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Gr 90501Aug 5, 1991G.R. No. 90501 August 5, 1991ARIS (PHIL.) INC., petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO BESTAMONTE, AIDA OPENA, REYNALDO TORIADO, APOLINARIO GAGAHINA, RUFINO DE CASTRO, FLORDELIZA RAYOS DEL SOL, STEVE SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B. NADALA, respondents.Cesar C. Cruz & Partners for petitioner.Zosimo Morillo for respondent Rayos del Sol.Banzuela, Flores, Miralles, Raneses, Sy & Associates for private respondents. DAVIDE, JR., J.:pPetitioner assails the constitutionality of the amendment introduced by Section 12 of Republic Act No. 6715 to Article 223 of the Labor Code of the Philippines (PD No. 442, as amended) allowing execution pending appeal of the reinstatement aspect of a decision of a labor arbiter reinstating a dismissed or separated employee and of Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715 implementing the same. It also questions the validity of the Transitory Provision (Section 17) of the said Interim Rules.The challenged portion of Section 12 of Republic Act No. 6715, which took effect on 21 March 1989, reads as follows:

SEC 12. Article 223 of the same code is amended to read as follows:ART. 223. Appeal.

xxx xxx xxxIn any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, in so far as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided therein.

This is a new paragraph ingrafted into the Article.Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715, Amending the Labor Code", which the National Labor Relations Commission (NLRC) promulgated on 8 August 1989, provide as follows:

Section 2. Order of Reinstatement and Effect of Bond. — In so far as the reinstatement aspect is concerned, the decision of the Labor Arbiter reinstating a dismissed or separated employee shall immediately be executory even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation, or, at the option of the employer, merely be reinstated in the payroll.The posting of a bond by the employer shall not stay the execution for reinstatement.xxx xxx xxxSection 17. Transitory provision. — Appeals filed on or after March 21, 1989, but prior to the effectivity of these Interim Rules must conform to the requirements as herein set forth or as may be directed by the Commission.

The antecedent facts and proceedings which gave rise to this petition are not disputed:On 11 April 1988, private respondents, who were employees of petitioner, aggrieved by management's failure to attend to their complaints concerning their working surroundings which had become detrimental and hazardous, requested for a grievance conference. As none was arranged, and believing that their appeal would be fruitless, they grouped together after the end of their work that day with other employees and marched directly to the management's office to protest its long silence and inaction on their complaints.On 12 April 1988, the management issued a memorandum to each of the private respondents, who were identified by the petitioner's supervisors as the most active participants in the rally requiring them to explain why they should not be terminated from the service for their conduct. Despite their explanation, private respondents were dismissed for violation of company rules and regulations, more specifically of the provisions on security and public order and on inciting or participating in illegal strikes or concerted actions.Private respondents lost no time in filing a complaint for illegal dismissal against petitioner and Mr. Gavino Bayan with the regional office of the NLRC at the National Capital Region, Manila, which was docketed therein as NLRC-NCR-00-0401630-88.After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June 1989 a decision' the dispositive portion of which reads:

ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate within ten (10) days from receipt hereof, herein complainants Leodegario de Guzman, Rufino de Castro, Lilia M. Perez, Marieta Magalad, Flordeliza Rayos del Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario Gagahina, Aidam (sic) Opena, Steve C. Sancho Ester Cairo, and Mary B. Nadala to their former respective positions or any substantial equivalent positions if already filled up, without loss of seniority right and privileges but with limited backwages of six (6) months except complainant Leodegario de Guzman.All other claims and prayers are hereby denied for lack of merit.SO ORDERED.

On 19 July 1989, complainants (herein private respondents) filed a Motion For Issuance of a Writ of Execution 2pursuant to the above-quoted Section 12 of R.A. No. 6715.On 21 July 1989, petitioner filed its Appeal. 3

On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial Appeal. 4

On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal. 5

On 29 August 1989, petitioner filed an Opposition 6 to the motion for execution alleging that Section 12 of R.A. No. 6715 on execution pending appeal cannot be applied retroactively to cases pending at the time of its effectivity because it does not expressly provide that it

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shall be given retroactive effect 7 and to give retroactive effect to Section 12 thereof to pending cases would not only result in the imposition of an additional obligation on petitioner but would also dilute its right to appeal since it would be burdened with the consequences of reinstatement without the benefit of a final judgment. In their Reply 8 filed on 1 September 1989, complainants argued that R.A. No. 6715 is not sought to be given retroactive effect in this case since the decision to be executed pursuant to it was rendered after the effectivity of the Act. The said law took effect on 21 March 1989, while the decision was rendered on 22 June 1989.Petitioner submitted a Rejoinder to the Reply on 5 September 1989. 9

On 5 October 1989, the Labor Arbiter issued an Order granting the motion for execution and the issuance of a partial writ of execution 10 as far as reinstatement of herein complainants is concerned in consonance with the provision of Section 2 of the rules particularly the last sentence thereof.In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC Interim Rules in this wise:

Since Section 17 of the said rules made mention of appeals filed on or after March 21, 1989, but prior to the effectivity of these interim rules which must conform with the requirements as therein set forth (Section 9) or as may be directed by the Commission, it obviously treats of decisions of Labor Arbiters before March 21,1989. With more reason these interim rules be made to apply to the instant case since the decision hereof (sic) was rendered thereafter. 11

Unable to accept the above Order, petitioner filed the instant petition on 26 October 1989 12 raising the issues adverted to in the introductory portion of this decision under the following assignment of errors:

A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE REINSTATEMENT OF THE PRIVATE RESPONDENTS PENDING APPEAL AND IN PROVIDING FOR SECTION 2 OF THE INTERIM RULES, RESPECTIVELY, ACTED WITHOUT AND IN EXCESS OF JURISDICTION SINCE THE BASIS FOR SAID ORDER AND INTERIM RULE, i.e., SECTION 12 OF R.A. 6715 IS VIOLATIVE OF THE CONSTITUTIONAL GUARANTY OF DUE PROCESS IT BEING OPPRESSIVE AND UNREASONABLE.B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC) REINSTATEMENT PENDING APPEAL IS VALID, NONETHELESS, THE LABOR ARBITER A QUO AND THE NLRC STILL ACTED IN EXCESS AND WITHOUT JURISDICTION IN RETROACTIVELY APPLYING SAID PROVISION TO PENDING LABOR CASES.

In Our resolution of 7 March 1989, We required the respondents to comment on the petition.Respondent NLRC, through the Office of the Solicitor General, filed its Comment on 20 November 1989. 13Meeting squarely the issues raised by petitioner, it submits that the provision concerning the mandatory and automatic reinstatement of an employee whose dismissal is found unjustified by the labor arbiter is a valid exercise of the police power of the state and the contested provision "is then a police legislation."As regards the retroactive application thereof, it maintains that being merely procedural in nature, it can apply to cases pending at the time of its effectivity on the theory that no one can claim a vested right in a rule of procedure. Moreover, such a law is compatible with the constitutional provision on protection to labor.On 11 December 1989, private respondents filed a Manifestation 14 informing the Court that they are adopting the Comment filed by the Solicitor General and stressing that petitioner failed to comply with the requisites for a valid petition for certiorari under Rule 65 of the Rules of Court.On 20 December 1989, petitioner filed a Rejoinder 15 to the Comment of the Solicitor General.In the resolution of 11 January 1990, 16 We considered the Comments as respondents' Answers, gave due course to the petition, and directed that the case be calendared for deliberation.In urging Us to declare as unconstitutional that portion of Section 223 of the Labor Code introduced by Section 12 of R.A. No. 6715, as well as the implementing provision covered by Section 2 of the NLRC Interim Rules, allowing immediate execution, even pending appeal, of the reinstatement aspect of a decision of a labor arbiter reinstating a dismissed or separated employee, petitioner submits that said portion violates the due process clause of the Constitution in that it is oppressive and unreasonable. It argues that a reinstatement pending appeal negates the right of the employer to self-protection for it has been ruled that an employer cannot be compelled to continue in employment an employee guilty of acts inimical to the interest of the employer; the right of an employer to dismiss is consistent with the legal truism that the law, in protecting the rights of the laborer, authorizes neither the oppression nor the destruction of the employer. For, social justice should be implemented not through mistaken sympathy for or misplaced antipathy against any group, but even-handedly and fairly. 17

To clinch its case, petitioner tries to demonstrate the oppressiveness of reinstatement pending appeal by portraying the following consequences: (a) the employer would be compelled to hire additional employees or adjust the duties of other employees simply to have someone watch over the reinstated employee to prevent the commission of further acts prejudicial to the employer, (b) reinstatement of an undeserving, if not undesirable, employee may demoralize the rank and file, and (c) it may encourage and embolden not only the reinstated employees but also other employees to commit similar, if not graver infractions.These rationalizations and portrayals are misplaced and are purely conjectural which, unfortunately, proceed from a misunderstanding of the nature and scope of the relief of execution pending appeal.Execution pending appeal is interlinked with the right to appeal. One cannot be divorced from the other. The latter may be availed of by the losing party or a party who is not satisfied with a judgment, while the former may be applied for by the prevailing party during the pendency of the appeal. The right to appeal, however, is not a constitutional, natural or inherent right. It is a statutory privilege of statutory origin 18 and, therefore, available only if granted or provided by statute. The law may then validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party. Execution pending appeal is one such relief long recognized in this jurisdiction. The Revised Rules of Court allows execution pending appeal and the grant thereof is left to the discretion of the court upon good reasons to be stated in a special order. 19

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Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor Code already allowed execution of decisions of the NLRC pending their appeal to the Secretary of Labor and Employment.In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working-man.These provisions are the quintessence of the aspirations of the workingman for recognition of his role in the social and economic life of the nation, for the protection of his rights, and the promotion of his welfare. Thus, in the Article on Social Justice and Human Rights of the Constitution, 20 which principally directs Congress to give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good, the State is mandated to afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all; to 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, security of tenure, human conditions of work, and a living wage, to participate in policy and decision-making processes affecting their rights and benefits as may be provided by law; and to promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes. Incidentally, a study of the Constitutions of various nations readily reveals that it is only our Constitution which devotes a separate article on Social Justice and Human Rights. Thus, by no less than its fundamental law, the Philippines has laid down the strong foundations of a truly just and humane society. This Article addresses itself to specified areas of concern labor, agrarian and natural resources reform, urban land reform and housing, health, working women, and people's organizations and reaches out to the underprivileged sector of society, for which reason the President of the Constitutional Commission of 1986, former Associate Justice of this Court Cecilia Muñoz-Palma, aptly describes this Article as the "heart of the new Charter." 21

These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution also expressly affirms With equal intensity. 22 Labor is an indispensable partner for the nation's progress and stability.If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of which is merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their only source of livelihood, their only means of support for their family their very lifeblood. To Us, this special circumstance is far better than any other which a judge, in his sound discretion, may determine. In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal.The validity of the questioned law is not only supported and sustained by the foregoing considerations. As contended by the Solicitor General, it is a valid exercise of the police power of the State. Certainly, if the right of an employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its permanent police power on the theory that the preservation of the lives of the citizens is a basic duty of the State, that is more vital than the preservation of corporate profits. 23 Then, by and pursuant to the same power, the State may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated employee and its family.The charge then that the challenged law as well as the implementing rule are unconstitutional is absolutely baseless. Laws are presumed constitutional. 24 To justify nullification of a law, there must be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative implication; a law shall not be declared invalid unless the conflict with the constitution is clear beyond reasonable doubt. 25 In Parades, et al. vs. Executive Secretary 26 We stated:

2. For one thing, it is in accordance with the settled doctrine that between two possible constructions, one avoiding a finding of unconstitutionality and the other yielding such a result, the former is to be preferred. That which will save, not that which will destroy, commends itself for acceptance. After all, the basic presumption all these years is one of validity. The onerous task of proving otherwise is on the party seeking to nullify a statute. It must be proved by clear and convincing evidence that there is an infringement of a constitutional provision, save in those cases where the challenged act is void on its face. Absent such a showing, there can be no finding of unconstitutionality. A doubt, even if well-founded, does not suffice. Justice Malcolm's aphorism is apropos: To doubt is to sustain. 27

The reason for this:... can be traced to the doctrine of separation of powers which enjoins on each department a proper respect for the acts of the other departments. ... The theory is that, as the joint act of the legislative and executive authorities, a law is supposed to have been carefully studied and determined to be constitution before it was finally enacted. Hence, as long as there is some other basis that can be used by the courts for its decision, the constitutionality of the challenged law will not be touched upon and the case will be decided on other available grounds. 28

The issue concerning Section 17 of the NLRC Interim Rules does not deserve a measure of attention. The reference to it in the Order of the Labor Arbiter of 5 October 1989 was unnecessary since the procedure of the appeal proper is not involved in this case. Moreover, the questioned interim rules of the NLRC, promulgated on 8 August 1989, can validly be given retroactive effect. They are procedural or remedial in character, promulgated pursuant to the authority vested upon it under Article 218(a) of the Labor Code of the Philippines, as amended. Settled is the rule that procedural laws may be given retroactive effect. 29 There are no vested rights in rules of procedure. 30 A remedial statute may be made applicable to cases pending at the time of its enactment. 31

WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against petitioner.SO ORDERED.

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GR L-15045 Jan 29, 1961G.R. No. L-15045             January 20, 1961IN RE: PETITION FOR EXEMPTION FROM COVERAGE BY THE SOCIAL SECURITY SYSTEM. ROMAN CATHOLIC ARCHBISHOP OF MANILA, petitioner-appellant, vs.SOCIAL SECURITY COMMISSION, respondent-appellee.Feria, Manglapus and Associates for petitioner-appellant.Legal Staff, Social Security System and Solicitor General for respondent-appellee.GUTIERREZ DAVID, J.:On September 1, 1958, the Roman Catholic Archbishop of Manila, thru counsel, filed with the Social Security Commission a request that "Catholic Charities, and all religious and charitable institutions and/or organizations, which are directly or indirectly, wholly or partially, operated by the Roman Catholic Archbishop of Manila," be exempted from compulsory coverage of Republic Act No. 1161, as amended, otherwise known as the Social Security Law of 1954. The request was based on the claim that the said Act is a labor law and does not cover religious and charitable institutions but is limited to businesses and activities organized for profit. Acting upon the recommendation of its Legal Staff, the Social Security Commission in its Resolution No. 572, series of 1958, denied the request. The Roman Catholic Archbishop of Manila, reiterating its arguments and raising constitutional objections, requested for reconsideration of the resolution. The request, however, was denied by the Commission in its Resolution No. 767, series of 1958; hence, this appeal taken in pursuance of section 5(c) of Republic Act No. 1161, as amended.Section 9 of the Social Security Law, as amended, provides that coverage "in the System shall be compulsory upon all members between the age of sixteen and sixty rears inclusive, if they have been for at least six months a the service of an employer who is a member of the System, Provided, that the Commission may not compel any employer to become member of the System unless he shall have been in operation for at least two years and has at the time of admission, if admitted for membership during the first year of the System's operation at least fifty employees, and if admitted for membership the following year of operation and thereafter, at least six employees x x x." The term employer" as used in the law is defined as any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government" (par. [c], see. 8), while an "employee" refers to "any person who performs services for an 'employer' in which either or both mental and physical efforts are used and who receives compensation for such services" (par. [d], see. 8). "Employment", according to paragraph [i] of said section 8, covers any service performed by an employer except those expressly enumerated thereunder, like employment under the Government, or any of its political subdivisions, branches or instrumentalities including corporations owned and controlled by the Government, domestic service in a private home, employment purely casual, etc.From the above legal provisions, it is apparent that the coverage of the Social Security Law is predicated on the existence of an employer-employee relationship of more or less permanent nature and extends to employment of all kinds except those expressly excluded.Appellant contends that the term "employer" as defined in the law should — following the principle of ejusdem generis — be limited to those who carry on "undertakings or activities which have the element of profit or gain, or which are pursued for profit or gain," because the phrase ,activity of any kind" in the definition is preceded by the words "any trade, business, industry, undertaking." The contention cannot be sustained. The rule ejusdem generisapplies only where there is uncertainty. It is not controlling where the plain purpose and intent of the Legislature would thereby be hindered and defeated. (Grosjean vs. American Paints Works [La], 160 So. 449). In the case at bar, the definition of the term "employer" is, we think, sufficiently comprehensive as to include religious and charitable institutions or entities not organized for profit, like herein appellant, within its meaning. This is made more evident by the fact that it contains an exception in which said institutions or entities are not included. And, certainly, had the Legislature really intended to limit the operation of the law to entities organized for profit or gain, it would not have defined an "employer" in such a way as to include the Government and yet make an express exception of it.It is significant to note that when Republic Act No. 1161 was enacted, services performed in the employ of institutions organized for religious or charitable purposes were by express provisions of said Act excluded from coverage thereof (sec. 8, par. [j] subpars. 7 and 8). That portion of the law, however, has been deleted by express provision of Republic Act No. 1792, which took effect in 1957. This is clear indication that the Legislature intended to include charitable and religious institutions within the scope of the law.In support of its contention that the Social Security Law was intended to cover only employment for profit or gain, appellant also cites the discussions of the Senate, portions of which were quoted in its brief. There is, however, nothing whatsoever in those discussions touching upon the question of whether the law should be limited to organizations for profit or gain. Of course, the said discussions dwelt at length upon the need of a law to meet the problems of industrializing society and upon the plight of an employer who fails to make a profit. But this is readily explained by the fact that the majority of those to be affected by the operation of the law are corporations and industries which are established primarily for profit or gain.Appellant further argues that the Social Security Law is a labor law and, consequently, following the rule laid down in the case of Boy Scouts of the Philippines vs. Araos (G.R. No. L-10091, January 29, 1958) and other cases1, applies only to industry and occupation for purposes of profit and gain. The cases cited, however, are not in point, for the reason that the law therein involved expressly limits its application either to commercial, industrial, or agricultural establishments, or enterprises. .Upon the other hand, the Social Security Law was enacted pursuant to the "policy of the Republic of the Philippines to develop, establish gradually and perfect a social security system which shall be suitable to the needs of the people throughout the Philippines and shall provide protection to employees against the hazards of disability, sickness, old age and death." (See. 2, Republic Act No. 1161, as

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amended.) Such enactment is a legitimate exercise of the police power. It affords protection to labor, especially to working women and minors, and is in full accord with the constitutional provisions on the "promotion of social justice to insure the well-being and economic security of all the people." Being in fact a social legislation, compatible with the policy of the Church to ameliorate living conditions of the working class, appellant cannot arbitrarily delimit the extent of its provisions to relations between capital and labor in industry and agriculture.There is no merit in the claim that the inclusion of religious organizations under the coverage of the Social Security Law violates the constitutional prohibition against the application of public funds for the use, benefit or support of any priest who might be employed by appellant. The funds contributed to the System created by the law are not public funds, but funds belonging to the members which are merely held in trust by the Government. At any rate, assuming that said funds are impressed with the character of public funds, their payment as retirement death or disability benefits would not constitute a violation of the cited provisions of the Constitution, since such payment shall be made to the priest not because he is a priest but because he is an employee.Neither may it be validly argued that the enforcement of the Social Security Law impairs appellant's right to disseminate religious information. All that is required of appellant is to make monthly contributions to the System for covered employees in its employ. These contributions, contrary to appellant's contention, are not in the nature of taxes on employment." Together with the contributions imposed upon the employees and the Government, they are intended for the protection of said employees against the hazards of disability, sickness, old age and death in line with the constitutional mandate to promote social justice to insure the well-being and economic security of all the people.IN VIEW OF THE FOREGOING, Resolutions Nos. 572 kind 767, series of 1958, of the Social Security Commission are hereby affirmed. So ordered with costs against appellant.

GR 120095 Aug 5, 1996FIRST DIVISION

[G.R. No. 120095.  August 5, 1996]JMM PROMOTION AND MANAGEMENT, INC., and KARY INTERNATIONAL, INC., petitioner, vs. HON. COURT OF APPEALS, HON. MA.

NIEVES CONFESSOR, then Secretary of the Department of the Labor and Employment, HON. JOSE BRILLANTES, in his capacity as acting Secretary of the Department of Labor and Employment and HON.  FELICISIMO JOSON, in his capacity as Administrator of the Philippine Overseas Employment Administration, respondents.

D E C I S I O NKAPUNAN, J.:

The limits of government regulation under the State's Police Power are once again at the vortex of the instant controversy.  Assailed is the government's power to control deployment of female entertainers to Japan by requiring an Artist Record Book (ARB) as a precondition to the processing by the POEA of any contract for overseas employment.   By contending that the right to overseas employment, is a property right within the meaning of the Constitution, petitioners vigorously aver that deprivation thereof allegedly through the onerous requirement of an ARB violates the due process clause and constitutes an invalid exercise of the police power.

The factual antecedents are undisputed.Following the much-publicized death of Maricris Sioson in 1991, former President Corazon C. Aquino ordered a total ban against

the deployment of performing artists to Japan and other foreign destinations. The ban was, however, rescinded after leaders of the overseas employment industry promised to extend full support for a program aimed at removing kinks in the system of deployment.   In its place, the government, through the Secretary of Labor and Employment, subsequently issued Department Order No. 28, creating the Entertainment Industry Advisory Council (EIAC), which was tasked with issuing guidelines on the training, testing certification and deployment of performing artists abroad.

Pursuant to the EIAC's recommendations,[1] the Secretary of Labor, on January 6, 1994, issued Department Order No. 3 establishing various procedures and requirements for screening performing artists under a new system of training, testing, certification and deployment of the former.  Performing artists successfully hurdling the test, training and certification requirement were to be issued an Artist's Record Book (ARB), a necessary prerequisite to processing of any contract of employment by the POEA.   Upon request of the industry, implementation of the process, originally scheduled for April 1, 1994, was moved to October 1, 1994.

Thereafter, the Department of Labor, following the EIAC's recommendation, issued a series of orders fine-tuning and implementing the new system.  Prominent among these orders were the following issuances:1.       Department Order No. 3-A, providing for additional guidelines on the training, testing, certification and deployment of performing artists.2.       Department Order No. 3-B, pertaining to the Artist Record Book (ARB) requirement, which could be processed only after the artist could show proof of academic and skills training and has passed the required tests.3.       Department Order No. 3-E, providing the minimum salary a performing artist ought to receive (not less than US$600.00 for those bound for Japan) and the authorized deductions therefrom.4.       Department Order No. 3-F, providing for the guidelines on the issuance and use of the ARB by returning performing artists who, unlike new artists, shall only undergo a Special Orientation Program (shorter than the basic program) although they must pass the academic test.

In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of the Philippines (FETMOP), on January 27, 1995 filed a class suit assailing these department orders, principally contending that said orders 1) violated the constitutional right to travel; 2) abridged existing contracts for employment; and 3) deprived individual artists of their licenses without due process of law.   FETMOP, likewise, averred that the issuance of the Artist Record Book (ARB) was discriminatory and illegal and "in gross violation of the

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constitutional right... to life liberty and property." Said Federation consequently prayed for the issuance of a writ of preliminary injunction against the aforestated orders.

On February 2, 1992, JMM Promotion and Management, Inc. and Kary International, Inc., herein petitioners, filed a Motion for Intervention in said civil case, which was granted by the trial court in an Order dated 15 February, 1995.

However, on February 21, 1995, the trial court issued an Order denying petitioners' prayer for a writ of preliminary injunction and dismissed the complaint.

On appeal from the trial court's Order, respondent court, in CA G.R. SP No. 36713 dismissed the same.   Tracing the circumstances which led to the issuance of the ARB requirement and the assailed Department Order, respondent court concluded that the issuances constituted a valid exercise by the state of the police power.

We agree.The latin maxim salus populi est suprema lex embodies the character of the entire spectrum of public laws aimed at promoting the

general welfare of the people under the State's police power.  As an inherent attribute of sovereignty which virtually "extends to all public needs,"[2] this "least limitable"[3] of governmental powers grants a wide panoply of instruments through which the state, as  parens patriae gives effect to a host of its regulatory powers.

Describing the nature and scope of the police power, Justice Malcolm, in the early case of Rubi v. Provincial Board of Mindoro[4] wrote:"The police power of the State," one court has said...'is a power coextensive with self-protection, and is not inaptly termed 'the law of overruling necessity.' It may be said to be that inherent and plenary power in the state which enables it to prohibit all things hurtful to the comfort, safety and welfare of society.' Carried onward by the current of legislature, the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided the purposes of the law do not go beyond the great principles that mean security for the public welfare or do not arbitrarily interfere with the right of the individual."[5]

Thus, police power concerns government enactments which precisely interfere with personal liberty or property in order to promote the general welfare or the common good.  As the assailed Department Order enjoys a presumed validity, it follows that the burden rests upon petitioners to demonstrate that the said order, particularly, its ARB requirement, does not enhance the public welfare or was exercised arbitrarily or unreasonably.

A thorough review of the facts and circumstances leading to the issuance of the assailed orders compels us to rule that the Artist Record Book requirement and the questioned Department Order related to its issuance were issued by the Secretary of Labor pursuant to a valid exercise of the police power.

In 1984, the Philippines emerged as the largest labor sending country in Asia dwarfing the labor export of countries with mammoth populations such as India and China.  According to the National Statistics Office, this diaspora was augmented annually by over 450,000 documented and clandestine or illegal (undocumented) workers who left the country for various destinations abroad, lured by higher salaries, better work opportunities and sometimes better living conditions.

Of the hundreds of thousands of workers who left the country for greener pastures in the last few years, women composed slightly close to half of those deployed, constituting 47% between 1987-1991, exceeding this proportion (58%) by the end of 1991, [6] the year former President Aquino instituted the ban on deployment of performing artists to Japan and other countries as a result of the gruesome death of Filipino entertainer Maricris Sioson.

It was during the same period that this Court took judicial notice not only of the trend, but also of the fact that most of our women, a large number employed as domestic helpers and entertainers, worked under exploitative conditions "marked by physical and personal abuse."[7] Even then, we noted that "[t]he sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by testimonies of returning workers" compelled "urgent government action."[8]

Pursuant to the alarming number of reports that a significant number of Filipina performing artists ended up as prostitutes abroad (many of whom were beaten, drugged and forced into prostitution), and following the deaths of a number of these women, the government began instituting measures aimed at deploying only those individuals who met set standards which would qualify them as legitimate performing artists.  In spite of these measures, however, a number of our countrymen have nonetheless fallen victim to unscrupulous recruiters, ending up as virtual slaves controlled by foreign crime syndicates and forced into jobs other than those indicated in their employment contracts.  Worse, some of our women have been forced into prostitution.

Thus, after a number of inadequate and failed accreditation schemes, the Secretary of Labor issued on August 16, 1993, D.O. No. 28, establishing the Entertainment Industry Advisory Council (EIAC), the policy advisory body of DOLE on entertainment industry matters.[9] Acting on the recommendations of the said body, the Secretary of Labor, on January 6, 1994, issued the assailed orders.   These orders embodied EIAC's Resolution No. 1, which called for guidelines on screening, testing and accrediting performing overseas Filipino artists.  Significantly, as the respondent court noted, petitioners were duly represented in the EIAC, [10] which gave the recommendations on which the ARB and other requirements were based.

