SPECIAL THIRD DIVISION

[G.R. Nos. 158930-31. March 3, 2008.]

UNION OF FILIPRO EMPLOYEES — DRUG, FOOD AND ALLIED

INDUSTRIES UNIONS — KILUSANG MAYO UNO (UFE-DFA-
KMU), petitioner, vs. NESTLÉ PHILIPPINES, INCORPORATED,
respondent.

[G.R. Nos. 158944-45. March 3, 2008.]

NESTLÉ PHILIPPINES, INCORPORATED, petitioner, vs. UNION

OF FILIPRO EMPLOYEES — DRUG, FOOD AND ALLIED
INDUSTRIES UNIONS — KILUSANG MAYO UNO (UFE-DFA-
KMU), respondent.

RESOLUTION

CHICO-NAZARIO, J : p

On 22 August 2006, this Court promulgated its Decision 1 in the above-

entitled cases, the dispositive part of which reads —
WHEREFORE, in view of the foregoing, the Petition in G.R. No.
158930-31 seeking that Nestlé be declared to have committed unfair
labor practice in allegedly setting a precondition to bargaining is
DENIED. The Petition in G.R. No. 158944-45, however, is PARTLY
GRANTED in that we REVERSE the ruling of the Court of Appeals in CA
G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE
gravely abused her discretion in failing to confine her assumption of
jurisdiction power over the ground rules of the CBA negotiations; but
the ruling of the Court of Appeals on the inclusion of the Retirement
Plan as a valid issue in the collective bargaining negotiations between
UFE-DFA-KMU and Nestlé is AFFIRMED. The parties are directed to
resume negotiations respecting the Retirement Plan and to take
action consistent with the discussions hereinabove set forth. No
costs.
Subsequent thereto, Nestlé Philippines, Incorporated (Nestlé) filed a
Motion for Clarification 2 on 20 September 2006; while Union of Filipro
Employees — Drug, Food and Allied Industries Union — Kilusang Mayo Uno
(UFE-DFA-KMU), on 21 September 2006, filed a Motion for Partial
Reconsideration 3 of the foregoing Decision.
The material facts of the case, as determined by this Court in its
Decision, may be summarized as follows:
UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-
and-file employees of Nestlé belonging to the latter's Alabang and Cabuyao
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 plants. On 4 April 2001, as the existing collective bargaining agreement
(CBA) between Nestlé and UFE-DFA-KMU 4 was to end on 5 June 2001, 5 the
Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed
Nestlé of their intent to "open [our] new Collective Bargaining Negotiation
for the year 2001-2004 . . . as early as June 2001." 6 In response thereto,
Nestlé informed them that it was also preparing its own counter-proposal
and proposed ground rules to govern the impending conduct of the CBA
negotiations. ICASEH

On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao

Division only), 7 Nestlé reiterated its stance that "unilateral grants, one-time
company grants, company-initiated policies and programs, which include,
but are not limited to the Retirement Plan, Incidental Straight Duty Pay and
Calling Pay Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom." 8
Dialogue between the company and the union thereafter ensued.
On 14 August 2001, however, Nestlé requested 9 the National
Conciliation and Mediation Board (NCMB), Regional Office No. IV, Imus,
Cavite, to conduct preventive mediation proceedings between it and UFE-
DFA-KMU owing to an alleged impasse in said dialogue; i.e., that despite
fifteen (15) meetings between them, the parties failed to reach any
agreement on the proposed CBA.
Conciliation proceedings proved ineffective, though, and the UFE-DFA-
KMU filed a Notice of Strike 10 on 31 October 2001 with the NCMB,
complaining, in essence, of a bargaining deadlock pertaining to economic
issues, i.e., "retirement (plan), panel composition, costs and attendance, and
CBA". 11 On 07 November 2001, another Notice of Strike 12 was filed by the
union, this time predicated on Nestlé's alleged unfair labor practices, that is,
bargaining in bad faith by setting pre-conditions in the ground rules and/or
refusing to include the issue of the Retirement Plan in the CBA negotiations.
The result of a strike vote conducted by the members of UFE-DFA-KMU
yielded an overwhelming approval of the decision to hold a strike. 13
On 26 November 2001, prior to holding the strike, Nestlé filed with the
DOLE a Petition for Assumption of Jurisdiction, 14 praying for the Secretary of
the DOLE, Hon. Patricia A. Sto. Tomas, to assume jurisdiction over the
current labor dispute in order to effectively enjoin any impending strike by
the members of the UFE-DFA-KMU at the Nestlé's Cabuyao Plant in Laguna.
On 29 November 2001, Sec. Sto. Tomas issued an Order 15 assuming
jurisdiction over the subject labor dispute. The fallo of said Order states that:
CONSIDERING THE FOREGOING, this Office hereby assumes
jurisdiction over the labor dispute at the Nestlé Philippines, Inc.
(Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as
amended.
Accordingly, any strike or lockout is hereby enjoined. The
parties are directed to cease and desist from committing any act that
might lead to the further deterioration of the current labor relations
situation.
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 The parties are further directed to meet and convene for the
discussion of the union proposals and company counter-proposals
before the National Conciliation and Mediation Board (NCMB) who is
hereby designated as the delegate/facilitator of this Office for this
purpose. The NCMB shall report to this Office the results of this
attempt at conciliation and delimitation of the issues within thirty (30)
days from the parties' receipt of this Order, in no case later than
December 31, 2001. If no settlement of all the issues is reached, this
Office shall thereafter define the outstanding issues and order the
filing of position papers for a ruling on the merits.
ISCDEA

UFE-DFA-KMU sought reconsideration 16 of the above but nonetheless

moved for additional time to file its position paper as directed by the
Assumption of Jurisdiction Order.
On 14 January 2002, Sec. Sto. Tomas denied said motion for
reconsideration.
On 15 January 2002, despite the order enjoining the conduct of any
strike or lockout and conciliation efforts by the NCMB, the employee
members of UFE-DFA-KMU at Nestlé's Cabuyao Plant went on strike.
In view of the above, in an Order dated on 16 January 2002, Sec. Sto.
Tomas directed: (1) the members of UFE-DFA-KMU to return-to-work within
twenty-four (24) hours from receipt of such Order; (2) Nestlé to accept back
all returning workers under the same terms and conditions existing
preceding to the strike; (3) both parties to cease and desist from committing
acts inimical to the on-going conciliation proceedings leading to the further
deterioration of the situation; and (4) the submission of their respective
position papers within ten (10) days from receipt thereof. But
notwithstanding the Return-to-Work Order, the members of UFE-DFA-KMU
continued with their strike, thus, prompting Sec. Sto. Tomas to seek the
assistance of the Philippine National Police (PNP) for the enforcement of said
order.
On 7 February 2002, Nestlé and UFE-DFA-KMU filed their respective
position papers. Nestlé addressed several issues concerning economic
provisions of the CBA as well as the non-inclusion of the issue of the
Retirement Plan in the collective bargaining negotiations. On the other hand,
UFE-DFA-KMU limited itself to the issue of whether or not the retirement plan
was a mandatory subject in its CBA negotiations.
On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the
chance to tender its stand on the other issues raised by Nestlé but not
covered by its initial position paper by way of a Supplemental Position Paper.
UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed
several pleadings, one of which was a Manifestation with Motion for
Reconsideration of the Order dated February 11, 2002 assailing the Order of
February 11, 2002 for supposedly being contrary to law, jurisprudence and
the evidence on record. The union posited that Sec. Sto. Tomas "could only
assume jurisdiction over the issues mentioned in the notice of strike subject
of the current dispute," 17 and that the Amended Notice of Strike it filed did
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 not cite, as one of the grounds, the CBA deadlock. cHESAD

On 8 March 2002, Sec. Sto. Tomas denied the motion for

reconsideration of UFE-DFA-KMU.
Thereafter, UFE-DFA-KMU filed a Petition for Certiorari 18 before the
Court of Appeals, alleging that Sec. Sto. Tomas committed grave abuse of
discretion amounting to lack or excess of jurisdiction when she issued the
Orders of 11 February 2002 and 8 March 2002.
In the interim, in an attempt to finally resolve the crippling labor
dispute between the parties, then Acting Secretary of the DOLE, Hon. Arturo
D. Brion, came out with an Order 19 dated 02 April 2002, ruling that:
a. we hereby recognize that the present Retirement Plan at the
Nestlé Cabuyao Plant is a unilateral grant that the parties have
expressly so recognized subsequent to the Supreme Court's ruling in
Nestlé, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and is
therefore not a mandatory subject for bargaining;
b. the Union's charge of unfair labor practice against the
Company is hereby dismissed for lack of merit;
c. the parties are directed to secure the best applicable terms
of the recently concluded CBSs between Nestlé Phils. Inc. and it eight
(8) other bargaining units, and to adopt these as the terms and
conditions of the Nestlé Cabuyao Plant CBA;
d. all union demands that are not covered by the provisions of
the CBAs of the other eight (8) bargaining units in the Company are
hereby denied;
e. all existing provisions of the expired Nestlé Cabuyao Plant
CBA without any counterpart in the CBAs of the other eight bargaining
units in the Company are hereby ordered maintained as part of the
new Nestlé Cabuyao Plant CBA;
f. the parties shall execute their CBA within thirty (30) days
from receipt of this Order, furnishing this Office a copy of the signed
Agreement;
g. this CBA shall, in so far as representation is concerned, be for
a term of five (5) years; all other provisions shall be renegotiated not
later than three (3) years after its effective date which shall be
December 5, 2001 (or on the first day six months after the expiration
on June 4, 2001 of the superceded CBA). cIACaT

UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such

was subsequently denied on 6 May 2002.
For the second time, UFE-DFA-KMU went to the Court of Appeals via
another Petition for Certiorari seeking to annul the Orders of 02 April 2002
and 06 May 2002 of the Secretary of the DOLE, having been issued in grave
abuse of discretion amounting to lack or excess of jurisdiction.
On 27 February 2003, the appellate court promulgated its Decision on
the twin petitions for certiorari, ruling entirely in favor of UFE-DFA-KMU, the
dispositive part thereof stating —

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 WHEREFORE, in view of the foregoing, there being grave abuse
on the part of the public respondent in issuing all the assailed Orders,
both petitions are hereby GRANTED. The assailed Orders dated
February 11, 2001, and March 8, 2001 (CA-G.R. SP No. 69805), as
well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP
No. 71540) of the Secretary of Labor and Employment in the case
entitled: "IN RE: LABOR DISPUTE AT NESTLE PHILIPPINES INC.
(CABUYAO FACTORY)" under OS-AJ-0023-01 (NCMB-RBIV-CAV-PM-08-
035-01, NCMB-RBIV-LAG-NS-10-037-01, NCMB-RBIV-LAG-NS-11-10-
039 — 01) are hereby ANNULLED and SET ASIDE. Private respondent
is hereby directed to resume the CBA negotiations with the petitioner.
20

Both parties appealed the aforequoted ruling. Nestlé essentially

assailed that part of the decision finding the DOLE Secretary to have gravely
abused her discretion amounting to lack or excess of jurisdiction when she
ruled that the Retirement Plan was not a valid issue to be tackled during the
CBA negotiations; UFE-DFA-KMU, in contrast, questioned the appellate
court's decision finding Nestlé free and clear of any unfair labor practice.
Since the motions for reconsideration of both parties were denied by
the Court of Appeals in a joint Resolution dated 27 June 2003, UFE-DFA-KMU
and Nestlé separately filed the instant Petitions for Review on Certiorari
under Rule 45 of the Rules of Court, as amended.
G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestlé seeking
to reverse the Court of Appeals Decision insofar as the appellate court's
failure to find Nestlé guilty of unfair labor practice was concerned; while G.R.
No. 158944-45 was instituted by Nestlé against UFE-DFA-KMU likewise
looking to annul and set aside the part of the Court of Appeals Decision
declaring that: 1) the Retirement Plan was a valid collective bargaining
issue; and 2) the scope of the power of the Secretary of the Department of
Labor and Employment (DOLE) to assume jurisdiction over the labor dispute
between UFE-DFA-KMU and Nestlé was limited to the resolution of questions
and matters pertaining merely to the ground rules of the collective
bargaining negotiations to be conducted between the parties. DSHcTC

On 29 March 2004, this Court resolved 21 to consolidate the two

petitions inasmuch as they (1) involved the same set of parties; (2) arose
from the same set of circumstances, i.e., from several Orders issued by then
DOLE Secretary, Hon. Patricia A. Sto. Tomas, respecting her assumption of
jurisdiction over the labor dispute between Nestlé and UFE-DFA-KMU,
Alabang and Cabuyao Divisions; 22 and (3) similarly assailed the same
Decision and Resolution of the Court of Appeals.
After giving due course to the instant consolidated petitions, this Court
promulgated on 22 August 2006 its Decision, now subject of UFE-DFA-KMU's
Motion for Partial Reconsideration and Nestlé's Motion for Clarification.
In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this
Court address and discuss anew points or arguments that have basically
been passed upon in this Court's 22 August 2006 Decision. Firstly, it
questions this Court's finding that Nestlé was not guilty of unfair labor
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 practice, considering that the transaction speaks for itself, i.e., res ipsa
loquitor. And made an issue again is the question of whether or not the
DOLE Secretary can take cognizance of matters beyond the amended Notice
of Strike.
As to Nestlé's prayer for clarification, the corporation seeks elucidation
respecting the dispositive part of this Court's Decision directing herein
parties to resume negotiations on the retirement compensation package of
the concerned employees. It posits that "[i]n directing the parties to
negotiate the Retirement Plan, the Honorable Court . . . might have
overlooked the fact that here, the Secretary of Labor had already assumed
jurisdiction over the entire 2001-2004 CBA controversy . . . ."
As to the charge of unfair labor
practice:
The motion does not put forward new arguments to substantiate the
prayer for reconsideration of this Court's Decision except for the sole
contention that the transaction speaks for itself, i.e., res ipsa loquitor.
Nonetheless, even a perusal of the arguments of UFE-DFA-KMU in its petition
and memorandum in consideration of the point heretofore raised will not
convince us to change our disposition of the question of unfair labor
practice. UFE-DFA-KMU argues therein that Nestlé's "refusal to bargain on a
very important CBA economic provision constitutes unfair labor practice." 23
It explains that Nestlé set as a precondition for the holding of collective
bargaining negotiations the non-inclusion of the issue of Retirement Plan. In
its words, "respondent Nestlé Phils., Inc. insisted that the Union should first
agree that the retirement plan is not a bargaining issue before respondent
Nestlé would agree to discuss other issues in the CBA." 24 It then concluded
that "the Court of Appeals committed a legal error in not ruling that
respondent company is guilty of unfair labor practice. It also committed a
legal error in failing to award damages to the petitioner for the ULP
committed by the respondent." 25 TEHIaA

We are unconvinced still.

The duty to bargain collectively is mandated by Articles 252 and 253 of
the Labor Code, as amended, which state —
ART. 252. Meaning of duty to bargain collectively. — The duty
to bargain collectively means the performance of a mutual obligation
to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to wages, hours, of
work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under
such agreement and executing a contract incorporating such
agreements if requested by either party but such duty does not
compel any party to agree to a proposal or to make any concession.
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
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 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 of conditions of
the existing agreement during the 60-day period and/or until a new
agreement is reached by the parties.
Obviously, the purpose of collective bargaining is the reaching of an
agreement resulting in a contract binding on the parties; but the failure to
reach an agreement after negotiations have continued for a reasonable
period does not establish a lack of good faith. The statutes invite and
contemplate a collective bargaining contract, but they do not compel one.
The duty to bargain does not include the obligation to reach an agreement.
The crucial question, therefore, of whether or not a party has met his
statutory duty to bargain in good faith typically turns on the facts of the
individual case. As we have said, there is no per se test of good faith in
bargaining. Good faith or bad faith is an inference to be drawn from the
facts. To some degree, the question of good faith may be a question of
credibility. The effect of an employer's or a union's individual actions is not
the test of good-faith bargaining, but the impact of all such occasions or
actions, considered as a whole, and the inferences fairly drawn therefrom
collectively may offer a basis for the finding of the NLRC. 26
For a charge of unfair labor practice to prosper, it must be shown that
Nestlé was motivated by ill will, "bad faith, or fraud, or was oppressive to
labor, or done in a manner contrary to morals, good customs, or public
policy, and, of course, that social humiliation, wounded feelings, or grave
anxiety resulted . . ." 27 in disclaiming unilateral grants as proper subjects in
their collective bargaining negotiations. While the law makes it an obligation
for the employer and the employees to bargain collectively with each other,
such compulsion does not include the commitment to precipitately accept or
agree to the proposals of the other. All it contemplates is that both parties
should approach the negotiation with an open mind and make reasonable
effort to reach a common ground of agreement. DcCITS

Herein, the union merely bases its claim of refusal to bargain on a

letter 28 dated 29 May 2001 written by Nestlé where the latter laid down its
position that "unilateral grants, one-time company grants, company-initiated
policies and programs, which include, but are not limited to the Retirement
Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very
nature not proper subjects of CBA negotiations and therefore shall be
excluded therefrom." But as we have stated in this Court's Decision, said
letter is not tantamount to refusal to bargain. In thinking to exclude the issue
of Retirement Plan from the CBA negotiations, Nestlé, cannot be faulted for
considering the same benefit as unilaterally granted, considering that eight
out of nine bargaining units have allegedly agreed to treat the Retirement
Plan as a unilaterally granted benefit. This is not a case where the employer
exhibited an indifferent attitude towards collective bargaining, because the
negotiations were not the unilateral activity of the bargaining representative.
Nestlé's desire to settle the dispute and proceed with the negotiation being
evident in its cry for compulsory arbitration is proof enough of its exertion of
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 reasonable effort at good-faith bargaining.
In the case at bar, Nestle never refused to bargain collectively with
UFE-DFA-KMU. The corporation simply wanted to exclude the Retirement
Plan from the issues to be taken up during CBA negotiations, on the
postulation that such was in the nature of a unilaterally granted benefit. An
employer's steadfast insistence to exclude a particular substantive provision
is no different from a bargaining representative's perseverance to include
one that they deem of absolute necessity. Indeed, an adamant insistence on
a bargaining position to the point where the negotiations reach an impasse
does not establish bad faith. [fn24 p.10] It is but natural that at negotiations,
management and labor adopt positions or make demands and offer
proposals and counter-proposals. On account of the importance of the
economic issue proposed by UFE-DFA-KMU, Nestle could have refused to
bargain with the former — but it did not. And the management's firm stand
against the issue of the Retirement Plan did not mean that it was bargaining
in bad faith. It had a right to insist on its position to the point of stalemate.
The foregoing things considered, this Court replicates below its clear
disposition of the issue:
The concept of "unfair labor practice" is defined by the Labor
Code as:

ART. 247 . CONCEPT OF UNFAIR LABOR PRACTICE

AND PROCEDURE FOR PROSECUTION THEREOF. — Unfair
labor practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate
interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-
management relations.

xxx xxx xxx

The same code likewise provides the acts constituting unfair

labor practices committed by employers, to wit: SEcTHA

ART. 248 . UNFAIR LABOR PRACTICES OF

EMPLOYERS. — It shall be unlawful for an employer to commit
any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the

exercise of their right to self-organization;

(b) To require as a condition of employment that a person

or an employee shall not join a labor organization or shall
withdraw from one to which he belongs;

(c) To contract out services or functions being performed

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

(d) To initiate, dominate, assist or otherwise interfere with

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 the formation or administration of any labor organization,
including the giving of financial or other support to it or its
organizers or supporters;

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

other terms and conditions of employment in order to encourage
or discourage membership in any labor organization. Nothing in
this Code or in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as a
condition for employment, except those employees who are
already members of another union at the time of the signing of
the collective bargaining agreement.

Employees of an appropriate collective bargaining unit who

are not members of the recognized collective bargaining agent
may be assessed a reasonable fee equivalent to the dues and
other fees paid by members of the recognized collective
bargaining agent, if such non-union members accept the benefits
under the collective agreement. Provided, That the individual
authorization required under Article 242, paragraph (o) of this
Code shall not apply to the nonmembers of the recognized
collective bargaining agent; [The article referred to is 241, not
242. — CAA]

(f) To dismiss, discharge, or otherwise prejudice or

discriminate against an employee for having given or being
about to give testimony under this Code; SAcaDE

(g) To violate the duty to bargain collectively as

prescribed by this Code;
(h) To pay negotiation or attorney's fees to the union or its
officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph

notwithstanding, only the officers and agents of corporations
associations or partnerships who have actually participated,
authorized or ratified unfair labor practices shall be held
criminally liable. (Emphasis supplied.)

Herein, Nestlé is accused of violating its duty to bargain

collectively when it purportedly imposed a pre-condition to its
agreement to discuss and engage in collective bargaining
negotiations with UFE-DFA-KMU.
A meticulous review of the record and pleadings of the cases at
bar shows that, of the two notices of strike filed by UFE-DFA-KMU
before the NCMB, it was only on the second that the ground of unfair
labor practice was alleged. Worse, the 7 November 2001 Notice of
Strike merely contained a general allegation that Nestlé committed
unfair labor practice by bargaining in bad faith for supposedly
"setting pre-condition in the ground rules (Retirement issue)." (Notice
of Strike of 7 November 2001; Annex "C" of UFE-DFA-KMU Position
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 Paper; DOLE original records, p. 146.) In contrast, Nestlé, in its
Position Paper, did not confine itself to the issue of the non-inclusion
of the Retirement Plan but extensively discussed its stance on other
economic matters pertaining to the CBA. It is UFE-DFA-KMU,
therefore, who had the burden of proof to present substantial
evidence to support the allegation of unfair labor practice.
A perusal of the allegations and arguments raised by UFE-DFA-
KMU in the Memorandum (in G.R. Nos. 158930-31) will readily
disclose the need for the presentation of evidence other than its bare
contention of unfair labor practice in order to make certain the
propriety or impropriety of the ULP charge hurled against Nestlé.
Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor
Code:

. . . . In cases of unfair labor practices, the notice of

strike shall as far as practicable, state the acts
complained of and the efforts to resolve the dispute amicably."
(Emphasis supplied.)

In the case at bar, except for the assertion put forth by UFE-
DFA-KMU, neither the second Notice of Strike nor the records of these
cases substantiate a finding of unfair labor practice. It is not enough
that the union believed that the employer committed acts of unfair
labor practice when the circumstances clearly negate even aprima
f a c i e showing to warrant such a belief. (Tiu v. National Labor
Relations Commission , G.R. No. 123276, 18 August 1997, 277 SCRA
681, 688.)
Employers are accorded rights and privileges to assure their
self-determination and independence and reasonable return of
capital. (Capitol Medical Center, Inc. v. Meris , G.R. No. 155098, 16
September 2005, 470 SCRA 125, 136.) This mass of privileges
comprises the so-called management prerogatives. ( Capitol Medical
Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA
125, 136.) In this connection, the rule is that good faith is always
presumed. As long as the company's exercise of the same is in good
faith to advance its interest and not for purpose of defeating or
circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld. (Capitol Medical Center, Inc.
v. Meris , G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.)
ADEacC

There is no per se test of good faith in bargaining. (Hongkong

Shanghai Banking Corporation Employees Union v. National Labor
Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA
509, 518.) Good faith or bad faith is an inference to be drawn from
the facts. ( Hongkong Shanghai Banking Corporation Employees Union
v. National Labor Relations Commission , G.R. No. 125038, 6
November 1997, 281 SCRA 509, 518.) Herein, no proof was presented
to exemplify bad faith on the part of Nestlé apart from mere
allegation. Construing arguendo that the content of the aforequoted
letter of 29 May 2001 laid down a pre-condition to its agreement to
bargain with UFE-DFA-KMU, Nestlé's inclusion in its Position Paper of
its proposals affecting other matters covered by the CBA negates the
claim of refusal to bargain or bargaining in bad faith. Accordingly,
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 since UFE-DFA-KMU failed to proffer substantial evidence that would
overcome the legal presumption of good faith on the part of Nestlé,
the award of moral and exemplary damages is unavailing.
As to the jurisdiction of the DOLE
Secretary under the amended Notice
of Strike:
This Court is not convinced by the argument raised by UFE-DFA-KMU
that the DOLE Secretary should not have gone beyond the disagreement on
the ground rules of the CBA negotiations. The union doggedly asserts that
the entire labor dispute between herein parties concerns only the ground
rules.
Lest it be forgotten, it was UFE-DFA-KMU which first alleged a
bargaining deadlock as the basis for the filing of its Notice of Strike; and at
the time of the filing of the first Notice of Strike, several conciliation
conferences had already been undertaken where both parties had already
exchanged with each other their respective CBA proposals. In fact, during
the conciliation meetings before the NCMB, but prior to the filing of the
notices of strike, the parties had already delved into matters affecting the
meat of the collective bargaining agreement.
The Secretary of the DOLE simply relied on the Notices of Strike that
were filed by UFE-DFA-KMU as stated in her Order of 08 March 2002, to wit:
DIETcH

. . . The records disclose that the Union filed two Notices of

Strike. The First is dated October 31, 2001 whose grounds are cited
verbatim hereunder:
"A. Bargaining Deadlock
1. Economic issues (specify)

1. Retirement
2. Panel Composition

3. Costs and Attendance

4. CBA"

The second Notice of Strike is dated November 7, 2001 and the

cited ground is like quoted verbatim below:

"B. Unfair Labor Practices (specify)

Bargaining in bad faith —

Setting pre-condition in the ground

rules (Retirement issue)"
Nowhere in the second Notice of Strike is it indicated that this
Notice is an amendment to and took the place of the first Notice of
Strike. In fact, our Assumption of Jurisdiction Order dated November
29, 2001 specifically cited the two (2) Notices of Strike without any
objection on the part of the Union . . . . 29
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 Had the parties not been at the stage where the substantive provisions of
the proposed CBA had been put in issue, the union would not have based
thereon its initial notice to strike. This Court maintains its original position in
the Decision that, based on the Notices of Strike filed by UFE-DFA-KMU, the
Secretary of the DOLE rightly decided on matters of substance. That the
union later on changed its mind is of no moment because to give premium to
such would make the legally mandated discretionary power of the Dole
Secretary subservient to the whims of the parties. IEaHSD

As to the point of clarification on the

resumption of negotiations
respecting the Retirement Plan:
As for the supposed confusion or uncertainty of the dispositive part of
this Court's Decision, Nestle moves for clarification of the statement — "The
parties are directed to resume negotiations respecting the Retirement Plan
and to take action consistent with the discussion hereinabove set forth. No
costs." The entire fallo of this Court's Decision reads:
WHEREFORE, in view of the foregoing, the Petition in G.R. No.
158930-31 seeking that Nestlé be declared to have committed unfair
labor practice in allegedly setting a precondition to bargaining is
DENIED. The Petition in G.R. No. 158944-45, however, is PARTLY
GRANTED in that we REVERSE the ruling of the Court of Appeals in CA
G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE
gravely abused her discretion in failing to confine her assumption of
jurisdiction power over the ground rules of the CBA negotiations; but
the ruling of the Court of Appeals on the inclusion of the Retirement
Plan as a valid issue in the collective bargaining negotiations between
UFE-DFA-KMU and Nestlé is AFFIRMED. The parties are directed to
resume negotiations respecting the Retirement Plan and to take action
consistent with the discussions hereinabove set forth. No costs.

Nestle interprets the foregoing as an order for the parties to resume

negotiations by themselves respecting the issue of retirement benefits due
the employees of the Cabuyao Plant. Otherwise stated, Nestle posits that the
dispositive part of the Decision directs the parties to submit to a voluntary
mode of dispute settlement.
A read-through of this Court's Decision reveals that the ambiguity is
more ostensible than real. This Court's Decision of 22 August 2006
designated marked boundaries as to the implications of the assailed Orders
of the Secretary of the DOLE. We said therein that 1) the Retirement Plan is
still a valid issue for herein parties' collective bargaining negotiations; 2) the
Court of Appeals committed reversible error in limiting to the issue of the
ground rules the scope of the power of the Secretary of Labor to assume
jurisdiction over the subject labor dispute; and 3) Nestlé is not guilty of unfair
labor practice. Nowhere in our Decision did we require parties to submit to
negotiate by themselves the tenor of the retirement benefits of the
concerned employees of Nestlé, precisely because the Secretary of the DOLE
had already assumed jurisdiction over the labor dispute subject of herein
petitions. Again, we spell out what encompass the Secretary's assumption of
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 jurisdiction power. The Secretary of the DOLE has been explicitly granted by
Article 263 (g) of the Labor Code the authority to assume jurisdiction over a
labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, and decide the same accordingly. And,
as a matter of necessity, it includes questions incidental to the labor dispute;
that is, issues that are necessarily involved in the dispute itself, and not just
to that ascribed in the Notice of Strike or otherwise submitted to him for
resolution. In the case at bar, the issue of retirement benefits was
specifically what was presented before the Secretary of the DOLE; hence,
We reject Nestlé's interpretation. Our decision is crystal and cannot be
interpreted any other way. The Secretary having already assumed
jurisdiction over the labor dispute subject of these consolidated petitions, the
issue concerning the retirement benefits of the concerned employees must
be remanded back to him for proper disposition. ACaDTH

All told, in consideration of the points afore-discussed and the fact that
no substantial arguments have been raised by either party, this Court
remains unconvinced that it should modify or reverse in any way its
disposition of herein cases in its earlier Decision. The labor dispute between
the Nestle and UFE-DFA-KMU has dragged on long enough. As no other
issues are availing, let this Resolution write an ending to the protracted labor
dispute between Nestlé and UFE-DFA-KMU (Cabuyao Division).
WHEREFORE, premises considered, the basic issues of the case having
been passed upon and there being no new arguments availing, the Motion
for Partial Reconsideration is hereby DENIED WITH FINALITY for lack of merit.
Let these cases be remanded to the Secretary of the Department of Labor
and Employment for proper disposition, consistent with the discussions in
this Court's Decision of 22 August 2006 and as hereinabove set forth. No
costs.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Azcuna * and Tinga, * JJ., concur.

