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RepublicofthePhilippinesSUPREMECOURT
Manila
SECONDDIVISIONALABANGCOUNTRYCLUB,INC.,G.R.No.170287Petitioner,Present:versusQUISUMBING,J.,Chairperson,
CARPIOMORALES,NATIONALLABORRELATIONSAZCUNA,COMMISSION,ALABANGTINGA,andCOUNTRYCLUBINDEPENDENTVELASCO,JR.,JJ.EMPLOYEESUNION,CHRISTOPHERPIZARRO,MICHAELBRAZA,andPromulgated:NOLASCOCASTUERAS,
Respondents.February14,2008xx
DECISION
VELASCO,JR.,J.:PetitionerAlabangCountryClub, Inc. (Club) is a domestic nonprofit corporationwithprincipal office at Country Club Drive, Ayala Alabang, Muntinlupa City. RespondentAlabangCountryClubIndependentEmployeesUnion(Union)istheexclusivebargainingagent of the Clubs rankandfile employees. In April 1996, respondents ChristopherPizarro, Michael Braza, and Nolasco Castueras were elected Union President, VicePresident,andTreasurer,respectively.On June 21, 1999, the Club and the Union entered into a Collective BargainingAgreement (CBA), which provided for a Union shop andmaintenance of membershipshop.
Thepertinent parts of theCBA included inArticle II onUnionSecurity read, as
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follows:ARTICLEII
UNIONSECURITYSECTION 1. CONDITION OF EMPLOYMENT. All regular rankandfile
employees, who are members or subsequently become members of the UNION shallmaintain their membership in good standing as a condition for their continuedemploymentbytheCLUBduringthelifetimeofthisAgreementoranyextensionthereof.
SECTION2.[COMPULSORY]UNIONMEMBERSHIPFORNEWREGULAR
RANKANDFILEEMPLOYEESa)NewregularrankandfileemployeesoftheClubshalljointheUNIONwithinfive(5)
daysfromthedateoftheirappointmentasregularemployeesasaconditionfortheircontinuedemploymentduringthelifetimeofthisAgreement,otherwise, theirfailuretodososhallbeagroundfordismissalfromtheCLUBupondemandbytheUNION.
b)TheClubagreestofurnishtheUNIONthenamesofallnewprobationaryandregularemployeescoveredby thisAgreementnot later than three (3)days from thedateofregularappointmentshowingthepositionsanddatesofhiring.
xxxxSECTION4.TERMINATIONUPONUNIONDEMAND.Uponwrittendemand
oftheUNIONandafterobservingdueprocess,theClubshalldismissaregularrankandfileemployeeonanyofthefollowinggrounds:
(a) Failure to join theUNIONwithin five (5) days from the time of
regularization(b)ResignationfromtheUNION,exceptwithintheperiodallowedbylaw(c)Convictionofacrimeinvolvingmoralturpitude(d)NonpaymentofUNIONdues,fees,andassessments(e)JoininganotherUNIONexceptwithintheperiodallowedbylaw(f)Malversationofunionfunds(g)ActivelycampaigningtodiscouragemembershipintheUNIONand(h)InflictingharmorinjurytoanymemberorofficeroftheUNION.ItisunderstoodthattheUNIONshallholdtheCLUBfreeandharmless[sic]from
any liability or damage whatsoever which may be imposed upon it by any competentjudicial or quasijudicial authority as a result of such dismissal and the UNION shall
reimbursetheCLUBforanyandallliabilityordamageitmaybeadjudged.[1]
(Emphasissupplied.)
