Applicable Laws and Basic Principles1. MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO, President vs.THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR, REGION X

Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover President. The hospital derives its finances from the club itself as well as from paying patients, averaging 130 per month. It is also partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan De Oro City government. Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given food, but the amount spent therefor is deducted from their respective salaries. Ten (10) employees of the petitioner employed in different capacities/positions filed a complaint with the Office of the Regional Director of Labor and Employment, Region X, for underpayment of their salaries and ECOLAS. The Labor Standard and Welfare Officers submitted their report confirming that there was underpayment of wages and ECOLAs of all the employees by the petitioner. Based on this inspection report and recommendation, the Regional Director issued an Order, directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the petitioner's employees. Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who rendered a Decision modifying the said Order in that deficiency wages and ECOLAs should be computed only from May 23, 1983 to May 23, 1986. The petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in his Order dated May 13, 1987, for lack of merit. The instant petition questions the all-embracing applicability of the award involving salary differentials and ECOLAS, in that it covers not only the hospital employees who signed the complaints, but also those (a) who are not signatories to the complaint, and (b) those who were no longer in the service of the hospital at the time the complaints were filed. Petitioner further questions the authority of the Regional Director to award salary differentials and ECOLAs to private respondents, alleging that the original and exclusive jurisdiction over money claims is properly lodged in the Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code.Issue: Whether or not the Regional Director had jurisdiction over the case and if so, the extent of coverage of any award that should be forthcoming, arising from his visitorial and enforcement powers under Article 128 of the Labor Code. Held: This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by E.O. No. 111. Under the present rules, a Regional Director exercisesbothvisitorial and enforcement power over labor standards cases, and is therefore empowered to adjudicate money claims,providedthere still existsan employer-employee relationship, and the findings of the regional office isnot contestedby the employer concerned.Labor standards refer to the minimum requirements prescribed by existing laws, rules, and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety, and health standards (Section 7, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987).Petition DISMISSED, as regards all persons still employed in the Hospital at the time of the filing of the complaint, but GRANTED as regards those employees no longer employed at that time.

ER-EE Relationship10. PHILIPPINE FUJI XEROX CORPORATION, JENNIFER A. BERNARDO, and ATTY. VICTORINO LUIS vs. NATIONAL LABOR RELATIONS COMMISSION (First Division), PAMBANSANG KILUSAN NG PAG-GAWA, (KILUSAN)-TUCP, PHILIPPINE XEROX EMPLOYEES UNION-KILUSAN and PEDRO GARADOFacts: Petitioner Fuji Xerox entered into an agreement under which Skillpower, Inc. supplied workers to operate copier machines of Fuji Xerox as part of the latter's "Xerox Copier Project" in its sales offices. Private respondent Pedro Garado was assigned as key operator at Fuji Xerox's branch. at Buendia, Makati, Metro Manila. Three years after, Garado went on leave and his place was taken over by a substitute. Upon his return in March, he discovered that there was a spoilage of over 600 copies. Afraid that he might be blamed for the spoilage, he tried to talk a service technician of Fuji Xerox into stopping the meter of the machine. The technician refused Garado's request, but this incident came to the knowledge of Fuji Xerox which reported the matter to Skillpower, Inc. The next day, Skillpower, Inc. wrote Garado, ordering him to explain. In the meantime, it suspended him from work. Garado filed a complaint for illegal dismissal. The Labor Arbiter found that Garado applied for work to Skillpower, Inc.; that in 1980 he was employed and made to sign a contract; that although he received his salaries regularly from Fuji Xerox, it was Skillpower, Inc. which exercised control and supervision over his work; that Skillpower, Inc. had substantial capital and investments in machinery, equipment, and service vehicles, and assets. On the basis of these findings the Labor Arbiter held in a decision that Garado was an employee of Skillpower, Inc., and that he had merely been assigned by Skillpower, Inc. to Fuji Xerox. Hence, the Labor Arbiter dismissed Garado's complaint. The NLRC found Garado to be infact an employee of petitioner Fuji Xerox and by it to have been illegally dismissed. The NLRC held that although Skillpower, Inc. had substantial capital assets, the fact was that the copier machines, which Garado operated, belonged to petitioner Fuji Xerox, and that although it was Skillpower, Inc. which had suspended Garado, the latter merely acted at the behest of Fuji Xerox. The NLRC found that Garado worked under the control and supervision of Fuji Xerox, which paid his salaries, and that Skillpower, Inc. merely acted as paymaster-agent of Fuji Xerox. The NLRC held that Skillpower, Inc. was a labor-only contractor and Garado should be deemed to have been directly employed by Fuji Xerox, regardless of the agreement between it and Skillpower, Inc. Issue: whether private respondent is an employee of Fuji Xerox (as the NLRC found) or of Skillpower, Inc. (as the Labor Arbiter found). Held: The contentions of the petitioner are without merit. The court held that private respondent is an employee of Fuji Xerox and accordingly dismiss the petition for review of Fuji Xerox.1. Fuji Xerox argues that Skillpower, Inc. is an independent contractor and that Garado is its employee. Fuji Xerox contends that Garado was actually recruited by Skillpower, Inc. as part of its personnel pool and later merely assigned to it (petitioner). Petitioners claim that Skillpower, Inc. has other clients to whom it provided "temporary" services. That, however, is irrelevant. What is important is that once employed, Garado was never assigned to any other client of Skillpower, Inc. In fact, although under the agreement Skillpower, Inc. was supposed to provide only "temporary" services, Skillpower, Inc. actually supplied Fuji Xerox the labor which the latter needed for its Xerox Copier Project for seven (7) years, from 1977 to 1984.2. Petitioner contends that the service provided by Skillpower, Inc., namely, operating petitioners' xerox machine, is not directly related nor necessary to the business of selling and leasing copier machines of petitioner. The Court disagreed. As correctly held by the NLRC, at the very least, the Xerox Copier Project of petitioners promotes goodwill for the company . It may not generate income for the company but there are activities which a company may find necessary to engage in because they ultimately redound to its benefit. Operating the company's copiers at its branches advertises the quality of their products and promotes the company's reputation and public image. It also advertises the utility and convenience of having a copier machine. It is noteworthy that while not operated for profit the copying service is not intended either to be "promotional," as, indeed, petitioner charged a fee for the copies made. It is wrong to say that if a task is not directly related to the employer's business, or it falls under what may be considered "housekeeping activities," the one performing the task is a job contractor. The determination of the existence of an employer-employee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved.3. Petitioners contend that it never exercised control over the conduct of private respondent. It is also contended that it was Skillpower, Inc. which twice required private respondent to explain why he should not be dismissed for the spoilage in Fuji Xerox's Buendia branch and suspended him pending the result of the investigation. According to petitioners, although they conducted an administrative investigation, the purpose was only to determine the complicity of their own employees in the incident, if any, and any criminal liability of private respondent. They dispel any doubt that Fuji Xerox exercised disciplinary authority over Garado and that Skillpower, Inc. issued the order of dismissal merely in obedience to the decision of petitioner.4. Petitioner avers that Skillpower, Inc. is a highly-capitalized business venture, registered as an "independent employer" with the Securities and Exchange Commission as well as the Department of Labor and Employment. Petitioner Fuji Xerox argues that Skillpower, Inc. had typewriters and service vehicles for the conduct of its business independently of the petitioner. But typewriters and vehicles bear no direct relationship to the job for which Skillpower, Inc. contracted its service of operating copier machines and offering copying services to the public. The fact is that Skillpower, Inc. did not have copying machines of its own. What it did was simply to supply manpower to Fuji Xerox. The phrase "substantial capital and investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business," in the Implementing Rules clearly contemplates tools, equipment, etc., which are directly related to the service it is being contracted to render. One who does not have an independent business for undertaking the job contracted for is just an agent of the employer.5. The Agreement between petitioner Fuji Xerox and Skillpower, Inc. provides that Skillpower, Inc. is an independent contractor and that the workers hired by it "shall not, in any manner and under any circumstances, be considered employees of [the] Company, and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor's obligations under this AGREEMENT."Skillpower, Inc. is, therefore, a "labor-only" contractor and Garado is not its employee. No grave abuse of discretion can thus be imputed to the NLRC for declaring petitioner Fuji Xerox guilty of illegal dismissal of private respondent.The petition forcertiorariis DISMISSED for lack of merit.

