G.R. No.
110434 December 13, 1993 unanimous Award dated 13 November 1992, the dispositive
HI-PRECISION STEEL CENTER, INC., petitioner,
vs.
LIM KIM STEEL BUILDERS, INC., and CONSTRUCTION
INDUSTRY ARBITRATION COMMISSION, respondents.
Felix Q. Vinluan and Siguion Reyna, Montecillo & Ongsiako for
petitioner.
De Castro & Cagampang Law Offices for Lim Kim teel
Builders, Inc.
RESOLUTION
FELICIANO, J.:
On 18 June 1993, a "Petition for Extension to File Petition for
Review" 1 was filed before the Court, petitioner Hi-Precision
Steel Center, Inc. ("Hi-Precision") stating that it intended to
file a Petition for Review on Certiorari in respect of the 13
November 1992 Award 2 and 13 May 1993 Order 3 of public
respondent Construction Industry Arbitration Commission
("CIAC") in Arbitration Case No. 13-90. The Petition (really a
Motion) prayed for an extension of thirty (30) days or until 21
July 1993 within which to file a Petition for Review.
An opposition 4 to the Motion was filed by private respondent
Lim Kim Steel Builders, Inc. ("Steel Builders") on 5 July 1993.
On the same day, however, the Court issued a
Resolution 5 granting the Motion with a warning that no
further extension would be given.
The Opposition, the subsequent Reply 6 of petitioner filed on
20 July 1993 and the Petition for Review 7 dated 21 July
1993, were noted by the Court in its Resolution 8 of 28 July
1993. The Court also required private respondent Steel
Builders to file a Comment on the Petition for Review and
Steel Builders complied.
The Petition prays for issuance of a temporary restraining
order 9 to stay the execution of the assailed Order and Award
in favor of Steel Builders, which application the Court merely
noted, as it did subsequent Urgent Motions for a temporary
restraining order. 10
Petitioner Hi-Precision entered into a contract with private
respondent Steel Builders under which the latter as
Contractor was to complete a P21 Million construction project
owned by the former within a period of 153 days, i.e. from 8
May 1990 to 8 October 1990. The project completion date
was first moved to 4 November 1990. On that date, however,
only 75.8674% of the project was actually completed.
Petitioner attributed this non-completion to Steel Builders
which allegedly had frequently incurred delays during the
original contract period and the extension period. Upon the
other hand, Steel Builders insisted that the delays in the
project were either excusable or due to Hi-Precision's own
fault and issuance of change orders. The project was taken
over on 7 November 1990, and eventually completed on
February 1991, by Hi-Precision.
Steel Builders filed a "Request for Adjudication" with public
respondent CIAC. In its Complaint filed with the CIAC, Steel
Builders sought payment of its unpaid progress buildings,
alleged unearned profits and other receivables. Hi-Precision,
upon the other hand, in its Answer and Amended Answer,
claimed actual and liquidated damages, reimbursement of
alleged additional costs it had incurred in order to complete
the project and attorney's fees.
The CIAC formed an Arbitral Tribunal with three (3) members,
two (2) being appointed upon nomination of Hi-Precision and
Steel Builders, respectively; the third member (the Chairman)
was appointed by the CIAC as a common nominee of the two
(2) parties. On the Chairman was a lawyer. After the
arbitration proceeding, the Arbitral Tribunal rendered a
portion of which reads as follows:
WHEREFORE, premises considered, the
Owner [petitioner Hi-Precision] is ordered to
pay the Contractor [private respondent
Steel Builders] the amount of
P6,400,717.83 and all other claims of the
parties against each other are deemed
compensated and offset. No pronouncement
as to costs.
The Parties are enjoined to abide by the
award. 11
Upon motions for reconsideration filed, respectively,
by Hi-Precision and Steel Builders, the Arbitral
Tribunal issued an Order dated 13 May 1993 which
reduced the net amount due to contractor Steel
Builders to P6,115,285.83. 12
In its Award, the Arbitral Tribunal stated that it was guided by
Articles 1169, 1192 and 2215 of the Civil Code. With such
guidance, the arbitrators concluded that (a) both parties were
at fault, though the Tribunal could not point out which of the
parties was the first infractor; and (b) the breaches by one
party affected the discharge of the reciprocal obligations of
the other party. With mutual fault as a principal premise, the
Arbitral Tribunal denied (a) petitioner's claims for the
additional costs allegedly incurred to complete the project;
and (b) private respondent's claim for profit it had failed to
earn because of petitioner's take over of the project.
The Tribunal then proceeded to resolve the remaining specific
claims of the parties. In disposing of these multiple, detailed
claims the Arbitral Tribunal, in respect of one or more of the
respective claims of the parties: (a) averaged out the
conflicting amounts and percentages claimed by the
parties; 13 (b) found neither basis nor justification for a
particular claim; 14 (c) found the evidence submitted in
support of particular claims either weak or non-
existent; 15 (d) took account of the admissions of liability in
respect of particular claims; 16 (e) relied on its own expertise
in resolving particular claims; 17 and (f) applied a "principle of
equity" in requiring each party to bear its own loss resulting
or arising from mutual fault or delay (compensation
morae). 18
Petitioner Hi-Precision now asks this Court to set aside the
Award, contending basically that it was the contractor Steel
Builders who had defaulted on its contractual undertakings
and so could not be the injured party and should not be
allowed to recover any losses it may have incurred in the
project. Petitioner Hi-Precision insists it is still entitled to
damages, and claims that the Arbitral Tribunal committed
grave abuse of discretion when it allowed certain claims by
Steel Builders and offset them against claims of Hi-Precision.
A preliminary point needs to be made. We note that the
Arbitral Tribunal has not been impleaded as a respondent in
the Petition at bar. The CIAC has indeed been impleaded;
however, the Arbitral Award was not rendered by the CIAC,
but rather by the Arbitral Tribunal. Moreover, under Section
20 of Executive Order No. 1008, dated 4 February 1985, as
amended, it is the Arbitral Tribunal, or the single Arbitrator,
with the concurrence of the CIAC, which issues the writ of
execution requiring any sheriff or other proper officer to
execute the award. We consider that the Arbitral Tribunal
which rendered the Award sought to be reviewed and set
aside, should be impleaded even though the defense of its
Award would presumably have to be carried by the prevailing
party.
Petitioner Hi-Precision apparently seeks review of both under
Rule 45 and Rule 65 of the Rules of Court. 19 We do not find it
necessary to rule which of the two: a petition for review
under Rule 45 or a petition for certiorari under Rule 65 — is
necessary under Executive Order No. 1008, as amended; this
issue was, in any case, not squarely raised by either party
and has not been properly and adequately litigated.
Page 1 of 16
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In its Petition, Hi-Precision purports to raise "legal issues,"
and in presenting these issues, prefaced each with a creative
formula:
(1)
The public respondent [should be the
"Arbitral Tribunal'] committed serious error
in law, if not grave abuse of discretion,
when it failed to strictly apply Article 1191,
New Civil Code, against the
contractor . . .;
(2)
The public respondent committee serious
error in law, if not grave abuse of
discretion, when it failed to rule in favor of
the owner, now petitioner herein, all the
awards it claimed on arbitration, and when
it nonetheless persisted in its awards of
damages in favor of the
respondent. . . .;
(3)
The public respondent committed serious
error in law, if not grave abuse of
discretion, for its abject failure to apply the
doctrine of waiver, estoppel against the
contractor, the private respondent herein,
when it agreed on November 16, 1990 to
award termination of the contract and the
owner's takeover of the project . . .;
(4)
The public respondent committed serious
error in law, if not grave abuse of
discretion, when it did not enforce the law
between the parties, the "technical
specification[s]" which is one of the contract
documents, particularly to par. (a), sub-part
3.01, part 3, Sec. 2b, which expressly
requires that major site work activities like
stripping, removal and stockpiling of top soil
shall be done "prior to the start of regular
excavation or backfiling work", the principal
issue in arbitration being non-compliance
with the contract documents;
(5)
The public respondent committed serious
error in law, if not grave abuse of
discretion, when it found, in the May 13,
1993 Order, the petitioner "guilty of
estoppel" although it is claimed that the
legal doctrine of estoppel does not apply
with respect to the required written
formalities in the issuance of change order .
. .;
(6)
The exceptional circumstances in Remalante
vs. Tibe, 158 SCRA 138, where the
Honorable Supreme Court may review
findings of facts, are present in the instant
case, namely; (a) when the inference made
is manifestly absurd, mistaken or impossible
(Luna vs. Linatoc, 74 Phil. 15); (2) when
there is grave abuse of discretion in the
appreciation of facts (Buyco vs. People, 95
Phil. 253); (3) when the judgment is
premised on a misapprehension of facts (De
la Cruz v. Sosing, 94 Phil. 26 and Castillo
vs. CA, 124 SCRA 808); (4) when the
findings of fact are conflicting (Casica v.
Villaseca, 101 Phil. 1205); (5) when the
findings are contrary to the admissions of
the parties (Evangelista v. Alto Surety, 103
Phil. 401), and therefore, the findings of
facts of the public respondent in the instant
case may be reviewed by the Honorable
Supreme Court. 20 (Emphasis partly applied
and partly in the original)
From the foregoing, petitioner Hi-Precision may be seen to be
making two (2) basic arguments:
(a) Petitioner asks this Court to correct legal
errors committed by the Arbitral Tribunal,
which at the same time constitute grave
abuse of discretion amounting to lack of
jurisdiction on the part of the Arbitral
Tribunal; and
(b) Should the supposed errors petitioner
asks us to correct be characterized as errors
of fact, such factual errors should
nonetheless be reviewed because there was
"grave abuse of discretion" in the
misapprehension of facts on the part of the
Arbitral Tribunal.
Executive Order No. 1008, as amended, provides, in its
Section 19, as follows:
Sec. 19. Finality of Awards. — The arbitral
award shall be binding upon the parties. It
shall be final and inappealable except on
questions of law which shall be appealable
to the Supreme Court.
Section 19 makes it crystal clear that questions of
fact cannot be raised in proceedings before the
Supreme Court — which is not a trier of facts — in
respect of an arbitral award rendered under the
aegis of the CIAC. Consideration of the animating
purpose of voluntary arbitration in general, and
arbitration under the aegis of the CIAC in particular,
requires us to apply rigorously the above principle
embodied in Section 19 that the Arbitral Tribunal's
findings of fact shall be final and inappealable.
Voluntary arbitration involves the reference of a dispute to an
impartial body, the members of which are chosen by the
parties themselves, which parties freely consent in advance to
abide by the arbitral award issued after proceedings where
both parties had the opportunity to be heard. The basic
objective is to provide a speedy and inexpensive method of
settling disputes by allowing the parties to avoid the
formalities, delay, expense and aggravation which commonly
accompany ordinary litigation, especially litigation which goes
through the entire hierarchy of courts. Executive Order No.
1008 created an arbitration facility to which the construction
industry in the Philippines can have recourse. The Executive
Order was enacted to encourage the early and expeditious
settlement of disputes in the construction industry, a public
policy the implementation of which is necessary and
important for the realization of national development goals. 21
Aware of the objective of voluntary arbitration in the labor
field, in the construction industry, and in any other area for
that matter, the Court will not assist one or the other or even
both parties in any effort to subvert or defeat that objective
for their private purposes. The Court will not review the
factual findings of an arbitral tribunal upon the artful
allegation that such body had "misapprehended the facts" and
will not pass upon issues which are, at bottom, issues of fact,
no matter how cleverly disguised they might be as "legal
questions." The parties here had recourse to arbitration and
chose the arbitrators themselves; they must have had
confidence in such arbitrators. The Court will not, therefore,
permit the parties to relitigate before it the issues of facts
previously presented and argued before the Arbitral Tribunal,
save only where a very clear showing is made that, in
reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as
to constitute a grave abuse of discretion resulting in lack or
loss of jurisdiction. 22 Prototypical examples would be factual
Page 2 of 16
Alternative Dispute Resolution Cases for Group 5
conclusions of the Tribunal which resulted in deprivation of
one or the other party of a fair opportunity to present its
position before the Arbitral Tribunal, and an award obtained
through fraud or the corruption of arbitrators. 23 Any other,
more relaxed, rule would result in setting at naught the basic
objective of a voluntary arbitration and would reduce
arbitration to a largely inutile institution.
Examination of the Petition at bar reveals that it is essentially
an attempt to re-assert and re-litigate before this Court the
detailed or itemized factual claims made before the Arbitral
Tribunal under a general averment that the Arbitral Tribunal
had "misapprehended the facts" submitted to it. In the
present Petition, too, Hi-Precision claims that the Arbitral
Tribunal had committed grave abuse of discretion amounting
to lack of jurisdiction in reaching its factual and legal
conclusions.
The first "legal issue" submitted by the Petition is the claimed
misapplication by the Arbitral Tribunal of the first and second
paragraphs of Article 1911 of the Civil Code. 24 Article 1191
reads:
Art. 1191. The power to rescind obligations
is implied in reciprocal ones, in case one of
the obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the
obligation, with the payment of damages in
either case. He may also seek rescission,
even after he has chosen fulfillment, if the
latter should become impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice
to the rights of third persons who have
acquired the thing, in accordance with
articles 1385 and 1388 and the Mortgage
Law.
Hi-Precision contends energetically that it is the injured party
and that Steel Builders was the obligor who did not comply
with what was incumbent upon it, such that Steel Builders
was the party in default and the entity guilty of negligence
and delay. As the injured party, Hi-Precision maintains that it
may choose between the fulfillment or rescission of the
obligation in accordance with Article 1191, and is entitled to
damages in either case. Thus, Hi-Precision continues, when
the contractor Steel Builders defaulted on the 153rd day of
the original contract period, Hi-Precision opted for specific
performance and gave Steel Builders a 30-day extension
period with which to complete the project.
What petitioner Hi-Precision, in its above argument,
disregards is that the determination of whether Hi-Precision
or Steel Builders was the "injured party" is not to be resolved
by an application of Article 1191. That determination is
eminently a question of fact, for it requires ascertainment and
identification of which the two (2) contending parties had first
failed to comply with what is incumbent upon it. In other
words, the supposed misapplication of Article 1191, while
ostensibly a "legal issue," is ultimately a question of fact, i.e.,
the determination of the existence or non-existence of a fact
or set of facts in respect of which Article 1191 may be
properly applied. Thus, to ask this Court to correct a claimed
misapplication or non-application of Article 1191 is to compel
this Court to determine which of the two (2) contending
parties was the "injured party" or the "first infractor." As
noted earlier, the Arbitral Tribunal after the prolonged
arbitration proceeding, was unable to make that factual
determination and instead concluded that both parties had
committed breaches of their respective obligations. We will
not review, and much less reverse, that basic factual finding
of the Arbitral Tribunal.
A second "legal issue" sought to be raised by petitioner Hi-
Precision relates to the supposed failure of the Arbitral
Tribunal to apply the doctrines of estoppel and waiver as
against Steel Builders. 25 The Arbitral Tribunal, after declaring
that the parties were mutually at fault, proceeded to
enumerate the faults of each of the parties. One of the faults
attributed to petitioner Hi-Precision is that it had failed to give
the contractor Steel Builders the required 15-day notice for
termination of the contract. 26 This was clearly a finding of
fact on the part of the Tribunal, supported by the
circumstance that per the record, petitioner had offered no
proof that it had complied with such 15-day notice required
under Article 28.01 of the General Conditions of Contract
forming part of the Contract Documents. Petitioner Hi-
Precision's argument is that a written Agreement dated 16
November 1990 with Steel Builders concerning the take over
of the project by Hi-Precision, constituted waiver on the part
of the latter of its right to a 15-day notice of contract
termination. Whether or not that Agreement dated 16
November 1990 (a document not submitted to this Court) is
properly characterized as constituting waiver on the part of
Steel Builders, may be conceded to be prima facie a question
of law; but, if it is, and assuming arguendo that the Arbitral
Tribunal had erred in resolving it, that error clearly
did not constitute a grave abuse of discretion resulting in lack
or loss of jurisdiction on the part of the Tribunal.
A third "legal issue" posed by Hi-Precision relates to the
supposed failure on the part of the Arbitral Tribunal "to
uphold the supremacy of 'the
law between the parties' and enforce it against private
respondent [Steel Builders]." 27 The "law between that
parties" here involved is the "Technical Specifications"
forming part of the Contract Documents. Hi-Precision asserts
that the Arbitral Tribunal did not uphold the "law between the
parties," but instead substituted the same with "its [own]
absurd inference and 'opinion' on mud." Here again, petitioner
is merely disguising a factual question as a "legal issue," since
petitioner is in reality asking this Court to review the physical
operations relating, e.g., to site preparation carried out by the
contractor Steel Builders and to determine whether such
operations were in accordance with the Technical
Specifications of the project. The Arbitral Tribunal resolved Hi-
Precision's claim by finding that Steel Builders had complied
substantially with the Technical Specifications. This Court will
not pretend that it has the technical and engineering
capability to review the resolution of that factual issue by the
Arbitral Tribunal.
Finally, the Petition asks this Court to "review serious errors
in the findings of fact of the [Arbitral Tribunal]." 28 In this
section of its Petition,
Hi-Precision asks us to examine each item of its own claims
which the Arbitral Tribunal had rejected in its Award, and
each claim of the contractor Steel Builders which the Tribunal
had granted. In respect of each item of the owner's claims
and each item of the contractor's claims, Hi-Precision sets out
its arguments, to all appearances the same arguments it had
raised before the Tribunal. As summarized in the Arbitral
Award, Contractor's Claims were as follows:
12.1. Unpaid Progress Billing 1,812,706.95
12.2. Change Order 1 0.00
12.3. -do- 2 10,014.00
12.4. -do- 3 320,000.00
12.5. -do- 4 112,300.70
12.6. -do- 5 398,398.00
12.7. -do- 6 353,050.38
12.8. -do- 7 503,836.53
12.9. -do- 8 216,138.75
12.10. -do- 9 101,621.40
12.11. -do- 10 7,200.00
12.12. -do- 11 0.00
12.13. -do- 12 7,800.00
12.14. -do- 13 49,250.00
12.15. -do- 14 167,952.00
12.16. -do- 15 445,600.00
12.17. -do- 16 92,457.30
12.18. -do- 17 1,500.00
12.19. 20,240.00
12.20. 63,518.00
12.21. 0.00
12.22. 0.00
12.23. 0.00
12.24. 0.00
Page 3 of 16
Alternative Dispute Resolution Cases for Group 5
 12.25. 0.00 a. Foreign exchange loss 4,155,982.18
12.26. 730,201.57 b. Cost of money (a) 821,242.72
12.27. 1,130,722.70 c. Additional import levy of 5% 886,513.33
12.28. 0.00 d. Cost of money (c) 170,284.44
12.29. 273,991.00 e. Cost of money on marginal
12.30. 0.00 deposit on Letter of Credit 561,195.25

