SECOND DIVISION

C. ALCANTARA & SONS, INC., G.R. No. 155109

Petitioner,

Present:

CARPIO, J., Chairperson,

- versus - NACHURA,

PERALTA,

ABAD, and

MENDOZA, JJ.

COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA, LABOR ARBITER ARTURO

L. GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO SA
ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO,
EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL
DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY
ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO
ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS,
HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS,
ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO
BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN,
TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS,
PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO
ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE,
ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE
MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO
HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO
MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA,
JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO
CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON
CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO,
ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO
GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL,
FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON,
ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO,
ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO,
FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA,
Respondents.

x ------------------------------------------------ x

NAGKAHIUSANG MAMUMUO SA G.R. No. 155135

ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO,

EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL
DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY
ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO
ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS,
HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS,
ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO
BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN,
TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS,
PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO
ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE,
ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE
MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO
HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO
MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA,
JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO
CAPUYAN, JUANITO NISNISAN, AURELIO CARIN, PRIMO OPLIMO, ANGELITO CASTANEDA,
EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO
PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, MANUEL PIAPE, ROY
CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO
DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN,
ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO
SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI,
CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI,
JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA,

Petitioners,

- versus -

C. ALCANTARA & SONS, INC., EDITHA I. ALCANTARA, ATTY. NELIA A. CLAUDIO, CORNELIO
E. CAGUIAT, JESUS S. DELA CRUZ, ROLANDO Z. ANDRES and JOSE MA. MANUEL
YRASUEGUI,
Respondents.

x ------------------------------------------------ x

NAGKAHIUSANG MAMUMUO SA G.R. No. 179220

ALSONS-SPFL (NAMAAL-SPFL),

and its members whose names are

listed below,

Petitioners,

- versus -

Promulgated:

C. ALCANTARA & SONS, INC.,

Respondent. September 29, 2010

x ----------------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

This case is about a) the consequences of an illegally staged strike upon the employment status of
the union officers and its ordinary members and b) the right of reinstated union members to go back
to work pending the companys appeal from the order reinstating them.

The Facts and the Case

C. Alcantara & Sons, Inc., (the Company) is a domestic corporation engaged in the manufacture and
processing of plywood. Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) is the exclusive
bargaining agent of the Companys rank and file employees. The other parties to these cases are the
Union officers[1] and their striking members.[2]

The Company and the Union entered into a Collective Bargaining Agreement (CBA) that bound them
to hold no strike and no lockout in the course of its life. At some point the parties began negotiating
the economic provisions of their CBA but this ended in a deadlock, prompting the Union to file a
notice of strike. After efforts at conciliation by the Department of Labor and Employment (DOLE)
failed, the Union conducted a strike vote that resulted in an overwhelming majority of its members
favoring it. The Union reported the strike vote to the DOLE and, after the observance of the
mandatory cooling-off period, went on strike.

During the strike, the Company filed a petition for the issuance of a writ of preliminary injunction with
prayer for the issuance of a temporary restraining order (TRO) Ex Parte[3] with the National Labor
Relations Commission (NLRC) to enjoin the strikers from intimidating, threatening, molesting, and
impeding by barricade the entry of non-striking employees at the Companys premises. The NLRC
first issued a 20-day TRO and, after hearing, a writ of preliminary injunction, enjoining the Union and
its officers and members from performing the acts complained of. But several attempts to implement
the writ failed. Only the intervention of law enforcement units made such implementation possible.
Meantime, the Union filed a petition[4] with the Court of Appeals (CA), questioning the preliminary
injunction order. On February 8, 1999 the latter court dismissed the petition. The Union did not
appeal from such dismissal.

The Company, on the other hand, filed a petition with the Regional Arbitration Board to declare the
Unions strike illegal,[5] citing its violation of the no strike, no lockout, provision of their CBA.
Subsequently, the Company amended its petition to implead the named Union members who
allegedly committed prohibited acts during the strike. For their part, the Union, its officers, and its
affected members filed against the Company a counterclaim for unfair labor practices, illegal
dismissal, and damages. The Union also assailed as invalid the service of summons on the
individual Union members included in the amended petition.

On June 29, 1999 the Labor Arbiter rendered a decision,[6] declaring the Unions strike illegal for
violating the CBAs no strike, no lockout, provision. As a consequence, the Labor Arbiter held that the
Union officers should be deemed to have forfeited their employment with the Company and that they
should pay actual damages of P3,825,000.00 plus 10% interest and attorneys fees. With respect to
the striking Union members, finding no proof that they actually committed illegal acts during the
strike, the Labor Arbiter ordered their reinstatement without backwages. The Labor Arbiter denied
the Unions counterclaim for lack of merit.
On June 29, 1999 the terminated Union members promptly filed a motion for their immediate
reinstatement but the Labor Arbiter did not act on the same. At any rate, the Company did not
reinstate them. Both parties appealed[7] the Labor Arbiters decision to the NLRC. The Company
impugned the Labor Arbiters decision insofar as it ordered the reinstatement of the terminated Union
members. The Union, on the other hand, questioned the declaration of illegality of the strike as well
as the dismissal of its officers and the order for them to pay damages.

On November 8, 1999 the NLRC rendered a decision,[8] affirming that of the Labor Arbiter insofar as
the latter declared the strike illegal, ordered the Union officers terminated, and directed them to pay
damages to the Company. The NLRC ruled, however, that the Union members involved, who were
identified in the proceedings held in the case, should also be terminated for having committed
prohibited and illegal acts.

The Union filed a petition for certiorari[9] with the CA, questioning the NLRC decision. Finding merit
in the petition, the CA rendered a decision on March 20, 2002,[10] annulling the NLRC decision and
reinstating that of the Labor Arbiter. The Company and the Union with its officers and members filed
separate petitions for review of the CA decision in G.R. 155109 and 155135, respectively.

During the pendency of these cases, the affected Union members filed with the Labor Arbiter a
motion for reinstatement pending appeal by the parties and the computation of their backwages
based on the CA decision. After hearing, the Labor Arbiter issued a resolution dated November 21,
2002,[11] holding that due to the delay in the resolution of the dispute and the impracticability of
reinstatement owing to the fact that the relations between the terminated Union members and the
Company had been severely strained by the prolonged litigation, payment of separation pay to such
Union members was in order. The Labor Arbiter thus approved the computation and payment of their
separation pay and denied all their other claims.

Both parties appealed the Labor Arbiters resolution[12] to the NLRC. Initially, in its resolution dated
April 30, 2003,[13] the NLRC declared the Labor Arbiters resolution of November 21, 2002 void for
lack of factual and legal basis but ordered the Company to pay the affected employees accrued
wages and 13th month pay considering the Companys refusal to reinstate them pending appeal. On
motion for reconsideration by both parties, however, the NLRC issued a resolution on August 29,
2003,[14] modifying its earlier resolution by deleting the grant of accrued wages and 13th month pay
to the subject employees, thus denying their motion for computation.

Upon the Unions petition for certiorari[15] with the CA, questioning the NLRCs denial of the
terminated Union members claim for separation pay, accrued wages, and other benefits, the CA
rendered a decision on February 24, 2005,[16] dismissing the petition. The CA ruled that the
reinstatement pending appeal provided under Article 223 of the Labor Code contemplated illegal
dismissal or termination cases and not cases under Article 263. Thus, the CA ruled that the
resolution ordering the reinstatement of the terminated Union members and the payment of their
wages and other benefits had no basis. Aggrieved, the Union sought intervention by this Court.

The Issues Presented

The issues presented in these cases are:

1. Whether or not the NLRC properly acquired jurisdiction over the persons of the individual Union
members impleaded in the case;

2. Whether or not the Union staged an illegal strike;

3. Assuming the strike to be illegal, whether or not the impleaded Union members committed illegal
acts during the strike, justifying their termination from employment;

4. Whether or not the terminated Union members are entitled to the payment of backwages on
account of the Companys refusal to reinstate them, pending appeal by the parties, from the Labor
Arbiters decision of June 29, 1999; and

5. Whether or not the terminated Union members are entitled to accrued backwages and separation
pay.

The Rulings of the Court

One. The NLRC acquires jurisdiction over parties in cases before it either by summons served on
them or by their voluntary appearance before its Labor Arbiter. Here, while the Union insists that
summons were not properly served on the impleaded Union members with respect to the Companys
amended petition that sought to declare the strike illegal, the records show that they were so served.
The Return of Service of Summons[17] indicated that 74 out of the 81[18] impleaded Union
members were served with summons. But they refused either to accept the summons or to
acknowledge receipt of the same. Such refusal cannot of course frustrate the NLRCs acquisition of
jurisdiction over them. Besides, the affected Union members voluntarily entered their appearance in
the case when they sought affirmative relief in the course of the proceedings like an award of
damages in their favor.

Two. A strike may be regarded as invalid although the labor union has complied with the strict
requirements for staging one as provided in Article 263 of the Labor Code when the same is held
contrary to an existing agreement, such as a no strike clause or conclusive arbitration clause.[19]
Here, the CBA between the parties contained a no strike, no lockout provision that enjoined both the
Union and the Company from resorting to the use of economic weapons available to them under the
law and to instead take recourse to voluntary arbitration in settling their disputes.

No law or public policy prohibits the Union and the Company from mutually waiving the strike and
lockout maces available to them to give way to voluntary arbitration. Indeed, no less than the 1987
Constitution recognizes in Section 3, Article XIII, preferential use of voluntary means to settle
disputes. Thus

The State shall promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.

The Court finds no compelling reason to depart from the findings of the Labor Arbiter, the NLRC, and
the CA regarding the illegality of the strike. Social justice is not one-sided. It cannot be used as a
badge for not complying with a lawful agreement.

Three. Since the Unions strike has been declared illegal, the Union officers can, in accordance with
law be terminated from employment for their actions. This includes the shop stewards. They cannot
be shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as
such and placed them in positions of leadership and power over the men in their respective work
units.

As regards the rank and file Union members, Article 264 of the Labor Code provides that termination
from employment is not warranted by the mere fact that a union member has taken part in an illegal
strike. It must be shown that such a union member, clearly identified, performed an illegal act or acts
during the strike.[20]

Here, although the Labor Arbiter found no proof that the dismissed rank and file Union members
committed illegal acts, the NLRC found following the injunction hearing in NLRC IC M-000126-98
that the Union members concerned committed such acts, for which they had in fact been criminally
charged before various courts and the prosecutors office in Davao City. Since the CA held that the
existence of criminal complaints against the Union members did not warrant their dismissal, it
becomes necessary for the Court to go into the records to settle the issue.

The striking Union members allegedly committed the following prohibited acts:

a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and
customers;

b. They obstructed the free ingress to and egress from the company premises; and

c. They resisted and defied the implementation of the writ of preliminary injunction issued against the
strikers.

Cornelio Caguiat, Ruben Tungapalan, and Eufracio Rabusa depicted the above prohibited acts in
their affidavits and testimonies. The Sheriff of the NLRC said in his Report[21] that, in the course of
his implementation of the writ of injunction, he observed that the striking employees blocked the exit
lane of the Alson drive with their tent. Tungapalan, a non-striking employee, identified the Union
members who threatened and coerced him. Indeed, he filed criminal actions against them. Lastly,
the photos taken of the strike show the strikers, properly identified, committing the acts complained
of. These constitute substantial evidence in support of the termination of the subject Union
members.

The mere fact that the criminal complaints against the terminated Union members were
subsequently dismissed for one reason or another does not extinguish their liability under the Labor
Code. Nor does such dismissal bar the admission of the affidavits, documents, and photos
presented to establish their identity and guilt during the hearing of the petition to declare the strike
illegal. The technical grounds that the Union interposed for denying admission of the photos are also
not binding on the NLRC.[22]

Four. The terminated Union members contend that, since the Company refused to reinstate them
after the Labor Arbiter rendered a decision in their favor, the Company should be ordered to pay
them their wages during the pendency of the appeals from the Labor Arbiters decision.
It will be recalled that after the Labor Arbiter rendered his decision on June 29, 1999, which decision
ordered the reinstatement of the terminated Union members, the latter promptly filed a motion for
their reinstatement pending appeal. But the Labor Arbiter did not for some reason act on the motion.
As it happened, after about four months or on November 8, 1999, the NLRC reversed the Labor
Arbiters reinstatement order. It cannot be said, therefore, that the Company had resisted a standing
order of reinstatement directed at it at this point.

Of course, on March 20, 2002 the CA restored the Labor Arbiters reinstatement order. And this
prompted the affected Union members to again file with the Labor Arbiter a motion for their
reinstatement pending appeal. But, acting on the motion, the Labor Arbiter resolved at this point that
reinstatement was no longer practicable because of the severely strained relation between the
company and the terminated Union members. In place of reinstatement, the Labor Arbiter ordered
the Company to pay them their separation pays.

Both parties appealed the Labor Arbiters above ruling[23] to the NLRC. But, as it turned out the
NLRC did not also favor reinstatement. It instead ordered the Company to pay the terminated Union
members their accrued wages and 13th month pay considering its refusal to reinstate them pending
appeal. On motion for reconsideration, however, the NLRC reconsidered and deleted altogether the
grant of accrued wages and 13th month pay. The Union appealed the NLRC ruling to the CA on
behalf of its terminated members but the CA denied their appeal.

The CA denied reinstatement for the reason that the reinstatement pending appeal provided under
Article 223 of the Labor Code contemplated illegal dismissal or termination cases and not cases
under Article 264. But this perceived distinction does not find support in the provisions of the Labor
Code.

The grounds for termination under Article 264 are based on prohibited acts that employees could
commit during a strike. On the other hand, the grounds for termination under Articles 282 to 284 are
based on the employees conduct in connection with his assigned work. Still, Article 217, which
defines the powers of Labor Arbiters, vests in the latter jurisdiction over all termination cases,
whatever be the grounds given for the termination of employment. Consequently, Article 223, which
provides that the decision of the Labor Arbiter reinstating a dismissed employee shall immediately
be executory pending appeal, cannot but apply to all terminations irrespective of the grounds on
which they are based.

Here, although the Labor Arbiter failed to act on the terminated Union members motion for
reinstatement pending appeal, the Company had the duty under Article 223 to immediately reinstate
the affected employees even if it intended to appeal from the decision ordaining such reinstatement.
The Companys failure to do so makes it liable for accrued backwages until the eventual reversal of
the order of reinstatement by the NLRC on November 8, 1999,[24] a period of four months and nine
days.

Five. While it is true that generally the grant of separation pay is not available to employees who are
validly dismissed, there are, in furtherance of the laws policy of compassionate justice, certain
circumstances that warrant the grant of some relief in favor of the terminated Union members based
on equity.

Bitter labor disputes, especially strikes, always generate a throng of odium and abhorrence that
sometimes result in unpleasant, although unwanted, consequences.[25] Considering this, the
striking employees breach of certain restrictions imposed on their concerted actions at their
employers doorsteps cannot be regarded as so inherently wicked that the employer can totally
disregard their long years of service prior to such breach.[26] The records also fail to disclose any
past infractions committed by the dismissed Union members. Taking these circumstances in
consideration, the Court regards the award of financial assistance to these Union members in the
form of one-half month salary for every year of service to the company up to the date of their
termination as equitable and reasonable.

WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and
its officers and members in G.R. 155135 for lack of merit, and REVERSES and SETS ASIDE the
decision of the Court of Appeals in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the
other hand, GRANTS the petition of C. Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the
decision of the National Labor Relations Commission in NLRC CA M-004996-99 dated November 8,
1999.

Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-
SPFL and their dismissed members in G.R. 179220 and ORDERS C. Alcantara & Sons, Inc. to pay
the terminated Union members backwages for four (4) months and nine (9) days and separation
pays equivalent to one-half month salary for every year of service to the company up to the date of
their termination, with interest of 12% per annum from the time this decision becomes final and
executory until such backwages and separation pays are paid. The Court DENIES all other claims.

SO ORDERED.

_____________________________________________________________________
G.R. No. 113856 September 7, 1998

SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE

PHILIPPINES (SMTFM-UWP), its officers and members, petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP FORM
MANUFACTURING PHIL., INC., respondents.

ROMERO, J.:

The issue in this petition for certiorari is whether or not an employer committed an unfair labor
practice by bargaining in bad faith and discriminating against its employees. The charge arose from
the employer's refusal to grant across-the-board increases to its employees in implementing Wage
Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National
Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact that prior to the issuance of
said wage orders, the employer allegedly promised at the collective bargaining conferences to
implement any government-mandated wage increases on an across-the-board basis.

Petitioner Samahang Manggagawa sa Top Form Manufacturing — United Workers of the Philippines
(SMTFM) was the certified collective bargaining representative of all regular rank and file employees
of private respondent Top Form Manufacturing Philippines, Inc. At the collective bargaining
negotiation held at the Milky Way Restaurant in Makati, Metro Manila on February 27, 1990, the
parties agreed to discuss unresolved economic issues. According to the minutes of the meeting,
Article VII of the collective bargaining agreement was discussed. The following appear in said
Minutes:

Art. VII, Wages

Sect. 1.— Defer —

Sect. 2.Status quo

Sec. 3. Union proposed that any future wage increase given by the government should be
implemented by the company across-the-board or non-conditional.

Management requested the union to retain this provision since their sincerity was already proven
when the P25.00 wage increase was granted across-the-board. The union acknowledges
management's sincerity but they are worried that in case there is a new set of management, they
can just show their CBA. The union decided to defer this provision. 1

In their joint affidavit dated January 30, 1992, 2 union members Salve L. Barnes, Eulisa Mendoza,
Lourdes Barbero and Concesa Ibañez affirmed that at the subsequent collective bargaining
negotiations, the union insisted on the incorporation in the collective bargaining agreement (CBA) of
the union proposal on "automatic across-the-board wage increase." They added that:

11. On the strength of the representation of the negotiating panel of the company and the above
undertaking/promise made by its negotiating panel, our union agreed to drop said proposal relying
on the undertakings made by the officials of the company who negotiated with us, namely, Mr.
William Reynolds, Mr. Samuel Wong and Mrs. Remedios Felizardo. Also, in the past years, the
company has granted to us government mandated wage increases on across-the-board basis.

On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00
per day in the salary of workers. This was followed by Wage Order No. 02 dated December 20, 1990
providing for a P12.00 daily increase in salary.

As expected, the union requested the implementation of said wage orders. However, they
demanded that the increase be on an across-the-board basis. Private respondent refused to accede
to that demand. Instead, it implemented a scheme of increases purportedly to avoid wage distortion.
Thus, private respondent granted the P17.00 increase under Wage Order No. 01 to
workers/employees receiving salary of P125.00 per day and below. The P12.00 increase mandated
by Wage Order No. 02 was granted to those receiving the salary of P140.00 per day and below. For
employees receiving salary higher than P125.00 or P140.00 per day, private respondent granted an
escalated increase ranging from P6.99 to P14.30 and from P6.00 to P10.00, respectively. 3

On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter
demanding that it should "fulfill its pledge of sincerity to the union by granting an across-the-board
wage increases (sic) to all employees under the wage orders." The union reiterated that it had
agreed to "retain the old provision of CBA" on the strength of private respondent's "promise and
assurance" of an across-the-board salary increase should the government mandate salary
increases. 4 Several conferences between the parties notwithstanding, private respondent
adamantly maintained its position on the salary increases it had granted that were purportedly
designed to avoid wage distortion.

Consequently, the union filed a complaint with the NCR NLRC alleging that private respondent's act
of "reneging on its undertaking/promise clearly constitutes act of unfair labor practice through
bargaining in bad faith." It charged private respondent with acts of unfair labor practices or violation
of Article 247 of the Labor Code, as amended, specifically "bargaining in bad faith," and prayed that
it be awarded actual, moral and exemplary damages.5 In its position paper, the union added that it
was charging private respondent with "violation of Article 100 of the Labor Code." 6

Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and
02, it had avoided "the existence of a wage distortion" that would arise from such implementation. It
emphasized that only "after a reasonable length of time from the implementation" of the wage orders
"that the union surprisingly raised the question that the company should have implemented said
wage orders on an across-the-board basis." It asserted that there was no agreement to the effect
that future wage increases mandated by the government should be implemented on an across-the-
board basis. Otherwise, that agreement would have been incorporated and expressly stipulated in
the CBA. It quoted the provision of the CBA that reflects the parties' intention to "fully set forth"
therein all their agreements that had been arrived at after negotiations that gave the parties
"unlimited right and opportunity to make demands and proposals with respect to any subject or
matter not removed by law from the area of collective bargaining." The same CBA provided that
during its effectivity, the parties "each voluntarily and unqualifiedly waives the right, and each agrees
that the other shall not be obligated, to bargain collectively, with respect to any subject or matter not
specifically referred to or covered by this Agreement, even though such subject or matter may not
have been within the knowledge or contemplation of either or both of the parties at the time they
negotiated or signed this Agreement." 7

On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint for
lack of merit. 8 He considered two main issues in the case: (a) whether or not respondents are guilty
of unfair labor practice, and (b) whether or not the respondents are liable to implement Wage Orders
Nos. 01 and 02 on an across-the-board basis. Finding no basis to rule in the affirmative on both
issues, he explained as follows:

The charge of bargaining in bad faith that the complainant union attributes to the respondents is
bereft of any certitude inasmuch as based on the complainant union's own admission, the latter
vacillated on its own proposal to adopt an across-the-board stand or future wage increases. In fact,
the union acknowledges the management's sincerity when the latter allegedly implemented Republic
Act 6727 on an across-the-board basis. That such union proposal was not adopted in the existing
CBA was due to the fact that it was the union itself which decided for its deferment. It is, therefore,
misleading to claim that the management undertook/promised to implement future wage increases
on an across-the-board basis when as the evidence shows it was the union who asked for the
deferment of its own proposal to that effect.

The alleged discrimination in the implementation of the subject wage orders does not inspire belief at
all where the wage orders themselves do not allow the grant of wage increases on an across-the-
board basis. That there were employees who were granted the full extent of the increase authorized
and some others who received less and still others who did not receive any increase at all, would not
ripen into what the complainants termed as discrimination. That the implementation of the subject
wage orders resulted into an uneven implementation of wage increases is justified under the law to
prevent any wage distortion. What the respondents did under the circumstances in order to deter an
eventual wage distortion without any arbitral proceedings is certainly commendable.

The alleged violation of Article 100 of the Labor Code, as amended, as well as Article XVII, Section 7
of the existing CBA as herein earlier quoted is likewise found by this Branch to have no basis in fact
and in law. No benefits or privileges previously enjoyed by the employees were withdrawn as a
result of the implementation of the subject orders. Likewise, the alleged company practice of
implementing wage increases declared by the government on an across-the-board basis has not
been duly established by the complainants' evidence. The complainants asserted that the company
implemented Republic Act No. 6727 which granted a wage increase of P25.00 effective July 1, 1989
on an across-the-board basis. Granting that the same is true, such isolated single act that
respondents adopted would definitely not ripen into a company practice. It has been said that "a
sparrow or two returning to Capistrano does not a summer make."

Finally, on the second issue of whether or not the employees of the respondents are entitled to an
across-the-board wage increase pursuant to Wage Orders Nos. 01 and 02, in the face of the above
discussion as well as our finding that the respondents correctly applied the law on wage increases,
this Branch rules in the negative.

Likewise, for want of factual basis and under the circumstances where our findings above are
adverse to the complainants, their prayer for moral and exemplary damages and attorney's fees may
not be granted.

Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of
April 29, 1993 9 dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought
reconsideration which, however, was denied by the NLRC in the Resolution dated January 17, 1994.
Hence, the instant petition for certiorari contending that:
-A-

THE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT DECLARING THE PRIVATE

RESPONDENTS GUILTY OF ACTS OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE
LATTER HAS BARGAINED IN BAD FAITH WITH THE UNION AND HAS VIOLATED THE CBA
WHICH IT EXECUTED WITH THE HEREIN PETITIONER UNION.

-B-

THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING THE PRIVATE

RESPONDENTS GUILTY OF ACTS OF DISCRIMINATION IN THE IMPLEMENTATION OF NCR
WAGE ORDER NOS. 01 AND 02.

-C-

THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING THE PRIVATE

RESPONDENTS GUILTY OF HAVING VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING
CBA.

-D-

THE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT DECLARING THE PRIVATE

RESPONDENTS GUILTY OF HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF THE
PHILIPPINES, AS AMENDED.

-E-

ASSUMING, WITHOUT ADMITTING THAT THE PUBLIC RESPONDENTS HAVE CORRECTLY

RULED THAT THE PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR LABOR
PRACTICES, THEY COMMITTED SERIOUS ERROR IN NOT FINDING THAT THERE IS A
SIGNIFICANT DISTORTION IN THE WAGE STRUCTURE OF THE RESPONDENT COMPANY.
-F-

THE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE PETITIONERS HEREIN

ACTUAL, MORAL, AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.

As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a) whether or
not private respondent committed an unfair labor practice in its refusal to grant across-the-board
wage increases in implementing Wage Orders Nos. 01 and 02, and (b) whether or not there was a
significant wage distortion of the wage structure in private respondent as a result of the manner by
which said wage orders were implemented.

With respect to the first issue, petitioner union anchors its arguments on the alleged commitment of
private respondent to grant an automatic across-the-board wage increase in the event that a
statutory or legislated wage increase is promulgated. It cites as basis therefor, the aforequoted
portion of the Minutes of the collective bargaining negotiation on February 27, 1990 regarding
wages, arguing additionally that said Minutes forms part of the entire agreement between the
parties.

The basic premise of this argument is definitely untenable. To start with, if there was indeed a
promise or undertaking on the part of private respondent to obligate itself to grant an automatic
across-the-board wage increase, petitioner union should have requested or demanded that such
"promise or undertaking" be incorporated in the CBA. After all, petitioner union has the means under
the law to compel private respondent to incorporate this specific economic proposal in the CBA. It
could have invoked Article 252 of the Labor Code defining "duty to bargain," thus, the duty includes
"executing a contract incorporating such agreements if requested by either party." Petitioner union's
assertion that it had insisted on the incorporation of the same proposal may have a factual basis
considering the allegations in the aforementioned joint affidavit of its members. However, Article 252
also states that the duty to bargain "does not compel any party to agree to a proposal or make any
concession." Thus, petitioner union may not validly claim that the proposal embodied in the Minutes
of the negotiation forms part of the CBA that it finally entered into with private respondent.

The CBA is the law between the contracting parties 10 — the collective bargaining representative
and the employer-company. Compliance with a CBA is mandated by the expressed policy to give
protection to labor. 11 In the same vein, CBA provisions should be "construed liberally rather than
narrowly and technically, and the courts must place a practical and realistic construction upon it,
giving due consideration to the context in which it is negotiated and purpose which it is intended to
serve." 12 This is founded on the dictum that a CBA is not an ordinary contract but one impressed
with public interest. 13 It goes without saying, however, that only provisions embodied in the CBA
should be so interpreted and complied with. Where a proposal raised by a contracting party does not
find print in the CBA, 14 it is not a part thereof and the proponent has no claim whatsoever to its
implementation.

Hence, petitioner union's contention that the Minutes of the collective bargaining negotiation meeting
forms part of the entire agreement is pointless. The Minutes reflects the proceedings and
discussions undertaken in the process of bargaining for worker benefits in the same way that the
minutes of court proceedings show what transpired therein. 15 At the negotiations, it is but natural
for both management and labor to adopt positions or make demands and offer proposals and
counter-proposals. However, nothing is considered final until the parties have reached an
agreement. In fact, one of management's usual negotiation strategies is to ". . . agree tentatively as
you go along with the understanding that nothing is binding until the entire agreement is reached."
16 If indeed private respondent promised to continue with the practice of granting across-the-board
salary increases ordered by the government, such promise could only be demandable in law if
incorporated in the CBA.

Moreover, by making such promise, private respondent may not be considered in bad faith or at the
very least, resorting to the scheme of feigning to undertake the negotiation proceedings through
empty promises. As earlier stated, petitioner union had, under the law, the right and the opportunity
to insist on the foreseeable fulfillment of the private respondent's promise by demanding its
incorporation in the CBA. Because the proposal was never embodied in the CBA, the promise has
remained just that, a promise, the implementation of which cannot be validly demanded under the
law.

Petitioner's reliance on this Court's pronouncements 17 in Kiok Loy v. NLRC 18 is, therefore,
misplaced. In that case, the employer refused to bargain with the collective bargaining
representative, ignoring all notices for negotiations and requests for counter proposals that the union
had to resort to conciliation proceedings. In that case, the Court opined that "(a) Company's refusal
to make counter-proposal, if considered in relation to the entire bargaining process, may indicate
bad faith and this is specially true where the Union's request for a counter-proposal is left
unanswered." Considering the facts of that case, the Court concluded that the company was
"unwilling to negotiate and reach an agreement with the Union." 19

In the case at bench, however, petitioner union does not deny that discussion on its proposal that all
government-mandated salary increases should be on an across-the-board basis was "deferred,"
purportedly because it relied upon the "undertaking" of the negotiating panel of private respondent.
20 Neither does petitioner union deny the fact that "there is no provision of the 1990 CBA containing
a stipulation that the company will grant across-the-board to its employees the mandated wage
increase." They simply assert that private respondent committed "acts of unfair labor practices by
virtue of its contractual commitment made during the collective bargaining process." 21 The mere
fact, however, that the proposal in question was not included in the CBA indicates that no
contractual commitment thereon was ever made by private respondent as no agreement had been
arrived at by the parties. Thus:

Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a contract
binding on the parties; but the failure to reach an agreement after negotiations continued for a
reasonable period does not establish a lack of good faith. The statutes invite and contemplate a
collective bargaining contract, but they do not compel one. The duty to bargain does not include the
obligation to reach an agreement. . . . 32

With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of the
parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where private respondent exhibited an
indifferent attitude towards collective bargaining because the negotiations were not the unilateral
activity of petitioner union. The CBA is proof enough that private respondent exerted "reasonable
effort at good faith bargaining." 23

Indeed, the adamant insistence on a bargaining position to the point where the negotiations reach an
impasse does not establish bad faith. Neither can bad faith be inferred from a party's insistence on
the inclusion of a particular substantive provision unless it concerns trivial matters or is obviously
intolerable. 24

The question as to what are mandatory and what are merely permissive subjects of collective
bargaining is of significance on the right of a party to insist on his position to the point of stalemate. A
party may refuse to enter into a collective bargaining contract unless it includes a desired provision
as to a matter which is a mandatory subject of collective bargaining; but a refusal to contract unless
the agreement covers a matter which is not a mandatory subject is in substance a refusal to bargain
about matters which are mandatory subjects of collective bargaining, and it is no answer to the
charge of refusal to bargain in good faith that the insistence on the disputed clause was not the sole
cause of the failure to agree or that agreement was not reached with respect to other disputed
clauses. 25

On account of the importance of the economic issue proposed by petitioner union, it could have
refused to bargain and to enter into a CBA with private respondent. On the other hand, private
respondent's firm stand against the proposal did not mean that it was bargaining in bad faith. It had
the right "to insist on (its) position to the point of stalemate." On the part of petitioner union, the
importance of its proposal dawned on it only after the wage orders were issued after the CBA had
been entered into. Indeed, from the facts of this case, the charge of bad faith bargaining on the part
of private respondent was nothing but a belated reaction to the implementation of the wage orders
that private respondent made in accordance with law. In other words, petitioner union harbored the
notion that its members and the other employees could have had a better deal in terms of wage
increases had it relentlessly pursued the incorporation in the CBA of its proposal. The inevitable
conclusion is that private respondent did not commit the unfair labor practices of bargaining in bad
faith and discriminating against its employees for implementing the wage orders pursuant to law.

The Court likewise finds unmeritorious petitioner union's contention that by its failure to grant across-
the-board wage increases, private respondent violated the provisions of Section 5, Article VII of the
existing CBA 26 as well as Article 100 of the Labor Code. The CBA provision states:

Sec. 5. The COMPANY agrees to comply with all the applicable provisions of the Labor Code of the
Philippines, as amended, and all other laws, decrees, orders, instructions, jurisprudence, rules and
regulations affecting labor.

Art. 100 of the Labor Code on prohibition against elimination or diminution of benefits provides that
"(n)othing in this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code."

We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by
petitioner union and the other employees were withdrawn as a result of the manner by which private
respondent implemented the wage orders. Granted that private respondent had granted an across-
the-board increase pursuant to Republic Act No. 6727, that single instance may not be considered
an established company practice. Petitioner union's argument in this regard is actually tied up with
its claim that the implementation of Wage Orders Nos. 01 and 02 by private respondent resulted in
wage distortion.

The issue of whether or not a wage distortion exists is a question of

fact 27 that is within the jurisdiction of the quasi-judicial tribunals below. Factual findings of
administrative agencies are accorded respect and even finality in this Court if they are supported by
substantial evidence. 28 Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court
said:

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage
increase to certain employees, we agree, is, by and large, a question of fact the determination of
which is the statutory function of the NLRC. Judicial review of labor cases, we may add, does not go
beyond the evaluation of the sufficiency of the evidence upon which the labor officials' findings rest.
As such, the factual findings of the NLRC are generally accorded not only respect but also finality
provided that its decisions are supported by substantial evidence and devoid of any taint of
unfairness or arbitrariness. When, however, the members of the same labor tribunal are not in
accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so
conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived

therefrom. 29

Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC Decision
in this case which was penned by the dissenter in that case, Presiding Commissioner Edna Bonto-
Perez unanimously ruled that no wage distortions marred private respondent's implementation of the
wage orders. The NLRC said:

On the issue of wage distortion, we are satisfied that there was a meaningful implementation of
Wage Orders Nos. 01 and 02. This debunks the claim that there was wage distortion as could be
shown by the itemized wages implementation quoted above. It should be noted that this itemization
has not been successfully traversed by the appellants. . . . . 30

The NLRC then quoted the labor arbiter's ruling on wage distortion.

We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It is
apropos to note, moreover, that petitioner's contention on the issue of wage distortion and the
resulting allegation of discrimination against the private respondent's employees are anchored on its
dubious position that private respondent's promise to grant an across-the-board increase in
government-mandated salary benefits reflected in the Minutes of the negotiation is an enforceable
part of the CBA.

In the resolution of labor cases, this Court has always been guided by the State policy enshrined in
the Constitution that the rights of workers and the promotion of their welfare shall be protected. 31
The Court is likewise guided by the goal of attaining industrial peace by the proper application of the
law. It cannot favor one party, be it labor or management, in arriving at a just solution to a
controversy if the party has no valid support to its claims. It is not within this Court's power to rule
beyond the ambit of the law.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the questioned
Resolutions of the NLRC AFFIRMED. No costs.

SO ORDERED.
________________________________________________________________

GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, GENERAL

MILLING CORPORATION INDEPENDENT LABOR UNION (GMC-ILU), and RITO MANGUBAT,
respondents.

DECISION

QUISUMBING, J.:

Before us is a petition for certiorari assailing the decision[1] dated July 19, 2000, of the Court of
Appeals in CA-G.R. SP No. 50383, which earlier reversed the decision[2] dated January 30, 1998 of
the National Labor Relations Commission (NLRC) in NLRC Case No. V-0112-94.

The antecedent facts are as follows:

In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation
(GMC) employed 190 workers. They were all members of private respondent General Milling
Corporation Independent Labor Union (union, for brevity), a duly certified bargaining agent.

On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which
included the issue of representation effective for a term of three years. The CBA was effective for
three years retroactive to December 1, 1988. Hence, it would expire on November 30, 1991.

On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed
CBA, with a request that a counter-proposal be submitted within ten (10) days.

As early as October 1991, however, GMC had received collective and individual letters from workers
who stated that they had withdrawn from their union membership, on grounds of religious affiliation
and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC
did not send any counter-proposal.

On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat and Victor
Lastimoso. The letter stated that it felt there was no basis to negotiate with a union which no longer
existed, but that management was nonetheless always willing to dialogue with them on matters of
common concern and was open to suggestions on how the company may improve its operations.

In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive
disaffiliation or resignation from the union and submitted a manifesto, signed by its members, stating
that they had not withdrawn from the union.

On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of
incompetence. The union protested and requested GMC to submit the matter to the grievance
procedure provided in the CBA. GMC, however, advised the union to refer to our letter dated
December 16, 1991.[3]

Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division,
Cebu City. The complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain
collectively; (2) interference with the right to self-organization; and (3) discrimination. The labor
arbiter dismissed the case with the recommendation that a petition for certification election be held to
determine if the union still enjoyed the support of the workers.

The union appealed to the NLRC.

On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article 253-A of the
Labor Code, as amended by Rep. Act No. 6715,[4] which fixed the terms of a collective bargaining
agreement, the NLRC ordered GMC to abide by the CBA draft that the union proposed for a period
of two (2) years beginning December 1, 1991, the date when the original CBA ended, to November
30, 1993. The NLRC also ordered GMC to pay the attorneys fees.[5]

In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a
CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-
Independent Labor Union was from December 1, 1988 to November 30, 1993. All other provisions of
the CBA are to be renegotiated not later than three (3) years after its execution. Thus, the NLRC
held that respondent union remained as the exclusive bargaining agent with the right to renegotiate
the economic provisions of the CBA. Consequently, it was unfair labor practice for GMC not to enter
into negotiation with the union.

The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13 of its
members from February to June 1993 confirmed the pressure exerted by GMC on its employees to
resign from the union. Thus, the NLRC also found GMC guilty of unfair labor practice for interfering
with the right of its employees to self-organization.

With respect to the unions claim of discrimination, the NLRC found the claim unsupported by
substantial evidence.

On GMCs motion for reconsideration, the NLRC set aside its decision of January 30, 1998, through
a resolution dated October 6, 1998. It found GMCs doubts as to the status of the union justified and
the allegation of coercion exerted by GMC on the unions members to resign unfounded. Hence, the
union filed a petition for certiorari before the Court of Appeals. For failure of the union to attach the
required copies of pleadings and other documents and material portions of the record to support the
allegations in its petition, the CA dismissed the petition on February 9, 1999. The same petition was
subsequently filed by the union, this time with the necessary documents. In its resolution dated April
26, 1999, the appellate court treated the refiled petition as a motion for reconsideration and gave the
petition due course.

On July 19, 2000, the appellate court rendered a decision the dispositive portion of which reads:

WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October 6, 1998 is
hereby SET ASIDE, and its decision of January 30, 1998 is, except with respect to the award of
attorneys fees which is hereby deleted, REINSTATED.[6]

A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October 26,
2000, the CA denied it for lack of merit.

Hence, the instant petition for certiorari alleging that:

THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO

DECISION SHALL BE RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN
CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON WHICH IT IS BASED.
II

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE

DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY
FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION.

III

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT THE
NLRC HAS NO JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A
COLLECTIVE BARGAINING AGREEMENT.[7]

Thus, in the instant case, the principal issue for our determination is whether or not the Court of
Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) finding
GMC guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with
the right of its employees to self-organization, and (2) imposing upon GMC the draft CBA proposed
by the union for two years to begin from the expiration of the original CBA.

On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states:

ART. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that
the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of
five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of such five year
term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution....

The law mandates that the representation provision of a CBA should last for five years. The relation
between labor and management should be undisturbed until the last 60 days of the fifth year. Hence,
it is indisputable that when the union requested for a renegotiation of the economic terms of the CBA
on November 29, 1991, it was still the certified collective bargaining agent of the workers, because it
was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on
December 1, 1988. The unions proposal was also submitted within the prescribed 3-year period from
the date of effectivity of the CBA, albeit just before the last day of said period. It was obvious that
GMC had no valid reason to refuse to negotiate in good faith with the union. For refusing to send a
counter-proposal to the union and to bargain anew on the economic terms of the CBA, the company
committed an unfair labor practice under Article 248 of the Labor Code, which provides that:

ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of
the following unfair labor practice:

...

(g) To violate the duty to bargain collectively as prescribed by this Code;

...

Article 252 of the Labor Code elucidates the meaning of the phrase duty to bargain collectively, thus:

ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement....

We have held that the crucial question whether or not a party has met his statutory duty to bargain in
good faith typically turn$ on the facts of the individual case.[8] There is no per se test of good faith in
bargaining.[9] Good faith or bad faith is an inference to be drawn from the facts.[10] The effect of an
employers or a unions actions individually is not the test of good-faith bargaining, but the impact of
all such occasions or actions, considered as a whole.[11]

Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet
and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.
The union lived up to this obligation when it presented proposals for a new CBA to GMC within three
(3) years from the effectivity of the original CBA. But GMC failed in its duty under Article 252. What it
did was to devise a flimsy excuse, by questioning the existence of the union and the status of its
membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory
because of the basic interest of the state in ensuring lasting industrial peace. Thus:

ART. 250. Procedure in collective bargaining. The following procedures shall be observed in
collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other
party with a statement of its proposals. The other party shall make a reply thereto not later than ten
(10) calendar days from receipt of such notice. (Underscoring supplied.)

GMCs failure to make a timely reply to the proposals presented by the union is indicative of its utter
lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the
workers, was mainly dilatory as it turned out to be utterly baseless.

We hold that GMCs refusal to make a counter-proposal to the unions proposal for CBA negotiation is
an indication of its bad faith. Where the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively.[12]

Failing to comply with the mandatory obligation to submit a reply to the unions proposals, GMC
violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of
Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in
finding that GMC is, under the circumstances, guilty of unfair labor practice.

Did GMC interfere with the employees right to self-organization? The CA found that the letters
between February to June 1993 by 13 union members signifying their resignation from the union
clearly indicated that GMC exerted pressure on its employees. The records show that GMC
presented these letters to prove that the union no longer enjoyed the support of the workers. The
fact that the resignations of the union members occurred during the pendency of the case before the
labor arbiter shows GMCs desperate attempts to cast doubt on the legitimate status of the union. We
agree with the CAs conclusion that the ill-timed letters of resignation from the union members
indicate that GMC had interfered with the right of its employees to self-organization. Thus, we hold
that the appellate court did not commit grave abuse of discretion in finding GMC guilty of unfair labor
practice for interfering with the right of its employees to self-organization.

Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by
the union for two years commencing from the expiration of the original CBA?
The Code provides:

ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. ....It shall
be the duty of both parties to keep the status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the 60-day period [prior to its expiration date] and/or
until a new agreement is reached by the parties. (Underscoring supplied.)

The provision mandates the parties to keep the status quo while they are still in the process of
working out their respective proposal and counter proposal. The general rule is that when a CBA
already exists, its provision shall continue to govern the relationship between the parties, until a new
one is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that
neither party is guilty of bad faith. However, when one of the parties abuses this grace period by
purposely delaying the bargaining process, a departure from the general rule is warranted.

In Kiok Loy vs. NLRC,[13] we found that petitioner therein, Sweden Ice Cream Plant, refused to
submit any counter proposal to the CBA proposed by its employees certified bargaining agent. We
ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. Thus,
we did not hesitate to impose on the erring company the CBA proposed by its employees union -
lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the present case, to wit:

petitioner Companys approach and attitude stalling the negotiation by a series of postponements,
non-appearance at the hearing conducted, and undue delay in submitting its financial statements,
lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the
Union. Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully
the claims and demands set forth by the Union much less justify its objection thereto.[14]

Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment,[15]
petitioner therein, Divine Word University of Tacloban, refused to perform its duty to bargain
collectively. Thus, we upheld the unilateral imposition on the university of the CBA proposed by the
Divine Word University Employees Union. We said further:

That being the said case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its action which bespeak its
insincerity, it has forfeited whatever rights it could have asserted as an employer.[16]
Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and
its members if the terms and conditions contained in the old CBA would continue to be imposed on
GMCs employees for the remaining two (2) years of the CBAs duration. We are not inclined to gratify
GMC with an extended term of the old CBA after it resorted to delaying tactics to prevent
negotiations. Since it was GMC which violated the duty to bargain collectively, based on Kiok Loy
and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate the
terms and conditions of the draft CBA proposed by the union.

We carefully note, however, that as strictly distinguished from the facts of this case, there was no
pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban.
Nonetheless, we deem it proper to apply in this case the rationale of the doctrine in the said two
cases. To rule otherwise would be to allow GMC to have its cake and eat it too.

Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be allowed
to resort with impunity to schemes feigning negotiations by going through empty gestures.[17] Thus,
by imposing on GMC the provisions of the draft CBA proposed by the union, in our view, the
interests of equity and fair play were properly served and both parties regained equal footing, which
was lost when GMC thwarted the negotiations for new economic terms of the CBA.

The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft
CBA proposed by the union should not be disturbed since they are supported by substantial
evidence. On this score, we see no cogent reason to rule otherwise. Hence, we hold that the Court
of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when
it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the union
for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social
justice are best served in this case by sustaining the appellate courts decision on this issue.

WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the
resolution dated October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, are
AFFIRMED. Costs against petitioner.

SO ORDERED.

__________________________________________________________________
STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner, vs. The Honorable MA.
NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR AND EMPLOYMENT; and the
STANDARD CHARTERED BANK, respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard Chartered
Bank Employees Union, seeking the nullification of the October 29, 1993 Order[1] of then Secretary
of Labor and Employment Nieves R. Confesor and her resolutions dated December 16, 1993 and
February 10, 1994.

The Antecedents

Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in
the Philippines. The exclusive bargaining agent of the rank and file employees of the Bank is the
Standard Chartered Bank Employees Union (the Union, for brevity).

In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement (CBA)
with a provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-
year period[2] but within the sixty-day freedom period, the Union initiated the negotiations. On
February 18, 1993, the Union, through its President, Eddie L. Divinagracia, sent a letter[3] containing
its proposals[4] covering political provisions[5] and thirty-four (34) economic provisions.[6] Included
therein was a list of the names of the members of the Unions negotiating panel.[7]

In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris, took
note of the Unions proposals. The Bank attached its counter-proposal to the non-economic
provisions proposed by the Union.[8] The Bank posited that it would be in a better position to present
its counter-proposals on the economic items after the Union had presented its justifications for the
economic proposals.[9] The Bank, likewise, listed the members of its negotiating panel.[10] The
parties agreed to set meetings to settle their differences on the proposed CBA.

Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the
Banks Human Resource Manager and head of the negotiating panel, Cielito Diokno, that the bank
lawyers should be excluded from the negotiating team. The Bank acceded.[11] Meanwhile, Diokno
suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank
Employees (NUBE), the federation to which the Union was affiliated, be excluded from the Unions
negotiating panel.[12] However, Umali was retained as a member thereof.

On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno suggested
that the negotiation be kept a family affair. The proposed non-economic provisions of the CBA were
discussed first.[13] Even during the final reading of the non-economic provisions on May 4, 1993,
there were still provisions on which the Union and the Bank could not agree. Temporarily, the
notation DEFERRED was placed therein. Towards the end of the meeting, the Union manifested that
the same should be changed to DEADLOCKED to indicate that such items remained unresolved.
Both parties agreed to place the notation DEFERRED/DEADLOCKED.[14]

On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the basis
of the Unions economic proposals was made. The next meeting, the Bank made a similar
presentation. Towards the end of the Banks presentation, Umali requested the Bank to validate the
Unions guestimates, especially the figures for the rank and file staff.[15] In the succeeding meetings,
Umali chided the Bank for the insufficiency of its counter-proposal on the provisions on salary
increase, group hospitalization, death assistance and dental benefits. He reminded the Bank, how
the Union got what it wanted in 1987, and stated that if need be, the Union would go through the
same route to get what it wanted.[16]

Upon the Banks insistence, the parties agreed to tackle the economic package item by item. Upon
the Unions suggestion, the Bank indicated which provisions it would accept, reject, retain and agree
to discuss.[17] The Bank suggested that the Union prioritize its economic proposals, considering that
many of such economic provisions remained unresolved. The Union, however, demanded that the
Bank make a revised itemized proposal.

In the succeeding meetings, the Union made the following proposals:

Wage Increase:

1st Year Reduced from 45% to 40%

2nd Year - Retain at 20%

Total = 60%

Group Hospitalization Insurance:

Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually
Death Assistance:

For the employee -- Reduced from P50,000.00 to P45,000.00

For Immediate Family Member -- Reduced from P30,000.00 to P25,000.00

Dental and all others -- No change from the original demand.[18]

In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would not make
the necessary revisions on its counter-proposal, it would be best to seek a third party assistance.[19]
After the break, the Bank presented its revised counter-proposal[20] as follows:

Wage Increase : 1st Year from P1,000 to P1,050.00

2nd Year P800.00 no change

Group Hospitalization Insurance

From: P35,000.00 per illness

To : P35,000.00 per illness per year

Death Assistance For employee

From: P20,000.00

To : P25,000.00

Dental Retainer Original offer remains the same[21]

The Union, for its part, made the following counter-proposal:

Wage Increase: 1st Year - 40%

2nd Year - 19.5%

Group Hospitalization Insurance

From: P60,000.00 per year

To : P50,000.00 per year

Dental:

Temporary Filling/ P150.00

Tooth Extraction

Permanent Filling 200.00

Prophylaxis 250.00

Root Canal From P2,000 per tooth

To: 1,800.00 per tooth

Death Assistance:

For Employees: From P45,000.00 to P40,000.00

For Immediate Family Member: From P25,000.00 to P20,000.00.[22]

The Unions original proposals, aside from the above-quoted, remained the same.

Another set of counter-offer followed:

Management Union

Wage Increase

1st Year P1,050.00 40%

2nd Year - 850.00 19.0%[23]

Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what
it wanted to be included in the total economic package. Umali replied that it was impossible to do so
because the Banks counter-proposal was unacceptable. He furthered asserted that it would have
been easier to bargain if the atmosphere was the same as before, where both panels trusted each
other. Diokno requested the Union panel to refrain from involving personalities and to instead focus
on the negotiations.[24] He suggested that in order to break the impasse, the Union should prioritize
the items it wanted to iron out. Divinagracia stated that the Bank should make the first move and
make a list of items it wanted to be included in the economic package. Except for the provisions on
signing bonus and uniforms, the Union and the Bank failed to agree on the remaining economic
provisions of the CBA. The Union declared a deadlock[25] and filed a Notice of Strike before the
National Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-NS-
06-380-93.[26]

On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before
the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila, docketed as
NLRC Case No. 00-06-04191-93 against the Union on June 28, 1993. The Bank alleged that the
Union violated its duty to bargain, as it did not bargain in good faith. It contended that the Union
demanded sky high economic demands, indicative of blue-sky bargaining.[27] Further, the Union
violated its no strike- no lockout clause by filing a notice of strike before the NCMB. Considering that
the filing of notice of strike was an illegal act, the Union officers should be dismissed. Finally, the
Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and actual
damages and was forced to litigate and hire the services of the lawyer.[28]

On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, pursuant to
Article 263(g) of the Labor Code, issued an Order assuming jurisdiction over the labor dispute at the
Bank. The complaint for ULP filed by the Bank before the NLRC was consolidated with the complaint
over which the SOLE assumed jurisdiction. After the parties submitted their respective position
papers, the SOLE issued an Order on October 29, 1993, the dispositive portion of which is herein
quoted:

WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees Union
NUBE are hereby ordered to execute a collective bargaining agreement incorporating the
dispositions contained herein. The CBA shall be retroactive to 01 April 1993 and shall remain
effective for two years thereafter, or until such time as a new CBA has superseded it. All provisions
in the expired CBA not expressly modified or not passed upon herein are deemed retained while all
new provisions which are being demanded by either party are deemed denied, but without prejudice
to such agreements as the parties may have arrived at in the meantime.

The Banks charge for unfair labor practice which it originally filed with the NLRC as NLRC-NCR
Case No. 00-06-04191-93 but which is deemed consolidated herein, is dismissed for lack of merit.
On the other hand, the Unions charge for unfair labor practice is similarly dismissed.
Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR Case No. 00-06-
04191-93 is pending for his guidance and appropriate action.[29]

The SOLE gave the following economic awards:

1. Wage Increase:

a) To be incorporated to present salary rates:

Fourth year : 7% of basic monthly salary

Fifth year : 5% of basic monthly salary based on the 4th year adjusted salary

b) Additional fixed amount:

Fourth year : P600.00 per month

Fifth year : P400.00 per month

2. Group Insurance

a) Hospitalization : P45,000.00

b) Life : P130,000.00

c) Accident : P130,000.00

3. Medicine Allowance

Fourth year : P5,500.00

Fifth year : P6,000.00

4. Dental Benefits

Provision of dental retainer as proposed by the Bank, but without diminishing existing benefits

5. Optical Allowance

Fourth year: P2,000.00

Fifth year : P2,500.00

6. Death Assistance

a) Employee : P30,000.00

b) Immediate Family Member : P5,000.00

7. Emergency Leave Five (5) days for each contingency

8. Loans

a) Car Loan : P200,000.00

b) Housing Loan : It cannot be denied that the costs attendant to having ones own home have
tremendously gone up. The need, therefore, to improve on this benefit cannot be overemphasized.
Thus, the management is urged to increase the existing and allowable housing loan that the Bank
extends to its employees to an amount that will give meaning and substance to this CBA benefit.[30]

The SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both
parties failed to substantiate their claims. Citing National Labor Union v. Insular-Yebana Tobacco
Corporation,[31] the SOLE stated that ULP charges would prosper only if shown to have directly
prejudiced the public interest.

Dissatisfied, the Union filed a motion for reconsideration with clarification, while the Bank filed a
motion for reconsideration. On December 16, 1993, the SOLE issued a Resolution denying the
motions. The Union filed a second motion for reconsideration, which was, likewise, denied on
February 10, 1994.

On March 22, 1994, the Bank and the Union signed the CBA.[32] Immediately thereafter, the wage
increase was effected and the signing bonuses based on the increased wage were distributed to the
employees covered by the CBA.

The Present Petition

On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of Procedure
alleging as follows:

A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE UNIONS CHARGE OF UNFAIR
LABOR PRACTICE IN VIEW OF THE CLEAR EVIDENCE OF RECORD AND ADMISSIONS
PROVING THE UNFAIR LABOR PRACTICES CHARGED.[33]

B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON OTHER UNFAIR LABOR
PRACTICES CHARGED.[34]

C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE CHARGES OF UNFAIR LABOR
PRACTICES ON THE GROUND THAT NO PROOF OF INJURY TO THE PUBLIC INTEREST WAS
PRESENTED.[35]

The Union alleges that the SOLE acted with grave abuse of discretion amounting to lack or excess
of jurisdiction when it found that the Bank did not commit unfair labor practice when it interfered with
the Unions choice of negotiator. It argued that, Dioknos suggestion that the negotiation be limited as
a family affair was tantamount to suggesting that Federation President Jose Umali, Jr. be excluded
from the Unions negotiating panel. It further argued that contrary to the ruling of the public
respondent, damage or injury to the public interest need not be present in order for unfair labor
practice to prosper.

The Union, likewise, pointed out that the public respondent failed to rule on the ULP charges arising
from the Banks surface bargaining. The Union contended that the Bank merely went through the
motions of collective bargaining without the intent to reach an agreement, and made bad faith
proposals when it announced that the parties should begin from a clean slate. It argued that the
Bank opened the political provisions up for grabs, which had the effect of diminishing or obliterating
the gains that the Union had made.

The Union also accused the Bank of refusing to disclose material and necessary data, even after a
request was made by the Union to validate its guestimates.
In its Comment, the Bank prayed that the petition be dismissed as the Union was estopped,
considering that it signed the Collective Bargaining Agreement (CBA) on April 22, 1994. It asserted
that contrary to the Unions allegations, it was the Union that committed ULP when negotiator Jose
Umali, Jr. hurled invectives at the Banks head negotiator, Cielito Diokno, and demanded that she be
excluded from the Banks negotiating team. Moreover, the Union engaged in blue-sky bargaining and
isolated the no strike-no lockout clause of the existing CBA.

The Office of the Solicitor General, in representation of the public respondent, prayed that the
petition be dismissed. It asserted that the Union failed to prove its ULP charges and that the public
respondent did not commit any grave abuse of discretion in issuing the assailed order and
resolutions.

The Issues

The issues presented for resolution are the following: (a) whether or not the Union was able to
substantiate its claim of unfair labor practice against the Bank arising from the latters alleged
interference with its choice of negotiator; surface bargaining; making bad faith non-economic
proposals; and refusal to furnish the Union with copies of the relevant data; (b) whether or not the
public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction
when she issued the assailed order and resolutions; and, (c) whether or not the petitioner is
estopped from filing the instant action.

The Courts Ruling

The petition is bereft of merit.

Interference under Article

248 (a) of the Labor Code

The petitioner asserts that the private respondent committed ULP, i.e., interference in the selection
of the Unions negotiating panel, when Cielito Diokno, the Banks Human Resource Manager,
suggested to the Unions President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the
NUBE, be excluded from the Unions negotiating panel. In support of its claim, Divinagracia executed
an affidavit, stating that prior to the commencement of the negotiation, Diokno approached him and
suggested the exclusion of Umali from the Unions negotiating panel, and that during the first
meeting, Diokno stated that the negotiation be kept a family affair.

Citing the cases of U.S. Postal Service[36] and Harley Davidson Motor Co., Inc., AMF,[37] the Union
claims that interference in the choice of the Unions bargaining panel is tantamount to ULP.

In the aforecited cases, the alleged ULP was based on the employers violation of Section 8(a)(1)
and (5) of the National Labor Relations Act (NLRA),[38] which pertain to the interference, restraint or
coercion of the employer in the employees exercise of their rights to self-organization and to bargain
collectively through representatives of their own choosing; and the refusal of the employer to bargain
collectively with the employees representatives. In both cases, the National Labor Relations Board
held that upon the employers refusal to engage in negotiations with the Union for collective-
bargaining contract when the Union includes a person who is not an employee, or one who is a
member or an official of other labor organizations, such employer is engaged in unfair labor practice
under Section 8(a)(1) and (5) of the NLRA.

The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association NATU
vs. Insular Life Assurance Co., Ltd.,[39] wherein this Court said that the test of whether an employer
has interfered with and coerced employees in the exercise of their right to self-organization within
the meaning of subsection (a)(1) is whether the employer has engaged in conduct which it may
reasonably be said, tends to interfere with the free exercise of employees rights under Section 3 of
the Act.[40] Further, it is not necessary that there be direct evidence that any employee was in fact
intimidated or coerced by statements of threats of the employer if there is a reasonable inference
that anti-union conduct of the employer does have an adverse effect on self-organization and
collective bargaining.[41]

Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF ASSOCIATION
AND PROTECTION OF THE RIGHT TO ORGANIZE to which the Philippines is a signatory, workers
and employers, without distinction whatsoever, shall have the right to establish and, subject only to
the rules of the organization concerned, to job organizations of their own choosing without previous
authorization.[42] Workers and employers organizations shall have the right to draw up their
constitutions and rules, to elect their representatives in full freedom to organize their administration
and activities and to formulate their programs.[43] Article 2 of ILO Convention No. 98 pertaining to
the Right to Organize and Collective Bargaining, provides:

Article 2
1. Workers and employers organizations shall enjoy adequate protection against any acts or
interference by each other or each others agents or members in their establishment, functioning or
administration.

2. In particular, acts which are designed to promote the establishment of workers organizations
under the domination of employers or employers organizations or to support workers organizations
by financial or other means, with the object of placing such organizations under the control of
employers or employers organizations within the meaning of this Article.

The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243 thereof,
which provides:

ART. 243. COVERAGE AND EMPLOYEES RIGHT TO SELF-ORGANIZATION. All persons

employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical
or educational institutions whether operating for profit or not, shall have the right to self-organization
and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and
those without any definite employers may form labor organizations for their mutual aid and
protection.

and Articles 248 and 249 respecting ULP of employers and labor organizations.

The said ILO Conventions were ratified on December 29, 1953. However, even as early as the 1935
Constitution,[44] the State had already expressly bestowed protection to labor as part of the general
provisions. The 1973 Constitution,[45] on the other hand, declared it as a policy of the state to afford
protection to labor, specifying that the workers rights to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work would be assured. For its part, the 1987
Constitution, aside from making it a policy to protect the rights of workers and promote their
welfare,[46] devotes an entire section, emphasizing its mandate to afford protection to labor, and
highlights the principle of shared responsibility between workers and employers to promote industrial
peace.[47]

Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes,
restrains or coerces employees in the exercise of their right to self-organization or the right to form
association. The right to self-organization necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to
exclude from its panel of negotiators a representative of the Union, and if it can be inferred that the
employer adopted the said act to yield adverse effects on the free exercise to right to self-
organization or on the right to collective bargaining of the employees, ULP under Article 248(a) in
connection with Article 243 of the Labor Code is committed.

In order to show that the employer committed ULP under the Labor Code, substantial evidence is
required to support the claim. Substantial evidence has been defined as such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.[48] In the case at bar, the Union
bases its claim of interference on the alleged suggestions of Diokno to exclude Umali from the
Unions negotiating panel.

The circumstances that occurred during the negotiation do not show that the suggestion made by
Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank
consciously adopted such act to yield adverse effects on the free exercise of the right to self-
organization and collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and simultaneously with Divinagracias
suggestion that the bank lawyers be excluded from its negotiating panel.

The records show that after the initiation of the collective bargaining process, with the inclusion of
Umali in the Unions negotiating panel, the negotiations pushed through. The complaint was made
only on August 16, 1993 after a deadlock was declared by the Union on June 15, 1993.

It is clear that such ULP charge was merely an afterthought. The accusation occurred after the
arguments and differences over the economic provisions became heated and the parties had
become frustrated. It happened after the parties started to involve personalities. As the public
respondent noted, passions may rise, and as a result, suggestions given under less adversarial
situations may be colored with unintended meanings.[49] Such is what appears to have happened in
this case.

The Duty to Bargain

Collectively

If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the normal
relations and innocent communications, which are all part of the friendly relations between the Union
and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article
248(g) when it engaged in surface bargaining. It alleged that the Bank just went through the motions
of bargaining without any intent of reaching an agreement, as evident in the Banks counter-
proposals. It explained that of the 34 economic provisions it made, the Bank only made 6 economic
counterproposals. Further, as borne by the minutes of the meetings, the Bank, after indicating the
economic provisions it had rejected, accepted, retained or were open for discussion, refused to
make a list of items it agreed to include in the economic package.

Surface bargaining is defined as going through the motions of negotiating without any legal intent to
reach an agreement.[50] The resolution of surface bargaining allegations never presents an easy
issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a
difficult one because it involves, at bottom, a question of the intent of the party in question, and
usually such intent can only be inferred from the totality of the challenged partys conduct both at and
away from the bargaining table.[51] It involves the question of whether an employers conduct
demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.[52]

The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any
intention of violating its duty to bargain with the Union. Records show that after the Union sent its
proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on
February 24, 1993. Thereafter, meetings were set for the settlement of their differences. The
minutes of the meetings show that both the Bank and the Union exchanged economic and non-
economic proposals and counter-proposals.

The Union has not been able to show that the Bank had done acts, both at and away from the
bargaining table, which tend to show that it did not want to reach an agreement with the Union or to
settle the differences between it and the Union. Admittedly, the parties were not able to agree and
reached a deadlock. However, it is herein emphasized that the duty to bargain does not compel
either party to agree to a proposal or require the making of a concession.[53] Hence, the parties
failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.

We can hardly dispute this finding, for it finds support in the evidence. The inference that
respondents did not refuse to bargain collectively with the complaining union because they accepted
some of the demands while they refused the others even leaving open other demands for future
discussion is correct, especially so when those demands were discussed at a meeting called by
respondents themselves precisely in view of the letter sent by the union on April 29, 1960[54]
In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad
faith provisions has no leg to stand on. The records show that the Banks counter-proposals on the
non-economic provisions or political provisions did not put up for grabs the entire work of the Union
and its predecessors. As can be gleaned from the Banks counter-proposal, there were many
provisions which it proposed to be retained. The revisions on the other provisions were made after
the parties had come to an agreement. Far from buttressing the Unions claim that the Bank made
bad-faith proposals on the non-economic provisions, all these, on the contrary, disprove such
allegations.

We, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish the
information it needed.

While the refusal to furnish requested information is in itself an unfair labor practice, and also
supports the inference of surface bargaining,[55] in the case at bar, Umali, in a meeting dated May
18, 1993, requested the Bank to validate its guestimates on the data of the rank and file. However,
Umali failed to put his request in writing as provided for in Article 242(c) of the Labor Code:

Article 242. Rights of Legitimate Labor Organization

(c) To be furnished by the employer, upon written request, with the annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar
days from the date of receipt of the request, after the union has been duly recognized by the
employer or certified as the sole and exclusive bargaining representatives of the employees in the
bargaining unit, or within sixty (60) calendar days before the expiration of the existing collective
bargaining agreement, or during the collective negotiation;

The Union, did not, as the Labor Code requires, send a written request for the issuance of a copy of
the data about the Banks rank and file employees. Moreover, as alleged by the Union, the fact that
the Bank made use of the aforesaid guestimates, amounts to a validation of the data it had used in
its presentation.

No Grave Abuse of Discretion

On the Part of the Public Respondent

The special civil action for certiorari may be availed of when the tribunal, board, or officer exercising
judicial or quasi-judicial functions has acted without or in excess of jurisdiction and there is no appeal
or any plain, speedy, and adequate remedy in the ordinary course of law for the purpose of annulling
the proceeding.[56] Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility which must be so patent and gross as to
amount to an invasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at
all in contemplation of law. Mere abuse of discretion is not enough.[57]

While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to
prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise of
judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the public
respondent exercised its power in an arbitrary and despotic manner by reason of passion or
personal hostility.

Estoppel not Applicable

In the Case at Bar

The respondent Bank argues that the petitioner is estopped from raising the issue of ULP when it
signed the new CBA.

Article 1431 of the Civil Code provides:

Through estoppel an admission or representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying thereon.

A person, who by his deed or conduct has induced another to act in a particular manner, is barred
from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or
injury to another.[58]

In the case, however, the approval of the CBA and the release of signing bonus do not necessarily
mean that the Union waived its ULP claim against the Bank during the past negotiations. After all,
the conclusion of the CBA was included in the order of the SOLE, while the signing bonus was
included in the CBA itself. Moreover, the Union twice filed a motion for reconsideration respecting its
ULP charges against the Bank before the SOLE.
The Union Did Not Engage

In Blue-Sky Bargaining

We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or
making exaggerated or unreasonable proposals.[59] The Bank failed to show that the economic
demands made by the Union were exaggerated or unreasonable. The minutes of the meeting show
that the Union based its economic proposals on data of rank and file employees and the prevailing
economic benefits received by bank employees from other foreign banks doing business in the
Philippines and other branches of the Bank in the Asian region.

In sum, we find that the public respondent did not act with grave abuse of discretion amounting to
lack or excess of jurisdiction when it issued the questioned order and resolutions. While the approval
of the CBA and the release of the signing bonus did not estop the Union from pursuing its claims of
ULP against the Bank, we find that the latter did not engage in ULP. We, likewise, hold that the
Union is not guilty of ULP.

IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16, 1993 and
February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor are AFFIRMED. The
Petition is hereby DISMISSED.

SO ORDERED.

______________________________________________________________________

THIRD DIVISION

GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), EDUARDO FLORES, BONIFACIO

LABACO, SALVADOR VERDEFLOR, PAULITO NIEVES, NILO AMENAZOR, BENJAMIN BEDUYA,
EUTIQUIO MENESES, CENON LABACO, DANILO MARANAN, ELISEO LASTIMOSO, JAMES
MADERAS, EFREN LABACO, CESARIO BOLSICO, DARIO DECALAIN, SAMMY CEDENO,
PRUDENCIO DELA CRUZ, EDGARDO PASTRANA, DANILO BERMUDEZ, BILLY BLASCO,
ROBERTO PEPINO, RUBEN TENOSO, ORLANDO TUDILLA, JESSIE SACE, JUNE DALAYAT,
FRANCISO LABACO, EDIN DEMAYO, WILFREDO CHENG, JAIME GANDO, JOSELITO
GUANZON, VICTOR DELMUNDO, NATHANIEL PEROY, ROBERTO VIRTUDAZO, RICARDO
HILAGA, RODRIGO FIRMANEZ, RENE VILLA, VERGELIO ICO, NOLITO PANUNCIA,
ALDRONICO BAHILLO, FLORENCIO LANZADEROS, ROLLY ROTIL, BENJAMIN ESCANO,
DOMINADOR ABAINCIA, ROMEO LITANG, NELSON PETALIO, MARIO VILLAMOR, AGUSTIN
CONSTANTINO, HERMINIO AGUSTIN, VICTORIO NEMENZO, MABINI YARCIA, PERCY
ZOSIMO, ANGELITO DELOS REYES, ADVINCULA ELMEDULAN, GORGONIO BOLORAN, ALAN
MONIN, JESSIE PACALINGGA, and MICHAEL DACLAG,

Petitioners,

- versus -

NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO

CHENG,

Respondents.

G.R. No. 165757

Present:

QUISUMBING, J., Chairperson,

CARPIO,

CARPIO MORALES,

TINGA, and

VELASCO, JR., JJ.

Promulgated:

October 17, 2006

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DECISION

CARPIO MORALES, J.:

Assailed via petition for review are issuances of the Court of Appeals in CA-G.R. SP No. 68669, to
wit: Decision[1] dated March 26, 2004 denying petitioners petition for certiorari and upholding the
decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 026956-00, and
Resolution dated October 19, 2004 denying petitioners motion for reconsideration of the decision.

Respondent Galaxie Steel Corporation (Galaxie) is a corporation engaged in the business of

manufacturing and sale of re-bars and steel billets which are used primarily in the construction of
high-rise buildings. On account of serious business losses which occurred in 1997 up to mid-1999
totaling around P127,000,000.00,[2] Galaxie decided to close down its business operations.

Galaxie thus filed on July 30, 1999 a written notice with the Department of Labor and Employment
(DOLE) informing the latter of its intended closure and the consequent termination of its employees
effective August 31, 1999.[3] And it posted the notice of closure on the corporate bulletin board.[4]

On September 8, 1999, petitioners Galaxie Steel Workers Union and Galaxie employees filed a
complaint for illegal dismissal, unfair labor practice, and money claims against Galaxie.

The Labor Arbiter, by Decision of October 30, 2000, declared valid Galaxies closure of business but
nevertheless ordered it to pay petitioner-employees separation pay, pro-rata 13th month pay, and
vacation and sick leave credits. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered ordering Respondents to pay complainants separation

pay, pro-rata 13th month pay, and vacation leave and sick leave credits in the following computed
amounts:

xxxx
Respondents are further ordered to pay complainants their tax refund for 1999 and to pay 10%
attorneys fees based on the total withheld labor standard benefits.

The complaint for unfair labor practice, illegal lockout, wage differentials, and other money claims
are hereby disallowed for lack of merit.

SO ORDERED.[5]

On appeal, the NLRC upheld the Labor Arbiters decision but reversed the award of pro-rata 13th
month pay and vacation and sick leave credits, the same not being among petitioners causes of
action as in fact they were not even mentioned in their pleadings.[6] And it reversed too the award
for separation pay, the closure of Galaxies business being due to serious business losses.
Nevertheless, the NLRC directed Galaxie to grant petitioners, by way of financial assistance, the
same amount given to the employees who had executed quitclaims. Thus the dispositive portion of
the NLRC decision read:

WHEREFORE, the decision appealed from is hereby SET ASIDE. The complaint for unfair labor
practice and illegal dismissal is DISMISSED for lack of merit. The respondent Galaxie Steel
Corporation is hereby ordered to extend as any by way of financial assistance the equivalent of ten
(10) days (sic) salary for every year of service to each of the following: Eduardo Flores, Bonifacio
Labaco, Salvador Verdeeflor, Paulito Nieves, Nilo Amenazor, Benjamin Beduya, Eutiquio Meneses,
Cenon Labaco, Danilo Maranan, Eliseo Lastimoso, James Maderas, Efren Labaco, Cesario Bolsico,
Dario Cecalain, Sammy Cedeno, Prudencio dela Cruz, Edgardo Pastrana, Danilo Bermudez, Billy
Blasco, Roberto Pepino, Ruben Tenoso, Orlando Dudilla, Jessie Sace, June Dalayat, Francisco
Labaco, Edwin Demayo, Wilfredo Cheng, Jaime Gando, Joselito Guanzon, Victor Delmundo,
Nathaniel Peroy, Roberto Virtudazo, Ricardo Hilaga, Rodrigo Firnanez, Rene Villa, Vergelio Ico,
Nolito Panuncio, Aldronico Bahillo, Florencio Lanzaderos, Rolly Rotil, Benjamin Escano, Dominador
Abaincia, Romeo Litang, Nelson Petalio, Mario Villamor, Agustin Constantino, Herminio Agustin,
Victorio Nemenzo, Mabini Yarcia, Percy Zosimo, Angelito delos Reyes, Advincula Elmedulan,
Gorgonio Boloran, Alan Monin, Jessie Pacalingga and Michael Daclag.

All other claims are DISMISSED for lack of merit.

SO ORDERED.[7]
Their motion for reconsideration having been denied, petitioners filed a petition for certiorari with the
Court of Appeals, arguing that the NLRC acted with grave abuse of discretion in not finding Galaxie
guilty of unfair labor practice and of violating petitioners right to notice of closure, and in deleting the
award of separation pay.

In the assailed decision,[8] the Court of Appeals upheld the NLRC decision and accordingly denied
petitioners petition for certiorari as it did their motion for reconsideration.

Hence, the present petition for review which raises the following issues:

1. Whether or not [Galaxie] is guilty of unfair labor practice in closing its business
operations shortly after petitioner union filed for certification election.

2. Whether or not petitioners are entitled to separation pay.

3. Whether or not the written notice posted by [Galaxie] on the company bulletin board
sufficiently complies with the notice requirement under Article 283 of the Labor Code.

Petitioners contend that the Court of Appeals erred in not finding that Galaxies closure of business
operations was motivated not by serious business losses but by their anti-union stance.

It is settled that this Court is not a trier of facts, a rule which applies with greater force in labor cases
where the findings of fact of the NLRC are accorded respect and even finality, as long as they are
supported by substantial evidence from which an independent evaluation of the facts may be
made.[9] In this case, the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in
ruling that Galaxies closure or cessation of business operations was due to serious business losses
or financial reverses, and not because of any alleged anti-union position. This Court finds no reason
to modify such finding.
In any event, petitioners contend that Galaxie did not serve written notices of the closure of business
operations upon its employees, it having merely posted a notice on the company bulletin board.
Hence, petitioners conclude, following the doctrine in Serrano v. National Labor Relations
Commission,[10] Galaxie should be liable for backwages from the date of dismissal until finality of
the decision in the case.

Further, petitioners contend that the appellate courts upholding of the deletion by the NLRC of
separation pay is contrary to the ruling in Banco Filipino Savings and Mortgage Bank v. National
Labor Relations Commission[11] which held that separation pay is proper in cases where closure or
cessation of business operations is due to serious business losses or financial reverses.

Indeed, Galaxies documentary evidence shows that it had been experiencing serious financial
losses at the time it closed business operations. As aptly found by the Court of Appeals:

The NLRCs finding on the legality of the closure should be upheld for it is supported by substantial
evidence consisting of the audited financial statements showing that Galaxie continuously incurred
losses from 1997 up to mid-1999, to wit: P65,753,480.65 in 1997, P48,429,785.89 in 1998, and
P13,204,389.97 in 1999; and of the various demand notices of payments from creditor banks.
Besides, the petitioners had not presented evidence to the contrary; nor did they

establish that the closure was motivated by Galaxies anti-union stance. True, the union was seeking
the holding of a certification election at the time that Galaxie closed its business operation, but that,
without more, was not sufficient to attribute anti-unionism against Galaxie. (Underscoring supplied)

Upon the other hand, petitioners failed to present concrete evidence supporting their claim of unfair
labor practice. Unfair labor practice refers to acts that violate the workers right to organize,[12] and
are defined in Articles 248 and 261 of the Labor Code. The prohibited acts relate to the workers right
to self-organization and to the observance of Collective Bargaining Agreement without which relation
the acts, no matter how unfair, are not deemed unfair labor practices.[13]

Respecting petitioners claim for separation pay, Article 283 of the Labor Code provides:

Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of service ,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation
of operations of establishment or under taking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

In North Davao Mining Corporation v. National Labor Relations Commission,[14] this Court held that
Article 283 governs the grant of separation benefits "in case of closures or cessation of operation" of
business establishments "NOT due to serious business losses or financial reverses . . ." Where, the
closure then is due to serious business losses, the Labor Code does not impose any obligation upon
the employer to pay separation benefits.[15]

Explaining the policy distinction in Article 283 of the Labor Code, this Court, in Cama v. Jonis Food
Services, Inc., declared:[16]

The Constitution, while affording full protection to labor, nonetheless, recognizes the right of
enterprises to reasonable returns on investments, and to expansion and growth. In line with this
protection afforded to business by the fundamental law, Article 283 of the Labor Code clearly makes
a policy distinction. It is only in instances of retrenchment to prevent losses and in cases of closures
or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses that employees whose employment has been terminated as a result are entitled to
separation pay. In other words, Article 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to serious losses. To require an employer to be
generous when it is no longer in a position to do so, in our view, would be unduly oppressive, unjust,
and unfair to the employer. Ours is a system of laws, and the law in protecting the rights of the
working man, authorizes neither the oppression nor the self-destruction of the employer. x x x
(Emphasis supplied)

The denial of petitioners claim for separation pay was thus in order.
Finally, with regard to the notice requirement, the Labor Arbiter found, and it was upheld by the
NLRC and the Court of Appeals, that the written notice of closure or cessation of Galaxies business
operations was posted on the company bulletin board one month prior to its effectivity. The mere
posting on the company bulletin board does not, however, meet the requirement under Article 283 of
serving a written notice on the workers. The purpose of the written notice is to inform the employees
of the specific date of termination or closure of business operations, and must be served upon them
at least one month before the date of effectivity to give them sufficient time to make the necessary
arrangements.[17] In order to meet the foregoing purpose, service of the written notice must be
made individually upon each and every employee of the company.

Nevertheless, the validity of termination of services can exist independently of the procedural
infirmity in the dismissal. In Agabon v. National Labor Relations Commission,[18] the Court deemed
it best to revisit the doctrine in Serrano,[19] which was cited by petitioners, in relation to Wenphil
Corp. v. National Labor Relations Commission.[20] After analyzing the consequences of the
divergent doctrines on employment termination, the Court held that in cases involving dismissals for
cause, but without observance of statutory due process, the better rule is to abandon the Serrano
doctrine and to follow Wenphil by declaring that the dismissal was for cause but imposing sanctions
on the employer. By so doing, dispensing justice not just to employees but to employers as well is
achieved.[21]

In Business Services of the Future Today, Inc. v. Court of Appeals,[22] which reiterated the ruling in
Agabon v. National Labor Relations Commission,[23] this Court held that where the dismissal is for
an authorized cause, the lack of statutory due process should not nullify the dismissal, or render it
illegal, or ineffectual. However, the employer should indemnify the employee, in the form of nominal
damages, for the violation of his right to statutory due process.

Ultimately, however, the amount of damages to be awarded the employee is addressed to the sound
discretion of the Court, taking into account the relevant circumstances.[24]

Under the facts and circumstances attendant to the case, this Court finds the amount of P20,000 in
nominal damages sufficient to vindicate each petitioners right to due process.

WHEREFORE, the assailed Decision dated March 26, 2004 and Resolution dated October 19, 2004
issued by the Court of Appeals in CA-G.R. SP No. 68669 are AFFIRMED with the MODIFICATION
that respondent Galaxie Steel Corporation is ORDERED to PAY each of the individual petitioners
the amount of P20,000.00 as nominal damages for non-compliance with statutory due process.

SO ORDERED.
____________________________________________________________________

TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA BREWERY,

Petitioner,

- versus -

G.R. No. 162025

Present:

CARPIO MORALES, J.,

Chairperson,

BRION,

BERSAMIN,

ABAD,* and

VILLARAMA, JR., JJ.

ASIA BREWERY, INC.,

Respondent.

Promulgated:

August 3, 2010

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DECISION
VILLARAMA, JR., J.:

For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision[1] dated November 22, 2002 and Resolution[2]
dated January 28, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 55578, granting
the petition of respondent company and reversing the Voluntary Arbitrators Decision[3] dated
October 14, 1999.

The facts are:

Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer,
shandy, bottled water and glass products. ABI entered into a Collective Bargaining Agreement
(CBA),[4] effective for five (5) years from August 1, 1997 to July 31, 2002, with Bisig at Lakas ng
mga Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the exclusive bargaining
representative of ABIs rank-and-file employees. On October 3, 2000, ABI and BLMA-
INDEPENDENT signed a renegotiated CBA effective from August 1, 2000 to 31 July 2003.[5]

Article I of the CBA defined the scope of the bargaining unit, as follows:

Section 1. Recognition. The COMPANY recognizes the UNION as the sole and exclusive bargaining
representative of all the regular rank-and-file daily paid employees within the scope of the
appropriate bargaining unit with respect to rates of pay, hours of work and other terms and
conditions of employment. The UNION shall not represent or accept for membership employees
outside the scope of the bargaining unit herein defined.

Section 2. Bargaining Unit. The bargaining unit shall be comprised of all regular rank-and-file daily-
paid employees of the COMPANY. However, the following jobs/positions as herein defined shall be
excluded from the bargaining unit, to wit:

1. Managers

2. Assistant Managers

3. Section Heads

4. Supervisors

5. Superintendents

6. Confidential and Executive Secretaries

7. Personnel, Accounting and Marketing Staff

8. Communications Personnel

9. Probationary Employees

10. Security and Fire Brigade Personnel

11. Monthly Employees

12. Purchasing and Quality Control Staff[6] [EMPHASIS SUPPLIED.]

Subsequently, a dispute arose when ABIs management stopped deducting union dues from eighty-
one (81) employees, believing that their membership in BLMA-INDEPENDENT violated the CBA.
Eighteen (18) of these affected employees are QA Sampling Inspectors/Inspectresses and Machine
Gauge Technician who formed part of the Quality Control Staff. Twenty (20) checkers are assigned
at the Materials Department of the Administration Division, Full Goods Department of the Brewery
Division and Packaging Division. The rest are secretaries/clerks directly under their respective
division managers.[7]

BLMA-INDEPENDENT claimed that ABIs actions restrained the employees right to self-organization
and brought the matter to the grievance machinery. As the parties failed to amicably settle the
controversy, BLMA-INDEPENDENT lodged a complaint before the National Conciliation and
Mediation Board (NCMB). The parties eventually agreed to submit the case for arbitration to resolve
the issue of [w]hether or not there is restraint to employees in the exercise of their right to self-
organization.[8]

In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-INDEPENDENT after
finding that the records submitted by ABI showed that the positions of the subject employees qualify
under the rank-and-file category because their functions are merely routinary and clerical. He noted
that the positions occupied by the checkers and secretaries/clerks in the different divisions are not
managerial or supervisory, as evident from the duties and responsibilities assigned to them. With
respect to QA Sampling Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI
failed to establish with sufficient clarity their basic functions as to consider them Quality Control Staff
who were excluded from the coverage of the CBA. Accordingly, the subject employees were
declared eligible for inclusion within the bargaining unit represented by BLMA-INDEPENDENT.[9]

On appeal, the CA reversed the Voluntary Arbitrator, ruling that:

WHEREFORE, foregoing premises considered, the questioned decision of the Honorable Voluntary
Arbitrator Bienvenido De Vera is hereby REVERSED and SET ASIDE, and A NEW ONE ENTERED
DECLARING THAT:

a) the 81 employees are excluded from and are not eligible for inclusion in the bargaining unit as
defined in Section 2, Article I of the CBA;

b) the 81 employees cannot validly become members of respondent and/or if already members, that
their membership is violative of the CBA and that they should disaffiliate from respondent; and

c) petitioner has not committed any act that restrained or tended to restrain its employees in the
exercise of their right to self-organization.

NO COSTS.

SO ORDERED.[10]

BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a certification election

was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ng Manggagawa sa Asia
(TPMA) won. As the incumbent bargaining representative of ABIs rank-and-file employees claiming
interest in the outcome of the case, petitioner filed with the CA an omnibus motion for
reconsideration of the decision and intervention, with attached petition signed by the union
officers.[11] Both motions were denied by the CA.[12]

The petition is anchored on the following grounds:

(1)

THE COURT OF APPEALS ERRED IN RULING THAT THE 81 EMPLOYEES ARE EXCLUDED
FROM AND ARE NOT ELIGIBLE FOR INCLUSION IN THE BARGAINING UNIT AS DEFINED IN
SECTION 2, ARTICLE 1 OF THE CBA[;]

(2)

THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES CANNOT VALIDLY
BECOME UNION MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF THE CBA AND
THAT THEY SHOULD DISAFFILIATE FROM RESPONDENT;

(3)

THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER (NOW

PRIVATE RESPONDENT) HAS NOT COMMITTED ANY ACT THAT RESTRAINED OR TENDED
TO RESTRAIN ITS EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZATION.[13]

Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this prohibition to confidential
employees or those who by reason of their positions or nature of work are required to assist or act in
a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly
confidential records.[14] Confidential employees are thus excluded from the rank-and-file bargaining
unit. The rationale for their separate category and disqualification to join any labor organization is
similar to the inhibition for managerial employees because if allowed to be affiliated with a Union, the
latter might not be assured of their loyalty in view of evident conflict of interests and the Union can
also become company-denominated with the presence of managerial employees in the Union
membership.[15] Having access to confidential information, confidential employees may also
become the source of undue advantage. Said employees may act as a spy or spies of either party to
a collective bargaining agreement.[16]

In Philips Industrial Development, Inc. v. NLRC,[17] this Court held that petitioners division
secretaries, all Staff of General Management, Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems are confidential employees not included within the
rank-and-file bargaining unit.[18] Earlier, in Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-
Confesor,[19] we declared that legal secretaries who are tasked with, among others, the typing of
legal documents, memoranda and correspondence, the keeping of records and files, the giving of
and receiving notices, and such other duties as required by the legal personnel of the corporation,
fall under the category of confidential employees and hence excluded from the bargaining unit
composed of rank-and-file employees.[20]
Also considered having access to vital labor information are the executive secretaries of the General
Manager and the executive secretaries of the Quality Assurance Manager, Product Development
Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing
Director, Engineering Manager, Materials Manager and Production Manager.[21]

In the present case, the CBA expressly excluded Confidential and Executive Secretaries from the
rank-and-file bargaining unit, for which reason ABI seeks their disaffiliation from petitioner. Petitioner,
however, maintains that except for Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had
been promoted to monthly paid positions, the following secretaries/clerks are deemed included
among the rank-and-file employees of ABI:[22]

NAME

DEPARTMENT

IMMEDIATE SUPERIOR

C1 ADMIN DIVISION

1. Angeles, Cristina C.

Transportation

Mr. Melito K. Tan

2. Barraquio, Carina P.

Transportation

Mr. Melito K. Tan

3. Cabalo, Marivic B.

Transportation

Mr. Melito K. Tan

4. Fameronag, Leodigario C.

Transportation

Mr. Melito K. Tan

1. Abalos, Andrea A.

Materials

Mr. Andres G. Co

2. Algire, Juvy L.

Materials

Mr. Andres G. Co

3. Anouevo, Shirley P.

Materials

Mr. Andres G. Co

4. Aviso, Rosita S.

Materials

Mr. Andres G. Co

5. Barachina, Pauline C.

Materials

Mr. Andres G. Co

6. Briones, Catalina P.

Materials

Mr. Andres G. Co

7. Caralipio, Juanita P.

Materials

Mr. Andres G. Co

8. Elmido, Ma. Rebecca S.

Materials

Mr. Andres G. Co
9. Giron, Laura P.

Materials

Mr. Andres G. Co

10. Mane, Edna A.

Materials

Mr. Andres G. Co

xxxx

C2 BREWERY DIVISION

1. Laloon, Daisy S.

Brewhouse

Mr. William Tan

1. Arabit, Myrna F.

Bottling Production

Mr. Julius Palmares

2. Burgos, Adelaida D.

Bottling Production

Mr. Julius Palmares

3. Menil, Emmanuel S.

Bottling Production

Mr. Julius Palmares

4. Nevalga, Marcelo G.

Bottling Production

Mr. Julius Palmares

1. Mapola, Ma. Esraliza T.

Bottling Maintenance

Mr. Ernesto Ang

2. Velez, Carmelito A.

Bottling Maintenance

Mr. Ernesto Ang

1. Bordamonte, Rhumela D.

Bottled Water

Mr. Faustino Tetonche

2. Deauna, Edna R.

Bottled Water

Mr. Faustino Tetonche

3. Punongbayan, Marylou F.

Bottled Water

Mr. Faustino Tetonche

4. Saguan, Lennie Y.

Bottled Water

Mr. Faustino Tetonche

1. Alcoran, Simeon A.

Full Goods

Mr. Tsoi Wah Tung

2. Cervantes, Ma. Sherley Y.

Full Goods

Mr. Tsoi Wah Tung

3. Diongco, Ma. Teresa M.

Full Goods

Mr. Tsoi Wah Tung

4. Mabilangan, Evelyn M.

Full Goods

Mr. Tsoi Wah Tung

5. Rivera, Aurora M.

Full Goods

Mr. Tsoi Wah Tung

6. Salandanan, Nancy G.

Full Goods

Mr. Tsoi Wah Tung

1. Magbag, Ma. Corazon C.

Tank Farm/

Cella Services

Mr. Manuel Yu Liat

1. Capiroso, Francisca A.

Quality Assurance

Ms. Regina Mirasol

1. Alconaba, Elvira C.

Engineering

Mr. Clemente Wong

2. Bustillo, Bernardita E.

Electrical

Mr. Jorge Villarosa

3. Catindig, Ruel A.

Civil Works
Mr. Roger Giron

4. Sison, Claudia B.

Utilities

Mr. Venancio Alconaba

xxxx

C3 PACKAGING DIVISION

1. Alvarez, Ma. Luningning L.

GP Administration

Ms. Susan Bella

2. Caiza, Alma A.

GP Technical

Mr. Chen Tsai Tyan

3. Cantalejo, Aida S.

GP Engineering
Mr. Noel Fernandez

4. Castillo, Ma. Riza R.

GP Production

Mr. Tsai Chen Chih

5. Lamadrid, Susana C.

GP Production

Mr. Robert Bautista

6. Mendoza, Jennifer L.

GP Technical

Mr. Mel Oa

As can be gleaned from the above listing, it is rather curious that there would be several
secretaries/clerks for just one (1) department/division performing tasks which are mostly routine and
clerical. Respondent insisted they fall under the Confidential and Executive Secretaries expressly
excluded by the CBA from the rank-and-file bargaining unit. However, perusal of the job descriptions
of these secretaries/clerks reveals that their assigned duties and responsibilities involve routine
activities of recording and monitoring, and other paper works for their respective departments while
secretarial tasks such as receiving telephone calls and filing of office correspondence appear to
have been commonly imposed as additional duties.[23] Respondent failed to indicate who among
these numerous secretaries/clerks have access to confidential data relating to management policies
that could give rise to potential conflict of interest with their Union membership. Clearly, the rationale
under our previous rulings for the exclusion of executive secretaries or division secretaries would
have little or no significance considering the lack of or very limited access to confidential information
of these secretaries/clerks. It is not even farfetched that the job category may exist only on paper
since they are all daily-paid workers. Quite understandably, petitioner had earlier expressed the view
that the positions were just being reclassified as these employees actually discharged routine
functions.