Footnotes

1. Penned by Associate Justice Minita V. Chico-Nazario with retired Chief Justice

Artemio V. Panganiban, Associate Justices Consuelo Ynares-Santiago, Alicia
Austria-Martinez and Romeo J. Callejo, Jr. concurring. G.R. Nos. 158930-31, 22
August 2006, 499 SCRA 521, 551-552.
2. Rollo of G.R. Nos. 158944-45, pp. 1371-1391.

3. Rollo of G.R. Nos. 158930-31, pp. 1944-1956.

4. Alabang and Cabuyao Divisions.

5. Annex "B" of the Petition; rollo of G.R. Nos. 158930-31, Vol. I, p. 281.
6. Id.

7. The Cabuyao Division of UFE-DFA-KMU became the sole bargaining unit involved
in the subject CBA negotiations because of the closure of the Nestlé Alabang
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 Plant. HETDAa

8. Annex "F-1" of the Petition; rollo of G.R. Nos. 158930-31, p. 460.

9. In a letter addressed to Atty. Jose Velasco, Director, National Conciliation and

Mediation Board, Regional Office No. IV, Imus, Cavite; Annex "F" of the
Petition; rollo of G.R. Nos. 158944-45, p. 104.

10. Id.
11. Records, Vol. IV, p. 1.

12. Records, Vol. II, p. 146.

13. Of the 789 regular rank-and-file employees of Nestlé (Cabuyao Factory,
Laguna), only 724 employees voted; the YES ballot garnered 708 votes, while
only 13 employees decided against the plan to stage a strike; Records, Vol. II,
p. 150.

14. Dated 23 November 2001; rollo of G.R. Nos. 158944-45, pp. 112-129.
15. Id. at 130-135.

16. Dated 29 November 2001; Annex "L" of the Petition; rollo of G.R. Nos. 158944-
45, pp. 136-182.
17. Id.

18. CA rollo (CA-G.R. SP No. 69805).

19. Annex "BB" of the Petition; rollo of G.R. Nos. 158944-45, pp. 508-520.

20. Id. at 43.

21. SC Resolution dated 29 March 2004.
22. Concerning employees at Nestlé's Alabang and Cabuyao factories.

23. Petitioner's Memorandum, pp 10-11; rollo of G.R. Nos. 158930-31, pp. 1672-
1673.
24. Id.

25. Id. at 1671-1672.

26. 48 Am. Jur. 2d, Labor and Labor Relations, Sec. 1028, 828.

27. San Miguel Corporation v. Del Rosario, G.R. Nos. 168194 & 168603, 13
December 2005, 477 SCRA 604, 619.

28. ". . . [U]nilateral grants, one-time company grants, company-initiated policies

and programs, which include, but are not limited to the Retirement Plan,
Incidental Straight Duty Pay and Calling Pay Premium, are by their very
nature not proper subjects of CBA negotiations and therefore shall be
excluded therefrom." cHSTEA

29. Rollo of G.R. Nos. 158930-31, Vol. I, pp. 333-334.

* Justices Adolfo S. Azcuna and Dante O. Tinga were designated to sit as additional
members replacing retired Chief Justice Artemio V. Panganiban and Justice
Romeo J. Callejo, Sr. per Raffle dated 3 December 2007.
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 THIRD DIVISION

[G.R. No. 155690. June 30, 2005.]

CAPITOL MEDICAL CENTER, INC., petitioner, vs. HON.

CRESENCIANO B. TRAJANO, in his capacity as Secretary of
the Department of Labor and Employment, and CAPITOL
MEDICAL CENTER EMPLOYEES ASSOCIATION-AFW,
respondents.

DECISION

SANDOVAL-GUTIERREZ, J : p

For our resolution is the instant petition for review on certiorari under
Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the
Decision 1 dated September 20, 2001 and the Resolution 2 dated October 18,
2002 rendered by the Court of Appeals in CA-G.R. SP No. 53479, entitled
"Capitol Medical Center, Inc. vs. Hon. Cresenciano B. Trajano, in his capacity as
Secretary of the Department of Labor and Employment and Capitol Medical
Center Employees Association-AFW."' AIHaCc

The factual antecedents as gleaned from the records are:

Capitol Medical Center, Inc., petitioner, is a hospital with address at Panay

Avenue corner Scout Magbanua Street, Quezon City. Upon the other hand,
Capitol Medical Center Employees Association-Alliance of Filipino Workers,
respondent, is a duly registered labor union acting as the certified collective
bargaining agent of the rank-and-file employees of petitioner hospital.
On October 2, 1997, respondent union, through its president Jaime N.
Ibabao, sent petitioner a letter requesting a negotiation of their Collective
Bargaining Agreement (CBA).
In its reply dated October 10, 1997, petitioner, challenging the union's
legitimacy, refused to bargain with respondent. Subsequently or on October 15,
1997, petitioner filed with the Bureau of Labor Relations (BLR), Department of
Labor and Employment, a petition for cancellation of respondent's certificate of
registration, docketed as NCR-OD-9710-006-IRD. 3
For its part, on October 29, 1997, respondent filed with the National
Conciliation and Mediation Board (NCMB), National Capital Region, a notice of
strike, docketed as NCMB-NCR-NS-10-453-97. Respondent alleged that
petitioner's refusal to bargain constitutes unfair labor practice. Despite several
conferences and efforts of the designated conciliator-mediator, the parties
failed to reach an amicable settlement. SECcIH

On November 28, 1997, respondent staged a strike.

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 On December 4, 1997, former Labor Secretary Leonardo A. Quisumbing,
now Associate Justice of this Court, issued an Order assuming jurisdiction over
the labor dispute and ordering all striking workers to return to work and the
management to resume normal operations, thus:
"WHEREFORE, this Office assumes jurisdiction over the labor
disputes at Capitol Medical Center pursuant to Article 263 (g) of the
Labor Code, as amended. Consequently, all striking workers are
directed to return to work within twenty-four (24) hours from the
receipt of this Order and the management to resume normal operations
and accept back all striking workers under the same terms and
conditions prevailing before the strike. Further, parties are directed to
cease and desist from committing any act that may exacerbate the
situation. CaAcSE

Moreover, parties are hereby directed to submit within 10 days

from receipt of this Order proposals and counter-proposals leading to
the conclusion of the collective bargaining agreement in compliance
with aforementioned Resolution of the Office as affirmed by the
Supreme Court.

SO ORDERED."

Petitioner then filed a motion for reconsideration but was denied in an

Order dated April 27, 1998.

On June 23, 1998, petitioner filed with this Court a petition for certiorari
assailing the Labor Secretary's Orders. Pursuant to our ruling in St. Martin
Funeral Home vs. The National Labor Relations Commission, et al., 4 we referred
the petition to the Court of Appeals for its appropriate action and disposition.
Meantime, on October 1, 1998, the Regional Director, in NCR-OD-9710-
006-IRD, issued an Order denying the petition for cancellation of respondent
union's certificate of registration. 5

On September 20, 2001, the Appellate Court rendered a Decision

affirming the Orders of the Secretary of Labor. The Court of Appeals held:
"Anent the first issue raised by the petitioner, We find the same
untenable. The public respondent acted well within his duty to order
the petitioner hospital to bargain collectively, for it was the surest way
to end the dispute. In LMG Chemicals Corporation vs. Secretary of the
Department of Labor and Employment , the Hon. Leonardo A.
Quisumbing and Chemical Worker's Union (G.R. No. 127422, April 17,
2001), the Supreme Court made the following pronouncement, to wit:
'It is well settled in our jurisprudence that the authority of
the Secretary of Labor to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all
questions and controversies arising therefrom. The power is
plenary and discretionary in nature to enable him to effectively
and efficiently dispose of the primary dispute.
xxx xxx xxx
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 Indeed, We find no grave abuse of discretion on the part of
respondent Secretary of Labor whose power is plenary and includes the
resolution of all controversies arising from the labor dispute. In fact, he
was merely following the directive laid down by the Supreme Court
(Decision dated February 4, 1997) in the case of Capitol Medical Center
Alliance of Concerned Employees-Unified Filipino Service Workers
(CMC-ACE-UFSW) vs. Hon. Bienvenido E. Laguesma, Undersecretary of
the Department of Labor and Employment, Capitol Medical Center
Employees Association-Alliance of Filipino Workers and Capitol Medical
Center Incorporated and Dra. Thelma Clemente, President, ordering
petitioner hospital to collectively bargain with the Capitol Medical
Center Employees Association-Alliance of Filipino Workers (private
respondent herein) — the certified bargaining agent.

As earlier mentioned, the petition for cancellation was dismissed

by the regional director in a decision dated September 30, 1998. . . .

xxx xxx xxx

Said decision by the regional director was affirmed by the

Director of the Bureau of Labor Relations in a resolution dated
December 29, 1998, dismissing the appeal of the petitioner hospital
from the said DOLE-NCR's decision.

Finally, the petition for certiorari (docketed as CA-G.R. SP No.

52736) entitled — Capitol Medical Center, Inc. vs. Hon. Benedictor R.
Bitonio, Jr., in his capacity as Director of the Bureau of Labor Relations,
Department of Labor and Employment; Hon. Maximo B. Lim in his
capacity as Regional Director, National Capital Region, Department of
Labor and Employment and Capitol Medical Center Employees
Association (CMCEA-AFW), was dismissed in a decision dated January
11, 2001. The motion for reconsideration which was subsequently filed
was denied on March 23, 2001. DEacIT

xxx xxx xxx

In order to allow an employer to validly suspend the bargaining

process, there must be a valid petition for certification election. The
mere filing of a petition does not ipso facto justify the suspension of
negotiation by the employer (Colegio de San Juan de Letran vs.
Association of Employees and Faculty of Letran and Eleanor Ambas,
G.R. No. 141471, September 18, 2000 ). If pending a petition for
certification, the collective bargaining is allowed by the Supreme Court
to proceed, with more reason should the collective bargaining (in this
case) continue since the High Court had recognized the respondent as
the certified bargaining agent in spite of several petitions for
cancellation filed against it.

xxx xxx xxx

Secondly, We are inclined to agree with the public respondent's

statement that 'the primary assumption of jurisdiction may be
exercised by this Office even without the necessity of prior notice or
hearing given to any of the parties disputants.''(page 56 of the Rollo ).

xxx xxx xxx

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 We are also not convinced by the arguments raised by the
petitioner with respect to its third assigned error. This Court fails to see
any supervening event that would render the execution of the decision
of public respondent impossible. The petitioner asserts that the
respondent union has lost its legitimacy, but at every turn it has been
ruled by the various labor administrative officials that the respondent
union is legitimate. It has failed to convince the labor administrative
officials, We are likewise not persuaded. Unless and until the Certificate
of Registration of the union is cancelled, it (union) remains the certified
bargaining agent and the Hospital has the duty to enter into a
collective bargaining agreement with it.

xxx xxx xxx

WHEREFORE, premises considered, the instant petition is

DENIED, hereby AFFIRMING the two assailed orders, dated December 4,
1997 and April 27, 1998, of the public respondent in OS-AJ-0024-97
(NCMB-NCR-NS-10-453-97).

SO ORDERED."

On October 18, 2002, the Court of Appeals issued a Resolution denying

petitioner's motion for reconsideration.

Hence, this petition for review on certiorari.

Petitioner contends that its petition for the cancellation of respondent

union's certificate of registration involves a prejudicial question that should first
be settled before the Secretary of Labor could order the parties to bargain
collectively.

We are not persuaded.

As aptly stated by the Solicitor General in his comment on the petition,

the Secretary of Labor correctly ruled that the pendency of a petition for
cancellation of union registration does not preclude collective bargaining, thus:
"That there is a pending cancellation proceedings against the
respondent Union is not a bar to set in motion the mechanics of
collective bargaining. If a certification election may still be ordered
despite the pendency of a petition to cancel the union's registration
certificate (National Union of Bank Employees vs. Minister of Labor, 110
SCRA 274 ), more so should the collective bargaining process continue
despite its pendency. We must emphasize that the majority status of
the respondent Union is not affected by the pendency of the Petition
for Cancellation pending against it. Unless its certificate of registration
and its status as the certified bargaining agent are revoked, the
Hospital is, by express provision of the law, duty bound to collectively
bargain with the Union. Indeed, no less than the Supreme Court already
ordered the Hospital to collectively bargain with the Union when it
affirmed the resolution of this Office dated November 18, 1994
directing the management of the Hospital to negotiate a collective
bargaining agreement with the Union. That was the categorical
directive of the High Court in its Resolution dated February 4, 1997 in
Capitol Medical Center Alliance of Concerned Employees-United Filipino
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 Service Worker vs. Hon. Bienvenido E. Laguesma, et al. , G.R. No. L-
118915." DaACIH

Moreover, as mentioned earlier, during the pendency of this case before

the Court of Appeals, the Regional Director, in NCR-OD-9710-006-IRD, issued an
Order on October 1, 1998 denying the petition for cancellation of respondent's
certificate of registration. This Order became final and executory and recorded
in the BLR's Book of Entries of Judgments on June 3, 1999.
Petitioner also maintains that the Secretary of Labor cannot exercise his
powers under Article 263 (g) of the Labor Code without observing the
requirements of due process.

Article 263 (g) of the Labor Code, as amended, provides:

"ART. 263. Strikes, Picketing and Lockouts. —
xxx xxx xxx

(g) When, in his opinion, there exists a labor dispute causing

or likely to cause a strike or lockout in an industry indispensable to the
national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption
or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall
immediately resume operations and readmit all workers under the
same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the Commission may seek the
assistance of law enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue to enforce the
same. IEaCDH

. . . In labor disputes adversely affecting the continued operation

of such hospitals, clinics or medical institutions, it shall be the duty of
the striking union or locking-out employer to provide and maintain an
effective skeletal workforce of medical and other health personnel,
whose movement and services shall be unhampered and unrestricted,
as are necessary to insure the proper and adequate protection of the
life and health of its patients, most especially emergency cases, for the
duration of the strike or lockout. In such cases, therefore, the Secretary
of Labor and Employment is mandated to immediately assume, within
twenty-four (24) hours from knowledge of the occurrence of such a
strike or lockout, jurisdiction over the same or certify it to the
Commission for compulsory arbitration. For this purpose, the
contending parties are strictly enjoined to comply with such orders,
prohibitions and/or injunctions as are issued by the Secretary of Labor
and Employment or the Commission, under pain of immediate
disciplinary action, including dismissal or loss of employment status or
payment by the locking-out employer of backwages, damages and
other affirmative relief, even criminal prosecution against either or
both of them.
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 The foregoing notwithstanding, the President of the Philippines
shall not be precluded from determining the industries that, in his
opinion, are indispensable to the national interest, and from
intervening at any time and assuming jurisdiction over any such labor
dispute in order to settle or terminate the same.

xxx xxx xxx

I n Magnolia Poultry Employees Union vs. Sanchez, 6 we held that the

discretion to assume jurisdiction may be exercised by the Secretary of Labor
and Employment without the necessity of prior notice or hearing given to any of
the parties. The rationale for his primary assumption of jurisdiction can
justifiably rest on his own consideration of the exigency of the situation in
relation to the national interests.
In sum, petitioner's submissions are bereft of merit.

WHEREFORE, the petition is DENIED. The assailed Decision dated

September 20, 2001 and the Resolution dated October 18, 2002 of the Court of
Appeals in CA-G.R. SP No. 53479 are AFFIRMED. Costs against petitioner. DTaAHS

SO ORDERED.

Panganiban, Corona, Carpio Morales and Garcia, JJ., concur.

Footnotes

1. Penned by Justice Ramon Mabutas, Jr. (retired), and concurred in by Justice

Roberto A. Barrios and Justice Edgardo P. Cruz, Annex "A" of the Petition,
Rollo at 31-41.
2. Annex "B", id . at 42-44.

3. The petition alleged as ground for cancellation of respondent union's

certificate of registration its violation of Article 239 of the Labor Code or its
failure to submit the annual financial statements from 1992 to 1996.

4. G.R. No. 130866, September 16, 1998, 295 SCRA 494, holding that a petition
for certiorari assailing the decision or order of the Secretary of Labor should
be initially filed with the Court of Appeals, no longer with this Court, pursuant
to the doctrine of hierarchy of courts.

5. Upon appeal, the BLR issued a Resolution dated December 29, 1998 affirmed
the Regional Director's Order. Petitioner then filed a motion for
reconsideration but was denied in a Resolution dated March 4, 1999.
Subsequently, an Entry of Judgment was issued on June 3, 1999.

6. G.R. No. 76227-28, November 5, 1986, Minute Resolution. See also C.A.
Azucena, Jr., The Labor Code with Comments and Cases, Vol. II, Fourth
Edition 1999, Reprinted 2001 at 452.

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 SECOND DIVISION

[G.R. No. 114974. June 16, 2004.]

STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE) ,

petitioner, vs. The Honorable MA. NIEVES R. CONFESOR, in
her capacity as SECRETARY OF LABOR AND EMPLOYMENT;
and the STANDARD CHARTERED BANK, respondents.

DECISION

CALLEJO, SR., J : p

This is a petition for certiorari under Rule 65 of the Rules of Court filed by
the Standard Chartered Bank Employees Union, seeking the nullification of the
October 29, 1993 Order 1 of then Secretary of Labor and Employment Nieves R.
Confesor and her resolutions dated December 16, 1993 and February 10, 1994.

The Antecedents
Standard Chartered Bank (the Bank, for brevity) is a foreign banking
corporation doing business in the Philippines. The exclusive bargaining agent of
the rank and file employees of the Bank is the Standard Chartered Bank
Employees Union (the Union, for brevity).

In August of 1990, the Bank and the Union signed a five-year collective
bargaining agreement (CBA) with a provision to renegotiate the terms thereof
on the third year. Prior to the expiration of the three-year period 2 but within
the sixty-day freedom period, the Union initiated the negotiations. On February
18, 1993, the Union, through its President, Eddie L. Divinagracia, sent a letter 3
containing its proposals 4 covering political provisions 5 and thirty-four (34)
economic provisions. 6 Included therein was a list of the names of the members
of the Union’s negotiating panel. 7
In a Letter dated February 24, 1993, the Bank, through its Country
Manager Peter H. Harris, took note of the Union’s proposals. The Bank attached
its counter-proposal to the non-economic provisions proposed by the Union. 8
The Bank posited that it would be in a better position to present its counter-
proposals on the economic items after the Union had presented its justifications
for the economic proposals. 9 The Bank, likewise, listed the members of its
negotiating panel. 10 The parties agreed to set meetings to settle their
differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through
Divinagracia, suggested to the Bank’s Human Resource Manager and head of
the negotiating panel, Cielito Diokno, that the bank lawyers should be excluded
from the negotiating team. The Bank acceded. 11 Meanwhile, Diokno suggested
to Divinagracia that Jose P. Umali, Jr., the President of the National Union of
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 Bank Employees (NUBE), the federation to which the Union was affiliated, be
excluded from the Union’s negotiating panel. 12 However, Umali was retained as
a member thereof.
On March 12, 1993, the parties met and set the ground rules for the
negotiation. Diokno suggested that the negotiation be kept a “family affair.”
The proposed non-economic provisions of the CBA were discussed first. 13 Even
during the final reading of the non-economic provisions on May 4, 1993, there
were still provisions on which the Union and the Bank could not agree.
Temporarily, the notation “DEFERRED” was placed therein. Towards the end of
the meeting, the Union manifested that the same should be changed to
“DEADLOCKED” to indicate that such items remained unresolved. Both parties
agreed to place the notation “DEFERRED/DEADLOCKED.” 14

On May 18, 1993, the negotiation for economic provisions commenced. A

presentation of the basis of the Union’s economic proposals was made. The
next meeting, the Bank made a similar presentation. Towards the end of the
Bank’s presentation, Umali requested the Bank to validate the Union’s
“guestimates,” especially the figures for the rank and file staff. 15 In the
succeeding meetings, Umali chided the Bank for the insufficiency of its counter-
proposal on the provisions on salary increase, group hospitalization, death
assistance and dental benefits. He reminded the Bank, how the Union got what
it wanted in 1987, and stated that if need be, the Union would go through the
same route to get what it wanted. 16

Upon the Bank’s insistence, the parties agreed to tackle the economic
package item by item. Upon the Union’s suggestion, the Bank indicated which
provisions it would accept, reject, retain and agree to discuss. 17 The Bank
suggested that the Union prioritize its economic proposals, considering that
many of such economic provisions remained unresolved. The Union, however,
demanded that the Bank make a revised itemized proposal.

In the succeeding meetings, the Union made the following proposals:

Wage Increase:
1st Year — Reduced from 45% to 40%
2nd Year — Retain at 20%
Total = 60%
Group Hospitalization Insurance:
Maximum disability benefit reduced from P75,000.00 to P60,000.00 per
illness annually

Death Assistance:
For the employee — Reduced from P50,000.00 to P45,000.00
For Immediate Family Member — Reduced from P30,000.00 to
P25,000.00

Dental and all others — No change from the original demand. 18

In the morning of the June 15, 1993 meeting, the Union suggested that if
the Bank would not make the necessary revisions on its counter-proposal, it
would be best to seek a third party assistance. 19 After the break, the Bank
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 presented its revised counter-proposal 20 as follows:
Wage Increase: 1st Year — from P1,000 to P1,050.00
2nd Year — P800.00–no change

Group Hospitalization Insurance

From: P35,000.00 per illness
To: P35,000.00 per illness per year

Death Assistance — For employee

From: P20,000.00
To: P25,000.00

Dental Retainer — Original offer remains the same 21

The Union, for its part, made the following counter-proposal:

Wage Increase: 1st Year — 40%
2nd Year — 19.5%
Group Hospitalization Insurance
From: P60,000.00 per year
To: P50,000.00 per year

Dental:
Temporary Filling/ — P150.00
Tooth Extraction
Permanent Filling — 200.00
Prophylaxis — 250.00
Root Canal — From P2,000 per tooth
To: 1,800.00 per tooth

Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For Immediate Family Member: From P25,000.00 to P20,000.00. 22

The Union’s original proposals, aside from the above-quoted, remained

the same.

Another set of counter-offer followed:

Management Union

Wage Increase
1st Year — P1,050.00 40%
2nd Year — 850.00 19.0% 23

Diokno stated that, in order for the Bank to make a better offer, the Union
should clearly identify what it wanted to be included in the total economic
package. Umali replied that it was impossible to do so because the Bank’s
counter-proposal was unacceptable. He furthered asserted that it would have
been easier to bargain if the atmosphere was the same as before, where both
panels trusted each other . Diokno requested the Union panel to refrain from
involving personalities and to instead focus on the negotiations. 24 He
suggested that in order to break the impasse, the Union should prioritize the
items it wanted to iron out. Divinagracia stated that the Bank should make the
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 first move and make a list of items it wanted to be included in the economic
package. Except for the provisions on signing bonus and uniforms, the Union
and the Bank failed to agree on the remaining economic provisions of the CBA.
The Union declared a deadlock 25 and filed a Notice of Strike before the National
Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-
NCR-NS-06-380-93. 26

On the other hand, the Bank filed a complaint for Unfair Labor Practice
(ULP) and Damages before the Arbitration Branch of the National Labor
Relations Commission (NLRC) in Manila, docketed as NLRC Case No. 00-06-
04191-93 against the Union on June 28, 1993. The Bank alleged that the Union
violated its duty to bargain, as it did not bargain in good faith. It contended that
the Union demanded “sky high economic demands,” indicative of blue-sky
bargaining. 27 Further, the Union violated its no strike- no lockout clause by
filing a notice of strike before the NCMB. Considering that the filing of notice of
strike was an illegal act, the Union officers should be dismissed. Finally, the
Bank alleged that as a consequence of the illegal act, the Bank suffered
nominal and actual damages and was forced to litigate and hire the services of
the lawyer. 28

On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves
R. Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order
assuming jurisdiction over the labor dispute at the Bank. The complaint for ULP
filed by the Bank before the NLRC was consolidated with the complaint over
which the SOLE assumed jurisdiction. After the parties submitted their
respective position papers, the SOLE issued an Order on October 29, 1993, the
dispositive portion of which is herein quoted:
WHEREFORE, the Standard Chartered Bank and the Standard
Chartered Bank Employees Union — NUBE are hereby ordered to
execute a collective bargaining agreement incorporating the
dispositions contained herein. The CBA shall be retroactive to 01 April
1993 and shall remain effective for two years thereafter, or until such
time as a new CBA has superseded it. All provisions in the expired CBA
not expressly modified or not passed upon herein are deemed retained
while all new provisions which are being demanded by either party are
deemed denied, but without prejudice to such agreements as the
parties may have arrived at in the meantime.

The Bank’s charge for unfair labor practice which it originally

filed with the NLRC as NLRC-NCR Case No. 00-06-04191-93 but which is
deemed consolidated herein, is dismissed for lack of merit. On the
other hand, the Union’s charge for unfair labor practice is similarly
dismissed.

Let a copy of this order be furnished the Labor Arbiter in whose

sala NLRC-NCR Case No. 00-06-04191-93 is pending for his guidance
and appropriate action. 29

The SOLE gave the following economic awards:

1. Wage Increase:
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 a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based
on the 4th year adjusted salary
b) Additional fixed
amount:
Fourth year : P600.00 per month
Fifth year : P400.00 per month

2. Group Insurance
a) Hospitalization : P45,000.00
b) Life : P130,000.00
c) Accident : P130,000.00

3. Medicine Allowance
Fourth year : P5,500.00
Fifth year : P6,000.00

4. Dental Benefits
Provision of dental retainer as proposed by the Bank, but
without diminishing existing
benefits

5. Optical Allowance
Fourth year : P2,000.00
Fifth year : P2,500.00

6. Death Assistance
a) Employee : P30,000.00
b) Immediate : P5,000.00
Family
Member

7. Emergency Leave — Five (5) days for each contingency

8. Loans
a) Car Loan : P200,000.00
b) Housing Loan : It cannot be denied that the costs
attendant to having one’s own
home
have tremendously gone up. The
need, therefore, to improve on this
benefit cannot be overemphasized.
Thus, the management is urged to
increase the existing and allowable
housing loan that the Bank extends
to its employees to an amount that
will give meaning and substance to
this CBA benefit. 30

The SOLE dismissed the charges of ULP of both the Union and the Bank,
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 explaining that both parties failed to substantiate their claims. Citing National
Labor Union v. Insular-Yebana Tobacco Corporation, 31 the SOLE stated that ULP
charges would prosper only if shown to have directly prejudiced the public
interest. SDAcaT

Dissatisfied, the Union filed a motion for reconsideration with clarification,

while the Bank filed a motion for reconsideration. On December 16, 1993, the
SOLE issued a Resolution denying the motions. The Union filed a second motion
for reconsideration, which was, likewise, denied on February 10, 1994.

On March 22, 1994, the Bank and the Union signed the CBA. 32
Immediately thereafter, the wage increase was effected and the signing
bonuses based on the increased wage were distributed to the employees
covered by the CBA.

The Present Petition

On April 28, 1994, the Union filed this petition for certiorari under Rule 65
of the Rules of Procedure alleging as follows:
A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
DISMISSING THE UNION’S CHARGE OF UNFAIR LABOR PRACTICE
IN VIEW OF THE CLEAR EVIDENCE OF RECORD AND ADMISSIONS
PROVING THE UNFAIR LABOR PRACTICES CHARGED. 33

B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
FAILING TO RULE ON OTHER UNFAIR LABOR PRACTICES
CHARGED. 34

C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
DISMISSING THE CHARGES OF UNFAIR LABOR PRACTICES ON THE
GROUND THAT NO PROOF OF INJURY TO THE PUBLIC INTEREST
WAS PRESENTED. 35

The Union alleges that the SOLE acted with grave abuse of discretion
amounting to lack or excess of jurisdiction when it found that the Bank did not
commit unfair labor practice when it interfered with the Union’s choice of
negotiator. It argued that, Diokno’s suggestion that the negotiation be limited
as a “family affair” was tantamount to suggesting that Federation President
Jose Umali, Jr. be excluded from the Union’s negotiating panel. It further argued
that contrary to the ruling of the public respondent, damage or injury to the
public interest need not be present in order for unfair labor practice to prosper.

The Union, likewise, pointed out that the public respondent failed to rule
on the ULP charges arising from the Bank’s surface bargaining. The Union
contended that the Bank merely went through the motions of collective
bargaining without the intent to reach an agreement, and made bad faith
proposals when it announced that the parties should begin from a clean slate. It
argued that the Bank opened the political provisions “up for grabs,” which had
the effect of diminishing or obliterating the gains that the Union had made.
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 The Union also accused the Bank of refusing to disclose material and
necessary data, even after a request was made by the Union to validate its
“guestimates.”
In its Comment, the Bank prayed that the petition be dismissed as the
Union was estopped, considering that it signed the Collective Bargaining
Agreement (CBA) on April 22, 1994. It asserted that contrary to the Union’s
allegations, it was the Union that committed ULP when negotiator Jose Umali, Jr.
hurled invectives at the Bank’s head negotiator, Cielito Diokno, and demanded
that she be excluded from the Bank’s negotiating team. Moreover, the Union
engaged in blue-sky bargaining and isolated the no strike-no lockout clause of
the existing CBA.

The Office of the Solicitor General, in representation of the public

respondent, prayed that the petition be dismissed. It asserted that the Union
failed to prove its ULP charges and that the public respondent did not commit
any grave abuse of discretion in issuing the assailed order and resolutions.

The Issues
The issues presented for resolution are the following: (a) whether or not
the Union was able to substantiate its claim of unfair labor practice against the
Bank arising from the latter’s alleged “interference” with its choice of
negotiator; surface bargaining; making bad faith non-economic proposals; and
refusal to furnish the Union with copies of the relevant data; (b) whether or not
the public respondent acted with grave abuse of discretion amounting to lack
or excess of jurisdiction when she issued the assailed order and resolutions;
and, (c) whether or not the petitioner is estopped from filing the instant action.