ER-EE Relationship19. VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT1TRUCKING CORPORATION vs. HON. COURT OF APPEALS and JAIME SAHOTFacts: Sometime in 1958, private respondent Jaime Sahot5started working as a truck helper for petitioners family-owned trucking business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family business, renamed T. Paulino Trucking Service, later 6Bs Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994. Throughout all these changes in names and for 36 years, private respondent continuously served the trucking business of petitioners. In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from various ailments. Particularly causing him pain was his left thigh, which greatly affected the performance of his task as a driver. He inquired about his medical and retirement benefits with the Social Security System (SSS) but discovered that his premium payments had not been remitted by his employer. Sahot had filed a week-long leave sometime in May 1994. He was medically examined and treated for EOR, presleyopia, hypertensive retinopathy G II and heart enlargement. On said grounds, Belen Paulino of the SBT Trucking Service management told him to file a formal request for extension of his leave. At the end of his week-long absence, Sahot applied for extension of his leave for the whole month of June. It was at this time when petitioners allegedly threatened to terminate his employment should he refuse to go back to work. Petitioners dismissed Sahot from work, effective June 30. He ended up sick, jobless and penniless. Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal. He prayed for the recovery of separation pay and attorneys fees against Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein petitioners. Petitioners contend that private respondent was not illegally dismissed as a driver because he was in fact petitioners industrial partner. They add that it was not until the year 1994, when SBT Trucking Corporation was established, and only then did respondent Sahot become an employee of the company, with a monthly salary that reached P4,160.00 at the time of his separation. The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente Santos, ruled that there was no illegal dismissal in Sahots case. Moreover, said the Labor Arbiter, petitioners and private respondent were industrial partners before January 1994. The Labor Arbiter concluded by ordering petitioners to pay "financial assistance" of P15,000 to Sahot for having served the company as a regular employee since January 1994 only. On appeal, the National Labor Relations Commission modified the judgment of the Labor Arbiter. It declared that private respondent was an employee, not an industrial partner, since the start. Petitioners assailed the decision of the NLRC before the Court of Appeals. The appellate court affirmed with modification the judgment of the NLRC. Issue: Whether or not an employer-employee relationship existed between petitioners and respondent SahotHeld: Yes. The Court agrees with complainant that there was error committed by the Labor Arbiter when he concluded that complainant was an industrial partner prior to 1994.Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There was no written agreement, no proof that he received a share in petitioners profits, nor was there anything to show he had any participation with respect to the running of the business. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.As found by the appellate court, petitioners owned and operated a trucking business since the 1950s and by their own allegations, they determined private respondents wages and rest day.Records of the case show that private respondent actually engaged in work as an employee. During the entire course of his employment he did not have the freedom to determine where he would go, what he would do, and how he would do it. He merely followed instructions of petitioners and was content to do so, as long as he was paid his wages. Indeed, said the CA, private respondent had worked as a truck helper and driver of petitioners not for his own pleasure but under the latters control.Article 1767of the Civil Code states that in a contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves.Not one of these circumstances is present in this case. Thus, the NLRC and the CA did not err in reversing the finding of the Labor Arbiter that private respondent was an industrial partner from 1958 to 1994.On this point, we affirm the findings of the appellate court and the NLRC. Private respondent Jaime Sahot was not an industrial partner but an employee of petitioners from 1958 to 1994. The existence of an employer-employee relationship is ultimately a question of factand the findings thereon by the NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality when supported by substantial evidence. Substantial evidence is such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.Time and again this Court has said that "if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter."Here, we entertain no doubt. Private respondent since the beginning was an employee of, not an industrial partner in, the trucking business.

Right to Self-Organization28. PAMANTASAN NG LUNGSOD NG MAYNILA (PLM) vs.CIVIL SERVICE COMMISSION (CSC), PAMANTASAN NG LUNGSOD NG MAYNILA FACULTY ORGANIZATION (PLMFO), ROBERTO AMORES, ROLANDO AUSTRIA, VICENTE BANAGALE, NEMENCIO CABATUANDO, MANOLO HINA, ELEANOR JIMENEZ, ANITA LEYSON, JONATHAN MANZANO, JOSE MEJIA, ESTELITA PINEDA, LORDEO POQUIZ, ALFREDO RAZON, MA. ZELDA REYES, SALVACION RODRIGUEZ, BELINDA SANTOS, and VIRGILIO ZAMORA The sixteen (16) individual private respondents were full-time instructors of PLM under "temporary contracts" of employment renewable on a yearly basis. They, among other instructors, joined the PLMFO. Uniform notices of termination, were individually sent to private respondents informing them of "the expiration of their temporary appointments at the close of office hours on 31 May 1990" and the non-renewal of their appointments for the school year (SY) 1990-1991. A series of letter-complaints addressed to the CSC by private respondents evoked a letter-response from PLM traversing the complainants' right to compel a renewal of the appointments. They were advised that their retention was not recommended by their respective Deans. Private respondents, through PLMFO, filed with the CSC a verified complaint for illegal dismissal and unfair labor practice against petitioner and its officers. Petitioner denied having committed any unfair labor practice or having illegally dismissed private respondents. In its defense, PLM interposed (1) the temporary nature of private respondents' contracts of employment and (2) reasons that could justify the non- renewal of the contracts. Public respondent CSC referred the case to the Public Sector Labor-Management Council("PSLMC"). In a Resolution the PSLMC found petitioner guilty of "Unfair Labor Practice" and held that private respondents "should be reinstated." Petitioner's request for reconsideration was denied in PSLMC's Order. Forthwith, the PSLMC transmitted the case to the CSC for appropriate action. Public respondent CSC, acting on the case forwarded to it by the PSLMC, issued a resolution sustaining the findings of the PSLMC. The CSC, accordingly, directed the reinstatement, with back salaries, of private respondents. The request for the reconsideration of the order was denied by the CSC. Respondent CSC, in denying petitioner's motion, held, among other things, that the findings of fact by the PSLMC deserved the respect of the Commission and that there was no further need for it, to conduct a hearing of its own. PLM filed an instant petition forcertiorari before the SC.Issue: WON the Civil Service Commission acted with grave abuse of discretion tantamount to lack of jurisdiction and denial of due process when it adopted entirely, without according the petitioner the opportunity to be heard, the findings of facts and resolutions of the Public Sector Labor and Management Council, a body separate and distinct and with different jurisdiction from that of the CommissionWON the CSC committed grave abuse of discretion in directing reinstatement and payment of backwages to private respondents whose temporary contracts of employment had already expired.Held: NO.Petitioner stresses that the CSC and the PSLMC both exercise quasi-judicial functions but not on identical issues and subject matter; that the PSLMC possesses jurisdiction only over the unfair labor practice aspect of private respondents' complaint but that it is the CSC which alone can take cognizance over the question of illegal dismissal; and that, therefore, when the CSC has simply adopted the recommendations of the PSLMC in the unfair labor practice case in resolving the issue of illegal dismissal and ordering the reinstatement of private respondents without conducting further proceedings of its own, it has effectively denied petitioner of its right to due process.PSLMC's jurisdiction over the unfair labor practice case filed by private respondents against petitioner is not disputed. The PSLMC, in case No. 00-06-91, has conducted its proceedings in accordance with its legal mandate.Petitioner insists that when CSC has ruled on the matter of illegal dismissal without conducting any further hearing of its own, relying, instead, on PSLMC's finding of unfair labor practice on the part of petitioner, the latter has thereby been denied due process. Unfortunately for petitioner, however, the two supposed independent issues, i.e., the unfair labor practice charge and the complaint for illegal dismissal both filed by private respondents, are, in fact, here unavoidably interlinked. The non-renewal of an employment contract with a term, it is true, is ordinarily a valid mode of removal at the end of eachperiod.This rule, however, must yield to the superior constitutional right of employees, permanent or temporary, to self-organization. While, a temporary employment may be ended with or without cause, it certainly may not, however, be terminated for anillegalcause.Petitioner claims that it was denied "due process." It itself admitted, however, that "it manifested (before the PSLMC) its intention to submit evidence (that it had other valid grounds for not renewing private respondents' temporary contracts of employment) which, inadvertently or otherwise, it failed to present . . .This supposed evidence, if true and being material to substantiate its defense against the unfair labor charge, should have been duly presented, but it did not. Petitioner should not now be heard to complain that it was denied due process. The court ruled, time and again, that "due process" was designed to afford an opportunity to be heard,not that an actual hearing should always and indispensably be held.The finding of the PSLMC that the non-renewal by petitioner of the questioned contracts of employment had been motivated by private respondents' union activities is conclusive on the parties. Indeed, this Court's resolution in G.R. No. 105157 (PLM vs. PSLMC et al.) which has long become final and executory should now render that matter afait accompli.When the case was thus referred to the CSC by the PSLMC to take "appropriate action" it understandably meant that the CSC should take the necessary steps of reinstating the illegally dismissed employees.WHEREFORE, the petition forcertiorariis DISMISSED and the appealed resolutions of the Civil Service Commission are AFFIRMED.

