Labor - Batch 2 (9 Full Cases)

8/13/2019 Labor - Batch 2 (9 Full Cases)

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Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 90519 March 23, 1992

UNION OF FILIPINO WORKERS (UFW), petitioners,vs.NATIONAL LABOR RELATIONS COMMISSION, SIMEX INTERNATIONAL INC., LILIASANTANDER, GEORGE SANTANDER and JOSEPH SANTANDER, respondents.

MELENCIO-HERRERA, J .:

This Petition for Certiorari seeks to set aside the Decision of public respondent National LaborRelations Commission (NLRC), dated 26 August 1989, which reversed the Decision of the Labor

Arbiter, dated 27 June 1988, and sustained the closure of private respondent company, SIMEXInternational Inc., as valid.

On 4 September 1987, a Petition for Direct Certification among the rank-and-file workers of SIMEXwas filed before the Med Arbiter, docketed as Case No. 00-09-634-87 (Petition for DirectCertification), with the hearing thereof set for 18 September 1987. These workers subsequentlyaffiliated with petitioner Union of Filipino Workers (UFW).

On 19 September 1987, thirty-six (36) workers of the "lumpia" department were not given their usual

working materials and equipment for that day and, instead, were asked to clean their respectiveworking areas. Since these workers were employed on a "pakiao" basis, they refused. Nevertheless,they still reported for work on 21 September 1987 but to their surprise, they found out that SIMEXhad removed all materials and equipments from their workplaces. The Union claims that itsmembers were, therefore, effectively locked out.

From 1 October 1987 to 7 October 1987, sixteen (16) more workers from the other departmentswere similarly refused employment. As a consequence, these workers, through UFW, instituted aComplaint for Unfair Labor Practices and violation of labor standard laws against SIMEX and itsprincipal officers and stockholders, namely private respondents Lilia, George and Joseph, allsurnamed SANTANDER, docketed as NLRC-NCR-00-09-03329-87 (for Illegal Dismissal/Lockout of36 "lumpia" department workers and 16 others, etc.).

On 9 October 1987, however, SIMEX had filed a Notice of "Permanent Shutdown/Total Closure ofAll Units of Operation in the Establishment" with the Department of Labor and Employment to takeeffect on 9 November 1987, allegedly due to business reverses brought about by the enormousrejection of their products for export to the United States. This notice of closure rendered the Petitionfor Direct Certification moot and academic. Notices of Closure were placed in conspicuous placesaround the company premises.


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Meanwhile, in sympathy with their fifty-two (52) co-workers who were allegedly illegally dismissed bySIMEX and in "protest to the continued acts of unfair labor practices committed" by SIMEX, thirty-nine (39) other workers staged a picket outside the company premises from 10 October 1987 to 27October 1987. By reason thereof, SIMEX's supposed offer of separation pay totalling P280,000.00was withdrawn. When these workers lifted their picket on 27 October 1987 and voluntarily reportedfor work, SIMEX refused to give them their usual work. They were dismissed effective 1 November

1987.

Another Complaint for Unfair Labor Practice was, therefore, filed against the same respondents, thistime involving the thirty-nine (39) workers who picketed the company premises in sympathy withtheir other co-workers, docketed as NLRC-NCR-11-03887-87 (for Unfair Labor Practice, IllegalDismissal/Lockout of thirty-nine [39]workers). It is this case that is the subject of this Petitionfor Certiorari.

On 27 June 1988, the Labor Arbiter rendered his verdict declaring that the closure of SIMEX was amere subterfuge in order to discourage the formation of the union. The respondents, SIMEX and theSANTANDERs, were found guilty of unfair labor practice and were ordered, jointly and solidarily, toreinstate the 39 workers without loss of seniority rights, benefits and privileges, with full backwagesfrom 1 November 1987 until such time that these workers are actually reinstated. They were alsoordered to pay ten per cent (10%) of the total awards as attorney's fees.

On appeal, the NLRC, in a Decision dated 28 August 1989, set aside the Labor Arbiter's Decisionwhen it held that the "determination of the wisdom or expediency to close a department in acorporation, e.g., the 'lumpia' department in this case, due to financial reverses, is the soleprerogative of the corporation." It ruled that since SIMEX had filed a Notice of Closure on 9 October1987 and had complied with the requirements of the applicable rules and regulations when it postedin their main gate the aforesaid Notice, its failure to accept the workers of UFW did not constituteunfair labor practice considering that SIMEX had already closed the "lumpia" department. Hence,SIMEX was merely ordered to pay the workers affected a separation pay equivalent to one (1)month's salary for every year of service rendered.

Petitioner UFW has thus elevated its cause before us in this Petition for Certiorari, seeking thereversal of the NLRC Decision, for having been rendered with grave abuse of discretion, and thereinstatement instead of the Decision of the Labor Arbiter and its affirmance in toto.

The public and private respondents in this case were required to file their respective Comments.Since the Solicitor General adopted a position contrary to that of the NLRC, the Court required thelatter to file its own Comment, which it has done.

After the Comments, Reply, Rejoinders and the parties' respective Memoranda were submitted,private respondents SIMEX and the SANTANDERs filed a Manifestation, dated 10 December 1990(p. 212, Rollo), signed by Atty. Julio F. Andres, Jr., stating that after they had manifested to the Courton 9 December 1990 that they were adopting their Memorandum, they discovered that an

"Acknowledgment Receipt and Undertaking," dated 9 June 1989, had already been signed betweenprivate respondent George SANTANDER and petitioner's former counsel, Atty. Modesto S.Mendoza, whereby this case as well as two (2) others had already been settled and compromised.Thereby, this controversy has become moot and academic. Said Undertaking reads:

I, MODESTO S. MENDOZA, . . ., have today RECEIVED FROM SIMEXINTERNATIONAL, INC., through its Vice-President, MR. GEORGE SANTANDER,the following amounts:


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P500,000.00 in cash andP50,000.00 PCIB check No. 496869 dated Sept. 9, 1989P50,000.00 PCIB check No. 496870 dated Dec. 9, 1989P50,000.00 PCIB check No. 496871 dated March. 9, 1990P50,000.00 PCIB check No. 496872 dated June 9, 1990

in full and complete settlement of NLRC-NCR-CASE NOS. 00-09-03329-87, 00-11-3887-87 and 00-01-00255-88.

I undertake to take charge of obtaining the signatures of the proper officers of theunion to sign the Motion to Dismiss in order to implement the full and final settlementof said cases between complainant and respondents.

I further undertake and warrant that with this payment by the respondents, thecomplainant Union and each of their members, hereby RELEASE AND DISCHARGEthe SIMEX INTERNATIONAL INC., each (sic) Officers, agents and representative(sic) fro any demands, claims and liabilities from any cause whatsoever, arising outof their employment with the said respondents (sic) corporation.

UFW maintains, however, that the settlement did not materialize because of its objections as shownby the fact that it had not filed a Motion to Dismiss and Quitclaim in this case.

The issues for determination then are: 1) whether or not a compromise had been reached by theparties; and 2) whether or not there was a valid closure of SIMEX that entitled it to terminate theemployment of its thirty-nine (39) employees. A plea is also made that the individual privaterespondents SANTANDERs be dropped from the suit since they only acted within the scope of theirauthority.

We incline to the view that no valid compromise agreement was arrived at in this case.

The alleged settlement involved three (3) cases, one of which charges alleged violation of laborstandards. Compromise agreements involving labor standards cases must be reduced to writing andsigned in the presence of the Regional Director or his duly authorized representative (Atilano v. Dela Cruz, G.R. No. 82488, 28 February 1990, 182 SCRA 886). Section 8, Rule II of the Rules on theDisposition of Labor Standards Cases in the Regional Offices provides:

Sec. 8. Compromise Agreement.Should the party arrive at an agreement as tothe whole or part of the dispute, said agreement shall be reduced [to] writing andsigned by the parties in the presence of the regional director or his duly authorizedrepresentative.

The questioned "Acknowledgment Receipt and Undertaking" did not comply with this requisite. Itwas not, therefore, duly executed.

Even assuming arguendo that it was, Atty. Modesto Mendoza, counsel for petitioner UFW, whoseservices were subsequently terminated, was not duly authorized to enter into a compromise withSIMEX and the SANTANDERs. As aptly pointed out by the Solicitor General, Article 1878 of the CivilCode provides that a Special Power of Authority is required before an agent can be authorized toenter into a compromise. It reads:

Art. 1878. Special powers of attorney are necessary in the following cases:


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(3) To compromise, to submit questions to arbitration, to renounce the right to appealfrom a judgment, to waive objections to the venue of an action or to abandon aprescription already acquired. (Emphasis ours).

No evidence was adduced that would show that the aforementioned counsel for UFW wasauthorized to enter into a compromise. Correspondingly, he cannot release and discharge SIMEXand the SANTANDERs from their obligation. A perusal of the "Acknowledgment Receipt andUndertaking" reveals that no representative of UFW signed the alleged settlement.

