LABOR LAW REVIEW

CASE #1

CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., petitioner, vs. UE

MONTHLY ASSOCIATES, UEAMI WORKERS UNION NFL AND ALFREDO BASI,
respondents.
G.R. No. 181387. SEPTEMBER 5, 2016
FIRST DIVISION
PONENTE: SERENO, CJ:

TOPIC: THIRD-PARTY CLAIM BEFORE THE LABOR ARBITER

DOCTRINE: The Labor Arbiter has the discretion to determine whether additional evidence
needed to be presented before the third-party claim could be resolved.

FACTS: The dispute in this case stemmed from the levy and execution sale made by NLRC
Sheriff Manolito G. Manuel. Such levy was made pursuant to a final and executory NLRC
judgment against UE Automotive Manufacturing, Inc. (UEAMI), in an illegal dismissal case, in
which it was ordered to pay PhP53,729,534 to herein respondents.

Metrobank, on September 6, 2002, filed an Affidavit of Third-Party claim with the Labor
Arbiter. It claimed that the machines and equipment levied upon by Sheriff Manuel were covered
by three mortgage documents executed in favor of the bank by UEAMI. Herein respondents
opposed Metrobank’s claim and asserted that they were not bound by the mortgage agreements
cited by the bank because the instrument were not registered and consequently had no effect on
third parties.

The Labor Arbiter denied Metrobank’s claim on the ground for failure to establish proof of their
actual ownership over the contested properties. Thereafter, Metrobank filed a Notice of Appeal
and a Memorandum of Appeal with the NLRC to challenge the ruing of the Labor Arbiter.

The NLRC affirmed the order of the Labor Arbiter. Metrobank sought reconsideration of the
ruling of the NLRC but the same was denied.

Metrobank elevated the matter before the Court of Appeals via Petition for Certiorari under Rule
65 of the Rules of Civil Procedure. It argued that the NLRC committed grave abuse of discretion
in disregarding the fact that the third-party claim of Metrobank was denied by the Labor Arbiter
without the benefit of hearing.

The CA dismissed the petition and ruled that the NLRC did not act with grave abuse of
discretion in affirming the Labor Arbiter’s denial of the third-party claim filed by Metrobank. It
declared that under the Rules of Procedure of the NLRC, the Labor Arbiter was not obligation to
conduct a hearing before deciding the claim.

ISSUE: Whether or not the CA erred in applying the Revised Rules of Procedure of the NLRC,

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which does not require the LA to conduct a hearing before deciding Metrobank's third-party
claim.

RULING: NO

Petitioner's main argument concerns the supposed failure of the Labor Arbiter to conduct an
evidentiary hearing before resolving the third-party claim. Petitioner insists that its right to due
process was violated, because such a hearing is required under Rule IV, Section 2 of the 1993
NLRC Manual, which states:

“x x x Upon receipt of the third-party claim, all proceedings with respect to the execution
of the property subject of the third- party claim shall automatically be suspended and the
Commission or Labor Arbiter who issued the writ shall conduct a hearing with due notice
to all parties concerned and resolve the validity of the claim within ten (10) working days
from receipt thereof. Where the decision is rendered by the Labor Arbiter, it is appealable
to the Commission within ten (10) working days from notice. The Commission shall
resolve the appeal within the same period.

x x x x”

The Supreme Court sustains the conclusion of the CA that the 1993 Manual does not govern the
present case. It is its view that such manual has already been superseded by a new version in
July 2002. Section 1, Rule VI of this 2002 Manual on Execution of Judgment, provides:

