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Republic of the Philippines SUPREME COURTManila

THIRD DIVISION

G.R. No. 170112 April 30, 2008

DEL PILAR ACADEMY, EDUARDO ESPEJO and ELISEO OCAMPO, JR., petitioners, vs.DEL PILAR ACADEMY EMPLOYEES UNION, respondents.

D E C I S I O N

NACHURA, J.:

Before this Court is a petition for review on certiorari assailing the July 19, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 86868, and its September 28, 2005 Resolution2 denying the motion for reconsideration.

Following are the factual antecedents.

Respondent Del Pilar Academy Employees Union (the UNION) is the certified collective bargaining representative of teaching and non-teaching personnel of petitioner Del Pilar Academy (DEL PILAR), an educational institution operating in Imus, Cavite.

On September 15, 1994, the UNION and DEL PILAR entered into a Collective Bargaining Agreement (CBA)3 granting salary increase and other benefits to the teaching and non-teaching staff. Among the salient provisions of the CBA are:

ARTICLE V

SALARY INCREASE

SECTION 1. Basic Pay – the ACADEMY and the UNION agreed to maintain the wage increase in absolute amount as programmed in the computation prepared by the ACADEMY and dated 30 June 1994 initialed by the members of the bargaining panel of both parties, taking into account increases in tuition fees, if any.

SECTION 2. The teaching load of teachers shall only be Twenty-Three (23) hours per week effective this school year and any excess thereon shall be

considered as overload with pay.

SECTION 3. Overloadpay (sic) will be based on the Teachersʼ Basic Monthly Rate.

SECTION 4. The ACADEMY agrees to grant longevity pay as follows: P100.00 for every 5 years of continuous service. The longevity shall be integrated in the basic salary within three (3) years from the effectivity of this agreement.

ARTICLE VI

VACATION LEAVE WITH PAY

SECTION 1. Every faculty member who has rendered at least six (6) consecutive academic semester of service shall be entitled to the 11th month and 12th month pay as summer vacation leave with pay. They may, however, be required to report [and] undergo briefings or seminars in connection with their teaching assignments for the ensuing school year.

SECTION 2. Non-teaching employees who shall have rendered at least one (1) year of service shall be entitled to fifteen days leave with pay.

The UNION then assessed agency fees from non-union employees, and requested DEL PILAR to deduct said assessment from the employeesʼ salaries and wages. DEL PILAR, however, refused to effect deductions claiming that the non-union employees were not amenable to it.

In September 1997, the UNION negotiated for the renewal of the CBA. DEL PILAR, however, refused to renew the same unless the provision regarding entitlement to two (2) months summer vacation leave with pay will be amended by limiting the same to teachers, who have rendered at least three (3) consecutive academic years of satisfactory service. The UNION objected to the proposal claiming diminution of benefits. DEL PILAR refused to sign the CBA, resulting in a deadlock. The UNION requested DEL PILAR to submit the case for voluntary arbitration, but the latter allegedly refused, prompting the UNION to file a case for unfair labor practice with the Labor Arbiter against DEL PILAR; Eduardo Espejo, its president; and Eliseo Ocampo, Jr., chairman of the Board of Trustees.

Traversing the complaint, DEL PILAR denied committing unfair labor practices against the UNION. It justified the non-deduction of the agency fees

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by the absence of individual check off authorization from the non-union employees. As regards the proposal to amend the provision on summer vacation leave with pay, DEL PILAR alleged that the proposal cannot be considered unfair for it was done to make the provision of the CBA conformable to the DECSʼ Manual of Regulations for Private Schools.4

On October 2, 1998, Labor Arbiter Nieves V. De Castro rendered a Decision, viz.:

Reviewing the records of this case and the law relative to the issues at hand, we came to the conclusion that it was an error on [the] part of [DEL PILAR] not to have collected agency fee due other workers who are non-union members but are included in the bargaining unit being represented by [the UNION]. True enough as was correctly quoted by [the UNION] Art. 248, to wit:

Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agency may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agreement: Provided, that the individual authorization required under Article [241], paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent.

As it is, [DEL PILARʼs] unwarranted fear re-individual dues [without] authorization for non-union members has no basis in fact or in law. For receipt of CBA benefits brought about by the CBA negotiated with [petitioners], they are duty bound to pay agency fees which may lawfully be deducted sans individual check-off authorization. Being [recipients] of said benefits, they should share and be made to pay the same considerations imposed upon the union members. [DEL PILAR], therefore, was in error in refusing to deduct corresponding agency fees which lawfully belongs to the union.

Anent the proposal to decrease the coverage of the 11th and 12th month vacation with pay, we do not believe that such was done in bad faith but rather in an honest attempt to make perfect procession following the DECSʼ Manuals. Moreso, it is of judicial notice that in the course of negotiation, almost all provisions are up for grabs, amendments or change. This is something normal in the course of a negotiation and does not necessarily connote bad faith as each every one (sic) has the right to negotiate reward or totally amend the provisions of the contract/agreement.

All told while there was error on [the] part of [DEL PILAR] for the first issue, [it] came through in the second. But as it is, we do not believe that a finding of unfair labor practice can be had considering the lack of evidence on record that said acts were done to undermine the union or stifle the memberʼs right to self organization or that the [petitioners] were in bad faith. If at all, itʼs (sic) error may have been the result of a mistaken notion that individual check-off authorization is needed for it to be able to validly and legally deduct assessment especially after individual[s] concerned registered their objection. On the other hand, it is not error to negotiate for a better term in the CBA. So long as [the] parties will agree. It must be noted that a CBA is a contract between labor and management and is not simply a litany of benefits for labor. Moreso, for unfair labor practice to prosper, there must be a clear showing of acts aimed at stifling the workerʼs right to self-organization. Mere allegations and mistake notions would not suffice.

ACCORDINGLY, premises considered, the charge of unfair labor practice is hereby Dismissed for want of basis.

SO ORDERED.5

On appeal, the National Labor Relations Commission (NLRC) affirmed the Arbiterʼs ruling. In gist, it upheld the UNIONʼs right to agency fee, but did not consider DEL PILARʼs failure to deduct the same an unfair labor practice.6

The UNIONʼs motion for reconsideration having been denied,7 it then went to the CA via certiorari. On July 19, 2005, the CA rendered the assailed decision, affirming with modification the resolutions of the NLRC. Like the Arbiter and the NLRC, the CA upheld the UNIONʼs right to collect agency fees from non-union employees, but did not adjudge DEL PILAR liable for unfair labor practice. However, it ordered DEL PILAR to deduct agency fees from the salaries of non-union employees.

The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The assailed resolution of the NLRC dated April 30, 2004 is hereby MODIFIED. Private respondent Del Pilar Academy is ordered to deduct the agency fees from non-union members who are recipients of the collective bargaining agreement benefits. The agency fees shall be equivalent to the dues and other fees paid by the union members.

SO ORDERED.8

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DEL PILAR filed a motion for reconsideration of the decision, but the CA denied the same on September 28, 2005.9

Before us, DEL PILAR impugns the CA Decision on the following grounds:

I. IN PROMULGATING THE CHALLENGED DECISION AND RESOLUTION, THE HON. COURT OF APPEALS DISREGARDED THE FACT THAT THE ANNUAL INCREASE IN THE SALARIES OF THE EMPLOYEES WAS NOT A BENEFIT ARISING FROM A COLLECTIVE BARGAINING AGREEMENT, BUT WAS MANDATED BY THE DIRECTIVE OF A GOVERNMENTAL DEPARTMENT; and

II. CONSIDERING THE ANNUAL SALARY INCREASE OF NON-UNION MEMBERS WAS NOT A BENEFIT ARISING FROM THE CBA, THEIR INDIVIDUAL WRITTEN AUTHORIZATIONS ARE STILL REQUIRED TO ALLOW PETITIONER ACADEMY TO LEGALLY DEDUCT THE SAME FROM THEIR RESPECTIVE SALARY.10

The issue here boils down to whether or not the UNION is entitled to collect agency fees from non-union members, and if so, whether an individual written authorization is necessary for a valid check off.

The collection of agency fees in an amount equivalent to union dues and fees, from employees who are not union members, is recognized by Article 248(e) of the Labor Code, thus:

Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed reasonable fees equivalent to the dues and other fees paid by the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement. Provided, That the individual authorization required under Article 241, paragraph (o) of this Code shall not apply to the non-members of recognized collective bargaining agent.

When so stipulated in a collective bargaining agreement or authorized in writing by the employees concerned, the Labor Code and its Implementing Rules recognize it to be the duty of the employer to deduct the sum equivalent to the amount of union dues, as agency fees, from the employees' wages for direct remittance to the union. The system is referred to as check off.11 No requirement of written authorization from the non-union employees is necessary if the non-union employees accept the benefits resulting from the CBA.12

DEL PILAR admitted its failure to deduct the agency fees from the salaries of non-union employees, but justifies the non-deduction by the absence of individual written authorization. It posits that Article 248(e) is inapplicable considering that its employees derived no benefits from the CBA. The annual salary increase of its employee is a benefit mandated by law, and not derived from the CBA. According to DEL PILAR, the Department of Education, Culture and Sports (DECS) required all educational institutions to allocate at least 70% of tuition fee increases for the salaries and other benefits of teaching and non-teaching personnel; that even prior to the execution of the CBA in September 1994, DEL PILAR was already granting annual salary increases to its employees. Besides, the non-union employees objected to the deduction; hence, a written authorization is indispensable to effect a valid check off. DEL PILAR urges this Court to reverse the CA ruling insofar as it ordered the deduction of agency fees from the salaries of non-union employees, arguing that such conclusion proceeds from a misplaced premise that the salary increase arose from the CBA.

The argument cannot be sustained.

Contrary to what DEL PILAR wants to portray, the grant of annual salary increase is not the only provision in the CBA that benefited the non-union employees. The UNION negotiated for other benefits, namely, limitations on teaching assignments to 23 hours per week, additional compensation for overload units or teaching assignments in excess of the 23 hour per week limit, and payment of longevity pay. It also negotiated for entitlement to summer vacation leave with pay for two (2) months for teaching staff who have rendered six (6) consecutive semesters of service. For the non-teaching personnel, the UNION worked for their entitlement to fifteen (15) days leave with pay.13 These provisions in the CBA surely benefited the non-union employees, justifying the collection of, and the UNIONʼs entitlement to, agency fees.

Accordingly, no requirement of written authorization from the non-union employees is needed to effect a valid check off. Article 248(e) makes it explicit that Article 241, paragraph (o),14 requiring written authorization is inapplicable to non-union members, especially in this case where the non-union employees receive several benefits under the CBA.

As explained by this Court in Holy Cross of Davao College, Inc. v. Hon. Joaquin15 viz.:

The employee's acceptance of benefits resulting from a collective bargaining

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agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union.

By this jurisprudential yardstick, this Court finds that the CA did not err in upholding the UNIONʼs right to collect agency fees.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 86868, are AFFIRMED.

SO ORDERED.

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SECOND DIVISION

[G.R. No. 132400. January 31, 2005]

EDUARDO J. MARIÑO, JR., MA. MELVYN P. ALAMIS and UST FACULTY UNION, petitioners, vs. GIL GAMILLA, DUPONT ASERON and JUSTINO CARDENAS, respondents.

D E C I S I O N

TINGA, J.:

This is a petition for review under Rule 45 assailing the Decision[1] of the Court of Appeals in CA-G.R. SP No. 43701,[2] setting aside the order and the writ of preliminary mandatory injunction issued by the lower court.

The facts of the case are as follows:

Sometime in May 1986, the UST Faculty Union (USTFU) entered into an initial collective bargaining agreement with the University of Santo Tomas (UST) wherein UST undertook to provide USTFU with a free office space at Room 302 of its Health Center Building.[3]

On 21 September 1996, the officers and directors of USTFU scheduled a general membership meeting on 5 October 1996 for the election of the union officers. However, respondent Gamilla and some faculty members filed a Petition[4] with the Med-Arbitration Unit of the Department of Labor and Employment (DOLE) seeking to stop the holding of the USTFU election.[5]

Meanwhile, on 2 October 1996, Rev. Fr. Rodel Aligan, O.P., Secretary General of the UST, issued a Memorandum to the Deans, Regents, Principals and Heads of Departments regarding the holding of a faculty convocation on 4 October 1996.[6]

On 4 October 1996, Med-Arbiter Tomas Falconitin issued a temporary restraining order (TRO) in Case No. NCR-OD-M-9610-001, enjoining the holding of the election of the USTFU officers and directors. However, denying the TRO they themselves sought, Gamilla and some of the faculty members present in the 4 October 1996 faculty convocation proceeded with the election of the USTFU officers. On the other hand, the scheduled election for 5 October 1996 did not push through by virtue of the TRO.[7]

In the succeeding week, on 11 October 1996, petitioners filed with the DOLE a petition for prohibition, injunction, with prayer for preliminary injunction and temporary restraining order,[8] seeking to invalidate the election held on 4 October 1996.

