THIRD DIVISION

September 8, 2015

G.R. No. 193798

COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,

vs.
ILOCOS PROFESSIONAL AND TECHNICAL EMPLOYESS UNION (IPTEU), Respondent.

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure (Rules) seeks to reverse and set aside the March 17, 2010 Decision  and September 16,
1

2010 Resolution  of the Court of Appeals (CA) in CA-G.R. SP No. 104043, which affirmed the May 6,
2

2008 Resolution  of the Secretary of Labor and Employment (SOLE) dismissing petitioner's appeal
3

that assailed the Decision (On the Challenged Voters )  and Proclamation of the Winner,  both dated
4 5

October 22, 2007, of the Mediator-Arbiter.

Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation duly organized and
operating under the Philippine laws. It is primarily engaged in the beverage business, which includes
the manufacture of carbonated soft drinks. On the other hand, respondent Ilocos Professional and
Technical Employees Union (IPTEU) is a registered independent labor organization with address at
CCBPI Ilocos Plant in Barangay Catuguing, San Nicolas, Ilocos Norte.

On July 9, 2007, IPTEU filed a verified Petition  for certification election seeking to represent a
6

bargaining unit consisting of approximately twenty-two (22) rank-and-file professional and technical
employees of CCBPI Ilocos Norte Plant. CCBPI prayed for the denial and dismissal of the petition,
arguing that the Sales Logistics Coordinator and Maintenance Foreman are supervisory employees,
while the eight (8) Financial Analysts, five (5) Quality Assurance Specialists, Maintenance Manager
Secretary, Trade Promotions and Merchandising Assistant (TPMA), Trade Asset Controller and
Maintenance Coordinator (TACMC), Sales Information Analyst (SIA), Sales Logistics Assistant,
Product Supply Coordinator, Buyer, Inventory Planner, and Inventory Analyst are confidential
employees;  hence, ineligible for inclusion as members of IPTEU. It also sought to cancel and revoke
7

the registration of IPTEU for failure to comply with the twenty percent (20%) membership
requirement based on all the supposed employees in the bargaining unit it seeks to operate.

A preliminary hearing of the petition was scheduled and held on July 19, 2007. The possibility of
voluntary recognition or consent election was not acceded to by CCBPI.

Convinced that the union members are rank-and-file employees and not occupying positions that are
supervisory or confidential in nature, Mediator-Arbiter Florence Marie A. Gacad-Ulep granted
IPTEU’S petition. The dispositive portion of the August 23, 2007 Decision  ordered:
8

WHEREFORE, premises considered, the Petition is GRANTED. The bargaining unit shall be all the
rank-and-file Exempt (Professional and Technical) Workers of CCBPI who are now excluded from
the existing bargaining units of the Coca-Cola Bottlers Philippines, Inc. – Ilocos Plant. The choices in
the election shall be:
ILOCOS PROFESSIONAL AND TECHNICAL
[EMPLOYEES] UNION (IPTEU)

No Union

The Labor Relations Division of this office is hereby directed to conduct the Pre-election
Conference(s) within the periods set by law. The CCBPI is hereby ordered to submit, not later than
the date of the first pre-election conference, its Certified List of Exempt (Professional and Technical)
rankand- file workers, or in its absence, the employee payrolls from May to June 2007. In case
Management fails or refuses to submit the same, the Union’s list shall be allowed, as provided for
under the Rules.

SO ORDERED. 9

On September 3, 2007, CCBPI filed an appeal before the SOLE.  The Mediator-Arbiter
10

acknowledged having received the Memorandum of Appeal but informed that, pursuant to the
Implementing Rules and Regulations of the Labor Code, as amended, "[the] order granting
the conduct of a certification election in an unorganized establishment shall not be subject to appeal.
Any issue arising therefrom may be raised by means of protest on the conduct and results of the
certification election."  On September 5, 2007, CCBPI then filed an Urgent Motion to Suspend
11

Proceedings,  alleging that the notice issued by the Assistant Regional Director for the conduct of
12

pre-election conference is premature since the decision of the Mediator-Arbiter is not yet final and
executory and that the Mediator-Arbiter already lost jurisdiction over the case with the filing of an
appeal. Two days after, CCBPI filed a Manifestation,  stating that its participation in the pre-election
13

conference, certification election, and other proceedings is not a waiver, withdrawal or abandonment
of the pending appeal and motion to suspend proceedings.

In the Pre-election Conference held on September 10, 2007, CCBPI and IPTEU mutually agreed to
conduct the certification election on September 21, 2007. On election day, only sixteen (16) of the
twenty-two (22) employees in the IPTEU list voted. However, no votes were canvassed. CCBPI filed
and registered a Protest14 questioning the conduct and mechanics of the election and a Challenge
to Votes15 on the ground that the voters are supervisory and confidential employees.

By agreement, the parties met on September 26, 2007 for the opening and counting of the
challenged votes. On said date, CCBPI filed a motion for inhibition, which the Mediator-Arbiter
verbally denied on the grounds that it was not verified and would cause undue delay on the
proceedings as there are no other Mediators-Arbiters in the Region. The parties were informed that
their agreement to have the ballots opened could not bind the Mediator-Arbiter. Instead, they were
directed to submit additional evidence that would aid in the resolution of the challenged votes.

On October 22, 2007, the Mediator-Arbiter denied CCBPI’s challenge to the 16 votes. She found that
the voters are rank-and-file employees holding positions that are not confidential in nature, and who
are not, or used to be, members of Ilocos Monthlies Union (IMU) due to the reclassification of their
positions by CCBPI and have been excluded from the CBA entered into by IMU and CCBPI from
1997 to 2005. Consequently, the challenged votes were opened and canvassed. After garnering 14
out of the 16 votes cast, IPTEU was proclaimed as the sole and exclusive bargaining agent of the
rank-and-file exempt workers in CCBPI Ilocos Norte Plant.

CCBPI elevated the case to the SOLE, raising the following grounds:

1. The Honorable public [appellee] erred in disregarding the fact that there is already an
existing bargaining representative of the rank-andfile professional and technical employees
 at the Ilocos Plant of appellant, namely, the Ilocos Monthlies Union (IMU) [to] which the
sixteen (16) challenged voters should be members as long as they are not disqualified by
law [for] being confidential employees.

2. The Honorable public appellee erred in denying the challenge to the sixteen (16) actual
voters, and subsequently declaring that private appellee is the sole and exclusive
[bargaining] agent of the rank-andfile exempt employees.

3. The Honorable public appellee erred in disregarding the fact that there is a pending earlier
appeal filed by appellant with the Honorable Secretary of Labor, and so the Regional Office
No. 1 of the Department of Labor and Employment lost jurisdiction over the case including
the certification election conducted by the Election Officer.

4. The Honorable public appellee erred in disregarding the fact that there is a pending
Motion to Suspend Proceedings filed by appellant with the Department of Labor and
Employment, Regional Office No. 1, San Fernando City, La Union[,] due to the pendency of
its appeal with the Honorable Secretary of Labor, and the same is not yet resolved.

5. The Honorable public appellee erred in disregarding the fact that there is a need to
suspend the conduct of election and other proceedings to await for the final result of the
earlier appeal made by herein appellant.

6. The Honorable public appellee erred in not declaring the certification election on
September 21, 2007 null and void. 16

On May 6, 2008, the appeal of CCBPI was denied. The SOLE held that, as shown by the
certification of the IMU President and the CBAs forged between CCBPI and IMU from 1997 to 2007,
the 22 employees sought to be represented by IPTEU are not part of IMU and are excluded from its
CBA coverage; that even if the 16 challenged voters may have access to information which are
confidential from the business standpoint, the exercise of their right to self-organization could not be
defeated because their common functions do not show that there exist a confidential relationship
within the realm of labor relations; and that the order granting the certification election and sustaining
its validity despite the pendency of appeal and motion to suspend is proper in view of Section 17,
Rule VIII of Department Order No. 40, Series of 2003, which states that the order granting the
conduct of a certification election in an unorganized establishment is not subject to appeal and that
any issue arising therefrom may be raised by means of protest on the conduct and results of the
certification election.

Confronted with an adverse ruling, CCBPI filed before the CA a petition for certiorari with prayer for
temporary restraining order and writ of preliminary injunction.  It reiterated that:
17

a. There is already an existing and incumbent sole and exclusive bargaining agent in the
bargaining unit which respondent IPTEU seeks to represent, namely, the Ilocos Monthlies
Union (IMU). The bargaining unit which IPTEU seeks to represent is rank-and-file
professional and technical employees which the incumbent union, the IMU, presently
represents.

b. Respondent IPTEU never sought to represent the alleged rank-and-file Exempt

employees because it is clearly indicated in its petition for certification election that it seeks
to represent rank-and-file professional and technical employees only. Its Constitution and
bylaws includes solely and only professional and technical employees of CCBPI-ILOCOS
PLANT to its membership, and nothing more.
 c. The sixteen (16) voters are not eligible for Union membership because they are
confidential employees occupying confidential positions.

d. The bargaining unit is organized due to the presence of the IMU, the sole and exclusive
bargaining unit of the rank-and-file professional and technical employees at the Ilocos Plant
of petitioner, and so the appeal of the earlier decision of the respondent Med-Arbiter dated
August 23, 2007 is in order, proper, valid and should have been given due course in
accordance with Sec. 17, Rule [VIII] of the Rules Implementing Book V of the Labor Code.

e. The earlier appeal x x x together with the motion for suspension of the proceedings x x x
filed by petitioner on September 5, 2007 remain unresolved to date, and there is a need to
await for their final resolution before any further action including the certification election
could validly proceed. 18

On March 17, 2010, the Court of Appeals denied the petition. CCBPI filed a motion for
reconsideration,  which was also denied in the September 16, 2010 Resolution; hence, this petition.
19

CCBPI contends that the CA Decision and Resolution are based on misapprehension of facts
relative to the proceedings before the Mediator- Arbiter and that its pronouncement consists of
inferences which are manifestly mistaken and without factual/legal basis. It is argued that a petition
for certiorari was filed before the CA because the orders of the SOLE and Mediator-Arbiter were
issued in patent disregard of established facts and existing jurisprudence, thus, tainted with grave
abuse of discretion

1) In considering respondent IPTEU as the sole and exclusive bargaining agent of the purported
rank-and-file exempt employees in the Ilocos Plant; 2) In not declaring the certification election held
on September 21, 2007 improper and void; 3) In disregarding the fact that the Ilocos Monthlies
Union (IMU) is the existing sole bargaining agent of the rank-and-[file] professional and technical
employees at the Ilocos Plant, to which the sixteen (16) challenged voters should be members, if
allowed by law[;] and 4) [In] ruling that the concerned employees should not be prohibited by joining
any union.20

The petition is unmeritorious.

As proven by the certification of the IMU President as well as the CBAs executed between IMU and
CCBPI, the 22 employees sought to be represented by IPTEU are not IMU members and are not
included in the CBAs due to reclassification of their positions. If these documents were false, the
IMU should have manifested its vigorous opposition.  In fact, the Mediator-Arbiter noted:
1âwphi1

The most tenacious resistance to the granting of the Petition as well as the holding of the CE has
been Management. On the other hand, the existing unions at CCBPI, especially the IMU of which
most of the IPTEU members were once part (until they were considered outside the ambit of its
existing bargaining unit) never once opposed the Petition and the Certification election, whether
verbally or in written Opposition.

Between Management and IMU, it is the latter which has more to lose, as the creation of a separate
bargaining unit would reduce the scope of IMU’s bargaining unit. Yet through all these proceedings,
we take note of the substantial moral support that has been extended to the Petitioner by the other
Unions of CCBPI, so much so that, until objected to by Management, they were even willing to be
present during the Certification Election of 21 September 2007. 21

As to whether the 16 voters sought to be excluded from the appropriate bargaining unit are
confidential employees,  such query is a question of fact, which is not a proper issue in a petition for
22

review under Rule 45 of the Rules.  This holds more true in the present case in view of the
23

consistent findings of the Mediator-Arbiter, the SOLE, and the CA.

We reiterate that:

[T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court requires that it
shall raise only questions of law. The factual findings by quasi-judicial agencies, such as the
Department of Labor and Employment, when supported by substantial evidence, are entitled to great
respect in view of their expertise in their respective fields. Judicial review of labor cases does not go
so far as to evaluate the sufficiency of evidence on which the labor official's findings rest. It is not our
function to assess and evaluate all over again the evidence, testimonial and documentary, adduced
by the parties to an appeal, particularly where the findings of both the trial court (here, the DOLE
Secretary) and the appellate court on the matter coincide, as in this case at bar. The Rule limits that
function of the Court to the review or revision of errors of law and not to a second analysis of the
evidence. x x x Thus, absent any showing of whimsical or capricious exercise of judgment, and
unless lack of any basis for the conclusions made by the appellate court be amply demonstrated, we
may not disturb such factual findings. 24

The determination of factual issues is vested in the Mediator-Arbiter and the Department of Labor
and Employment. Pursuant to the doctrine of primary jurisdiction, the Court should refrain from
resolving such controversies unless the case falls under recognized and well-established
exceptions. The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the
authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative
body of special competence. 25

In this case, organizational charts, detailed job descriptions, and training programs were presented
by CCBPI before the Mediator-Arbiter, the SOLE, and the CA. Despite these, the Mediator-Arbiter
ruled that employees who encounter or handle trade secrets and financial information are not
automatically classified as confidential employees. It was admitted that the subject employees
encounter and handle financial as well as physical production data and other information which are
considered vital and important from the business operations’ standpoint. Nevertheless, it was opined
that such information is not the kind of information that is relevant to collective bargaining
negotiations and settlement of grievances as would classify them as confidential employees. The
SOLE, which the CA affirmed, likewise held that the questioned voters do not have access to
confidential labor relations information.

We defer to the findings of fact of the Mediator-Arbiter, the SOLE, and the CA. Certainly, access to
vital labor information is the imperative consideration. An employee must assist or act in a
confidential capacity and obtain confidential information relating to labor relations policies. Exposure
to internal business operations of the company is not per se a ground for the exclusion in the
bargaining unit.26

The Court sees no need to belabor the effects of the unresolved notice of appeal and motion to
suspend proceedings filed by CCBPI in September 2007. Suffice it to say that the substantial merits
of the issues raised in said pleadings are the same as what were already brought to and passed
upon by the Mediator-Arbiter, the SOLE, and the CA.
WHEREFORE, premises considered, the petition is DENIED. The March 17, 2010 Decision and
September 16, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 104043, which affirmed
the May 6, 2008 Resolution of the Secretary of Labor and Employment, dismissing petitioner's
appeal that assailed the Decision (On the Challenged Voters) and Proclamation of the Winner, both
dated October 22, 2007, of the Mediator-Arbiter, are hereby AFFIRMED.

July 24, 2019

G.R. No. 234446

VICTORIA MANUFACTURING CORPORATION EMPLOYEES UNION, Petitioner

vs.
VICTORIA MANUFACTURING CORPORATION, Respondent

DECISION

A. REYES, JR., J.:

Like courts, administrative boards and officers vested with quasijudicial power may only exercise
jurisdiction over matters that their enabling statutes confer in them. This rule applies even though
the parties hold out to the administrative agency concerned that it has jurisdiction over a particular
dispute. Generally, lack of jurisdiction may be raised at any time, and is a defense that cannot be
lost. However, by way of narrow exception, the doctrine of estoppel by laches, which rests on
considerations of public policy, may effectively bar jurisdictional challenges. But it must be
emphasized that the doctrine finds application only where the jurisdictional issue is so belatedly
raised that it may be presumed o have been waived by the invoking party.

This is a petition for review on certiorari  questioning the May 26, 2017 Decision  and the August 30,
1 2

2017 Resolution  rendered by the Court of Appeals (CA) in CA-G.R. SP No. 146672, through which
3

the May 26, 2016 Decision  of Voluntary Arbitrator (VA) Renato Q. Bello was set aside insofar as the
4

respondent, Victoria Manufacturing Corporation (VMC), was ordered to reimburse the income tax
withheld from the salaries of the members of the petitioner, Victoria Manufacturing Corporation
Employees Union (VMCEU).

The Factual Antecedents

VMC is a domestic corporation engaged in the textile business.  Aside from dyeing and finishing
1âшphi1

fabrics, it manufactures laces, embroidered and knitted fabrics, and hooks and eyes. 5

On the other hand, VMCEU is the sole and exclusive bargaining agent of the permanent and regular
rank-and-file employees within the pertinent bargaining unit of VMC. 6

Through a letter dated March 14, 2014, VMC sought the opinion of the Bureau of Internal Revenue
(BIR) on the tax implications of the wage structure that was stipulated in the collective bargaining
agreement (CBA) between the company and VMCEU. At the time, the applicable minimum wage
was ₱466.00, broken down into a basic wage of ₱451.00 and a cost of living allowance (COLA) of
₱15.00, as mandated by Wage Order No. NCR-18. This was different from the company's wage
structure, which integrated the COLA it to the total wage it paid VMCEU's members, viz.: 7

  VMC wage structure pursuant Minimum wage mandated by

to the CBA Wage Order No. NCR-18
 Basic wage ₱466.00 ₱451.00
COLA n/a ₱15.00
TOTAL ₱466.00 ₱466.00

In response to VCM's letter, the BIR opined that VMCEU's members were not exempt from income
tax, as what they were earning was above the statutory minimum wage mandated by Wage Order
No. NCR-18. 8

As a result, VMC withheld the income tax due on the wages of VMCEU's members.

On May 8, 2015, VMC and VMCEU held a grievance meeting to settle various issues, including the
company's decision to withhold income tax from the wages of the union members who were earning
the statutory minimum wage. Unfortunately, the parties failed to resolve the issue. 9

After failing to reach an amicable settlement before the National Conciliation and Mediation Board,
VMC and VMCEU executed a Submission Agreement,  designating AVA Renato Q. Bello to resolve
10

whether the company properly withheld the income tax due from the union's members, among other
issues.

After VMC and VMCEU submitted their respective position papers and replies, the case was
submitted for decision.

The VA's Ruling

On May 26, 2016, the VA rendered a Decision in favor of VMCEU, ruling that VMC erroneously
withheld income tax from the wages of the union's members. Ratiocinating that the subject
employees were statutory minimum wage earners, it was held that they were exempt from the
payment of income tax, pursuant to Republic Act (R.A.) No. 9504.  As such, the ruling contained an
11

order directing the company to reimburse the withheld income tax, viz.:

WHEREFORE, premises considered, a decision is hereby rendered ORDERING respondent

VICTORIA MANUFACTURING CORPORATION to:

xxxx

2.) reimburse all its rank-and-file minimum wage earners who are exempt from income taxes with the
amounts it erroneously withheld.

xxxx

SO DECIDED. 12

Aggrieved, VMC sought relief before the CA through a petition for certiorari.13

The CA's Ruling

On May 26, 2017, the CA rendered the challenged Decision, reversing the VA's ruling. The appellate
court, after brushing aside VMC's resort to the wrong remedy,  held that the jurisdiction of VAs is
14

limited to labor disputes.  As such, the VA could not validly rule on the propriety of VMC's decision to
15
withhold the income taxes of VMCEU's members, a matter properly within the competence of the
BIR.  Hence, the CA set aside the VA's decision, viz.:
16

ACCORDINGLY, the petition is GRANTED and the assailed Decision dated May 26,
2016, NULLIFIED.

SO ORDERED.  (Emphasis in the original)

17

After the denial of its motion for reconsideration, VMCEU filed the instant petition, arguing that the
CA should not have allowed VMC to question the VA's jurisdiction because the company: (1) actively
participated in the arbitration proceedings and, at the time, never raised lack of jurisdiction; and (2)
voluntarily bound itself, through the Submission Agreement, to abide by the VA's
decision.  Essentially, the union contends that the company was estopped from challenging the VA's
18

jurisdiction.

The Issue

Whether or not the CA correctly set aside the VA's decision on the ground of lack of jurisdiction

The Court's Ruling

The CA's decision is sustained.

Jurisdiction is the power of a court, tribunal, or officer to hear, try, and decide a case. 19

The seminal ponencia in El Banco Español-Filipino v. Palanca  instructs that a court, in order to

20

validly try a civil case, must be possessed of two types of jurisdiction: (1) jurisdiction over the subject
matter; and (2) jurisdiction over the parties.  Relevant to the resolution of the issue raised in this
21

case is the first, which, broadly defined, is "the power to hear and determine the general class to
which the proceedings in question belong"  or, in the words of Palanca, "the authority of the court to
22

entertain a particular kind of action or to administer a particular kind of relief."

23

Emanating from the sovereign authority that organizes courts,  jurisdiction over the subject matter is
24

conferred by law. It is determined by the allegations in the complaint based on the character of the
relief sought.  Verily, if the relief sought is the payment of a certain sum of money, the complaint
25

must be filed before the court on which the law bestows the power to grant money judgments of that
amount. If the complaint is filed before any other court, the only power that court has is to dismiss
the case.  It is axiomatic that a judgment rendered by a court without jurisdiction over the subject
26

matter produces no legal effect. 27

The above principles apply analogously to administrative boards and officers exercising quasi-
judicial power,  such as VAs constituted under the Labor Code.
28

Relevantly, the Labor Code vests in VAs the power to hear and decide labor disputes, viz.:

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 x x x.
Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks. 29

Did the VA, pursuant to the above provisions, have jurisdiction to rule on the legality of VMC's act of
withholding income tax from the salaries of VMCEU's members?