Subsequently, in July 2001, an election was held and a new set of officers waselected. Soon thereafter, the newofficers conducted an audit of theUnion funds.Theydiscovered some irregularly recorded entries, unaccounted expenses and disbursements,and uncollected loans from the Union funds. The Union notified respondents Pizarro,
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Braza,andCastuerasof theaudit resultsandaskedthemtoexplain thediscrepancies in
writing.[2]
Thereafter, on October 6, 2001, in a meeting called by the Union, respondents
Pizarro, Braza, and Castueras explained their side. Braza denied any wrongdoing andinstead asked that the investigation be addressed to Castueras, who was the UnionTreasureratthattime.Withregardtohisunpaidloans,BrazaclaimedhehadbeenpayingthroughmonthlysalarydeductionsandsaidtheUnioncouldcontinuetodeductfromhissalaryuntilfullpaymentofhisloans,providedhewouldbereimbursedshouldtheresultof the initial audit be proven wrong by a licensed auditor. With regard to the Unionexpenses which were without receipts, Braza explained that these were legitimateexpensesforwhichreceiptswerenotissued,e.g.transportationfares,foodpurchasesfromsmall eateries, and food and transportation allowances given to Union members withpendingcomplaintswith theDepartmentofLaborandEmployment, theNationalLaborRelations Commission (NLRC), and the fiscals office. He explained that though therewereno receipts for these expenses, thesewere supportedbyvouchers and itemized asexpenses.RegardinghisunpaidandunliquidatedcashadvancesamountingtoalmostPhP20,000, Braza explained that these were not actual cash advances but payments to a
certainRicardoRicafrentewhohadloanedPhP200,000totheUnion.[3]
Pizarro,forhispart,blamedCastuerasforhisunpaidanduncollectedloanandcash
advances.Heclaimedhissalarieswereregularlydeductedtopayhisloanandhedidnotknow why these remained unpaid in the records. Nonetheless, he likewise agreed to
continuoussalarydeductionsuntilallhisaccountabilitieswerepaid.[4]
Castuerasalsodeniedanywrongdoingandclaimedthattheirregularentriesinthe
recordswereunintentionalandwereduetoinadvertencebecauseofhisvoluminousworkload.Heoffered thathisunpaidpersonal loanofPhP27,500alsobededucted fromhissalaryuntiltheloanswerefullypaid.Withoutadmittinganyfaultonhispart,Castuerassuggestedthathissalarybededucteduntiltheunaccounteddifferencebetweentheloans
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andtheamountcollectedamountingtoatotalofPhP22,000ispaid.[5]
Despitetheirexplanations,respondentsPizarro,Braza,andCastueraswereexpelled
fromtheUnion,and,onOctober16,2001,werefurnishedindividuallettersofexpulsion
formalversationofUnionfunds.[6]
AttachedtotheletterswerecopiesofthePanawaganngmgaOpisyalesngUnyonsignedby37outof63Unionmembersandofficers,anda
BoardofDirectorsResolution[7]
expellingthemfromtheUnion.InaletterdatedOctober18,2001,theUnion,invokingtheSecurityClauseoftheCBA,demandedthattheClubdismissrespondentsPizarro,Braza,andCastuerasinviewoftheir
expulsionfromtheUnion.[8]
TheClub required the three respondents to showcause inwriting within 48 hours from notice why they should not be dismissed. Pizarro andCastueras submitted their respective written explanations on October 20, 2001, whileBrazasubmittedhisexplanationthefollowingday.During the last week of October 2001, the Clubs general manager called respondentsPizarro, Braza, and Castueras for an informal conference inquiring about the chargesagainstthem.Said respondentsgave theirexplanationandasserted that theUnionfundsallegedlymalversedbythemwereevenoverthetotalamountcollectedduringtheirtenureasUnionofficersPhP120,000 forBraza,PhP57,000 forCastueras,andPhP10,840 forPizarro, as against the total collection fromApril 1996 toDecember 2001of onlyPhP102,000. They claimed the charges are baseless. The general manager announced hewouldconductaformalinvestigation.Nonetheless,afterweighingtheverbalandwrittenexplanationsofthethreerespondents,theClub concluded that said respondents failed to refute thevalidityof their expulsionfrom the Union. Thus, it was constrained to terminate the employment of saidrespondents. On December 26, 2001, said respondents received their notices of
terminationfromtheClub.[9]
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RespondentsPizarro,Braza,andCastueraschallengedtheirdismissalfromtheClubinanillegaldismissalcomplaintdocketedasNLRCNCRCaseNo.30010013002filedwiththeNLRC,NationalCapitalRegionArbitrationBranch.InhisJanuary27,2003Decision,[10]
the LaborArbiter ruled in favor of the Club, and found that therewas justifiablecauseinterminatingsaidrespondents.Hedismissedthecomplaintforlackofmerit.On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an AppealdocketedasNLRCNCRCANo.03460103withtheNLRC.