We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-file employees
and not confidential employees.

With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine Technician, there
seems no dispute that they form part of the Quality Control Staff who, under the express terms of the
CBA, fall under a distinct category. But we disagree with respondents contention that the twenty (20)
checkers are similarly confidential employees being quality control staff entrusted with the handling
and custody of company properties and sensitive information.

Again, the job descriptions of these checkers assigned in the storeroom section of the Materials
Department, finishing section of the Packaging Department, and the decorating and glass sections
of the Production Department plainly showed that they perform routine and mechanical tasks
preparatory to the delivery of the finished products.[24] While it may be argued that quality control
extends to post-production phase -- proper packaging of the finished products -- no evidence was
presented by the respondent to prove that these daily-paid checkers actually form part of the
companys Quality Control Staff who as such were exposed to sensitive, vital and confidential
information about [companys] products or have knowledge of mixtures of the products, their defects,
and even their formulas which are considered trade secrets. Such allegations of respondent must be
supported by evidence.[25]

Consequently, we hold that the twenty (20) checkers may not be considered confidential employees
under the category of Quality Control Staff who were expressly excluded from the CBA of the rank-
and-file bargaining unit.

Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to
persons who formulate, determine, and effectuate management policies in the field of labor relations.
The two (2) criteria are cumulative, and both must be met if an employee is to be considered a
confidential employee that is, the confidential relationship must exist between the employee and his
supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations.
The exclusion from bargaining units of employees who, in the normal course of their duties, become
aware of management policies relating to labor relations is a principal objective sought to be
accomplished by the confidential employee rule.[26] There is no showing in this case that the
secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees
and obtained confidential information relating to labor relations policies. And even assuming that
they had exposure to internal business operations of the company, respondent claimed, this is not
per se ground for their exclusion in the bargaining unit of the daily-paid rank-and-file employees.[27]

Not being confidential employees, the secretaries/clerks and checkers are not disqualified from
membership in the Union of respondents rank-and-file employees. Petitioner argues that
respondents act of unilaterally stopping the deduction of union dues from these employees
constitutes unfair labor practice as it restrained the workers exercise of their right to self-
organization, as provided in Article 248 (a) of the Labor Code.

Unfair labor practice refers to acts that violate the workers right to organize. The prohibited acts are
related to the workers right to self organization and to the observance of a CBA. For a charge of
unfair labor practice to prosper, it must be shown that ABI was motivated by ill will, bad faith, or
fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public
policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x x[28]
from ABIs act in discontinuing the union dues deduction from those employees it believed were
excluded by the CBA. Considering that the herein dispute arose from a simple disagreement in the
interpretation of the CBA provision on excluded employees from the bargaining unit, respondent
cannot be said to have committed unfair labor practice that restrained its employees in the exercise
of their right to self-organization, nor have thereby demonstrated an anti-union stance.

WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2002 and Resolution
dated January 28, 2004 of the Court of Appeals in CA-G.R. SP No. 55578 are hereby REVERSED
and SET ASIDE. The checkers and secretaries/clerks of respondent company are hereby declared
rank-and-file employees who are eligible to join the Union of the rank-and-file employees.

No costs.
SO ORDERED.

________________________________________________________________________

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA,
petitioners,

vs.

NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE,

respondents.

PANGANIBAN, J.:

Although the employers have shown that respondents performed work that was seasonal in nature,
they failed to prove that the latter worked only for the duration of one particular season. In fact,
petitioners do not deny that these workers have served them for several years already. Hence, they
are regular — not seasonal — employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside
the February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The
dispositive part of the Decision reads:

"WHEREFORE, premises considered, the instant special civil action for certiorari is hereby
DENIED." 2

On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA,
disposed in this wise:

"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and
VACATED and a new one entered declaring complainants to have been illegally dismissed.
Respondents are hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona
Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from
September 1991 until reinstated. Respondents being guilty of unfair labor practice are further
ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as
exemplary damages." 4

The Facts

The facts are summarized in the NLRC Decision as follows:

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work
and/or were choosy in the kind of jobs they wanted to perform, the records is replete with
complainants' persistence and dogged determination in going back to work.

"Indeed, it would appear that respondents did not look with favor workers' having organized
themselves into a union. Thus, when complainant union was certified as the collective bargaining
representative in the certification elections, respondents under the pretext that the result was on
appeal, refused to sit down with the union for the purpose of entering into a collective bargaining
agreement. Moreover, the workers including complainants herein were not given work for more than
one month. In protest, complainants staged a strike which was however settled upon the signing of a
Memorandum of Agreement which stipulated among others that:

'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will
endeavor to conclude the same within thirty (30) days.

'b) The management will give priority to the women workers who are members of the union in
case work relative . . . or amount[ing] to gahit and [dipol] arises.

'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week.

'd) The management will provide fifteen (15) wagons for the workers and that existing workforce
prior to the actual strike will be given priority. However, in case the said workforce would not be
enough, the management can hire additional workers to supplement them.

'e) The management will not anymore allow the scabs, numbering about eighteen (18)
workers[,] to work in the hacienda; and
'f) The union will immediately lift the picket upon signing of this agreement.'

"However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its
commitment to sit down and bargain collectively. Instead, respondent employed all means including
the use of private armed guards to prevent the organizers from entering the premises.

"Moreover, starting September 1991, respondents did not any more give work assignments to the
complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation
efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and
respondents which provides:

'Whereas the union staged a strike against management on January 2, 1992 grounded on the
dismissal of the union officials and members;

'Whereas parties to the present dispute agree to settle the case amicably once and for all;

'Now therefore, in the interest of both labor and management, parties herein agree as follows:

'1. That the list of the names of affected union members hereto attached and made part of this
agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this
concerned Union members are hacienda workers;

'2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the
subjects of a Memorandum of Agreement entered into by and between the parties last January 4,
1990;

'3. That herein parties can use other employment references in support of their respective
claims whether or not any or all of the listed 36 union members are employees or hacienda workers
or not as the case may be;
'4. That in case conflict or disagreement arises in the determination of the status of the
particular hacienda workers subject of this agreement herein parties further agree to submit the
same to voluntary arbitration;

'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be
composed of three representatives each and is given five working days starting Jan. 23, 1992 to
resolve the status of the subject 36 hacienda workers. (Union representatives: Bernardo Torres,
Martin Alas-as, Ariston Arulea Jr.)"

"Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed
as follows:

'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who
received their 13th month pay. The following are deemed not considered employees:

1. Luisa Rombo

2. Ramona Rombo

3. Bobong Abrega

4. Boboy Silva

'The name Orencio Rombo shall be verified in the 1990 payroll.

'The following employees shall be reinstated immediately upon availability of work:

1. Jose Dagle

7. Alejandro Tejares
2. Rico Dagle

8. Gaudioso Rombo

3. Ricardo Dagle

9. Martin Alas-as Jr.

4. Jesus Silva

10. Cresensio Abrega

5. Fernando Silva

11. Ariston Eruela Sr.

6. Ernesto Tejares

12. Ariston Eruela Jr.'

"When respondents again reneged on its commitment; complainants filed the present complaint.

"But for all their persistence, the risk they had to undergo in conducting a strike in the face of
overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of
'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they were considered to
be merely on leave during the off-season and were therefore still employed by petitioners. Moreover,
the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to
be tantamount to illegal dismissal.

The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers
themselves who refused to or were choosy in their work." As found by the NLRC, the record of this
case is "replete with complainants' persistence and dogged determination in going back to work." 6

The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor
practice.

Hence this Petition. 7

Issues

Petitioners raise the following issues for the Court's consideration:

"A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal
workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code,
which categorically state that seasonal employees are not covered by the definition of regular
employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual
employees who have served for at least one year.

"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying
instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco,
Bacolod-Murcia, and Gaco, . . .

"C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the
NLRC's conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of
unfair labor practice, and that the union be awarded moral and exemplary damages." 8
Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the
first issue and Item C as the second.

The Court's Ruling

The Petition has no merit.

First Issue:

Regular Employment

At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions
for review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not
a trier of facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are
for labor tribunals to resolve. 12 In the present case, these have already been threshed out by the
NLRC. Its findings were affirmed by the appellate court.

Contrary to petitioners' contention, the CA did not err when it held that respondents were regular
employees.

Article 280 of the Labor Code, as amended, states:

"Art. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exist." (Italics supplied)

For respondents to be excluded from those classified as regular employees, it is not enough that
they perform work or services that are seasonal in nature. They must have also been employed only
for the duration of one season. The evidence proves the existence of the first, but not of the second,
condition. The fact that respondents — with the exception of Luisa Rombo, Ramona Rombo,
Bobong Abriga and Boboy Silva — repeatedly worked as sugarcane workers for petitioners for
several years is not denied by the latter. Evidently, petitioners employed respondents for more than
one season. Therefore, the general rule of regular employment is applicable.

In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:

"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v.
NLRC, in which this Court held:

"The primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business
of the employer. The test is whether the former is usually necessary or desirable in the usual trade
or business of the employer. The connection can be determined by considering the nature of the
work performed and its relation to the scheme of the particular business or trade in its entirety. Also
if the employee has been performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such activity and while such activity
exists.

xxx xxx xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the
duration of the . . . season does not detract from considering them in regular employment since in a
litany of cases this Court has already settled that seasonal workers who are called to work from time
to time and are temporarily laid off during off-season are not separated from service in said period,
but merely considered on leave until re-employed." 14
The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In
the earlier case, the workers were required to perform phases of agricultural work for a definite
period of time, after which their services would be available to any other farm owner. They were not
hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single
phase thereof. On the other hand, herein respondents, having performed the same tasks for
petitioners every season for several years, are considered the latter's regular employees for their
respective tasks. Petitioners' eventual refusal to use their services — even if they were ready, able
and willing to perform their usual duties whenever these were available — and hiring of other
workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the
latter.

The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid
exercise of a management prerogative. The sudden changes in work assignments reeked of bad
faith. These changes were implemented immediately after respondents had organized themselves
into a union and started demanding collective bargaining. Those who were union members were
effectively deprived of their jobs. Petitioners' move actually amounted to unjustified dismissal of
respondents, in violation of the Labor Code.

"Where there is no showing of clear, valid and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is on the employer to prove that the
termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove
any such cause for the dismissal of respondents who, as discussed above, are regular employees.

Second Issue:

Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:

"Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the
promotion of those who withdrew from the union, the use of armed guards to prevent the organizers
to come in, and the dismissal of union officials and members, one cannot but conclude that
respondents did not want a union in their hacienda—a clear interference in the right of the workers to
self-organization." 17
We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who
are deemed to have acquired expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality. Their findings are binding on the Supreme Court. 18
Verily, their conclusions are accorded great weight upon appeal, especially when supported by
substantial evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of
their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any
rational basis." 20

The finding of unfair labor practice done in bad faith carries with it the sanction of moral and
exemplary damages." 21

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.

SO ORDERED.

__________________________________________________________________

COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION OF EMPLOYEES AND

FACULTY OF LETRAN and ELEONOR AMBAS, respondents.

DECISION

KAPUNAN, J.:

This is a petition for review on certiorari seeking the reversal of the Decision of the Court of Appeals,
promulgated on 9 August 1999, dismissing the petition filed by Colegio de San Juan de Letran
(hereinafter, "petitioner") and affirming the Order of the Secretary of Labor, dated December 2, 1996,
finding the petitioner guilty of unfair labor practice on two (2) counts.

The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals, are as follows:

"On December 1992, Salvador Abtria, then President of respondent union, Association of
Employees and Faculty of Letran, initiated the renegotiation of its Collective Bargaining Agreement
with petitioner Colegio de San Juan de Letran for the last two (2) years of the CBA's five (5) year
lifetime from 1989-1994. On the same year, the union elected a new set of officers wherein private
respondent Eleanor Ambas emerged as the newly elected President (Secretary of Labor and
Employment's Order dated December 2, 1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr. Edwin Lao,
claimed that the CBA was already prepared for signing by the parties. The parties submitted the
disputed CBA to a referendum by the union members, who eventually rejected the said CBA (Ibid, p.
2).

Petitioner accused the union officers of bargaining in bad faith before the National Labor Relations
Commission (NLRC). Labor Arbiter Edgardo M. Madriaga decided in favor of petitioner. However,
the Labor Arbiter's decision was reversed on appeal before the NLRC (Ibid, p. 2).

On January 1996, the union notified the National Conciliation and Mediation Board (NCMB) of its
intention to strike on the grounds (sic) of petitioner's: non-compliance with the NLRC (1) order to
delete the name of Atty. Federico Leynes as the union's legal counsel; and (2) refusal to bargain
(Ibid, p. 1).

On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start negotiation on a
new five-year CBA starting 1994-1999. On February 7, 1996, the union submitted its proposals to
petitioner, which notified the union six days later or on February 13, 1996 that the same had been
submitted to its Board of Trustees. In the meantime, Ambas was informed through a letter dated
February 15, 1996 from her superior that her work schedule was being changed from Monday to
Friday to Tuesday to Saturday. Ambas protested and requested management to submit the issue to
a grievance machinery under the old CBA (Ibid, p. 2-3).

Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The parties met on
March 27, 1996 before the NCMB to discuss the ground rules for the negotiation. On March 29,
1996, the union received petitioner's letter dismissing Ambas for alleged insubordination. Hence, the
union amended its notice of strike to include Ambas' dismissal. (Ibid, p. 2-3).

On April 20, 1996, both parties again discussed the ground rules for the CBA renegotiation.
However, petitioner stopped the negotiations after it purportedly received information that a new
group of employees had filed a petition for certification election (Ibid, p. 3).

On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the Secretary of
Labor and Employment assumed jurisdiction and ordered all striking employees including the union
president to return to work and for petitioner to accept them back under the same terms and
conditions before the actual strike. Petitioner readmitted the striking members except Ambas. The
parties then submitted their pleadings including their position papers which were filed on July 17,
1996 ( Ibid, pp. 2-3).

On December 2, 1996, public respondent issued an order declaring petitioner guilty of unfair labor
practice on two counts and directing the reinstatement of private respondent Ambas with
backwages. Petitioner filed a motion for reconsideration which was denied in an Order dated May
29, 1997 (Petition, pp. 8-9)."[1]

Having been denied its motion for reconsideration, petitioner sought a review of the order of the
Secretary of Labor and Employment before the Court of Appeals. The appellate court dismissed the
petition and affirmed the findings of the Secretary of Labor and Employment. The dispositive portion
of the decision of the Court of Appeals sets forth:

WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for being without merit
in fact and in law.

With cost to petitioner.

SO ORDERED.[2]

Hence, petitioner comes to this Court for redress.

Petitioner ascribes the following errors to the Court of Appeals:

THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF REFUSAL TO BARGAIN
(UNFAIR LABOR PRACTICE) FOR SUSPENDING THE COLLECTIVE BARGAINING
NEGOTIATIONS WITH RESPONDENT AEFL, DESPITE THE FACT THAT THE SUSPENSION OF
THE NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A PETITION FOR
CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED TO COMMAND THE MAJORITY
OF THE EMPLOYEES WITHIN THE BARGAINING UNIT.

II

THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF UNFAIR LABOR
PRACTICE FOR DISMISSING RESPONDENT AMBAS, DESPITE THE FACT THAT HER
DISMISSAL WAS CAUSED BY HER INSUBORDINATE ATTITUDE, SPECIFICALLY, HER
REFUSAL TO FOLLOW THE PRESCRIBED WORK SCHEDULE.[3]

The twin questions of law before this Court are the following: (1) whether petitioner is guilty of unfair
labor practice by refusing to bargain with the union when it unilaterally suspended the ongoing
negotiations for a new Collective Bargaining Agreement (CBA) upon mere information that a petition
for certification has been filed by another legitimate labor organization? (2) whether the termination
of the union president amounts to an interference of the employees' right to self-organization?

The petition is without merit.

After a thorough review of the records of the case, this Court finds that petitioner has not shown any
compelling reason sufficient to overturn the ruling of the Court of Appeals affirming the findings of
the Secretary of Labor and Employment. It is axiomatic that the findings of fact of the Court of
Appeals are conclusive and binding on the Supreme Court and will not be reviewed or disturbed on
appeal. In this case, the petitioner failed to show any extraordinary circumstance justifying a
departure from this established doctrine.

As regards the first issue, Article 252 of the Labor Code defines the meaning of the phrase "duty to
bargain collectively," as follows:

Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages, hours of work and all other terms
and conditions of employment including proposals for adjusting any grievances or questions arising
under such agreement and executing a contract incorporating such agreements if requested by
either party but such duty does not compel any party to agree to a proposal or to make any
concession.

Noteworthy in the above definition is the requirement on both parties of the performance of the
mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement. Undoubtedly, respondent Association of Employees and Faculty of Letran
(AEFL) (hereinafter, "union") lived up to this requisite when it presented its proposals for the CBA to
petitioner on February 7, 1996. On the other hand, petitioner devised ways and means in order to
prevent the negotiation.

Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to make a timely
reply to the proposals presented by the latter. More than a month after the proposals were submitted
by the union, petitioner still had not made any counter-proposals. This inaction on the part of
petitioner prompted the union to file its second notice of strike on March 13, 1996. Petitioner could
only offer a feeble explanation that the Board of Trustees had not yet convened to discuss the matter
as its excuse for failing to file its reply. This is a clear violation of Article 250 of the Labor Code
governing the procedure in collective bargaining, to wit:

Art. 250. Procedure in collective bargaining. - The following procedures shall be observed in
collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other
party with a statement of its proposals. The other party shall make a reply thereto not later than ten
(10) calendar days from receipt of such notice.[4]

xxx

As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make counter-
proposal to the union's proposed CBA is an indication of its bad faith. Where the employer did not
even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of
the duty to bargain collectively.[6] In the case at bar, petitioner's actuation show a lack of sincere
desire to negotiate rendering it guilty of unfair labor practice.

Moreover, the series of events that transpired after the filing of the first notice of strike in January
1996 show petitioner's resort to delaying tactics to ensure that negotiation would not push through.
Thus, on February 15, 1996, or barely a few days after the union proposals for the new CBA were
submitted, the union president was informed by her superior that her work schedule was being
changed from Mondays to Fridays to Tuesdays to Saturdays. A request from the union president
that the issue be submitted to a grievance machinery was subsequently denied. Thereafter, the
petitioner and the union met on March 27, 1996 to discuss the ground rules for negotiation.
However, just two days later, or on March 29, 1996, petitioner dismissed the union president for
alleged insubordination. In its final attempt to thwart the bargaining process, petitioner suspended
the negotiation on the ground that it allegedly received information that a new group of employees
called the Association of Concerned Employees of Colegio (ACEC) had filed a petition for
certification election. Clearly, petitioner tried to evade its duty to bargain collectively.

Petitioner, however, argues that since it has already submitted the union's proposals to the Board of
Trustees and that a series of conferences had already been undertaken to discuss the ground rules
for negotiation such should already be considered as acts indicative of its intention to bargain. As
pointed out earlier, the evidence on record belie the assertions of petitioner.

Petitioner, likewise, claims that the suspension of negotiation was proper since by the filing of the
petition for certification election the issue on majority representation of the employees has arose.
According to petitioner, the authority of the union to negotiate on behalf of the employees was
challenged when a rival union filed a petition for certification election. Citing the case of Lakas Ng
Manggagawang Makabayan v. Marcelo Enterprises,[7] petitioner asserts that in view of the
pendency of the petition for certification election, it had no duty to bargain collectively with the union.

We disagree. In order to allow the employer to validly suspend the bargaining process there must be
a valid petition for certification election raising a legitimate representation issue. Hence, the mere
filing of a petition for certification election does not ipso facto justify the suspension of negotiation by
the employer. The petition must first comply with the provisions of the Labor Code and its
Implementing Rules. Foremost is that a petition for certification election must be filed during the
sixty-day freedom period. The "Contract Bar Rule" under Section 3, Rule XI, Book V, of the Omnibus
Rules Implementing the Labor Code, provides that: " . If a collective bargaining agreement has been
duly registered in accordance with Article 231 of the Code, a petition for certification election or a
motion for intervention can only be entertained within sixty (60) days prior to the expiry date of such
agreement." The rule is based on Article 232,[8] in relation to Articles 253, 253-A and 256 of the
Labor Code. No petition for certification election for any representation issue may be filed after the
lapse of the sixty-day freedom period. The old CBA is extended until a new one is signed. The rule is
that despite the lapse of the formal effectivity of the CBA the law still considers the same as
continuing in force and effect until a new CBA shall have been validly executed.[9] Hence, the
contract bar rule still applies.[10] The purpose is to ensure stability in the relationship of the workers
and the company by preventing frequent modifications of any CBA earlier entered into by them in
good faith and for the stipulated original period.[11]
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition for certification
election by ACEC, allegedly a legitimate labor organization, was filed with the Department of Labor
and Employment (DOLE) only on May 26, 1996. Clearly, the petition was filed outside the sixty-day
freedom period. Hence, the filing thereof was barred by the existence of a valid and existing
collective bargaining agreement. Consequently, there is no legitimate representation issue and, as
such, the filing of the petition for certification election did not constitute a bar to the ongoing
negotiation. Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang Makabayan
v. Marcelo Enterprises[12] is misplaced since that case involved a legitimate representation issue
which is not present in the case at bar.

Significantly, the same petition for certification election was dismissed by the Secretary of Labor on
October 25, 1996. The dismissal was upheld by this Court in a Resolution, dated April 21, 1997.[13]

In view of the above, there is no doubt that petitioner is guilty of unfair labor practice by its stern
refusal to bargain in good faith with respondent union.

Concerning the issue on the validity of the termination of the union president, we hold that the
dismissal was effected in violation of the employees' right to self-organization.

To justify the dismissal, petitioner asserts that the union president was terminated for cause,
allegedly for insubordination for her failure to comply with the new working schedule assigned to her,
and pursuant to its managerial prerogative to discipline and/or dismiss its employees. While we
recognize the right of the employer to terminate the services of an employee for a just or authorized
cause, nevertheless, the dismissal of employees must be made within the parameters of law and
pursuant to the tenets of equity and fair play.[14] The employer's right to terminate the services of an
employee for just or authorized cause must be exercised in good faith.[15] More importantly, it must
not amount to interfering with, restraining or coercing employees in the exercise of their right to self-
organization because it would amount to, as in this case, unlawful labor practice under Article 248 of
the Labor Code.

The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion that she was
dismissed in order to strip the union of a leader who would fight for the right of her co-workers at the
bargaining table. Ms. Ambas, at the time of her dismissal, had been working for the petitioner for ten
(10) years already. In fact, she was a recipient of a loyalty award. Moreover, for the past ten (10)
years her working schedule was from Monday to Friday. However, things began to change when she
was elected as union president and when she started negotiating for a new CBA. Thus, it was when
she was the union president and during the period of tense and difficult negotiations when her work
schedule was altered from Mondays to Fridays to Tuesdays to Saturdays. When she did not budge,
although her schedule was changed, she was outrightly dismissed for alleged insubordination.[16]
We quote with approval the following findings of the Secretary of Labor on this matter, to wit:

"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not, however, a valid
ground to teminate her employment. The disputed management action was directly connected with
Ms. Ambas' determination to change the complexion of the CBA. As a matter of fact, Ms. Ambas'
unflinching position in faithfully and truthfully carrying out her duties and responsibilities to her Union
and its members in getting a fair share of the fruits of their collective endeavors was the proximate
cause for her dismissal, the charge of insubordination being merely a ploy to give a color of legality
to the contemplated management action to dismiss her. Thus, the dismissal of Ms. Ambas was
heavily tainted with and evidently done in bad faith. Manifestly, it was designed to interfere with the
members' right to self-organization.

Admittedly, management has the prerogative to discipline its employees for insubordination. But
when the exercise of such management right tends to interfere with the employees' right to self-
organization, it amounts to union-busting and is therefore a prohibited act. The dismissal of Ms.
Ambas was clearly designed to frustrate the Union in its desire to forge a new CBA with the College
that is reflective of the true wishes and aspirations of the Union members. Her dismissal was merely
a subterfuge to get rid of her, which smacks of a pre-conceived plan to oust her from the premises of
the College. It has the effect of busting the Union, stripping it of its strong-willed leadership. When
management refused to treat the charge of insubordination as a grievance within the scope of the
Grievance Machinery, the action of the College in finally dismissing her from the service became
arbitrary, capricious and whimsical, and therefore violated Ms. Ambas' right to due process."[17]

In this regard, we find no cogent reason to disturb the findings of the Court of Appeals affirming the
findings of the Secretary of Labor and Employment. The right to self-organization of employees must
not be interfered with by the employer on the pretext of exercising management prerogative of
disciplining its employees. In this case, the totality of conduct of the employer shows an evident
attempt to restrain the employees from fully exercising their rights under the law. This cannot be
done under the Labor Code.

WHEREFORE, premises considered, the petition is DENIED for lack of merit.

SO ORDERED.

___________________________________________________________________

ST. JOHN COLLEGES, INC., G.R. No. 167892

Petitioner,
Present:

Panganiban, C.J. (Chairperson),

- versus - Ynares-Santiago,

Austria-Martinez,

Callejo, Sr., and

Chico-Nazario, JJ.

ST. JOHN ACADEMY FACULTY

AND EMPLOYEES UNION, Promulgated:

Respondent.

October 27, 2006

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the April 22, 2004 Decision[1] of the Court of Appeals in
CA-G.R. SP No. 74519, which affirmed with modifications the June 28, 2002 Resolution[2] of the
National Labor Relations Commission (NLRC) in NLRC CN RAB IV 5-10035-98-1, and its April 15,
2005 Resolution[3] denying petitioners motion for reconsideration.

Petitioner St. John Colleges, Inc. (SJCI) is a domestic corporation which owns and operates the St.
Johns Academy (later renamed St. John Colleges) in Calamba, Laguna. Prior to 1998, the Academy
offered a secondary course only. The high school then employed about 80 teaching and non-
teaching personnel who were members of the St. John Academy Faculty & Employees Union
(Union).

The Collective Bargaining Agreement (CBA) between SJCI and the Union was set to expire on May
31, 1997. During the ensuing collective bargaining negotiations, SJCI rejected all the proposals of
the Union for an increase in workers benefits. This resulted to a bargaining deadlock which led to the
holding of a valid strike by the Union on November 10, 1997. In order to end the strike, on November
27, 1997, SJCI and the Union, through the efforts of the National Conciliation and Mediation Board
(NCMB), agreed to refer the labor dispute to the Secretary of Labor and Employment (SOLE) for
assumption of jurisdiction:

AGREEMENT AND JOINT PETITION FOR ASSUMPTION OF JURISDICTION

Both parties agree as follows:

1. That the issue raised by the Union shall be referred to the Honorable Secretary of Labor by way of
Assumption of Jurisdiction. Note this will serve as a joint petition for Assumption of Jurisdiction.

2. Parties shall submit their respective position paper within 10 days upon the signing of this
agreement and to be decided within two months.

3. That management shall grant the employees cash advance of P1,800.00 each to be given on or
before December 5, 1997 deductible after two months payable in two installments starting January
31, 1998. The decision re: assumption [of] jurisdiction has not been resolved.

4. Union shall lift the picket immediately and remove all obstruction and return to work on Monday,
December 1, 1997.

5. No retaliatory action shall be undertaken by either party against each other in relation to the
strike.[4]

After which, the strike ended and classes resumed. Subsequently, the SOLE issued an Order dated
January 19, 1998 assuming jurisdiction over the labor dispute pursuant to Article 263 of the Labor
Code. The parties were required to submit their respective position papers within ten (10) days from
receipt of said Order.

Pending resolution of the labor dispute before the SOLE, the Board of Directors of SJCI approved on
February 22, 1998 a resolution recommending the closure of the high school which was approved by
the stockholders on even date. The Minutes[5] of the stockholders meeting stated the reasons
therefor, to wit:

98-3 CLOSURE OF THE SCHOOL

The President, Mr. Rivera, informed the stockholders that the Board at its meeting on February 15,
1998 unanimously approved to recommend to the stockholders the closure of the school because of
the irreconcilable differences between the school management and the Academys Union particularly
the safety of our students and the financial aspect of the ongoing CBA negotiations.

After due deliberations, and upon motion of Dr. Jose O. Juliano seconded by Miss Eva Escalano, it
was unanimously resolved, as it is hereby resolved, that the Board of St. John Colleges, Inc. be
authorized to decide on the terms and conditions of closure, if such decision is made, to the best
interest of the stockholders, parents and students.[6]

Thereafter, SJCI informed the Department of Labor and Employment (DOLE), Department of
Education, Culture and Sports (DECS), parents, students and the Union of the impending closure of
the high school which took effect on March 31, 1998.

Subsequently, some teaching and non-teaching personnel of the high school agreed to the closure.
On April 2, 1998, SJCI informed the DOLE that as of March 31, 1998, 51 employees had received
their separation compensation package while 25 employees refused to accept the same.

On May 4, 1998, the aforementioned 25 employees conducted a protest action within the perimeter
of the high school. The Union filed a notice of strike with the NCMB only on May 7, 1998.

On May 19, 1998, SJCI filed a petition to declare the strike illegal before the NLRC which was
docketed as NLRC Case No. RAB-IV-5-10035-98-L. It claimed that the strike was conducted in
violation of the procedural requirements for holding a valid strike under the Labor Code.

On May 21, 1998, the 25 employees filed a complaint for unfair labor practice (ULP), illegal dismissal
and non-payment of monetary benefits against SJCI before the NLRC which was docketed as RAB-
IV-5-10039-98-L. The Union members alleged that the closure of the high school was done in bad
faith in order to get rid of the Union and render useless any decision of the SOLE on the CBA
deadlocked issues.
These two cases were then consolidated. On January 8, 1999, Labor Arbiter Antonio R. Macam
rendered a Decision[7] dismissing the Unions complaint for ULP and illegal dismissal while granting
SJCIs petition to declare the strike illegal coupled with a declaration of loss of employment status of
the 25 Union members involved in the strike.

Meanwhile, in the proceedings before the SOLE, the Union filed a manifestation[8] to maintain the
status quo on March 30, 1998 praying that SJCI be enjoined from closing the high school. It claimed
that the decision of SJCI to close the high school violated the SOLEs assumption order and the
agreement of the parties not to take any retaliatory action against the other. For its part, SJCI filed a
motion to dismiss with entry of appearance[9] on October 14, 1998 claiming that the closure of the
high school rendered the CBA deadlocked issues moot. Upon receipt of the Labor Arbiters decision
in the aforesaid consolidated cases, SJCI filed a second motion to dismiss[10] on February 1, 1999
arguing that the case had already been resolved.

Moreover, after the favorable decision of the Labor Arbiter, SJCI resolved to reopen the high school
for school year 1999-2000. However, it did not restore the high school teaching and non-teaching
employees it earlier terminated. That same school year SJCI opened an elementary and college
department.

On July 23, 1999, the SOLE denied SJCIs motions to dismiss and certified the CBA deadlock case
to the NLRC. It ordered the consolidation of the CBA deadlock case with the ULP, illegal dismissal,
and illegal strike cases which were then pending appeal before the NLRC.

On June 28, 2002, the NLRC rendered judgment reversing the decision of the Labor Arbiter. It found
SJCI guilty of ULP and illegal dismissal and ordered it to reinstate the 25 employees to their former
positions without loss of seniority rights and other benefits, and with full backwages. It also required
SJCI to pay moral and exemplary damages, attorneys fees, and two (2) months summer/vacation
pay. Moreover, it ruled that the mass actions conducted by the 25 employees on May 4, 1998 could
not be considered as a strike since, by then, the employer-employee relationship had already been
terminated due to the closure of the high school. Finally, it dismissed, without prejudice, the certified
case on the CBA deadlocked issues for failure of the parties to substantiate their respective
positions.

On appeal, the Court of Appeals, in its Decision dated April 22, 2004, affirmed with modification the
decision of the NLRC:
WHEREFORE, in light of the preceding discussions, the decision subject of the instant petition is
hereby affirmed with a modification that in the computation of backwages, the two month unworked
summer vacation should excluded.

SO ORDERED.[11]

With the denial of its motion for reconsideration, SJCI interposed the instant petition essentially
raising two issues: (1) whether it is liable for ULP and illegal dismissal when it closed down the high
school on March 31, 1998 and (2) whether the Union is liable for illegal strike due to the protest
actions which its 25 members undertook within the high schools perimeter on May 4, 1998.

The petition lacks merit.

Under Article 283 of the Labor Code, the following requisites must concur for a valid closure of the
business: (1) serving a written notice on the workers at least one (1) month before the intended date
thereof; (2) serving a notice with the DOLE one month before the taking effect of the closure; (3)
payment of separation pay equivalent to one (1) month or at least one half (1/2) month pay for every
year of service, whichever is higher, with a fraction of at least six (6) months to be considered as a
whole year; and (4) cessation of the operation must be bona fide.[12] It is not disputed that the first
two requisites were satisfied. The third requisite would have been satisfied were it not for the refusal
of the herein private respondents to accept the separation compensation package. The instant case,
thus, revolves around the fourth requisite, i.e., whether SJCI closed the high school in good faith.

Whether or not the closure of the high school was done in good faith is a question of fact and is not
reviewable by this Court in a petition for review on certiorari save for exceptional circumstances. In
fine, the finding of the NLRC, which was affirmed by the Court of Appeals, that SJCI closed the high
school in bad faith is supported by substantial evidence and is, thus, binding on this Court.
Consequently, SJCI is liable for ULP and illegal dismissal.

The determination of whether SJCI acted in bad faith depends on the particular facts as established
by the evidence on record. Bad faith is, after all, an inference which must be drawn from the peculiar
circumstances of a case. The two decisive factors in determining whether SJCI acted in bad faith are
(1) the timing of, and reasons for the closure of the high school, and (2) the timing of, and the
reasons for the subsequent opening of a college and elementary department, and, ultimately, the
reopening of the high school department by SJCI after only one year from its closure.
Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997 CBA deadlock to
the SOLE for assumption of jurisdiction under Article 263 of the Labor Code. As a result, the strike
ended and classes resumed. After the SOLE assumed jurisdiction, it required the parties to submit
their respective position papers. However, instead of filing its position paper, SJCI closed its high
school, allegedly because of the irreconcilable differences between the school management and the
Academys Union particularly the safety of our students and the financial aspect of the ongoing CBA
negotiations. Thereafter, SJCI moved to dismiss the pending labor dispute with the SOLE
contending that it had become moot because of the closure. Nevertheless, a year after said closure,
SJCI reopened its high school and did not rehire the previously terminated employees.

Under these circumstances, it is not difficult to discern that the closure was done to defeat the
parties agreement to refer the labor dispute to the SOLE; to unilaterally end the bargaining deadlock;
to render nugatory any decision of the SOLE; and to circumvent the Unions right to collective
bargaining and its members right to security of tenure. By admitting that the closure was due to
irreconcilable differences between the Union and school management, specifically, the financial
aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the bargaining
deadlock and eliminate the problem of dealing with the demands of the Union. This is precisely what
the Labor Code abhors and punishes as unfair labor practice since the net effect is to defeat the
Unions right to collective bargaining.

However, SJCI contends that these circumstances do not establish its bad faith in closing down the
high school. Rather, it claims that it was forced to close down the high school due to alleged difficult
labor problems that it encountered while dealing with the Union since 1995, specifically, the Unions
illegal demands in violation of R.A. 6728 or the Government Assistance to Students and Teachers in
Private Education Act. Under R.A. 6728, the income from tuition fee increase is to be used as
follows: (a) 70% of the tuition fee shall go to the payment of salaries, wages, allowances, and other
benefits of teaching and non-teaching personnel, and (b) 20% of the tuition fee increase shall go to
the improvement or modernization of the buildings, equipment, and other facilities as well as
payment of the cost of operations. However, sometime in 1995, SJCI claims that it was forced to
give-in to the demands of the Union by allocating 100% of the tuition fee increase for teachers
benefits even though the same was in violation of R.A. 6728 in order to end the on-going strike of
the Union and avoid prolonged disturbances of classes. Subsequently or during the school year
1996-1997, SJCI claims that it obtained an approval from the DECS for a 30% tuition fee increase,
however, only 10% was implemented. Despite this, the Union persisted in making illegal demands
by filing a complaint before the DOLE claiming that they were entitled to the unimplemented 20%
tuition fee increase. Finally, during the collective bargaining negotiations in 1997, the Union again
made economic demands in excess of the 70% of the tuition fee increase under R.A. 6728. As a
result, SJCI claims it had no choice but to refuse the Unions demands which thereafter led to the
holding of a strike on November 10, 1998. It argues that the Unions alleged illegal demands was a
valid justification for the closure of the high school considering that it was financially incapable of
meeting said demands and that it would violate R.A. 6728 if it gave in to said demands which carried
corresponding penalties to be imposed by the DECS.
We are not persuaded.

These alleged difficult labor problems merely show that SJCI and the Union had disagreements
regarding workers benefits which is normal in any business establishment. That SJCI agreed to
appropriate 100% of the tuition fee increase to the workers benefits sometime in 1995 does not
mean that it was helpless in the face of the Unions demands because neither party is obligated to
precipitately give in to the proposal of the other party during collective bargaining.[13] If SJCI found
the Unions demands excessive, its remedy under the law is to refer the matter for voluntary or
compulsory dispute resolution. Besides, this incident which occurred in 1995, could hardly establish
the good faith of SJCI or justify the high schools closure in 1998.

Anent the Unions claim for the unimplemented 20% tuition fee increase in 1996, suffice it to say that
it is erroneous to rule on said issue since the same was submitted before the Voluntary Arbitrator[14]
and is not on appeal before this Court.[15] Besides, by referring the labor dispute to the Voluntary
Arbitrator, the parties themselves acknowledged that there is a sufficient mechanism to resolve the
said dispute. Again, we fail to see how this alleged labor problem in 1996 shows the good faith of
SJCI in closing the high school in 1998.

With respect to SJCIs claim that during the 1997 CBA negotiations the Union made illegal demands
because they exceeded the 70% limitation set by R.A. No. 6728, it is important to note that the
alleged illegality or excessiveness of the Unions demands were the issues to be resolved by the
SOLE after the parties agreed to refer the said labor dispute to the latter for assumption of
jurisdiction. As previously mentioned, the SOLE certified the case to the NLRC, which on June 28,
2002, rendered a decision finding that there was insufficient evidence to determine the
reasonableness of the Unions proposals. The NLRC found that SJCI failed to establish that the
Unions demands were illegal or excessive. A review of the records clearly shows that the Union
submitted a position paper detailing its demands in actual monetary terms. However, SJCI failed to
establish how and why these demands were in excess of the limitation set by R.A. 6728. Up to this
point in the proceedings, it has merely relied on its self-serving statements that the Unions demands
were illegal and excessive. There is no basis, therefore, to hold that the Union ever made illegal or
excessive demands.

At any rate, even assuming that the Unions demands were illegal or excessive, the important and
crucial point is that these alleged illegal or excessive demands did not justify the closure of the high
school and do not, in any way, establish SJCIs good faith. The employer cannot unilaterally close its
establishment on the pretext that the demands of its employees are excessive. As already
discussed, neither party is obliged to give-in to the others excessive or unreasonable demands
during collective bargaining, and the remedy in such case is to refer the dispute to the proper
tribunal for resolution. This was what SJCI and the Union did when they referred the 1997 CBA
bargaining deadlock to the SOLE; however, SJCI pre-empted the resolution of the dispute by closing
the high school. SJCI disregarded the whole dispute resolution mechanism and undermined the
Unions right to collective bargaining when it closed down the high school while the dispute was still
pending with the SOLE.

The Labor Code does not authorize the employer to close down the establishment on the ground of
illegal or excessive demands of the Union. Instead, aside from the remedy of submitting the dispute
for voluntary or compulsory arbitration, the employer may file a complaint for ULP against the Union
for bargaining in bad faith. If found guilty, this gives rise to civil and criminal liabilities and allows the
employer to implement a lock out, but not the closure of the establishment resulting to the
permanent loss of employment of the whole workforce.

In fine, SJCI undermined the Labor Codes system of dispute resolution by closing down the high
school while the 1997 CBA negotiations deadlock issues were pending resolution before the SOLE.
The closure was done in bad faith for the purpose of defeating the Unions right to collective
bargaining. Besides, as found by the NLRC, the alleged illegality and excessiveness of the Unions
demands were not sufficiently proved by SJCI. Even on the assumption that the Unions demands
were illegal or excessive, SJCIs remedy was to await the resolution by the SOLE and to file a ULP
case against the Union. However, SJCI did not have the power to take matters into its own hands by
closing down the school in order to get rid of the Union.

SJCI next argues that the Union unduly endangered the safety and well-being of the students who
joined the valid strike held on November 10, 1997, thus it closed down the high school on March 31,
1998. It claims that the Union coerced the students to join the protest actions to pressure SJCI to
give-in to the demands of the Union.

However, SJCI provided no evidence to substantiate these claims except for its self-serving
statements in its position paper before the Labor Arbiter and pictures belatedly attached to the
instant petition before this Court. However, the pictures were never authenticated and, on its face,
only show that some students watched the Union members while they conducted their protest
actions. More importantly, it is not true, as SJCI claims, that the Union admitted that it coerced the
students to join the protest actions and recklessly placed the students in harms way. In its Reply[16]
to SJCIs position paper before the Labor Arbiter, the Union categorically denied that it put the
students in harms way or pressured them to join the protest actions. Given this denial by the Union,
it was incumbent upon SJCI to prove that the students were actually harmed or put in harms way
and that the Union coerced them to join the protest actions. The reason for this is that the employer
carries the burden of proof to establish that the closure of the business was done in good faith. In the
instant case, SJCI had the burden of proving that, indeed, the closure of the school was necessary
to uphold the safety and well-being of the students.
SJCI presented no evidence to show that the protest actions turned violent; that the parents did not
give their consent to their children who allegedly joined the protest actions; that the Union did not
take the necessary steps to protect some of the students who allegedly joined the same; or that the
Union forced or pressured the said students to join the protest actions. Moreover, if the problem was
the endangerment of the students well-being due to the protest actions by the Union, then the
natural response would have been to immediately go after the Union members who allegedly
coerced the students to join the protest actions and thereby endangered the students safety. But no
such action appears to have been undertaken by SJCI. There is even no showing that it prohibited
its students from joining the protest actions or informed the parents of the activities of the students
who allegedly joined the protest actions. This raises serious doubts as to whether SJCI was really
looking after the welfare of its students or merely using them as a scapegoat to justify the closure of
the school and thereby get rid of the Union.

Even assuming arguendo that the safety and well-being of some of the students who allegedly
joined the protest actions were compromised, still, the closure was done in bad faith because it was
done long after the strike had ended. Thus, there is no more danger to the students well-being
posed by the strike to speak of. It bears stressing that the closure was implemented on March 31,
1998 but the risk to the safety of the students had long ceased to exist as early as November 28,
1997 when the parties agreed to refer the labor dispute to the SOLE, thus, betraying SJCIs claim
that it wanted to safeguard the interest of the students.

Furthermore, if SJCI was after the interests of the students, then it should not have closed the school
because the parents and the students were vehemently opposed to the same, as shown by the letter
dated March 9, 1998 written by Mr. Teofilo G. Mamplata, President of the Parents Association, and
addressed to the Secretary of DECS, to wit:

As per letters sent recently by the school Management to the teachers and parents, notifying of its
closure on March 31, 1998, as decided upon by its Board of Trustees and Stockholders on February
22, 1998 no reasons were stated to justify said decision and action which will definitely affect
adversely and to the detriment of the plight of parents, teachers, students and other personnel of the
school.

In this connection and due to the urgency of the matter, we hereby reiterate our appeal with our
prayer that the management and Board of Trustees of St. John Academy of Calamba, Laguna, be
stopped from pursuing their most sudden, unfair, unfavorable and detrimental decision and action,
and if warranted, sanctions be imposed against the erring party.[17] (Italics supplied)

Along the same vein, the parents voiced out their strong objections to the proposed closure of the
school, to wit:
PAHAYAG NG PAGTUTOL

Kami, mga magulang, mag-aaral, guro, propesyonal, manggagawa at iba pang sector ng
pamayanan sa bayan ng Calamba, Laguna ay nagpapahayag ng pagtutol sa hindi makatarungang
pagsasara ng paaralang SAINT JOHN ACADEMY. Ang kagyat na pagsasara nito ay nagdulot ng
malaking suliranin sa 2,300 estudyante (incoming 2nd year 4th year), kagaya ng mga sumusunod:

1. Kakaunti ang bilang ng paaralan sa Calamba;

2. Walang paaralan na basta tatanggap sa 700 incoming third year at 800 incoming fourth
year;

3. Ang lahat ng HONOR STUDENTS ay mababaliwala ang kanilang pinagsikapan;

4. Negatibo ang epekto sa moral ng mga batang estudyante ang pagkakaroon ng

physical and moral displacement dahil sa biglaang pagsasara nito;

5. Hindi lahat ng magulang ay kakayaning bumayad ng mataas na tuition fee sa ibang

paaralan;

6. Ang mataas na kalidad ng turo ng mga guro sa paaralang ito ay mahirap pantayan; at

7. HIGIT NA LIGTAS SA SAKUNA ANG AMING MGA ANAK sa nasabing paaralan.

Bilang pagtutol sa pagsasara ng SAINT JOHN ACADEMY ay inilalagda namin ang aming pangalan
sa libis nito. (56 signatures follow)[18] [Italics supplied]

Worth noting is the belief of the parents that the safety of their children was properly secured in said
high school. This was obviously in response to the claim of SJCI that the school was being closed,
inter alia, for the safety and well-being of the students. As correctly observed by the CA:

The petitioner urges this Court to believe that they closed down the school out of their sheer concern
for the students, some of whom have started to sympathize and participate in the unions cause.