The answer is in the negative.

In Honda Cars Philippines, Inc. v. Honda Cars Technical Specialist and Supervisors Union,  the30

Court ruled that VAs have no competence to rule on the propriety of withholding of tax. That case
concerned the withholding of income tax from union members relative to unused gasoline allowance.
The company claimed that the benefit was tied up to a similar company policy enjoyed by managers
and assistant vice-presidents, who were allowed to convert the unutilized portion of their monthly
gasoline allowance into cash, subject to whatever tax may be applicable. Since the union and the
company could not agree on the proper tax treatment of the converted allowance, the dispute was
submitted to a Panel of VAs. In the arbitration proceedings, it was held that the company's act of
withholding was improper since the cash conversion was not subject to income tax. When the case
eventually reached the Court, the panel's decision was declared null and void on the ground that
VAs have no jurisdiction to settle tax matters. Ruling that the jurisdiction of VAs is limited to labor
disputes, the Court declared that the company and the union should have submitted the question to
the Commissioner of Internal Revenue (CIR),  viz.:
31

The [VA] has no competence to rule on the taxability of the gas allowance and on the propriety of the
withholding of tax. These issues are clearly tax matters, and do not involve labor disputes. To be
exact, they involve tax issues within a labor relations setting, as they pertain to questions of law on
the application of Section 33 (A) of the [Tax Code]. They do not require the application of the Labor
Code or the interpretation of the [Memorandum of Agreement] and/or company personnel policies.
Furthermore, the company and the union cannot agree or compromise on the taxability of the gas
allowance. Taxation is the State's inherent power; its imposition cannot be subject to the will of the
parties.

Under paragraph 1, Section 4 of the [Tax Code], the CIR shall have the exclusive and original
jurisdiction to interpret the provisions of the [Tax Code] and other tax laws, subject to review by the
Secretary of Finance. Consequently, if the company and/or the union desire/s to seek clarification of
these issues, it/they should have requested for a tax ruling from the Bureau of Internal Revenue
(BIR). x x x

xxxx

On the other hand, if the union disputes the withholding of tax and desires a refund of the withheld
tax, it should have filed an administrative claim for refund with the CIR. Paragraph 2, Section 4 of the
[Tax Code] expressly vests the CIR original jurisdiction over refunds of internal revenue taxes, fees
or other charges, penalties imposed in relation thereto, or other tax matters.  (Citations omitted)
32

Honda Cars espouses a sound view. The ponencia recognized that the jurisdiction of an

administrative body must be confined to matters within its specialized competence. Since the
withholding of tax from employees' salaries is governed by the Tax Code, disputes involving the
propriety or legality of withholding should be submitted to the CIR, the administrative body vested
with the power to interpret tax laws, and not the VA, whose jurisdiction is limited to labor disputes.
After all, quasi-judicial bodies only possess jurisdiction over matters that are conferred upon them by
their enabling statutes.
33
Turning now to VMCEU's arguments, did VMC's execution of the Submission Agreement and active
participation in the arbitration proceedings operate to rectify the VA's lack of jurisdiction?

Again, the answer is in the negative.

As mentioned above, jurisdiction is conferred by law. As a result, absent a statutory grant, the
actions, representations, declarations, or omissions of a party will not serve to vest jurisdiction over
the subject matter in a court, board, or officer.  Simply put, "judicial or quasi-judicial jurisdiction
34

cannot be conferred upon a tribunal by the parties alone."  As the Court explained in La Naval Drug
35

Corporation v. Court of Appeals: 36

x x x Whenever it appears that the court has no jurisdiction over the subject matter, the action shall
be dismissed. This defense may be interposed at any time, during appeal or even after final
judgment. Such is understandable, as this kind of jurisdiction is conferred by law and not within the
courts, let alone the parties, to themselves determine or conveniently set aside.  (Citations omitted)
37

At this juncture, it should be stated that lack of jurisdiction is a serious defect that may be raised
anytime, even for the first time on appeal, since it is a defense that is not subject to waiver. 38

However, by way of exception, the doctrine of estoppel by laches, pursuant to the ruling in Tijam, et
al. v. Sibonghanoy,  may operate to bar jurisdictional challenges. In that case, lack of jurisdiction
39

was raised for the first time only in a motion for reconsideration filed before the CA fifteen (15) years
after the commencement of the action. Prior thereto, the party that belatedly raised the jurisdictional
issue had actively participated in the proceedings before the trial and appellate courts, seeking
affirmative relief and, thereafter, submitting the case for adjudication on the merits. Based on public
policy considerations, it was ruled that jurisdiction could no longer be questioned. The Court held
that no tolerance should be afforded to the practice of submitting a case for resolution, only to accept
a favorable judgment, and to raise a jurisdictional issue in case of a decision that is adverse. 40

Estoppel by laches has been broadly defined as "failure or neglect for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence, could or should have been
done earlier."  As applied to jurisdictional challenges, it is the failure to timely raise a court's lack of
41

jurisdiction, ultimately resulting in a binding judgment, not because said judgment is valid as an
adjudication, but because public policy looks with disfavor on the belated invocation of jurisdictional
issues.42

Notwithstanding the unequivocal dictum in Sibonghanoy, it must be emphasized that the general rule
remains to be that jurisdiction is not to be left to the will or stipulation of the parties; it cannot be lost
by estoppe1.  Such emphasis is called for because, as the Court pointed out in Calimlim, et al. v.
43

Hon. Ramirez, etc., et al.,  a jurisprudential trend was starting to emerge where estoppel was
44

applied to bar jurisdictional challenges even in situations not contemplated by Sibonghanoy.

Consequently, Figueroa v. People  sought to elucidate on the proper application
45

of Sibonghanoy, viz.:

The Court, thus, wavered on when to apply the exceptional circumstance in Sibonghanoy and on
when to apply the general rule x x x expounded at length in Calimlim. The general rule should,
however, be, as it has always been, that the issue of jurisdiction may be raised at any stage of the
proceedings, even on appeal, and is not lost by waiver or by estoppel. Estoppel by laches, to bar a
litigant from asserting the court's absence or lack of jurisdiction, only supervenes in exceptional
cases similar to the factual milieu of [Sibonghanoy]. Indeed, the fact that a person attempts to invoke
unauthorized jurisdiction of a court does not estop him from thereafter challenging its jurisdiction
over the subject matter, since such jurisdiction must arise by law and not by mere consent of the
parties. This is especially true where the person seeking to invoke unauthorized jurisdiction of the
court does not thereby secure any advantage or the adverse party does not suffer any
harm.  (Emphasis supplied)
46

The above pronouncement was more recently reiterated in Adlawan v. Joaquino, et al.  viz.: 47

We emphasize that our ruling in Sibonghanoy establishes an exception which is to be applied only

under extraordinary circumstances or to those cases similar to its factual situation. The rule to be
followed is that the lack of a court's jurisdiction is a non-waivable defense that a party can raise at
any stage of the proceedings in a case, even on appeal; the doctrine of estoppel, being the
exception to such non-waivable defense, must be applied with great care and the equity must be
strong in its favor.  (Emphasis supplied)
48

Taking the foregoing into account, it is clear that estoppel will not operate to confer jurisdiction upon
a court, save in the most exceptional of cases.  Without a law that grants the power to hear, try, and
49

decide a particular type of action, a court may not, regardless of what the parties do or fail to do,
afford any sort of relief in any such action filed before it. It follows then that, in those cases, any
judgment or order other than one of dismissal is void for lack of jurisdiction.  This must be the rule
50

since no less than the Constitution provides that it is a function of the Congress to define, prescribe,
and apportion the jurisdiction of courts.  Nevertheless, jurisprudence has recognized that situations
51

may arise where parties, as a matter of public policy, must be bound by judgments rendered even
without jurisdiction.  Such situations, however, are exceptional, and courts must exercise the highest
52

degree of caution in their application of estoppel to bar jurisdictional challenges.  That said, where
53

the circumstances of a particular case are comparable to those attendant in Sibonghanoy,

jurisdictional issues may no longer be entertained, and the doctrine of estoppel by laches will
effectively bind the parties to the judgment rendered therein regardless of whether the dispensing
court was vested with jurisdiction by statute. In such situations, lack of jurisdiction must be invoked
so belatedly so as to give rise to "a presumption that the party entitled to assert it either has
abandoned it or declined to assert it."54

The rule that estops a party from assailing the jurisdiction of a court finds like application in
proceedings before administrative boards and officers that possess quasi-judicial power. This
approach is sensible, as no germane differences exist between such bodies, on one hand, and
courts, on the other, when it comes to belated jurisdictional challenges. It cannot be gainsaid that it
is just as deplorable to tardily raise a jurisdictional issue before a court as it is to do so before an
administrative tribunal.  Thus, the Court must apply the preceding tenets to the case at bar.
55

Here, the Court cannot conclude that VMC was estopped from assailing the VA's jurisdiction.

First, lack of jurisdiction was timely raised. The record discloses that (1) the proceedings before the
VA commenced with the execution of the Submission Agreement dated August 7, 2015;  and (2) the 56

case was submitted for resolution on December 22, 2015, when VMC and VMCEU filed their
respective replies.  As soon as the VA rendered his Decision on May 26, 2016,  the company,
57 58

through a petition for certiorari dated July 18, 2016,  immediately raised the jurisdictional issue
59

before the CA. To be sure, not even a year had elapsed between the commencement of the
arbitration proceedings and the invocation of the jurisdictional issue. By no stretch of the imagination
can this be compared to the factual milieu of Sibonghanoy, where lack of jurisdiction was raised only
15 years after the case was filed. Hence, the temporal element of estoppel by laches vis-a-vis
jurisdiction does not obtain in the case at bar.

Second, VMC never prayed for affirmative relief. In Sibonghanoy, the party that raised lack of
jurisdiction, a bonding company, prayed that it be relieved of its liability under the bond subject of
that case.  On the other hand, VMC, in the position paper that it filed before the VA, merely prayed
60

that "the complaint of [VMCEU] be dismissed with prejudice for utter lack of merit."  Since all the
61

company sought was the dismissal of the union's complaint, the former's prayer cannot be
considered as one seeking affirmative relief.

Taking the foregoing into account, the public policy considerations attendant in Sibonghanoy find no
application here so as to estop VMC from questioning the VA's jurisdiction.

WHEREFORE, the May 26, 2017 Decision and August 30, 2017 Resolution rendered by the Court of
Appeals in CA-G.R. SP No. 146672 are AFFIRMED.

November 21, 2016

G.R. No. 193816

ERSON ANG LEE DOING BUSINESS as "SUPER LAMINATION SERVICES," Petitioner

vs.
SAMAHANG MANGGAGAWA NG SUPER LAMINATION (SMSLS-NAFLU-KMU), Respondent

DECISION

SERENO, CJ.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court on the Decision  and
1

Resolution  of the Court of Appeals (CA) affirming the assailed Decision  of the Department of Labor
2 3

and Employment (DOLE). DOLE allowed the conduct of certification election among the rank-and-
file employees of Super Lamination Services (Super Lamination), Express Lamination Services, Inc.
(Express Lamination), and Express Coat Enterprises, Inc. (Express Coat).

THE ANTECEDENT FACTS

Petitioner Erson Ang Lee (petitioner), through Super Lamination, is a duly registered entity
principally engaged in the business of providing lamination services to the general public.
Respondent Samahan ng mga Manggagawa ng Super Lamination Services (Union A) is a legitimate
labor organization, which is also a local chapter affiliate of the National Federation of Labor Unions -
Kilusang Mayo Uno.  It appears that Super Lamination is a sole proprietorship under petitioner's
4

name,  while Express Lamination and Express Coat are duly incorporated entities separately
5

registered with the Securities and Exchange Commission (SEC). 6

On 7 March 2008, Union A filed a Petition for Certification Election  to represent all the rank-and-file
7

employees of Super Lamination. 8

Notably, on the same date, Express Lamination Workers' Union (Union B) also filed a Petition for
Certification Election to represent all the rank-and-file employees of Express Lamination. 9

Also on the same date, the Samahan ng mga Manggagawa ng Express Coat Enterprises, Inc.
(Union C) filed a Petition for Certification Election to represent the rank-and-file employees of
Express Coat. 10

Super Lamination, Express Lamination, and Express Coat, all represented by one counsel,
separately claimed in their Comments and Motions to Dismiss that the petitions must be dismissed
on the same ground - lack of employer-employee relationship between these establishments and the
bargaining units that Unions A, B, and C seek to represent as well as these unions' respective
members.  Super Lamination, in its Motion, posited that a majority of the persons who were
11

enumerated in the list of members and officers of Union A were not its employees, but were
employed by either Express Lamination or Express Coat.  Interestingly, both Express Lamination
12

and Express Coat, in turn, maintained the same argument - that a majority of those who had
assented to the Petition for Certification Election were not employees of either company, but of one
of the two other companies involved.13

All three Petitions for Certification Election of the Unions were denied. On 21 May 2008, an Order
was issued by DOLE National Capital Region (NCR) Med-Arbiter Michael Angelo Parado denying
the respective petitions of Unions B and C on the ground that there was no existing employer-
employee relationship between the members of the unions and the companies concerned. On 23
May 2008, DOLE NCR Med-Arbiter Alma Magdaraog-Alba also denied the petition of respondent
Union A on the same ground. 14

The three unions filed their respective appeals before the Office of the DOLE Secretary, which
consolidated the appeal because the involved companies alternately referred to one another as the
employer of the members of the bargaining units sought to be represented.  The unions argued that
15

their petitions should have been allowed considering that the companies involved were unorganized,
and that the employers had no concomitant right to oppose the petitions. They also claimed that
while the questioned employees might have been assigned to perform work at the other companies,
they were all under one management's direct control and supervision. 16

DOLE, through Undersecretary Romeo C. Lagman, rendered the assailed Decision, the dispositive
portion of which reads as follows:

WHEREFORE, premises considered, the appeals filed by Express Lamination Workers Union
(ELWU-NAFLU-KMU), Samahang Manggagawa ng Express Coat Enterprises, Inc. (SMEC-NAFLU-
KMU) and Samahang Manggagawa ng Super Lamination Services (SMSLS-NAFLU-KMU) are
hereby GRANTED and the Orders dated 21 May 2008 of DOLE-NCR Mediator-Arbiter Michael
Angelo T. Parado are hereby REVERSED and SET ASIDE. The Order dated 23 May 2008 of DOLE
NCR Mediator-Arbiter Alma E. Magdaraog-Alba is likewise REVERSED and SET ASIDE.

Accordingly, let the entire records of this be remanded to the regional office of origin for the
immediate conduct of certification election among the rank-and-file employees of Express
Lamination Services, Inc., Super Lamination Services and Express Coat Enterprises Inc., after the
conduct of pre-election conference/s, with the following as choices;

1. Express Lamination Workers Union-NAFLU-KMU;

2. Samahan ng mga Manggagawa ng Super Lamination Services-NAFLU-KMU;

3. Samahang ng mga Manggagawa ng Express Coat Enterprises, Inc.-NAFLU-KMU; and

4. "No Union."

The employer/s and/or contending union(s) are hereby directed to submit to the Regional Office of
origin, within ten (10) days from receipt of this Decision, a certified list of employees in the
bargaining unit or the payrolls covering the members of the bargaining unit for the last three (3)
months prior to the issuance of the Decision.
SO DECIDED.  (Emphases in the original)
17

DOLE found that Super Lamination, Express Lamination, and Express Coat were sister companies
that had a common human resource department responsible for hiring and disciplining the
employees of the three companies. The same department was found to have also given them daily
instructions on how to go about their work and where to report for work. It also found that the three
companies involved constantly rotated their workers, and that the latter's identification cards had
only one signatory. 18

To DOLE, these circumstances showed that the companies were engaged in a work-pooling
scheme, in light of which they might be considered as one and the same entity for the purpose of
determining the appropriate bargaining unit in a certification election.  DOLE applied the concept of
19

multi-employer bargaining under Sections 5 and 6 of DOLE Department Order 40-03, Series of
2003. Under that concept, the creation of a single bargaining unit for the rank-and-file employees of
all three companies was not implausible and was justified under the given circumstances.  Thus, it
20

considered these rank-and-file employees as one bargaining unit and ordered the conduct of a
certification election as uniformly prayed for by the three unions.

Aggrieved, petitioner instituted an appeal before the CA, which denied his Petition and affirmed the
Decision of DOLE.  It sided with DOLE in finding that Super Lamination, Express Lamination, and
1âwphi1

Express Coat were sister companies that had adopted a work-pooling scheme. Therefore, it held
that DOLE had correctly applied the concept of multi-employer bargaining in finding that the three
companies could be considered as the same entity, and their rank-and-file employees as comprising
one bargaining unit. 21

Petitioner filed a Motion for Reconsideration of the CA Decision, but the motion was
denied.  Therefore, he now comes to this Court through the present Petition.
22

ISSUES

From the established facts and arguments, we cull the issues as follows:

1. Whether the application of the doctrine of piercing the corporate veil is warranted

2. Whether the rank-and-file employees of Super Lamination, Express Lamination, and

Express Coat constitute an appropriate bargaining unit

THE COURT'S RULING

We deny the petition.

An application of the doctrine of
piercing the corporate veil is
warranted.

Petitioner argues that separate corporations cannot be treated as a single bargaining unit even if
their businesses are related,  as these companies are indubitably distinct entities with separate
23

juridical personalities.  Hence, the employees of one corporation cannot be allowed to vote in the
24

certification election of another corporation, lest the abovementioned rule be violated. 25

Petitioner's argument, while correct, is a general rule. This Court has time and again disregarded
separate juridical personalities under the doctrine of piercing the corporate veil. It has done so in
cases where a separate legal entity is used to defeat public convenience, justify wrong, protect
fraud, or defend crime, among other grounds.  In any of these situations, the law will regard it as an
26

association of persons or, in case of two corporations, merge them into one. 27

A settled formulation of the doctrine of piercing the corporate veil is that when two business
enterprises are owned, conducted, and controlled by the same parties, both law and equity will,
when necessary to protect the rights of third parties, disregard the legal fiction that these two entities
are distinct and treat them as identical or as one and the same. 28

This formulation has been applied by this Court to cases in which the laborer has been put in a
disadvantageous position as a result of the separate juridical personalities of the employers
involved.  Pursuant to veil-piercing, we have held two corporations jointly and severally liable for an
29

employee's back wages.  We also considered a corporation and its separately-incorporated
30

branches as one and the same for purposes of finding the corporation guilty of illegal
dismissal.  These rulings were made pursuant to the fundamental doctrine that the corporate fiction
31

should not be used as a subterfuge to commit injustice and circumvent labor laws. 32

Here, a certification election was ordered to be held for all the rank-and- file employees of Super
Lamination, Express Lamination, and Express Coat.  The three companies were supposedly distinct
1âwphi1

entities based on the fact that Super Lamination is a sole proprietorship while Express Lamination
and Express Coat were separately registered with the SEC.  The directive was therefore, in effect, a
33

piercing of the separate juridical personalities of the corporations involved. We find the piercing to be
proper and in accordance with the law as will be discussed below.

The following established facts show that Super Lamination, Express Lamination, and Express Coat
are under the control and management of the same party - petitioner Ang Lee. In effect, the
employees of these three companies have petitioner as their common employer, as shown by the
following facts:

1. Super Lamination, Express Lamination, and Express Coat were engaged in the same business of
providing lamination services to the public as admitted by petitioner in his petition. 34

2. The three establishments operated and hired employees through a common human resource
department as found by DOLE in a clarificatory hearing.  Though it was not clear which company the
35

human resource department was officially attached to, petitioner admits in his petition that such
department was shared by the three companies for purposes of convenience. 36

3. The workers of all three companies were constantly rotated and periodically assigned to Super
Lamination or Express Lamination or Express Coat to perform the same or similar tasks.  This 37

finding was further affirmed when petitioner admitted in his petition before us that the Super
Lamination had entered into a work-pooling agreement with the two other companies and shared a
number of their employees. 38

4. DOLE found and the CA affirmed that the common human resource department imposed
disciplinary sanctions and directed the daily performance of all the members of Unions A, B, and C. 39

5. Super Lamination included in its payroll and SSS registration not just its own employees, but also
the supposed employees of Express Lamination and Express Coat. This much was admitted by
petitioner in his Motion to Dismiss  which was affirmed by the Med-Arbiter in the latter's Order.
40 41
6. Petitioner admitted that Super Lamination had issued and signed the identification cards of
employees who were actually working for Express Lamination and Express Coat. 42

7. Super Lamination, Express Lamination, and Express Coat were represented by the same counsel
who interposed the same arguments in their motions before the Med-Arbiters and DOLE. 43

Further, we discern from the synchronized movements of petitioner and the two other companies an
attempt to frustrate or defeat the workers' right to collectively bargain through the shield of the
corporations' separate juridical personalities. We make this finding on the basis of the motions to
dismiss filed by the three companies. While similarly alleging the absence of an employer-employee
relationship, they alternately referred to one another as the employer of the members of the
bargaining units sought to be represented respectively by the unions. This fact was affirmed by the
Med-Arbiters' Orders finding that indeed, the supposed employees of each establishment were
found to be alternately the employees of either of the two other companies as well. This was
precisely the reason why DOLE consolidated the appeals filed by Unions A, B, and C. 44

Due to the finger-pointing by the three companies at one another, the petitions were dismissed. As a
result, the three unions were not able to proceed with the conduct of the certification election. This
also caused confusion among the employees as to who their real employer is, as Union A claims in
its Comment. 45

We hold that if we allow petitioner and the two other companies to continue obstructing the holding
of the election in this manner, their employees and their respective unions will never have a chance
to choose their bargaining representative. We take note that all three establishments were
unorganized. That is, no union therein was ever duly recognized or certified as a bargaining
representative. 46

Therefore, it is only proper that, in order to safeguard the right of the workers and Unions A, B, and
C to engage in collective bargaining, the corporate veil of Express Lamination and Express Coat
must be pierced. The separate existence of Super Lamination, Express Lamination, and Express
Coat must be disregarded. In effect, we affirm the lower tribunals in ruling that these companies
must be treated as one and the same unit for purposes of holding a certification election.

