G.R. No. L-4641 - Seminary of San Carlos vs. Municipality of Cebu

The dispute originated from a prior Supreme Court Resolution (August 30, 1989, in G.R. No. 85577) dismissing a petition for illegal dismissal, where individual private respondents were identified as laborers supplied via Skillpower Corporation and Lipercon Services Inc.
After their contracts expired and the private respondents were denied entry to the premises, separate complaints were filed in the National Labor Relations Commission leading to a voluntary arbitration process.
The Labor Arbiter (Tito F. Genilo) rendered a decision on July 29, 1988, declaring the private respondents as regular employees and ordering their reinstatement along with the payment of backwages.

A Motion for Execution led to an October 20, 1988 Order by the Labor Arbiter, which directed the regularization of all complainants, both those still working and those already terminated.
Petitioners (Philippine Dairy Products Corporation and San Miguel Corporation – Magnolia Dairy Products Division) challenged this by arguing that additional preconditions (e.g., submission of NBI and police clearances, physical and medical examinations) should be met before reinstatement.
They also contended that employees supplied by contractual arrangements not party to the arbitration should not be automatically included in the regularization order.

On November 10, 1989, the Voluntary Arbitrator approved the execution based on three separate lists (Annexes “A,” “B,” and “C”) covering 223, 220, and 45 employees respectively.
Petitioners filed motions for reconsideration claiming inadequate notice of hearings and arguing that the order extended relief to individuals not properly impleaded in the arbitration.
The Voluntary Arbitrator, in his December 27, 1989 Order, clarified that the Court’s August 29, 1989 Resolution applied to both the original complainants and similarly situated employees, modifying the stipulations on reinstatement.

Petitioners asserted that only the original complainants should be regularized while others must first comply with additional requirements before reinstatement.
They maintained that positions for contractual employees terminated due to valid management prerogatives (including positions abolished by automation) should not be automatically reopened for regular employment.
Despite partial regularization and payment of monetary awards, petitioners claimed that they had complied with the orders and argued that no further relief was warranted.

Private respondents and the respondent union alleged that petitioners continued to hire contractual workers and failed to exert “best efforts” in identifying or creating available regular positions.
Multiple lists and supplementary motions (including a contempt proceeding and proposals for re-hiring or reclassification) were filed, reflecting disputes over which employees were entitled to regularization.
Various orders (including those dated March 6, 1991; March 17, 1992; and subsequent developments) attempted to resolve the compliance issues by setting deadlines and detailing specific groups of employees (original complainants under special payroll and similarly situated employees).

Petitioners argued that the Voluntary Arbitrator exhibited bias and abused his discretion by reconsidering his earlier inhibition, claiming his decisions favored complainants.
The matter of the arbitrator’s inhibition, the subsequent withdrawal, and his resumption of handling the case were hotly contested, with petitioners alleging violation of due process and impartiality.
Despite the motion to inhibit being eventually granted on a nominal basis, the controversy over his neutrality persisted throughout the proceedings.

Subsequent orders detailed specific names of employees who were to be reinstated or regularized, including provisions for additional monetary awards such as wage differentials and backwages.
Efforts by the parties to reach an agreement (e.g., the February 8, 1991 conference and agreements on special payroll regularization) did not fully resolve the dispute.
Ultimately, after numerous orders, motions, and appeals, the petitioner’s contention of grave abuse of discretion was raised in the instant petition, which was dismissed by the Court.

Whether the Voluntary Arbitrator had jurisdiction to rule on claims brought by employees who were not originally impleaded but were alleged to be similarly situated to the original complainants.
Whether the benefits of regularization, as determined by the August 29, 1989 Resolution, could be extended to these alternatively situated employees.

Whether petitioners’ insistence on imposing preconditions (e.g., submission of clearances and examinations) for reinstatement violated the concept of due process, particularly in a context where the employees had rendered years of service.
Whether the failure of petitioners to properly appear and contest the lists of employees in the arbitration hearings deprived them of their right to procedural fairness.

Whether the Voluntary Arbitrator’s modification from a “best efforts” mandate to an order of immediate regularization amounted to a departure from the original court order (November 12, 1990 Order).
Whether this modification effectively altered the rights and obligations under the earlier order without proper procedural basis.

Whether the decision to reconsider his prior inhibition, and the timing thereof, constituted an abuse of discretion or demonstrated bias in favor of the complainants.
Whether the petitioners’ claim regarding the arbitrator’s partiality had merit and if it affected the adjudication of the case.

Whether petitioners’ claim that there were no available regular positions—as evidenced by their failure to produce a “plantilla”—is sufficient to justify non-compliance with the regularization order.
Whether the employer’s hiring of contractual workers in lieu of regularizing complainants constitutes a breach of the obligation to exert “best efforts” in finding regular positions as mandated by the Court.