Two months later, on 4 December 1996, UST and USTFU, represented by Gamilla and his co-officers, entered into a collective bargaining agreement (CBA) for a period of five (5) years from 1 June 1996 up to 31 May 2001. The CBA was ratified on 12 December 1996.[9]

In another front, the Med-Arbiter issued a TRO dated 11 December 1996, enjoining Gamilla and his fellow officers to “cease and desist from performing any and all acts pertaining to the duties and functions of the officers and directors” of USTFU.[10]

On 27 January 1997, at around eleven in the morning (11:00 a.m.), respondents Gamilla, Cardenas and Aseron, with some other persons, served a letter of even date on petitioners Mariño and Alamis, demanding that the latter vacate the premises located at Room 302, Health Center Building, UST—the Office of USTFU. However, only the office messenger was in the office at the time. After coercing the office messenger to step out of the office, Gamilla and company padlocked the door leading to the unionʼs office.[11]

On 5 February 1997, petitioners filed with the Regional Trial Court (RTC) of Manila a Complaint[12] for injunction and damages with a prayer for preliminary injunction and temporary restraining order over the use of the USTFU office.

At the 11 February 1997 hearing on the application for TRO before the trial court, respondents through a consolidated motion to dismiss sought the dismissal of the complaint on the ground of forum-shopping and prayed that the trial court suspend the application for injunctive relief until it shall have resolved the motion to dismiss.[13]

On the same date, Med-Arbiter Falconitin rendered a decision,[14] declaring the 4 October 1996 election and its results null and void ab initio. The decision was appealed to the Bureau of Labor Relations which affirmed the same.[15] Respondents brought the matter to this Court via a special civil action for certiorari.[16] The Court promulgated its decision,[17] dismissing the petition on 16 November 1999.

On 3 March 1997, the RTC issued the assailed order,[18] to wit:

WHEREFORE, upon plaintiffʼs filing a bond in the amount of P50,000.00, let

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a writ of preliminary mandatory injunction issue requiring defendants their representatives and agents or other persons acting in their behalf to remove the padlocks on the door of the UST Faculty Union office located at Room 302, Health Center Bldg., UST, España, Manila and to refrain from preventing/disturbing in any manner whatsoever the plaintiffs in entering the said premises.

In the meantime, defendants are hereby ordered to submit their answer to the complaint within fifteen (15) days from receipt hereof.

On 5 March 1997, after petitioners as plaintiffs therein had posted the requisite bond, the RTC issued a writ of preliminary mandatory injunction.[19]

On 19 March 1997, respondents filed a Petition for Certiorari[20] before the Court of Appeals, claiming that the orders dated 3 and 5 March 1997 were void ab initio for lack of jurisdiction and on the ground that they were issued in violation of due process of law.[21] The Court of Appeals stated that the basic issue of the case was whether the RTC of Manila had jurisdiction over the subject matter of Civil Case No. 97-81928.[22] It agreed with respondentsʼ disquisition that petitionersʼ cause of action in the complaint before the trial court is inextricably linked and intertwined with the issue of who are the legitimate officers of the USTFU, which issue was then being litigated before the DOLE. The appellate court held that Civil Case No. 97-81928 and Case No. NCR-OD-M-9610-016 appear to be the same, with the observation that the civil case merely “grew out” from the labor case. It also cited the prohibition against the issuance of injunction in any case involving or growing out of a labor dispute, unless otherwise provided by law.[23] It added that it would have been more appropriate for the RTC to determine whether it had jurisdiction over the subject case before issuing the assailed orders.[24] The dispositive portion of the decision reads:

WHEREFORE, premises considered, the petition is hereby GRANTED—and the assailed order (dated March 3, 1997) and the writ of preliminary mandatory injunction (dated March 5, 1997) SET ASIDE—and the respondent judge ordered to DISMISS Civil Case No. 97-81928.

SO ORDERED.[25] (Emphasis in the original.)

Petitionersʼ Motion for Reconsideration[26] was denied. Hence, this petition.

Petitioners assert that the RTC has jurisdiction to decide Civil Case No. 97-81928, as the determination of the legality and propriety of padlocking

the doors of the USTFU office and preventing the free and unhampered ingress to and egress from the said premises, as alleged in the complaint, are matters incapable of pecuniary estimation.[27] Moreover, they claim that the civil case was premised on causes of action belonging to the USTFU which are to be resolved not by reference to the Labor Code or other labor relations statutes. They stress that the causes of action involve a tortious act and the corresponding claim for damages that are both governed by the civil law and fall under the jurisdiction of regular courts.[28]

Petitioners add that not all controversies involving members of the same union are to be decided by the labor tribunal. They add that in the instant case, the pendency of the labor case should not militate against the civil case they filed since the criminal and civil aspects of a violation of Article 241 of the Labor Code[29]can be litigated separately and independently from the administrative aspect of a breach of the rights and conditions of membership.[30]

Anent the ruling of the Court of Appeals on the writ of injunction issued by the trial court, petitioners state that Art. 254 of the Labor Code[31] on prohibition against injunctions is not applicable to the instant case since the controversy cannot be categorized as a labor dispute. They argue that the injunction was called for considering that they “have rights to be protected and preserved,” which however, “were violated, invaded and trampled upon” by respondents through the acts complained of.[32]

Petitioners claim that respondents were not denied their day in court when the trial court did not resolve the issue of jurisdiction before proceeding with the hearing on the application for injunctive order. According to them, respondents were given the chance to present their evidence in support of their opposition to the injunction and TRO, but respondents chose not to avail of this opportunity.[33]

Lastly, they add that respondents Gamilla, Cardenas and Aseron had no right to act for and in behalf of the USTFU for the following reasons, to wit: Gamillaʼs claim to the USTFU presidency was declared non-existent by the labor tribunals; Cardenas was the chief of the security force in the university and not a faculty member; and, Aseron was a Barangay Chairman and not a member of the UST faculty.[34] Thus, petitioners claim that USTFU was improperly included as petitioner in the petition[35] before the Court of Appeals.

Accordingly, petitioners assert that the Court of Appeals erred and gravely abused its discretion when:

I. It ruled that the regional trial court had no

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jurisdiction over Civil Case No. 97-81928;

II. It ruled that Civil Case No. 97-81928 is a labor dispute cognizable by the DOLE;

III. It granted the petition for certiorari in CA-G.R. SP No. 43701, set aside the orders issued by the trial court, and ordered the dismissal of the civil case;

IV. It ruled that Art. 254 of the Labor Code is applicable to the matters involved in Civil Case No. 97-81928;

V. It ruled that respondents were denied their day in court; and

VI. It ruled that the Motion for Reconsideration filed in CA-G.R. SP No. 43701 was pro-forma.[36]

On the other hand, respondents maintain that the regional trial court had no jurisdiction over the issue as to who has the right to use the union office because the same is inextricably linked and intertwined with the issue as to who are the legitimate and duly elected officers of the USTFU, which was then the subject of another case before the DOLE.[37] Furthermore, respondents insist that the trial court violated their right to due process when it refused to determine the issue of jurisdiction before issuing its assailed orders.[38] Respondents submit that the only issue in the instant petition is whether the RTC has jurisdiction over Civil Case No. 97-81928.[39]

There is merit in the petition but only in part.

Jurisdiction over a subject matter is conferred by law and determined by the allegations in the complaint[40] and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein.[41]

Central to the assailed decision of the Court of Appeals is its adoption of respondentsʼ argument that the issue in Civil Case No. 97-81928 is “inextricably linked and intertwined with the issue as to who are the lawful officers of the USTFU,” which is within the exclusive jurisdiction of the Secretary of Labor; and that “the use of the union office is a mere incident of the labor dispute.” [42] Specifically, the Court of Appeals held:

. . . .The two cases (Civil Case No. 97-81928 and Case No. NCR-OD-M-9610-016) appear the same. While ostensibly, the complaint filed with the trial court was branded ʻinjunction and damagesʼ, the action challenged the legitimacy of petitionersʼ election as officers of the UST Faculty Union, with the plaintiff therein (respondent herein) seeking to enjoin them (petitioners herein) from claiming and acting as such (elected officers of the union) and to have the election proceedings of October 4, 1996 invalidated and declared null and void. Taking note of plaintiffsʼ (private respondentsʼ) previous moves before the Department of Labor, Civil Case No. 97-81928 appear (sic) to have grown out therefrom—hence, said case clearly falls outside of the competence of the trial court.[43]

Another reason that militates against the trial courtʼs assumption of jurisdiction over the case is Article 254 of the Labor Code that states:

Art. 254. Injunction prohibited.—No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264 of this Code.[44]

As pointed out by petitioners, the Court of Appeals erroneously categorized the instant matter as a labor dispute. Such labor dispute includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.[45] Jurisdiction over labor disputes, including claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations is vested in Labor Arbiters and the National Labor Relations Commission (NLRC).[46]

On the other hand, an intra-union dispute refers to any conflict between and among union members. It encompasses all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, not excepting cases arising from chartering or affiliation of labor organizations or from any violation of the rights and conditions of union membership provided for in the Labor Code.[47] In contrast, an inter-union dispute refers to any conflict between and among legitimate labor organizations involving questions of representation for purposes of collective bargaining; it includes all other conflicts which legitimate labor organizations may have against each other based on any violations of their rights as labor organizations.[48] Like labor disputes, jurisdiction over intra-union and inter-union disputes does not

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pertain to the regular courts. It is vested in the Bureau of Labor Relations Divisions in the regional offices of the Department of Labor.

Case No. NCR-OD-M-9610-016 entitled “Eduardo J. Mariño, Jr., et al. v. Gil Gamilla, et al.” before the BLR is neither a labor nor an inter-union dispute. It is clearly an intra-union dispute.

The case before the trial court, Civil Case No. 97-81928 entitled Eduardo J. Mariño, Jr. et al. v. Gil Gamilla, et al.,[49] on the other hand, is a simple case for damages, with an accompanying application for injunction. The complaint essentially bears the following allegations: that despite an outstanding temporary restraining order prohibiting the holding of an election of officers, respondent Gamilla and others proceeded to hold a purported election; that there was a case pending before the DOLE questioning the validity of the supposed election; and, that respondent Gamilla with two other persons (later learned to be respondents Aseron and Cardenas) compelled the office messenger to vacate the premises of the USTFU office, and thereafter padlocked the room. Petitioners alleged respondentsʼ act of padlocking the office was without lawful basis, and had prevented them from entering the office premises, thereby denying them access to personal effects, documents and records needed in the on-going cases both in the DOLE and in the complaint a quo, and ultimately precluding the union from serving its members.

Fundamentally, the civil case a quo seeks two reliefs¾one is for the removal of the padlocks on the office door and restraining respondents from blocking petitionersʼ access to the premises, while the other is for the recovery of moral and exemplary damages.

Prior to the institution of the civil case, petitioners filed before the Med-Arbitration Unit of the DOLE-NCR a petition for prohibition, injunction with a prayer for preliminary injunction and temporary restraining order against herein respondents for the latterʼs assumption of office as elected USTFU officers. Specifically, they prayed that respondents be enjoined from claiming to be the duly elected officers of the union and from performing acts for and in behalf of the union.

The propriety of padlocking the unionʼs office, the relief sought by the petitioner in the civil case, is interwoven with the issue of legitimacy of the assumption of office by the respondents in light of the violation of the unionʼs constitution and by-laws, which was then pending before the Med-Arbiter. Necessarily, therefore, the trial court has no jurisdiction over the case insofar as the prayer for the removal of the padlocks and the issuance of an injunctive writ is concerned.

It is a settled rule that jurisdiction, once acquired, continues until the case is finally terminated.[50] The petition with the Med-Arbiter was filed ahead of the complaint in the civil case before the RTC. As such, when the petitioners filed their complaint a quo, jurisdiction over the injunction and restraining order prayed for had already been lodged with the Med-Arbiter. The removal of padlocks and the access to the office premises is necessarily included in petitionersʼ prayer to enjoin respondents from performing acts pertaining to union officers and on behalf of the union. In observance of the principle of adherence of jurisdiction, it is clear that the RTC should not have exercised jurisdiction over the provisional reliefs prayed for in the complaint. A review of the complaint shows that petitioners disclosed the existence of the petition pending before the Med-Arbiter and even attached a copy thereof.[51] The trial court was also aware of the decision of the Med-Arbiter dated 11 February 1997, declaring the supposed union officersʼ election void ab initio and ordering respondents to cease and desist from discharging the duties and functions of the legitimate officers of the USTFU. The trial court even obtained a copy of the said decision two (2) days after its promulgation.[52] Still, it continued the hearing on the application for injunction and eventually issued the assailed orders.

At this juncture, the Court notes that a key question in this case has already been settled by the Court in its decision in UST Faculty Union, et al. v. Bitonio, Jr., et al.[53] In that case, it was ruled that the 04 October 1996 election was void for having been conducted in violation of the unionʼs constitution and by-laws. Nevertheless, the complaint a quo could not have validly proceeded at the time of its filing of the said case due to petitionersʼ lack of cause of action.

As to the alleged inclusion of the USTFU as petitioner in the petition before the Court of Appeals, suffice it to say that the right to use the unionʼs name as well as to represent it has been settled by our decision in UST Faculty Union, et al. v. Bitonio, Jr., et al. Petitioners, as the rightful officers of the USTFU, and not respondents, have the right to represent USTFU in the proceedings.