Petitioner has cited Diatagon Labor Federation Local v. Ople  and lndophil Textile Mill Worker Union
47

v. Calica  in which this Court refused to treat separate corporations as a single bargaining unit.
48

Those cases, however, are not substantially identical with this case and would not warrant their
application herein. Unlike in the instant case, the corporations involved were found to be completely
independent or were not involved in any act that frustrated the laborers' rights.

In Diatagon,  we refused to include the 236 employees of Georgia Pacific International Corporation
49

in the bargaining unit of the employees of Liangga Bay Logging Co., Inc. This Court's refusal was in
light of the fact that the two corporations were indubitably distinct entities with separate corporate
identities and origins. Moreover, there was no discernible attempt to frustrate any of their labor-
related rights, as the only conflict was over which bargaining unit they belonged to.

In Indophil,  this Court refused to pierce the corporate veil of Indophil Textile Mill and Indophil Acrylic
50

Manufacturing. We found that the creation of Indophil Acrylic was not a device to evade the
application of the collective bargaining agreement (CBA) between petitioner union and Indophil
Textile Mill. This Court further found that despite the similarity in their business operations, the
separate personalities of the two corporations were maintained and were not used for any of the
purposes specified under the law that would warrant piercing. It is also apparent in this case that the
workers' rights were not being hampered by the employers concerned, as the only issue between
them was the extent of the subject CBA's application.

In this case, not only were Super Lamination, Express Lamination, and Express Coat found to be
under the control of petitioner, but there was also a discernible attempt to disregard the workers' and
unions' right to collective bargaining.

The foregoing considered, we find no error in the CA' s affirmance of the DOLE directive. We affirm
DOLE's application by analogy of the concept of multi-employer bargaining to justify its Decision to
treat the three companies as one. While the multi-employer bargaining mechanism is relatively new
and purely optional under Department Order No. 40-03, it illustrates the State's policy to promote the
primacy of free and responsible exercise of the right to collective bargaining.  The existence of this
51

mechanism in our labor laws affirm DOLE's conclusion that its treatment of the employees of the
three companies herein as a single bargaining unit is neither impossible nor prohibited.  It is justified
52

under the circumstances discussed above.

Besides, it is an established rule that factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded by the courts not only
respect but even finality when supported by substantial evidence; i.e., that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. 53

The bargaining unit of the rank-and-

file employees of the three companies
is appropriate.

Petitioner argues that there is no showing that the rank-and-file employees of the three companies
would constitute an appropriate bargaining unit on account of the latter's different geographical
locations.  This contention lacks merit. The basic test for determining the appropriate bargaining unit
54

is the application of a standard whereby a unit is deemed appropriate if it affects a grouping of

employees who have substantial, mutual interests in wages, hours, working conditions, and other
subjects of collective bargaining.  We have ruled that geographical location can be completely
55

disregarded if the communal or mutual interests of the employees are not sacrificed. 56

In the present case, there was communal interest among the rank-and-file employees of the three
companies based on the finding that they were constantly rotated to all three companies, and that
they performed the same or similar duties whenever rotated.  Therefore, aside from geographical
57

location, their employment status and working conditions were so substantially similar as to justify a
conclusion that they shared a community of interest. This finding is consistent with the policy in favor
of a single-employer unit, unless the circumstances require otherwise.  The more solid the
58

employees are, the stronger is their bargaining capacity. 59

As correctly observed by the CA and DOLE, while there is no prohibition on the mere act of
engaging in a work-pooling scheme as sister companies, that act will not be tolerated, and the sister
companies' separate juridical personalities will be disregarded, if they use that scheme to defeat the
workers' right to collective bargaining. The employees' right to collectively bargain with their
employers is necessary to promote harmonious labor-management relations in the interest of sound
and stable industrial peace. 60

WHEREFORE, the Petition for Review on Certiorari under Rule 45 is DENIED for lack of merit. The
Court of Appeals Decision  and Resolution  in CA-G.R. SP No. 109486 are hereby AFFIRMED.
61 62

SO ORDERED.
 June 27, 2016

G.R. No. 188020

REN TRANSPORT CORP. and/or REYNALDO PAZCOGUIN III, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION), SAMAHANG MANGGAGAWA
SA REN TRANSPORT-ASSOCIATION OF DEMOCRATIC LABOR ASSOCIATIONS (SMART-
ADLO) represented by its President NESTOR FULMINAR, Respondents.

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

G.R. No. 188252

SAMAHANG MANGGAGA WA SA REN TRANSPORT-ASSOCIATION OF DEMOCRATIC LABOR

ASSOCIATIONS (SMART-ADLO) represented by NESTOR FULMINAR, Petitioner,
vs.
REN TRANSPORT CORP. and/or REYNALDO PAZCOGUIN III, Respondents.

DECISION

SERENO, CJ.:

Before this Court are consolidated Rule 45 petitions challenging the Decision  and the
1

Resolution  issued by the Court of Appeals (CA) in CA-G.R. SP No. 100722.

2

THE FACTS

Samahan ng Manggagawa sa Ren Transport (SMART) is a registered union, which had a five-year
collective bargaining agreement (CBA) with Ren Transport Corp. (Ren Transport) set to expire on 31
December 2004.  The 60-day freedom period of the CBA passed without a challenge to SMART's
3

majority status as bargaining agent.  SMART thereafter conveyed its willingness to bargain with Ren
4

Transport, to which it sent bargaining proposals. Ren Transport, however, failed to reply to the
demand. 5

Subsequently, two members of SMART wrote to the Department of Labor and Employment -
National Capital Region (DOLE-NCR). The office was informed that a majority of the members of
SMART had decided to disaffiliate from their mother federation to form another union, Ren Transport
Employees Association (RTEA).  SMART contested the alleged disaffiliation through a letter dated 4
6

April 2005.  7

During the pendency of the disaffiliation dispute at the DOLE-NCR, Ren Transport stopped the
remittance to SMART of the union dues that had been checked off from the salaries of union
workers as provided under the CBA.   Further, on 19 April 2005, Ren Transport voluntarily
8

recognized RTEA as the sole and exclusive bargaining agent of the rank-and-file employees of their
company. 9

On 6 July 2005, SMART filed with the labor arbiter a complaint for unfair labor practice against Ren
Transport.  10

THE LABOR ARBITER'S RULING

The labor arbiter rendered a decision   finding Ren Transport guilty of acts of unfair labor practice.
11

The former explained that since the disaffiliation issue remained pending, SMART continued to be
the certified collective bargaining agent; hence, Ren Transport's refusal to send a counter-proposal
to SMART was not justified. The labor arbiter also held that the company's failure to remit the union
dues to SMART and the voluntary recognition of RTEA were clear indications of interference with the
employees' exercise of the right to self-organize.

Both parties elevated the case to the National Labor Relations Commission (NLRC). SMART
contested only the failure of the labor arbiter to award damages.

Ren Transport challenged the entire Decision, assigning four errors in its Memorandum of Appeal,
namely: (1) SMART was no longer the exclusive bargaining agent; (2) Ren Transport did not fail to
bargain collectively with SMART; (3) Ren Transport was not obliged to remit dues to SMART; and
(4) SMART lacked the personality to sue Ren Transport.   All the assigned errors were based on the
12

assertion that SMART had lost its majority status.

The appeals were consolidated.

THE NLRC RULING

The NLRC issued a decision  affirming the labor arbiter's finding of unfair labor practice on the part
13

of Ren Transport. Union dues were ordered remitted to SMART.

The NLRC also awarded moral damages to SMART, saying that Ren transport's refusal to bargain
was inspired by malice or bad faith.  The precipitate recognition of RTEA evidenced such bad faith,
1âwphi1

considering that it was done despite the pendency of the disaffiliation dispute at the DOLE-NCR.

Ren Transport filed a motion for reconsideration   alleging, among others, that the NLRC failed to
14

resolve all the arguments the former had raised in its memorandum of appeal.

The NLRC denied the motion for reconsideration,   prompting Ren Transport to file a Rule 65
15

petition with the CA. 

16

THE CA RULING

On 30 January 2009, the CA rendered a decision   partially granting the petition. It deleted the
17

award of moral damages to SMART, but affirmed the NLRC decision on all other matters. The CA
ruled that SMART, as a corporation, was not entitled to moral damages.  18

On the contention that the NLRC decided the case without considering all the arguments of Ren
Transport, the CA found that the latter had passed upon the principal issue of the existence of unfair
labor practice.

Hence, both parties appealed to this Court.

THE ISSUES

Based on the foregoing facts and arguments raised in the petitions, the threshold issues to be
resolved are the following: (1) whether Ren Transport committed acts of unfair labor practice; (2)
whether the decision rendered by the NLRC is valid on account of its failure to pass upon all the
errors assigned by Ren Transport; and (3) whether SMART is entitled to moral damages.
 OUR RULING

We deny the petitions for lack of merit.

Ren Transport committed acts of

unfair labor practice.

Ren Transport violated its duty to bargain collectively with SMART.

Ren Transport concedes that it refused to bargain collectively with SMART. It claims, though, that
the latter ceased to be the exclusive bargaining agent of the rank-and-file employees because of the
disaffiliation of the majority of its members. 19

The argument deserves no consideration.

Violation of the duty to bargain collectively is an unfair labor practice under Article 258(g) of the
Labor Code. An instance of this practice is the refusal to bargain collectively as held in General
Milling Corp. v CA.   In that case, the employer anchored its refusal to bargain with and recognize
20

the union on several letters received by the former regarding the withdrawal of the workers'
membership from the union. We rejected the defense, saying that the employer had devised a flimsy
excuse by attacking the existence of the union and the status of the union's membership to prevent
any negotiation. 21

It bears stressing that Ren Transport had a duty to bargain collectively with SMART. Under Article
263 in relation to Article 267 of the Labor Code, it is during the freedom period - or the last 60 days
before the expiration of the CBA - when another union may challenge the majority status of the
bargaining agent through the filing of a petition for a certification election. If there is no such petition
filed during the freedom period, then the employer "shall continue to recognize the majority status of
the incumbent bargaining agent where no petition for certification election is filed."  22

In the present case, the facts are not up for debate. No petition for certification election challenging
the majority status of SMART was filed during the freedom period, which was from November 1 to
December 31, 2004 - the 60-day period prior to the expiration of the five-year CBA. SMART
therefore remained the exclusive bargaining agent of the rank-and-file employees.

Given that SMART continued to be the workers' exclusive bargaining agent, Ren Transport had the
corresponding duty to bargain collectively with the former.  Ren Transport's refusal to do so
1âwphi1

constitutes an unfair labor practice.

Consequently, Ren Transport cannot avail itself of the defense that SMART no longer represents the
majority of the workers. The fact that no petition for certification election was filed within the freedom
period prevented Ren Transport from challenging SMART' s existence and membership.

Moreover, it must be stressed that, according to the labor arbiter, the purported disaffiliation from
SMART was nothing but a convenient, self-serving excuse.   This factual finding, having been
23

affirmed by both the CA and the NLRC, is now conclusive upon the Court.   We do not see any
24

patent error that would take the instant case out of the general rule.
Ren Transport interfered with the
exercise of the employees' right to self-
organize.

Interference with the employees' right to self-organization is considered an unfair labor practice
under Article 258 (a) of the Labor Code. In this case, the labor arbiter found that the failure to remit
the union dues to SMART and the voluntary recognition of RTEA were clear indications of
interference with the employees' right to self-organization.   It must be stressed that this finding was
25

affirmed by the NLRC and the CA; as such, it is binding on the Court, especially when we consider
that it is not tainted with any blatant error. As aptly pointed out by the labor arbiter, these acts were
ill-timed in view of the existence of a labor controversy over membership in the union. 26

Ren Transport also uses the supposed disaffiliation from SMART to justify the failure to remit union
dues to the latter and the voluntary recognition of RTEA. However, for reasons already discussed,
this claim is considered a lame excuse that cannot validate those acts.

II.

The NLRC decision is valid.

Ren Transport next argues that the decision rendered by the NLRC is defective considering that it
has failed to resolve all the issues in its Memorandum of Appeal. 27

We do not agree.

Section 14, Article VIII of the 1987 Constitution, states that "[n]o decision shall be rendered by any
court without expressing therein clearly and distinctly the facts and the law on which it is based." It
has been held that the constitutional provision does not require a "point-by-point consideration and
resolution of the issues raised by the parties."28

In the present case, the decision shows that the NLRC resolved the focal issue raised by Ren
Transport: whether or not SMART remained the exclusive bargaining agent, such that Ren Transport
could be found guilty of acts of unfair labor practice. We quote the NLRC discussion:

At the outset, let it be stated that insofar as the principal issue of whether unfair labor practice was
committed by respondents, there is no occasion to find, or even entertain, doubts that the findings
and conclusion of the Labor Arbiter that unfair labor practice (ULP) was committed against the
complainants, are infused with serious errors. We quote:

[I]t is our considered view that the respondents committed acts of unfair labor practice even if the
CBA between the complainant union and respondent company already expired and majority of the
workers of the existing bargaining agent disaffiliated therefrom, formed its own union and have it
registered as an independent one, still the respondent Company has the duty to bargain collectively
with the existing bargaining agent. It bears stressing that the disaffiliation issue of the members of
the complainant union is still pending before the DOLE and has not yet attained its finality; that there
is no new bargaining agent certified yet by the DOLE, there is no legal basis yet for the respondent
company to disregard the personality of the complainant union and refused or ignored the agent for
renewal of its CBA. It is still the certified collective bargaining agent of the workers, because there
was no new [u]nion yet being certified by the DOLE as the new bargaining agent of the workers.
The above discourse shows the factual and legal bases for the NLRC's resolution of the issue of
whether Ren Transport committed unfair labor practice and thereby satisfies the constitutional
provision on the contents of a decision. The NLRC succeeded in disposing of all the arguments
raised by Ren Transport without going through every argument, as all the assigned errors hinged on
the majority status of SMART.  All of these errors were addressed and settled by the NLRC by
29

finding that SMART was still the exclusive bargaining agent of the employees of Ren Transport.

As aptly stated by the CA, a court or any other tribunal is not required to pass upon all the errors
assigned by Ren Transport; the resolution of the main question renders the other issues academic
or inconsequential.30

At this juncture, it is well to note that addressing every one of the errors assigned would not be in
keeping with the policy of judicial economy. Judicial economy refers to "'efficiency in the operation of
the courts and the judicial system; especially the efficient management of litigation so as to minimize
duplication of effort and to avoid wasting the judiciary's time and resources."  In Salud v. Court of
31

Appeals, the Court remarked that judicial economy is a "strong [norm] in a society in need of swift
32

justice."  Now, more than ever, the value of brevity in the writing of a decision assumes greater
33

significance, as we belong to an age in which dockets of the courts are congested and their
resources limited.

III.

SMART is not entitled to an award of moral damages.

We now address the petition of SMART, which faults the CA for deleting the grant of moral
damages.  34

We hold that the CA correctly dropped the NLRC's award of moral damages to SMART. Indeed, a
corporation is not, as a general rule, entitled to moral damages. Being a mere artificial being, it is
incapable of experiencing physical suffering or sentiments like wounded feelings, serious anxiety,
mental anguish or moral shock. 35

Although this Court has allowed the grant of moral damages to corporations in certain situations,   it
36

must be remembered that the grant is not automatic. The claimant must still prove the factual basis
of the damage and the causal relation to the defendant's acts.   In this case, while there is a showing
37

of bad faith on the part of the employer in the commission of acts of unfair labor practice, there is no
evidence establishing the factual basis of the damage on the part of SMART.

WHEREFORE, premises considered, the petitions are DENIED. The Decision dated 30 January

2009 and the Resolution dated 20 May 2009 issued by the Court of Appeals in CA-G.R. SP No.
100722 are AFFIRMED.

July 5, 2017

G.R. No. 220383

SONEDCO WORKERS FREE LABOR UNION (SWOFLU) I RENATO YUDE, MARIANITO

REGINO, MANUEL YUMAGUE, FRANCISCO DACUDAG, RUDY ABABAO, DOMINIC SORNITO,
SERGIO CAJUYONG, ROMULO LABONETE, GENEROSO GRANADA, EMILIO AGUS, ARNOLD
CAYAO, BEN GENEVE, I VICTOR MAQUE, RICARDO GOMEZ, RODOLFO GAWAN, JIMMY
SULLIVAN, FEDERICO SUMUGAT, JR., ROMULO AVENTURA, JR., JURRY MAGALLANES,
HERNAN EPISTOLA, JR., ROBERTO BELARTE, EDMON MONTALVO, TEODORO MAGUAD,
DOMINGO TABABA, MAXIMO SALE, CYRUS DIONILLO, LEONARDO JUNSAY, JR., DANILO
SAMILLION, MARIANITO BOCATEJA, JUANITO GEBUSION, RICARDO MAYO, RAUL ALIMON,
ARNEL ARNAIZ, REBENCY BASOY, JIMMY VICTORIO BERNALDE, RICARDO BOCOL, JR.,
JOB CALAMBA, WOLFRANDO CALAMBA, RODOLFO CASISID, JR., EDGARDO DELA PENA,
ALLAN DIONILLO, EDMUNDO EBIDO, JOSE ELEPTICO, JR., MARCELINO FLORES,
HERNANDO FUENTEBILLA SAUL HITALIA, JOSELITO JAGODILLA, NONITO JAYME, ADJIE
JUANILLO, JEROLD JUD ILLA, EDILBERTO NACIONAL, SANDY NAVALES, FELIPE
NICOLASORA, JOSE PAMALO-AN, ISMAEL PEREZ, JR., ERNESTO RANDO, JR., PHILIP
REPULLO, VICENTE RUIZ, JR., JOHN SUMUGAT, CARLO SUSANA, ROMEO TALAPIERO, JR.,
FERNANDO TRIENTA, FINDY VILLACRUZ, JOEL VILLANUEVA, and JERRY
MONTELIBANO, Petitioners
vs.
UNIVERSAL ROBINA CORPORATION, SUGAR DIVISION-SOUTHERN NEGROS
DEVELOPMENT CORPORATION (SONEDCO), Respondents

RESOLUTION

LEONEN, J.:

Generally, a wage increase not included in the Collective Bargaining Agreement is not demandable.
However, if it was withheld by the employer as part of its unfair labor practice against the union
members, this benefit should be granted.

Before this Court is a Motion for Partial Reconsideration  filed by Southern Negros Development
1

Corporation (SONEDCO) Workers Free Labor Union. The concerned SONEDCO Workers Free
Labor Union members are asking that the wage increase given to their fellow employeesbe awarded
to them as well. Their co-workers of the same rank are allegedly earning ₱32.00/day more than they
are receiving.2

This case arose from an unfair labor practice complaint filed by SONEDCO Workers Free Labor
Union against its employer, Universal Robina Corporation, Sugar Division-Southern Negros
Development Corporation (URC-SONEDCO). 3

In 2007, while there was no Collective Bargaining Agreement in effect, URC-SONEDCO offered,
among other benefits, a ₱l6.00/day wage increase to their employees. To receive the benefits,
employees had to sign a waiver that said: "In the event that a subsequent [Collective Bargaining
Agreement] is negotiated between Management and Union, the new [Collective Bargaining
Agreement] shall only be effective [on] January 1, 2008."  Realizing that the waiver was an unfair
4

labor practice, some members of SONEDCO Workers Free Labor Union refused to sign. 5

URC-SONEDCO offered the same arrangement in 2008. It extended an additional ₱l6.00/day wage
increase to employees who would agree that any Collective Bargaining Agreement negotiated for
that year would only be effective on January 1, 2009.  Several members of SONEDCO Workers Free
6

Labor Union again refused to waive their rights. Consequently, they did not receive the wage
increase which already amounted to a total of ₱32.00/day, beginning 2009. 7

On July 2, 2009, SONEDCO Workers Free Labor Union and its members who refused to sign the
2007 and 2008 waivers filed a complaint for unfair labor practices against URC-SONEDCO. They
argued that the requirement of a waiver prior to the release of the wage increase constituted
interference to the employees' right to self-organization, collective bargaining, and concerted action.
They asked that they be granted a ₱l6.00/day wage increase for 2007 and an additional ₱l6.00/day
wage increase for 2008.  SONEDCO Workers Free Labor Union also demanded a continuing wage
8

increase of ₱32.00/day "from January 1, 2009 onwards." 9

Both the National Labor Relations Commission and the Court of Appeals found URC-SONEDCO not
guilty of unfair labor practice.  Nonetheless, they ordered URC-SONEDCO to give petitioners the
10

same benefits their co-workers received in 2007 and 2008. However, SONEDCO Workers Free
Labor Union's claim for the 2009 wage increase was denied. Since a new Collective Bargaining
Agreement was already in effect by 2009, this Collective Bargaining Agreement governed the
relationship between the management and the union.  The Court of Appeals ruled:
11

As there was no provision in the existing CBA regarding wage increase of [₱]16.00 per day, the
[National Labor Relations Commission] was correct in ruling that it cannot further impose private
respondents to pay petitioners the subject wage increase for the year 2009 and onwards. 12

On October 5, 2016, this Court found URC-SONEDCO guilty of unfair labor practice for failing to
bargain with SONEDCO Workers Free Labor Union in good faith.  URC-SONEDCO restricted
13

SONEDCO Workers Free Labor Union's bargaining power when it asked the rank-and-file
employees to sign a waiver foregoing Collective Bargaining Agreement negotiations in exchange for
wage increases.  Thus, this Court ordered URC-SONEDCO to grant the union members the 2007
14

and 2008 wage increases. Nevertheless, this Court denied the claim for the 2009 wage increase and
ruled that if SONEDCO Workers Free Labor Union wished to continue receiving the additional wage
after 2008, the proper recourse was to include it in the 2009 Collective Bargaining Agreement. 15

On December 27, 2016, URC-SONEDCO filed a Motion for Reconsideration  assailing this Court's
16

October 5, 2016 Decision. Since respondent merely reiterated the same arguments it raised in the
Comment, the motion was denied.