Clearly, the welfare of Filipino performing artists, particularly the women was paramount in the issuance of Department Order No. 3.  Short of a total and absolute ban against the deployment of performing artists to "high risk" destinations, a measure which would only drive recruitment further underground, the new scheme at the very least rationalizes the method of screening performing artists by requiring reasonable educational and artistic skills from them and limits deployment to only those individuals adequately prepared for the unpredictable demands of employment as artists abroad.  It cannot be gainsaid that this scheme at least lessens the room for exploitation by unscrupulous individuals and agencies.

Moreover, here or abroad, selection of performing artists is usually accomplished by auditions, where those deemed unfit are usually weeded out through a process which is inherently subjective and vulnerable to bias and differences in taste.   The ARB requirement goes one step further, however, attempting to minimize the subjectivity of the process by defining the minimum skills required from entertainers and performing artists.  As the Solicitor General observed, this should be easily met by experienced artists

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possessing merely basic skills.  The tests are aimed at segregating real artists or performers from those passing themselves off as such, eager to accept  any available job and therefore exposing themselves to possible exploitation.

As to the other provisions of Department Order No. 3 questioned by petitioners, we see nothing wrong with the requirement for document and booking confirmation (D.O. 3-C), a minimum salary scale (D.O. 3-E), or the requirement for registration of returning performers.  The requirement for a venue certificate or other documents evidencing the place and nature of work allows the government closer monitoring of foreign employers and helps keep our entertainers away from prostitution fronts and other worksites associated with unsavory, immoral, illegal or exploitative practices.  Parenthetically, none of these issuances appear to us, by any stretch of the imagination, even remotely unreasonable or arbitrary.  They address a felt need of according greater protection for an oft-exploited segment of our OCW's.  They respond to the industry's demand for clearer and more practicable rules and guidelines.   Many of these provisions were fleshed out following recommendations by, and after consultations with, the affected sectors and non-government organizations.  On the whole, they are aimed at enhancing the safety and security of entertainers and artists bound for Japan and other destinations, without stifling the industry's concerns for expansion and growth.

In any event, apart from the State's police power, the Constitution itself mandates government to extend the fullest protection to our overseas workers.  The basic constitutional statement on labor, embodied in Section 18 of Article II of the Constitution provides:Sec. 18.  The State affirms labor as a primary social economic force.  It shall protect the rights of workers and promote their welfare.

More emphatically, the social justice provision on labor of the 1987 Constitution in its first paragraph states: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.Obviously, protection to labor does not indicate promotion of employment alone.  Under the welfare and social justice provisions of

the Constitution, the promotion of full employment, while desirable, cannot take a backseat to the government's constitutional duty to provide mechanisms for the protection of our workforce, local or overseas.   As this Court explained in Philippine Association of Service Exporters (PASEI) v. Drilon,[11] in reference to the recurring problems faced by our overseas workers:What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and humane.  It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home.  Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home.

We now go to petitioners' assertion that the police power cannot, nevertheless, abridge the right of our performing workers to return to work abroad after having earlier qualified under the old process, because, having previously been accredited, their accreditation became a property right," protected by the due process clause.  We find this contention untenable.

A profession, trade or calling is a property right within the meaning of our constitutional guarantees.  One cannot be deprived of the right to work and the right to make a living because these rights are property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong.[12]

Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has always been upheld as a legitimate subject of a valid exercise of the police power by the state particularly when their conduct affects either the execution of legitimate governmental functions, the preservation of the State, the public health and welfare and public morals.   According to the maxim, sic utere tuo ut alienum non laedas, it must of course be within the legitimate range of legislative action to define the mode and manner in which every one may so use his own property so as not to pose injury to himself or others.[13]

In any case, where the liberty curtailed affects at most the rights of property, the permissible scope of regulatory measures is certainly much wider.[14] To pretend that licensing or accreditation requirements violates the due process clause is to ignore the settled practice, under the mantle of the police power, of regulating entry to the practice of various trades or professions.   Professionals leaving for abroad are required to pass rigid written and practical exams before they are deemed fit to practice their trade.  Seamen are required to take tests determining their seamanship.  Locally, the Professional Regulation Commission has began to require previously licensed doctors and other professionals to furnish documentary proof that they had either re-trained or had undertaken continuing education courses as a requirement for renewal of their licenses.  It is not claimed that these requirements pose an unwarranted deprivation of a property right under the due process clause.  So long as Professionals and other workers meet reasonable regulatory standards no such deprivation exists.

Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of the Constitution to support their argument that the government cannot enact the assailed regulatory measures because they abridge the freedom to contract.  In Philippine Association of Service Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment clause of the Constitution... must yield to the loftier purposes targeted by the government." [15] Equally important, into every contract is read provisions of existing law, and always, a reservation of the police power for so long as the agreement deals with a subject impressed with the public welfare.

A last point.  Petitioners suggest that the singling out of entertainers and performing artists under the assailed department orders constitutes class legislation which violates the equal protection clause of the Constitution.  We do not agree.

The equal protection clause is directed principally against undue favor and individual or class privilege.  It is not intended to prohibit legislation which is limited to the object to which it is directed or by the territory in which it is to operate.   It does not require absolute equality, but merely that all persons be treated alike under like conditions both as to privileges conferred and liabilities imposed.[16] We have held, time and again, that the equal protection clause of the Constitution does not forbid classification for so long as such classification is based on real and substantial differences having a reasonable relation to the subject of the particular legislation.[17] If classification is germane to the purpose of the law, concerns all members of the class, and applies equally to present and future conditions, the classification does not violate the equal protection guarantee.

In the case at bar, the challenged Department Order clearly applies to all performing artists and entertainers destined for jobs abroad.  These orders, we stressed hereinbefore, further the Constitutional mandate requiring Government to protect our workforce,

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particularly those who may be prone to abuse and exploitation as they are beyond the physical reach of government regulatory agencies.  The tragic incidents must somehow stop, but short of absolutely curtailing the right of these performers and entertainers to work abroad, the assailed measures enable our government to assume a measure of control.

WHEREFORE, finding no reversible error in the decision sought to be reviewed, petition is hereby DENIED.SO ORDERED.

GR 61594 Sep 28, 1990G.R. No. 61594 September 28, 1990PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner, vsHON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMASIG, respondents.Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.Ledesma, Saludo & Associates for private respondents. FELICIANO, J.:On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign corporation licensed to do business in the Philippines, executed in Manila two (2) separate contracts of employment, one with private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig. 1 The contracts, which became effective on 9 January 1979, provided in pertinent portion as follows:

5. DURATION OF EMPLOYMENT AND PENALTYThis agreement is for a period of three (3) years, but can be extended by the mutual consent of the parties.

xxx xxx xxx6. TERMINATION

xxx xxx xxxNotwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this agreement at any time by giving the EMPLOYEE notice in writing in advance one month before the intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month's salary.

xxx xxx xxx10. APPLICABLE LAW:This agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under this agreement.

Respondents then commenced training in Pakistan. After their training period, they began discharging their job functions as flight attendants, with base station in Manila and flying assignments to different parts of the Middle East and Europe.On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both that their services as flight stewardesses would be terminated "effective 1 September 1980, conformably to clause 6 (b) of the employment agreement [they had) executed with [PIA]."  2

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint, docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of company benefits and bonuses, against PIA with the then Ministry of Labor and Employment ("MOLE"). After several unfruitful attempts at conciliation, the MOLE hearing officer Atty. Jose M. Pascual ordered the parties to submit their position papers and evidence supporting their respective positions. The PIA submitted its position paper, 3 but no evidence, and there claimed that both private respondents were habitual absentees; that both were in the habit of bringing in from abroad sizeable quantities of "personal effects"; and that PIA personnel at the Manila International Airport had been discreetly warned by customs officials to advise private respondents to discontinue that practice. PIA further claimed that the services of both private respondents were terminated pursuant to the provisions of the employment contract.In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the reinstatement of private respondents with full backwages or, in the alternative, the payment to them of the amounts equivalent to their salaries for the remainder of the fixed three-year period of their employment contracts; the payment to private respondent Mamasig of an amount equivalent to the value of a round trip ticket Manila-USA Manila; and payment of a bonus to each of the private respondents equivalent to their one-month salary. 4 The Order stated that private respondents had attained the status of regular employees after they had rendered more than a year of continued service; that the stipulation limiting the period of the employment contract to three (3) years was null and void as violative of the provisions of the Labor Code and its implementing rules and regulations on regular and casual employment; and that the dismissal, having been carried out without the requisite clearance from the MOLE, was illegal and entitled private respondents to reinstatement with full backwages.On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director and affirmed the latter's award save for the portion thereof giving PIA the option, in lieu of reinstatement, "to pay each of the complainants [private respondents] their salaries corresponding to the unexpired portion of the contract[s] [of employment] . . .". 5

In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director and the Order of the Deputy Minister as having been rendered without jurisdiction; for having been rendered without support in the evidence of record since, allegedly, no

9

hearing was conducted by the hearing officer, Atty. Jose M. Pascual; and for having been issued in disregard and in violation of petitioner's rights under the employment contracts with private respondents.1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over the subject matter of the complaint initiated by private respondents for illegal dismissal, jurisdiction over the same being lodged in the Arbitration Branch of the National Labor Relations Commission ("NLRC") It appears to us beyond dispute, however, that both at the time the complaint was initiated in September 1980 and at the time the Orders assailed were rendered on January 1981 (by Regional Director Francisco L. Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction over termination cases.Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of employees with at least one (1) year of service without prior clearance from the Department of Labor and Employment:

Art. 278. Miscellaneous Provisions — . . .(b) With or without a collective agreement, no employer may shut down his establishment or dismiss or terminate the employment of employees with at least one year of service during the last two (2) years, whether such service is continuous or broken, without prior written authority issued in accordance with such rules and regulations as the Secretary may promulgate . . . (emphasis supplied)

Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made clear that in case of a termination without the necessary clearance, the Regional Director was authorized to order the reinstatement of the employee concerned and the payment of backwages; necessarily, therefore, the Regional Director must have been given jurisdiction over such termination cases:

Sec. 2. Shutdown or dismissal without clearance. — Any shutdown or dismissal without prior clearance shall be conclusively presumed to be termination of employment without a just cause. The Regional Director shall, in such case order the immediate reinstatement of the employee and the payment of his wages from the time of the shutdown or dismissal until the time of reinstatement. (emphasis supplied)

Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was similarly very explicit about the jurisdiction of the Regional Director over termination of employment cases:

Under PD 850, termination cases — with or without CBA — are now placed under the original jurisdiction of the Regional Director. Preventive suspension cases, now made cognizable for the first time, are also placed under the Regional Director. Before PD 850, termination cases where there was a CBA were under the jurisdiction of the grievance machinery and voluntary arbitration, while termination cases where there was no CBA were under the jurisdiction of the Conciliation Section.In more details, the major innovations introduced by PD 850 and its implementing rules and regulations with respect to termination and preventive suspension cases are:1. The Regional Director is now required to rule on every application for clearance, whether there is opposition or not, within ten days from receipt thereof.

xxx xxx xxx(Emphasis supplied)

2. The second contention of petitioner PIA is that, even if the Regional Director had jurisdiction, still his order was null and void because it had been issued in violation of petitioner's right to procedural due process .  6 This claim, however, cannot be given serious consideration. Petitioner was ordered by the Regional Director to submit not only its position paper but also such evidence in its favor as it might have. Petitioner opted to rely solely upon its position paper; we must assume it had no evidence to sustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ample opportunity to explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of Labor and Employment. 7

There is another reason why petitioner's claim of denial of due process must be rejected. At the time the complaint was filed by private respondents on 21 September 1980 and at the time the Regional Director issued his questioned order on 22 January 1981, applicable regulation, as noted above, specified that a "dismissal without prior clearance shall be conclusively presumed to be termination of employment without a cause", and the Regional Director was required in such case to" order the immediate reinstatement of the employee and the payment of his wages from the time of the shutdown or dismiss until . . . reinstatement." In other words, under the then applicable rule, the Regional Director did not even have to require submission of position papers by the parties in view of the conclusive (juris et de jure) character of the presumption created by such applicable law and regulation. In Cebu Institute of Technology v. Minister of Labor and Employment, 8 the Court pointed out that "under Rule 14, Section 2, of the Implementing Rules and Regulations, the termination of [an employee] which was without previous clearance from the Ministry of Labor is conclusively presumed to be without [just] cause . . . [a presumption which] cannot be overturned by any contrary proof however strong."3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of employment with private respondents Farrales and Mamasig, arguing that its relationship with them was governed by the provisions of its contract rather than by the general provisions of the Labor Code. 9

Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by agreement between the parties; while paragraph 6 provided that, notwithstanding any other provision in the Contract, PIA had the right to terminate the employment agreement at any time by giving one-month's notice to the employee or, in lieu of such notice, one-months salary.A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law between the parties. 10 The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient, "provided they are not contrary to law, morals, good customs, public order or public policy." Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written into the

10

contract. 11 Put a little differently, the governing principle is that parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest. The law relating to labor and employment is clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other. It is thus necessary to appraise the contractual provisions invoked by petitioner PIA in terms of their consistency with applicable Philippine law and regulations.As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that paragraph 5 of that employment contract was inconsistent with Articles 280 and 281 of the Labor Code as they existed at the time the contract of employment was entered into, and hence refused to give effect to said paragraph 5. These Articles read as follows:

Art. 280. Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his backwages computed from the time his compensation was withheld from him up to the time his reinstatement.Art. 281. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.An employment shall be deemed to be casual if it is not covered by the preceding paragraph: provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. (Emphasis supplied)

In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had occasion to examine in detail the question of whether employment for a fixed term has been outlawed under the above quoted provisions of the Labor Code. After an extensive examination of the history and development of Articles 280 and 281, the Court reached the conclusion that a contract providing for employment with a fixed period was not necessarily unlawful:

There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist e.g. where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non would an agreement fixing a period be essentially evil or illicit, therefore anathema Would such an agreement come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in . . . (his) employment?"As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employers" using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head.

xxx xxx xxxAccordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. (emphasis supplied)

It is apparent from Brent School that the critical consideration is the presence or absence of a substantial indication that the period specified in an employment agreement was designed to circumvent the security of tenure of regular employees which is provided for in Articles 280 and 281 of the Labor Code. This indication must ordinarily rest upon some aspect of the agreement other than the mere specification of a fixed term of the ernployment agreement, or upon evidence aliunde of the intent to evade.

Examining the provisions of paragraphs 5 and 6 of the employment agreement between petitioner PIA and private respondents, we consider that those provisions must be read together and when so read, the fixed period of three (3) years specified in paragraph 5 will be seen to have been effectively neutralized by the provisions of paragraph 6 of that agreement. Paragraph 6 in effect took back from the

11

employee the fixed three (3)-year period ostensibly granted by paragraph 5 by rendering such period in effect a facultative one at the option of the employer PIA. For petitioner PIA claims to be authorized to shorten that term, at any time and for any cause satisfactory to itself, to a one-month period, or even less by simply paying the employee a month's salary. Because the net effect of paragraphs 5 and 6 of the agreement here involved is to render the employment of private respondents Farrales and Mamasig basically employment at the pleasure of petitioner PIA, the Court considers that paragraphs 5 and 6 were intended to prevent any security of tenure from accruing in favor of private respondents even during the limited period of three (3) years, 13 and thus to escape completely the thrust of Articles 280 and 281 of the Labor Code.Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement of any dispute arising out of or in connection with the agreement "only [in] courts of Karachi Pakistan". The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and regulations to the subject matter of this case, i.e., the employer-employee relationship between petitioner PIA and private respondents. We have already pointed out that the relationship is much affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship. Neither may petitioner invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for the settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant circumstances of this case will show the multiple and substantive contacts between Philippine law and Philippine courts, on the one hand, and the relationship between the parties, upon the other: the contract was not only executed in the Philippines, it was also performed here, at least partially; private respondents are Philippine citizens and respondents, while petitioner, although a foreign corporation, is licensed to do business (and actually doing business) and hence resident in the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the Middle East and Europe. All the above contacts point to the Philippine courts and administrative agencies as a proper forum for the resolution of contractual disputes between the parties. Under these circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law. 14

We conclude that private respondents Farrales and Mamasig were illegally dismissed and that public respondent Deputy Minister, MOLE, had not committed any grave abuse of discretion nor any act without or in excess of jurisdiction in ordering their reinstatement with backwages. Private respondents are entitled to three (3) years backwages without qualification or deduction. Should their reinstatement to their former or other substantially equivalent positions not be feasible in view of the length of time which has gone by since their services were unlawfully terminated, petitioner should be required to pay separation pay to private respondents amounting to one (1) month's salary for every year of service rendered by them, including the three (3) years service putatively rendered.ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Order dated 12 August 1982 of public respondent is hereby AFFIRMED, except that (1) private respondents are entitled to three (3) years backwages, without deduction or qualification; and (2) should reinstatement of private respondents to their former positions or to substantially equivalent positions not be feasible, then petitioner shall, in lieu thereof, pay to private respondents separation pay amounting to one (1)-month's salary for every year of service actually rendered by them and for the three (3) years putative service by private respondents. The Temporary Restraining Order issued on 13 September 1982 is hereby LIFTED. Costs against petitioner.SO ORDERED.

Gr 90634-5 June 6, 1990G.R. No. 90634-35 June 6, 1990CARMELCRAFT CORPORATION &/OR CARMEN V. YULO, President and General Manager, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, CARMELCRAFT EMPLOYEES UNION, PROGRESSIVE FEDERATION OF LABOR, represented by its Local President GEORGE OBANA, respondents.Tee, Tomas & Associates for petitioners.Raul E. Espinosa for private respondents. CRUZ, J.:The Court is appalled by the degree of bad faith that has characterized the petitioners' treatment of their employees. It borders on puredisdain. And on top of this, they now have the temerity to seek from us a relief to which they are clearly not entitled. The petition must be dismissed.The record shows that after its registration as a labor union, the Camelcraft Employees Union sought but did not get recognition from the petitioners. Consequently, it filed a petition for certification election in June 1987. On July 13, 1987, Camelcraft Corporation, through its president and general manager, Carmen Yulo, announced in a meeting with the employees that it would cease operations on August 13, 1987, due to serious financial losses. Operations did cease as announced. On August 17, 1987, the union filed a complaint with the Department of Labor against the petitioners for illegal lockout, unfair labor practice and damages, followed the next day with another complaint for payment of unpaid wages, emergency cost of living allowances, holiday pay, and other benefits. On November 29, 1988, the Labor Arbiter declared the shutdown illegal and violative of the employees' right to self-organization. The claim for unpaid benefits was also granted. 1 After reviewing the decision on appeal, the respondent NLRC declared:

WHEREFORE, premises considered, the appealed decision is modified. In addition to the underpayment in their wages, emergency living allowance, 13th month pay, legal holiday pay and premium pay for holidays for a period of three

12

years, the respondents are ordered to pay complainants their separation pay equivalent to one-month pay for every year of service, a fraction of six months or more shall be considered as one (1) whole year.The rest of the disposition stand. 2

We do not find that the above decision is tainted with grave abuse of discretion. On the contrary, it is comformable to the pertinent laws and the facts clearly established at the hearing.The reason invoked by the petitioner company to justify the cessation of its operations is hardly credible; in fact, it is preposterous when viewed in the light of the other relevent circumstances. Its justification is that it sustained losses in the amount of P 1,603.88 as of December 31, 1986 . 3 There is no report, however, of its operations during the period after that date, that is, during the succeeding seven and a half months before it decided to close its business. Significantly, the company is capitalized at P 3 million .  4 Considering such a substantial investment, we hardly think that a loss of the paltry sum of less than P 2,000.00 could be considered serious enough to call for the closure of the company.We agree with the public respondent that the real reason for the decision of the petitioners to cease operations was the establishment of respondent Carmelcraft Employees Union. It was apparently unwelcome to the corporation, which would rather shut down than deal with the union. There is the allegation from the private respondent that the company had suggested that it might decide not to close the business if the employees were to affiliate with another union which the management preferred. 5 This allegation has not been satisfactorily disproved. At any rate, the finding of the NLRC is more believable than the ground invoked by the petitioners. Notably, this justification was made only eight months after the alleged year-end loss and shortly after the respondent union filed a petition for certification election.The act of the petitioners was an unfair labor practice prohibited by Article 248 of the Labor Code, to wit:

ART. 248. Unfair labor practices of employers.-It shall be unlawful for an employer to commit any of the following unfair labor practice:(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

More importantly, it was a defiance of the constitutional provision guaranteeing to workers the right to self-organization and to enter into collective bargaining with management through the labor union of their own choice and confidence. 6

The determination to cease operations is a prerogative of management that is usually not interfered with by the State as no business can be required to continue operating at a loss simply to maintain the workers in employment. 7 That would be a taking of property without due process of law which the employer has a right to resist. But where it is manifest that the closure is motivated not by a desire to avoid further losses but to discourage the workers from organizing themselves into a union for more effective negotiations with the management, the State is bound to intervene.And, indeed, even without such motivation, the closure cannot be justified because the claimed losses are obviously not serious. In this situation, the employees are entitled to separation pay at the rate of one-half month for every year of service under Art. 283 of the Labor Code.The contention of the petitioners that the employees are estopped from claiming the alleged unpaid wages and other compensation must also be rejected. This claim is based on the waivers supposedly made by the complainants on the understanding that "the management will implement prospectively all benefits under existing labor standard laws." The petitioners argue that this assurance provided the consideration that made the quitclaims executed by the employees valid. They add that the waivers were made voluntarily and contend that the contract should be respected as the law between the parties.Even if voluntarily executed, agreements are invalid if they are contrary to public policy. This is elementary. The protection of labor is one of the policies laid down by the Constitution not only by specific provision but also as part of social justice. The Civil Code itself provides:

ART. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.ART. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

The subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments and importunings, and even intimidations, that may result in his improvidently if reluctantly signing over benefits to which he is clearly entitled. Recognizing this danger, we have consistently held that quitclaims of the workers' benefits win not estop them from asserting them just the same on the ground that public policy prohibits such waivers.

That the employee has signed a satisfaction receipt does not result in a waiver; the law does not consider as valid any agreement to receive less compensation than what a worker is entitled to recover. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. 8

Release and quitclaim is inequitable and incongruous to the declared public policy of the State to afford protection to labor and to assure the rights of workers to security of tenure. 9

We find also untenable the contention of Carmen Yulo that she is not liable for the acts of the petitioner company, assuming it had acted illegally, because the Carmelcraft Corporation is a distinct and separate entity with a legal personality of its own. Yulo claims she is only an agent of the company carrying out the decisions of its board of directors. We do not agree. Our finding is that she is in fact and legal effect the corporation, being not only its president and general manager but also its owner. 10

Moreover, and this is a no less important consideration, she is raising this issue only at this tardy hour, when she should have invoked this argument earlier, when the case was being heard before the labor arbiter and later m the NLRC. It is too late now to shunt these responsibilities to the company after she herself had been found liable.All told, the conduct of the petitioners toward the employees has been less than commendable. Indeed, it is reprehensible. First, the company inveigled them to waive their claims to compensation due them on the promise that future benefits would be paid (and to

13

make matters worse, there is no showing that they were indeed paid). Second, it refused to recognize the respondent union, suggesting to the employees that they join another union acceptable to management. Third, it threatened the employees with the closure of the company and then actually did so when the employees insisted on their demands. All these acts reflect on the bona fides of the petitioners and unmistakably indicate their ill will toward the employees.The petitioners obviously regard the private respondents as mere servants simply because they are paid employees. That is a mistake. Laborers are not just hired help to be exploited, without the right to defend and improve their interest . The working class is an equal partner of management and should always be treated as such.The more labor is prevented from pursuing its legitimate demands for its protection and enhancement, the more it is likely to lose faith in our free institutions and to incline toward Ideologies offering a more if deceptive regime. One way of disabusing our working men and women of this delusion is to assure them that under our form of government, the interests of labor deserve and will get proper recognition from an enlightened and compassionate management, no less than the total sympathy of a solicitous State.WHEREFORE, the petition is DISMISSED and the challenged decision is AFFIRMED, with costs against the petitioner. It is so ordered.