“SECTION 1. Proceedings. SHOULD A THIRD-PARTY CLAIM BE FILED DURING

EXECUTION OF THE JUDGMENT AWARD, THE THIRD-PARTY CLAIMANT
shall EXECUTE an affidavit STATING his title TO PROPERTY or possession thereof
WITH SUPPORTING EVIDENCE and shall file the same with the sheriff and copies
thereof served upon the Commission or Labor Arbiter who issued the writ and upon the
prevailing party. Upon receipt of the third-party claim, all proceedings, with respect to
the execution of the property subject of the third-party claim, shall automatically be
suspended. The Commission or Labor Arbiter who issued the writ MAY REQUIRE THE
THIRD-PARTY CLAIMANT TO ADDUCE ADDITIONAL EVIDENCE IN SUPPORT
OF HIS THIRD-PARTY CLAIM AND TO POST A CASH OR SURETY BOND
EQUIVALENT TO THE AMOUNT OF HIS CLAIM AS PROVIDED FOR IN
SECTION 6, RULE VI, OF THE NLRC RULES OF PROCEDURE, WITHOUT
PREJUDICE TO THE POSTING BY THE PREVAILING PARTY OF A
SUPERSEDEAS BOND IN AN AMOUNT EQUIVALENT TO THAT POSTED BY
THE THIRD-PARTY CLAIMANT. The PROPRIETY of the THIRD-PARTY claim
SHALL BE RESOLVED within ten (10) working days from SUBMISSION OF THE
CLAIM FOR RESOLUTION. The decision OF the Labor Arbiter is appealable to the
Commission within ten (10) working days from notice AND the Commission shall
resolve the appeal within the same period.”

In the instant case, Metrobank filed its third-party claim on September 6, 2002, or 10 days before
September 16, 2002 - when the 2002 Manual took effect. This sequence of events explains why

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no supporting evidence was attached to the bank's Affidavit of Third-Party Claim. The Supreme
Court said that the 2002 Manual was already in effect when Metrobank filed its Reply to
Comment to Third-party Claim with Motion to Set Hearing on October 3, 2002. By then, it
should have realized that it was already required to submit supporting evidence of its claim under
the revised rule, and that it no longer needed to await the grant of its request for a hearing.
Furthermore, since the Labor Arbiter resolved the claim only on December 5, 2002, or three
months after the 2002 Manual took effect, Metrobank had more than enough time to submit the
required evidentiary support of its alleged right to the property.

It must be emphasized that the amended provision gave the Labor Arbiter the discretion to
determine whether additional evidence needed to be presented before the third-party claim could
be resolved. Since the claimant was already required to submit proof of his alleged title to the
property, the Labor Arbiter was allowed to decide the claim based only on the evidence
submitted. Here, the Labor Arbiter decided that no further hearing was necessary, given the
failure of Metrobank to submit proof of its claim to the properties. As will be further discussed,
the Supreme Court found no reason to overturn this conclusion.

In any case, Metrobank was given additional opportunities to argue its case and present its
evidence before the NLRC and the CA. These subsequent proceedings were more than enough to
rectify any alleged procedural flaw and satisfy the requirements of due process.

CASE #2
NARCISO T. MATIS, petitioner, vs. MANILA ELECTRIC COMPANY, respondent.
G.R. No. 206629. SEPTEMBER 14, 2016
THIRD DIVISION
PONENTE: PERALTA, J:

TOPIC: ILLEGAL DISMISSAL

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DOCTRINE: Article 282 (c) of the Labor Code provides that an employer may terminate an
employment for fraud or willful breach by the employee of the trust reposed in him by his
employer or duly-authorized representative.

FACTS: Respondent Manila Electric Company (Meralco) hired petitioner Matis, and
complainants Nemencio Hipolito, Jr. (Hipolito), Raymundo M. Zuniga (Zuniga), Gerardo de
Guia (De Guia), and Ricardo Ignacio (Ignacio) on various dates and in various capacities. At the
time of their dismissal, Matis was a foreman; Hipolito and Zuniga were acting foremen; De Guia
was a stockman/driver; and Ignacio was a leadman.