Let us go back to the claim for damages before the lower court. Art. 226 of the Labor Code provides, thus:

The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except those arising

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from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration.

Thus, unlike the NLRC which is explicitly vested with the jurisdiction over claims for actual, moral, exemplary and other forms of damages,[54] the BLR is not specifically empowered to adjudicate claims of such nature arising from intra-union or inter-union disputes. In fact, Art. 241 of the Labor Code ordains the separate institution before the regular courts of criminal and civil liabilities arising from violations of the rights and conditions of union membership. The Court has consistently held that where no employer-employee exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes, or any collective bargaining agreement, it is the regional trial court that has jurisdiction.[55]

Administrative agencies are tribunals of limited jurisdiction and as such, can exercise only those powers which are specifically granted to them by their enabling statutes. Consequently, matters over which they are not granted authority are beyond their competence.[56] While the trend is towards vesting administrative bodies with the power to adjudicate matters coming under their particular specialization, to ensure a more knowledgeable solution of the problems submitted to them, this should not deprive the courts of justice their power to decide ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply.[57] In their complaint in the civil case, petitioners do not seek any relief under the Labor Code but the payment of a sum of money as damages on account of respondentsʼ alleged tortuous conduct. The action is within the realm of civil law and, hence, jurisdiction over the case belongs to the regular courts.[58]

WHEREFORE, the Petition is hereby GRANTED IN PART. The Decision of the Court of Appeals setting aside the Order dated 3 March 1997 and the writ of preliminary mandatory injunction dated 5 March 1997 is hereby AFFIRMED. The case is REMANDED to the trial court for further proceedings in accordance with this Decision. No costs.

SO ORDERED.

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SECOND DIVISION

THE HERITAGE HOTEL MANILA, acting through its owner, GRAND PLAZA HOTEL CORPORATION,

Petitioner, - versus -

NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC),

Respondent.

G.R. No. 178296 Present: CARPIO, J., Chairperson, NACHURA, LEONARDO-DE CASTRO,* ABAD, and MENDOZA, JJ. Promulgated: January 12, 2011

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

DECISION

NACHURA, J.:

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

of the Court of Appeals (CA) dated May 30, 2005 and Resolution dated June

4, 2007. The assailed Decision affirmed the dismissal of a petition for

cancellation of union registration filed by petitioner, Grand Plaza Hotel

Corporation, owner of Heritage Hotel Manila, against respondent, National

Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage

Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), a labor

organization of the supervisory employees of Heritage Hotel Manila.

The case stemmed from the following antecedents:

On October 11, 1995, respondent filed with the Department of

Labor and Employment-National Capital Region (DOLE-NCR) a petition for

certification election.[2] The Med-Arbiter granted the petition on February 14,

1996 and ordered the holding of a certification election.[3] On appeal, the

DOLE Secretary, in a Resolution dated August 15, 1996, affirmed the Med-

Arbiterʼs order and remanded the case to the Med-Arbiter for the holding of a

preelection conference on February 26, 1997. Petitioner filed a motion for

reconsideration, but it was denied on September 23, 1996.

The preelection conference was not held as initially scheduled; it was

held a year later, or on February 20, 1998. Petitioner moved to archive or to

dismiss the petition due to alleged repeated non-appearance of respondent.

The latter agreed to suspend proceedings until further notice. The preelection

11

conference resumed on January 29, 2000.

Subsequently, petitioner discovered that respondent had failed to

submit to the Bureau of Labor Relations (BLR) its annual financial report for

several years and the list of its members since it filed its registration papers

in 1995. Consequently, on May 19, 2000, petitioner filed a Petition for

Cancellation of Registration of respondent, on the ground of the non-

submission of the said documents. Petitioner prayed that respondentʼs

Certificate of Creation of Local/Chapter be cancelled and its name be deleted

from the list of legitimate labor organizations. It further requested the

suspension of the certification election proceedings.[4]

On June 1, 2000, petitioner reiterated its request by filing a Motion to

Dismiss or Suspend the [Certification Election] Proceedings,[5] arguing that

the dismissal or suspension of the proceedings is warranted, considering that

the legitimacy of respondent is seriously being challenged in the petition for

cancellation of registration. Petitioner maintained that the resolution of the

issue of whether respondent is a legitimate labor organization is crucial to the

issue of whether it may exercise rights of a legitimate labor organization,

which include the right to be certified as the bargaining agent of the covered

employees.

Nevertheless, the certification election pushed through on June 23,

2000. Respondent emerged as the winner.[6]

On June 28, 2000, petitioner filed a Protest with Motion to Defer

Certification of Election Results and Winner,[7] stating that the certification

election held on June 23, 2000 was an exercise in futility because, once

respondentʼs registration is cancelled, it would no longer be entitled to be

certified as the exclusive bargaining agent of the supervisory employees.

Petitioner also claimed that some of respondentʼs members were not

qualified to join the union because they were either confidential employees or

managerial employees. It then prayed that the certification of the election

results and winner be deferred until the petition for cancellation shall have

been resolved, and that respondentʼs members who held confidential or

managerial positions be excluded from the supervisorsʼ bargaining unit.

12

Meanwhile, respondent filed its Answer[8] to the petition for the

cancellation of its registration. It averred that the petition was filed primarily to

delay the conduct of the certification election, the respondentʼs certification

as the exclusive bargaining representative of the supervisory employees, and

the commencement of bargaining negotiations. Respondent prayed for the

dismissal of the petition for the following reasons: (a) petitioner is estopped

from questioning respondentʼs status as a legitimate labor organization as it

had already recognized respondent as such during the preelection

conferences; (b) petitioner is not the party-in-interest, as the union members

are the ones who would be disadvantaged by the non-submission of financial

reports; (c) it has already complied with the reportorial requirements, having

submitted its financial statements for 1996, 1997, 1998, and 1999, its

updated list of officers, and its list of members for the years 1995, 1996,

1997, 1998, and 1999; (d) the petition is already moot and academic,

considering that the certification election had already been held, and the

members had manifested their will to be represented by respondent.

Citing National Union of Bank Employees v. Minister of Labor, et al.[9]

and Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma,[10] the

Med-Arbiter held that the pendency of a petition for cancellation of

registration is not a bar to the holding of a certification election. Thus, in an

Order[11] dated January 26, 2001, the Med-Arbiter dismissed petitionerʼs

protest, and certified respondent as the sole and exclusive bargaining agent

of all supervisory employees.

Petitioner subsequently appealed the said Order to the DOLE

Secretary.[12] The appeal was later dismissed by DOLE Secretary Patricia A.

Sto. Tomas (DOLE Secretary Sto. Tomas) in the Resolution of August 21,

2002.[13] Petitioner moved for reconsideration, but the motion was also

denied.[14]

In the meantime, Regional Director Alex E. Maraan (Regional Director

Maraan) of DOLE-NCR finally resolved the petition for cancellation of

registration. While finding that respondent had indeed failed to file financial

reports and the list of its members for several years, he, nonetheless, denied

the petition, ratiocinating that freedom of association and the employeesʼ

13

right to self-organization are more substantive considerations. He took into

account the fact that respondent won the certification election and that it had

already been certified as the exclusive bargaining agent of the supervisory

employees. In view of the foregoing, Regional Director Maraan—while

emphasizing that the non-compliance with the law is not viewed with favor—

considered the belated submission of the annual financial reports and the list

of members as sufficient compliance thereof and considered them as having

been submitted on time. The dispositive portion of the decision[15] dated

December 29, 2001 reads:

WHEREFORE, premises considered, the

instant petition to delist the National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter from the roll of legitimate labor organizations is hereby DENIED.

SO ORDERED.[16]

Aggrieved, petitioner appealed the decision to the BLR.[17] BLR

Director Hans Leo Cacdac inhibited himself from the case because he had

been a former counsel of respondent.

In view of Director Cacdacʼs inhibition, DOLE Secretary Sto. Tomas

took cognizance of the appeal. In a resolution[18] dated February 21, 2003,

she dismissed the appeal, holding that the constitutionally guaranteed

freedom of association and right of workers to self-organization outweighed

respondentʼs noncompliance with the statutory requirements to maintain its

status as a legitimate labor organization.

Petitioner filed a motion for reconsideration,[19] but the motion

was likewise denied in a resolution[20] dated May 30, 2003. DOLE Secretary

Sto. Tomas admitted that it was the BLR which had jurisdiction over the

appeal, but she pointed out that the BLR Director had voluntarily inhibited

himself from the case because he used to appear as counsel for respondent.

In order to maintain the integrity of the decision and of the BLR, she therefore

accepted the motion to inhibit and took cognizance of the appeal.

Petitioner filed a petition for certiorari with the CA, raising the issue of

whether the DOLE Secretary acted with grave abuse of discretion in taking

cognizance of the appeal and affirming the dismissal of its petition for

14

cancellation of respondentʼs registration.

In a Decision dated May 30, 2005, the CA denied the petition. The CA

opined that the DOLE Secretary may legally assume jurisdiction over an

appeal from the decision of the Regional Director in the event that the

Director of the BLR inhibits himself from the case. According to the CA, in the

absence of the BLR Director, there is no person more competent to resolve

the appeal than the DOLE Secretary. The CA brushed aside the allegation of

bias and partiality on the part of the DOLE Secretary, considering that such

allegation was not supported by any evidence.

The CA also found that the DOLE Secretary did not commit grave

abuse of discretion when she affirmed the dismissal of the petition for

cancellation of respondentʼs registration as a labor organization. Echoing the

DOLE Secretary, the CA held that the requirements of registration of labor

organizations are an exercise of the overriding police power of the State,

designed for the protection of workers against potential abuse by the union

that recruits them. These requirements, the CA opined, should not be

exploited to work against the workersʼ constitutionally protected right to self-

organization.

Petitioner filed a motion for reconsideration, invoking this Courtʼs ruling

in Abbott Labs. Phils., Inc. v. Abbott Labs. Employees Union,[21] which

categorically declared that the DOLE Secretary has no authority to review the

decision of the Regional Director in a petition for cancellation of union

registration, and Section 4,[22] Rule VIII, Book V of the Omnibus Rules

Implementing the Labor Code.

In its Resolution[23] dated June 4, 2007, the CA denied petitionerʼs

motion, stating that the BLR Directorʼs inhibition from the case was a

peculiarity not present in the Abbott case, and that such inhibition justified the

assumption of jurisdiction by the DOLE Secretary. In this petition, petitioner argues that:

I.

The Court of Appeals seriously erred in ruling that the Labor Secretary properly assumed jurisdiction over Petitionerʼs appeal of the Regional Directorʼs Decision in the Cancellation Petition x x x.

15

A. Jurisdiction is conferred only by law. The Labor Secretary had no jurisdiction to review the decision of the Regional Director in a petition for cancellation. Such jurisdiction is conferred by law to the BLR.

B. The unilateral inhibition by the BLR

Director cannot justify the Labor Secretaryʼs exercise of jurisdiction over the Appeal.

C. The Labor Secretaryʼs assumption of

jurisdiction over the Appeal without notice violated Petitionerʼs right to due process.

II.

The Court of Appeals gravely erred in affirming the dismissal of the Cancellation Petition despite the mandatory and unequivocal provisions of the Labor Code and its Implementing Rules.[24]

The petition has no merit.

Jurisdiction to review the decision of the Regional Director lies with the

BLR. This is clearly provided in the Implementing Rules of the Labor Code

and enunciated by the Court in Abbott. But as pointed out by the CA, the

present case involves a peculiar circumstance that was not present or

covered by the ruling in Abbott. In this case, the BLR Director inhibited

himself from the case because he was a former counsel of respondent. Who,

then, shall resolve the case in his place?

In Abbott, the appeal from the Regional Directorʼs decision was

directly filed with the Office of the DOLE Secretary, and we ruled that the

latter has no appellate jurisdiction. In the instant case, the appeal was filed

by petitioner with the BLR, which, undisputedly, acquired jurisdiction over the

case. Once jurisdiction is acquired by the court, it remains with it until the full

termination of the case.[25]

Thus, jurisdiction remained with the BLR despite the BLR

Directorʼs inhibition. When the DOLE Secretary resolved the appeal, she

merely stepped into the shoes of the BLR Director and performed a function

that the latter could not himself perform. She did so pursuant to her power of

supervision and control over the BLR.[26]

Expounding on the extent of the power of control, the Court, in

Araneta, et al. v. Hon. M. Gatmaitan, et al.,[27] pronounced that, if a certain

16

power or authority is vested by law upon the Department Secretary, then

such power or authority may be exercised directly by the President, who

exercises supervision and control over the departments. This principle was

incorporated in the Administrative Code of 1987, which defines “supervision

and control” as including the authority to act directly whenever a specific

function is entrusted by law or regulation to a subordinate.[28] Applying the

foregoing to the present case, it is clear that the DOLE Secretary, as the

person exercising the power of supervision and control over the BLR, has the

authority to directly exercise the quasi-judicial function entrusted by law to the

BLR Director.

