standing of the union or who thereafter may become members, shall as a condition of continued employment, maintain their membership in the union in good standing for the duration of the agreement. xxx xxx xxx Sec. 3 The parties agree that failure to retain membership in good standing with the UNION shall be ground for the operation of paragraph 1 hereof and the dismissal by the company of the aforesaid employee upon written request by the union. The aforesaid request shall be accompanied by a verified carbon original of the Board of (sic) Resolution by the UNION signed by at least a majority of its officers/directors. (p. 562, Rollo.) On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in the Department of Labor and Employment (DOLE), a complaint for the expulsion from SAMAHAN of the following officers: Genaro Capitle (president), Jesus Tumagan (vice-president), Godofredo Pacheco (auditor), and Marcelino Pacheco (board member) (Case No. NCR- 00-M-89-11-01). The complaint was founded on said officers' alleged inattentiveness to the economic demands of the workers. However, on September 4, 1989, petitioners Diaz and Alex Ferrer withdrew the petition (p. 590, Rollo). On September 10, 1989, petitioners conducted a special election of officers of the SAMAHAN (pp. 205 & 583,Rollo). Said election was, however, later questioned by the FFW. Nonetheless, the elected set of officers tried to dissuade the OFC from remitting union dues to the officers led by Capitle who were allied with the FFW. Later, however, Romulo Erlano, one of the officers elected at the special election, manifested to the DOLE that he was no longer objecting to the remittance of union dues to the officers led by Capitle. Petitioners' move to stage a strike based on economic demands was also later disowned by members of the SAMAHAN. The intraunion squabble came to a head when, on September 11, 1989, a resolution expelling petitioners from the SAMAHAN was issued by the aforesaid union officials headed by Capitle, together with board members George Ignas, Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The following day, Capitle sent OFC the following letter: 1 2
S e p t e m b e r
1 9 8 9 Page 46 of 54
Mr. Hui Kam Chang General Manager Malanday, Valenzuela Metro Manila Dear Mr. Chang: In compliance with Article II, Sec. 3 of the Union Security Clause as enunciated in our Collective Bargaining Agreement, I would like you to dismiss the following employees on the ground of failure to retain membership in good standing: 1. Alex Ferrer 2. Gil de Guzman 3. Henry Diaz 4. Domingo Bancolita 5. Rafael Ferrer, Jr. Attached herewith is the verified carbon original of the Board Resolution of the union signed by the majority of its officers/directors. Thank you very much. V e r y
t r u l y
y o u r s , ( S g d . )
G E N A R O
C A P I T L E
P r e s i d e n t (p. 66, Rollo.) Although petitioners received this letter weeks after its date, it appears that on that same date, they had learned about their dismissal from employment as shown by the letter also dated September 13, 1989 which they sent the Federation of Democratic Labor Unions (FEDLU). They volunteered therein to be admitted as members of the FEDLU and requested that they be represented ("katawanin") by said federation before the DOLE in the complaint which they intended to file against the union (SAMAHAN), the FFW and the company for illegal dismissal, reinstatement, and other benefits in accordance with law (p. 74, Rollo). Thereafter, on various dates, petitioners sent individual letters to Hui Kam Chang professing innocence of the charges levelled against them by the SAMAHAN and the FFW and pleading that they be reinstated (pp. 69- 73,Rollo). Their letters appear to have elicited no response. Thus, contending that their dismissal was without cause and in utter disregard of their right to due process of law, petitioners, through the FEDLU, filed a complaint for illegal dismissal and unfair labor practice before the NLRC against Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of the FFW) the FFW, and the SAMAHAN officers headed by Capitle (p. 75, Rollo). Page 47 of 54
In due course, after the case was ventilated through position papers and other documents, the labor arbiter rendered a decision dismissing petitioners' complaint (pp. 79-89, Rollo). He found that in dismissing petitioners, OFC was "merely complying with the mandatory provisions of the CBA the law between it and the union." He added: To register compliance with the said covenant, all that is necessary is a written request of the union requesting dismissal of the employees who have failed to retain membership in good standing with the union. The matter or question, therefore of determining why and how did complainants fail to retain membership in good standing is not for the company to inquire via formal investigation. By having the request of the union, a legal presumption that the request was born out of a formal inquiry by the union that subject employees failed to exist. This means generally that where a valid closed shop or similar agreement is in force with respect