The Court’s Ruling

The petition is bereft of merit.

“Interference” under Article

248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e.,
interference in the selection of the Union’s negotiating panel, when Cielito
Diokno, the Bank’s Human Resource Manager, suggested to the Union’s
President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the NUBE, be
excluded from the Union’s negotiating panel. In support of its claim,
Divinagracia executed an affidavit, stating that prior to the commencement of
the negotiation, Diokno approached him and suggested the exclusion of Umali
from the Union’s negotiating panel, and that during the first meeting, Diokno
stated that the negotiation be kept a “family affair.”
Citing the cases of U.S. Postal Service 36 and Harley Davidson Motor Co.,
Inc., AMF, 37 the Union claims that interference in the choice of the Union’s
bargaining panel is tantamount to ULP.

In the aforecited cases, the alleged ULP was based on the employer’s
violation of Section 8(a)(1) and (5) of the National Labor Relations Act (NLRA),
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 38 which pertain to the interference, restraint or coercion of the employer in the
employees’ exercise of their rights to self-organization and to bargain
collectively through representatives of their own choosing; and the refusal of
the employer to bargain collectively with the employees’ representatives. In
both cases, the National Labor Relations Board held that upon the employer’s
refusal to engage in negotiations with the Union for collective-bargaining
contract when the Union includes a person who is not an employee, or one who
is a member or an official of other labor organizations, such employer is
engaged in unfair labor practice under Section 8(a)(1) and (5) of the NLRA.

The Union further cited the case of Insular Life Assurance Co., Ltd.
Employees Association — NATU vs. Insular Life Assurance Co. Ltd . , 39 wherein
this Court said that the test of whether an employer has interfered with and
coerced employees in the exercise of their right to self-organization within the
meaning of subsection (a)(1) is whether the employer has engaged in conduct
which it may reasonably be said, tends to interfere with the free exercise of
employees’ rights under Section 3 of the Act. 40 Further, it is not necessary that
there be direct evidence that any employee was in fact intimidated or coerced
by statements of threats of the employer if there is a reasonable inference that
anti-union conduct of the employer does have an adverse effect on self-
organization and collective bargaining. 41

Under the International Labor Organization Convention (ILO) No. 87

FREEDOM OF ASSOCIATION AND PROTECTION OF THE RIGHT TO ORGANIZE to
which the Philippines is a signatory, “workers and employers, without
distinction whatsoever, shall have the right to establish and, subject only to the
rules of the organization concerned, to job organizations of their own choosing
without previous authorization.” 42 Workers’ and employers’ organizations shall
have the right to draw up their constitutions and rules, to elect their
representatives in full freedom to organize their administration and activities
and to formulate their programs. 43 Article 2 of ILO Convention No. 98
pertaining to the Right to Organize and Collective Bargaining, provides:
Article 2

1. Workers’ and employers’ organizations shall enjoy adequate

protection against any acts or interference by each other or each
other’s agents or members in their establishment, functioning or
administration.

2. In particular, acts which are designed to promote the establishment

of workers’ organizations under the domination of employers or
employers’ organizations or to support workers’ organizations by
financial or other means, with the object of placing such
organizations under the control of employers or employers’
organizations within the meaning of this Article.

The aforecited ILO Conventions are incorporated in our Labor Code,

particularly in Article 243 thereof, which provides:
ART. 243. COVERAGE AND EMPLOYEES’ RIGHT TO SELF-
ORGANIZATION. — All persons employed in commercial, industrial and
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 agricultural enterprises and in religious, charitable, medical or
educational institutions whether operating for profit or not, shall have
the right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-
employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and
protection.

and Articles 248 and 249 respecting ULP of employers and labor
organizations.

The said ILO Conventions were ratified on December 29, 1953. However,
even as early as the 1935 Constitution, 44 the State had already expressly
bestowed protection to labor as part of the general provisions. The 1973
Constitution, 45 on the other hand, declared it as a policy of the state to afford
protection to labor, specifying that the workers’ rights to self-organization,
collective bargaining, security of tenure, and just and humane conditions of
work would be assured. For its part, the 1987 Constitution, aside from making it
a policy to “protect the rights of workers and promote their welfare,” 46 devotes
an entire section, emphasizing its mandate to afford protection to labor, and
highlights “the principle of shared responsibility” between workers and
employers to promote industrial peace. 47

Article 248(a) of the Labor Code, considers it an unfair labor practice

when an employer interferes, restrains or coerces employees in the exercise of
their right to self-organization or the right to form association. The right to self-
organization necessarily includes the right to collective bargaining.

Parenthetically, if an employer interferes in the selection of its negotiators

or coerces the Union to exclude from its panel of negotiators a representative
of the Union, and if it can be inferred that the employer adopted the said act to
yield adverse effects on the free exercise to right to self-organization or on the
right to collective bargaining of the employees, ULP under Article 248(a) in
connection with Article 243 of the Labor Code is committed.

In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence has
been defined as such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. 48 In the case at bar, the Union bases its
claim of interference on the alleged suggestions of Diokno to exclude Umali
from the Union’s negotiating panel.

The circumstances that occurred during the negotiation do not show that
the suggestion made by Diokno to Divinagracia is an anti-union conduct from
which it can be inferred that the Bank consciously adopted such act to yield
adverse effects on the free exercise of the right to self-organization and
collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and
simultaneously with Divinagracia’s suggestion that the bank lawyers be
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 excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining
process, with the inclusion of Umali in the Union’s negotiating panel, the
negotiations pushed through. The complaint was made only on August 16,
1993 after a deadlock was declared by the Union on June 15, 1993.

It is clear that such ULP charge was merely an afterthought. The

accusation occurred after the arguments and differences over the economic
provisions became heated and the parties had become frustrated. It happened
after the parties started to involve personalities. As the public respondent
noted, passions may rise, and as a result, suggestions given under less
adversarial situations may be colored with unintended meanings. 49 Such is
what appears to have happened in this case.

The Duty to Bargain

Collectively
If at all, the suggestion made by Diokno to Divinagracia should be
construed as part of the normal relations and innocent communications, which
are all part of the friendly relations between the Union and Bank.

The Union alleges that the Bank violated its duty to bargain; hence,
committed ULP under Article 248(g) when it engaged in surface bargaining. It
alleged that the Bank just went through the motions of bargaining without any
intent of reaching an agreement, as evident in the Bank’s counter-proposals. It
explained that of the 34 economic provisions it made, the Bank only made 6
economic counterproposals. Further, as borne by the minutes of the meetings,
the Bank, after indicating the economic provisions it had rejected, accepted,
retained or were open for discussion, refused to make a list of items it agreed
to include in the economic package.

Surface bargaining is defined as “going through the motions of

negotiating” without any legal intent to reach an agreement. 50 The resolution
of surface bargaining allegations never presents an easy issue. The
determination of whether a party has engaged in unlawful surface bargaining is
usually a difficult one because it involves, at bottom, a question of the intent of
the party in question, and usually such intent can only be inferred from the
totality of the challenged party’s conduct both at and away from the bargaining
t a b l e . 51 It involves the question of whether an employer’s conduct
demonstrates an unwillingness to bargain in good faith or is merely hard
bargaining. 52

The minutes of meetings from March 12, 1993 to June 15, 1993 do not
show that the Bank had any intention of violating its duty to bargain with the
Union. Records show that after the Union sent its proposal to the Bank on
February 17, 1993, the latter replied with a list of its counter-proposals on
February 24, 1993. Thereafter, meetings were set for the settlement of their
differences. The minutes of the meetings show that both the Bank and the
Union exchanged economic and non-economic proposals and counter-
proposals.
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 The Union has not been able to show that the Bank had done acts, both at
and away from the bargaining table, which tend to show that it did not want to
reach an agreement with the Union or to settle the differences between it and
the Union. Admittedly, the parties were not able to agree and reached a
deadlock. However, it is herein emphasized that the duty to bargain “does not
compel either party to agree to a proposal or require the making of a
concession.” 53 Hence, the parties’ failure to agree did not amount to ULP under
Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the
evidence. The inference that respondents did not refuse to bargain
collectively with the complaining union because they accepted some of
the demands while they refused the others even leaving open other
demands for future discussion is correct, especially so when those
demands were discussed at a meeting called by respondents
themselves precisely in view of the letter sent by the union on April 29,
1960 . . . 54

In view of the finding of lack of ULP based on Article 248(g), the

accusation that the Bank made bad-faith provisions has no leg to stand on. The
records show that the Bank’s counterproposals on the non-economic provisions
or political provisions did not put “up for grabs” the entire work of the Union
and its predecessors. As can be gleaned from the Bank’s counterproposal,
there were many provisions which it proposed to be retained. The revisions on
the other provisions were made after the parties had come to an agreement.
Far from buttressing the Union’s claim that the Bank made bad-faith proposals
on the non-economic provisions, all these, on the contrary, disprove such
allegations.

We, likewise, find that the Union failed to substantiate its claim that the
Bank refused to furnish the information it needed.

While the refusal to furnish requested information is in itself an unfair

labor practice, and also supports the inference of surface bargaining, 55 in the
case at bar, Umali, in a meeting dated May 18, 1993, requested the Bank to
validate its guestimates on the data of the rank and file. However, Umali failed
to put his request in writing as provided for in Article 242(c) of the Labor Code:
Article 242. Rights of Legitimate Labor Organization . . .
(c) To be furnished by the employer, upon written request, with
the annual audited financial statements, including the balance sheet
and the profit and loss statement, within thirty (30) calendar days from
the date of receipt of the request, after the union has been duly
recognized by the employer or certified as the sole and exclusive
bargaining representatives of the employees in the bargaining unit, or
within sixty (60) calendar days before the expiration of the existing
collective bargaining agreement, or during the collective negotiation;

The Union, did not, as the Labor Code requires, send a written request for
the issuance of a copy of the data about the Bank’s rank and file employees.
Moreover, as alleged by the Union, the fact that the Bank made use of the
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 aforesaid guestimates, amounts to a validation of the data it had used in its
presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal,
board, or officer exercising judicial or quasi-judicial functions has acted without
or in excess of jurisdiction and there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law for the purpose of annulling the
proceeding. 56 Grave abuse of discretion implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction, or where the power
is exercised in an arbitrary or despotic manner by reason of passion or personal
hostility which must be so patent and gross as to amount to an invasion of
positive duty or to a virtual refusal to perform the duty enjoined or to act at all
in contemplation of law. Mere abuse of discretion is not enough. 57
While it is true that a showing of prejudice to public interest is not a
requisite for ULP charges to prosper, it cannot be said that the public
respondent acted in capricious and whimsical exercise of judgment, equivalent
to lack of jurisdiction or excess thereof. Neither was it shown that the public
respondent exercised its power in an arbitrary and despotic manner by reason
of passion or personal hostility.

Estoppel not Applicable

In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising
the issue of ULP when it signed the new CBA.

Article 1431 of the Civil Code provides:

Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon.

A person, who by his deed or conduct has induced another to act in a

particular manner, is barred from adopting an inconsistent position, attitude or
course of conduct that thereby causes loss or injury to another. 58

In the case, however, the approval of the CBA and the release of signing
bonus do not necessarily mean that the Union waived its ULP claim against the
Bank during the past negotiations. After all, the conclusion of the CBA was
included in the order of the SOLE, while the signing bonus was included in the
CBA itself. Moreover, the Union twice filed a motion for reconsideration
respecting its ULP charges against the Bank before the SOLE.

The Union Did Not Engage

In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in
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 blue-sky bargaining or making exaggerated or unreasonable proposals. 59 The
Bank failed to show that the economic demands made by the Union were
exaggerated or unreasonable. The minutes of the meeting show that the Union
based its economic proposals on data of rank and file employees and the
prevailing economic benefits received by bank employees from other foreign
banks doing business in the Philippines and other branches of the Bank in the
Asian region.

In sum, we find that the public respondent did not act with grave abuse of
discretion amounting to lack or excess of jurisdiction when it issued the
questioned order and resolutions. While the approval of the CBA and the
release of the signing bonus did not estop the Union from pursuing its claims of
ULP against the Bank, we find the latter did not engage in ULP. We, likewise,
hold that the Union is not guilty of ULP.
IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December
16, 1993 and February 10, 1994 Resolutions of then Secretary of Labor Nieves
R. Confesor are AFFIRMED. The Petition is hereby DISMISSED.
SO ORDERED.

Puno, Quisumbing, Austria-Martinez and Tinga, JJ ., concur.

Footnotes
1. Rollo , pp. 451–464.

2. The expiration of the CBA is on March 31, 1993.

3. Rollo , pp. 120–121.

4. Id. at 122–141.
5. Sometimes referred to as non-economic provisions.

6. Uniforms, signing bonus, wages, group insurance, medicine allowance, dental

benefits, optical allowance, death assistance, additional ½ month in midyear
allowance, additional 2.5% in the teller’s guarantee fund; profit-sharing
provision, improvements in leave benefits, i.e., maternity, vacation, sick,
emergency and union leave; introduction of paternity leave, marriage leave,
birthday leave and loyalty leave; extension of the enjoyment of salary
increments from 35 to 40 years of service; provision for meal and shift
allowances; increase in overtime, weekend, holiday and shift allowances;
increase emergency premiums, increase in availments of housing
corresponding lowering of interest rates and eligibility requirements, and
deletion of the current rules on availment; improvement of gratuities to a
maximum of 175% and increase of medical benefits ( Rollo , p. 142).

7. Eddie L. Divinagracia, Rogelio Fernando, Nancy G. Sagum, Rebecca Gabay, Ray

Michael Quimpo, Reyel G. Vargas, Cipriano Garcia, Alberto Diaz, Ed De Mesa
and Jose P. Umali, Jr.

8. The Bank’s counterproposal centered on union recognition and scope

(appropriate bargaining agreement), union security and check-off
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 (maintenance of membership), new employees, collection of union dues, job
security, hiring of next of kin, temporary personnel, redundancies, closure
and relocation, management prerogative, uniforms and grievance
procedures. With respect to the counterproposals on all economic provisions,
the Bank said that it is open for discussion. (Rollo , p. 144).
9. Rollo , p. 142.

10. Pinky Diokno (sometimes referred to as Cielito Diokno), Jose S. Ho, Rene
Padlan, Rolando Orbeta, Janet Camarista, Sinforoso Morada and Modesto B.
Lim.

11. Rollo , p. 544.

12. Id. at 288.

13. The negotiations for the non-economic provisions were made on March 12, 16,
23, and 30, 1993; April 6, 13, 20, 23 and 28, 1993 and May 4, 1993.

14. The Union defined “DEADLOCKED” as exhaustion of the three readings; Rollo ,
p. 269.

15. Minutes of the Meeting of June 1, 1993; Rollo , p. 277.

16. Rollo , p. 278.

17. Minutes of the Meeting of June 8, 1993; Rollo , p. 281.

18. Rollo , p. 284.

19. Ibid.
20. Rollo , pp. 284–285.

21. Id. at 285.

22. Id. at 285.

23. Id.
24. Id.

25. Minutes of the Meeting of June 15, 1993; Rollo , p. 286.

26. Rollo , p. 683.

27. Blue-Sky Bargaining is defined as “unrealistic and unreasonable demands in

negotiations by either or both labor and management, where neither
concedes anything and demands the impossible.” It actually is not collective
bargaining at all. (Harold S. Roberts, Robert’s Dictionary of Industrial
Relations (Revised Edition, 1971, p. 51); Rollo , p. 671.
28. Rollo , pp. 670–676.

29. Id. at 463–464.

30. Id. at 459–460.

31. 2 SCRA 924 (1961).

32. Rollo , pp. 562–611.
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 33. Id. at 10.
34. Id. at 23.

35. Id. at 24.

36. 280 NLRB No. 80 280 NLRB No. 8

37. 214 NLRB No. 062.

38. Section 8.a . It shall be unfair labor practice for an employer —

(1) To interfere with, restrain or coerce employees in the exercise of their rights
guaranteed under Section 7;

xxx xxx xxx

(5) To refuse to bargain collectively with the representatives of his employees,
subject to the provisions of Section 9. (National Labor Management Act)

Section 7. Employees shall have the right to self-organization, to form, join or

assist labor organizations, to bargain collectively through representatives of
their own choosing; and to engage in other concerted activities for the
purpose of collective bargaining or other mutual aid or protection, and shall
also have the right to refrain from any or all of such activities except to the
extant that such right may be affected by an agreement requiring
membership in a labor organization as a condition of employment as
authorized in Section 8(a)(3.)
39. 37 SCRA 244 (1971).
40. Section 3. Employees’ Right to Self-Organization . — Employees shall have the
right to self-organization and to form, join or assist labor organizations of
their own choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in concerted activities
for the purpose of collective bargaining and other mutual aid or protection.
Individuals employed as supervisors shall not be eligible for membership in a
labor organization of employees under their supervision but may form
separate organizations of their own.

xxx xxx xxx

Section 4. Unfair Labor Practices. —

(a) It shall be unfair labor practice for an employer:

(1) To interfere with, restrain or coerce employees in the exercise of their rights
guaranteed in Section three; (Republic Act No. 875)
41. Referring to Section 3 and 4(a)(1) of the Industrial Peace Act, Republic Act No.
875.

42. Article 2, ILO Convention No. 87.

43. Article 3, ILO Convention No. 87.

44. Section 6, Article XIV of the 1935 Constitution provides:

Sec. 6. The State shall afford protection to labor, especially to working women
and minors, and shall regulate the relations between landowner and tenant,
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 and between labor and capital in industry and in agriculture. The State may
provide for compulsory arbitration.

45. Section 9, Article II of the 1973 Constitution provides:

Sec. 9. The State shall afford protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex,
race, or creed, and regulate the relations between workers and employers.
The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work. The
State may provide for compulsory arbitration.
46. Section 18, Article II of the 1987 Constitution provides:

Sec. 18. The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.

47. Section 3, Article XIII on Social Justice and Human Rights reads as follows:
LABOR

Sec. 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized and unorganized, and promote full employment
and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective

bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers
and employers and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable return on investments, and to
expansion and growth.

48. Rubberworld (Phils.), Inc. vs. NLRC, 175 SCRA 450 (1989).
49. Rollo , p. 462.

50. K-Mart Corporation vs. National Labor Relations Board, 626 F.2d 704 (1980).
51. Luck Limousine, 312 NLRB 770, 789 (1993).

52. Queen Mary Restaurants Corp. and Q.M. Foods, Inc. vs. National Labor
Relations Board , 560 F.2d 403 (1977).
53. Eastern Maine Medical Center vs. National Labor Relations Board, 658 F.2d 1
(1981).

54. National Union of Restaurant Workers (PTUC) vs. Court of Industrial Relations ,
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 10 SCRA 843 (1964).

55. K-Mart Corporation vs. NLRB, supra.

56. Guerrero vs. Commission on Elections , 336 SCRA 458 (2000).

57. Santos vs. Commission on Elections, 399 SCRA 611 (2003).

58. Navarro vs. Second Laguna Development Bank, 398 SCRA 227 (2003).

59. Arthur A. Sloane and Fred Witney, Labor Relations, 7th Edition 1991, p. 195.

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 SECOND DIVISION

[G.R. No. 146728. February 11, 2004.]

GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT

OF APPEALS, GENERAL MILLING CORPORATION
INDEPENDENT LABOR UNION (GMC-ILU), and RITO
MANGUBAT, respondents.

DECISION

QUISUMBING, J : p

Before us is a petition for certiorari assailing the decision 1 dated July 19,
2000, of the Court of Appeals in CA-G.R. SP No. 50383, which earlier reversed
the decision 2 dated January 30, 1998 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-0112-94.

The antecedent facts are as follows:

In its two plants located at Cebu City and Lapu-Lapu City, petitioner
General Milling Corporation (GMC) employed 190 workers. They were all
members of private respondent General Milling Corporation Independent Labor
Union (union, for brevity), a duly certified bargaining agent.

On April 28, 1989, GMC and the union concluded a collective bargaining
agreement (CBA) which included the issue of representation effective for a
term of three years. The CBA was effective for three years retroactive to
December 1, 1988. Hence, it would expire on November 30, 1991. SIcEHC

On November 29, 1991, a day before the expiration of the CBA, the union
sent GMC a proposed CBA, with a request that a counter-proposal be submitted
within ten (10) days.
As early as October 1991, however, GMC had received collective and
individual letters from workers who stated that they had withdrawn from their
union membership, on grounds of religious affiliation and personal differences.
Believing that the union no longer had standing to negotiate a CBA, GMC did
not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the union's officers, Rito
Mangubat and Victor Lastimoso. The letter stated that it felt there was no basis
to negotiate with a union which no longer existed, but that management was
nonetheless always willing to dialogue with them on matters of common
concern and was open to suggestions on how the company may improve its
operations. aDHScI

In answer, the union officers wrote a letter dated December 19, 1991
disclaiming any massive disaffiliation or resignation from the union and
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 submitted a manifesto, signed by its members, stating that they had not
withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member,
on the ground of incompetence. The union protested and requested GMC to
submit the matter to the grievance procedure provided in the CBA. GMC,
however, advised the union to "refer to our letter dated December 16, 1991." 3

Thus, the union filed, on July 2, 1992, a complaint against GMC with the
NLRC, Arbitration Division, Cebu City. The complaint alleged unfair labor
practice on the part of GMC for: (1) refusal to bargain collectively; (2)
interference with the right to self-organization; and (3) discrimination. The labor
arbiter dismissed the case with the recommendation that a petition for
certification election be held to determine if the union still enjoyed the support
of the workers.

The union appealed to the NLRC.

On January 30, 1998, the NLRC set aside the labor arbiter's decision.
Citing Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, 4
which fixed the terms of a collective bargaining agreement, the NLRC ordered
GMC to abide by the CBA draft that the union proposed for a period of two (2)
years beginning December 1, 1991,: the date when the original CBA ended, to
November 30, 1993. The NLRC also ordered GMC to pay the attorney's fees. 5

In its decision, the NLRC pointed out that upon the effectivity of Rep. Act
No. 6715, the duration of a CBA, insofar as the representation aspect is
concerned, is five (5) years which, in the case of GMC-Independent Labor Union
was from December 1, 1988 to November 30, 1993. All other provisions of the
CBA are to be renegotiated not later than three (3) years after its execution.
Thus, the NLRC held that respondent union remained as the exclusive
bargaining agent with the right to renegotiate the economic provisions of the
CBA. Consequently, it was unfair labor practice for GMC not to enter into
negotiation with the union.

The NLRC likewise held that the individual letters of withdrawal from the
union submitted by 13 of its members from February to June 1993 confirmed
the pressure exerted by GMC on its employees to resign from the union. Thus,
the NLRC also found GMC guilty of unfair labor practice for interfering with the
right of its employees to self-organization.

With respect to the union's claim of discrimination, the NLRC found the
claim unsupported by substantial evidence.

On GMC's motion for reconsideration, the NLRC set aside its decision of
January 30, 1998, through a resolution dated October 6, 1998. It found GMC's
doubts as to the status of the union justified and the allegation of coercion
exerted by GMC on the union's members to resign unfounded. Hence, the union
filed a petition for certiorari before the Court of Appeals. For failure of the union
to attach the required copies of pleadings and other documents and material
portions of the record to support the allegations in its petition, the CA dismissed
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 the petition on February 9, 1999. The same petition was subsequently filed by
the union, this time with the necessary documents. In its resolution dated April
26, 1999, the appellate court treated the refiled petition as a motion for
reconsideration and gave the petition due course.

On July 19, 2000, the appellate court rendered a decision the dispositive
portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC
Resolution of October 6, 1998 is hereby SET ASIDE, and its decision of
January 30, 1998 is, except with respect to the award of attorney's fees
which is hereby deleted, REINSTATED. 6

A motion for reconsideration was seasonably filed by GMC, but in a

resolution dated October 26, 2000, the CA denied it for lack of merit.

Hence, the instant petition for certiorari alleging that:

I

THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL

RULE THAT NO DECISION SHALL BE RENDERED BY ANY COURT
WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS
AND THE LAW ON WHICH IT IS BASED. ETHIDa

II

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN

REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION IN THE ABSENCE OF ANY FINDING OF SUBSTANTIAL
ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION.

III

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT

APPRECIATING THAT THE NLRC HAS NO JURISDICTION TO DETERMINE
THE TERMS AND CONDITIONS OF A COLLECTIVE BARGAINING
AGREEMENT. 7

Thus, in the instant case, the principal issue for our determination is
whether or not the Court of Appeals acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in (1) finding GMC guilty of unfair
labor practice for violating the duty to bargain collectively and/or interfering
with the right of its employees to self-organization, and (2) imposing upon GMC
the draft CBA proposed by the union for two years to begin from the expiration
of the original CBA.

On the first issue, Article 253-A of the Labor Code, as amended by Rep.
Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement . —
Any Collective Bargaining Agreement that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a term
of five (5) years. No petition questioning the majority status of the
incumbent bargaining agent shall be entertained and no certification
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 election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the
date of expiry of such five year term of the Collective Bargaining
Agreement. All other provisions of the Collective Bargaining Agreement
shall be renegotiated not later than three (3) years after its execution. .
..

The law mandates that the representation provision of a CBA should last
for five-years. The relation between labor and management should be
undisturbed until the last 60 days of the fifth year. Hence, it is indisputable that
when the union requested for a renegotiation of the economic terms of the CBA
on November 29, 1991, it was still the certified collective bargaining agent of
the workers, because it was seeking said renegotiation within five (5) years
from the date of effectivity of the CBA on December 1, 1988. The union's
proposal was also submitted within the prescribed 3-year period from the date
of effectivity of the CBA, albeit just before the last day of said period. It was
obvious that GMC had no valid reason to refuse to negotiate in good faith with
the union. For refusing to send a counter-proposal to the union and to bargain
anew on the economic terms of the CBA, the company committed an unfair
labor practice under Article 248 of the Labor Code, which provides that:
ART. 248. Unfair labor practices of employers. — It shall be
unlawful for an employer to commit any of the following unfair labor
practice:

(g) To violate the duty to bargain collectively as prescribed

by this Code;

Article 252 of the Labor Code elucidates the meaning of the phrase "duty
to bargain collectively," thus:
ART. 252. Meaning of duty to bargain collectively. — The duty
to bargain collectively means the performance of a mutual obligation to
meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement. . . .

We have held that the crucial question whether or not a party has met his
statutory duty to bargain in good faith typically turns on the facts of the
individual case. 8 There is no per se test of good faith in bargaining. 9 Good faith
or bad faith is an inference to be drawn from the facts. 10 The effect of an
employer's or a union's actions individually is not the test of good-faith
bargaining, but the impact of all such occasions or actions, considered as a
whole. 11

Under Article 252 abovecited, both parties are required to perform their
mutual obligation to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement. The union lived up to this
obligation when it presented proposals for a new CBA to GMC within three (3)
years from the effectivity of the original CBA. But GMC failed in its duty under
Article 252. What it did was to devise a flimsy excuse, by questioning the
existence of the union and the status of its membership to prevent any
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 negotiation.

It bears stressing that the procedure in collective bargaining prescribed

by the Code is mandatory because of the basic interest of the state in ensuring
lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. — The following
procedures shall be observed in collective bargaining:

(a) When a party desires to negotiate an agreement, it shall

serve a written notice upon the other party with a statements of its
proposals. The other party shall make a reply thereto not later than ten
(10) calendar days from receipt of such notice. (Emphasis supplied.)
GMC's failure to make a timely reply to the proposals presented by the
union is indicative of its utter lack of interest in bargaining with the union. Its
excuse that it felt the union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless. IDSaTE

We hold that GMC's refusal to make a counter-proposal to the union's

proposal for CBA negotiation is an indication of its bad faith. Where the
employer did not even bother to submit an answer to the bargaining proposals
of the union, there is a clear evasion of the duty to bargain collectively. 12

Failing to comply with the mandatory obligation to submit a reply to the

union's proposals, GMC violated its duty to bargain collectively, making it liable
for unfair labor practice. Perforce, the Court of Appeals did not commit grave
abuse of discretion amounting to lack or excess of jurisdiction in finding that
GMC is, under the circumstances, guilty of unfair labor practice.

Did GMC interfere with the employees' right to self-organization? The CA

found that the letters between February to June 1993 by 13 union members
signifying their resignation from the union clearly indicated that GMC exerted
pressure on its employees. The records show that GMC presented these letters
to prove that the union no longer enjoyed the support of the workers. The fact
that the resignations of the union members occurred during the pendency of
the case before the labor arbiter shows GMC's desperate attempts to cast doubt
on the legitimate status of the union. We agree with the CA's conclusion that
the ill-timed letters of resignation from the union members indicate that GMC
had interfered with the right of its employees to self-organization. Thus, we
hold that the appellate court did not commit grave abuse of discretion in
finding GMC guilty of unfair labor practice for interfering with the right of its
employees to self-organization.

Finally, did the CA gravely abuse its discretion when it imposed on GMC
the draft CBA proposed by the union for two years commencing from the
expiration of the original CBA?

The Code provides:

ART. 253. Duty to bargain collectively when there exists a
collective bargaining agreement — It shall be the duty of both parties
to keep the status quo and to continue in full force and effect the terms
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 and conditions of the existing agreement during the 60-day period
[prior to its expiration date] and/or until a new agreement is reached
by the parties. (Emphasis supplied.)
The provision mandates the parties to keep the status quo while they are
still in the process of working out their respective proposal and counter
proposal. The general rule is that when a CBA already exists, its provision shall
continue to govern the relationship between the parties, until a new one is
agreed upon. The rule necessarily presupposes that all other things are equal.
That is, that neither party is guilty of bad faith. However, when one of the
parties abuses this grace period by purposely delaying the bargaining process,
a departure from the general rule is warranted.