It is true that the power of control and supervision does not give the

Department Secretary unbridled authority to take over the functions of his or

her subordinate. Such authority is subject to certain guidelines which are

stated in Book IV, Chapter 8, Section 39(1)(a) of the Administrative Code of

1987.[29] However, in the present case, the DOLE Secretaryʼs act of taking

over the function of the BLR Director was warranted and necessitated by the

latterʼs inhibition from the case and the objective to “maintain the integrity of

the decision, as well as the Bureau itself.”[30]

Petitioner insists that the BLR Directorʼs subordinates should have

resolved the appeal, citing the provision under the Administrative Code of

1987 which states, “in case of the absence or disability of the head of a

bureau or office, his duties shall be performed by the assistant head.”[31]

The provision clearly does not apply considering that the BLR Director was

neither absent nor suffering from any disability; he remained as head of the

BLR. Thus, to dispel any suspicion of bias, the DOLE Secretary opted to

resolve the appeal herself.

Petitioner was not denied the right to due process when it was not

notified in advance of the BLR Directorʼs inhibition and the DOLE Secretaryʼs

assumption of the case. Well-settled is the rule that the essence of due

process is simply an opportunity to be heard, or, as applied to administrative

proceedings, an opportunity to explain oneʼs side or an opportunity to seek a

reconsideration of the action or ruling complained of.[32] Petitioner had the

opportunity to question the BLR Directorʼs inhibition and the DOLE

17

Secretaryʼs taking cognizance of the case when it filed a motion for

reconsideration of the latterʼs decision. It would be well to state that a critical

component of due process is a hearing before an impartial and disinterested

tribunal, for all the elements of due process, like notice and hearing, would be

meaningless if the ultimate decision would come from a partial and biased

judge.[33] It was precisely to ensure a fair trial that moved the BLR Director

to inhibit himself from the case and the DOLE Secretary to take over his

function.

Petitioner also insists that respondentʼs registration as a legitimate

labor union should be cancelled. Petitioner posits that once it is determined

that a ground enumerated in Article 239 of the Labor Code is present,

cancellation of registration should follow; it becomes the ministerial duty of

the Regional Director to cancel the registration of the labor organization,

hence, the use of the word “shall.” Petitioner points out that the Regional

Director has admitted in its decision that respondent failed to submit the

required documents for a number of years; therefore, cancellation of its

registration should have followed as a matter of course.

We are not persuaded.

Articles 238 and 239 of the Labor Code read:

ART. 238. CANCELLATION OF REGISTRATION; APPEAL The certificate of registration of any legitimate labor organization, whether national or local, shall be canceled by the Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements herein prescribed.[34] ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION. The following shall constitute grounds for cancellation of union registration: x x x x (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; x x x x (i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau.[35]

18

These provisions give the Regional Director ample discretion in dealing

with a petition for cancellation of a unionʼs registration, particularly,

determining whether the union still meets the requirements prescribed by

law. It is sufficient to give the Regional Director license to treat the late filing

of required documents as sufficient compliance with the requirements of the

law. After all, the law requires the labor organization to submit the annual

financial report and list of members in order to verify if it is still viable and

financially sustainable as an organization so as to protect the employer and

employees from fraudulent or fly-by-night unions. With the submission of the

required documents by respondent, the purpose of the law has been

achieved, though belatedly.

We cannot ascribe abuse of discretion to the Regional Director and the

DOLE Secretary in denying the petition for cancellation of respondentʼs

registration. The union members and, in fact, all the employees belonging to

the appropriate bargaining unit should not be deprived of a bargaining agent,

merely because of the negligence of the union officers who were responsible

for the submission of the documents to the BLR.

Labor authorities should, indeed, act with circumspection in treating

petitions for cancellation of union registration, lest they be accused of

interfering with union activities. In resolving the petition, consideration must

be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the

Constitution, i.e., the rights of all workers to self-organization, collective

bargaining and negotiations, and peaceful concerted activities. Labor

authorities should bear in mind that registration confers upon a union the

status of legitimacy and the concomitant right and privileges granted by law

to a legitimate labor organization, particularly the right to participate in or ask

for certification election in a bargaining unit.[36] Thus, the cancellation of a

certificate of registration is the equivalent of snuffing out the life of a labor

organization. For without such registration, it loses - as a rule - its rights

under the Labor Code.[37]

It is worth mentioning that the Labor Codeʼs provisions on cancellation

of union registration and on reportorial requirements have been recently

19

amended by Republic Act (R.A.) No. 9481, An Act Strengthening the

Workersʼ Constitutional Right to Self-Organization, Amending for the Purpose

Presidential Decree No. 442, As Amended, Otherwise Known as the Labor

Code of the Philippines, which lapsed into law on May 25, 2007 and became

effective on June 14, 2007. The amendment sought to strengthen the

workersʼ right to self-organization and enhance the Philippinesʼ compliance

with its international obligations as embodied in the International Labour

Organization (ILO) Convention No. 87,[38] pertaining to the non-dissolution

of workersʼ organizations by administrative authority.[39] Thus, R.A. No.

9481 amended Article 239 to read: ART. 239. Grounds for Cancellation of Union Registration.—The following may constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; (c) Voluntary dissolution by the members.

R.A. No. 9481 also inserted in the Labor Code Article 242-A, which

provides:

ART. 242-A. Reportorial Requirements.—The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned: (a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election;

(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and

(d) Its list of members at least once a year or whenever required by the Bureau. Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty.

ILO Convention No. 87, which we have ratified in 1953, provides that

“workersʼ and employersʼ organizations shall not be liable to be dissolved or

suspended by administrative authority.” The ILO has expressed the opinion

20

that the cancellation of union registration by the registrar of labor unions,

which in our case is the BLR, is tantamount to dissolution of the organization

by administrative authority when such measure would give rise to the loss of

legal personality of the union or loss of advantages necessary for it to carry

out its activities, which is true in our jurisdiction. Although the ILO has

allowed such measure to be taken, provided that judicial safeguards are in

place, i.e., the right to appeal to a judicial body, it has nonetheless reminded

its members that dissolution of a union, and cancellation of registration for

that matter, involve serious consequences for occupational representation. It

has, therefore, deemed it preferable if such actions were to be taken only as

a last resort and after exhausting other possibilities with less serious effects

on the organization.[40]

The aforesaid amendments and the ILOʼs opinion on this matter serve

to fortify our ruling in this case. We therefore quote with approval the DOLE

Secretaryʼs rationale for denying the petition, thus:

It is undisputed that appellee failed to submit

its annual financial reports and list of individual members in accordance with Article 239 of the Labor

Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. Article 239 recognizes the regulatory authority of the State to exact compliance with reporting requirements. Yet there is more at stake in this case than merely monitoring union activities and requiring periodic documentation thereof. The more substantive considerations involve the constitutionally guaranteed freedom of association and right of workers to self-organization. Also involved is the public policy to promote free trade unionism and collective bargaining as instruments of industrial peace and democracy. An overly stringent interpretation of the statute governing cancellation of union registration without regard to surrounding circumstances cannot be allowed. Otherwise, it would lead to an unconstitutional application of the statute and emasculation of public policy objectives. Worse, it can render nugatory the protection to labor and social justice clauses that pervades the Constitution and the Labor Code. Moreover, submission of the required documents is the duty of the officers of the union. It would be unreasonable for this Office to order the cancellation of the union and penalize the entire union membership on the basis of the negligence of its officers. In National Union of Bank Employees vs. Minister of Labor, L-53406, 14 December 1981, 110 SCRA 296, the Supreme Court ruled:

As aptly ruled by respondent Bureau of Labor Relations Director Noriel: “The rights of workers to self-organization finds general and specific constitutional guarantees. x x x Such constitutional guarantees should not be lightly taken much less nullified. A healthy respect for the freedom of association demands that acts imputable to officers or members

21

be not easily visited with capital punishments against the association itself.”

At any rate, we note that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. To rule differently would be to preclude the union, after having failed to meet its periodic obligations promptly, from taking appropriate measures to correct its omissions. For the record, we do not view with favor appelleeʼs late submission. Punctuality on the part of the union and its officers could have prevented this petition.[41]

WHEREFORE, premises considered, the Court of Appeals Decision

dated May 30, 2005 and Resolution dated June 4, 2007 are AFFIRMED.

SO ORDERED.

22

FIRST DIVISION

EDEN GLADYS ABARIA, ROMULO ALFORQUE, ELENA ALLA, EVELYN APOSTOL, AMELIA ARAGON, BEATRIZ ALBASTRO, GLORIA ARDULLES, GLENDA BANTILAN, VIRGILIE BORINAGA, ROLDAN CALDERON, ILDEBRANDO CUTA, ROMEO EMPUERTO, LANNIE FERNANDEZ, LUCINELL GABAYERON, JESUSA GERONA, JOSE GONZAGA, TEOFILO HINAMPAS, JOSEFINA IBUNA, MARLYN LABRA, MARIA CARMENCITA LAO, ERA CANEN, RODNEY REX LERIAS, ERNIE MANLIGAS, JOHANNE DEL MAR, RUBY ORIMACO, CONSTANCIO PAGADOR, MARVELOUS PANAL, NOLAN PANAL, LILLAN PETALLAR, GERNA PATIGDAS, MELODIA PAULIN, SHIRLEY ROSE REYES, JOSEFINA REYES, OSCAR DE LOS SANTOS, SOLOMON DE LOS SANTOS, RAMON TAGNIPIS, BERNADETTE TIBAY, RONALD TUMULAK, LEONCIO VALLINAS, EDELBERTO VILLA and the NAGKAHIUSANG MAMUMUO SA METRO CEBU COMMUNITY HOSPITAL, Petitioners, - versus - NATIONAL LABOR RELATIONS COMMISSION, METRO CEBU COMMUNITY HOSPITAL, INC., ITS BOARD OF TRUSTEES, REV. GREGORIO IYOY, SHIELA BUOT, REV. LORENZO GENOTIVA, RUBEN CARABAN, RUBEN ESTOYE, LILIA SAURO, REV. ELIZER BERTOLDO, RIZALINA VILLAGANTE, DRA. LUCIA FLORENDO, CONCEPCION VILLEGAS, REV. OLIVER CANEN, DRA. CYD RAGAS, REV. MIKE CAMBA, AVEDNIGO VALIENTE, RIZALINO TAGANAS, CIRIACO PONGASI, ISIAS WAGAS, REV. ESTER GELOAGAN, REV. LEON MANIWAN, CRESENTE BAOAS, WINEFREDA BARLOSO, REV. RUEL MARIGA AND THE UNITED CHURCH OF CHRIST IN THE PHILIPPINES, REV. HILARIO GOMEZ, REV. ELMER BOLOCON, THE NATIONAL FEDERATION OF LABOR AND ARMAND ALFORQUE, Respondents. x- - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 154113

PERLA NAVA, DANIELA YOSORES, AGUSTIN ALFORNON, AILEEN CATACUTAN, ROLANDO REDILOSA, CORNELIO MARIBOJO, VIRGENCITA CASAS, CRISANTA GENEGABOAS, EMILIO LAO, RICO GASCON, ALBINA BAÑEZ, PEDRO CABATINGAN, PROCOMIO SALUPAN, ELIZABETH RAMON, DIOSCORO GABUNADA, ROY MALAZARTE, FELICIANITA MALAZARTE, NORBERTA CACA, MILAGROS CASTILLO, EDNA ALBO, BERNABE LUMAPGUID, CELIA SABAS, SILVERIO LAO, DARIO LABRADOR, ERNESTO CANEN, JR., ELSA BUCAO, HANNAH BONGCARAS, NEMA BELOCURA, PEPITO LLAGAS, GUILLERMA REMOCALDO, ROGELIO DABATOS, ROBERTO JAYMA, RAYMUNDO DELATADO, MERLYN NODADO, NOEL HORTELANO, HERMELO DELA TORRE, LOURDES OLARTE, DANILO ZAMORA, LUZ CABASE, CATALINA ALSADO, RUTH BANZON AND THE NAGKAHIUSANG MAMUMUO SA METRO CEBU COMMUNITY HOSPITAL, Petitioners, - versus - NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), METRO CEBU COMMUNITY HOSPITAL, INC., BOARD OF TRUSTEES, REV. GREGORIO IYOY, SHIELA BUOT, REV. LORENZO GENOTIVA, RUBEN CABABAN, ROSENDO ESTOYE, LILIA SAURO, REV. ELIZER BERTOLDO, RIZALINA VILLAGANTE, DRA. LUCIA FLORENDO, CONCEPCION VILLEGAS, REV. OLIVER CANEN, DRA. CYD RAAGAS, REV. MIKE CAMBA, AVIDNIGO VALIENTE, RIZALINO TAGANAS, CIRIACO PONGASI, ISIAS WAGAS, REV. ESTER GELOAGAN, REV. LEON MANIWAN, CRESENTE BAOAS, WINIFREDA BARLOSO, REV. RUEL MARIGA, THE UNITED CHURCH OF CHRIST IN THE PHILIPPINES, REV. HILARIO GOMEZ, REV. ELMER BOLOCON, THE NATIONAL FEDERATION OF LABOR AND ARMANDO ALFORQUE, Respondents. x- - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 187778

METRO CEBU COMMUNITY HOSPITAL, presently known as Visayas Community Medical Center (VCMC),

G.R. No. 187861

23

Petitioner, - versus - PERLA NAVA, DANIELA YOSORES, AGUSTIN ALFORNON, AILEEN CATACUTAN, ROLANDO REDILOSA, CORNELIO MARIBOJO, VIRGENCITA CASAS, CRISANTA GENEGABOAS, EMILIO LAO, RICO GASCON, ALBINA BANEZ, PEDRO CABATINGAN, PROCOMIO SALUPAN, ELIZABETH RAMON, DIOSCORO GABUNADA, ROY MALAZARTE, FELICIANITA MALAZARTE, NORBERTA CACA, MILAGROS CASTILLO, EDNA ALBO, BERNABE LUMABGUID, CELIA SABAS, SILVERIO LAO, DARIO LABRADOR, ERNESTO CANEN, JR., ELSA BUCAO, HANNAH BONGCARAS, NEMA BELOCURA, PEPITO LLAGAS, GUILLERMA REMOCALDO, ROGELIO DABATOS, ROBERTO JAYMA, RAYMUNDO DELATADO, NOEL HORTELANO, HERMELO DE LA TORRE, LOURDES OLARTE, DANILO ZAMORA, LUZ CABASE, CATALINA ALSADO AND RUTH BANZON, Respondents. x- - - - - - - - - - - - - - - - - - - - - - - -x VISAYAS COMMUNITY MEDICAL CENTER (VCMC) formerly known as METRO CEBU COMMUNITY HOSPITAL (MCCH), Petitioner, - versus - ERMA YBALLE, NELIA ANGEL, ELEUTERIA CORTEZ and EVELYN ONG, Respondents.