On July 27, 2006, Matis and the others were dismissed on the grounds of serious misconduct,
fraud or willful breach of trust, commission of a crime or offense against the employer and other
causes analogous to the foregoing. They were dismissed for their alleged cooperation in the
pilferages of Meralco's electrical supplies by one Norberto Llanes (Llanes), a non-Meralco
employee, particularly, in an incident which took place on May 25, 2006. On that same day,
Matis and the rest of the crew of Trucks 1837 and 1891 were replacing a rotten pole in Pacheco
Subdivision, Dalandan, Valenzuela City.

Unknown to them, a Meralco surveillance team was monitoring their activities and recording the
same with a video camera. Due to reports of alleged pilferages occurring in Trucks 1837 and
1891, Meralco was prompted to create the said team or "task force" to tail and monitor Matis and
the others.

In a Memorandum dated June 16, 2006, Meralco required them to appear before Meralco's
counsel for an investigation relative to the incident. Matis and the others denied any involvement
in the stealing of the company properties. Subsequently, they were dismissed.

Matis and the other complainants alleged that Meralco's dismissal of their employment violated
their constitutional right to property protection, social justice and security of tenure. They denied
any complicity or participation in the pilferage.

Meralco, on the other hand, maintained that petitioner and the complainants were validly
dismissed on the ground of serious misconduct.

In its Decision, the Labor Arbiter (LA) ruled that Matis and the others were not illegally
dismissed. The LA considered their dismissal from service too harsh when suspension would
have sufficed given that they were not entirely faultless. The charge of serious misconduct
cannot prosper as there is no substantial evidence of their alleged cooperation and participation
in the theft. Likewise, the LA rejected respondent's claim that complainants are guilty of gross
negligence since there was no evidence of complainants' habitual neglect of duty.
On appeal, the NLRC ruled that Matis and the other complainants were validly dismissed. Their
suspicious leniency and laxity in allowing Llanes to board the trucks, conversing with him
intimately, permitting him to return to the trucks with empty sacks in tow, and the quantity of
materials stolen, all video-taped and described in detail by the surveillance team, belie their
denial of involvement. However, the NLRC held that Ignacio was illegally dismissed in the

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absence of evidence showing his complicity or participation in the theft.

The Court of Appeals affirmed the decision of the NLRC.

ISSUE: Whether or not petitioner Matis was illegally dismissed.

RULING: NO.

Matis maintains that Meralco failed to prove that he was legally dismissed based on the ground
that he was grossly negligent which constituted breach of trust as provided by the Labor Code.
To be a ground for dismissal, the neglect of duty must be both gross and habitual. The case
stemmed from a single incident which occurred on May 25, 2006, thus, he cannot be validly
dismissed from employment.

According to records, it was not only on May 25, 2006 that Llanes, the pilferer, was seen during
a Meralco operation as he was previously noticed by Meralco employees in past operations.
Also, the evidence ascertained the presence of Matis in the worksite where the pilferage took
place, and his familiarity with Llanes. Matis’ tolerance of the activities of Llanes demonstrates
his complicity in the theft, and not a mere want of care in the performance of his duty or gross
negligence.

Article 282 (c) of the Labor Code provides that an employer may terminate an employment for
fraud or willful breach by the employee of the trust reposed in him by his employer or duly-
authorized representative. It is stressed that loss of confidence as a just cause for the termination
of employment is based on the premise that the employee holds a position where greater trust is
placed by management and from whom greater fidelity to duty is correspondingly expected.

The argument of Matis that he may not be removed on the ground of breach of trust and
confidence because was a managerial employee or an employee primarily entrusted with the
handling of company funds or property, is of no moment. Loss of confidence applies to (1)
employees occupying positions of trust and confidence, the managerial employees, and (2)
employees who are routinely charged with the case and custody of the employer’s money or
property which may include rank-and-file employees.

It is established that Matis was a foreman at the time of his dismissal. The vehicles being utilized
in the repair and maintenance of Meralco's distribution lines ordinarily carried necessary
equipment, tools, supplies and materials. Thus, Matis, as the foreman, is routinely entrusted with
the care and custody of Meralco's properties in the exercise of his function.