I n Kiok Loy vs. NLRC, 13 we found that petitioner therein, Sweden Ice
Cream Plant, refused to submit any counter proposal to the CBA proposed by
its employees' certified bargaining agent. We ruled that the former had thereby
lost its right to bargain the terms and conditions of the CBA. Thus, we did not
hesitate to impose on the erring company the CBA proposed by its employees'
union — lock, stock and barrel. Our findings in Kiok Loy are similar to the facts
in the present case, to wit:
. . . petitioner Company's approach and attitude — stalling the
negotiation by a series of postponements, non-appearance at the
hearing conducted, and undue delay in submitting its financial
statements, lead to no other conclusion except that it is unwilling to
negotiate and reach an agreement with the Union. Petitioner has not at
any instance, evinced good faith or willingness to discuss freely and
fully the claims and demands set forth by the Union much less justify
its objection thereto. 14

Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and

Employment, 15 petitioner therein, Divine Word University of Tacloban, refused
to perform its duty to bargain collectively. Thus, we upheld the unilateral
imposition on the university of the CBA proposed by the Divine Word University
Employees Union. We said further:
That being the said case, the petitioner may not validly assert
that its consent should be a primordial consideration in the bargaining
process. By its acts, no less than its action which bespeak its
insincerity, it has forfeited whatever rights it could have asserted as an
employer. 16

Applying the principle in the foregoing cases to the instant case, it would
be unfair to the union and its members if the terms and conditions contained in
the old CBA would continue to be imposed on GMC's employees for the
remaining two (2) years of the. CBA's duration. We are not inclined to gratify
GMC with an extended term of the old CBA after it resorted to delaying tactics
to prevent negotiations. Since it was GMC which violated the duty to bargain
collectively, based on Kiok Loy and Divine Word University of Tacloban , it had
lost its statutory right to negotiate or renegotiate the terms and conditions of
the draft CBA proposed by the union.

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 We carefully note, however, that as strictly distinguished from the facts of
this case, there was no pre-existing CBA between the parties in Kiok Loy and
Divine Word University of Tacloban . Nonetheless, we deem it proper to apply in
this case the rationale of the doctrine in the said two cases. To rule otherwise
would be to allow GMC to have its cake and eat it too.

Under ordinary circumstances, it is not obligatory upon either side of a

labor controversy to precipitately accept or agree to the proposals of the other.
But an erring party should not be allowed to resort with impunity to schemes
feigning negotiations by going through empty gestures. 17 Thus, by imposing
on GMC the provisions of the draft CBA proposed by the union, in our view, the
interests of equity and fair play were properly served and both parties regained
equal footing, which was lost when GMC thwarted the negotiations for new
economic terms of the CBA. IScaAE

The findings of fact by the CA, affirming those of the NLRC as to the
reasonableness of the draft CBA proposed by the union should not be disturbed
since they are supported by substantial evidence. On this score, we see no
cogent reason to rule otherwise. Hence, we hold that the Court of Appeals did
not commit grave abuse of discretion amounting to lack or excess of
jurisdiction when it imposed on GMC, after it had committed unfair labor
practice, the draft CBA proposed by the union for the remaining two (2) years of
the duration of the original CBA. Fairness, equity, and social justice are best
served in this case by sustaining the appellate court's decision on this issue.

WHEREFORE, the petition is DISMISSED and the assailed decision dated

July 19, 2000, and the resolution dated October 26, 2000, of the Court of
Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner.

SO ORDERED.
Puno, Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur.

Footnotes
1. Rollo , pp. 172-179. Penned by Associate Justice Conchita Carpio Morales
(now a member of this Court), with Associate Justices Teodoro P. Regino and
Mercedes Gozo-Dadole.

2. Id. at 34-48.
3. Id. at 175; See also CA Rollo , CA G.R. No. 51763, p. 83.
4. Effective March 21, 1989.

5. Rollo , p. 44.
6. Id. at 178.
7. Id. at 10.
8. Hongkong and Shanghai Banking Corporation Employees Union v. National
Labor Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA
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 509, 518.

9. Ibid.
10. Ibid.
11. Ibid.
12. Colegio De San Juan De Letran v. Association of Employees and Faculty of
Letran , G.R. No. 141471, 18 September 2000, 340 SCRA 587, 595.
13. No. L-54334, 22 January 1986, 141 SCRA 179, 188.

14. Supra.
15. 213 SCRA 759, 11 September 1992.

16. Supra.
17. Ibid., citing H. ROTHENBERG, ROTHENBERG ON LABOR RELATIONS 435
(1949), NLRB v. Sunshine Mining Co., 110 F. 2d 780, NLRB v. Condenser
Corp., 128 F. 2d 67.

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 SECOND DIVISION

[G.R. No. 176249. November 27, 2009.]

FVC LABOR UNION-PHILIPPINE TRANSPORT AND GENERAL

WORKERS ORGANIZATION (FVCLU-PTGWO) , petitioner, vs.
SAMA-SAMANG NAGKAKAISANG MANGGAGAWA SA FVC-
SOLIDARITY OF INDEPENDENT AND GENERAL LABOR
ORGANIZATIONS (SANAMA-FVC-SIGLO), respondent.

DECISION

BRION, J : p

We pass upon the petition for review on certiorari under Rule 45 of the
Rules of Court 1 filed by FVC Labor Union-Philippine Transport and General
Workers Organization (FVCLU-PTGWO) to challenge the Court of Appeals'
(CA) decision of July 25, 2006 2 and its resolution rendered on January 15,
2007 3 in C.A. G.R. SP No. 83292. 4
THE ANTECEDENTS

The facts are undisputed and are summarized below.

On December 22, 1997, the petitioner FVCLU-PTGWO — the recognized

bargaining agent of the rank-and-file employees of the FVC Philippines,
Incorporated (company) — signed a five-year collective bargaining
agreement (CBA) with the company. The five-year CBA period was from
February 1, 1998 to January 30, 2003. 5 At the end of the 3rd year of the
five-year term and pursuant to the CBA, FVCLU-PTGWO and the company
entered into the renegotiation of the CBA and modified, among other
provisions, the CBA's duration. Article XXV, Section 2 of the renegotiated
CBA provides that "this re-negotiation agreement shall take effect beginning
February 1, 2001 and until May 31, 2003" thus extending the original five-
year period of the CBA by four (4) months.
On January 21, 2003, nine (9) days before the January 30, 2003
expiration of the originally-agreed five-year CBA term (and four [4] months
and nine [9] days away from the expiration of the amended CBA period), the
respondent Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity of
Independent and General Labor Organizations (SANAMA-SIGLO) filed before
the Department of Labor and Employment (DOLE) a petition for certification
election for the same rank-and-file unit covered by the FVCLU-PTGWO CBA.
FVCLU-PTGWO moved to dismiss the petition on the ground that the
certification election petition was filed outside the freedom period or outside
of the sixty (60) days before the expiration of the CBA on May 31, 2003. EHCDSI

Action on the Petition and Related Incidents

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 On June 17, 2003, Med-Arbiter Arturo V. Cosuco dismissed the petition
on the ground that it was filed outside the 60-day period counted from the
May 31, 2003 expiry date of the amended CBA. 6 SANAMA-SIGLO appealed
the Med-Arbiter's Order to the DOLE Secretary, contending that the filing of
the petition on January 21, 2003 was within 60-days from the January 30,
2003 expiration of the original CBA term.
DOLE Secretary Patricia A. Sto. Tomas sustained SANAMA-SIGLO's
position, thereby setting aside the decision of the Med-Arbiter. 7 She ordered
the conduct of a certification election in the company. FVCLU-PTGWO moved
for the reconsideration of the Secretary's decision.
On November 6, 2003, DOLE Acting Secretary Manuel G. Imson
granted the motion; he set aside the August 6, 2003 DOLE decision and
dismissed the petition as the Med-Arbiter's Order of June 17, 2003 did. 8 The
Acting Secretary held that the amended CBA (which extended the
representation aspect of the original CBA by four [4] months) had been
ratified by members of the bargaining unit some of whom later organized
themselves as SANAMA-SIGLO, the certification election applicant. Since
these SANAMA-SIGLO members fully accepted and in fact received the
benefits arising from the amendments, the Acting Secretary rationalized that
they also accepted the extended term of the CBA and cannot now file a
petition for certification election based on the original CBA expiration date.
SANAMA-SIGLO moved for the reconsideration of the Acting Secretary's
Order, but Secretary Sto. Tomas denied the motion in her Order of January
30, 2004. 9
SANAMA-SIGLO sought relief from the CA through a petition for
certiorari under Rule 65 of the Rules of Court based on the grave abuse of
discretion the Labor Secretary committed when she reversed her earlier
decision calling for a certification election. SANAMA-SIGLO pointed out that
the Secretary's new ruling is patently contrary to the express provision of
the law and established jurisprudence.
THE CA DECISION
The CA found SANAMA-SIGLO's petition meritorious on the basis of the
applicable law 10 and the rules, 11 as interpreted in the congressional
debates. It set aside the challenged DOLE Secretary decisions and reinstated
her earlier ruling calling for a certification election. The appellate court
declared:
It is clear from the foregoing that while the parties may
renegotiate the other provisions (economic and non-economic) of the
CBA, this should not affect the five-year representation aspect of the
original CBA. If the duration of the renegotiated agreement does not
coincide with but rather exceeds the original five-year term, the same
will not adversely affect the right of another union to challenge the
majority status of the incumbent bargaining agent within sixty (60)
days before the lapse of the original five (5) year term of the CBA. In
the event a new union wins in the certification election, such union is
required to honor and administer the renegotiated CBA throughout the
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 excess period. aSEHDA

FVCLU-PTGWO moved to reconsider the CA decision but the CA denied

the motion in its resolution of January 15, 2007. 12 With this denial, FVCLU-
PTGWO now comes before us to challenge the CA rulings. 13 It argues that in
light of the peculiar attendant circumstances of the case, the CA erred in
strictly applying Section 11 (11b), Rule XI, Book V of the Omnibus Rules
Implementing the Labor Code, as amended by Department Order No. 9, s.
1997. 14
Apparently, the "peculiar circumstances" the FVCLU-PTGWO referred to
relate to the economic and other provisions of the February 1, 1998 to
January 30, 2003 CBA that it renegotiated with the company. The
renegotiated CBA changed the CBA's remaining term from February 1, 2001
to May 31, 2003. To FVCLU-PTGWO, this extension of the CBA term also
changed the union's exclusive bargaining representation status and
effectively moved the reckoning point of the 60-day freedom period from
January 30, 2003 to May 30, 2003. FVCLU-PTGWO thus moved to dismiss the
petition for certification election filed on January 21, 2003 (9 days before the
expiry date on January 30, 2003 of the original CBA) by SANAMA-SIGLO on
the ground that the petition was filed outside the authorized 60-day freedom
period.
It also submits in its petition that the SANAMA-SIGLO is estopped from
questioning the extension of the CBA term under the amendments because
its members are the very same ones who approved the amendments,
including the expiration date of the CBA, and who benefited from these
amendments.
Lastly, FVCLU-PTGWO posits that the representation petition had been
rendered moot by a new CBA it entered into with the company covering the
period June 1, 2003 to May 31, 2008. 15
Required to comment by the Court 16 and to show cause for its failure
to comply, 17 SANAMA-SIGLO manifested on October 10, 2007 that: since the
promulgation of the CA decision on July 25, 2006 or three years after the
petition for certification election was filed, the local leaders of SANAMA-
SIGLO had stopped reporting to the federation office or attending meetings
of the council of local leaders; the SANAMA-SIGLO counsel, who is also the
SIGLO national president, is no longer in the position to pursue the present
case because the local union and its leadership, who are principals of SIGLO,
had given up and abandoned their desire to contest the representative
status of FVCLU-PTGWO; and a new CBA had already been signed by FVCLU-
PTGWO and the company. 18 Under these circumstances, SANAMA-SIGLO
contends that pursuing the case has become futile, and accordingly simply
adopted the CA decision of July 25, 2006 as its position; its counsel likewise
asked to be relieved from filing a comment in the case. We granted the
request for relief and dispensed with the filing of a comment. 19
THE COURT'S RULING
While SANAMA-SIGLO has manifested its abandonment of its challenge
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 to the exclusive bargaining representation status of FVCLU-PTGWO, we
deem it necessary in the exercise of our discretion to resolve the question of
law raised since this exclusive representation status issue will inevitably
recur in the future as workplace parties avail of opportunities to prolong
workplace harmony by extending the term of CBAs already in place. 20 aIHCSA

The legal question before us centers on the effect of the amended or

extended term of the CBA on the exclusive representation status of the
collective bargaining agent and the right of another union to ask for
certification as exclusive bargaining agent. The question arises because the
law allows a challenge to the exclusive representation status of a collective
bargaining agent through the filing of a certification election petition only
within 60 days from the expiration of the five-year CBA.
Article 253-A of the Labor Code covers this situation and it provides:
Terms of a collective bargaining agreement. — Any Collective
Bargaining Agreement that the parties may enter into, shall, insofar as
the representation aspect is concerned, be for a term of five (5) years.
No petition questioning the majority status of the incumbent bargaining
agent shall be entertained and no certification election shall be
conducted by the Department of Labor and Employment outside of the
sixty day period immediately before the date of expiry of such five-year
term of the Collective Bargaining Agreement. All other provisions of the
Collective Bargaining Agreement shall be renegotiated not later than
three (3) years after its execution.

Any agreement on such other provisions of the Collective

Bargaining Agreement entered into within six (6) months from the date
of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following
such date. If any such agreement is entered into beyond six months,
the parties shall agree on the duration of retroactivity thereof. In case
of a deadlock in the renegotiation of the collective bargaining
agreement, the parties may exercise their rights under this Code.

This Labor Code provision is implemented through Book V, Rule VIII of

the Rules Implementing the Labor Code 21 which states:
Sec. 14. Denial of the petition; grounds. — The Med-Arbiter
may dismiss the petition on any of the following grounds:

xxx xxx xxx

(b) the petition was filed before or after the freedom period of
a duly registered collective bargaining agreement;
provided that the sixty-day period based on the original
collective bargaining agreement shall not be affected by
any amendment, extension or renewal of the collective
bargaining agreement (underscoring supplied).

xxx xxx xxx

The root of the controversy can be traced to a misunderstanding of the

interaction between a union's exclusive bargaining representation status in
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 a CBA and the term or effective period of the CBA.
FVCLU-PTGWO has taken the view that its exclusive representation
status should fully be in step with the term of the CBA and that this status
can be challenged only within 60 days before the expiration of this term.
Thus, when the term of the CBA was extended, its exclusive bargaining
status was similarly extended so that the freedom period for the filing of a
petition for certification election should be counted back from the expiration
of the amended CBA term. ATHCDa

We hold this FVCLU-PTGWO position to be correct, but only with

respect to the original five-year term of the CBA which, by law, is also the
effective period of the union's exclusive bargaining representation status.
While the parties may agree to extend the CBA's original five-year term
together with all other CBA provisions, any such amendment or term in
excess of five years will not carry with it a change in the union's exclusive
collective bargaining status. By express provision of the above-quoted
Article 253-A, the exclusive bargaining status cannot go beyond five years
and the representation status is a legal matter not for the workplace parties
to agree upon. In other words, despite an agreement for a CBA with a life of
more than five years, either as an original provision or by amendment, the
bargaining union's exclusive bargaining status is effective only for five years
and can be challenged within sixty (60) days prior to the expiration of the
CBA's first five years. As we said in San Miguel Corp. Employees Union-
PTGWO, et al. v. Confesor, San Miguel Corp., Magnolia Corp. and San Miguel
Foods, Inc. , 22 where we cited the Memorandum of the Secretary of Labor
and Employment dated February 24, 1994:
In the event however, that the parties, by mutual agreement,
enter into a renegotiated contract with a term of three (3) years or one
which does not coincide with the said five-year term and said
agreement is ratified by majority of the members in the bargaining
unit, the subject contract is valid and legal and therefore, binds the
contracting parties. The same will however not adversely affect the
right of another union to challenge the majority status of the
incumbent bargaining agent within sixty (60) days before the lapse of
the original five (5) year term of the CBA.

In the present case, the CBA was originally signed for a period of five
years, i.e., from February 1, 1998 to January 30, 2003, with a provision for
the renegotiation of the CBA's other provisions at the end of the 3rd year of
the five-year CBA term. Thus, prior to January 30, 2001 the workplace parties
sat down for renegotiation but instead of confining themselves to the
economic and non-economic CBA provisions, also extended the life of the
CBA for another four months, i.e., from the original expiry date on January
30, 2003 to May 30, 2003.
As discussed above, this negotiated extension of the CBA term has no
legal effect on the FVCLU-PTGWO's exclusive bargaining representation
status which remained effective only for five years ending on the original
expiry date of January 30, 2003. Thus, sixty days prior to this date, or
starting December 2, 2002, SANAMA-SIGLO could properly file a petition for
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 certification election. Its petition, filed on January 21, 2003 or nine (9) days
before the expiration of the CBA and of FVCLU-PTGWO's exclusive bargaining
status, was seasonably filed.
We thus find no error in the appellate court's ruling reinstating the
DOLE order for the conduct of a certification election. If this ruling cannot
now be given effect, the only reason is SANAMA-SIGLO's own desistance; we
cannot disregard its manifestation that the members of SANAMA themselves
are no longer interested in contesting the exclusive collective bargaining
agent status of FVCLU-PTGWO. This recognition is fully in accord with the
Labor Code's intent to foster industrial peace and harmony in the workplace.
DAETcC

WHEREFORE, premises considered, we AFFIRM the correctness of the

challenged Decision and Resolution of the Court of Appeals and accordingly
DISMISS the petition, but nevertheless DECLARE that no certification
election, pursuant to the underlying petition for certification election filed
with the Department of Labor and Employment, can be enforced as this
petition has effectively been abandoned.

SO ORDERED.
Carpio, Leonardo-de Castro, Del Castillo and Abad, JJ., concur.

Footnotes

1. Rollo , pp. 3-17.

2. Id. at 69-85. Penned by Associate Justice Mariflor P. Punzalan Castillo and
concurred in by Associate Justice Remedios A. Salazar Fernando and
Associate Justice Noel G. Tijam.

3. Id. at 94-96.
4. Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent
and General Labor Organizations (SANAMA-FVC-SIGLO) v. Hon. Patricia Sto.
Tomas, Secretary of Labor and Employment, FVC Labor Union-PTGWO and
FVC Philippines.
5. Petition, Annex "A"; rollo, pp. 19-35.

6. Petition, Annex "C"; id. at 51-55.

7. Dated August 6, 2003; Petition, Annex "D"; id. at 56-60.

8. Petition, Annex "E"; id. at 61-64.

9. Petition, Annex "F"; id. at 65-67.

10. LABOR CODE, Article 253-A.

11. Omnibus Rules Implementing the Labor Code, Book V, Rule XI, Section 11
(11b).

12. Supra note 3.

13. Supra note 1.
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 14. Supra note 11.
15. Petition, Annex "J"; rollo, pp. 97-120.

16. Resolution dated February 26, 2007; id. at 127.

17. Resolution dated July 16, 2007; id. at 138.

18. Id. at 140-142.

19. Resolution dated November 19, 2007; id. at 144-145.

20. Caneland Sugar Corporation v. Alon, et al., G.R. No. 142896, September 12,
2007, 533 SCRA 29; Manalo v. Calderon, G.R. No. 178920, October 15, 2007,
536 SCRA 2007; See Acop v. Guingona, G.R. No. 134855, July 2, 2002, 383
SCRA 577; 433 Phil 62 (2002).

21. Supra note 11.

22. G.R. No. 111262, September 19, 1996, 262 SCRA 81.

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 SECOND DIVISION

[G.R. No. 162324. February 4, 2009.]

RFM CORPORATION-FLOUR DIVISION and SFI FEEDS

DIVISION, petitioner, vs. KASAPIAN NG MANGGAGAWANG
PINAGKAISA-RFM (KAMPI-NAFLU-KMU) and SANDIGAN AT
UGNAYAN NG MANGGAGAWANG PINAGKAISA-SFI (SUMAPI-
NAFLU-KMU), respondents.

DECISION

CARPIO-MORALES, J : p

Petitioner RFM Corporation (RFM) is a domestic corporation engaged in

flour-milling and animal feeds manufacturing. Sometime in 2000, its Flour
Division and SFI Feeds Division entered into collective bargaining
agreements (CBAs) with their respective labor unions, the Kasapian ng
Manggagawang Pinagkaisa-RFM (KAMPI-NAFLU-KMU) for the Flour Division,
and Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI (SUMAPI-
NAFLU-KMU) for the Feeds Division (respondents). The CBAs, which
contained similar provisions, were effective for five years, from July 1, 2000
up to June 30, 2005. SIcCEA

Sec. 3, Art. XVI of each of the CBAs reads:

Section. 3. Special Holidays with Pay. — The COMPANY
agrees to make payment to all daily paid employees, in respect of any
of the days enumerated hereunto if declared as special holidays by
the national government:

a) Black Saturday

b) November 1

c) December 31
The compensation rate shall be the regular rate. Any work
beyond eight (8) hours shall be paid the standard ordinary premium.
(Emphasis and underscoring supplied)

During the first year of the effectivity of the CBAs in 2000, December
31 which fell on a Sunday was declared by the national government as a
special holiday. Respondents thus claimed payment of their members'
salaries, invoking the above-stated CBA provision. Petitioner refused the
claims for payment, averring that December 31, 2000 was not compensable
as it was a rest day. The controversy resulted in a deadlock, drawing the
parties to submit the same for voluntary arbitration.
Following the submission by the parties of their respective position
papers, Voluntary Arbitrator (VA) Bernardino M. Volante, by Decision 1 of
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 October 11, 2001, declared that the above-quoted provision of the CBA is
clear. It accordingly ruled in favor of respondents and ordered petitioner to
pay the salaries of respondents' members for December 31, 2000, and to
pay attorney's fees to respondents equivalent to 10% of the monetary
award.
Its motion for reconsideration of the VA ruling having been denied, 2
petitioner appealed to the Court of Appeals which affirmed the same by
Decision 3 dated October 30, 2003.
The appellate court held that if it was indeed petitioner's intent to pay
the salaries of daily-paid employees during a special holiday, even if
unworked, only if such special holiday fell on weekdays, then it should have
been clearly and expressly stipulated in the CBAs. And it held inapplicable
Kimberly Clark Philippines v. Lorredo 4 cited by petitioner which case held
that whenever there is a conflict between the words in the CBA and the
evident intention of the parties, the latter prevails. For, so the appellate
court explained, there were no words or provisions in the CBAs which would
result in an absurd interpretation vis a vis the parties' true intention. IaDcTC

In sustaining the award of attorney's fees, the appellate court ruled

that respondents were entitled thereto as they were compelled to engage a
lawyer to pursue their claims.
Petitioner's motion for reconsideration having been denied, the present
petition was filed.
Petitioner insists that the CBA provision in question was intended to
protect the employees from reduction of their take-home pay, hence, it was
not meant to remunerate them on Sundays, which are rest days, nor to
increase their salaries.
On the award of attorney's fees, petitioner argues that it is not
warranted as it did not arbitrarily refuse to pay respondents' demands.
The petition is bereft of merit.
If the terms of a CBA are clear and have no doubt upon the intention of
the contracting parties, as in the herein questioned provision, the literal
meaning thereof shall prevail. That is settled. 5 As such, the daily-paid
employees must be paid their regular salaries on the holidays which are so
declared by the national government, regardless of whether they fall on rest
days.
Holiday pay is a legislated benefit enacted as part of the
Constitutional imperative that the State shall afford protection to labor.
Its purpose is not merely "to prevent diminution of the
monthly income of the workers on account of work
interruptions. In other words, although the worker is forced to
take a rest, he earns what he should earn, that is, his holiday
pay." 6 (Emphasis and underscoring supplied)

The CBA is the law between the parties, hence, they are obliged to
comply with its provisions. 7 Indeed, if petitioner and respondents intended
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 the provision in question to cover payment only during holidays falling on
work or weekdays, it should have been so incorporated therein. EHSADc

Petitioner maintains, however, that the parties failed to foresee a

situation where the special holiday would fall on a rest day. The Court is not
persuaded. The Labor Code specifically enjoins that in case of doubt in the
interpretation of any law or provision affecting labor, it should be interpreted
in favor of labor. 8
Respondents having been compelled to litigate as a result of
petitioner's failure to satisfy their valid claim, the Court deems it just and
equitable to sustain the award of attorney's fees.

WHEREFORE, the petition is DENIED.

SO ORDERED.

Quisumbing, Tinga, Velasco, Jr. and Brion, JJ., concur.

Footnotes

1. Rollo, pp. 45-47. DTAIaH

2. Id. at 55-56.
3. Id. at 18-23; Penned by Associate Justice (later Presiding Justice) Romeo A.
Brawner and concurred in by Associate Justices Sergio L. Pestaño and Jose C.
Reyes, Jr. ETHCDS

4. G.R. No. 103090, September 21, 1993, 226 SCRA 639.

5. United Kimberly-Clark Employees Union-Philippine Transport General
Workers' Organization (UKCEU-PTGWO) v. Kimberly-Clark Philippines, Inc.,
G.R. No. 162957, March 6, 2006.

6. Asian Transmission Corp. v. Court of Appeals, G.R. No. 144664, March 15,
2004, 425 SCRA 478, 484-485.

7. TSPIC Corporation v. TSPIC Employees' Union, et al., G.R. No. 163419,

February 13, 2008, 545 SCRA 215, 225.

8. FAMIT v. Court of Appeals, G.R. No. 164060, June 15, 2007, 524 SCRA 709,
717. CaAcSE

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 THIRD DIVISION

[G.R. No. 162943. December 6, 2010.]

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S.

FACUNDO, in his capacity as President, petitioners, vs. BAYER
PHILIPPINES, INC., DIETER J. LONISHEN (President),
ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO
AND ANASTACIA VILLAREAL, respondents.

DECISION

VILLARAMA, JR., J : p

This petition for review on certiorari assails the Decision 1 dated

December 15, 2003 and Resolution 2 dated March 23, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 73813.
Petitioner Employees Union of Bayer Philippines 3 (EUBP) is the
exclusive bargaining agent of all rank-and-file employees of Bayer
Philippines (Bayer), and is an affiliate of the Federation of Free Workers
(FFW). In 1997, EUBP, headed by its president Juanito S. Facundo (Facundo),
negotiated with Bayer for the signing of a collective bargaining agreement
(CBA). During the negotiations, EUBP rejected Bayer's 9.9% wage-increase
proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a
strike, prompting the Secretary of the Department of Labor and Employment
(DOLE) to assume jurisdiction over the dispute.
In November 1997, pending the resolution of the dispute, respondent
Avelina Remigio (Remigio) and 27 other union members, without any
authority from their union leaders, accepted Bayer's wage-increase proposal.
EUBP's grievance committee questioned Remigio's action and reprimanded
Remigio and her allies. On January 7, 1998, the DOLE Secretary issued an
arbitral award ordering EUBP and Bayer to execute a CBA retroactive to
January 1, 1997 and to be made effective until December 31, 2001. The said
CBA 4 was registered on July 8, 1998 with the Industrial Relations Division of
the DOLE-National Capital Region (NCR). 5
Meanwhile, the rift between Facundo's leadership and Remigio's group
broadened. On August 3, 1998, barely six months from the signing of the
new CBA, during a company-sponsored seminar, 6 Remigio solicited
signatures from union members in support of a resolution containing the
decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union
as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new
constitution and by-laws for the union, (4) abolish all existing officer
positions in the union and elect a new set of interim officers, and (5)
authorize REUBP to administer the CBA between EUBP and Bayer. 7 The said
resolution was signed by 147 of the 257 local union members. A subsequent
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 resolution was also issued affirming the first resolution. 8

A tug-of-war then ensued between the two rival groups, with both
seeking recognition from Bayer and demanding remittance of the union dues
collected from its rank-and-file members. On September 8, 1998, Remigio's
splinter group wrote Facundo, FFW and Bayer informing them of the decision
of the majority of the union members to disaffiliate from FFW. 9 This was
followed by another letter informing Facundo, FFW and Bayer that an interim
set of REUBP executive officers and board of directors had been appointed,
and demanding the remittance of all union dues to REUBP. Remigio also
asked Bayer to desist from further transacting with EUBP. Facundo,
meanwhile, sent similar requests to Bayer 10 requesting for the remittance of
union dues in favor of EUBP and accusing the company of interfering with
purely union matters. 11 Bayer responded by deciding not to deal with either
of the two groups, and by placing the union dues collected in a trust account
until the conflict between the two groups is resolved. 12 IDCcEa

On September 15, 1998, EUBP filed a complaint for unfair labor

practice (first ULP complaint) against Bayer for non-remittance of union
dues. The case was docketed as NLRC-NCR-Case No. 00-09-07564-98. 13
EUBP later sent a letter dated November 5, 1998 to Bayer asking for a
grievance conference. 14 The meeting was conducted by the management
on November 11, 1998, with all REUBP officers including their lawyers
present. Facundo did not attend the meeting, but sent two EUBP officers to
inform REUBP and the management that a preventive mediation conference
between the two groups has been scheduled on November 12, 1998 before
the National Conciliation and Mediation Board (NCMB). 15
Apparently, the two groups failed to settle their issues as Facundo
again sent respondent Dieter J. Lonishen two more letters, dated January 14,
1999 16 and September 2, 1999, 17 asking for a grievance meeting with the
management to discuss the failure of the latter to comply with the terms of
their CBA. Both requests remained unheeded.
On February 9, 1999, while the first ULP case was still pending and
despite EUBP's repeated request for a grievance conference, Bayer decided
to turn over the collected union dues amounting to P254,857.15 to
respondent Anastacia Villareal, Treasurer of REUBP.
Aggrieved by the said development, EUBP lodged a complaint 18 on
March 4, 1999 against Remigio's group before the Industrial Relations
Division of the DOLE praying for their expulsion from EUBP for commission of
"acts that threaten the life of the union."
On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the
first ULP complaint for lack of jurisdiction. 19 The Arbiter explained that the
root cause for Bayer's failure to remit the collected union dues can be traced
to the intra-union conflict between EUBP and Remigio's group 20 and that the
charges imputed against Bayer should have been submitted instead to
voluntary arbitration. 21 EUBP did not appeal the said decision. 22
On December 14, 1999, petitioners filed a second ULP complaint
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 against herein respondents docketed as NLRC-RAB-IV Case No. 12-11813-99-
L. Three days later, petitioners amended the complaint charging the
respondents with unfair labor practice committed by organizing a company
union, gross violation of the CBA and violation of their duty to bargain. 23
Petitioners complained that Bayer refused to remit the collected union dues
to EUBP despite several demands sent to the management. 24 They also
alleged that notwithstanding the requests sent to Bayer for a renegotiation
of the last two years of the 1997-2001 CBA between EUBP and Bayer, the
latter opted to negotiate instead with Remigio's group. 25
On even date, REUBP and Bayer agreed to sign a new CBA. Remigio
immediately informed her allies of the management's decision. 26
In response, petitioners immediately filed an urgent motion for the
issuance of a restraining order/injunction 27 before the National Labor
Relations Commission (NLRC) and the Labor Arbiter against respondents.
Petitioners asserted their authority as the exclusive bargaining
representative of all rank-and-file employees of Bayer and asked that a
temporary restraining order be issued against Remigio's group and Bayer to
prevent the employees from ratifying the new CBA. Later, petitioners filed a
second amended complaint 28 to include in its complaint the issue of gross
violation of the CBA for violation of the contract bar rule following Bayer's
decision to negotiate and sign a new CBA with Remigio's group.
Meanwhile, on January 26, 2000, the Regional Director of the Industrial
Relations Division of DOLE issued a decision dismissing the issue on
expulsion filed by EUBP against Remigio and her allies for failure to exhaust
reliefs within the union and ordering the conduct of a referendum to
determine which of the two groups should be recognized as union officers. 29
EUBP seasonably appealed the said decision to the Bureau of Labor Relations
(BLR). 30 On June 16, 2000, the BLR reversed the Regional Director's ruling
and ordered the management of Bayer to respect the authority of the duly-
elected officers of EUBP in the administration of the prevailing CBA. 31
Unfortunately, the said BLR ruling came late since Bayer had already
signed a new CBA 32 with REUBP on February 21, 2000. The said CBA was
eventually ratified by majority of the bargaining unit. 33 IaESCH

On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed

EUBP's second ULP complaint for lack of jurisdiction. 34 The Labor Arbiter
explained the dismissal as follows:
All told, were it not for the fact that there were two (2) [groups]
of employees, the Union led by its President Juanito Facundo and the
members who decided to disaffiliate led by Ms. Avelina Remigio,
claiming to be the rightful representative of the rank and file
employees, the Company would not have acted the way it did and the
Union would not have filed the instant case.