The fact that said counsel undertook to obtain the signatures of the proper officers of UFW showsthat his action was still subject to ratification by the union members. This confirmation was neversecured as shown by the fact that no motion for the dismissal of the case at bar had been filed byUFW or on its behalf "in order to implement the full and final settlement of said case," unlike inNLRC-NCR Case No. 00-01-00255-88 where such a Motion had been filed. In an Affidavit, dated 6May 1991 (p. 258, Rollo), Atty. Mendoza also declared that respondent George Santander hadstopped the payment of the three (3) postdated checks, which statement has not been refuted by

private respondents.

We now shift to the issue bearing on the legality of the closure of SIMEX. Article 283 (then Article284) of the Labor Code provides:

Art. 283. Closure of the establishment and reduction of personnel. The employermay also terminate the employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing orcessation of operation of the establishment or undertaking unless the closing is forthe purpose of circumventing the provisions of this Title, by serving a written noticeon the workers and the Ministry of Labor and Employment at least one (1) monthbefore the intended date thereof. In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby shall be entitled to aseparation pay equivalent to at least his one (1) month pay or at least one (1) monthpay for every year of service, whichever is higher. In case of retrenchment to preventlosses and in cases of closures or cessation of operations of establishment andundertaking not due to serious business losses or financial losses, the separationpay shall be equivalent to one (1) month pay or at least one half (1/2) month pay forevery year of service, whichever is higher. A fraction of at least six (6) months shallbe considered one (1) whole year. (Emphasis in text supplied).

Under this provision, the closure of a business establishment is a ground for the termination of theservices of any employee unless the closing is for the purpose of circumventing the provisions oflaw. But, while business reverses can be a just cause for terminating employees, they must besufficiently proven by the employer (Indino v. NLRC, G.R. No. 80352, 29 September 1989, 178

SCRA 168).

In the case at bar, SIMEX alleged that it suffered export rejections amounting to $78,959.54 for1985, $1,654.00 for 1986 and $28,414.11 for 1987, respectively. It alleged that these exportrejections resulted in huge financial losses to the company (Rollo, p. 96) so much so that remedialmeasures were instituted as suppliers hesitated to given the company their usual credit terms ( ibid,p. 97).


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The audited financial statement of SIMEX, however, clearly depicted that for 1985 and 1986, thecompany actually derived retained earnings of P35,593.21 and P73, 241.25, respectively. Theprivate respondents never refuted this fact. Instead, they merely insisted that these export rejectionsresulted in heavy losses for the company. These export rejections may have, indeed, contributed toa reduction of SIMEX's earnings. The company, however, was not suffering from business losses, asclaimed, at the time of application for closure.

Indeed, there is no question that an employer may reduce its work force to prevent losses. However,these losses must be serious, actual and real (Lopez Sugar Corporation v. Federation of FreeWorkers, G.R. No. 75000-01, 30 August 1990, 189 SCRA 179). Otherwise, this "ground fortermination would be susceptible to abuse by scheming employers who might be merely feigningbusiness losses or reverses in their business ventures in order to ease out employees (Garcia v.NLRC, G.R. No. L-67825, 4 September 1987, 153 SCRA 639).

In this regard, then, SIMEX failed to prove its claim. What were submitted as evidence were merereceipts of export rejections, nothing more. SIMEX never adduced evidence that would reflect theextent of losses suffered as a result of the export rejections, which failure is fatal to its cause.

The Notice of Closure filed by SIMEX had indicated that it will have a permanent shutdown and/ortotal closure of all its units of operation. This was not so. Workers belonging to the Marketing andExport Divisions were never laid off. A SEC Certification, dated 4 February 1988, shows that SIMEXnever applied for dissolution. The Labor Arbiter also found as a fact that SIMEX continued to exportits products, including "eggroll wrap," long after its target date of closure.

In explaining this discrepancy, SIMEX merely alleged that not all its operations were closed. Even onthis score alone, therefore, private respondents' position must be rejected.

These factors strongly give more credence to the Solicitor General and UFW's contention that thealleged closure of business of SIMEX was "but a subterfuge to discourage formation of a union" andthat SIMEX was guilty of union busting. To all appearances, the company had filed a Notice ofClosure simply to pre-empt the employees from forming a union within the company.

The SANTANDERs' prayer that they be dropped from this case must also be rejected. They shouldhave adopted that recourse during the earlier stages. Moreover, UFW has adequately shown thatthe individual private respondents were not only officers of the company but its major stockholdersas well (see Carmelcraft Corporation v. NLRC, G.R. Nos. 90634-35, 6 June 1990, 186 SCRA 393).

Lastly, if SIMEX has not yet recovered the balance of the compromise money given to then counselfor petitioner, its recourse is to file the appropriate civil or criminal case against the latter. After all, insaid counsel's Affidavit, he has stated that he is ready to return the balance of what he had receivedafter payment of the amount due in NLRC-NCR Case No. 00-01-00255-88.

WHEREFORE, the Petition for Certiorari is GRANTED. The Decision of respondent NLRC, dated 26

August 1989, is hereby SET ASIDE and the Decision of the Labor Arbiter, dated 27 June 1988, ishereby REINSTATED and AFFIRMED in toto.

Costs against private respondents.

SO ORDERED.

Paras, Padilla, Regalado and Nocon, JJ., concur.


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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 ANDWILSON T. GO,respondents.

CRUZ, J .:p

The law looks with disfavor upon quitclaims and releases by employees who are inveigled orpressured 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'sclaims 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 infavor of their employer, the herein private respondent, by reason of their dire necessity. The latter,for its part, insists that the petitioner entered into the compromise agreement freely and with openeyes 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 ofovertime, holiday, and other benefits. This was decided in favor of the complainants on October6,1987. The motion for reconsideration, which was treated as an appeal, was dismissed in aresolution dated February 17, 1988, the dispositive portion of which read as follows:

WHEREFORE, the instant appeal is hereby DISMISSED and the questioned Orderaffirmed with the modification that the monetary awards to Jeric Dequito, CustodioGanuhay Conrado Mori and Rogelio Veloso are hereby deleted for being settled. Letexecution push through with respect to the awards to Alfredo Veloso and EditoLiguaton.

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 inconsideration of P25,000.00, 1and on the same day his counsel, Atty. Gaga Mauna, manifested"Satisfaction of Judgment" by receipt of the said sum by Veloso. 2For his part, petitioner Liguaton filed amotion to dismiss dated July 16, 1988, based on a Release and Quitclaim dated July 19,1988 , 3for and inconsideration of the sum of P20,000.00 he acknowledged to have received from the private respondent. 4


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These releases were later impugned by the petitioners on September 20, 1988, on the ground thatthey were constrained to sign the documents because of their "extreme necessity." In an Orderdated December 16, 1988, the Undersecretary of Labor rejected their contention and ruled:

IN VIEW THEREOF, complainants Motion to Declare Quitclaim Null and Void ishereby denied for lack of merit and the compromise agreements/settlements dated

April 15, 1988 and July 19, 1988 are hereby approved. Respondents' motion forreconsideration is hereby denied for being moot and academic.

Reconsideration of the order having been denied on March 7, 1989, the petitioners have come tothis Court oncertiorari. They ask that the quitclaims they have signed be annulled and that writs ofexecution be issued for the sum of P21,267.92 in favor of Veloso and the sum of P26,267.92 in favorof Liguaton in settlement of their claims.

Their petition is based primarily on Pampanga Sugar Development Co., Inc. v. Court of IndustrialRelations, 5where 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 rightrecognized by law. (Art. 6, New Civil Code) ...

... The above-quoted provision renders the quitclaim agreements void ab initio intheir 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 chooseto reject. This runs counter to Art. 22 of the new Civil Code which provides that noone 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 petitionmust 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 employerafter it had already lost in the lower court and were subsequently rejected by this Court when theemployer invoked it in a petition for certiorari. By contrast, the quitclaims in the case before us weresigned by the petitioners while the motion for reconsideration was still pending in the DOLE, whichfinally deemed it on March 7, 1989. Furthermore, the quitclaims in the cited case were entered intowithout leave of the lower court whereas in the case at bar the quitclaims were made with theknowledge and approval of the DOLE, which declared in its order of December 16, 1988, that "thecompromise 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 petitionerseven if they may now deny this. In the case of Veloso, the quitclaim he had signed carried thenotation that the sum stated therein had been paid to him in the presence of Atty. Gaga Mauna, hiscounsel, 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 quitclaimwas made with the assistance of his counsel, Atty. Leopoldo Balguma, who also notarized it andlater 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 nowchallenging the very same quitclaim of Liguaton that he himself notarized and invoked as the basisof Liguaton's motion to dismiss, but this time for a different reason. whereas he had earlier arguedfor Liguaton that the latter's signature was a forgery, he has abandoned that contention and nowclaims that the quitclaim had been executed because of the petitioners' dire necessity.