On February 20, 2017 petitioners, who are members of SONEDCO Workers Free Labor Union, filed
a Motion for Partial Reconsideration.  Petitioners aver that the ₱l6.00 wage increases granted in
17

2007 and 2008 were integrated in the salary of the employees who signed the waiver. Thus, since
the start of 2009, employees who signed the waiver have been receiving ₱32.00/day more than
petitioners.

Respondent URC-SONEDCO filed a Comment/Opposition  to Petitioners' Motion for Partial

18

Reconsideration on March 2, 2017. It was filed prior to this Court's March 6, 2017 Resolution,  which
19

required such comment.

Respondent argues that this issue has already been ruled upon. Since the 2009 wage increase was
not included in the 2009 Collective Bargaining Agreement, it cannot be demanded. 20

The sole issue for resolution is whether a ₱32.00/day wage increase beginning January 1, 2009 to
present should be awarded to petitioners.

In their Motion for Partial Reconsideration, petitioners ask for four (4) awards: 1) a ₱16.00/day wage
increase for 2007; 2) another ₱l6.00/day wage increase for 2008; 3) the 2009 wage increase, which
is a "continuing wage increase,"  of ₱32.00/day from January 1, 2009 to present, and 4) attorney's
21

fees.22

The Court already granted the wage increases for 2007 and 2008 in its October 5, 2016 Decision: 23
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated January 30,
2015 and the Resolution dated July 27, 2015 in CA-G.R. SP No. 05950 are SET ASIDE.
Respondent Universal Robina Corporation Sugar Division - Southern Negros Development
Corporation is GUILTY of unfair labor practice and is ORDERED to pay each of the petitioners the
wage increase of Pl 6.00 for the years 2007 and 2008; and to pay SONEDCO Workers Free Labor
Union moral damages in the amount of ₱l00,000.00; and exemplary damages in the amount of
₱200,000.00.

SO ORDERED.  (Emphasis supplied)

24

Thus, the only wage increase in issue here is the continuing wage increase of ₱32.00/day starting
2009.

Generally, the Collective Bargaining Agreement controls the relationship between the parties. Any
benefit not included in it is not demandable. 25

However, in light of the peculiar circumstances in this case, the requested wage increase should be
granted.

According to petitioners, the "₱32.00/day [wage increase] was integrated to the wage[s] of those
who signed the waivers so that they are receiving the wage increase of ₱32.00/day up to now."  To 26

prove this allegation, petitioners have attached a joint affidavit  dated January 18, 2017 signed by 26
27

URC-SONEDCO employees. According to the affiants, they signed the 2007 and 2008 waivers and
are, thus, currently receiving ₱32.00/day more than petitioners. 28

The wage increase was integrated in the salary of those who signed the waivers. When the affiants
waived their rights, respondent rewarded them with a ₱32.00/day wage increase that continues to
this day. The respondent company granted this benefit to its employees to induce them to waive
their collective bargaining rights. This Court has declared this an unfair labor practice. Accordingly, it
is illegal to continue denying the petitioners the wage increase that was granted to employees who
signed the waivers. To rule otherwise will perpetuate the discrimination against petitioners. All the
consequences of the unfair labor practice must be addressed.

The grant of the ₱32.00/day wage increase is not an additional benefit outside the Collective
Bargaining Agreement of 2009.  By granting this increase to petitioners, this Court is eliminating the
1âwphi1

discrimination against them, which was a result of respondent's unfair labor practice.

Considering that exemplary damages were imposed, this Court also deems it proper to grant
attorney's fees.29

WHEREFORE, the Motion for Partial Reconsideration is GRANTED. The dispositive portion of the

October 5, 2016 Decision in G.R. No. 220383 is MODIFIED as follows:

Respondent Universal Robina Corporation, Sugar Division - Southern Negros Development

Corporation is ORDERED to:

1. pay the wage increase of ₱l6.00/day in the year 2007 and another wage increase of
₱l6.00/day in the year 2008 to the following petitioners: (1) Renato Yude, (2) Marianito
Regino, (3) Manuel Yumague, (4) Francisco Dacudag, (5) Rudy Ababao, (6) Dominic
Somito, (7) Sergio Cajuyong, (8) Romulo Labonete, (9) Generoso Granada, (10) Emilio
Agus, (11) Arnold Cayao, (12) Ben Geneve, (13) Victor Maque, (14) Ricardo Gomez, (15)
 Rodolfo Gawan, (16) Jimmy Sullivan, (17) Federico Sumugat, Jr., (18) Romulo Aventura, Jr.,
(19) Jurry Magallanes, (20) Heman Epistola, Jr., (21) Roberto Belarte, (22) Edmon Montalvo,
(23) Teodoro Maguad, (24) Domingo Tababa, (25) Maximo Sale, (26) Cyrus Dionillo, (27)
Leonardo Junsay, Jr., (28) Danilo Samillion, (29) Marianito Bocateja, (30) Juanito Gebusion,
and (31) Ricardo Mayo;

2. pay the wage increase of P16.00/day in the year 2008 to the following petitioners: (1) Raul
Alimon, (2) Rebency Basoy, (3) Ricardo Bocol, Jr., (4) Wolfrando Calamba, (5) Edgardo Dela
Pena, (6) Edmundo Ebido, (7) Marcelino Flores, (8) Saul Hitalia, (9) Nonito Jayme, (10)
Jerold Judilla, (11) Sandy Navales, (12) Jose Pamalo-an, (13) Ernesto Rando, Jr., (14)
Vicente Ruiz, Jr., (15) Carlo Susana, (16) Fernando Trienta, (17) Joel Villanueva, (18) Amel
Amaiz, (19) Jimmy Victorio Bemalde, (20) Job Calamba, (21) Rodolfo Casisid, Jr., (22) Allan
Dionillo, (23) Jose Eleptico, Jr., (24) Hernando Fuentebilla, (25) Joselito Jagodilla, (26) Adjie
Juanillo, (27) Edilberto Nacional, (28) Felipe Nicolasora, (29) Ismael Perez, Jr., (30) Philip
Repullo, (31) John Sumugat, (32) Romeo Talapiero, Jr., (33) Findy Villacruz and (34) Jerry
Montelibano;

3. incorporate the wage increase of P32.00/day to the wage of all the individual petitioners
from January 1, 2009 to present;

4. pay SONEDCO Workers Free Labor Union moral damages in the amount of ₱l00,000.00;

5. pay SONEDCO Workers Free Labor Union exemplary damages in the amount of
₱200,000.00; and

6. pay SONEDCO Workers Free Labor Union ten percent (10%) of the total award as
attorney's fees.

G.R. No. 220383

SONEDCO WORKERS FREE LABOR UNION (SWOFLU) I RENATO YUDE, MARIANITO

REGINO, MANUEL YUMAGUE, FRANCISCO DACUDAG, RUDY ABABAO, DOMINIC SORNITO,
SERGIO CAJUYONG, ROMULO LABONETE, GENEROSO GRANADA, EMILIO AGUS, ARNOLD
CAYAO, BEN GENEVE, I VICTOR MAQUE, RICARDO GOMEZ, RODOLFO GAWAN, JIMMY
SULLIVAN, FEDERICO SUMUGAT, JR., ROMULO AVENTURA, JR., JURRY MAGALLANES,
HERNAN EPISTOLA, JR., ROBERTO BELARTE, EDMON MONTALVO, TEODORO MAGUAD,
DOMINGO TABABA, MAXIMO SALE, CYRUS DIONILLO, LEONARDO JUNSAY, JR., DANILO
SAMILLION, MARIANITO BOCATEJA, JUANITO GEBUSION, RICARDO MAYO, RAUL ALIMON,
ARNEL ARNAIZ, REBENCY BASOY, JIMMY VICTORIO BERNALDE, RICARDO BOCOL, JR.,
JOB CALAMBA, WOLFRANDO CALAMBA, RODOLFO CASISID, JR., EDGARDO DELA PENA,
ALLAN DIONILLO, EDMUNDO EBIDO, JOSE ELEPTICO, JR., MARCELINO FLORES,
HERNANDO FUENTEBILLA SAUL HITALIA, JOSELITO JAGODILLA, NONITO JAYME, ADJIE
JUANILLO, JEROLD JUD ILLA, EDILBERTO NACIONAL, SANDY NAVALES, FELIPE
NICOLASORA, JOSE PAMALO-AN, ISMAEL PEREZ, JR., ERNESTO RANDO, JR., PHILIP
REPULLO, VICENTE RUIZ, JR., JOHN SUMUGAT, CARLO SUSANA, ROMEO TALAPIERO, JR.,
FERNANDO TRIENTA, FINDY VILLACRUZ, JOEL VILLANUEVA, and JERRY
MONTELIBANO, Petitioners
vs.
UNIVERSAL ROBINA CORPORATION, SUGAR DIVISION-SOUTHERN NEGROS
DEVELOPMENT CORPORATION (SONEDCO), Respondents

RESOLUTION
LEONEN, J.:

Generally, a wage increase not included in the Collective Bargaining Agreement is not demandable.
However, if it was withheld by the employer as part of its unfair labor practice against the union
members, this benefit should be granted.

Before this Court is a Motion for Partial Reconsideration  filed by Southern Negros Development
1

Corporation (SONEDCO) Workers Free Labor Union. The concerned SONEDCO Workers Free
Labor Union members are asking that the wage increase given to their fellow employeesbe awarded
to them as well. Their co-workers of the same rank are allegedly earning ₱32.00/day more than they
are receiving.2

This case arose from an unfair labor practice complaint filed by SONEDCO Workers Free Labor
Union against its employer, Universal Robina Corporation, Sugar Division-Southern Negros
Development Corporation (URC-SONEDCO). 3

In 2007, while there was no Collective Bargaining Agreement in effect, URC-SONEDCO offered,
among other benefits, a ₱l6.00/day wage increase to their employees. To receive the benefits,
employees had to sign a waiver that said: "In the event that a subsequent [Collective Bargaining
Agreement] is negotiated between Management and Union, the new [Collective Bargaining
Agreement] shall only be effective [on] January 1, 2008."  Realizing that the waiver was an unfair
4

labor practice, some members of SONEDCO Workers Free Labor Union refused to sign. 5

URC-SONEDCO offered the same arrangement in 2008. It extended an additional ₱l6.00/day wage
increase to employees who would agree that any Collective Bargaining Agreement negotiated for
that year would only be effective on January 1, 2009.  Several members of SONEDCO Workers Free
6

Labor Union again refused to waive their rights. Consequently, they did not receive the wage
increase which already amounted to a total of ₱32.00/day, beginning 2009. 7

On July 2, 2009, SONEDCO Workers Free Labor Union and its members who refused to sign the
2007 and 2008 waivers filed a complaint for unfair labor practices against URC-SONEDCO. They
argued that the requirement of a waiver prior to the release of the wage increase constituted
interference to the employees' right to self-organization, collective bargaining, and concerted action.
They asked that they be granted a ₱l6.00/day wage increase for 2007 and an additional ₱l6.00/day
wage increase for 2008.  SONEDCO Workers Free Labor Union also demanded a continuing wage
8

increase of ₱32.00/day "from January 1, 2009 onwards." 9

Both the National Labor Relations Commission and the Court of Appeals found URC-SONEDCO not
guilty of unfair labor practice.  Nonetheless, they ordered URC-SONEDCO to give petitioners the
10

same benefits their co-workers received in 2007 and 2008. However, SONEDCO Workers Free
Labor Union's claim for the 2009 wage increase was denied. Since a new Collective Bargaining
Agreement was already in effect by 2009, this Collective Bargaining Agreement governed the
relationship between the management and the union.  The Court of Appeals ruled:
11

As there was no provision in the existing CBA regarding wage increase of [₱]16.00 per day, the
[National Labor Relations Commission] was correct in ruling that it cannot further impose private
respondents to pay petitioners the subject wage increase for the year 2009 and onwards. 12

On October 5, 2016, this Court found URC-SONEDCO guilty of unfair labor practice for failing to
bargain with SONEDCO Workers Free Labor Union in good faith.  URC-SONEDCO restricted
13

SONEDCO Workers Free Labor Union's bargaining power when it asked the rank-and-file
employees to sign a waiver foregoing Collective Bargaining Agreement negotiations in exchange for
wage increases.  Thus, this Court ordered URC-SONEDCO to grant the union members the 2007
14

and 2008 wage increases. Nevertheless, this Court denied the claim for the 2009 wage increase and
ruled that if SONEDCO Workers Free Labor Union wished to continue receiving the additional wage
after 2008, the proper recourse was to include it in the 2009 Collective Bargaining Agreement. 15

On December 27, 2016, URC-SONEDCO filed a Motion for Reconsideration  assailing this Court's
16

October 5, 2016 Decision. Since respondent merely reiterated the same arguments it raised in the
Comment, the motion was denied.

On February 20, 2017 petitioners, who are members of SONEDCO Workers Free Labor Union, filed
a Motion for Partial Reconsideration.  Petitioners aver that the ₱l6.00 wage increases granted in
17

2007 and 2008 were integrated in the salary of the employees who signed the waiver. Thus, since
the start of 2009, employees who signed the waiver have been receiving ₱32.00/day more than
petitioners.

Respondent URC-SONEDCO filed a Comment/Opposition  to Petitioners' Motion for Partial

18

Reconsideration on March 2, 2017. It was filed prior to this Court's March 6, 2017 Resolution,  which
19

required such comment.

Respondent argues that this issue has already been ruled upon. Since the 2009 wage increase was
not included in the 2009 Collective Bargaining Agreement, it cannot be demanded. 20

The sole issue for resolution is whether a ₱32.00/day wage increase beginning January 1, 2009 to
present should be awarded to petitioners.

In their Motion for Partial Reconsideration, petitioners ask for four (4) awards: 1) a ₱16.00/day wage
increase for 2007; 2) another ₱l6.00/day wage increase for 2008; 3) the 2009 wage increase, which
is a "continuing wage increase,"  of ₱32.00/day from January 1, 2009 to present, and 4) attorney's
21

fees.22

The Court already granted the wage increases for 2007 and 2008 in its October 5, 2016 Decision: 23

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated January 30,
2015 and the Resolution dated July 27, 2015 in CA-G.R. SP No. 05950 are SET ASIDE.
Respondent Universal Robina Corporation Sugar Division - Southern Negros Development
Corporation is GUILTY of unfair labor practice and is ORDERED to pay each of the petitioners the
wage increase of Pl 6.00 for the years 2007 and 2008; and to pay SONEDCO Workers Free Labor
Union moral damages in the amount of ₱l00,000.00; and exemplary damages in the amount of
₱200,000.00.

SO ORDERED.  (Emphasis supplied)

24

Thus, the only wage increase in issue here is the continuing wage increase of ₱32.00/day starting
2009.

Generally, the Collective Bargaining Agreement controls the relationship between the parties. Any
benefit not included in it is not demandable.
25

However, in light of the peculiar circumstances in this case, the requested wage increase should be
granted.
According to petitioners, the "₱32.00/day [wage increase] was integrated to the wage[s] of those
who signed the waivers so that they are receiving the wage increase of ₱32.00/day up to now."  To 26

prove this allegation, petitioners have attached a joint affidavit  dated January 18, 2017 signed by 26
27

URC-SONEDCO employees. According to the affiants, they signed the 2007 and 2008 waivers and
are, thus, currently receiving ₱32.00/day more than petitioners. 28

The wage increase was integrated in the salary of those who signed the waivers. When the affiants
waived their rights, respondent rewarded them with a ₱32.00/day wage increase that continues to
this day. The respondent company granted this benefit to its employees to induce them to waive
their collective bargaining rights. This Court has declared this an unfair labor practice. Accordingly, it
is illegal to continue denying the petitioners the wage increase that was granted to employees who
signed the waivers. To rule otherwise will perpetuate the discrimination against petitioners. All the
consequences of the unfair labor practice must be addressed.

The grant of the ₱32.00/day wage increase is not an additional benefit outside the Collective
Bargaining Agreement of 2009.  By granting this increase to petitioners, this Court is eliminating the
1âwphi1

discrimination against them, which was a result of respondent's unfair labor practice.

Considering that exemplary damages were imposed, this Court also deems it proper to grant
attorney's fees.29

WHEREFORE, the Motion for Partial Reconsideration is GRANTED. The dispositive portion of the

October 5, 2016 Decision in G.R. No. 220383 is MODIFIED as follows:

Respondent Universal Robina Corporation, Sugar Division - Southern Negros Development

Corporation is ORDERED to:

1. pay the wage increase of ₱l6.00/day in the year 2007 and another wage increase of
₱l6.00/day in the year 2008 to the following petitioners: (1) Renato Yude, (2) Marianito
Regino, (3) Manuel Yumague, (4) Francisco Dacudag, (5) Rudy Ababao, (6) Dominic
Somito, (7) Sergio Cajuyong, (8) Romulo Labonete, (9) Generoso Granada, (10) Emilio
Agus, (11) Arnold Cayao, (12) Ben Geneve, (13) Victor Maque, (14) Ricardo Gomez, (15)
Rodolfo Gawan, (16) Jimmy Sullivan, (17) Federico Sumugat, Jr., (18) Romulo Aventura, Jr.,
(19) Jurry Magallanes, (20) Heman Epistola, Jr., (21) Roberto Belarte, (22) Edmon Montalvo,
(23) Teodoro Maguad, (24) Domingo Tababa, (25) Maximo Sale, (26) Cyrus Dionillo, (27)
Leonardo Junsay, Jr., (28) Danilo Samillion, (29) Marianito Bocateja, (30) Juanito Gebusion,
and (31) Ricardo Mayo;

2. pay the wage increase of P16.00/day in the year 2008 to the following petitioners: (1) Raul
Alimon, (2) Rebency Basoy, (3) Ricardo Bocol, Jr., (4) Wolfrando Calamba, (5) Edgardo Dela
Pena, (6) Edmundo Ebido, (7) Marcelino Flores, (8) Saul Hitalia, (9) Nonito Jayme, (10)
Jerold Judilla, (11) Sandy Navales, (12) Jose Pamalo-an, (13) Ernesto Rando, Jr., (14)
Vicente Ruiz, Jr., (15) Carlo Susana, (16) Fernando Trienta, (17) Joel Villanueva, (18) Amel
Amaiz, (19) Jimmy Victorio Bemalde, (20) Job Calamba, (21) Rodolfo Casisid, Jr., (22) Allan
Dionillo, (23) Jose Eleptico, Jr., (24) Hernando Fuentebilla, (25) Joselito Jagodilla, (26) Adjie
Juanillo, (27) Edilberto Nacional, (28) Felipe Nicolasora, (29) Ismael Perez, Jr., (30) Philip
Repullo, (31) John Sumugat, (32) Romeo Talapiero, Jr., (33) Findy Villacruz and (34) Jerry
Montelibano;

3. incorporate the wage increase of P32.00/day to the wage of all the individual petitioners
from January 1, 2009 to present;
 4. pay SONEDCO Workers Free Labor Union moral damages in the amount of ₱l00,000.00;

5. pay SONEDCO Workers Free Labor Union exemplary damages in the amount of
₱200,000.00; and

6. pay SONEDCO Workers Free Labor Union ten percent (10%) of the total award as
attorney's fees.

SO ORDERED.

G.R. No. 193816

ERSON ANG LEE DOING BUSINESS as "SUPER LAMINATION SERVICES," Petitioner

vs.
SAMAHANG MANGGAGAWA NG SUPER LAMINATION (SMSLS-NAFLU-KMU), Respondent

DECISION

SERENO, CJ.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court on the Decision  and
1

Resolution  of the Court of Appeals (CA) affirming the assailed Decision  of the Department of Labor
2 3

and Employment (DOLE). DOLE allowed the conduct of certification election among the rank-and-
file employees of Super Lamination Services (Super Lamination), Express Lamination Services, Inc.
(Express Lamination), and Express Coat Enterprises, Inc. (Express Coat).