GR 43633 Sept 14 1990G.R. Nos. 43633-34 September 14, 1990PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN, and FELINO BULANDUS, petitioners, vs.THE COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents.Januario T. Seno for petitioners. NARVASA, J.:Under the Industrial Peace Act, 1 government-owned or controlled corporations had the duty to bargain collectively and were otherwise subject to the obligations and duties of employers in the private sector. 2 The Act also prohibited supervisors to become, or continue to be, members of labor organizations composed of rank-and-file employees, 3 and prescribed criminal sanctions for breach of the prohibition. 4

It was under the regime of said Industrial Peace Act that the Government Service Insurance System (GSIS, for short) became bound by a collective bargaining agreement executed between it and the labor organization representing the majority of its employees, the GSIS Employees Association. The agreement contained a "maintenance-of-membership" clause, 5 i.e., that all employees who, at the time of the execution of said agreement, were members of the union or became members thereafter, were obliged to maintain their union membership in good standing for the duration of the agreement as a condition for their continued employment in the GSIS.There appears to be no dispute that at that time, the petitioners occupied supervisory positions in the GSIS. Pablo Arizala and Sergio Maribao were, respectively, the Chief of the Accounting Division, and the Chief of the Billing Section of said Division, in the Central Visayas Regional Office of the GSIS. Leonardo Joven and Felino Bulandus were, respectively, the Assistant Chief of the Accounting Division (sometimes Acting Chief in the absence of the Chief) and the Assistant Chief of the Field Service and Non-Life Insurance Division (and Acting Division Chief in the absence of the Chief), of the same Central Visayas Regional Office of the GSIS. Demands were made on all four of them to resign from the GSIS Employees Association, in view of their supervisory positions. They refused to do so. Consequently, two (2) criminal cases for violation of the Industrial Peace Act were lodged against them in the City Court of Cebu: one involving Arizala and Maribao 6 and the other, Joven and Bulandus. 7

Both criminal actions resulted in the conviction of the accused in separate decisions. 8 They were each sentenced "to pay a fine of P 500.00 or to suffer subsidiary imprisonment in case of insolvency." They appealed to the Court of Appeals.  9Arizala's and Maribao's appeal was docketed as CA-G.R. No. 14724-CR; that of Joven and Bulandus, as CA-G.R. No. 14856-CR.The appeals were consolidated on motion of the appellants, and eventuated in a judgment promulgated on January 29, 1976 affirming the convictions of all four appellants. The appellants moved for reconsideration. They argued that when the so called "1973 Constitution" took effect on January 17, 1973 pursuant to Proclamation No. 1104, the case of Arizala and Maribao was still pending in the Court of Appeals and that of Joven and Bulandus, pending decision in the City Court of Cebu; that since the provisions of that constitution and of the Labor Code subsequently promulgated (eff., November 1, 1974), repealing the Industrial Peace Act-placed employees of all categories in government-owned or controlled corporations without distinction within the Civil Service, and provided that the terms and conditions of their employment were to be "governed by the Civil Service Law, rules and regulations" and hence, no longer subject of collective bargaining, the appellants ceased to fall within the coverage of the Industrial Peace Act and should thus no longer continue to be prosecuted and exposed to punishment for a violation thereof. They pointed out further that the criminal sanction in the Industrial Peace Act no longer appeared in the Labor Code. The Appellate Court denied their plea for reconsideration.Hence, the present petition for review on certiorari.The crucial issue obviously is whether or not the petitioners' criminal liability for a violation of the Industrial Peace Act may be deemed to have been obliterated in virtue of subsequent legislation and the provisions of the 1973 and 1987 Constitutions.The petitioners' contention that their liability had been erased is made to rest upon the following premises:1. Section 1, Article XII-B of the 1973 Constitution does indeed provide that the "Civil Service embraces every branch, agency, subdivision and instrumentality of the government, including government-owned or controlled corporations, .. administered by an independent Civil Service Commission.2. Article 292 of the Labor Code repealed such parts and provisions of the Industrial Peace Act as were "not adopted as part" of said Code "either directly or by reference." The Code did not adopt the provision of the Industrial Peace Act conferring on employees of government-owned or controlled corporations the right of self-organization and collective bargaining; in fact it made known that the "terms and conditions of employment of all government employees, including employees of government-owned and controlled

14

corporations," would thenceforth no longer be fixed by collective bargaining but "be governed by the Civil Service Law, rules and regulations." 10

3. The specific penalty for violation of the prohibition on supervisors being members in a labor organization of employees under their supervision has disappeared.4. The Code also modified the concept of unfair labor practice, decreeing that thenceforth, "it shall be considered merely as an administrative offense rather than a criminal offense (and that) (u)nfair labor practice complaints shall x x be processed like any ordinary labor disputes." 11

On the other hand, in justification of the Appellate Tribunal's affirmance of the petitioners' convictions of violations of the Industrial Peace Act, the People-1) advert to the fact that said Labor Code also states that "all actions or claims accruing prior to ... (its) effectivity ... shall be determined in accordance with the laws in force at the time of their accrual;" and2) argue that the legislature cannot generally intervene and vacate the judgment of the courts, either directly or indirectly, by the repeal of the statute under which said judgment has been rendered.The legal principles governing the rights of self-organization and collective bargaining of rank-and-file employees in the government- particularly as regards supervisory, and high level or managerial employees have undergone alterations through the years.Republic Act No. 875As already intimated, under RA 875 (the Industry Peace Act), 12 persons "employed in proprietary functions of the Government, including but not limited to governmental corporations," had the right of self-organization and collective bargaining, including the right to engage in concerted activities to attain their objectives, e.g. strikes.But those "employed in governmental functions" were forbidden to "strike for the purpose of securing changes or modification in their terms and conditions of employment" or join labor organizations which imposed on their members the duty to strike. The reason obviously was that the terms and conditions of their employment were "governed by law" and hence could not be fixed, altered or otherwise modified by collective bargaining.Supervisory employees were forbidden to join labor organizations composed of employees under them, but could form their own unions. Considered "supervisors' were those 'having authority in the interest of an employer to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievance or effectively to recommend such acts if, in connection with the foregoing, the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment." 13

Republic Act No. 2260Similar provisions were found in R.A. No. 2260, the Civil Service Act of 1959. This Act declared that the "Philippine Civil Service ... (embraced) all branches, subdivisions and instrumentalities of the government including government-owned and controlled corporations." 14

It prohibited such civil service employees who were "employed in governmental functions" to belong to any labor organization which imposed on their members "the obligation to strike or to join strikes." And one of the first issuances of the President after the proclamation of martial law in September, 1972, was General Order No. 5 which inter alia banned strikes in vital industries," as well as 'all rallies, demonstrations and other forms of group actions." 15

Not so prohibited, however, were those "employed in proprietary functions of the Government including, but not limited to, governmental corporations." 16 The Act also penalized any person who "violates, refuses or neglects to comply with any ... provisions (of the Act) or rules (thereunder promulgated) ... by a fine not exceeding one thousand pesos or by imprisonment not exceeding six months or both such fine and imprisonment in the discretion of the court." 17

The 1973 ConstitutionThe 1973 Constitution laid down the broad principle that "(t)he State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work," 18 and directed that the "National Assembly shall provide for the standardization of compensation of government officials and employees,including those in government-owned or controlled corporations, taking into account the nature of the responsibilities pertaining to, and the qualifications required for, the positions concerned." 19

PD 442, The Labor CodeThe Labor Code of the Philippines, Presidential Decree No. 442, enacted within a year from effectivity of the 1973 Constitution, 20 incorporated the proposition that the "terms and conditions of employment of all government employees, including employees of government-owned and controlled corporations ... (are) governed by the Civil Service Law, rules and regulations." 21 It incorporated, too, the constitutional mandate that the salaries of said employees "shall be standardized by the National Assembly."The Labor Code, 22 however "exempted" government employees from the right to self-organization for purposes of collective bargaining. While the Code contained provisions acknowledging the right of "all persons employed in commercial, industrial and agricultural enterprises, including religious, medical or educational institutions operating for profit" to "self-organization and to form, join or assist labor organizations for purposes of collective bargaining," they "exempted from the foregoing provisions:a) security guards;b) government employees, including employees of government government-owned and/ or controlled corporations;c) managerial employees; andd) employees of religious, charitable, medical and educational institutions not operating for profit, provided the latter do not have existing collective agreements or recognized unions at the time of the effectivity of the code or have voluntarily waived their exemption." 23

15

The reason for denying to government employees the right to "self-organization and to form, join or assist labor organizations for purposes of collective bargaining" is presumably the same as that under the Industrial Peace Act, i.e., that the terms and conditions of government employment are fixed by law and not by collective bargaining.Some inconsistency appears to have arisen between the Labor Code and the Civil Service Act of 1959. Under the Civil Service Act, persons "employed in proprietary functions of the government including, but not limited to, governmental corporations'-not being within "the policy of the Government that the employees therein shall not strike for the purpose of securing changes in their terms and conditions of employment"-could legitimately bargain with their respective employers through their labor organizations, and corollarily engage in strikes and other concerted activities in an attempt to bring about changes in the conditions of their work. They could not however do so under the Labor Code and its Implementing Rules and Regulations; these provided that "government employees, including employees of government-owned and/or controlled corporations," without distinction as to function, were "exempted" (excluded is the better term) from "the right to self-organization and to form, join or assist labor organizations for purposes of collective bargaining," and by implication, excluded as well from the right to engage in concerted activities, such as strikes, as coercive measures against their employers.Members of supervisory unions who were not managerial employees, were declared by the Labor Code to be "eligible to join or assist the rank and file labor organization, and if none exists, to form or assist in the forming of such rank and file organization " 24 Managerial employees, on the other hand, were pronounced as 'not eligible to join, assist or form any labor organization." 25 A "managerial employee" was defined as one vested with power or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions." 26

Presidential Decree No. 807Clarification of the matter seems to have been very shortly attempted by the Civil Service Decree of the Philippines, Presidential Decree No. 807 (eff., Oct. 6,1975) which superseded the Civil Service Law of 1959 (RA 2260) 27 and repealed or modified "all laws, rules and regulations or parts thereof inconsistent with the provisions" thereof. The Decree categorically described the scope and coverage of the "Civil Service" as embracing 44 every branch, agency, subdivision, and instrumentality of the government, including every government owned or controlled corporation whether performing governmental or propriety function. 28 The effect was seemingly to prohibit government employees (including those "employed in proprietary functions of the Government") to "strike for the purpose of securing changes of their terms and conditions of employment," 29 something which, as aforestated, they were allowed to do under the Civil Service Act of 1959. 30

Be this as it may it seems clear that PD 807 (the Civil Service Decree) did not modify the declared ineligibility of "managerial employees" from joining, assisting or forming any labor organization.Executive Order No. 111Executive Order No. 111, issued by President Corazon C. Aquino on December 24, 1986 in the exercise of legislative powers under the Freedom Constitution, modified the general disqualification above mentioned of 'government employees, including employees of government-owned and/or controlled corporations" from "the right to self-organization and to form, join or assist labor organizations for purposes of collective bargaining.' It granted to employees "of government corporations established under the Corporation Code x x the right to organize and to bargain collectively with their respective employers." 31 To all 'other employees in the civil service, ... (it granted merely) the right to form associations for purposes not contrary to law," 32 not for "purposes of collective bargaining."The 1987 ConstitutionThe provisions of the present Constitution on the matter appear to be somewhat more extensive. They declare that the "right to self organization shall not be denied to government employees;" 33 that the State "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;" and that said workers "shall be entitled to security of tenure, humane conditions of work, and a living wage, ... (and) also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. 34

CSC Memorandum Circular No. 6Memorandum Circular No. 6 of the Civil Service Commission, issued on April 21, 1987 enjoined strikes by government officials and employees, to wit: 35

... Prior to the enactment by Congress of applicable laws concerning strike by government employees, and considering that there are existing laws which prohibit government officials and employees from resorting to strike, the Commission enjoins, under pain of administrative sanctions, all government officers and employees from staging strikes, demonstrations, mass leaves, walk-outs and other forms of mass action which will result in temporary stoppage or disruption of public services. To allow otherwise is to undermine or prejudice the government system.

Executive Order No. 180The scope of the constitutional right to self-organization of "government employees" above mentioned, was defined and delineated in Executive Order No. 180 (eff. June 1, 1987). According to this Executive Order, the right of self-organization does indeed pertain to all "employees of all branches, subdivisions, instrumentalities and agencies of the Government, including government-owned or controlled corporations with original charters;" 36such employees "shall not be discriminated against in respect of their employment by reason of their membership in employees' organizations or participation in the normal activities of their organization x x (and their) employment shall not be subject to the condition that they shall not join or shall relinquish their membership in the employees' organizations. 37

However, the concept of the government employees' right of self-organization differs significantly from that of employees in the private sector. The latter's right of self-organization, i.e., "to form, join or assist labor organizations for purposes of collective bargaining," admittedly includes the right to deal and negotiate with their respective employers in order to fix the terms and conditions of employment and also, to engage in concerted activities for the attainment of their objectives, such as strikes, picketing, boycotts. But the right of government employees to "form, join or assist employees organizations of their own choosing" under Executive Order No. 180 is

16

not regarded as existing or available for "purposes of collective bargaining," but simply "for the furtherance and protection of their interests." 38

In other words, the right of Government employees to deal and negotiate with their respective employers is not quite as extensive as that of private employees. Excluded from negotiation by government employees are the "terms and conditions of employment ... that are fixed by law," it being only those terms and conditions not otherwise fixed by law that "may be subject of negotiation between the duly recognized employees' organizations and appropriate government authorities," 39 And while EO No. 180 concedes to government employees, like their counterparts in the private sector, the right to engage in concerted activities, including the right to strike, the executive order is quick to add that those activities must be exercised in accordance with law, i.e. are subject both to "Civil Service Law and rules" and "any legislation that may be enacted by Congress," 40 that "the resolution of complaints, grievances and cases involving government employees" is not ordinarily left to collective bargaining or other related concerted activities, but to "Civil Service Law and labor laws and procedures whenever applicable;" and that in case "any dispute remains unresolved after exhausting all available remedies under existing laws and procedures, the parties may jointly refer the dispute to the (Public Sector Labor-Management) Council for appropriate action." 41 What is more, the Rules and Regulations implementing Executive Order No. 180 explicitly provide that since the "terms and conditions of employment in the government, including any political subdivision or instrumentality thereof and government-owned and controlled corporations with original charters are governed by law, the employees therein shall not strike for the purpose of securing changes thereof. 42

On the matter of limitations on membership in labor unions of government employees, Executive Order No. 180 declares that "high level employees whose functions are normally considered as policy making or managerial, or whose duties are of a highly confidential nature shall not be eligible to join the organization of rank-and-file government employees. 43 A "high level employee" is one "whose functions are normally considered policy determining, managerial or one whose duties are highly confidential in nature. A managerial function refers to the exercise of powers such as: 1. To effectively recommend such managerial actions; 2. To formulate or execute management policies and decisions; or 3. To hire, transfer, suspend, lay off, recall, dismiss, assign or discipline employees. 44

Republic Act No. 6715The rule regarding membership in labor organizations of managerial and supervisory employees just adverted to, was clarified and refined by Republic Act No. 6715, effective on March 21, 1989, further amending the Labor Code.Under RA 6715 labor unions are regarded as organized either (a) "for purposes of negotiation," or (b) "for furtherance and protection"of the members' rights. Membership in unions organized "for purposes of negotiation" is open only to rank-and-file employees. "Supervisory employees" are ineligible "for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own," i.e., one organized "for furtherance and protection" of their rights and interests. However, according to the Rules implementing RA 6715, "supervisory employees who are included in an existing rank-and- file bargaining unit, upon the effectivity of Republic Act No. 6715 shall remain in that unit ..." Supervisory employees are "those who, in the interest of the employer, effectively recommend such managerial actions 45 if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. 46

Membership in employees' organizations formed for purposes of negotiation are open to rank-and-file employees only, as above mentioned, and not to high level employees. 47 Indeed, "managerial employees" or "high level employees" are, to repeat, "not eligible to join, assist or form any labor organization" at all. 48 A managerial employee is defined as "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."  49

This is how the law now stands, particularly with respect to supervisory employees vis a vis labor organizations of employees under them.Now, the GSIS performs proprietary functions. It is a non-stock corporation, managed by a Board of Trustees exercising the "usual corporate powers." 50 In other words, it exercises all the powers of a corporation under the Corporation Law in so far as they are not otherwise inconsistent with other applicable law. 51 It is engaged essentially in insurance, a business that "is not inherently or exclusively a governmental function, ... (but) is on the contrary, in essence and practice, of a private nature and interest." 52

1. The petitioners contend that the right of self-organization and collectivebargaining had been withdrawn by the Labor Code from government employees including those in government-owned and controlled corporations- chiefly for the reason that the terms and conditions of government employment, all embraced in civil service, may not be modified by collective bargaining because set by law. It is therefore immaterial, they say, whether supervisors are members of rank-and-file unions or not; after all, the possibility of the employer's control of the members of the union thru supervisors thus rendering collective bargaining illusory, which is the main reason for the prohibition, is no longer of any consequence.This was true, for a time. As already discussed, both under the Labor Code and PD 807, government employees, including those in government-owned or controlled corporations, were indeed precluded from bargaining as regards terms and conditions of employment because these were set by law and hence could not possibly be altered by negotiation.But EO 111 restored the right to organize and to negotiate and bargain of employees of "government corporations established under the Corporation Code." And EO 180, and apparently RA 6715, too, granted to all government employees the right of collective bargaining or negotiation except as regards those terms of their employment which were fixed by law; and as to said terms fixed by law, they were prohibited to strike to obtain changes thereof.2. The petitioners appear to be correct in their view of the disappearance from the law of the prohibition on supervisors being members of labor organizations composed of employees under their supervision. The Labor Code (PD 442) allowed supervisors (if not managerial) to join rank-and-file unions. And under the Implementing Rules of RA 6715, supervisors who were members of existing labor organizations on the effectivity of said RA 6715 were explicitly authorized to "remain therein."3. The correctness of the petitioners' theory that unfair labor practices ceased to be crimes and were deemed merely administrative offenses in virtue of the Labor Code, cannot be gainsaid. Article 250 of the Labor Code did provide as follows:

17

ART. 250. Concept of unfair labor practice.-The concept of unfair labor practice is hereby modified. Henceforth, it shall be considered merely as an administrative offense rather than a criminal offense. Unfair labor practice complaints shall, therefore, be processed like any ordinary labor disputes.

But unfair labor practices were declared to be crimes again by later amendments of the Labor Code effected by Batas Pambansa Blg. 70, approved on May 1, 1980. As thus amended, the Code now pertinently reads as follows:

ART. 248. Concept of unfair labor practice and procedure for prosecution thereof. — Unfair labor practices violate the right of workers and employees to self organization, are inimical to the legitimate interests of both labor and management including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, and hinder the promotion of healthy and stable labor management relations. Consequently, unfair labor practices are not only violations of the civil rights of both labor and management but are also offenses against the State which shall be subject to prosecution and punishment as herein provided.xxx xxx xxxRecovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code.No criminal prosecution under this title may be instituted without a final judgment, finding that an unfair labor practice was committed having been first obtained in the preceding paragraph. ...

The decisive consideration is that at present, supervisors who were already members of a rank-and-file labor organization at the time of the effectivity of R.A. No. 6715, are authorized to "remain therein." It seems plain, in other words, that the maintenance by supervisors of membership in a rank-and-file labor organization even after the enactment of a statute imposing a prohibition on such membership, is not only not a crime, but is explicitly allowed, under present law.Now, in a case decided as early as 1935, People v. Tamayo, 53 where the appellants had appealed from a judgment convicting them of a violation of a municipal -ordinance, and while their appeal was pending, the ordinance was repealed such that the act complained of ceased to be a criminal act but became legal, this Court dismissed the criminal proceedings, pronouncing the effects of the repeal to be as follows:

In the leading case of the United States vs. Cuna (12 Phil. 241), and Wing vs. United States (218 U.S. 272), the doctrine was clearly established that in the Philippines repeal of a criminal act by its reenactment, even without a saving clause would not destroy criminal liability. But not a single sentence in either derision indicates that there was any desire to hold that a person could be prosecuted convicted, and punished for acts no longer criminal.There is no question that at common law and in America a much more favorable attitude towards the accused exists relative to statutes that have been repealed than has been adopted here. Our rule is more in conformity with the Spanish doctrine, but even in Spain, where the offense ceased to be criminal, petition cannot be had (1 Pacheco, Commentaries, 296).The repeal here was absolute and not a reenactment and repeal by implication. Nor was there any saving clause. The legislative intent as shown by the action of the municipal is that such conduct, formerly denounced, is no longer deemed criminal, and it would be illogical for this court to attempt to sentence appellant for the offense that no longer exists.We are therefore of the opinion that the proceedings against appellant must be dismissed.

To the same effect and in even more unmistakable language is People v. Almuete 54 where the defendants-appellees were charged under section 39 of Republic Act No. 1199, as amended (the Agricultural Land Tenancy Law of 1954) which penalized pre-threshing by either agricultural tenant or his landlord. They sought and secured a dismissal on the ground, among others, that there was no law punishing the act charged-a reference to the fact that Republic Act No. 1199 had already been superseded by the Agricultural Land Reform Code of 1963 which instituted the leasehold system and abolished share tenancy subject to certain conditions. On appeal by the Government, this Court upheld the dismissal, saying:

The legislative intent not to punish anymore the tenant's act of pre-reaping and pre-threshing without notice to the landlord is inferable from the fact that, as already noted, the Code of Agrarian Reforms did not reenact section 39 of the Agricultural Tenancy Law and that it abolished share tenancy which is the basis for penalizing clandestine pre-reaping and pre-threshing.xxx xxx xxxAs held in the Adillo case, 55 the act of pre-reaping and pre-threshing without notice to the landlord, which is an offense under the Agricultural Tenancy Law, had ceased to be an offense under the subsequent law, the Code of Agrarian Reforms. To prosecute it as an offense when the Code of Agrarian Reforms is already in force would be repugnant or abhorrent to the policy and spirit of that Code and would subvert the manifest legislative intent not to punish anymore pre-reaping and pre-threshing without notice to the landholder.xxx xxx xxxThe repeal of a penal law deprives the courts of jurisdiction to punish persons charged with a violation of the old penal law prior to its repeal (People vs. Tamayo, 61 Phil. 225; People vs. Sindiong and Pastor, 77 Phil. 1000; People vs. Binuya, 61 Phil. 208; U.S. vs. Reyes, 10 Phil. 423; U.S. vs. Academia, 10 Phil. 431. See dissent in Lagrimas vs. Director of Prisons, 57 Phil. 247, 252, 254).

The foregoing precedents dictate absolution of the appellants of the offenses imputed to them.WHEREFORE, the judgments of conviction in CA-G.R. No. 14724-CR and CA-G.R. No. 14856-CR, subject of the appeal, as well as those in Crim. Case No. 5275-R and Crim. Case No. 4130-R rendered by the Trial Court, are REVERSED and the accused-appellants ACQUITTED of the charges against them, with costs de officio.SO ORDERED.

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GR 967622GR 190515 Nov 15, 2010CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS,

    Petitioner,

                 - versus -

CIRTEK ELECTRONICS, INC.,Respondent.

G.R. No. 190515

Present:

CARPIO MORALES, J., Chairperson,DE-CASTRO,*

BERSAMIN,VILLARAMA, JR., andSERENO, JJ.

Promulgated:

   November 15, 2010x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x   

D E C I S I O N 

 CARPIO MORALES, J.: 

Cirtek Electronics, Inc. (respondent), an electronics and semi-conductor firm situated inside the Laguna Technopark, had an existing Collective Bargaining Agreement (CBA) with Cirtek Employees Labor Union-Federation of Free Workers (petitioner) for the period January 1, 2001 up to December 31, 2005.   Prior to the 3rd year of the CBA, the parties renegotiated its economic provisions but failed to reach a settlement, particularly on the issue of wage increases.   Petitioner thereupon declared a bargaining deadlock and filed a Notice of Strike with the National Conciliation and Mediation Board-Regional Office No. IV (NCMB-RO IV) on April 26, 2004.   Respondent, upon the other hand, filed a Notice of Lockout  on June 16, 2004. 

While the conciliation proceedings were ongoing, respondent placed seven union officers including the President, a Vice President, the Secretary and the Chairman of the Board of Directors under preventive suspension for allegedly spearheading a boycott of overtime work.  The officers were eventually dismissed from employment, prompting petitioner to file another Notice of Strike which was, after conciliation meetings, converted to a voluntary arbitration case.  The dismissal of the officers was later found to be legal, hence, petitioner appealed. 

In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike on June 20, 2005.   By Order[1]  dated June 23, 2005, the Secretary of Labor assumed jurisdiction over the controversy and issued a Return to Work Order which was complied with. 

 Before the Secretary of Labor could rule on the controversy, respondent created a Labor Management Council (LMC) through which it concluded with the remaining officers of petitioner a Memorandum of Agreement (MOA) [2] providing for daily wage increases of P6.00 per day effective January 1, 2004 and P9.00 per day effective January 1, 2005.   Petitioner submitted the MOA via Motion and Manifestation[3] to the Secretary of Labor, alleging that the remaining officers signed the MOA under respondent’s assurance that should the Secretary order a higher award of wage increase, respondent would comply.

By Order[4] dated March 16, 2006, the Secretary of Labor resolved the CBA deadlock by awarding a wage increase of from P6.00 to P10.00 per day effective January 1, 2004 and fromP9.00 to P15.00 per day effective January 1, 2005, and adopting all other benefits as embodied in the MOA. 

Respondent moved for a reconsideration of the Decision as petitioner’s vice-president submitted a “Muling Pagpapatibay ng Pagsang-ayon sa Kasunduan na may Petsang ika-4 ng Agosto 2005,”[5] stating that the union members were waiving their rights and benefits under the Secretary’s Decision.  Reconsideration of the Decision was denied  by  Resolution[6] of August 12, 2008, hence, respondent filed a petition for certiorari  before the Court of Appeals. 

By Decision[7] of September 24, 2009, the appellate court ruled in favor of respondent and accordingly set aside the Decision of the Secretary of Labor.  It held that the Secretary of Labor gravely abused his discretion in not respecting the MOA.  It did not give credence to the minutes of the meeting[8] that attended the forging of the MOA as it was not verified, nor to the “Paliwanag”[9] submitted by respondent union members explaining why they signed the MOA as it was not notarized.

Petitioner’s motion for reconsideration having been denied by Resolution[10] of December 2, 2009, the present petition was filed, maintaining that the Secretary of Labor’s award is in order, being in accord with the parties’ CBA history respondent having already─ granted P15.00 per day for 2001, P10.00 per day for 2002, and P10.00 per day for 2003, and that the Secretary has the power to grant awards higher than what are stated in the CBA. 

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Respecting the MOA, petitioner posits that it was “surreptitiously entered into [in] bad faith,” it having been forged without the assistance of the Federation of Free Workers or counsel, adding that respondent could have waited for the Secretary’s resolution of the pending CBA deadlock or that the MOA could have been concluded before representatives of the Secretary of Labor.          The relevant issues for resolution are 1) whether the Secretary of Labor is authorized to give an award higher than that agreed upon in the MOA, and 2) whether the MOA was entered into and ratified by the remaining officers of petitioner under the condition, which was not incorporated in the MOA, that respondent would honor the Secretary of Labor’s award in the event that it is higher.          The Court resolves both issues in the affirmative.          It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction under Art. 263 (g) [11] of the Labor Code, may resolve all issues involved in the controversy including the award of wage increases and benefits. [12]  While an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the intervention and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the arbitral award can be considered an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties, hence, it has the force and effect of a valid contract obligation.[13] 

That the arbitral award was higher than that which was purportedly agreed upon in the MOA is of no moment.   For the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents[14] submitted by respondent as well as the parties’ bargaining history and respondent’s financial outlook and improvements as stated in its website.[15] 

It bears noting that since the filing and submission of the MOA did not have the effect of divesting the Secretary of his jurisdiction, or of automatically disposing the controversy, thenneither should the provisions of the MOA restrict the Secretary’s leeway in deciding the matters before him.          The appellate court’s brushing aside of the “Paliwanag” and the minutes of the meeting that resulted in the conclusion of the MOA because they were not verified and notarized, thus violating, so the appellate court reasoned, the rules on parol evidence, does not lie.  Like any other rule on evidence, parol evidence should not be strictly applied in labor cases.    

 The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the

Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA. [16] (emphasis supplied)    While a contract constitutes the law between the parties, this is so in the present case with respect to the CBA, not to the MOA in

which even the union’s signatories had expressed reservations thereto.  But even assuming arguendo that the MOA is treated as a new CBA, since it is imbued with public interest, it must be construed liberally and yield to the common good. 

 While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary

contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but  impressed with public interest, thus, it must yield to the common good . As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.[17] (emphasis and underscoring supplied)

           WHEREFORE, the petition is GRANTED. The Decision dated  September 24, 2009 and the Resolution dated December 2, 2009 of the Court of Appeals are REVERSED  and SET ASIDEand the Order dated March 16, 2006 and Resolution dated August 12, 2008 of the Secretary of Labor are REINSTATED.  

           SO ORDERED.