——————— IF Cost of money on holding to CRC INTY

3,319,609.63
12.31. 7,318,499.28 29

Total Actual Damages 35,295,927.32

=============
2. Liquidated Damages 2,436,000.00
Upon the other hand, the petitioner's claims we are asked to
review and grant are summarized as follows: 3. Attorney's Fees 500,000.00

1. Actual Damages ———————

Advance Downpayment P38,231,927.3230

[at] signing of Contract
which is subject to 40%
deduction every progress
billing (40% of Contract Price)
P8,406,000.00
Progress Billings 5,582,585.55
Advances made to Lim Kim
a) prior to take-over 392,781.45
b) after the take-over
Civil Works 1,158,513.88
Materials 4,213,318.72
Labor 2,155,774.79
Equipment Rental 1,448,208.90
———————
P8,974,816.45
=============
We consider that in asking this Court to go over each
individual claim submitted by it and each individual
countering claim submitted by Steel Builders to the Arbitral
Tribunal, petitioner Hi-Precision is asking this Court to pass
upon claims which are either clearly and directly factual in
nature or require previous determination of factual issues.
This upon the one hand. Upon the other hand, the Court
considers that petitioner Hi-Precision has failed to show any
serious errors of law amounting to grave abuse of discretion
resulting in lack of jurisdiction on the part of the Arbitral
Tribunal, in either the methods employed or the results
reached by the Arbitral Tribunal, in disposing of the detailed
claims of the respective parties.
WHEREFORE, for all the foregoing, the Petition is hereby
DISMISSED for lack of merit. Costs against petitioner.
SO ORDERED.

Total Amount Paid for Construction

23,650,183.00 [G.R. No. 129175. November 19, 2001]
Less: Contract Price (21,000,000.00)

IA Excess of amount paid

over contract price 2,650,163.29
RUBEN N. BARRAMEDA, ELVIS L. ESPIRITU, MERARDO
G. ENERO, JR., MARCELITO B. ABBAS and
IB Other items due from Lim REYNALDO V. ABUNDO, petitioners, vs. ROMEO
Kim Steel Builders ATIENZA, EDGARDO DASCO, BERNARDO
DIEZMO, JESUS FERNANDEZ, MILAGROS
a. Amount not yet deducted ESTRELLADO, ARTEMIO INDIAS, RAUL
from Downpayment due CARRANCEJA, MARY ANN ASOR and ANTONIO
to non-completion of Project OBIAS, respondents.
(P24.1326%) 2,027,138.40
DECISION
b. Due to Huey Commercial
PARDO, J.:
used for HSCI Project 51,110.40

IC Additional construction expenses
a. Increases in prices since Oct.
5,272,096.81
The key issue is whether or not petitioners are the
rightful directors of Camarines Norte Electric Cooperative
(CANORECO) as against respondents, who were elected in a
general assembly of members called by a presidential ad
hoc committee.

CANORECO is an electric cooperative organized under

b. Cost of money of (a) 873,535.49
ID Installation of machinery
a. Foreign exchange loss 11,565,048.37
b. Cost of money (a) 2,871,987.01
I[E] Raw Materials
the provisions of P. D. No. 269, otherwise known as the
National Electrification Administration Decree, as amended by
P. D. No. 1645. On July 10, 1996, the Cooperative
Development Authority (CDA) certified that CANORECO is
registered as a full-fledged cooperative under R. A. No. 6938.
On March 1, 1988, the National Electrification
Administration (NEA) and CANORECO entered into a Contract
of Loan[1] and First Mortgage[2] of CANORECO properties for
the improvement of the cooperatives electrification program.
One provision in the loan agreement is embodied in Article VI,
Section 2, which provides:

Page 4 of 16
Alternative Dispute Resolution Cases for Group 5
Section 2. In the event of default, the NEA may, in addition to
the rights, privileges, powers and remedies granted to it
under Presidential Decree No. 269 and other pertinent laws,
exercise any or all of the following remedies.
a. xxx
b. xxx
c. Assign or appoint a Project Supervisor and/or General
Manager
d. Take over the construction, operation, management and
control of the SYSTEM
e. Take any other lawful remedial measure
On March 10, 1990, Congress enacted into law Republic
Act No. 6938 (the Cooperative Code of the Philippines) and
Republic Act No. 6939 (creating the Cooperative Development
Authority [CDA]). The latter act vested the power to register
cooperatives solely on CDA.
One of the signatories to the loan contract was
petitioner Reynaldo V. Abundo, the general manager of
CANORECO at that time.
During Abundos incumbency, he failed to pay the loan
obligations as they fell due. Thus, as of March 31, 1995,
CANORECOs outstanding loan with NEA amounted to seventy
four (74) million pesos.[3]
In 1995, NEA enforced the provisions of the mortgage
contract by designating an acting general manager of
CANORECO to protect state funds invested therein.
On May 28, 1995, during the annual general
membership assembly of CANORECO, the members elected a
new set of members of the board of directors.[4] Thereafter,
NEA appointed a new general manager, Felix Rolando G.
Zaldua, and declared former manager Reynaldo V. Abundo
as pesona non grata.
Shortly, the group of Reynaldo V. Abundo contested the
authority of NEA to supervise and control CANORECO, filing
with CDA several cases, including CDA-CO Case No. 95-910.
On February 15, 1996, CDA declared the board meeting
of May 28, 1995, void ab initio because there was
no quorum considering that there were only three (3)
incumbent board members who were present. Thus, the
resolutions issued during the meeting were all declared null
and void. The CDA ruled:
WHEREFORE, premises considered, the Board Meeting of May
28, 1995, participated by respondents, and all the Resolutions
issued on such occasions, are hereby declared NULL AND
VOID AB INITIO.
Likewise, the election of respondents Norberto Ochoa, Antonio
Obias, Felicito Ilan, and Luis Pascua, as President, Vice-
President, Secretary, and Treasurer, respectively, of
CANORECO is hereby declared NULL AND VOID AB INITIO.
Hence, respondents Norberto Ochoa, Antonio Obias, Felicito
Ilan, and Luis Pascua are hereby ordered to refrain from
representing themselves as President, Vice-President,
Secretary, and Treasurer, respectively, of CANORECO. The
same respondents are further ordered to refrain from acting
as authorized signatories to the bank accounts of CANORECO.
Further respondent Felicito Ilan is hereby ordered to refrain
from exercising the duties and functions of a member of the
Board of CANORECO until the election protest is resolved in a
proper forum. In the meantime, the incumbency of petitioner
Merardo Enero, Jr. as Director of CANORECO Board is hereby
recognized.
A status quo is hereby ordered as regards the position of
General Manager, being held by Mr. Reynaldo Abundo,
considering that the recall of his appointment was done under
a void Resolution, and that the designation of Mr. Oscar
Acodera as Officer-In-Charge, under the same void
Resolution, has no force and effect.
Finally, respondents Antonio Obias, Norberto Ochoa, Luisito
Pascua, and petitioners Ruben Barrameda, Elvis Espiritu,
Marcelito Abas and Merardo Enero, Jr. are hereby ordered to
work together as Board of Directors, for the common good of
CANORECO and its consumer-members, and to maintain an
atmosphere of sincere cooperation among the officers and
members of CANORECO.[5]
On February 27, 1996, petitioner Abundo resigned as
general manager of CANORECO.[6]
In turn, NEA recognized the appointment of acting
general manager Felix Rolando G. Zaldua. On September 23,
1996, Juanito M. Irabon replaced Rolando G. Zaldua. [7]
On September 26, 1996, CDA issued a writ of execution
and order to vacate thereby enabling petitioners to resume
control of CANORECO.
On December 3, 1996, President Fidel V. Ramos issued
Memorandum Order No. 409,[8] in response to letters from the
Governor of Camarines Norte and the Office of the
Sangguniang Panlalawigan regarding the conflict between the
NEA group and the CDA group.[9]
The order constituted an ad hoc committee to
temporarily take over and manage the affairs of
CANORECO. NEA and CDA are both under the supervision and
control of the Office of the President.
The ad hoc committee was composed of:
Rex Tantiongco Chairman Presidential Assistant on Energy
Affairs
(Member)
Honesto de Jesus Cooperative Development Authority
Nominee
(Member)
Andres Ibasco Cooperative Development Authority Nominee
(Member)
Teodulo M. Mea National Electrification Administration
Nominee
(Member)
Vicente Lukban National Electrification Administration
Nominee
(Member)
On February 16, 1997, the ad hoc committee presided
over by Chairman Rex Tantiongco called for a special general
membership meeting of CANORECO. The purpose of the
meeting was to determine whether there was a need to
change the composition of CANORECOs board of directors. An
overwhelming majority voted in favor of replacing the board
of directors of CANORECO.[10]
Accordingly, CANORECO conducted a general election for
directors.
On March 23, 1997, CANORECO elected as new board
members the following:
1. Milagros Estrellado
2. Jesus Thomas Fernandez
3. Bernardo Diezmo
4. Raul Carranceja
5. Romeo Atienza
6. Edgar Dasco
7. Artemio Indias[11]
On April 19, 1997, the board passed Resolution No. 01,
series of 1997, declaring the position of general manager
Page 5 of 16
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vacant,[12] and Resolution No. 02, series of 1997, appointing
Mary Ann C. Asor general manager.[13]
Hence, this petition for quo warranto.[14]
On February 27, 1998, we declared invalid Memorandum
Order No. 409 of the President.[15]
We said:
Having registered itself with the CDA pursuant to Section 128
of R.A. No. 6938 and Section 17 of R.A. No. 6939, CANORECO
was brought under the coverage of said laws. Article 38 of
R.A. No. 6938 vests upon the board of directors the conduct
and management of the affairs of cooperatives, and Article 39
provides for the powers of the board of directors. These
sections read:
Article 38. Composition of the Board of Directors. -- The
conduct and management of the affairs of a cooperative shall
be vested in a board of directors which shall be composed of
not less than five (5) nor more than fifteen (15) members
elected by the general assembly for a term fixed in the by-
laws but not exceeding a term of two (2) years and shall hold
office until their successors are duly elected and qualified, or
until duly removed. However, no director shall serve for more
than three (3) consecutive terms.
Article 39. Powers of the Board of Directors. -- The board of
directors shall direct and supervise the business, manage the
property of the cooperative and may, by resolution, exercise
all such powers of the cooperative as are not reserved for the
general assembly under this Code and the by-laws.
As to the officers of cooperatives, Article 43 of the Code
provides:
ART. 43. Officers of the Cooperatives. The board of directors
shall elect from among themselves only the chairman and
vice-chairman, and elect or appoint other officers of the
cooperative from outside of the board in accordance with their
by-laws. All officers shall serve during good behavior
and shall not be removed except for cause and after due
hearing. Loss of confidence shall not be a valid ground for
removal unless evidenced by acts or omissions causing loss of
confidence in the honesty and integrity of such officer. No two
(2) or more persons with relationship up to the third degree
of consanguinity or affinity shall serve as elective or
appointive officers in the same board.
Under Article 34 of the Code, the general assembly of
cooperatives has the exclusive power, which cannot be
delegated, to elect or appoint the members of the board of
directors and to remove them for cause. Article 51 thereof
provides for removal of directors and officers as follows:
ART. 51. Removal. -- An elective officer, director, or
committee member may be removed by a vote of two-thirds
(2/3) of the voting members present and constituting a
quorum, in a regular or special general assembly meeting
called for the purpose. The person involved shall be given an
opportunity to be heard at said assembly.
Memorandum Order No. 409 clearly removed from the Board
of Directors of CANORECO the power to manage the affairs of
CANORECO and transferred such power to the Ad Hoc
Committee, albeit temporarily. Considering that (1) the take-
over will be until such time that a general membership
meeting can be called to decide the serious issues affecting
the said cooperative and normalcy in operations is restored,
and (2) the date such meeting shall be called and the
determination of whether there is a need to change the
composition of the membership of CANORECOs Board of
Directors are exclusively left to the Ad Hoc Committee, it
necessarily follows that the incumbent directors were, for all
intents and purposes, suspended at the least, and removed,
at the most, from their office. The said Memorandum did no
less to the lawfully appointed General Manager by directing
that upon the settlement of the issue concerning the
composition of the board of directors the Committee shall
decide on the appointment of a general manager. In the
meantime, it authorized the Committee to designate upon the
recommendation of the Chairman an Acting Manager, with the
lawfully appointed Manager considered on leave, but who is,
however, entitled to the payment of his salaries.
Nothing in law supported the take-over of the management of
the affairs of CANORECO, and the suspension, if not removal,
of the Board of Directors and the officers thereof.
It must be pointed out that the controversy which resulted in
the issuance of the Memorandum Order stemmed from a
struggle between two groups vying for control of the
management of CANORECO. One faction was led by the group
of Norberto Ochoa, while the other was petitioners group
whose members were, at that time, the incumbent directors
and officers. It was the action of Ochoa and his cohorts in
holding a special meeting on 28 May 1995 and then declaring
vacant the positions of cooperative officers and thereafter
electing themselves to the positions of president, vice-
president, treasurer, and secretary of CANORECO which
compelled the petitioners to file a petition with the CDA. The
CDA thereafter came out with a decision favorable to the
petitioners.
Obviously there was a clear case of intra-cooperative
dispute. Article 121 of the Cooperative Code is explicit on how
the dispute should be resolved; thus:
ART. 121. Settlement of Disputes. -- Disputes among
members, officers, directors, and committee members, and
intra-cooperative disputes shall, as far as practicable, be
settled amicably in accordance with the conciliation or
mediation mechanisms embodied in the by-laws of the
cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the
matter shall be settled in a court of competent jurisdiction.
Complementing this Article is Section 8 of R. A. No. 6939,
which provides:
SEC. 8. Mediation and Conciliation. Upon request of either or
both or both parties, the [CDA] shall mediate and conciliate
disputes with the cooperative or between cooperatives:
Provided, That if no mediation or conciliation succeeds within
three (3) months from request thereof, a certificate of non-
resolution shall be issued by the commission prior to the filing
of appropriate action before the proper courts.
Even granting for the sake of argument that the party
aggrieved by a decision of the CDA could pursue an
administrative appeal to the Office of the President on the
theory that the CDA is an agency under its direct supervision
and control, still the Office of the President could not in this
case, motu proprio or upon request of a party, supplant or
overturn the decision of the CDA. The record does not
disclose that the group of Norberto Ochoa appealed from the
decision of the CDA in CDA-CO Case No. 95-010 to the Office
of the President as the head of the Executive Department
exercising supervision and control over said agency. In fact
the CDA had already issued a Cease and Desist Order dated
14 August 1996 ordering Antonio Obias, Norberto Ochoa, Luis
Pascua, Felicito Ilan and their followers to cease and desist
from acting as the Board of Directors and Officers of
Camarines Norte Electric Cooperative (CANORECO) and to
refrain from implementing their Resolution calling for the
District V Election on August 17 and 24, 1996. Consequently,
the said decision of the CDA had long become final and
executory when Memorandum Order No. 409 was issued on 3
December 1996. That Memorandum cannot then be
considered as one reversing the decision of the CDA which
had attained finality.
Under Section 15, Chapter III of Book VII of the
Administrative Code of 1987 (Executive Order No. 292),
decisions of administrative agencies become final and
executory fifteen days after receipt of a copy thereof by the
party adversely affected unless within that period an
administrative appeal or judicial review, if proper, has been
perfected. One motion for reconsideration is allowed. A final
resolution or decision of an administrative agency also binds
the Office of the President even if such agency is under the
administrative supervision and control of the latter.
Page 6 of 16
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 xxx xxx xxx
Neither can police power be invoked to clothe with validity the
assailed Memorandum Order No. 409. Police power is the
power inherent in a government to enact laws, within
constitutional limits, to promote the order, safety, health,
morals, and general welfare of society. It is lodged primarily
in the legislature. By virtue of a valid delegation of legislative
power, it may also be exercised by the President and
administrative boards, as well as the lawmaking bodies on all
municipal levels, including the barangay.Delegation of
legislative powers to the President is permitted in Sections
23(2) and 28(2) of Article VI of the Constitution. The
pertinent laws on cooperatives, namely, R. A. No. 6938, R. A.
No. 6939, and P. D. No. 269 as amended by P. D. No. 1645
do not provide for the President or any other administrative
body to take over the internal management of a
cooperative. Article 98 of R. A. No. 6938 instead provides:
ART. 98. Regulation of Public Service Cooperatives. -- (1) The
internal affairs of public service cooperatives such as the
rights and privileges of members, the rules and procedures
for meetings of the general assembly, board of directors and
committees; for the election and qualification of officers,
directors, and committee members; allocation and
distribution of surpluses, and all other matters relating to
their internal affairs shall be governed by this Code.
We do not then hesitate to rule that Memorandum Order No.
409 has no constitutional and statutory basis. It violates the
basic underlying principle enshrined in Article 4(2) of R.A. No.
6938 that cooperatives are democratic organizations and that
their affairs shall be administered by persons elected or
appointed in a manner agreed upon by the
members. Likewise, it runs counter to the policy set forth in
Section 1 of R.A. No. 6939 that the State shall, except as
provided in said Act, maintain a policy of non-interference in
the management and operation of cooperatives. (Italics ours)
In our resolution dated November 16, 1998, we said
that the decision in G. R. No. 127249 declared invalid
Memorandum Order No. 409, but did not delve on the issue of
who are the rightful directors of the cooperative.[16]
Until the merits of the quo warranto proceedings have
been decided, petitioners cannot unilaterally assume their
former positions in the cooperative.[17]
On November 16, 1998, we issued a temporary
restraining order[18] enjoining the Cooperative Development
Authority, its agents and representatives from executing
the alias writ of execution dated July 27, 1998, issued in CDA-