to a particular bargaining unit as in the case a quo, the employer shall refuse to employ any person unless he is a member of the majority union and the employer shall dismiss employees who fail to retain their membership in the majority union. This must be deemed a just cause recognized by law and jurisprudence. The effect is discrimination to encourage membership in other unions. (pp. 86- 87, Rollo.) Hence, the labor arbiter concluded, the dismissal of petitioners was an exercise of legitimate management prerogative which cannot be considered as an unfair labor practice. On whether the SAMAHAN and the FFW could be held liable for illegal dismissal and unfair labor practice, the arbiter opined that since there was no employer- employee relationship between petitioners and respondent unions, the complaint against the latter has no factual and legal bases, because petitioners "should not have confused expulsion from membership in the union as one and the same incident to their subsequent employment termination." Consequently, petitioners appealed to the NLRC on the grounds that there was prima facie evidence of abuse of discretion on the part of the labor arbiter and that he committed serious errors in his findings of facts. On June 20, 1991, the NLRC rendered the herein questioned decision affirming in toto the decision of the arbiter. Petitioners motion for the reconsideration of the NLRC decision having been denied, they resorted to the instant petition for certiorari which presents the issue of wether or not respondent Commision gravely abused its discretion in affirming the decision of the labor arbiter which is allegedly in defiance of the elementary principles of procedural due process as the petitioners were summarily dismissed from employment without an investigation having been conducted by the OFC on the veracity of the allegation of the SAMAHAN-FFW that they violated the CBA. A CBA is the law between the company and the union and compliance therewith is mandated by the express policy to give protection to labor. Said policy should be given paramount consideration unless otherwise provided for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]. A CBA provision for a closed shop is a valid form of union security and it is not a restriction on the right or freedom of association guaranteed by the Constitution (Lirag Textile Mill, Inc. vs. Blanco, 109 SCRA 87 [1981]. However, in the implementation of the provisions of the CBA, both parties thereto should see to it that no right is violated or impaired. In the case at bar, while it is true that the CBA between OFC and the SAMAHAN provided for the dismissal of employees who have not maintained their membership in the union, the manner in which the dismissal was enforced left much to be desired in terms of respect for the right of petitioners to procedural due process. In the first place, the union has a specific provision for the permanent or temporary "expulsion" of its erring members in its constitution and by-laws ("saligang batas at alituntunin"). Under the heading membership and removal ("pag-aanib at pagtitiwalag"), it states: Sec. 4. Ang sinumang kasapi ay maaring itwalag (sic) ng Samahan pangsamantala o tuluyan sa pamamagitan (sic) ng tatlo't ikaapat () na bahagi ng dami ng bilang ng Pamunuang Tagapagpaganap. Pagkaraan lamang sa pandinig sa kanyang kaso. Batay sa sumusunod: (a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa patakaran ng Samahan. (b) Sinumang gumawa ng mga bagay na maaaring ikabuwag ng Samahan. (c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit o Doctor's Certificate. (d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan. Page 48 of 54
(e) Sinumang kasapi na natanggal sa kapisanan at gustong, sumapi uli ay magpapanibago ng bilang, mula sa taon ng kanyang pagsapi uli sa Samahan. (Emphasis supplied; Ibid., p. 177). No hearing ("pandinig") was ever conducted by the SAMAHAN to look into petitioners' explanation of their moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU. While it is true that petitioners' actions might have precipitated divisiveness and, later, showed disloyalty to the union, still, the SAMAHAN should have observed its own constitution and by-laws by giving petitioners an opportunity to air their side and explain their moves. If, after an investigation the petitioners were found to have violated union rules, then and only then should they be subjected to proper disciplinary measures. Here lies the distinction between the facts of this case and that of Cario vs. NLRC (185 SCRA 177 [1990]) upon which the Solicitor General heavily relies in supporting the stand of petitioners. In Cario, the erring union official was given the chance to answer the complaints against him before an investigating committee created for that purpose. On the other, hand, herein petitioners were not given even one opportunity to explain their side in the controversy. This procedural lapse should not have been overlooked considering the union security provision of the CBA. What aggravated the situation in this case is the fact that OFC itself took