As intimated by the private respondent, however, the petitioner itself said that the closing down of
the school was, inter alia, because of irreconcilable differences between the school management
and the Academys Union. Indeed, this translates into an admission that the cessation of business
was neither due to any patrician nor noble objective of protecting the studentry but because the
administration no longer wished to deal with respondent Union.

We are further tempted to doubt the verity of the petitioners claim that in deciding to shut down the
school, it only had the welfare of its students in mind. There is evidence on record which hints
otherwise. Apparently, the parents of the students were vehemently against the idea of closing down
the academy as this would be, as it later did prove, more detrimental to the studentry. No less than
Mr. Teofilo Mamplata, President of St. John Academy Parents Association of Calamba expressed
the groups aversion against such move and even wrote a letter to the then Secretary of the
Department of Education seeking immediate intervention to enjoin the school from closing. This is an
indication that the parents were unanimous in their sentiment that the shutdown would result in
inconvenience and displacement of the students who had already been halfway through elementary
school and high school. It turned out some were even forced to pay higher tuition fees just so they
would be admitted in other academies.[19] (Italics supplied)

To recapitulate, there is insufficient evidence to hold that the safety and well-being of the students
were endangered and/or compromised, and that the Union was responsible therefor. Even assuming
arguendo that the students safety and well-being were jeopardized by the said protest actions, the
alleged threat to the students safety and well-being had long ceased by the time the high school was
closed. Moreover, the parents were vehemently opposed to the closure of the school because there
was no basis to claim that the students safety was at risk. Taken together, these circumstances lead
to the inescapable conclusion that SJCI merely used the alleged safety and well-being of the
students as a subterfuge to justify its actions.

SJCI next contends that the subsequent reopening of the high school after only one year from its
closure did not show that the previous decision to close the high school was tainted with bad faith
because the reopening was done due to the clamor of the high schools former students and their
parents. It claims that its former students complained about the cramped classrooms in the schools
where they transferred.

The contention is untenable.

First, the fact that after one year from the time it closed its high school, SJCI opened a college and
elementary department, and reopened its high school department showed that it never intended to
cease operating as an educational institution. Second, there is evidence on record contesting the
alleged reason of SJCI for reopening the high school, i.e., that its former students and their parents
allegedly clamored for the reopening of the high school. In a letter[20] dated December 15, 2000
addressed to the NLRC, which has never been rebutted by SJCI, Mr. Mamplata, stated that
Para po sa inyong kabatiran xxx isinara nila ang paaralang ito dahil sa mga nag-alsang guro.

Sa ganitong kalagayan kaming pamunuan at kasapi ng PTA ay nakipag-usap sa pamunuan ng

paaralang ito na huwag naming isara dahil malaking epekto ito sa aming mga anak dahil noon ay
kalagitnaan pa lamang ng pasukan. Sa kabila ng pakiusap naming ito ay hindi kami pinakinggan at
sa halip ay tuluyang isinara. Sa kanilang ginawang ito marami sa mga bata ang hindi nakapasok sa
ibang paaralan at ang iba naman ay nadoble ang pinagbayaran sa matrikula. Sa kabuuan nito ay
malaking paghirap ang ginawa nila sa aming mga magulang at anak na nag-aaral sa paaralang ito
dahil lamang sa panggigipit sa mga gurong walang tanging hangarin kundi bayaran sila ng naaayon
sa itinakda ng batas.

Sa taong 1999-2000 ay muling binuksan ang paaralang ito na sabi nila ay sa kahilingan ng PTA. Alin
kayang PTA ang tinutukoy nila. Paanong magkakaroon ng PTA samantalang ito ay nakasara at
kami ang PTA bago ito isinara.

Kaya po pinaabot naming sa inyong kaalaman na kaming PTA ng paaralang (St. John Academy) ito
ay hindi kailanman humiling sa kanila na pamuling buksan ito.[21] (Italics supplied)

Finally, when SJCI reopened its high school, it did not rehire the Union members. Evidently, the
closure had achieved its purpose, that is, to get rid of the Union members.

Clearly, these pieces of evidence regarding the subsequent reopening of the high school after only
one year from its closure further show that the high schools closure was done in bad faith.

Lastly, SJCI asserts that the strike conducted by the 25 employees on May 4, 1998 was illegal for
failure to take the necessary strike vote and give a notice of strike. However, we agree with the
findings of the NLRC and CA that the protest actions of the Union cannot be considered a strike
because, by then, the employer-employee relationship has long ceased to exist because of the
previous closure of the high school on March 31, 1998.

In sum, the timing of, and the reasons for the closure of the high school and its reopening after only
one year from the time it was closed down, show that the closure was done in bad faith for the
purpose of circumventing the Unions right to collective bargaining and its members right to security
of tenure. Consequently, SJCI is liable for ULP and illegal dismissal.
WHEREFORE, the petition is DENIED. The April 22, 2004 Decision and April 15, 2005 Resolution of
the Court Appeals in CA-G.R. SP No. 74519 are AFFIRMED.

SO ORDERED.

JOHN COLLEGES, INC., VS. ST. JOHN ACADEMY FACULTY AND EMPLOYEES UNION

G.R. No. 167892 October 27, 2006

FACTS:

Petitioner St. John Colleges, Inc. (SJCI) is a domestic corporation which owns and operates the St.
John’s Academy (later renamed St. John Colleges) in Calamba, Laguna. Prior to 1998, the Academy
offered a secondary course only. The high school then employed about 80 teaching and non-
teaching personnel who were members of the St. John Academy Faculty & Employees Union
(Union).The CBA between SJCI and the Union was set to expire on May 31, 1997. During the
ensuing collective bargaining negotiations, SJCI rejected all the proposals of the Union for an
increase in worker’s benefits. This resulted to a bargaining deadlock which led to the holding of a
valid strike by the Union on November 10, 1997.In order to end the strike, SJCI and the Union,
through the efforts of the NCMB, agreed to refer the labor dispute to the Secretary of Labor and
Employment (SOLE) for assumption of jurisdiction. After which, the strike ended and classes
resumed. Subsequently, the SOLE issued an Order dated January19, 1998 assuming jurisdiction
over the labor dispute pursuant to Article 263 of the Labor Code. The partieswere required to submit
their respective position papers. Pending resolution of the labor dispute before the SOLE, the Board
of Directors of SJCI approved on February 22, 1998 a resolution recommending the closure of the
high school which was approved by the stockholders on even date.

Thereafter, SJCI informed the DOLE, DECS, parents, students and the Union of the impending
closure of the high school which took effect on March 31, 1998. Subsequently, some teaching and
non-teaching personnel of the high school agreed to the closure. Some 51 employees had received
their separation compensation package while 25 employees refused to accept the same. Instead,
these employees conducted a protest action within the perimeter of the high school. The Union filed
a notice of strike. Thereafter SJCI filed a petition to declare the strike illegal before the NLRC. It
claimed that the strike was conducted in violation of the procedural requirements for holding a valid
strike under the Labor Code. Subsequently, the 25 employees filed a complaint for unfair labor
practice (ULP), illegal dismissal and non-payment of monetary benefits against SJCI before the
NLRC, alleging that the closure of the high school was done in bad faith in order to get rid of the
Union and render useless any decision of the SOLE on the CBA deadlocked issues.
LA: Dismissed the Union’s complaint for ULP and illegal dismissal while granting SJCI’s petition to
declare the strike illegal coupled with a declaration of loss of employment status of the 25 Union
members involved in the strike.[SOLE: Union filed a manifestation to maintain the status quo on
March 30, 1998 praying that SJCI be enjoined from closing the high school. It claimed that the
decision of SJCI to close the high school violated the SOLE’s assumption order and the agreement
of the parties not to take any retaliatory action against the other. For its part, SJCI filed a motion to
dismiss with entry of appearance on October 14, 1998 claiming that the closure of the high school
rendered the CBA deadlocked issues moot. The SOLE denied SJCI’s motions to dismiss and
certified the CBA deadlock case to the NLRC] After the favorable decision of the Labor Arbiter, SJCI
resolved to reopen the high school for school year 1999-2000. However, it did not restore the high
school teaching and non-teaching employees it earlier terminated. That same school year SJCI
opened an elementary and college department.

NLRC: Rendered judgment reversing the decision of the Labor Arbiter. It found SJCI guilty of ULP
and illegal dismissal and ordered it to reinstate the 25 employees to their former positions without
loss of seniority rights and other benefits, and with full backwages. It also required SJCI to pay moral
and exemplary damages, attorney’s fees, and two (2) months summer/vacation pay. Moreover, it
ruled that the mass actions conducted by the 25 employees on May 4, 1998 could not be considered
as a strike since, by then, the employer-employee relationship had already been terminated due to
the closure of the high school.

CA: Affirmed the Decision of the NLRC

ISSUE: W/N the petitioner is guilty of ULP and illegal dismissal

HELD: Yes, the petitioner is guilty of UPL and illegal dismissal, base on the following premise:

When SJCI reopened its high school, it did not rehire the Union members. Evidently, the closure had
achieved its purpose, that is, to get rid of the Union members.

Evidence provides that subsequent reopening of the high school after only one year from its closure
further show that the high school’s closure was done in bad faith.
Thus, the SJCI asserts that the strike conducted by the 25 employees on May 4, 1998 was illegal for
failure to take the necessary strike vote and give a notice of strike. However, the High Court finds for
the findings of the NLRC and CA that the protest actions of the Union cannot be considered a strike
because, by then, the employer-employee relationship has long ceased to exist because of the
previous closure of the high school on March 31, 1998.

In sum, the timing of, and the reasons for the closure of the high school and its reopening after only
one year from the time it was closed down, show that the closure was done in bad faith for the
purpose of circumventing the Union’s right to collective bargaining and its members’ right to security
of tenure. Consequently, SJCI is liable for ULP and illegal dismissal.

____________________________________________________________________

PUREFOODS CORPORATION,

Petitioner,

- versus -

NAGKAKAISANG SAMAHANG MANGGAGAWA NG PUREFOODS RANK-AND-FILE, ST.

THOMAS FREE WORKERS UNION, PUREFOODS GRANDPARENT FARM WORKERS UNION
and PUREFOODS UNIFIED LABOR ORGANIZATION,

Respondents.

G.R. No. 150896

Present:

YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO,
NACHURA, and

REYES, JJ.

Promulgated:

August 28, 2008

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

The petitioner, Purefoods Corporation, in this Rule 45 petition seeks the reversal of the appellate
courts dismissal of its certiorari petition, and our consequent review of the labor commissions finding
that it committed unfair labor practice and illegally dismissed the concerned union members.

Three labor organizations and a federation are respondents in this caseNagkakaisang Samahang
Manggagawa Ng Purefoods Rank-And-File (NAGSAMA-Purefoods), the exclusive bargaining agent
of the rank-and-file workers of Purefoods meat division throughout Luzon; St. Thomas Free Workers
Union (STFWU), of those in the farm in Sto. Tomas, Batangas; and Purefoods Grandparent Farm
Workers Union (PGFWU), of those in the poultry farm in Sta. Rosa, Laguna. These organizations
were affiliates of the respondent federation, Purefoods Unified Labor Organization (PULO).[1]

On February 8, 1995, NAGSAMA-Purefoods manifested to petitioner corporation its desire to re-

negotiate the collective bargaining agreement (CBA) then due to expire on the 28th of the said
month. Together with its demands and proposal, the organization submitted to the company its
January 28, 1995 General Membership Resolution approving and supporting the unions affiliation
with PULO, adopting the draft CBA proposals of the federation, and authorizing a negotiating panel
which included among others a PULO representative. While Purefoods formally acknowledged
receipt of the unions proposals, it refused to recognize PULO and its participation, even as a mere
observer, in the negotiation. Consequently, notwithstanding the PULO representatives non-
involvement, the negotiation of the terms of the CBA still resulted in a deadlock. A notice of strike
was then filed by NAGSAMA-Purefoods on May 15, 1995. In the subsequent conciliation
conference, the deadlock issues were settled except the matter of the companys recognition of the
unions affiliation with PULO.[2]

In the meantime, STFWU and PGFWU also submitted their respective proposals for CBA renewal,
and their general membership resolutions which, among others, affirmed the two organizations
affiliation with PULO. Consistent with its stance, Purefoods refused to negotiate with the unions
should a PULO representative be in the panel. The parties then agreed to postpone the negotiations
indefinitely.[3]

On July 24, 1995, however, the petitioner company concluded a new CBA with another union in its
farm in Malvar, Batangas. Five days thereafter, or on July 29, 1995, at around 8:00 in the evening,
four company employees facilitated the transfer of around 23,000 chickens from the poultry farm in
Sto. Tomas, Batangas (where STFWU was the exclusive bargaining agent) to that in Malvar. The
following day, the regular rank-and-file workers in the Sto. Tomas farm were refused entry in the
company premises; and on July 31, 1995, 22 STFWU members were terminated from employment.
The farm manager, supervisors and electrical workers of the Sto. Tomas farm, who were members
of another union, were nevertheless retained by the company in its employ.[4]

Aggrieved by these developments, the four respondent labor organizations jointly instituted a
complaint for unfair labor practice (ULP), illegal lockout/dismissal and damages, docketed as NLRC
Case No. NLRC-NCR-00-07-05159-95, with the Labor Arbitration Branch of the National Labor
Relations Commission (NLRC).[5]

In the proceedings before the Labor Arbiter (LA), Purefoods interposed, among others, the defenses
that PULO was not a legitimate labor organization or federation for it did not have the required
minimum number of member unions; that the closure of the Sto. Tomas farm was not arbitrary but
was the result of the financial non-viability of the operations therein, or the consequence of the
landowners pre-termination of the lease agreement; that the other complainants had no cause of
action considering that it was only the Sto. Tomas farm which was closed; that the termination of the
employees complied with the 30-day notice requirement and that the said employees were paid 30-
day advance salary in addition to separation pay; and that the concerned union, STFWU, lost its
status as bargaining representative when the Sto. Tomas farm was closed.[6]
On August 17, 1999, the LA rendered a Decision[7] dismissing the complaint, and declaring that the
company neither committed ULP nor illegally dismissed the employees.

On appeal, the NLRC reversed the ruling of the LA, ordered the payment of P500,000.00 as moral
and exemplary damages and the reinstatement with full backwages of the STFWU members. In its
March 16, 2001 Decision (CA No. 022059-00), the labor commission ruled that the petitioner
companys refusal to recognize the labor organizations affiliation with PULO was unjustified
considering that the latter had been granted the status of a federation by the Bureau of Labor
Relations; and that this refusal constituted undue interference in, and restraint on the exercise of the
employees right to self-organization and free collective bargaining. The NLRC said that the real
motive of the company in the sudden closure of the Sto. Tomas farm and the mass dismissal of the
STFWU members was union busting, as only the union members were locked out, and the company
subsequently resumed operations of the closed farm under a new contract with the landowner.
Because the requisites of a valid lockout were absent, the NLRC concluded that the company
committed ULP. The dispositive portion of the NLRC decision reads:

WHEREFORE, respondent Purefoods Corporation is hereby directed to reinstate effective October

1, 2000 employees-members of the STFWU-PULO who were illegally locked out on July 30, 1995
and to pay them their full backwages.

SO ORDERED.

Its motion for reconsideration having been denied,[8] the petitioner corporation filed a Rule 65
petition before the Court of Appeals (CA) docketed as CA-G.R. SP No. 66871.

In the assailed October 25, 2001 Resolution,[9] the appellate court dismissed outright the companys
petition for certiorari on the ground that the verification and certification of non-forum shopping was
defective since no proof of authority to act for and on behalf of the corporation was submitted by the
corporations senior vice-president who signed the same; thus, the petition could not be deemed filed
for and on behalf of the real party-in-interest. Then, the CA, in its November 22, 2001 Resolution,[10]
denied petitioners motion for reconsideration of the dismissal order.

Dissatisfied, petitioner instituted before us the instant petition for review on certiorari under Rule 45.
The petition is denied.

Section 1, Rule 65 of the Rules of Court explicitly mandates that the petition for certiorari shall be
accompanied by a sworn certification of non-forum shopping.[11] When the petitioner is a
corporation, inasmuch as corporate powers are exercised by the board, the certification shall be
executed by a natural person authorized by the corporations board of directors.[12] Absent any
authority from the board, no person, not even the corporate officers, can bind the corporation.[13]
Only individuals who are vested with authority by a valid board resolution may sign the certificate of
non-forum shopping in behalf of the corporation, and proof of such authority must be attached to the
petition.[14] Failure to attach to the certification any proof of the signatorys authority is a sufficient
ground for the dismissal of the petition.[15]

In the instant case, the senior vice-president of the petitioner corporation signed the certificate of
non-forum shopping. No proof of his authority to sign the said certificate was, however, attached to
the petition. Thus, applying settled jurisprudence, we find that the CA committed no error when it
dismissed the petition.

The Court cannot even be liberal in the application of the rules because liberality is warranted only in
instances when there is substantial compliance with the technical requirements in pleading and
practice, and when there is sufficient explanation that the non-compliance is for a justifiable cause,
such that the outright dismissal of the case will defeat the administration of justice.[16] Here, the
petitioner corporation, in its motion for reconsideration before the appellate court and in its petition
before us, did not present a reasonable explanation for its non-compliance with the rules. Further, it
cannot be said that petitioner substantially complied therewith, because it did not attach to its motion
for reconsideration any proof of the authority of its signatory. It stands to reason, therefore, that this
Court now refuses to condone petitioners procedural transgression.

We must reiterate that the rules of procedure are mandatory, except only when, for the most
persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate to
the degree of his thoughtlessness in not complying therewith.[17] While technical rules of procedure
are not designed to frustrate the ends of justice, they are provided to effect the proper and orderly
disposition of cases and effectively prevent the clogging of court dockets.[18]

Be that as it may, this Court has examined the records if only to dispel any doubt on the propriety of
the dismissal of the case, and we found no abuse of discretion, much more a grave one, on the part
of the labor commission in reversing the ruling of the LA.
It is crystal clear that the closure of the Sto. Tomas farm was made in bad faith. Badges of bad faith
are evident from the following acts of the petitioner: it unjustifiably refused to recognize the STFWUs
and the other unions affiliation with PULO; it concluded a new CBA with another union in another
farm during the agreed indefinite suspension of the collective bargaining negotiations; it
surreptitiously transferred and continued its business in a less hostile environment; and it suddenly
terminated the STFWU members, but retained and brought the non-members to the Malvar farm.
Petitioner presented no evidence to support the contention that it was incurring losses or that the
subject farms lease agreement was pre-terminated. Ineluctably, the closure of the Sto. Tomas farm
circumvented the labor organizations right to collective bargaining and violated the members right to
security of tenure.[19]

The Court reiterates that the petition for certiorari under Rule 65 of the Rules of Court filed with the
CA will prosper only if there is clear showing of grave abuse of discretion or an act without or in
excess of jurisdiction on the part of the NLRC.[20] It was incumbent, then, for petitioner to prove
before the appellate court that the labor commission capriciously and whimsically exercised its
judgment tantamount to lack of jurisdiction, or that it exercised its power in an arbitrary or despotic
manner by reason of passion or personal hostility, and that its abuse of discretion is so patent and
gross as to amount to an evasion of a positive duty enjoined or to act at all in contemplation of
law.[21] Here, as aforesaid, no such proof was adduced by petitioner. We, thus, declare that the
NLRC ruling is not characterized by grave abuse of discretion. Accordingly, the same is also
affirmed.

However, this Court makes the following observations and modifications:

We deem as proper the award of moral and exemplary damages. We hold that the sudden
termination of the STFWU members is tainted with ULP because it was done to interfere with,
restrain or coerce employees in the exercise of their right to self-organization. Thus, the petitioner
company is liable for the payment of the aforesaid damages.[22] Notable, though, is that this award,
while stated in the body of the NLRC decision, was omitted in the dispositive portion of the said
ruling. To prevent any further confusion in the implementation of the said decision, we correct the
dispositive portion of the ruling to include the payment of P500,000.00 as moral and exemplary
damages to the illegally dismissed STFWU members.

As to the order of reinstatement, the Court modifies the same in that if it is no longer feasible
considering the length of time that the employees have been out of petitioners employ,[23] the
company is ordered to pay the illegally dismissed STFWU members separation pay equivalent to
one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher.[24]
The releases and quitclaims, as well as the affidavits of desistance,[25] signed by the concerned
employees, who were then necessitous men at the time of execution of the documents, are declared
invalid and ineffective. They will not bar the workers from claiming the full measure of benefits
flowing from their legal rights.[26]

WHEREFORE, premises considered, the petition for review on certiorari is DENIED. The October
25, 2001 and the November 22, 2001 Resolutions of the Court of Appeals in CA-G.R. SP No. 66871
are AFFIRMED. The March 16, 2001 Decision of the National Labor Relations Commission in
NLRC-NCR-00-07-05159-95 (CA No. 022059-00) is AFFIRMED with the MODIFICATION that
petitioner company is ordered to: (1) reinstate the illegally dismissed STFWU members and pay
them full backwages from the time of illegal termination up to actual reinstatement; (2) if
reinstatement is no longer feasible, pay the illegally dismissed STFWU members their separation
pay equivalent to one month pay, or one-half month pay for every year of service, whichever is
higher; and (3) pay moral and exemplary damages in the aggregate amount of P500,000.00 to the
said illegally dismissed STFWU members.

SO ORDERED.

Facts:

Three labor organizations and a federation are respondents in this case NAGSAMA-Purefoods, the
exclusive bargaining agent of the rank-and-file workers of Purefoods, STFWU, (Sto. Tomas,
Batangas); and PGFWU (Sta. Rosa, Laguna). These organizations were affiliates of the respondent
federation, Purefoods Unified Labor Organization (PULO). The three labor organizations manifested
their desire to re-negotiate the collective bargaining agreement, submitting their respective demands
and proposals and authorizing a negotiating panel which included among others a PULO
representative. While Purefoods formally acknowledged receipt of the union’s proposals, but refused
to negotiate with the unions should a PULO representative be in the panel which resulted in a
deadlock. However, the petitioner company concluded a new CBA with another union in its farm in
Malvar, Batangas and terminated the service of regular rank-and file workers in Sto Tomas. The
farm manager, supervisors and electrical workers of the Sto. Tomas farm, who were members of
another union, were nevertheless retained by the company in its employ. The 4 respondent labor
organizations jointly instated a complaint for Unfair Labor Practice, illegal lockout/dismissal and
damages.

Issue:
WON the refusal of Purefoods to recognized PULO as a labor organizations’ affiliation constituted
undue interference in, and restraint on the exercise of the employees’ right to self-organization and
free collective bargaining

Held:

Yes! It is crystal clear that the closure of the Sto. Tomas farm was made in bad faith. Badges of bad
faith are evident from the following acts of the petitioner: it unjustifiably refused to recognize the
STFWU’s and the other unions’ affiliation with PULO; it concluded a new CBA with another union in
another farm during the agreed indefinite suspension of the collective bargaining negotiations; it
surreptitiously transferred and continued its business in a less hostile environment; and it suddenly
terminated the STFWU members, but retained and brought the non-members to the Malvar farm.
Petitioner presented no evidence to support the contention that it was incurring losses or that the
subject farm’s lease agreement was pre-terminated. Ineluctably, the closure of the Sto. Tomas farm
circumvented the labor organization’s right to collective bargaining and violated the members’ right
to security of tenure.

___________________________________________________________________

RICARDO PORTUGUEZ,

Petitioner,

- versus -

GSIS FAMILY BANK (Comsavings Bank) and THE HON. COURT OF APPEALS,

Respondents.
G.R. No. 169570

Present:

YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,

CALLEJO, SR.,*

CHICO-NAZARIO, and

NACHURA, JJ.

Promulgated:

March 2, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

For resolution is a Petition for Review by Certiorari under Rule 45 of the Revised Rules of Court, of
the Decision[1] dated 25 April 2005 and the Resolution[2] dated 25 August 2005 of the Court of
Appeals. The assailed Decision and Resolution reversed the findings of both the National Labor
Relations Commission (NLRC) and the Labor Arbiter, in their Decisions dated 30 January 2004 and
30 June 2003, respectively, that respondent GSIS Family Bank is guilty of the illegal dismissal of
petitioner Ricardo Portuguez. The dispositive portion of the assailed decision of the appellate court
reads:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED, the assailed NLRC
Decision dated January 30, 2004, together with the Resolution dated June 22, 2004, are RECALLED
and SET ASIDE, and a new one entered DISMISSING NLRC NCR CA No. 037015-03 (NLRC NCR
Case. No. 07-05075-2002). No pronouncement as to costs.[3]

The factual and procedural antecedents of this instant petition are as follows:

Petitioner was employed by the respondent bank as utility clerk on 1 February 1971. Later, he rose
from the ranks and was promoted as branch manager of the Gen. Trias Branch, and was
subsequently assigned to other branches of respondent bank within the Province of Cavite.
Eventually, he was appointed as Business Development and Public Relations (BDPR) Officer of the
entire respondent bank.[4]

In addition to his regular duties as BDPR Officer, petitioner was designated as a member of the
Procurement Bidding and Awards Committee (PBAC), Oversight Committee and Investigating
Committee of the respondent bank.[5]

On 23 October 1997, petitioner was temporarily assigned as caretaker of respondent bank. Finally,
he was designated as Acting Assistant Vice-President and at the same time Officer-In-Charge of the
respondent bank on 15 June 1998.[6]

Respondent bank, on the other hand, is a banking institution duly authorized and existing as such
under the Philippine laws. It was originally known as Royal Savings Bank. In 1983 and the early part
of 1984, respondent bank underwent serious liquidity problems and was placed by the Central Bank
of the Philippines (Central Bank) under receivership. However, due to the continued inability to
maintain a state of liquidity, the Central Bank ordered its closure on 9 July 1984. After two months,
the respondent bank was reopened under the control and management of the Commercial Bank of
Manila and was then renamed as Comsavings Bank.[7]

In 1987, the Government Service Insurance System (GSIS) acquired the interest of the Commercial
Bank of Manila in the respondent bank and together with the Central Bank and the Philippine
Deposit Insurance Corporation (PDIC), GSIS infused a substantial amount of fresh capital into
respondent bank in order to ensure its effective rehabilitation. Resultantly, GSIS took over the
control and management of the respondent bank that was renamed as GSIS Family Savings
Bank.[8]

Accordingly, Amando Macalino (Macalino) was appointed as President of the respondent bank on 21
December 1998. In view of Macalinos appointment, the designation of petitioner as Officer-In-
Charge and caretaker of respondent bank was recalled; however, his appointment as Acting
Assistant Vice-President, was retained.[9]

In line with its policy to attain financial stability, respondent bank adopted measures directed to cut
down administrative overhead expenses through streamlining. Thus, respondent bank came up with
an early voluntary retirement program. On 15 April 2001, petitioner opted to avail himself of this
retirement package, supposedly, under protest, and received the amount of P1.324 Million as
retirement pay.[10]

On 11 July 2002, petitioner filed a complaint against the respondent bank and Macalino for
constructive dismissal and underpayment of wages, 13th month pay and retirement benefits before
the Labor Arbiter.[11] In his Position Paper,[12] petitioner alleged that due to discrimination, unfair
treatment, and intense pressure he had received from the new management through Macalino, he
was forced to retire at the prime of his life.

In a Decision[13] dated 30 June 2003, the Labor Arbiter adjudged the respondent bank guilty of
illegal dismissal, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered, finding complainant to have been illegally dismissed.
Concomitantly, Respondents are jointly and solidarily liable to pay RICARDO PORTUGUEZ the
following:

P1,148,333.33 representing backwages;

1,280,000.00 representing separation pay;

443,884.32 representing salary differentials;

500,000.00 representing moral damages;

400,000.00 representing exemplary damages;

Ten percent of the total award as attorneys fees.

Other claims are dismissed for lack of merit.

The detailed computation of the Computation & Examination Unit, National Capital Region is made
part of this Decision.[14]

Aggrieved, respondent bank appealed the adverse decision to the NLRC which adopted in toto the
findings of the Labor Arbiter. In a Decision[15] dated 30 January 2004, the NLRC dismissed the
appeal and found the decision of the Labor Arbiter to be sufficiently supported by the facts on record
and law on the matter.

Respondent banks Motion for Reconsideration was likewise denied by the NLRC in its
Resolution[16] dated 22 June 2004 for failing to show that patent or palpable errors have been
committed in the assailed decision.

The NLRC Resolution dated 22 June 2004, denying respondent banks motion for reconsideration,
was prematurely declared final and executory and was entered into judgment on 6 August 2004.[17]

Shortly thereafter, on 16 August 2004, respondent bank timely elevated the matter to the Court of
Appeals through a Special Civil Action for Certiorari[18] under Rule 65 of the Revised Rules of
Court. Incorporated with its petition was the Urgent Application for the Issuance of Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction.

Pending resolution of its petition and application for the issuance of TRO and/or writ of preliminary
injunction before the appellate court, the Labor Arbiter, on 16 September 2004, issued a Writ of
Execution[19] for the satisfaction of the NLRC decision dated 30 January 2004. On the same date, a
Notice of Garnishment[20] was served on the manager/cashier of respondent bank in the Pamplona
Uno, Las Pias City Branch.

Acting on the application for TRO, the Court of Appeals enjoined the implementation of the NLRC
decision dated 30 January 2004 and therefore, the satisfaction of the Writ of Execution dated 16
September 2004 issued by the Labor Arbiter was tolled for a period of 60 days.[21]

Eventually, the appellate court issued a Writ of Preliminary Injunction[22] permanently enjoining the
execution of the NLRC decision dated 30 January 2004 until the final resolution of the case.

On 25 April 2005, the Court of Appeals resolved the controversy by reversing the judgment of the
Labor Arbiter and the NLRC and ruling out constructive dismissal considering that petitioners
separation from service was voluntary on his part when he chose to avail himself of the respondent
banks early retirement program and received the amount of P1.324 Million as retirement pay.[23]

Similarly ill-fated was Petitioners Motion for Reconsideration which was denied by the Court of
Appeals in its Resolution[24] dated 25 August 2005.

Hence, this instant Petition for Review on Certiorari.[25]

For the resolution of this Court are the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT

PETITIONER WAS NOT CONSTRUCTIVELY DISMISSED FROM EMPLOYMENT.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT

PETITIONER IS NOT ENTITLED TO SALARY DIFFERENTIAL.

Before we delve into the merits of the case, it is best to underscore that the factual findings of the
NLRC affirming those of the Labor Arbiter, who are deemed to have acquired expertise on the
matters within their jurisdiction, when sufficiently supported by evidence on record, are accorded
respect if not finality, and are considered binding on this Court.[26] It is equally true, however, that
when the findings of the Labor Arbiter and the NLRC are inconsistent with that of the Court of
Appeals, there is a need to review the records to determine which of them should be preferred as
more conformable to evidentiary facts.[27]

As borne by the records, it appears that there is a divergence between the findings of the Labor
Arbiter as affirmed by the NLRC, and those of the Court of Appeals. For the purpose of clarity and
intelligibility, therefore, this Court will make an infinitesimal scrunity of the records and recalibrate
and reevaluate the evidence presented by the parties all over again.
We have already repeatedly held that this Court is not a trier of facts. Rule 45 of the Revised Rules
of Court limits the office of a Petition for Review to questions of law and leaves the factual issues as
found by the quasi-judicial bodies, as long as they are supported by evidence.[28] We never fail to
stress as well that when the rulings of the labor tribunal and the appellate court are in conflict, we are
constrained to analyze and weigh the evidence again.[29]

Substantively, petitioner alleges that respondent bank, through Macalino, subjected him to all forms
of unbearable harassment that can be mustered in order to force him to resign. Petitioner specifically
claims that he was deprived of his salary and other benefits and privileges appurtenant to his
position as the Acting Assistant Vice-President, including his office. Respondent bank allegedly
granted much higher salary to the newly hired bank officers compared to what he was receiving
during his tenure.

In contrast, respondent bank maintains that petitioner was not coerced to resign but voluntarily opted
to avail himself of the early retirement program and was duly paid his retirement benefits. It posits
that petitioner was merely holding the position of Assistant Vice-President in acting capacity subject
to the ratification of the respondent banks Board of Directors and since his appointment has never
been ratified by the Board, respondent bank cannot therefore grant him the salary and benefits
accorded to such position.

In finding that petitioner was not constructively dismissed from employment, the Court of Appeals
stressed that there was no showing that petitioners separation from employment was due to
involuntary resignation or forced severance. Neither was it shown that there was a decrease in
salary and privileges or downgrading of petitioners rank. What can be clearly deduced from the
evidence was that until his voluntary retirement in 2001, petitioner was holding the position of Acting
Assistant Vice-President and was receiving the salary and benefits accorded thereto.

After scrupulously examining the contrasting positions of the parties, and the conflicting decisions of
the Labor Arbiter and the NLRC, on one hand, and the appellate court, on the other, we find the
records of the case bereft of evidence to substantiate the conclusions reached by both the Labor
Arbiter and the NLRC that petitioner was constructively dismissed from employment.

Constructive dismissal or constructive discharge has been defined as quitting because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay. [30] In the case at bar, a demotion in rank or diminution in pay was
never raised as an issue. Settled then is the fact that petitioner suffered no demotion in rank or
diminution in pay that could give rise to a cause of action against respondent bank for constructive
dismissal under this definition.

Worthy to stress, however, is that constructive dismissal does not always take the form of demotion
in rank or diminution in pay. In several cases, we have ruled that the act of a clear discrimination,
insensibility or disdain by an employer may become so unbearable on the part of the employee so
as to foreclose any choice on his part except to resign from such employment.[31]
It is upon the aforementioned legal tenet that petitioner anchored his case. Petitioner strenuously
argues that while the newly hired bank officers were given higher salaries and fat allowances, he
was merely paid the amount of P15,000 basic pay and P4,000 allowance for the position of Acting
Assistant Vice-President which, according to him, was way below what the newly hired bank officers
were enjoying. Stated differently, petitioner avers that he was discriminated against by the
respondent bank in terms of payment of salary and grant of benefits and allowances.

We do not agree.

Upon careful perusal of the position papers, memoranda and other pleadings submitted by petitioner
from the Labor Arbiter up to this Court, including the evidence appended thereon, we find that no
evidence, substantial or otherwise, was ever submitted by petitioner to buttress the very premise of
his position that there was discrimination.

Discrimination has been defined as the failure to treat all persons equally when no reasonable
distinction can be found between those favored and those not favored.[32] Thus, before a claim for
discrimination can prosper, it must be established that, first, there is no reasonable distinction or
classification that can be obtained between persons belonging to the same class, and second,
persons belonging to the same class have not been treated alike.[33]

Apropos thereto, petitioner failed to establish that he possessed the same skills, competencies and
expertise as those of the newly hired bank officers so as to eliminate any possibility of substantial
distinction that may warrant the unequal treatment between them. No proof was likewise presented
by petitioner to show that the functions, duties and responsibilities he was performing are the same
as those of the newly hired bank officers.

Petitioner likewise failed to present any proof tending to show that he was discriminated against by
the respondent bank. While he vigorously cried that the newly hired bank officers were afforded
higher salaries and benefits compared to what he was earning, petitioner, however, miserably failed
to substantiate his claim. No evidence was ever offered by petitioner to prove the amount of salaries
and bonuses actually enjoyed by the newly hired bank officers, except for his bare allegations
contained in his demand letter[34] dated 20 February 2001, to wit:

Mr. Portuguez has reliably learned that Bank records could show that your newly hired officers are
being paid the basic salaries in the range of P25,000 to P30,000.[35]
Such bare and sweeping statement contains nothing but empty imputation of a fact that could hardly
be given any evidentiary weight by this Court. It is indeed true that the demand letter made reference
to bank records upon which petitioner purportedly derived his allegation but no such bank records
were ever presented as evidence at any stage of the proceedings.

Indubitably, such self-serving and unsubstantiated declaration is insufficient to establish a case

before quasi-judicial bodies. Well-entrenched is the rule that the quantum of evidence required to
establish a fact in quasi-judicial bodies is substantial evidence. Substantial evidence is such amount
of relevant evidence which a reasonable mind might accept as adequate to support a conclusion,
even if other equally reasonable minds might opine otherwise.[36]

It is beyond question that the evidence presented by petitioner cannot be considered as substantial
evidence. Verily, petitioners case is devoid of substance to convince even the unreasonable minds,
for evidently the records are stripped of supporting proofs to, at the very least, even just verify his
claim.

In addition, petitioner asseverates that in cases of constructive dismissal, the burden of proof rests
on the employer to show that the employee was dismissed on a valid and just cause.[37] And failing
to discharge such presumption, as in the case at bar, respondent bank should be adjudged guilty of
illegal dismissal.

Again, we are not persuaded. We are not unaware of the statutory rule that in illegal dismissal
cases, the employer has the onus probandi to show that the employees separation from employment
is not motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause.[38] It bears stressing, however, that this legal principle
presupposes that there is indeed an involuntary separation from employment and the facts attendant
to such forced separation was clearly established.

This legal principle has no application in the instant controversy for as we have succinctly pointed
above, petitioner failed to establish that indeed he was discriminated against and on account of such
discrimination, he was forced to sever his employment from the respondent bank. What is
undisputed is the fact that petitioner availed himself of respondent banks early voluntary retirement
program and accordingly received his retirement pay in the amount of P1.324 Million under such
program. Consequently, the burden of proof will not vest on respondent bank to prove the legality of
petitioners separation from employment but aptly remains with the petitioner to prove his allegation
that his availment of the early voluntary retirement program was, in fact, done involuntarily.

As we have explicitly ruled in Machica v. Roosevelt Service Center, Inc.[39]:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened
to prove their allegation that respondents dismissed them from their employment. It must be
stressed that the evidence to prove this fact must be clear, positive and convincing. The rule that the
employer bears the burden of proof in illegal dismissal cases finds no application here because the
respondents deny having dismissed the petitioners. (Emphases supplied.)

Verily, petitioner did not present any clear, positive or convincing evidence in the present case to
support his claims. Indeed, he never presented any evidence at all other than his own self-serving
declarations. We must bear in mind the legal dictum that, he who asserts, not he who denies, must
prove.[40]

In the same breath, we are constrained to deny petitioners claim for salary differentials. We are not
unmindful that the amount of P19,000 a month may not be commensurate compensation to the
position of Acting Assistant Vice-President, but in the case at bar, the facts and the evidence did not
establish even at least a rational basis for how much the standard compensation for the said position
must be. It is not enough that petitioner perceived that he was receiving a very low salary in the
absence of a comparative standard upon which he can peg his supposed commensurate
compensation.

Petitioners incessant reliance on the findings of the Labor Arbiter and the NLRC is equally
unavailing. At the outset, we have already laid down that findings of fact of quasi-judicial bodies are
conclusive and are not subject to review by the Court. However, this rule does not apply if such
findings are tainted with mistake or not supported by evidence. [41]

In finding that respondent bank is guilty of constructive dismissal, the Labor Arbiter mainly hinges its
ruling on the Constitutional dogma that due to the lopsided power of capital over labor, the State
shall intervene as an equalizer consistent with the social justice policy affording protection to
labor.[42]

While we agree with the Labor Arbiter that in light of this Constitutional mandate, we must be vigilant
in striking down any attempt of the management to exploit or oppress the working class, it does not
mean, however, that we are but bound to uphold the working class in every labor dispute brought
before this Court for our resolution.

While our laws endeavor to give life to the constitutional policy on social justice and on the protection
of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law
also recognizes that management has rights which are also entitled to respect and enforcement in
the interest of fair play.[43]
It should be remembered that the Philippine Constitution, while inexorably committed towards the
protection of the working class from exploitation and unfair treatment, nevertheless mandates the
policy of social justice so as to strike a balance between an avowed predilection for labor, on the one
hand, and the maintenance of the legal rights of capital, the proverbial hen that lays the golden egg,
on the other. Indeed, we should not be unmindful of the legal norm that justice is in every case for
the deserving, to be dispensed with in light of established facts, the applicable law, and existing
jurisprudence.[44]

The presumption in favor of labor cannot defeat the very purpose for which our labor laws exist: to
balance the conflicting interest of labor and management and to guaranty that labor and
management stand on equal footing when bargaining in good faith with each other, not to tilt the
scale to favor one over the other.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The Decision dated 25 April
2005, and the Resolution dated 25 August 2005, both rendered by the Court of Appeals in CA-G.R.
SP No. 85723, are hereby AFFIRMED. No costs.

SO ORDERED.

_______________________________________

G.R. No. L-33955 January 26, 1989

FORTUNATO DA. BONDOC petitioner,

vs.

COURT OF INDUSTRIAL RELATIONS, PHILIPPINE NATIONAL RAILWAYS and LIBERTADO S.

CASTRO, respondents.

The Government Corporate Counsel for respondent Phil. National Railways.

GRIÑO-AQUINO, J.:

This is a petition for review of the order dated January 11, 1971 of the Court of Industrial Relations
(CIR for short), dismissing the charge of unfair labor practice against the private respondents in
Case No. 4927-ULP, as well as, the Resolution dated March 2, 1971 of that court, denying
petitioner's motion for reconsideration.

On January 10, 1968, a complaint for unfair labor practices under Section 4(a), sub-sections 4 and 5
of Republic Act No. 875 was filed by the Acting Prosecutor of the CIR against the private
respondents based on the complaint of petitioner Fortunato Da. Bondoc charging the private
respondents with having discriminated against him in the giving of promotions to its employees
because he was not a member of any labor organization. Bondoc prayed for a cease and desist
order against the respondents and for his promotion to the position of General Road Foreman
effective July 1, 1962 with the corresponding salary and benefits.

The private respondents denied the material allegations of the complaint and, on July 1, 1968, filed a
motion to dismiss the complaint for failure to allege a valid cause of action. The CIR deferred the
resolution of the motion until after it had heard the merits of the case.

Petitioner presented evidence in the CIR to show that, in derogation of his seniority, rank,
competence, and fitness, and because he did not belong to any labor union, private respondents
discriminated against him by promoting and appointing Simeon Mendoza on July 1, 1962 to the
position of Road Foreman of the engineering Department, instead of him. Again, on January 1,
1965, Simeon Mendoza, instead of petitioner, was promoted to the position of General Road
Foreman of the Engineering Department. Private respondents paid no heed to petitioner's protests
against such discrimination. Instead of promoting him, the private respondents assigned him at the
Hearing Committee without per diems. When Simeon Mendoza retired as General Road Foreman,
private respondents appointed someone else-Simeon Malinay-to the vacant position, by-passing the
petitioner. Finally, private respondents subdivided the Central Division of the Engineering
Department, thereby reducing petitioner's area of responsibility. Petitioner alleged he had exhausted
all his administrative remedies in vain.

Answering the complaint, the private respondents alleged that petitioner was not next-in-rank to the
position of Road Foreman; that based on individual work merits and the Revised Civil Service Rules,
Mendoza and Malinay obtained higher ratings than the petitioner; that Mendoza was promoted to
Assistant General Foreman because be was next-in-rank; that Simeon Malinay was next-in-rank to
Simeon Mendoza; that when the position of General Road Foreman became vacant, Mendoza was
recommended for the position but his retirement precluded his appointment thereto; that the position
of General Road Foreman was later abolished; that the reorganization was for the best interest of
the company; that contrary to petitioner's allegation, his transfer to the Hearing Committee was done
at his own request. As for per diems, he was paid for the first month, but he was not paid per diems
for services rendered in excess of one month because it would have been contrary to law, rules and
regulations.
As aptly put by the CIR, the issue in this case is whether or not the private respondents were guilty
of unfair labor practice under Section 4 (a) (4); of Republic Act 875, otherwise known as the
Industrial Peace Act, which provides:

SEC. 4. Unfair Labor Practices. —

(a) It shall be unfair labor practice for an employer:

xxx xxx xxx

(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment
to encourage or discourage membership in any labor organization; ... (As amended by R.A. No. L-
3350, approved June 17, 1961).

In dismissing the charge of unfair labor practice, the CIR found that the alleged discriminatory acts
against the petitioner did not arise from union membership or activity because he was not in fact a
union member.

Petitioner's allegation that be was discriminated against to force him to join a labor organization is
unconvincing since no specific union was mentioned in his complaint. It is unbelievable that the
private respondents would harass and oppress him to force him to join any labor union for We do not
see how that can possibly be advantageous to the former.

The petitioner does not show how or why the CIR Order allegedly conflicts with the evidence
presented at the trial. We have, time and again, ruled that findings of fact of the CIR are accorded
full respect by the Supreme Court if supported by substantial evidence (Community Sawmill
Company vs. CIR, 89 SCRA 164; Dy Keh Beng vs. International Labor & Marine Union of the Phil.,
90 SCRA 162; Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 97). In this case, We find no reason to
depart from that doctrine.

WHEREFORE, the petition for review is denied for lack of merit.

______________________________________________________________________

G.R. No. 164301 October 19, 2011

BANK OF THE PHILIPPINE ISLANDS, Petitioner,

vs.

BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK,

Respondent.

RESOLUTION

LEONARDO-DE CASTRO, J.:

In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration1 of
our Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust
Company (FEBTC) "absorbed" by BPI pursuant to the two banks’ merger in 2000 were covered by
the Union Shop Clause in the then existing collective bargaining agreement (CBA)2 of BPI with
respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank (the Union).

To recall, the Union Shop Clause involved in this long standing controversy provided, thus:

ARTICLE II

xxxx

Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of
this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days
after they become regular employees, join the Union as a condition of their continued employment. It
is understood that membership in good standing in the Union is a condition of their continued
employment with the Bank.3 (Emphases supplied.)