G.R. No. 196156 Present: CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN, DEL CASTILLO, and VILLARAMA, JR., JJ. Promulgated: December 7, 2011

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

DECISION

VILLARAMA, JR., J.:

The consolidated petitions before us involve the legality of mass

termination of hospital employees who participated in strike and picketing

activities.

The factual antecedents:

Metro Cebu Community Hospital, Inc. (MCCHI), presently known as

the Visayas Community Medical Center (VCMC), is a non-stock, non-profit

corporation organized under the laws of the Republic of the Philippines. It

operates the Metro Cebu Community Hospital (MCCH), a tertiary medical

institution located at Osmeña Boulevard, Cebu City. MCCH is owned by the

United Church of Christ in the Philippines (UCCP) and Rev. Gregorio P. Iyoy

is the Hospital Administrator.

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

representative of the rank-and-file employees of MCCHI. Under the 1987

and 1991 Collective Bargaining Agreements (CBAs), the signatories were

Ciriaco B. Pongasi, Sr. for MCCHI, and Atty. Armando M. Alforque (NFL

Legal Counsel) and Paterno A. Lumapguid as President of NFL-MCCH

Chapter. In the CBA effective from January 1994 until December 31, 1995,

24

the signatories were Sheila E. Buot as Board of Trustees Chairman, Rev.

Iyoy as MCCH Administrator and Atty. Fernando Yu as Legal Counsel of

NFL, while Perla Nava, President of Nagkahiusang Mamumuo sa MCCH

(NAMA-MCCH-NFL) signed the Proof of Posting.[1]

On December 6, 1995, Nava wrote Rev. Iyoy expressing the unionʼs

desire to renew the CBA, attaching to her letter a statement of proposals

signed/endorsed by 153 union members. Nava subsequently requested that

the following employees be allowed to avail of one-day union leave with pay

on December 19, 1995: Celia Sabas, Jesusa Gerona, Albina Bañez, Eddie

Villa, Roy Malazarte, Ernesto Canen, Jr., Guillerma Remocaldo, Catalina

Alsado, Evelyn Ong, Melodia Paulin, Sofia Bautista, Hannah Bongcaras,

Ester Villarin, Iluminada Wenceslao and Perla Nava. However, MCCHI

returned the CBA proposal for Nava to secure first the endorsement of the

legal counsel of NFL as the official bargaining representative of MCCHI

employees.[2]

Meanwhile, Atty. Alforque informed MCCHI that the proposed CBA

submitted by Nava was never referred to NFL and that NFL has not

authorized any other legal counsel or any person for collective bargaining

negotiations. By January 1996, the collection of union fees (check-off) was

temporarily suspended by MCCHI in view of the existing conflict between the

federation and its local affiliate. Thereafter, MCCHI attempted to take over

the room being used as union office but was prevented to do so by Nava and

her group who protested these actions and insisted that management directly

negotiate with them for a new CBA. MCCHI referred the matter to Atty.

Alforque, NFLʼs Regional Director, and advised Nava that their group is not

recognized by NFL.[3]

In his letter dated February 24, 1996 addressed to Nava, Ernesto

Canen, Jr., Jesusa Gerona, Hannah Bongcaras, Emma Remocaldo, Catalina

Alsado and Albina Bañez, Atty. Alforque suspended their union membership

for serious violation of the Constitution and By-Laws. Said letter states: During the last General Membership

Meeting of the union on February 20, 1996, you openly declared that you recognized the officers of the KMU not those of the NFL, that you submit to the stuctures [sic] and authority of the KMU not of the NFL, and that you are loyal only to the KMU not to the NFL.

Also, in the same meeting, you admitted having sent a proposal for a renewed collective bargaining agreement to the management without any consultation with the NFL. In fact, in your letter dated February 21, 1996 addressed to Rev. Gregorio Iyoy, the Administrator of the hospital, you categorically stated as follows: “We do not need any endorsement from NFL, more particularly from Atty. Armando Alforque to negotiate our CBA with MCCH.” You did

25

not only ignore the authority of the undersigned as Regional Director but you maliciously prevented and bluntly refused my request to join the union negotiating panel in the CBA negotiations.

Your above flagrant actuations, made in the presence of the union membership, constitute the following offenses:

1. Willful violation of the Constitution and By-Laws of the Federation and the orders and decisions of duly constituted authorities of the same (Section 4 (b), Article III), namely:

a) Defying the decision of the organization disaffiliating from the KMU; and

b) Section 9 (b), Article IX which pertains to the powers and responsibilities of the Regional Director, particularly, to negotiate and sign collective bargaining agreement together with the local negotiating panel subject to prior ratification by the general membership;

2. Joining or assisting another labor organization or helping in the formation of a new labor organization that seeks or tends to defeat the purpose of the Federation (Section 4 (d), Article III) in relation to the National Executive Boardʼs Resolution No. 8, September 26-27, 1994, to wit:

“Pursuant to the NEB Resolution disaffiliating from the KMU dated September 11, 1993, the NEB in session hereby declare that KMU is deemed an organization that seeks to defeat the objective of establishing independent and democratic unions and seeks to replace the Federation as exclusive representative of its members.

Committing acts that tend to alienate the loyalty of the members to the Federation, subvert its duly constituted authorities, and divide the organization in any level with the objective of establishing a pro-

KMU faction or independent union loyal to the KMU shall be subject to disciplinary action, suspension or expulsion from union membership, office or position in accordance with paragraph[s] d and f of Section 4, Article III, and paragraph h, Section 6, Article VI, paragraph d, Section 9, Article IX.” You are, therefore, directed to submit written

explanation on the above charges within five (5) days from receipt hereof. Failure on your part shall be considered a waiver of your right to be heard and the Federation will act accordingly.

Considering the gravity of the charges against you, the critical nature of the undertaking to renew the collective bargaining agreement, and the serious threat you posed to the organization, you are hereby placed under temporary suspension from your office and membership in the union immediately upon receipt hereof pending investigation and final disposition of your case in accordance with the unionʼs constitution and by-laws.

For your guidance and compliance.[4]

On February 26, 1996, upon the request of Atty. Alforque, MCCHI

granted one-day union leave with pay for 12 union members.[5] The next

day, several union members led by Nava and her group launched a series of

mass actions such as wearing black and red armbands/headbands,

marching around the hospital premises and putting up placards, posters and

streamers. Atty. Alforque immediately disowned the concerted activities

being carried out by union members which are not sanctioned by NFL.

MCCHI directed the union officers led by Nava to submit within 48 hours a

26

written explanation why they should not be terminated for having engaged in

illegal concerted activities amounting to strike, and placed them under

immediate preventive suspension. Responding to this directive, Nava and

her group denied there was a temporary stoppage of work, explaining that

employees wore their armbands only as a sign of protest and reiterating their

demand for MCCHI to comply with its duty to bargain collectively. Rev. Iyoy,

having been informed that Nava and her group have also been suspended

by NFL, directed said officers to appear before his office for investigation in

connection with the illegal strike wherein they reportedly uttered slanderous

and scurrilous words against the officers of the hospital, threatening other

workers and forcing them to join the strike. Said union officers, however,

invoked the grievance procedure provided in the CBA to settle the dispute

between management and the union.[6]

On March 13 and 19, 1996, the Department of Labor and Employment

(DOLE) Regional Office No. 7 issued certifications stating that there is

nothing in their records which shows that NAMA-MCCH-NFL is a registered

labor organization, and that said union submitted only a copy of its Charter

Certificate on January 31, 1995.[7] MCCHI then sent individual notices to all

union members asking them to submit within 72 hours a written explanation

why they should not be terminated for having supported the illegal concerted

activities of NAMA-MCCH-NFL which has no legal personality as per DOLE

records. In their collective response/statement dated March 18, 1996, it was

explained that the picketing employees wore armbands to protest MCCHIʼs

refusal to bargain; it was also contended that MCCHI cannot question the

legal personality of the union which had actively assisted in CBA negotiations

and implementation.[8]

On March 13, 1996, NAMA-MCCH-NFL filed a Notice of Strike but the

same was deemed not filed for want of legal personality on the part of the

filer. The National Conciliation and Mediation Board (NCMB) Region 7 office

likewise denied their motion for reconsideration on March 25, 1996. Despite

such rebuff, Nava and her group still conducted a strike vote on April 2, 1996

during which an overwhelming majority of union members approved the

strike.[9]

Meanwhile, the scheduled investigations did not push through because

the striking union members insisted on attending the same only as a group.

MCCHI again sent notices informing them that their refusal to submit to

27

investigation is deemed a waiver of their right to explain their side and

management shall proceed to impose proper disciplinary action under the

circumstances. On March 30, 1996, MCCHI sent termination letters to union

leaders and other members who participated in the strike and picketing

activities. On April 8, 1996, it also issued a cease-and-desist order to the

rest of the striking employees stressing that the wildcat concerted activities

spearheaded by the Nava group is illegal without a valid Notice of Strike and

warning them that non-compliance will compel management to impose

disciplinary actions against them. For their continued picketing activities

despite the said warning, more than 100 striking employees were dismissed

effective April 12 and 19, 1996.

Unfazed, the striking union members held more mass actions. The

means of ingress to and egress from the hospital were blocked so that

vehicles carrying patients and employees were barred from entering the

premises. Placards were placed at the hospitalʼs entrance gate stating:

“Please proceed to another hospital” and “we are on protest.” Employees

and patients reported acts of intimidation and harassment perpetrated by

union leaders and members. With the intensified atmosphere of violence

and animosity within the hospital premises as a result of continued protest

activities by union members, MCCHI suffered heavy losses due to low patient

admission rates. The hospitalʼs suppliers also refused to make further

deliveries on credit.

With the volatile situation adversely affecting hospital operations and

the condition of confined patients, MCCHI filed a petition for injunction in the

NLRC (Cebu City) on July 9, 1996 (Injunction Case No. V-0006-96). A

temporary restraining order (TRO) was issued on July 16, 1996. MCCHI

presented 12 witnesses (hospital employees and patients), including a

security guard who was stabbed by an identified sympathizer while in the

company of Navaʼs group. MCCHIʼs petition was granted and a permanent

injunction was issued on September 18, 1996 enjoining the Nava group from

committing illegal acts mentioned in Art. 264 of the Labor Code.[10]

On August 27, 1996, the City Government of Cebu ordered the

demolition of the structures and obstructions put up by the picketing

employees of MCCHI along the sidewalk, having determined the same as a

public nuisance or nuisance per se.[11]

Thereafter, several complaints for illegal dismissal and unfair labor

28

practice were filed by the terminated employees against MCCHI, Rev. Iyoy,

UCCP and members of the Board of Trustees of MCCHI.

On August 4, 1999, Executive Labor Arbiter Reynoso A.

Belarmino rendered his decision[12] dismissing the complaints for unfair

labor practice in NLRC Case Nos. RAB-VII-02-0309-98, RAB-VII-02-0394-98

and RAB-VII-03-0596-98 filed by Nava and 90 other complainants.