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"Dire necessity" is not an acceptable ground for annulling the releases, especially since it has notbeen shown that the employees had been forced to execute them. It has not even been proven thatthe considerations for the quitclaims were unconscionably low and that the petitioners had beentricked 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 stillsubject 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 wouldsuggest that the original award was exorbitant and they were apprehensive that it would be adjustedand reduced. In any event, no deception has been established on the part of the Private respondentthat 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 thoseinvolving labor standard laws, voluntarily agreed upon by the parties with theassistance of the Bureau or the regional office of the Department of Labor, shall befinal and binding upon the parties. The National Labor Relations Commission or anycourt shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there isprima facieevidence that the settlement wasobtained through fraud, misrepresentation or coercion.

The petitioners cannot renege on their agreement simply because they may now feel they made amistake in not awaiting the resolution of the private respondent's motion for reconsideration andrecomputation. The possibility that the original award might have been affirmed does not justify theinvalidation of the perfectly valid compromise agreements they had entered into in good faith andwith full voluntariness. In General Rubber and Footwear Corp. vs. Drilon, 6we "made clear that theCourt is not saying that accrued money claims can never be effectively waived by workers andemployees." As we later declared in Periquet v. NLRC: 7

Not all waivers and quitclaims are invalid as against public policy. If the agreementwas 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 isonly where there is clear proof that the waiver was wangled from an unsuspecting orgullible person, or the terms of settlement are unconscionable on its face, that thelaw will step in to annul the questionable transaction. But where it is shown that theperson making the waiver did so voluntarily, with full understanding of what he wasdoing, and the consideration for the quitclaim is credible and reasonable, thetransaction 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 thepetitioners should not be relieved of their waivers on the ground that they now feel they wereimprovident in agreeing to the compromise. What they call their "dire necessity" then is no warrant tonullify 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 isnot 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.


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Manila

FIRST DIVISION

G.R. No. 91298 June 22, 1990

CORAZON PERIQUET, petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION and THE PHIL. NATIONAL CONSTRUCTIONCORPORATION (Formerly Construction Development Corp. of the Phils.), respondents.

Tabaquero, Albano & Associates for petitioner.

The Government Corporate Counsel for private respondent.

CRUZ, J .:

It is said that a woman has the privilege of changing her mind but this is usually allowed only inaffairs of the heart where the rules are permissibly inconstant. In the case before us, CorazonPeriquet, the herein petitioner, exercised this privilege in connection with her work, where the rulesare not as fickle.

The petitioner was dismissed as toll collector by the Construction Development Corporation of thePhilippines, private respondent herein, for willful breach of trust and unauthorized possession ofaccountable toll tickets allegedly found in her purse during a surprise inspection. Claiming she hadbeen "framed," she filed a complaint for illegal dismissal and was sustained by the labor arbiter, who

ordered her reinstatement within ten days "without loss of seniority rights and other privileges andwith fun back wages to be computed from the date of her actual dismissal up to date of her actualreinstatement." 1On appeal, this order was affirmed in totoby public respondent NLRC on August 29,1980. 2

On March 11, 1989, almost nine years later, the petitioner filed a motion for the issuance of a writ ofexecution of the decision. The motion was granted by the executive labor arbiter in an order datedJune 26, 1989, which required payment to the petitioner of the sum of P205,207.42 "by way ofimplementing the balance of the judgment amount" due from the private respondent. 3Pursuantthereto, the said amount was garnished by the NLRC sheriff on July 12, 1989. 4On September 11, 1989,however, the NLRC sustained the appeal of the CDCP and set aside the order dated June 20, 1989, thecorresponding writ of execution of June 26, 1989, and the notice of garnishment. 5

In its decision, the public respondent held that the motion for execution was time-barred, havingbeen filed beyond the five-year period prescribed by both the Rules of Court and the Labor Code. Italso rejected the petitioner's claim that she had not been reinstated on time and ruled as valid thetwo quitclaims she had signed waiving her right to reinstatement and acknowledging settlement infull of her back wages and other benefits. The petitioner contends that this decision is tainted withgrave abuse of discretion and asks for its reversal. We shall affirm instead.

Sec. 6, Rule 39 of the Revised Rules of Court, provides:


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SEC. 6. Execution by motion or by independent action.A judgment may beexecuted on motion within five (5) years from the date of its entry or from the date itbecomes final and executory. After the lapse of such time, and before it is barred bythe statute of limitations, a judgment may be enforced by action.

A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715, viz.

ART. 224. Execution of decision, orders, awards.(a) The Secretary of Labor andEmployment or any Regional Director, the Commission or any Labor Arbiter or Med-

Arbiter, or the Voluntary Arbitrator may, motu propio,or on motion of any interestedparty, issue a writ of execution on a judgment within five (5) years from the date itbecomes final and executory, requiring a sheriff or a duly deputized officer to executeor enforce a final decision, order or award. ...

The petitioner argues that the above rules are not absolute and cites the exception snowedin Lancita v. Magbanua, 6where the Court held:

Where judgments are for money only and wholly unpaid, and execution has been

previously withheld in the interest of the judgment debtor, which is in financialdifficulties, the court has no discretion to deny motions for leave to issue executionmore than five years after the judgments are entered. (Application of Molnar,Belinsky, et al. v. Long Is. Amusement Corp., I N.Y.S, 2d 866)

In computing the time limited for suing out of an execution, although there is authorityto the contrary, the general rule is that there should not be included the time whenexecution is stayed, either by agreement of the parties for a definite time, byinjunction, by the taking of an appeal or writ of error so as to operate as asupersedeas, by the death of a party, or otherwise. Any interruption or delayoccasioned by the debtor will extend the time within which the writ may be issuedwithout scire facias.

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There has been no indication that respondents herein had ever slept on their rights tohave the judgment executed by mere motions, within the reglementary period. Thestatute of limitation has not been devised against those who wish to act but cannotdo so, for causes beyond their central.

Periquet insists it was the private respondent that delayed and prevented the execution of thejudgment in her favor, but that is not the way we see it. The record shows it was she who dilly-dallied.

The original decision called for her reinstatement within ten days from receipt thereof following its

affirmance by the NLRC on August 29, 1980, but there is no evidence that she demanded herreinstatement or that she complained when her demand was rejected. What appears is that sheentered into a compromise agreement with CDCP where she waived her right to reinstatement andreceived from the CDCP the sum of P14,000.00 representing her back wages from the date of herdismissal to the date of the agreement. 7

Dismissing the compromise agreement, the petitioner now claims she was actually reinstated onlyon March 16, 1987, and so should be granted back pay for the period beginning November 28,1978, date of her dismissal, until the date of her reinstatement. She conveniently omits to mention


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several significant developments that transpired during and after this period that seriously cast doubton her candor and bona fides.

After accepting the sum of P14,000.00 from the private respondent and waiving her right toreinstatement in the compromise agreement, the petitioner secured employment as kitchendispatcher at the Tito Rey Restaurant, where she worked from October 1982 to March 1987.

According to the certification issued by that business,8

she received a monthly compensation ofP1,904.00, which was higher than her salary in the CDCP.

For reasons not disclosed by the record, she applied for re-employment with the CDCP and was onMarch 16,1987, given the position of xerox machine operator with a basic salary of P1,030.00 plusP461.33 in allowances, for a total of P1,491.33 monthly. 9

On June 27, 1988; she wrote the new management of the CDCP and asked that the rights grantedher by the decision dated August 29, 1980, be recognized because the waiver she had signed wasinvalid. 10

On September 19, 1988, the Corporate Legal Counsel of the private respondent (now Philippine

National Construction Corporation) recommended the payment to the petitioner of the sum ofP9,544.00, representing the balance of her back pay for three years at P654. 00 per month (minusthe P14,000.00 earlier paid). 11

On November 10, 1988, the petitioner accepted this additional amount and signed another Quitclaimand Release reading as follows:

KNOW ALL MEN BY THESE PRESENTS:

THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis St., QuezonCity, hereby acknowledged receipt of the sum of PESOS: NINE THOUSAND FIVE HUNDREDFORTY FOUR PESOS ONLY (P9,544.00) Philippine currency, representing the unpaid balance of

the back wages due me under the judgment award in NLRC Case No. AB-2-864-79 entitled"Corazon Periquet vs. PNCC- TOLLWAYS" and I further manifest that this payment is in fullsatisfaction of all my claims/demands in the aforesaid case. Likewise, I hereby manifest that I hadvoluntarily waived reinstatement to my former position as TOLL TELLER and in lieu thereof, I soughtand am satisfied with my present position as XEROX MACHINE OPERATOR in the Central Office.

Finally, I hereby certify that delay in my reinstatement, after finality of the Decision dated 10 May1979 was due to my own fault and that PNCC is not liable thereto.