GR 152123 June 21, 2005ALADDIN TRANSIT CORPORATION,             G.R. No. 152123                                      Petitioner,                                                                       Present:                                                                              DAVIDE, JR., C.J., (Chairman),          - versus -                                                    QUISUMBING,                                                                             YNARES-SANTIAGO,                                                                             CARPIO, and                                                                             AZCUNA, JJ.THE HONORABLE COURT OF

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APPEALS (SPECIAL SIXTHDIVISION), AND RAFAEL ROXAS,          Promulgated:                                      Respondents.                June 21, 2005 x-----------------------------------------------------------------------------------------x

  

DECISION 

AZCUNA, J.:              This is a petition for certiorari under Rule 45 of the Revised Rules of Court seeking to set aside and annul the Decision of the Court of Appeals[1] and the Resolution denying the Motion for Reconsideration dated December 20, 2001 in C.A.-G.R. SP No. 62302.           The facts are not disputed.           Petitioner Aladdin Transit Corporation, a public service entity engaged in transportation, hired respondent Rafael Rodriguez in February 1990 as an accounting clerk.  Sometime thereafter, or on July 17, 1997, respondent employee alleged that his sister had a quarrel with their personnel manager.  As a result thereof, he was barred from entering the company’s premises.  He was then instructed to take a leave of absence for a month.  He wrote a letter to the President of the company but he did not receive any reply.   While he was on leave, he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit.  Respondent merely said he tried to report to the office, but petitioner did not allow him.           On August 11, 1997, respondent employee received another letter from the personnel department informing him of his preventive suspension for certain offenses.  He alleged that he tried to answer the allegation and wrote a letter to the President of the company, but did not receive a reply.  Thus, he filed a complaint with the Labor Arbiter.           Petitioner, on its part, alleged that respondent employee violated the trust and confidence of petitioner when he used the company’s funds and lent them with interest to his co-employees for his personal gain.   Petitioner added that an investigation they conducted showed that respondent employee and a co-employee, Divina David, had colluded in illegally making payroll salary deductions.  Furthermore, petitioner alleged that respondent employee is guilty of using the company vehicle without authority and failed to remit the SSS contribution of his co-employees.           Finding the arguments of petitioner deserving of credence, the Labor Arbiter ruled as follows: 

          “WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit with admonition that the filing of another baseless complaint shall be severely dealt[ ] with in the future.”[2]

           Subsequently, on April 27, 2000, respondent employee appealed to the National Labor Relations Commission (NLRC).  On July 3, 2000, the NLRC denied his appeal, for lack of merit.           Respondent employee thereupon appealed through a Petition for Certiorari to the Court of Appeals.  The Court of Appeals in its Decision held, as follows: 

The issue before the Court, therefore, is whether petitioner was dismissed:  1) for just cause and 2) with the observance of due process.

 With regard the requirement of just cause, the Court finds in the affirmative.  Both the Labor Arbiter and the

NLRC have thoroughly discussed the reason why private respondent was justified in dismissing petitioner from the service. (pp. 123-124, 139-140, Rollo)

 However, with regard the second requirement, the Court notes that the Labor Arbiter and the NLRC failed to

discuss and rule on the same.  Nothing in the records show that private respondent gave petitioner the opportunity to be heard and to explain his side.  It has been ruled by the Supreme Court that:

 The law requires the employer to give the worker to be dismissed two written notices before

terminating his employment, namely:  (1) a notice which apprises the employee of the particular acts or 

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omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer’s decision to dismiss him. x x x (Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC, 168 SCRA 122 [1988]; Ruffy vs. NLRC, 182 SCRA 365 [1990]) The same is provided for in Section 2(a) Rule 1 of the Implementing Rules of Book VI which reads: 

“SEC. 2.  Security of Tenure. – (a) In cases of regular employment, the employer shall not terminate the services of an employee except for just or authorized causes as provided by law, and subject to the requirements of due process.”  (Underscoring supplied) In the case at bar, it was not proven by private respondent that it gave petitioner notice informing him of the

cause of his impending dismissal.  It did not narrate that it heard petitioner’s side, nor did it show that petitioner was given notice of his dismissal.  The Court recognizes the right of [the] employer to discipline its employees and not to continue in its employ those who are inimical to its business operation.  However, it must be stressed that in the normal course of things, labor stands not on equal plane as the employer which has in its disposal all means to defend itself.   Thus, laws must be read for the protection of labor.

 This reality is enunciated in Article 3 of the Labor Code in relation to Article 3 of the 1987 Constitution, when it

provides:             ART. 3.  DECLARATION OF BASIC POLICY. – The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers.  The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.” As such, based on the ruling of the Supreme Court in the earlier quoted case of Serrano vs. NLRC, private

respondent is directed to pay petitioner his backwages from the time he was dismissed up to the time the herein decision becomes final.

 WHEREFORE, based on the foregoing, the instant petition is hereby GRANTED in part.  Private respondent is

directed to pay petitioner his full backwages from the time the latter was dismissed until this decision becomes final. SO ORDERED.[3]

  

          After the reconsideration was denied, as aforestated, petitioner appealed to this Court.           Since there is no dispute that petitioner did not inform the respondent employee in dismissing him from the service, the whole issue to be resolved is whether the Court of Appeals correctly applied the ruling of this Court in  Serrano v. NLRC,[4] to the effect that in cases where there is a valid cause to dismiss the employee but the required notice of dismissal was not given, the dismissal is deemed ineffectual and the employee must be reinstated with full backwages.           Recently, this Court has had occasion to revisit the Serrano doctrine and the present rule is set forth in the Agabon v. NLRC, et al.,[5] namely, that where the dismissal is based on a just cause, the failure to give the required notice does not invalidate the same, but merely holds the employer liable for damages for violating said notice of requirement.   The amount of damages was fixed at Thirty Thousand Pesos (P30,000) by way of nominal damages.           WHEREFORE, the Petition is GRANTED and the Decision and Resolution of the Court of Appeals dated September 5, 2001 and December 20, 2001, respectively, in C.A.-G.R. SP No. 62302, are hereby MODIFIED, in that instead of requiring petitioner to reinstate respondent employee with full backwages, the petitioner is ORDERED to pay respondent employee nominal damages in the amount of Thirty Thousand Pesos (P30,000).           No costs.           SO ORDERED. 

GR L-54285 Dec 8, 1988G.R. No. L-54285 December 8, 1988

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CEBU STEVEDORING CO., INC., petitioner, vs.THE HONORABLE REGIONAL DIRECTOR/MINISTER OF LABOR, ARSENIO GELIG and MARIA LUZ QUIJANO,respondents.Valentin A. Zozobrado for petitioner.Silvino G. Maceren, Jr. for private respondents.Office of the Solicitor General for public respondent. REGALADO, J.:This is a petition for review on certiorari of the order, dated May 2, 1978, of the Regional Director of Labor Regional Office No. 7 in Cebu City, in an action for reinstatement with backwages, which order was affirmed on appeal by the then Ministry of Labor 1 and, subsequently, by the Office of the President, 2 and the dispositive portion whereof reads as follows:

WHEREFORE, the respondent, Cebu Stevedoring Co., Inc., is hereby ordered to reinstate Arsenio Gelig and Maria Luz Quijano to their former positions within ten days from receipt to (sic) this order without loss of seniority rights and with full backwages from October 18, 1977 until the actual date of reinstatement. 3

Private respondents Arsenio Gelig and Maria Luz Quijano were former employees of the Cebu Customs Arrastre Service (hereinafter referred to as CCAS). On May 2, 1977, pursuant to Customs Administrative Order No. 21-77 of the Hon. Pio de Roda, Acting Commissioner of Customs and concurrently Acting Secretary of Finance, the CCAS was abolished "for the reason that the objectives for which it was created had already been attained". 4 As a consequence of such abolition, all the employees of CCAS, including herein respondents, were given their termination and/or separation pay by the Bureau of Customs, Cebu City, computed up to April 30, 1977. 5

Thereafter, on May 1, 1977, all the employees of CCAS including herein private respondents, were absorbed by petitioner Cebu Stevedoring Co. Inc. (CSCI for brevity), with the same positions that they held in the CCAS. Eventually, however, on October 17, 1977, private respondents were dismissed by petitioner 6 without prior clearance, allegedly for redundancy and other alleged ground hereinafter discussed . 7

A complaint for reinstatement with backwages was filed by private respondents before Regional Office No. 7 of the Ministry of Labor, which thereafter rendered the order containing the above-quoted portion under the following rationale:

It is to be noted that the complainants were employed by the Cebu Customs Arrastre Service long time ago whose functions were carried over when they were absorbed by the herein respondent. In other words, there is no need to employ them as probationary considering that they are already well trained in their respective functions. They were not absorbed for a definite period but instead for an indefinite period.A probationary period of employment means that an employee is hired for training for a certain period in order to determine whether they qualify (sic) for the position or not. In this case, the complainants cannot be mistakenly considered as probationary viewed on the theory that they have been holding the same positions for a quite a long time at the Cebu Customs Arrastre Service before they were absorbed by the Cebu Stevedoring Co. Inc. with the same positions. 8

On appeal, the Minister of Labor affirmed the decision of the Labor Regional Director, stating that:... complainants who were employed by Cebu Arrastre Service upon being absorbed by respondent for the same function and work need not undergo another probationary test in the same line of work where they have gained a latitude of expertise. 9

Petitioner thereafter elevated the case to the Office of the President which, through Presidential Executive Assistant Jacobo C. Clave, issued a resolution dismissing the appeal for the reason that "there is no law expressly recognizing the parties' right to appeal to this Office in cases of this nature and considering that it does not show any exceptionally meritorious cause for the exercise in this case of the constitutional power of review (control) of the President/Prime Minister as implemented by Executive Order No. 19, series of 1966, as amended, Section 1 of which pertinently provides that 'an appeal to the Office of the President ... is not a matter of right in the absence of statutory provision to that effect '" and further noting that the "case does not involve national interest." 10 A motion for reconsideration of the resolution was like-wise denied. 11

Petitioner's submissions in the present recourse may be synthesized into the following propositions: (1) There is a brazen disregard of the constitutional precept of "due process of law" prejudicing petitioner's rights; (2) As casuals, respondents Gelig and Quijano can be terminated within the 6-month period without need of clearance from the Ministry of Labor and neither is the employer obligated to pay them termination pay; (3) Redundancy is one of the grounds under the Labor Code justifying termination of employees; and (4) Retrenchment is another justifying circumstance for terminating the services of an employee.1. Petitioner contends that it was denied procedural due process because no hearing was conducted before the Labor Regional Director and neither did private respondents Gelig and Quijano file their position papers as provided in the Labor Code; that upon the abolition of the CCAS, all its employees were given separation pay, and thus, when the employees, including herein private respondents, were absorbed by petitioner when it took over the arrastre operations on May 3, 1977, they were all employed as casuals; that when the company terminated the services of private respondents, together with 52 others, on October 18, 1977 they had served CSCI for barely 5-1/2 months and were still on probation, hence no clearance was required for their termination; that since the positions occupied by herein private respondents with the former CCAS are Identical with the positions already filled up and with the same functions being discharged in the main office of CSCI, private respondents may be terminated for redundancy; and that financial losses incurred by petitioner likewise justify the retrenchment of its employees. 12

Public respondent, in its Comment, 13 points out that although private respondents failed to submit their position paper, they substantiated their complaint in a hearing before the labor arbiter on April 5, 1978; that although petitioner, through an error in the subpoena but also with its contributory fault, was deprived of the opportunity to appear at the scheduled hearing of April 5, 1978, it does

23

not mean an outright denial of due process considering that petitioner availed of the remedy of appeal to the Ministry of Labor and the Office of the President; that the dismissal of private respondents is without just cause; and that the present petition raises mainly questions of fact.We find this petition devoid of merit; the writ prayed for cannot be granted.Petitioner's proposition that the lack of hearing before the Labor Regional Director and private respondents' failure to file their respective position papers constitute a denial of due process, deserves meagre consideration.We agree that no rule is better established, under the due process clause of the Constitution, than that which requires notice and the opportunity to be heard before any person can be lawfully deprived of his rights. 14 The right to be heard, as a preliminary step essential to the rendition of an enforceable judgment, constitutes a basic element of the constitutional requirement of due process of law. 15

However, while in this case petitioner was not afforded an opportunity to be heard by oral argument on its position paper due to its absence at the scheduled hearing, as already explained, it is likewise true that it was required to, as in fact it actually did, submit a position paper which, together with the evidence presented during the hearing, became the basis of the questioned order of the Regional Director. From this order, to repeat, petitioner appealed to the Labor Minister, and then to the Office of the President. It is, therefore, apparent that petitioner was not denied adequate remedies from the alleged procedural infirmities imputed to the rendition of the Regional Director's order. The entire record of the case was reviewed and duly considered on appeal to the Labor Minister, which appellate proceeding remedied any inadequacy in the procedural due process with which the trial proceedings are being faulted.Thus, We have consistently adhered to the decisional rule that appellate review is curative in character on the issue of an alleged denial of due process for lack of a hearing in the case. 16

This Court has never lost sight of the fact that one of the most important and significant State policies, enshrined in the present Constitution as it was in its two predecessors, is the promotion of social justice in all phases of national development, specifically the protection of the rights of workers and the promotion of their welfare. 17

It was in the light of this concern in the fundamental law and the jurisprudence thereon that the Labor Code was enacted, with a specific declaration of its basic policy that-

The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and human conditions of work. 18

2. With these in mind, We approach the next issue for resolution, that is, whether herein private respondents were validly dismissed.Petitioner submits that private respondents were merely casuals and could, therefore, be terminated even without prior clearance from the then Ministry of Labor and without entitlement to separation pay. This contention is not well-taken.We agree with the Regional Director that private respondents could not be considered probationary employees because they were already well-trained in their respective functions. This conclusion is further bolstered by the factual findings of the Labor Minister that said order of the Director was supported by substantial evidence. As stressed by the Solicitor General, while private respondents were still with the CCAS they were already clerks. Respondent Gelig had been a clerk for CCAS for more than ten (10) years, while respondent Quijano had slightly less than ten (10) years of service. They were, therefore, not novices in their jobs but experienced workers. 19

On this particular issue, it is perhaps timely to consider well settled principles involving decisions of administrative agencies. Findings of quasi-judicial agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but, at times, even finality where such findings are supported by substantial evidence, 20 and judicial review by Us is limited to issues of jurisdiction or grave abuse of discretion. 21

As regular employees, therefore, private respondents may not be dismissed and petitioner cannot terminate their services except for a just or authorized cause provided by law and with scrupulous observance of due process requirements. 22

3. It is true that Article 283 of the Labor Code provides that an "employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking." However, the records fail to establish clearly and convincingly that the positions occupied by private respondents are Identical with those presently existing in petitioner's office.Furthermore, petitioner kept private respondents in its employ for almost six months without raising this issue. It does not mention which positions are allegedly duplicated by the positions held by private respondents. It does not even explain why the private respondents should be the ones to be terminated, without regard to the comparative lengths of service, qualifications and performance of all employees concerned.4. Petitioner's submission that it is suffering financial losses is untenable since it appears that it absorbed and employed for almost six months, without any intimation of supposed financial distress, the majority of the former employees of CCAS. It never advised private respondents of a company retrenchment program; the first time this supposed program was mentioned was when petitioner was trying to justify the dismissal of the private respondents before the labor arbiter. In a futile attempt to extricate itself from liability, petitioner presented a so-called Statement of Operations, 23 which, however, remains an uncorroborated and self-serving piece of evidence.The constitutional duty of the State to protect the right of laborers to security of tenure demands that an employer may be permitted to terminate the services of an employee only under conditions allowed by and with due process of law. Under the circumstances obtaining in this case, the irresistible conclusion is that the termination of private respondents' services was unjust and illegal, as to justify their reinstatement and entitlement to backwages for three years.WHEREFORE, this petition is hereby DISMISSED and petitioner is ordered to reinstate private respondents to their former positions at the time of their dismissal, or if such reinstatement is not possible, to substantially equivalent positions, without loss of seniority rights and other privileges appertaining thereto; and to pay private respondents three (3) years backwards, from October 18, 1977 without qualification or deduction. In the event that reinstatement is not possible due to the supervenience of events which prevent the same,

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petitioner is ordered to further pay private respondents, more as a vindication of a right and less as indemnification of a loss, separation pay equivalent to one (1) month's salary based on their monthly salaries as of October 17, 1977.SO ORDERED.

GR 85985 Aug 13, 1993G.R. No. 85985 August 13, 1993PHILIPPINE AIRLINES, INC. (PAL), petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents.Solon Garcia for petitioner.Adolpho M. Guerzon for respondent PALEA. MELO, J.:In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the employees.On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. The Code was circulated among the employees and was immediately implemented, and some employees were forthwith subjected to the disciplinary measures embodied therein.Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of the Code be held in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees dismissed under the Code be reinstated and their cases subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14, Record.)PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe rules and regulations regarding employess' conduct in carrying out their duties and functions, and alleging that by implementing the Code, it had not violated the collective bargaining agreement (CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence, PAL maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated.In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I of Chapter II of the Code as defective for, respectively, running counter to the construction of penal laws and making punishable any offense within PAL's contemplation. These provisions are the following:

Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations of the company. Every employee is bound to comply with all applicable rules, regulations, policies, procedures and standards, including standards of quality, productivity and behaviour, as issued and promulgated by the company through its duly authorized officials. Any violations thereof shall be punishable with a penalty to be determined by the gravity and/or frequency of the offense.Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The penalty for an offense shall be determined on the basis of his past record of offenses of any nature or the absence thereof. The more habitual an offender has been, the greater shall be the penalty for the latest offense. Thus, an employee may be dismissed if the number of his past offenses warrants such penalty in the judgment of management even if each offense considered separately may not warrant dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand, due regard shall be given to the length of time between commission of individual offenses to determine whether the employee's conduct may indicate occasional lapses (which may nevertheless require sterner disciplinary action) or a pattern of incorrigibility.

Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that no unfair labor practice had been committed. However, the arbiter held that PAL was "not totally fault free" considering that while the issuance of rules and regulations governing the conduct of employees is a "legitimate management prerogative" such rules and regulations must meet the test of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all embracing and all encompassing provision that makes punishable any offense one can think of in the company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule against double jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp. 38-39, Rollo.)The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence, she stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all the while that the 1966 Code was still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds application only after it has been

25

conclusively shown that the law was circulated to all the parties concerned and efforts to disseminate information regarding the new law have been exerted. (p. 39, Rollo.) She thereupon disposed:

WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:1. Furnish all employees with the new Code of Discipline;2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and remand the same for further hearing; and3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision.All other claims of the complainant union (is) [are] hereby, dismissed for lack of merit.SO ORDERED. (p. 40, Rollo.)

PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge. Nonetheless, the NLRC made the following observations:

Indeed, failure of management to discuss the provisions of a contemplated code of discipline which shall govern the conduct of its employees would result in the erosion and deterioration of an otherwise harmonious and smooth relationship between them as did happen in the instant case. There is no dispute that adoption of rules of conduct or discipline is a prerogative of management and is imperative and essential if an industry, has to survive in a competitive world. But labor climate has progressed, too. In the Philippine scene, at no time in our contemporary history is the need for a cooperative, supportive and smooth relationship between labor and management more keenly felt if we are to survive economically. Management can no longer exclude labor in the deliberation and adoption of rules and regulations that will affect them.The complainant union in this case has the right to feel isolated in the adoption of the New Code of Discipline. The Code of Discipline involves security of tenure and loss of employment — a property right! It is time that management realizes that to attain effectiveness in its conduct rules, there should be candidness and openness by Management and participation by the union, representing its members. In fact, our Constitution has recognized the principle of "shared responsibility" between employers and workers and has likewise recognized the right of workers to participate in "policy and decision-making process affecting their rights . . ." The latter provision was interpreted by the Constitutional Commissioners to mean participation in "management"' (Record of the Constitutional Commission, Vol. II).In a sense, participation by the union in the adoption of the code if conduct could have accelerated and enhanced their feelings of belonging and would have resulted in cooperation rather than resistance to the Code. In fact, labor-management cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.)

Respondent Commission thereupon disposed:WHEREFORE, premises considered, we modify the appealed decision in the sense that the New Code of Discipline should be reviewed and discussed with complainant union, particularly the disputed provisions [.] (T)hereafter, respondent is directed to furnish each employee with a copy of the appealed Code of Discipline. The pending cases adverted to in the appealed decision if still in the arbitral level, should be reconsidered by the respondent Philippine Air Lines. Other dispositions of the Labor Arbiter are sustained.SO ORDERED. (p. 5, NLRC Decision.)

PAL then filed the instant petition for certiorari charging public respondents with grave abuse of discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8,Rollo.)As stated above, the Principal issue submitted for resolution in the instant petition is whether management may be compelled to share with the union or its employees its prerogative of formulating a code of discipline.PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of responsibility therefor between employer and employee.Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the participation of workers in decision and policy-making processes affecting the rights, duties and welfare." However, even in the absence of said clear provision of law, the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held that management's prerogatives must be without abuse of discretion.In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the company's right to implement a new system of distributing its products, but gave the following caveat:

So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. (at p. 28.)

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be duly established that the prerogative being invoked is clearly a managerial one.A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business-oriented nor do they concern the management aspect of the business of the company as in the San Miguel case. The provisions of the Code clearly have repercusions on

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the employee's right to security of tenure. The implementation of the provisions may result in the deprivation of an employee's means of livelihood which, as correctly pointed out by the NLRC, is a property right (Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case which border on infringement of constitutional rights, we must uphold the constitutional requirements for the protection of labor and the promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker" (Employees Association of the Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes action. PAL asserts that all its employees have been furnished copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to great respect.PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules and regulations to carry out the functions of management without having to discuss the same with PALEA and much less, obtain the latter'sconformity thereto" (pp. 11-12, Petitioner's Memorandum; pp 180-181, Rollo.) Petitioner's view is based on the following provision of the agreement:

The Association recognizes the right of the Company to determine matters of management it policy and Company operations and to direct its manpower. Management of the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one department, to another, to promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the functions of management.The exercise by management of its prerogative shall be done in a just reasonable, humane and/or lawful manner.

Such provision in the collective bargaining agreement may not be interpreted as cession of employees' rights to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto. And one such mater is the formulation of a code of discipline.Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442) was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) To promote the enlightenment of workers concerning their rights and obligations . . . as employees." This was, of course, amplified by Republic Act No 6715 when it decreed the "participation of workers in decision and policy making processes affecting their rights, duties and welfare." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as during the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was formulated, the attainment of a harmonious labor-management relationship and the then already existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees' rights.Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly implemented in the absence of full cooperation of the employees. Such cooperation cannot be attained if the employees are restive on account, of their being left out in the determination of cardinal and fundamental matters affecting their employment.WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special pronouncement is made as to costs.SO ORDERED.

GR 87700 June 13, 1990G.R. No. 87700 June 13, 1990SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners, vs.HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.Romeo C. Lagman for petitioners.Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents. MELENCIO-HERRERA, J.:Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari and Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs. SMCEU-PTGWO, et als."Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the ground of absence of any employer-employee relationship between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent said workers for purposes of collective bargaining. The Solicitor General agrees with the position of SanMig.The antecedents of the controversy reveal that:

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Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent contractors duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into those contracts to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers employed by the contractors were to be paid by the latter and that none of them were to be deemed employees or agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SanMig on the other.Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorized representative of the monthly paid rank-and-file employees of SanMig with whom the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or contract employees and workers are excluded from the bargaining unit and, therefore, outside the scope of this Agreement."In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon and D'Rite workers had signed up for union membership and sought the regularization of their employment with SMC. The Union alleged that this group of employees, while appearing to be contractual workers supposedly independent contractors, have been continuously working for SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was then demanded that the employment status of these workers be regularized.On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex D, Petition).On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F, Petition).As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the two (2) notices of strike were consolidated and several conciliation conferences were held to settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition).Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite workers in various SMC plants and offices.On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to enjoin the Union from:

a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the purposes of collective bargaining;b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the bargaining unit referred to in the CBA,...;d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within the bargaining unit referred to in the CBA ...;f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract workers of plaintiff, as well as those persons lawfully transacting business with plaintiff at the work places within the bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from, the work places within the bargaining unit referred to in the CBA .., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex H, Petition)

Respondent Court found the Complaint sufficient in form and substance and issued a Temporary Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction for hearing.In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.After several hearings on SanMig's application for injunctive relief, where the parties presented both testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever damages petitioners may sustain by reason thereof.In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the existence of labor dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance.The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and D'Rite. The application and contract for employment of the defendants' witnesses are either with Lipercon or D'Rite. What could be discerned is that there is no employer-employee relationship between plaintiff and the contractual workers employed by Lipercon and D'Rite. This, however, does not mean that a final determination regarding the question of the existence of employer-employee relationship has already been made. To finally resolve this dispute, the court must extensively consider and delve into the manner of selection and engagement of the putative employee; the mode of payment of

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wages; the presence or absence of a power of dismissal; and the Presence or absence of a power to control the putative employee's conduct. This necessitates a full-blown trial. If the acts complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the other hand, a writ of injunction does not necessarily expose defendants to irreparable damages.Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)

Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the implementation of the Injunction issued by respondent Court. The Union construed this to mean that "we can now strike," which it superimposed on the Order and widely circulated to entice the Union membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen (13) of the latter's plants and offices.On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees were recalled, and discussion on their other demands, such as wage distortion and appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8 May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and return to work.After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January 1990.The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or arose out of a labor dispute and is directly connected or interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners' Memo).On the other hand, SanMig denies the existence of any employer-employee relationship and consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that "respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of strike staged by petitioner union and its officers herein complained of," for the reasons that:

A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer to hire and thereby create an employment relationship with contractual workers, especially were the contractual workers were recognized by the union, under the governing collective bargaining agreement, as excluded from, and therefore strangers to, the bargaining unit.B. A strike is a coercive economic weapon granted the bargaining representative only in the event of a deadlock in a labor dispute over 'wages, hours of work and all other and of the employment' of the employees in the unit. The union leaders cannot instigate a strike to compel the employer, especially on the eve of certification elections, to hire strangers or workers outside the unit, in the hope the latter will help re-elect them.C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise out of a labor dispute, is an abuse of right, and violates the employer's constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo).

We find the Petition of a meritorious character.A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee."While it is SanMig's submission that no employer-employee relationship exists between itself, on the one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether the disputants stand in the proximate relationship of employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the terms and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and employee.That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells on the working relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to represent those workers, who have signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that Union demand on the ground that there is no employer-employee relationship between it and those workers and because the demand violates the terms of their CBA. Obvious then is that representation and association, for the purpose of negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation. Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied that the controversy below is

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directly connected with the labor dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the employer to hire strangers outside the working unit; — those are issues the resolution of which call for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably linked with those issues.The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig is not controlling as in that case there was no controversy over terms, tenure or conditions, of employment or the representation of employees that called for the application of labor laws. In that case, what the petitioning union demanded was not a change in working terms and conditions, or the representation of the employees, but that its members be hired as stevedores in the place of the members of a rival union, which petitioners wanted discharged notwithstanding the existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis of those facts unique to that case, that such a demand could hardly be considered a labor dispute.As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of the law.The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute existing between the parties and would have to be ventilated before the administrative machinery established for the expeditious settlement of those disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice (Philippine Communications, Electronics and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its best business judgment to determine whether it should contract out the performance of some of its work to independent contractors. However, 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 (Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending interests must be placed in proper perspective and equilibrium.WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.SO ORDERED.

GR 128682 Marcg 18, 1999[G.R. No. 128682.  March 18, 1999]

JOAQUIN T. SERVIDAD, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, INNODATA PHILIPPINES, INC./ INNODATA CORPORATION, TODD SOLOMON,respondents.

D E C I S I O NPURISIMA, J.:

Commodum ex injuria sua nemo habere debet.  No one should obtain an advantage from his own wrong.  Schemes which preclude acquisition of tenurial security should be condemned as contrary to public policy.   No member of the work force of this country should be allowed to be taken advantage of by the employer.[1]

In this special civil action for Certiorari petitioner seeks to annul the decision[2] of the National Labor Relations Commission (NLRC) reversing the Labor Arbiter’s disposition[3] that he was illegally dismissed.