OnFebruary26,2004,theNLRCrenderedaDecision[11]
grantingtheappeal,thefalloofwhichreads:
WHEREFORE, findingmerit in theAppeal, judgment is hereby rendered declaring thedismissal of the complainants illegal. x x x Alabang Country Club, Inc. and AlabangCountry Club Independent Union are hereby ordered to reinstate complainantsChristopher Pizarro, Nolasco Castueras and Michael Braza to their former positionswithout loss of seniority rights and other privilegeswith full backwages from the timetheyweredismisseduptotheiractualreinstatement.SOORDERED.
TheNLRC ruled that therewas no justifiable cause for the termination of respondentsPizarro,Braza,andCastueras.ThecommissionersreliedheavilyonSection2,RuleXVIIIoftheRulesImplementingBookVoftheLaborCode.Sec.2provides:
SEC.2.ActionsarisingfromArticle241oftheCode.Anyactionarisingfromthe
administration or accounting of union funds shall be filed and disposed of as an intrauniondisputeinaccordancewithRuleXIVofthisBook.
Incaseof violation, theRegional orBureauDirector shall order the responsible
officertorenderanaccountingoffundsbeforethegeneralmembershipandmay,wherecircumstances warrant, mete the appropriate penalty to the erring officer/s, including
suspensionorexpulsionfromtheunion.[12]
AccordingtotheNLRC,saidrespondentsexpulsionfromtheUnionwasillegalsincethe
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DOLE had not yet made any definitive ruling on their liability regarding theadministrationoftheUnionsfunds.TheClubthenfiledamotionforreconsiderationwhichtheNLRCdeniedinitsJune20,
2004Resolution.[13]
Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition forCertiorariwhichwasdocketedasCAG.R.SPNo.86171withtheCourtofAppeals(CA).
TheCAUpheldtheNLRCRulingthattheThreeRespondentswereDeprivedDueProcess
On July 5, 2005, the appellate court rendered aDecision,[14]
denying the petition andupholding theDecision of theNLRC. TheCAsDecision focusedmainly on theClubsperceived failure to afford due process to the three respondents. It found that saidrespondentswerenotgiventheopportunitytobeheardinaseparatehearingasrequiredbySec.2(b),RuleXXIII,BookVoftheOmnibusRulesImplementingtheLaborCode,asfollows:
SEC.2.Standardsofdueprocessrequirementsofnotice.Inallcasesofterminationofemployment,thefollowingstandardsofdueprocessshallbesubstantiallyobserved:ForterminationofemploymentbasedonjustcausesasdefinedinArticle282oftheCode:xxxx(b)Ahearingorconferenceduringwhichtheemployeeconcerned,withtheassistanceofcounseliftheemployeesodesires,isgivenopportunitytorespondtothecharge,presenthisevidenceorrebuttheevidencepresentedagainsthim.
TheCAalsosaidthedismissalofthethreerespondentswascontrarytothedoctrinelaiddowninMalayangSamahanngmgaManggagawasaM.Greenfieldv.Ramos(MalayangSamahan),where thisCourt ruled that evenon theassumption that theunionhadvalidgroundstoexpelthelocalunionofficers,dueprocessrequiresthattheunionofficersbe
accordedaseparatehearingbytheemployercompany.[15]
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In a Resolution[16]
dated October 20, 2005, the CA denied the Clubs motion forreconsideration.TheClubnowcomesbeforethisCourtwiththeseissuesforourresolution,summarizedasfollows:
1. Whethertherewasjustcausetodismissprivaterespondents,andwhethertheywere affordeddueprocess in accordancewith the standardsprovided for by theLaborCodeanditsImplementingRules.
2.WhetherornottheCAerredinnotfindingthattheNLRCcommittedgraveabuseof discretion amounting to lack or excess of jurisdiction when it ruled thatrespondentsPizarro,Braza,andCastueraswereillegallyexpelledfromtheUnion.
3.WhetherthecaseofAgabonvs.NLRC[17]
shouldbeappliedtothiscase.
4.WhetherthatintheabsenceofbadfaithandmaliceonthepartoftheClub,theUnionissolelyliablefortheterminationfromemploymentofsaidrespondents.