CO Case No. 95-010.
As said at the outset, the question is whether petitioners
are entitled to their positions in the cooperative.
Memorandum Order No. 409
M. O. No. 409 caused the interruption of petitioners
functions.
In Akbayan v. Philippine National Bank, citing a US
Supreme Court decision, we said:
"The actual existence of a statute, prior to such a
determination [of unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The
past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, with
respect to particular relations, individual and corporate, and
particular conduct private and official."[19]
This has been quoted with approval in a resolution in
Araneta v. Hill, 93 Phil. 1002 (1953), in Manila Motor Co.,
Inc. v. Flores, 99 Phil. 738 (1956), and in Fernandez v.
Cuerva and Co., 129 Phil. 332 (1967).[20]
In the case of Municipality of Malabang v. Benito,[21] we
said:
"An unconstitutional act is not a law; it confers no rights; it
imposes no duties; it affords no protection; it creates no
office; it is, in legal contemplation, as inoperative as though it
had never been passed."[22]
In that case, Executive Order No. 386, creating the
Municipality of Balabagan was declared unconstitutional.
In the same wise, M. O. No. 409 "created no office." The
existence of M. O. No. 409 is "an operative fact which cannot
justly be ignored."[23] Therefore, M. O. No. 409 conferred no
rights. The board of directors, elected through the ad
hoc committees exercise of its functions while the law was in
force, did not exist, as if no election was held.
In Malabag, the court declared Executive Order 386
void, and permanently restrained the respondents from
performing the duties and functions of their respective offices.
In this case, however, the situation was complicated by
certain events. While we declared M. O. No. 409
unconstitutional, the election of respondents before such
event is presumed valid until nullified.
The law expressly confers on the board of directors the
power to manage the affairs of the cooperative, according to
the Cooperative Code.
However, CANORECO entered into a contract of loan
with NEA.
The National Electrification Administration
As far as NEA is concerned, Article VI, Section 2 of the
loan agreement was clear that in the event of default in the
payment of the loan, NEA may assign or appoint a project
supervisor or a general manager. This provision finds support
in Section 10, Chapter II, P. D. No. 269, as amended by P. D.
No. 1645.
A contract is the law between the parties.[24] Obligations
arising from contracts have the force of law between the
contracting parties and shall be complied with in good
faith.[25]
At the time NEA took over the management of
CANORECO, it exercised its rights under the law and the loan
agreement entered into by CANORECO and NEA.
The Cooperative Development Authority
However, as we said,[26] having registered itself with the
CDA, pursuant to Section 128 of R. A. No. 6938 and Section
17 of R. A. No. 6939, CANORECO was under the coverage of
said laws. Article 38 of R. A. No. 6938 vests upon the board
of directors the conduct and management of the affairs of
cooperatives, and Article 39 prescribes the powers of the
board of directors.
Article 38. Composition of the Board of Directors. -- The
conduct and management of the affairs of a cooperative shall
be vested in a board of directors which shall be composed of
not less than five (5) nor more than fifteen (15) members
elected by the general assembly for a term fixed in the by-
laws but not exceeding a term of two (2) years and shall hold
office until their successors are duly elected and qualified, or
until duly removed. However, no director shall serve for more
than three (3) consecutive terms.
Article 39. Powers of the Board of Directors. -- The board of
directors shall direct and supervise the business, manage the
property of the cooperative and may, by resolution, exercise
all such powers of the cooperative as are not reserved for the
general assembly under this Code and the by-laws.
As to the officers of cooperatives, Article 43 of the Code
provides:
Page 7 of 16
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ART. 43. Officers of the Cooperatives. The board of directors
shall elect from among themselves only the chairman and
vice-chairman, and elect or appoint other officers of the
cooperative from outside of the board in accordance with their
by-laws. All officers shall serve during good behavior and
shall not be removed except for cause and after due
hearing. Loss of confidence shall not be a valid ground for
removal unless evidenced by acts or omissions causing loss of
confidence in the honesty and integrity of such officer. No two
(2) or more persons with relationship up to the third degree
of consanguinity or affinity shall serve as elective or
appointive officers in the same board.
Under Article 34 of the Code, the general assembly of
cooperatives has the exclusive power, which cannot be
delegated, to elect or appoint the members of the board of
directors and to remove them for cause. Article 51 provides
for removal of directors and officers as follows:
ART. 51. Removal. -- An elective officer, director, or
committee member may be removed by a vote of two-thirds
(2/3) of the voting members present and constituting a
quorum, in a regular or special general assembly meeting
called for the purpose. The person involved shall be given an
opportunity to be heard at said assembly.
Nevertheless, this is without prejudice to the holding of
a general assembly for the purpose of conducting another
election of directors since the term of office of the directors
expired sometime in 1996. In the meantime, respondents
shall hold office until their successors shall have been elected
and qualified.
WHEREFORE, the petition is hereby
DENIED. Respondents are allowed to continue occupying their
positions pending the holding of a general assembly for the
purpose of electing directors.
No costs.
SO ORDERED.
[G.R. No. 132400. January 31, 2005]
EDUARDO J. MARIO, JR., MA. MELVYN P. ALAMIS and
UST FACULTY UNION, petitioners, vs. GIL
GAMILLA, DUPONT ASERON and JUSTINO
CARDENAS, respondents.
DECISION
TINGA, J.:
This is a petition for review under Rule 45 assailing
the Decision[1] of the Court of Appeals in CA-G.R. SP No.
43701,[2] setting aside the order and the writ of preliminary
mandatory injunction issued by the lower court.
The facts of the case are as follows:
Sometime in May 1986, the UST Faculty Union (USTFU)
entered into an initial collective bargaining agreement with
the University of Santo Tomas (UST) wherein UST undertook
to provide USTFU with a free office space at Room 302 of its
Health Center Building.[3]
On 21 September 1996, the officers and directors of
USTFU scheduled a general membership meeting on 5
October 1996 for the election of the union officers. However,
respondent Gamilla and some faculty members filed
a Petition[4] with the Med-Arbitration Unit of the Department
of Labor and Employment (DOLE) seeking to stop the holding
of the USTFU election.[5]
Meanwhile, on 2 October 1996, Rev. Fr. Rodel Aligan,
O.P., Secretary General of the UST, issued a Memorandum to
the Deans, Regents, Principals and Heads of Departments
regarding the holding of a faculty convocation on 4 October
1996.[6]
On 4 October 1996, Med-Arbiter Tomas Falconitin issued
a temporary restraining order (TRO) in Case No. NCR-OD-M-
9610-001, enjoining the holding of the election of the USTFU
officers and directors. However, denying the TRO they
themselves sought, Gamilla and some of the faculty members
present in the 4 October 1996 faculty convocation proceeded
with the election of the USTFU officers. On the other hand,
the scheduled election for 5 October 1996 did not push
through by virtue of the TRO.[7]
In the succeeding week, on 11 October 1996, petitioners
filed with the DOLE a petition for prohibition, injunction, with
prayer for preliminary injunction and temporary restraining
order,[8] seeking to invalidate the election held on 4 October
1996.
Two months later, on 4 December 1996, UST and
USTFU, represented by Gamilla and his co-officers, entered
into a collective bargaining agreement (CBA) for a period of
five (5) years from 1 June 1996 up to 31 May 2001. The CBA
was ratified on 12 December 1996.[9]
In another front, the Med-Arbiter issued a TRO dated 11
December 1996, enjoining Gamilla and his fellow officers to
cease and desist from performing any and all acts pertaining
to the duties and functions of the officers and directors of
USTFU.[10]
On 27 January 1997, at around eleven in the morning
(11:00 a.m.), respondents Gamilla, Cardenas and Aseron,
with some other persons, served a letter of even date on
petitioners Mario and Alamis, demanding that the latter
vacate the premises located at Room 302, Health Center
Building, USTthe Office of USTFU. However, only the office
messenger was in the office at the time. After coercing the
office messenger to step out of the office, Gamilla and
company padlocked the door leading to the unions office.[11]
On 5 February 1997, petitioners filed with the Regional
Trial Court (RTC) of Manila a Complaint[12] for injunction and
damages with a prayer for preliminary injunction and
temporary restraining order over the use of the USTFU office.
At the 11 February 1997 hearing on the application for
TRO before the trial court, respondents through a
consolidated motion to dismiss sought the dismissal of the
complaint on the ground of forum-shopping and prayed that
the trial court suspend the application for injunctive relief
until it shall have resolved the motion to dismiss.[13]
On the same date, Med-Arbiter Falconitin rendered a
decision,[14] declaring the 4 October 1996 election and its
results null and void ab initio. The decision was appealed to
the Bureau of Labor Relations which affirmed the
same.[15] Respondents brought the matter to this Court via a
special civil action for certiorari.[16] The Court promulgated its
decision,[17] dismissing the petition on 16 November 1999.
On 3 March 1997, the RTC issued the assailed
order,[18] to wit:
WHEREFORE, upon plaintiffs filing a bond in the amount
of P50,000.00, let a writ of preliminary mandatory injunction
issue requiring defendants their representatives and agents or
other persons acting in their behalf to remove the padlocks on
the door of the UST Faculty Union office located at Room 302,
Health Center Bldg., UST, Espaa, Manila and to refrain from
preventing/disturbing in any manner whatsoever the plaintiffs
in entering the said premises.
In the meantime, defendants are hereby ordered to submit
their answer to the complaint within fifteen (15) days from
receipt hereof.
On 5 March 1997, after petitioners as plaintiffs therein
had posted the requisite bond, the RTC issued a writ of
preliminary mandatory injunction.[19]
On 19 March 1997, respondents filed a Petition
for Certiorari[20] before the Court of Appeals, claiming that the
orders dated 3 and 5 March 1997 were void ab initio for lack
of jurisdiction and on the ground that they were issued in
violation of due process of law.[21] The Court of Appeals stated
that the basic issue of the case was whether the RTC of
Manila had jurisdiction over the subject matter of Civil Case
No. 97-81928.[22] It agreed with respondents disquisition that
petitioners cause of action in the complaint before the trial
Page 8 of 16
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court is inextricably linked and intertwined with the issue of
who are the legitimate officers of the USTFU, which issue was
then being litigated before the DOLE. The appellate court held
that Civil Case No. 97-81928 and Case No. NCR-OD-M-9610-
016 appear to be the same, with the observation that the civil
case merely grew out from the labor case. It also cited the
prohibition against the issuance of injunction in any case
involving or growing out of a labor dispute, unless otherwise
provided by law.[23] It added that it would have been more
appropriate for the RTC to determine whether it had
jurisdiction over the subject case before issuing the assailed
orders.[24] The dispositive portion of the decision reads:
WHEREFORE, premises considered, the petition is
hereby GRANTEDand the assailed order (dated March 3,
1997) and the writ of preliminary mandatory injunction
(dated March 5, 1997) SET ASIDEand the respondent judge
ordered to DISMISS Civil Case No. 97-81928.
SO ORDERED.[25] (Emphasis in the original.)
Petitioners Motion for Reconsideration[26] was denied.
Hence, this petition.
Petitioners assert that the RTC has jurisdiction to decide
Civil Case No. 97-81928, as the determination of the legality
and propriety of padlocking the doors of the USTFU office and
preventing the free and unhampered ingress to and egress
from the said premises, as alleged in the complaint, are
matters incapable of pecuniary estimation.[27] Moreover, they
claim that the civil case was premised on causes of action
belonging to the USTFU which are to be resolved not by
reference to the Labor Code or other labor relations statutes.
They stress that the causes of action involve a tortious act
and the corresponding claim for damages that are both
governed by the civil law and fall under the jurisdiction of
regular courts.[28]
Petitioners add that not all controversies involving
members of the same union are to be decided by the labor
tribunal. They add that in the instant case, the pendency of
the labor case should not militate against the civil case they
filed since the criminal and civil aspects of a violation of
Article 241 of the Labor Code[29]can be litigated separately
and independently from the administrative aspect of a breach
of the rights and conditions of membership.[30]
Anent the ruling of the Court of Appeals on the writ of
injunction issued by the trial court, petitioners state that Art.
254 of the Labor Code[31] on prohibition against injunctions is
not applicable to the instant case since the controversy
cannot be categorized as a labor dispute. They argue that the
injunction was called for considering that they have rights to
be protected and preserved, which however, were violated,
invaded and trampled upon by respondents through the acts
complained of.[32]
Petitioners claim that respondents were not denied their
day in court when the trial court did not resolve the issue of
jurisdiction before proceeding with the hearing on the
application for injunctive order. According to them,
respondents were given the chance to present their evidence
in support of their opposition to the injunction and TRO, but
respondents chose not to avail of this opportunity.[33]
Lastly, they add that respondents Gamilla, Cardenas and
Aseron had no right to act for and in behalf of the USTFU for
the following reasons, to wit: Gamillas claim to the USTFU
presidency was declared non-existent by the labor tribunals;
Cardenas was the chief of the security force in the university
and not a faculty member; and, Aseron was a Barangay
Chairman and not a member of the UST faculty.[34] Thus,
petitioners claim that USTFU was improperly included as
petitioner in the petition[35] before the Court of Appeals.
Accordingly, petitioners assert that the Court of Appeals
erred and gravely abused its discretion when:
I. It ruled that the regional trial court
had no jurisdiction over Civil Case No. 97-
81928;
II. It ruled that Civil Case No. 97-81928
is a labor dispute cognizable by the DOLE;
III. It granted the petition for certiorari
in CA-G.R. SP No. 43701, set aside the
orders issued by the trial court, and ordered
the dismissal of the civil case;
IV. It ruled that Art. 254 of the Labor Code
is applicable to the matters involved in Civil
Case No. 97-81928;
V. It ruled that respondents were denied
their day in court; and
VI. It ruled that the Motion for
Reconsideration filed in CA-G.R. SP No.
43701 was pro-forma.[36]
On the other hand, respondents maintain that the
regional trial court had no jurisdiction over the issue as to
who has the right to use the union office because the same is
inextricably linked and intertwined with the issue as to who
are the legitimate and duly elected officers of the USTFU,
which was then the subject of another case before the
DOLE.[37] Furthermore, respondents insist that the trial court
violated their right to due process when it refused to