The bone of contention between the parties was whether or not the "absorbed" FEBTC employees
fell within the definition of "new employees" under the Union Shop Clause, such that they may be
required to join respondent union and if they fail to do so, the Union may request BPI to terminate
their employment, as the Union in fact did in the present case. Needless to state, BPI refused to
accede to the Union’s request. Although BPI won the initial battle at the Voluntary Arbitrator level,
BPI’s position was rejected by the Court of Appeals which ruled that the Voluntary Arbitrator’s
interpretation of the Union Shop Clause was at war with the spirit and rationale why the Labor Code
allows the existence of such provision. On review with this Court, we upheld the appellate court’s
ruling and disposed of the case as follows:

WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the
Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein.
Former FEBTC employees who opt not to become union members but who qualify for retirement
shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the
CBA, as the case may be.4

Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC
employees, for reasons already extensively discussed in the August 10, 2010 Decision, even now
BPI continues to protest the inclusion of said employees in the Union Shop Clause.

In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA
clearly intended to limit the application of the Union Shop Clause only to new employees who were
hired as non-regular employees but later attained regular status at some point after hiring. FEBTC
employees cannot be considered new employees as BPI merely stepped into the shoes of FEBTC
as an employer purely as a consequence of the merger.5

Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate
Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its
contention that "the situation of absorbed employees can be likened to old employees of BPI, insofar
as their full tenure with FEBTC was recognized by BPI and their salaries were maintained and
safeguarded from diminution" but such absorbed employees "cannot and should not be treated in
exactly the same way as old BPI employees for there are substantial differences between them."6
Although petitioner admits that there are similarities between absorbed and new employees, they
insist there are marked differences between them as well. Thus, adopting Justice Brion’s stance,
petitioner contends that the absorbed FEBTC employees should be considered "a sui generis group
of employees whose classification will not be duplicated until BPI has another merger where it would
be the surviving corporation."7 Apparently borrowing from Justice Carpio, petitioner propounds that
the Union Shop Clause should be strictly construed since it purportedly curtails the right of the
absorbed employees to abstain from joining labor organizations.8

Pursuant to our directive, the Union filed its Comment9 on the Motion for Reconsideration. In
opposition to petitioner’s arguments, the Union, in turn, adverts to our discussion in the August 10,
2010 Decision regarding the voluntary nature of the merger between BPI and FEBTC, the lack of an
express stipulation in the Articles of Merger regarding the transfer of employment contracts to the
surviving corporation, and the consensual nature of employment contracts as valid bases for the
conclusion that former FEBTC employees should be deemed new employees.10 The Union argues
that the creation of employment relations between former FEBTC employees and BPI (i.e., BPI’s
selection and engagement of former FEBTC employees, its payment of their wages, power of
dismissal and of control over the employees’ conduct) occurred after the merger, or to be more
precise, after the Securities and Exchange Commission’s (SEC) approval of the merger.11 The
Union likewise points out that BPI failed to offer any counterargument to the Court’s reasoning that:

The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon
the individual employee's right or freedom of association, is not to protect the union for the union's
sake. Laws and jurisprudence promote unionism and afford certain protections to the certified
bargaining agent in a unionized company because a strong and effective union presumably benefits
all employees in the bargaining unit since such a union would be in a better position to demand
improved benefits and conditions of work from the employer. x x x.

x x x Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in
recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of
constitutional values, this Court has repeatedly held that the right to abstain from joining a labor
organization is subordinate to the policy of encouraging unionism as an instrument of social
justice.12

While most of the arguments offered by BPI have already been thoroughly addressed in the August
10, 2010 Decision, we find that a qualification of our ruling is in order only with respect to the
interpretation of the provisions of the Articles of Merger and its implications on the former FEBTC
employees’ security of tenure.

Taking a second look on this point, we have come to agree with Justice Brion’s view that it is more in
keeping with the dictates of social justice and the State policy of according full protection to labor to
deem employment contracts as automatically assumed by the surviving corporation in a merger,
even in the absence of an express stipulation in the articles of merger or the merger plan. In his
dissenting opinion, Justice Brion reasoned that:

To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally declared
policies on work, labor and employment, and the specific FEBTC-BPI situation — i.e., a merger with
complete "body and soul" transfer of all that FEBTC embodied and possessed and where both
participating banks were willing (albeit by deed, not by their written agreement) to provide for the
affected human resources by recognizing continuity of employment — should point this Court to a
declaration that in a complete merger situation where there is total takeover by one corporation over
another and there is silence in the merger agreement on what the fate of the human resource
complement shall be, the latter should not be left in legal limbo and should be properly provided for,
by compelling the surviving entity to absorb these employees. This is what Section 80 of the
Corporation Code commands, as the surviving corporation has the legal obligation to assume all the
obligations and liabilities of the merged constituent corporation.

Not to be forgotten is that the affected employees managed, operated and worked on the transferred
assets and properties as their means of livelihood; they constituted a basic component of their
corporation during its existence. In a merger and consolidation situation, they cannot be treated
without consideration of the applicable constitutional declarations and directives, or, worse, be
simply disregarded. If they are so treated, it is up to this Court to read and interpret the law so that
they are treated in accordance with the legal requirements of mergers and consolidation, read in
light of the social justice, economic and social provisions of our Constitution. Hence, there is a need
for the surviving corporation to take responsibility for the affected employees and to absorb them into
its workforce where no appropriate provision for the merged corporation's human resources
component is made in the Merger Plan.13

By upholding the automatic assumption of the non-surviving corporation’s existing employment

contracts by the surviving corporation in a merger, the Court strengthens judicial protection of the
right to security of tenure of employees affected by a merger and avoids confusion regarding the
status of their various benefits which were among the chief objections of our dissenting colleagues.
However, nothing in this Resolution shall impair the right of an employer to terminate the
employment of the absorbed employees for a lawful or authorized cause or the right of such an
employee to resign, retire or otherwise sever his employment, whether before or after the merger,
subject to existing contractual obligations. In this manner, Justice Brion’s theory of automatic
assumption may be reconciled with the majority’s concerns with the successor employer’s
prerogative to choose its employees and the prohibition against involuntary servitude.1avvphi1

Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the
absorbed FEBTC employees are covered by the Union Shop Clause.

Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on
mergers (that the surviving corporation continues the corporate existence of the non-surviving
corporation) is mainly a tool to adjudicate the rights and obligations between and among the merged
corporations and the persons that deal with them.14 Such a legal fiction cannot be unduly extended
to an interpretation of a Union Shop Clause so as to defeat its purpose under labor law. Hence, we
stated in the Decision that:

In any event, it is of no moment that the former FEBTC employees retained the regular status that
they possessed while working for their former employer upon their absorption by petitioner. This fact
would not remove them from the scope of the phrase "new employees" as contemplated in the Union
Shop Clause of the CBA, contrary to petitioner's insistence that the term "new employees" only
refers to those who are initially hired as non-regular employees for possible regular employment.

The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of
the CBA "may be regularly employed" by the Bank must join the union within thirty (30) days from
their regularization. There is nothing in the said clause that limits its application to only new
employees who possess non-regular status, meaning probationary status, at the start of their
employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from
the Union Shop Clause new employees who are "absorbed" as regular employees from the
beginning of their employment. What is indubitable from the Union Shop Clause is that upon the
effectivity of the CBA, petitioner's new regular employees (regardless of the manner by which they
became employees of BPI) are required to join the Union as a condition of their continued
employment.15

Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if
the former had been the employer of the latter’s employees from the beginning it must be
emphasized that, in reality, the legal consequences of the merger only occur at a specific date, i.e.,
upon its effectivity which is the date of approval of the merger by the SEC. Thus, we observed in the
Decision that BPI and FEBTC stipulated in the Articles of Merger that they will both continue their
respective business operations until the SEC issues the certificate of merger and in the event no
such certificate is issued, they shall hold each other blameless for the non-consummation of the
merger.16 We likewise previously noted that BPI made its assignments of the former FEBTC
employees effective on April 10, 2000, or after the SEC approved the merger.17 In other words, the
obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its right of
discipline and control over them only arose with the effectivity of the merger. Concomitantly, the
obligation of former FEBTC employees to render service to BPI and their right to receive benefits
from the latter also arose upon the effectivity of the merger. What is material is that all of these legal
consequences of the merger took place during the life of an existing and valid CBA between BPI and
the Union wherein they have mutually consented to include a Union Shop Clause.

From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who
(a) enter the employ of BPI during the term of the CBA; (b) are part of the bargaining unit (defined in
the CBA as comprised of BPI’s rank and file employees); and (c) become regular employees without
distinguishing as to the manner they acquire their regular status. Consequently, the number of such
employees may adversely affect the majority status of the Union and even its existence itself, as
already amply explained in the Decision.

Indeed, there are differences between (a) new employees who are hired as probationary or
temporary but later regularized, and (b) new employees who, by virtue of a merger, are absorbed
from another company as regular and permanent from the beginning of their employment with the
surviving corporation. It bears reiterating here that these differences are too insubstantial to warrant
the exclusion of the absorbed employees from the application of the Union Shop Clause. In the
Decision, we noted that:

Verily, we agree with the Court of Appeals that there are no substantial differences between a newly
hired non-regular employee who was regularized weeks or months after his hiring and a new
employee who was absorbed from another bank as a regular employee pursuant to a merger, for
purposes of applying the Union Shop Clause. Both employees were hired/employed only after the
CBA was signed. At the time they are being required to join the Union, they are both already regular
rank and file employees of BPI. They belong to the same bargaining unit being represented by the
Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When
they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in
effect and neither of them had the opportunity to express their preference for unionism or not. We
see no cogent reason why the Union Shop Clause should not be applied equally to these two types
of new employees, for they are undeniably similarly situated.18

Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would
dilute its efficacy and put the certified union that is supposedly being protected thereby at the mercy
of management. For if the former FEBTC employees had no say in the merger of its former
employer with another bank, as petitioner BPI repeatedly decries on their behalf, the Union likewise
could not prevent BPI from proceeding with the merger which undisputedly affected the number of
employees in the bargaining unit that the Union represents and may negatively impact on the
Union’s majority status. In this instance, we should be guided by the principle that courts must place
a practical and realistic construction upon a CBA, giving due consideration to the context in which it
is negotiated and purpose which it is intended to serve.19

We now come to the question: Does our affirmance of our ruling that former FEBTC employees
absorbed by BPI are covered by the Union Shop Clause violate their right to security of tenure which
we expressly upheld in this Resolution? We answer in the negative.

In Rance v. National Labor Relations Commission,20 we held that:

It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of
the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social
justice. When a person has no property, his job may possibly be his only possession or means of
livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. Article 280
of the Labor Code has construed security of tenure as meaning that "the employer shall not
terminate the services of an employee except for a just cause or when authorized by" the Code. x x
x (Emphasis supplied.)
We have also previously held that the fundamental guarantee of security of tenure and due process
dictates that no worker shall be dismissed except for a just and authorized cause provided by law
and after due process is observed.21 Even as we now recognize the right to continuous, unbroken
employment of workers who are absorbed into a new company pursuant to a merger, it is but logical
that their employment may be terminated for any causes provided for under the law or in
jurisprudence without violating their right to security of tenure. As Justice Carpio discussed in his
dissenting opinion, it is well-settled that termination of employment by virtue of a union security
clause embodied in a CBA is recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v.
Saldivar,23 we explained the rationale for this policy in this wise:

Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by [Title I, Book
Six of the Labor Code]." Admittedly, the enforcement of a closed-shop or union security provision in
the CBA as a ground for termination finds no extension within any of the provisions under Title I,
Book Six of the Labor Code. Yet jurisprudence has consistently recognized, thus: "It is State policy
to promote unionism to enable workers to negotiate with management on an even playing field and
with more persuasiveness than if they were to individually and separately bargain with the employer.
For this reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of
encouraging workers to join and support the union of their choice in the protection of their rights and
interests vis-a-vis the employer."24 (Emphasis supplied.)

Although it is accepted that non-compliance with a union security clause is a valid ground for an
employee’s dismissal, jurisprudence dictates that such a dismissal must still be done in accordance
with due process. This much we decreed in General Milling Corporation v. Casio,25 to wit:

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos that:

While respondent company may validly dismiss the employees expelled by the union for disloyalty
under the union security clause of the collective bargaining agreement upon the recommendation by
the union, this dismissal should not be done hastily and summarily thereby eroding the employees'
right to due process, self-organization and security of tenure. The enforcement of union security
clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and
always with due process. Even on the assumption that the federation had valid grounds to expel the
union officers, due process requires that these union officers be accorded a separate hearing by
respondent company.
The twin requirements of notice and hearing constitute the essential elements of procedural due
process. The law requires the employer to furnish the employee sought to be dismissed with two
written notices before termination of employment can be legally effected: (1) a written notice
apprising the employee of the particular acts or omissions for which his dismissal is sought in order
to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he
desires, and (2) a subsequent notice informing the employee of the employer's decision to dismiss
him. This procedure is mandatory and its absence taints the dismissal with illegality.

Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing
Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The
rights of an employee to be informed of the charges against him and to reasonable opportunity to
present his side in a controversy with either the company or his own union are not wiped away by a
union security clause or a union shop clause in a collective bargaining agreement. x x x26
(Emphases supplied.)

In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period
from notice of finality of the Decision given to the affected FEBTC employees to join the Union
before the latter can request petitioner to terminate the former’s employment, petitioner must still
accord said employees the twin requirements of notice and hearing on the possibility that they may
have other justifications for not joining the Union. Similar to our August 10, 2010 Decision, we
reiterate that our ruling presupposes there has been no material change in the situation of the
parties in the interim.

WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 is
AFFIRMED, subject to the qualifications that:

(a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank and Trust
Company (FEBTC) employees upon effectivity of the merger without break in the continuity of their
employment, even without express stipulation in the Articles of Merger; and

(b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010 Decision,
given to former FEBTC employees to join the respondent, said employees shall be accorded full
procedural due process before their employment may be terminated.

SO ORDERED.

____________________________________________________________________
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.

DECISION

NARVASA, C.J.:

A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was entered into
between petitioner Holy Cross of Davao College, Inc. (hereafter Holy Cross), an educational
institution, and the affiliate labor organization representing its employees, respondent Holy 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
unions 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.[1] Holy Cross
President Emilio P. Palma-Gil replied that he had no objection to the extension sought, it being
allowable under the collective bargaining agreement.[2]

On 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, Galera forthwith initiated
discussions for the unions disaffiliation from the KAMAPI Federation.

Galleras group subsequently formed a separate organization known as the Holy 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.[3]

Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees
the corresponding union dues and special assessment (payable by union members), and agency
fees (payable by non-members), in accordance with the check-off clause of the CBA,[4] prompting
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.[5] KAMAPI
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 of officers who would also comprise its
negotiating panel.[6]

The Med-Arbiter denied KAMAPIs motion to dismiss, and ordered the holding of a certification
election. On appeal, however, the Secretary of Labor reversed the Med-Arbiters 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;[7] and 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 Secretarys decision in favor of KAMAPI as the exclusive bargaining
representative of the School employees, whereupon KAMAPIs counsel furnished it with a copy of
the Courts 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 KAMAPIs request). Said
Article provides inter alia for 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.[8]

KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor practice for
refusing to bargain despite the formers repeated demands; and on the following day, it filed a notice
of strike with the National Mediation and Conciliation Board..[9]

KAMAPI 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.[10] Both 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; and
b. 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.[11] He 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 Schools prolonged inaction
on KAMAPIs 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 Schools 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 negotiation 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 CBAs check-off provisions as of said date.[12]

The 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 Arbitrators decision on the
following grounds, viz.:[13]
1. 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 Arbitrators 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 schools
permanent and regular teachers -- 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 Courts
correcting hand through the extraordinary writ of certiorari. 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 provisions 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 Courts Resolution
on July 18, 1991 -- and in any case, the Voluntary Arbitrators order for it to pay to the union the
uncollected employees' dues or agency fees -- would amount to the unions unjust enrichment.[14]

KAMAPI 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;[15] and 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 -- as union dues (with respect to union members) or agency 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 representatives, 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.[16] Its 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.[17] When 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 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 of, 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 dissaffiliated.[18]

The legal basis of check-off is thus found in statute or in contract.[19] Statutory limitations on check-
offs generally require written authorization from each employee to deduct wages; however, a
resolution approved and adopted by a majority of 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.[20]

Authorization to effect a check-off of union dues is co-terminous with the union affiliation or
membership of employees.[21] On the other hand, the collection of agency fees in 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 employees acceptance of benefits resulting from a collective bargaining
agreement justifies the deduction of agency fees from his pay and the unions entitlement thereto. In
this aspect, the legal basis of the unions 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.[22]
No 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 employers failure to make the requisite deductions may
constitute a violation of a contractual commitment for which it may incur liability for unfair labor
practice.[23] But 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 as 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 latters life and sustenance.
But the obligation to pay union dues and agency fees obviously devolves not upon the employer, but
the individual employee. It is a personal obligation not demandable from the employer upon default
or refusal of the employer 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.

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.
FACTS: A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was
entered into between petitioner Holy Cross of Davao College, Inc. (hereafter Holy Cross), an
educational institution, and the affiliate labor organization representing its employees, respondent
Holy 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. Granted.

Thereafter an election of officers was held, and 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 the Holy 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.

Holy 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, 4 prompting
KAMAPI, on September 1, 1989, to demand an explanation.

* In the meantime, there ensued between the two unions (KAMAPI vs. GALLERA GROUP) a full-
blown action on the basic issue of representation, which was to last for some two years. KAMAPI
won.

After its success in the certification election case KAMAPI presented a revised bargaining proposals
to Holy Cross; asking for Holy Cross counter-proposal. Holy cross refused to submit its counter-
proposal (based on many many grounds not relative to the topic in our syllabus ).

* 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. On
both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI. Petition by Holy
Cross with the SC, denied.

ISSUE: Whether or not an employer is liable to pay to the union of its employees, the amounts it
failed to deduct from their salaries — as union dues (with respect to union members) or agency 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.

HELD: NO

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.

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.

No 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. 23 But 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.

The obligation to pay union dues and agency fees obviously devolves not upon 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.
PETITION GRANTED.

_______________

NOTES:

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; and

b. Whether or not there was refusal to negotiate on the part of the Holy Cross of Davao College.

 The legal basis of check-off is thus found in statute or in contract. 19 Statutory 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.

 Authorization to effect a check-off of union dues is co-terminous with the union affiliation or
membership of employees.

 On the other hand, the collection of agency fees in 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.

___________________________________________________________________

FLIGHT ATTENDANTS AND G.R. No. 178083

STEWARDS ASSOCIATION OF

THE PHILIPPINES (FASAP),

Petitioner, Present:

Ynares-Santiago, J. (Chairperson),

- versus - Chico-Nazario,

Nachura,

Peralta, and

Bersamin,* JJ.

PHILIPPINE AIRLINES, INC.,

PATRIA CHIONG and COURT Promulgated:

OF APPEALS,

Respondents. October 2, 2009

x ---------------------------------------------------------------------------------------- x

RESOLUTION

YNARES-SANTIAGO, J.:

For resolution is respondent Philippine Airlines, Inc.s (PAL) Motion for Reconsideration[1] of our
Decision of July 22, 2008, the dispositive portion of which provides:

WHEREFORE, the instant petition is GRANTED. The assailed Decision of the Court of Appeals in
CA-G.R. SP No. 87956 dated August 23, 2006, which affirmed the Decision of the NLRC setting
aside the Labor Arbiters findings of illegal retrenchment and its Resolution of May 29, 2007 denying
the motion for reconsideration, are REVERSED and SET ASIDE and a new one is rendered:

1. FINDING respondent Philippine Airlines, Inc. GUILTY of illegal dismissal;

2. ORDERING Philippine Airlines, Inc. to reinstate the cabin crew personnel who were covered by
the retrenchment and demotion scheme of June 15, 1998 made effective on July 15, 1998, without
loss of seniority rights and other privileges, and to pay them full backwages, inclusive of allowances
and other monetary benefits computed from the time of their separation up to the time of their actual
reinstatement, provided that with respect to those who had received their respective separation pay,
the amounts of payments shall be deducted from their backwages. Where reinstatement is no longer
feasible because the positions previously held no longer exist, respondent Corporation shall pay
backwages plus, in lieu of reinstatement, separation pay equal to one (1) month pay for every year
of service;

3. ORDERING Philippine Airlines, Inc. to pay attorneys fees equivalent to ten percent (10%) of the
total monetary award.

Costs against respondent PAL.

SO ORDERED.

In its Motion for Reconsideration, PAL maintains that it was suffering from financial distress which
justified the retrenchment of more than 1,400 of its flight attendants. This, it argued, was an
established fact. Furthermore, FASAP never assailed the economic basis for the retrenchment, but
only the allegedly discriminatory and baseless manner by which it was carried out.

PAL asserts that it has presented proof of its claimed losses by attaching its petition for suspension
of payments, as well as the June 23, 1998 Order of the Securities and Exchange Commission (SEC)
approving the said petition for suspension of payments, in its Motion to Dismiss and/or Consolidation
of Case filed with the Labor Arbiter in NLRC-NCR Case No. 06-05100-98, or the labor case subject
of the herein petition. Also attached to the petition for suspension of payments were its audited
financial statements for its fiscal year ending March 1998, and interim financial statements as of the
end of the month prior to the filing of its petition for suspension of payments, as well as:

a) A summary of its debts and other liabilities;

b) A summary of its assets and properties;

c) List of its equity security shareholders showing the name of the security holder and the kind of
interest registered in the name of each holder;
d) A schedule which contains a full and true statement of all of its debts and liabilities, together with
a list of all those to whom said debts and liabilities are due;

e) An inventory which contains an accurate description of all the real and personal property, estate
and effects of PAL, together with a statement of the value of each item of said property, estate and
effects, their respective location and a statement of the encumbrances thereon.

In the instant Motion for Reconsideration, PAL attached a copy of its audited financial statements for
fiscal years 1996, 1997 and 1998. It justifies the submission before the Court of Appeals of its 2002-
2004, and not the 1996-1998, audited financial statements, to show that as of the time of their
submission with the Court of Appeals, PAL was still under rehabilitation, and not for the purpose of
establishing its financial problems during the retrenchment period.

PAL asserts further that the Court should have accorded the SECs findings as regards its financial
condition respect and finality, considering that said findings were based on the financial statements
and other documents submitted to it, which PAL now submits, albeit belatedly, via the instant Motion
for Reconsideration. It cites the case of Clarion Printing House Inc. v. National Labor Relations
Commission,[2] where the Court declared that the appointment of a receiver or management
committee by the SEC presupposes a finding that, inter alia, a company possesses sufficient
property to cover all its debts but foresees the impossibility of meeting them when they respectively
fall due and there is imminent danger of dissipation, loss, wastage or destruction of assets or other
properties or paralyzation of business operations. On the other hand, it claims that in Rivera v.
Espiritu,[3] the Court made a finding that as a result of the pilots three-week strike that began on
June 5, 1998, PALs financial situation went from bad to worse and it was faced with bankruptcy,
requiring it to seek rehabilitation and downsize its labor force by more than one-third; and that said
pilots strike was immediately followed by another four-day employee-wide strike on July 22, 1998,
which involved 1,899 union[4] members.

PAL likewise cites previous decisions of the Court which declared a suspension of claims against it
in light of pending rehabilitation proceedings and the issuance of a stay order in the enforcement of
all claims, whether for money or otherwise, which is effective from the date of its issuance until the
dismissal of the petition or the termination of the rehabilitation proceedings.[5] Moreover, it claims
that the infusion of $200 million in PAL in June 1999 is proof of the airlines financial distress, and
was a condition sine qua non if PALs Amended and Restated Rehabilitation Plan were to be
approved by the SEC, and if the absolute closure of PAL were to be averted.

PAL underscores that its situation in 1998 was unique, as it had to contend with
the very distinct possibility that its losses would eventually result in default on its payments to
creditors for its aircraft leases. If that happened, creditors could have immediately seized all its
leased planes and that would have spelled PALs demise. The petition for rehabilitation and
suspension of payments was precisely intended to avoid PALs collapse and eventual liquidation.[6]

Exercising its management prerogative and sound business judgment, it decided to cut its fleet of
aircraft in order to minimize its operating losses and rescue itself from total downfall; which meant
that a corresponding company-wide reduction in manpower necessarily had to be made. As a result,
5,000 PAL employees (including the herein 1,400 cabin attendants) were retrenched.

Further, PAL argues that aside from the confluence of simultaneous unfortunate events that
occurred during the time, like successive strikes, peso depreciation and the Asian currency crisis,
there was a serious drop in passenger traffic which necessitated the closure of PALs entire
European, Australian, and Middle East operations and numerous Asian stations, as well as some of
its domestic stations. Consequently, its 27 international routes were reduced to only 7, and its 37
domestic routes to just 17.

PAL claims that it did not act with undue haste in effecting the mass retrenchment of cabin
attendants since, as early as February 17, 1998, consultations were being held in connection with
the proposed retrenchment, and that twice-weekly meetings between the union and the airline were
being held since February 12, 1998. It claims that it took PAL four months before the retrenchment
scheme was finally implemented.

With regard to the implementation of Plan 22 instead of the original Plan 14, PAL asserts that, in so
doing, it should not be found guilty of bad faith. It sets out the chronology of events that led it to
implement Plan 22 instead of Plan 14, thus:

The initial plan was, indeed, to reduce PALs fleet from 54 planes to 14. With a smaller fleet, PAL
necessarily had to reduce manpower accordingly, and this was the basis for the retrenchment. The
retrenchment was done on the basis of the conditions and circumstances existing at that time.
However, a series of events ensued

PAL was placed under corporate rehabilitation by the SEC on June 23, 1998.

Later, on July 22, 1998, the rank-and-file employees belonging to PALEA staged a strike.
Then, on August 28, 1998, President Joseph Ejercito Estrada issued Administrative Order No. 16
creating Inter-Agency Task Force to aid PAL and its employees in solving the problem.

On September 4, 1998, PAL submitted an offer to the Task Force of a plan to transfer shares of
stocks to its employees with a request to suspend existing Collective Bargaining Agreements, which
was later rejected by the employees.

On September 23, 1998, PAL ceased operations.

Then, President Estrada intervened again through the request of PAL employees. PALEA made an
offer, which was rejected by PAL. Finally, PALEA made an offer again which was successfully
ratified by the employees on October 2, 1998 and accepted by PAL.

Subsequently, PAL partially resumed domestic operations on October 7, 1998 believing that the
mutually beneficial terms of the suspension agreement could possibly redeem PAL. Later, it partially
resumed its operations internationally (Los Angeles and San Francisco, United States).

True enough, with some degree of relief as a result of the suspension of payment and rehabilitation
proceedings in the SEC and the suspension of the CBA, PAL began to see slow but steady
improvements. Also, airline industry experts who were commissioned by PAL to assist in drafting its
Amended and Restated Rehabilitation Plan came to a conclusion that PAL had to increase its fleet
of planes to improve its financial and operational viability. This advice was adopted by PAL in its
Amended and Restated Rehabilitation Plan, which was eventually approved by the SEC.

With these supervening events, PAL decided to implement Plan 22 upon reevaluation and optimistic
future projection for its operations. The decision to abandon Plan 14 was not done with precipitate
haste. The Honorable Court should appreciate that the chain of unfolding events after the
retrenchment encouraged PAL, in the exercise of its sound business discretion, to implement Plan
22. This was not a capricious decision. In fact, the SEC approved PALs Amended and Restated
Rehabilitation Plan, which includes, among others, PALs Fleet Plan composed of 22 planes.

Neither does it show that PAL was uncertain of its financial condition when it retrenched based on
Plan 14. PAL would not have even petitioned the SEC for its rehabilitation were it not certain of its
dire financial state. The decision to later abandon Plan 14 was a business judgment that PAL made
in good faith upon the advice of foreign airline industry experts and in light of the supervening
circumstances explained above.

In this regard, this Honorable Court has once held that

Questions of policy or of management are left solely to the honest decision of the board as the
business manager of the corporation, and the court is without authority to substitute its judgment for
that of the board, and as long as it acts in good faith and in the exercise of honest judgment in the
interest of the corporation, its orders are not reviewable by the courts.

On the basis of Plan 22, PAL decided to recall/rehire some of the retrenched employees.

With due respect, this Honorable Court is mistaken in its ruling that PAL acted in bad faith simply
because it later on decided to recall or rehire the employees it initially retrenched. The decision to
recall/rehire was a logical consequence of PALs decision to increase its fleet from 14 to 22 planes,
which as discussed earlier, was a business judgment exercised in good faith by PAL after a series of
significant events.

PAL did not even have any legal obligation to rehire the employees who have already been paid
their separation pay and who have executed valid quitclaims. PAL, instead of being accused of bad
faith for rehiring these employees, should in fact be commended. That the retrenched employees
were given priority in hiring is certainly not bad faith. Noteworthy is the fact that PAL never hired
NEW employees until November 2000 or more than 2 years after the 1998 retrenchment.

It is respectfully submitted that the legality of the retrenchment could not be made to depend on the
fact that PAL recalled/rehired some of the employees after five months without taking into account
the supervening events. At the exact time of retrenchment, PAL was not in a position to know with
certainty that it could actually recover from the precarious financial problem it was facing and, if so,
when.

The only thing PAL knew at that exact point in time was that it was in its most critical condition when
its liabilities amounted to about Php 85,109,075,351.00, while its assets amounted to only about Php
90,642,330,919.00 aggravated by many other circumstances as explained earlier. At the time of the
retrenchment in June 1998, PAL was at the brink of total collapse and it could not have known that in
five months, there will be supervening events that will impel it to reassess its initial decisions.
xxxx

In the present case, PAL beseeches this Honorable Court to take a second look at the peculiar facts
and circumstances that clearly show that the recall/rehire was done in good faith. These facts and
circumstances make the case of PAL totally different from the other cases decided by this Honorable
Court where it found bad faith on the part of the employer for immediately rehiring or hiring
employees after retrenchment.

xxxx

But even then, PAL still endeavored to recall or rehire the maximum number of FASAP members
that it could. Thus, out of the 1,423 FASAP members who were retrenched, 496 were eventually
recalled or reinstated (those who did not receive separation pay and opted to resume their
employment with PAL with no loss of seniority).

On the other hand, 321 FASAP members were rehired (those who received separation pay and
voluntarily rejoined PAL as new employees). In this regard, PAL would like to take exception to the
Honorable Courts observation that these employees were taken in as new hires without due regard
to their long years of service. The FASAP members who were rehired as new employees were those
who already received their separation pay because of the retrenchment but voluntarily accepted
PALs offer for them to be rehired when Plan 22 was implemented. It cannot be said that they were
prejudiced by the rehire process, as they already cashed in on their tenure when they accepted the
separation pay. That they later on accepted PALs offer to rehire them as new employees was purely
voluntary on their part.

Meanwhile, around 591 FASAP members opted not to return anymore after receiving their full
separation pay. Thus, including those who voluntarily opted not to resume their employment with
PAL, only about 591 can be considered to have remained unrecalled or unrehired.

It is significant to mention that FASAP directly and actively participated in the recall process, and
even suggested the names of its members for prospective recall.

Likewise, in the recall process, PAL followed the provisions of the CBA and as a result, some of the
recalled employees were assigned to lower positions (or demoted as noted by this Honorable Court).
However, this was only because there were not enough positions for all of them to be restored to
their previous posts. Evidently, with lesser planes flying international routes, not all international flight
attendants would be restored to international flight posts. Some of them would be downgraded to
domestic flights. This was the natural and logical effect of the fleet downsizing that PAL adopted.
This could not be a badge of bad faith, as this Honorable Court seems to believe.

xxxx

Likewise, no bad faith should be inferred from PALs closure in September 1998. That decision was
by no means easy being the national flag carrier and the oldest airline in Asia (having operated for
57 years at the time). The closure could not have been a mere retaliation for rejecting the offer of
PAL, as it would have aggravated matters further and rendered rehabilitation impossible.

Hence, PALs decision to resume operations when the employees acceded to its request to suspend
the CBA should be seen in this context. This was not a coercive posture. PAL resumed operations
only because the suspension of the CBA, among others, gave it hope that it could recover.

Furthermore, any issue on the legality of the suspension of the CBA had already been put to rest by
no less than this Honorable Court in the case of Rivera vs. Espiritu where it held that

The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations
undertaken in the light of the severe financial situation faced by the employer, with the peculiar and
unique intention of not merely promoting industrial peace at PAL, but preventing the latters
closure.[7] (Emphasis supplied)

PAL explains that the 140 probationary cabin attendants who were fired and subsequently rehired
were part of an earlier retrenchment process in February and March 1998, a component of PALs
less drastic cost cutting measures then being implemented. Eventually, these rehired probationary
cabin attendants were included in the subject retrenchment of more than 1,400. Thus, it claims that it
was inaccurate for the Court to have held that these 140 probationary cabin attendants were
retained while those with permanent status were fired.

Finally, PAL begs the Court to reconsider its finding that the retrenchment scheme in question did
not pass the test of fairness and reasonableness with respect to the criteria used in selecting those
whose services should be retained or terminated. That it merely used the criteria stipulated in its
CBA with FASAP where efficiency rating and inverse seniority are the basic considerations as
carried over from the parties previous CBAs could allegedly be seen from the manner the
retrenchment plan was carried out. The rating variables contained in the Performance Evaluation
Form of each and every cabin crew personnels Grooming and Appearance Handbook are fair and
reasonable since they are inherent requirements (necessarily intertwined, as PAL would put it) for
employment as flight attendant or steward. More significantly, it claims that the criteria used in the
implementation of the retrenchment scheme in question was based on the ratified PAL-FASAP
1996-2000 CBA, which should be considered as the law between the parties.

PAL believes that the Court may have misconstrued the significance of the term other reasons which
the NLRC utilized in its summary of FASAP members and causes for their retrenchment,[8] arguing
that the use of the phrase does not necessarily mean that the employees were retrenched for
obscure reasons that are not acceptable under the law; it simply points to the NLRCs economy of
language in lumping together various reasons for retrenchment, such as excess sick leaves,
previous admonitions, suspensions, passenger complaints, poor performance, tardiness, etc. It
claims that it used seniority in conjunction with a combination of these grounds in arriving at a
conclusion of whether to retain or retrench.

PAL defends as well its use of a single year (1997) as basis for assessing the cabin attendants
fitness for retention or retrenchment, stressing that its CBA with FASAP requires as basis for
reduction in personnel only one efficiency rating, which should be construed as that obtained by
each cabin attendant for a single year, in accordance with Section 112 of the CBA which provides:

In the event of redundancy, phase-out of equipment or reduction of operations, the following rules in
the reduction of personnel shall apply:

A. Reduction in the number of Pursers:

1. In the event of a reduction of purser OCARs, pursers who have not attained an
efficiency rating of 85% shall be downgraded to international Cabin Attendant in the reverse order of
seniority.

2. If the reduction of purser OCARs would involve more than the number of pursers who
have not attained an efficiency rating of 85%, then pursers who have attained an efficiency rating of
85% shall be downgraded to international Cabin Attendant in the inverse order of seniority.

B. In reducing the number of international Cabin Attendants due to reduction in

international Cabin Attendant OCARs, the same process in paragraph A shall be observed.
International Cabin Attendants shall be downgraded to domestic.
C. In the event of reduction of domestic OCARs thereby necessitating the retrenchment of
personnel, the same process shall be observed.

In no case, however, shall a regular Cabin Attendant be separated from the service in the event of
retrenchment until all probationary or contractual Cabin Attendant in the entire Cabin Attendants
Corps, in that order, shall have been retrenched. (Emphasis and underscoring supplied)

PAL asserts that since efficiency ratings for each cabin or flight attendant are computed on an
annual basis, it should therefore mean that when Section 112 referred to an efficiency rating of 85%,
then it should logically and practically follow that only one years worth of performance should be
used as criteria for the retrenchment of cabin attendants that is, the most recent efficiency rating
obtained by each of them. For purposes of the present case, it would necessarily be that for the year
1997, or the year immediately prior to the retrenchment, and no other.

Finally, regarding the quitclaims executed, PAL maintains that since the retrenchment scheme it
implemented was essentially valid, then it should follow that the quitclaims are regular as well, and
more so given the absence of mistake, duress, fraud or misrepresentation.

In its Comment[9] to PALs Motion for Reconsideration, FASAP asserts that the issue is not centered
on PALs financial condition but whether the retrenchment of the 1,400 cabin personnel was
warranted. It alleges that:

The issue is whether or not the nature and extent of the financial circumstances and the methods
used to resolve fiscal difficulties warranted the illegal and unceremonious dismissal of around 1,400
flight attendants, stewards, and cabin crew. It was the termination without considering the legal
factors for retrenchment. Because of the difficulties that the entire nation was going through, the
ostensible name given was retrenchment. But it was really an illegal dismissal and arbitrary
termination. x x x

The casualties of illegal action, the ones sacrificed in the early stages of the situation and not as a
last resort, are not the employer and its officers or owner. As the Honorable Court pointed out, the
questioned action struck at the very heart of the workers employment, the lifeblood upon which the
worker and his family owe their survival. No proof has been adduced in ten long years of litigation
that retrenchment was only a measure of last resort, (that) other less drastic means were considered
and tried and found inadequate.
xxxx

The Court has treated the instant case for what it truly is an illegal retrenchment, one that was
prematurely done and whimsically carried out. x x x

This is about a bad faith retrenchment one which neither complied with the legal prerequisites
therefor nor observed the provisions of the PAL-FASAP CBA thereon; one which was not employed
as a last resort and which did not have any fair and reasonable criteria to serve as basis for selecting
who would be retrenched; one which was capriciously and whimsically implemented; one which was
illegally made.[10]

FASAP declares that although it recognized PALs financial difficulties in 1997 and 1998, it never
conceded the same to be valid reason upon which to base the questioned retrenchment, citing that
in proceedings below, the reasonable necessity of the retrenchment and its effectiveness in
preventing losses to PAL had been squarely raised. FASAP maintains that prior negotiations with
PAL (on the possible implementation of cost-cutting measures, employee rotation plans, triple and
quadruple room sharing arrangements, allocation of vacation leaves without pay, etc.) is proof of that
recognition, but that ultimately, it was incumbent upon PAL to have shown that it undertook a
retrenchment scheme that was in proportion to and commensurate with the financial distress it was
experiencing at the time.

Essentially, FASAP merely echoed our pronouncements, focusing upon our dissertation on each of
the elements required in order to justify retrenchment, most of which were found lacking in PALs
retrenchment program or scheme. Specifically, FASAP points to the lack of prior resort to cost-
cutting measures, the rehiring of probationary employees, prior assurances by PAL that
retrenchment was no longer necessary, and lack of fair and reasonable criteria in selecting the
employees to retrench.

Specifically, mention is made that there is nothing in its then existing CBA with PAL which mandates
that a single year 1997 should be used as the gauge or measure for determining the flight attendants
performance for purposes of retrenchment. Asserting that PALs justification of its use of a single
year was a very strained interpretation of the provisions in the CBA, FASAP insists that seniority,
loyalty and past efficiency are requirements of law and jurisprudence which may not be summarily
disregarded in choosing whom to retrench, demote or retain, a proposition it claims to find support in
Article III, Section 7(A) of its CBA which provides:
The Association (FASAP) hereby acknowledges that the management of the Company (PAL) and
the direction of its employees; x x x; and the lay-off and re-employment of employees in connection
with increases or decreases in the work force are the exclusive rights and functions of management
provided only that the Company act in accordance with applicable laws and the provisions of this
Agreement.[11] (Words in parentheses supplied)

FASAP goes on further to suggest that the basic criterion for effecting the retrenchment scheme
should have been seniority, as enunciated in Maya Farms Employees Organization v. National
Labor Relations Commission.[12] In said case, the employer was constrained to streamline its
manpower base owing to losses and setbacks in operations. Management sent notices of
termination (due to redundancy) to 66 of its employees. In the labor case that ensued, the union
pointed to a violation of a specific provision in its CBA which declared, thus:

Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment resulting in termination of employment in
the line of work, the Last-In-First-Out (LIFO) Rule must always be strictly observed.

Ultimately, we held therein that the employer did not violate the LIFO rule in the CBA. We explained
therein that

It is not disputed that the LIFO rule applies to termination of employment in the line of work. Verily,
what is contemplated in the LIFO rule is that when there are two or more employees occupying the
same position in the company affected by the retrenchment program, the last one employed will
necessarily be the first to go.

Moreover, the reason why there was no violation of the LIFO rule was amply explained by public
respondent in this wise:

. . . The LIFO rule under the CBA is explicit. It is ordained that in cases of retrenchment resulting in
termination of employment in line of work, the employee who was employed on the latest date must
be the first one to go. The provision speaks of termination in the line of work. This contemplates a
situation where employees occupying the same position in the company are to be affected by the
retrenchment program. Since there ought to be a reduction in the number of personnel in such
positions, the length of service of each employee is the determining factor, such that the employee
who has a longer period of employment will be retained.
In the case under consideration, specifically with respect to Maya Farms, several positions were
affected by the special involuntary redundancy program. These are packers, egg sorters/stockers,
drivers. In the case of packers, prior to the involuntary redundancy program, twenty-one employees
occupied the position of packers. Out of this number, only 5 were retained. In this group of
employees, the earliest date of employment was October 27, 1969, and the latest packer was
employed in 1989. The most senior employees occupying the position of packers who were retained
are as follows:

Santos, Laura C. Oct. 27, 1969

Estrada, Mercedes Aug. 20, 1970

Hortaleza, Lita June 11, 1971

Jimenez, Lolita April 25, 1972

Aquino, Teresita June 25, 1975

All the other packers employed after June 2, 1975 (sic) were separated from the service.

The same is true with respect to egg sorters. The egg sorters employed on or before April 26, 1972
were retained. All those employed after said date were separated.

With respect to the position of drivers, there were eight drivers prior to the involuntary redundancy
program. Thereafter only 3 positions were retained. Accordingly, the three drivers who were most
senior in terms of period of employment, were retained.

They are: Ceferino D. Narag, Efren Macaraig and Pablito Macaraig.

The case of Roberta Cabrera and Lydia C. Bandong, Asst. Superintendent for packing and Asst.
Superintendent for meat processing respectively was presented by the union as an instance where
the LIFO rule was not observed by management. The union pointed out that Lydia Bandong who
was retained by management was employed on a much later date than Roberta Cabrera, and both
are Assistant Superintendent. We cannot sustain the union's argument. It is indeed true that Roberta
Cabrera was employed earlier (January 28, 1961) and (sic) Lydia Bandong (July 9, 1966). However,
it is maintained that in meat processing department there were 3 Asst. Superintendents assigned as
head of the 3 sections thereat. The reason advanced by the company in retaining Bandong was that
as Asst. Superintendent for meat processing she could already take care of the operations of the
other sections. The nature of work of each assistant superintendent as well as experience were
taken into account by management. Such criteria was not shown to be whimsical nor carpricious
(sic).[13]

Finally, FASAP claims that PAL did not provide reasons for retrenching the more than 1,400 flight
attendants; that it was only when it filed its Supplemental Memorandum before the Labor Arbiter in
March 2000 that the airline submitted in evidence the ICCD Masterank and Seniority 1997 Ratings,
which allegedly took into account the subjective factors such as appearance and good grooming,
which supposedly require the written conformity of its members if they were to be considered at all,
in accordance with Section 124, Article XXVI of the CBA.

By way of reply to FASAPs Comment, PAL insists that its decision to downsize the flight fleet was
the principal reason why it had to put into effect a corresponding downsizing of cabin crew
personnel; that the reduction in fleet size was an integral part of its SEC-approved rehabilitation
plan; that the reduction in the number of its aircraft by 75% from 54 to just 14 likewise necessitated a
corresponding 75% reduction in its total cabin crew personnel; and that its subsequent decision to
increase its remaining fleet from 14 aircraft to 22 was a business judgment exercised in good faith
after a series of significant events and upon the advice of airline industry experts who were assisting
it in its rehabilitation efforts.[14] This increase from 14 to 22 aircraft was then included in its
Amended and Restated Rehabilitation Plan, which was subsequently approved by the SEC.
Because of this, it then had to increase its manpower; it recalled or rehired the services of the
employees it had previously terminated.

PAL begs the Court to recognize this downsizing of aircraft as a valid exercise of its management
prerogative to close its business operations, and not merely to reduce personnel. In other words,
PAL would have the Court believe that its retrenchment program is not merely a reduction of
personnel for the purpose of cutting on costs of operations, but as a closure of its business, a
cessation of business operations to prevent further financial drain.[15] PAL argues that cost-cutting
measures could not have sufficed to nurse the airline back to financial health; it had to resort to
partial closure of its business. Thus:

18. Moreover, how can PAL possibly implement the cost-cutting measures allegedly suggested by
FASAP with 75% of its fleet already gone? The situation would be different if PAL retained its 54-
plane fleet, and PALs only concern was to save on salaries and wages. In such a situation, PAL is
indeed obliged to resort to less drastic cost-cutting measures before it can validly proceed with
retrenchment. But this is not the case here. PALs financial condition could not have improved by
merely adopting cost-cutting measures such as work rotation and forced leaves. In fact,
retrenchment alone could not have saved PAL from financial ruin. PAL had to resort to the drastic
action of partially closing its business operations by downsizing its fleet of aircrafts. This naturally
resulted in the reduction of PALs personnel.
19. Assuming arguendo that the jurisprudence relied upon by FASAP apply, the proven facts in this
case show that retrenchment was not the only option for PAL. The problem with FASAP is that it is
taking a myopic view of what truly happened. It stubbornly claims that the reduction of employees is
a simple case of retrenchment program that was implemented in the first instance. But it is clear
from the record that when PAL suffered serious business losses, retrenchment was not the only
option, obviously because the objective was to cut down on operating expenses as a whole, and not
merely in terms of salaries and wages, which is the only purpose of a retrenchment.