The facts of the case are as follows:Petitioner Joaquin T. Servidad was employed on May 9, 1994 by respondent INNODATA as a “Data Control Clerk”, under a contract

of employment Section 2 of which, reads:“Section 2.  This Contract shall be effective for a period of 1 years commencing on May 10, 1994, until  May 10, 1995  unless sooner terminated pursuant to the provisions hereof.From May 10, 1994 to November 10, 1994, or for a period of six (6) months, the EMPLOYEE shall be contractual during which the EMPLOYER can terminate the EMPLOYEE’s services by serving written notice to that effect.  Such termination shall be immediate, or at whatever date within the six-month period, as the EMPLOYER may determine.  Should the EMPLOYEE continue his employment beyond November 10, 1994, he shall become a regular employee upon demonstration of sufficient skill in the terms of his ability to meet the standards set by the EMPLOYER.  If the EMPLOYEE fails to demonstrate the ability to master his task during the first six months he can be placed on probation for another six (6) months after which he will be evaluated for promotion as a regular employee.”[4]

On November 9, 1995, or after working for six (6) months, he was made to sign a three-month probationary employment and later, an extended three-month probationary employment good until May 9, 1995.[5]

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On July 7, 1994, the petitioner was given an overall rating of 100% and 98% in the work evaluations conducted by the company.   In another evaluation, petitioner received a rating of 98.5% given by the private respondent.[6]

On May 9, 1995, petitioner was dismissed from the service on the ground of alleged termination of contract of employment.Such happening prompted petitioner to institute a case for illegal dismissal against the private respondent.   In ruling for petitioner,

the Labor Arbiter disposed as follows:"WHEREFORE, premises considered judgment is hereby rendered finding Respondent guilty of illegal dismissal and concomitantly, Respondent is ordered to pay complainant full backwages from the time of his dismissal till actual or payroll reinstatement, in the amount of P53,826.50 (computed till promulgation only).Respondent is hereby further ordered to reinstate complainant to his former position or equivalent position without loss of seniority rights, privileges and benefits as a regular employee immediately upon receipt of this decision.SO ORDERED.”[7]

On appeal thereto by INNODATA, the NLRC reversed the aforesaid judgment of the Labor Arbiter.   It declared that the contract between petitioner and private respondent was for a fixed term and therefore, the dismissal of petitioner Joaquin T. Servidad, at the end of his one year term agreed upon, was valid.  The decretal portion of the decision of NLRC is to the following effect:“All said the judgment dated August 20, 1996 is hereby, REVERSED.WHEREFORE, premises considered, the instant case is hereby DISMISSED for lack of merit.SO ORDERED.”[8]

Undaunted, petitioner found his way to this Court via the present faulting NLRC for acting with grave abuse of discretion in adjudging subject contract of employment of petitioner to be for a definite or fixed period.

The petition is impressed with merit.At bar is just another scheme to defeat the constitutionally guaranteed right of employees to security of tenure.   The issue posited

centers on the validity and enforceability of the contract of employment entered into by the parties.The NLRC found that the contract in question is for a fixed term.   It is worthy to note, however, that the said contract provides for

two periods.  The first period was for six months terminable at the option of private respondent, while the second period was also for six months but probationary in character.  In both cases, the private respondent did not specify the criteria for the termination or retention of the services of petitioner.  Such a wide leeway for the determination of the tenure of an employee during a one year period of employment is violative of the right of the employee against unwarranted dismissal.

Decisively in point is Article 1377 of the Civil Code, which provides:“Art. 1377.  The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.”

Certainly, favorable interpretation of the contract in the case under scrutiny should be for petitioner and not for the private respondent which caused the preparation of said contract.

If the contract was really for a fixed term, the private respondent should not have been given the discretion to dismiss the petitioner during the one year period of employment for reasons other than the just and authorized causes under the Labor Code.  Settled is the rule that an employer can terminate the services of an employee only for valid and just causes which must be shown by clear and convincing evidence.[9]

According to the private respondent, the one-year period stipulated in subject contract was to enable petitioner to acquire the skill necessary for the job.  In effect, what respondent employer theorized upon is that the one-year term of employment is probationary.   If the nature of the job did actually necessitate at least one year for the employee to acquire the requisite training and experience, still, the same could not be a valid probationary employment as it falls short of the requirement of Article 281 [10] of the  Labor Code.  It was not brought to light that the petitioner was duly informed at the start of his employment, of the reasonable standards under which he could qualify as a regular employee.  The rudiments of due process demand that an employee should be apprised before hand of the conditions of his employment and the basis for his advancement.[11]

The language of the contract in dispute is truly a double-bladed scheme to block the acquisition of the employee of tenurial security.  Thereunder, private respondent has two options.  It can terminate the employee by reason of expiration of contract, or it may use “failure to meet work standards” as the ground for the employee’s dismissal.   In either case, the tenor of the contract jeopardizes the right of the worker to security of tenure guaranteed by the Constitution.[12]

In the case of Brent School, Inc. vs. Zamora, et al.[13], the Court upheld the principle that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy.

Such circumstance has been indubitably shown here to justify the application of the following conclusion:“Accordingly, and since the entire purpose behind the development of the legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee’s right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. x x x”[14]

The agreement in the case under consideration has such an objective and consequently, is a complete nullity.[15]

It is abundantly clear that the petitioner was hired as a regular employee, at the outset.   He worked as a “Data Control Clerk”.  His job was directly related to the data processing and data encoding business of Innodata.  His work was therefore necessary and important to the business of his employer.  Such being the scenario involved under Article 280[16] of the Labor Code petitioner is considered a regular employee of private respondent.  At any rate, even assuming that his original employment was probationary, petitioner was anyway permitted to work beyond the first six-month period and under Article 281 [17] an employee allowed to work beyond the probationary period is deemed a regular employee.

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Reliance by NLRC on the ruling in Mariwasa Manufacturing, Inc., et al. vs. Hon. V. Leogardo Jr., et al.[18] is misplaced.  Pertinent portion of the disquisition therein was as follows:“By voluntary agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion of said period if he still failed to make the grade during the period of extension.  The Court finds nothing in the law which by any fair interpretation prohibits such waiver.  And no public policy protecting the employee and the security of tenure is served by proscribing voluntary agreements which, by reasonably extending the period of probation, actually improve and further a probationary employee’s prospects of demonstrating his fitness for regular employment.”[19]

The above-described situation, however, is not the same as what obtained in this case.   In the Mariwasa case, the employment was expressly agreed upon as probationary.  Here, no such specific designation is stipulated in the contract.  The private respondent sought to alternatively avail of probationary employment and employment for a fixed term so as to preclude the regularization of the status of petitioner.  The utter disregard of public policy by the contract in question negates the ruling of NLRC that said contract is the law between the parties.  The private agreement of the parties cannot prevail over Article 1700 of the Civil Code, which provides:“Art. 1700.  The relation between capital and labor are not merely contractual.  They are so impressed with public interest that labor contracts must yield to the common good.  Therefore, such contracts are subject to special laws on labor unions, collective bargaining, strikes and lockouts, closed shops, wages, working conditions, hours of labor and similar subjects.”

Similarly telling is the case of Pakistan Airlines Corporation vs. Pole, et al.[20] There, it was said:“x x x provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written into the contract.  Put a little differently, the governing principle is that the parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest.  The law relating to labor and employment is clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other. x x x”[21]

On the averment that NLRC gravely abused its discretion in finding that petitioner failed to meet the standards of the company, we find for petitioner.  The decision of NLRC on the matter simply stated that the petitioner fell short of the expectations of the company without specifying factual basis therefor.[22] The public respondent overlooked the undisputed satisfactory ratings of the performance of petitioner in the two job evaluations conducted by the respondent company.   Even granting, therefore, that the contract litigated upon is valid; still, the petitioner, who was permitted to work beyond six months could not be dismissed on the ground of failure to meet the standards of Innodata.  By the provisions of the very contract itself, petitioner has become a regular employee of private respondent.  Therein, it is stipulated that: “xxx Should the EMPLOYEE continue employment beyond November 10, 1994, he shall become a regular employee upon demonstration of sufficient skill in the terms of his ability to meet the standards set by the EMPLOYER. x x x”[23]

Then too, the case at bar is on all fours with the recent case of Villanueva vs. NLRC, et al.[24] where the same standard form of employment contract prepared by INNODATA was at issue.  In deciding that the said contract violated the employee’s right to security of tenure, the court ratiocinated:“The termination of petitioner’s employment contract on 21 February 1995, as well as the subsequent issuance on 13 March 1995 of a “new” contract for five months as “data encoder,” was a devious, but crude, attempt to circumvent petitioner’s right to security of tenure as a regular employee guaranteed by Article 279 of the Labor Code.[25] Hence, the so called “end of contract” on 21 February 1995 amounted to a dismissal without any valid cause.”

Indeed, the NLRC gravely abused its discretion in construing the contract sued upon as one with a fixed term.   To uphold such a finding would be to concede to the private respondent an advantage arising from its own mistake.

On the matter of moral damages, however, we rule for the private respondent.   Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages.   It must be shown that the proximate cause thereof was the unlawful act or omission of the private respondent. [26] However, the petitioner herein predicated his claim for such damages on mere allegations of sleepless nights, embarrassment, etc., without detailing out what was responsible therefor or the cause thereof.

As regards the backwages to be granted to petitioner, the amount thereof should be computed from the time he was illegally dismissed to the time of his actual or payroll reinstatement, without any deduction.[27]

WHEREFORE, the petition is GRANTED, the questioned decision of NLRC is SET ASIDE, and the decision of the Labor Arbiter, dated August 20, 1996, in NLRC-NCR-00-055-03471-95 REINSTATED, with the modification that the award of backwages be computed from the time of the dismissal of petitioner to his actual or payroll reinstatement.  Costs against the private respondent.

SO ORDERED.

GR 83207 Aug 5 1991G.R. No. 83207 August 5, 1991MARCOPPER MINING CORPORATION, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, NATIONAL MINES & ALLIED WORKERS UNION, and HEIRS OF CALIXTO C. GAMBOA, PETRONIO Q. ROBLES, and ALFREDO B. RANCES, respondents.Gozon, Fernandez, Defensor & Associates for petitioner.Cesar M. Angeles for private respondents. CRUZ, J.:p

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The issue before us is the correct interpretation of the following provision in Article XII of the collective bargaining agreement between petitioner Marcopper Mining Corporation and private respondent National Mines and Allied Workers Union (NAMAWU):

Section 1. The COMPANY agrees to grant a severance pay equivalent to twenty (20) days of base wage for every year of service to regular employees covered by this Agreement who leave the COMPANY other than for cause before qualifying for early retirement under the Retirement Plan as provided hereunder, provided, however, that an employee who voluntarily resigns from the COMPANY shall not be entitled to the benefits herein unless he has completed at least ten (10) years of services. Any dismissal on ground of illness shall be treated in accordance with the provisions of the Labor Code as amended and its implementing rules and regulations except that where an employee who has rendered ten (10) or more years of service to the COMPANY shall be entitled to the above benefit in lieu of what is provided for under the Labor Code.

This case arose when three employees of the petitioner company, namely, Calixto Gamboa, Petronio Robles and Alfredo Rances, died after serving therein for 17, 12, and 18 years respectively. Pursuant to the CBA, the petitioner paid the heirs of the deceased employees the proceeds of the group life insurance plan and the cash value of their unused vacation and sick leaves, besides waiving certain amounts owing to it by Rances and Robles. The payments are itemized as follows. 1

ALFREDO B. RANCES(Group Life Insurance Proceeds) P45,700.00(Vacation & Sick Leave Balances) 1,830.65TOTAL P47,530.65[The amount of 47,530.00 excludes the amount of P33,594.68 which represents share in medical expenses, Loyola Memorial Chapel charges and various cash advances which were written off and/or waived by Marcopper in favor of the heirs of the deceased].PEDRONIO Q. ROBLES(Group Life Insurance Proceeds) -P37,400.00(Vacation & Sick Leave Balances) -3,156.55TOTAL -P46,556.55[The amount of P40,556.55 excludes the amount of P15,739.55 representing various accounts of the deceased with Petitioner which was written off and/or waived by Marcopper in favor of the heirs of the Deceased].CALIXTO C. GAMBOA(Group Life Insurance Proceeds) P44,600.00(Vacation & Sick Leave Balances) 1,485.90TOTAL P46,085.90

After receipt of the foregoing payments, the heirs executed separate quitclaims -releases in favor of the petitioner.2

Subsequently, NAMAWU demanded from the petitioner severance pay for the said deceased employees on the basis of the above-cited Article XII, Section 1, of the CBA. The demand was rejected and the union thereupon filed a complaint on behalf of the heirs for the recovery of the said claim.After considering the position papers of the parties, Labor Arbiter Cornelio Linsangan rendered a decision 3 on February 13, 1987, disposing as follows:

WHEREFORE, judgment is hereby rendered ordering the respondent to pay the heirs of Calixto Gamboa, Alfredo Rances and Petronio Robles, all represented by herein complainant union, separation pay equivalent to twenty (20) days salary for every year of service.

The rationale of the decision was explained thus:There is an apparent doubt on how Section I is to be interpreted. However, in consonance with Article 4, Preliminary Title, Labor Code, aforesaid provision should be interpreted in favor of Labor. Statutes granting rights to laborers are liberally construed. (Union Trust Co. vs. State, 24 LRA NS 111).But even in the absence of Article 4 of the Labor Code, which provides -Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations shall be resolved in favor of labor.It would still appear that the claim of complainant union is founded on cogent logic. The granting by the company of severance pay to its employees who leave other than for cause is, in effect, a recognition of their services worthy of a reward. It can be easily discussed from subject provision the rationale and purpose for the granting of severance pay. The provision aims and intends to provide to the employee and his family financial security, at least during the period immediately following his leaving the company. It will, therefore, be absurd and self-defeating if subject CBA provision will be interpreted otherwise as it is precisely in case of death of the employee that his family needs most the severance benefit or assistance contemplated in the provision under consideration. Needless to state that by reason of death of Calixto Gamboa, Alfredo Rances and Petronio Robles the source of livelihood of their heirs was extinguished. It is only fitting that they should be rewarded in consideration of their length of service, which reward should be extended to their heirs in the form of severance pay.Anent the contention of respondent that the heirs have already received certain fringe benefits, it should be remembered those were proceeds emanating from insurance contracts. The severance pay being claimed does not spring from said insurance contract but by virtue of a separate provision of the CBA.

Marcopper appealed to the NLRC, which affirmed the decision on October 8, 1987, and denied the motion for reconsideration on January 4, 1988. This petition for certiorari was then filed on the grounds that the NLRC committed grave abuse of discretion in its interpretation

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of the questioned CBA provision; in not taking into account the various amounts due to Marcopper from the deceased employees which it had written off as an act of compassion and in recognition of the deceased employees' non-entitlement to separation pay; and in disregarding the affidavits of release and quitclaim executed by the heirs of the deceased employees.The petitioner contends that the clause "who leave the company other than for cause" is clear and unambiguous, leaving no room for interpretation and calling for the application of Article 1370 of the Civil Code viz.:

Article 1370. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control.x x x x x x x x x

"Leave" should be given a literal or dictionary interpretation as signifying "willful departure with intent to remain away and not temporary absence with intention of returning." 4 The word should be understood as referring to a positive and voluntary act of departure and does not include death, which is involuntary. In fact, the Pilipino equivalent of the word "leave" as used in the official translation of the CBA, is "aalis."Assuming arguendo that the provision is not really clear, Article 4 of the Labor Code should not have been resorted to as this applies only in case of doubt in the interpretation and implementation of the provisions of the Labor Code and its implementing rules and regulations. The CBA being a contract, the rules embodied in the Civil Code on interpretation of contracts should govern. The intent of the parties should be ascertained by considering relevant provisions of the CBA on the retirement plan, the group life insurance, and bereavement assistance together with Section 1 in the light of Article 1374 of the Civil Code. 5

The petitioner further points out that aside from dismissal for cause, there are only three modes by which an employer-employee relationship is terminated, to wit, voluntary resignation, retirement and death of the employee. The Labor Code does not require separation pay in these instances, but the CBA corrects the omission by providing for these contingencies. Thus, death benefits consisting of bereavement assistance under Section 5 6and insurance proceeds are made available under the group life insurance plan 7 resignation benefits under Section 1, 8 and retirement benefits under Section 2, 9 of the CBA.The phrase "other than for cause" in reference to "early retirement taken in conjunction with "leave" connotes a voluntary, willful and intentional act of separation other than by retirement. If "other than for cause" were construed to include even death, which is involuntary, the reference to early retirement would be meaningless.The petitioner adds that insurance proceeds are given in case of death to help the family of the deceased. The grant of severance pay in case of death would extend the scope of the benefit beyond its purpose and defeat the intent behind the grant of funeral benefits, retirement benefits and severance coverage in the CBA.At any rate, it also maintains, the heirs of the deceased have executed quitclaims/releases which now bar them from demanding severance pay.For their part, the respondents argue that while resignation is a voluntary mode of separation, dismissal on the ground of illness is also provided for in the same Section 1 of Article XII although it is an involuntary mode of separation. Obviously, the word "leave" is used in its generic sense. To grant severance pay to an employee who is dismissed on the ground of illness and to exclude one who dies is to them "a myopic and constricted view". The provision should be interpreted under the spirit that gives life and not the letter that killeth.The respondents see no reason why the deceased employees should be placed at a disadvantage merely because they did not resign or were dismissed on the ground of illness after having served the company for more than 10 years. If a worker who willingly leaves the company is entitled to severance pay under the CBA, the same benefit should not be denied one, who, through no choice of his own, is separated from employment by reason of death.They also contend that the NLRC correctly applied not only Article 4 of the Labor Code but also Article 1702 of the Civil Code, which applies not only to labor legislation but also to labor contracts, thus:

Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

The private respondents point out that there is nothing in the CBA which states that insurance benefits and severance pay are mutually exclusive, unlike retirement and severance pay under Section 2, Article XII. Furthermore, it is the insurance company that pays the insurance benefits while it is the company or employer that is liable for severance benefits. Since the primary purpose of the CBA is to provide more benefits to workers, the contract would be rendered more effectual if the heirs were awarded both insurance benefits and severance pay.The Solicitor General takes the side of the respondents. He maintains that the clause "who leave the company other than for cause" literally includes death as a manner of leaving the company because death terminates an existing employer-employee relationship. It cannot be validly argued that the leave-taking mentioned in the phrase refers exclusively to voluntary resignation because the very same article is made applicable also to any employee who is dismissed on the ground of illness. As long as he has rendered at least 10 years of service, the employee shall also be entitled to the benefits therein provided although his separation is not voluntary. If the parties to the CBA had really intended a restrictive interpretation of the provision in question, they would have so provided clearly and placed the word voluntarily before the word "leave."These are the arguments of the parties. Now for the opinion of the Court.The title of Article XII is SEVERANCE, RETIREMENT AND LIFE INSURANCE.Severance is "the termination of contractual association (as employment)." 10 Severance pay is defined as "an allowance usually based on length of service that is payable to an employee on severance except usually in case of disciplinary discharge"  11 or as "compensation due an employee upon the severance of his employment status with the employer. 12

The word leave is defined in Black's Law Dictionary as "Willful departure with intent to remain away" and in Webster's as to "desert, abandon, forsake, to terminate association with, quit the service of " Given these definitions, the petitioner argues that death should not be included in the term as this is an involuntary mode of separation that is covered by another provision of the CBA.

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This is a correct conclusion insofar as the word is used in the basic rule embodied in Section 1 of Article XII of the CBA declaring that those entitled to severance pay are regular employees "who leave" the COMPANY other than for cause before qualifying for early retirement under the Retirement Plan as provided hereunder, provided, however, that an employee who voluntarily resigns from the COMPANY shall not be entitled to the benefits herein unless he has completed at least ten (10) years of service.The trouble with the petitioner's contention is that it is a generalization that does not take into account the specific exception thereto that in fact has been clearly expressed also in the same provision of the CBA. The last part of the section reads as follows:

... Any dismissal on ground of illness shall be treated in accordance with the provisions of the Labor Code as amended and its implementing rules and regulations except that where an employee who has rendered ten (10) or more years of service to the COMPANY shall be entitled to the above benefit in lieu of what is provided for under the Labor Code.

It would really seem strange, as the private respondent muses, that while an employee who is dismissed for illness may be entitled to severance pay under this exception, he will not be similarly benefited if he dies of that illness during his employment. Death, to be sure, is an involuntary mode of separation. We agree with NAMAWU however, that it is covered by the situation contemplated in the above-cited exception, which, if it is to be reasonably interpreted, should include the aggravation of illness. The exception, as we understand it, is intended to provide some measure of relief to the dismissed employee, on the justification that it is not his fault that he is ill and he needs some financial assistance for his cure and treatment. As it is clearly not the worker's fault either if he should die in the course of his employment, nor can it be suggested that he needs in this case less financial assistance, we see no reason why he should be treated differently.This interpretation need not be based on the rule that doubts on the meaning of labor contracts should be resolved in favor of labor. It is dictated, as we see it, by ordinary logic and by the obvious intendment behind the above-quoted exception. The Court will concede that without this exception, the general rule preceding it would have defeated the private respondents' claim for severance pay. But as the petitioner itself correctly contends, the section must be read in its entirety and, indeed, in relation to the rest of the CBA.It is also our belief, and we so hold, that the quitclaims/releases, while concededly made voluntarily, did not constitute a knowing waiver of the severance pay because the heirs of the deceased employees were not aware at that time that they were entitled to such pay.We are not persuaded that the insurance benefits should be discounted because they do not come from the insurance company and not the petitioner itself. On the contrary, the private respondents should be properly grateful therefor because these would not have been available at all if the petitioner had not paid the premiums on the group insurance of its employees, who have not contributed a single centavo for such payment. Nevertheless, we agree that the insurance benefits do not exclude the severance pay as there is no clear agreement on that point nor has the petitioner pointed to any law or rule clearly providing for such exclusion.The Court is convinced that the petitioner has acted in complete good faith in this case and that its position is based on a sincere and even reasonable interpretation of the section in question. To repeat, it should have operated in its favor were it not for the exception embodied therein as we now interpret it. We must add that Marcopper should be commended for its treatment of the heirs of the deceased employees, particularly Rances and Robles, whose respective accountabilities in the amounts of P33,594.68 and P15,739.55 it voluntarily and graciously wrote off as a gesture of good will and generosity. This speaks well of its attitude toward its loyal employees, who for their part appear to be appreciative enough albeit they cannot yield on this question before us. That is their right, of course. At any rate, the Court is gratified over the intelligent and respectful debate of the parties in their pleadings which it found especially noteworthy for the lack of acrimony and bellicoseness that usually taint adversarial discussions, particularly in labor disputes.We rule for the private respondents, but not completely. The Court feels that if the private respondents are to be given severance pay, as we here hold, it is only fair that the amounts earlier condoned by the petitioner be also taken into account in the final disposition of the conflicting claims. Thus, even as we disregard the quitclaims of the private respondents on the ground that these did not cover the severance pay, so too must we in fairness deduct such severance pay from the amounts the petitioner has waived in good faith.The record shows that Robles is entitled to severance pay of P11,508.00 for 12 years service and Rances to P21,096,00 for 18 years service, and that they had outstanding liabilities of P15,739.55 and P33,594.68, respectively, that were condoned by the petitioner. Their severance pay should now be charged against their indebtedness, leaving a balance of P4,231.55 against Robles and P12,498.68, respectively, still due to the petitioner. These are the amounts only that are deemed waived by the petitioner after full settlement of the severance pay of the deceased employees.WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, but with the modification that the severance pay due to private respondents is deemed paid and covered by the amounts previously condoned by the petitioner. The severance pay owing to Calixto Gamboa shall be paid in full. No costs.SO ORDERED.GR 72222 Jan 13 1989G.R. No. 72222 January 30, 1989INTERNATIONAL CATHOLIC MIGRATION COMMISSION, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and BERNADETTE GALANG, respondents. FERNAN, C.J.:The issue to be resolved in the instant case is whether or not an employee who was terminated during the probationary period of her employment is entitled to her salary for the unexpired portion of her six-month probationary employment.The facts of the case are undisputed.Petitioner International Catholic Migration Commission (ICMC), a non-profit organization dedicated to refugee service at the Philippine Refugee Processing Center in Morong, Bataan engaged the services of private respondent Bernadette Galang on January 24, 1983 as a probationary cultural orientation teacher with a monthly salary of P2,000.00.

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Three (3) months thereafter, or on April 22, 1983, private respondent was informed, orally and in writing, that her services were being terminated for her failure to meet the prescribed standards of petitioner as reflected in the performance evaluation of her supervisors during the teacher evaluation program she underwent along with other newly-hired personnel.Despite her termination, records show that private respondent did not leave the ICMC refugee camp at Morong, Bataan, but instead stayed thereat for a few days before leaving for Manila, during which time, she was observed by petitioner to be allegedly acting strangely.On July 24, 1983, private respondent returned to Morong, Bataan on board the service bus of petitioner to accomplish the clearance requirements. In the evening of that same day, she was found at the Freedom Park of Morong wet and shivering from the rain and acting bizarrely. She was then taken to petitioner's hospital where she was given the necessary medical attention.Two (2) days later, or on July 26, 1983, she was taken to her residence in Manila aboard petitioner's service bus. Thru a letter, her father expressed appreciation to petitioner for taking care of her daughter. On that same day, her father received, on her behalf, the proportionate amount of her 13th month pay and the equivalent of her two week pay.On August 22, 1983, private respondent filed a complaint 1 for illegal dismissal, unfair labor practice and unpaid wages against petitioner with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral damages.On October 8, 1983, after the parties submitted their respective position papers and other pleadings, Labor Arbiter Pelagio A. Carpio rendered his decision dismissing the complaint for illegal dismissal as well as the complaint for moral and exemplary damages but ordering the petitioner to pay private respondent the sum of P6,000.00 as payment for the last three (3) months of the agreed employment period pursuant to her verbal contract of employment. 2

Both parties appealed the decision to the National Labor Relations Commission. In her appeal, private respondent contended that her dismissal was illegal considering that it was effected without valid cause. On the other hand, petitioner countered that private respondent who was employed for a probationary period of three (3) months could not rightfully be awarded P6,000.00 because her services were terminated for failure to qualify as a regular employee in accordance with the reasonable standards prescribed by her employer.On August 22, 1985, the NLRC, by a majority vote of Commissioners Guillermo C. Medina and Gabriel M. Gatchalian, sustained the decision of the Labor Arbiter and thus dismissed both appeals for lack of merit. Commissioner Miguel Varela, on the other hand, dissented and voted for the reversal of the Labor Arbiter's decision for lack of legal basis considering that the termination of services of complainant, now private respondent, was effected during her probationary period on valid grounds made known to her. 3

Dissatisfied, petitioner filed the instant petition.Petitioner maintains that private respondent is not entitled to the award of salary for the unexpired three-month portion of the probationary period since her services were terminated during such period when she failed to qualify as a regular employee in accordance with the reasonable standards prescribed by petitioner; that having been terminated on valid grounds during her probationary period, or specifically on April 24, 1983, petitioner is not liable to private respondent for services not rendered during the unexpired three-month period, otherwise, unjust enrichment of her part would result; that under Article 282 (now Article 281) of the Labor Code, if the employer finds that the probationary employees does not meet the standards of employment set for the position, the probationary employee may be terminated at any time within the six-month period, without need of exhausting raid entire six-month term. 4

The Solicitor General, on the other hand, contends that a probationary employment for six (6) months, as in the case of herein private respondent, is an employment for a definite period of time and, as such, the employer is duty-bound to allow the probationary employee to work until the termination of the probationary employment before her re- employment could be refused; that when petitioner disrupted the probationary employment of private respondent, without giving her the opportunity to improve her method of instruction within the said period, it held itself liable to pay her salary for the unexpired portion of such employment by way of damages pursuant to the general provisions of civil law that he who in any manner contravenes the terms of his obligation without any valid cause shall be liable for damages; 5 that, as held in Madrigal v. Ogilvie, et al, 6 the damages so awarded are equivalent to her salary for the unexpired portion of her employment for a fixed period. 7

We find for petitioner.There is justifiable basis for the reversal of public respondent's award of salary for the unexpired three-month portion of private respondent's six-month probationary employment in the light of its express finding that there was no illegal dismissal. There is no dispute that private respondent was terminated during her probationary period of employment for failure to qualify as a regular member of petitioner's teaching staff in accordance with its reasonable standards. Records show that private respondent was found by petitioner to be deficient in classroom management, teacher-student relationship and teaching techniques. 8 Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just cause for terminating a probationary employee specifically recognized under Article 282 (now Article 281) of the Labor Code which provides thus:

ART. 281. Probationary employment. — Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employer who has been engaged in a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employer in accordance with reasonable standard made known by the employer to the employer at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. (Emphasis supplied.)