Clearly then, as the case involves intra-union disputes, this Office

is bereft of any jurisdiction pursuant to Article 226 of the Labor Code,
as amended, which provides pertinently in part, thus:

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 "Bureau of Labor Relations — The Bureau of Labor
Relations and the Labor Relations Divisions in the regional offices
of the Department of Labor and Employment 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
from the implementation or interpretation of collective
bargaining agreements which shall be the subject of grievance
procedure and/or voluntary arbitration."

Specifically, with respect to the union dues, the authority is the

case of Cebu Seamen's Association[,] Inc. vs. Ferrer-Calleja, (212 SCRA
51), where the Supreme Court held that when the issue calls for the
determination of which between the two groups within a union is
entitled to the union dues, the same cannot be taken cognizance of by
the NLRC.

xxx xxx xxx

WHEREFORE, premises considered, the instant complaint is

hereby DISMISSED on the ground of lack of jurisdiction.

SO ORDERED. 35

On June 28, 2000, the NLRC resolved to dismiss 36 petitioners' motion

for a restraining order and/or injunction stating that the subject matter
involved an intra-union dispute, over which the said Commission has no
jurisdiction. 37
Aggrieved by the Labor Arbiter's decision to dismiss the second ULP
complaint, petitioners appealed the said decision, but the NLRC denied the
appeal. 38 EUBP's motion for reconsideration was likewise denied. 39
Thus, petitioners filed a Rule 65 petition to the CA. On December 15,
2003, the CA sustained both the Labor Arbiter and the NLRC's rulings. The
appellate court explained,
A cursory reading of the three pleadings, to wit: the Complaint
(Vol. I, Rollo, p[p]. 166-167); the Amended Complaint (Vol. I, Rollo [,]
pp. 168-172) and the Second Amended Complaint dated March 8, 2000
(Vol. II, Rollo, pp. 219-225) will readily show that the instant case was
brought about by the action of the Group of REM[I]GIO to disaffiliate
from FFW and to organized (sic) REUBP under the tutelage of
REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves
purely an (sic) inter-union and intra-union conflicts or disputes between
EUBP-FFW and REUBP which issue should have been resolved by the
Bureau of Labor Relations under Article 226 of the Labor Code.
However, since no less than petitioners who admitted that respondents
committed gross violations of the CBA, then the BLR is divested of
jurisdiction over the case and the issue should have been referred to
the Grievance Machinery and Voluntary Arbitrator and not to the Labor
Arbiter as what petitioners did in the case at bar. . . .

xxx xxx xxx

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 Furthermore, the CBA entered between BAYER and EUBP-FFW
[has] a life span of only five years and after the said period, the
employees have all the right to change their bargaining unit who will
represent them. If there exist[s] two opposing unions in the same
company, the remedy is not to declare that such act is considered
unfair labor practice but rather they should conduct a certification
election provided [that] it should be conducted within 60 days of the
so[-]called freedom period before the expiration of the CBA.

WHEREFORE, premises considered, this Petition is DENIED and

the assailed Decision dated September 27, 2001 as well as the Order
dated June 21, 2002, denying the motion for reconsideration, by the
National Labor Relations Commission, First Division, in NLRC Case No.
RAB-IV-12-11813-99-L, are hereby AFFIRMED in toto. Costs against
petitioners. HAICcD

SO ORDERED. 40

Undaunted, petitioners filed this Rule 45 petition before this Court.

Initially, the said petition was denied for having been filed out of time and for
failure to comply with the requirements provided in the 1997 Rules of Civil
Procedure, as amended. 41 Upon petitioners' motion, however, we decided to
reinstate their appeal.
The following are the issues raised by petitioners, to wit:
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN
ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER
2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004,
DECIDED THE CASE IN ACCORDANCE WITH LAW AND
JURISPRUDENCE; AND

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN

ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER
2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004,
GRAVELY ABUSE[D] ITS DISCRETION IN ITS FINDINGS AND
CONCLUSION THAT:

THE ACTS OF ABETTING OR ASSISTING IN THE CREATION

OF ANOTHER UNION, NEGOTIATING OR BARGAINING WITH
SUCH UNION, WHICH IS NOT THE SOLE AND EXCLUSIVE
BARGAINING AGENT, VIOLATING THE DUTY TO BARGAIN
COLLECTIVELY, REFUSAL TO PROCESS GRIEVABLE ISSUES
IN THE GRIEVANCE MACHINERY AND/OR REFUSAL TO DEAL
WITH THE SOLE AND EXCLUSIVE BARGAINING AGENT ARE
ACTS CONSTITUTING OR TANTAMOUNT TO UNFAIR LABOR
PRACTICE. 42

Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the

issues as follows:
I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF
APPEALS, THE NLRC AND THE LABOR ARBITER ARE BINDING ON
THIS HONORABLE COURT;

II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE
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 JURISDICTION OVER THE INSTANT CASE;

III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION

DISPUTE;

IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND

AMISTOSO COMMITTED AN ACT OF UNFAIR LABOR PRACTICE;
AND

V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND

ACADEMIC. 43

Essentially, the issue in this petition is whether the act of the

management of Bayer in dealing and negotiating with Remigio's splinter
group despite its validly existing CBA with EUBP can be considered unfair
labor practice and, if so, whether EUBP is entitled to any relief.
Petitioners argue that the subject matter of their complaint, as well as
the subsequent amendments thereto, pertain to the unfair labor practice act
of respondents Bayer, Lonishen and Amistoso in dealing with Remigio's
splinter union. They contend that (1) the acts of abetting or assisting in the
creation of another union is among those considered by the Labor Code, as
amended, specifically under Article 248 (d) 44 thereof, as unfair labor
practice; (2) the act of negotiating with such union constitutes a violation of
Bayer's duty to bargain collectively; and (3) Bayer's unjustified refusal to
process EUBP's grievances and to recognize the said union as the sole and
exclusive bargaining agent are tantamount to unfair labor practice. 45
Respondents Bayer, Lonishen and Amistoso, on the other hand,
contend that there can be no unfair labor practice on their part since the
requisites for unfair labor practice — i.e., that the violation of the CBA should
be gross, and that it should involve violation in the economic provisions of
the CBA — were not satisfied. Moreover, they cite the ruling of the Labor
Arbiter that the issues raised in the complaint should have been ventilated
and threshed out before the voluntary arbitrators as provided in Article 261
of the Labor Code, as amended. 46 Respondents Remigio and Villareal,
meanwhile, point out that the case should be dismissed as against them
since they are not real parties in interest in the ULP complaint against Bayer,
47 and since there are no specific or material acts imputed against them in

the complaint. 48
The petition is partly meritorious.
An intra-union dispute refers to any conflict between and among union
members, including grievances arising from any violation of the rights and
conditions of membership, violation of or disagreement over any provision of
the union's constitution and by-laws, or disputes arising from chartering or
disaffiliation of the union. 49 Sections 1 and 2, Rule XI of Department Order
No. 40-03, Series of 2003 of the DOLE enumerate the following
circumstances as inter/intra-union disputes, viz.: IDEHCa

RULE XI

INTER/INTRA-UNION DISPUTES AND

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 OTHER RELATED LABOR RELATIONS DISPUTES

SECTION 1. Coverage. — Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its

members or by another labor organization;

(b) conduct of election of union and workers' association

officers/nullification of election of union and workers'
association officers;

(c) audit/accounts examination of union or workers' association

funds;

(d) deregistration of collective bargaining agreements;

(e) validity/invalidity of union affiliation or disaffiliation;

(f) validity/invalidity of acceptance/non-acceptance for union

membership;

(g) validity/invalidity of impeachment/expulsion of union and

workers' association officers and members;

(h) validity/invalidity of voluntary recognition;

(i) opposition to application for union and CBA registration;

(j) violations of or disagreements over any provision in a union or

workers' association constitution and by-laws;
(k) disagreements over chartering or registration of labor
organizations and collective bargaining agreements;

(l) violations of the rights and conditions of union or workers'

association membership;

(m) violations of the rights of legitimate labor organizations,

except interpretation of collective bargaining agreements;

(n) such other disputes or conflicts involving the rights to self-

organization, union membership and collective bargaining
—

(1) between and among legitimate labor organizations;

(2) between and among members of a union or workers'

association.

SECTION 2. Coverage. — Other related labor relations disputes

shall include any conflict between a labor union and the employer or
any individual, entity or group that is not a labor organization or
workers' association. This includes: (1) cancellation of registration of
unions and workers' associations; and (2) a petition for interpleader.

It is clear from the foregoing that the issues raised by petitioners do

not fall under any of the aforementioned circumstances constituting an intra-
union dispute. More importantly, the petitioners do not seek a determination
of whether it is the Facundo group (EUBP) or the Remigio group (REUBP)
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 which is the true set of union officers. Instead, the issue raised pertained
only to the validity of the acts of management in light of the fact that it still
has an existing CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the
question was whether they were liable for unfair labor practice, which issue
was within the jurisdiction of the NLRC. The dismissal of the second ULP
complaint was therefore erroneous.
However, as to respondents Remigio and Villareal, we find that
petitioners' complaint was validly dismissed.
Petitioners' ULP complaint cannot prosper as against respondents
Remigio and Villareal because the issue, as against them, essentially
involves an intra-union dispute based on Section 1 (n) of DOLE Department
Order No. 40-03. To rule on the validity or illegality of their acts, the Labor
Arbiter and the NLRC will necessarily touch on the issues respecting the
propriety of their disaffiliation and the legality of the establishment of REUBP
— issues that are outside the scope of their jurisdiction. Accordingly, the
dismissal of the complaint was validly made, but only with respect to these
two respondents.
But are Bayer, Lonishen and Amistoso liable for unfair labor practice?
On this score, we find that the evidence supports an answer in the
affirmative.
It must be remembered that a CBA is entered into in order to foster
stability and mutual cooperation between labor and capital. An employer
should not be allowed to rescind unilaterally its CBA with the duly certified
bargaining agent it had previously contracted with, and decide to bargain
anew with a different group if there is no legitimate reason for doing so and
without first following the proper procedure. If such behavior would be
tolerated, bargaining and negotiations between the employer and the union
will never be truthful and meaningful, and no CBA forged after arduous
negotiations will ever be honored or be relied upon. Article 253 of the Labor
Code, as amended, plainly provides: HICSaD

ART. 253. Duty to bargain collectively when there exists a

collective bargaining agreement. — Where there is a collective
bargaining agreement, the duty to bargain collectively shall
also mean that neither party shall terminate or 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. (Emphasis
supplied.)

This is the reason why it is axiomatic in labor relations that a CBA

entered into by a legitimate labor organization that has been duly certified
as the exclusive bargaining representative and the employer becomes the
law between them. Additionally, in the Certificate of Registration 50 issued
by the DOLE, it is specified that the registered CBA serves as the covenant
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 between the parties and has the force and effect of law between them during
the period of its duration. Compliance with the terms and conditions of the
CBA is mandated by express policy of the law primarily to afford protection
to labor 51 and to promote industrial peace. Thus, when a valid and binding
CBA had been entered into by the workers and the employer, the latter is
behooved to observe the terms and conditions thereof bearing on union dues
and representation. 52 If the employer grossly violates its CBA with the duly
recognized union, the former may be held administratively and criminally
liable for unfair labor practice. 53
Respondents Bayer, Lonishen and Amistoso, contend that their acts
cannot constitute unfair labor practice as the same did not involve gross
violations in the economic provisions of the CBA, citing the provisions of
Articles 248 (1) and 261 54 of the Labor Code, as amended. 55 Their
argument is, however, misplaced.
Indeed, in Silva v. National Labor Relations Commission , 56 we
explained the correlations of Article 248 (1) and Article 261 of the Labor
Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and
for the NLRC to exercise appellate jurisdiction thereon, the allegations in the
complaint must show prima facie the concurrence of two things, namely: (1)
gross violation of the CBA; and (2) the violation pertains to the economic
provisions of the CBA. 57
This pronouncement in Silva, however, should not be construed to
apply to violations of the CBA which can be considered as gross violations
per se, such as utter disregard of the very existence of the CBA itself, similar
to what happened in this case. When an employer proceeds to negotiate
with a splinter union despite the existence of its valid CBA with the duly
certified and exclusive bargaining agent, the former indubitably abandons
its recognition of the latter and terminates the entire CBA.
Respondents cannot claim good faith to justify their acts. They knew
that Facundo's group represented the duly-elected officers of EUBP.
Moreover, they were cognizant of the fact that even the DOLE Secretary
himself had recognized the legitimacy of EUBP's mandate by rendering an
arbitral award ordering the signing of the 1997-2001 CBA between Bayer
and EUBP. Respondents were likewise well-aware of the pendency of the
intra-union dispute case, yet they still proceeded to turn over the collected
union dues to REUBP and to effusively deal with Remigio. The totality of
respondents' conduct, therefore, reeks with anti-EUBP animus.
Bayer, Lonishen and Amistoso argue that the case is already moot and
academic following the lapse of the 1997-2001 CBA and their renegotiation
with EUBP for the 2006-2007 CBA. They also reason that the act of the
company in negotiating with EUBP for the 2006-2007 CBA is an obvious
recognition on their part that EUBP is now the certified collective bargaining
agent of its rank-and-file employees. 58
We do not agree. First, a legitimate labor organization cannot be
construed to have abandoned its pending claim against the
management/employer by returning to the negotiating table to fulfill its duty
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 to represent the interest of its members, except when the pending claim has
been expressly waived or compromised in its subsequent negotiations with
the management. To hold otherwise would be tantamount to subjecting
industrial peace to the precondition that previous claims that labor may have
against capital must first be waived or abandoned before negotiations
between them may resume. Undoubtedly, this would be against public policy
of affording protection to labor and will encourage scheming employers to
commit unlawful acts without fear of being sanctioned in the future.
Second, that the management of Bayer decided to recognize EUBP as
the certified collective bargaining agent of its rank-and-file employees for
purposes of its 2006-2007 CBA negotiations is of no moment. It did not
obliterate the fact that the management of Bayer had withdrawn its
recognition of EUBP and supported REUBP during the tumultuous
implementation of the 1997-2001 CBA. Such act of interference which is
violative of the existing CBA with EUBP led to the filing of the subject
complaint. AEDCHc

On the matter of damages prayed for by the petitioners, we have held

that as a general rule, a corporation cannot suffer nor be entitled to moral
damages. A corporation, and by analogy a labor organization, being an
artificial person and having existence only in legal contemplation, has no
feelings, no emotions, no senses; therefore, it cannot experience physical
suffering and mental anguish. Mental suffering can be experienced only by
one having a nervous system and it flows from real ills, sorrows, and griefs
of life — all of which cannot be suffered by an artificial, juridical person. 59 A
fortiori, the prayer for exemplary damages must also be denied. 60
Nevertheless, we find it in order to award (1) nominal damages in the
amount of P250,000.00 on the basis of our ruling in De La Salle University v.
De La Salle University Employees Association (DLSUEA-NAFTEU) 61 and
Article 2221, 62 and (2) attorney's fees equivalent to 10% of the monetary
award. The remittance to petitioners of the collected union dues previously
turned over to Remigio and Villareal is likewise in order.
WHEREFORE, the petition for review on certiorari is PARTLY
GRANTED. The Decision dated December 15, 2003 and the Resolution dated
March 23, 2004 of the Court of Appeals in CA-G.R. SP No. 73813 are
MODIFIED as follows:

1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion

Amistoso are found LIABLE for Unfair Labor Practice, and are
hereby ORDERED to remit to petitioners the amount of
P254,857.15 representing the collected union dues
previously turned over to Avelina Remigio and Anastacia
Villareal. They are likewise ORDERED to pay petitioners
nominal damages in the amount of P250,000.00 and
attorney's fees equivalent to 10% of the monetary award;
and

2) The complaint, as against respondents Remigio and Villareal is

DISMISSED due to the lack of jurisdiction of the Labor
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 Arbiter and the NLRC, the complaint being in the nature of an
intra-union dispute.

No pronouncement as to costs.
SO ORDERED.
Carpio Morales, Brion, Bersamin and Sereno, JJ., concur.

Footnotes

1. Rollo , pp. 221-237. Penned by Associate Justice Mercedes Gozo-Dadole, with

Associate Justices Eugenio S. Labitoria and Rosmari D. Carandang,
concurring.

2. Id. at 239.

3. With Registration No. NCR-10-165-88. See CA rollo, Vol. I, p. 183.

4. Rollo, pp. 31-47.

5. Id. at 48.

6. Id. at 71, 136.

7. Id. at 52.
8. Id.

9. Id. at 517-529.
10. Id. at 551-553 and 556.

11. Id. at 556.

12. Letter dated October 30, 1998. Id. at 557-558.

13. Id. at 531-534.

14. Id. at 492.

15. Id. at 492 and 560.

16. Id. at 68.

17. Id. at 69-73.

18. Docketed as Case No. OD-9903-004-IRD. See rollo, pp. 563-568.

19. Rollo, pp. 535-549.

20. Id. at 543-544.

21. Id. at 546-548.

22. Id. at 490.

23. Id. at 571.

24. Id.

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 25. Id.

26. Id. at 574.

27. Dated January 21, 2000. Id. at 575-584.

28. Dated March 8, 2000. Id. at 81-87.

29. Id. at 178.

30. The appeal was docketed as BLR-A-TR-13-17-2-00. See rollo, p. 176.

31. Rollo, p. 181.

32. Id. at 585-614.

33. Id. at 495.

34. Id. at 615-624.

35. Id. at 623-624.

36. Id. at 626-634.

37. Id. at 633.

38. NLRC Decision dated September 27, 2001. Id. at 185-215.

39. NLRC Order dated June 21, 2002. Id. at 217-219.

40. Id. at 234-236.

41. Id. at 469-470.

42. Id. at 782.

43. Id. at 731.

44. Article 248 (d) of the Labor Code provides:

ART. 248. Unfair labor practices of employers. — It shall be unlawful for an
employer to commit any of the following unfair labor practices:
xxx xxx xxx

(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or
other support to it or its organizers or supporters;

xxx xxx xxx

45. Rollo, pp. 783-790.

46. Id. at 734-740.

47. Id. at 661-663.

48. Id. at 675-676.

49. C.A. Azucena, Jr., Vol. II, THE LABOR CODE WITH COMMENTS AND CASES, 2004
ed., p. 111.
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 50. Rollo, p. 48.

51. Del Monte Philippines, Inc. v. Saldivar, G.R. No. 158620, October 11, 2006, 504
SCRA 192, 201.

52. De La Salle University v. De La Salle University Employees Association

(DLSUEA-NAFTEU), G.R. No. 177283, 584 SCRA 592, 603.
53. Article 248 of the Labor Code provides in part:

ART. 248. Unfair labor practices of employers. — It shall be unlawful for an

employer to commit any of the following unfair labor practices:

xxx xxx xxx

(i) To violate a collective bargaining agreement.

54. Art. 261 of the Labor Code provides in part:

ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators. — The Voluntary Arbitrator or panel of Voluntary Arbitrators shall
have original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies referred to in the immediately
preceding article. Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of a Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply
with the economic provisions of such agreement. (Emphasis supplied.)
55. Rollo, pp. 499-500.

56. G.R. No. 110226, June 19, 1997, 274 SCRA 159.
57. Id. at 173.

58. Rollo, pp. 752-753.

59. Flight Attendants and Stewards Association of the Philippines v. Philippine
Airlines, Inc., G.R. No. 178083, July 22, 2008, 559 SCRA 252, 294.
60. Article 2234 of the Civil Code provides in part:

ART. 2234. While the amount of the exemplary damages need not be proved,
the plaintiff must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of
whether or not exemplary damages should be awarded. . . .
61. Supra note 52 at 604.

62. Article 2221 of the Civil Code provides:

ART. 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff
for any loss suffered by him.
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 FIRST DIVISION

[G.R. No. 183122. June 15, 2011.]

GENERAL MILLING CORPORATION-INDEPENDENT LABOR

UNION (GMC-ILU), petitioner, vs. GENERAL MILLING
CORPORATION, respondent.

[G.R. No. 183889. June 15, 2011.]

GENERAL MILLING CORPORATION, petitioner, vs. GENERAL

MILLING CORPORATION-INDEPENDENT LABOR UNION (GMC-
ILU), ET AL., respondents.

DECISION

PEREZ, J : p

Assailed in these petitions for review on certiorari filed pursuant to Rule

45 of the 1997 Rules of Civil Procedure are the Court of Appeals' (CA)
resolution of the separate petitions for certiorari questioning the 20 July
2006 Decision 1 rendered and the 23 August 2006 Resolution 2 issued by the
Fourth Division of the National Labor Relations Commission (NLRC), Cebu
City, in NLRC Case No. V-000632-2005. In G.R. No. 183122, petitioner
General Milling Corporation-Independent Labor Union (the Union) seeks the
reversal of the 10 October 2007 Decision rendered by the Special Twentieth
Division of the CA in CA-G.R. CEB-SP No. 02226, 3 the dispositive portion of
which states:
WHEREFORE, all the foregoing premises considered, the instant
Petition is hereby PARTIALLY GRANTED.

The July 20, 2006 Decision of respondent NLRC in NLRC Case No.
V-000632-2005 is hereby AFFIRMED insofar as it affirmed the October
27, 2005 Order of Executive Labor Arbiter Ortiz in RAB Case No. VII-06-
0475-1992 with the modification of: a) excluding the vacation leave
salary rate differentials, sick leave salary rate differentials, b)
excluding employees who have executed quitclaims which are hereby
declared valid, and c) deducting salary increases and other
employment benefits voluntarily given by respondent GMC in the
computation of benefits. IADCES

Accordingly, the instant case is hereby REFERRED to the

GRIEVANCE MACHINERY under the imposed CBA for the recomputation
of benefits claimed by petitioner GMC-ILU under the said imposed CBA
taking into consideration the guidelines laid down by the Court in this
Decision as well as the validity of the subject quitclaims hereinbefore
discussed.
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 SO ORDERED. 4

In G.R. No. 183889, petitioner General Milling Corporation (GMC) prays

for the setting aside of the 16 November 2007 Decision rendered by the
Eighteenth Division of the CA in CA-G.R. CEB-SP No. 02232, 5 the decretal
portion of which states:
WHEREFORE, the Decision dated July 20, 2006 and the Resolution
dated August 23, 2006 of public respondent NLRC are hereby
AFFIRMED IN TOTO and the instant petition is DISMISSED.

SO ORDERED. 6

The Facts
On 28 April 1989, GMC and the Union entered into a collective
bargaining agreement (CBA) which provided, among other terms, the latter's
representation of the collective bargaining unit for a three-year term made
to retroact to 1 December 1988. On 29 November 1991 or one day before
the expiration of the subject CBA, the Union sent a draft CBA proposal to
GMC, with a request for counter-proposals from the latter, for the purpose of
renegotiating the existing CBA between the parties. In view of GMC's failure
to comply with said request, the Union commenced the complaint for unfair
labor practice which, under docket of RAB Case No. VII-06-0475-92, was
dismissed for lack of merit in a decision dated 21 December 1993 issued by
the Regional Arbitration Branch-VII (RAB-VII) of the National Labor Relations
Commission (NLRC). 7 On appeal, however, said dismissal was reversed and
set aside in the 30 January 1998 decision rendered by the Fourth Division of
the NLRC in NLRC Case No. V-0112-94, 8 the dispositive portion of which
states: HDTISa

WHEREFORE, premises considered, the instant appeal is hereby

GRANTED. The Decision dated December 21, 1993 is hereby VACATED
and SET ASIDE and a new one issued ordering the imposition upon the
respondent company of the complainant union['s] draft CBA proposal
for the remaining two years duration of the original CBA which is from
December 1, 1991 to November 30, 1993; and for the respondent to
pay attorney's fees.

SO ORDERED. 9

With the reconsideration and setting aside of the foregoing decision in

the NLRC's resolution dated 6 October 1998, 10 the Union filed the petitions
for certiorari docketed before the CA as CA-G.R. SP Nos. 50383 and 51763. In
a decision dated 19 July 2000, the then Fourteenth Division of the CA
reversed and set aside the NLRC's 6 October 1998 resolution and reinstated
the aforesaid 30 January 1998 decision, except with respect to the
undetermined award of attorney's fees which was deleted for lack of
statement of the basis therefor in the assailed decision. 11 Aggrieved by the
CA's 26 October 2000 resolution denying its motion for reconsideration, GMC
elevated the case to this Court via the petition for review on certiorari
docketed before this Court as G.R. No. 146728. In a decision dated 11
February 2004 rendered by the Court's then Second Division, the CA's 30
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 January 1998 decision and 26 October 2000 resolution were affirmed, 12

upon the following findings and conclusions, to wit:

GMC's failure to make a timely reply to the proposals presented
by the union is indicative of its utter lack of interest in bargaining with
the union. Its excuse that it felt the union no longer represented the
worker, was mainly dilatory as it turned out to be utterly baseless.