determine the issue of jurisdiction before issuing its assailed
orders.[38] Respondents submit that the only issue in the
instant petition is whether the RTC has jurisdiction over Civil
Case No. 97-81928.[39]
There is merit in the petition but only in part.
Jurisdiction over a subject matter is conferred by law
and determined by the allegations in the complaint[40] and the
character of the relief sought, irrespective of whether the
plaintiff is entitled to all or some of the claims asserted
therein.[41]
Central to the assailed decision of the Court of Appeals
is its adoption of respondents argument that the issue in Civil
Case No. 97-81928 is inextricably linked and intertwined with
the issue as to who are the lawful officers of the USTFU,
which is within the exclusive jurisdiction of the Secretary of
Labor; and that the use of the union office is a mere incident
of the labor dispute. [42] Specifically, the Court of Appeals
held:
. . . .The two cases (Civil Case No. 97-81928 and Case No.
NCR-OD-M-9610-016) appear the same. While ostensibly, the
complaint filed with the trial court was branded injunction and
damages, the action challenged the legitimacy of petitioners
election as officers of the UST Faculty Union, with the plaintiff
therein (respondent herein) seeking to enjoin them
(petitioners herein) from claiming and acting as such (elected
officers of the union) and to have the election proceedings of
October 4, 1996 invalidated and declared null and void.
Taking note of plaintiffs (private respondents) previous moves
before the Department of Labor, Civil Case No. 97-81928
appear (sic) to have grown out therefromhence, said case
clearly falls outside of the competence of the trial court.[43]
Another reason that militates against the trial courts
assumption of jurisdiction over the case is Article 254 of the
Labor Code that states:
Art. 254. Injunction prohibited.No temporary or permanent
injunction or restraining order in any case involving or
growing out of labor disputes shall be issued by any court or
other entity, except as otherwise provided in Articles 218 and
264 of this Code.[44]
As pointed out by petitioners, the Court of Appeals
erroneously categorized the instant matter as a labor dispute.
Such labor dispute includes any controversy or matter
concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms and conditions
of employment, regardless of whether the disputants stand in
the proximate relation of employer and
employee.[45] Jurisdiction over labor disputes, including claims
for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations is vested in
Labor Arbiters and the National Labor Relations Commission
(NLRC).[46]
Page 9 of 16
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 On the other hand, an intra-union dispute refers to any
conflict between and among union members. It encompasses
all disputes or grievances arising from any violation of or
disagreement over any provision of the constitution and by-
laws of a union, not excepting cases arising from chartering
or affiliation of labor organizations or from any violation of the
rights and conditions of union membership provided for in the
Labor Code.[47] In contrast, an inter-union dispute refers to
any conflict between and among legitimate labor
organizations involving questions of representation for
purposes of collective bargaining; it includes all other conflicts
which legitimate labor organizations may have against each
other based on any violations of their rights as labor
organizations.[48] Like labor disputes, jurisdiction over intra-
union and inter-union disputes does not pertain to the regular
courts. It is vested in the Bureau of Labor Relations Divisions
in the regional offices of the Department of Labor.
Case No. NCR-OD-M-9610-016 entitled Eduardo J.
Mario, Jr., et al. v. Gil Gamilla, et al. before the BLR is neither
a labor nor an inter-union dispute. It is clearly an intra-union
dispute.
The case before the trial court, Civil Case No. 97-81928
entitled Eduardo J. Mario, Jr. et al. v. Gil Gamilla, et al.,[49] on
the other hand, is a simple case for damages, with an
accompanying application for injunction. The complaint
essentially bears the following allegations: that despite an
outstanding temporary restraining order prohibiting the
holding of an election of officers, respondent Gamilla and
others proceeded to hold a purported election; that there was
a case pending before the DOLE questioning the validity of
the supposed election; and, that respondent Gamilla with two
other persons (later learned to be respondents Aseron and
Cardenas) compelled the office messenger to vacate the
premises of the USTFU office, and thereafter padlocked the
room. Petitioners alleged respondents act of padlocking the
office was without lawful basis, and had prevented them from
entering the office premises, thereby denying them access to
personal effects, documents and records needed in the on-
going cases both in the DOLE and in the complaint a quo, and
ultimately precluding the union from serving its members.
Fundamentally, the civil case a quo seeks two reliefsone
is for the removal of the padlocks on the office door and
restraining respondents from blocking petitioners access to
the premises, while the other is for the recovery of moral and
exemplary damages.
Prior to the institution of the civil case, petitioners filed
before the Med-Arbitration Unit of the DOLE-NCR a petition
for prohibition, injunction with a prayer for preliminary
injunction and temporary restraining order against herein
respondents for the latters assumption of office as elected
USTFU officers. Specifically, they prayed that respondents be
enjoined from claiming to be the duly elected officers of the
union and from performing acts for and in behalf of the union.
The propriety of padlocking the unions office, the relief
sought by the petitioner in the civil case, is interwoven with
the issue of legitimacy of the assumption of office by the
respondents in light of the violation of the unions constitution
and by-laws, which was then pending before the Med-Arbiter.
Necessarily, therefore, the trial court has no jurisdiction over
the case insofar as the prayer for the removal of the padlocks
and the issuance of an injunctive writ is concerned.
It is a settled rule that jurisdiction, once acquired,
continues until the case is finally terminated.[50] The petition
with the Med-Arbiter was filed ahead of the complaint in the
civil case before the RTC. As such, when the petitioners filed
their complaint a quo, jurisdiction over the injunction and
restraining order prayed for had already been lodged with the
Med-Arbiter. The removal of padlocks and the access to the
office premises is necessarily included in petitioners prayer to
enjoin respondents from performing acts pertaining to union
officers and on behalf of the union. In observance of the
principle of adherence of jurisdiction, it is clear that the RTC
should not have exercised jurisdiction over the provisional
reliefs prayed for in the complaint. A review of the complaint
shows that petitioners disclosed the existence of the petition
pending before the Med-Arbiter and even attached a copy
thereof.[51] The trial court was also aware of the decision of
the Med-Arbiter dated 11 February 1997, declaring the
supposed union officers election void ab initio and ordering
respondents to cease and desist from discharging the duties
and functions of the legitimate officers of the USTFU. The trial
court even obtained a copy of the said decision two (2) days
after its promulgation.[52] Still, it continued the hearing on the
application for injunction and eventually issued the assailed
orders.
At this juncture, the Court notes that a key question in
this case has already been settled by the Court in its decision
in UST Faculty Union, et al. v. Bitonio, Jr., et al.[53] In that
case, it was ruled that the 04 October 1996 election was void
for having been conducted in violation of the unions
constitution and by-laws. Nevertheless, the complaint a
quo could not have validly proceeded at the time of its filing
of the said case due to petitioners lack of cause of action.
As to the alleged inclusion of the USTFU as petitioner in
the petition before the Court of Appeals, suffice it to say that
the right to use the unions name as well as to represent it has
been settled by our decision in UST Faculty Union, et al. v.
Bitonio, Jr., et al. Petitioners, as the rightful officers of the
USTFU, and not respondents, have the right to represent
USTFU in the proceedings.
Let us go back to the claim for damages before the
lower court. Art. 226 of the Labor Code provides, thus:
The Bureau of Labor Relations and the Labor Relations
Divisions in the regional offices of the Department of Labor
shall have original and exclusive authority to act, at their own
initiative or upon request of either or both parties, on all
inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-
management relations in all workplaces whether agricultural
or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance procedure
and/or voluntary arbitration.
Thus, unlike the NLRC which is explicitly vested with the
jurisdiction over claims for actual, moral, exemplary and
other forms of damages,[54] the BLR is not specifically
empowered to adjudicate claims of such nature arising from
intra-union or inter-union disputes. In fact, Art. 241 of the
Labor Code ordains the separate institution before the regular
courts of criminal and civil liabilities arising from violations of
the rights and conditions of union membership. The Court has
consistently held that where no employer-employee exists
between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes,
or any collective bargaining agreement, it is the regional trial
court that has jurisdiction.[55]
Administrative agencies are tribunals of limited
jurisdiction and as such, can exercise only those powers
which are specifically granted to them by their enabling
statutes. Consequently, matters over which they are not
granted authority are beyond their competence.[56] While the
trend is towards vesting administrative bodies with the power
to adjudicate matters coming under their particular
specialization, to ensure a more knowledgeable solution of the
problems submitted to them, this should not deprive the
courts of justice their power to decide ordinary cases in
accordance with the general laws that do not require any
particular expertise or training to interpret and apply.[57] In
their complaint in the civil case, petitioners do not seek any
relief under the Labor Code but the payment of a sum of
money as damages on account of respondents alleged
tortuous conduct. The action is within the realm of civil law
and, hence, jurisdiction over the case belongs to the regular
courts.[58]
WHEREFORE, the Petition is hereby GRANTED IN PART.
The Decision of the Court of Appeals setting aside the Order
dated 3 March 1997 and the writ of preliminary mandatory
injunction dated 5 March 1997 is hereby AFFIRMED. The case
is REMANDED to the trial court for further proceedings in
accordance with this Decision. No costs.
SO ORDERED.
[G.R. No. 113638. November 16, 1999]
Page 10 of 16
Alternative Dispute Resolution Cases for Group 5
A. D. GOTHONG MANUFACTURING CORPORATION
EMPLOYEES UNION-ALU, petitioner, vs. HON.
NIEVES CONFESOR, SECRETARY, DEPARTMENT
OF LABOR AND EMPLOYMENT and A. D.
GOTHONG MANUFACTURING CORPORATION,
Subangdaku, Mandaue City, respondents.
DECISION
GONZAGA REYES, J.:
_
Petitioner A. D. Gothong Manufacturing Corporation
Employees Union-ALU seeks to reverse and set aside the
decision of the Secretary of Labor promulgated on September
30, 1993 affirming in toto the Resolution of Mediator-Arbiter,
Achilles V. Manit declaring Romulo Plaza and Paul Michael Yap
as rank- and-file employees of A. D. Gothong Manufacturing
Corporation.
On May 12, 1993, petitioner A. D. Gothong
Manufacturing Corporation Employees Union-ALU (Union) filed
a petition for certification election in its bid to represent the
unorganized regular rank-and-file employees of respondent A.
D. Gothong Manufacturing Corporation (Company) excluding
its office staff and personnel. Respondent Company opposed
the petition as it excluded office personnel who are rank and
file employees. In the inclusion-exclusion proceedings, the
parties agreed to the inclusion of Romulo Plaza and Paul
Michael Yap in the list of eligible voters on condition that their
votes are considered challenged on the ground that they were
supervisory employees.
The certification election was conducted as scheduled
and yielded the following results:
YES - - - - - - - - - - - - - - - 20
NO - - - - - - - - - - - - - - - - 19
Spoiled - - - - - - - - - - - - - - 0
Challenged - - -- - - - - - - - _2
Total votes cast - - - - - - - -41
Both Plaza and Yap argued that they are rank-and-file
employees. Plaza claimed that he was a mere salesman based
in Cebu, and Yap argued that he is a mere expediter whose
job includes the facilitation of the processing of the bills of
lading of all intended company shipments.
Petitioner Union maintains that both Plaza and Yap are
supervisors who are disqualified to join the proposed
bargaining unit for rank-and-file employees. In support of its
position paper, the petitioner Union submitted the following:
1. Joint affidavit of Ricardo Caete, et al. which
alleges that Michael Yap is a supervisory
employee of A. D. Gothong Manufacturing
Corporation and can effectively recommend for
their suspension/dismissal.
2. Affidavit of Pedro Diez which alleges that the
affiant is a supervisor in the production
department of A. D. Gothong Manufacturing
Corporation; that the affiant knows the
challenged voters because they are also
supervisory employees of the same
corporation; that the challenged voters used to
attend the quarterly meeting of the staff
employees of A. D. Gothong Manufacturing
Corporation;
3. Photocopy of the memorandum dated January 4,
1991 regarding the compulsory attendance of
department heads/supervisors to the regular
quarterly meeting of all regular workers of A. D.
Gothong Manufacturing Corporation on January
13, 1991. Appearing therein are the names
ROMULO PLAZA and MICHAEL YAP;
4. A not-so-legible photocopy of a memorandum
dated March 1, 1989 wherein the name ROMY
PLAZA is mentioned as the acting OIC of GT
Marketing in Davao; and
5. Photocopy of the minutes of the regular
quarterly staff meeting on August 13, 1989 at
Mandaue City wherein Michael Yap is mentioned
as a shipping assistant and a newly hired
member of the staff.[1]
The Med-Arbiter declared that the challenged voters Yap
and Plaza are rank-and-file employees.
Petitioner Union appealed to the Secretary of Labor
insisting that Yap and Plaza are supervisor and manager
respectively of the corporation and are prohibited from joining
the proposed bargaining unit of rank-and-file employees. In
an attempt to controvert the arguments of petitioner,
respondent Company stressed that Pacita Gothong is the
companys corporate secretary and not Baby L. Siador, who
signed the minutes of the meeting submitted in
evidence. Respondent also argued that Romulo Plaza could
not qualify as a manager of the Davao Branch the opening of
which branch never materialized.
Respondent Secretary of Labor affirmed the finding of
the Med-Arbiter. Motion for Reconsideration of the above
resolution having been denied, petitioner Union appeals to
this Court by petition for review on certiorari alleging the
following grounds:
I. THAT THE SECRETARY OF LABOR AND
EMPLOYMENT CLEARLY COMMITTED
MISAPPREHENSION OF FACTS/EVIDENCE AND
IF IT WERE NOT FOR SUCH MISAPPREHENSION
IT WOULD HAVE ARRIVED AT DIFFERENT
CONCLUSION FAVORABLE TO PETITIONER.
II. THAT THE SECRETARY OF LABOR AND
EMPLOYMENT ACTED WITH GRAVE ABUSE OF
DISCRETION AND CONTRARY TO LAW IN
AFFIRMING IN TOTO THE DECISION OF
HONORABLE ACHILLES V. MANIT, DEPARTMENT
OF LABOR AND EMPLOYMENT, REGIONAL
OFFICE No. 7, CEBU CITY IN DENYING
PETITIONERS MOTION FOR
RECONSIDERATION.[2]
We find no merit in the instant petition.
The Labor Code recognizes two (2) principal groups of
employees, namely, the managerial and the rank and file
groups. Article 212 (m) of the Code provides:
(m) Managerial employee is one who is vested with powers or
prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are