37. DELA SALLE UNIVERSITYvs. DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEA) and BUENAVENTURA MAGSALINFacts: Dela Salle University (hereinafter referred to as UNIVERSITY) and Dela Salle University Employees Association National Federation of Teachers and Employees Union (DLSUEA-NAFTEU), which is composed of regular non-academic rank and file employees,(hereinafter referred to as UNION) entered into a collective bargaining agreement with a life span of three (3) years. During the freedom period, or 60 days before the expiration of the said collective bargaining agreement, the Union initiated negotiations with the University for a new collective bargaining agreementwhich, however, turned out to be unsuccessful, hence, the Union filed a Notice of Strike with the National Conciliation and Mediation Board, National Capital Region. After several conciliation-mediation meetings, five (5) out of the eleven (11) issues raised in the Notice of Strike were resolved by the parties. A partial collective bargaining agreement was thereafter executed by the parties. The parties entered into a Submission Agreement, identifying the remaining six (6) unresolved issues for arbitration, namely: "(1) scope of the bargaining unit, (2) union security clause, (3) security of tenure, (4) salary increases for the third and fourth years [this should properly read second and third years]of the collective bargaining agreement, (5) indefinite union leave, reduction of the union president's workload, special leave, and finally, (6) duration of the agreement." The parties appointed Buenaventura Magsalin as voluntary arbitrator.The voluntary arbitrator rendered a decision the first issue involving the scope of the bargaining unit, ruled that ". . . the Computer Operators assigned at the CSC [Computer Services Center], just like any other Computer Operators in other units, [should be] included as members of the bargaining unit,"13after finding that "[e]vidently, the Computer Operators are presently doing clerical and routinary work and had nothing to do with [the] setting of management policies for the University, as [may be] gleaned from the duties and responsibilities attached to the position and embodied in the CSC [Computer Services Center] brochure. They may have, as argued by the University, access to vital information regarding the University's operations but they are not necessarily confidential."14Regarding the discipline officers, the voluntary arbitrator ". . . believes that this type of employees belong (sic) to the rank-and-file on the basis of the nature of their job."15With respect to the employees of the College of St. Benilde, the voluntary arbitrator found that the College of St. Benilde has a personality separate and distinct from the University and thus, held ". . . that the employees therein are outside the bargaining unit of the University's rank-and-file employees."16On the second issue regarding the propriety of the inclusion of a union shop clause in the collective bargaining agreement, in addition to the existing maintenance of membership clause, the voluntary arbitrator opined that a union shop clause ". . . is not a restriction on the employee's right of (sic) freedom of association but rather a valid form of union security while the CBA is in force and in accordance with the Constitutional policy to promote unionism and collective bargaining and negotiations. The parties therefore should incorporate such union shop clause in their CBA."17On the third issue with respect to the use of the "last-in-first-out" method in case of retrenchment and transfer to other schools or units, the voluntary arbitrator upheld the ". . . elementary right and prerogative of the management of the University to select and/or choose its employees, a right equally recognized by the Constitution and the law. The employer, in the exercise of this right, can adopt valid and equitable grounds as basis for lay-off or separation, like performance, qualifications, competence, etc. Similarly, the right to transfer or reassign an employee is an employer's exclusive right and prerogative."18Regarding the fourth issue concerning salary increases for the second and third years of the collective bargaining agreement, the voluntary arbitrator opined that the ". . .proposed budget of the University for SY 1992-93 could not sufficiently cope up with the demand for increases by the Union. . . . . . . . With the present financial condition of the University, it cannot now be required to grant another round of increases through collective bargaining without exhausting its coffers for other legitimate needs of the University as an institution,"19thus, he ruled that ". . . the University can no longer be required to grant a second round of increase for the school years under consideration and charge the same to the incremental proceeds."20On the fifth issue as to the Union's demand for a reduction of the workload of the union president, special leave benefits and indefinite union leave with pay, the voluntary arbitrator rejected the same, ruling that unionism ". . . is no valid reason for the reduction of the workload of its President,"21and that there is ". . . no sufficient justification to grant an indefinite leave."22Finding that the Union and the Faculty Association are not similarly situated, technically and professionally,23and that "[w]hile professional growth is highly encouraged on the part of the rank-and-file employees, this educational advancement would not serve in the same degree as demanded of the faculty members,"24the voluntary arbitrator denied the Union's demand for special leave benefits.On the last issue regarding the duration of the collective bargaining agreement, the voluntary arbitrator ruled that ". . . when the parties forged their CBA and signed it on 19 November 1990, where a provision on duration was explicitly included, the same became a binding agreement between them. Notwithstanding the Submission Agreement, thereby reopening this issue for resolution, this Voluntary Arbitrator is constrained to respect the original intention of the parties, the same being not contrary to law, morals or public policy."25As to the economic aspect of the collective bargaining agreement, the voluntary arbitrator opined that the ". . . economic provisions of the CBA shall be re-opened after the third year in compliance with the mandate of the Labor Code, as amended."26Subsequently, both parties filed their respective motions for reconsideration which, however, were not entertained by the voluntary arbitrator "pursuant to existing rules and jurisprudence governing voluntary arbitration cases."27On March 5, 1993, the University filed with the Second Division of this Court, a petition forcertiorariwith temporary restraining order and/or preliminary injunction assailing the decision of the voluntary arbitrator, as having been rendered "in excess of jurisdiction and/or with grave abuse of discretion."28Subsequently, on May 24, 1993, the Union also filed a petition forcertiorariwith the First Division.29Without giving due course to the petition pending before each division, the First and Second Divisions separately resolved to require the respondents in each petition, including the Solicitor General on behalf of the voluntary arbitrator, to file their respective Comments.30Upon motion by the Solicitor General dated July 29, 1993, both petitions were consolidated and transferred to the Second Division.31In his consolidated Comment32filed on September 9, 1993 on behalf of voluntary arbitrator Buenaventura C. Magsalin, the Solicitor General agreed with the voluntary arbitrator's assailed decision on all points except that involving the employees of the College of St. Benilde. According to the Solicitor General, the employees of the College of St. Benilde should have been included in the bargaining unit of the rank-and-file employees of the University.33The Solicitor General came to this conclusion after finding ". . . sufficient evidence to justify the Union's proposal to consider the University and the CSB [College of St. Benilde] as only one entity because the latter is but a mere integral part of the University," to wit:341. One of the duties and responsibilities of the CSB's Director of Academic Services is to coordinate with the University's Director of Admissions regarding the admission of freshmen, shiftees and transferees (Annex "3" of the University's Reply);2. Some of the duties and responsibilities of the CSB's Administrative Officer are as follows:A. xxx xxx xxx4. Recommends and implements personnel policies and guidelines (in accordance with the Staff Manual) as well as pertinent existing general policies of the university as a whole. . . . .12. Conducts and establishes liaison with all the offices concerned at the Main Campus as well (sic) with other government agencies on all administrative-related matters. . . .B. xxx xxx xxx7. Handles processing, canvassing and direct purchasing of all requisitions worth more than P10,000 or less. Coordinates and canvasses with the Main Campus all requisitions worth more than P10,000. . . .C. xxx xxx xxx7. Plans and coordinates with the Security and Safety Committee at the Main Campus the development of a security and safety program during times of emergency or occurrence of fire or other natural calamities. . . . (Annex "4" of the University's Reply).3. The significant role which the University assumes in the admission of students at the CSB is revealed in the following provisions of the CSB's Bulletin for Arts and Business Studies Department for the schoolyear 1992-1993, thus:Considered in the process of admission for a (sic) high school graduate applicants are the following criteria: results of DLSU College Entrance Examination . . . .Admission requirements for transferees are: . . . and an acceptable score in the DLSU admission test. . . .Shiftees from DLSU who are still eligible to enroll may be admitted in accordance with the DLSU policy on shifting. Considering that there sometimes exist exceptional cases where a very difficult but temporary situation renders a DLSU student falling under this category a last chance to be re-admitted provided he meets the cut-off scores required in the qualifying examination administered by the university. . . .He may not be remiss in his study obligations nor incur any violation whatsoever, as such will be taken by the University to be an indication of his loss of initiative to pursue further studies at DLSU. In sch (sic) a case, he renders himself ineligible to continue studying at DLSU. DLSU thus reserves the right to the discontinuance of the studies of any enrolee whose presence is inimical to