THE ANTECEDENT FACTS

Petitioner Erson Ang Lee (petitioner), through Super Lamination, is a duly registered entity
principally engaged in the business of providing lamination services to the general public.
Respondent Samahan ng mga Manggagawa ng Super Lamination Services (Union A) is a legitimate
labor organization, which is also a local chapter affiliate of the National Federation of Labor Unions -
Kilusang Mayo Uno.  It appears that Super Lamination is a sole proprietorship under petitioner's
4

name,  while Express Lamination and Express Coat are duly incorporated entities separately
5

registered with the Securities and Exchange Commission (SEC). 6

On 7 March 2008, Union A filed a Petition for Certification Election  to represent all the rank-and-file
7

employees of Super Lamination. 8

Notably, on the same date, Express Lamination Workers' Union (Union B) also filed a Petition for
Certification Election to represent all the rank-and-file employees of Express Lamination. 9

Also on the same date, the Samahan ng mga Manggagawa ng Express Coat Enterprises, Inc.
(Union C) filed a Petition for Certification Election to represent the rank-and-file employees of
Express Coat. 10

Super Lamination, Express Lamination, and Express Coat, all represented by one counsel,
separately claimed in their Comments and Motions to Dismiss that the petitions must be dismissed
on the same ground - lack of employer-employee relationship between these establishments and the
bargaining units that Unions A, B, and C seek to represent as well as these unions' respective
members.  Super Lamination, in its Motion, posited that a majority of the persons who were
11
enumerated in the list of members and officers of Union A were not its employees, but were
employed by either Express Lamination or Express Coat.  Interestingly, both Express Lamination
12

and Express Coat, in turn, maintained the same argument - that a majority of those who had
assented to the Petition for Certification Election were not employees of either company, but of one
of the two other companies involved. 13

All three Petitions for Certification Election of the Unions were denied. On 21 May 2008, an Order
was issued by DOLE National Capital Region (NCR) Med-Arbiter Michael Angelo Parado denying
the respective petitions of Unions B and C on the ground that there was no existing employer-
employee relationship between the members of the unions and the companies concerned. On 23
May 2008, DOLE NCR Med-Arbiter Alma Magdaraog-Alba also denied the petition of respondent
Union A on the same ground. 14

The three unions filed their respective appeals before the Office of the DOLE Secretary, which
consolidated the appeal because the involved companies alternately referred to one another as the
employer of the members of the bargaining units sought to be represented.  The unions argued that
15

their petitions should have been allowed considering that the companies involved were unorganized,
and that the employers had no concomitant right to oppose the petitions. They also claimed that
while the questioned employees might have been assigned to perform work at the other companies,
they were all under one management's direct control and supervision. 16

DOLE, through Undersecretary Romeo C. Lagman, rendered the assailed Decision, the dispositive
portion of which reads as follows:

WHEREFORE, premises considered, the appeals filed by Express Lamination Workers Union
(ELWU-NAFLU-KMU), Samahang Manggagawa ng Express Coat Enterprises, Inc. (SMEC-NAFLU-
KMU) and Samahang Manggagawa ng Super Lamination Services (SMSLS-NAFLU-KMU) are
hereby GRANTED and the Orders dated 21 May 2008 of DOLE-NCR Mediator-Arbiter Michael
Angelo T. Parado are hereby REVERSED and SET ASIDE. The Order dated 23 May 2008 of DOLE
NCR Mediator-Arbiter Alma E. Magdaraog-Alba is likewise REVERSED and SET ASIDE.

Accordingly, let the entire records of this be remanded to the regional office of origin for the
immediate conduct of certification election among the rank-and-file employees of Express
Lamination Services, Inc., Super Lamination Services and Express Coat Enterprises Inc., after the
conduct of pre-election conference/s, with the following as choices;

1. Express Lamination Workers Union-NAFLU-KMU;

2. Samahan ng mga Manggagawa ng Super Lamination Services-NAFLU-KMU;

3. Samahang ng mga Manggagawa ng Express Coat Enterprises, Inc.-NAFLU-KMU; and

4. "No Union."

The employer/s and/or contending union(s) are hereby directed to submit to the Regional Office of
origin, within ten (10) days from receipt of this Decision, a certified list of employees in the
bargaining unit or the payrolls covering the members of the bargaining unit for the last three (3)
months prior to the issuance of the Decision.

SO DECIDED.  (Emphases in the original)

17
DOLE found that Super Lamination, Express Lamination, and Express Coat were sister companies
that had a common human resource department responsible for hiring and disciplining the
employees of the three companies. The same department was found to have also given them daily
instructions on how to go about their work and where to report for work. It also found that the three
companies involved constantly rotated their workers, and that the latter's identification cards had
only one signatory. 18

To DOLE, these circumstances showed that the companies were engaged in a work-pooling
scheme, in light of which they might be considered as one and the same entity for the purpose of
determining the appropriate bargaining unit in a certification election.  DOLE applied the concept of
19

multi-employer bargaining under Sections 5 and 6 of DOLE Department Order 40-03, Series of
2003. Under that concept, the creation of a single bargaining unit for the rank-and-file employees of
all three companies was not implausible and was justified under the given circumstances.  Thus, it
20

considered these rank-and-file employees as one bargaining unit and ordered the conduct of a
certification election as uniformly prayed for by the three unions.

Aggrieved, petitioner instituted an appeal before the CA, which denied his Petition and affirmed the
Decision of DOLE.  It sided with DOLE in finding that Super Lamination, Express Lamination, and
1âwphi1

Express Coat were sister companies that had adopted a work-pooling scheme. Therefore, it held
that DOLE had correctly applied the concept of multi-employer bargaining in finding that the three
companies could be considered as the same entity, and their rank-and-file employees as comprising
one bargaining unit. 21

Petitioner filed a Motion for Reconsideration of the CA Decision, but the motion was
denied.  Therefore, he now comes to this Court through the present Petition.
22

ISSUES

From the established facts and arguments, we cull the issues as follows:

1. Whether the application of the doctrine of piercing the corporate veil is warranted

2. Whether the rank-and-file employees of Super Lamination, Express Lamination, and

Express Coat constitute an appropriate bargaining unit

THE COURT'S RULING

We deny the petition.

An application of the doctrine of
piercing the corporate veil is
warranted.

Petitioner argues that separate corporations cannot be treated as a single bargaining unit even if
their businesses are related,  as these companies are indubitably distinct entities with separate
23

juridical personalities.  Hence, the employees of one corporation cannot be allowed to vote in the
24

certification election of another corporation, lest the abovementioned rule be violated. 25

Petitioner's argument, while correct, is a general rule. This Court has time and again disregarded
separate juridical personalities under the doctrine of piercing the corporate veil. It has done so in
cases where a separate legal entity is used to defeat public convenience, justify wrong, protect
fraud, or defend crime, among other grounds.  In any of these situations, the law will regard it as an
26

association of persons or, in case of two corporations, merge them into one. 27

A settled formulation of the doctrine of piercing the corporate veil is that when two business
enterprises are owned, conducted, and controlled by the same parties, both law and equity will,
when necessary to protect the rights of third parties, disregard the legal fiction that these two entities
are distinct and treat them as identical or as one and the same. 28

This formulation has been applied by this Court to cases in which the laborer has been put in a
disadvantageous position as a result of the separate juridical personalities of the employers
involved.  Pursuant to veil-piercing, we have held two corporations jointly and severally liable for an
29

employee's back wages.  We also considered a corporation and its separately-incorporated
30

branches as one and the same for purposes of finding the corporation guilty of illegal
dismissal.  These rulings were made pursuant to the fundamental doctrine that the corporate fiction
31

should not be used as a subterfuge to commit injustice and circumvent labor laws. 32

Here, a certification election was ordered to be held for all the rank-and- file employees of Super
Lamination, Express Lamination, and Express Coat.  The three companies were supposedly distinct
1âwphi1

entities based on the fact that Super Lamination is a sole proprietorship while Express Lamination
and Express Coat were separately registered with the SEC.  The directive was therefore, in effect, a
33

piercing of the separate juridical personalities of the corporations involved. We find the piercing to be
proper and in accordance with the law as will be discussed below.

The following established facts show that Super Lamination, Express Lamination, and Express Coat
are under the control and management of the same party - petitioner Ang Lee. In effect, the
employees of these three companies have petitioner as their common employer, as shown by the
following facts:

1. Super Lamination, Express Lamination, and Express Coat were engaged in the same business of
providing lamination services to the public as admitted by petitioner in his petition. 34

2. The three establishments operated and hired employees through a common human resource
department as found by DOLE in a clarificatory hearing.  Though it was not clear which company the
35

human resource department was officially attached to, petitioner admits in his petition that such
department was shared by the three companies for purposes of convenience. 36

3. The workers of all three companies were constantly rotated and periodically assigned to Super
Lamination or Express Lamination or Express Coat to perform the same or similar tasks.  This 37

finding was further affirmed when petitioner admitted in his petition before us that the Super
Lamination had entered into a work-pooling agreement with the two other companies and shared a
number of their employees. 38

4. DOLE found and the CA affirmed that the common human resource department imposed
disciplinary sanctions and directed the daily performance of all the members of Unions A, B, and C. 39

5. Super Lamination included in its payroll and SSS registration not just its own employees, but also
the supposed employees of Express Lamination and Express Coat. This much was admitted by
petitioner in his Motion to Dismiss  which was affirmed by the Med-Arbiter in the latter's Order.
40 41

6. Petitioner admitted that Super Lamination had issued and signed the identification cards of
employees who were actually working for Express Lamination and Express Coat. 42
7. Super Lamination, Express Lamination, and Express Coat were represented by the same counsel
who interposed the same arguments in their motions before the Med-Arbiters and DOLE. 43

Further, we discern from the synchronized movements of petitioner and the two other companies an
attempt to frustrate or defeat the workers' right to collectively bargain through the shield of the
corporations' separate juridical personalities. We make this finding on the basis of the motions to
dismiss filed by the three companies. While similarly alleging the absence of an employer-employee
relationship, they alternately referred to one another as the employer of the members of the
bargaining units sought to be represented respectively by the unions. This fact was affirmed by the
Med-Arbiters' Orders finding that indeed, the supposed employees of each establishment were
found to be alternately the employees of either of the two other companies as well. This was
precisely the reason why DOLE consolidated the appeals filed by Unions A, B, and C. 44

Due to the finger-pointing by the three companies at one another, the petitions were dismissed. As a
result, the three unions were not able to proceed with the conduct of the certification election. This
also caused confusion among the employees as to who their real employer is, as Union A claims in
its Comment. 45

We hold that if we allow petitioner and the two other companies to continue obstructing the holding
of the election in this manner, their employees and their respective unions will never have a chance
to choose their bargaining representative. We take note that all three establishments were
unorganized. That is, no union therein was ever duly recognized or certified as a bargaining
representative. 46

Therefore, it is only proper that, in order to safeguard the right of the workers and Unions A, B, and
C to engage in collective bargaining, the corporate veil of Express Lamination and Express Coat
must be pierced. The separate existence of Super Lamination, Express Lamination, and Express
Coat must be disregarded. In effect, we affirm the lower tribunals in ruling that these companies
must be treated as one and the same unit for purposes of holding a certification election.

Petitioner has cited Diatagon Labor Federation Local v. Ople  and lndophil Textile Mill Worker Union
47

v. Calica  in which this Court refused to treat separate corporations as a single bargaining unit.
48

Those cases, however, are not substantially identical with this case and would not warrant their
application herein. Unlike in the instant case, the corporations involved were found to be completely
independent or were not involved in any act that frustrated the laborers' rights.

In Diatagon,  we refused to include the 236 employees of Georgia Pacific International Corporation
49

in the bargaining unit of the employees of Liangga Bay Logging Co., Inc. This Court's refusal was in
light of the fact that the two corporations were indubitably distinct entities with separate corporate
identities and origins. Moreover, there was no discernible attempt to frustrate any of their labor-
related rights, as the only conflict was over which bargaining unit they belonged to.

In Indophil,  this Court refused to pierce the corporate veil of Indophil Textile Mill and Indophil Acrylic
50

Manufacturing. We found that the creation of Indophil Acrylic was not a device to evade the
application of the collective bargaining agreement (CBA) between petitioner union and Indophil
Textile Mill. This Court further found that despite the similarity in their business operations, the
separate personalities of the two corporations were maintained and were not used for any of the
purposes specified under the law that would warrant piercing. It is also apparent in this case that the
workers' rights were not being hampered by the employers concerned, as the only issue between
them was the extent of the subject CBA's application.
In this case, not only were Super Lamination, Express Lamination, and Express Coat found to be
under the control of petitioner, but there was also a discernible attempt to disregard the workers' and
unions' right to collective bargaining.

The foregoing considered, we find no error in the CA' s affirmance of the DOLE directive. We affirm
DOLE's application by analogy of the concept of multi-employer bargaining to justify its Decision to
treat the three companies as one. While the multi-employer bargaining mechanism is relatively new
and purely optional under Department Order No. 40-03, it illustrates the State's policy to promote the
primacy of free and responsible exercise of the right to collective bargaining.  The existence of this
51

mechanism in our labor laws affirm DOLE's conclusion that its treatment of the employees of the
three companies herein as a single bargaining unit is neither impossible nor prohibited.  It is justified
52

under the circumstances discussed above.

Besides, it is an established rule that factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded by the courts not only
respect but even finality when supported by substantial evidence; i.e., that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. 53

The bargaining unit of the rank-and-

file employees of the three companies
is appropriate.

Petitioner argues that there is no showing that the rank-and-file employees of the three companies
would constitute an appropriate bargaining unit on account of the latter's different geographical
locations.  This contention lacks merit. The basic test for determining the appropriate bargaining unit
54

is the application of a standard whereby a unit is deemed appropriate if it affects a grouping of

employees who have substantial, mutual interests in wages, hours, working conditions, and other
subjects of collective bargaining.  We have ruled that geographical location can be completely
55

disregarded if the communal or mutual interests of the employees are not sacrificed. 56

In the present case, there was communal interest among the rank-and-file employees of the three
companies based on the finding that they were constantly rotated to all three companies, and that
they performed the same or similar duties whenever rotated.  Therefore, aside from geographical
57

location, their employment status and working conditions were so substantially similar as to justify a
conclusion that they shared a community of interest. This finding is consistent with the policy in favor
of a single-employer unit, unless the circumstances require otherwise.  The more solid the
58

employees are, the stronger is their bargaining capacity. 59

As correctly observed by the CA and DOLE, while there is no prohibition on the mere act of
engaging in a work-pooling scheme as sister companies, that act will not be tolerated, and the sister
companies' separate juridical personalities will be disregarded, if they use that scheme to defeat the
workers' right to collective bargaining. The employees' right to collectively bargain with their
employers is necessary to promote harmonious labor-management relations in the interest of sound
and stable industrial peace. 60

WHEREFORE, the Petition for Review on Certiorari under Rule 45 is DENIED for lack of merit. The
Court of Appeals Decision  and Resolution  in CA-G.R. SP No. 109486 are hereby AFFIRMED.
61 62

SO ORDERED.

THIRD DIVISION
 February 28, 2018

G.R. No. 218390

HONGKONG BANK INDEPENDENT LABOR UNION (HBILU), Petitioner

vs.
HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, Respondent

DECISION

VELASCO, JR., J.:

The Case

For consideration is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
questioning the Decision  and Resolution of the Court of Appeals (CA), dated October 23, 2014 and
1

May 21, 2015, respectively, in CA-G.R. SP No. 130798. The challenged rulings sustained the validity
of the external credit check as a condition before respondent could grant the application for salary
loans of petitioner's members. This is notwithstanding the non-mention of the said condition in the
parties' Collective Bargaining Agreement (CBA).

The Facts

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

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

Pursuant to the above-cited provision, respondent Hongkong and Shanghai Banking Corporation
Limited (HSBC), on March 12, 2003, submitted its Financial Assistance Plan (Plan) to the BSP for
approval. The Plan allegedly contained a credit checking proviso stating that "[r]epayment defaults
on existing loans and adverse information on outside loans will be considered in the evaluation of
loan applications." The BSP approved the Plan on May 5, 2003.  Said Plan was later amended
2

thrice,  all of which amendments were approved by the BSP.

3 4

Meanwhile, petitioner Hongkong Bank Independent Labor Union (HBILU), the incumbent bargaining
agent of HSBC's rank-and-file employees, entered into a CBA with the bank covering the period from
April 1, 2010 to March 31, 2012. Pertinent to the instant petition is Article XI thereof, which reads:

Article XI

Salary Loans

Section 1. Housing/house Improvement Loan. The BANK, or other financial institution when
appropriate, shall extend housing loan to qualified employees with at least three (3) YEARS OF
SERVICE, UP TO One Million Five Hundred Thousand Pesos (₱l,500,000.00) payable in twenty-five
(25) years or up to the retirement date of the employee, whichever comes first. Subject to BSP
approval, an additional Five Hundred Thousand Pesos (₱500,000.00) can be availed subject to the
terms above with interest rate at the BLR less 3% but not less than six percent (6%) per annum.

Section 2. Personal Loans. The BANK, or the Retirement Trust Fund Inc. or other financial
institutions, when appropriate, shall extend personal loan to qualified employees, with at least 1 year
service, up to six months basic pay of the employees at six percent (6%) interest per annum,
payable in three years.

Section 3. Car Loans. The BANK, or the Retirement Trust Fund Inc. or other financial institutions
when appropriate, shall extend a car loan to qualified employees with at least 3 years service up to
Five Hundred Fifty Thousand Pesos (PHP550,000.00) payable in seven (7) years. Interest rate shall
be six percent (6%) per annum.

Section 4. Credit Ratio. The availment of any of the foregoing loans shall be subject to the BANK's
credit ratio policy.

When the CBA was about to expire, the parties started negotiations for a new one to cover the
period from April 1, 2012 to March 31, 2017. During the said negotiations, HSBC proposed
amendments to the above-quoted Article XI allegedly to align the wordings of the CBA with its BSP-
approved Plan. Particularly, HSBC proposed the deletion of Article XI, Section 4 (Credit Ratio) of the
CBA, and the amendment of Sections 1 to 3 of the same Article to read as follows:

Article XI

Salary Loans

Section 1. Housing/house Improvement Loan. Based on the Financial Assistance Plan duly
approved by Bangko Sentral ng Pilipinas (BSP), the BANK, or other financial institution when
appropriate, shall extend housing loan to qualified employees with at least three (3) YEARS OF
SERVICE UP TO One Million Five Hundred Thousand Pesos (₱l,500,000.00) payable in twenty-five
(25) years or up to the retirement date of the employee, whichever comes first, subject to employee's
credit ratio. An additional Five hundred thousand Pesos (₱500,000.00) can be availed subject to the
terms above with interest rates at the BLR less 3% but not less than six percent (6%) per annum.

Section 2. Personal Loans. Based on the financial Assistance Plan duly approved by Bangko Sentral
ng Pilipinas (BSP), the BANK, or other financial institutions when appropriate, shall extend personal
loan to qualified employees, with at least 1 year service, up to six months basic pay of the
employees at six percent (6%) interest per annum, payable in three (3) years, subject to employee's
credit ratio.

Section 3. Car loans. Based on the Financial Assistance Plan duly approved by Bangko Sentral ng
Pilipinas (BSP), the BANK, or other financial institutions when appropriate, shall extend a car loan to
qualified employees with at least three years service, up to Five Hundred Fifty Thousand Pesos
(PHP550,000.00) payable in seven (7) years. Interest rate shall be six percent (6%) per annum.
(emphasis added)

HBILU vigorously objected to the proposed amendments, claiming that their insertions would curtail
its members' availment of salary loans. This, according to the Union, violates the existing exceptions
set forth in BSP Circular 423, Series of 2004,  and Section X338.3  of the MoRB. In view of HBILU's
5 6

objection, HSBC withdrew its proposed amendments and, consequently, Article XI remained
unchanged.
Despite the withdrawal of the proposal, HSBC sent an e-mail to its employees on April 20, 2012
concerning the enforcement of the Plan, including the Credit Checking provisions thereof. The e-mail
reads:

Dear All

We wish to reiterate the following provisions included in the Financial Assistance Plan (F AP) as
approved by Bangko Sentral ng Pilipinas (BSP). Note that the F AP is the official guideline and
policy governing Staff Loans and Credit Cards.

>>>>CREDIT CHECKING

Below are the specific provisions included in the F AP regarding credit checking.

Housing Loan, Car Loan, Personal Loan & Repayment defaults on existing loans and
Computer/Club Membership/Medical adverse information considered in the
Equipment Loan evaluation of loan applications.

Credit Card Repayment defaults on existing loans and

adverse information considered in the
evaluation of loan applications.

With the strict implementation of these provisions, adverse credit findings may result to disapproval
of loan or credit card applications. These findings will include the following:

(1) Frequency of confirmed ADA failure on staff/commercial loans and credit cards (3 consecutive
incidents within the past 6 months or 6 incidents within the past 12 months). Note that applications
with pending ADA for investigation will only be processed upon confirmation of status (Confirmed or
Reprieved);

(2) Adverse findings on HSBC cards; or

(3) Adverse findings from external credit checks. 7

Thereafter, in September 2012, HBILU member Vince Mananghaya (Mananghaya) applied for a
loan under the provisions of Article XI of the CBA. His first loan application in March 2012 was
approved, but adverse findings from the external checks on his credit background resulted in the
denial of his September application.  HBILU then raised the denial as a grievance issue with the
8

National Conciliation Mediation Board (NCMB). It argued that the imposition of an additional
requirement-the external credit checking prior to approval of any loan application under Article XI of
the CBA-is not sanctioned under the CBA. The Union emphasized that under the terms of Article XI,
there is no such requirement and that it cannot, therefore, be unilaterally imposed by HSBC.