for granted that the SAMAHAN had actually conducted an inquiry and considered the CBA provision for the closed shop as self-operating that, upon receipt of a notice that some members of the SAMAHAN had failed to maintain their membership in good standing in accordance with the CBA, it summarily dismissed petitioners. To make matters worse, the labor arbiter and the NLRC shared the same view in holding that "(t)he matter or question, therefore, of determining why and how did complainants fail to retain membership in good standing is not for the company to inquire via formal investigation" (pp. 87 & 135, Rollo). In this regard, the following words of my learned brother, Mr. Justice Feliciano, in the Resolution in Cario are apt: 4. Turning now to the involvement of the Company in the dismissal of petitioner Cario, we note that the Company upon being formally advised in writing of the expulsion of petitioner Cario from the Union, in turn simply issued a termination letter to Cario, the termination being made effective the very next day. We believe that the Company should have given petitioner Cario an opportunity to explain his side of the controversy with the Union. Notwithstanding the Union's Security Clause in the CBA, the Company should have reasonably satisfied itself by its own inquiry that the Union had not been merely acting arbitrarily and capriciously in impeaching and expelling petitioner Cario . . . xxx xxx xxx 5. We conclude that the Company had failed to accord to petitioner Cario the latter's right to procedural due process. The right of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the Company or his own Union, is not wiped away by a Union Security Clause or a Union Shop Clause in a CBA. An employee is entitled to be protected not only from a company which disregards his rights but also from his own Union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and hence dismissal from his job. (pp. 186 & 189.) The need for a company investigation is founded on the consistent ruling of this Court that the twin requirements of notice and hearing which are essential elements of due process must be met in employment-termination cases. The employee concerned must be notified of the employer's intent to dismiss him and of the reason or reasons for the proposed dismissal. The hearing affords the employee an opportunity to answer the charge or charges against him and to defend himself therefrom before dismissal is effected (Kwikway Engineering Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202 SCRA 7 [1991]). Observance to the letter of company rules on investigation of an employee about to be dismissed is not mandatory. It is enough that there is due notice and hearing before a decision to dismiss is made (Mendoza vs. NLRC, 195 SCRA 606 (1991]). But even if no hearing is conducted, the requirement of due process would have been met where a chance to explain a party's side of the controversy had been accorded him (Philippine Airlines, Inc. vs. NLRC, 198 SCRA 748 [1991]). If an employee may be considered illegally dismissed because he was not accorded fair investigation (Hellenic Philippine Shipping vs. Siete, 195 SCRA 179 (1991]), the more reason there is to strike down as an inexcusable and disdainful rejection of due process a situation where there is no investigation at all (See: Colegio del Sto. Nio vs. NLRC, 197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187 SCRA 611 [1990]). The need for the Page 49 of 54
observance of an employee's right to procedural due process in termination cases cannot be overemphasized. After all, one's employment, profession, trade, or calling is a "property right" and the wrongful interference therewith gives rise to an actionable wrong (Callanta vs. Carnation Philippines, Inc., 145 SCRA 268 (1986]). Verily, a man's right to his labor is property within the meaning of constitutional guarantees which he cannot be deprived of without due process (Batangas Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]). While the law recognizes the right of an employer to dismiss employees in warranted cases, it frowns upon arbitrariness as when employees are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651 [1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically done for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line with the closed shop provision of the CBA, without a proper hearing (Tropical Hut Employees' Union-CGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co., Inc. (BISCOM) vs. Philippine Association of Free Labor Unions (PAFLU), 8 SCRA 700 [1983]). Neither can the manner of dismissal be considered within the ambit of managerial prerogatives, for while termination of employment is traditionally considered a management prerogative, it is not an absolute prerogative subject as it is to limitations founded in law, the CBA, or general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Under Rule XIV, Sections 2, 5, and 6 of the rules implementing Batas Pambansa Blg. 130, the OFC and the SAMAHAN should solidarity indemnify petitioners for the violation of their right to