the objectives of the CSB/DLSU. . . .As a college within the university, the College of St. Benilde subscribes to the De La Salle Mission." (Annexes "C-1," "C-2," and "C-3" of the Union's Consolidated Reply and Rejoinder)4. The academic programs offered at the CSB are likewise presented in the University's Undergraduate Prospectus for schoolyear 1992-1993 (Annex "D" of the Union's Consolidated Reply and Rejoinder).5. The Leave Form Request (Annex "F" of the Union's Position Paper) at the CSB requires prior permission from the University anent leaves of CSB employees, to wit:AN EMPLOYEE WHO GOES ON LEAVE WITHOUT PRIOR PERMISSION FROM THE UNIVERSITY OR WHO OVEREXTENDS THE PERIOD OF HIS APPROVED LEAVE WITHOUT SECURING AUTHORITY FROM THE UNIVERSITY, OR WHO REFUSE TO BE RECALLED FROM AN APPROVED LEAVE SHALL BE CONSIDERED ABSENT WITHOUT LEAVE AND SHALL BE SUBJECT TO DISCIPLINARY ACTION.6. The University officials themselves claimed during the 1990 University Athletic Association of the Philippines (UAAP) meet that the CSB athletes represented the University since the latter and the CSB comprise only one entity.On February 9, 1994, this Court resolved to give due course to these consolidated petitions and to require the parties to submit their respective memoranda.35In its memorandum filed on April 28, 1994,36pursuant to the above-stated Resolution,37the University raised the following issues for the consideration of the Court:38I.WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE INCLUDED, WITHIN THE BARGAINING UNIT COMPRISING THE UNIVERSITY'S RANK-AND-FILE EMPLOYEES, THE COMPUTER OPERATORS ASSIGNED AT THE UNIVERSITY'S COMPUTER SERVICES CENTER AND THE UNIVERSITY'S DISCIPLINE OFFICERS, AND WHEN HE EXCLUDED THE COLLEGE OF SAINT BENILDE EMPLOYEES FROM THE SAID BARGAINING UNIT.II.WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE UPHELD THE UNION'S DEMAND FOR THE INCLUSION OF A UNION SHOP CLAUSE IN THE PARTIES' COLLECTIVE BARGAINING AGREEMENT.III.WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION'S PROPOSAL FOR THE "LAST-IN-FIRST-OUT" METHOD OF LAY-OFF IN CASES OF RETRENCHMENT.IV.WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE RULED THAT THE UNIVERSITY CAN NO LONGER BE REQUIRED TO GRANT A SECOND ROUND OF WAGE INCREASES FOR THE SCHOOL YEARS 1991-92 AND 1992-93 AND CHARGE THE SAME TO THE INCREMENTAL PROCEEDS.V.WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION'S PROPOSALS ON THE DELOADING OF THE UNION PRESIDENT, IMPROVED LEAVE BENEFITS AND INDEFINITE UNION LEAVE WITH PAY.The Union, on the other hand, raised the following issues, in its memorandum,39filed pursuant to Supreme Court Resolution dated February 9, 1994,40to wit; that the voluntary arbitrator committed grave abuse of discretion in:(1) FAILING AND/OR REFUSING TO PIERCE THE VEIL OF CORPORATE FICTION OF THE COLLEGE OF ST. BENILDE-DLSU DESPITE THE PRESENCE OF SUFFICIENT BASIS TO DO SO AND IN FINDING THAT THE EMPLOYEES THEREAT ARE OUTSIDE OF THE BARGAINING UNIT OF THE DLSU'S RANK-AND-FILE EMPLOYEES. HE ALSO ERRED IN HIS INTERPRETATION OF THE APPLICATION OF THE DOCTRINE;(2) DENYING THE PETITIONER'S PROPOSAL FOR THE "LAST-IN FIRST-OUT" METHOD OF LAY-OFF IN CASE OF RETRENCHMENT AND IN UPHOLDING THE ALLEGED MANAGEMENT PREROGATIVE TO SELECT AND CHOOSE ITS EMPLOYEES DISREGARDING THE BASIC TENETS OF SOCIAL JUSTICE AND EQUITY UPON WHICH THIS PROPOSAL WAS FOUNDED;(3) FINDING THAT THE MULTISECTORAL COMMITTEE IN THE RESPONDENT UNIVERSITY IS THE LEGITIMATE GROUP WHICH DETERMINES AND SCRUTINIZES ANNUAL SALARY INCREASES AND FRINGE BENEFITS OF THE EMPLOYEES;(4) HOLDING THAT THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS IS THE ONLY SOURCE OF SALARY INCREASES AND FRINGE BENEFITS OF THE EMPLOYEES;(5) FAILING/REFUSING/DISREGARDING TO CONSIDER THE RESPONDENT UNIVERSITY'S FINANCIAL STATEMENTS FACTUALLY TO DETERMINE THE FORMER'S CAPABILITY TO GRANT THE PROPOSED SALARY INCREASES OVER AND ABOVE THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS AND IN GIVING WEIGHT AND CONSIDERATION TO THE RESPONDENT UNIVERSITY'S PROPOSED BUDGET WHICH IS MERELY AN ESTIMATE.(6) FAILING TO EQUATE THE POSITION AND RESPONSIBILITIES OF THE UNION PRESIDENT WITH THOSE OF THE PRESIDENT OF THE FACULTY ASSOCIATION WHICH IS NOT EVEN A LEGITIMATE LABOR ORGANIZATION AND IN SPECULATING THAT THE PRESIDENT OF THE FACULTY ASSOCIATION SUFFERS A CORRESPONDING REDUCTION IN SALARY ON THE ACCOUNT OF THE REDUCTION OF HIS WORKLOAD; IN FAILING TO APPRECIATE THE EQUAL RIGHTS OF THE MEMBERS OF THE UNION AND OF THE FACULTY FOR PROFESSIONAL ADVANCEMENT AS WELL AS THE DESIRABLE EFFECTS OF THE INSTITUTIONALIZATION OF THE SPECIAL LEAVE AND WORKLOAD REDUCTION BENEFITS.41The question which now confronts us is whether or not the voluntary arbitrator committed grave abuse of discretion in rendering the assailed decision, particularly, in resolving the following issues: (1) whether the computer operators assigned at the University's Computer Services Center and the University's discipline officers may be considered as confidential employees and should therefore be excluded from the bargaining unit which is composed of rank and file employees of the University, and whether the employees of the College of St. Benilde should also be included in the same bargaining unit; (2) whether a union shop clause should be included in the parties' collective bargaining agreement, in addition to the existing maintenance of membership clause; (3) whether the denial of the Union's proposed "last-in-first-out" method of laying-off employees, is proper; (4) whether the ruling that on the basis of the University's proposed budget, the University can no longer be required to grant a second round of wage increases for the school years 1991-92 and 1992-93 and charge the same to the incremental proceeds, is correct; (5) whether the denial of the Union's proposals on the deloading of the union president, improved leave benefits and indefinite union leave with pay, is proper; (6) whether the finding that the multi-sectoral committee in the University is the legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of the employees of the University, is correct; and (7) whether the ruling that the 70% share in the incremental tuition proceeds is the only source of salary increases and fringe benefits of the employees, is proper.Now, before proceeding to the discussion and resolution of the issues raised in the pending petitions, certain preliminary matters call for disposition. As we reiterated in the case ofCaltex Refinery Employees Association(CREA)vs.Jose S.Brillantes,42the following are the well-settled rules in a petition forcertiorariinvolving labor cases. "First, the factual findings of quasi-judicial agencies (such as the Department of Labor and Employment), when supported by substantial evidence, are binding on this Court and entitled to great respect, considering the expertise of these agencies in their respective fields. It is well-established that findings of these administrative agencies are generally accorded not only respect but even finality.43Second, substantial evidence in labor cases is such amount of relevant evidence which a reasonable mind will accept as adequate to justify a conclusion.44Third, inFlores vs.National Labor Relations Commission,45we explained the role and function of Rule 65 as an extraordinary remedy:It should be noted, in the first place, that the instant petition is a special civil action forcertiorariunder Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only and restrictively in truly exceptional cases those wherein the action of an inferior court, board or officer performing judicial or quasi-judicial acts is challenged for being wholly void on grounds of jurisdiction. The sole office of the writ ofcertiorariis the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of public respondent NLRC's evaluation of the evidence and factual findings based thereon, which are generally accorded not only great respect but even finality.No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench. Instead, what is being sought is a judicial re-evaluation of the adequacy or inadequacy of the evidence on record, which is certainly beyond the province of the extraordinary writ ofcertiorari. Such demand is impermissible for it would involve this Court in determining what evidence is entitled to belief and the weight to be assigned it. As we have reiterated countless times, judicial review by this Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction. (emphasis supplied).With the foregoing rules in mind, we shall now proceed to discuss the merit of these consolidated petitions.We affirm in part and modify in part.On the first issue involving the classification of the computer operators assigned at the University's Computer Services Center and discipline officers, the University argues that they are confidential employees and that the Union has already recognized the confidential nature of their functions when the latter agreed in the parties' 1986 collective bargaining agreement to exclude the said employees from the bargaining unit of rank-and-file employees. As far as the said computer operators are concerned, the University contends that ". . . the parties have already previously agreed to exclude all positions in the University's Computer Services Center (CSC), which include the positions of computer operators, from the collective bargaining unit. . . . . . . . "46The University further contends that ". . . the nature of the work done by these Computer Operators is enough justification for their exclusion from the coverage of the bargaining unit of the University's rank-and-file employees. . . . . . . ."47According to the University, the Computer Services Center, where these computer operators work, ". . . processes data that are needed by management for strategic planning and evaluation of systems. It also houses the University's confidential records and information [e.g. student records, faculty records, faculty and staff payroll data, and budget allocation and expenditure related data] which are contained in computer files and computer-generated reports. . . . . . . . Moreover, the Computer Operators are in fact the repository of the University's confidential information and data, including those involving and/or pertinent to labor relations. . . . . . . ."48As to the discipline officers, the University maintains that " . . . they are likewise excluded from the bargaining unit of the rank-and-file employees under the parties' 1986 CBA. The Discipline Officers are clearlyalter egosof management as they perform tasks which are inherent in management [e.g. enforce discipline, act as peace officers, secure peace and safety of the students