Contrary to his allegation that he failed to notice the thievery because he and the crew were
preoccupied with the replacement of the rotting post, Matis lingered, by his admission, to
supposedly look after the truck. As established, the crew exhibited familiarity with the culprit
during the entire operations. Based on the testimonies of the witnesses, Llanes was seen picking
up unused supplies and materials that were not returned to the company in the past operations.
He was casually boarding the trucks despite the same being prohibited from non-Meralco
employees. Matis was seen conversing intimately with Llanes inside Truck 1891. Thereafter,

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Llanes was able to filch Meralco properties in the presence of Matis. Thus, Matis was complicit
in the pilferage by being familiar with Llanes, by his inaction while the looting was being
perpetrated, and by not repmiing the same to the authorities and to Meralco. The totality of the
circumstances convinces it is evident that Matis is guilty of breach of trust.

CASE # 3
COCA-COLA FEMSA PHILIPPINES, INC., petitioner, v. BACOLOD SALES FORCE
UNION-CONGRESS OF INDEPENDENT ORGANIZATION- ALU, respondent.
G.R. No. 220605. September 21, 2016
FIRST DIVISION
PONENTE: PERLAS-BERNABE, J:

TOPIC: FINALITY OF DECISIONS MADE BY VOLUNTARY ARBITRATORS

DOCTRINE: The Supreme Court allowed the filing of a petition for certiorari from the
Voluntary Arbitrator's (VA) judgment to the CA under Rule 65 of the Rules of Court, where the

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VA was averred to have acted without or in excess of his jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction.

FACTS: Petitioner is a corporation engaged in the manufacture of nonalcoholic beverages.

Sometime in 2001, Cosmos Bottling Corporation (Cosmos) ceded its sales functions to petitioner
which resulted in the integration of a number of Cosmos's salesmen, including Fernando T.
Oquiana, Norman F. Vinarta, and Santiago B. Espino, Jr. (Cosmos integrees) into petitioner's
workforce as route salesmen. The Cosmos integrees were given salary adjustments that would
align with that of petitioner's own route salesmen. At the time of integration, petitioner's system
of product distribution was by direct selling, but it subsequently adopted the route-to-market
(RTM) system of distribution which led to the abolition of the route salesman position and its
replacement by the account developer (AD) position. Thus, through an internal selection process,
the Cosmos integrees' positions were eventually designated as ADs.

Petitioner hired new ADs who were, however, subject to a different set of qualifications from the
Cosmos integrees. The newly-hired ADs received a higher basic monthly pay although,
allegedly, occupying the same position, job description, and functions as that of the Cosmos
integrees. Furthermore, the newly-hired ADs were given, upon union membership, a monthly 45-
kilogram (kg.) rice provision with a corresponding monthly deduction of the amount of P550.00
from their salaries.

Aggrieved by the difference in treatment, respondent Bacolod Sales Force Union- Congress of
Independent Organization-ALU, the recognized collective bargaining agent of the rank-and-file
sales personnel of petitioner's Bacolod Plant7 (respondent), submitted its concerns to the
grievance machinery in accordance with the Collective Bargaining Agreement (CBA),
demanding, among others, that: (a) the salary rates of the Cosmos integrees be readjusted to
equal to that of the newly-hired ADs' salary rates; (b) the conversion of the P550.00 monthly
deduction from the salaries of the Bacolod Plant sales personnel into a 45-kg. rice provision be
declared as a violation of the non-diminution rule under Article 100 of the Labor Code, as
amended; and (c) the employees concerned be reimbursed for the amounts illegally deducted.

After the grievance process failed, the parties agreed to submit the unresolved matters to
voluntary arbitration pursuant to Article 5 of the CBA, and filed a preventive mediation case
before the NCMB raising the aforesaid issues.

Respondent claimed that the Cosmos integrees were being discriminated against the newly-hired
ADs, in light of the disparity between their salaries and reiterated that the monthly P550.00
deduction from the basic salaries of the new union members constitutes a violation of the non-
diminution rule.