It must be noted that notwithstanding the finding of legality of the termination of private respondent, public respondent justified the award of salary for the unexpired portion of the probationary employment on the ground that a probationary employment for six (6) months is an employment for a "definite period" which requires the employer to exhaust the entire probationary period to give the employee the opportunity to meet the required standards.

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The legal basis of public respondent is erroneous. A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. 9 The word "probationary", as used to describe the period of employment, implies the purpose of the term or period, but not its length. 10

Being in the nature of a "trial period" 11 the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. While the employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer, that he has the qualifications to meet the reasonable standards for permanent employment.It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. The equality of right that exists between the employer and the employee as to the nature of the probationary employment was aptly emphasized by this Court in Grand Motor Parts Corporation v. Minister of Labor, et al., 130 SCRA 436 (1984), citing the 1939 case of Pampanga Bus. Co., Inc. v. Pambusco Employees Union, Inc. 68 Phil. 541, thus:

The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. If the employer can compel the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work against the employer's will, this is oppression.

As the law now stands, Article 281 of the Labor Code gives ample authority to the employer to terminate a probationary employee for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. There is nothing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, Article 281 of the Labor Code does not likewise preclude the employer from terminating the probationary employment on justifiable causes as in the instant case.We find unmeritorious, therefore, public respondents argument that the security of tenure of probationary employees within the period of their probation, as in the case of herein private respondent, justified the award of salary for the unexpired portion of her probationary employment. The termination of private respondent predicated on a just cause negates the application in this case of the pronouncement in the case of Biboso v. Victories Milling Co., Inc., 12 on the right of security of tenure of probationary employees.Upon inquiry by the then Ministry of Labor and Employment as a consequence of the illegal dismissal case filed by private respondent before it, docketed as Case No. NLRC NCR-8-3786-83, it was found that there was no illegal dismissal involved in the case, hence, the circumvention of the rights of the probationary employees sought to be regulated as pointed out in Biboso v. Victorias Milling Co., Inc., 13 is wanting.There was no showing, as borne out by the records, that there was circumvention of the rights of private respondent when she was informed of her termination. Her dismissal does not appear to us as arbitrary, fanciful or whimsical. Private respondent was duly notified, orally and in writing, that her services as cultural orientation teacher were terminated for failure to meet the prescribed standards of petitioner as reflected in the performance evaluation conducted by her supervisors during the teacher evaluating program. The dissatisfaction of petitioner over the performance of private respondent in this regard is a legitimate exercise of its prerogative to select whom to hire or refuse employment for the success of its program or undertaking. More importantly, private respondent failed to show that there was unlawful discrimination in the dismissal.It was thus a grave abuse of discretion on the part of public respondent to order petitioner to pay private respondent her salary for the unexpired three-month portion of her six-month probationary employment when she was validly terminated during her probationary employment. To sanction such action would not only be unjust, but oppressive on the part of the employer as emphasized in Pampanga Bus Co., Inc., v. Pambusco Employer Union, Inc. 14

WHEREFORE, in view of the foregoing, the petition is GRANTED. The Resolution of the National Labor Relations Commission dated August 22, 1985, is hereby REVERSED and SET ASIDE insofar as it ordered petitioner to pay private respondent her P6,000.00 salary for the unexpired portion of her six-month probationary employment. No cost.SO ORDERED.GR 106654 Year 1994G.R. No. 106654 December 16, 1994PANTRANCO NORTH EXPRESS, INC., and/or ABELARDO DE LEON, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, Second Division, and RODOLFO PERONILA, respondents.The Government Corporate Counsel for petitioner.Alfonso A. Osia for private respondent. REGALADO, J.:This special civil action for certiorari assails and seeks the nullification of two resolutions of the National Labor Relations Commission (NLRC) of the National Capital Region (NCR), dated July 2, 1992 and August 11, 1992, 1holding that private respondent Rodolfo Peronila was illegally dismissed by petitioner corporation and imposing sanctions therefore.

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It appears on the record that sometime in 1971, private respondent Peronila was employed as a driver of Pantranco North Express, Inc., a domestic corporation engaged in the public transportation business as a common carrier, and of which its co-petitioner Abelardo de Leon is a manager.In 1973, Peronila was administratively investigated by the corporation for his absence from work of more than two and one-half months without leave. According to an investigation report of petitioners' area manager, dated March 10, 1973, Peronila claimed that he went on absence without leave from his work from November 1, 1972 up to February 16, 1973 which was date of the investigation, or one hundred seven calendar days continuously, because "he went to Cotabato, Mindanao to visit his dead grandfather during the period of his unofficial absence."2

Finding the belated explanation of Peronila insufficient, the petitioner declared that private respondent had "grossly violated the provisions of (its) existing company policies, CVT Policy No. 71-102" and it consequently "dismissed the respondent from service upon receipt of the approved clearance from the NLRC." 3

In an order 4 dated March 20, 1973, Mediator-Factfinder Loreto V. Poblete of the National Relations Commission, Regional Office No. II in Tuguegarao, Cagayan, affirmed the dismissal made by petitioner for being duly supported by the evidence and made in accordance with law.Fifteen years after such termination of his employment, Peronila reappeared in 1988 and implored petitioner to reconsider his dismissal, which plea was initially denied by petitioner. However, due to insistent appeals by Peronila, petitioner eventually acceded and hired him as a driver, but on a contractual basis for a fixed period of one month. 5

The terms and conditions of that new employment on a contractual basis are contained in a letter, dated April 5, 1988, signed by the general manager of the company and voluntarily conformed to by Peronila, thus:

This will confirm your assignment as Driver-Baler Line on a contractual basis under the following terms and conditions:1. EFFECTIVITYThis assignment shall take effect on April 5, 1988 and shall be for a period of one month.2. FEEYou shall receive a compensation of P64.00/day.3. HOURS OF WORKYou shall work in accordance with the schedule given by your immediate supervisor.4. TERMINATIONThis contract is automatically terminated after one (1) month or at the close of office hours on May 5, 1988.5. MISCELLANEOUSThere is no employer-employee relationship between us hence you are not entitled to any privilege of an employee viz: sick leave, vacation leave, holiday pay, overtime pay and others. 6

Barely fifteen days from such employment as a contractual driver, or on April 20, 1988, private respondent was involved in a vehicular mishap in Nueva Vizcaya wherein the bus he was driving hit another vehicle. 7 After an administrative investigation conducted by petitioner corporation, Peronila was found guilty thereof, hence his employment contract was terminated and was no longer renewed thereafter.On January 18, 1989, private respondent filed a case for illegal dismissal against petitioner in the Arbitration Branch of the NLRC-NCR wherein he argued that he was refused assignment after May 5, 1988, which refusal was tantamount to constructive dismissal. Accordingly, he sought his reinstatement and the payment of his back wages. 8

Labor Arbiter Patricio P. Libo-on dismissed the case on February 12, 1991, ruling that "(a)lthough as a driver, his services (are) usual and necessary to the business of the respondent, yet it is also true that complainant's case falls within one of the exceptions. When he was rehired, it was clear to him that he would be working only for one (1) month. . . . Apparently, the reason for this is to fill or to stop-gap the requirements of the employe(r)/respondent during the period (when) he was rehired, and which it foresees to ease up in May 1988." The labor arbiter also upheld the aforestated contract signed by Peronila.  9

On appeal, public respondent NLRC set aside the decision of the labor arbiter declaring that the dismissal was illegal since there was no just cause, with the decretal portion of its resolution on appeal disposing as follows:

WHEREFORE, premises considered, the decision appealed from is hereby set aside and a new Order promulgated ordering the reinstatement of complainant with one (1) year backwages. 10

The finding of the labor arbiter regarding the dismissal of Peronila was reversed by public respondent on these considerations:However, we do not agree with the finding of the Labor Arbiter that complainant's re-employment was an exception to Article 280 of the Labor Code.

xxx xxx xxxSuffice it to state that the Constitution recognizes the need to afford protection to labor and assures security of tenure to workers. In consonance thereto, the Labor Code was enacted to give special attention to the relationship between labor and management. Indeed, the Labor Code is a special law, and well settled in this jurisdiction is the rule that as between a special law and a general law, the former prevails. Without further belaboring their distinction, to equate and apply the present case to an ordinary contract with a fixed term and period destroys the spirit and intention of the labor laws to give special treatment to labor and management relationship. To uphold the findings a quo of the Labor Arbiter would put to naught the benefits that the State has intended for labor, since by the mere expedience of defining the terms and conditions of employment in a well prepared contract, no employee shall ever attain a regular employment. 11

However, respondent commission rejected the argument of Peronila that he was not afforded the opportunity to adduce evidence before the labor arbiter. The NLRC maintained that there was no error in the procedure conducted by the labor arbiter because he is given

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ample discretion to determine whether there is a need to conduct further hearings after the parties have submitted their position papers and supporting proofs. 12

On August 11, 1992, 13 petitioner's motion for reconsideration was denied for lack of merit, hence this petition alleging grave abuse of discretion on the part of the NLRC in ordering the reinstatement of private respondent and the payment to him of one year back wages.We find adequate and compelling merit in the petition.The determinative issue in this case is whether or not the employment contract which stipulates that there is no employer-employee relationship between petitioner and Peronila is valid. Relevant to this issue, we are persuaded to hold that the re-employment of Peronila as a contractual bus driver was merely an act of generosity on the part of petitioner.Although we have ruled in a number of cases applying Article 280 of the Labor Code 14 that when the activities performed by the employee are usually necessary or desirable in the usual trade of the employer, the employment is deemed regular notwithstanding a contrary agreement, 15 there are exceptions to this rule especially if circumstances peculiar to the case warrant a departure therefrom.What said Article 280 seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status. Management has rights which should also be protected.The petitioner had validly dismissed Peronila long before he entered into the contested employment contract. It was Peronila who earnestly pleaded with petitioner to give him a second chance. The re-hiring of private respondent was out of compassion and not because the petitioner was impressed with the credentials of Peronila. Peronila's previous violations of company rules explains the reluctant attitude to the petitioner in re-hiring him. When the bus driven by Peronila figured in a road mishap, that incident finally prompted petitioner to sever any further relationship with said private respondent.We have recently held in Philippine Village Hotel vs. National Labor Relations Commission, et al. 16 that the fact that the private respondents therein were required to render services necessary or desirable in the operation of the petitioner's business for a duration of the one month dry-run operation period did not in any way impair the validity of the contractual nature of private respondents' contracts of employment which specifically stipulated that their employment was only for one month.In upholding the validity of a contract of employment with fixed or specific period in a number of cases, we explained therein that "the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when. . . . This ruling is only in consonance with Article 280 of the Labor Code."As to whether or not the principle of security of tenure provided in Article 280 of the Labor Code has been violated, we have made the following pronouncements by way of guidelines:

In Brent School, Inc., et al. vs. Ronaldo Zamora, etc., et al., the Court had occasion to examine in detail the question of whether employment for a fixed term has been outlawed under the above quoted provisions of the Labor Code. After an extensive examination of the history and development of Articles 280 and 281, the Court reached the conclusion that the contract providing for employment with a fixed period was not necessarily unlawful: "There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in . . . (his) employment?" As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employers' using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head.17

In the case of Philippine National Oil Company-Energy Development Corporation vs. National Labor Relations Commission, et al., 18 this Court set down two criteria under which fixed contracts of employments cannot be said to be in circumvention of security of tenure, to wit:

1. The Fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter.

In the present dispute, the services of respondent Peronila had been validly terminated by petitioner, when the latter absented himself without official leave, fifteen years before he was re-hired as a contractual driver for just one month. Definitely, his re-hiring cannot be construed to mean that Peronila reacquired his former permanent status.

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Furthermore, as correctly pointed out by the Solicitor General, "there is no evidence on record that private respondent in fact held the position of a bus driver for nearly seventeen years, except his bare and unsupported allegations to that effect in his Position Paper. . . . There is ample and unrebutted evidence that private respondent's employment by PNEI in 1971 was illegally terminated on March 20, 1973. The Order issued by the Mediator-Factfinder Loreto V. Poblete of the Regional Office No. II, National Labor Relations Commission, Tuguegarao, Cagayan in the case entitled, 'Pantranco vs. Rodolfo Peronila' docketed as NLRC Case No. 85, attests to this fact. 19

We once again reiterate that the findings of an administrative agency, to be conclusive and binding, must be supported by substantial evidence. 20 A conflict between the factual findings of the NLRC and the labor arbiter will necessitate a review of such factual findings. The impugned decision of respondent commission appears to have laid too much stress on the conceptual principles of social justice in labor cases without the corresponding specifics to support its conclusions.It must not be overlooked that along with the inspirational passages on social justice in Calalang vs. Williams, et., al., 21 there is this sobering caveat: "The promotion of social justice, however, it is to be achieved not through a mistaken sympathy towards any given group" since it "means the promotion of the welfare of all the people . . . through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community," and "must be founded on the recognition . . . of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, . . . ."WHEREFORE, the instant petition is GRANTED, the challenged decision of respondent National Labor Relations Commission is hereby SET ASIDE, and the complaint against petitioners is DISMISSED.SO ORDERED.GR 120319 Oct 5 1995G.R. No. 120319 October 6, 1995LUZON DEVELOPMENT BANK, petitioner, vs.ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA in her capacity as VOLUNTARY ARBITRATOR, respondents. ROMERO, J.:From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:

Whether or not the company has violated the Collective Bargaining Agreement provision and the Memorandum of Agreement dated April 1994, on promotion.

At a conference, the parties agreed on the submission of their respective Position Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had been filed by LDB.On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing the same.In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of evidence and arguments presented by such parties who have bound themselves to accept the decision of the arbitrator as final and binding.Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or voluntary.Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government to forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a third party.  1The essence of arbitration remains since a resolution of a dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the parties, but in compulsory arbitration, such a third party is normally appointed by the government.Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and binding resolution.  2Ideally, arbitration awards are supposed to be complied with by both parties without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's decision.In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein provisions for a machinery for the resolution of grievances arising from the interpretation or implementation of the CBA or company personnel policies. 3 For this purpose, parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for their selection, preferably from those accredited by the National Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or implementation of the CBA and (2) the interpretation or enforcement of company personnel policies. Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over other labor disputes.On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following enumerated cases:

. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without

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extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:1. Unfair labor practice cases;2. Termination disputes;3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts;6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

xxx xxx xxxIt will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The state of our present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders." 6 Hence, while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator.Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not, elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an unnecessary burden upon it.In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., 9 this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the NLRC since his decisions are not appealable to the latter. 10

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall exercise:xxx xxx xxx

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

xxx xxx xxxAssuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be considered as a quasi-judicial agency, board or commission, still both he and the panel are comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry Arbitration Commission,  11 that the broader term "instrumentalities" was purposely included in the above-quoted provision.An "instrumentality" is anything used as a means or agency. 12 Thus, the terms governmental "agency" or "instrumentality" are synonymous in the sense that either of them is a means by which a government acts, or by which a certain government act or function is performed. 13 The word "instrumentality," with respect to a state, contemplates an authority to which the state delegates governmental power for the performance of a state function. 14 An individual person, like an administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the same manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court,  16 and a trustee in bankruptcy of a defunct corporation is an instrumentality of the state.  17

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated therein.This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities  18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either

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the Constitution or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the contract or submission, or if none be specified, the Regional Trial Court for the province or city in which one of the parties resides or is doing business, or in which the arbitration is held, shall have jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made, apply to the court having jurisdiction for an order confirming the award and the court must grant such order unless the award is vacated, modified or corrected.  19

In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.SO ORDERED.

18 SCRA 190 (1191)

G.R. No. L-21278 December 27, 1966

FEATI UNIVERSITY, petitioner, vs.HON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relations and FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondents.

----------------------------------------

G.R. No. L-21462 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant, vs.FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.

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G.R. No. L-21500 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant, vs.FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.

Rafael Dinglasan for petitioner. Cipriano Cid and Associates for respondents.

ZALDIVAR, J.:

This Court, by resolution, ordered that these three cases be considered together, and the parties were allowed to file only one brief for the three cases.

On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU — hereinafter referred to as Faculty Club — wrote a letter to Mrs. Victoria L. Araneta, President of petitioner Feati University — hereinafter referred to as University — informing her of the organization of the Faculty Club into a registered labor union. The Faculty Club is composed of members who are professors and/or instructors of the University. On January 22, 1963, the President of the Faculty Club sent another letter containing twenty-six demands that have connection with the employment of the members of the Faculty Club by the University, and requesting an answer within ten days from receipt thereof. The President of the University answered the two letters, requesting that she be given at least thirty days to study thoroughly the different phases of the demands. Meanwhile counsel for the University, to whom the demands were referred, wrote a letter to the President of the Faculty Club demanding proof of its majority status and designation as a bargaining representative. On February 1, 1963, the President of the Faculty Club again wrote the President of the University rejecting the latter's request for extension of time, and on the same day he filed a notice of strike with the Bureau of Labor alleging as reason therefor the refusal of the University to bargain collectively. The parties were called to conferences at the Conciliation Division of the Bureau of Labor but efforts to conciliate them failed. On February 18, 1963, the members of the Faculty Club declared a strike and established picket lines in the premises of the University, resulting in the disruption of classes in the University. Despite further efforts of the officials from the Department of Labor to effect a settlement of the differences between the management of the University and the striking faculty members no satisfactory agreement was arrived at. On March 21, 1963, the President of the Philippines certified to the Court of

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Industrial Relations the dispute between the management of the University and the Faculty Club pursuant to the provisions of Section 10 of Republic Act No. 875.

In connection with the dispute between the University and the Faculty Club and certain incidents related to said dispute, various cases were filed with the Court of Industrial Relations — hereinafter referred to as CIR. The three cases now before this Court stemmed from those cases that were filed with the CIR.

CASE NO. G.R. NO. L-21278

On May 10, 1963, the University filed before this Court a "petition for certiorari and prohibition with writ of preliminary injunction", docketed as G.R. No. L-21278, praying: (1) for the issuance of the writ of preliminary injunction enjoining respondent Judge Jose S. Bautista of the CIR to desist from proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the proceedings in Cases Nos. 41-IPA and 1183-MC be annulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29, 1963 in Case No. V-30, all be annulled; and (4) that the respondent Judge be ordered to dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.

On May 10, 1963, this Court issued a writ of preliminary injunction, upon the University's filing a bond of P1,000.00, ordering respondent Judge Jose S. Bautista as Presiding Judge of the CIR, until further order from this Court, "to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations)."1 On December 4, 1963, this Court ordered the injunction bond increased to P100,000.00; but on January 23, 1964, upon a motion for reconsideration by the University, this Court reduced the bond to P50,000.00.

A brief statement of the three cases — CIR Cases 41-IPA, 1183-MC and V-30 — involved in the Case G.R. No. L-21278, is here necessary.

CIR Case No. 41-IPA, relates to the case in connection with the strike staged by the members of the Faculty Club. As we have stated, the dispute between the University and the Faculty Club was certified on March 21, 1963 by the President of the Philippines to the CIR. On the strength of the presidential certification, respondent Judge Bautista set the case for hearing on March 23, 1963. During the hearing, the Judge endeavored to reconcile the part and it was agreed upon that the striking faculty members would return to work and the University would readmit them under a status quo arrangement. On that very same day, however, the University, thru counsel filed a motion to dismiss the case upon the ground that the CIR has no jurisdiction over the case, because (1) the Industrial Peace Act is not applicable to the University, it being an educational institution, nor to the members of the Faculty Club, they being independent contractors; and (2) the presidential certification is violative of Section 10 of the Industrial Peace Act, as the University is not an industrial establishment and there was no industrial dispute which could be certified to the CIR. On March 30, 1963 the respondent Judge issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification. In the same order, the respondent Judge, believing that the dispute could not be decided promptly, ordered the strikers to return immediately to work and the University to take them back under the last terms and conditions existing before the dispute arose, as per agreement had during the hearing on March 23, 1963; and likewise enjoined the University, pending adjudication of the case, from dismissing any employee or laborer without previous authorization from the CIR. The University filed on April 1, 1963 a motion for reconsideration of the order of March 30, 1963 by the CIR en banc, and at the same time asking that the motion for reconsideration be first heard by the CIR en banc. Without the motion for reconsideration having been acted upon by the CIR en banc, respondent Judge set the case for hearing on the merits for May 8, 1963. The University moved for the cancellation of said hearing upon the ground that the court en banc should first hear the motion for reconsideration and resolve the issues raised therein before the case is heard on the merits. This motion for cancellation of the hearing was denied. The respondent Judge, however, cancelled the scheduled hearing when counsel for the University manifested that he would take up before the Supreme Court, by a petition for certiorari, the matter regarding the actuations of the respondent Judge and the issues raised in the motion for reconsideration, specially the issue relating to the jurisdiction of the CIR. The order of March 30, 1963 in Case 41-IPA is one of the orders sought to be annulled in the case, G.R. No. L-21278.

Before the above-mentioned order of March 30, 1963 was issued by respondent Judge, the University had employed professors and/or instructors to take the places of those professors and/or instructors who had struck. On April 1, 1963, the Faculty Club filed with the CIR in Case 41-IPA a petition to declare in contempt of court certain parties, alleging that the University refused to accept back to work the returning strikers, in violation of the return-to-work order of March 30, 1963. The University filed, on April 5,1963, its opposition to the petition for contempt, denying the allegations of the Faculty Club and alleging by way of special defense that there was still the motion for reconsideration of the order of March 30, 1963 which had not yet been acted upon by the CIR en banc. On April 6, 1963, the respondent Judge issued an order stating that "said replacements are hereby warned and cautioned, for the time being, not to disturb nor in any manner commit any act tending to disrupt the effectivity of the order of March 30,1963, pending the final resolution of the same."2 On April 8, 1963, there placing professors and/or instructors concerned filed, thru counsel, a motion for reconsideration by the CIR en banc of the order of respondent Judge of April 6, 1963. This order of April 6, 1963 is one of the orders that are sought to be annulled in case G.R. No. L-21278.

CIR Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club on March 8, 1963 before the CIR, praying that it be certified as the sole and exclusive bargaining representative of all the employees of the University. The University filed an

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opposition to the petition for certification election and at the same time a motion to dismiss said petition, raising the very same issues raised in Case No. 41-IPA, claiming that the petition did not comply with the rules promulgated by the CIR; that the Faculty Club is not a legitimate labor union; that the members of the Faculty Club cannot unionize for collective bargaining purposes; that the terms of the individual contracts of the professors, instructors, and teachers, who are members of the Faculty Club, would expire on March 25 or 31, 1963; and that the CIR has no jurisdiction to take cognizance of the petition because the Industrial Peace Act is not applicable to the members of the Faculty Club nor to the University. This case was assigned to Judge Baltazar Villanueva of the CIR. Before Judge Villanueva could act on the motion to dismiss, however, the Faculty Club filed on April 3, 1963 a motion to withdraw the petition on the ground that the labor dispute (Case No. 41-IPA) had already been certified by the President to the CIR and the issues raised in Case No. 1183-MC were absorbed by Case No. 41-IPA. The University opposed the withdrawal, alleging that the issues raised in Case No. 1183-MC were separate and distinct from the issues raised in Case No. 41-IPA; that the questions of recognition and majority status in Case No. 1183-MC were not absorbed by Case No. 41-IPA; and that the CIR could not exercise its power of compulsory arbitration unless the legal issue regarding the existence of employer-employee relationship was first resolved. The University prayed that the motion of the Faculty Club to withdraw the petition for certification election be denied, and that its motion to dismiss the petition be heard. Judge Baltazar Villanueva, finding that the reasons stated by the Faculty Club in the motion to withdraw were well taken, on April 6, 1963, issued an order granting the withdrawal. The University filed, on April 24, 1963, a motion for reconsideration of that order of April 6, 1963 by the CIR en banc. This order of April 6, 1963 in Case No. 1183-MC is one of the orders sought to be annulled in the case, G.R. No. L-21278, now before Us.

CIR Case No. V-30 relates to a complaint for indirect contempt of court filed against the administrative officials of the University. The Faculty Club, through the Acting Chief Prosecutor of the CIR, filed with the CIR a complaint docketed as Case No. V-30, charging President Victoria L. Araneta, Dean Daniel Salcedo, Executive Vice-President Rodolfo Maslog, and Assistant to the President Jose Segovia, as officials of the University, with indirect contempt of court, reiterating the same charges filed in Case No. 41-IPA for alleged violation of the order dated March 30, 1963. Based on the complaint thus filed by the Acting Chief Prosecutor of the CIR, respondent Judge Bautista issued on April 29, 1963 an order commanding any officer of the law to arrest the above named officials of the University so that they may be dealt with in accordance with law, and the same time fixed the bond for their release at P500.00 each. This order of April 29, 1963 is also one of the orders sought to be annulled in the case, G.R. No. L-2l278.

The principal allegation of the University in its petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278, now before Us, is that respondent Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or with grave abuse of discretion, in taking cognizance of, and in issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let it be noted that when the petition for certiorari and prohibition with preliminary injunction was filed on May 10, 1963 in this case, the questioned order in CIR Cases Nos. 41-IPA, 1183-MC and V-30 were still pending action by the CIR en banc upon motions for reconsideration filed by the University.

On June 10, 1963, the Faculty Club filed its answer to the petition for certiorari and prohibition with preliminary injunction, admitting some allegations contained in the petition and denying others, and alleging special defenses which boil down to the contentions that (1) the CIR had acquired jurisdiction to take cognizance of Case No. 41-IPA by virtue of the presidential certification, so that it had jurisdiction to issue the questioned orders in said Case No. 41-IPA; (2) that the Industrial Peace Act (Republic Act 875) is applicable to the University as an employer and to the members of the Faculty Club as employees who are affiliated with a duly registered labor union, so that the Court of Industrial Relations had jurisdiction to take cognizance of Cases Nos. 1183-MC and V-30 and to issue the questioned orders in those two cases; and (3) that the petition for certiorari and prohibition with preliminary injunction was prematurely filed because the orders of the CIR sought to be annulled were still the subjects of pending motions for reconsideration before the CIR en banc when said petition for certiorari and prohibition with preliminary injunction was filed before this Court.