We hold that GMC's refusal to make a counter proposal to the

union's proposal for CBA negotiation is an indication of its bad faith.
Where the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty
to bargain [Link]

Failing to comply with the mandatory obligation to submit a reply

to the union's proposals, GMC violated its duty to bargain collectively,
making it liable for unfair labor practice. Perforce, the Court of Appeals
did not commit grave abuse of discretion amounting to lack or excess
of jurisdiction in finding that GMC is, under the circumstances, guilty of
unfair labor practice.
xxx xxx xxx

. . . (I)t would be unfair to the union and its members if the terms
and conditions contained in the old CBA would continue to be imposed
on GMC's employees for the remaining two (2) years of the CBA's
duration. We are not inclined to gratify GMC with an extended term of
the old CBA after it resorted to delaying tactics to prevent negotiations.
Since it was GMC which violated the duty to bargain collectively, based
o n Kiok Loy and Divine World University of Tacloban , it had lost its
statutory right to negotiate or renegotiate the terms and conditions of
the draft CBA proposed by the union. cHDaEI

xxx xxx xxx

Under ordinary circumstances, it is not obligatory upon either

side of a labor controversy to precipitately accept or agree to the
proposals of the other. But an erring party should not be allowed with
impunity to schemes feigning negotiations by going through empty
gestures. Thus, by imposing on GMC the provisions of the draft CBA
proposed by the union, in our view, the interests of equity and fair play
were properly served and both the parties regained equal footing,
which was lost when GMC thwarted the negotiations for new economic
terms of the CBA. 13

With the ensuing finality of the foregoing decision, the Union filed a
motion for issuance of a writ of execution dated 21 March 2005, to enforce
the claims of the covered employees which it computed in the sum of
P433,786,786.36 and to require GMC to produce said employee's time cards
for the purpose of computing their overtime pay, night shift differentials and
labor standard benefits for work rendered on rest days, legal holidays and
special holidays. 14 On 18 April 2005, however, GMC opposed said motion on
the ground, among other matters, that the bargaining unit no longer exist in
view of the resignation, retrenchment, retirement and separation from
service of workers who have additionally executed waivers and quitclaims
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 acknowledging full settlement of their claims; that the covered employees
have already received salary increases and benefits for the period 1991 to
1993; and, that aside from the aforesaid supervening events which
precluded the enforcement thereof, the decision rendered in the case simply
called for the execution of a CBA incorporating the Union's proposal, not the
outright computation of benefits thereunder. 15
In a "Submission" dated 27 May 2005, GMC further manifested that the
Union membership in the bargaining unit did not exceed 286 and that
following employees should be excluded from the coverage of the decision
sought to be enforced: (a) 47 employees who were hired after 1992; (b) 234
employees who had been separated from the service; (c) 37 employees who,
as daily paid rank and file employees, were represented by another union
and covered by a different CBA; and, (d) 41 workers holding
managerial/supervisory/confidential positions. 16 In its comment to the
foregoing "Submission", however, the Union argued that the benefits derived
from its proposed CBA extended to both union members and non-members;
that the newly hired employees were entitled to the benefits accruing after
their employment by GMC; that the employees who had, in the meantime,
been separated from service could not have validly waived the benefits
which were only determined with finality in the 11 February 2004 decision
rendered in G.R. No. 146728; that the CBA benefits can be extended the
daily paid employees upon their re-classification as monthly paid employees
as well as to GMC's managerial and supervisory employees, prior to their
promotion; and, that the imposition of its CBA proposals necessarily calls for
the computation of the benefits therein provided. 17
Acting on the memoranda the parties filed in support of their
respective positions, 18 Executive Labor Arbiter Violeta Ortiz-Bantug issued
the 27 October 2005 order, limiting the computation of the benefits of the
Union's CBA proposal to the remaining two years of the duration of the
original CBA or from 1 December 1991 up to 30 November 1993. The
computation covered the 436 employees included in the Union's list, less the
following: (a) 77 employees who were hired or regularized after 30
November 1993; (b) 36 daily paid rank and file employees who were covered
by a separate CBA; (c) 41 managerial/supervisory employees; and (d) 1
employee for whom no salary-rate information was submitted in the
premises. 19 As a consequence, said Executive Labor Arbiter disposed of the
aforesaid pending motion and incidents in the following wise:
Based on all the foregoing, computations have been made,
details of which are prepared and reflected in separate pages but
which still form part of this Order. By way of summary, the grand total
consists of the following:

Salary Increase Differentials P17,575,000.00

Rest Day 4,320,148.50
Vacation Leave Differentials 920,013.42
Sick Leave Differentials 920,013.42
School Opening Bonus 5,094,044.69
13th Month Pay Differentials 1,468,999.98
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 Christmas Bonus 4,560,816.78
Signing Bonus 1,310,000.00
—————————
Total Money Claims P36,169,036.79
============
Sacks of Rice 6,372

Issue the appropriate writ of execution based on the foregoing

computations. ASIDTa

SO ORDERED. 20

Aggrieved, the Union filed a partial appeal dated 2 November 2005, on

the ground that the Executive Labor Arbiter abused her discretion in: (a)
confining the computation of the benefits from 1 December 1991 to 30
November 1993 in favor of only 281 employees out of the 436 included in its
list; (b) computing only 10 out of the 15 benefits provided under its CBA
proposal; and (c) failing to direct the GMC to produce the employees' time
cards and other pertinent documents essential for the computation of the
benefits due in the premises. 21 In turn, GMC filed its 17 November 2005
"Objections" to the aforesaid 22 October 2005 order, arguing that the
Executive Labor Arbiter not only varied the dispositive portion of the NLRC
decision dated 30 January 1998 but also ignored the quitclaims executed
and the benefits actually paid in the premises. 22 Reiterating the foregoing
arguments in its 16 May 2006 opposition to the Union's partial appeal, GMC
further maintained that its not being duly heard on the computation of the
award in the subject 27 October 2005 order rendered the Union's partial
appeal premature; and, that its CBA with the Union had expired on 30
November 1993, with the latter exerting no effort at all for its renewal. 23
On 20 July 2006, the NLRC rendered a decision in NLRC Case No. V-
000632-2005, affirming the aforesaid 27 October 2005 order of execution.
Finding that the duty to maintain the status quo and to continue in full force
and effect the terms of the existing agreement under Article 253 of the
Labor Code of the Philippines applies only when the parties agreed to the
terms and conditions of the CBA, the NLRC upheld the Executive Labor
Arbiter's computation on the ground, among others, that the decision sought
to be enforced covered only the remaining two years of the duration of the
original CBA, i.e., from 1 December 1991 to 30 November 1993; that like
GMC's supposed grant of additional benefits during the remaining term of
the original CBA, the Union's claims for payment of vacation leave salary
differentials, sick leave salary rate differentials, dislocation allowance,
separation pay for voluntary resignation and separation pay salary rate
differentials were not sufficiently established; that required by law to
preserve its records for a period of five years, GMC cannot possibly be
expected to preserve employees' records for the period 1 December 1991 to
30 November 1993; and, that the claimant has the burden of proving
entitlement to holiday pay, premium for holiday and rest day as well night
shift differentials. Giving short shrift to GMC's objections as aforesaid, the
NLRC likewise ruled that computation of the monetary award was necessary
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 for the enforcement of this Court's 11 February 2004 decision and avoidance
of multiplicity of suits. 24
Dissatisfied with the NLRC's 23 August 2006 denial of their motions for
reconsideration of the foregoing decision, 25 GMC and the Union filed
separate Rule 65 petitions for certiorari before the CA. Docketed as CA-G.R.
CEB-SP No. 02226 before the CA's Special Twentieth Division, the Union's
petition was partially granted in the 10 October 2007 decision rendered in
the case, 26 upon the finding that the parties' old CBA was superseded by
the imposed CBA which provided a term of five years from 1 December 1991
and remained in force until a new CBA is concluded between the parties.
Brushing aside the Executive Labor Arbiter's computation of the benefits as
"too sweeping" and "inaccurate", the CA ruled that: (a) employees hired
after the effectivity of the imposed CBA are entitled to its benefits on their
first day of work; (b) daily paid employees are entitled to said benefits from
the first day they became regular monthly paid employees; (c) managerial
and supervisory employees are entitled to the same benefits until their
promotion as such; (d) employees for whom no information as to salary rate
were submitted are entitled to the CBA benefits upon submission of proof in
respect thereto; and, (e) employees who signed Deeds of waiver, release
and quitclaim are no longer entitled to said benefits. 27
Rejecting the argument that the NLRC erred in upholding the Executive
Labor Arbiter's computation of only 10 out of the 15 benefits provided under
the imposed CBA, the CA went on to take appropriate note of the fact that
no proof was submitted by the Union to justify the grant of said benefits.
While ruling that the imposed CBA had the same force and effect as a
negotiated CBA, the CA, however, faulted the Union for its "hasty" and
"premature" filing of its motion for issuance of a writ of execution, instead of
first demanding the enforcement of the imposed CBA from GMC and, failing
the same, referring the matter to the grievance machinery or voluntary
arbitration provided under the imposed CBA, in accordance with Articles 260
and 261 of the Labor Code. Acknowledging the difficulty of computing the
benefits demanded by the Union in the absence of evidence upon which to
base the same, the CA referred the case to the Grievance Machinery under
the imposed CBA and directed the exclusion of the following items from said
computation: (a) the Union's claims for vacation leave salary rate
differentials and sick leave salary rate differentials; (b) the benefits in favor
of the employees who have already executed quitclaims in favor of GMC; and
(c) the salary increases and other employment benefits GMC had, in the
meantime, extended its employees. 28 Discontented with the CA's 14 May
2008 resolution denying its motion for reconsideration of the foregoing
decision, 29 the Union filed its Rule 45 petition currently docketed before this
Court as G.R. No. 183122. 30
On the other hand, GMC's petition for certiorari assailing the NLRC's 20
July 2006 decision was docketed as CA-G.R. SP No. CEB-SP No. 02232 before
the CA's Eighteenth Division 31 which subsequently rendered the decision
dated on 16 November 2007, dismissing the same for lack of merit. Finding
that both parties were given an opportunity to present their respective
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 positions during the pre-execution conference conducted a quo, the CA ruled
that the Executive Labor Arbiter's 27 October 2005 order had attained
finality insofar as GMC is concerned, in view of its failure to perfect an
appeal therefrom by paying the required appeal fee and posting the cash or
surety bond in an amount equivalent to the benefits computed. In addition to
rejecting GMC's argument that the quitclaims executed by its employees
were in the nature of a supervening event which rendered execution
proceedings impossible, the CA held that said quitclaims did not extend to
the benefits provided under the imposed CBA and that the additional
benefits supposedly received by GMC's employees should not be deducted
therefrom, for lack of sufficient evidence to prove the same. 32 Aggrieved by
the denial of its motion for reconsideration of the foregoing decision in the
CA's resolution dated 10 July 2008, 33 GMC filed the petition for review on
certiorari docketed before us as G.R. No. 183889. 34
The Issues
In G.R. No. 183122, the Union proffers the following grounds for the grant
of its petition, to wit:
I. THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION AND COMMITTED REVERSIBLE ERROR IN
AFFIRMING THE COMPUTATION OF THE NLRC IN ITS
DECISION DATED JULY 20, 2006 AND DISTORTING THE
APPLICATION OF ARTICLE 253 OF THE LABOR CODE IN THE
EXECUTION OF THE DECISION OF THIS HONORABLE COURT
IN G.R. NO. 146728.

II. THE COURT OF APPEALS GRAVELY ABUSED ITS

DISCRETION AND COMMITTED REVERSIBLE ERROR IN
EXCLUDING FROM THE COMPUTATION THE EMPLOYEES
WHO HAVE EXECUTED QUITCLAIMS, IN EXCLUDING FROM
THE COMPUTATION VACATION AND SICK LEAVE SALARY
DIFFERENTIALS, AND IN DEDUCTING ALLEGED SALARY
INCREASES AND OTHER BENEFITS GIVEN BY [GMC].

III. THE COURT OF APPEALS GRAVELY ABUSED ITS

DISCRETION AND COMMITTED REVERSIBLE ERROR IN
REFERRING THE INSTANT CASE TO THE GRIEVANCE
MACHINERY FOR COMPUTATION OF THE BENEFITS DUE
UNDER THE IMPOSED CBA. cSaADC

IV. THE DECISION IN THE INSTANT CASE IS IN DIRECT

CONFLICT WITH THE DECISION OF ANOTHER DIVISION OF
THE COURT OF APPEALS INVOLVING THE SAME ISSUES. 35

In G.R. No. 183889, GMC prays for the setting aside of the CA's 16
November 2007 decision in CA-G.R. CEB-SP No. 02232, on the following
grounds, to wit:
A. THE DECISION OF NOVEMBER 16, 2007 AND THE
RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS ARE CONTRARY TO LAW.

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 B. THE DECISION OF NOVEMBER 16, 2007 AND THE
RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS ARE NOT IN ACCORD WITH THE APPLICABLE
DECISIONS OF THIS HONORABLE COURT.

C. THE DECISION OF NOVEMBER 16, 2007 AND THE

RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS ARE CONTRARY TO THE ESTABLISHED FACTS. IECcaA

D. THE DECISION OF NOVEMBER 16, 2007 AND THE

RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS VIOLATE THE LAW OF THE CASE.

E. THE DECISION OF NOVEMBER 16, 2007 AND THE

RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS CONTRAVENE THEIR OWN DECISION IN AN
EXACTLY SIMILAR CASE INVOLVING THE SAME PARTIES. 36

As may be gleaned from the grounds GMC and the Union interpose in
support of their respective petitions, it is evident that we are called upon to
determine the following matters: (a) the period of effectivity of the imposed
CBA; (b) the employees covered by the imposed CBA; and, (c) the benefits to
be included in the execution of the 11 February 2004 decision rendered in
G.R. No. 146728. Preliminary to the foregoing considerations is the effect of
the rendition of diametrically opposed decisions in CA-G.R. CEB. SP Nos.
02226 and 02232 by the CA's Special Twentieth and Eighteenth Divisions on
the parties' conflicting claims.
The Court's Ruling
We find the reversal of the assailed decisions in order.

Both GMC and the Union call our attention to the fact that the 10
October 2007 decision rendered by the CA's Special Twentieth Division in
CA-G.R. CEB-SP No. 02226 is in conflict with the 16 November 2007 decision
rendered by the same court's Eighteenth Division in CA-G.R. CEB-SP No.
02232. In G.R. No. 183122, the Union argues that, given the identity of
parties and issues raised in said cases, the 16 November 2007 decision in
CA-G.R. CEB-SP No. 02232 should have been taken considered and adopted
by the CA's Special Twentieth Division in resolving its motion for
reconsideration of the 10 October 2007 decision in CA-G.R. CEB-SP No.
02226. 37 In G.R. No. 183889, on the other hand, GMC maintains that, having
been rendered ahead of the 16 November 2007 decision in CA-G.R. CEB-SP
No. 02232, the CA's Special Twentieth Division's 10 October 2007 in CA-G.R.
CEB-SP No. 02226 is the law of the case which the Eighteenth Division
erroneously contravened when it dismissed its petition for certiorari. 38
The conflicting decisions in CA-G.R. CEB-SP Nos. 02226 and 02232
would have been, in the first place, avoided had the CA consolidated said
cases pursuant to Section 3, Rule III of its 2002 Internal Rules (IRCA). 39
Being intimately and substantially related cases, their consolidation should
have been ordered to avert the possibility of conflicting decisions in the two
cases. 40 Although rendered on the merits by a court of competent
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 jurisdiction acting within its authority, neither one of said decisions can,
however, be invoked as law of the case insofar as the other case is
concerned. The doctrine of "law of the case" means that whatever is once
irrevocably established as the controlling legal rule or decision between the
same parties in the same case continues to be the law of the case, whether
correct on general principles or not, 41 so long as the facts on which such
decision was predicated continue to be the facts of the case before the
court. 42 Considering that a decision becomes the law of the case once it
attains finality, 43 it is evident that, without having achieved said status, the
herein assailed decisions cannot be invoked as the law of the case by either
GMC or the Union. acHDTA

Anent its period of effectivity, Article XIV of the imposed CBA provides
that "(t)his Agreement shall be in full force and effect for a period of five (5)
years from 1 December 1991, provided that sixty (60) days prior to the lapse
of the third year of effectivity hereof, the parties shall open negotiations on
economic aspect for the fourth and fifth years effectivity of this Agreement."
44 Considering that no new CBA had been, in the meantime, agreed upon by
GMC and the Union, we find that the CA's Special Twentieth Division
correctly ruled in CA-G.R. CEB-SP No. 02226 that, pursuant to Article 253 of
the Labor Code, 45 the provisions of the imposed CBA continues to have full
force and effect until a new CBA has been entered into by the parties. Article
253 mandates the 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 prior to the expiration of the old CBA and/or until a new
agreement is reached by the parties. 46 In the same manner that it does not
provide for any exception nor qualification on which economic provisions of
the existing agreement are to retain its force and effect, 47 the law does not
distinguish between a CBA duly agreed upon by the parties and an imposed
CBA like the one under consideration.
The foregoing disquisition notwithstanding, it bears emphasizing,
however, that the dispositive portion of the 30 January 1998 decision
rendered by the Fourth Division of the NLRC in NLRC Case No. V-0112-94
specifically ordered "the imposition upon [GMC] of the [Union's] draft CBA
proposal for the remaining two years duration of the original CBA which is
from 1 December 1991 to 30 November 1993." 48 Initially set aside in the 6
October 1998 resolution issued in the same case by the NLRC 49 and
reinstated in the 19 July 2000 decision rendered by the CA's then Fourteenth
Division in CA-G.R. SP Nos. 50383 and 51763, 50 said 30 January 1998
decision was upheld in the 11 February 2004 decision rendered by this Court
in G.R. No. 146728 which, in turn, affirmed the CA's 19 July 2000 decision as
aforesaid. 51 Considering that the 30 January 1998 decision sought to be
enforced confined the application of the imposed CBA to the remaining two-
year duration of the original CBA, we find that the computation of the
benefits due GMC's covered employees was correctly limited to the period 1
December 1991 to 30 November 1993 in the 27 October 2005 order issued
by Executive Labor Arbiter Violeta Ortiz-Bantug and the 20 July 2006
decision rendered by the NLRC in NLRC Case No. V-000632-2005. IcHAaS

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 Consequently, insofar as the execution of the 30 January 1998 decision
is concerned, the Union is out on a limb in espousing a computation which
extends the benefits of the imposed CBA beyond the remaining two-year
duration of the original CBA. The rule is, after all, settled that an order of
execution which varies the tenor of the judgment or exceeds the terms
thereof is a nullity. 52 Since execution not in harmony with the judgment is
bereft of validity, 53 it must conform, more particularly, to that ordained or
decreed in the dispositive portion of the decision sought to be enforced.
Considering that the decision sought to be enforced pertains to the period 1
December 1991 to 30 November 1993, it necessarily follows that the
computation of benefits under the imposed CBA should be limited to covered
employees who were in GMC's employ during said period of time. While it is
true that the provisions of the imposed CBA extend beyond said remaining
two-year duration of the original CBA in view of the parties' admitted failure
to conclude a new CBA, the corresponding computation of the benefits
accruing in favor of GMC's covered employees after the term of the original
CBA was correctly excluded in the aforesaid 27 October 2005 order issued in
RAB VII-06-0475-1992. Rather than the abbreviated pre-execution
proceedings before Executive Labor Arbiter Violeta Ortiz-Bantug, the
computation of the same benefits beyond 30 November 1993 should,
instead, be threshed out by GMC and the Union in accordance with the
Grievance Procedure outlined as follows under Article XII of the imposed
CBA, to wit:
Article XII

GRIEVANCE PROCEDURE

Section 1. Whenever an employee covered by the terms of

this Agreement believes that the COMPANY has violated the express
terms thereof, or is aggrieved on the enforcement or application of the
COMPANY's personnel policies, he/she shall be required to follow the
procedure hereinafter set forth in processing the grievance. The
COMPANY will not be required to consider a grievance unless it is
presented within 7 days from the alleged breach of the express terms
of this Agreement or the COMPANY personnel policies,

STEP I. The employee, through the UNION Steward, shall

present the alleged grievance in writing to the immediate superior and
they shall endeavor to settle the grievance within ten (10) days.

STEP II. Failing the settlement in Step I, the UNION President

and the Personnel Officer shall meet and adjust the grievance within
fifteen (15) days.

STEP III. Any unresolved grievance shall be referred to the

Arbitration Committee provided hereunder. CaAcSE

Section 2. Procedure before the Grievance Committee. —

A. In the event a dispute arises concerning the application or
interpretation of the terms of this Agreement or
enforcement/application of the COMPANY personnel policies which
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 cannot be settled pursuant to Section I and II, Section 1 hereof, an
Arbitration Committee shall be formed for the purpose of settling that
particular dispute only. The Grievance Committee shall be composed of
three (3) members, one to be appointed by the COMPANY as its
representative, another to be appointed by the UNION, and the third to
be appointed by common agreement of the two representatives
selected from among the list of accredited voluntary arbitrators in the
Province of Cebu, or from government officials or civic leaders and
responsible citizens in the community.

B. In all meetings of the Grievance Committee organized for

the purpose of resolving a particular dispute, all members must be
present and no business shall be deliberated upon if any member
thereof is absent. However, if any member is unable to attend the
meeting, he/she shall immediately appoint one to represent him/her,
but if the one appointed by agreement of both representatives of the
COMPANY and the UNION is the one absent, the two representatives
present shall agree between themselves on any person to take the
place of the absent member. Any business or matter shall be
considered as passed and approved by the Committee when there is a
vote thereo[n] by at least two (2) members present and the same shall
be final and binding on the parties concerned.

C. All decisions of the Committee shall be final: provided,

however, that all decisions of the Committee shall be limited to the
terms and provisions of this Agreement and in no event may the terms
and provisions of this Agreement be altered, amended or modified by
the Committee. 54

Article II of the imposed CBA, relatedly, provides that "(t)he employees

covered by this Agreement are those employed as regular monthly paid
employees at the [GMC] offices in Cebu City and Lapulapu City, including
cadet engineers, salesmen, veterinarians, field and laboratory workers, with
the exception of managerial employees, supervisory employees, executive
and confidential secretaries, probationary employees and the employees
covered by a separate Collective Bargaining Agreement at the Company's
Mill in Lapulapu City." 55 Gauged from the express language of the foregoing
provision, we find that Executive Labor Arbiter Violeta Ortiz-Bantug correctly
excluded the following employees from the list of 436 employees submitted
by the Union 56 and the computation of the benefits for the period 1
December 1991 to 30 November 1993, to wit: (a) 77 employees who were
hired or regularized after 30 November 1993; (b) 36 daily paid rank and file
employees who were covered by a separate CBA; (c) 41
managerial/supervisory employees; and, (d) 1 employee for whom no salary-
rate information was submitted in the premises. 57 However, we find that
the 234 employees who had already been separated from GMC's employ by
the time of the rendition of the 11 February 2004 decision in G.R. No.
146728 should further be added to these excluded employees. THCSEA

The record shows that said 234 employees were union members whose
employment with GMC ceased as a consequence of death, termination due
to redundancy, termination due to closure of plant, termination for cause,
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 voluntary resignation, separation or dismissal from service as well as
retirement. 58 Upon compliance with GMC's clearance requirements 59 and in
consideration of sums ranging from P38,980.12 to P631,898.72, due
payment and receipt of which were duly acknowledged, it appears that said
employees executed deeds of waiver, release and quitclaim 60 which
uniformly stated as follows:
THAT, for and in consideration of the said payment, I have
remised, released and do hereby discharge, and by these presents do
for myself, my heirs, executors and administrators, remise, release and
forever discharge said GENERAL MILLING CORPORATION, its successors
and assigns, and/or any of its officers or employees of and from any
and all manner of actions, cause or causes of actions, sum or sums of
money, account damages, claims and demands whatsoever by way of
separation pay, benefits, bonuses, and all other rights to
compensation, salary, wage, emolument, reimbursement, or monetary
benefits, which I ever had, now have or which my heirs, executors and
administrators hereafter can, shall or may have, upon or by reason of
any matter, cause or things whatsoever in connection with my former
employment in and retirement from the said GENERAL MILLING
CORPORATION.

THAT, I have signed this Deed of Waiver, Release and Quitclaim

after I have read the contents thereof and understood the same and its
legal effects.

In its assailed 16 November 2007 decision in CA-G.R. CEB-SP No.

02232, the CA's then Eighteenth Division brushed aside said deeds of
waiver, release and quitclaim on the ground, among other matters, that the
same only covered the employees' separation pay and retirement benefits
but did not extend to the benefits which had accrued in their favor under the
imposed CBA; and, that to be valid, the waiver "should be couched in clear
and unequivocal terms leaving no doubt as to the intention of those giving
up a right or a benefit that legally pertains to them." 61 In so doing, however,
the CA's Eighteenth Division egregiously disregarded the clear intent on the
part of the employees who executed said deeds of waiver, release and
quitclaim to relinquish all present and future claims arising out of their
employment with GMC. Although generally looked upon with disfavor, 62 it
cannot be gainsaid that legitimate waivers that represent a voluntary and
reasonable settlement of laborers' claims should be so respected by the
Court as the law between the parties. 63 It is only where there is clear proof
that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in
to annul the questionable transaction. 64 The absence of showing of these
factors in the case at bench impels us to uphold the validity of said deeds of
waiver, release and quitclaim and, to exclude the employees who executed
the same from those still entitled to the benefits under the imposed CBA
both before and after the remaining term of the original CBA. The waiver
was all inclusive. There was not even a hint of a limitation of coverage. aIcHSC

Inasmuch as mere allegation is not evidence, the basic evidentiary rule

is to the effect that the burden of evidence lies with the party who asserts
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 the affirmative of an issue has the burden of proving the same 65 with such
quantum of evidence required by law. In administrative or quasi-judicial
proceedings like those conducted before the NLRC, the standard of proof is
substantial evidence which is understood to be more than just a scintilla or
such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. 66 Since it does not mean just any evidence
in the record of the case for, otherwise, no finding of fact would be wanting
in basis, the test to be applied is whether a reasonable mind, after
considering all the relevant evidence in the record of a case, would accept
the findings of fact as adequate. 67 Viewed in the light of Union's failure to
prove the factual bases for the computation of the same, we find that the
NLRC correctly affirmed Executive Labor Arbiter Violeta Ortiz-Bantug's
exclusion of the following benefits from the order dated 27 October 2005, to
wit: (a) vacation leave salary rate differentials; (b) sick leave salary rate
differentials; (c) dislocation allowance; (d) separation pay for voluntary
resignation; and (e) separation pay salary rate differentials. 68 For want of
substantial evidence to prove the same, the CA's Eighteenth Division also
correctly brushed aside GMC's insistence on the deduction of the additional
benefits it purportedly extended to its employees from 1 December 1991 to
30 November 1993. 69
As for the benefits after the expiration of the term of the parties'
original CBA, we find that the extent thereof as well as identity of the
employees entitled thereto will be better and more thoroughly threshed out
by the parties themselves in accordance with the grievance procedure
outlined in Article XII of the imposed CBA. Aside from being already beyond
the scope of the decision sought to be enforced, these matters will not be
accurately ascertained from the summaries of claims the parties have been
wont to submit at the pre-execution conference conducted a quo. Taking into
consideration such factors as hiring of new employees, personnel movement
and/or promotions as well as separations from employment which may have,
in the meantime, occurred after the expiration of the remaining term of the
original CBA, the identity of the covered employees as well as the extent of
the benefits due them should clearly be reckoned from acquisition and/or
until loss of their status as regular monthly paid GMC employees. Since the
computation must likewise necessarily take into consideration the increases
in salaries and benefits that may have been given in the intervening period,
both GMC and the Union are enjoined to make the pertinent employment
and company records available to each other, to facilitate the expeditious
and accurate determination of said benefits. CIAacS

WHEREFORE, premises considered the assailed decisions dated 10

October 2007 and 16 November 2007 are REVERSED and SET ASIDE. In
lieu thereof, the 27 October 2005 order issued by Labor Arbiter Violeta Ortiz-
Bantug is ordered REINSTATED and MODIFIED to further exclude the 234
employees who have executed deeds of waiver, release and quitclaim from
the computation of the benefits for the remaining term of the original CBA.

SO ORDERED.

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 Velasco, Jr., * Leonardo-de Castro, Bersamin ** and Del Castillo, JJ., concur.

Footnotes
*Per Special Order No. 1003, Justice Presbitero J. Velasco, Jr., is designated as
Acting Chairperson of the First Division, in lieu of the official trip of Chief
Justice Renato C. Corona.
**Per Special Order No. 1000, Associate Justice Lucas P. Bersamin is designated
additional member.
[Link] , G.R. No. 183122, pp. 76-86, 20, NLRC's July 2006 Decision in NLRC Case
No. V-000632-2005.

[Link]. at 87-89, NLRC's Resolution dated 23 August 2006.

[Link]. at 28-52, CA's 10 October 2007 Decision in CA-G.R. CEB-SP No. 02226.

[Link]. at 51.
[Link] , G.R. No. 183889, pp. 40-53, CA's 16 November 2007 Decision in CA-G.R.
CEB-SP No. 02232.
[Link]. at 53.

[Link] , G.R. No. 183122, p. 117.

[Link], CA-G.R. SP No. 02226, Volume 1, pp. 36-50, NLRC's 30 January 1998
Decision in NLRC Case No. V-0112-94.

[Link]. at 46.
[Link]. at 56-57.

[Link]. at 52-59, CA's Decision dated 19 July 2000 in CA-G.R. SP Nos. 50383 and
51763.

[Link]. at 61-74, SC's Decision dated 11 February 2004 in G.R. No. 146728.
[Link] , G.R. No. 18322, pp. 124; 127-128.

[Link], CA-G.R. No. CEB SP No. 02226, Volume 1, pp. 75-77, Union's Motion for
Execution dated 21 March 2005.

[Link]., Volume II, pp. 1014-1020, GMC's Opposition dated 18 April 2005.
[Link]. at 1021-1030, GMC Submission dated 27 May 2005.

[Link]. at 1274-1280, Union's Comment dated 9 June 2005.

[Link]. at 1372-1385; 1386-1412. GMC & the Union's Memoranda dated 3 August
and 31, 2005.

[Link]. at 1421-1425, Executive Labour Arbiter's Order dated 27 October 2005.

[Link]. at 1424-1425.

[Link]. at 1433-1444, Union's Partial Appeal dated 2 November 2005.

[Link]. at 1455-1468, GMC's Objections dated 17 November 2005.
CD Technologies Asia, Inc. © 2021 [Link]
 [Link]. at 1469-1496, GMC's Opposition to the Union's Partial Appeal dated 16 May
2006.

[Link], CA-G.R. CEB-SP No. 02226, Volume 1, pp. 21 to 31, NLRC's 20 July
2006 Decision in NLRC Case No. V-000632-2005.
[Link]. at 32-34, NLRC's 23 August 2006 Resolution.

[Link]., Volume II, pp. 1943-1966, CA's 10 October 2007 Decision in CA-G.R. CEB-SP
No. 02226.

[Link]. at 1955-1956.
[Link]. at 1957-1965.

[Link]. at 2009-2012, CA's 14 May 2008 Resolution.

[Link] , G.R. No. 183122, pp. 3-27, Union's Petition for Review on Certiorari.

[Link], CA-G.R. SP No. 02232, pp. 7-36, GMC's Petition for Certiorari.
[Link]. at 1244-1257, CA's 16 November 2007 Decision in CA-G.R. SP No. CEB-SP
No. 02232.
[Link]. at 1443-1454, CA's Resolution dated 10 July 2008.

[Link] , G.R. No. 183889, pp. 3-37, GMC's Petition for Review on Certiorari.
[Link] , G.R. No. 183122, p. 12.

[Link] , G.R. No. 183889, pp. 12-13.