I hereby RELEASE AND DISCHARGE the said corporation and its officers from money and allclaims by way of unpaid wages, separation pay, differential pay, company, statutory and otherbenefits or otherwise as may be due me in connection with the above-entitled case. I hereby statefurther that I have no more claims or right of action of whatever nature, whether past, present, future

or contingent against said corporation and its officers, relative to NLRC Case No. AB-2-864-79.

IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November 1988 atMandaluyong, Metro Manila. (Emphasis supplied.) 12

The petitioner was apparently satisfied with the settlement, for in the memorandum she sent thePNCC Corporate Legal Counsel on November 24, 1988, 13she said in part:


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Sir, this is indeed my chance to express my gratitude to you and all others who havehelped me and my family enjoy the fruits of my years of stay with PNCC by way ofgranting an additional amount of P9,544.00 among others ...

As per your recommendation contained therein in said memo, I am now occupyingthe position of xerox machine operator and is (sic) presently receiving a monthly

salary of P2,014.00.

Reacting to her inquiry about her entitlement to longevity pay, yearly company increases and otherstatutory benefits, the private respondent adjusted her monthly salary from P2,014.00 to P3,588.00monthly.

Then the lull. Then the bombshell.

On March 11, 1989, she filed the motion for execution that is now the subject of this petition.

It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if she doesnot know her own mind. First she signed a waiver and then she rejected it; then she signed another

waiver which she also rejected, again on the ground that she had been deceived. In her first waiver,she acknowledged full settlement of the judgment in her favor, and then in the second waiver, afteraccepting additional payment, she again acknowledged fun settlement of the same judgment. Butnow she is singing a different tune.

In her petition she is now disowning both acknowledgments and claiming that the earlier paymentsboth of which she had accepted as sufficient, are insufficient. They were valid before but they are notvalid now. She also claimed she was harassed and cheated by the past management of the CDCPand sought the help of the new management of the PNCC under its "dynamic leadership." But nowshe is denouncing the new management-for also tricking her into signing the second quitclaim.

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 bedisowned simply because of a change of mind. It is only where there is clear proof that the waiverwas wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionableon its face, that the law will step in to annul the questionable transaction. But where it is shown thatthe person making the waiver did so voluntarily, with full understanding of what he was doing, andthe consideration for the quitclaim is credible and reasonable, the transaction must be recognized asa valid and binding undertaking. As in this case.

The question may be asked: Why did the petitioner sign the compromise agreement of September16, 1980, and waive all her rights under the judgment in consideration of the cash settlement shereceived? It must be remembered that on that date the decision could still have been elevatedon certioraribefore this Court and there was still the possibility of its reversal. The petitionerobviously decided that a bird in hand was worth two on the wing and so opted for the compromise

agreement. The amount she was then waiving, it is worth noting, had not yet come up to theexorbitant sum of P205,207.42 that she was later to demand after the lapse of eight years.

The back pay due the petitioner need not detain us. We have held in countless cases that thisshould be limited to three years from the date of the illegal dismissal, during which period (but notbeyond) the dismissed employee is deemed unemployed without the necessity of proof. 14Hence, thepetitioner's contention that she should be paid from 1978 to 1987 must be rejected, and even withoutregard to the fact (that would otherwise have been counted against her) that she was actually employedduring most of that period.


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Finally, the petitioner's invocation of Article 223 of the Labor Code to question the failure of theprivate respondent to file a supersedeas bond is not well-taken. As the Solicitor General correctlypoints out, the bond is required only when there is an appeal from the decision with a monetaryaward, not an order enforcing the decision, as in the case at bar.

As officers of the court, counsel are under obligation to advise their clients against making untenable

and inconsistent claims like the ones raised in this petition that have only needlessly taken up thevaluable time of this Court, the Solicitor General, the Government Corporate Counsel, and therespondents. Lawyers are not merely hired employees who must unquestioningly do the bidding ofthe client, however unreasonable this may be when tested by their own expert appreciation of thepertinent facts and the applicable law and jurisprudence. Counsel must counsel.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

Narvasa (Chairman), Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Footnotes

1 Derision dated May 10, 1979, penned by Labor Arbiter Mirasol Corleto.

2 Decision rendered by NLRC, First Division.

3 Rollo, p. 9.

4 Ibid.,p. 10.

5 NLRC Decision dated September 11, 1989 penned by Encarnacion, PresidingCommissioner, with Bonto-Perez and Maglaya, Commissioners, concurring, rollo, pp.20-32.

6 7 SCRA 42.

7 Rollo, pp. 12, 22 and 64.

8 NLRC Decision dated September 11, 1989, p. 3, rollo, p. 22.

9 Ibid., p. 4; Ibid., p. 23.

10 Id., Id.

11 Id., p. 5; Id., p. 24.

12 Id., p. 6, Id., p. 25.

13 Id., p. 7, Id., p. 26.

14 Mercury Drug Co., Inc. v. CIR, 56 SCRA 694; Feati University Faculty Club v.Feati University, 58 SCRA 395; Mariners Polytechnic School v. Leogardo, Jr., G.R.No. 74271, March 31, 1989; Central Azucazera de Tarlac v. Sampang, G.R. No.84598, May 29, 1989, Third Division, Minute Resolution.


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Baguio City

FIRST DIVISION

G.R. No. 115077 April 18, 1997

PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA HUT, petitioner,vs.HON. BIENVENIDO LAGUESMA, in his capacity as Undersecretary of Labor, andNAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN, respondents.

KAPUNAN, J.:

On July 9, 1993, Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan (respondent Union) filed apetition for certification election with the Department of Labor (National Capital Region) in behalf ofthe rank and file employees of the Progressive Development Corporation (Pizza Hut) docketed asNCR Case No. NCR-OD-M-9307-020. 1

Petitioner filed on August 20, 1993, a verified Motion to Dismiss the petition alleging fraud,falsification and misrepresentation in the respondent. Union's registration making it void and invalid.The motion specifically alleged that: a) respondent Union's registration was tainted with false, forged,double or multiple signatures of those who allegedly took part in the ratification of the respondentUnion's constitution and by-laws and in the election of its officers that there were two sets ofsupposed attendees to the alleged organizational meeting that was alleged to have taken place on

June 26, 1993; that the alleged chapter is claimed to have been supported by 318 members when infact the persons who actually signed their names were much less; and b) while the application forregistration of the charter was supposed to have been approved in the organizational meeting heldon June 27, 1993, the charter certification issued by the federation KATIPUNAN was dated June 26,1993or one (1) day prior to the formation of the chapter, thus, there were serious falsities in thedates of the issuance of the charter certification and the organization meeting of the alleged chapter.

Citing other instances of misrepresentation and fraud, petitioner, on August 29, 1993, filed aSupplement to its Motion to Dismiss, 2claiming that:

1) Respondent Union alleged that the election of its officers was held on June 27,1993; however, it appears from the documents submitted by respondent union to theBIR-DOLE that the Union's constitution and by-laws were adopted only on July 7,1993, hence, there was no bases for the supposed election of officers on June 27,1993 because as of this date, there existed no positions to which the officers couldbe validly elected;

2) Voting was not conducted by secret ballot in violation of Article 241, section (c) ofthe Labor Code;


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3) The Constitution and by Laws submitted in support of its petition were not properlyacknowledged and notarized. 3

On August 30, 1993, petitioner filed a Petition 4seeking the cancellation of the Union's registration onthe grounds of fraud and falsification, docketed as BIR Case No. 8-21-83. 5Motion was likewise filed bypetitioner with the Med-Arbiter requesting suspension of proceedings in the certification election case until

after the prejudicial question of the Union's legal personality is determined in the proceedings forcancellation of registration.

However, in an Order dated September 29, 1993, 6Med-Arbiter Rasidali C. Abdullah directed theholding of a certification election among petitioner's rank and file employees. The Order explained:

. . . Sumasaklaw sa Manggagawa ng Pizza Hut is a legitimate labor organization incontemplation of law and shall remain as such until its very charter certificate iscanceled or otherwise revoked by competent authority. The allegedmisrepresentation, fraud and false statement in connection with the issuance of thecharter certificate are collateral issues which could be properly ventilated in thecancellation proceedings. 7

On appeal to the office of the Secretary of Labor, Labor Undersecretary Bienvenido E. Laguesma ina Resolution dated December 29, 1993 8denied the same.

A motion for reconsideration of the public respondent's resolution was denied in his Order 9datedJanuary 27, 1994, hence, this special civil action for certiorariunder Rule 65 of the Revised Rules ofCourt where the principal issue raised is whether or not the public respondent committed grave abuse ofdiscretion in affirming the Med-Arbiter's order to conduct a certification election among petitioner's rankand file employees, considering that: (1) respondent Union's legal personality was squarely put in issue;(2) allegations of fraud and falsification, supported by documentary evidence were made; and (3) apetition to cancel respondent Union's registration is pending with the regional office of the Department ofLabor and Employment. 10

We grant the petition.