procedural due process (Great Pacific Life Assurance Corporation vs. NLRC, 187 SCRA 694[1990], citing Wenphil vs. NLRC, 170 SCRA 69 [1989], Cario vs. NLRC, supra). However, such penalty may be imposed only where the termination of employment is justified and not when the dismissal is illegal as in this case where the damages are in the form of back wages. As earlier discussed, petitioners' alleged act of sowing disunity among the members of the SAMAHAN could have been ventilated and threshed out through a grievance procedure within the union itself. But resort to such procedure was not pursued. What actually happened in this case was that some members, including petitioners, tried to unseat the SAMAHAN leadership headed by Capitle due to the latter's alleged inattention to petitioners' demands for the implementation of the P25- wage increase which took effect on July 1, 1989. The intraunion controversy was such that petitioners even requested the FFW to intervene to facilitate the enforcement of the said wage increase (Petition, p. 54; p. 55, Rollo). Petitioners sought the help of the FEDLU only after they had learned of the termination of their employment upon the recommendation of Capitle. Their alleged application with federations other than the FFW (Labor Arbiter's Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to the SAMAHAN, nor may the filing of such applications denote that petitioners failed to maintain in good standing their membership in the SAMAHAN. The SAMAHAN is a different entity from FFW, the federation to which it belonged. Neither may it, be inferred that petitioners sought disaffiliation from the FFW for petitioners had not formed a union distinct from that of the SAMAHAN. Parenthetically, the right of a local union to disaffiliate from a federation in the absence of any provision in the federation's constitution preventing disaffiliation of a local union is legal (People's Industrial and Commercial Employees and Worker's Org. (FFW) vs. People's Industrial and Commercial Corp., 112 SCRA 440 (1982]). Such right is consistent with the constitutional guarantee of freedom of association (Tropical Hut Employees Union-CGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]). Hence, while petitioners' act of holding a special election to oust Capitle, et al. may be considered as an act of sowing disunity among the SAMAHAN members, and, perhaps, disloyalty to the union officials, which could have been dealt with by the union as a disciplinary matter, it certainly cannot be considered as constituting disloyalty to the union. Faced with a SAMAHAN leadership which they had tried to remove as officials, it was but a natural act of self-preservation that petitioners fled to the arms of the FEDLU after the union and the OFC had tried to terminate their employment. Petitioners should not be made accountable for such an act. With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor Code was amended to read as follows: Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor Relations Page 50 of 54
Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed workers to three (3) years "without deduction or qualification" to obviate the need for further proceedings in the course of execution, is no longer applicable. A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is that the employer may, however, deduct any amount which the employee may have earned during the period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521 [1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by the illegally dismissed employee after his termination and before actual reinstatement should be ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of the 1990 new Rules of Procedure of the National Labor Relations Commission. Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it ineluctably follows that petitioners can receive their back wages computed from the moment their compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such a scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug Rule depending, of course, on when the employer will reinstate the employees. It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position, and to impress the idea that immediate reinstatement is tantamount to a cost-saving measure in terms of overhead expense plus incremental productivity to the company which lies in the hands of the employer. WHEREFORE, the decision appealed from is hereby SET ASIDE and private respondents are hereby ordered to reinstate petitioners to their former or equivalent positions without loss of seniority rights and with full back wages, inclusive of allowances and other benefits or their monetary equivalent, pursuant to Article 279 of the Labor Code, as amended by Republic Act No. 6715. SO ORDERED. Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 85333 February 26, 1990 CARMELITO L. PALACOL, ET AL., petitioners, vs. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, MANILA CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES), INC., respondents. Wellington B. Lachica for petitioners. Adolpho M. Guerzon for respondent Union.