Themainissueiswhetherthethreerespondentswereillegallydismissedandwhethertheywereaffordeddueprocess.TheClub avers that the dismissal of the three respondentswas in accordancewith theUnionsecurityprovisionsintheirCBA.TheClubalsoclaimsthatthethreerespondentswere afforded due process, since the Club conducted an investigation separate andindependentfromthatconductedbytheUnion.RespondentsPizarro,Braza,andCastueras,ontheotherhand,contendthattheClubfailedto conduct a separate hearing as prescribed by Sec. 2(b), Rule XXIII, Book V of theimplementingrulesoftheCode.First,weresolvethelegalityofthethreerespondentsdismissalfromtheClub.
ValidGroundsforTermination
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UndertheLaborCode,anemployeemaybevalidlyterminatedonthefollowinggrounds:(1)justcausesunderArt.282(2)authorizedcausesunderArt.283(3)terminationduetodiseaseunderArt.284and(4)terminationbytheemployeeorresignationunderArt.285.
Another cause for termination is dismissal from employment due to theenforcementoftheunionsecurityclauseintheCBA.Here,Art.IIoftheCBAonUnionsecuritycontainstheprovisionsontheUnionshopandmaintenanceofmembershipshop.Thereisunionshopwhenallnewregularemployeesarerequiredtojointheunionwithinacertainperiodasaconditionfortheircontinuedemployment.There ismaintenanceofmembershipshopwhenemployeeswhoareunionmembersasoftheeffectivedateoftheagreement, or who thereafter becomemembers,mustmaintain unionmembership as acondition for continued employment until they are promoted or transferred out of the
bargainingunitortheagreementisterminated.[18]
Terminationofemploymentbyvirtueof a union security clause embodied in a CBA is recognized and accepted in our
jurisdiction.[19]
This practice strengthens the union and prevents disunity in thebargainingunitwithinthedurationoftheCBA.Bypreventingmemberdisaffiliationwiththethreatofexpulsionfromtheunionandtheconsequentterminationofemployment,theauthorizedbargainingrepresentativegainsmorenumbersandstrengthens itspositionasagainstotherunionswhichmaywanttoclaimmajorityrepresentation.
In terminating the employment of an employee by enforcing the union security
clause,theemployerneedsonlytodetermineandprovethat:(1)theunionsecurityclauseis applicable (2) the union is requesting for the enforcement of the union securityprovisionintheCBAand(3)thereissufficientevidencetosupporttheunionsdecisiontoexpeltheemployeefromtheunion.TheserequisitesconstitutejustcauseforterminatinganemployeebasedontheCBAsunionsecurityprovision.
The languageofArt. II of theCBA that theUnionmembersmustmaintain their
membershipingoodstandingasaconditionsinequanonfortheircontinuedemploymentwiththeClubisunequivocal.ItisalsoclearthatupondemandbytheUnionandafterdueprocess,theClubshallterminatetheemploymentofaregularrankandfileemployeewho
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may be found liable for a number of offenses, one ofwhich ismalversation ofUnion
funds.[20]
Below is the letter sent to respondents Pizarro, Braza, and Castueras, informing
themoftheirtermination:
OnOctober18,2001,theClubreceivedaletterfromtheBoardofDirectorsoftheAlabangCountryClubIndependentEmployeesUnion(Union)demandingyourdismissalfrom service by reason of your alleged commission of act of dishonesty, specificallymalversation of union funds. In support thereof, the Club was furnished copies of thefollowingdocuments:
1.AletterunderthesubjectResultofAuditdatedSeptember14,2001(receiptof
whichwasdulyacknowledgedfromyourend),whichrequiredyoutoexplaininwritingthechargesagainstyou(copyattached)
2. The Unions Board of Directors Resolution dated October 2, 2001, whichexplained that theUnionaffordedyouanopportunity toexplainyourside tothecharges
3. Minutes of the meeting of the Unions Board of Directors wherein an
administrative investigation of the casewas conducted lastOctober 6, 2001and
4. TheUnions Board of Directors Resolution datedOctober 15, 2001which
resolved your expulsion from the Union for acts of dishonesty andmalversation of union funds, which was duly approved by the generalmembership.