In the public respondent's assailed Resolution dated December 29, 1993, the suggestion is madethat once a labor organization has filed the necessary documents and papers and the same havebeen certified under oath and attested to, said organization necessarily becomes clothed with thecharacter of a legitimate labor organization. The resolution declares:

Records show that at the time of the filing of the subject petition on 9 July 1993 bythe petitioner NLM-KATIPUNAN, for and in behalf of its local affiliate Sumasaklaw saManggagawa ng Pizza Hut, the latter has been clothed with the status and/orcharacter of a legitimate labor organization. This is so, because on 8 July 1993,petitioner submitted to the Bureau of Labor Relations (BLR), this Department, the

following documents: Charter Certificate, Minutes of the Organizational Meeting, Listof Officers, and their respective addresses, financial statement, Constitution and By-Laws (CBL, and the minutes of the ratification of the CBL). Said documents (exceptthe charter certificate) are certified under oath and attested to by the local union'sSecretary/Treasurer and President, respectively.

As to the contention that the certification election proceedings should be suspendedin view of the pending case for the cancellation of the petitioner's certificate ofregistration, let it be stressed that the pendency of a cancellation case is not a


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ground for the dismissal or suspension of a representation proceedings consideringthat a registered labor organization continues to be a legitimate one entitled to all therights appurtenant thereto until a final valid order is issued canceling suchregistration. 11

In essence, therefore, the real controversy in this case centers on the question of whether or not,

after the necessary papers and documents have been filed by a labor organization, recognition bythe Bureau of Labor Relations merely becomes a ministerial function.

We do not agree.

In the first place, the public respondent's views as expressed in his December 29, 1993 Resolutionmiss the entire point behind the nature and purpose of proceedings leading to the recognition ofunions as legitimate labor organizations. Article 234 of the Labor Code provides:

Art. 234. Requirements of registration.Any applicant labor organization,association or group of unions or workers shall acquire legal personality and shall beentitled to the rights and privileges granted by law to legitimate labor organizations

upon issuance of the certificate of registration based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labororganization, the minutes of the organizational meetings and the list of the workerswho participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all theemployees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its

annual financial reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes ofits adoption or ratification, and the list of the members who participated in it.

A more than cursory reading of the aforecited provisions clearly indicates that the requirementsembodied therein are intended as preventive measures against the commission of fraud. After alabor organization has filed the necessary papers and documents for registration, it becomesmandatory for the Bureau of Labor Relations to check if the requirements under Article 234 havebeen sedulously complied with. If its application for registration is vitiated by falsification and seriousirregularities, especially those appearing on the face of the application and the supportingdocuments, a labor organization should be denied recognition as a legitimate labor organization.

And if a certificate of recognition has been issued, the propriety of the labor organization'sregistration could be assailed directly through cancellation of registration proceedings in accordancewith Articles 238 and 239 of the Labor Code, or indirectly, by challenging its petition for the issuanceof an order for certification election.

These measures are necessaryand may be undertaken simultaneouslyif the spirit behind theLabor Code's requirements for registration are to be given flesh and blood. Registrationrequirements specifically afford a measure of protection to unsuspecting employees who may belured into joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or


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use the labor organization for illegitimate ends. 12Such requirements are a valid exercise of the policepower, because the activities in which labor organizations, associations and unions of workers areengaged directly affect the public interest and should be protected. 13

Thus, in Progressive Development Corporation vs.Secretary of Labor and Employment, 14we held:

The controversy in this case centers on the requirements before a local or chapter ofa federation may file a petition for certification election and be certified as the soleand exclusive bargaining agent of the petitioner's employees.

xxx xxx xxx

But while Article 257 cited by the Solicitor General directs the automatic conduct of acertification election in an unorganized establishment, it also requires that the petitionfor certification election must be filed by a legitimate labor organization . . .

xxx xxx xxx

. . . The employer naturally needs assurance that the union it is dealing with is abona-fide organization, one which has not submitted false statements ormisrepresentations to the Bureau. The inclusion of the certification and attestationrequirements will in a marked degree allay these apprehensions of management. Notonly is the issuance of any false statement and misrepresentation or ground forcancellation of registration (see Article 239 (a), (c) and (d)); it is also a ground for acriminal charge of perjury.

The certification and attestation requirements are preventive measures against thecommission of fraud. They likewise afford a measure of protection to unsuspectingemployees who may be lured into joining unscrupulous or fly-by-night unions whosesole purpose is to control union funds or to use the union for dubious ends.

xxx xxx xxx

. . . It is not this Court's function to augment the requirements prescribed by law inorder to make them wiser or to allow greater protection to the workers and even theiremployer. Our only recourse is, as earlier discussed, to exact strict compliance withwhat the law provides as requisites for local or chapter formation.

xxx xxx xxx

The Court's conclusion should not be misconstrued as impairing the local union'sright to be certified as the employees' bargaining agent in the petitioner'sestablishment. We are merely saying that the local union must first comply with thestatutory requirements in order to exercise this right. Big federations and nationalunions of workers should take the lead in requiring their locals and chapters tofaithfully comply with the law and the rules instead of merely snapping union afterunion into their folds in a furious bid with rival federations to get the most number ofmembers

Furthermore, the Labor Code itself grants the Bureau of Labor Relations a period of thirty (30) dayswithin which to review all applications for registration. Article 235 provides:


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Art. 235.Action on application.The Bureau shall act on all applications forregistration within thirty (30) days from filing.

All requisite documents and papers shall be certified under oath by the secretary orthe treasurer of the organization, as the case may be, and attested to by itspresident.

The thirty-day period in the aforecited provision ensures that any action taken by the Bureau ofLabor Relations is made in consonance with the mandate of the Labor Code, which, it bearsemphasis, specifically requires that the basis for the issuance of a certificate of registration shouldbe compliance with the requirements for recognition under Article 234. Since, obviously, recognitionof a labor union or labor organization is not merely a ministerial function, the question now arises asto whether or not the public respondent committed grave abuse of discretion in affirming the Med-

Arbiter's order in spite of the fact that the question of the Union's legitimacy was squarely put inissue and that the allegations of fraud and falsification were adequately supported by documentaryevidence.

The Labor Code requires that in organized and unorganized 15establishments, a petition for

certification election mustbe filed by a legitimate labor organization. The acquisition of rights by any unionor labor organization, particularly the right to file a petition for certification election, first and foremost,depends on whether or not the labor organization has attained the status of a legitimate labororganization.

In the case before us, the Med-Arbiter summarily disregarded the petitioner's prayer that the formerlook into the legitimacy of the respondent. Union by a sweeping declaration that the union was in thepossession of a charter certificate so that "for all intents and purposes, Sumasaklaw saManggagawa sa Pizza Hut (was) a legitimate labor organization." 16Glossing over the transcendentalissue of fraud and misrepresentation raised by herein petitioner, Med-Arbiter Rasidali Abdullah held that:

The alleged misrepresentation, fraud and false statement in connection with theissuance of the charter certificate are collateral issues which could be ventilated in

the cancellation proceedings. 17

It cannot be denied that the grounds invoked by petitioner for the cancellation of respondent Union'sregistration fall under paragraph (a) and (c) of Article 239 of the Labor Code, to wit:

(a) Misrepresentation, false statement or fraud in connection with the adoption orratification of the constitution and by-laws or amendments thereto, the minutes ofratification, the list of members who took part in the ratification of the constitution andby-laws or amendments thereto, the minutes of ratification, the list of members whotook part in the ratification;

xxx xxx xxx

(c) Misrepresentation, false statements or fraud in connection with the election ofofficers, minutes of the election of officers, the list of voters, or failure to submit thesedocuments together with the list of the newly elected-appointed officers and theirpostal addresses within thirty (30) days from election.

xxx xxx xxx


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The grounds ventilated in cancellation proceedings in accordance with Article 239 of the Labor Codeconstitute a grave challenge to the right of respondent Union to ask for certification election. TheMed-Arbiter should have looked into the merits of the petition for cancellation before issuing an ordercalling for certification election. Registration based on false and fraudulent statements anddocuments confer no legitimacy upon a labor organization irregularly recognized, which, at best,holds on to a mere scrap of paper. Under such circumstances, the labor organization, not being a

legitimate labor organization, acquires no rights, particularly the right to ask for certification electionin a bargaining unit.

As we laid emphasis in Progressive Development Corporation Labor, 18"[t]he employer needs theassurance that the union it is dealing with is a bona fide organization, one which has not submitted falsestatements or misrepresentations to the Bureau." Clearly, fraud, falsification and misrepresentation inobtaining recognition as a legitimate labor organization are contrary to the Med-Arbiter's conclusion notmerely collateral issues. The invalidity of respondent Union's registration would negate its legalpersonality to participate in certification election.