those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not
falling within any of the above definitions are considered
rank-and-file employees for purposes of this Book.
Under Rule I, Section 2 (c), Book III of the
Implementing Rules of the Labor Code, to be a member of
managerial staff, the following elements must concur or co-
exist, to wit: (1) that his primary duty consists of the
performance of work directly related to management policies;
(2) that he customarily and regularly exercises discretion and
independent judgment in the performance of his functions;
(3) that he regularly and directly assists in the management
of the establishment; and (4) that he does not devote more
than twenty percent of his time to work other than those
described above.
In the case of Franklin Baker Company of the Philippines
vs. Trajano[3], this Court stated:
The test of supervisory or managerial status depends on
whether a person possess authority to act in the interest of
his employer in the matter specified in Article 212 (k) of the
Labor Code and Section 1 (m) of its Implementing Rules and
whether such authority is not merely routinary or clerical in
nature, but requires the use of independent judgment. Thus,
where such recommendatory powers as in the case at bar,
are subject to evaluation, review and final action by the
Page 11 of 16
Alternative Dispute Resolution Cases for Group 5
department heads and other higher executives of the
company, the same, although present, are not exercise of
independent judgment as required by law.[4]
It has also been established that in the determination of
whether or not certain employees are managerial employees,
this Court accords due respect and therefore sustains the
findings of fact made by quasi-judicial agencies which are
supported by substantial evidence considering their expertise
in their respective fields.[5]
The petition has failed to show reversible error in the
findings of the Med-Arbiter and the Secretary of the
Department of Labor.
In ruling against petitioner Union, the Med-Arbiter ruled
that the petitioner Union failed to present concrete and
substantial evidence to establish the fact that challenged
voters are either managerial or supervising employees; the
Med-Arbiter evaluated the evidence as follows:
The said joint affidavit of Ricardo Caete, et al. and that of
Pedro Diez merely tagged the challenged voters as
supervisors, but nothing is mentioned about their respective
duties, powers and prerogatives as employees which would
have indicated that they are indeed supervisory
employees. There is no statement about an instance where
the challenged voters effectively recommended such
managerial action which required the use of independent
judgment.
The aforementioned documents have not been properly
identified which renders them inadmissible in evidence. But,
granting that they are the exact replica of a genuine and
authentic original copy, there is nothing in them which
specifically and precisely tells that the challenged voters can
exercise the powers and prerogatives to effectively
recommended such managerial actions which require the use
of independent judgment.[6]
In upholding the above findings, the respondent
Secretary of Labor rationalized:
Based on the foregoing, Romulo Plaza and Paul Michael Yap
can not qualify as managerial and supervisory employees,
respectively, because there is nothing in the documentary
evidence offered by herein petitioner-appellant showing that
they are actually conferred or actually exercising the said
managerial/supervisory attributes.
In the case of Romulo Plaza, we note that indeed there is
nothing in the minutes of the staff meeting held on 05 March
1993, particularly on the report of the Sales Department,
indicating that said appellee had been exercising managerial
prerogatives by hiring workers and issuing a check for the
payment of rentals of a warehouse, relative to the company
branch in Davao City. The imputation on the exercise of the
said prerogative is misleading if not malicious because a plain
reading of that portion of the report shows in clear and simple
language that one who made the said hiring and payment
was no other than Mr. John Chua, the Sales Manager. The
only instance when the name of Romy Plaza was mentioned
in the said report was in reference to his designation as an
OIC of the Davao City Branch while all the aspect of the
creation of the said branch is awaiting final approval by the
Company president and general manager (p. 197, last
paragraph, records). The setting up of said branch however,
did not materialize, as evidenced by the certification issued by
the Revenue District Office and Office of the Mayor in Davao
City (pp. 198-199, records).
Likewise, evidence pinpointing that Paul Michael Yap is a
supervisory employee is altogether lacking. The fact that he
was designated as shipping assistant/expediter is of no
moment, because titles or nomenclatures attached to the
position is not controlling.
Finally, the job descriptions extant on records vividly exhibit
no trace of the performance of managerial or supervisory
functions (pp. 124-126, records).[7]
In this petition, petitioner Union claims that the
documentary evidence was misapprehended by public
respondent. Petitioner Union reiterates that: (1) in minutes of
the staff meeting of respondent Company on August 13,
1989, duly signed by the President Albino Gothong and
attested by Jose F. Loseo presiding officer/VP and Gertrudo
Lao, Assistant General Manager, Paul Michael Yap was listed
as one of the staff; (2) in the regular quarterly meeting on
January 4, 1991, the names of Yap and Plaza are listed under
the heading Department Heads/Supervisors duly signed by
President/General Manager Albino Gothong and Asst. General
Manager Gertrudo Lao; and (3) in the staff meeting of March
5, 1993, Plaza was assigned as officer-in-charge of the
companys branch in Davao.
We find no cogent reason to disturb the finding of the
Med-Arbiter and the Secretary of Labor that the copies of the
minutes presented in evidence do not prove that Yap and
Plaza were managerial or supervisory employees. We have
examined the documentary evidence, and nowhere is there a
statement therein about any instance where the challenged
voters effectively recommended any managerial action which
would require the use of independent judgment. The last
piece of evidence was not discussed by the Med-Arbiter;
however a perusal thereof would show that while one J. Chua
of the Sales Department reported that Romy Plaza was in
Davao right now acting as OIC, the same document states
that the Davao operations still had to be finalized.On the
other hand, the claim of respondent Company that Plaza is
the head of the Davao branch is belied by the certification of
the City Treasurer of Davao and of the Bureau of Internal
Revenue of Mandaue City that the plan to open a branch in
Davao City did not materialize.[8]
The reliance of petitioner on the affidavit of Jose Loseo,
Personnel Manager, that Plaza and Yap were hired by him as
department head and supervisor of the respondent Company
cannot be sustained in light of the affidavit of said Loseo
dated September 28, 1993, attesting that he was forced to
sign the earlier memorandum on the job assignment of Yap
and Plaza. This affidavit is sought to be discarded by
respondent Company for being perjurious and ill-
motivated.[9] Petitioner Union however reiterates that Loseos
affidavit is corroborated by the other public documents
indicating that Plaza and Yap are not rank-and-file
employees.[10]
The issue raised herein is basically one of fact: whether
in the light of the evidence submitted by both parties, Plaza
and Yap are managerial employees or rank-and-file
employees.
This Court is not a trier of facts. As earlier stated, it is
not the function of this Court to examine and evaluate the
probative value of all evidence presented to the concerned
tribunal which formed the basis of its impugned decision or
resolution. Following established precedents, it is
inappropriate to review that factual findings of the Med-
Arbiter regarding the issue whether Romulo Plaza and Paul
Michael Yap are or are not rank-and-file employees
considering that these are matters within their technical
expertise.[11] They are binding on this Court as we are
satisfied that they are supported by substantial evidence, and
we find no capricious exercise of judgment warranting
reversal by certiorari.
WHEREFORE, the petition is denied for lack of merit.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 147080. April 26, 2005
CAPITOL MEDICAL CENTER, INC., Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, JAIME
IBABAO, JOSE BALLESTEROS, RONALD CENTENO,
NARCISO SARMIENTO, EDUARDO CANAVERAL,
SHERLITO DELA CRUZ, SOFRONIO COMANDAO,
MARIANO GALICIA, RAMON MOLOD, CARMENCITA
SARMIENTO, HELEN MOLOD, ROSA COMANDAO,
ANGELITO CUIZON, ALEX MARASIGAN, JESUS CEDRO,
ENRICO ROQUE, JAY PERILLA, HELEN MENDOZA, MARY
GLADYS GEMPEROSO, NINI BAUTISTA, ELENA
MACARUBBO, MUSTIOLA SALVACION DAPITO,
ALEXANDER MANABE, MICHAEL EUSTAQUIO, ROSE
Page 12 of 16
Alternative Dispute Resolution Cases for Group 5
AZARES, FERNANDO MANZANO, HENRY VERA CRUZ,
CHITO MENDOZA, FREDELITA TOMAYAO, ISABEL
BRUCAL, MAHALKO LAYACAN, RAINIER MANACSA,
KAREN VILLARENTE, FRANCES ACACIO, LAMBERTO
CONTI, LORENA BEACH, JUDILAH RAVALO, DEBORAH
NAVE, MARILEN CABALQUINTO, EMILIANA RIVERA,
MA. ROSARIO URBANO, ROWENA ARILLA, CAPITOL
MEDICAL CENTER EMPLOYEES ASSOCIATION-AFW,
GREGORIO DEL PRADO, ARIEL ARAJA, and JESUS STA.
BARBARA, JR., Respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review of the Decision1 of the Court of
Appeals (CA) in CA-G.R. SP No. 57500 and its Resolution
denying the motion for reconsideration thereof.
The Antecedents2
Whether the respondent Capitol Medical Center Employees
Association-Alliance of Filipino Workers (the Union, for
brevity) was the exclusive bargaining agent of the rank-and-
file employees of the petitioner Capitol Medical Center, Inc.
had been the bone of contention between the Union and the
petitioner. The petitioner’s refusal to negotiate for a collective
bargaining agreement (CBA) resulted in a union-led strike on
April 15, 1993.
The Union had to contend with another union – the Capitol
Medical Center Alliance of Concerned Employees (CMC-ACE) –
which demanded for a certification election among the rank-
and-file employees of the petitioner. Med-Arbiter Brigida
Fadrigon granted the petition, and the matter was appealed
to the Secretary of Labor and Employment (SOLE).
Undersecretary Bienvenido E. Laguesma rendered a
Resolution on November 18, 1994 granting the appeal. He,
likewise, denied the motion filed by the petitioner and the
CMC-ACE. The latter thereafter brought the matter to the
Court which rendered judgment on February 4, 1997
affirming the resolution of Undersecretary Laguesma, thus:
1. Dismissing the petition for certification election filed by the
Capitol Medical Center Alliance of Concerned Employees-
United Filipino Services Workers for lack of merit; and
2. Directing the management of the Capitol Medical Center to
negotiate a CBA with the Capitol Medical Center Employees
Association-Alliance of Filipino Workers, the certified
bargaining agent of the rank-and-file employees.3
The decision of the Court became final and executory.
Thereafter, in a Letter dated October 3, 1997 addressed to
Dr. Thelma N. Clemente, the President and Director of the
petitioner, the Union requested for a meeting to discuss
matters pertaining to a negotiation for a CBA, conformably
with the decision of the Court.4 However, in a Letter to the
Union dated October 10, 1997, Dr. Clemente rejected the
proposed meeting, on her claim that it was a violation of
Republic Act No. 6713 and that the Union was not a
legitimate one. On October 15, 1997, the petitioner filed a
Petition for the Cancellation of the Union’s Certificate of
Registration with the Department of Labor and Employment
(DOLE) on the following grounds:
3) Respondent has failed for several years to submit annually
its annual financial statements and other documents as
required by law. For this reason, respondent has long lost its
legal personality as a union.
4) Respondent also engaged in a strike which has been
declared illegal by the National Labor Relations Commission.5
Apparently unaware of the petition, the Union reiterated its
proposal for CBA negotiations in a Letter dated October 16,
1997 and suggested the date, time and place of the initial
meeting. The Union further reiterated its plea in another
Letter6 dated October 28, 1997, to no avail.
Instead of filing a motion with the SOLE for the enforcement
of the resolutions of Undersecretary Laguesma as affirmed by
this Court, the Union filed a Notice of Strike on October 29,
1997 with the National Conciliation and Mediation Board
(NCMB), serving a copy thereof to the petitioner. The Union
alleged as grounds for the projected strike the following acts
of the petitioner: (a) refusal to bargain; (b) coercion on
employees; and (c) interference/ restraint to self-
organization.7
A series of conferences was conducted before the NCMB
(National Capital Region), but no agreement was reached. On
November 6, 1997, the petitioner even filed a Letter with the
Board requesting that the notice of strike be dismissed;8 the
Union had apparently failed to furnish the Regional Branch of
the NCMB with a copy of a notice of the meeting where the
strike vote was conducted.
On November 20, 1997, the Union submitted to the NCMB the
minutes9 of the alleged strike vote purportedly held on
November 10, 1997 at the parking lot in front of the
petitioner’s premises, at the corner of Scout Magbanua Street
and Panay Avenue, Quezon City. It appears that 178 out of
the 300 union members participated therein, and the results
were as follows: 156 members voted to strike; 14 members
cast negative votes; and eight votes were spoiled.10
On November 28, 1997, the officers and members of the
Union staged a strike. Subsequently, on December 1, 1997,
the Union filed an ex parte motion with the DOLE, praying for
its assumption of jurisdiction over the dispute. The Union
likewise prayed for the imposition of appropriate legal
sanctions, not limited to contempt and other penalties,
against the hospital director/president and other responsible
corporate officers for their continuous refusal, in bad faith, to
bargain collectively with the Union, to adjudge the same
hospital director/president and other corporate officers guilty
of unfair labor practices, and for other just, equitable and
expeditious reliefs in the premises.11
On December 4, 1997, the SOLE issued an Order, assuming
jurisdiction over the ongoing labor dispute. The decretal
portion of the order reads:
WHEREFORE, this Office now assumes jurisdiction over the
labor disputes at Capitol Medical Center pursuant to Article
263(g) of the Labor Code, as amended. Consequently, all
striking workers are directed to return to work within twenty-
four (24) hours from the receipt of this Order and the
management to resume normal operations and accept back
all striking workers under the same terms and conditions
prevailing before the strike. Further, parties are directed to
cease and desist from committing any act that may
exacerbate the situation.
Moreover, parties are hereby directed to submit within 10
days from receipt of this Order proposals and counter-
proposals leading to the conclusion of the collective
bargaining agreements in compliance with aforementioned
Resolution of the Office as affirmed by the Supreme Court.
SO ORDERED.12
In obedience to the order of the SOLE, the officers and
members of the Union stopped their strike and returned to
work.
For its part, the petitioner filed a petition13 to declare the
strike illegal with the National Labor Relations Commission
(NLRC), docketed as NLRC NCR Case No. 00-12-08644-97. In
its position paper, the petitioner appended the affidavit of
Erwin Barbacena, the overseer of the property across the
hospital which was being used as a parking lot, at the corner
of Scout Magbanua Street and Panay Avenue, Quezon City.
Also included were the affidavits of Simon J. Tingzon and
Reggie B. Barawid, the petitioner’s security guards assigned
in front of the hospital premises. They attested to the fact