CASE G.R. NO. L-21462

This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already stated Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club as a labor union, praying that it be certified as the sole and exclusive bargaining representative of all employees of the University. This petition was opposed by the University, and at the same time it filed a motion to dismiss said petition. But before Judge Baltazar Villanueva could act on the petition for certification election and the motion to dismiss the same, Faculty Club filed a motion to withdraw said petition upon the ground that the issue raised in Case No. 1183-MC were absorbed by Case No. 41-IPA which was certified by the President of the Philippines. Judge Baltazar Villanueva, by order April 6, 1963, granted the motion to withdraw. The University filed a motion for reconsideration of that order of April 6, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R. no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963, ordering respondent Judge Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations).

On June 5, 1963, that is, after this Court has issued the writ of preliminary injunction in Case G.R. No. L-21278, the CIR en banc issued a resolution denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC.

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On July 8, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the CIR en banc, dated June 5, 1963, denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC. This petition was docketed as G.R. No. L-21462. In its petition for certiorari, the University alleges (1) that the resolution of the Court of Industrial Relations of June 5, 1963 was null and void because it was issued in violation of the writ of preliminary injunction issued in Case G.R. No. L-21278; (2) that the issues of employer-employee relationship, the alleged status as a labor union, majority representation and designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to the determination of the issues in Case No. 41-IPA and therefore the motion to withdraw the petition for certification election should not have been granted upon the ground that the issues in the first case have been absorbed in the second case; and (3) the lower court acted without or in excess of jurisdiction in taking cognizance of the petition for certification election and that the same should have been dismissed instead of having been ordered withdrawn. The University prayed that the proceedings in Case No. 1183-MC and the order of April 6, 1963 and the resolution of June 5, 1963 issued therein be annulled, and that the CIR be ordered to dismiss Case No. 1183-MC on the ground of lack of jurisdiction.

The Faculty Club filed its answer, admitting some, and denying other, allegations in the petition for certiorari; and specially alleging that the lower court's order granting the withdrawal of the petition for certification election was in accordance with law, and that the resolution of the court en banc on June 5, 1963 was not a violation of the writ of preliminary injunction issued in Case G.R. No. L-21278 because said writ of injunction was issued against Judge Jose S. Bautista and not against the Court of Industrial Relations, much less against Judge Baltazar Villanueva who was the trial judge of Case No. 1183-MC.

CASE G.R. NO. L-21500

This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier stated, Case No. 41-IPA relates to the strike staged by the members of the Faculty Club and the dispute was certified by the President of the Philippines to the CIR. The University filed a motion to dismiss that case upon the ground that the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose S. Bautista issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification; and in that same order Judge Bautista ordered the strikers to return to work and the University to take them back under the last terms and conditions existing before the dispute arose; and enjoined the University from dismissing any employee or laborer without previous authority from the court. On April 1, 1963, the University filed a motion for reconsideration of the order of March 30, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 was filed on May 10, 1963. As we have already stated, this Court in said case G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963 ordering respondent Judge Jose S. Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations).

On July 2, 1963, the University received a copy of the resolution of the CIR en banc, dated May 7, 1963 but actually received and stamped at the Office of the Clerk of the CIR on June 28, 1963, denying the motion for reconsideration of the order dated March 30, 1963 in Case No. 41-IPA.

On July 23, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the Court of Industrial Relations en banc dated May 7, 1963 (but actually received by said petitioner on July 2, 1963) denying the motion for reconsideration of the order of March 30, 1963 in Case No. 41-IPA. This petition was docketed as G.R. No. L-21500. In its petition for certiorari the University alleges (1) that the resolution of the CIR en banc, dated May 7, 1963 but filed with the Clerk of the CIR on June 28, 1963, in Case No. 41-IPA, is null and void because it was issued in violation of the writ of preliminary injunction issued by this Court in G.R. No. L-21278; (2) that the CIR, through its Presiding Judge, had no jurisdiction to take cognizance of Case No. 41-IPA and the order of March 30, 1963 and the resolution dated May 7, 1963 issued therein are null and void; (3) that the certification made by the President of the Philippines is not authorized by Section 10 of Republic Act 875, but is violative thereof; (4) that the Faculty Club has no right to unionize or organize as a labor union for collective bargaining purposes and to be certified as a collective bargaining agent within the purview of the Industrial Peace Act, and consequently it has no right to strike and picket on the ground of petitioner's alleged refusal to bargain collectively where such duty does not exist in law and is not enforceable against an educational institution; and (5) that the return-to-work order of March 30, 1963 is improper and illegal. The petition prayed that the proceedings in Case No. 41-IPA be annulled, that the order dated March 30, 1963 and the resolution dated May 7, 1963 be revoked, and that the lower court be ordered to dismiss Case 41-IPA on the ground of lack of jurisdiction.

On September 10, 1963, the Faculty Club, through counsel, filed a motion to dismiss the petition for certiorari on the ground that the petition being filed by way of an appeal from the orders of the Court of Industrial Relations denying the motion to dismiss in Case No. 41-IPA, the petition for certiorari is not proper because the orders appealed from are interlocutory in nature.

This Court, by resolution of September 26, 1963, ordered that these three cases (G.R. Nos. L-21278, L-21462 and L-21500) be considered together and the motion to dismiss in Case G.R. No. L-21500 be taken up when the cases are decided on the merits after the hearing.

Brushing aside certain technical questions raised by the parties in their pleadings, We proceed to decide these three cases on the merits of the issues raised.

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The University has raised several issues in the present cases, the pivotal one being its claim that the Court of Industrial Relations has no jurisdiction over the parties and the subject matter in CIR Cases 41-IPA, 1183-MC and V-30, brought before it, upon the ground that Republic Act No. 875 is not applicable to the University because it is an educational institution and not an industrial establishment and hence not an "employer" in contemplation of said Act; and neither is Republic Act No. 875 applicable to the members of the Faculty Club because the latter are independent contractors and, therefore, not employees within the purview of the said Act.

In support of the contention that being an educational institution it is beyond the scope of Republic Act No. 875, the University cites cases decided by this Court: Boy Scouts of the Philippines vs. Juliana Araos, L-10091, Jan. 29, 1958; University of San Agustin vs. CIR, et al., L-12222, May 28, 1958; Cebu Chinese High School vs. Philippine Land-Air-Sea Labor Union, PLASLU, L-12015, April 22, 1959; La Consolacion College, et al. vs. CIR, et al., L-13282, April 22, 1960; University of the Philippines, et al. vs. CIR, et al., L-15416, April 8, 1960; Far Eastern University vs. CIR, L-17620, August 31, 1962. We have reviewed these cases, and also related cases subsequent thereto, and We find that they do not sustain the contention of the University. It is true that this Court has ruled that certain educational institutions, like the University of Santo Tomas, University of San Agustin, La Consolacion College, and other juridical entities, like the Boy Scouts of the Philippines and Manila Sanitarium, are beyond the purview of Republic Act No. 875 in the sense that the Court of Industrial Relations has no jurisdiction to take cognizance of charges of unfair labor practice filed against them, but it is nonetheless true that the principal reason of this Court in ruling in those cases that those institutions are excluded from the operation of Republic Act 875 is that those entities are not organized, maintained and operated for profit and do not declare dividends to stockholders. The decision in the case of University of San Agustin vs. Court of Industrial Relations, G.R. No. L-12222, May 28, 1958, is very pertinent. We quote a portion of the decision:

It appears that the University of San Agustin, petitioner herein, is an educational institution conducted and managed by a "religious non-stock corporation duly organized and existing under the laws of the Philippines." It was organized not for profit or gain or division of the dividends among its stockholders, but solely for religious and educational purposes. It likewise appears that the Philippine Association of College and University Professors, respondent herein, is a non-stock association composed of professors and teachers in different colleges and universities and that since its organization two years ago, the university has adopted a hostile attitude to its formation and has tried to discriminate, harass and intimidate its members for which reason the association and the members affected filed the unfair labor practice complaint which initiated this proceeding. To the complaint of unfair labor practice, petitioner filed an answer wherein it disputed the jurisdiction of the Court of Industrial Relations over the controversy on the following grounds:

"(a) That complainants therein being college and/or university professors were not "industrial" laborers or employees, and the Philippine Association of College and University Professors being composed of persons engaged in the teaching profession, is not and cannot be a legitimate labor organization within the meaning of the laws creating the Court of Industrial Relations and defining its powers and functions;

"(b) That the University of San Agustin, respondent therein, is not an institution established for the purpose of gain or division of profits, and consequently, it is not an "industrial" enterprise and the members of its teaching staff are not engaged in "industrial" employment (U.S.T. Hospital Employees Association vs. Sto. Tomas University Hospital, G.R. No. L-6988, 24 May 1954; and San Beda College vs. Court of Industrial Relations and National Labor Union, G.R. No. L-7649, 29 October 1955; 51 O.G. (Nov. 1955) 5636-5640);

"(c) That, as a necessary consequence, alleged controversy between therein complainants and respondent is not an "industrial" dispute, and the Court of Industrial Relations has no jurisdiction, not only on the parties but also over the subject matter of the complaint."

The issue now before us is: Since the University of San Agustin is not an institution established for profit or gain, nor an industrial enterprise, but one established exclusively for educational purposes, can it be said that its relation with its professors is one of employer and employee that comes under the jurisdiction of the Court of Industrial Relations? In other words, do the provisions of the Magna Carta on unfair labor practice apply to the relation between petitioner and members of respondent association?

The issue is not new. Thus, in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L-10091, promulgated on January 29, 1958, this Court, speaking thru Mr. Justice Montemayor, answered the query in the negative in the following wise:

"The main issue involved in the present case is whether or not a charitable institution or one organized not for profit but for more elevated purposes, charitable, humanitarian, etc., like the Boy Scouts of the Philippines, is included in the definition of "employer" contained in Republic Act 875, and whether the employees of said institution fall under the definition of "employee" also contained in the same Republic Act. If they are included, then any act which may be considered unfair labor practice, within the meaning of said Republic Act, would come under the jurisdiction of the Court of Industrial Relations; but if they do not fall within the scope of said Republic Act, particularly, its definitions of employer and employee, then the Industrial Court would have no jurisdiction at all.

xxx xxx xxx

"On the basis of the foregoing considerations, there is every reason to believe that our labor legislation from Commonwealth Act No. 103, creating the Court of Industrial Relations, down through the Eight-Hour Labor Law, to the Industrial Peace Act, was intended by the

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Legislature to apply only to industrial employment and to govern the relations between employers engaged in industry and occupations for purposes of profit and gain, and their industrial employees, but not to organizations and entities which are organized, operated and maintained not for profit or gain, but for elevated and lofty purposes, such as, charity, social service, education and instruction, hospital and medical service, the encouragement and promotion of character, patriotism and kindred virtues in youth of the nation, etc.

"In conclusion, we find and hold that Republic Act No. 875, particularly, that portion thereof regarding labor disputes and unfair labor practice, does not apply to the Boy Scouts of the Philippines, and consequently, the Court of Industrial Relations had no jurisdiction to entertain and decide the action or petition filed by respondent Araos. Wherefore, the appealed decision and resolution of the CIR are hereby set aside, with costs against respondent."

There being a close analogy between the relation and facts involved in the two cases, we cannot but conclude that the Court of Industrial Relations has no jurisdiction to entertain the complaint for unfair labor practice lodged by respondent association against petitioner and, therefore, we hereby set aside the order and resolution subject to the present petition, with costs against respondent association.

The same doctrine was confirmed in the case of University of Santo Tomas v. Hon. Baltazar Villanueva, et al., G.R. No. L-13748, October 30, 1959, where this Court ruled that:

In the present case, the record reveals that the petitioner University of Santo Tomas is not an industry organized for profit but an institution of learning devoted exclusively to the education of the youth. The Court of First Instance of Manila in its decision in Civil Case No. 28870, which has long become final and consequently the settled law in the case, found as established by the evidence adduced by the parties therein (herein petitioner and respondent labor union) that while the University collects fees from its students, all its income is used for the improvement and enlargement of the institution. The University declares no dividend, and the members of the corporation who founded it, as ordained in its articles of incorporation, receive no material compensation for the time and sacrifice they render to the University and its students. The respondent union itself in a case before the Industrial Court (Case No. 314-MC) has averred that "the University of Santo Tomas, like the San Beda College, is an educational institution operated not for profit but for the sole purpose of educating young men." (See Annex "B" to petitioner's motion to dismiss.). It is apparent, therefore, that on the face of the record the University of Santo Tomas is not a corporation created for profit but an educational institution and therefore not an industrial or business organization.

In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282, April 22, 1960, this Court repeated the same ruling when it said:

The main issue in this appeal by petitioner is that the industry trial court committed an error in holding that it has jurisdiction to act in this case even if it involves unfair labor practice considering that the La Consolacion College is not a business enterprise but an educational institution not organized for profit.

If the claim that petitioner is an educational institution not operated for profit is true, which apparently is the case, because the very court a quo found that it has no stockholder, nor capital . . . then we are of the opinion that the same does not come under the jurisdiction of the Court of Industrial Relations in view of the ruling in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L-10091, decided on January 29, 1958.

It is noteworthy that the cases of the University of San Agustin, the University of Santo Tomas, and La Consolacion College, cited above, all involve charges of unfair labor practice under Republic Act No. 875, and the uniform rulings of this Court are that the Court of Industrial Relations has no jurisdiction over the charges because said Act does not apply to educational institutions that are not operated or maintained for profit and do not declare dividends. On the other hand, in the cases of Far Eastern University v. CIR, et al., G.R. No. L-17620, August 31, 1962, this Court upheld the decision of the Court of Industrial Relations finding the Far Eastern University, also an educational institution, guilty of unfair labor practice. Among the findings of fact in said case was that the Far Eastern University made profits from the school year 1952-1953 to 1958-1959. In affirming the decision of the lower court, this Court had thereby ratified the ruling of the Court of Industrial Relations which applied the Industrial Peace Act to educational institutions that are organized, operated and maintained for profit.

It is also noteworthy that in the decisions in the cases of the Boy Scouts of the Philippines, the University of San Agustin, the University of Sto. Tomas, and La Consolacion College, this Court was not unanimous in the view that the Industrial Peace Act (Republic Act No. 875) is not applicable to charitable, eleemosynary or non-profit organizations — which include educational institutions not operated for profit. There are members of this Court who hold the view that the Industrial Peace Act would apply also to non-profit organizations or entities — the only exception being the Government, including any political subdivision or instrumentality thereof, in so far as governmental functions are concerned. However, in the Far Eastern University case this Court is unanimous in supporting the view that an educational institution that is operated for profit comes within the scope of the Industrial Peace Act. We consider it a settled doctrine of this Court, therefore, that the Industrial Peace Act is applicable to any organization or entity — whatever may be its purpose when it was created — that is operated for profit or gain.

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Does the University operate as an educational institution for profit? Does it declare dividends for its stockholders? If it does not, it must be declared beyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to it. The University itself admits that it has declared dividends.3 The CIR in its order dated March 30, 1963 in CIR Case No. 41-IPA — which order was issued after evidence was heard — also found that the University is not for strictly educational purposes and that "It realizes profits and parts of such earning is distributed as dividends to private stockholders or individuals (Exh. A and also 1 to 1-F, 2-x 3-x and 4-x)"4 Under this circumstance, and in consonance with the rulings in the decisions of this Court, above cited, it is obvious that Republic Act No. 875 is applicable to herein petitioner Feati University.

But the University claims that it is not an employer within the contemplation of Republic Act No. 875, because it is not an industrial establishment. At most, it says, it is only a lessee of the services of its professors and/or instructors pursuant to a contract of services entered into between them. We find no merit in this claim. Let us clarify who is an "employer" under the Act. Section 2(c) of said Act provides:

Sec. 2. Definitions.—As used in this Act —

(c) The term employer include any person acting in the interest of an employer, directly or indirectly, but shall not include any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of such labor organization.

It will be noted that in defining the term "employer" the Act uses the word "includes", which it also used in defining "employee". [Sec. 2 (d)], and "representative" [Sec. 2(h)]; and not the word "means" which the Act uses in defining the terms "court" [Sec. 2(a)], "labor organization" [Sec. 2(e)], "legitimate labor organization [Sec. 2(f)], "company union" [Sec. 2(g)], "unfair labor practice" [Sec. 2(i)], "supervisor" [Sec. 2(k)], "strike" [Sec. 2(l)] and "lock-out" [Sec. 2(m)]. A methodical variation in terminology is manifest. This variation and distinction in terminology and phraseology cannot be presumed to have been the inconsequential product of an oversight; rather, it must have been the result of a deliberate and purposeful act, more so when we consider that as legislative records show, Republic Act No. 875 had been meticulously and painstakingly drafted and deliberated upon. In using the word "includes" and not "means", Congress did not intend to give a complete definition of "employer", but rather that such definition should be complementary to what is commonly understood as employer. Congress intended the term to be understood in a broad meaning because, firstly, the statutory definition includes not only "a principal employer but also a person acting in the interest of the employer"; and, secondly, the Act itself specifically enumerated those who are not included in the term "employer", namely: (1) a labor organization (otherwise than when acting as an employer), (2) anyone acting in the capacity of officer or agent of such labor organization [Sec. 2(c)], and (3) the Government and any political subdivision or instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications in the terms and conditions of employment is concerned (Section 11). Among these statutory exemptions, educational institutions are not included; hence, they can be included in the term "employer". This Court, however, has ruled that those educational institutions that are not operated for profit are not within the purview of Republic Act No. 875.5

As stated above, Republic Act No. 875 does not give a comprehensive but only a complementary definition of the term "employer". The term encompasses those that are in ordinary parlance "employers." What is commonly meant by "employer"? The term "employer" has been given several acceptations. The lexical definition is "one who employs; one who uses; one who engages or keeps in service;" and "to employ" is "to provide work and pay for; to engage one's service; to hire." (Webster's New Twentieth Century Dictionary, 2nd ed., 1960, p. 595). The Workmen's Compensation Act defines employer as including "every person or association of persons, incorporated or not, public or private, and the legal representative of the deceased employer" and "includes the owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried on in the establishment or place of work but who, for reason that there is an independent contractor in the same, or for any other reason, is not the direct employer of laborers employed there." [Sec. 39(a) of Act No. 3428.] The Minimum Wage Law states that "employer includes any person acting directly or indirectly in the interest of the employer in relation to an employee and shall include the Government and the government corporations". [Rep. Act No. 602, Sec. 2(b)]. The Social Security Act defines employer as "any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government." (Rep. Act No. 1161, Sec. 8[c]).

This Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat River Workers' Union (PLUM), et al., G.R. Nos. L-10934 and L-10944, December 28, 1957, which cases involve unfair labor practices and hence within the purview of Republic Act No. 875, defined the term employer as follows:

An employer is one who employs the services of others; one for whom employees work and who pays their wages or salaries (Black Law Dictionary, 4th ed., p. 618).

An employer includes any person acting in the interest of an employer, directly or indirectly (Sec. 2-c, Rep. Act 875).

Under none of the above definitions may the University be excluded, especially so if it is considered that every professor, instructor or teacher in the teaching staff of the University, as per allegation of the University itself, has a contract with the latter for teaching services, albeit for one semester only. The University engaged the services of the professors, provided them work, and paid them compensation or

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salary for their services. Even if the University may be considered as a lessee of services under a contract between it and the members of its Faculty, still it is included in the term "employer". "Running through the word `employ' is the thought that there has been an agreement on the part of one person to perform a certain service in return for compensation to be paid by an employer. When you ask how a man is employed, or what is his employment, the thought that he is under agreement to perform some service or services for another is predominant and paramount." (Ballentine Law Dictionary, Philippine ed., p. 430, citing Pinkerton National Detective Agency v. Walker, 157 Ga. 548, 35 A. L. R. 557, 560, 122 S.E. Rep. 202).

To bolster its claim of exception from the application of Republic Act No. 875, the University contends that it is not state that the employers included in the definition of 2 (c) of the Act. This contention can not be sustained. In the first place, Sec. 2 (c) of Republic Act No. 875 does not state that the employers included in the definition of the term "employer" are only and exclusively "industrial establishments"; on the contrary, as stated above, the term "employer" encompasses all employers except those specifically excluded by the Act. In the second place, even the Act itself does not refer exclusively to industrial establishments and does not confine its application thereto. This is patent inasmuch as several provisions of the Act are applicable to non-industrial workers, such as Sec. 3, which deals with "employees' right to self-organization"; Sections 4 and 5 which enumerate unfair labor practices; Section 8 which nullifies private contracts contravening employee's rights; Section 9 which relates to injunctions in any case involving a labor dispute; Section 11 which prohibits strikes in the government; Section 12 which provides for the exclusive collective bargaining representation for labor organizations; Section 14 which deals with the procedure for collective bargaining; Section 17 which treats of the rights and conditions of membership in labor organizations; Sections 18, 19, 20 and 21 which provide respectively for the establishment of conciliation service, compilation of collective bargaining contracts, advisory labor-management relations; Section 22 which empowers the Secretary of Labor to make a study of labor relations; and Section 24 which enumerates the rights of labor organizations. (See Dissenting Opinion of Justice Concepcion in Boy Scouts of the Philippines v. Juliana Araos, G.R. No. L-10091, January 29, 1958.)

This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had occasion to state that the Industrial Peace Act "refers only to organizations and entities created and operated for profits, engaged in a profitable trade, occupation or industry". It cannot be denied that running a university engages time and attention; that it is an occupation or a business from which the one engaged in it may derive profit or gain. The University is not an industrial establishment in the sense that an industrial establishment is one that is engaged in manufacture or trade where raw materials are changed or fashioned into finished products for use. But for the purposes of the Industrial Peace Act the University is an industrial establishment because it is operated for profit and it employs persons who work to earn a living. The term "industry", for the purposes of the application of our labor laws should be given a broad meaning so as to cover all enterprises which are operated for profit and which engage the services of persons who work to earn a living.

The word "industry" within State Labor Relations Act controlling labor relations in industry, cover labor conditions in any field of employment where the objective is earning a livelihood on the one side and gaining of a profit on the other. Labor Law Sec. 700 et seq. State Labor Relations Board vs. McChesney, 27 N.Y.S. 2d 866, 868." (Words and Phrases, Permanent Edition, Vol. 21, 1960 edition p. 510).

The University urges that even if it were an employer, still there would be no employer-employee relationship between it and the striking members of the Faculty Club because the latter are not employees within the purview of Sec. 2(d) of Republic Act No. 875 but are independent contractors. This claim is untenable.

Section 2 (d) of Republic Act No. 875 provides:

(d) The term "employee" shall include any employee and shall not be limited to the employee of a particular employer unless the act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment.

This definition is again, like the definition of the term "employer" [Sec. 2(c)], by the use of the term "include", complementary. It embraces not only those who are usually and ordinarily considered employees, but also those who have ceased as employees as a consequence of a labor dispute. The term "employee", furthermore, is not limited to those of a particular employer. As already stated, this Court in the cases of The Angat River Irrigation System, et al. v. Angat River Workers' Union (PLUM), et al., supra, has defined the term "employer" as "one who employs the services of others; one for whom employees work and who pays their wages or salaries. "Correlatively, an employee must be one who is engaged in the service of another; who performs services for another; who works for salary or wages. It is admitted by the University that the striking professors and/or instructors are under contract to teach particular courses and that they are paid for their services. They are, therefore, employees of the University.

In support of its claim that the members of the Faculty Club are not employees of the University, the latter cites as authority Francisco's Labor Laws, 2nd ed., p. 3, which states:

While the term "workers" as used in a particular statute, has been regarded as limited to those performing physical labor, it has been held to embrace stenographers and bookkeepers. Teachers are not included, however.

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It is evident from the above-quoted authority that "teachers" are not to be included among those who perform "physical labor", but it does not mean that they are not employees. We have checked the source of the authority, which is 31 Am. Jur., Sec. 3, p. 835, and the latter cites Huntworth v. Tanner, 87 Wash 670, 152 P. 523, Ann Cas 1917 D 676. A reading of the last case confirms Our view.

That teachers are "employees' has been held in a number of cases (Aebli v. Board of Education of City and County of San Francisco, 145 P. 2d 601, 62 Col. App 2.d 706; Lowe & Campbell Sporting Goods Co. v. Tangipahoa Parish School Board, La. App., 15 So. 2d 98, 100; Sister Odelia v. Church of St. Andrew, 263 N. W. 111, 112, 195 Minn. 357, cited in Words and Phrases, Permanent ed., Vol. 14, pp. 806-807). This Court in the Far Eastern University case, supra, considered university instructors as employees and declared Republic Act No. 875 applicable to them in their employment relations with their school. The professors and/or instructors of the University neither ceased to be employees when they struck, for Section 2 of Rep. Act 875 includes among employees any individual whose work has ceased as consequence of, or in connection with a current labor dispute. Striking employees maintain their status as employees of the employer. (Western Cartridge Co. v. NLRB, C.C.A. 7, 139 F2d 855, 858).

The contention of the University that the professors and/or instructors are independent contractors, because the University does not exercise control over their work, is likewise untenable. This Court takes judicial notice that a university controls the work of the members of its faculty; that a university prescribes the courses or subjects that professors teach, and when and where to teach; that the professors' work is characterized by regularity and continuity for a fixed duration; that professors are compensated for their services by wages and salaries, rather than by profits; that the professors and/or instructors cannot substitute others to do their work without the consent of the university; and that the professors can be laid off if their work is found not satisfactory. All these indicate that the university has control over their work; and professors are, therefore, employees and not independent contractors. There are authorities in support of this view.

The principal consideration in determining whether a workman is an employee or an independent contractor is the right to control the manner of doing the work, and it is not the actual exercise of the right by interfering with the work, but the right to control, which constitutes the test. (Amalgamated Roofing Co. v. Travelers' Ins. Co., 133 N.E. 259, 261, 300 Ill. 487, quoted in Words and Phrases, Permanent ed., Vol. 14, p. 576).

Where, under Employers' Liability Act, A was instructed when and where to work . . . he is an employee, and not a contractor, though paid specified sum per square. (Heine v. Hill, Harris & Co., 2 La. App. 384, 390, in Words and Phrases, loc, cit.) .

Employees are those who are compensated for their labor or services by wages rather than by profits. (People vs. Distributors Division, Smoked Fish Workers Union Local No. 20377, Sup. 7 N. Y. S. 2d 185, 187 in Words and Phrases, loc, cit.)

Services of employee or servant, as distinguished from those of a contractor, are usually characterized by regularity and continuity of work for a fixed period or one of indefinite duration, as contrasted with employment to do a single act or a series of isolated acts; by compensation on a fixed salary rather than one regulated by value or amount of work; . . . (Underwood v. Commissioner of Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words and Phrases, op. cit., p. 579.)

Independent contractors can employ others to work and accomplish contemplated result without consent of contractee, while "employee" cannot substitute another in his place without consent of his employer. (Luker Sand & Gravel Co. v. Industrial Commission, 23 P. 2d 225, 82 Utah, 188, in Words and Phrases, Vol. 14, p. 576).