Once a labor organization attains the status of a legitimate labor organization it begins to possess allof the rights and privileges granted by law to such organizations. As such rights and privilegesultimately affect areas which are constitutionally protected, the activities in which labor organizations,

associations and unions are engaged directly affect the public interest and should be zealouslyprotected. A strict enforcement of the Labor Code's requirements for the acquisition of the status of alegitimate labor organization is in order.

Inasmuch as the legal personality of respondent Union had been seriously challenged, it would havebeen more prudent for the Med-Arbiter and public respondent to have granted petitioner's request forthe suspension of proceedings in the certification election case, until the issue of the legality of theUnion's registration shall have been resolved. Failure of the Med-Arbiter and public respondent toheed the request constituted a grave abuse of discretion.

WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED and the Resolutionand Order of the public respondent dated December 29, 1993 and January 24, 1994, respectively,

are hereby SET ASIDE.

The case is REMANDED to the Med-Arbiter to resolve with reasonable dispatch petitioner's petitionfor cancellation of respondent Union's registration.

SO ORDERED.

Padilla, Bellosillo and Vitug, JJ., concur.

Hermosisima, Jr., J., is on leave.


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Manila

FIRST DIVISION

G.R. No. L-35120 January 31, 1984

ADAMSON & ADAMSON, INC., petitioner,vs.THE COURT OF INDUSTRIAL RELATIONS and ADAMSON & ADAMSON SUPERVISORYUNION (FFW),respondents.

Sycip, Salazar, Luna & Feliciano for petitioner.

Jaime D. Lauron for respondents.

GUTIERREZ, JR., J.:

Adamson and Adamson, Inc., filed this petition to set aside orders of the respondent Court ofIndustrial Relations (CIR) holding that the Adamson and Adamson, Inc. supervisory Union (FFW)can legally represent supervisors of the petitioner corporation notwithstanding the affiliation of thelank and file union of the same company with the same labor federation, the Federation of FreeWorkers.

The Adamson and Adamson, Inc. Supervisory Union (FFW) informed the petitioner about its havingorganized on the same date that the Adamson and Adamson, Inc. Salesmen Association (FFW)advised the petitioner that the rank and file salesmen had formed their own union.

The CIR dismissed the petition in CIR Case No. 3267-MC entitled "In the Matter of Representation of

the Supervisory Employees of Adamson and Adamson, Inc., Petitioner " thus prompting the filing ofthis petition for review on certiorari.

Subsequently and during the pendency of the present petition, the rank and file employees formedtheir own union, naming it Adamson and Adamson Independent Workers (FFW).

The petitioner made a lone assignment of error, to wit:

THE RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN SUSTAINING THEELIGIBILITY OF THE RESPONDENT UNION TO REPRESENT THE PETITIONER'SSUPERVISORY EMPLOYEES NOT-WITHSTANDING THE AFFILIATION OF THE SAID UNIONWITH THE SAME NATIONAL FEDERATION WITH WHICH THE UNIONS OF NON-

SUPERVISORS IN THE PETITIONER COMPANY ARE ALSO AFFILIATED.

The petitioner argues that the affiliation of the respondent union of supervisors, the salesmen'sassociation, and the Adamson and Adamson independent Workers Union of rank and file personnelwith the same national federation (FFW) violates Section 3 of the Industrial Peace Act, as amended,because(1) it results in the indirect affiliation Of supervisors and rank-and-file employees withone labor organization; (2) since respondent union and the unions of non-supervisors in the samecompany are governed by the same constitution and by-laws of the national federation, in practical


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effect, there is but one union; and (3) it would result in the respondent union's losing itsindependence because it becomes the alter ego of the federation.

The petitioner also submits that should affiliation be allowed, this would violate the requirement ofseparateness of bar units under Section 12 of the Act because only one union will in fact representboth supervisors and rank-and-file employees of the petitioner.

The respondents on the other hand argue that the supervisory employees of an employer mayvalidly join an organization of the rank-and-file employees so long as the said rank and fileemployees are not under their supervision. They submit that Adamson and Adamson SupervisoryUnion (FFW) is not composed of sales supervisors and, therefore, the salesmen of the company arenot under the supervision of the supervisory employees forming the union. Respondents also arguethat even if the salesmen of the petitioner company are under the supervision of the members of thesupervisory union, the prohibition would not apply because the salesmen and the supervisoryemployees of the company have their separate and distinct labor organizations, and, as a matter offact, their respective unions sent separate proposal for collective bargaining agreements. Theycontend that their respective labor organizations, not the FFW, will represent their members in thenegotiations as well as in the signing of their respective contracts. Respondents further argue thatthe Federation of Free Workers has, as its affiliates, supervisory as well as rank-and-file employees,and should both the supervisory and the rank-and-file employees of a certain employer who haveseparate certificates of registration affiliate with the same federation, the prohibition does not applyas the federation is not the organization of the supervisory employees contemplated in the law.

The issue presented involves the correct interpretation of Section 3 of Republic Act No. 875, theIndustrial Peace Act, as amended, which states:

Employees shall have the right to self-organization and to form join or assist labor organizations oftheir own choosing for the purpose 6f collective bargaining through representatives of their own andto engage in concerted activities for the purpose of collective bargaining and other mutual aid orprotection. Individuals employed as supervisors shall not be eligible for membership in a labororganization of employees under their supervision but may form separate organizations of their own.

The right of employees to self-organization and to form, join or assist labor organizations of their ownchoosing for the purpose of collective bargaining and to engage in concerted activities for mutual aidor protection is a fundamental right of labor that derives its existence from the Constitution. It isrecognized and implemented through the abovecited Section 3 of the Industrial Peace Act asamended.

In interpreting the protection to labor and social justice provisions of the Constitution and the laborlaws or rules and regulations implementing the constitutional mandates, we have always adoptedthe liberal approach which favors the exercise of labor rights.

In deciding this case, we start with the recognized rule that the right of supervisory employees to

organize under the Industrial Peace Act carries certain restrictions but the right itself may not bedenied or unduly abridged. The supervisory employees of an employer cannot join any labororganization of employees under their supervision but may validly form a separate organization oftheir own. As stated in Caltex Filipino Managers and Supervisors Association v. Court of IndustrialRelations (47 SCRA 112), it would be to attach unorthodoxy to, not to say an emasculation of, theconcept of law if managers as such were precluded from organization. Thus, if Republic Act 875, inits Section 3, recognizes the right of supervisors to form a separate organization of their own, albeitthey cannot be members of a labor organization of employees under their supervision, that authorityof supervisors to form a separate labor union carries with it the right to bargain collectively with the


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employer. (Government Service Insurance System v. Government Service Insurance SystemSupervisors' Union, 68 SCRA 418).

The specific issue before us is whether or not a supervisor's union may affiliate with a federation withwhich unions of rank and-file employees of the same employer are also affiliated. We find withoutmerit the contentions of petitioner that if affilation will be allowed, only one union will in fact represent

both supervisors and rank-and-file employees of the petitioner; that there would be an indirectaffiliation of supervisors and rank-and-file employees with one labor organization; that there wouldbe emerging of two bargaining units ; and that the respondent union will loose its independencebecause it becomes an alter ego of the federation.

InElisco-Elirol Labor Union (NAFLU) v. Noriel(80 SCRA 681) and Liberty Cotton Mills WorkersUnion v. Liberty Cotton Mills, Inc.(66 SCRA 512),we held :

xxx xxx xxx

... the court expressly cited and affirmed the basic principle that '(T)he locals areseparate and distinct units primarily designed to secure and maintain the equality of

bargaining power between the employer and their employee-member in theeconomic struggle for the fruits of the joint productive effort of labor and capital;and the association of the locals into the national union (as PAFLU) was in thefurtherance of the same end.These association are concensual entities capable ofentering into such legal relations with their members. The essential purpose was theaffiliation of the local unions into a common enterprise to increase by collective actionthe common bargaining power in respect of the terms and conditions of labor.Yet thelocals remained the basic units of association; free to serve their own and thecommon-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 welfareupon the terms laid down in the agreement which brought it into existence.

We agree with the Court of Industrial Relations when it ruled that:

xxx xxx xxx

The confusion seems to have stemmed from the prefix of FFW after the name of the localunions in the registration of both. Nonetheless, the inclusion of FWW in the registration ismerely to stress that they are its affiliates at the time of registrations. It does not meanthat said local unions cannot stand on their own Neither can it be construed that theirpersonalities are so merged with the mother federation that for one difference or anotherthey cannot pursue their own ways, independently of the federation. This is borne by thefact that FFW, like other federation is a legitimate labor organization separate and distinctfrom its locals and affiliates and to construe the registration certificates of the aforecitedunions, along the line of the Company's argument. would tie up any affiliates to the shoestring of the federation. ...