Justifying its denial of the loan application, HSBC countered that the external credit check conducted
in line with Mananghaya's loan application was merely an implementation of the ESP-approved Plan.
The adoption of the Plan, HSBC stressed, is a condition sine qua non for any loan grant under
Section X338 of the MoRB. Moreover, the Credit Check policy has been in place since 2003, and is
a sound practice in the banking industry to protect the interests of the public and preserve
confidence in banks.
The issue was then submitted for resolution by the NCMB Panel of Accredited Voluntary Arbitrators
(the Panel).  In the interim, the parties, on September 29, 2012, inked a new CBA for the period
9

covering April 1, 2012 up to March 31, 2017. 10

NCMB-PVA Decision

On May 17, 2013, the Panel rendered a Decision finding for HSBC. It held that herein respondent,
as an employer, has the right to issue and implement guidelines for the availment of loan
accommodations under the CBA as part of its management prerogative. The repeated use of the
term "qualified employees" in Article XI of the CBA was deemed indicative of room for the adoption
of further guidelines in the availment of the benefits thereunder. The Panel also agreed that HSBC's
Plan is not a new policy as it has already been approved by the BSP as early as 2003. Thus, the
Panel ruled that the salary loan provisions under Article XI of the CBA must be read in conjunction
with the provisions of the Plan.

The Panel further discussed that HSBC's adoption of the Plan was not done for any whimsical or
arbitrary reason, but because the bank was constrained to comply with Section X338 of the MoRB.
As a banking institution, HSBC cannot divorce itself from the regulatory powers of the BSP.
Observance of Section X338 of the MoRB was then necessary before the bank could have been
allowed to extend loan accommodations to its officers and employees.

On the basis thereof, the Panel held that they are not ready to rule that HSBC's Plan violates Article
XI of the CBA.

Aggrieved, HBILU elevated the case to the CA.

CA Decision

The CA sustained the findings and conclusions of the NCMB-PV A in toto on the ratiocination that
HSBC was merely complying with Section X338 of the MoRB when it submitted the Plan to BSP.
When BSP, in turn, approved the said Plan, HSBC became legally bound to enforce its provisions,
including the conduct of external credit checks on its loan applicants  The appellate court further
11

ruled that the Plan should be deemed incorporated in the CBA because it is a regulatory requirement
of BSP without which the salary loan provisions of the CBA are rendered inoperative.

Petitioner's motion for reconsideration having been denied by the CA thru its May 21, 2015
Resolution, HBILU now seeks recourse from this Court.

The Issues

HBILU presents the following grounds to warrant the reversal of the assailed Decision, viz:

The decisions and resolutions of the Hon. Panel of Voluntary Arbitrators and the Hon. Court of
Appeals are tainted with grave abuse of discretion and it showed patent errors in the appreciation of
facts which led to wrong conclusions of law; or stated otherwise;

The Hon. Panel of Voluntary Arbitrators and Court of Appeals committed serious, reversible and
gross error in law in ruling that the Bank's Financial Assistance Plan as not in violation of Article XI of
the Parties' CBA provision on Salary Loans (Article XII of the new and existing CBA) 12
Simply put, the issue for Our resolution is whether or not HSBC could validly enforce the credit-
checking requirement under its BSP-approved Plan in processing the salary loan applications of
covered employees even when the said requirement is not recognized under the CBA.

Arguments of Petitioner

In support of its position, HBILU argues, among others, that HSBC failed to present in court the Plan
that was supposedly submitted to the BSP for approval, and to show that the requirement of external
credit checking had already been included therein.  Too, said Plan is not a set of policies for salary
13

loans that came from the BSP, but was devised solely by HSBC. 14

Furthermore, HBILU claims that it is not privy to the Plan and has not been consulted, much less
informed, of the impositions therein prior to its implementation. No proof was offered that the Plan
had been disseminated to the employees prior to the April 20, 2012 e-mail blast. 15

Lastly, the implementation of the Plan, according to HBILU, is tantamount to diminution of

benefits  and a unilateral amendment of the existing CBA,  which are both proscribed under the
16 17

Labor Code. Had the parties to the CBA intended to include the external credit check as an
additional condition to the availment of employee salary loans, then it should have been plainly
provided in their agreement.18

Arguments of Respondent

In its Comment, HSBC claims that the Plan is neither new nor was it issued on a mere whim or
caprice. On the contrary, the Plan was established as early as 2003, way before Mananghaya's
application was denied, to conform to Section X338 of the BSP MoRB. HSBC reminds the Court that
the loan and credit accommodations could have only formed part of the employees' fringe benefit
program if they were extended through a financing scheme (i.e., the Plan) approved by the BSP.

Moreover, HSBC argues that the dissemination of the Plan via e-mail blast on April 20, 2012 was but
a reiteration, as opposed to a first publication. It contends that even prior to the establishment and
approval of the Plan in 2003, the then-loan policy already included the requirement on external credit
checking. According to the bank, there was already a provision that required the conduct of credit
checking in the processing and evaluation of loan applications in their General Policies on Loans,
cascaded through the Intranet system to HSBC employees on October 24, 2002, viz:

CREDIT CHECKING  

  Repayment defaults on existing loans and adverse information

on outside loans will be considered m the evaluation of loan
applications.

The union members cannot then feign ignorance of the external credit checking requirement in staff
loan applications, according to HSBC. Consequently, petitioner's bare denial of any knowledge
about it cannot be given any credence. Considering too that the Plan reiterating the requirement has
been approved by the BSP in 2003, HBILU slept on its rights when it questioned its strict imposition
almost a decade after its issuance.
Finally, HSBC postulates that the non-mention of the Plan in the CBA is no justification for the bank
to disregard the same in processing employee loan applications. Provisions of applicable laws,
especially those relating to matters affected with public policy, are deemed written into the contract. 19

Our Ruling

The petition is meritorious.

The constitutional right of employees

to participate in matters affecting
their benefits and the sanctity of the
CBA

Preliminarily, it is crucial to stress that no less than the basic law of the land guarantees the rights of
workers to collective bargaining and negotiations as well as to participate in policy and decision-
making processes affecting their rights and benefits. Section 3, Article XIII of the 1987 Constitution
provides:

Section 3. The State shall afford full protection to labor, local and overseas, organized 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.

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

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

xx xx

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

xx xx

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

Corollary thereto, Article 255 of the same Code provides:

ART. 255. EXCLUSIVE BARGAINING REPRESENTATION AND WORKERS PARTICIPATION IN

POLICY AND DECISION-MAKING.

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

We deem it necessary to remind HSBC of the basic and well-entrenched rule that although
jurisprudence recognizes the validity of the exercise by an employer of its management prerogative
and will ordinarily not interfere with such, this prerogative is not absolute and is subject to limitations
imposed by law, collective bargaining agreement, and general principles of fair play and justice. 20

Indeed, being a product of said constitutionally-guaranteed right to participate, the CBA is, therefore,
.the law between the parties and they are obliged to comply with its provisions.

Unilateral amendments to the CBA

violate Article 253 of the Labor Code

A collective bargaining agreement or CBA is the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear
and unambiguous, it becomes the law between the parties and compliance therewith is mandated by
the express policy of the law. 21

In Faculty Association of Mapua Institute of Technology (FAMJT) v. Court of Appeals,  this Court
22

was emphatic in its pronouncement 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. And until a new CBA is executed by and between the parties, they are duty-bound to
keep the status quo and to continue in full force and effect the terms and conditions of the existing
agreement.  This finds basis under Article 253 of the Labor Code, which states:
23

ARTICLE 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. x x x It shall be the duty
of both parties to keep the status quo and to continue in full force and effect the terms and conditions
of the existing agreement during the 60-day period and/or until a new agreement is reached by the
parties. (emphasis added)

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

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

HSBC' s defense, that there was no modification of the CBA since the external credit check has
been a long-standing policy of the Bank applied to all of its employees, is unconvincing. Noteworthy
is that the bank failed to submit in evidence the very Plan that was supposedly approved by the BSP
in 2003. Nevertheless, even if We were to rely on the later versions of the Plan approved by the
BSP, Our ruling will not change.

The only provision relative to the credit checking requirement under the 2006 and 2011 Plans is this
and nothing else:

CREDIT CHECKING  

  Repayment defaults on existing loans and adverse information on

outside loans will be considered in the evaluation of loan
applications.24

As for the manner in which said credit checking will be done, as well as any additional requirements
that will be imposed for the purpose, the 2006 Plan and even its later 2011 version are silent
thereon.  Nowhere in these Plans can We find the requirement for the submission of an "Authority to
25

Conduct Checks Form," as well as the details on adverse credit finding, specifically:

With the strict implementation of these provisions, adverse credit findings may result to disapproval
of loan or credit card applications. These findings will include the following:

(1) Frequency of confirmed ADA failure on staff/commercial loans and credit cards (3 consecutive
incidents within the past 6 months or 6 incidents within the past 12 months). Note that applications
with pending ADA for investigation will only be processed upon confirmation of status (Confirmed or
Reprieved);

(2) Adverse findings on HSBC cards; or

(3) Adverse findings from external credit checks. 26

In fact, regrettably, HSBC's only documentary basis for proving that the credit checking requirement
and the manner of its enforcement have been set in place much earlier is the use of the term
"reiterate" in its April 20, 2012 e-mail. Thus, we quote:

Dear All

We wish to reiterate the following provisions included in the Financial Assistance Plan (FAP) as
approved by Bangko Sentral ng Pilipinas (BSP).

xxx
20. Accordingly, the above email dated 20 April 2012 clearly indicates that the dissemination therein
of the FAP and its provisions is merely a reiteration, and not a first publication as the Union now
conveniently claims.  xx x (emphasis supplied)
27

What further convinces Us that the external credit check as well as the manner of its enforcement is
a new imposition by HSBC is the fact that the bank made no attempt to rebut HBILU's evidence that
the former's requirements for the grant of salary loans changed only after the April 20, 2012 email
blast. HBILU sufficiently proved that prior to the April 20, 2012 email, members of the bargaining unit
were using only four (4) documents in applying for a loan, to wit: 1) Application for Personal Loan
Form; 2) Authority to Deduct Form; 3) Set-Off of Retirement Fund Form; and 4) Promissory Note
Form.  Thereafter, management imposed a new set of requirements, which includes the "Authority
28

to Conduct Checks Form."  As testified to by Mananghaya, he only signed the first four (4)
29

requirements for his March 2012 loan. However, for the September 2012 loan, he was asked to
complete a new set of documents which included the Authority to Conduct Checks Form.  Too, even
30

the email itself states that said credit checking requirement, among others, is to be strictly enforced
effective May 2012.  Though HSBC claims that credit checking has been the bank's long-standing
31

policy, it failed to show that it indeed required such before its covered employees could avail of a
salary loan under the CBA prior to April 20, 2012-the date of the email blast.

Thus, no other conclusion can be had in this factual milieu other than the fact that HSBC's
enforcement of credit checking on salary loans under the CBA invalidly modified the latter's
provisions thereon through the imposition of additional requirements which cannot be found
anywhere in the CBA.

If it were true that said credit checking under the Plan covers salary loans under the CBA, then the
bank should have negotiated for its inclusion thereon as early as the April 1, 2010 to March 31, 2012
CBA which it entered into with HBILU. However, the express provisions of said CBA inked by the
parties clearly make no reference to the Plan. And even in the enforcement thereof, credit checking
was not included as one of its requirements. This leads Us to conclude that HSBC originally never
intended the credit checking requirement under the Plan to apply to salary loans under the CBA. At
most, its application thereto is a mere afterthought, as evidenced by its sudden, belated, and hurried
enforcement on said salary loans via the disputed email blast.

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

The minority argues that primacy is being accorded to the CBA over the Plan approved by the BSP.
Such, however, is not the case. We are not saying that the Plan should yield to the CBA. The point
that we are driving at in this lengthy discussion is that on the basis of the evidence presented, We
are convinced that the credit checking provision of the Plan was never intended to cover salary loans
under the CBA. Otherwise, HSBC would have implemented such the moment said salary loans
under the previous CBA were made available to its covered employees. Thus, HSBC cannot now
insist on its imposition on loan applications under the disputed CBA provision without violating its
duty to bargain collectively.

If We were to allow this practice of leaving to HSBC the determination, formulation, and
implementation of the guidelines, procedures, and requirements for the availment of salary loans
granted under the CBA, which guidelines, procedures, and requirements unduly restrict the
provisions of the CBA, this Court would in effect be permitting HSBC to repeatedly violate its duty to
bargain collectively under the guise of enforcing the general terms of the Plan.

Salary loans subject of this case are

not covered by the credit checking
requirement under the MORB

In maintaining that the credit checking requirement under the MoRB should be deemed written into
the CBA, the minority makes reference to Sec. X304.1 of the 2011 MoRB in maintaining that
financial institutions must look into the obligor' s repayment history, among other things, before
approving a loan application. Said provision reads:

§ X304. l General guidelines. Consistent with safe and sound banking practices, a bank shall grant
loans or other credit accommodations only in amounts and for the periods of time essential for the
effective completion of the operation to be financed. Before granting loans or other credit
accommodations, a bank must ascertain that the borrower, co-maker, endorser, surety, and/or
guarantor, if applicable, is/are financially capable of fulfilling his/their commitments to the bank. For
this purpose, a bank shall obtain adequate information on his/their credit standing and financial
capacities x x x.

At this point it is well to draw attention to the fact that said provision is a general one as specifically
indicated thereat. It is also equally important to emphasize that Sec. X304.1 must be interpreted in
conjunction with Section X338.3, the provision which specifically applies to salary loans under the
fringe benefit program of the bank. Thus:

Subsection X338.3 Other conditions/limitations

The investment by a bank in equipment and other chattels under its fringe benefits program for
officers and employees shall be included in determining the extent of the investment of the bank in
real estate and equipment for purposes of Section 51 of R.A. No. 8791.

The investment by a bank in equipment and other chattels contemplated under these guidelines
shall not be for the purpose of profits in the course of business for the bank.

All loans or other credit accommodations to bank officers and employees, EXCEPT those granted
under the fringe benefit program of the bank, shall be subject to the same terms and conditions
imposed on the regular lending operations of the bank. Loans or other credit accommodations
granted to officers shall, in addition, be subject to the provisions of Section 36 of RA. No. 8791 and
Sections X326 to X336 but not to the individual ceilings where such loans or other credit
accommodations are obtained under the bank's fringe benefits program. (emphasis ours)

In specifying that "[a]ll loans or other credit accommodations to bank officers and employees, except
those granted under the fringe benefit program of the bank, shall be subject to the same terms and
conditions imposed on the regular lending operations of the bank," Sec. X338.3 clearly excluded
loans and credit accommodations under the bank's fringe benefits program from the operation of
Sec. X304.1. This fact is even recognized in the dissent. To ignore this clear exception and insist on
interpreting the general guidelines under Section X304.1 would be to renege from Our duty to apply
a clear and unambiguous provision. 32

It may also be argued that HSBC, being a bank, is statutorily required to conduct a credit check on
all of its borrowers, even though it be made under a loan accommodation scheme, applying Section
40  of Republic Act No. (RA) 8791 (General Banking Law of 2000). A reading of RA 8791, however,
33

reveals that loan accommodations to employees are not covered by said statute. Nowhere in the law
does it state that its provisions shall apply to loans extended to bank employees which are granted
under the latter's fringe benefits program. Had the law intended otherwise, it could have easily
specified such, similar to what was done for directors, officers, stockholders and their related
interests under Section 36 thereof. This conclusion is supported by the very wording of Subsection
X338.3 of the MORE. To reiterate:

Subsection X338.3 Other conditions/limitations

The investment by a bank in equipment and other chattels under its fringe benefits program for
officers and employees shall be included in determining the extent of the investment of the bank in
real estate and equipment for purposes of Section 51 of R.A. No. 8791.

The investment by a bank in equipment and other chattels contemplated under these guidelines
shall not be for the purpose of profits in the course of business for the bank.

All loans or other credit accommodations to bank officers and employees, except those granted
under the fringe benefit program of the bank, shall be subject to the same terms and conditions
imposed on the regular lending operations of the bank. Loans or other credit accommodations
granted to officers shall, in addition, be subject to the provisions of Section 36 of R.A. No. 8791 and
Sections X326 to X336 but not to the individual ceilings where such loans or other credit
accommodations are obtained under the bank's fringe benefits program.

Notably, even though the provision covers loans extended to both bank officers and employees,
paragraph 3 thereof singled out loans and credit accommodations granted to officers when it
provided for the applicability of RA 8791.

What the law does not include, it excludes.

These convince Us to conclude that RA 8791 only intended to cover loans by third persons and
those extended to directors, officers, stockholders and their related interests. Consequently, Section
40 thereof, which requires a bank to ascertain that the debtor is capable of fulfilling his commitments
to it before granting a loan or other credit accommodation, does not automatically apply to the type
of loan subject of the instant case.

Furthermore, it is inaccurate to state that credit checking is necessary, or even indispensable, in the
grant of salary loans to the bank's employees, since the business of banking is imbued with public
interest and there is a fiduciary relationship between the depositor and the bank. It is also incorrect
to state that allowing bank employees to borrow funds from their employer via salary loans without
the prior conduct of a credit check is inconsistent with this fiduciary obligation. This is so because
there are other ways of securing payment of said salary loans other than ascertaining whether the
borrowing employee has the capacity to pay the loan. BSP Circular 423, Series of 2004 itself
provides for such, thus:

Subsection X338.l Mechanics. The mechanics of such financing plan shall have the following
minimum features:

Participation shall be limited to full-time and permanent officers and employees of the bank;

xx xx
The bank shall adopt measures to protect itself from losses such as by incorporating in the plan or
contract provisions requiring co-makers or co-signor, chattel, or real estate mortgages, fire
insurance, mortgage redemption insurance, assignment of money value of leave credits, pension or
retirement benefits. (Emphasis ours)

Additionally, both the BSP Circular 423, Series of 2004 and Section X338.3 of the MoRB provide for
a safeguard in order to protect the funds of the Bank's depositors while allowing the Bank to extend
such benefits to its employees, in that both require that:

The aggregate outstanding loans and other credit accommodations granted under the bank's fringe
benefits program, inclusive of those granted to officers in the nature of lease with option to purchase,
shall not exceed five percent (5%) of the bank's total loan portfolio.
34

There are, therefore, sufficient safety nets consistent with the bank's fiduciary duty to its depositors
even without requiring the conduct of an external credit check in the availment of salary loans under
the subject CBA. As a matter of fact, there is no showing that the bank's finances suffered because it
has been granting said salary loans under the CBA without the external credit check.

Withal, We cannot subscribe to HSBC's position that its imposition of the credit checking
requirement on salary loans granted under the CBA is valid. The evidence presented convinces Us
to hold that the credit checking requirement imposed by HSBC under the questioned Plan which
effectively and undoubtedly modified the CBA provisions on salary loans was a unilateral imposition
violative of HSBC's duty to bargain collectively and, therefore, invalid. HSBC miserably failed to
present even an iota of concrete documentary evidence that the credit checking requirement has
been imposed on salary loans even before the signing of the CBA subject of the instant dispute and
that the Plan was sufficiently disseminated to all concerned. In contrast, HBILU sufficiently proved
that HSBC violated its duty to bargain collectively under Article 253 of the Labor Code when it
unilaterally restricted the availment of salary loans under Article XI of the CBA on the excuse of
enforcing the Plan approved by the BSP.

As this Court emphasized in Philippine Airlines, Inc. v. NLRC, industrial peace cannot be achieved if
the employees are denied their just participation in the discussion of matters affecting their
rights,  more so in the case at bar where the employees have been led to believe that they were
35

given the chance to participate in HSBC's policy-formulation with respect to the subject benefit, only
to find out later that they would be deprived of the fruits of said involvement.

On interpretation of CBAs

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

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

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

1. It is so unfounded in reason and fact;

2. It is so unconnected with the working and purpose of the agreement;

3. It is without factual support in view of its language, its context, and any other indicia of the parties'
intention;

4. It ignores or abandons the plain language of the contract;

5. It is mistakenly based on a crucial assumption which concededly is a nonfact;

6. It is unlawful, arbitrary or capricious; and

7. It is contrary to public policy.

xx xx

If the terms of a CBA are clear and [leave] no doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that the
hirees must be presumed of employment qualification standards but fail to state such qualification
standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full
agreement intended by the parties. When a CBA may be expected to speak on a matter, but does
not, its sentence imports .ambiguity on that subject. The VA is not merely to rely on the cold and
cryptic words on the face of the CBA but is mandated to discover the intention of the
parties. Recognizing the inability of the parties to anticipate or address all future problems, gaps may
be left to be filled in by reference to the practices of the industry, and the step which is equally a part
of the CBA although not expressed in it. In order to ascertain the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally considered The VA may also
consider and rely upon negotiating and contractual history of the parties, evidence of past practices
interpreting ambiguous provisions. The VA has to examine such practices to determine the scope of
their agreement, as where the provision of the CBA has been loosely formulated. Moreover, the CBA
must be construed liberally rather than narrowly and technically and the Court must place a practical
and realistic construction upon it.  (emphasis ours)
36

Thus, in resolving issues concerning CBAs, We must not forget that the foremost consideration
therein is upholding the intention of both parties as stated in the agreement itself, or based on their
negotiations. Should it appear that a proposition or provision has clearly been rejected by one party,
and said provision was ultimately not included in the signed CBA, then We should not simply
disregard this fact. We are duty-bound to resolve the question presented, albeit on a different
ground, so long as it is consistent with law and jurisprudence and, more importantly, does not ignore
the intention of both parties. Otherwise, We would be substituting Our judgment in place of the will of
the parties to the CBA.