Afteracarefulevaluationoftheevidenceonhandvisvisathoroughassessmentofyourdefenses presented in your letterexplanation datedOctober 6, 2001 ofwhich you alsoexpressedthatyouwaivedyourrighttobepresentduringtheadministrativeinvestigationconducted by the Unions Board of Directors on October 6, 2001, Management hasreached the conclusion that there are overwhelming reasons to consider that you haveviolatedSection4(f) of theCBA, particularly on the grounds ofmalversation of unionfunds.TheClubhasdeterminedthatyouweresufficientlyaffordeddueprocessunderthecircumstances.Inasmuchas theClub isdutybound tocomplywith itsobligationunderSection4(f)oftheCBA,itisunfortunatethatManagementisleftwithnootherrecoursebuttoconsideryourterminationfromserviceeffectiveuponyourreceiptthereof.WewishtothankyouforyourservicesduringyouremploymentwiththeCompany.Itwouldbemoreprudentthatwejustmoveonindependentlyifonlytomaintainindustrialpeaceintheworkplace.
Beguidedaccordingly.[21]
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Gleaned from the above, the three respondents were expelled from and by the
UnionafterdueinvestigationforactsofdishonestyandmalversationofUnionfunds.InaccordancewiththeCBA,theUnionproperlyrequestedtheClub,throughtheOctober18,
2001 letter[22]
signedbyMarioOrense, theUnionPresident, andaddressed toCynthiaFigueroa,theClubsHRDManager,toenforcetheUnionsecurityprovisionintheirCBAand terminate said respondents.Then, in compliancewith theUnions request, theClubreviewed the documents submitted by theUnion, requested said respondents to submitwrittenexplanations,andthereafteraffordedthemreasonableopportunitytopresenttheirside. After it had determined that there was sufficient evidence that said respondentsmalversed Union funds, the Club dismissed them from their employment conformablywithSec.4(f)oftheCBA.Consideringtheforegoingcircumstances,weareconstrainedtorulethatthereissufficientcauseforthethreerespondentsterminationfromemployment.Were respondents Pizarro, Braza, and Castueras accorded due process before theiremploymentswereterminated?
We rule that the Club substantially complied with the due process requirementsbeforeitdismissedthethreerespondents.
The three respondents aver that the Club violated their rights to due process as
enunciated inMalayang Samahan,[23]
when it failed to conduct an independent andseparatehearingbeforetheyweredismissedfromservice.TheCA, indismissing theClubspetitionandaffirmingtheDecisionof theNLRC,alsoreliedonthesamecase.WeexplainedinMalayangSamahan:
xxxAlthough thisCourthas ruled thatunion security clauses embodied in the
collective bargaining agreement may be validly enforced and that dismissals pursuanttheretomay likewisebevalid, thisdoesnot erode the fundamental requirementsofdueprocess.Thereasonbehindtheenforcementofunionsecurityclauseswhichisthesanctity
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andinviolabilityofcontractscannotoverrideonesrighttodueprocess.[24]
Intheabovecase,wepronouncedthatwhilethecompany,underamaintenanceofmembership provision of the CBA, is bound to dismiss any employee expelled by theunionfordisloyaltyuponitswrittenrequest,thisundertakingshouldnotbedonehastilyandsummarily.Thecompanyactsinbadfaithindismissingaworkerwithoutgivinghim
thebenefitofahearing.[25]
Wecautionedinthesamecasethatthepowertodismissisanormalprerogativeoftheemployerhowever,thispowerhasalimitation.Theemployeris bound to exercise caution in terminating the services of the employees especially sowhenitismadeupontherequestofalaborunionpursuanttotheCBA.Dismissalsmustnotbearbitraryandcapricious.Dueprocessmustbeobserved indismissingemployeesbecause thedismissalaffectsnotonly theirpositionsbutalso theirmeansof livelihood.Employers should respect and protect the rights of their employees, which include the
righttolabor.[26]
The CA and the three respondents err in relying onMalayang Samahan, as its
ruling has no application to this case. InMalayangSamahan, the unionmemberswereexpelledfromtheunionandwereimmediatelydismissedfromthecompanywithoutanysemblanceofdueprocess.Boththeunionandthecompanydidnotconductadministrativehearings togive theemployeesachance toexplain themselves. In thepresent case, theClub has substantially compliedwith due process. The three respondentswere notifiedthattheirdismissalwasbeingrequestedbytheUnion,andtheirexplanationswereheard.Then, the Club, through its President, conferred with said respondents during the lastweek of October 2001. The three respondents were dismissed only after the Clubreviewed and considered the documents submitted by the Union visvis the writtenexplanationssubmittedbysaidrespondents.Underthesecircumstances,wefindthat theClubhadaffordedthethreerespondentsareasonableopportunitytobeheardanddefendthemselves.