GANCAYCO, J.: Can a special assessment be validly deducted by a labor union from the lump-sum pay of its members, granted under a collective bargaining agreement (CBA), notwithstanding a subsequent disauthorization of the same by a majority of the union members? This is the main issue for resolution in the instant petition for certiorari. As gleaned from the records of the case, the pertinent facts are as follows: On October 12, 1987, the respondent Manila CCBPI Sales Force Union (hereinafter referred to as the Union), as the collective bargaining agent of all regular salesmen, regular helpers, and relief helpers of the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Philippines), Inc. (hereinafter referred to as the Company) concluded a new collective bargaining agreement with the latter. 1 Among the compensation benefits granted to the employees was a general salary increase to be given in lump sum including recomputation of actual commissions earned based on the new rates of increase. On the same day, the president of the Union submitted to the Company the ratification by the union members of the new CBA and authorization for the Company to deduct union dues equivalent to P10.00 every payday or P20.00 every month and, in addition, 10% by way of special assessment, from the CBA lump-sum pay granted to the union members. The last one among the aforementioned is the subject of the instant petition. As embodied in the Board Resolution of the Union dated September 29, 1987, the purpose of the special Page 51 of 54
assessment sought to be levied is "to put up a cooperative and credit union; purchase vehicles and other items needed for the benefit of the officers and the general membership; and for the payment for services rendered by union officers, consultants and others." 2 There was also an additional proviso stating that the "matter of allocation ... shall be at the discretion of our incumbent Union President." This "Authorization and CBA Ratification" was obtained by the Union through a secret referendum held in separate local membership meetings on various dates. 3 The total membership of the Union was about 800. Of this number, 672 members originally authorized the 10% special assessment, while 173 opposed the same. 4
Subsequently however, one hundred seventy (170) members of the Union submitted documents to the Company stating that although they have ratified the new CBA, they are withdrawing or disauthorizing the deduction of any amount from their CBA lump sum. Later, 185 other union members submitted similar documents expressing the same intent. These members, numbering 355 in all (170 + 185), added to the original oppositors of 173, turned the tide in favor of disauthorization for the special assessment, with a total of 528 objectors and a remainder of 272 supporters. 5
On account of the above-mentioned disauthorization, the Company, being in a quandary as to whom to remit the payment of the questioned amount, filed an action for interpleader with the Bureau of Labor Relations in order to resolve the conflicting claims of the parties concerned. Petitioners, who are regular rank-and-file employees of the Company and bona fide members of the Union, filed a motion/complaint for intervention therein in two groups of 161 and 94, respectively. They claimed to be among those union members who either did not sign any individual written authorization, or having signed one, subsequently withdrew or retracted their signatures therefrom. Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to Article 222(b) of the Labor Code. Article 222(b) provides as follows: ART. 222. Appearances and Fees. xxx xxx xxx (b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual member of the contracting union; Provided, however, that attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. On the other hand, Article 241(o) mandates that: ART. 241. Rights and conditions of membership in a labor organization. xxx xxx xxx (o) Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction; As authority for their contention, petitioners cited Galvadores v. Trajano, 6 wherein it was ruled that no check-offs from any amount due employees may be effected without individual written authorizations duly signed by the employees specifically stating the amount, purpose, and beneficiary of the deduction. In its answer, the Union countered that the deductions not only have the popular indorsement and approval of the general membership, but likewise complied with the legal requirements of Article 241 (n) and (o) of the Labor Code in that the board resolution of the Union imposing the questioned special assessment had been duly approved in a general membership meeting and that the collection of a special fund for labor education and research is mandated. Article 241(n) of the Labor Code states that Page 52 of 54