[Link] , G.R. No. 183122, pp. 19-23.

[Link]., G.R. No. 183889, pp. 15-19.

[Link]. 3. Consolidation of Cases. — When related cases are assigned to different
Justices, they may be consolidated and assigned to one Justice.

(a) At the instance of a party with notice to the other party; or at the instance
of the Justice to whom the case is assigned, and with the conformity of the
Justice to whom the cases shall be consolidated, upon notice to the parties,
consolidation may be allowed when the cases involve the same parties
and/or related questions of fact and/or law.

(b) Consolidated cases shall pertain to the Justice —

(1) To whom the case with the lowest docket number is assigned, if they are
of the same kind;

xxx xxx xxx

(c) Notice of consolidation and replacement shall be given to the raffle staff
and the Judicial Records Division.
[Link] Export and Import Corporation v. Court of Appeals, G.R. No. 97217, 10
April 1992, 208 SCRA 95, 100 citing Benguet Corporation, Inc. v. Court of
Appeals, 165 SCRA 265 (1988).
[Link] v. Court of Appeals , 422 Phil. 334, 351 (2001) citing Ducat v. Court of
Appeals, 322 SCRA 695, 706-707 (2000) citing further Zebra Security Agency
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 and Allied Services v. NLRC, 270 SCRA 476, 485 (1997), People v. Pinuila, et
al., 103 Phil. 992, 999 (1958).
[Link] v. Ofiana, G.R. No. L-54362, 28 February 1985, 135 SCRA 124, 127, citing
Reyes v. Commission on Elections , 129 SCRA 286, 290-291.
[Link] v. Court of Appeals, G.R. No. 83720, 4 October 1991, 202 SCRA 487,
492.
[Link], CA-G.R. SP No. 02226, Volume I, p. 96, Imposed CBA.

[Link]. 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.

[Link] of Filipro Employees v. National Labor Relations Commission, G.R. No.

91025, 19 December 1990, 192 SCRA 414, 427.

[Link] Association of Mapua Institute of Technology (FAMIT) v. Court of

Appeals, G.R. No. 164060, 15 June 2007, 524 SCRA 709, 716.
[Link], CA-G.R. SP No. 02226, Volume 1, p. 46.

[Link]. at 56-57.
[Link]. at 52-59.
[Link]. at 61-74.

[Link] Realty Development, Inc. v. Mayfair Theater, Inc. , 387 Phil. 885, 895
(2000) citing Philippine Bank of Communications v. Court of Appeals, 279
SCRA 364 (1997).

[Link] Corporation v. Court of Appeals, 428 Phil. 949, 958 (2002) citing
Government Service Insurance System v. Court of Appeals, 218 SCRA 233,
250, (1993).

[Link], CA-G.R. CEB SP No. 02226, Volume I, pp. 91-93, Imposed CBA.
[Link]. at 80.

[Link]. at 98-112.
[Link]., Volume II, pp. 1421-1425.

[Link]. at 1024-1027.
[Link]. at 1121-1258.

[Link]. at 1031-1121.
[Link] , G.R. No. 183899, p. 51.

[Link] Carpet Employees Association v. Philippine Carpet Manufacturing

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 Corporation, 394 Phil. 716, 726 (2000).
[Link] v. National Organization of Working Men , 451 Phil. 254, 263, (2003)
citing Alcosero v. NLRC, 288 SCRA 129 (1998).

[Link] Manila Bay, Inc. v. Ortega, G.R. No. 172628, 13 February 2009, 579 SCRA
300, 311-312, citing Bogo Medellin Sugarcane Planters Asso., Inc. v. National
Labor Relations Commission, 357 Phil. 110, 126 (1998).
[Link] Electric Cooperative, Inc. v. NLRC, 380 Phil. 225, 245 (2000).
[Link] v. Philippine Mining Service Corporation, 443 Phil. 878, 888-889
(2003).

[Link] v. Cardama, 380 Phil. 246, 256-257, citing Moreno, The Philippine
Law Dictionary, 1982 Ed., p. 596.
[Link], CA-G.R. CEB-SP No. 02226, pp. 29-30, NLRC Decision dated 20 July
2006.

[Link] , G.R. No. 183889, pp. 51-52, CA Decision dated 16 November 2007.

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 SECOND DIVISION

[G.R. No. 181357. February 2, 2010.]

MALAYAN EMPLOYEES ASSOCIATION-FFW and RODOLFO

MANGALINO, petitioners, vs. MALAYAN INSURANCE
COMPANY, INC., respondent.

DECISION

BRION, J : p

The petitioner Malayan Employees Association-FFW (union) asks us in

this petition for certiorari, 1 to set aside the June 26, 2007 decision 2 and the
November 29, 2007 resolution 3 of the Court of Appeals (CA) in CA-G.R. SP
No. 80691, ruling that the suspension imposed by the respondent Malayan
Insurance Company, Inc. (company) on union member Rodolfo Mangalino
(Mangalino) is valid. Mangalino was suspended for taking a union leave
without the prior authority of his department head and despite a previous
disapproval of the requested leave.
BACKGROUND FACTS
The union is the exclusive bargaining agent of the rank-and-file
employees of the company. A provision in the union's collective bargaining
agreement (CBA) with the company allows union officials to avail of union
leaves with pay for a total of "ninety-man" days per year for the purpose of
attending grievance meetings, Labor-Management Committee meetings,
annual National Labor Management Conferences, labor education programs
and seminars, and other union activities.
The company issued a rule in November 2002 requiring not only the
prior notice that the CBA expressly requires, but prior approval by the
department head before the union and its members can avail of union
leaves. The rule was placed into effect in November 2002 without any
objection from the union until a union officer, Mangalino, filed union leave
applications in January and February, 2004. His department head
disapproved the applications because the department was undermanned at
that time.
Despite the disapproval, Mangalino proceeded to take the union leave.
He said he believed in good faith that he had complied with the existing
company practice and with the procedure set forth in the CBA. The company
responded by suspending him for one week and, thereafter, for a month, for
his second offense in February 2004.
The union raised the suspensions as a grievance issue and went
through all the grievance processes, including the referral of the matter to
the company's president, Yvonne Yuchengco. After all internal remedies
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 failed, the union went to the National Conciliation and Mediation Board for
preventive mediation. When this recourse also failed, the parties submitted
the dispute to voluntary arbitration 4 on the following issues: aSDCIE

1. whether or not Mangalino's suspensions were valid; and

2. whether or not Mangalino should be paid backwages for the

duration of the suspensions.

The Voluntary Arbitrators decided the submitted dispute on November

26, 2004, 5 ruling as follows:
WHEREFORE, in view of the foregoing, this Honorable Office
adjudged the suspension of Mr. Rodolfo Mangalino's on first availment
of union leave invalid while the second suspension valid but illicit in
terms of penalty of thirty (30) days suspension. We consider the
honesty of the same as mitigating circumstances, for the Chairman of
this panel of Arbitrators attested that complainant attended labor
matter in the Office of Voluntary Arbitrator last January 19, 2004 and
February 5, 2004. However, it is good to note the wisdom of Justice
Narvasa in the aforecited Supreme Court Ruling of obey first before you
complain.

In view thereof, this Honorable Office reduced the suspension

from thirty seven (37) days to ten (10) days only. Henceforth, the
Complainant is entitled to twenty seven (27) days backwages.

Proof of payment of backwages should be submitted to the

chairman of this Panel of Arbitrators within ten (10) days from receipt
hereof.

Parties are hereby enjoined to comply in this Award as provided

in the submission Agreement.

SO ORDERED.

Notably, the decision was not unanimous. Voluntary Arbitrator dela Fuente
submitted the following dissent: 6
The act of any employee that can only be interpreted to be an
open and utter display of arrogance and unconcern for the welfare of
his Company thru the use of what he pretends to believe to be an
unbridled political right cannot be allowed to pass without sanction lest
the employer desires anarchy and chaos to reign in its midst.

Hence, having failed to comply with the requirements for

availment of union leaves and for going on such leave despite the
express disapproval of his superior, Mr. Mangalino's two suspensions
are valid and he is not entitled to any backwages for the duration of his
suspensions.

The company appealed the decision to the CA on May 12, 2005

through a petition for review under Rule 43 of the Rules of Court (Rules). In a
decision promulgated on June 26, 2007, the CA granted the company's
petition and upheld the validity of Mangalino's suspension on the basis of the
company's prerogative to prescribe reasonable rules to regulate the use of
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 union leaves. 7 AHSaTI

The union moved for the reconsideration of the CA decision and

received the CA's denial (through its resolution of November 29, 2007) on
December 8, 2007. 8
THE PETITION
The union seeks relief from this Court against the CA decision through
its Rule 65 petition for certiorari filed on February 6, 2008. 9 It alleged that
the CA committed grave abuse of discretion when, despite the clear terms of
the CBA grant of union leaves, it disregarded the evidence on record and
recognized that the company's use of its management prerogative as
justification was proper.
In our Resolution of March 5, 2008, we resolved to treat the Rule 65
petition as a petition for review on certiorari under Rule 45 of the Rules, and
required the respondent company to comment. 10 After comment, we
required the union to file its reply. 11 Thereafter, the parties submitted their
respective memoranda. 12
In its comment, the company raised both procedural and substantive
objections.
It questioned the petition's compliance with the Rules, particularly the
use of a petition for certiorari under Rule 65 to question the CA decision,
when the appropriate remedy is a petition for review on certiorari under Rule
45. The company also asserted that the union violated Section 2, Rule 45
when it failed to attach the material portions of the record as would support
its petition, such as the company's pleadings and the entirety of the
company's evidence. More importantly, it posited that the petition is barred
by time limitation and has lapsed to finality as it was filed sixty-two (62) days
after the union's receipt of the CA decision.
On the substantive aspect, the company mainly contended that the
regulation of the use of union leaves is within the company's management
prerogative, and the company was simply exercising its management
prerogative when it required its employees to first obtain the approval of
either the department head or the human resource manager before making
use of any union leave. Thus, Mangalino committed acts of insubordination
when he insisted on going on leave despite the disapproval of his leave
applications.
In its reply and subsequent memorandum, the union presented its
justification for the technical deficiencies the company cited (quoted below),
and maintained as well that the use of management prerogative was
improper because the CBA grant of the union leave benefit did not require
prior company approval as a condition; any change in the CBA grant
requires union conformity. The union posited as well that any unilateral
change in the CBA terms violates Article 255 of the Labor Code, which
guarantees the right of employees to participate in the company's policy and
decision-making processes on matters directly affecting their interests. It
argued against the company position that it had not objected to the
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 company rule and is now in estoppel.
THE COURT'S RULING
We deny the petition for lack of merit. DTcACa

The company position that the union should have filed an appeal under
Rule 45 of the Rules and not a petition for certiorari is correct. Section 1,
Rule 45 of the Rules states that:
SECTION 1. Filing of petition with Supreme Court. — A party
desiring to appeal by certiorari from a judgment or final order
or resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law, may
file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which must be
distinctly set forth. [Emphasis supplied.]

Complementing this Rule is Section 1, Rule 65 which provides that a

special civil action for certiorari under Rule 65 lies only when "there is no
appeal, nor plain, speedy and adequate remedy in the ordinary course of
law." From this Rule proceeds the established jurisprudential ruling that a
petition for certiorari cannot be allowed when a party fails to appeal a
judgment despite the availability of that remedy, as certiorari is not a
substitute for a lost appeal. 13
In our Resolution of March 5, 2008, we opted to liberally apply the rules
and to treat the petition as a petition for review on certiorari under Rule 45
in order to have a total view of the merits of the petition in light of the
importance of a ruling on the presented issues. The union — which did not
present any justification at the outset for the petition's deficiencies,
particularly for the late filing — had this to say:
9) In a resolution dated 05 March 2008, this Honorable Court
resolved to treat the petition in the above-captioned case as a petition
for review on certiorari under Rule 45 of the Rules of Civil Procedure.
All along the petitioner thought that the filing of the petition for
certiorari under Rule 65 is appropriate considering that the ground
raised is grave abuse of discretion by the Honorable Court of Appeals
for reversing the decision of the majority decision of the Panel of
Voluntary Arbitration in arbitrary and whimsical manner.

10) For having treated this petition under Rule 45 of the

Rules of Civil Procedure, petitioner humbly admits that delay was
incurred in the filing thereof, such delay was caused by several factors
beyond control such as the transfer of handling legal assistant to
another office and the undersigned had to reassign the case for the
preparation of the petition. Furthermore, the undersigned counsel,
other than being the Chief of FFW LEGAL CENTER is also the Vice
President of the Federation of Free Workers (FFW), who has to attend
similar and urgent pressing problems of local affiliates arising from the
effects of contracting out and closure of companies.

11) Considering the issue to be resolved requires only two

CBA provisions — (1) the recognition of management prerogative
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 (Section 1, Article III of the CBA), and union leave (Section 3, Article XV
of the CBA) to guide the Honorable Court reached (sic) a decision,
petitioner honestly thought that the other pleadings referred to by
respondent are not relevant. AHDcCT

With this kind and tenor of justification, we appear to have acted with
extreme liberality in recognizing the petition as a Rule 45 petition and in
giving it due course. We cannot extend the same liberality, however, with
respect to the union's violation of the established rules on timelines in the
filing of petitions, which violations the company has kept alive by its
continuing objection. While we can be liberal in considering the mode of
review of lower court decisions (and even in the contents of the petition
which the company insists are deficient), we cannot do the same with
respect to the time requirements that govern the finality of these decisions.
A final judgment can no longer be disturbed under the combined application
of the principles of immutability of final judgments 14 and res judicata, 15
subject only to very exceptional circumstances not at all present in this case.
16

Under Rule 45, a petition for review on certiorari should be filed within
15 days from notice of judgment, extendible in meritorious cases for a total
of another 30 days. 17 Given that a Rule 45 petition is appropriate in the
present case, the period of 60 days after notice of judgment is way past the
deadline allowed, so that the CA decision had lapsed to finality by the time
the petition with us was filed. This reason alone — even without considering
the company's other technical objection based on the union's failure to
attach relevant documents in support of the petition — amply supports the
denial of the petition.
The lack of merit of the petition likewise precludes us from resolving it
in the union's favor. In short, we see no reversible error in the CA's ruling.
While it is true that the union and its members have been granted
union leave privileges under the CBA, the grant cannot be considered
separately from the other provisions of the CBA, particularly the provision on
management prerogatives where the CBA reserved for the company the full
and complete authority in managing and running its business. 18 We see
nothing in the wordings of the union leave provision that removes from the
company the right to prescribe reasonable rules and regulations to govern
the manner of availing of union leaves, particularly the prerogative to
require prior approval. Precisely, prior notice is expressly required under the
CBA so that the company can appropriately respond to the request for leave.
In this sense, the rule requiring prior approval only made express what is
implied in the terms of the CBA.
In any event, any doubt in resolving any interpretative conflict is
settled by subsequent developments in the course of the parties'
implementation of the CBA, specifically, by the establishment of the
company regulation in November 2002 requiring prior approval before the
union leave can be used. The union accepted this regulation without
objection since its promulgation (or more than a year before the present
dispute arose), and the rule on its face is not unreasonable, oppressive, nor
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 violative of CBA terms. Ample evidence exists in the records indicating the
union's acquiescence to the rule. 19 Notably, no letter from the union
complaining about the unilateral change in policy or any request for a
meeting to discuss this policy appears on record. The union and its members
have willingly applied for approval as the rule requires. 20 Even Mangalino
himself, in the past, had filed applications for union leave with his
department manager, and willingly complied with the disapproval without
protest of any kind. 21 Thus, when Mangalino asserted his right to take a
leave without prior approval, the requirement for prior approval was already
in place and established, and could no longer be removed except with the
company's consent or by negotiation and express agreement in future CBAs.
SaITHC

The "prior approval" policy fully supported the validity of the

suspensions the company imposed on Mangalino. We point out additionally
that as an employee, Mangalino had the clear obligation to comply with the
management disapproval of his requested leave while at the same time
registering his objection to the company regulation and action. That he still
went on leave, in open disregard of his superior's orders, rendered
Mangalino open to the charge of insubordination, separately from his
absence without official leave. 22 This charge, of course, can no longer
prosper even if laid today, given the lapse of time that has since transpired.
In light of the petition's procedural infirmities, particularly its late filing
that rendered the CA decision final, and the petition's lack of substantive
merit, denial of the petition necessarily follows.
WHEREFORE, premises considered, we DENY the petition for lack of
merit. Costs against the petitioners.

SO ORDERED.

Carpio, Corona, * Velasco, Jr. ** and Perez, JJ., concur.

Footnotes

* Designated additional Member of the Second Division vice Associate Justice

Mariano C. Del Castillo, per Raffle dated January 25, 2010.

** Designated additional Member of the Second Division vice Associate Justice

Roberto A. Abad, per Special Order No. 820 dated January 25, 2010.

1. Under Rule 65 of the Revised Rules of Civil Procedure; rollo, pp. 3-22.

2. Penned by Associate Justice Arcangelita Romilla-Lontok, with the

concurrence of Associate Justice Mariano Del Castillo (now a member of this
Court) and Associate Justice Romeo Barza; id. at 26-32.

3. Id. at 39.
4. The Voluntary Arbitrators are Herminigildo Javen, Atty. Marcial de la Fuente
and Allan Montano.

5. Rollo, pp. 179-191.

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 6. Id. at 192-201.
7. Id. at 26-32.
8. Id. at 39.
9. Id. at 3-20.
10. Id. at 40.
11. Id. at 280.
12. Id. at 291-341.
13. Bernardo v. Court of Appeals, 341 Phil. 413 (1997); see also Macawiag v.
Balindog, G.R. No. 159210, September 20, 2006, 502 SCRA 454, 465-66.
14. See Coca-Cola Bottlers Philippines, Inc., Sales Force Union-PTGWO-BALAIS
v. Coca-Cola Bottlers, Philippines, Inc., G.R. No. 155651, July 28, 2005, 464
SCRA 507.

15. See Allied Banking Corporation v. Court of Appeals, G.R. No. 108089,
January 10, 1994, 229 SCRA 252.

16. The immutability doctrine admits several exceptions, like: (1) the correction
of clerical errors; (2) the so-called nunc pro tunc entries that cause no
prejudice to any party; (3) void judgments; and (4) whenever circumstances
transpire after the finality of the decision rendering its execution unjust and
inequitable. Temic Semiconductors, Inc. Employees Union [TSIEU-FFW] v.
Federation of Free Workers [FFW], G.R. No. 160993, May 20, 2008, 554 SCRA
122.)

17. Rule 45, Section 2 of the Rules of Court states:

Section 2. Time for filing; extension. — The petition shall be filed within
fifteen (15) days from notice of the judgment or final order or resolution
appealed from, or of the denial of the petitioner's motion for new trial or
reconsideration filed in due time after notice of the judgment. On motion duly
filed and served, with full payment of the docket and other lawful fees and
the deposit for costs before the expiration of the reglementary period, the
Supreme Court may for justifiable reasons grant an extension of thirty (30)
days only within which to file the petition.

18. Article III, Section 1 of the CBA provides:

The Union hereby recognizes that the Company shall have full and exclusive
direction and control of the management of the Company and direction of its
employees . . . and the right to make and enforce Company rules to carry out
the functions of management.

19. Rollo , pp. 118-136.

20. Id. at 118-126.
21. Id. at 127-129, 132-134.
22. See GTE Directories Corporation v. Sanchez, 274 Phil. 738 (1991) which
held:

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 To sanction disregard or disobedience by employees of a rule or
order laid down by management, on the pleaded theory that the rule
or order is unreasonable, illegal, or otherwise irregular for one
reason or another, would be disastrous to the discipline and order
that it is in the interest of both the employer and his employees to
preserve and maintain in the working establishment and without
which no meaningful operation and progress is possible. Deliberate
disregard or disobedience of rules, defiance of management authority cannot
be countenanced. This is not to say that the employees have no remedy
against rules or orders they regard as unjust or illegal. They may object
thereto, ask to negotiate thereon, bring proceedings for redress against the
employer before the Ministry of Labor. But until and unless the rules or
orders are declared to be illegal or improper by competent
authority, the employees ignore or disobey them at their peril. It is
impermissible to reverse the process: suspend enforcement of the orders or
rules until their legality or propriety shall have been subject of negotiation,
conciliation, or arbitration. [Emphasis supplied.]

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 THIRD DIVISION

[G.R. No. 171231. February 17, 2010.]

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY

DIVISION WORKERS ORGANIZATION (PSTMSDWO),
represented by its President, RENE SORIANO, petitioner, vs.
PNCC SKYWAY CORPORATION, respondent.

DECISION

PERALTA, J : p

Before this Court is a Petition for Review on Certiorari under Rule 45 of

the Rules of Court seeking to set aside the Decision 1 and the Resolution 2 of
the Court of Appeals (CA) in CA-G.R. SP. No. 87069, which annulled and set
aside the Decision and Order of the Voluntary Arbitrator dated July 12, 2004
and August 11, 2004, respectively.
The factual antecedents are as follows:
Petitioner PNCC Skyway Corporation Traffic Management and Security
Division Workers' Organization (PSTMSDWO) is a labor union duly registered
with the Department of Labor and Employment (DOLE). Respondent PNCC
Skyway Corporation is a corporation duly organized and operating under and
by virtue of the laws of the Philippines.
On November 15, 2002, petitioner and respondent entered into a
Collective Bargaining Agreement (CBA) incorporating the terms and
conditions of their agreement which included vacation leave and expenses
for security license provisions.
The pertinent provisions of the CBA relative to vacation leave and sick
leave are as follows:
ARTICLE VIII

VACATION LEAVE AND SICK LEAVE

Section 1. Vacation Leave. —

[a] Regular Employees covered by the bargaining unit who have

completed at least one [1] year of continuous service shall be entitled
to vacation leave with pay depending on the length of service as
follows:
1-9 years of service - 15 working days
10-15 years of service - 16 working days
16-20 years of service - 17 working days
21-25 years of service - 18 working days
26 and above years of
- 19 working days.
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 service

[b] The company shall schedule the vacation leave of

employees during the year taking into consideration the
request of preference of the employees. (emphasis supplied)
[c] Any unused vacation leave shall be converted to cash and
shall be paid to the employees on the first week of December each
year."

ARTICLE XXI

Section 6. Security License. — All covered employees must

possess a valid License [Security Guard License] issued by the Chief,
Philippine National Police or his duly authorized representative, to
perform his duties as security guard. All expenses of security guard in
securing/renewing their licenses shall be for their personal account.
Guards, securing/renewing their license must apply for a leave of
absence and/or a change of schedule. Any guard who fails to renew his
security guard license should be placed on forced leave until such time
that he can present a renewed security license.

In a Memorandum dated December 29, 2003, 3 respondent's Head of

the Traffic Management and Security Department (TMSD) published the
scheduled vacation leave of its TMSD personnel for the year 2004.
Thereafter, the Head of the TMSD issued a Memorandum 4 dated January 9,
2004 to all TMSD personnel. In the said memorandum, it was provided that:
SCHEDULED VACATION LEAVE WITH PAY.

The 17 days (15 days SVL plus 2-day-off) scheduled vacation

leave (SVL) with pay for the year 2004 had been published for
everyone to take a vacation with pay which will be our opportunity to
enjoy quality time with our families and perform our other activities
requiring our personal attention and supervision. Swapping of SVL
schedule is allowed on a one-on-one basis by submitting a written
request at least 30 days before the actual schedule of SVL duly signed
by the concerned parties. However, the undersigned may consider the
re-scheduling of the SVL upon the written request of concerned TMSD
personnel at least 30 days before the scheduled SVL. Re-scheduling
will be evaluated taking into consideration the TMSDs operational
requirement.

Petitioner objected to the implementation of the said memorandum. It

insisted that the individual members of the union have the right to schedule
their vacation leave. It opined that the unilateral scheduling of the
employees' vacation leave was done to avoid the monetization of their
vacation leave in December 2004. This was allegedly apparent in the
memorandum issued by the Head HRD, 5 addressed to all department heads,
which provides:
FOR : All Dept. Heads

FROM : Head, HRD

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 SUBJECT : Leave Balances as of January 01, 2004

DATE : January 9, 2004

We are furnishing all the departments the leave balances of their

respective staff as of January 01, 2004, so as to have them monitor
and program the schedule of such leave.

Please consider the leave credit they earned each month [1-2-0],
one day and two hours in anticipation of the later schedule. As we are
targeting the zero conversion comes December 2004, it is suggested
that the leave balances as of to date be given preferential scheduling.

xxx xxx xxx

Petitioner also demanded that the expenses for the required in-service
training of its member security guards, as a requirement for the renewal of
their license, be shouldered by the respondent. However, the respondent did
not accede to petitioner's demands and stood firm on its decision to
schedule all the vacation leave of petitioner's members.
Due to the disagreement between the parties, petitioner elevated the
matter to the DOLE-NCMB for preventive mediation. For failure to settle the
issue amicably, the parties agreed to submit the issue before the voluntary
arbitrator.
The voluntary arbitrator issued a Decision dated July 12, 2004, the
dispositive portion of which reads:
WHEREFORE, premises all considered, declaring that:

a) The scheduling of all vacation leaves under Article VIII, Section

6, thereof, shall be under the discretion of the union members entitled
thereto, and the management to convert them into cash all the leaves
which the management compelled them to use.

b) To pay the expenses for the in-service-training of the company

security guards, as a requirement for renewal of licenses, shall not be
their personal account but that of the company.

All other claims are dismissed for lack of merit.

SO ORDERED. 6

Respondent filed a motion for reconsideration, which the voluntary

arbitrator denied in the Order 7 dated August 11, 2004.
Aggrieved, on October 22, 2004, respondent filed a Petition for
Certiorari with Prayer for Temporary Restraining Order and/or Writ of
Preliminary Injunction with the CA, and the CA rendered a Decision dated
October 4, 2005, 8 annulling and setting aside the decision and order of the
voluntary arbitrator. The CA ruled that since the provisions of the CBA were
clear, the voluntary arbitrator has no authority to interpret the same beyond
what was expressly written.
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 Petitioner filed a motion for reconsideration, which the CA denied
through a Resolution dated January 23, 2006. 9 Hence, the instant petition
assigning the following errors:
I

WITH ALL DUE RESPECT, THE HONORABLE PUBLIC RESPONDENT

COURT OF APPEALS [THIRTEENTH DIVISION] ERRED IN HOLDING THAT:

A) THE MANAGEMENT HAS THE SOLE DISCRETION TO SCHEDULE THE

VACATION LEAVE OF HEREIN PETITIONER.

B) THE MANAGEMENT IS NOT LIABLE FOR THE IN-SERVICE-TRAINING OF

THE SECURITY GUARDS.

II

THE HONORABLE PUBLIC RESPONDENT ERRED IN OVERSEEING THE

CONVERSION ASPECT OF THE UNUSED LEAVE.

Before considering the merits of the petition, We shall first address the
objection based on technicality raised by respondent.
Respondent alleged that the petition was fatally defective due to the
lack of authority of its union president, Rene Soriano, to sign the certification
and verification against forum shopping on petitioner's behalf. It alleged that
the authority of Rene Soriano to represent the union was only conferred on
June 30, 2006 by virtue of a board resolution, 10 while the Petition for Review
had long been filed on February 27, 2006. Thus, Rene Soriano did not
possess the required authority at the time the petition was filed on February
27, 2006.
The petitioner countered that the Board Resolution 11 dated June 30,
2006 merely reiterated the authority given to the union president to
represent the union, which was conferred as early as October 2005. The
resolution provides in part that:
WHEREAS, in a meeting duly called for October 2005, the Union
decided to file a Motion for Reconsideration and if the said motion be
denied, to file a petition before the Supreme Court. (Emphasis
supplied)

Thus, the union president, representing the union, was clothed with authority
to file the petition on February 27, 2006.
The purpose of requiring verification is to secure an assurance that the
allegations in the petition have been made in good faith; or are true and
correct, not merely speculative. This requirement is simply a condition
affecting the form of pleadings, and non-compliance therewith does not
necessarily render it fatally defective. Truly, verification is only a formal, not
a jurisdictional, requirement.
With respect to the certification of non-forum shopping, it has been
held that the certification requirement is rooted in the principle that a party-
litigant shall not be allowed to pursue simultaneous remedies in different
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 fora, as this practice is detrimental to an orderly judicial procedure.
However, this Court has relaxed, under justifiable circumstances, the rule
requiring the submission of such certification considering that, although it is
obligatory, it is not jurisdictional. Not being jurisdictional, it can be relaxed
under the rule of substantial compliance. 12
I n Cagayan Valley Drug Corporation v. Commissioner of Internal
Revenue, 13 We said that:
In a slew of cases, however, we have recognized the authority of
some corporate officers to sign the verification and certification against
forum shopping. In Mactan-Cebu International Airport Authority v. CA,
we recognized the authority of a general manager or acting general
manager to sign the verification and certificate against forum
shopping; in Pfizer v. Galan , we upheld the validity of a verification
signed by an "employment specialist" who had not even presented any
proof of her authority to represent the company; in Novelty Philippines,
Inc., v. CA , we ruled that a personnel officer who signed the petition
but did not attach the authority from the company is authorized to sign
the verification and non-forum shopping certificate; and in Lepanto
Consolidated Mining Company v. WMC Resources International Pty. Ltd.
(Lepanto), we ruled that the Chairperson of the Board and President of
the Company can sign the verification and certificate against non-
forum shopping even without the submission of the board's
authorization.

In sum, we have held that the following officials or employees of

the company can sign the verification and certification without need of
a board resolution: (1) the Chairperson of the Board of Directors, (2)
the President of a corporation, (3) the General Manager or Acting
General Manager, (4) Personnel Officer, and (5) an Employment
Specialist in a labor case.