20. What PAL did was to reduce its fleet of 54 planes to only 14 planes. It was only after PAL
reduced its fleet of aircrafts that it had to terminate the employment of its employees who were
already in excess of the workforce required under the reduced fleet set-up. In other words,
retrenchment was merely a necessary and natural consequence of PALs earlier decision to
downsize its fleet of aircrafts. There is thus simply no basis to say that PAL implemented
retrenchment in the first instance.

xxxx

22. Neither is there basis to FASAPs claim that PAL made the assurance that there will be no more
need for retrenchment. How could have PAL given such assurance in light of its huge business
losses, bordering on bankruptcy? The truth is, no such assurance was ever given by PAL. This is
clear in the minutes of all of the meetings with FASAP where the only issue discussed was how to
proceed with the retrenchment. These meetings were held in February to April 1998, or two to three
months before the decision to reduce operations was made by PAL due to various serious
supervening events the strike staged by the Airline Pilots Association of the Philippines (ALPAP) and
by the Philippine Airlines Employees Association (PALEA).[16]

On the use of efficiency ratings obtained for the year 1997 as singular basis for determining the
fitness of cabin crew personnel to continue working with it, PAL explains that

24. There is nothing unreasonable in using the year 1997 as basis for arriving at the efficiency
ratings. FASAPs insinuations that it ignored the employees alleged exceptional performance ratings
and exemplary attendance records in the past are simply baseless, misleading and erroneous.

24.1. First, while an employee may rack up hundreds of awards and commendations and hundreds
of hours of leave credits, it does not necessarily follow that the same employee, although admittedly
of exceptional caliber, cannot be terminated if just or authorized cause subsequently exists. For
instance, if there is redundancy, an employee holding a superfluous position may be terminated
regardless of numerous awards and leave credits he may have earned. In this case, it cannot be
denied that PALs reduction, or partial closure, of its business operations, i.e., downsizing its flight
fleet from 54 to 14 aircrafts, in order to prevent business losses and avoid total closure of its
business, is one of the recognized authorized causes expressly provided under Article 283 of the
Labor Code.

PAL could, therefore, retrench employees regardless of the number of commendations, awards and
accumulated leave credits the latter obtained in the course of employment provided, of course, that
the retrenchment is valid and legal. In this case, the Labor Arbiter, the NLRC and the Court of
Appeals unanimously found that the retrenchment is intrinsically valid and legal based on the same
set of evidence. In fact, the Labor Arbiter categorically ruled:

there is no question that the rules imposed by law and jurisprudence to sustain retrenchment have
been amply satisfied by PAL. The only issue at hand is whether or not the retrenchment can be
upheld for complying with rules set forth in the collective bargaining agreement.

24.2. Second, in implementing retrenchment, the law does not require an employer to look back into
far reaches of time to check every good deed performed by every employee. This would not only be
highly impractical, but manifestly absurd as well. In evaluating job efficiency, it is enough for an
employer to fix a determinate time frame within which to base its evaluation. It can be six months,
one year, two years, three years or ten years. It can in fact be any period of time, subject to
managements sound discretion.

But to be fair and reasonable, the application of the period must be uniform and consistent. It cannot
be one year for employee A, two years for employee B and three years for employee C. In this case,
PAL selected a period of one year (the year 1997), which was uniformly and consistently applied to
all, without exception.

The year 1997 was chosen by PAL as it was the most logical period being the year immediately
preceding the retrenchment. All relevant records for the year 1997, such as attendance and
performance evaluation, were complete and accurate. Certainly, the year 1997 was not selected for
the purpose of discriminating against any employee, but with the sole objective of retaining the more
efficient among the employees.

xxxx
26. FASAP then insists that the basic criterion to effect lay-off or retrenchment is seniority. FASAP
cites Article VII, Section 23 of the PAL-FASAP 1995-2000 CBA:

The term seniority whenever used in this Agreement shall be deemed to mean a measure of a
regular Cabin Attendants claim in relation to other regular Cabin Attendants holding similar positions,
to preferential consideration whenever the Company exercises its right to promote to a higher paying
position or lay-off of any Cabin Attendant.

27. FASAP obviously misread and misinterpreted Section 23 of the PAL-FASAP 1995-2000 CBA.
The provision does not even mandate seniority to be a criterion whenever PAL implements a
reduction or retrenchment, much less does it say that seniority is the one and only criterion to be
applied. Section 23 simply defines seniority and states that seniority may be given preferential
consideration whenever PAL exercises its right to promote to a higher paying position or lay-off of
cabin attendants. PAL did just that in complying with Section 112 of the PAL-FASAP CBA 1995-
2000 when seniority was applied whenever all other factors were found to be equal. PAL clearly
followed Section 23 of the PAL-FASAP CBA in giving seniority preferential consideration. This is
also reflected in the tabulation made by the NLRC in its Decision.[17]

PAL argues that in its past two CBAs with FASAP prior to the one under controversy, the same
provisions and criteria for appearance, grooming, efficiency and performance were used, without
objections having been advanced by FASAP.

During oral arguments, PAL advanced an altogether new line of reasoning that has, until now, never
been advanced as the primary argument in defense of its retrenchment scheme: that the principal
and true reason why PAL had to implement the mass lay-off of cabin personnel was not the
downsizing of aircraft fleet size, but the June 5, 1998 pilots strike, where approximately six hundred
(600) of its pilots apparently abandoned their planes and simultaneously refused to fly. Thus,
counsel for PAL manifested to the Court that

ATTY. MENDOZA

As a consequence, if your Honor please, but what really brought about, shall we say, the really
perilous situation of closure was that on June 5, 1998, the pilots went on strike, ninety (90%) per
cent of the pilots went on strike, approximately six hundred (600). These pilots strike was so
devastating because the pilots, if your Honors please, even left their place where they were at the
time, somewhere in Bangkok, somewhere in Taipei and they just left the planes. Without any pilots
no plane can fly, your Honor, that is the stark reality of the situation, and without airplanes flying,
there would be no place for employment of cabin attendants.[18] (Emphasis supplied)
As a result of this pilots strike, PAL claims to have suffered daily revenue losses equivalent to P100
million and P50 million of lost fixed costs, which came at a time when PAL had no more money.[19]
Owing to this pilots strike, PAL was brought to the brink of disaster and emergency that it needed to
align the number of cabin attendants with the number of airplanes that were flying.[20] After the
pilots went on strike, PAL was left with only 68 pilots who chose to remain, but with 2,039 cabin
attendants. Faced with this disproportionate ratio of pilots to cabin attendants, PAL immediately
decided to terminate the services of more than 1,400 cabin attendants via the retrenchment scheme
in question. At the same time, the reduction in fleet which until that time remained a mere proposal
had to be immediately implemented, and cost-cutting measures were simply out of the question.
Thus:

ATTY. MENDOZA

While meetings between PAL and FASAP may have occurred prior to June 1998 to discuss
measures in which to possibly avoid retrenchment with its planned reduction of fleet, PALs financial
circumstances drastically changed in June 1998 that necessitated immediate and corresponding
measures. Harsh reality was that, there simply was no time. FASAP-suggested less drastic
measures of work rotation, forced vacation leaves, hotel sharing etc. were no longer feasible.
Indeed, reduction by about 5,000 employees, including 1,423 cabin crew, was the less drastic
measure. The alternative, harsher obviously, was closure and liquidation.[21] (Emphasis supplied)

All throughout, it has been impressed upon us that PALs decision to downsize its fleet size is the
principal reason why it had to put into effect a corresponding downsizing of cabin crew personnel.
However, on oral arguments before us, PAL now makes a total turnaround and attributes the
retrenchment to the June 5, 1998 pilots strike. Repeatedly, counsel for PAL blamed the pilots strike
as the main culprit, thus:

ATTY. MENDOZA

As a consequence, if your Honor please, but what really brought about, shall we say, the really
perilous situation of closure was that on June 5, 1998, the pilots went on strike, ninety (90%) per
cent of the pilots went on strike, approximately six hundred (600). These pilots strike was so
devastating x x x. Without any pilots no plane can fly, your Honor, that is the stark reality of the
situation, and without airplanes flying, there would be no place for employment of cabin attendants.

xxxx
ATTY. MENDOZA

Well, according to the Court, Your Honor, the Court principally invalidated this because, according to
the Court it was fraudulent. And it was fraudulent because PAL misrepresented that it was losing,
but in fact it was not as the Court found. So, in other words, if Your Honor please, as I have
explained, there was no misrepresentation because the members of FASAP could not have but
known that there were less planes that were flying. And they could not have but known that the
number of cabin attendants cannot have exceed that which were required by the number of planes
that were flying. So that was basically the reason for the redundancy and so it can never be said that
this was redundant. But as I have said, if Your Honor please, if the Court reconsiders its finding that
there was illegal dismissal there would really be no relevance to this quitclaim because, in any event,
the separation pay has been received by some, except for those who declined it.

So therefore, if Your Honor please, if I may conclude since my time is practically up. First, there can
hardly be any question, in fact, it is considered by FASAP and found by the National Labor Relations
Commission, the Labor Arbiter, and the Court of Appeals that circumstances existed that did not only
warrant the reduction of personnel including the members of FASAP and the cabin attendants but
that these were compelled by circumstances. If the cabin attendants were not retrenched you would
have a situation where cabin attendants would be there but were not needed but would earn
compensation.

Second, if Your Honor please, as to the second issue, cost-cutting measures they were
contemplated. But when the pilots struck, an emergency situation arose and so there needed to be
an immediate response to that situation and the only one of the components of that response is this
retrenchment.

Incidentally, if Your Honor please, a basic core of the rehabilitation of PAL was for the creditors to
agree. PAL is a different business than other businesses, Your Honor. An airline cannot stand still
and the creditors demands are not met immediately, PAL would simply lose its airplanes. And so far
as Point No. 3 is concerned, if Your Honor please, PAL did the best it could under the
circumstances. And as to number 3, as I said, if Your Honor please, PAL acted in accordance with
criteria in the Collective Bargaining Agreement which it followed meticulously and religiously.

Whereas for the fourth, if Your Honor please, there was no fraud in the execution of the quitclaim but
I must emphasize once again that PALs case does not really rest on the quitclaims. PALs case rests
on the response that we made on the first three (3) questions.
xxxx

ATTY. MENDOZA

Yes. As I explained, Your Honor, when the 1997 economic crisis took place and PAL saw that it was
going to create a problem, PAL started studying measures already. But before it could implement
any of these measures, even conclude the study the pilots struck, when the pilots struck the
situations changed entirely. It put PAL in complete peril of total closure because no planes could fly,
so that changed the picture, there was no more time to engage in cost-cutting measures. What
needed to be done, if Your Honor please, is to do what was necessary to survive at that point? The
first thing to do to survive was to fly as many planes as possible in order to earn some revenue. But
you could only fly as many planes as there were pilots, and that was the reason for the initial flights.

xxxx

ASSOCIATE JUSTICE NACHURA

During these conferences, did FASAP not suggest any other cost-cutting measures in order to
determine the immediate implementation of a retrenchment program?

ATTY. MENDOZA

Well, there was an endorsed initial conversation; there were suggestions if there is to be reduction of
personnel, rotations, and so on and so forth, Your Honor. So, by the time the pilots struck you have
to retrench quickly x x x.

ASSOCIATE JUSTICE NACHURA

Because related to this is a statement in our Decision that the retrenchment was illegal because it
was not actually the last resort that PAL could have; it was not the last resort that PAL could have
attended, well used. That means, there were other options that would probably have opened to PAL
which would not be as detrimental to FASAP as retrenchment.
ATTY. MENDOZA

If Your Honor please, may I put it this way? It was not just the last; it was the only resort, Your
Honor, because of these circumstances. There was no other option, but to operate flghts and spend
only as necessary. If you have more cabin attendants than we required for those planes which were
flying you are spending needlessly actually, Your Honor, and that is certainly not conducive to bring
about a recovery of Philippine Airlines.

xxxx

ASSOCIATE JUSTICE DE CASTRO

You mentioned thatbefore that, that there is a need for rehabilitation because the PAL was in dire
financial condition at that time, and it was

ATTY. MENDOZA

Your Honor please, the rehabilitation came after the pilots strike. Actually, before the pilots strike the
effort of PAL is to find the way to address the Asian economic crisis. Its just like, if Your Honor
please, a factory which is to be more efficient in order to be able to compete, let us say, with the
imported goods, so you downsize or you may try to be more efficient but the situation PAL
confronted after the pilots strike was entirely different. It was a case of survival already, Your Honor,
because it meant closure and PAL was able to operate some planes only because of what they
called management pilots. There were certain pilots who were occupying supervisory positions but
who were employed still by PAL. They were the ones who actually flew the plane because the
members of the pilots union simply stopped working.[22] (Emphasis supplied)

On the other hand, FASAP argued and reiterated its original contentions, inter alia, that during
negotiations for the implementation of cost-cutting measures, it was assured by PAL that since there
were negotiations with possible investors who were being eyed as business partners, retrenchment
was no longer necessary;[23] that although it admitted PALs financial difficulties, it did not concede
that these losses justified the urgency, necessity and extent of the questioned retrenchment
scheme;[24] that the ICCD Masterank Listing was an afterthought, the same having been presented
only on March 13, 2000, and was never shown to the retrenched employees during the period of
retrenchment;[25] that the criteria for retrenchment did not conform to the CBA;[26] and that no cost-
cutting measures were implemented.[27]
PAL has all this time tried to convince the Court that its decision to downsize its flight fleet was the
principal reason why it undertook a corresponding downsizing of cabin crew personnel. This time,
however, it significantly changed stance and blamed the June 5, 1998 pilots strike as the real culprit
which drove it to undertake the massive retrenchment under scrutiny. This time, PAL characterizes
the retrenchment scheme and the downsizing of aircraft as mere necessary reactions to or
unfortunate consequences of the pilots strike, which it claims likewise necessitated a disregard of all
previous negotiations for the implementation of cost-cutting measures that could have rendered the
retrenchment scheme unnecessary, and which cost-cutting measures it no longer found necessary
to undertake.

We find this argument untenable. The strike was a temporary occurrence that did not necessitate the
immediate and sweeping retrenchment of 1,400 cabin or flight attendants. By PALs own account,
some of the striking pilots went back to work in July 1998, or less than one month after the strike
began. Moreover, PAL admitted that it remedied the situation by employing management pilots.[28]
It could have hired new pilots as well. Certainly, it could have implemented the cost-cutting
measures being discussed as a temporary measure to obviate the adverse effects of the pilots
strike. There was no reason to drastically implement a permanent retrenchment scheme in response
to a temporary strike, which could have ended at any time, or remedied promptly, if management
acted with alacrity. Juxtaposed with its failure to implement the required cost-cutting measures, the
retrenchment scheme was a knee-jerk solution to a temporary problem that beset PAL at the time.

Besides, we cannot simply allow PAL to conveniently blame the striking pilots for causing the
massive retrenchment of cabin personnel. Using them as scapegoats to validate a comprehensive
retrenchment scheme of cabin personnel without observing the requirements set by law is both
unfair and underhanded. PAL must still prove that it implemented cost-cutting measures to obviate
retrenchment, which under the law should be the last resort. By PALs own admission, however, the
cabin personnel retrenchment scheme was one of the first remedies it resorted to, even before it
could complete the proposed downsizing of its aircraft fleet. It admittedly dropped all plans of
implementing cost-cutting measures as soon as the pilots went on strike, and right away it sent
notices of termination to its cabin personnel.[29] This knee-jerk reaction would explain why it had to
eventually recall and rehire some of the cabin attendants almost immediately after it retrenched
them, because the retrenchment simply was not commensurate with the downsizing of aircraft fleet
size. This outcome only proves to show that the decision to retrench came even before a final
determination of how many aircraft were needed to be retained or discarded, or even before the
rehabilitation plan could be approved.[30]

Again, it must be emphasized that in order for a retrenchment scheme to be valid, all of the following
elements under Article 283 of the Labor Code must concur or be present, to wit:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor
and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month
pay or at least one-half () month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of tenure;
and,

(5) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed and
who would be retained among the employees, such as status, efficiency, seniority, physical fitness,
age, and financial hardship for certain workers.

In the absence of one element, the retrenchment scheme becomes an irregular exercise of
management prerogative. The employers obligation to exhaust all other means to avoid further
losses without retrenching its employees is a component of the first element as enumerated above.
To impart operational meaning to the constitutional policy of providing full protection to labor, the
employers prerogative to bring down labor costs by retrenching must be exercised essentially as a
measure of last resort, after less drastic means have been tried and found wanting.[31]

In the instant case, PAL admitted that since the pilots strike allegedly created a situation of extreme
urgency, it no longer implemented cost-cutting measures and proceeded directly to retrench. This
being so, it clearly did not abide by all the requirements under Article 283 of the Labor Code. At the
time it was implemented, the retrenchment scheme under scrutiny was not triggered directly by any
financial difficulty PAL was experiencing at the time, nor borne of an actual implementation of its
proposed downsizing of aircraft. It was brought about by and resorted to as an immediate reaction to
a pilots strike which, in strict point of law and as herein earlier discussed, may not be considered as
a valid reason to retrench, nor may it be used to excuse PAL for its non-observance of the
requirements of the law on retrenchment under the Labor Code.
On the basis of the foregoing disquisition, we find no further need to discuss the other arguments
advanced by the parties in their pleadings and during the oral arguments.

Therefore, this Court finds no reason to disturb its finding that the retrenchment of the flight
attendants was illegally executed. As held in the Decision sought to be reconsidered, PAL failed to
observe the procedure and requirements for a valid retrenchment. Assuming that PAL was indeed
suffering financial losses, the requisite proof therefor was not presented before the NLRC which was
the proper forum. More importantly, the manner of the retrenchment was not in accordance with the
procedure required by law. Hence, the retrenchment of the flight attendants amounted to illegal
dismissal. Consequently, the flight attendants affected are entitled to the reliefs provided by law,
which include backwages and reinstatement or separation pay, as the case may be.

PAL begs the compassion of this Court and alleges that the monetary award it stands to pay to the
affected flight attendants totals a whopping P2.3 billion, the payment of which will certainly paralyze
its operations and even lead to its untimely demise. However, a careful review of the records of the
case, as well as the respective allegations of the parties, shows that several of the crew members do
not need to be paid full backwages or separation pay. A substantial fraction of the 1,400 flight
attendants have already been either recalled, reinstated or relieved from the service. Still, some of
them have reached the age of compulsory retirement or even died. Likewise, a significant portion of
these retrenched flight attendants have already received separation pay and signed quitclaim. All of
these factors, to the mind of the Court, will greatly reduce the quoted amount of the money judgment
that PAL will have to pay.

After finality of this case, the records will have to be remanded to the Labor Arbiter who decided the
case at the first instance. There, the actual amount of PALs liability to each and every flight
attendant will be computed. Both parties will have a chance to submit further proof and argument in
support of their respective proposed computations. For the guidance of the Labor Arbiter as well as
the parties, this Court lays down the following yardsticks in the computation of the final amount of
liability, in order to avoid any protracted and heated debates which can again lead to further delays
in the final resolution of this case and the full realization by the retrenched flight attendants of the
amounts necessary to compensate and indemnify them for the wrongful retrenchment.

1. Flight attendants who have been re-employed without loss of seniority rights shall be paid
backwages but only up to the time of their actual reinstatement.

2. Flight attendants who have been re-employed as new hires shall be restored their seniority and
other preferential rights. However, their backwages shall be computed only up to the date of actual
re-hiring.
3. Flight attendants who have reached their compulsory age of retirement shall receive backwages
up to the date of their retirement only. The same is true as regards the heirs of those who have
passed away.

4. Flight attendants who have not been re-employed by PAL, including those who executed
quitclaims and received separation pay or financial assistance, shall be reinstated without loss of
seniority rights and paid full backwages. However, the amounts they already received should be
deducted from whatever amounts are finally adjudged to them individually.

Four members of the Division voted to include a fifth (5th) criterion, namely that flight attendants who
had obtained substantially equivalent or even more lucrative employment elsewhere in 1998 or
thereafter are deemed to have severed their employment with PAL. They shall be entitled to full
backwages from the date of their retrenchment only up to the date they found employment
elsewhere.

On a final note, this Court finds that the award of attorneys fees equivalent to 10% of the total
monetary award should be tempered, considering the number of flight attendants who stand to
receive monetary awards and the totality of all amounts due to them. To be sure, attorneys fees in
labor cases are awarded specifically in actions for recovery of wages or where an employee was
forced to litigate and thus incurred expenses to protect his rights and interests. In such cases, a
maximum of 10% of the total monetary award is justifiable under Article 111 of the Labor Code,
Section 8, Rule VIII, Book III of its Implementing Rules and paragraph 7, Article 2208 of the Civil
Code.[32] The award of attorneys fees is proper where there is a showing that the lawful wages
were not paid accordingly.[33]

x x x [T]here are two commonly accepted concepts of attorneys fees, the so-called ordinary and
extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a
lawyer by his client for the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement with the client. In its extraordinary
concept, attorneys fees are deemed indemnity for damages ordered by the court to be paid by the
losing party in a litigation. The instances where these may be awarded are those enumerated in
Article 2208 of the Civil Code, specifically par. 7 thereof which pertains to actions for recovery of
wages, and is payable not to the lawyer but to the client, unless they have agreed that the award
shall pertain to the lawyer as additional compensation or as part thereof. The extraordinary concept
of attorneys fees is the one contemplated in Article 111 of the Labor Code, which provides:
Art. 111. Attorneys fees. (a) In cases of unlawful withholding of wages, the culpable party may be
assessed attorneys fees equivalent to ten percent of the amount of wages recovered x x x

The afore-quoted Article 111 is an exception to the declared policy of strict construction in the
awarding of attorneys fees. Although an express finding of facts and law is still necessary to prove
the merit of the award, there need not be any showing that the employer acted maliciously or in bad
faith when it withheld the wages. There need only be a showing that the lawful wages were not paid
accordingly, as in this case.

In carrying out and interpreting the Labor Codes provisions and its implementing regulations, the
employees welfare should be the primordial and paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and compassionate spirit of the law as provided in Article
4 of the Labor Code which states that [a]ll doubts in the implementation and interpretation of the
provisions of [the Labor] Code including its implementing rules and regulations, shall be resolved in
favor of labor, and Article 1702 of the Civil Code which provides that [i]n case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer. (Emphasis supplied)[34]

In the case of Concept Placement Resources, Inc. v. Funk,[35] this Court reduced the amount of
attorneys fees which it ruled to be iniquitous and unconscionable after finding that the lawyer did not
encounter difficulty in representing his client. It was held:

We observe, however, that respondent did not encounter difficulty in representing petitioner. The
complaint against it was dismissed with prejudice. All that respondent did was to prepare the answer
with counterclaim and possibly petitioners position paper. Considering respondents limited legal
services and the case involved is not complicated, the award of P50,000.00 as attorneys fees is a bit
excessive. In First Metro Investment Corporation vs. Este del Sol Mountain Reserve, Inc., we ruled
that courts are empowered to reduce the amount of attorneys fees if the same is iniquitous or
unconscionable. Under the circumstances obtaining in this case, we consider the amount of
P20,000.00 reasonable.[36]

In the case at bar, we find that the flight attendants were represented by respondent union which, in
turn, engaged the services of its own counsel. The flight attendants had a common cause of action.
While the work performed by respondents counsel was by no means simple, seeing as it spanned
the whole litigation from the Labor Arbiter stage all the way to this Court, nevertheless, the issues
involved in this case are simple, and the legal strategies, theories and arguments advanced were
common for all the affected crew members. Hence, it may not be reasonable to award said counsel
an amount equivalent to 10% of all monetary awards to be received by each individual flight
attendant. Based on the length of time that this case has been litigated, however, we find that the
amount of P2,000,000.00 is reasonable as attorneys fees. This amount should include all expenses
of litigation that were incurred by respondent union.
WHEREFORE, for lack of merit, the Motion for Reconsideration is hereby DENIED with FINALITY.
The assailed Decision dated July 22, 2008 is AFFIRMED with MODIFICATION in that the award of
attorneys fees and expenses of litigation is reduced to P2,000,000.00. The case is hereby
REMANDED to the Labor Arbiter solely for the purpose of computing the exact amount of the award
pursuant to the guidelines herein stated.

No further pleadings will be entertained.

SO ORDERED.

FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES (FASAP) v.

PHILIPPINE AIRLINES, INC., PATRIA CHIONG and COURT OF APPEALS

October 2, 2009/ G.R. No. 178083

YNARES-SANTIAGO, J.:

ISSUE: Cabin crew personnel were covered by the retrenchment and demotion scheme of PAL due
to financial distress which is evidenced by proof of its claimed losses in a petition for suspension of
payments, as well as the Order of the Securities and Exchange Commission (SEC) approving the
said petition for suspension of payments, together with proof of summary of its debts and other
liabilities.

Exercising its management prerogative and sound business judgment, it decided to cut its fleet of
aircraft in order to minimize its operating losses and rescue itself from “total downfall;” which meant
that a corresponding company-wide reduction in manpower necessarily had to be made. As a
result, 5,000 PAL employees (including the herein 1,400 cabin attendants) were retrenched.

PAL, however, gave a whole different reason for retrenchment when the pilots went on strike.
Accordingly, what really brought about “the really perilous situation of closure was that on June 5,
1998, the pilots went on strike, ninety (90%) per cent of the pilots went on strike, approximately six
hundred (600).” These pilots’ strike was so devastating x x x. Without any pilots no plane can fly,
your Honor, that is the stark reality of the situation, and without airplanes flying, there would be no
place for employment of cabin attendants.
ISSUE: Whether or not the strike, which PAL used as basis to undertake the massive retrenchment
under scrutiny, is an authorized cause.

RULING: The strike was a temporary occurrence that did not necessitate the immediate and
sweeping retrenchment of 1,400 cabin or flight attendants.

There was no reason to drastically implement a permanent retrenchment scheme in response to a

temporary strike, which could have ended at any time, or remedied promptly, if management acted
with alacrity. Juxtaposed with its failure to implement the required cost-cutting measures, the
retrenchment scheme was a knee-jerk solution to a temporary problem that beset PAL at the time.

PAL must still prove that it implemented cost-cutting measures to obviate retrenchment, which under
the law should be the last resort. By PAL’s own admission, however, the cabin personnel
retrenchment scheme was one of the first remedies it resorted to, even before it could complete the
proposed downsizing of its aircraft fleet.

The following elements under Article 283 of the Labor Code must concur or be present, to wit:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half (½) month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to security of
tenure; and,
(5) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.

In the absence of one element, the retrenchment scheme becomes an irregular exercise of
management prerogative.

The retrenchment scheme under scrutiny was not triggered directly by any financial difficulty PAL
was experiencing at the time, nor borne of an actual implementation of its proposed downsizing of
aircraft.

__________________________________________________________________

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, represented by

SABINO F. GRAGANZA, Union President, and REYVILOSA TRINIDAD,

Petitioners,

- versus -

SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT and TRIUMPH

INTERNATIONAL (PHILS.), INC.,

Respondents.

x ---------------------------------------- x

TRIUMPH INTERNATIONAL (PHILS.), INC.,

Petitioner,

- versus -

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, ELOISA FIGURA,

JERRY JAICTEN, ROWELL FRIAS, MARGARITA PATINGO and ROSALINDA OLANGAR,

Respondents.

G.R. No. 167401

G.R. No. 167407

Present:

CARPIO MORALES, J., Chairperson,

BRION,

BERSAMIN,

*ABAD, and

VILLARAMA, JR., JJ.

Promulgated:

July 5, 2010
x----------------------------------------------------------------------------------------x

DECISION

BRION, J.:

Before the Court are two separate petitions[1] which were consolidated pursuant to our Resolution
dated June 8, 2005.[2] The first,[3] filed by the Bagong Pagkakaisa ng Manggagawa ng Triumph
International (union), seeks to set aside the decision[4] of the Court of Appeals (CA) in CA-G.R. SP
No. 60516, and the subsequent resolution[5] of March 10, 2005, on the parties motion for
reconsideration. The second,[6] filed by Triumph International (Phils.), Inc. (company), prays for the
annulment of the same decision and resolution with respect to the illegal dismissal issue.

THE ANTECEDENTS

The relevant facts, clearly laid out in the challenged CA decision, are summarized below.

The union and the company had a collective bargaining agreement (CBA) that expired on July 18,
1999. The union seasonably submitted proposals to the company for its renegotiation. Among these
proposals were economic demands for a wage increase of P180.00 a day, spread over three (3)
years, as follows: P70.00/day from July 19, 1999; P60.00/day from July 19, 2000, and P50.00/day
from July 19, 2001. The company countered with a wage increase offer, initially at P42.00 for three
years, then increased it to P45.00, also for three years.

The negotiations reached a deadlock, leading to a Notice of Strike the union filed on October 15,
1999.[7] The National Conciliation and Mediation Board (NCMB) exerted efforts but failed to resolve
the deadlock.

On November 15, 1999, the company filed a Notice of Lock-out[8] for unfair labor practice due to the
unions alleged work slowdown. The union went on strike three days later, or on November 18, 1999.
On January 27, 2000, Secretary Bienvenido E. Laguesma (Labor Secretary) of the Department of
Labor and Employment (DOLE) assumed jurisdiction over the labor dispute, pursuant to Article
263(g) of the Labor Code.[9] The Labor Secretary directed all striking workers to return to work
within twenty-four (24) hours from receipt of the assumption order, while the company was directed
to accept them back to work under the same terms and conditions existing before the strike. The
Labor Secretary also required the parties to submit their respective position papers.

On February 2 and 3, 2000, several employees attempted to report for work, but the striking
employees prevented them from entering the company premises.

In a petition dated February 8, 2000,[10] the company asked the Labor Secretary to issue an order
directing the union to allow free ingress to and egress from the company premises; to dismantle all
structures obstructing free ingress and egress; and, to deputize the Philippine National Police to
assist the DOLE in the peaceful implementation of the Labor Secretary's January 27, 2000 order.

The Labor Secretary reiterated his directives in another order dated February 22, 2000,[11] and
deputized Senior Superintendent Manuel A. Cabigon, Director of the Southern Police District, to
assist in the peaceful and orderly implementation of this Order.

At a conciliation meeting held on February 29, 2000, the company agreed to extend the
implementation of the return-to-work order until March 6, 2000.[12] The union, through a letter dated
March 2, 2000,[13] advised the NCMB Administrator of the union executive boards decision to return
to work the following day. In a letter also dated March 2, 2000,[14] the company advised the NCMB
Administrator that it was willing to accept all returning employees, without prejudice to whatever legal
action it may take against those who committed illegal acts. The company also stated that all the
union officers and members and the union board members would be placed under preventive
suspension, pending investigation of their alleged illegal acts.

The striking employees returned to work on March 3 and 4, 2000 but twenty (20) union officers and a
shop steward were not allowed entry into the company premises. The excluded union leaders were
each served identical letters[15] directing them to explain in writing why their employment should not
be terminated or why no disciplinary action should be imposed on them for defying and violating the
Labor Secretarys assumption order of January 27, 2000 and the second return-to-work order of
February 22, 2000; for blocking and resisting the entry of returning employees on February 2, 3, and
8, 2000; for acts of violence committed on February 24 and 25, 2000; and for defying the company's
return-to-work order of all employees on February 8, 2000.[16]
On March 6, 2000, the twenty-one (21) union officers, by motion, asked the Labor Secretary to issue
a reinstatement order and to cite the company for contempt. On March 9, 2000, the Labor Secretary
directed the company to accept the union officers and the shop steward back to work, without
prejudice to the continuation of the investigation.[17]

At the conciliation meeting of March 15, 2000, the company agreed to reinstate the union officers in
the payroll effective March 13, 2000[18] and withdrew its notice of lockout.[19]

On March 21, 2000, the union officers again received identically worded letters requiring them to
explain in writing within twenty-four (24) hours why no disciplinary action, including dismissal, should
be taken against them for leading, instigating, and participating in a deliberate work slowdown during
the CBA negotiations.[20]

The union officers explained, as required, through their respective affidavits,[21] and a hearing
followed on May 5, 2000. Thereafter, the union officers were each served a notice of termination of
employment effective at the close of office hours on May 11, 2000.[22]

On June 8, 2000, the union and the officers filed a petition to cite the company and its responsible
officers for contempt, and moved that a reinstatement order be issued.[23] They claimed that: (1) the
company officials violated the Labor Secretarys return-to-work order when these officials placed
them under preventive suspension and refused them entry into the company premises; (2) the
company also violated the March 9, 2000 order of the Labor Secretary when they were reinstated
only in the payroll; and (3) the company committed unfair labor practice and dismissed them without
basis.

THE LABOR SECRETARYS DECISION

The Labor Secretary resolved the bargaining deadlock[24] and awarded a wage increase of P48.00
distributed over three years, as follows:[25]

Effective July 19, 1999 P15.00/day

Effective July 19, 2000 P16.00/day

Effective July 19, 2001 - P17.00/day

The unions other economic demands and non-economic proposals were all denied.
The union moved for the reconsideration[26] of the Labor Secretarys decision, while the company
moved for its own partial reconsideration.[27] The Labor Secretary denied both motions, declaring
that the petition to cite the company and its responsible officers for contempt had already been
rendered moot and academic.[28] He also ruled that the legality of the union officers dismissal
properly falls within the original and exclusive jurisdiction of the labor arbiter under Article 217 of the
Labor Code.

The union elevated the case to the CA, through a petition for certiorari under Rule 65 of the Rules of
Court,[29] on the following grounds:

1. The Labor Secretary committed grave abuse of discretion amounting to lack or excess of
jurisdiction when he denied the proposals of the 1,130 union members to improve the existing CBA.

2. The Labor Secretary committed grave abuse of discretion when he declared that the issue of
reinstatement of the officers of the union and the petition to cite the company and its responsible
officers for contempt had become academic.

The union insisted on its demanded P180.00 daily wage increase distributed over three years (1999
to 2001), arguing that the demand is just, fair and reasonable based on the company's capacity to
pay and the companys bargaining history. It noted that the company gave a P55.00 increase for the
years 1993-1995, and P64.00 for the years 1996 to 1998. It also objected the rejection of its other
economic demands and non-economic proposals.

The union also contended that the company and its responsible officers should have been held in
contempt for violating the Labor Secretarys return-to-work order. It argued that the officers should
have been reinstated in the absence of substantial evidence supporting the charges against them.

The company responded by praying for the dismissal of the petition for lack of abuse of discretion on
the part of the Labor Secretary. It posited that the P48.00 wage increase award is more than
reasonable, and that the Labor Secretary properly stayed his hand on the issue of illegal dismissal
as the matter was beyond his jurisdiction. The company likewise argued that any question on the
award had been mooted by the workers acceptance of the wage increase.

While the petition was pending, individual settlements were reached between certain individual
petitioners (Cenon N. Dionisio, Catalina N. Velasquez, Nila P. Tresvalles, Vivian A. Arcos, Delia N.
Soliven, Leticia S. Santos, Emerita D. Maniebo, Conchita R. Encinas, Elpidia C. Cancino,
Consolacion S. Umalia, Nenette N. Gonzales, Creselita D. Rivera, and Rolando O. Madera) and the
company. These petitioners executed their respective Release, Waiver and Quitclaim after receiving
their separation pay and other benefits from the company.[30]

In light of these developments and the workers acceptance of the wage award (except for the union
officers), the company moved for the dismissal of the petition.[31] The union and the remaining
union officers opposed the motion, contending that the workers acceptance of the awarded wage
increase cannot be considered a waiver of their demand; the receipt of the P48.00 award was
merely an advance on their demand. The Release, Waiver and Quitclaim executed by the 13
officers, on the other hand, cannot bind the officers who opted to maintain the petition.

On December 17, 2001, two more officers Juliana D. Galo and Remedios C. Barque also executed
their respective Release, Waiver and Quitclaim.[32]

THE CA DECISION

The CA found the petition partly meritorious. It affirmed the Labor Secretary's wage increase award,
but modified his ruling on the dismissal of the union officers.[33]

On the wage issue and related matters, the CA found the Labor Secretarys award legally in order. It
noted the following factors supportive of the award:

1. The average daily salary of an employee of P310.00 is more than the statutory minimum wage
as admitted by the union itself.

2. The company grants to its employees forty-two (42) other monetary and welfare benefits.

3. The increase in the wages of the employees carries with it a corresponding increase in their
salary-based benefits.

4. The wage increase granted to workers employed in the industry is less than the increase
proposed by the company.
5. The Asian financial crisis.

The CA also noted that, in the meantime, the parties had executed a new CBA for the years 2002 to
2005 where they freely agreed on a total P45.00/day wage increase distributed over three years.

On the other hand, the CA faulted the Labor Secretary for not ruling on the dismissal of the union
officers. It took exception to the Labor Secretary's view that the dismissal question is within the
exclusive jurisdiction of the labor arbiter pursuant to Article 217 of the Labor Code. It invoked the
ruling of this Court in Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc.,[34]
which, in turn, cited International Pharmaceuticals, Inc. v. Secretary of Labor,[35] where we held that
the Labor Secretary has jurisdiction over all questions and controversies arising from an assumed
dispute, including cases over which the labor arbiter has exclusive jurisdiction.

The CA pointed out that while the labor dispute before the Labor Secretary initially involved a
bargaining deadlock, a related strike ensued and charges were brought against the union officers
(for defiance of the return-to-work order of the Labor Secretary, and leading, instigating, and
participating in a deliberate work slowdown during the CBA negotiations) resulting in their dismissal
from employment; thus, the dismissal is intertwined with the strike that was the subject of the Labor
Secretarys assumption of jurisdiction.

The CA, however, avoided a remand of the illegal dismissal aspect of the case to the Labor
Secretary on the ground that it would compel the remaining six officers, lowly workers who had been
out of work for four (4) years, to go through the calvary of a protracted litigation. In the CAs view, it
was in keeping with justice and equity for it to proceed to resolve the dismissal issue itself.

The six remaining officers of the union Reyvilosa Trinidad, Eloisa Figura, Jerry Jaicten, Rowell Frias,
Margarita Patingo, and Rosalinda Olangar (shop steward) all stood charged with defying (1) the
Labor Secretarys return-to-work order of January 27, 2000,[36] and (2) the companys general notice
for the return of all employees on February 8, 2000.[37] Later, they were also charged with leading,
instigating, and participating in a deliberate slowdown during the CBA negotiations.

The charges were supported by the affidavits of Ernesto P. Dayag, Salvio Bayon, Victoria Sanchez,
Lyndon Dinglasan, Teresita Nacion, Herman Vinoya, and Leonardo Gomez.[38] The CA noted that
in all these affidavits, no mention was ever made of [anyone] of the six (6) remaining individual
petitioners, save for Reyvilosa Trinidad. Also, none of the said affidavits even hinted at the
culpabilities of petitioners Eloisa Figura, Jerry Jaicten, Rowell Frias, Margarita Patingo, and
Rosalinda Olangar for the alleged illegal acts imputed to them.[39]
For failure of the company to prove by substantial evidence the charges against the remaining
officers, the CA concluded that their employment was terminated without valid and just cause,
making their dismissal illegal.

With respect to Trinidad, the CA found that her presence in the picket line and participation in an
illegal act obstructing the ingress to and egress from the company's premises were duly established
by the affidavit of Bayon.[40] For this reason, the CA found Trinidad's dismissal valid.

The appellate court thus affirmed the May 31, 2000[41] order of the Labor Secretary and modified
the resolution dated July 14, 2000.[42]

The CA denied the motions for reconsideration that the union and its officers, and the company
filed.[43] Hence, the present petitions.

THE PETITIONS

G.R. No. 167401

The petition is anchored on the following grounds

1. The CA erred in sustaining the Labor Secretary's wage increase award of P48.00/day spread
over three years.

2. The CA erred in finding the dismissal of Trinidad valid.

The union presents the following arguments

On the CBA Award

The union contends that the CBA wage increases from 1994 to 1998 ranged from P16.00/day to
P27.00/day for every year of the CBA period; the arguments behind the companys decreased wage
offer were the same arguments it raised in previous CBA negotiations; the alleged financial crisis in
the region on which the CBA award was based actually did not affect the company because it
sourced its raw materials from its mother company, thereby avoiding losses; the companys leading
status in the industry in terms of wages should not be used in the determination of the award; rather,
it should be based on the companys financial condition and its number one rank among 7,000
corporations in the country manufacturing ladies, girls, and babies garments, and number 46 in
revenues with gross revenues of P1.08B, assets of P525.5M and stockholders equity of P232.1M; in
granting only a wage increase out of 44 items in its proposal, the award disregarded the factors on
which its demands were based such as the peso devaluation and the daily expenditure of
P1,400.00/day for a family of six (6) as found by the National Economic and Development Authority.

On the Dismissal of Reyvilosa Trinidad

The union seeks a reversal of the dismissal of Trinidad. It argues that she was dismissed for alleged
illegal acts based solely on the self-serving affidavits executed by officers of the company; the strike
had not been declared illegal for the company had not initiated an action to have it declared illegal;
Trinidad was discriminated against because of the four union officers mentioned in the affidavits,
three were granted one month separation pay plus other benefits to settle the dispute in regard to
the three; also the same arrangement was entered into with the other officers, which resulted in the
signing of the waiver, quitclaim and release; the only statement in the affidavits against Trinidad was
her alleged megaphone message to the striking employees not to return to work.

The union thus asks this Court to modify the assailed CA ruling through an order improving the CBA
wage award and the grant of the non-wage proposals. It also asks that the dismissal of Trinidad be
declared illegal, and that the company be ordered to pay the union moral and exemplary damages,
litigation expenses, and attorney's fees.

G.R. No. 167407

For its part, the company seeks to annul the CA rulings on the dismissal issue, on the following
grounds

1. The CA erred in ruling that the Labor Secretary abused his discretion in not resolving the issue
of the validity of the dismissal of the officers of the union.
2. The CA erred in resolving the factual issue of dismissal instead of remanding the case for
further proceedings.

3. In resolving the issue, the company was deprived of its right to present evidence and, therefore,
to due process of law.

The company submits that the Labor Secretary has no authority to decide the legality or illegality of
strikes or lockouts, jurisdiction over such issue having been vested on the labor arbiters pursuant to
Article 217 of the Labor Code; under Article 263 of the Code, the Labor Secretarys authority over a
labor dispute encompasses only the issues, not the legality or illegality of any strike that may have
occurred in the meantime.[44] It points out that before the Labor Secretary can take cognizance of
an incidental issue such as a dismissal question, it must first be properly submitted to him, as in the
case of International Pharmaceuticals, Inc. v. Secretary of Labor[45] where the Labor Secretary was
adjudged to have the power to assume jurisdiction over a labor dispute and its incidental issues such
as unfair labor practices subject of cases already ongoing before the National Labor Relations
Commission (NLRC).

The company takes exception to the CA ruling that it submitted the dismissal issue to the Labor
Secretary claiming that it can be seen from its opposition to the unions petition to cite the company
for contempt;[46] that it consistently maintained that the Labor Secretary has no jurisdiction over the
dismissal issue; that the affidavits it submitted to the Labor Secretary were only intended to establish
the unions violation of the return-to-work orders and, to support its petition, on February 8, 2000,[47]
for the issuance of a return-to-work order; and, that the CA overstepped its jurisdiction when it ruled
on a factual issue, the sole office of certiorari being the corrections of errors of jurisdiction, including
the commission of grave abuse of discretion.

The company likewise disputes the CAs declaration that it took into consideration all the evidence on
the dismissal issue, claiming that the evidence on record is deficient, for it did not have the
opportunity to adduce evidence to prove the involvement of the union officers in the individual acts
for which they were dismissed; had it been given the opportunity to present evidence, it could have
done so. To prove its point, it included in its motion for partial reconsideration[48] a copy of the
information,[49] charging union officers Nenette Gonzales and Margarita Patingo of malicious
mischief for stoning a company vehicle on February 25, 2000, while the strike was ongoing.

Even assuming that it could no longer submit evidence on the dismissal of the union officers, the
company posits that sufficient grounds exist to uphold the dismissals. It maintains that the officers
are liable to lose their employment status for knowingly staging a strike after the assumption of
jurisdiction by the Labor Secretary and in defying the return-to-work mandated by the assumption,
which are considered prohibited activities under Article 264(a) of the Labor Code, not to mention that
without first having filed a notice, when the union officers and members engaged in and instigated a
work slowdown, a form of strike, without complying with the procedural requirements for staging a
strike, the union officers had engaged in an illegal strike.

The parties practically reiterated these positions and the positions taken below in their respective
comments to each others petition.

THE COURT'S RULING

The CBA Award

We affirm the CA's disposition, upholding the Labor Secretarys award in resolving the bargaining
deadlock between the union and the company for their 1999-2001 CBA.

We find no compelling justification to disturb the award. We are convinced, as the appellate court
was, of the reasonableness of the award. It was based on the prevailing economic indicators in the
workplace, in the industry, and in the local and regional economy. As well, it took into account the
comparative standing of the company in terms of employees' wages and other economic benefits.
We find the following factors as sufficient justification for the award:

1. The regional financial crisis and the downturn in the economy at the time, impacting on the
performance of the company as indicated in its negative financial picture in 1999.

2. The companys favorable comparison with industry standards in terms of employee benefits,
especially wages. Its average daily basic wage of P310.00 is 40% higher than the statutory minimum
wage of P223.50, and superior to the industrys average of P258.00. For the years prior to the 1999
negotiations, its aggregate daily wage increase of P64.00 surpassed the statutory minimum increase
of P33.00.

3. The forty-two (42) non-wage benefit programs of the company which undeniably extend the
reach of the employees' cash wage in enhancing the well-being of the employees and their families.