Moreover, even if university professors are considered independent contractors, still they would be covered by Rep. Act No. 875. In the case of the Boy Scouts of the Philippines v. Juliana Araos, supra, this Court observed that Republic Act No. 875 was modelled after the Wagner Act, or the National Labor Relations Act, of the United States, and this Act did not exclude "independent contractors" from the orbit of "employees". It was in the subsequent legislation — the Labor Management Relation Act (Taft-Harley Act) — that "independent contractors" together with agricultural laborers, individuals in domestic service of the home, supervisors, and others were excluded. (See Rothenberg on Labor Relations, 1949, pp. 330-331).

It having been shown that the members of the Faculty Club are employees, it follows that they have a right to unionize in accordance with the provisions of Section 3 of the Magna Carta of Labor (Republic Act No. 875) which provides as follows:

Sec. 3. Employees' right to self-organization.—Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. . . .

We agree with the statement of the lower court, in its order of March 30, 1963 which is sought to be set aside in the instant case, that the right of employees to self-organization is guaranteed by the Constitution, that said right would exist even if Republic Act No. 875 is repealed, and that regardless of whether their employers are engaged in commerce or not. Indeed, it is Our considered view that the members of the faculty or teaching staff of private universities, colleges, and schools in the Philippines, regardless of whether the university, college or school is run for profit or not, are included in the term "employees" as contemplated in Republic Act No. 875 and as such they may organize themselves pursuant to the above-quoted provision of Section 3 of said Act. Certainly, professors, instructors or

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teachers of private educational institutions who teach to earn a living are entitled to the protection of our labor laws — and one such law is Republic Act No. 875.

The contention of the University in the instant case that the members of the Faculty Club can not unionize and the Faculty Club can not exist as a valid labor organization is, therefore, without merit. The record shows that the Faculty Club is a duly registered labor organization and this fact is admitted by counsel for the University.5a

The other issue raised by the University is the validity of the Presidential certification. The University contends that under Section 10 of Republic Act No. 875 the power of the President of the Philippines to certify is subject to the following conditions, namely: (1) that here is a labor dispute, and (2) that said labor dispute exists in an industry that is vital to the national interest. The University maintains that those conditions do not obtain in the instant case. This contention has also no merit.

We have previously stated that the University is an establishment or enterprise that is included in the term "industry" and is covered by the provisions of Republic Act No. 875. Now, was there a labor dispute between the University and the Faculty Club?

Republic Act No. 875 defines a labor dispute as follows:

The term "labor dispute" includes any controversy concerning terms, tenure or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment regardless of whether the disputants stand in proximate relation of employer and employees.

The test of whether a controversy comes within the definition of "labor dispute" depends on whether the controversy involves or concerns "terms, tenure or condition of employment" or "representation." It is admitted by the University, in the instant case, that on January 14, 1963 the President of the Faculty Club wrote to the President of the University a letter informing the latter of the organization of the Faculty Club as a labor union, duly registered with the Bureau of Labor Relations; that again on January 22, 1963 another letter was sent, to which was attached a list of demands consisting of 26 items, and asking the President of the University to answer within ten days from date of receipt thereof; that the University questioned the right of the Faculty Club to be the exclusive representative of the majority of the employees and asked proof that the Faculty Club had been designated or selected as exclusive representative by the vote of the majority of said employees; that on February 1, 1963 the Faculty Club filed with the Bureau of Labor Relations a notice of strike alleging as reason therefor the refusal of the University to bargain collectively with the representative of the faculty members; that on February 18, 1963 the members of the Faculty Club went on strike and established picket lines in the premises of the University, thereby disrupting the schedule of classes; that on March 1, 1963 the Faculty Club filed Case No. 3666-ULP for unfair labor practice against the University, but which was later dismissed (on April 2, 1963 after Case 41-IPA was certified to the CIR); and that on March 7, 1963 a petition for certification election, Case No. 1183-MC, was filed by the Faculty Club in the CIR.6 All these admitted facts show that the controversy between the University and the Faculty Club involved terms and conditions of employment, and the question of representation. Hence, there was a labor dispute between the University and the Faculty Club, as contemplated by Republic Act No. 875. It having been shown that the University is an institution operated for profit, that is an employer, and that there is an employer-employee relationship, between the University and the members of the Faculty Club, and it having been shown that a labor dispute existed between the University and the Faculty Club, the contention of the University, that the certification made by the President is not only not authorized by Section 10 of Republic Act 875 but is violative thereof, is groundless.

Section 10 of Republic Act No. 875 provides:

When in the opinion of the President of the Philippines there exists a labor dispute in an industry indispensable to the national interest and when such labor dispute is certified by the President to the Court of Industrial Relations, said Court may cause to be issued a restraining order forbidding the employees to strike or the employer to lockout the employees, and if no other solution to the dispute is found, the Court may issue an order fixing the terms and conditions of employment.

This Court had occasion to rule on the application of the above-quoted provision of Section 10 of Republic Act No. 875. In the case of Pampanga Sugar Development Co. v. CIR, et al., G.R. No. L-13178, March 24, 1961, it was held:

It thus appears that when in the opinion of the President a labor dispute exists in an industry indispensable to national interest and he certifies it to the Court of Industrial Relations the latter acquires jurisdiction to act thereon in the manner provided by law. Thus the court may take either of the following courses: it may issue an order forbidding the employees to strike or the employer to lockout its employees, or, failing in this, it may issue an order fixing the terms and conditions of employment. It has no other alternative. It can not throw the case out in the assumption that the certification was erroneous.

xxx xxx xxx

. . . The fact, however, is that because of the strike declared by the members of the minority union which threatens a major industry the President deemed it wise to certify the controversy to the Court of Industrial Relations for adjudication. This is the power that the law gives to the President the propriety of its exercise being a matter that only devolves upon him. The same is not the concern of the

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industrial court. What matters is that by virtue of the certification made by the President the case was placed under the jurisdiction of said court. (Emphasis supplied)

To certify a labor dispute to the CIR is the prerogative of the President under the law, and this Court will not interfere in, much less curtail, the exercise of that prerogative. The jurisdiction of the CIR in a certified case is exclusive (Rizal Cement Co., Inc. v. Rizal Cement Workers Union (FFW), et al., G.R. No. L-12747, July 30, 1960). Once the jurisdiction is acquired pursuant to the presidential certification, the CIR may exercise its broad powers as provided in Commonwealth Act 103. All phases of the labor dispute and the employer-employee relationship may be threshed out before the CIR, and the CIR may issue such order or orders as may be necessary to make effective the exercise of its jurisdiction. The parties involved in the case may appeal to the Supreme Court from the order or orders thus issued by the CIR.

And so, in the instant case, when the President took into consideration that the University "has some 18,000 students and employed approximately 500 faculty members", that `the continued disruption in the operation of the University will necessarily prejudice the thousand of students", and that "the dispute affects the national interest",7 and certified the dispute to the CIR, it is not for the CIR nor this Court to pass upon the correctness of the reasons of the President in certifying the labor dispute to the CIR.

The third issue raised by the University refers to the question of the legality of the return-to-work order (of March 30, 1963 in Case 41-IPA) and the order implementing the same (of April 6, 1963). It alleges that the orders are illegal upon the grounds: (1) that Republic Act No. 875, supplementing Commonwealth Act No. 103, has withdrawn from the CIR the power to issue a return-to-work order; (2) that the only power granted by Section 10 of Republic Act No. 875 to the CIR is to issue an order forbidding the employees to strike or forbidding the employer to lockout the employees, as the case may be, before either contingency had become a fait accompli; (3) that the taking in by the University of replacement professors was valid, and the return-to-work order of March 30, 1963 constituted impairment of the obligation of contracts; and (4) the CIR could not issue said order without having previously determined the legality or illegality of the strike.

The contention of the University that Republic Act No. 875 has withdrawn the power of the Court of Industrial Relations to issue a return-to-work order exercised by it under Commonwealth Act No. 103 can not be sustained. When a case is certified by the President to the Court of Industrial Relations, the case thereby comes under the operation of Commonwealth Act No. 103, and the Court may exercise the broad powers and jurisdiction granted to it by said Act. Section 10 of Republic Act No. 875 empowers the Court of Industrial Relations to issue an order "fixing the terms of employment." This clause is broad enough to authorize the Court to order the strikers to return to work and the employer to readmit them. This Court, in the cases of the Philippine Marine Officers Association vs. The Court of Industrial Relations, Compania Maritima, et al.; and Compañia Martima, et al. vs. Philippine Marine Radio Officers Association and CIR, et al., G.R. Nos. L-10095 and L-10115, October 31, 1957, declared:

We cannot subscribe to the above contention. We agree with counsel for the Philippine Radio Officers' Association that upon certification by the President under Section 10 of Republic Act 875, the case comes under the operation of Commonwealth Act 103, which enforces compulsory arbitration in cases of labor disputes in industries indispensable to the national interest when the President certifies the case to the Court of Industrial Relations. The evident intention of the law is to empower the Court of Industrial Relations to act in such cases, not only in the manner prescribed under Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that act. If the Court of Industrial Relations is granted authority to find a solution to an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power or jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted? Lastly, if the said court has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of employment.

The foregoing ruling was reiterated by this Court in the case of Hind Sugar Co. v. CIR, et al., G.R. No. L-13364, July 26, 1960.

When a case is certified to the CIR by the President of the Philippines pursuant to Section 10 of Republic Act No. 875, the CIR is granted authority to find a solution to the industrial dispute; and the solution which the CIR has found under the authority of the presidential certification and conformable thereto cannot be questioned (Radio Operators Association of the Philippines vs. Philippine Marine Radio Officers Association, et al., L-10112, Nov. 29, 1957, 54 O.G. 3218).

Untenable also is the claim of the University that the CIR cannot issue a return-to-work order after strike has been declared, it being contended that under Section 10 of Republic Act No. 875 the CIR can only prevent a strike or a lockout — when either of this situation had not yet occurred. But in the case of Bisaya Land Transportation Co., Inc. vs. Court of Industrial Relations, et al., No. L-10114, Nov. 26, 1957, 50 O.G. 2518, this Court declared:

There is no reason or ground for the contention that Presidential certification of labor dispute to the CIR is limited to the prevention of strikes and lockouts. Even after a strike has been declared where the President believes that public interest demands arbitration and conciliation, the President may certify the ease for that purpose. The practice has been for the Court of Industrial Relations to order the strikers to work, pending the determination of the union demands that impelled the strike. There is nothing in the law to indicate that this practice is abolished." (Emphasis supplied)

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Likewise untenable is the contention of the University that the taking in by it of replacements was valid and the return-to-work order would be an impairment of its contract with the replacements. As stated by the CIR in its order of March 30, 1963, it was agreed before the hearing of Case 41-IPA on March 23, 1963 that the strikers would return to work under the status quo arrangement and the University would readmit them, and the return-to-work order was a confirmation of that agreement. This is a declaration of fact by the CIR which we cannot disregard. The faculty members, by striking, have not abandoned their employment but, rather, they have only ceased from their labor (Keith Theatre v. Vachon et al., 187 A. 692). The striking faculty members have not lost their right to go back to their positions, because the declaration of a strike is not a renunciation of their employment and their employee relationship with the University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13, 138). The employment of replacements was not authorized by the CIR. At most, that was a temporary expedient resorted to by the University, which was subject to the power of the CIR to allow to continue or not. The employment of replacements by the University prior to the issuance of the order of March 30, 1963 did not vest in the replacements a permanent right to the positions they held. Neither could such temporary employment bind the University to retain permanently the replacements.

Striking employees maintained their status as employees of the employer (Western Castridge Co. v. National Labor Relations Board, C.C.A. 139 F. 2d 855, 858) ; that employees who took the place of strikers do not displace them as `employees." ' (National Labor Relations Board v. A. Sartorius & Co., C.C.A. 2, 140 F. 2d 203, 206, 207.)

It is clear from what has been said that the return-to-work order cannot be considered as an impairment of the contract entered into by petitioner with the replacements. Besides, labor contracts must yield to the common good and such contracts are subject to the special laws on labor unions, collective bargaining, strikes and similar subjects (Article 1700, Civil Code).

Likewise unsustainable is the contention of the University that the Court of Industrial Relations could not issue the return-to-work order without having resolved previously the issue of the legality or illegality of the strike, citing as authority therefor the case of Philippine Can Company v. Court of Industrial Relations, G.R. No. L-3021, July 13, 1950. The ruling in said case is not applicable to the case at bar, the facts and circumstances being very different. The Philippine Can Company case, unlike the instant case, did not involve the national interest and it was not certified by the President. In that case the company no longer needed the services of the strikers, nor did it need substitutes for the strikers, because the company was losing, and it was imperative that it lay off such laborers as were not necessary for its operation in order to save the company from bankruptcy. This was the reason of this Court in ruling, in that case, that the legality or illegality of the strike should have been decided first before the issuance of the return-to-work order. The University, in the case before Us, does not claim that it no longer needs the services of professors and/or instructors; neither does it claim that it was imperative for it to lay off the striking professors and instructors because of impending bankruptcy. On the contrary, it was imperative for the University to hire replacements for the strikers. Therefore, the ruling in the Philippine Can case that the legality of the strike should be decided first before the issuance of the return-to-work order does not apply to the case at bar. Besides, as We have adverted to, the return-to-work order of March 30, 1963, now in question, was a confirmation of an agreement between the University and the Faculty Club during a prehearing conference on March 23, 1963.

The University also maintains that there was no more basis for the claim of the members of the Faculty Club to return to their work, as their individual contracts for teaching had expired on March 25 or 31, 1963, as the case may be, and consequently, there was also no basis for the return-to-work order of the CIR because the contractual relationships having ceased there were no positions to which the members of the Faculty Club could return to. This contention is not well taken. This argument loses sight of the fact that when the professors and instructors struck on February 18, 1963, they continued to be employees of the University for the purposes of the labor controversy notwithstanding the subsequent termination of their teaching contracts, for Section 2(d) of the Industrial Peace Act includes among employees "any individual whose work has ceased a consequence of, or in connection with, any current labor dispute or of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment."

The question raised by the University was resolved in a similar case in the United States. In the case of Rapid Roller Co. v. NLRB 126 F. 2d 452, we read:

On May 9, 1939 the striking employees, eighty-four in number, offered to the company to return to their employment. The company believing it had not committed any unfair labor practice, refused the employees' offer and claimed the right to employ others to take the place of the strikers, as it might see fit. This constituted discrimination in the hiring and tenure of the striking employees. When the employees went out on a strike because of the unfair labor practice of the company, their status as employees for the purpose of any controversy growing out of that unfair labor practice was fixed. Sec. 2 (3) of the Act. Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S. Ct. 845, 85. L. ed. 1271, 133 A.L.R. 1217.

For the purpose of such controversy they remained employees of the company. The company contended that they could not be their employees in any event since the "contract of their employment expired by its own terms on April 23, 1939."

In this we think the company is mistaken for the reason we have just pointed out, that the status of the employees on strike became fixed under Sec. 2 (3) of the Act because of the unfair labor practice of the company which caused the strike.

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The University, furthermore, claims that the information for indirect contempt filed against the officers of the University (Case No. V-30) as well as the order of April 29, 1963 for their arrest were improper, irregular and illegal because (1) the officers of the University had complied in good faith with the return-to-work order and in those cases that they did not, it was due to circumstance beyond their control; (2) the return-to-work order and the order implementing the same were illegal; and (3) even assuming that the order was legal, the same was not Yet final because there was a motion to reconsider it.

Again We find no merit in this claim of Petitioner. We have already ruled that the CIR had jurisdiction to issue the order of March 30, 1963 in CIR Case 41-IPA, and the return-to-work provision of that order is valid and legal. Necessarily the order of April 6, 1963 implementing that order of March 30, 1963 was also valid and legal.

Section 6 of Commonwealth Act No. 103 empowers the Court of Industrial Relations of any Judge thereof to punish direct and indirect contempts as provided in Rule 64 (now Rule 71) of the Rules of Court, under the same procedure and penalties provided therein. Section 3 of Rule 71 enumerates the acts which would constitute indirect contempt, among which is "disobedience or resistance to lawful writ, process, order, judgment, or command of a court," and the person guilty thereof can be punished after a written charge has been filed and the accused has been given an opportunity to be heard. The last paragraph of said section provides:

But nothing in this section shall be so construed as to prevent the court from issuing process to bring the accused party into court, or from holding him in custody pending such proceedings.

The provision authorizes the judge to order the arrest of an alleged contemner (Francisco, et al. v. Enriquez, L-7058, March 20, 1954, 94 Phil., 603) and this, apparently, is the provision upon which respondent Judge Bautista relied when he issued the questioned order of arrest.

The contention of petitioner that the order of arrest is illegal is unwarranted. The return-to-work order allegedly violated was within the court's jurisdiction to issue.

Section 14 of Commonwealth Act No. 103 provides that in cases brought before the Court of Industrial Relations under Section 4 of the Act (referring to strikes and lockouts) the appeal to the Supreme Court from any award, order or decision shall not stay the execution of said award, order or decision sought to be reviewed unless for special reason the court shall order that execution be stayed. Any award, order or decision that is appealed is necessarily not final. Yet under Section 14 of Commonwealth Act No. 103 that award, order or decision, even if not yet final, is executory, and the stay of execution is discretionary with the Court of Industrial Relations. In other words, the Court of Industrial Relations, in cases involving strikes and lockouts, may compel compliance or obedience of its award, order or decision even if the award, order or decision is not yet final because it is appealed, and it follows that any disobedience or non-compliance of the award, order or decision would constitute contempt against the Court of Industrial Relations which the court may punish as provided in the Rules of Court. This power of the Court of Industrial Relations to punish for contempt an act of non-compliance or disobedience of an award, order or decision, even if not yet final, is a special one and is exercised only in cases involving strikes and lockouts. And there is reason for this special power of the industrial court because in the exercise of its jurisdiction over cases involving strikes and lockouts the court has to issue orders or make decisions that are necessary to effect a prompt solution of the labor dispute that caused the strike or the lockout, or to effect the prompt creation of a situation that would be most beneficial to the management and the employees, and also to the public — even if the solution may be temporary, pending the final determination of the case. Otherwise, if the effectiveness of any order, award, or decision of the industrial court in cases involving strikes and lockouts would be suspended pending appeal then it can happen that the coercive powers of the industrial court in the settlement of the labor disputes in those cases would be rendered useless and nugatory.

The University points to Section 6 of Commonwealth Act No. 103 which provides that "Any violation of any order, award, or decision of the Court of Industrial Relations shall after such order, award or decision has become final, conclusive and executory constitute contempt of court," and contends that only the disobedience of orders that are final (meaning one that is not appealed) may be the subject of contempt proceedings. We believe that there is no inconsistency between the above-quoted provision of Section 6 and the provision of Section 14 of Commonwealth Act No. 103. It will be noted that Section 6 speaks of order, award or decision that is executory. By the provision of Section 14 an order, award or decision of the Court of Industrial Relations in cases involving strikes and lockouts are immediately executory, so that a violation of that order would constitute an indirect contempt of court.

We believe that the action of the CIR in issuing the order of arrest of April 29, 1963 is also authorized under Section 19 of Commonwealth Act No. 103 which provides as follows:

SEC. 19. Implied condition in every contract of employment.—In every contract of employment whether verbal or written, it is an implied condition that when any dispute between the employer and the employee or laborer has been submitted to the Court of Industrial Relations for settlement or arbitration pursuant to the provisions of this Act . . . and pending award, or decision by the Court of such dispute . . . the employee or laborer shall not strike or walk out of his employment when so enjoined by the Court after hearing and when public interest so requires, and if he has already done so, that he shall forthwith return to it, upon order of the Court, which shall be issued only after hearing when public interest so requires or when the dispute cannot, in its opinion, be promptly decided or settled; and if the employees or laborers fail to return to work, the Court may authorize the employer to accept other employees or laborers. A

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condition shall further be implied that while such dispute . . . is pending, the employer shall refrain from accepting other employees or laborers, unless with the express authority of the Court, and shall permit the continuation in the service of his employees or laborers under the last terms and conditions existing before the dispute arose. . . . A violation by the employer or by the employee or laborer of such an order or the implied contractual condition set forth in this section shall constitute contempt of the Court of Industrial Relations and shall be punished by the Court itself in the same manner with the same penalties as in the case of contempt of a Court of First Instance. . . .

We hold that the CIR acted within its jurisdiction when it ordered the arrest of the officers of the University upon a complaint for indirect contempt filed by the Acting Special Prosecutor of the CIR in CIR Case V-30, and that order was valid. Besides those ordered arrested were not yet being punished for contempt; but, having been charged, they were simply ordered arrested to be brought before the Judge to be dealt with according to law. Whether they are guilty of the charge or not is yet to be determined in a proper hearing.

Let it be noted that the order of arrest dated April 29, 1963 in CIR Case V-30 is being questioned in Case G.R. No. L-21278 before this Court in a special civil action for certiorari. The University did not appeal from that order. In other words, the only question to be resolved in connection with that order in CIR Case V-30 is whether the CIR had jurisdiction, or had abused its discretion, in issuing that order. We hold that the CIR had jurisdiction to issue that order, and neither did it abuse its discretion when it issued that order.

In Case G.R. No. L-21462 the University appealed from the order of Judge Villanueva of the CIR in Case No. 1183-MC, dated April 6, 1963, granting the motion of the Faculty Club to withdraw its petition for certification election, and from the resolution of the CIR en banc, dated June 5, 1963, denying the motion to reconsider said order of April 6, 1963. The ground of the Faculty Club in asking for the withdrawal of that petition for certification election was because the issues involved in that petition were absorbed by the issues in Case 41-IPA. The University opposed the petition for withdrawal, but at the same time it moved for the dismissal of the petition for certification election.

It is contended by the University before this Court, in G.R. L-21462, that the issues of employer-employee relationship between the University and the Faculty Club, the alleged status of the Faculty Club as a labor union, its majority representation and designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to the determination of the issues in Case No. 41-IPA, and, therefore, the motion to withdraw the petition for certification election should not have been granted upon the ground that the issues in the first case were absorbed in the second case.

We believe that these contentions of the University in Case G.R. No. L-21462 have been sufficiently covered by the discussion in this decision of the main issues raised in the principal case, which is Case G.R. No. L-21278. After all, the University wanted CIR Case 1183-MC dismissed, and the withdrawal of the petition for certification election had in a way produced the situation desired by the University. After considering the arguments adduced by the University in support of its petition for certiorari by way of appeal in Case G.R. No. L-21278, We hold that the CIR did not commit any error when it granted the withdrawal of the petition for certification election in Case No. 1183-MC. The principal case before the CIR is Case No. 41-IPA and all the questions relating to the labor disputes between the University and the Faculty Club may be threshed out, and decided, in that case.

In Case G.R. No. L-21500 the University appealed from the order of the CIR of March 30, 1963, issued by Judge Bautista, and from the resolution of the CIR en banc promulgated on June 28, 1963, denying the motion for the reconsideration of that order of March 30, 1963, in CIR Case No. 41-IPA. We have already ruled that the CIR has jurisdiction to issue that order of March 30, 1963, and that order is valid, and We, therefore, hold that the CIR did not err in issuing that order of March 30, 1963 and in issuing the resolution promulgated on June 28, 1963 (although dated May 7, 1963) denying the motion to reconsider that order of March 30, 1963.

IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 is dismissed and the writs prayed for therein are denied. The writ of preliminary injunction issued in Case G.R. No. L-21278 is dissolved. The orders and resolutions appealed from, in Cases Nos. L-21462 and L-21500, are affirmed, with costs in these three cases against the petitioner-appellant Feati University. It is so ordered.

G.R. No. L-52824 March 16, 88

REYNALDO BAUTISTA, petitioner, vs.HON. AMADO C. INCIONG, in his capacity as Deputy Minister of Labor and ASSOCIATED LABOR UNIONS (ALU), respondents.

GUTIERREZ, JR., J.:

This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein petitioner principally on the ground that no employer-employee relationship existed between the petitioner and respondent Associated Labor Unions (ALU).

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The facts as found by the National Capital Region Director of the then ministry of Labor (MOL) Region IV are as follows:

Complainant (petitioner) was employed by ALU as 'Organizer' in 1972 with a starting salary of P250.00 a month. As such he paid his monthly SSS contributions, with the respondent as his employer. On March 15, 1979, He was left in the office of ALU while his other co-organizers were in Cainta, Rizal attending a certification election at Chrysler Philippines, as he was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for ten (10) days. His SSS sickness benefit application form signed by ALU's physician was given to ALU for submission to the SSS. On March 16, 1979, complainant reported back for work upon expiration of his leave but was informed by ALU's Area Vice-President for Luzon of his termination effective March 15, 1979. Hence, this complaint filed on March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate complainant's services effective March 16, 1979 on the ground of abandonment of work. (p. 48, Rollo)

Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate the petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and to refund his Mutual Aid Fund Deposit in the amount of P 370.00

Respondent ALU appealed to the Ministry of Labor. On October 23,1979, the respondent Deputy Minister set aside the order of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister found that the petitioner was merely accomodated by the respondent union after he was dismissed by his former employer sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is the one paying the employer's share in the premiums is not conclusive proof that respondent is the petitioner's employer because such payments were performed by the respondent as a favor for all those who were performing full time union activities with it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an employer-employee relationship between the parties is bolstered by the fact that respondent ALU is not an entity for profit but a duly registered labor union whose sole purpose is the representation of its bona fide organization units where it is certified as such.

In this petition, the petitioner contends that the respondent Deputy minister committed grave abuse of discretion in holding that there was no employer-employee relationship between him and the respondent union so much so that he is not entitled to the benefits that he is praying for.

We agree with the petitioner.

There is nothing in the records which support the Deputy minister's conclusion that the petitioner is not an employee of respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor organization. In case of es v. Brotherhood Labor Unity Movement in the Phillipines Zamora, , (147 SCRA 49, 54), we outlined the factors in ascertaining an employer-employee realtionship:

In determining the existence of an employer-employee relationship, the elements that are generally considered are the following : (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called 'control test' that is the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21 SCRA 492; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)

In the case at bar, the Regional director correctly found that the petitioner was an employee of the respondent union as reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System (SSS) and the respondent union's share of remittances in the petitioner's favor. Even more significant, is the respondent union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista was selected and hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal basis got deputy Minister Inciong's decision.

We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show that antipathy and antagonism between the petitioner and the respondent union militate against the former's reinstatement. ALU would not want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize commercial and industrial establishments. Severance pay, therefore, is more proper in order. As we have ruled in the case of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23, 1987) quoting the cast of Balaquezon EWTU v. Zamora, (97 SCRA 5,8):

It should be underscored that the backwages are being awarded on the basis of equity or in the nature of severance pay. This means that a monetary award is to be paid to the employees as an alternative to reinstatement which can no longer be effected in view of the long passage of time or because of the realities of the situation. (Emphasis supplied)

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WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is ANNULLED and SET ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and ordered executed but instead of returning the petitioner to his former position, the private respondent is ordered to pay him an amount equal to his backwages for only three years and the separation pay to which he may be entitled as of the end of the three year period under the applicable law or collective bargaining agreement.