The Adamson and Adamson Supervisory Union and the Adamson and Adamson, Inc., Salesmen Association (FFW),have their own respective constitutions and by-laws. They are separately and independently registered of each other.Both sent their separate proposals for collective bar agreements with their employer. There could be no employerinfluence on rank-and-file organizational activities nor their could be any rank and file influence on the supervisoryfunction of the supervisors because of the representation sought to be proscribed.

WHEREFORE, the instant petition is DISMISSED for lack of merit. The questioned order and the resolution enbancof the respondent Court of Industrial Relations are AFFIRMED. SO ORDERED.


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Republic of the Philippines

SUPREME COURTManila

SECOND DIVISION

G.R. No. 75037 April 30, 1987

TANDUAY DISTILLERY LABOR UNION, petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION, LAMBERTO SANTOS, PEDRO ESTERAL,ROMAN CHICO, JOSELITO ESTANISLAO, JOSE DELGADO, JUANITO ARGUELLES,RICARDO CAJOLES, and JOSEFINO PAGUYO, respondents.

No. 75055 April 30, 1987

TANDUAY DISTILLERY, INC., petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION (NLRC), LAMBERTO SANTOS, PEDROESTERAL, ROMAN CHICO, JOSELITO ESTANISLAO, JOSE DELGADO, JUANITOARGUELLES, RICARDO CAJOLES, and JOSEFINO PAGUYO, respondents.

Jaime G. de Leon for petitioner in G.R. No. 75037.

Pacifico de Ocampo and Benjamin C. Gascon for petitioner in G.R. No. 75055.

GUTIERREZ, JR.:

These consolidated petitions for certiorari seek the review and setting aside of respondent NationalLabor Relations Commission's decision in NLRC Case No. AB-6-11685-81 dated May 26, 1986,affirming the October 12, 1984 decision of the Labor Arbiter, and of the NLRC resolution dated June28, 1986, which denied the motion for reconsideration of the petitioners.

The facts of the case are as follows:

Private respondents were all employees of Tanduay Distillery, Inc., (TDI) and members of theTanduay Distillery Labor Union (TDLU), a duly organized and registered labor organization and theexclusive bargaining agent of the rank and file employees of the petitioner company.

On March 11, 1980, a Collective Bargaining Agreement (CBA), was executed between TDI andTDLU. The CBA was duly ratified by a majority of the workers in TDI including herein privaterespondents, and a copy was filed with the Ministry of Labor and Employment (MOLE) on October29, 1980 for certification. The CBA had a term of three (3) years from July 1, 1979 to June 30, 1982.It also contained a union security clause. which provides:

All workers who are or may during the effectivity of this Contract, become membersof the Union in accordance with its Constitution and By-Laws shall, as a condition of


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their continued employment, maintain membership in good standing in the Union forthe duration of the agreement.

On or about the early part of October 1980, while the CBA was in effect and within the contract barperiodthe private respondents joined another union, the Kaisahan Ng ManggagawangPilipinoKAMPIL) and organized its local chapter in TDI, with private respondents Pedro Esteral and

Lamberts Santos being elected President and Vice-President, respectively.

On November 7, 1980, KAMPIL filed a petition for certification election to determine unionrepresentation in TDI, which development compelled TDI to file a grievance with TDLU on November7, 1980 pursuant to Article XV of the CBA.

Acting on the grievance of TDI, TDLU wrote the private respondents on December 23, 1980requiring them to explain why TDLU should not take disciplinary action against them for, amongother things

Disloyalty to the Tanduay Distillery Labor Union (T.D.L.U.) by forming and joininganother union with a complete takeover intent as the sole and exclusive bargaining

representative of all rank and file employees at TDI. (p. 16, Rollo)

TDLU created a committee to investigate its erring members in accordance with its by-laws whichare not disputed by the private respondents. Except for Josefino Paguyo who, despite due notice,was absent during the investigation conducted on January 2, 1981, all the private respondents werepresent and given a chance to explain their side. Thereafter, in a resolution dated January 9, 1981,TDLU, through the Investigating Committee and approved by TDLU's Board of Directors, expelledthe private respondents from TDLU for disloyalty to the Union effective January 16, 1981. By letterdated January 10, 1981, TDLU notified TDI that private respondents had been expelled from TDLUand demanded that TDI terminate the employment of private, respondents because they had losttheir membership with TDLU.

Acting on the demand of TDLU, TDI, in a Memorandum dated January 13, 1981, notified "thateffective January 16, 1981, we shall file the usual application for clearance (with preventivesuspension to take effect on the same day) to terminate your services on the basis of the unionsecurity clause of our CBA.

Accordingly, TDI filed with the MOLE on January 14, 1981 its application for clearance to terminatethe employment of private respondents. This application docketed as Case No. NCR-AC-1-435-81specifically stated that the action applied for was preventive suspension which will result intermination of employment, ... due to (T)hreat to (P)roduction traceable to rival (U)nion activity. Theprivate respondents then filed with the MOLE a complaint for illegal dismissal against TDI andBenjamin Agaloos, in his capacity as President of TDLU, which complaint was docketed as CaseNo. STF-1-333-91. The cases were jointly heard and tried by Labor Arbiter Teodorico Dogelio.

However, on January 26, 1981, the Med-Arbiter granted the private respondents' petition calling for acertification election among the rank and file employees of TDI. The Med-Arbiter's Orderstated, inter-aliathat the existence of an uncertified CBAcannot be availed of as a bar to the holdingof a certification election (Emphasis supplied). On appeal of TDI and TDLU to the Bureau of LaborRelations (BLR), the order for the holding of a certification election was reversed and set aside bythe BLR on July 8,1982, thus:

A careful perusal of the records of the case will reveal that the uncertified CBA wasduly filedand submitted on 29 October 1980, to last until June 30, 1982. Indeed, said


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CBA is certifiablefor havingcomplied with all the necessary requirements forcertification.Consistent with the intent and spirit of P.D. 1391 and its implementingrules, the contract bar rule should have been applied in this case. The representationissue cannot be entertained except within the last sixty (60) days of the collectiveagreement. (Emphasis supplied) (p. 243, Rollo)

The last 60 days in a collective bargaining agreement is referred to as the "freedom period" whenrival union representation can be entertained during the existence of a valid CBA. In this case, the"freedom period" was May 1 to June 30, 1982. After the term of the CBA lapsed, KAMPIL moved fora reconsideration of the July 8, 1982 decision of the BLR on July 23, 1982 on the same ground thatsince the CBA then in question was uncertified, the contract bar rule could not be made to apply. OnDecember 3, 1982, the BLR reversed itself, but for a different reason and heldthat:

Movant union (Kampil) now seeks for the reconsideration of that Order on theground, among others, that the CBA in question is not certifiable and, hence, thecontract bar rule cannot properly apply in this case.

After a more careful examination of the records, this Bureau is of the view that

the instant motion should be given due course, not necessarily for the argumentsraised by herein movant.

It should be noted that the alleged CBA has now expired. Its expiry date being 30June 1982. Consequently; there appears to be no more obstacle in allowing acertification election to be conducted among the rank and file of respondent. Thecontract bar rule will no longer apply in view of the supervening event, that is, theexpiration of the contract. (Emphasis supplied) (pp. 244-245, Rollo)

TDLU filed a petition for review of the BLR decision with the Supreme Court, docketed as Case No.G.R. No. 63995 TDI argued that KAMPIL did not have a cause of action when the petition forcertification was filed on November 7, 1980 because the freedom period was not yet in effect. Thefact that the BLR issued its order when the 60-day freedom period had supervened, did not cure thisdefect. Moreover, the BLR decision completely overlooked or ignored the fact that on September 21,1982, a new CBA had been executed between the TDLU and TDI so that when the BLR allowed acertification election in its order dated December 3, 1982, the contract bar rule was applicable again.This Court denied TDLU's petition in a minute resolution on November 14,1983.

Using the foregoing as relevant and applicable to the consolidated cases for the clearanceapplication for termination filed by TDI and the illegal dismissal case filed by the private respondentson October 12, 1984, Labor Arbiter Teodorico Dogelio rendered a decision denying TDI's applicationto terminate the private respondents and ordering TDI to reinstate the complainants with backwages.It should be noted that the Labor Arbiter rendered the decision even before the petitioner companycould file its memorandum, formal offer of exhibits and its manifestation and motion to correcttentative markings of exhibits. This decision of the arbiter was upheld by the respondent NLRC in

NLRC Case No. AB-6-11685-81 in its decision dated May 20,1986.

TDI and TDLU moved for reconsideration of the questioned decision, In its motion, TDI alleged, interalia, that respondent NLRC did not rule on the validity of the CBA as a contract, neither did it resolvesquarely the validity of the enforcement of the union security clause of the CBA. TDI stated furtherthat respondent NLRC failed to consider the fact that at the time the private respondents wereexpelled by TDLU and consequently terminated by TDI, the union security clause of the CBA was infull force and effect, binding TDI and TDLU.