ART. 241. Rights and conditions of membership in a labor organization. xxx xxx xxx (n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessments or fees. The record shall be attested to by the president; Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated February 15, 1988 whereby he directed the Company to remit the amount it had kept in trust directly to the rank-and-file personnel without delay. On appeal to the Bureau of Labor Relations, however, the order of the Med-Arbiter was reversed and set aside by the respondent-Director in a resolution dated August 19, 1988 upholding the claim of the Union that the special assessment is authorized under Article 241 (n) of the Labor Code, and that the Union has complied with the requirements therein. Hence, the instant petition. Petitioners allege that the respondent-Director committed a grave abuse of discretion amounting to lack or excess of jurisdiction when she held Article 241 (n) of the Labor Code to be the applicable provision instead of Article 222(b) in relation to Article 241(o) of the same law. According to petitioners, a cursory examination and comparison of the two provisions of Article 241 reveals that paragraph (n) cannot prevail over paragraph (o). The reason advanced is that a special assessment is not a matter of major policy affecting the entire union membership but is one which concerns the individual rights of union members. Petitioners further assert that assuming arguendo that Article 241(n) should prevail over paragraph (o), the Union has nevertheless failed to comply with the procedure to legitimize the questioned special assessment by: (1) presenting mere minutes of local membership meetings instead of a written resolution; (2) failing to call a general membership meeting; (3) having the minutes of three (3) local membership meetings recorded by a union director, and not by the union secretary as required; (4) failing to have the list of members present included in the minutes of the meetings; and (5) failing to present a record of the votes cast. 7 Petitioners concluded their argument by citingGalvadores. After a careful review of the records of this case, We are convinced that the deduction of the 10% special assessment by the Union was not made in accordance with the requirements provided by law. Petitioners are correct in citing the ruling of this Court in Galvadores which is applicable to the instant case. The principle "that employees are protected by law from unwarranted practices that diminish their compensation without their known edge and consent" 8 is in accord with the constitutional principle of the State affording full protection to labor. 9
The respondent-Union brushed aside the defects pointed out by petitioners in the manner of compliance with the legal requirements as "insignificant technicalities." On the contrary, the failure of the Union to comply strictly with the requirements set out by the law invalidates the questioned special assessment. Substantial compliance is not enough in view of the fact that the special assessment will diminish the compensation of the union members. Their express consent is required, and this consent must be obtained in accordance with the steps outlined by law, which must be followed to the letter. No shortcuts are allowed. The applicable provisions are clear. The Union itself admits that both paragraphs (n) and (o) of Article 241 apply. Paragraph (n) refers to "levy" while paragraph (o) refers to "check-off" of a special assessment. Both provisions must be complied with. Under paragraph (n), the Union must submit to the Company a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. In addition, the secretary of the organization must record the minutes of the meeting which, in turn, must include, among others, the list of all the members present as well as the votes cast. As earlier outlined by petitioners, the Union obviously failed to comply with the requirements of paragraph (n). It held local membership meetings on separate occasions, on different dates and at various venues, contrary to the express requirement that there must be a general membership meeting. The contention of the Union that "the local membership meetings are precisely the very general meetings required by law" 10 is untenable because the law would not have specified a general membership meeting had the legislative intent been to allow local meetings in lieu of the latter. Page 53 of 54
It submitted only minutes of the local membership meetings when what is required is a written resolution adopted at the general meeting. Worse still, the minutes of three of those local meetings held were recorded by a union director and not by the union secretary. The minutes submitted to the Company contained no list of the members present and no record of the votes cast. Since it is quite evident that the Union did not comply with the law at every turn, the only conclusion that may be made therefrom is that there was no valid levy of the special assessment pursuant to paragraph (n) of Article 241 of the Labor Code. Paragraph (o) on the other hand requires an individual written authorization duly signed by every employee in order that a special assessment may be validly checked- off. Even assuming that the special assessment was validly levied pursuant to paragraph (n), and granting that individual written authorizations were obtained by the Union, nevertheless there can be no valid check-off considering that the majority of the union members had already withdrawn their individual authorizations. A withdrawal of individual authorizations is equivalent to no authorization at all. Hence, the ruling in Galvadores that "no check-offs from any amounts due employees may be effected without an individual written authorization signed by the employees ... " is applicable. The Union points out, however, that said disauthorizations are not valid for being collective in form, as they are "mere bunches of randomly procured signatures, under loose sheets of paper." 