With these, We find no need to resolve the other matters presented.

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated October 23,
2014 and Resolution dated May 21, 2015 of the Court of Appeals in CA-G.R. SP No. 130798 are
hereby REVERSED and SET ASIDE.

Respondent Hongkong and Shanghai Banking Corporation's Financial Assistance Plan, insofar as it
unilaterally imposed a credit checking proviso on the availment of Salary Loans by its employees
under Article XI of the 2010-2012 CBA, is hereby declared legally ineffective and invalid for being in
contravention of Article 253 of the Labor Code.
SO ORDERED.

FIRST DIVISION

November 20, 2017

G.R. No. 200576

MAERSK-FILIPINAS CREWING, INC. and AP MOLLER SINGAPORE PTE LTD., Petitioners

vs.
ROSEMARY G. MALICSE (Legal wife of the deceased seafarer Efren B. Malicse, representing
the latter's estate), Respondent

DECISION

SERENO, CJ.:

Before this Court is a Petition for Review on Certiorari,  seeking a reversal of the Court of Appeals
1

(CA) Decision and Resolution,  awarding death benefits, moral and exemplary damages, and
2

attorney's fees to respondent Rosemary G. Malicse as the beneficiary of the deceased seafarer,
Efren B. Malicse.

The antecedent facts are as follows:

For the tenth time,  Efren was employed as an able-bodied seaman by petitioner AP Moller
3

Singapore Pte., Ltd. for a term of nine months through its agency, Maersk-Filipinas Crewing, Inc.  At
4

the time of his employment, he had already passed his pre-employment medical examination and
was declared fit to work.

Four months later, on 20 May 2007, Efren complained of a fever and headache while on
board Maersk Tide. When paracetamol, bed rest, and tetracycline administered by the vessel's
medical staff did not work, he was sent to Clinica Hospital del Atlantico in Panama on 25 May
2007.  On 29 May 2007, he died.
5

The death certificate of Efren stated that he died of "multiple organ dysfunction, Septicemia and
Mononucleosis due to Cytomegalovirus."  According to the Autopsy Report and the Pathological
6

Report of Dr. Edwin C. Alconel, an anatomical and clinical pathologist of the City Health Office of
General Santos City, Efren died of "multiple organ failure secondary to septicemia."  Neither party
7

disclaimed that Efren died of septicemia, which is severe blood poisoning or infection.

Petitioners paid Rosemary USD 1,000 representing burial benefits. As for death benefits, they
offered her USD 40,000,  which was equivalent to half of the death benefits provided by the
8

Collective Bargaining Agreement (CBA) between Maersk and Singapore Organization of Seamen,
the union to which her husband belonged.  When she demanded a full copy of the CBA, as well as a
9

copy of the International Transport Workers Federation Standard Collective Agreement (ITF
Agreement)  from petitioners, the latter refused.
10

Consequently, Rosemary filed a Complaint  before the Executive Labor Arbiter (LA) for death
11

benefits, moral and exemplary damages, and attorney's fees. Petitioners responded that the death of
her husband was not caused by a work-related illness. Rosemary countered by arguing that
according to the ITF Agreement, she was entitled to death benefits regardless of the cause of
Efren's death.

In its Decision dated 26 February 2009,  the LA sustained the claim of Rosemary that the labor
12

union of her husband was an affiliate of the ITF. The LA held that the ITF Agreement should prevail
over the CBA and the 2000 Philippine Overseas Employment Administration Standard Employment
Contract for Seafarers (POEA-SEC). The ITF Agreement, said the LA, had a more beneficial
provision on granting death benefits since it awards claims regardless of the seafarer's cause of
death.

The LA granted death benefits of USD 82,500 to Rosemary and ordered petitioners to pay her moral
damages of PHP 5 million, exemplary damages of PHP 3 million, and 10% attorney's fees.

Petitioners appealed  before the National Labor Relations Commission (NLRC). Rosemary likewise
13

appealed and demanded payment for loss of income and interest on her monetary claims. The
NLRC dismissed the appeals. Both parties moved for reconsideration, but to no avail.

In its Resolution dated 29 June 2010,  the NLRC held that the LA correctly appreciated the
14

applicability of the ITF Agreement. In addition, the NLRC declared that petitioners had the burden of
proving that Efren had died of a non-compensable illness. Finding that petitioners had failed to
discharge such burden, the NLRC affirmed the ruling of the LA with the modification that moral and
exemplary damages be reduced to ₱l00,000 and ₱50,000, respectively.

Petitioners and respondent separately filed Petitions for Certiorari  before the CA, with essentially
15

the same arguments as those raised a quo. At the outset, the appellate court issued a Temporary
Restraining Order  and a Writ of Preliminary Injunction  in favor of petitioners.
16 17

After perusing the merits of the main case, the CA found no grave abuse of discretion on the part of
the NLRC. In its assailed Decision dated 21 October 2011, the CA maintained that petitioners were
liable to Rosemary for full death benefits and damages, but that she was not entitled to additional
compensation in the form of income losses and interest claims. The dispositive portion reads in
part:
18

Maersk-Filipinas Crewing, Inc., with its corporate officers and directors and its foreign principal A.P.
Moller Singapore PTE. LTD., are hereby adjudged jointly and solidarily liable in the payment of
eighty thousand US Dollars (USD 80,000.00) payable in its equivalent in Philippine currency
computed at the prevailing rate of exchange at the time of payment as indemnity pursuant to the ITF
Standard Collective Agreement. Moral and exemplary damages are hereby awarded to Rosemary
G. Malicse in the amounts of ₱100,000.00 and ₱50,000.00, respectively, or a total of ₱150,000.00.
Ten percent (10%) of the total monetary award is further awarded to Rosemary G. Malicse as
attorney's fees.

SO ORDERED.

The CA echoed the appreciation of the NLRC that employers have the burden of proof in showing
that the seafarer died from a non-compensable illness. Based on the records, the appellate court
ruled that petitioners had failed to show that they were not liable to pay respondent's claims for death
benefits.

Petitioners and respondent unsuccessfully moved for reconsideration.  Petitioners have therefore
19

filed the instant Petition for Review on Certiorari, questioning the grant of death benefits and
damages, as well as the applicability of the ITF Agreement. Respondent has waived her right to
comment on this petition. 20

Before this Court are questions of law. We are tasked to evaluate the applicability of the following
contracts: the POEA-SEC, the CBA, and the ITF Agreement. Corollary to that issue, this Court
outlines and applies the burdens of proof involved in seafarers' claims for death benefits.

RULING OF THE COURT

The Applicability of the PO EA-SEC,

the CBA, and the ITF Agreement

The entitlement to disability benefits of seafarers on overseas work is a matter governed not only by
medical findings, but also by law and contract.  By contract, the POEA-SEC and the CBA bind
21

seafarers and their employers.  An overriding instrument, such as the instant ITF Agreement, also
22

forms part of the covenants of the parties to each other. 23

In awarding death benefits to Rosemary in the amount of USD 82,500, the LA, the NLRC, and the
CA cited Section 19 of the ITF Agreement, viz:

If a Seafarer dies through any cause, whilst in the employment of the Company, or arising from
her/his employment with the Company, including death from natural causes or death occurring whilst
travelling to or from the vessel, or as a result of marine or other similar peril, the Company shall pay
the sums specified in the attached schedule [US$82,500 in Annex 2] to the widow or children or
parents and to each dependent child up to a maximum of 4 (four) under the age of 21. x x x.

However, before claimants may avail themselves of the benefits provided by Section 19 of the ITF
Agreement, they must comply with Section 1:

This agreement sets out the standard terms and conditions applicable to all Seafarers serving on
any Ship in respect of which there is in existence a Special Agreement ("the Special Agreement")
made between the Union, an affiliate of the International Transport Workers' Federation (the ITF)
and the Company who is the Owner/Agent of the Ship.

The following are the conditions for the applicability of the ITF Agreement: (1) the seafarer is a
member of a union, (2) which is affiliated with the ITF, (3) that has entered into a special agreement
with petitioners.

The parties have not disputed the first requisite. As regards the other two, the LA, the NLRC, and the
CA only made the following pronouncement: 24

[p]er ITF Standard collective agreement, of which the union is an affiliate, does (sic) not make any
distinction as to the kind of death of the covered seafarer.

Noticeably, the labor tribunals made a generalization without citing their sources. They failed to point
to specific evidence showing that Efren's labor union was affiliated with the ITF. Neither did the LA,
the NLRC, or the CA allude to a special agreement between the union or the ITF and petitioners.
Therefore, this Court will not automatically conclude that the seafarer is entitled to the benefits given
under the ITF Agreement premised on the unreferenced determination of the labor tribunals. 25
Perusing now the records before us, we find that none of the pieces of evidence adduced by the
parties has depicted with clarity the relationship of Efren's labor union - Singapore Organisation of
Seamen - with the ITF. Furthermore, none of the documents herein portray that petitioners entered
into any special agreement. In this light, we find grave abuse of discretion on the part of the CA for
awarding the death benefits provided by the ITF Agreement sans any proof of the applicability
thereof.

Given that the ITF Agreement is not an overriding instrument in this case, we apply the minimum
acceptable terms in a seafarer's employment contract provided by the POEA-SEC.  However,
26

in Legal Heirs of Deauna v. Fil-Star Maritime Corp.,  we clarified that beneficial CBA clauses prevail
27

over the POEA-SEC:

More importantly, the special clauses on collective bargaining agreements must prevail over the
standard terms and benefits formulated by the POEA in its Standard Employment Contract. A
contract of labor is so impressed with public interest that the more beneficial conditions must be
endeavored in favor of the laborer. This is in consonance with the avowed policy of the State to give
maximum aid and full protection to labor as enshrined in Article XIII of the 1987 Constitution.
(Emphasis supplied)

We then proceed to an inquiry into whether or not the compensability clauses in the CBA provide
greater death benefits to the seafarer than those granted under the POEA-SEC.

Section 20(A)(l) of the POEA-SEC provides that in case of the work-related death of a seafarer
during the term of his contract, the employer shall pay his beneficiaries the "Philippine Currency
equivalent to the amount of Fifty Thousand US dollars (US$50,000) and an additional amount of
Seven Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not
exceeding four (4) children, at the exchange rate prevailing during the time of payment."

On the other hand, Section 25(1) of the CBA states that petitioners shall pay compensation to a
seafarer for any death arising from an accident equivalent to USD 80,000.  Section 25(5) further
28

provides that if a seafarer "dies from natural causes or illness while in the employment of the
Company, the Company shall pay fifty percent of the quantum payable for death x x x." 29

Comparing these two provisions, the CBA clearly provides higher death benefits of USD 80,000.
However, the cause of death of the seafarer must be due to an accident; otherwise, his beneficiaries
would receive only USD 40,000. That amount is lower than the benefit granted by the POEASEC,
which is USD 50,000. But before beneficiaries may receive compensation under the POEA-SEC,
there must be substantial evidence that the seafarer died of a work-related illness.30

Thus, respondent is entitled to the more beneficial provision of the POEA-SEC if his death is proven
to have been work-related.  Otherwise, the CBA's provision on the grant of USD 40,000 regardless
1âwphi1

of the cause of death will apply. The labor tribunals, therefore, should have ascertained whether or
not Efren's death was caused by a work-related illness.

Burden of Proof in Compensation

Proceedings for Seafarers

In its assailed Decision, the CA sustained the appreciation of the NLRC that petitioners failed to
show that Efren died from a non-compensable illness. For the CA, petitioners were "less than
convincing in their denial of liability to their deceased employee."
31
The CA believes that employers have the duty to prove that a seafarer died from a non-
compensable illness. However, in numerous cases, this Court has explained that "whoever claims
entitlement to the benefits provided by law should establish his rights to the benefits by substantial
evidence."  Hence, the claimants of death benefits, and not the employers, carry the burden of
32

proof.  We elucidated in Quizora v. Denholm Crew Management (Philippines), Inc. as follows:
33

At any rate, granting that the provisions of the 2000 POEA-SEC apply, the disputable presumption
provision in Section 20(B) does not allow him to just sit down and wait for respondent company to
present evidence to overcome the disputable presumption of work-relatedness of the illness.
Contrary to his position, he still has to substantiate his claim in order to be entitled to disability
compensation. He has to prove that the illness he suffered was work-related and that it must have
existed during the term of his employment contract. He cannot simply argue that the burden of proof
belongs to respondent company. (Emphases supplied)

Therefore, in resolving the death claims of respondent, the CA proceeded from an incorrect legal
framework, which this Court must rectify. After all, in a petition under Rule 45 of the Rules of Court,
what we review are the legal errors that the CA may have committed in the assailed decision. 34

The correct approach in adjudging claims of seafarers for death and disability benefits is to
determine whether the claimants have proven the requisites of comperisability  under Section 32-A
35

of the POEA-SEC, viz: (1) the seafarer's work must have involved the risks described therein; (2) the
disease was contracted as a result of the seafarer's exposure to the described risks; (3) the disease
was contracted within a period of exposure and under such factors necessary to contract it; and (4)
there was no notorious negligence on the part of the seafarer.

Here, respondent has failed to satisfy the required positive propositions on compensability. First, she
did not describe the tasks performed by Efren on board Maersk Tide.  While his employment
36

contract identified him as an able-bodied seaman, none of the documents on record enumerated his
particular duties. Respondent did not even explain how his work environment caused his fever and
headache, and how these conditions worsened into the alleged fatal illness.

Second, given the dearth of evidence as regards Efren's actual job, there was absolutely no showing
of how his duties or tasks contributed to the development of his illness. Therefore, there could be no
basis to conclude that his multiple organ failure secondary to septicemia was contracted as a result
of his exposure to the risks of his trade.

The instant case is similar to Covita v. SSM Maritime Services, Inc.  In that case, we said that by
37

failing to prove the nature of the work of the seafarer, logically, the claimants would not be able to
prove the work-relatedness of his illness.

A reading of petitioner's above-quoted allegations to prove the work-relatedness of her husband's

chronic renal failure shows that they are mere general statements with no supporting documents or
medical records. She failed to show the nature of Rolando's work as a Bosun on board the vessel
since there was no specific description of Rolando's daily tasks or his working conditions which could
have caused or aggravated his illness. Her claim that Rolando's working conditions were
characterized by stress, heavy workload and over fatigue were mere self-serving allegations which
are not established by any evidence on record. In fact, petitioner alleged that one of the main causes
of kidney failure is high blood pressure due to stress, however, there was nothing on record to show
that Rolando was suffering from high blood pressure during his seven day's employment in the
vessel. Bare allegations do not suffice to discharge the required quantum of proof of compensability.
The beneficiaries must present evidence to prove a positive proposition. (Emphasis supplied).
Given that none of the labor tribunals made a factual determination of the work assignments of Efren
as an able-bodied seaman, this Court finds an utter lack of basis for granting the POEA-SEC's USD
50,000 death benefits to respondent.

Nonetheless, as earlier explained, respondents are still entitled to claim the death benefits provided
by the CBA. Section 25(5) thereof grants USD 40,000 regardless of whether the seafarer died of a
work-related illness, provided that he died while in the employment of petitioners. In the case at bar,
none of the parties dispute that Efren died of multiple organ failure secondary to septicemia caused
by severe infection on 29 May 2007 or during the term of his contract with petitioners.

Therefore, petitioners were correct to offer respondent only USD 40,000. Based on their uncontested
narrative, they had already proposed the payment of that sum to Rosemary as early as the
negotiations preceding the filing of the claims before the LA.

We find this circumstance an exercise in good faith on the part of petitioners. It would negate the
imposition upon them of moral and exemplary damages, as well as attorney's fees.  These forms of
38

indemnity may only be imposed on a concrete showing of bad faith or malice on the part of
petitioners.
39

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP Nos.
03832-MIN and 03841-MIN are hereby REVERSED and SET ASIDE, and a new
one ENTERED ordering petitioners to jointly and severally pay respondent the death benefits of
Efren B. Malicse amounting to USD 40,000.00 or its peso equivalent at the time of payment, which
shall earn legal interest at the rate of six percent (6%) per annum from the finality of this Decision
until fully paid.

SO ORDERED.

THIRD DIVISION

March 15, 2017

G.R. No. 192648

DE OCAMPO MEMORIAL SCHOOLS, INC., Petitioner

vs
BIGKIS MANGGAGAWA SA DE OCAMPO MEMORIAL SCHOOL, INC. , Respondent

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari  assailing the Court of Appeals (CA) Decision  dated July
1 2

15, 2009 and the Resolution  dated June 21, 2010 (assailed Decision). The assailed Decision
3

affirmed the Decision  dated December 29, 2004 of the Bureau of Labor Relations (BLR),
4

Department of Labor and Employment (DOLE) in Case No. BLR-A-C-75-8- 24-04, In Re: Petition for
Cancellation of Union Registration of Bigkis Manggagawa sa De Ocampo Memorial School,
Inc., - Lakas Union Registration Number (NCR-12-CC-002-2003).

I
De Ocampo Memorial Schools, Inc. (De Ocampo) is a domestic corporation duly-organized and
existing under the laws of the Philippines. It has two main divisions, namely: De Ocampo Memorial
Medical Center (DOMMC), its hospital entity, and the De Ocampo Memorial Colleges (DOMC), its
school entity. 200
5

On September 26, 2003, Union Registration No. NCR-UR-9-3858- 2002 was issued in favor
of Bigkis Manggagawa sa De Ocampo Memorial Medical Center - LAKAS (BMDOMMC). 6

Later, on December 5, 2003, Bigkis Manggagawa sa De Ocampo Memorial School, Inc.

(BMDOMSI) was issued a Union Registration/Certificate of Creation of Local Chapter No. NCR-l 2-
CC-002- 2003 and declared a legitimate labor organization. 7

On March 4, 2004, De Ocampo filed a Petition for Cancellation of Ce1iificate of Registration  with the
8

Department of Labor and Employment - National Capital Region (DOLE-NCR). It sought to cancel
the Certificate of Registration of BMDOMSI on the following grounds: 1) misrepresentation, false
statement and fraud in connection with its creation and registration as a labor union as it shared the
same set of officers and members with BMDOMMC; 2) mixed membership of rank-and-file and
managerial/supervisory employees; and 3) inappropriate bargaining unit. 9

On April 13, 2004, De Ocampo filed a Supplemental Petition,  informing the DOLE-NCR of the
10

cancellation of the Certificate of Registration of BMDOMMC in Case No. NCR-OD-0307-009-LRD. It

attached a copy of the Decision  of the DOLE-NCR dated March 3, 2004, which cancelled and
11

struck off Union Registration No. NCR-UR-9-3858- 2002 from the registry of legitimate labor
organizations for being an inappropriate bargaining unit. 12

On May 18, 2004, BMDOMSI filed its Comment-Opposition to Petition for Cancellation of Certificate
of Registration and Supplemental Petition,  denying De Ocampo's allegations and claiming that the
13

latter only wants to impede the formation of the union.

In a Decision  dated July 26, 2004, Acting Regional Director Ciriaco A. Lagunzad III of the DOLE-
14

NCR ruled that BMDOMSI committed misrepresentation by making it appear that the bargaining unit
is composed of faculty and technical employees. In fact, all the union officers and most of the
members are from the General Services Division.  Furthermore, the members of the union do not
15

share commonality of interest, as it is composed of academic and non-academic personnel.  The 16

nature of work of the employees of the General Services Division, while falling within the category of
non-academic personnel, differs from that of the other nonacademic employees composed of clerks,
messengers, etc., since they also serve the hospital component of De Ocampo. 17

BMDOMSI then filed an appeal to the BLR alleging that the union members are all employees of De
Ocampo and that the bargaining unit it sees to represent is appropriate. 18

In a Decision  dated December 29, 2004, the BLR reversed the Regional Director's finding of
19

misrepresentation, false statement or fraud in BMDOMSI's application for registration. According to

the BLR, De Ocampo failed to adduce proof to support its allegation of mixed membership within
respondent union.  Further, and contrary to De Ocampo's claim, records show that BMDOMSI
20

stated in its application that its members are composed of rank-and-file employees falling under
either faculty or technical occupational classifications.  The BLR also held that the existence of an
21

inappropriate bargaining unit would not necessarily result in the cancellation of union registration,
and the inclusion of a disqualified employee in a union is not a ground for cancellation.  Even if
22

BMDOMSI shared the same set of officers and members of BMDOMMC, the latter had already been
delisted on March 3, 2004 and there is no prohibition against organizing another union. 23
De Ocampo filed a Petition for Certiorari  with the CA seeking to annul and set aside the BLR
24

Decision as well as the Resolution  dated January 24, 2005 denying its motion for reconsideration.
25

The CA affirmed the Decision of the BLR. It ruled that there was no misrepresentation, false
statement or fraud in the application for registration.