Executive Labor Arbiter Belarmino found no basis for the charge of unfair

labor practice and declared the strike and picketing activities illegal having

been conducted by NAMA-MCCH-NFL which is not a legitimate labor

organization. The termination of union leaders Nava, Alsado, Bañez,

Bongcaras, Canen, Gerona and Remocaldo were upheld as valid but MCCHI

was directed to grant separation pay equivalent to one-half month for every

year of service, in the total amount of P3,085,897.40 for the 84

complainants.[13]

Complainants appealed to the Commission. On March 14, 2001,

the NLRCʼs Fourth Division rendered its Decision,[14] the dispositive portion

of which reads: WHEREFORE, premises considered, the

decision of the Executive Labor Arbiter dismissing the complaint for unfair labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring the

dismissal of all the complainants in RAB Case No. 07-02-0394-98 and RAB Case No. 07-03-0596-98 valid and legal. Necessarily, the award of separation pay and attorneyʼs fees are hereby Deleted.

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

SO ORDERED.[15]

In its Resolution dated July 2, 2001, the NLRC denied complainantsʼ

motion for reconsideration.[16]

Complainants elevated the case to the Court of Appeals (CA) (Cebu

Station) via a petition for certiorari, docketed as CA-G.R. SP No. 66540.[17]

In its Resolution dated November 14, 2001, the CAʼs Eighth Division

dismissed the petition on the ground that out of 88 petitioners only 47 have

signed the certification against forum shopping.[18] Petitioners moved to

reconsider the said dismissal arguing that the 47 signatories more than

constitute the principal parties as the petition involves a matter of common

concern to all the petitioning employees.[19] By Resolution[20] dated May

28, 2002, the CA reinstated the case only insofar as the 47 petitioners who

signed the petition are concerned.

Petitioners challenged the validity of the November 14, 2001 and May

28, 2002 resolutions before this Court in a petition for review on certiorari,

docketed as G.R. No. 154113.

29

Meanwhile, the NLRCʼs Fourth Division (Cebu City) rendered its

Decision[21] dated March 12, 2003 in RAB Case Nos. 07-02-0309-98 (NLRC

Case No. V-001042-99) pertaining to complainants Erma Yballe, Evelyn

Ong, Nelia Angel and Eleuteria Cortez as follows: WHEREFORE, premises considered, the decision of the Executive Labor Arbiter dismissing the complaint for unfair labor practice and illegal dismissal is AFFIRMED with MODIFICATIONS declaring all complainants to have been validly dismissed. Necessarily, the award of separation pay and attorneyʼs fees are hereby Deleted. SO ORDERED.[22]

The NLRC likewise denied the motion for reconsideration filed by

complainants Yballe, et al. in its Resolution dated April 13, 2004.[23]

On October 17, 2008, the CA rendered its Decision[24] in CA-G.R. SP

No. 66540, the dispositive portion of which states: WHEREFORE, premises considered,

judgment is hereby rendered AFFIRMING the Decision of the National Labor Relations Commission (NLRC) – Fourth Division dated March 14, 2001 in NLRC Case No. V-001042-99, WITH MODIFICATIONS to the effect that (1) the petitioners, except the union officers, shall be awarded separation pay equivalent to one-half (1/2) month pay for every year of service, and (2) petitioner Cecilia Sabas shall be awarded overtime pay amounting to sixty-three (63) hours.

SO ORDERED.[25]

Petitioners filed a motion for reconsideration while private respondents

filed a motion for partial reconsideration questioning the award of separation

pay. The former also invoked the decision of this Court in Bascon v. Court of

Appeals,[26] while the latter argued for the application of the ruling in

decision rendered by the CA (Cebu City) in Miculob v. NLRC, et al. (CA-G.R.

SP No. 84538),[27] both involving similar complaints filed by dismissed

employees of MCCHI.

By Resolution[28] dated April 17, 2009, the CA denied both motions: WHEREFORE, the petitionersʼ Motion for

Reconsideration and the private respondent[sʼ] Motion for Partial Reconsideration of the October 17, 2008 Decision are both DENIED for lack of merit.

The Motions for Substitution of Counsel and Compromise Agreements submitted by petitioners Bernardito Lawas, Avelina Bangalao, Dailenda Hinampas and Daylinda Tigo are hereby approved. Consequently, said petitioners are ordered dropped from the list of petitioners and the case is deemed dismissed as to them.

SO ORDERED.[29]

Complainants Yballe, et al. also challenged before the CA the March

12, 2003 Decision and April 13, 2004 Resolution of the NLRC in a petition for

certiorari, docketed as CA-G.R. SP No. 84998 (Cebu City). By Decision[30]

dated November 7, 2008, the CA granted their petition, as follows: WHEREFORE, the challenged Decision of public respondent dated March 12, 2003 and its Resolution dated April 13, 2004 are hereby REVERSED AND SET ASIDE. Private respondent Metro Cebu Community Hospital is ordered to reinstate petitioners Erma Yballe, Eleuteria Cortes, Nelia Angel and Evelyn Ong without loss of seniority rights and other privileges; to pay them their full backwages

30

inclusive of their allowances and other benefits computed from the time of their dismissal up to the time of their actual reinstatement. No pronouncement as to costs. SO ORDERED.[31]

Private respondents (MCCHI, et al.) moved to reconsider the above

decision but the CA denied their motion on February 22, 2011.[32]

Both petitioners and private respondents in CA-G.R. SP No. 66540

appealed to this Court. Private respondent MCCHI in CA-G.R. SP No. 84998,

under its new name Visayas Community Medical Center (VCMC), filed a

petition for certiorari in this Court.

In G.R. No. 187778, petitioners Nava, et al. prayed that the CA

decision be set aside and a new judgment be entered by this Court (1)

declaring private respondents guilty of unfair labor practice and union

busting; (2) directing private respondents to cease and desist from further

committing unfair labor practices against the petitioners; (3) imposing upon

MCCH the proposed CBA or, in the alternative, directing the hospital and its

officers to bargain with the local union; (4) declaring private respondents

guilty of unlawfully suspending and illegally dismissing the individual

petitioners-employees; (5) directing private respondents to reinstate

petitioners-employees to their former positions, or their equivalent, without

loss of seniority rights with full backwages and benefits until reinstatement;

and (6) ordering private respondents to pay the petitioners moral damages,

exemplary damages, legal interests, and attorneyʼs fees.[33]

On the other hand, petitioner MCCHI in G.R. No. 187861 prayed for

the modification of the CA decision by deleting the award of separation pay

and reinstating the March 14, 2001 decision of the NLRC.[34]

In G.R. No. 196156, MCCHI/VCMC prayed for the annulment of the

November 7, 2008 Decision and February 22, 2011 Resolution of the CA, for

this Court to declare the dismissal of respondents Yballe, et al. as valid and

legal and to reinstate the March 12, 2003 Decision and April 13, 2004

Resolution of the NLRC.

G.R. No. 187861 was consolidated with G.R. Nos. 154113 and 187778

as they involve similar factual circumstances and identical or related issues.

G.R. No. 196156 was later also consolidated with the aforesaid cases.

The issues are: (1) whether the CA erred in dismissing the petition for

certiorari (CA-G.R. SP No. 66540) with respect to the petitioners in G.R. No.

154113 for their failure to sign the certification against forum shopping; (2)

whether MCCHI is guilty of unfair labor practice; (3) whether petitioning

31

employees were illegally dismissed; and (4) if their termination was illegal,

whether petitioning employees are entitled to separation pay, backwages,

damages and attorneyʼs fees.

Dropping of petitioners who did not sign the certification against forum shopping improper

The Court has laid down the rule in Altres v. Empleo[35] as culled from

“jurisprudential pronouncements”, that the certification against forum

shopping must be signed by all the plaintiffs or petitioners in a case;

otherwise, those who did not sign will be dropped as parties to the case.

Under reasonable or justifiable circumstances, however, as when all the

plaintiffs or petitioners share a common interest and invoke a common cause

of action or defense, the signature of only one of them in the certification

against forum shopping substantially complies with the Rule.

In the case at bar, the signatures of 47 out of 88 petitioning employees

in the certification against forum shopping constitute substantial compliance

with the rule. There is no question that they shared a common interest and

invoked a common cause of action when they filed suit before the Labor

Arbiter and NLRC questioning the validity of their termination and charging

MCCHI with unfair labor practice. Thus, when they appealed their case to the

CA, they pursued the same as a collective body, raising only one argument in

support of their cause of action, i.e., the illegal dismissal allegedly committed

by MCCHI when union members resorted to strike and mass actions due to

MCCHIʼs refusal to bargain with officers of the local chapter. There is

sufficient basis, therefore, for the 47 signatories to the petition, to speak for

and in behalf of their co-petitioners and to file the Petition for Certiorari in the

appellate court.[36] Clearly, the CA erred in dropping as parties-petitioners

those who did not sign the certification against forum shopping.

However, instead of remanding the case to the CA for it to resolve the

petition with respect to the herein petitioners in G.R. No. 154113, and as

prayed for, the Court shall consider them parties-petitioners in CA-G.R. SP

No. 66540,which case has already been decided and now subject of appeal

in G.R. No. 187778.

32

MCCHI not guilty of unfair labor practice

Art. 248 (g) of the Labor Code, as amended, makes it an unfair labor

practice for an employer “[t]o violate the duty to bargain collectively” as

prescribed by the Code. The applicable provision in this case is Art. 253

which provides: ART. 253. Duty to bargain collectively when

there exists a collective bargaining agreement. – When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.

NAMA-MCCH-NFL charged MCCHI with refusal to bargain collectively

when the latter refused to meet and convene for purposes of collective

bargaining, or at least give a counter-proposal to the proposed CBA the

union had submitted and which was ratified by a majority of the union

membership. MCCHI, on its part, deferred any negotiations until the local

unionʼs dispute with the national union federation (NFL) is resolved

considering that the latter is the exclusive bargaining agent which

represented the rank-and-file hospital employees in CBA negotiations since

1987.

We rule for MCCHI.

Records of the NCMB and DOLE Region 7 confirmed that NAMA-

33

MCCH-NFL had not registered as a labor organization, having submitted only

its charter certificate as an affiliate or local chapter of NFL.[37] Not being a

legitimate labor organization, NAMA-MCCH-NFL is not entitled to those rights

granted to a legitimate labor organization under Art. 242, specifically: (a) To act as the representative of its

members for the purpose of collective bargaining; (b) To be certified as the exclusive

representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining;

x x x x

Aside from the registration requirement, it is only the labor organization

designated or selected by the majority of the employees in an appropriate

collective bargaining unit which is the exclusive representative of the

employees in such unit for the purpose of collective bargaining, as provided

in Art. 255.[38] NAMA-MCCH-NFL is not the labor organization certified or

designated by the majority of the rank-and-file hospital employees to

represent them in the CBA negotiations but the NFL, as evidenced by CBAs

concluded in 1987, 1991 and 1994. While it is true that a local union has the

right to disaffiliate from the national federation, NAMA-MCCH-NFL has not

done so as there was no any effort on its part to comply with the legal

requisites for a valid disaffiliation during the “freedom period”[39] or the last

60 days of the last year of the CBA, through a majority vote in a secret

balloting in accordance with Art. 241 (d).[40] Nava and her group simply

demanded that MCCHI directly negotiate with the local union which has not

even registered as one.

To prove majority support of the employees, NAMA-MCCH-NFL

presented the CBA proposal allegedly signed by 153 union members.

However, the petition signed by said members showed that the signatories

endorsed the proposed terms and conditions without stating that they were

likewise voting for or designating the NAMA-MCCH-NFL as their exclusive

bargaining representative. In any case, NAMA-MCCH-NFL at the time of

submission of said proposals was not a duly registered labor organization,

hence it cannot legally represent MCCHIʼs rank-and-file employees for

purposes of collective bargaining. Hence, even assuming that NAMA-

MCCH-NFL had validly disaffiliated from its mother union, NFL, it still did not

possess the legal personality to enter into CBA negotiations. A local union

which is not independently registered cannot, upon disaffiliation from the

federation, exercise the rights and privileges granted by law to legitimate

labor organizations; thus, it cannot file a petition for certification election.[41]

34

Besides, the NFL as the mother union has the right to investigate members

of its local chapter under the federationʼs Constitution and By-Laws, and if

found guilty to expel such members.[42] MCCHI therefore cannot be faulted

for deferring action on the CBA proposal submitted by NAMA-MCCH-NFL in

view of the union leadershipʼs conflict with the national federation. We have

held that the issue of disaffiliation is an intra-union dispute[43] which must be

resolved in a different forum in an action at the instance of either or both the

federation and the local union or a rival labor organization, not the

employer.[44]

Not being a legitimate labor organization nor the certified exclusive

bargaining representative of MCCHIʼs rank-and-file employees, NAMA-

MCCH-NFL cannot demand from MCCHI the right to bargain collectively in

their behalf.[45] Hence, MCCHIʼs refusal to bargain then with NAMA-MCCH-

NFL cannot be considered an unfair labor practice to justify the staging of the

strike.[46]

Strike and picketing activities conducted by union officers

and members were illegal

Art. 263 (b) of the Labor Code, as amended, provides: ART. 263. Strikes, picketing and lockouts. –

x x x (b) Workers shall have the right to engage

in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. However, no labor union may strike and no employer may declare a lockout on grounds involving inter-union and intra-union disputes.

x x x x (Emphasis supplied.)