11 The contention deserves no merit for the simple reason that the documents containing the disauthorizations have the signatures of the union members. The Court finds these retractions to be valid. There is nothing in the law which requires that the disauthorization must be in individual form. Moreover, it is well-settled that "all doubts in the implementation and interpretation of the provisions of the Labor Code ... shall be resolved in favor of labor." 12 And as previously stated, labor in this case refers to the union members, as employees of the Company. Their mere desire to establish a separate bargaining unit, albeit unproven, cannot be construed against them in relation to the legality of the questioned special assessment. On the contrary, the same may even be taken to reflect their dissatisfaction with their bargaining representative, the respondent-Union, as shown by the circumstances of the instant petition, and with good reason. The Med-Arbiter correctly ruled in his Order that: The mandate of the majority rank and file have (sic) to be respected considering they are the ones directly affected and the realities of the high standards of survival nowadays. To ignore the mandate of the rank and file would enure to destabilizing industrial peace and harmony within the rank and file and the employer's fold, which we cannot countenance. Moreover, it will be recalled that precisely union dues are collected from the union members to be spent for the purposes alluded to by respondent. There is no reason shown that the regular union dues being now implemented is not sufficient for the alleged expenses. Furthermore, the rank and file have spoken in withdrawing their consent to the special assessment, believing that their regular union dues are adequate for the purposes stated by the respondent. Thus, the rank and file having spoken and, as we have earlier mentioned, their sentiments should be respected. Of the stated purposes of the special assessment, as embodied in the board resolution of the Union, only the collection of a special fund for labor and education research is mandated, as correctly pointed out by the Union. The two other purposes, namely, the purchase of vehicles and other items for the benefit of the union officers and the general membership, and the payment of services rendered by union officers, consultants and others, should be supported by the regular union dues, there being no showing that the latter are not sufficient to cover the same. The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b) of the Labor Code. The contention is impressed with merit. Article 222 (b) prohibits attorney's fees, negotiations fees and similar charges arising out of the conclusion of a collective bargaining agreement from being imposed on any individual union member. The collection of the special assessment partly for the payment for services rendered by union officers, consultants and others may not be in the category of "attorney's fees or negotiations fees." But there is no question that it is an exaction which falls within the category of a "similar charge," and, therefore, within the coverage of the prohibition in the aforementioned article. There is an additional proviso giving the Union President unlimited discretion to allocate the proceeds of the special assessment. Such a proviso may open the door to abuse by the officers of the Union considering that the total amount of the special assessment is quite considerable P1,027,694.33 collected from those union members who originally authorized the deduction, and P1,267,863.39 from those who did not authorize the same, or subsequently retracted their authorizations. 13 The Page 54 of 54
former amount had already been remitted to the Union, while the latter is being held in trust by the Company. The Court, therefore, stakes down the questioned special assessment for being a violation of Article 241, paragraphs (n) and (o), and Article 222 (b) of the Labor Code. WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the Bureau of Labor Relations dated August 19, 1988 is hereby REVERSED and SET ASIDE, while the order of the Med-Arbiter dated February 17, 1988 is reinstated, and the respondent Coca-Cola Bottlers (Philippines), Inc. is hereby ordered to immediately remit the amount of P1,267,863.39 to the respective union members from whom the said amount was withheld. No pronouncement as to costs. This decision is immediately executory. SO ORDERED. Narvasa, Grio-Aquino and Medialdea, JJ., concur. Cruz, J., took no part.