OntheapplicabilityofAgabon,theClubpointsoutthattheCAruledthatthethree
respondents were illegally dismissed primarily because they were not afforded due
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process.WearenotunawareofthedoctrineenunciatedinAgabonthatwhenthereisjustcauseforthedismissalofanemployee,thelackofstatutorydueprocessshouldnotnullifythedismissal, or render it illegalor ineffectual, and the employer should indemnify the
employeefortheviolationofhisstatutoryrights.[27]
However,wefindthatwecouldnotapply Agabon to this case as we have found that the three respondents were validlydismissedandwereactuallyaffordeddueprocess.
Finally,theissuethatsincetherewasnobadfaithonthepartoftheClub,theUnion
is solely liable for the termination fromemploymentof the three respondents,hasbeenmootedbyourfindingthattheirdismissalisvalid.
WHEREFORE,premisesconsidered, theDecisiondatedJuly5,2005of theCA
andtheDecisiondatedFebruary26,2004oftheNLRCareherebyREVERSEDandSETASIDE.TheDecisiondatedJanuary27,2003oftheLaborArbiterinNLRCNCRCaseNo.30010013002isherebyREINSTATED.
Nocosts.SOORDERED.
PRESBITEROJ.VELASCO,JR.AssociateJustice
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WECONCUR:
LEONARDOA.QUISUMBING
AssociateJusticeChairperson
CONCHITACARPIOMORALESADOLFOS.AZCUNAAssociateJusticeAssociateJustice
DANTEO.TINGAAssociateJustice
ATTESTATIONIattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.LEONARDOA.QUISUMBINGAssociateJusticeChairperson
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CERTIFICATIONPursuant to Section 13,ArticleVIII of theConstitution, and theDivisionChairpersonsAttestation, I certify that the conclusions in the above Decision had been reached inconsultation before the case was assigned to the writer of the opinion of the CourtsDivision.
REYNATOS.PUNOChiefJustice
PerSeptember3,2007raffle.[1]
Rollo,pp.6263.[2]
Id.at74.[3]
Id.at160161.[4]
Id.at161.[5]
Id.at161163.[6]
Id.at8284.[7]
Id.at7981.[8]
Id.at73.[9]
Id.at95100.[10]
Id.at157173.[11]
Id.at212219.[12]
AmendedbyDepartmentOrderNo.4003,Seriesof2003.Thequotedprovision isnow inSec.4,RuleXIIIof theImplementingRulesofBookV,whichreads:Sec.4.ActionsarisingfromArticle241.Anycomplaintorpetitionwithallegationsofmishandling,misappropriationornonaccountingoffundsinviolationofArticle241shallbetreatedasanintrauniondispute.ItshallbeheardandresolvedbytheMedArbiterpursuanttotheprovisionsofRuleXI.
[13]Rollo,pp.220222.
[14] Id. at 5056. Penned byAssociate JusticeEliezerR.De losSantos and concurred in byAssociate Justices
EugenioS.LabitoriaandCeciliaC.LibreaLeagogo.[15]
G.R.No.113907,February28,2000,326SCRA428,463.[16]
Rollo,p.58.[17]
G.R.No.158693,November17,2004,442SCRA573.[18]
48AmJur2d,797,p.509.[19]
DelMontePhilippinesv.Saldivar,G.R.No.158620,October11,2006,504SCRA192,203204.
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[20]Supranote1,at63.
[21]Rollo,pp.95100.
[22]Id.at73.
[23]Supranote15.
[24]Supraat461462.
[25]Supraat462citingCariov.NationalLaborRelationsCommission,G.R.No.91086,May8,1990,185SCRA177,
187.[26]
Supraat462.[27]
Supranote17,at616.