The record shows that, as BMDOMSI had indicated, the bargaining unit as described is composed of
rank-and-file employees with occupational classifications under technical and faculty.  The CA found
26

that there could be no misrepresentation as the members appearing in the minutes of the general
membership meeting, and the list of members who attended the meeting and ratified the union
constitution and by-laws, are in truth employees of the school, though some service the
hospital.  The CA also ruled that, other than De Ocampo's bare allegations, there was no proof of
27

intent to defraud or mislead on the part of BMDOMSI. Hence, the charge of fraud, false statement or
misrepresentation cannot be sustained. 28

However, the CA observed that the members of the union, who are from academic, non-academic,
and general services, do not perform work of the same nature, receive the same wages and
compensation, nor share a common stake in concerted activities.  While these factors dictate the
29

separation of the categories of employees for purposes of collective bargaining,  the CA reasoned
30

that such lack of mutuality and commonality of interest of the union members is not among the
grounds for cancellation of union registration under Article 239 of the Labor Code. 31

De Ocampo filed a motion for reconsideration which was denied in the assailed Resolution dated
June 21, 2010. Hence, this petition.

De Ocampo maintains that BMDOMSI committed misrepresentation and fraud in connection with its
application, creation and registration. It intentionally suppressed the fact that at the time of its
application, there was another union known as BMDOMMC, with whom they shared the same set of
officers and members.  It was also made to appear that BMDOMMC is a labor union representing a
32

separate bargaining unit whose personality, affairs and composition are unknown to
BMDOMSI.  Lastly, BMDOMSI suppressed the fact that its members have no mutuality or
33

commonality of interest as they belong to different work classifications, nature and designations. 34

II

We deny the petition.

Article 247, previously Aiiicle 239 of the Labor Code  provides:

35

Art. 247. Grounds for Cancellation of Union Registration. - The following may constitute grounds for
cancellation of union registration:

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

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of
the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

For fraud and misrepresentation to constitute grounds for cancellation of union registration under the
Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough
to vitiate the consent of a majority of union members. 36

De Ocampo insists that "by conveniently disregarding" BMDOMMC's existence during the filing of its
application, despite having the same set of officers and members,  BMDOMSI "had misrepresented
37

facts, made false statements and committed fraud in its application for union registration for alleging
facts therein which they [know] or ought to have known to be false." 38

We agree with the BLR and the CA that BMDOMSI did not commit fraud or misrepresentation in its
application for registration.  In the form "Report of Creation of Local Chapter"  filed by BMDOMSI,
1âwphi1
39

the applicant indicated in the portion "Description of the Bargaining Unit" that it is composed of
"Rank and File" and under the "Occupational Classification," it marked "Technical" and "Faculty."

Further, the members appearing in the Minutes of the General Membership and the List of Workers
or Members who attended the organizational meeting and adopted/ratified the Constitution and By-
Laws are, as represented, employees of the school and the General Services Division, though some
of the latter employees service the hospital.40

Moreover, there is nothing in the form "Report of Creation of Local Chapter" that requires the
applicant to disclose the existence of another union, much less the names of the officers of such
other union. Thus, we cannot see how BMDOMSI made the alleged misrepresentation or false
statements in its application.

De Ocampo likewise claims that BMDOMSI committed fraud and misrepresentation when it
suppressed the fact that there exists "no mutuality and/or communality of interest"  of its members.
41

This, De Ocampo asserts, is a ground for the cancellation of its registration.

We disagree.

While the CA may have ruled that there is no mutuality or commonality of interests among the
members of BMDOMSI, this is not enough reason to cancel its registration. The only grounds on
which the cancellation of a union's registration may be sought are those found in Article 247 of the
Labor Code. In Tagaytay Highlands International Golf Club Incorporated v. Tagaytay Highlands
Employees Union-PTGW0,  we ruled that "[t]he inclusion in a union of disqualified employees is not
42

among the grounds for cancellation, unless such inclusion is due to misrepresentation, false
statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article [247] x x x
of the Labor Code."  Thus, for purposes of de-certifying a union, it is not enough to establish that the
43

rank-and-file union includes ineligible employees in its membership. Pursuant to paragraphs (a) and
(b) of Article 247 of the Labor Code, it must be shown that there was misrepresentation, false
statement or fraud in connection with: (1) the adoption or ratification of the constitution and by-laws
or amendments thereto; (2) the minutes of ratification; (3) the election of officers; (4) the minutes of
the election of officers; and (5) the list of voters.  Failure to submit these documents together with
44

the list of the newly elected-appointed officers and their postal addresses to the BLR may also
constitute grounds for cancellation, lack of mutuality of interests, however, is not among said
grounds. 45

The BLR and the CA's finding that the members of BMDOMSI are rank-and-file employees is
supported by substantial evidence and is binding on this Court.  On the other hand, other than the
46

allegation that BMDOMSI has the same set of officers with BMDOMMC and the allegation of mixed
membership of rank-and-file and managerial or supervisory employees, De Ocampo has cited no
other evidence of the alleged fraud and misrepresentation.
A final word. A party seeking the cancellation of a union's certificate of registration must bear in mind
that:

x x x [A] direct challenge to the legitimacy of a labor organization based on fraud and
misrepresentation in securing its certificate of registration is a serious allegation which deserves
careful scrutiny. Allegations thereof should be compounded with supporting circumstances and
evidence. The records of the case are devoid of such evidence. Furthermore, this Court is not a trier
of facts, and this doctrine applies with greater force in labor cases. Findings of fact of administrative
agencies and quasi-judicial bodies, such as the BLR, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only great respect but even
finality.
47

WHEREFORE, the petition is hereby DENIED for lack of merit. The Decision of the Court of Appeals
in CA-G.R. SP No. 89162 dated July 15, 2009 is AFFIRMED.

SO ORDERED.

FIRST DIVISION

January 23, 2017

G.R. No. 207971

ASIAN INSTITUTE OF MANAGEMENT, Petitioner,

vs.
ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the January 8, 2013 Decision  of the Court of Appeals
1 2

(CA) which dismissed the Petition for Certiorari in CA-G.R. SP No. 114122, and its subsequent June
3

27, 2013 Resolution   denying herein petitioner's Motion for Reconsideration. 

4 5

Factual Antecedents

Petitioner Asian Institute of Management (AIM) is a duly registered non-stock, non-profit educational
institution. Respondent Asian Institute of Management Faculty Association (AFA) is a labor
organization composed of members of the AIM faculty, duly registered under Certificate of
Registration No. NCR-UR-12-4076-2004.

On May 16, 2007, respondent filed a petition for certification election  seeking to represent a
6

bargaining unit in AIM consisting of forty (40) faculty members. The case was docketed as DOLE
Case No. NCR-OD-M-0705-007. Petitioner opposed the petition, claiming that respondent's
members are neither rank-and-file nor supervisory, but rather, managerial employees. 7

On July 11, 2007, petitioner filed a petition for cancellation of respondent's certificate of
registration  - docketed as DOLE Case No. NCROD-0707-001-LRD - on the grounds of
8

misrepresentation in registration and that respondent is composed of managerial employees who

are prohibited from organizing as a union.
On August 30, 2007, the Med-Arbiter in DOLE Case No. NCR-OD-M-0705-007 issued an
Order  denying the petition for certification election on the ground that AIM' s faculty members are
9

managerial employees. This Order was appealed by respondent before the Secretary of the
Department of Labor and Employment (DOLE),   who reversed foe same via a February 20, 2009
10

Decision   and May 4, 2009 Resolution,   decreeing thus:

11 12

WHEREFORE, the appeal filed by the Asian Institute of Management Faculty Association (AIMFA) is
GRANTED. The Order dated 30 August 2007 of DOLE-NCR Mediator-Arbiter Michael T. Parado is
hereby REVERSED and SET ASIDE.

Accordingly, let the entire records of the case be remanded to DOLEN CR for the conduct of a
certification election among the faculty members of the Asian Institute of Management (AIM), with
the following choices:

1. ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION (AIMFA); and

2. No Union.

SO ORDERED. 13

Meanwhile, in DOLE Case No. NCR-OD-0707-001-LRD, an Order  dated February 16, 2009 was
14

issued by DOLE-NCR Regional Director Raymundo G. Agravante granting AIM's petition for
cancellation of respondent's certificate of registration and ordering its delisting from the roster of
legitimate labor organizations. 1bis Order was appealed by respondent before the Bureau labor
Relations  (BLR), which, in a December 29, 2009 Decision,  reversed the same and ordered
15 16

respondent's retention in the roster of legitimate labor organizations. The BLR held that the grounds
relied upon in the petition for cancellation are not among the grounds authorized under Article 239 of
the Labor Code,   and that respondent's members are not managerial employees. Petitioner moved
17

to reconsider, but was rebuffed in a March 18, 2010 Resolution.  18

CA-G.R. SP No.109487 and G.R. No.197089

Petitioner filed a Petition for Certiorari before the CA, questioning the DOLE Secretary's February
20, 2009 Decision and May 4, 2009 Resolution relative to DOLE Case No. NCR-OD-M-0705-007, or
respondent's petition for certification election. Docketed as CA-G.R. SP No. 109487, the petition is
based on the arguments that 1) the bargaining unit within AIM sought to be represented is
composed of managerial employees who are not eligible to join, assist, or form any labor
organization, and 2) respondent is not a legitimate labor organization that may conduct a certification
election.

On October 22, 2010, the CA rendered its Decision  containing the following pronouncement:
19

AIM insists that the members of its tenure-track faculty are managerial employees, and therefore,
ineligible to join, assist or form a labor organization. It ascribes grave abuse of discretion on
SOLE  for its rash conclusion that the members of said tenure-track faculty are not managerial
20

employees solely because the faculty's actions are still subject to evaluation, review or final approval
by the board of trustees ("BOT'). AIM argues that the BOT does not manage the day-to-day affairs,
nor the making and implementing of policies of the Institute, as such functions are vested with the
tenure-track faculty.

We agree.
Article 212(m) of the Labor Code defines managerial employees as:

'ART. 212. Definitions. – x x x

(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay

down and execute management policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees. Supervisory employees are those who, in the interest of
the employer, effectively recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent judgment. All employees
not falling within any of the above definitions are considered rank-and-file employees for purposes of
this Book.'

There are, therefore, two (2) kinds of managerial employees under Art. 212(m) of the Labor Code.
Those who 'lay down x x x management policies', such as the Board of Trustees, and those who
'execute management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees'.

xxxx

On its face, the SOLE's opinion is already erroneous because in claiming that the 'test of
'supervisory' or 'managerial status' depends on whether a person possesses authority to act in the
interest of his employer in the matter specified in Article 212(m) of the Labor Code and Section
l(m) of its Implementing Rules', he obviously was referring to the old definition of a managerial
employee. Such is evident in his use of 'supervisory or managerial status', and reference
to 'Section l(m) of its Implementing Rules'. For presently, as aforequoted in Article 212(m) of the
Labor Code and as amended by Republic Act 6715 which took effect on March 21, 1989, a
managerial employee is already different from a supervisory employee. x x x

xxxx

In further opining that a managerial employee is one whose 'authority is not merely routinary or

clerical in nature but requires the use of independent judgment', a description which fits now
a supervisory employee under Section l(t), Rule I, Book V of the Omnibus Rules Implementing
the Labor Code, it then follows that the SOLE was not aware of the change in the law and thus
gravely abused its discretion amounting to lack of jurisdiction in concluding that AIM's 'tenure-
track' faculty are not managerial employees.

SOLE further committed grave abuse of discretion when it concluded that said tenure-track faculty
members are not managerial employees on the basis of a 'footnote' in AIM's Policy Manual, which
provides that 'the policy[-] making authority of the faculty members is merely
recommendatory in nature considering that the faculty standards they formulate are still subject to
evaluation, review or final approval by the [AIM]'s Board of Trustees'. x x x

xxxx

Clearly, AIM's tenure-track faculty do not merely recommend faculty standards.  They 'determine all
1âwphi1

faculty standards', and are thus managerial employees. The standards' being subjected to the
approval of the Board of Trustees would not make AIM's tenure-track faculty non-managerial
because as earlier mentioned, managerial employees are now of two categories: (1) those who 'lay
down policies', such as the members of the Board of Trustees, and (2) those
who 'execute management policies (etc.)’, such as AIM's tenure-track faculty.
 xxxx

It was also grave abuse of discretion on the part of the SOLE when he opined that AIM' s tenure-
track faculty members are not managerial employees, relying on an impression that they were
subjected to rigid observance of regular hours of work as professors. x x x

xxxx

More importantly, it behooves the SOLE to deny AFA's appeal in light of the February 16, 2009
Order of Regional Director Agravante delisting AFA from the roster of legitimate labor
organizations. For, only legitimate labor organizations are given the right to be certified as
sole and exclusive bargaining agent in an establishment.

xxxx

Here, the SOLE committed grave abuse of discretion by giving due course to AFA's petition for
certification election, despite the fact that: (1) AFA's members are managerial employees; and (2)
AFA is not a legitimate labor organization. 'These facts rendered AFA ineligible, and without any
right to file a petition for certification election, the object of which is to determine the sole and
exclusive bargaining representative of qualified AIM employees.

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated February 20, 2009
and Resolution dated May 4, 2009 are hereby REVERSED and SET ASIDE. The Order dated
August 30, 2007 of Mediator-Arbiter Parado is hereby REINSTATED.

SO ORDERED.  (Emphasis in the original)

21

Respondent sought reconsideration, but was denied. It thus instituted a Petition for Review
on Certiorari before this Court on July 4, 2011. The Petition, docketed as G.R. No. 197089, remains
pending to date.

The Assailed Ruling of the Court of Appeals

Meanwhile, relative to DOLE Case No. NCR-OD-0707-001-LRD or petitioner AIM's petition for
cancellation of respondent's certificate of registration, petitioner filed on May 24, 20 l 0 a Petition
for Certiorari before the CA, questioning the BLR's December 29, 2009 decision and March 18,
22

2010 resolution. The petition, docketed as CA-G.R. SP No. 114122, alleged that the BLR committed
grave abuse of discretion in granting respondent's appeal and affirming its certificate of registration
notwithstanding that its members are managerial employees who may not join, assist, or form a
labor union or organization.

On January 8, 2013, the CA rendered the assailed Decision, stating as follows:

The petition lacks merit

xxxx

It is therefore incumbent upon the Institute to prove that the BLR committed grave abuse of
discretion in issuing the questioned Decision.  Towards this end, AIM must lay the basis by showing
1âwphi1

that any of the grounds provided under Article 239 of the Labor Code, exists, to wit:
Article 239. Grounds for cancellation of union registration. - The following may constitute grounds for
cancellation of union registration:

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

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of
the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

Article 238 of the Labor Code provides that the enumeration of the grounds for cancellation of union
registration, is exclusive; in other words, no other grow1ds for cancellation is acceptable, except for
the three (3) grounds stated in Article 239. The scope of the grounds for cancellation has been
explained-

For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto; the minutes of ratification; or, in connection with
the election of officers, the minutes of the election of officers, the list of voters, or failure to submit
these documents together with the list of the newly elected-appointed officers and their postal
addresses to the BLR.

The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not, to our mind, provide a valid reason to cancel respondent's
certificate of registration. The cancellation of a union's registration doubtless has an impairing
dimension on the right of labor to self-organization. For fraud and misrepresentation to be grounds
for cancellation of union registration under the Labor Code, the nature of the fraud
andmisrepresentation must be grave and compelling enough to

vitiate the consent of a majority of union members. 23

In this regard, it has also been held that:

Another factor which militates against the veracity of the allegations in the Sinumpaang Petisyon is
the lack of particularities on how, when and where respondent union perpetrated the alleged fraud
on each member. Such details are crucial for, in the proceedings for cancellation of union
registration on the ground of fraud or misrepresentation, what needs to be established is that the
specific act or omission of the union deprived the complaining employees-members of their right to
choose. 24

A cursory reading of the Petition shows that AIM did NOT allege any specific act of fraud or
misrepresentation committed by AFA. What is clear is that the Institute seeks the cancellation of the
registration of AFA based on Article 245 of the Labor Code on the ineligibility of managerial
employees to form or join labor unions. Unfortunately for the petitioner, even assuming that there is
a violation of Article 245, such violation will not result in the cancellation of the certificate of
registration of a labor organization.

It should be stressed that a Decision had already been issued by the DOLE in the Certification
Election case; and the Decision ordered the conduct of a certification election among the faculty
members of the Institute, basing its directive on the finding that the members of AFA were not
managerial employees and are therefore eligible to form, assist and join a labor union. As a matter of
fact, the certification election had already been held on October 16, 2009, albeit the results have not
yet been resolved as inclusion/exclusion proceedings are still pending before the DOLE. The remedy
available to the Institute is not the instant Petition, but to question the status of the individual union
members of the AFA in the inclusion/exclusion proceedings pursuant to Article 245-A of the Labor
Code, which reads:

Article 245-A. Effect of inclusion as members of employees outside the bargaining unit. - The
inclusion as union members of employees outside the bargaining unit shall not be a ground for the
cancellation of the registration of the union. Said employees are automatically deemed removed
from the list of membership of said union.

Petitioner insists that Article 245-A is not applicable to this case as all AF A members are managerial
employees. We are not persuaded.

The determination of whether any or all of the members of AFA should be considered as managerial
employees is better left to the DOLE because,

It has also been established that in the determination of whether or not certain employees are
managerial employees, this Court accords due respect and therefore sustains the findings of fact
made by quasi-judicial agencies which are supported by substantial evidence considering their
expertise in their respective fields.
25

From the discussion, it is manifestly clear that the petitioner foiled to prove that the BLR committed
grave abuse of discretion; consequently, the Petition must fail.

WHEREFORE, the Petition is hereby DENIED. The Decision and Resolution of public respondent
Bureau of Labor Relations in BLR-A-C-19-3-6-09 (NCR-OD-0707-001) are hereby AFFIRMED.

SO ORDERED.  (Emphasis in the original)

26

Petitioner filed its Motion for Reconsideration, which was denied by the CA via its June 27, 2013
Resolution. Hence, the instant Petition.

In a November 10, 2014 Resolution,  the Court resolved to give due course to the Petition.
27

Issue

Petitioner claims that the CA seriously erred in affirming the dispositions of the BLR and thus
validating the respondent's certificate of registration notwithstanding the fact that its members are all
managerial employees who are disqualified from joining, assisting, or forming a labor organization.

Petitioner's Arguments

Praying that the assailed CA dispositions be set aside and that the DOLE-NCR Regional Director's
February 16, 2009 Order granting AIM's petition for cancellation of respondent's certificate of
registration and ordering its delisting from the roster of legitimate labor organizations be reinstated
instead, petitioner maintains in its Petition and Reply  that respondent's members are all managerial
28

employees; that the CA erred in declaring that even if respondent's members are all managerial
employees, this alone is not a ground for cancellation of its certificate of registration; that precisely,
the finding in DOLE Case No. NCR-ODM- 0705-007, which the CA affirmed in CA-G.R. SP No.
109487, is that respondent's members are managerial employees; that respondent's declaration that
its members are eligible to join, assist, or form a labor organization is an act of misrepresentation,
given the finding in CA-G.R. SP No. 109487 that they are managerial employees; and that the
grounds for cancellation of union registration enumerated in Article 239 of the Labor Code are not
exclusive.

Respondent's Arguments

In its Comment,  respondent maintains that the CA was right to treat petitioner’s case for
29

cancellation of its union registration with circumspection; that petitioner's ground for filing the petition
for cancellation is not recognized under Article 239; that petitioner's accusation of misrepresentation
is unsubstantiated, and is being raised for the first time at this stage; that its members are not
managerial employees; and that petitioner's opposition to respondent's attempts at self-organization
constitutes harassment, oppression, and violates the latter's rights under the Labor Code and the
Constitution.

Our Ruling

In Holy Child Catholic School v. Hon. Sto. Tomas, this Court declared that "[i]n case of alleged
30

inclusion of disqualified employees in a union, the proper procedure for an employer like petitioner is
to directly file a petition for cancellation of the union's certificate of registration due to
misrepresentation, false statement or fraud under the circumstances enumerated in Article 239 of
the Labor Code, as amended."

On the basis of the ruling in the above-cited case, it can be said that petitioner was correct in filing a
petition for cancellation of respondent's certificate of registration. Petitioner's sole ground for seeking
cancellation of respondent's certificate of registration - that its members are managerial employees
and for this reason, its registration is thus a patent nullity for being an absolute violation of Article
245 of the Labor Code which declares that managerial employees are ineligible to join any labor
organization --- is, in a sense, an accusation that respondent is guilty of misrepresentation for
registering under the claim that its members are not managerial employees.

However, the issue of whether respondent's members are managerial employees is still pending
resolution by way of petition for review on certiorari in G.R. No. 197089, which is the culmination of
all proceedings in DOLE Case No. NCR-OD-M-0705-007 -- where the issue relative to the nature of
respondent's membership was first raised by petitioner itself and is there fiercely contested. The
resolution of this issue cannot be pre-empted; until it is determined with finality in G.R. No. l 97089,
the petition for cancellation of respondent's certificate of registration on the grounds alleged by
petitioner cannot be resolved. As a matter of courtesy and in order to avoid conflicting decisions, We
must await the resolution of the petition in G.R. No. 197089.

x x x If a particular point or question is in issue in the second action, and the judgment will depend
on the determination of that particular point or question, a former judgment between the same
parties or their privies will be final and conclusive in the second if that same point or question was in
issue and adjudicated in the first suit. x x x Identity of cause of action is not required, but merely
identity of issues.  (Citation omitted)
31

WHEREFORE, considering that the outcome of this case depends on the resolution of the issue
relative to the nature of respondent's membership pending in G.R. No. 197089, this case is
ordered CONSOLIDATED with G.R. No. 197089.
SO ORDERED.