The Labor Secretary's Order of May 31, 2000 fully explained these considerations as follows:[50]
We fully agree with the Union that relations between management and labor ought to be governed
by the higher precepts of social justice as enshrined in the Constitution and in the laws. We further
agree with it that the worker's over-all well-being is as much affected by his wages as by other
macro-economic factors as the CPI, cost of living, the varied needs of the family. Yet, the other
macro-economic factors cited by the company such as the after-effects of the regional financial
crisis, the existing unemployment rate, and the need to correlate the rate of wage increase with the
CPI are equally important. Of course[,] other macro-economic factors such as the contraction of
sales and production as well as the growing lack of direct investors, are also important
considerations. It is noteworthy that both the Union and Management recognize that the entire
gamut of macro-economic factors necessarily impact on the micro-economic conditions of an
individual company even in terms of wage increases.

The Union also makes mention of the need to factor in the industry where the employer belongs x x
x. This is affirmed by the Company when it provides a comparison with the other key players in the
industry. It has been properly shown that its prevailing levels of wages and other benefits are,
generally, superior to its counterparts in the local garments industry. x x x

But even as we agree with the Union that the Company's negative financial picture for 1999 should
not be an overriding consideration in coming up with an adjudicated wage increase, We cannot
make the historical wage increases as our starting point in determining the appropriate wage
adjustment. The Companys losses for 1999 which, even the Union recognizes, amounts to millions
of pesos, coupled with the current economic tailspin warrant a more circumspect view[.]

Cognizance is likewise made of the Company's 42 non-wage benefits programs which substantially
[answer] the Union's concerns with respect to the living wage and the needs of a family. It would not
be amiss to mention that said benefits have their corresponding monetary valuations that in effect
increase a worker's daily pay. Likewise, the needed family expenditure is answered for not solely by
an individual family member's income alone, but also from other incomes derived by the entire family
from all possible sources.

Considering the foregoing circumstances, We deem it reasonable and fair to balance our award on
wages.

The conclusions of the Labor Secretary, drawn as they were from a close examination of the
submissions of the parties, do not indicate any legal error, much less any grave abuse of discretion.
We accord respect to these conclusions as they were made by a public official especially trained in
the delicate task of resolving collective bargaining disputes, and are on their face just and
reasonable. [U]nless there is a clear showing of grave abuse of discretion, this Court cannot, and will
not, interfere with the labor expertise of the public respondent Secretary of Labor, as the Court held
in Pier Arrastre and Stevedoring Services v. Ma. Nieves Roldan-Confesor, et al.[51]

We also note that during the pendency of the present dispute, the parties entered into a new CBA for
the years 2000-2005, providing for a P45.00/day wage increase for the workers. The CA cited this
agreed wage adjustment as an indication of the reasonableness of the disputed award. The Labor
Secretary himself alluded to the letter-manifestation received by this Office on 15 June 2000
containing the signatures of some 700 employees of the Company indicating the acceptance of the
award rendered in the 31 May 2000 Order.[52] There was also the manifestation of the company
dated February 7, 2006, advising the Court that it concluded another CBA with the union providing
for a wage increase of P22.00/day effective July 19, 2005; P20.00/day for July 19, 2006; and
P20.00/day for July 19, 2007.[53] The successful negotiation of two collective agreements even
before the parties could sit down and formalize the 1999-2001 CBA highlights the need for the
parties to abide by the decision of the Labor Secretary and move on to the next phase of their
collective bargaining relationship.

The Illegal Dismissal Issue

Before we rule on the substantive aspect of this issue, we deem it proper to resolve first the
companys submission that the CA erred: (1) in ruling that the Labor Secretary gravely abused his
discretion in not deciding the dismissal issue; and, (2) in deciding the factual issue itself, instead of
remanding the case, thereby depriving it of the right to present evidence on the matter.

We agree with the CA's conclusion that the Labor Secretary erred, to the point of abusing his
discretion, when he did not resolve the dismissal issue on the mistaken reading that this issue falls
within the jurisdiction of the labor arbiter. This was an egregious error and an abdication of authority
on the matter of strikes the ultimate weapon in labor disputes that the law specifically singled out
under Article 263 of the Labor Code by granting the Labor Secretary assumption of jurisdiction
powers. Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary
situation a strike or lockout in an industry indispensable to the national interest. This grant is not
limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or
lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken
place. As the term assume jurisdiction connotes, the intent of the law is to give the Labor Secretary
full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike
or lockout; it includes and extends to all questions and controversies arising from or related to the
dispute, including cases over which the labor arbiter has exclusive jurisdiction.[54]
In the present case, what the Labor Secretary refused to rule upon was the dismissal from
employment that resulted from the strike. Article 264 significantly dwells on this exact subject matter
by defining the circumstances when a union officer or member may be declared to have lost his
employment. We find from the records that this was an issue that arose from the strike and was, in
fact, submitted to the Labor Secretary, through the unions motion for the issuance of an order for
immediate reinstatement of the dismissed officers and the companys opposition to the motion. Thus,
the dismissal issue was properly brought before the Labor Secretary and this development in fact
gave rise to his mistaken ruling that the matter is legally within the jurisdiction of the labor arbiter to
decide.

We cannot disagree with the CAs sympathies when it stated that a remand of the case would only
compel the individual petitioners, x x x lowly workers who have been out of work for more than four
(4) years, to tread once again the [calvary] of a protracted litigation.[55] The dismissal issue and its
resolution, however, go beyond the realm of sympathy as they are governed by law and procedural
rules. The recourse to the CA was through the medium of a petition for certiorari under Rule 65 an
extraordinary but limited remedy. The CA was correct in declaring that the Labor Secretary had
seriously erred in not ruling on the dismissal issue, but was totally out of place in proceeding to
resolve the dismissal issue; its action required the prior and implied act of suspending the Rules of
Court a prerogative that belongs to this Court alone. In the recent case of Marcos-Araneta v. Court
of Appeals,[56] we categorically ruled that the CA cannot resolve the merits of the case on a petition
for certiorari under Rule 65 and must confine itself to the jurisdictional issues raised. Let this case be
another reminder to the CA of the limits of its certiorari jurisdiction.

But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would result if
a remand would be ordered under a situation where we are in the position to resolve the case based
on the records before us. As we said in Roman Catholic Archbishop of Manila v. Court of
Appeals:[57]

[w]e have laid down the rule that the remand of the case to the lower court for further reception of
evidence is not necessary where the Court is in a position to resolve the dispute based on the
records before it. On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of remanding them to the trial
court for further proceedings, such as where the ends of justice, would not be subserved by the
remand of the case.[58]

Thus, we shall directly rule on the dismissal issue. And while we rule that the CA could not validly
rule on the merits of this issue, we shall not hesitate to refer back to its dismissal ruling, where
appropriate.
The first question to resolve is the sufficiency of the evidence and records before us to support a
ruling on the merits. We find that the union fully expounded on the merits of the dismissal issue while
the companys positions find principal support from the affidavits of Dayag, Bayon, Sanchez,
Dinglasan, Nacion, Vinoya, and Gomez. The affidavits became the bases of the individual notices of
termination of employment sent to the union officers. The parties affidavits and their submitted
positions constitute sufficient bases to support a decision on the merits of the dismissal issue.

The dismissed union officers of the union originally numbered twenty-one (21), twenty (20) of whom
led by union President Cenon Dionisio were executive officers and members of the union board.
Completing the list was shop steward Olangar. As mentioned earlier, fifteen (15) of the dismissed
officers, including Dionisio, executed a Release, Waiver and Quitclaim and readily accepted their
dismissal.[59] Those who remained to contest their dismissal were Reyvilosa N. Trinidad, 2nd Vice-
President; Eloisa Figura, Asst. Secretary; Jerry Jaicten, PRO; Rowell Frias, Board Member;
Margarita Patingo, Board Member; and Rosalinda Olangar, Shop Steward.

The officers of the union subject of the petition were dismissed from the service for allegedly
committing illegal acts (1) during the CBA negotiations and (2) during the strike declared by the
union, shortly after the negotiations reached a deadlock. The acts alluded to under the first
category[60] involved leading, instigating, participating in a deliberate slowdown during the CBA
negotiations and, under the second,[61] the alleged defiance and violation by the union officers of
the assumption of jurisdiction and the return-to-work order of the Labor Secretary dated January 27,
2000, as well as the second return-to-work order dated February 22, 2000. More specifically, in the
course of the strike, the officers were charged with blocking and preventing the entry of returning
employees on February 2, 3, and 8, 2000; and on February 24 and 25, 2000, when acts of violence
were committed. They likewise allegedly defied the company's general return-to-work notice for the
return of all employees on February 8, 2000.[62]

The CA erred in declaring that except for Trinidad, the company failed to prove by substantial
evidence the charges against the remaining union officers, thus making this dismissal illegal. The
appellate court noted that in all the affidavits the company submitted as evidence no mention was
ever made of [anyone] of the six (6) remaining individual petitioners, save for Reyvilosa Trinidad.
Also, none of the said affidavits even hinted at the culpabilities of petitioners Eloisa Figuna, Jerry
Jaicten, Rowell Frias, Margarita Patingo and Rosalinda Olangar for the alleged illegal acts imputed
to them.[63]

The charges on which the company based its decision to dismiss the union officers and the shop
steward may be grouped into the following three categories: (1) defiance of the return-to-work order
of the Labor Secretary, (2) commission of illegal acts during the strike, and (3) leading, instigating
and participating in a deliberate work slowdown during the CBA negotiations.
While it may be true that the affidavits the company submitted to the Labor Secretary did not
specifically identify Figuna, Jaiden, Frias, Patingo and Olangar to have committed individual illegal
acts during the strike, there is no dispute that the union defied the return-to-work orders the Labor
Secretary handed down on two occasions, first on January 27, 2000 (more than two months after the
union struck on November 18, 1999) and on February 22, 2000. In decreeing a return-to-work for the
second time, the Labor Secretary noted:

To date, despite the lapse of the return-to-work period indicated in the Order, the Union continues
with its strike. A report submitted by NCMB-NCR even indicated that all gates of the Company are
blocked thereby preventing free ingress and egress to the premises.[64]

Under the law,[65] the Labor Secretary's assumption of jurisdiction over the dispute or its certification
to the National Labor Relations Commission for compulsory arbitration shall have the effect of
automatically enjoining the intended or impending strike or lockout and all striking or locked out
employees shall immediately return to work and the employer shall immediately resume operations
and readmit all workers under the same terms and conditions before the strike or lockout. The union
and its officers, as well as the workers, defied the Labor Secretary's assumption of jurisdiction,
especially the accompanying return-to-work order within twenty-four (24) hours; their defiance made
the strike illegal under the law[66] and applicable jurisprudence.[67] Consequently, it constitutes a
valid ground for dismissal.[68] Article 264(a), paragraph 3 of the Labor Code provides that Any union
officer who knowingly participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his
employment status.

The union officers were answerable not only for resisting the Labor Secretary's assumption of
jurisdiction and return-to-work orders; they were also liable for leading and instigating and, in the
case of Figura, for participating in a work slowdown (during the CBA negotiations), a form of
strike[69] undertaken by the union without complying with the mandatory legal requirements of a
strike notice and strike vote. These acts are similarly prohibited activities.[70]

There is sufficient indication in the case record that the union officers, collectively, save for shop
steward Olangar, were responsible for the work slowdown, the illegal strike, and the violation of the
Labor Secretary's assumption order, that started with the slowdown in July 1999 and lasted up to
March 2000 (or for about ten (10) months).[71] These illegal concerted actions could not have
happened at the spur of the moment and could not have been sustained for several months without
the sanction and encouragement of the union and its officers; undoubtedly, they resulted from a
collective decision of the entire union leadership and constituted a major component of the unions
strategy to obtain concessions from the company management during the CBA negotiations.
That the work slowdown happened is confirmed by the affidavits[72] and the documentary evidence
submitted by the company. Thus, Ernesto P. Dayag, a security officer of the agency servicing the
company (Tamaraw Security Service, Inc.) stated under oath that in October 1999, the union
members were engaging in a noise-barrage everyday and when it was time to go back to work at
noontime, they would mill around the production area or were at the toilet discussing the ongoing
CBA negotiations (among others), and were slow in their movements; in late October (October 27,
1999), they did the same thing at about seven oclock in the morning which was already time for
work; even those who were already working were deliberately slow in their movements. On
November 12, 1999, when union officer Lisa Velasquez talked to the union members at lunchtime
regarding the CBA negotiations, only about 50% of the union members returned to their work
stations.

Victoria P. Sanchez, a sewer in the company's production department, deposed that sometime in the
middle of September 1999, the sewers were told by the shop stewards to reduce their efficiency
below 75%. They followed the order as it came from a decision of the union officers at a meeting. It
was not difficult to comply with the order because they only had to slow down at the pre-production
and early segments of the production line so that the rest of the line would suffer.

Teresita T. Nacion, another sewer, corroborated Sanchez's deposition stating that in mid-September
1999, during the CBA negotiations, the sewers were told by the shop stewards to reduce their
efficiency below 75% pursuant to the union decision to slow down production so that the company
would suffer losses.

The work slowdown resulted in production losses to the company which it documented and
submitted in evidence[73] before the Labor Secretary and was summarized in the affidavit[74] of
Leonardo T. Gomez, who testified on the impact of the decrease of the workers production efficiency
that peaked in September, October, and November 1999, resulting in a financial loss to the company
of P69.277M. Specifically, the companys efficiency record for the year 1999[75] posted Eloisa C.
Figuras[76] work performance from April to June 1999 at 77.19% and from July to November 1999
at 51.77%, a substantial drop in her efficiency.

The unions two-pronged strategy to soften the companys stance in the CBA negotiations culminated
in its declaration of a strike on November 18, 1999, which prompted the Labor Secretarys
intervention through an assumption of jurisdiction. Judging from the manner the union staged the
strike, it is readily apparent that the unions objective was to paralyze the company and to maintain
the work stoppage for as long as possible.

This is the economic war that underlies the Labor Codes strike provisions, and which the same Code
also tries to temper by regulation. Thus, even with the assumption of jurisdiction and its
accompanying return-to-work order, the union persisted with the strike and prevented the entry to
the company premises of workers who wanted to report back for work. In particular, Salvio Bayon, a
company building technician and a member of the union, deposed that at about seven o'clock in the
morning of February 3, 2000, he and ten (10) of his co-employees attempted to enter the company
premises, but they were prevented by a member of the strikers, led by union President Cenon
Dionisio and other officers of the union; the same thing happened on February 8, 24 and 28,
2000.[77]

In the face of the union's defiance of his first return-to-work order, the Labor Secretary issued a
second return-to-work directive on February 22, 2000 where the labor official noted that despite the
lapse of the return-to-work period indicated in the order, the union continued with its strike.[78] At a
conciliation meeting on February 29, 2000, the company agreed to extend the implementation of the
return-to-work order to March 6, 2000.[79] The union, through a letter dated March 2, 2000,[80]
advised the NCMB administrator of the decision of the union executive board for the return to work
of all striking workers the following day. In a letter also dated March 2, 2000,[81] the company also
advised the NCMB Administrator that it was willing to accept all returning employees, without
prejudice to whatever legal action it may take against those who committed illegal acts.

The above union letter clearly shows the involvement of the entire union leadership in defying the
Labor Secretary's assumption of jurisdiction order as well as return-to-work orders. From the illegal
work slowdown to the filing of the strike notice, the declaration of the strike, and the defiance of the
Labor Secretary's orders, it was the union officers who were behind the every move of the striking
workers; and collectively deciding the twists and turns of the strike which even became violent as the
striking members prevented and coerced returning workers from gaining entry into the company
premises. To our mind, all the union officers who knowingly participated in the illegal strike knowingly
placed their employment status at risk.

In a different vein, the union faulted the company for having dismissed the officers, there being no
case filed on the legality or illegality of the strike. We see no merit in this argument. In Gold City
Integrated Port Service, Inc. v. NLRC,[82] we held that [t]he law, in using the word may, grants the
employer the option of declaring a union officer who participated in an illegal strike as having lost his
employment. We reiterated this principle in San Juan De Dios Educational Foundation Employees
Union-Alliance of Filipino Workers v. San Juan De Dios Educational Foundation, Inc.,[83] where we
stated that Despite the receipt of an order from the SOLE to return to their respective jobs, the Union
officers and members refused to do so and defied the same. Consequently, then, the strike staged
by the Union is a prohibited activity under Article 264 of the Labor Code. Hence, the dismissal of its
officers is in order. The respondent Foundation was, thus, justified in terminating the employment of
the petitioner Union's officers.
The union attempted to divert attention from its defiance of the return-to-work orders with the
specious submission that it was the company which violated the Labor Secretary's January 27, 2000
order, by not withdrawing its notice of lockout.[84]

The evidence indicates otherwise. The Labor Secretary himself, in his order of February 22,
2000,[85] noted that the union continued its strike despite the lapse of the return-to-work period
specified in his January 27, 2000 order. There is also the report of the NCMB-NCR clearly indicating
that all gates of the company were blocked, thereby preventing free ingress to and egress from the
company premises. There, too, was the letter of the company personnel manager, Ralph Funtila,
advising the union that the company will comply with the Labor Secretary's January 27, 2000 order;
Funtila appealed to the striking employees and the officers to remove all the obstacles and to lift
their picket line to ensure free ingress and egress.[86] Further, as we earlier noted, the union itself,
in its letter of March 2, 2000, advised the NCMB that the union board of directors had decided to
return to work on March 3, 2000 indicating that they had been on strike since November 18, 1999
and were defiant of the return-to-work orders since January 28, 2000.

As a final point, the extension of the return-to-work order and the submission of all striking workers,
by the company, cannot in any way be considered a waiver that the union officers can use to negate
liability for their actions, as the CA opined in its assailed decision.[87] In the first place, as clarified by
Funtila's letter to the NCMB dated March 2, 2000,[88] the company will accept all employees who
will report for work up to March 6, 2000, without prejudice to whatever legal action it may take
against those who committed illegal acts. He also clarified that it extended the return-to-work, upon
request of the union and the DOLE to accommodate employees who were in the provinces, who
were not notified, and those who were sick.

As a point of law, we find that the company did not waive the right to take action against the erring
officers, and this was acknowledged by the Labor Secretary himself in his order of March 9,
2000,[89] when he directed the company to accept back to work the twenty (20) union officers and
one (1) shop steward[,] without prejudice to the Company's exercise of its prerogative to continue its
investigation. The order was issued upon complaint of the union that the officers were placed under
preventive suspension.

For having participated in a prohibited activity not once, but twice, the union officers, except those
our Decision can no longer reach because of the amicable settlement they entered into with the
company, legally deserve to be dismissed from the service. For failure of the company, however, to
prove by substantial evidence the illegal acts allegedly committed by Rosalinda Olangar, who is a
shop steward but not a union officer, we find her dismissal without a valid cause.
WHEREFORE, premises considered, judgment is hereby rendered AFFIRMING with
MODIFICATION the challenged decision and

resolution of the Court of Appeals in CA-G.R. SP No. 60516, as follows:

1. The collective bargaining award of DOLE Secretary Bienvenido E. Laguesma, contained in his
order dated May 31, 2000, is fully AFFIRMED;

2. The dismissal of REYVILOSA TRINIDAD, union 2nd Vice-President, is likewise AFFIRMED;

3. The dismissal of ELOISA FIGURA, Assistant Secretary; JERRY JAICTEN, Press Relations
Officer; and ROWELL FRIAS, Board Member, is declared VALID and for a just cause; and

4. The dismissal of ROSALINDA OLANGAR is declared illegal. The CA award is SUSTAINED in

her case.

SO ORDERED.

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, represented by

SABINO F. GRAGANZA, Union President, and REYVILOSA TRINIDAD,Petitioners, v. SECRETARY
OF THE DEPARTMENT OF LABOR AND EMPLOYMENT and TRIUMPH INTERNATIONAL
(PHILS.), INC., Respondents.

BRION, J.:

FACTS:

The union and the company had a collective bargaining agreement (CBA) that expired. The union
seasonably submitted proposals to the company for its renegotiation. The negotiations reached a
deadlock, leading to a Notice of Strike the union. The National Conciliation and Mediation Board
(NCMB) exerted efforts but failed to resolve the deadlock.

The company filed a Notice of Lock-out for unfair labor practice due to the unions alleged work
slowdown. The unionwent on strike three days later. Secretary Bienvenido E. Laguesma (Labor
Secretary) of the Department of Labor and Employment (DOLE) assumed jurisdiction over the labor
dispute, pursuant to Article 263(g) of the Labor Code.The Labor Secretary directed all striking
workers to return to work within twenty-four (24) hours from receipt of the assumption order, while
the company was directed to accept them back to work under the same terms and conditions
existing before the strike.
Several employees attempted to report for work, but the striking employees prevented them from
entering the company premises. The union and the officers filed a petition to cite the company and
its responsible officers for contempt, and moved that a reinstatement order be issued. They claimed
that: (1) the company officials violated the Labor Secretarys return-to-work order when these officials
placed them under preventive suspension and refused them entry into the company premises; (2)
the company also violated the March 9, 2000 order of the Labor Secretary when they were
reinstated only in the payroll; and (3) the company committed unfair labor practice and dismissed
them without basis.

The Labor Secretary resolved the bargaining deadlock and awarded a wage increase of P48.00
distributed over three years. The unions other economic demands and non-economic proposals
were all denied. The union elevated the case to the CA, through a petition for certiorari under Rule
65 of the Rules of Court. The CA found the petition partly meritorious. It affirmed the Labor
Secretary's wage increase award, but modified his ruling on the dismissal of the union officers. On
the wage issue and related matters, the CA found the Labor Secretary's award legally in order.

ISSUE:

Whether or not the award of P40.00 wage increase of the Labor Arbiter is proper?

HELD:

LABOR LAW

The conclusions of the Labor Secretary, drawn as they were from a close examination of the
submissions of the parties, do not indicate any legal error, much less any grave abuse of discretion.
We accord respect to these conclusions as they were made by a public official especially trained in
the delicate task of resolving collective bargaining disputes, and are on their face just and
reasonable. "[U]nless there is a clear showing of grave abuse of discretion, this Court cannot, and
will not, interfere with the labor expertise of the public respondent Secretary of Labor," as the Court
held in Pier Arrastre and Stevedoring Services v. Ma. Nieves Roldan-Confesor, et al.

LABOR LAW

We agree with the CA's conclusion that the Labor Secretary erred, to the point of abusing his
discretion, when he did not resolve the dismissal issue on the mistaken reading that this issue falls
within the jurisdiction of the labor arbiter. This was an egregious error and an abdication of authority
on the matter of strikes the ultimate weapon in labor disputes that the law specifically singled out
under Article 263 of the Labor Code by granting the Labor Secretary assumption of jurisdiction
powers. Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary
situation a strike or lockout in an industry indispensable to the national interest. This grant is not
limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or
lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken
place. As the term "assume jurisdiction" connotes, the intent of the law is to give the Labor Secretary
full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike
or lockout; it includes and extends to all questions and controversies arising from or related to the
dispute, including cases over which the labor arbiter has exclusive jurisdiction.

LABOR LAW

Under the law, the Labor Secretary's assumption of jurisdiction over the dispute or its certification to
the National Labor Relations Commission for compulsory arbitration shall have the effect of
automatically enjoining the intended or impending strike or lockout and all striking or locked out
employees shall immediately return to work and the employer shall immediately resume operations
and readmit all workers under the same terms and conditions before the strike or lockout. The union
and its officers, as well as the workers, defied the Labor Secretary's assumption of jurisdiction,
especially the accompanying return-to-work order within twenty-four (24) hours; their defiance made
the strike illegal under the law and applicable jurisprudence. Consequently, it constitutes a valid
ground for dismissal. Article 264(a), paragraph 3 of the Labor Code provides that "Any union officer
who knowingly participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his
employment status."

The union officers were answerable not only for resisting the Labor Secretary's assumption of
jurisdiction and return-to-work orders; they were also liable for leading and instigating and, in the
case of Figura, for participating in a work slowdown (during the CBA negotiations), a form of strike
undertaken by the union without complying with the mandatory legal requirements of a strike notice
and strike vote. These acts are similarly prohibited activities.

In a different vein, the union faulted the company for having dismissed the officers, there being no
case filed on the legality or illegality of the strike. We see no merit in this argument. In Gold City
Integrated Port Service, Inc. v. NLRC, we held that "[t]he law, in using the word may, grants the
employer the option of declaring a union officer who participated in an illegal strike as having lost his
employment." We reiterated this principle in San Juan De Dios Educational Foundation Employees
Union-Alliance of Filipino Workers v. San Juan De Dios Educational Foundation, Inc., where we
stated that "Despite the receipt of an order from the SOLE to return to their respective jobs, the
Union officers and members refused to do so and defied the same. Consequently, then, the strike
staged by the Union is a prohibited activity under Article 264 of the Labor Code. Hence, the
dismissal of its officers is in order. The respondent Foundation was, thus, justified in terminating the
employment of the petitioner Union's officers."

DENIED

__________________________________________________________________

SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,

SECOND DIVISION, AND SAN MIGUEL CORPORATION EMPLOYEES UNION (SMCEU) -
PTGWO, respondents.

DECISION

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing the
Resolution[1] of the National Labor Relations Commission in NLRC NCR CASE NO. 00094-90,
which dismissed the complaint of San Miguel Corporation (SMC), seeking to dismiss the notice of
strike given by the private respondent union and to compel the latter to comply with the provisions of
the Collective Bargaining Agreement (CBA)[2] on grievance machinery, arbitration, and the no-strike
clause, with prayer for the issuance of a temporary restraining order.

The antecedent facts are as follows:

In July 1990, San Miguel Corporation, alleging the need to streamline its operations due to financial
losses, shut down some of its plants and declared 55 positions as redundant, listed as follows:
seventeen (17) employees in the Business Logistics Division (BLD), seventeen (17) in the Ayala
Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying Station (Magnolia-
MBS).[3] Consequently, the private respondent union filed several grievance cases for the said
retrenched employees, praying for the redeployment of the said employees to the other divisions of
the company.

The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the parties
1990 Collective Bargaining Agreement providing for the following procedures, to wit:

Sec.5. Processing of Grievance. - Should a grievance arise, an earnest effort shall be made to settle
the grievance expeditiously in accordance with the following procedures:
Step 1. - The individual employee concerned and the Union Directors, or the Union Steward shall,
first take up the employees grievance orally with his immediate superior. If no satisfactory agreement
or adjustment of the grievance is reached, the grievance shall, within twenty (20) working days from
the occurrence of the cause or event which gave rise to the grievance, be filed in writing with the
Department Manager or the next level superior who shall render his decision within ten (10) working
days from the receipt of the written grievance. A copy of the decision shall be furnished the Plant
Personnel Officer.

Step 2. - If the decision in Step 1 is rejected, the employee concerned may elevate or appeal this in
writing to the Plant Manager/Director or his duly authorized representative within twenty (20) working
days from the receipt of the Decision of the Department Manager. Otherwise, the decision in Step 1
shall be deemed accepted by the employee.

The Plant Manager/Director assisted by the Plant Personnel Officer shall determine the necessity of
conducting grievance meetings. If necessary, the Plant Manager/Director and the Plant Personnel
Officer shall meet the employee concerned and the Union Director/Steward on such date(s) as may
be designated by the Plant Manager. In every plant/office, Grievance Meetings shall be scheduled at
least twice a month.

The Plant Manager shall give his written comments and decision within ten (10) working days after
his receipt of such grievance or the date of submission of the grievance for resolution, as the case
may be. A copy of his Decision shall be furnished the Employee Relations Directorate.

Step 3. - If no satisfactory adjustment is arrived at Step 2, the employee may appeal the Decision to
the Conciliation Board as provided under Section 6 hereof, within fifteen (15) working days from the
date of receipt of the decision of the Plant Manager/Director or his designate. Otherwise, the
decision in Step 2 shall be deemed accepted by the employee.

The Conciliation Board shall meet on the grievance in such dates as shall be designated by the
Division/Business Unit Manager or his representative. In every Division/Business Unit, Grievance
Meetings of the Conciliation Board shall be scheduled at least once a month.

The Conciliation Board shall have fifteen (15) working days from the date of submission of the
grievance for resolution within which to decide on the grievance.
SEC. 6. Conciliation Board. - There shall be a conciliation Board per Business Unit or Division. Every
Conciliation Board shall be composed of not more than five (5) representatives each from the
Company and the Union. Management and the Union may be assisted by their respective legal
counsels.

In every Division/Business Unit, the names of the Company and Union representatives to the
Conciliation Board shall be submitted to the Division/Business Unit Manager not later than January
of every year. The Conciliation Board members shall act as such for one (1) year until removed by
the Company or the Union, as the case may be.

xxx

Sec. 8. Submission to Arbitration. - If the employee or Union is not satisfied with the Decision of the
Conciliation Board and desires to submit the grievance to arbitration, the employee or the Union
shall serve notice of such intention to the Company within fifteen (15) working days after receipt of
the Boards decision. If no such written notice is received by the Company within fifteen (15) working
days, the grievance shall be considered settled on the basis of the companys position and shall no
longer be available for arbitration.[4]

During the grievance proceedings, however, most of the employees were redeployed, while others
accepted early retirement. As a result only 17 employees remained when the parties proceeded to
the third level (Step 3) of the grievance procedure. In a meeting on October 26, 1990, petitioner
informed private respondent union that if by October 30, 1990, the remaining 17 employees could
not yet be redeployed, their services would be terminated on November 2, 1990. The said meeting
adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared that there was
nothing more to discuss in view of the deadlock.[5]

On November 7, 1990, the private respondent filed with the National Conciliation and Mediation
Board (NCMB) of the Department of Labor and Employment (DOLE) a notice of strike on the
following grounds: a) bargaining deadlock; b) union busting; c) gross violation of the Collective
Bargaining Agreement (CBA), such as non-compliance with the grievance procedure; d) failure to
provide private respondent with a list of vacant positions pursuant to the parties side agreement that
was appended to the 1990 CBA; and e) defiance of voluntary arbitration award. Petitioner on the
other hand, moved to dismiss the notice of strike but the NCMB failed to act on the motion.

On December 21, 1990, petitioner SMC filed a complaint[6] with the respondent NLRC, praying for:
(1) the dismissal the notice of strike; (2) an order compelling the respondent union to submit to
grievance and arbitration the issue listed in the notice of strike; (3) the recovery of the expenses of
litigation.

On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the complaint;
holding, thus:

NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -versus- San Miguel
Corporation Employees Union-PTWO (SMCEU), Respondent. - Considering the allegations in the
complaint to restrain Respondent Union from declaring a strike and to enforce mutual compliance
with the provisions of the collective bargaining agreement on grievance machinery, and the no-strike
clause, with prayer for issuance of temporary restraining order, and the evidence adduced therein,
the Answer filed by the respondent and the memorandum filed by the complainant in support of its
application for the issuance of an injunction, the Second Division, after due deliberation, Resolved to
dismiss the complaint for lack of merit.[7]

Aggrieved by the said resolution, petitioner found its way to this court via the present petition,
contending that:

IT IS THE POSITIVE LEGAL DUTY OF RESPONDENT NLRC TO COMPEL ARBITRATION AND

TO ENJOIN A STRIKE IN VIOLATION OF A NO STRIKE CLAUSE.

II

INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE DISASTROUS

ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID.[8]

On June 3, 1991, to preserve the status quo, the Court issued a Resolution[9] granting petitioners
prayer for the issuance of a Temporary Restraining Order.

The Petition is impressed with merit.

Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor Code[10], reads:
Section 1. Grounds for strike and lockout. -- A strike or lockout may be declared in cases of
bargaining deadlocks and unfair labor practices. Violations of the collective bargaining agreements,
except flagrant and/or malicious refusal to comply with its economic provisions, shall not be
considered unfair labor practice and shall not be strikeable. No strike or lockout may be declared on
grounds involving inter-union and intra-union disputes or on issues brought to voluntary or
compulsory arbitration.

In the case under consideration, the grounds relied upon by the private respondent union are non-
strikeable. The issues which may lend substance to the notice of strike filed by the private
respondent union are: collective bargaining deadlock and petitioners alleged violation of the
collective bargaining agreement. These grounds, however, appear more illusory than real.

Collective Bargaining Deadlock is defined as the situation between the labor and the management of
the company where there is failure in the collective bargaining negotiations resulting in a
stalemate[11] This situation, is non-existent in the present case since there is a Board assigned on
the third level (Step 3) of the grievance machinery to resolve the conflicting views of the parties.
Instead of asking the Conciliation Board composed of five representatives each from the company
and the union, to decide the conflict, petitioner declared a deadlock, and thereafter, filed a notice of
strike. For failing to exhaust all the steps in the grievance machinery and arbitration proceedings
provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed by
the NLRC and private respondent union ordered to proceed with the grievance and arbitration
proceedings. In the case of Liberal Labor Union vs. Phil. Can Co.,[12] the court declared as illegal
the strike staged by the union for not complying with the grievance procedure provided in the
collective bargaining agreement, ruling that:

x x x the main purpose of the parties in adopting a procedure in the settlement of their disputes is to
prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. x x x
strikes held in violation of the terms contained in the collective bargaining agreement are illegal,
specially when they provide for conclusive arbitration clauses. These agreements must be strictly
adhered to and respected if their ends have to be achieved. x x x[13]

As regards the alleged violation of the CBA, we hold that such a violation is chargeable against the
private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail
of the remedies under the CBA, private respondent violated the mandatory provisions of the
collective bargaining agreement.
Abolition of departments or positions in the company is one of the recognized management
prerogatives.[14] Noteworthy is the fact that the private respondent does not question the validity of
the business move of petitioner. In the absence of proof that the act of petitioner was ill-motivated, it
is presumed that petitioner San Miguel Corporation acted in good faith. In fact, petitioner acceded to
the demands of the private respondent union by redeploying most of the employees involved; such
that from an original 17 excess employees in BLD, 15 were successfully redeployed. In AOC, out of
the 17 original excess, 15 were redeployed. In the Magnolia - Manila Buying Station, out of 18
employees, 6 were redeployed and only 12 were terminated.[15]

So also, in filing complaint with the NLRC, petitioner prayed that the private respondent union be
compelled to proceed with the grievance and arbitration proceedings. Petitioner having evinced its
willingness to negotiate the fate of the remaining employees affected, there is no ground to sustain
the notice of strike of the private respondent union.

All things studiedly considered, we are of the ineluctable conclusion, and so hold, that the NLRC
gravely abused its discretion in dismissing the complaint of petitioner SMC for the dismissal of the
notice of strike, issuance of a temporary restraining order, and an order compelling the respondent
union to settle the dispute under the grievance machinery of their CBA.

WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel Corporation and
private respondent San Miguel Corporation Employees Union - PTGWO are hereby directed to
complete the third level (Step 3) of the Grievance Procedure and proceed with the Arbitration
proceedings if necessary. No pronouncement as to costs.

SO ORDERED.

__________________________________________________________________-

[G.R. Nos. 88710-13 : December 19, 1990.]

192 SCRA 396

UNION OF FILIPRO EMPLOYEES (UFE), MANUEL L. SARMIENTO, BENJAMIN M. ALTAREJOS,

RODOLFO D. PAGLINAWAN, CARMELITA G. NUQUI, CORAZON Y SAZON, RODRIGO P.
LUCAS, RUDOLPH C. ARMAS, EDUARDO A. ABELLA, ANGEL A. CANETE, JUANITO T. CAPILI,
ADOLFO S. CASTILLO, JR., PONCIANO A. CARINGAL, ERIBERTO S. LEONARDO, ADELAIDA B.
MIRA, EUGENIA C. NUÑEZ, PAZ B. SAN JOSE, VENUSITO S. SOLIS, EMMANUEL S. VILLENA,
ALFONSO R. RICAFRENTE, MELANIO C. LANTIN, AMADOR M. MONTOJO, RODOLFO M.
MUNSOD, RENATO P. DIAZ, RODRIGO M. URGELLES, CARLOS B. SAN JOSE, EUSTAQUIO E.
BUNYI, NELSON P. CENTENO, SOTERO A. GACUTAN, GUILLERMO G. DE BORJA, DIONISIO
H. NIPALES, EUGENIO S. SAN PEDRO, MANUEL DELA FUENTE, CARLO MEDINA, CESAR B.
PONCE, JORGE B. CASTRO, JR., RICARDO AREVALO, REY M. BEO, FELIX ESGUERRA,
REYNALDO ALMENANZA, MELITON C. ROXAS (as represented by his surviving spouse, MA.
CORAZON ROXAS), ROMEO A. ARANDELA, ISIDRO A. NATIVIDAD, EMILIANO M. SAYAO,
CELSO J. CENIDO, PAUL C. MEJARES, SILVERIO C. PAMPANG, DIONISIO S. CANLOBO,
GILBERT C. NOBLE, RODOLFO D. CALONG-CALONG, SR., PEPITO Q. QUITLONG, DIONISIO
C. COMPLETO, ANTONIO T. AVELINO, ANGELITO PAYABYAB, ISAIAS A. RIEZA, DEODITO M.
BELARMINO, QUEZON G. MATEO, CARLITO PRE, CIPRIANO P. LUPEBA, EFREN P. DINSAY,
WILDON C. BARROS, SUSAN A. BERRO, MANUEL A. LAVIN, ROY U. BACONGUIS, JEROME T.
FIEL, ANASTACIO G. CABALLERO, JR., ROGELIO E. RAIZ, JOSE T. ISIDTO, ANGELITO M.
ANICIETE, RAUL ROBERTO C. NANQUIL, LIZA T. VILLANUEVA, CESAR S. CRUZ, REYNALDO
L. CALIGUIA, ERNESTO M. SOLOMON, OSCAR G. AGUINALDO, DIEGO P. OLIVA, JAIME D.
NILLAS, ELPIDIO A. HERMOCILLA, DANTE L. ESCOSURA, FEDERICO P. CONTEMPRATO,
LAURO C. MAKILING, RENATO O. MINDANAO, RAFAEL C. TURA AND QUINTIN J. PEDRIDO,
JR., Petitioners, vs. NESTLÉ PHILIPPINES, INC., NATIONAL LABOR RELATIONS COMMISSION,
HON. EDUARDO G. MAGNO, HON. ZOSIMO T. VASALLO and HON. EVANGELINE S. LUBATON,
Respondents.

DECISION

MEDIALDEA, J.:

This petition assails the decision of the NLRC, dated November 2, 1988 on the consolidated appeals
of petitioners, the dispositive portion of which provides as follows:

"1. In NLRC Case No. NCR-12-4007-85 and NLRC Case No. NCR-1-295-86 —
a. Declaring the strike illegal;

b. Declaring the following respondent union officers, namely; M.L. Sarmiento, B.M. Altarejos, R.D.
Paglinawan, C.G. Nuqui, C.Y. Sazon, R. Armas, E. Abella, A.A. Cañete, A.B. Mira, P.C. Caringal, E.
Leonardo E.C. Nuñez, P.D. San Jose, E. Villena A. Ricafrente, M. Lantin, A. Montojo, R. Monsud, R.
Diaz, R. Urgelles, C. San Jose, E. Bunyi, N. Centeno, R. Gacutan, G. de Borja, N. Nipales, E. San
Pedro, C. Ponce, J. Castro, R. Beo, E. Quino, M. Roxas, R. Arandela, W. Ramirez, I. Natividad, S.
Pampang, D. Canlobo, R. Calong-Calong, G. Noble, E. Sayao, C. Cenido, P. Mijares, P. Quitlong, A.
Avelino, L. Payabyab, I. Rieza, C. Pre, D. Belarmino, to have lost their employment status;

c. Ordering the reinstatement of the following respondents-appellants: Juanito Capili, Carlo Medina,
Rodrigo Lucas, Adoho Castillo, Jr., Venusito Solis, Ricardo Arevalo, Quezon G. Mateo, Jr., Dionisio
Completo, Felix Esguerra, Manuel dela Fuente and Reymundo Almenanza, to their former or
equivalent positions without loss of seniority rights but without backwages;

d. Declaring the union (UFE) guilty of unfair labor practice; and

e. Dismissing the union complaint for unfair labor practice.- nad

2. In RAB-X-2-0047-86, the decision sought to be set aside is AFFIRMED and the individual
respondents-appellants namely: Roy Baconguis, Jerome T. Fiel, Efren P. Dinsay, Anastacio G.
Caballero, Susan E. Berro, Jose T. Isidto, Wilson C. Barros, Rogelio E. Raiz, Manuel A. Lavin,
Cipriano P. Lupeba are hereby declared to have lost their employment status;.

3. In NLRC-00-09-0385-87, the challenged decision is likewise AFFIRMED, except as it affects

Cesar S. Cruz, who is ordered reinstated to his former or equivalent position without backwages."
(pp. 417-418, Rollo)

and the resolution dated March 7, 1989, quoted as follows:

"NLRC CASE NO. NCR-12-4007-85 entitled Union of Filipro Employees (UFE), Petitioner-
Appellants, versus, Filipro, Inc., et al., Respondents-Appellees, NLRC CASE NO. NCR-1-295-86
entitled Nestle Phils., Inc., Petitioner-Appellee, versus, Union of Filipro Employees, et al.,
Respondents-Appellants, NLRC CASE NO. RAB-X-2-0047-86 entitled Nestle Phils., Inc., Petitioner-
Appellee, versus, Cagayan de Oro Filipro Workers Union-WATU, et al., Respondents-Appellants,
NCR-00-09-0385-87 entitled Union of Filipro Employees (UFE) and its officers, Complainants-
Appellants, versus, Nestle Phils., et al., Respondents-Appellees. The Commission sitting en banc,
after deliberation, resolved to rectify par. 3 of the dispositive portion of our November 2, 1988
resolution by ordering the reinstatement of Quezon G. Mateo, Jr. and Dionisio Completo to their
former or equivalent position without backwages and to deny the motion for reconsideration filed by
appellants UFE and its Officials adversely affected by said resolution." (p. 429, Rollo)

In a lengthy and voluminous petition, dwelling largely on facts, petitioner Union of Filipro Employees
and 70 union officers and a member (henceforth "UFE") maintain that public respondent NLRC had
acted with grave abuse of discretion in its affirmance of the decisions of the Labor Arbiters a quo,
declaring illegal the strikes staged by UFE.

Respondent NLRC premised its decision on the following sets of facts:

1. In NCR 12-4007-85 and NCR 1-295-86:

UFE filed a notice of strike on November 14, 1985, (BLR-NS-11-344-85) with the Bureau of Labor
Relations against Filipro (now Nestle Philippines, Inc., ["Nestle"]). On December 4, 1988, UFE filed a
complaint for Unfair Labor Practice (ULP) against Nestle and its officials for violation of the Labor
Code (Art. 94) on Holiday Pay, non-implementation of the CBA provisions (Labor Management
Corporation scheme), Financial Assistance and other unfair labor practice (p. 381, Rollo).:- nad

Acting on Nestle's petition seeking assumption of jurisdiction over the labor dispute or its certification
to the NLRC for compulsory arbitration, then Minister of Labor and Employment Blas F. Ople
assumed jurisdiction over the dispute and issued the following order on December 11, 1985:

"WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute at Filipino, Inc.
pursuant to Article 264(g) of the Labor Code of the Philippines, as amended. In lime with this
assumption a strike, lockout, or any other form of concerted action such as slowdowns, sitdowns,
noise barrages during office hours, which tend to disrupt company operations, are strictly enjoined.

Let a copy of this Order be published in three (3) conspicuous places inside company premises for
strict compliance of all concerned." (p. 381-382, Rollo)
On December 20, 1985, UFE filed a petition for Certiorari with prayer for issuance of temporary
restraining order, with this Court (G.R. No. 73129) assailing the assumption of jurisdiction by the
Minister. Notwithstanding the automatic injunction against any concerted activity, and an absence of
a restraining order, the union members, at the instigation of its leaders, and in clear defiance of
Minister Ople's Order of December 11, 1986, staged a strike and continued to man picket lines at the
Makati Administrative Office and all of Nestle's factories and warehouses at Alabang, Muntinlupa,
Cabuyao, Laguna, and Cagayan de Oro City. Likewise, the union officers and members distributed
leaflets to employees and passersby advocating a boycott of company products (p. 383, Rollo).

On January 23, 1986, Nestle filed a petition to declare the strike illegal (NCR-1-295-86) premised on
violation of the CBA provisions on "no strike/no lockout" clause and the grievance machinery
provisions on settlement of disputes.

On January 30, 1986, then Labor Minister Ople issued another Order, with this disposition:

"WHEREFORE, in line with the Order of December 11, 1985, this Office hereby orders all the
striking workers to report for work and the company to accept them under the same terms and
conditions prevailing before the work stoppage within forty eight (48) hours from notice of this Order.

The Director of Labor Relations is designated to immediately conduct appropriate hearings and
meetings and submit his recommendations to enable this Office to decide the issues within thirty
(30) days." (p. 383, Rollo)

Despite receipt of the second order dated January 30, 1986, and knowledge of a notice caused to be
published by Nestle in the Bulletin on February 1, 1986, advising all workers to report to work not
later than February 3, 1986, the officers and members of UFE continued with the strike.

On February 4, 1986, the Minister B. Ople denied their motion for reconsideration of the return-to-
work order portion as follows:

"WHEREFORE, the motion for reconsideration is hereby denied and no further motion of similar
nature shall be entertained.: nad

"The parties are further enjoined from committing acts that will disrupt the peaceful and productive
relations between the parties while the dispute is under arbitration as well as acts considered illegal
by law for the orderly implementation of this Order like acts of coercion, harassment, blocking of
public thoroughfares, ingress and egress to company premises for lawful purposes or those
undertaken without regard to the rights of the other party.

"Police and military authorities are requested to assist in the proper and effective implementation of
this Order." (p. 384, Rollo)

UFE defied the Minister and continued with their strike. Nestle filed criminal charges against those
involved.