For its part, petitioner maintained that the fixing of hiring rates is a management prerogative,
adding that the Cosmos integrees and the newly hired ADs were not similarly situated due to the
apparent variance in the manner by which they were appointed and hired, as well as their
qualifications, skills, and responsibilities for the position. Further, it claimed that the Cosmos
integrees failed to meet all the basic qualifications for the AD position, such as age and

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educational attainment.

The Voluntary Arbitrator ruled that declared that the disparity in the wages of the Cosmos
integrees and the newly-hired ADs was discriminatory for lack of substantial basis or valid
criteria and declared that the P550.00 deduction from the union members' basic salary in lieu of
one (1) 45-kg. sack of rice every month was a violation of Article X18 of the CBA and Article
100 of the Labor Code, as amended.

Petitioner filed its Petition for Review before the Court of Appeals. However the CA enied the
petition on the ground that the VA Decision had attained finality pursuant to Section 5,33 Article
5 of the CBA, which explicitly provides that "[t]he decision of the Arbitration Committee shall
be final and binding upon the COMPANY and the UNION, and the employees and may be
enforced in any court of competent jurisdiction."

ISSUE: Whether or not the CA correctly held that the VA Decision can no longer be the subject
of its review for having attained finality pursuant to the express provision under Section 5,
Article 5 of the CBA.

RULING: NO.

Voluntary arbitrators act in a quasi-judicial capacity; hence, their judgments or final orders
which are declared final by law are not so exempt from judicial review when so warranted. "Any
agreement stipulating that 'the decision of the arbitrator shall be final and unappealable' and 'that
no further judicial recourse if either party disagrees with the whole or any part of the arbitrator's
award may be availed of' cannot be held to preclude in proper cases the power of judicial review
which is inherent in courts.

According to various jurisprudence, the proper remedy to reverse or modify a Voluntary

Arbitrator's or a Panel of Voluntary Arbitrators' decision or award is to appeal the award or
decision before the CA under Rule 43 of the Rules on questions of fact, of law, mixed questions
of fact and law, or a mistake of judgment. However, in several cases, the Court allowed the filing
of a petition for certiorari from the VA's judgment to the CA under Rule 65 of the same Rules,
where the VA was averred to have acted without or in excess of his jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction.

The Supreme Court sees the prima facie reasonableness of petitioner's asseverations and finds
that the merits of its case, based on such argumentation, properly warrant judicial review. As
such, the CA should look into the soundness of the VA rulings in relation to the nuances averred,
particularly, the impact of the differences in the selection processes applied and relevant
qualifications between the Cosmos integrees and the newly-hired ADs. Moreover, the CA ought
to determine the proper application of the "equal pay for equal work" principle vis-a-vis the
business decision of an employer to adopt a more competitive compensation scheme in light of
the demands in human resource. Thus, borrowing the language in Chung Fu Industries (Phils.)
Inc. v. CA - which similarly involved a restrictive stipulation on appeal from an arbitral award
the Court fmds that the CA erred in refusing "to look into the merits of [this] case, despite [a]
prima facie showing of the existence of grounds warranting judicial review," which, thus,

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"effectively deprived petitione[r] of [the] opportunity to prove or substantiate [its] allegations."

In fact, aside from the above stated-issue, the following separate issues were left untouched by
the CA: (a) as raised by petitioner, whether or not the conversion of the monthly P550.00 rice
subsidy into one (1) 45-kg. sack of rice upon union membership constitutes a violation of Article
100 of the Labor Code, as amended, and non- compliance with Article X of the CBA; and (b) as
raised by respondent, whether or not the petition for review was filed out of time. The materiality
of these issues all the more reinforces the conclusion that the CA should not have refused to
exercise judicial review of the assailed VA rulings, notwithstanding the CBA stipulation that the
decision of the Arbitration Committee. In fine, a remand to the CA for the prompt resolution of
all these issues, including any other ancillary issues which the parties may have raised before it,
is, therefore, in order.