inside the campus, conduct investigations on violations of University regulations, or of existing criminal laws, committed within the University or by University employees] . . . . . . . "49The University also alleges that "the Discipline Officers are privy to highly confidential information ordinarily accessible only to management."50With regard to the employees of the College of St. Benilde, the Union, supported by the Solicitor General at this point, asserts that the veil of corporate fiction should be pierced, thus, according to the Union, the University and the College of St. Benilde should be considered as only one entity because the latter is but a mere integral part of the University.51The University's arguments on the first issue fail to impress us. The Court agrees with the Solicitor General that the express exclusion of the computer operators and discipline officers from the bargaining unit of rank-and-file employees in the 1986 collective bargaining agreement does not bar any re-negotiation for the future inclusion of the said employees in the bargaining unit. During the freedom period, the parties may not only renew the existing collective bargaining agreement but may also propose and discuss modifications or amendments thereto. With regard to the alleged confidential nature of the said employees' functions, after a careful consideration of the pleadings filed before this Court, we rule that the said computer operators and discipline officers are not confidential employees. As carefully examined by the Solicitor General, the service record of a computer operator reveals that his duties are basically clerical and non-confidential in nature.52As to the discipline officers, we agree with the voluntary arbitrator that based on the nature of their duties, they are not confidential employees and should therefore be included in the bargaining unit of rank-and-file employees.The Court also affirms the findings of the voluntary arbitrator that the employees of the College of St. Benilde should be excluded from the bargaining unit of the rank-and-file employees of Dela Salle University, because the two educational institutions have their own separate juridical personality and no sufficient evidence was shown to justify the piercing of the veil of corporate fiction.53On the second issue involving the inclusion of a union shop clause in addition to the existing maintenance of membership clause in the collective bargaining agreement, the University avers that ". . . it is in the spirit of the exercise of the constitutional right to self-organization that every individual should be able to freely choose whether to become a member of the Union or not. The right to join a labor organization should carry with it the corollary right not to join the same. This position of the University is but in due recognition of the individual's free will and capability for judgment."54The University assails the Union's demand for a union shop clause as ". . . definitely unjust and amounts to oppression. Moreover, such a demand is repugnant to democratic principles and the constitutionally guaranteed freedom of individuals to join or not to join an association as well as their right to security of tenure, particularly, on the part of present employees."55The Union, on the other hand, counters that the Labor Code, as amended, recognizes the validity of a union shop agreement in Article 248 thereof which reads:Art. 248.Unfair labor practices of employers. x x x x x x x x x(e) To discriminate in regard to hire or tenure of employment or any term or condition of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall prevent the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement. . . . . . . ." (emphasis supplied)We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop provision in addition to the existing maintenance of membership clause in the collective bargaining agreement. As the Solicitor General asserted in his consolidated Comment, the University's reliance on the case ofVictoriano vs.Elizalde Rope Workers'Union56is clearly misplaced. In that case, we ruled that ". . . the right to join a union includes the right to abstain from joining any union. . . . . . . . The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only members of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. . . . . . . ."57On the third issue regarding the Union's proposal for the use of the "last-in-first-out" method in case of lay-off, termination due to retrenchment and transfer of employees, the Union relies on social justice and equity to support its proposition, and submits that the University's prerogative to select and/or choose the employees it will hire is limited, either by law or agreement, especially where the exercise of this prerogative might result in the loss of employment.58The Union further insists that its proposal is ". . . in keeping with the avowed State policy '(q) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare' (Art. 211, Labor Code, as amended)."59On the other hand, the University asserts its management prerogative and counters that "[w]hile it is recognized that this right of employees and workers to 'participate in policy and decision-making processes affecting their rights and benefits as may be provided by law' has been enshrined in the Constitution (Article III, [should be Article XIII], Section 3, par. 2), said participation, however, does not automatically entitle the Union to dictate as to how an employer should choose the employees to be affected by a retrenchment program. The employer still retains the prerogative to determine the reasonable basis for selecting such employees."60We agree with the voluntary arbitrator that as an exercise of management prerogative, the University has the right to adopt valid and equitable grounds as basis for terminating or transferring employees. As we ruled in the case ofAutobus Workers'Union (AWU) and Ricardo Escanlar vs.National Labor Relations Commission,61"[a] valid exercise of management prerogative is one which, among others, covers: work assignment, working methods, time, supervision of workers, transfer of employees, work supervision, and the discipline, dismissal and recall of workers. Except as provided for, or limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment." (emphasis supplied)On the fourth issue involving the voluntary arbitrator's ruling that on the basis of the University's proposed budget, the University can no longer be required to grant a second round of wage increases for the school years 1991-92 and 1992-93 and charge the same to the incremental proceeds, we find that the voluntary arbitrator committed grave abuse of discretion amounting to lack or excess of jurisdiction. As we ruled in the case ofCaltex Refinery Employees Association (CREA) vs.Jose S.Brillantes,62". . . . . . . [w]e believe that the standard proof of a company's financial standing is its financial statements duly audited by independent and credible external auditors."63Financial statements audited by independent external auditors constitute the normal method of proof of profit and loss performance of a company.64The financial capability of a company cannot be based on its proposed budget because a proposed budget does not reflect the true financial condition of a company, unlike audited financial statements, and more importantly, the use of a proposed budget as proof of a company's financial condition would be susceptible to abuse by scheming employers who might be merely feigning dire financial condition in their business ventures in order to avoid granting salary increases and fringe benefits to their employees.On the fifth issue involving the Union's proposals on the deloading of the union president, improved leave benefits and indefinite union leave with pay, we agree with the voluntary arbitrator's rejection of the said demands, there being no justifiable reason for the granting of the same.On the sixth issue regarding the finding that the multi-sectoral committee in the University is the legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of the employees of the University, the Court finds that the voluntary arbitrator did not gravely abuse his discretion on this matter. From our reading of the assailed decision, it appears that during the parties' negotiations for a new collective bargaining agreement, the Union demanded for a 25% and 40% salary increase for the second and third years, respectively, of the collective bargaining agreement.65The University's counter-proposal was for a 10% increase for the third year.66After the meeting of the multi-sectoral committee on budget, which is composed of students, parents, faculty, administration and union, the University granted across-the-board salary increases of 11.3% and 19% for the second and third years, respectively.67While the voluntary arbitrator found that the said committee ". . . decided to grant the said increases based on the University's viability which were exclusively sourced from the tuition fees. . . . . . . .," no finding was made as to the basis of the committee's decision. Be that as it may, assuming for the sake of argument that the said committee is the group responsible for determining wage increases and fringe benefits, as ruled by the voluntary arbitrator, the committee's determination must still be based on duly audited financial statements following our ruling on the fourth issue.1wphi1On the seventh and last issue involving the ruling that the 70% share in the incremental tuition proceeds is the only source of salary increases and fringe benefits of the employees, the Court deems that any determination of this alleged error is unnecessary and irrelevant, in view of our rulings on the fourth and preceding issues and there being no evidence presented before the voluntary arbitrator that the University held incremental tuition fee proceeds from which any wage increase or fringe benefit may be satisfied.WHEREFORE, premises considered, the petitions in these consolidated cases, G.R. No. 109002 and G.R. No. 110072 are partially GRANTED. The assailed decision dated January 19, 1993 of voluntary arbitrator Buenaventura Magsalin is hereby AFFIRMED with the modification that the issue on salary increases for the second and third years of the collective bargaining agreement be REMANDED to the voluntary arbitrator for definite resolution within one month from the finality of this Decision, on the basis of the externally audited financial statements of the University already submitted by the Union before the voluntary arbitrator and forming part of the records.1wphi1.ntSO ORDERED.Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.