that no secret balloting took place at the said parking lot from
6:00 a.m. to 7:00 p.m. of November 10, 1997.14 The
petitioner also appended the affidavit of Henry V. Vera Cruz,
who alleged that he was a member of the Union and had
discovered that signatures on the Statements of Cash Receipt
Page 13 of 16
Alternative Dispute Resolution Cases for Group 5
Over Disbursement submitted by the Union to the DOLE
purporting to be his were not his genuine signatures;15 the
affidavits of 17 of its employees, who declared that no formal
voting was held by the members of the Union on the said
date, were also submitted. The latter employees also declared
that they were not members of any union, and yet were
asked to sign documents purporting to be a strike vote
attendance and unnumbered strike vote ballots on different
dates from November 8 to 11, 1997.
In their position paper, the respondents appended the joint
affidavit of the Union president and those members who
alleged that they had cast their votes during the strike vote
held on November 10, 1997.16
In the meantime, on September 30, 1998, the Regional
Director of the DOLE rendered a Decision denying the petition
for the cancellation of the respondent Union’s certificate of
registration. The decision was affirmed by the Director of the
Bureau of Labor Relations on December 29, 1998.
In a parallel development, Labor Arbiter Facundo L. Leda
rendered a Decision on December 23, 1998 in NLRC NCR
Case No. 00-12-08644-97 in favor of the petitioner, and
declared the strike staged by the respondents illegal.
The fallo of the decision reads:
1. Declaring as illegal the strike staged by the respondents
from November 28, 1997 to December 5, 1997;
2. Declaring respondent Jaime Ibabao, in his capacity as
union president, the other union officers, and respondents
Ronald Q. Centeno, Michael Eustaquio and Henry Vera Cruz to
have lost their employment status with petitioner; and
3. Ordering the above respondents to pay, jointly and
severally, petitioner the amount of Two Hundred Thousand
Pesos (₱200,000.00) by way of damages.17
The Labor Arbiter ruled that no voting had taken place on
November 10, 1997; moreover, no notice of such voting was
furnished to the NCMB at least twenty-four (24) hours prior to
the intended holding of the strike vote. According to the Labor
Arbiter, the affidavits of the petitioner’s 17 employees who
alleged that no strike vote was taken, and supported by the
affidavit of the overseer of the parking lot and the security
guards, must prevail as against the minutes of the strike vote
presented by the respondents. The Labor Arbiter also held
that in light of Article 263(9) of the Labor Code, the
respondent Union should have filed a motion for a writ of
execution of the resolution of Undersecretary Laguesma which
was affirmed by this Court instead of staging a strike.
The respondents appealed the decision to the NLRC which
rendered a Decision18 on June 14, 1999, granting their appeal
and reversing the decision of the Labor Arbiter. The NLRC also
denied the petitioner’s petition to declare the strike illegal. In
resolving the issue of whether the union members held a
strike vote on November 10, 1997, the NLRC ruled as follows:
We find untenable the Labor Arbiter’s finding that no actual
strike voting took place on November 10, 1997, claiming that
this is supported by the affidavit of Erwin Barbacena, the
overseer of the parking lot across the hospital, and the sworn
statements of nineteen (19) (sic) union members. While it is
true that no strike voting took place in the parking lot which
he is overseeing, it does not mean that no strike voting ever
took place at all because the same was conducted in the
parking lot immediately/directly fronting, not across, the
hospital building (Annexes "1-J," "1-K" to "1-K-6"). Further, it
is apparent that the nineteen (19) (sic) hospital employees,
who recanted their participation in the strike voting, did so
involuntarily for fear of loss of employment, considering that
their Affidavits are uniform and pro forma (Annexes "H-2" to
"H-19").19
The NLRC ruled that under Section 7, Rule XXII of DOLE
Order No. 9, Series of 1997, absent a showing that the NCMB
decided to supervise the conduct of a secret balloting and
informed the union of the said decision, or that any such
request was made by any of the parties who would be
affected by the secret balloting and to which the NCMB
agreed, the respondents were not mandated to furnish the
NCMB with such notice before the strike vote was
conducted.20
The petitioner filed a motion for the reconsideration of the
decision, but the NLRC denied the said motion on September
30, 1999.21
The petitioner filed a petition for certiorari with the CA
assailing the decision and resolution of the NLRC on the
following allegation:
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION (NLRC) COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION, ACTED CAPRICIOUSLY, AND CONTRAVENED
THE LAW AND ESTABLISHED JURISPRUDENCE IN REVERSING
THE LABOR ARBITER’S DECISION DATED DECEMBER 23,
1998 (ANNEX "E") AND IN UPHOLDING THE LEGALITY OF THE
STRIKE STAGED BY PRIVATE RESPONDENTS FROM
NOVEMBER 28, 1997 TO DECEMBER 5, 1997.22
On September 29, 2000, the CA rendered judgment
dismissing the petition and affirming the assailed decision and
resolution of the NLRC.
The petitioner filed the instant petition for review
on certiorari under Rule 45 of the Rules of Court on the
following ground:
THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING
THE NLRC’S FINDING THAT RESPONDENTS COMPLIED WITH
THE LEGAL REQUIREMENTS FOR STAGING THE SUBJECT
STRIKE.23
The petitioner asserts that the NLRC and the CA erred in
holding that the submission of a notice of a strike vote to the
Regional Branch of the NCMB as required by Section 7, Rule
XXII of the Omnibus Rules Implementing the Labor Code, is
merely directory and not mandatory. The use of the word
"shall" in the rules, the petitioner avers, indubitably indicates
the mandatory nature of the respondent Union’s duty to
submit the said notice of strike vote.
The petitioner contends that the CA erred in affirming the
decision of the NLRC which declared that the respondents
complied with all the requirements for a lawful strike. The
petitioner insists that, as gleaned from the affidavits of the 17
union members and that of the overseer, and contrary to the
joint affidavit of the officers and some union members, no
meeting was held and no secret balloting was conducted on
November 10, 1997.
The petitioner faults the CA and the NLRC for holding that a
meeting for a strike vote was held on the said date by the
respondents, despite the fact that the NLRC did not conduct
an ocular inspection of the area where the respondent’s
members allegedly held the voting. The petitioner also points
out that it adduced documentary evidence in the form of
affidavits executed by 17 members of the respondent union
which remained unrebutted. The petitioner also posits that
the CA and the NLRC erred in reversing the finding of the
Labor Arbiter; furthermore, there was no need for the
respondent union to stage a strike on November 28, 1997
because it had filed an urgent motion with the DOLE for the
enforcement and execution of the decision of this Court in
G.R. No. 118915.
The petition is meritorious.
We agree with the petitioner that the respondent Union failed
to comply with the second paragraph of Section 10, Rule XXII
of the Omnibus Rules of the NLRC which reads:
Section 10. Strike or lockout vote. – A decision to declare a
strike must be approved by a majority of the total union
membership in the bargaining unit concerned obtained by
secret ballot in meetings or referenda called for the purpose.
A decision to declare a lockout must be approved by a
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majority of the Board of Directors of the employer,
corporation or association or the partners obtained by a
secret ballot in a meeting called for the purpose.
The regional branch of the Board may, at its own initiative or
upon the request of any affected party, supervise the conduct
of the secret balloting. In every case, the union or the
employer shall furnish the regional branch of the Board and
notice of meetings referred to in the preceding paragraph at
least twenty-four (24) hours before such meetings as well as
the results of the voting at least seven (7) days before the
intended strike or lockout, subject to the cooling-off period
provided in this Rule.
Although the second paragraph of Section 10 of the said Rule
is not provided in the Labor Code of the Philippines,
nevertheless, the same was incorporated in the Omnibus
Rules Implementing the Labor Code and has the force and
effect of law.24
Aside from the mandatory notices embedded in Article 263,
paragraphs (c) and (f) of the Labor Code, a union intending to
stage a strike is mandated to notify the NCMB of the meeting
for the conduct of strike vote, at least twenty-four (24) hours
prior to such meeting. Unless the NCMB is notified of the
date, place and time of the meeting of the union members for
the conduct of a strike vote, the NCMB would be unable to
supervise the holding of the same, if and when it decides to
exercise its power of supervision. In National Federation of
Labor v. NLRC,25 the Court enumerated the notices required
by Article 263 of the Labor Code and the Implementing Rules,
which include the 24-hour prior notice to the NCMB:
1) A notice of strike, with the required contents, should be
filed with the DOLE, specifically the Regional Branch of the
NCMB, copy furnished the employer of the union;
2) A cooling-off period must be observed between the filing of
notice and the actual execution of the strike thirty (30) days
in case of bargaining deadlock and fifteen (15) days in case of
unfair labor practice. However, in the case of union busting
where the union’s existence is threatened, the cooling-off
period need not be observed.
… the hospital, and security guards Simon Tingzon and Reggie
4) Before a strike is actually commenced, a strike vote should
be taken by secret balloting, with a 24-hour prior notice to
NCMB. The decision to declare a strike requires the secret-
ballot approval of majority of the total union membership in
the bargaining unit concerned.
5) The result of the strike vote should be reported to the
NCMB at least seven (7) days before the intended strike or
lockout, subject to the cooling-off period.
A union is mandated to notify the NCMB of an impending
dispute in a particular bargaining unit via a notice of strike.
Thereafter, the NCMB, through its conciliator-mediators, shall
call the parties to a conference at the soonest possible time in
order to actively assist them in exploring all possibilities for
amicable settlement. In the event of the failure in the
conciliation/mediation proceedings, the parties shall be
encouraged to submit their dispute for voluntary arbitration.
However, if the parties refuse, the union may hold a strike
vote, and if the requisite number of votes is obtained, a strike
may ensue. The purpose of the strike vote is to ensure that
the decision to strike broadly rests with the majority of the
union members in general and not with a mere minority, and
at the same time, discourage wildcat strikes, union bossism
and even corruption.26 A strike vote report submitted to the
NCMB at least seven days prior to the intended date of strike
ensures that a strike vote was, indeed, taken. In the event
that the report is false, the seven-day period affords the
members an opportunity to take the appropriate remedy
before it is too late.27 The 15 to 30 day cooling-off period is
designed to afford the parties the opportunity to amicably
resolve the dispute with the assistance of the NCMB
conciliator/mediator,28 while the seven-day strike ban is
intended to give the DOLE an opportunity to verify whether
the projected strike really carries the imprimatur of the
majority of the union members.29
The requirement of giving notice of the conduct of a strike
vote to the NCMB at least 24 hours before the meeting for the
said purpose is designed to (a) inform the NCMB of the intent
of the union to conduct a strike vote; (b) give the NCMB
ample time to decide on whether or not there is a need to
supervise the conduct of the strike vote to prevent any acts of
violence and/or irregularities attendant thereto; and (c)
should the NCMB decide on its own initiative or upon the
request of an interested party including the employer, to
supervise the strike vote, to give it ample time to prepare for
the deployment of the requisite personnel, including peace
officers if need be. Unless and until the NCMB is notified at
least 24 hours of the union’s decision to conduct a strike vote,
and the date, place, and time thereof, the NCMB cannot
determine for itself whether to supervise a strike vote
meeting or not and insure its peaceful and regular conduct.
The failure of a union to comply with the requirement of the
giving of notice to the NCMB at least 24 hours prior to the
holding of a strike vote meeting will render the subsequent
strike staged by the union illegal.
In this case, the respondent Union failed to comply with the
24-hour prior notice requirement to the NCMB before it
conducted the alleged strike vote meeting on November 10,
1997. As a result, the petitioner complained that no strike
vote meeting ever took place and averred that the strike
staged by the respondent union was illegal.
Conformably to Article 264 of the Labor Code of the
Philippines30 and Section 7, Rule XXII of the Omnibus Rules
Implementing the Labor Code,31 no labor organization shall
declare a strike unless supported by a majority vote of the
members of the union obtained by secret ballot in a meeting
called for that purpose. The requirement is mandatory and
the failure of a union to comply therewith renders the strike
illegal.32 The union is thus mandated to allege and prove
compliance with the requirements of the law.
In the present case, there is a divergence between the factual
findings of the Labor Arbiter, on the one hand, and the NLRC
and the CA, on the other, in that the Labor Arbiter found and
declared in his decision that no secret voting ever took place
in the parking lot fronting the hospital on November 10, 1997
by and among the 300 members of the respondent Union.
Erwin Barbacena, the overseer of the only parking lot fronting
Barawid, declared in their respective affidavits that no secret
voting ever took place on November 10, 1997; 17 employees
of the petitioner also denied in their respective statements
that they were not members of the respondent Union, and
were asked to merely sign attendance papers and
unnumbered votes. The NLRC and the CA declared in their
respective decisions that the affidavits of the petitioner’s 17
employees had no probative weight because the said
employees merely executed their affidavits out of fear of
losing their jobs. The NLRC and the CA anchored their
conclusion on their finding that the affidavits of the
employees were uniform and pro forma.
We agree with the finding of the Labor Arbiter that no secret
balloting to strike was conducted by the respondent Union on
November 10, 1997 at the parking lot in front of the hospital,
at the corner of Scout Magbanua Street and Panay Avenue,
Quezon City. This can be gleaned from the affidavit of
Barbacena and the joint affidavit of Tingzon and Barawid,
respectively:
1. That I am working as an overseer of a parking lot owned
by Mrs. Madelaine Dionisio and located right in front of the
Capitol Medical Center, specifically at the corner of Scout
Magbanua Street and Panay Avenue, Quezon City;
2. That on November 10, 1997, during my entire tour of duty
from 6:00 a.m. to 6:00 p.m., no voting or election was
conducted in the aforementioned parking space for employees
of the Capitol Medical Center and/or their guests, or by any
other group for that matter.33
…
1. That I, Simon J. Tingzon, am a security officer of Veterans
Philippine Scout Security Agency (hereinafter referred to as
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VPSSA), assigned, since July 1997 up to the present, as
Security Detachment Commander at Capitol Medical Center
(hereinafter referred to as CMC) located at Scout Magbanua
corner Panay Avenue, Quezon City;