As borne by the records, NAMA-MCCH-NFL was not a duly

registered or an independently registered union at the time it filed the notice

of strike on March 13, 1996 and when it conducted the strike vote on April 2,

1996. It could not then legally represent the union members. Consequently,

the mandatory notice of strike and the conduct of the strike vote report were

ineffective for having been filed and conducted by NAMA-MCCH-NFL which

has no legal personality as a legitimate labor organization, in violation of Art.

263 (c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus

Rules Implementing the Labor Code.[47]

Art. 263 of the Labor Code provides: ART. 263. Strikes, picketing and lockouts.

— (a) x x x

35

x x x x (c) In cases of bargaining deadlocks, the

duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Department at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting, where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union may take action immediately. (As amended by Executive Order No. 111, December 24, 1986.)

(d) The notice must be in accordance with such implementing rules and regulations as the Department of Labor and Employment may promulgate.

x x x x (f) A decision to declare a strike must be

approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Department may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Ministry the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. (As amended by Batas Pambansa Bilang 130, August 21, 1981 and further amended by Executive Order No. 111, December 24, 1986.) (Emphasis supplied.)

Rule XXII, Book V of the Omnibus Rules Implementing the Labor

Code reads: RULE XXII

CONCILIATION, STRIKES AND LOCKOUTS x x x x SEC. 6. Who may declare a strike or

lockout. — Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the establishment may declare a strike but only on grounds of unfair labor practice. (Emphasis supplied.)

Furthermore, the strike was illegal due to the commission of the

following prohibited activities[48]: (1) violence, coercion, intimidation and

harassment against non-participating employees; and (2) blocking of free

ingress to and egress from the hospital, including preventing patients and

their vehicles from entering the hospital and other employees from

reporting to work, the putting up of placards with a statement advising

incoming patients to proceed to another hospital because MCCHI employees

are on strike/protest. As shown by photographs[49] submitted by MCCHI, as

well as the findings of the NCMB and Cebu City Government, the hospital

premises and sidewalk within its vicinity were full of placards, streamers and

makeshift structures that obstructed its use by the public who were likewise

36

barraged by the noise coming from strikers using megaphones.[50] On the

other hand, the affidavits[51] executed by several hospital employees and

patients narrated in detail the incidents of harassment, intimidation, violence

and coercion, some of these witnesses have positively identified the

perpetrators. The prolonged work stoppage and picketing activities of the

striking employees severely disrupted hospital operations that MCCHI

suffered heavy financial losses.

The findings of the Executive Labor Arbiter and NLRC, as

sustained by the appellate court, clearly established that the striking union

members created so much noise, disturbance and obstruction that the local

government authorities eventually ordered their removal for being a public

nuisance. This was followed by an injunction from the NCMB enjoining the

union leaders from further blocking the free ingress to and egress from the

hospital, and from committing threats, coercion and intimidation against non-

striking employees and patients/vehicles desiring to enter for the purpose of

seeking medical treatment/confinement. By then, the illegal strike had lasted

for almost five months.

C

onsequences of illegal strike to union officers a

37

nd members

Art. 264 (a) of the Labor Code, as amended, provides for the

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

The above provision makes a distinction between workers and union

officers who participate in an illegal strike: an ordinary striking worker cannot

be terminated for mere participation in an illegal strike. There must be proof

that he or she committed illegal acts during a strike. A union officer, on the

other hand, may be terminated from work when he knowingly participates in

an illegal strike, and like other workers, when he commits an illegal act during

a strike.[52]

Considering their persistence in holding picketing activities despite

the declaration by the NCMB that their union was not duly registered as a

legitimate labor organization and the letter from NFLʼs legal counsel

informing that their acts constitute disloyalty to the national federation, and

their filing of the notice of strike and conducting a strike vote notwithstanding

that their union has no legal personality to negotiate with MCCHI for

collective bargaining purposes, there is no question that NAMA-MCCH-NFL

officers knowingly participated in the illegal strike. The CA therefore did not

err in ruling that the termination of union officers Perla Nava, Catalina Alsado,

Albina Bañez, Hannah Bongcaras, Ernesto Canen, Jesusa Gerona and

Guillerma Remocaldo was valid and justified.

With respect to the dismissed union members, although MCCHI

submitted photographs taken at the picket line, it did not individually name

those striking employees and specify the illegal act committed by each of

them. As to the affidavits executed by non-striking employees, they identified

mostly union officers as the persons who blocked the hospital entrance,

harassed hospital employees and patients whose vehicles were prevented

from entering the premises. Only some of these witnesses actually named a

38

few union members who committed similar acts of harassment and coercion.

Consequently, we find no error committed by the CA in CA-G.R. SP No.

66540 when it modified the decision of the NLRC and ruled that the dismissal

of union members who merely participated in the illegal strike was illegal.

On the other hand, in CA-G.R. SP No. 84998, the CA did not err in ruling

that the dismissal of Yballe, et al. was illegal; however, it also ordered their

reinstatement with full back wages. Dismissed union members not

entitled to backwages but should be awarded se

39

paration pay in lieu of reinstatement

Since there is no clear proof that union members actually participated

in the commission of illegal acts during the strike, they are not deemed to

have lost their employment status as a consequence of a declaration of

illegality of the strike.

Petitioners in G.R. Nos. 154113 and 187778 assail the CA in not

ordering their reinstatement with back wages. Invoking stare decisis, they

cited the case of Bascon v. Court of Appeals[53] decided by this Court in

2004 and which involved two former hospital employees who likewise sued

MCCHI after the latter terminated their employment due to their participation

in the same illegal strike led by NAMA-MCCH-NFL. In said case we ruled that

petitioners Cole and Bascon were illegally dismissed because MCCHI failed

to prove that they committed illegal acts during the strike. We thus ordered

the reinstatement of petitioners Bascon and Cole without loss of seniority

rights and other privileges and payment of their back wages inclusive of

allowances, and other benefits computed from the time they were dismissed

up to the time of their actual reinstatement. Bascon was also the basis of the

award of back wages in CA-G.R. SP No. 84998.

Stare decisis et non quieta movere. Stand by the decision and disturb

not what is settled. Under the doctrine of stare decisis, once a court has laid

down a principle of law as applicable to a certain state of facts, it will adhere

to that principle and apply it to all future cases where the facts are

40

substantially the same,[54] even though the parties may be different. It

proceeds from the first principle of justice that, absent any powerful

countervailing considerations, like cases ought to be decided alike. Thus,

where the same questions relating to the same event have been put forward

by parties similarly situated as in a previous case litigated and decided by a

competent court, the rule of stare decisis is a bar to any attempt to relitigate

the same issue.[55]

The doctrine though is not cast in stone for upon a showing that

circumstances attendant in a particular case override the great benefits

derived by our judicial system from the doctrine of stare decisis, the Court is

justified in setting it aside.[56] For the Court, as the highest court of the land,

may be guided but is not controlled by precedent. Thus, the Court, especially

with a new membership, is not obliged to follow blindly a particular decision

that it determines, after re-examination, to call for a rectification.[57]

Although the Bascon case involved the very same illegal strike in

MCCHI which led to the termination of herein petitioners, its clearly

erroneous application of the law insofar only as the award of back wages

warrants setting aside the doctrine. Indeed, the doctrine of stare decisis

notwithstanding, the Court has abandoned or overruled precedents whenever

it realized that the Court erred in the prior decisions. “Afterall, more important

than anything else is that this Court should be right.”[58]

In G & S Transport Corporation v. Infante,[59] the Court explained

the rationale for its recent rulings deleting back wages awarded to the

dismissed workers if the strike was found to be illegal. Considering that they

did not render work for the employer during the strike, they are entitled only

to reinstatement. With respect to backwages, the principle

of a “fair dayʼs wage for a fair dayʼs labor” remains as the basic factor in determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. While it was found that respondents expressed their intention to report back to work, the latter exception cannot apply in this case. In Philippine Marine Officersʼ Guild v. Compañia Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar.

Under the circumstances, respondentsʼ reinstatement without backwages suffices for the appropriate relief. If reinstatement is no longer possible, given the lapse of considerable time from the occurrence of the strike, the award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order.[60] (Emphasis supplied.)

41

The CA decision in CA-G.R. SP No. 66540 ordering the payment

of separation pay in lieu of reinstatement without back wages is thus in order,

to conform to the policy of a fair dayʼs wage for a fair dayʼs labor. The

amount of separation pay is increased to one month pay for every year of

service, consistent with jurisprudence. Accordingly, the decision in CA-G.R.

SP No. 84998 is modified by deleting the award of back wages and granting

separation pay in lieu of reinstatement.

It is to be noted that as early as April 8, 1996, union members who

took part in the concerted activities have been warned by management that

NAMA-MCCH-NFL is not a legitimate labor organization and its notice of

strike was denied by the NCMB, and directed to desist from further

participating in such illegal activities. Despite such warning, they continued

with their picketing activities and held more mass actions after management

sent them termination notices. The prolonged work stoppage seriously

disrupted hospital operations, which could have eventually brought MCCHI

into bankruptcy had the City Government of Cebu not issued a demolition

order and the NLRC Region 7 not formally enjoined the prohibited picketing

activities. Also, the illegal dismissal complaints subsequently filed by the

terminated employees did not obliterate the fact that they did not suffer loss

of earnings by reason of the employerʼs unjustified acts, there being no unfair

labor practice committed by MCCHI. Hence, fairness and justice dictate that

back wages be denied the said employees who participated in the illegal

concerted activities to the great detriment of the employer.

Separation pay is made an alternative relief in lieu of

reinstatement in certain circumstances, like: (a) when reinstatement can no

longer be effected in view of the passage of a long period of time or because

of the realities of the situation; (b) reinstatement is inimical to the employerʼs

interest; (c) reinstatement is no longer feasible; (d) reinstatement does not

serve the best interests of the parties involved; (e) the employer is prejudiced

by the workersʼ continued employment; (f) facts that make execution unjust

or inequitable have supervened; or (g) strained relations between the

employer and employee.[61]

Considering that 15 years had lapsed from the onset of this labor

dispute, and in view of strained relations that ensued, in addition to the reality

of replacements already hired by the hospital which had apparently

recovered from its huge losses, and with many of the petitioners either

42

employed elsewhere, already old and sickly, or otherwise incapacitated,

separation pay without back wages is the appropriate relief. We note that

during the pendency of the cases in this Court, some of the petitioners have

entered into compromise agreements with MCCHI, all of which were duly

approved by this Court. Thus, excluded from the herein monetary awards

are the following petitioners whose compromise agreements have been

approved by this Court and judgment having been entered therein: Gloria

Arguilles, Romulo Alforque, Gerna Patigdas-Barte, Daylinda Tigo Merlyn

Nodado, Ramon Tagnipis, Bernabe Lumapguid, Romeo Empuerto, Marylen

Labra, Milagros Castillo Bernadette Pontillas-Tibay, Constancio Pagador,

Nolan Alvin Panal, Edilberto Villa, Roy Malazarte, Felecianita Malazarte and

Noel Hortelano.

Attorneyʼs fees

The dismissed employees having been compelled to litigate in order to

seek redress and protect their rights, they are entitled to reasonable

attorneyʼs fees pursuant to Art. 2208 (2) of the Civil Code. In view of the

attendant circumstances of this case, we hold that attorneyʼs fees in the

amount of P50,000.00 is reasonable and justified. However, the respondents

in G.R. No. 196156 are not entitled to the same relief since they did not

appeal from the CA decision which did not include the award of attorneyʼs

fees.

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

187861 is DENIED while the petitions in G.R. Nos. 154113, 187778 and

196156 are PARTLY GRANTED. The Decision dated October 17, 2008 of

the Court of Appeals in CA-G.R. SP No. 66540 is hereby AFFIRMED with

MODIFICATIONS in that MCCHI is ordered to pay the petitioners in G.R.

Nos. 154113 and 187778, except the petitioners who are union officers,

separation pay equivalent to one month pay for every year of service, and

reasonable attorneyʼs fees in the amount of P50,000.00. The Decision

dated November 7, 2008 is likewise AFFIRMED with MODIFICATIONS in

that MCCHI is ordered to pay the private respondents in G.R. No. 196156

separation pay equivalent to one month pay for every year of service, and

that the award of back wages is DELETED.

The case is hereby remanded to the Executive Labor Arbiter for

the recomputation of separation pay due to each of the petitioners union

43

members in G.R. Nos. 154113, 187778 and 196156 except those who have

executed compromise agreements approved by this Court.

No pronouncement as to costs. SO ORDERED.

44

THIRD DIVISION PICOP RESOURCES, INCORPORATED (PRI), Represented in this Petition by MR. WILFREDO D. FUENTES, in his capacity as Senior Vice-President and Resident Manager, Petitioner,

- versus - RICARDO DEQUILLA, ELMO PABILANDO, CESAR ATIENZA and ANICETO ORBETA, JR., and NAMAPRI-SPFI, Respondents.

G.R. No. 172666 Present:

PERALTA,* J., Acting Chairperson,

ABAD,

MENDOZA,

SERENO,* * and

PERLAS-BERNABE, JJ.