47. HOLY CROSS OF DAVAO COLLEGE, INC.,petitioner,vs.HON. JEROME JOAQUIN, in his capacity as Voluntary Arbitrator, and HOLY CROSS OF DAVAO COLLEGE UNION-KALIPUNAN NG MANGGAGAWANG PILIPINO (KAMAPI),respondents.NARVASA,C.J.:pA collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was entered into between petitionerHoly Cross of Davao College, Inc. (hereafter Holy Cross), an educational institution, and the affiliate labor organization representing its employees, respondentHoly Cross of Davao College Union-KAMAPI(hereafter KAMAPI). Shortly before the expiration of the agreement, KAMAPI President, Jose Lagahit, wrote Holy Cross under date of April 12, 1989 expressing his union's desire to renew the agreement, withal seeking its extension for two months, or until July 31, 1989, on the ground that the teachers were still on summer vacation and union activities necessary or incident to the negotiation of a new agreement could not yet be conducted.1Holy Cross President Emilio P. Palma-Gil replied that he had no objection to the extension sought, it being allowable under the collective bargaining agreement.2On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI membership for the purpose of electing a new set of union officers, at which Rodolfo Gallera won election as president. To the surprise of many, and with resultant dissension among the membership, Gallera forthwith initiated discussions for the union's disaffiliation from the KAMAPI Federation.Gallera's group subsequently formed a separate organization known as theHoly Cross of Davao College Teachers Union, and elected its own officers. For its part, the existing union, KAMAPI, sent to the School its proposals for a new collective bargaining contract; this it did on July 31, 1989, the expiry date of the two-month extension it had sought.3Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees the corresponding union dues and special assessments (payable by union members), and agency fees (payable by non-members), in accordance with the check-off clause of the CBA,4prompting KAMAPI, on September 1, 1989, to demand an explanation.In the meantime, there ensued between the two unions a full-blown action on the basic issue of representation, which was to last for some two years. It began with the filing by the new union (headed by Gallera) of a petition for certification election in the Office of the Med-Arbiter.5KAMAPI responded by filing a motion asking the Med-Arbiter to dismiss the petition. On August 31, 1989, KAMAPI also advised Holy Cross of the election of a new set officers who would also comprise its negotiating panel.6The Med-Arbiter denied KAMAPI's motion to dismiss, and ordered the holding of a certification election. On appeal, however, the Secretary of Labor reversed the Med-Arbiter's ruling and ordered the dismissal of the petition for certification election, which action was eventually sustained by this Court in appropriate proceedings.After its success in the certification election case KAMAPI presented, on April 11, 1991, revised bargaining proposals to Holy Cross;7and on July 11, 1991, it sent a letter to the School asking for its counter-proposals. The School replied, that it did not know if the Supreme Court had in fact affirmed the Labor Secretary's decision in favor of KAMAPI as the exclusive bargaining representative of the School employees, whereupon KAMAPI's counsel furnished it with a copy of the Court's resolution to that effect; and on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its counter-proposals as regards the terms of a new CBA.In response, Holy Cross declared that it would take no action towards a new CBA without a "definitive ruling" on the proper interpretation of Article I of the old CBA which should have expired on May 31, 1989 (but, as above stated, had been extended for two months at the KAMAPI's request). Said Article providesinter aliafor the automatic extension of the CBA for another period of three (3) years counted from its expiration, if the parties fail to agree on a renewal, modification or amendment thereof. It appears, in fact, that the opinion of the DOLE Regional Director on the meaning and import of said Article I had earlier been sought by the College president, Emilio Palma Gil.8KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor practice for refusing to bargain despite the former's repeated demands; and on the following day, it filed a notice of strike with the National Mediation and Conciliation Board.9KAMAPI and Holy Cross were ordered to appear before Conciliator-Mediator Agapito J. Adipen on October 2, 1991. Several conciliation meetings were thereafter held between them, and when these failed to bring about any amicable settlement, the parties agreed to submit the case to voluntary arbitration.10Both parties being of the view that the dispute did indeed revolve around the interpretation of 1 and 2 of Article I of the CBA, they submitted position papers explicitly dealing with the following issues presented by them for resolution to the voluntary arbitrator:a. Whether or not the CBA which expired on May 31, 1989 was automatically renewed and did not serve merely as a holdover CBA; andb. Whether or not there was refusal to negotiate on the part of the Holy Cross of Davao College.On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI.Respecting the matter of the automatic renewal of the bargaining agreement, the Voluntary Arbitrator ruled that the request for extension filed by KAMAPI constituted seasonable notice of its intention to renew, modify or amend the agreement, which it could not however pursue because of the absence of the teachers who were then on summer vacation.11He rejected the contention of Holy Cross that KAMAPI had unreasonably delayed (until July 31, 1989) the submission of bargaining proposals, opining that the delay was partly attributable to the School's prolonged inaction on KAMAPI's request for extension of the CBA. He also ruled that Holy Cross was estopped from claiming automatic renewal of the CBA because it ceased to implement the check-off provision embodied in the CBA, declaring said School's argument that a "definitive ruling" by the DOLE on the correct interpretation of the automatic-extension clause of the old CBA was a condition precedent to negotiations for a new CBA to be a mere afterthought set up to justify its refusal to bargain with KAMAPI after the latter had proven that it was the legally-empowered bargaining agent of the school employees. In the dispositive portion of his award, the Voluntary Arbitrator ordered Holy Cross to:1. sit down, negotiate and conclude (an agreement) with the Holy Cross of Davao College Faculty Union-KAMAPI, which, by Resolution of the Supreme Court, remains the collective bargaining agent of the permanent and regular teachers of said educational institution; (and)2. pay to the Union the amount equivalent to the uncollected union dues from August 1989 up to the time respondent shall have concluded a new CBA with the Union, it appearing that respondent stopped complying with the CBA's check-off provisions as of said date.12The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC, Region XI, Davao City, to make the proper computation of the union dues to be paid by management to the complainant union.Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary Arbitrator's decision on the following grounds,viz.:131. That the voluntary arbitrator erred and acted in grave abuse of discretion amounting to lack or excess of jurisdiction in ordering petitioner to pay the union the uncollected union dues to private respondent which was not even an issue submitted for voluntary arbitration, resulting in serious violation of due process.2. That the voluntary arbitrator erred in considering that petitioner refused to negotiate with (the) Union, contrary to the records and evidence presented in the case.The Voluntary Arbitrator's conclusion that petitioner Holy Cross had, in light of the evidence on record, failed to negotiate with KAMAPI, adjudged as the collective bargaining agent of the school's permanent and regularteachers is a conclusion of fact that the Court will not review, the inquiry at bar being limited to the issue of whether or not said Voluntary Arbitrator had acted without or in excess of his jurisdiction, or with grave abuse of discretion; nor does the Court see its way clear, after analyzing the record, to pronouncing that reasoned conclusion to have been made so whimsically, capriciously, oppressively, or unjustifiably in other words, attended by grave abuse of discretion amounting to lack or excess of jurisdiction as to call for extension of the Court's correcting hand through the extraordinary writ ofcertiorari. Said finding should therefore be, and is hereby, sustained.Now, concerning its alleged failure to observe the check-off provisions of the collective bargaining agreement, Holy Cross contends that this was not one of the issues raised in the arbitration proceedings; that said issue was therefore extraneous and improper; and that even assuming the contrary, it (Holy Cross) had not in truth violated the CBA.Holy Cross asserts that it could not comply with the check-off provision because contrary to established practice prior to August, 1989, KAMAPI failed to submit to the college comptroller every 8th day of the month, a list of employees from whom union dues and the corresponding agency fees were to be deducted; further, that there was an uncertainty as to the recognized bargaining agent with whom it would deal a matter settled only upon its receipt of a copy of this Court's Resolution on July 18, 1991 and in any case, the Voluntary Arbitrator's order for it to pay to the union the uncollected employees' dues or agency fees would amount to the union's unjust enrichment.14KAMAPI maintains, on the other hand, that the check-off issue was raised in the position paper it submitted in the voluntary arbitration proceedings; and that in any case, the issue was intimately connected with those submitted for resolution and necessary for complete adjudication of the rights and obligations of the parties;15and that said position paper had alleged the manifest bad faith of management in not providing information as to who were regular employees, thereby precluding determination of teachers eligible for union membership.Disregarding the objection of failure to seasonably set up the check-off question the factual premises thereof not being indisputable, and technical objections of this sort being generally inconsequential in quasi-judicial proceedings the issues here ultimately boil down to whether or not an employer is liable to pay to the union of its employees, the amounts it failed to deduct from their salaries asunion dues(with respect to union members) oragency fees(as regards those not union members) in accordance with the check-off provisions of the collective bargaining contract (CBA) which it claims to have been automatically extended.A check-off is a process or device whereby the employer, on agreement with the union recognized as the proper bargaining representative, or on prior authorization from its employees, deducts union dues or agency fees from the latter's wages and remits them directly to the union.16Its desirability to a labor organization is quite evident; by it, it is assured of continuous funding. Indeed, this Court has acknowledged that the system of check-off is primarily for the benefit of the union and, only indirectly, of the individual laborers.17When so stipulated in a collective bargaining agreement, or authorized in writing by the employees concerned the Labor Code and its Implementing Rules recognize it to be the duty of the employer to deduct sums equivalent to the amount of union dues from the employees' wages for direct remittance to the union, in order to facilitate the collection of funds vital to the role of the union as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the local union which continues to represent the employees under the terms of a CBA, and not to the parent association from which it has disaffiliated.18The legal basis of check-off is thus found in statute or in contract.19Statutory limitations on check-offs generally require written authorization from each employee to deduct wages; however, a resolution approved and adopted by a majority to the union members at a general meeting will suffice when the right to check-off has been recognized by the employer, including collection of reasonable assessments in connection with mandatory activities of the union, or other special assessments and extraordinary fees.20Authorization to effect a check-off of union dues is co-terminous with the union affiliation or membership of employees.21On the other hand, the collection ofagency feesin an amount equivalent to union dues and fees, from employees who are not union members, is recognized by Article 248 (e) of the Labor Code. No requirement of written authorization from the non-union employee is imposed. The employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union.22No provision of law makes the employer directly liable for the payment to the labor organization of union dues and assessments that the former fails to deduct from its employees' salaries and wages pursuant to a check-off stipulation. The employer's failure to make the requisite deductions may constitute a violation of a contractual commitment for which it may incur liability for unfair labor practice.23But it does not by that omission, incur liability to the union for the aggregate of dues or assessments uncollected from the union members, or agency fees for non-union employees.Check-offs in truth impose an extra burden on the employer in the form of additional administrative and bookkeeping costs. It is a burden assumed by management at the instance of the union and for its benefit, in order to facilitate the collection of dues necessary for the latter's life and sustenance. But the obligation to pay union dues and agency fees obviously devolvesnotupon the employer, but the individual employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions and remit the collections to the union. The principle of unjust enrichment necessarily precludes recovery of union dues or agency fees from the employer, these being, to repeat, obligations pertaining to the individual worker in favor of the bargaining union. Where the employer fails or refuses to implement a check-off agreement, logic and prudence dictate that the union itself undertake the collection of union dues and assessments from its members (and agency fees from non-union employees); this, of course, without prejudice to suing the employer for unfair labor practice.There was thus no basis for the Voluntary Arbitrator to require Holy Cross to assume liability for the union dues and assessments, and agency fees that it had failed to deduct from its employees' salaries on the proffered plea that contrary to established practice, KAMAPI had failed to submit to the college comptroller every 8th day of the month, a list of employees from whose pay union dues and the corresponding agency fees were to be deducted.WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged decision of the Voluntary Arbitrator, to pay respondent KAMAPI the amount equivalent to the uncollected union dues and agency fees from August 1989 up to the time a new collective bargaining agreement is concluded, is NULLIFIED and SET ASIDE; but in all other respects, the decision of the Voluntary Arbitrator is hereby AFFIRMED.SO ORDERED.Narvasa, C.J., Davide, Jr., Melo, Francisco and Panganiban, JJ., concur.

38. PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA HUT vs.HON. BIENVENIDO LAGUESMA, in his capacity as Undersecretary of Labor, and NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNANFacts: Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan (respondent Union) filed a petition for certification election with the Department of Labor (National Capital Region) in behalf of the rank and file employees of the Progressive Development Corporation (Pizza Hut) Petitioner filed a verified Motion to Dismiss the petition alleging fraud, falsification and misrepresentation in the respondent. Union's registration making it void and invalid. The motion specifically alleged that: a) respondent Union's registration was tainted with false, forged, double or multiple signatures of those who allegedly took part in the ratification of the respondent Union's constitution and by-laws and in the election of its officers that there were two sets of supposed attendees to the alleged organizational meeting; that the alleged chapter is claimed to have been supported by 318 members when in fact the persons who actually signed their names were much less; and b) while the application for registration of the charter was supposed to have been approved in the organizational meeting held onJune 27, 1993, the charter certification issued by the federation KATIPUNAN was datedJune 26, 1993or one (1) day prior to the formation of the chapter, thus, there were serious falsities in the dates of the issuance of the charter certification and the organization meeting of the alleged chapter. Citing other instances of misrepresentation and fraud, petitioner filed a Supplement to its Motion to Dismiss Petitioner filed a Petitionseeking the cancellation of the Union's registration on the grounds of fraud and falsification.Motion was likewise filed by petitioner with the Med-Arbiter requesting suspension of proceedings in the certification election case until after the prejudicial question of the Union's legal personality is determined in the proceedings for cancellation of registration. However,in an Order, Med-Arbiter Rasidali C. Abdullah directed the holding of a certification election among petitioner's rank and file employees. The Order explained that Sumasaklaw sa Manggagawa ng Pizza Hut is a legitimate labor organization and that the alleged misrepresentation, fraud and false statement in connection with the issuance of the charter certificate are collateral issues which could be properly ventilated in the cancellation proceedings. On appeal to the office of the Secretary of Labor, Labor Undersecretary Bienvenido E. Laguesma in a Resolutiondenied the same. A motion for reconsideration of the public respondent's resolution was denied in his Order. Issue: whether or not the public respondent committed grave abuse of discretion in affirming the Med-Arbiter's order to conduct a certification election among petitioner's rank and file employees, considering that: (1) respondent Union's legal personality was squarely put in issue; (2) allegations of fraud and falsification, supported by documentary evidence were made; and (3) a petition to cancel respondent Union's registration is pending with the regional office of the Department of Labor and Employment.Held: Petition GRANTED.In the public respondent's assailed Resolution the suggestion is made that once a labor organization has filed the necessary documents and papers and the same have been certified under oath and attested to, said organization necessarily becomes clothed with the character of a legitimate labor organization. The Court disagrees.In the first place, the public respondent's views miss the entire point behind the nature and purpose of proceedings leading to the recognition of unions as legitimate labor organizations. Article 234 of the Labor Code provides:Art. 234. Requirements of registration. Any applicant labor organization, association or group of unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements:(a) Fifty pesos (P50.00) registration fee;(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings;(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;(d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it.A more than cursory reading of the aforecited provisions clearly indicates that the requirements embodied therein are intended as preventive measures against the commission of fraud. After a labor organization has filed the necessary papers and documents for registration, it becomes mandatory for the Bureau of Labor Relations to check if the requirements under Article 234 have been sedulously complied with. If its application for registration is vitiated by falsification and serious irregularities, especially those appearing on the face of the application and the supporting documents, a labor organization should be denied recognition as a legitimate labor organization. And if a certificate of recognition has been issued, the propriety of the labor organization's registration could be assailed directly through cancellation of registration proceedings in accordance with Articles 238 and 239 of the Labor Code, or indirectly, by challenging its petition for the issuance of an order for certification election.Such requirements are a valid exercise of the police power, because the activities in which labor organizations, associations and unions of workers are engaged directly affect the public interest and should be protected.Thus, inProgressive Development Corporation vs.Secretary of Labor and Employment,14we held:The controversy in this case centers on the requirements before a local or chapter of a federation may file a petition for certification election and be certified as the sole and exclusive bargaining agent of the petitioner's employees.xxx xxx xxxBut while Article 257 cited by the Solicitor General directs the automatic conduct of a certification election in an unorganized establishment, it also requires that the petition for certification election must be filed by a legitimate labor organization . . .xxx xxx xxx. . . The employer naturally needs assurance that the union it is dealing with is a bona-fide organization, one which has not submitted false statements or misrepresentations to the Bureau. The inclusion of the certification and attestation requirements will in a marked degree allay these apprehensions of management. Not only is the issuance of any false statement and misrepresentation or ground for cancellation of registration (see Article 239 (a), (c) and (d)); it is also a ground for a criminal charge of perjury.The certification and attestation requirements are preventive measures against the commission of fraud. They likewise afford a measure of protection to unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or to use the union for dubious ends.xxx xxx xxx. . . It is not this Court's function to augment the requirements prescribed by law in order to make them wiser or to allow greater protection to the workers and even their employer. Our only recourse is, as earlier discussed, to exact strict compliance with what the law provides as requisites for local or chapter formation.xxx xxx xxxThe Court's conclusion should not be misconstrued as impairing the local union's right to be certified as the employees' bargaining agent in the petitioner's establishment. We are merely saying that the local union must first comply with the statutory requirements in order to exercise this right. Big federations and national unions of workers should take the lead in requiring their locals and chapters to faithfully comply with the law and the rules instead of merely snapping union after union into their folds in a furious bid with rival federations to get the most number of membersFurthermore, the Labor Code itself grants the Bureau of Labor Relations a period of thirty (30) days within which to review all applications for registration. Article 235 provides:Art. 235. Action on application. The Bureau shall act on all applications for registration within thirty (30) days from filing.All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the organization, as the case may be, and attested to by its president.The thirty-day period in the aforecited provision ensures that any action taken by the Bureau of Labor Relations is made in consonance with the mandate of the Labor Code, which, it bears emphasis, specifically requires that the basis for the issuance of a certificate of registration should be compliance with the requirements for recognition under Article 234. Since, obviously, recognition of a labor union or labor organization is not merely a ministerial function, the question now arises as to whether or not the public respondent committed grave abuse of discretion in affirming the Med-Arbiter's order in spite of the fact that the question of the Union's legitimacy was squarely put in issue and that the allegations of fraud and falsification were adequately supported by documentary evidence.The Labor Code requires that in organized and unorganized15establishments, a petition for certification electionmustbe filed by a legitimate labor organization. The acquisition of rights by any union or labor organization, particularly the right to file a petition for certification election, first and foremost, depends on whether or not the labor organization has attained the status of a legitimate labor organization.In the case before us, the Med-Arbiter summarily disregarded the petitioner's prayer that the former look into the legitimacy of the respondent. Union by a sweeping declaration that the union was in the possession of a charter certificate so that "for all intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate labor organization."16Glossing over the transcendental issue of fraud and misrepresentation raised by herein petitioner, Med-Arbiter Rasidali Abdullah held that:The alleged misrepresentation, fraud and false statement in connection with the issuance of the charter certificate are collateral issues which could be ventilated in the cancellation proceedings.17It cannot be denied that the grounds invoked by petitioner for the cancellation of respondent Union's registration fall under paragraph (a) and (c) of Article 239 of the Labor Code, to wit:(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who took part in the ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who took part in the ratification;xxx xxx xxx(c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to submit these documents together with the list of the newly elected-appointed officers and their postal addresses within thirty (30) days from election.xxx xxx xxxThe grounds ventilated in cancellation proceedings in accordance with Article 239 of the Labor Code constitute a grave challenge to the right of respondent Union to ask for certification election. The Med-Arbiter should have looked into the merits of the petition for cancellation before issuing an order calling for certification election. Registration based on false and fraudulent statements and documents confer no legitimacy upon a labor organization irregularly recognized, which, at best, holds on to a mere scrap of paper. Under such circumstances, the labor organization, not being a legitimate labor organization, acquires no rights, particularly the right to ask for certification election in a bargaining unit.As we laid emphasis inProgressive Development Corporation Labor,18"[t]he employer needs the assurance that the union it is dealing with is a bona fide organization, one which has not submitted false statements or misrepresentations to the Bureau." Clearly, fraud, falsification and misrepresentation in obtaining recognition as a legitimate labor organization are contrary to the Med-Arbiter's conclusion not merely collateral issues. The invalidity of respondent Union's registration would negate its legal personality to participate in certification election.Once a labor organization attains the status of a legitimate labor organization it begins to possess all of the rights and privileges granted by law to such organizations. As such rights and privileges ultimately affect areas which are constitutionally protected, the activities in which labor organizations, associations and unions are engaged directly affect the public interest and should be zealously protected. A strict enforcement of the Labor Code's requirements for the acquisition of the status of a legitimate labor organization is in order.Inasmuch as the legal personality of respondent Union had been seriously challenged, it would have been more prudent for the Med-Arbiter and public respondent to have granted petitioner's request for the suspension of proceedings in the certification election case, until the issue of the legality of the Union's registration shall have been resolved. Failure of the Med-Arbiter and public respondent to heed the request constituted a grave abuse of discretion.WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED and the Resolution and Order of the public respondent dated December 29, 1993 and January 24, 1994, respectively, are hereby SET ASIDE.The case is REMANDED to the Med-Arbiter to resolve with reasonable dispatch petitioner's petition for cancellation of respondent Union's registration.SO ORDERED.Padilla, Bellosillo and Vitug, JJ., concur.Hermosisima, Jr., J., is on leave.

39. JOHNSON AND JOHNSON LABOR UNION-FFW, DANTE JOHNSON MORANTE, MYRNA OLOVEJA AND ITS OTHER INDIVIDUAL UNION MEMBERS vs. DIRECTOR OF LABOR RELATIONS, AND OSCAR PILIFacts: The private respondent, a member of the petitioner-union was dismissed from his employment by employer Johnson & Johnson (Phil.) Inc., for non-disclosure in his job application form of the fact that he had a relative in the company in violation of company policies. The provision for the grant of financial aid in favor of a union member is embodied in the petitioner-union's Constitution and By-laws, Article XIII, Section 5, of which reads:A member who have (sic) been suspended or terminated without reasonable cause shall be extended a financial aid from the compulsory contributions in the amount of SEVENTY FIVE CENTAVOS (P0. 75) from each member weekly. A complaint was filed by the private respondent against the officers of the petitioner-union alleging, among others, that the union officers had refused to provide the private respondent the financial aid as provided in the union constitution despite demands for payment thereof The petitioner-union and its officers counter-alleged,