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For its part, TDLU said that the decision of the Supreme Court in the certification case could not beused by respondent NLRC to justify its decision in the dismissal case because the issues on thecases are entirely different and miles apart. It is for this reason that there are two (2) cases that areinvolved. TDLU explained that the Supreme Court decided to dismiss the petition for certiorari of TDIand TDLU in the certification case because the original CBA existing at the time the privaterespondents formed and joined KAMPIL had already expired. However, TDLU made it clear that

when the private respondents organized KAMPIL in TDI, the same CBA was still in force and thedisaffiliation did not take place within the freedom period. Hence, at that point in time, the privaterespondents committed disloyalty against the union.

On June 26, 1986, respondent NLRC denied the motion for reconsideration filed by TDI and TDLUfor lack of merit. In its petition, TDI alleged that:

I

RESPONDENT COMMISSION ACTED IN EXCESS AND WITH GRAVE ABUSE OFITS DISCRETION AND IN A MANNER CONTRARY TO LAW IN RENDERING ITSDECISION EN BANC OF MAY 20, 1986 AND IN DENYING PETITIONER'S

MOTION FOR RECONSIDERATION THEREOF IN ITS RESOLUTION SOLUTIONDATED JUNE 26, 1986 BECAUSE

1. THE RESPONDENT COMMISSION HAS IGNORED THE FACTTHAT THE PRIVATE RESPONDENTS WERE EXPELLED BY TDLUFROM ITS MEMBERSHIP ON JANUARY 16, 1981 AND,CONSEQUENTLY, TDLU HAD DEMANDED OF THE PETITIONEROF THE ENFORCEMENT OF THE UNION SECURITY CLAUSE OFTHE CBA, THE SAID CBA WAS AN EXISTING AND A VALIDCONTRACT BETWEEN THE PETITIONER AND TDLU, ANDEFFECTIVE BETWEEN THE PARTIES;

2. IT IS FUNDAMENTAL THAT A UNION SECURITY CLAUSEPROVISION IN COLLECTIVE BARGAINING AGREEMENT ISBINDING BETWEEN THE PARTIES TO THE CBA UNDER THELAWS;

3. THE EXPULSION OF THE PRIVATE RESPONDENTS FROMTDLU WAS THE UNION'S OWN DECISION. HENCE, WHEN TDLUDEMANDED OF THE PETITIONER THE ENFORCEMENT OF THESECURITY CLAUSE PROVISION OF THE CBA BY SEPARATINGPRIVATE RESPONDENTS FROM THEIR EMPLOYMENT, FORHAVING LOST THEIR MEMBERSHIP IN THE UNION, THEPETITIONER WAS DUTY BOUND TO DO SO;

4. THE ALLUSION THAT THE CBA WAS NOT CERTIFIED BY THEBUREAU OF LABOR RELATIONS (BLR) HAS NOTHING TO DOWITH ITS EFFECTIVENESS AS A VALID CONTRACT BETWEEN

ALL PARTIES THERETO.

II

RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETIONAND IN EXCESS OF ITS JURISDICTION IN HOLDING THAT PRIVATE


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RESPONDENTS DID NOT COMMIT ACTS PREJUDICIAL TO THE PETITIONER'SPRODUCTION EFFORTS TO BE SUFFICIENT BASIS FOR THEIR PREVENTIVESUSPENSION AND EVENTUAL REMOVAL.

On the other hand, petitioner TDLU in essence contends that:

THE CBA IS VALID AND BINDING NOT ONLY ON TDI AND TDLU BUT LIKEWISE ON PRIVATERESPONDENTS WHO HAVE RATIFIED THE SAME IN THEIR INDIVIDUAL CAPACITIES ASMEMBERS OF TDLU; HENCE, THE UNION SECURITY CLAUSE IS VALID AND BINDING ONTHEM;

THE ACTION OF TDLU IN REQUESTING FOR THE ENFORCEMENT OF THE UNION SECURITYCLAUSE OF THE CBA BETWEEN TDI AND TDLU IS PART OF THE INHERENT RIGHT TO SELF-ORGANIZATION;

TDLU CANNOT BE MADE LIABLE FOR THE PAYMENT OF BACKWAGES BECAUSE ALL THATIT DID WAS ASK FOR THE ENFORCEMENT OF A CBA, WHICH CBA HAS NEVER BEENDECLARED NULL AND VOID AND THE UNION SECURITY CLAUSE SOUGHT TO BE

ENFORCED WAS NOT ALSO DECLARED NULL AND VOID;

PRIVATE RESPONDENTS DISAFFILIATED THEMSELVES FROM TDLU BY ORGANIZING THELOCAL CHAPTER OF KAMPIL IN TDI IN OCTOBER 1980, BUT THE ACT OF DISAFFILIATIONWAS COMMITTED OUTSIDE THE FREEDOM PERIOD PROVIDED UNDER PRESIDENTIALDECREE 1391 WHICH LIMIT ALL PETITIONS FOR CERTIFICATION ELECTION,DISAFFILIATION AND INTERVENTION TO THE 60 DAY FREEDOM PERIOD PRECEDING THEEXPIRATION OF THE CBA. HENCE, PRIVATE RESPONDENTS COULD BE EXPELLED FROMMEMBERSHIP FOR DISLOYALTY AND OTHER INIMICAL ACTS AGAINST THE INTEREST OFTDLU.

The private respondents admit that the root of the whole controversy in the instant case is theorganization of a Local Union Chapter of KAMPIL at TDI and the subsequent filing of a petition forcertification election with the MOLE by said local chapter. This local chapter of KAMPIL wasorganized with the help of, among others, the private respondents some of whom were elected unionofficers of said chapter. They contend that their act of organizing a local chapter of KAMPIL andeventual filing of a petition for certification election was pursuant to their constitutional right to self-organization.

The issues to be resolved are the following: (a) whether or not TDI was justified in terminatingprivate respondents' employment in the company on the basis of TDLU's demand for theenforcement of the Union Security Clause of the CBA between TDI and TDLU; and (b) whether ornot TDI is guilty of unfair labor practice in complying with TDLU's demand for the dismissal of privaterespondents.

We enforce basic principles essential to a strong and dynamic labor movement. An establishedpostulate in labor relations firmly rooted in this jurisdiction is that the dismissal of an employeepursuant to a demand of the majority union in accordance with a union security agreement followingthe loss of seniority rights is valid and privileged and does not constitute an unfair labor practice.

Article 249 (e) of the Labor Code as amended specifically recognizes the closed shop arrangementas a form of union security. The closed shop, the union shop, the maintenance of membership shop,the preferential shop, the maintenance of treasury shop, and check-off provisions are valid forms ofunion security and strength. They do not constitute unfair labor practice nor are they violations of the


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freedom of association clause of the Constitution. (See Pascual, Labor Relations Law, 1986 Edition,pp. 221-225 and cases cited therein.) There is no showing in these petitions of any arbitrariness or aviolation of the safeguards enunciated in the decisions of this Court interpreting union securityarrangements brought to us for review.

In this light, the petitioner points out that embedded at the very core and as raison d'etrefor the

doctrine which enforces the closed-shop, the union shop, and other forms of union security clausesin the collective bargaining agreement is the principle of sanctity and inviolability of contractsguaranteed by the Constitution.

This Court speaking thru Mr. Justice Labrador, in Victorias Milling Co., Inc., v. Victorias-ManapiaWorkers Organization(9 SCRA 154), ruled:

Another reason for enforcing the closed-shop agreement is the principle of sanctity orinviolability of contracts guaranteed by the Constitution. As a matter of principle theprovision of the Industrial Peace Act relating freedom to employees to organizethemselves and set their representative for entering into bargaining agreements,should be subordinate to the constitutional provision protecting the sanctity of

contracts. We can not conceive how freedom to contract, which should be allowed tobe exercised without limitation may be subordinated to the freedom of laborers tochoose the organization they desire to represent them. And even if the legislaturehad intended to do so and made such freedom of the laborer paramount to thesanctity of obligation of contracts, such attempt to override the constitutionalprovision would necessarily and ipso factobe null and void.

xxx xxx xxx

[T]he action of the respondent company in enforcing the terms of the closed-shopagreement is a valid exercise of its rights and obligations under the contract. Thedismissal by virtue thereof cannot constitute an unfair labor practice, as it was inpursuance of an agreement that has been found to be regular and of a closed-shopagreement which under our laws is valid and binding.

In the instant case, the CBA in question provides for a Union Security Clause requiring:

(c)All workers who are or may during the effectivity of this contract becomemembers of the union in accordance with its constitution and by-laws shall as acondition of their continued employment, maintain membership in good standing inthe union for the duration of the agreement. (Emphasis supplied)

Having ratified that CBA and being then membe

Labor - Batch 2 (9 Full Cases)

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