Promulgated:

December 7, 2011

X -----------------------------------------------------------------------------------------------------X

D E C I S I O N MENDOZA, J.:

This is a petition for review assailing the April 14, 2005 Decision[1]

of the Court of Appeals (CA) which reversed and set aside the Resolutions[2]

of the National Labor Relations Commission (NLRC) dated December 27,

2002 and March 28, 2003, and reinstated the June 9, 2001 Decision[3] of the

Labor Arbiter (LA), which declared the dismissal of the private respondents

as illegal.

The Facts

Ricardo Dequilla, Cesar Atienza and Aniceto Orbeta (private

respondents) were regular rank-and-file employees of Picop Resources, Inc.

(PICOP) and members of the NAMAPRI-SPFL, a duly registered labor

organization and existing bargaining agent of the PICOP rank-and-file

employees. PICOP and NAMAPRI-SPFL had a collective bargaining

agreement (CBA) which would expire on May 22, 2000.

45

On May 16, 2000, the late Atty. Proculo P. Fuentes, Jr. (Atty. Fuentes),

then National President of the Southern Philippines Federation of Labor

(SPFL), advised the PICOP management to terminate about 800 employees

due to acts of disloyalty, specifically, for allegedly campaigning, supporting

and signing a petition for the certification of a rival union, the Federation of

Free Workers Union (FFW) before the 60-day “freedom period” and during

the effectivity of the CBA. Such acts of disloyalty were construed to be a valid

cause for termination under the terms and conditions of the CBA. Based on

the CBA, the freedom period would start on March 22, 2000.

Acting on the advice of Atty. Fuentes, Atty. Romero Boniel (Atty.

Boniel), Manager of the PICOP Legal and Labor Relations Department,

issued a memorandum directing the employees concerned to explain within

seventy-two (72) hours why their employment should not be terminated due

to alleged acts of disloyalty. Upon receiving their explanation letters, Atty.

Boniel endorsed the same to Atty. Fuentes who then requested the

termination of 46 employees found guilty of acts of disloyalty.

On October 16, 2000, PICOP served a notice of termination due

to acts of disloyalty to 31 of the 46 employees. Private respondents were

among the 31 employees dismissed from employment by PICOP on

November 16, 2000.

Enraged at what management did to them, private respondents filed a

complaint before the NLRC Regional Arbitration Branch No. XIII, Butuan City,

for Unfair Labor Practice and Illegal Dismissal with money claims, damages

and attorneyʼs fees.

LA Ruling

On June 9, 2001, after the parties submitted their respective

position papers, the LA rendered a decision declaring as illegal the

termination of the private respondents. The dispositive portion of the LA

Decision reads:

WHEREFORE, premises considered, judgment is hereby entered:

46

1. Declaring complainantsʼ

dismissal illegal; and

2. Ordering respondents PRI and

NAMPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of ₱177,403.68, as shown in the computation, hereto attached and marked as Annex “A” hereof, plus damages in the amount of ₱10,000.00 each and attorneyʼs fees equivalent to 10% of the total monetary award.

SO ORDERED. [4]

NLRC Ruling

PICOP elevated the LA decision to the NLRC but its appeal was

dismissed in the November 19, 2002 NLRC Resolution.[5] On motion for

reconsideration, however, the NLRC issued another resolution,[6] dated

December 27, 2002, reversing and setting aside its November 19, 2002

Resolution, the dispositive portion of which reads:

WHEREFORE, foregoing premises

considered, the above resolution dated November 19, 2002, is Reversed and Set Aside. In lieu thereof, a new judgment is rendered DISMISSING the above-entitled case for lack of merit.

SO ORDERED.[7]

CA Ruling

Upon the denial of their motion for reconsideration, the private

respondents brought the case to the CA. On April 14, 2005, the CA rendered

the subject decision reversing and setting aside the December 27, 2002

NLRC resolution and reinstating the June 9, 2001 Decision of the LA. The

decretal portion of the CA decision reads:

WHEREFORE, premises considered, [the]

instant petition is GRANTED and the assailed resolutions of the Public Respondent NLRC are hereby REVERSED and SET ASIDE. In view thereof, ordered REINSTATED is the Decision of Acting Executive Labor Arbiter Rogelio P. Legaspi dated 09 June 2001 which reads:

47

WHEREFORE, premises considered,

judgment is hereby entered:

1. Declaring

complainantsʼ dismissal illegal; and

2. Ordering

Respondents PRI and NAMPRI-SPFL to reinstate Complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of ₱177,403.68, plus damages in the amount of ₱10,000.00 each and attorneyʼs fees equivalent to 10% of the total monetary award.

SO ORDERED.[8]

The CA ruled, among others, that although private respondents

signed an authorization for the filing of the petition for certification election of

a rival union, PICOP Democratic Trade Unionist-Federation of Free Workers

(FFW), such act was not a sufficient ground to terminate the employment of

private respondents. It explained:

Ruminating from the alleged violation of the CBA, We see no reason, sufficient and compelling enough, to sustain the Public Respondentʼs raison dʼetre in overturning the Labor Arbiterʼs ruling in favor of the Petitioners. While it is true that Petitioners signed the authorization in support of the Petition for certification election of FFW before the “freedom period,” such act is not a sufficient ground to terminate the employment of the Petitioners in as much as the petition itself was filed during the freedom period. Hence, there is nil a basis to impute acts of disloyalty to Petitioners. Imputations of an alleged violation of the CBA should not arise from a vague and all embracing definition of alleged “acts of disloyalty.” Neither should it arise from speculative inferences where no evidence appears from the record that Respondent NAMAPRI-SPFL expressly defined “acts of disloyalty.” Besides, to Our mind, signing an authorization for the filing of the petition for certification election does not constitute an act of disloyalty per se. There must be proof of contemporaneous acts of resignation or withdrawal of their membership from the Respondent NAMAPRI-SPFL to which they are members. Respondents miserably failed to present evidence to justify a valid termination of employees in pursuance to the CBA allegedly violated. Petitioners, in fact remained in good standing, a continuing requirement for retaining their employment in the Respondent PRI. Petitioners neither joined nor affiliated with FFW and continuously paid their union dues with Respondent NAMAPRI-SPFL. Consequently, this lends credence to the Labor

48

Arbiterʼs ruling that Petitionersʼ dismissal was indeed illegal.

Likewise, the advise of the Respondent

NAMAPRI-SPFL to the Respondent PRI to effect the termination of employees, including herein Petitioners, finds no basis in fact and in law considering that at the time the Respondent PRI dismissed the Petitioners, among others, on 16 November 2000, there was no more CBA to speak of after it had already expired on 22 May 2000.[9]

The CA further agreed with private respondents that Article 256

and not Article 253, of the Labor Code applied in this case. The CA

discussed this point as follows:

We are inclined to favor Petitionerʼs stance that Article 256, supra, is applicable. The issue of acts of disloyalty relates more to a direct connection on the alleged violation or breach of loyalty to the majority status of the incumbent union than on violation of the terms and conditions of the agreement under Article 253, supra, as the Respondents would want Us to believe. Article 256 provides that at the expiration of the 60-day period reckoned from the expiration date of the CBA, the employer shall continue to recognize the majority status of the incumbent bargaining agent only where no petition for certification election is filed. However, as earlier pointed, a petition was already filed by the Petitioners, among others, during the 60-day freedom period. Clearly, from the imports of said provision, it will render nugatory the purpose of the law providing for a freedom period for the filing of a petition for certification election should the act of signing/filing the said petition be interpreted as an act of disloyalty

and will render farce the need for a certification election as an instrument of ascertaining the true expression of the will of the workers as to which labor organization would represent them.

To construe the provision of law in Article

253, supra, as imposing a restriction against the signing and filing a petition for certification election during the freedom period, is to violate the constitutional right of the employees to organize freely. It is a basic precept of statutory construction that statutes should be construed not so much according to the letters that killeth but in line with the purpose for which they have been enacted.[10]

Not in conformity with the CA decision, PICOP filed this petition for

review posing the following

ISSUES

WHETHER [OR NOT] AN EXISTING COLLECTIVE BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITIONS INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO?

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALLS WITHIN THE AMBIT OF THE EXTRA ORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.[11]

49

PICOP basically argues that Article 253 of the Labor Code applies in

this case. Article 253 of the Labor Code provides that the terms and

conditions of a CBA remain in full force and effect even beyond the 5-year

period when no new CBA has yet been reached. It claims that the private

respondents violated this provision when they campaigned for, supported

and signed FFWʼs petition for certification election on March 19 and 20,

2000, before the onset of the freedom period. It further argues that private

respondents were not denied due process when they were terminated.

Finally, it claims that the decision of the NLRC on the issues raised was not

without merit. Even assuming that it erred in its judgment on the legal issues

raised, its error is not equivalent to an abuse of discretion that should fall

within the ambit of the extraordinary remedy of certiorari.

Private respondentsʼ position

Private respondents argue that the substantial arguments raised by

PICOP in this petition are basically a rehash of the same issues and

arguments contained in its Motion for Reconsideration of the CA decision.

Private respondents adopted and repleaded the ruling of the CA in their

Comment[12] on this petition.

The Courtʼs Ruling

The petition merits a denial.

There is no question that in the CBA entered into by the parties,

there is a union security clause. The clause imposes upon the workers the

obligation to join and maintain membership in the companyʼs recognized

union as a condition for employment.

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the

50

employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.[13]

There is no dispute that private respondents were members of

NAMAPRI-SPFL who were terminated by PICOP due to alleged acts of

disloyalty. It is basic in labor jurisprudence that the burden of proof rests

upon management to show that the dismissal of its worker was based on a

just cause. When an employer exercises its power to terminate an employee

by enforcing the union security clause, it needs to determine and prove the

following: (1) the union security clause is applicable; (2) the union is

requesting for the enforcement of the union security provision in the CBA;

and (3) there is sufficient evidence to support the decision of the union to

expel the employee from the union.[14]

In this case, the resolution thereof hinges on whether PICOP was

able to show sufficient evidence to support the decision of the union to expel

private respondents from it.

PICOP basically contends that private respondents were justly

terminated from employment for campaigning, supporting and signing a

petition for the certification of FFW, a rival union, before the 60-day “freedom

period” and during the effectivity of the CBA. Their acts constitute an act of

disloyalty against the union which is valid cause for termination pursuant to

the Union Security Clause in the CBA.

The Court finds Itself unable to agree.

Considering the peculiar circumstances, the Court is of the view

that the acts of private respondents are not enough proof of a violation of the

Union Security Clause which would warrant their dismissal. PICOP failed to

show in detail how private respondents campaigned and supported FFW.

Their mere act of signing an authorization for a petition for certification

election before the freedom period does not necessarily demonstrate union

disloyalty. It is far from being within the definition of “acts of disloyalty” as

PICOP would want the Court to believe. The act of “signing an authorization

51

for a petition for certification election” is not disloyalty to the union per se

considering that the petition for certification election itself was filed during the

freedom period which started on March 22, 2000.

Moreover, as correctly ruled by the CA, the records are bereft of

proof of any contemporaneous acts of resignation or withdrawal of union

membership or non-payment of union dues. Neither is there proof that private

respondents joined FFW. The fact is, private respondents remained in good

standing with their union, NAMAPRI-SPFL. This point was settled in the

case of PICOP Resources, Incorporated (PRI) v. Anacleto L. Tañeca,[15]

where it was written:

However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents.

PRI alleged that respondents were

terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the "freedom period," is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW.

Significantly, petitioner's act of dismissing

respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000. Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period. This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondentsʼ right to self-organization.[16]

Finally, PICOP insists that Article 253 of the Labor Code applies in

this case, not Article 256 thereof. The Court agrees with the CA that its

argument is misplaced. This issue was tackled and settled in the same

52

PICOP Resources, Incorporated (PRI) v. Tañeca case, to wit:

Moreover, PRI anchored their decision to terminate respondentsʼ employment on Article 253 of the Labor Code which states that "it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties." It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents.

Petitioner's reliance on Article 253 is

misplaced. The provision of Article 256 of the Labor

Code is particularly enlightening. It reads: Article 256. Representation issue in

organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty

per cent (50%) of the number of votes cast. At the expiration of the freedom period, the

employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.

Applying the same provision, it can be said

that while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative. The provision for status quo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them.

In the instant case, four (4) petitions were

filed as early as May 12, 2000. In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000. Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case.

Moreover, the last sentence of Article 253

which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the

53

union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or compromised.

Time and again, we have ruled that we

adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned.

We will emphasize anew that the power to

dismiss is a normal prerogative of the employer. This, however, is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their employees, which include the right to labor. [17]

Considering that private respondents were illegally dismissed,

basic law provides that they shall be entitled to the benefit of full backwages

and reinstatement unless the latter is no longer viable, in which case, a grant

of separation pay shall be awarded equivalent to one month salary for every

year of service.

X x x Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision X x x.[18]

Private respondents are also entitled to an award of attorneyʼs

fees equivalent to 10% of the total monetary award as they were compelled

to litigate in order to seek redress for their illegal dismissal.

WHEREFORE, the petition is DENIED. SO ORDERED.