2. That my (Tingzon) functions as such include over-all in

charge of security of all buildings and properties of CMC, and
roving in the entire premises including the parking lots of all
the buildings of CMC;

3. That I, Reggie B. Barawid, am a security guard of VPSSA,

assigned, since June 1997 up to the present, as security
guard at CMC;

4. That my (Barawid) functions as such include access control

of all persons coming in and out of CMC’s buildings and
properties. I also sometimes guard the parking areas of CMC;

5. That on November 10, 1997, both of us were on duty at

CMC from 7:00 a.m. to 7:00 p.m., with me (Barawid)
assigned at the main door of the CMC’s Main Building along
Scout Magbanua St.;

6. That on said date, during our entire tour of duty, there

was no voting or election conducted in any of the four parking
spaces for CMC personnel and guests.34

The allegations in the foregoing affidavits belie the claim of

the respondents and the finding of the NLRC that a secret
balloting took place on November 10, 1997 in front of the
hospital at the corner of Scout Magbanua Street and Panay
Avenue, Quezon City. The respondents failed to prove the
existence of a parking lot in front of the hospital other than
the parking lot across from it. Indeed, 17 of those who
purportedly voted in a secret voting executed their separate
affidavits that no secret balloting took place on November 10,
1997, and that even if they were not members of the
respondent Union, were asked to vote and to sign attendance
papers. The respondents failed to adduce substantial evidence
that the said affiants were coerced into executing the said
affidavits. The bare fact that some portions of the said
affidavits are similarly worded does not constitute substantial
evidence that the petitioner forced, intimidated or coerced the
affiants to execute the same.

IN LIGHT OF ALL THE FOREGOING, the petition is

GRANTED. The Decisions of the Court of Appeals and NLRC
are SET ASIDE AND REVERSED. The Decision of the Labor
Arbiter is REINSTATED. No costs.

SO ORDERED.

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