While the above cases do not provide a complete listing of

authorized signatories to the verification and certification required by
the rules, the determination of the sufficiency of the authority was done
on a case to case basis. The rationale applied in the foregoing cases is
to justify the authority of corporate officers or representatives of the
corporation to sign the verification or certificate against forum
shopping, being "in a position to verify the truthfulness and correctness
of the allegations in the petition."

In the case at bar, We rule that Rene Soriano has sufficient authority to
sign the verification and certification against forum shopping for the
following reasons: First, the resolution dated June 30, 2006 was merely a
reiteration of the authority given to the Union President to file a case before
this Court assailing the CBA violations committed by the management, which
was previously conferred during a meeting held on October 5, 2005. Thus, it
can be inferred that even prior to the filing of the petition before Us on
February 27, 2006, the president of the union was duly authorized to
represent the union and to file a case on its behalf. Second, being the
president of the union, Rene Soriano is in a position to verify the truthfulness
and correctness of the allegations in the petition. Third, assuming that Mr.
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 Soriano has no authority to file the petition on February 27, 2006, the
passing on June 30, 2006 of a Board Resolution authorizing him to represent
the union is deemed a ratification of his prior execution, on February 27,
2006, of the verification and certificate of non-forum shopping, thus curing
any defects thereof. Ratification in agency is the adoption or confirmation by
one person of an act performed on his behalf by another without authority.
14

We now go to the merits of the case.

Petitioner insisted that their union members have the preference in
scheduling their vacation leave. On the other hand, respondent argued that
Article VIII, Section 1 (b) gives the management the final say regarding the
vacation leave schedule of its employees. Respondent may take into
consideration the employees' preferred schedule, but the same is not
controlling.
Petitioner also requested the respondent to provide and/or shoulder
the expenses for the in-service training of their members as a requirement
for the renewal of the security guards' license. Respondent did not accede to
the union's request invoking the CBA provision which states that all
expenses of security guards in securing/renewing their license shall be for
their personal account. The petitioner further argued that any doubts or
ambiguity in the interpretation of the CBA should be resolved in favor of the
laborer.
As to the issue on vacation leaves, the same has no merit.
The rule is that where the language of a contract is plain and
unambiguous, its meaning should be determined without reference to
extrinsic facts or aids. The intention of the parties must be gathered from
that language, and from that language alone. Stated differently, where the
language of a written contract is clear and unambiguous, the contract must
be taken to mean that which, on its face, it purports to mean, unless some
good reason can be assigned to show that the words used should be
understood in a different sense. 15
In the case at bar, the contested provision of the CBA is clear and
unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that
the scheduling of vacation leave shall be under the option of the employer.
The preference requested by the employees is not controlling because
respondent retains its power and prerogative to consider or to ignore said
request.
Thus, if the terms of a CBA are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation shall
prevail. 16 In fine, the CBA must be strictly adhered to and respected if its
ends have to be achieved, being the law between the parties. In Faculty
Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, 17
this Court held that the CBA during its lifetime binds all the parties. The
provisions of the CBA must be respected since its terms and conditions
constitute the law between the parties. The parties cannot be allowed to
change the terms they agreed upon on the ground that the same are not
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 favorable to them.
As correctly found by the CA:
The words of the CBA were unequivocal when it provided that
"The company shall schedule the vacation leave of employees during
the year taking into consideration the request of preference of the
employees." The word shall in this instance connotes an imperative
command, there being nothing to show a different intention. The only
concession given under the subject clause was that the company
should take into consideration the preferences of the employees in
scheduling the vacations; but certainly, the concession never
diminished the positive right of management to schedule the vacation
leaves in accordance with what had been agreed and stipulated upon
in the CBA.

There is, thus, no basis for the Voluntary Arbitrator to interpret

the subject provision relating to the schedule of vacation leaves as
being subject to the discretion of the union members. There is simply
nothing in the CBA which grants the union members this right.

It must be noted the grant to management of the right to

schedule vacation leaves is not without good reason. Indeed, if union
members were given the unilateral discretion to schedule their
vacation leaves, the same may result in significantly crippling the
number of key employees of the petitioner manning the toll ways on
holidays and other peak seasons, where union members may wittingly
or unwittingly choose to have a vacation. Put another way, the grant to
management of the right to schedule vacation leaves ensures that
there would always be enough people manning and servicing the toll
ways, which in turn assures the public plying the same orderly and
efficient toll way service.

Indeed, the multitude or scarcity of personnel manning the tollways

should not rest upon the option of the employees, as the public using the
skyway system should be assured of its safety, security and convenience.
Although the preferred vacation leave schedule of petitioner's
members should be given priority, they cannot demand, as a matter of right,
that their request be automatically granted by the respondent. If the
petitioners were given the exclusive right to schedule their vacation leave
then said right should have been incorporated in the CBA. In the absence of
such right and in view of the mandatory provision in the CBA giving
respondent the right to schedule the vacation leave of its employees,
compliance therewith is mandated by law.
In the grant of vacation leave privileges to an employee, the employer
is given the leeway to impose conditions on the entitlement to and
commutation of the same, as the grant of vacation leave is not a standard of
law, but a prerogative of management. 18 It is a mere concession or act of
grace of the employer and not a matter of right on the part of the employee.
19 Thus, it is well within the power and authority of an employer to impose
certain conditions, as it deems fit, on the grant of vacation leaves, such as
having the option to schedule the same.
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 Along that line, since the grant of vacation leave is a prerogative of the
employer, the latter can compel its employees to exhaust all their vacation
leave credits. Of course, any vacation leave credits left unscheduled by the
employer, or any scheduled vacation leave that was not enjoyed by the
employee upon the employer's directive, due to exigencies of the service,
must be converted to cash, as provided in the CBA. However, it is incorrect
to award payment of the cash equivalent of vacation leaves that were
already used and enjoyed by the employees. By directing the conversion to
cash of all utilized and paid vacation leaves, the voluntary arbitrator has
licensed unjust enrichment in favor of the petitioner and caused undue
financial burden on the respondent. Evidently, the Court cannot tolerate this.
It would seem that petitioner's goal in relentlessly arguing that its
members preferred vacation leave schedule should be given preference is
not allowed to them to avail themselves of their respective vacation leave
credits at all but, instead, to convert these into cash.
I n Cuajo v. Chua Lo Tan, 20 We said that the purpose of a vacation
leave is to afford a laborer a chance to get a much-needed rest to replenish
his worn-out energy and acquire a new vitality to enable him to efficiently
perform his duties, and not merely to give him additional salary and bounty.
This purpose is manifest in the Memorandum dated January 9, 200421
addressed to all TMSD Personnel which provides that:
SCHEDULED VACATION LEAVE WITH PAY

The 17 days (15 days SVL plus 2-Day-Off) scheduled vacation

leave (SVL) with pay for the year 2004 had been published for
everyone to take a vacation with pay which will be our opportunity
to enjoy quality time with our families and perform our other
activities requiring our personal attention and supervision.
(Emphasis ours.)

Accordingly, the vacation leave privilege was not intended to serve as

additional salary, but as a non-monetary benefit. To give the employees the
option not to consume it with the aim of converting it to cash at the end of
the year would defeat the very purpose of vacation leave.
Petitioner's contention that labor contracts should be construed in
favor of the laborer is without basis and, therefore, inapplicable to the
present case. This rule of construction does not benefit petitioners because,
as stated, there is here no room for interpretation. Since the CBA is clear and
unambiguous, its terms should be implemented as they are written.
This brings Us to the issue of who is accountable for the in-service
training of the security guards. On this point, We find the petition
meritorious.
Although it is a rule that a contract freely entered into between the
parties should be respected, since a contract is the law between the parties,
there are, however, certain exceptions to the rule, specifically Article 1306 of
the Civil Code, which provides:

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 The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order, or public
policy.

Moreover, the relations between capital and labor are not merely
contractual. "They are so impressed with public interest that labor contracts
must yield to the common good . . . ." 22 The supremacy of the law over
contracts is explained by the fact that labor contracts are not ordinary
contracts; they are imbued with public interest and therefore are subject to
the police power of the state. 23 However, it should not be taken to mean
that provisions agreed upon in the CBA are absolutely beyond the ambit of
judicial review and nullification. If the provisions in the CBA run contrary to
law, public morals, or public policy, such provisions may very well be voided.
In the present case, Article XXI, Section 6 of the CBA provides that"All
expenses of security guards in securing/renewing their licenses shall be for
their personal account." A reading of the provision would reveal that it
encompasses all possible expenses a security guard would pay or incur in
order to secure or renew his license. In-service training is a requirement for
the renewal of a security guard's license. 24 Hence, following the
aforementioned CBA provision, the expenses for the same must be on the
personal account of the employee. However, the 1994 Revised Rules and
Regulations Implementing Republic Act No. 5487 provides the following:
Section 17. Responsibility for Training and Progressive
Development. — It is the primary responsibility of all operators private
security agency and company security forces to maintain and upgrade
the standards of efficiency, discipline, performance and competence of
their personnel. To attain this end, each duly licensed private security
agency and company security force shall establish a staff position for
training and appoint a training officer whose primary functions are to
determine the training needs of the agency/guards in relation to the
needs of the client/market/industry, and to supervise and conduct
appropriate training requirements. All private security personnel shall
be re-trained at least once very two years.
Section 12. In service training. — a. To maintain and/or upgrade
the standard of efficiency, discipline and competence of security
guards and detectives, company security force and private security
agencies upon prior authority shall conduct-in-service training at least
two (2) weeks duration for their organic members by increments of at
least two percent (2%) of their total strength. Where the quality of
training is better served by centralization, the CSFD Directors
may activate a training staff from local talents to assist. The
cost of training shall be pro-rated among the participating
agencies/private companies. All security officer must undergo in-
service training at least once every two (2) years preferably two
months before his or her birth month.

Since it is the primary responsibility of operators of company security

forces to maintain and upgrade the standards of efficiency, discipline,
performance and competence of their personnel, it follows that the expenses
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 to be incurred therein shall be for the personal account of the company.
Further, the intent of the law to impose upon the employer the obligation to
pay for the cost of its employees' training is manifested in the
aforementioned law's provision that Where the quality of training is better
served by centralization, the CFSD Directors may activate a training staff
from local talents to assist. The cost of training shall be pro-rated among the
participating agencies/private companies. It can be gleaned from the said
provision that cost of training shall be pro-rated among participating
agencies and companies if the training is best served by centralization. The
law mandates pro-rating of expenses because it would be impracticable and
unfair to impose the burden of expenses suffered by all participants on only
one participating agency or company. Thus, it follows that if there is no
centralization, there can be no pro-rating, and the company that has its own
security forces shall shoulder the entire cost for such training. If the intent of
the law were to impose upon individual employees the cost of training, the
provision on the pro-rating of expenses would not have found print in the
law.
Further, petitioner alleged that prior to the inking of the CBA, it was the
respondent company providing for the in-service training of the guards. 25
Respondent never controverted the said allegation and is thus deemed to
have admitted the same. 26 Implicit from respondent's actuations was its
acknowledgment of its legally mandated responsibility to shoulder the
expenses for in-service training.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision and
Resolution of the Court of Appeals, dated October 4, 2005 and January 23,
2006, respectively, in CA-G.R. SP. No. 87069 is MODIFIED. The cost of in-
service training of the respondent company's security guards shall be at the
expense of the respondent company. This case is remanded to the voluntary
arbitrator for the computation of the expenses incurred by the security
guards for their in-service training, and respondent company is directed to
reimburse its security guards for the expenses incurred.
SO ORDERED.
Corona, Velasco, Jr., Nachura and Mendoza, JJ., concur.

Footnotes

1. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Rosmari
D. Carandang and Monina Arevalo-Zenarosa, concurring; rollo, pp. 32-43.

2. Id. at 45.

3. Records, pp. 4-9.

4. Supra note 1, at 76-77.

5. Supra note 3, at 3.

6. Supra note 1, at 113-118.

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 7. Supra note 1, 120-124.

8. Id. 32-43.

9. Id. 45.

10. Supra note 1, at 154-155.

11. Id. at 172-173.

12. People of the Philippines v. Joven de Grano, Armando de Grano, Domingo

Landicho and Estanislao Lacaba, G.R. No. 167710, June 5, 2009.
13. G.R. No. 151413, February 13, 2008, 545 SCRA 10, 17-19.

14. Filipinas Life Assurance Company v. Pedroso, G.R. No. 159489, February 4,
2008, 543 SCRA 542, 547.

15. Bautista v. Court of Appeals, 379 Phil. 386, 399 (2000), citing 17A Am. Jur. 2D
348-349.

16. RFM Corporation-Flour Division and SFI Feeds Division v. Kasapian ng

Manggagawang Pinagkaisa-RFM (KAMPI-NAFLU-KMU) and Sandigan at
Ugnayan ng Manggagawang Pinagkaisa-SFI (SUMAPI-NAFLU-KMU), G.R. No.
162324, February 4, 2009, 578 SCRA 37.

17. G.R. No. 164060, June 15, 2007, 524 SCRA 709, 716.
18. Sobrepeña, Jr. v. Court of Appeals, 345 Phil. 714, 728 (1997).

19. Virginia A. Sugue and the Heirs of Renato S. Valderrama v. Triumph

International (Phils.), Inc., G.R. No. 164804, January 30, 2009; Triumph
International (Phils.), Inc., v. Virginia A. Sugue and the Heirs of Renato S.
Valderrama, G.R. No. 164784, January 30, 2009, 577 SCRA 339.
20. No. L-16298, September 29, 1962, 6 SCRA 136, 138.

21. Supra note 1, at 76-77.

22. Article 1700, New Civil Code.

23. Villa v. National Labor Relations Commission, G.R. No. 117043, January 14,
1998, 284 SCRA 105, 127,128.

24. Revised Rules and Regulations Implementing Republic Act No. 5487, Rule X,
Section 12(b). The certificate of in-service training issued by company
security force/private security agency shall be a pre-requisite for the renewal
of license to exercise profession.

25. Petition for Review, supra note 1, at 21; Petitioner's Memorandum, id. at 220;
Petitioner's Motion for Reconsideration with the CA, CA records, pp. 181.

26. Sec. 32, Rule 130 of the Rules of Court — Admission by silence. — An act or
declaration made in the presence and within the hearing or observation of a
party who does or says nothing when the act or declaration is such as
naturally to call for action or comment if not true, and when proper and
possible for him to do so, may be given in evidence against him.

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 SECOND DIVISION

[G.R. No. 181806. March 12, 2014.]

WESLEYAN UNIVERSITY-PHILIPPINES , petitioner, vs.

WESLEYAN UNIVERSITY-FACULTY AND STAFF ASSOCIATION ,
respondent.

DECISION

DEL CASTILLO, J : p

A Collective Bargaining Agreement (CBA) is a contract entered into by

an employer and a legitimate labor organization concerning the terms and
conditions of employment. 1 Like any other contract, it has the force of law
between the parties and, thus, should be complied with in good faith. 2
Unilateral changes or suspensions in the implementation of the provisions of
the CBA, therefore, cannot be allowed without the consent of both parties.
This Petition for Review on Certiorari 3 under Rule 45 of the Rules of
Court assails the September 25, 2007 Decision 4 and the February 5, 2008
Resolution 5 of the Court of Appeals (CA) in CA-G.R. SP No. 97053.
Factual Antecedents
Petitioner Wesleyan University-Philippines is a non-stock, non-profit
educational institution duly organized and existing under the laws of the
Philippines. 6 Respondent Wesleyan University-Philippines Faculty and Staff
Association, on the other hand, is a duly registered labor organization 7
acting as the sole and exclusive bargaining agent of all rank-and-file faculty
and staff employees of petitioner. 8
In December 2003, the parties signed a 5-year CBA 9 effective June 1,
2003 until May 31, 2008. 10
On August 16, 2005, petitioner, through its President, Atty. Guillermo
T. Maglaya (Atty. Maglaya), issued a Memorandum 11 providing guidelines on
the implementation of vacation and sick leave credits as well as vacation
leave commutation. The pertinent portions of the Memorandum read: CAHaST

1.  VACATION AND SICK LEAVE CREDITS

    Vacation and sick leave credits are not automatic. They have to
be earned. Monthly, a qualified employee earns an equivalent of
1.25 days credit each for VL and SL. Vacation Leave and Sick
Leave credits of 15 days become complete at the cut off date of
May 31 of each year. (Example, only a total of 5 days credit will
be given to an employee for each of sick leave [or] vacation
leave, as of month end September, that is, 4 months from June to
September multiplied by 1.25 days). An employee, therefore,
who takes VL or SL beyond his leave credits as of date will have
to file leave without pay for leaves beyond his credit.
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 2.  VACATION LEAVE COMMUTATION
    Only vacation leave is commuted or monetized to cash.
Vacation leave commutation is effected after the second year of
continuous service of an employee. Hence, an employee who
started working June 1, 2005 will get his commutation on May 31,
2007 or thereabout. 12
On August 25, 2005, respondent's President, Cynthia L. De Lara (De
Lara) wrote a letter 13 to Atty. Maglaya informing him that respondent is not
amenable to the unilateral changes made by petitioner. 14 De Lara
questioned the guidelines for being violative of existing practices and the
CBA, 15 specifically Sections 1 and 2, Article XII of the CBA, to wit:
ARTICLE XII
VACATION LEAVE AND SICK LEAVE
SECTION 1.   VACATION LEAVE. — All regular and non-
tenured rank-and-file faculty and staff who are entitled to receive shall
enjoy fifteen (15) days vacation leave with pay annually.
1.1   All unused vacation leave after the second year of
service shall be converted into cash and be paid to the entitled
employee at the end of each school year to be given not later than
August 30 of each year.
SECTION 2.   SICK LEAVE. — All regular and non-tenured
rank-and-file faculty and staff shall enjoy fifteen (15) days sick leave
with pay annually. 16
On February 8, 2006, a Labor Management Committee (LMC) Meeting
was held during which petitioner advised respondent to file a grievance
complaint on the implementation of the vacation and sick leave policy. 17 In
the same meeting, petitioner announced its plan of implementing a one-
retirement policy, 18 which was unacceptable to respondent.
Ruling of the Voluntary Arbitrator
Unable to settle their differences at the grievance level, the parties
referred the matter to a Voluntary Arbitrator. During the hearing, respondent
submitted affidavits to prove that there is an established practice of giving
two retirement benefits, one from the Private Education Retirement Annuity
Association (PERAA) Plan and another from the CBA Retirement Plan.
Sections 1, 2, 3 and 4 of Article XVI of the CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY
SECTION 1.  ELIGIBILITY FOR MEMBERSHIP. — Membership in
the Plan shall be automatic for all full-time, regular staff and tenured
faculty of the University, except the University President. Membership
in the Plan shall commence on the first day of the month coincident
with or next following his statement of Regular/Tenured Employment
Status. EACIaT

SECTION 2.   COMPULSORY RETIREMENT DATE. — The

compulsory retirement date of each Member shall be as follows:

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 a.  Faculty — The last day of the School Year, coincident with his
attainment of age sixty (60) with at least five (years) of
unbroken, credited service.
b.  Staff — Upon reaching the age of sixty (60) with at least five (5)
years of unbroken, credited service.
SECTION 3.  OPTIONAL RETIREMENT DATE. — A Member may
opt for an optional retirement prior to his compulsory retirement. His
number of years of service in the University shall be the basis of
computing . . . his retirement benefits regardless of his chronological
age.
SECTION 4.  RETIREMENT BENEFIT. — The retirement benefit
shall be a sum equivalent to 100% of the member's final monthly
salary for compulsory retirement.

For optional retirement, the vesting schedule shall be:

xxx xxx xxx 19
On November 2, 2006, the Voluntary Arbitrator rendered a Decision 20
declaring the one-retirement policy and the Memorandum dated August 16,
2005 contrary to law. The dispositive portion of the Decision reads:
WHEREFORE, the following award is hereby made:
1.   The assailed University guidelines on the availment of
vacation and sick leave credits and vacation leave commutation are
contrary to law. The University is consequently ordered to reinstate the
earlier scheme, practice or policy in effect before the issuance of the
said guidelines on August 16, 2005;
2.   The "one retirement" policy is contrary to law and is
hereby revoked and rescinded. The University is ordered . . . to resume
and proceed with the established practice of extending to qualified
employees retirement benefits under both the CBA and the PERAA
Plan.
3.  The other money claims are denied. 21

Ruling of the Court of Appeals

Aggrieved, petitioner appealed the case to the CA via a Petition for
Review under Rule 43 of the Rules of Court.
On September 25, 2007, the CA rendered a Decision 22 finding the
rulings of the Voluntary Arbitrator supported by substantial evidence. It also
affirmed the nullification of the one-retirement policy and the Memorandum
dated August 16, 2005 on the ground that these unilaterally amended the
CBA without the consent of respondent. 23 Thus:
WHEREFORE, the instant appeal is DISMISSED for lack of merit.
SO ORDERED. 24

Petitioner moved for reconsideration but the same was denied by the
CA in its February 5, 2008 Resolution. 25
Issues
Hence, this recourse by petitioner raising the following issues:
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 a.
Whether . . . the [CA] committed grave and palpable error in
sustaining the Voluntary Arbitrator's ruling that the Affidavits
submitted by Respondent WU-PFSA are substantial evidence as defined
by the rules and jurisprudence that would substantiate that Petitioner
WU-P has long been in the practice of granting its employees two (2)
sets of Retirement Benefits. SHECcT

b.
Whether . . . the [CA] committed grave and palpable error in
sustaining the Voluntary Arbitrator's ruling that a university practice of
granting its employees two (2) sets of Retirement Benefits had already
been established as defined by the law and jurisprudence especially in
light of the illegality and lack of authority of such alleged grant.
c.
Whether . . . the [CA] committed grave and palpable error in
sustaining the Voluntary Arbitrator's ruling that it is incumbent upon
Petitioner WU-P to show proof that no Board Resolution was issued
granting two (2) sets of Retirement Benefits.
d.
Whether . . . the [CA] committed grave and palpable error in
revoking the 16 August 2005 Memorandum of Petitioner WU-P for being
contrary to extant policy. 26
Petitioner's Arguments
Petitioner argues that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same. 27 It maintains
that there is no established company practice or policy of giving two
retirement benefits to its employees. 28 Assuming, without admitting, that
two retirement benefits were released, 29 petitioner insists that these were
done by mere oversight or mistake as there is no Board Resolution
authorizing their release. 30 And since these benefits are unauthorized and
irregular, these cannot ripen into a company practice or policy. 31 As to the
affidavits submitted by respondent, petitioner claims that these are self-
serving declarations, 32 and thus, should not be given weight and credence.
33

In addition, petitioner claims that the Memorandum dated August 16,

2005, which provides for the guidelines on the implementation of vacation
and sick leave credits as well as vacation leave commutation, is valid
because it is in full accord with existing policy. 34
Respondent's Arguments
Respondent belies the claims of petitioner and asserts that there are
two retirement plans as the PERAA Retirement Plan, which has been
implemented for more than 30 years, is different from the CBA Retirement
Plan. 35 Respondent further avers that it has always been a practice of
petitioner to give two retirement benefits 36 and that this practice was
established by substantial evidence as found by both the Voluntary
Arbitrator and the CA. 37
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 As to the Memorandum dated August 16, 2005, respondent asserts that
it is arbitrary and contrary to the CBA and existing practices as it added
qualifications or limitations which were not agreed upon by the parties. 38
Our Ruling
The Petition is bereft of merit.
The Non-Diminution Rule found in Article 100 39 of the Labor Code
explicitly prohibits employers from eliminating or reducing the benefits
received by their employees. This rule, however, applies only if the benefit is
based on an express policy, a written contract, or has ripened into a
practice. 40 To be considered a practice, it must be consistently and
deliberately made by the employer over a long period of time. 41
An exception to the rule is when "the practice is due to error in the
construction or application of a doubtful or difficult question of law." 42 The
error, however, must be corrected immediately after its discovery; 43
otherwise, the rule on Non-Diminution of Benefits would still [Link]

The practice of giving two retirement

benefits to petitioner's employees is
supported by substantial evidence.
In this case, respondent was able to present substantial evidence in the
form of affidavits to support its claim that there are two retirement plans.
Based on the affidavits, petitioner has been giving two retirement benefits as
early as 1997. 44 Petitioner, on the other hand, failed to present any
evidence to refute the veracity of these affidavits. Petitioner's contention
that these affidavits are self-serving holds no water. The retired employees
of petitioner have nothing to lose or gain in this case as they have already
received their retirement benefits. Thus, they have no reason to perjure
themselves. Obviously, the only reason they executed those affidavits is to
bring out the truth. As we see it then, their affidavits, corroborated by the
affidavits of incumbent employees, are more than sufficient to show that the
granting of two retirement benefits to retiring employees had already
ripened into a consistent and deliberate practice.
Moreover, petitioner's assertion that there is only one retirement plan
as the CBA Retirement Plan and the PERAA Plan are one and the same is not
supported by any evidence. There is nothing in Article XVI of the CBA to
indicate or even suggest that the "Plan" referred to in the CBA is the PERAA
Plan. Besides, any doubt in the interpretation of the provisions of the CBA
should be resolved in favor of respondent. In fact, petitioner's assertion is
negated by the announcement it made during the LMC Meeting on February
8, 2006 regarding its plan of implementing a "one-retirement plan." For if it
were true that petitioner was already implementing a one-retirement policy,
there would have been no need for such announcement. Equally damaging
is the letter-memorandum 45 dated May 11, 2006, entitled "Suggestions on
the defenses we can introduce to justify the abolition of double retirement
policy," prepared by the petitioner's legal counsel. These circumstances,
taken together, bolster the finding that the two-retirement policy is a
practice. Thus, petitioner cannot, without the consent of respondent,
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 eliminate the two-retirement policy and implement a one-retirement policy
as this would violate the rule on non-diminution of benefits.
As a last ditch effort to abolish the two-retirement policy, petitioner
contends that such practice is illegal or unauthorized and that the benefits
were erroneously given by the previous administration. No evidence,
however, was presented by petitioner to substantiate its allegations.
Considering the foregoing disquisition, we agree with the findings of
the Voluntary Arbitrator, as affirmed by the CA, that there is substantial
evidence to prove that there is an existing practice of giving two retirement
benefits, one under the PERAA Plan and another under the CBA Retirement
Plan. cIACaT

The Memorandum dated August 16,

2005 is contrary to the existing CBA.
Neither do we find any reason to disturb the findings of the CA that the
Memorandum dated August 16, 2005 is contrary to the existing CBA.
Sections 1 and 2 of Article XII of the CBA provide that all covered
employees are entitled to 15 days sick leave and 15 days vacation leave with
pay every year and that after the second year of service, all unused vacation
leave shall be converted to cash and paid to the employee at the end of each
school year, not later than August 30 of each year.
The Memorandum dated August 16, 2005, however, states that
vacation and sick leave credits are not automatic as leave credits would be
earned on a month-to-month basis. This, in effect, limits the available leave
credits of an employee at the start of the school year. For example, for the
first four months of the school year or from June to September, an employee
is only entitled to five days vacation leave and five days sick leave. 46
Considering that the Memorandum dated August 16, 2005 imposes a
limitation not agreed upon by the parties nor stated in the CBA, we agree
with the CA that it must be struck down.
In closing, it may not be amiss to mention that when the provision of
the CBA is clear, leaving no doubt on the intention of the parties, the literal
meaning of the stipulation shall govern. 47 However, if there is doubt in its
interpretation, it should be resolved in favor of labor, 48 as this is mandated
by no less than the Constitution. 49
WHEREFORE, the Petition is hereby DENIED. The assailed September
25, 2007 Decision and the February 5, 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 97053 are hereby AFFIRMED.
SO ORDERED.
Carpio, Brion, Perez and Perlas-Bernabe, JJ., concur.

Footnotes
1. National Federation of Labor v. Court of Appeals, 483 Phil. 626, 639 (2004).

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 2. HFS Philippines, Inc. v. Pilar, G.R. No. 168716, April 16, 2009, 585 SCRA 315,
324.

3. Rollo , pp. 14-46.

4. CA rollo, pp. 268-288; penned by Associate Justice Vicente S.E. Veloso and
concurred in by Associate Justices Juan Q. Enriquez, Jr. and Marlene
Gonzales-Sison.

5. Id. at 315.

6. Id. at 269.

7. Rollo , p. 92.

8. CA rollo, p. 269.

9. Rollo , pp. 92-106.

10. CA rollo, p. 269.

11. Rollo , p. 107.

12. Id.

13. CA rollo, p. 104.

14. Id.

15. Id.

16. Rollo , p. 100.

17. CA rollo, p. 107.

18. Id. at 108.

19. Rollo , pp. 101-102.

20. Id. at 131-145; penned by Voluntary Arbitrator Francis V. Sobreviñas.

21. Id. at 144-145.

22. CA rollo, pp. 268-288.

23. Id. at 284 and 287.

24. Id. at 288.

25. Id. at 315.

26. Rollo , pp. 326-327.

27. Id. at 341-344.

28. Id. at 327-348.

29. Id. at 335.

30. Id. at 335-341.

31. Id. at 335.

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 32. Id. at 328.

33. Id. at 327-328.

34. Id. at 348-351.

35. Id. at 368-378.

36. Id. at 378.

37. Id. at 365.

38. Id. at 378-382.

39. ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. —

Nothing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of
promulgation of this Code.

40. Central Azucarera De Tarlac v. Central Azucarera De Tarlac Labor Union-NLU,

G.R. No. 188949, July 26, 2010, 625 SCRA 622, 630-631.

41. Id.

42. Id. at 631.

43. Id.

44. CA rollo, p. 284.

45. Id. at 207-208.

46. Rollo , p. 107.

47. Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme

Independent Union (NMS-IND-APL), G.R. No. 185556, March 28, 2011, 646
SCRA 501, 521.

48. Id.

49. Article II, Section 18 of the CONSTITUTION provides:

  Section 18. The State affirms labor as a primary social economic force. It
shall protect the rights of workers and promote their welfare.

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