On March 13, 1986, the new Minister of Labor and Employment, Augusto B. Sanchez, issued a
Resolution, the relevant portions of which stated thus:

"This Office hereby enjoins all striking workers to return-to-work immediately and management to
accept them under the same terms and conditions prevailing previous to the work stoppage except
as qualified in this resolution. The management of Nestle Philippines is further directed to grant a
special assistance as suggested by this Ministry in an order dated 30 January 1986 to all striking
employees covered by the bargaining units at Makati, Alabang, Cabuyao and Cagayan de Oro City
in an amount equivalent to their weighted average monthly basic salary, plus the cash conversion
value of the vacation leave credits for the year 1986, payable not later than five (5) days from the
date of the actual return to work by the striking workers." (p. 385, Rollo)

On March 17, 1986, the strikers returned to work.

On March 31, 1986, We granted UFE's Motion to Withdraw its Petition for Certiorari (G.R. No.
73129) (p. 385, Rollo)

On April 23, 1986, Minister Sanchez rendered a Decision, the dispositive portion of which reads:

WHEREFORE, the Union charge for unfair labor practices is hereby dismissed for want of merit.
Nestle Philippines is hereby directed to make good its promise to grant an additional benefit in the
form of bonus equivalent to one (1) month's gross compensation to all employees entitled to the
same in addition to the one-month weighted average pay granted by this office in the return-to-work
Order." (p. 786, Rollo)
On June 6, 1986, Minister Sanchez modified the foregoing decision as follows:

"WHEREFORE, our 23 April 1986 Decision is hereby modified as follows:

"1. Nestle Philippines is directed to pay the Anniversary bonus equivalent to one month basic salary
to all its employees in lieu of the one month gross compensation previously ordered by this office."
(p. 787, Rollo)

On November 13, 1987, after trial on the merits, Labor Arbiter Eduardo G. Magno issued his
decision, disposing as follows:

"WHEREFORE, judgment is hereby rendered:

"1. Declaring the strike illegal.: nad

"2. Declaring all the respondent union officers, namely: M.L. Sarmiento, R.M. Alterejos, R.D.
Paglinawan, C.G. Nuqui, C.Y. Sazon, R. Lucas, R. Armas, E. Abella, A.A. Cañete, J.T. Capili, A.S.
Castillo, Jr., P.C. Caringal, E. Leonardo, E.B. Mira, E.C. Nuñez, P.D. San Jose, V. Solis, E. Villena,
A. Ricafrente, M. Lantin, A. Mortojo, R. Munsod, R. Diaz, R. Urgelles, C. San Jose, E. Bunyi, N.
Centeno, R. Gacutan, G. de Borja, N. Nipales, E. San Pedro, M. de la Fuente, C. Medina, C. Ponce,
J. Castro Jr., R. Arevalo, R. Beo, F. Esguerra, R. Almenanza, E. Quino, M. Roxas, R. Arandela, W.
Ramirez, I. Natividad, S. Pampang, D. Canlobo, G. Noble, E. Sayao, C. Cenido, F. Mijares, R.
Calong-Calong, P. Quitlong, D. Completo, A. Avelino, L. Payabyab, I. Rieza, D. Belarmino, Q.
Mateo, and C. Pre to have lost their employment status.

"3. Declaring the union guilty of unfair labor practice; and

"4. Dismissing the Union complaint for unfair labor practice." (pp. 380-381, Rollo)

2. In RAB-X-2-0047-86:
Filipro (Nestle) and the Cagayan de Oro Filipro Workers Union-WATU, renewed a 3-year contract,
made effective from December 1, 1984 up to June 30, 1987. Petitioners signed the CBA as the duly-
elected officers of the Union.

On January 19, 1985, the union officers, together with other members of the union sent a letter to
Workers Alliance Trade Unions (WATU), advising them "that henceforth we shall administer the CBA
by ourselves and with the help of the Union of Filipro Employees (UFE) to where we have allied
ourselves." WATU disregarded the unions's advice, claiming to be the contracting party of the CBA.
UFE filed a petition (Case No. CRD-M-88-326-85) for administration of the existing CBAs at Cebu,
Davao and Cagayan de Oro bargaining units against TUPAS and WATU.

From January 22, 1986 to March 14, 1986, the rank and file employees of the company staged a
strike at the instigation of the UFE officers, who had represented themselves as officers.

Nestle filed a petition to declare the strike illegal. The strikers countered that their strike was legal
because the same was staged pursuant to the notice of strike filed by UFE on November 14, 1985
(BLR-NS-11-344-85), of which they claim to be members, having disaffiliated themselves from CDO-
FWU-WATU.

On November 24, 1987, Executive Labor Arbiter Zosimo Vasallo issued his decision, disposing as
follows:

"WHEREFORE, in view of the foregoing, judgment is hereby rendered:

"1. Declaring the strike illegal;

"2. Declaring respondent union guilty of unfair labor practice; and

"3. Declaring the following individual respondent Union officers namely: Roy Y. Baconguis, Jerome
T. Fiel, Efren P. Dinsay, Anastacio G. Caballero, Susan E. Berro, Jose T. Isidto, Wilson C. Barros,
Rogelio E. Raiz, Manuel A. Lavin and Cipriano P. Lupeba to have lost their employment status." (p.
388, Rollo)
3. In NCR-00-09-03285-87.

(a) On August 13, 1986, UFE, its officers and members staged a walkout from their jobs, and
participated in the Welga ng Bayan. Nestlé filed a petition to declare the walkout illegal (NLRC Case
No. SRB-IV-1831-87) (p. 392, Rollo);

(b) On September 21, 1986, complainants (UFE) again did not proceed to their work, but joined the
picket line in sympathy with the striking workers of Southern Textile Mills, which became the subject
of an Illegal Strike Petition (NLRC Case SRB-IV-I 1831-87) (p. 392, Rollo);

(c) On November 12, 1986, UFE its officers and members just left their work premises and marched
towards Calamba in a demonstration over the slaying of a labor leader, . . . hence a complaint for
Illegal Walkout (NLRC Case No. SRB-IV-1833-87) was filed by Nestle (p. 392, Rollo);

(d) On December 4, 1986, UFE filed a Notice of Strike with the Bureau of Labor Relations (BLR-NS-
12-531-86) (to protest the unfair labor practices of Nestle, such as hiring of contractual workers to
perform regular jobs and wage discrimination) (p. 392, Rollo);

(e) On December 23, 1986, then Minister Augusto S. Sanchez certified the labor dispute to the
Commission for compulsory arbitration, strictly enjoining any intended or actual strike or lockout (p.
392, Rollo);

(f) On August 18, 1987, UFE union officers and members at the Cabuyao factory again abandoned
their jobs and just walked out, leaving unfinished products on line and raw materials leading to their
spoilage. The walk-out resulted in economic losses to the company. Nestle filed a Petition to Declare
the Walkout Illegal. (NLRC Case No. SRB-IV-3-1898-87) (p. 407, Rollo);

(g) On August 21, 1987, UFE union officers and members at the Alabang factory also left their jobs
in sympathy with the walkout staged by their Cabuyao counterparts. Nestle filed again a Petition to
Declare the Strike Illegal (NLRC-NCR-Case No. 00-08-03003-87) (p. 407, Rollo);

(h) On August 27, 1987, UFE union members at the Alabang and Cabuyao factories, in disregard of
the Memorandum of Agreement entered into by the Union and Management on August 21, 1987, (to
exert their best efforts for the normalization of production targets and standards and to consult each
other on any matter that may tend to disrupt production to attain industrial peace) participated in an
indignation rally in Cabuyao because of the death of two (2) members of PAMANTIC, and in
Alabang because one of their members was allegedly mauled by a policeman during the nationwide
strike on August 26, 1987 (p. 408, Rollo);

(i) On September 4, 1987, around 6:00 P.M. all sections at the Alabang factory went on a 20-minute
mealbreak simultaneously, contrary to the agreement and despite admonition of supervisors,
resulting in complete stoppage of their production lines. Responsible officials namely: Eugenio San
Pedro, Carlos Jose, and Cesar Ponce, were suspended from work for six (6) days without pay (p.
408, Rollo);

(j) From September 5 to 8, 1987, at the instigation of UFE union officers, all workers staged a
sitdown strike; and

(k) On September 7, 1987, Cabuyao's culinary section's union members sympathized with the
sitdown strike at Alabang, followed at 12:30 P.M. by the whole personnel of the production line and
certain areas in the Engineering Department. These sitdown strikes at the Alabang and Cabuyao
factories became the subject of two separate petitions to declare the strike illegal (NCR-Case No.
00-09-03168-87 and SRB-IB-9-1903-87, respectively) (p. 408, Rollo);

(l) On September 8, 1987, Hon. F. Drilon issued the following order:

"All the workers are hereby directed to return to work immediately, refrain from resorting to any
further slowdown, sitdown strike, walkout and any other kind of activities that may tend to disrupt the
normal operations of the company. The company is directed to accept all employees and to resume
normal operations.: nad

Parties are likewise directed to cease and desist from committing any and all acts that would
aggravate the situation." (p. 394, Rollo)

(m) Despite the order, UFE staged a strike on September 11, 1987, without notice of strike, strike
vote and in blatant defiance of then Labor Minister Sanchez's certification order dated November 23,
1986 and Secretary Drilon's return-to-work order dated September 8, 1987." (p. 409, Rollo);

(n) Nestle sent individual letter of termination dated September 14, 1987 dismissing them from the
service effective immediately for knowingly instigating and participating in an illegal strike, defying
the order of the Secretary of Labor, dated September 8, 1987, and other illegal acts (pp. 394-395,
Rollo).

On September 22, 1987, UFE filed a complaint for Illegal Dismissal, ULP and damages (NLRC
NCR-00-03285-87). Labor Arbiter Evangeline Lubaton ruled on both issues of dismissal and strike
legality, upon the premise that the issue on validity of the dismissal of the individual complainants
from employment "depends on the resolution of the issue on whether or not the strike declared by
complainants was illegal."

The decision dated January 12, 1988, disposed as follows:

"WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1. Dismissing the instant complaint for lack of merit; and

2. Confirming the dismissal of all individual complainants herein as valid and legally justified." (p.
376, Rollo)

UFE appealed, assailing the three decisions, except that rendered in Case No. NLRC-NCR-12-
4007-85 (Complaint for Unfair Labor Practice Against UFE) "because it was already rendered moot
and academic by the return to work agreement and order dated March 10 and 13, 1986,
respectively." (p. 49, Rollo).

Upon UFE's subsequent motion, the three appeals were ordered consolidated and elevated to the
NLRC en banc (p, 95, Rollo)

The NLRC affirmed the unanimous decisions of the three labor arbiters which declared the strikes
illegal, premised on the view that "the core of the controversy rests upon the legality of the strikes."

In the petition before Us, UFE assigns several errors (pp. 63-321, Rollo), which We have
summarized as follows:
1. that Articles 263 and 264 are no longer good laws, since compulsory arbitration has been
curtailed under the present Constitution.

2. that the question on the legality of the strike was rendered moot and academic when Nestle
management accepted the striking workers in compliance with the return-to-work order of then
Minister of Labor Augusto Sanchez dated March 13, 1986, (citing the case of Bisayan Land
Transportation Co. v. CIR (102 Phil. 439) and affirmed in the case of Feati University Faculty Club
(PAFLU) v. Feati University, G.R. No. L-31503, August 15, 1974, 58 SCRA 395).chanrobles virtual
law library

3. that the union did not violate the no-strike/no lock-out clause, considering that the prohibition
applies to economic strikes, pursuant to Philippine Metal Foundries v. CIR, G.R. No. L-34948-49,
May 15, 1979, 90 SCRA 135. UFE, it is claimed, premised their strike on a violation of the labor
standard laws or non-payment of holiday pay, which is, in effect, a violation of the CBA.

4. on the commission of illegal and prohibited acts which automatically rendered the strike illegal,
UFE claimed that there were no findings of specific acts and identifies of those participating as to
render them liable (ESSO Phils. v. Malayang Manggagawa sa ESSO, G.R. No. L-36545, January
26, 1977, 75 SCRA 72; Shell Oil Workers Union v. CIR, G.R. No. L-28607, February 12, 1972, 43
SCRA 224). By holding the officers liable for the illegal acts of coercion, or denial of free ingress and
egress, without specifying and finding out their specific participation therein, the Labor Arbiter
resorted to the principle of vicarious liability which has since been discarded in the case of Benguet
Consolidated v. CIR, G.R. No. L-24711, April 30, 1968, 23 SCRA 465.

We agree with the Solicitor General that the petition failed to show that the NLRC committed grave
abuse of discretion in its affirmance of the decisions of the Labor Arbiters a quo.

At the outset, UFE questions the power of the Secretary of Labor under Art. 263(g) of the Labor
Code to assume jurisdiction over a labor dispute tainted with national interests, or to certify the same
for compulsory arbitration. UFE contends that Arts. 263 and 264 are based on the 1973 Constitution,
specifically Sec. 9 of Art. II thereof, the pertinent portion of which reads:

"Sec. 9. . . . The State may provide for compulsory arbitration." (p. 801, Rollo)

UFE argues that since the aforecited provision of Sec. 9 is no longer found in the 1987 Constitution,
Arts. 263(g) and 264 of the Labor Code are now "unconstitutional and must be ignored."
We are not persuaded. We agree with the Solicitor General that on the contrary, both provisions are
still applicable.

We quote:

"Article 7 of the New Civil Code declares that:

'Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall
not be excused by disuse or custom or practice to the contrary.

x x x'

"In the case at bar, no law has ever been passed by Congress expressly repealing Articles 263 and
264 of the Labor Code. Neither may the 1987 Constitution be considered to have impliedly repealed
the said Articles considering that there is no showing that said articles are inconsistent with the said
Constitution. Moreover, no court has ever declared that the said articles are inconsistent with the
1987 Constitution.

"On the contrary, the continued validity and operation of Articles 263 and 264 of the Labor Code has
been recognized by no less than the Congress of the Philippines when the latter enacted into law
R.A. 6715, otherwise known as Herrera Law, Section 27 of which amended paragraphs (g) and (i) of
Article 263 of the Labor Code.

"At any rate, it must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted
pursuant to the police power of the State, which has been defined as the power inherent in a
Government to enact laws, within constitutional limits, to promote the order, safety, health, morals
and general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The police power, together
with the power of eminent domain and the power of taxation, is an inherent power of government
and does not need to be expressly conferred by the Constitution. Thus, it is submitted that the
argument of petitioners that Articles 263 (g) and 264 of the Labor Code do not have any
constitutional foundation is legally inconsequential." (pp. 801-803, Rollo)
On the issue of the legality of the strike committed, UFE seeks to absolve itself by pointing out
qualifying factors such as motives, good faith, absence of findings on specific participation and/or
liability, and limiting the no-strike provision to economic strikes.

UFE completely misses the underlying principle embodied in Art. 264(g) on the settlement of labor
disputes and this is, that assumption and certification orders are executory in character and are to be
strictly complied with by the parties even during the pendency of any petition questioning their
validity. This extraordinary authority given to the Secretary of Labor is aimed at arriving at a peaceful
and speedy solution to labor disputes, without jeopardizing national interests.

Regardless therefore of their motives, or the validity of their claims, the striking workers must cease
and/or desist from any and all acts that tend to, or undermine this authority of the Secretary of Labor,
once an assumption and/or certification order is issued. They cannot, for instance, ignore return-to-
work orders, citing unfair labor practices on the part of the company, to justify their actions. Thus, the
NLRC in its decision, re-emphasized the nature of a return-to-work order within the context of Art.
264(g) as amended by BP Nos. 130 and 227:

"x x x

"One other point that must be underscored is that the return-to-work order is issued pending the
determination of the legality or illegality of the strike. It is not correct to say that it may be enforced
only if the strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to
maintain the status quo while the determination is being made. Otherwise, the workers who contend
that their strike is legal can refuse to return to work to their work and cause a standstill on the
company operations while retaining the positions they refuse to discharge or allow the management
to fill. Worse, they will also claim payment for work not done, on the ground that they are still legally
employed although actually engaged in the activities inimical to their employer's interest. (Emphasis
supplied)

"This is like eating one's cake and having it too, and at the expense of the management. Such an
unfair situation surely was not contemplated by our labor laws and cannot be justified under the
social justice policy, which is a policy of fairness to both labor and management. Neither can this
unseemly arrangement be sustained under the due process clause as the order, if thus interpreted,
would be plainly oppressive and arbitrary.

". . ." (p. 415, Rollo)

Also, in the cases of Sarmiento v. Judge Tuico, (G.R. No. 75271-73; Asian Transmission
Corporation v. National Labor Relations Commission, G.R. 77567, 27 June 88, 162 SCRA 676). We
stated:

"The return to work order does not so much confer a right as it imposes a duty; and while as a right it
may be waived, it must be discharged as a duty even against the worker's will. Returning to work in
this situation is not a matter of option or voluntariness but of obligation. The worker must return to his
job together with his co-workers so the operations of the company can be resumed and it can
continue serving the public and promoting its interest.": nad

We also wish to point out that an assumption and/or certification order of the Secretary of Labor
automatically results in a return-to-work of all striking workers, whether or not a corresponding order
has been issued by the Secretary of Labor. Thus, the striking workers erred when they continued
with their strike alleging absence of a return-to-work order. Article 264(g) is clear. Once an
assumption/certification order is issued, strikes are enjoined, or if one has already taken place, all
strikers shall immediately return to work.

A strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or
certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of
Art. 264 of the Labor Code as amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. 82088,
October 13, 1989; 178 SCRA 482). The Union officers and members, as a result, are deemed to
have lost their employment status for having knowingly participated in an illegal act.

The NLRC also gave the following reasons:

1. The strike was staged in violation of the existing CBA provisions on "No Strike/No Lockout
Clause" stating that a strike, which is in violation of the terms of the collective bargaining statement,
is illegal, especially when such terms provide for conclusive arbitration clause (Liberal Labor Union
vs. Phil. Can Co., 91 Phil. 72; Phil. Airlines vs. PAL Employees Association, L-8197, October 31,
1958). The main purpose of such an agreement is to prevent a strike and it must, therefore, be
adhered to strictly and respected if their ends are to be achieved (pp. 397-398, Rollo)

2. Instead of exhausting all the steps provided for in the grievance machinery provided for in the
collective bargaining agreement to resolve the dispute amicably and harmoniously within the plant
level, UFE went on strike (p. 398, Rollo)
3. The prescribed mandatory cooling-off period and then 7-day strike and after submission of the
report of strike vote at Nestle's Makati Offices and Muntinlupa and Cabuyao Plants were not
complied with (NLRC-NCR-124007-85 & NCR-1-295-86), while no notice of strike was filed by
respondents when they staged the strike at Nestle's Cagayan de Oro Plant (RABX-2-0047-86)
contrary to the pertinent provision of Articles 263 and 264 of the Labor Code, emphasizing that "the
mandatory character of these cooling-off periods has already been categorically ruled upon by the
Supreme Court" (National Federation of Sugar Workers (NFSW) vs. Ovejera, et al., 114 SCRA 354)
(p. 402, Rollo)- nad

4. In carrying out the strike, coercion, force, intimidation, violence with physical injuries, sabotage,
and the use of unnecessary and obscene language or epithets were committed by the respondent
officials and members of either UFE or WATU. It is well-settled that a strike conducted in this
manner is illegal (United Seamen's Union vs. Davao Shipowners Association, 20 SCRA 1226). In
fact, criminal cases were filed with the Makati Fiscal's Office (p. 402, Rollo).

Thus, the NLRC correctly upheld the illegality of the strikes and the corresponding dismissal of the
individual complainants because of their "brazen disregard of successive lawful orders of then Labor
Ministers Blas F. Ople, Augusto Sanchez and Labor Secretary Franklin Drilon dated December 11,
1985, January 30, 1986 and February 4, 1986, respectively, and the cavalier treatment of the
provisions of the Labor Code and the return-to-work orders of the Minister (now Secretary) of Labor
and Employment, or Articles 264 and 265 (now renumbered Arts. 263 and 264), providing in part as
follows:

"ART. 263. Strikes, picketing and lockouts. —

x x x

"(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts
adversely affecting the national interest, such as may occur in but not limited to public utilities,
companies engaged in the generation or distribution of energy, banks, hospitals, and export-oriented
industries including those within export processing zones, the Minister of Labor and Employment
shall assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or certification
order. If one has already taken place at the time of assumption or certification, all striking or locked
out employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike
or lockout. The Minister may seek the assistance of law enforcement agencies to ensure compliance
with this provision as well as with such orders as he may issue to enforce the same. (Italics
supplied)- nad

"The foregoing notwithstanding, the President of the Philippines shall not be precluded from
determining the industries wherein (sic) his opinion labor disputes may adversely affect the national
interest, and from intervening at any time and assuming jurisdiction over any labor dispute adversely
affecting the national interest in order to settle or terminate the same.

x x x

ART. 264. Prohibited activities. —

(a) No labor organization or employer shall declare a strike or lockout without first having bargained
collectively in accordance with Title VII of this Book or without first having filed the notice required in
the preceding Article or without the necessary strike or lockout vote first having been obtained and
reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister
or after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency o f cases involving the same grounds for the strike or lockout." ([pp. 399-401, Rollo])
(Emphasis supplied)

On the alleged lack of jurisdiction of Labor Arbiter Lubaton, NLRC has clarified that the question on
the legality of strike was properly resolved by the Labor Arbiter, not only because the question is
perfectly within the original and exclusive jurisdiction of the Labor Arbiter to adjudicate, but also
because the issue was not subsumed by the Order of Labor Minister Sanchez, dated December 23,
1986, certifying the Notice of Strike dated December 4, 1986 for compulsory arbitration, further
clarifying that the issue of whether or not the strike staged on September 11, 1987 by UFE and its
officials and members was illegal is a prejudicial question to the issue of whether or not the
complainants were illegally dismissed. We shall not belabor the issue any further.: nad

ACCORDINGLY, the petition is DISMISSED, and the decision of public respondent NLRC, dated
November 2, 1988, and its Resolution, dated March 7, 1989, are both AFFIRMED in their entirety.
No costs.
SO ORDERED.

___________________________________________________________________

G.R. No. L-59743 May 31 1982

NATIONAL FEDERATION OF SUGAR WORKERS (NFSW), petitioner,

vs.

ETHELWOLDO R. OVEJERA, CENTRAL AZUCARERA DE LA CARLOTA (CAC), COL. ROGELIO

DEINLA, as Provincial Commander, 3311st P.C. Command, Negros Occidental, respondents.

PLANA, J:

This is a petition for prohibition seeking to annul the decision dated February 20, 1982 of Labor
Arbiter Ethelwoldo R. Ovejera of the National Labor Relations Commission (NLRC) with station at
the Regional Arbitration Branch No. VI-A, Bacolod City, which, among others, declared illegal the
ongoing strike of the National Federation of Sugar Workers (NFSW) at the Central Azucarera de la
Carlota (CAC), and to restrain the implementation thereof.

I. FACTS —

1. NFSW has been the bargaining agent of CAC rank and file employees (about 1200 of more
than 2000 personnel) and has concluded with CAC a collective bargaining agreement effective
February 16, 1981 — February 15, 1984. Under Art. VII, Sec. 5 of the said CBA —

Bonuses — The parties also agree to maintain the present practice on the grant of Christmas bonus,
milling bonus, and amelioration bonus to the extent as the latter is required by law.

The Christmas and milling bonuses amount to 1-½ months' salary.

2. On November 28, 1981, NFSW struck allegedly to compel the payment of the 13th month
pay under PD 851, in addition to the Christmas, milling and amelioration bonuses being enjoyed by
CAC workers.

3. To settle the strike, a compromise agreement was concluded between CAC and NFSW on
November 30,1981. Under paragraph 4 thereof —

The parties agree to abide by the final decision of the Supreme Court in any case involving the 13th
Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate and
distinct from the bonuses already given.

4. As of November 30, 1981, G.R. No. 51254 (Marcopper Mining Corp. vs. Blas Ople and
Amado Inciong, Minister and Deputy Minister of Labor, respectively, and Marcopper Employees
Labor Union, Petition for certiorari and Prohibition) was still pending in the Supreme Court. The
Petition had been dismissed on June 11, 1981 on the vote of seven Justices. 1 A motion for
reconsideration thereafter filed was denied in a resolution dated December 15, 1981, with only five
Justices voting for denial. (3 dissented; 2 reserved their votes: 4 did not take part.)

On December 18, 1981 — the decision of June 11, 1981 having become final and executory — entry
of judgment was made.

5. After the Marcopper decision had become final, NFSW renewed its demand that CAC give
the 13th month pay. CAC refused.

6. On January 22, 1982, NFSW filed with the Ministry of Labor and Employment (MOLE)
Regional Office in Bacolod City a notice to strike based on non-payment of the 13th month pay. Six
days after, NFSW struck.

7. One day after the commencement of the strike, or on January 29, 1982, a report of the
strike-vote was filed by NFSW with MOLE.

8. On February 8, 1982, CAC filed a petition (R.A.B. Case No. 0110-82) with the Regional
Arbitration Branch VI-A, MOLE, at Bacolod City to declare the strike illegal, principally for being
violative of Batas Pambansa Blg. 130, that is, the strike was declared before the expiration of the 15-
day cooling-off period for unfair labor practice (ULP) strikes, and the strike was staged before the
lapse of seven days from the submission to MOLE of the result of the strike-vote.

9. After the submission of position papers and hearing, Labor Arbiter Ovejera declared the
NFSW strike illegal. The dispositive part of his decision dated February 20, 1982 reads:

Wherefore, premises considered, judgment is hereby rendered:

1. Declaring the strike commenced by NFSW on January 28, 1982, illegal,

2. Directing the Central to resume operations immediately upon receipt hereof;

3. Directing the Central to accept back to work all employees appearing in its payroll as of
January 28, 1982 except those covered by the February 1, 1982 memorandum on preventive
suspension but without prejudice to the said employees' instituting appropriate actions before this
Ministry relative to whatever causes of action they may have obtained proceeding from said
memorandum;

4. Directing the Central to pay effective from the date of resumption of operations the salaries
of those to be placed on preventive suspension as per February 1, 1982 memorandum during their
period of preventive suspension; and

5. Directing, in view of the finding that the subject strike is illegal, NFSW, its officers, members,
as well as sympathizers to immediately desist from committing acts that may impair or impede the
milling operations of the Central

The law enforcement authorities are hereby requested to assist in the peaceful enforcement and
implementation of this Decision.

SO ORDERED.
10. On February 26, 1982, the NFSW — by passing the NLRC — filed the instant Petition for
prohibition alleging that Labor Arbiter Ovejera, CAC and the PC Provincial Commander of Negros
Occidental were threatening to immediately enforce the February 20, 1982 decision which would
violate fundamental rights of the petitioner, and praying that —

WHEREFORE, on the foregoing considerations, it is prayed of the Honorable Court that on the
Petition for Preliminary Injunction, an order, after hearing, issue:

1. Restraining implementation or enforcement of the Decision of February 20, 1982;

2. Enjoining respondents to refrain from the threatened acts violative of the rights of strikers
and peaceful picketers;

3. Requiring maintenance of the status quo as of February 20, 1982, until further orders of the
Court;

and on the Main Petition, judgment be rendered after hearing.

1. Declaring the Decision of February 2O, l982 null and void;

2. Making the preliminary injunction permanent;

3. Awarding such other relief as may be just in the premises.

11. Hearing was held, after which the parties submitted their memoranda. No restraining order
was issued.

II ISSUES —
The parties have raised a number of issues, including some procedural points. However, considering
their relative importance and the impact of their resolution on ongoing labor disputes in a number of
industry sectors, we have decided — in the interest of expediency and dispatch — to brush aside
non-substantial items and reduce the remaining issues to but two fundamental ones:

1. Whether the strike declared by NFSW is illegal, the resolution of which mainly depends on
the mandatory or directory character of the cooling-off period and the 7-day strike ban after report to
MOLE of the result of a strike-vote, as prescribed in the Labor Code.

2. Whether under Presidential Decree 851 (13th Month Pay Law), CAC is obliged to give its
workers a 13th month salary in addition to Christmas, milling and amelioration bonuses, the
aggregate of which admittedly exceeds by far the disputed 13th month pay. (See petitioner's
memorandum of April 12, 1982, p. 2; CAC memorandum of April 2, 1982, pp. 3-4.) Resolution of this
issue requires an examination of the thrusts and application of PD 851.

III. DISCUSSION —

1. Articles 264 and 265 of the Labor Code, insofar as pertinent, read:

Art. 264, Strikes, picketing and lockouts. — ...

(c) In cases of bargaining deadlocks, the certified or duly recognized bargaining representative
may file a notice of strike with the Ministry (of Labor and Employment) at least thirty (30) days before
the intended date thereof. In cases of unfair labor practices, the period of notice shall be shortened
to fifteen (15) days; ...

(d) During the cooling-off period, it shall be the duty of the voluntary sttlement. Should the
dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of
the notice, the labor union may strike or the employer may declare a lockout.

(f) A decision to declae a strike must be approved by at least two-thirds (2/3) of the total union
membership in the bargaining unit concerened by secret ballots in meetings or referenda. A decision
to declae a lockout must be approved by at least two-thirds (2/3) of the board of direcotrs of the
employer corporation or association or of the partners in a partnership obtained by secret ballot in a
meeting called for the purpose. the decision shall be valid for the duration of the dispute based on
substantially the same grounds considered when the strike or lockout vote was taken . The Ministry,
may at its own intitiative or upon the request of any affected party, supervise the conduct of the
secret balloting. In every case, the union of the employer shall furnish the Ministry the results of the
voting at least seven (7) days before the intended strike or lockout, subject to the cooling-off period
herein provided. (Emphasis supplied).

ART. 265. Prohibited activities. — It shall be unlawful for any labor organization or employer to
declare a strike or lockout without first having bargained collectively in accordance with Title VII of
this Book or without first having filed the notice required in the preceding Article or without the
necessary strike or lockout vote first having been obtained and reported to the Ministry.

It shall likewise be unlawful to declare a strike or lockout after assumption of jurisdiction by the
President or the Minister or after certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for the strike or lockout.
(Emphasis supplied.)

(a) Language of the law. — The foregoing provisions hardly leave any room for doubt that the
cooling-off period in Art. 264(c) and the 7-day strike ban after the strike-vote report prescribed in Art.
264(f) were meant to be, and should be deemed, mandatory.

When the law says "the labor union may strike" should the dispute "remain unsettled until the lapse
of the requisite number of days (cooling-off period) from the filing of the notice," the unmistakable
implication is that the union may not strike before the lapse of the cooling-off period. Similarly, the
mandatory character of the 7-day strike ban after the report on the strike-vote is manifest in the
provision that "in every case," the union shall furnish the MOLE with the results of the voting "at least
seven (7) days before the intended strike, subject to the (prescribed) cooling-off period." It must be
stressed that the requirements of cooling-off period and 7-day strike ban must both be complied
with, although the labor union may take a strike vote and report the same within the statutory
cooling-off period.

If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not
the waiting periods so specifically and emphatically prescribed by law, the purposes (hereafter
discussed) for which the filing of the strike notice and strike-vote report is required would not be
achieved, as when a strike is declared immediately after a strike notice is served, or when — as in
the instant case — the strike-vote report is filed with MOLE after the strike had actually commenced
Such interpretation of the law ought not and cannot be countenanced. It would indeed be self-
defeating for the law to imperatively require the filing on a strike notice and strike-vote report without
at the same time making the prescribed waiting periods mandatory.
(b) Purposes of strike notice and strike-vote report.— In requiring a strike notice and a cooling-
off period, the avowed intent of the law is to provide an opportunity for mediation and conciliation. It
thus directs the MOLE "to exert all efforts at mediation and conciliation to effect a voluntary
settlement" during the cooling-off period . As applied to the CAC-NFSW dispute regarding the 13th
month pay, MOLE intervention could have possibly induced CAC to provisionally give the 13th
month pay in order to avert great business loss arising from the project strike, without prejudice to
the subsequent resolution of the legal dispute by competent authorities; or mediation/conciliation
could have convinced NFSW to at least postpone the intended strike so as to avoid great waste and
loss to the sugar central, the sugar planters and the sugar workers themselves, if the strike would
coincide with the mining season.

So, too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor General
—

Many disastrous strikes have been staged in the past based merely on the insistence of minority
groups within the union. The submission of the report gives assurance that a strike vote has been
taken and that, if the report concerning it is false, the majority of the members can take appropriate
remedy before it is too late. (Answer of public respondents, pp. 17-18.)

If the purpose of the required strike notice and strike-vote report are to be achieved, the periods
prescribed for their attainment must, as aforesaid, be deemed mandatory., —

... when a fair interpretation of the statute, which directs acts or proceedings to be done in a certain
way, shows the legislature intended a compliance with such provision to be essential to the validity
of the act or proceeding, or when some antecedent and prerequisite conditions must exist prior to
the exercise of power or must be performed before certain other powers can be exercised, the
statute must be regarded as mandatory. So it has been held that, when a statute is founded on
public policy [such as the policy to encourage voluntary settlement of disputes without resorting to
strikes], those to whom it applies should not be permitted to waive its provisions. (82 C.J.S. 873-874.
Emphasis supplied.)

(c) Waiting period after strike notice and strike-vote report, valid regulation of right to strike. —
To quote Justice Jackson in International Union vs. Wisconsin Employment Relations Board, 336
U.S. 245, at 259 —
The right to strike, because of its more serious impact upon the public interest, is more vulnerable to
regulation than the right to organize and select representatives for lawful purposes of collective
bargaining ...

The cooling-off period and the 7-day strike ban after the filing of a strike- vote report, as prescribed
in Art. 264 of the Labor Code, are reasonable restrictions and their imposition is essential to attain
the legitimate policy objectives embodied in the law. We hold that they constitute a valid exercise of
the police power of the state.

(d) State policy on amicable settlement of criminal liability. — Petitioner contends that since the
non-compliance (with PD 851) imputed to CAC is an unfair labor practice which is an offense against
the state, the cooling-off period provided in the Labor Code would not apply, as it does not apply to
ULP strikes. It is argued that mediation or conciliation in order to settle a criminal offense is not
allowed.

In the first place, it is at best unclear whether the refusal of CAC to give a 13th month pay to NFSW
constitutes a criminal act. Under Sec. 9 of the Rules and regulations Implementing Presidential
Decree No. 851 —

Non-payment of the thirteenth-month pay provided by the Decree and these rules shall be treated as
money claims cases and shall be processed in accordance with the Rules Implementing the Labor
Code of the Philippines and the Rules of the National Labor Relations Commission.

Secondly, the possible dispute settlement, either permanent or temporary, could very well be along
legally permissible lines, as indicated in (b) above or assume the form of measures designed to
abort the intended strike, rather than compromise criminal liability, if any. Finally, amicable
settlement of criminal liability is not inexorably forbidden by law. Such settlement is valid when the
law itself clearly authorizes it. In the case of a dispute on the payment of the 13th month pay, we are
not prepared to say that its voluntary settlement is not authorized by the terms of Art. 264(e) of the
Labor Code, which makes it the duty of the MOLE to exert all efforts at mediation and conciliation to
effect a voluntary settlement of labor disputes.

(e) NFSW strike is illegal. — The NFSW declared the strike six (6) days after filing a strike
notice, i.e., before the lapse of the mandatory cooling-off period. It also failed to file with the MOLE
before launching the strike a report on the strike-vote, when it should have filed such report "at least
seven (7) days before the intended strike." Under the circumstances, we are perforce constrained to
conclude that the strike staged by petitioner is not in conformity with law. This conclusion makes it
unnecessary for us to determine whether the pendency of an arbitration case against CAC on the
same issue of payment of 13th month pay [R.A.B No. 512-81, Regional Arbitration Branch No. VI-A,
NLRC, Bacolod City, in which the National Congress of Unions in the Sugar Industry of the
Philippines (NACUSIP) and a number of CAC workers are the complainants, with NFSW as
Intervenor seeking the dismissal of the arbitration case as regards unnamed CAC rank and file
employees] has rendered illegal the above strike under Art. 265 of the Labor Code which provides:

It shall likewise be unlawful to declare a strike or lockout after assumption of jurisdiction by the
President or the Minister, or after certification or submission of the dispute to compulsory or
voluntary arbitration or during the pendency of cases involving the same grounds for the strike or
lockout. (Emphasis supplied.)

(2) The Second Issue. — At bottom, the NFSW strike arose from a dispute on the meaning and
application of PD 851, with NFSW claiming entitlement to a 13th month pay on top of bonuses given
by CAC to its workers, as against the diametrically opposite stance of CAC. Since the strike was just
an offshoot of the said dispute, a simple decision on the legality or illegality of the strike would not
spell the end of the NFSW-CAC labor dispute. And considering further that there are other disputes
and strikes — actual and impending — involving the interpretation and application of PD 851, it is
important for this Court to definitively resolve the problem: whether under PD 851, CAC is obliged to
give its workers a 13th month salary in addition to Christmas, milling and amelioration bonuses
stipulated in a collective bargaining agreement amounting to more than a month's pay.

Keenly sensitive to the needs of the workingmen, yet mindful of the mounting production cost that
are the woe of capital which provides employment to labor, President Ferdinand E. Marcos issued
Presidential Decree No. 851 on 16 December 1975. Thereunder, "all employers are hereby required
to pay salary of not more than all their employees receiving a basic P1,000 a month, regardless of
the nature of their employment, a 13th month pay not later than December 24 of every year."
Exempted from the obligation however are:

Employers already paying their employees a 13th month pay or its equivalent ...

(Section 2.)

The evident intention of the law, as revealed by the law itself, was to grant an additional income in
the form of a 13th month pay to employees not already receiving the same. Otherwise put, the
intention was to grant some relief — not to all workers — but only to the unfortunate ones not
actually paid a 13th month salary or what amounts to it, by whatever name called; but it was not
envisioned that a double burden would be imposed on the employer already paying his employees a
13th month pay or its equivalent — whether out of pure generosity or on the basis of a binding
agreement and, in the latter ease, regardless of the conditional character of the grant (such as
making the payment dependent on profit), so long as there is actual payment. Otherwise, what was
conceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay.

This view is justified by the law itself which makes no distinction in the grant of exemption:
"Employers already paying their employees a 13th month pay or its equivalent are not covered by
this Decree." (P.D. 851.)

The Rules Implementing P.D. 851 issued by MOLE immediately after the adoption of said law
reinforce this stand. Under Section 3(e) thereof —

The term "its equivalent" ... shall include Christmas bonus, mid-year bonus, profit-sharing payments
and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include
cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits. Where an employer pays less than 1/12th of the
employee's basic salary, the employer shall pay the difference." (Italics supplied.)

Having been issued by the agency charged with the implementation of PD 851 as its
contemporaneous interpretation of the law, the quoted rule should be accorded great weight.

Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual
bonuses for the purpose of determining liability for the 13th month pay. To require employers
(already giving their employees a 13th month salary or its equivalent) to give a second 13th month
pay would be unfair and productive of undesirable results. To the employer who had acceded and is
already bound to give bonuses to his employees, the additional burden of a 13th month pay would
amount to a penalty for his munificence or liberality. The probable reaction of one so circumstance
would be to withdraw the bonuses or resist further voluntary grants for fear that if and when a law is
passed giving the same benefits, his prior concessions might not be given due credit; and this
negative attitude would have an adverse impact on the employees.

In the case at bar, the NFSW-CAC collective bargaining agreement provides for the grant to CAC
workers of Christmas bonus, milling bonus and amelioration bonus, the aggregate of which is very
much more than a worker's monthly pay. When a dispute arose last year as to whether CAC workers
receiving the stipulated bonuses would additionally be entitled to a 13th month pay, NFSW and CAC
concluded a compromise agreement by which they —
agree(d) to abide by the final decision of the Supreme Court in any case involving the 13th Month
Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate and distinct
from the bonuses already given.

When this agreement was forged on November 30,1981, the original decision dismissing the petition
in the aforecited Marcopper case had already been promulgated by this Court. On the votes of only
7 Justices, including the distinguished Chief Justice, the petition of Marcopper Mining Corp. seeking
to annul the decision of Labor Deputy Minister Amado Inciong granting a 13th month pay to
Marcopper employees (in addition to mid- year and Christmas bonuses under a CBA) had been
dismissed. But a motion for reconsideration filed by Marcopper was pending as of November 30,
1981. In December 1981, the original decision was affirmed when this Court finally denied the
motion for reconsideration. But the resolution of denial was supported by the votes of only 5
Justices. The Marcopper decision is therefore a Court decision but without the necessary eight votes
to be doctrinal. This being so, it cannot be said that the Marcopper decision "clearly held" that "the
employer is liable to pay a 13th month pay separate and distinct from the bonuses already given,"
within the meaning of the NFSW-CAC compromise agreement. At any rate, in view of the rulings
made herein, NFSW cannot insist on its claim that its members are entitled to a 13th month pay in
addition to the bonuses already paid by CAC. WHEREFORE, the petition is dismissed for lack of
merit. No costs.

SO ORDERED.

_______________________________________________________________________

SANTA ROSA COCA-COLA G.R. Nos. 164302-03

PLANT EMPLOYEES

UNION, Donrico V. Sebastian,

Eulogio G. Batino, Samuel A. Present:

Atanque, Manolo C.

Zabaljauregui, Dionisio Tenorio,

Edwin P. Rellores, Luis B. YNARES-SANTIAGO, J.

Natividad, Myrna Petingco, Chairperson,

Feliciano Tolentino, Rodolfo A. AUSTRIA-MARTINEZ,

Amante, Jr., Cipriano C. Bello, CALLEJO, SR., and

Ronaldo T. Espino, Efren Galan, CHICO-NAZARIO, JJ.

and Jun Carmelito Santos,

Petitioners,

Promulgated:

- versus -

January 24, 2007

COCA-COLA BOTTLERS

PHILS., INC.,

Respondent.

x-----------------------------------------------------------------------------------------x

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R.
SP Nos. 74174 and 74860, which affirmed the ruling of the National Labor Relations Commission
(NLRC) in NLRC CA No. 030424-02, and the Labor Arbiter in NLRC Case No. RAB-IV-10-11579-99-
L.

The Antecedents

The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive bargaining
representative of the regular daily paid workers and the monthly paid non-commission-earning
employees of the Coca-Cola Bottlers Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant. The
individual petitioners are Union officers, directors, and shop stewards.

The Union and the Company had entered into a three-year Collective Bargaining Agreement (CBA)
effective July 1, 1996 to expire on June 30, 1999. Upon the expiration of the CBA, the Union
informed the Company of its desire to renegotiate its terms. The CBA meetings commenced on July
26, 1999, where the Union and the Company discussed the ground rules of the negotiations. The
Union insisted that representatives from the Alyansa ng mga Unyon sa Coca-Cola be allowed to sit
down as observers in the CBA meetings. The Union officers and members also insisted that their
wages be based on their work shift rates. For its part, the Company was of the view that the
members of the Alyansa were not members of the bargaining unit. The Alyansa was a mere
aggregate of employees of the Company in its various plants; and is not a registered labor
organization. Thus, an impasse ensued.[2]

On August 30, 1999, the Union, its officers, directors and six shop stewards filed a Notice of Strike
with the National Conciliation and Mediation Board (NCMB) Regional Office in Southern Tagalog,
Imus, Cavite. The petitioners relied on two grounds: (a) deadlock on CBA ground rules; and (b)
unfair labor practice arising from the companys refusal to bargain. The case was docketed as
NCMB-RBIV-NS-08-046-99.[3]

The Company filed a Motion to Dismiss[4] alleging that the reasons cited by the Union were not valid
grounds for a strike. The Union then filed an Amended Notice of Strike on September 17, 1999 on
the following grounds: (a) unfair labor practice for the companys refusal to bargain in good faith; and
(b) interference with the exercise of their right to self-organization.[5]

Meanwhile, on September 15, 1999, the Union decided to participate in a mass action organized by
the Alyansa ng mga Unyon sa Coca-Cola in front of the Companys premises set for September 21,
1999. 106 Union members, officers and members of the Board of Directors, and shop stewards,
individually filed applications for leave of absence for September 21, 1999. Certain that its
operations in the plant would come to a complete stop since there were no sufficient trained
contractual employees who would take over, the Company disapproved all leave applications and
notified the applicants accordingly.[6] A day before the mass action, some Union members wore
gears, red tag cloths stating YES KAMI SA STRIKE as headgears and on the different parts of their
uniform, shoulders and chests.

The Office of the Mayor issued a permit to the Union, allowing it to conduct a mass protest action
within the perimeter of the Coca-Cola plant on September 21, 1999 from 9:00 a.m. to 12:00 noon.[7]
Thus, the Union officers and members held a picket along the front perimeter of the plant on
September 21, 1999. All of the 14 personnel of the Engineering Section of the Company did not
report for work, and 71 production personnel were also absent. As a result, only one of the three
bottling lines operated during the day shift. All the three lines were operated during the night shift
with cumulative downtime of five (5) hours due to lack of manning, complement and skills
requirement. The volume of production for the day was short by 60,000 physical case[s] versus
budget.[8]

On October 13, 1999, the Company filed a Petition to Declare Strike Illegal[9] alleging, inter alia, the
following: there was a deadlock in the CBA negotiations between the Union and Company, as a
result of which a Notice of Strike was filed by the Union; pending resolution of the Notice of Strike,
the Union members filed applications for leave on September 21, 1999 which were disapproved
because operations in the plant may be disrupted; on September 20, 1999, one day prior to the
mass leave, the Union staged a protest action by wearing red arm bands denouncing the alleged
anti-labor practices of the company; on September 21, 1999, without observing the requirements
mandated by law, the Union picketed the premises of the Company in clear violation of Article 262 of
the Labor Code; because of the slowdown in the work, the Company suffered losses amounting to
P2,733,366.29; the mass/protest action conducted on September 21, 1999 was clearly a strike;
since the Union did not observe the requirements mandated by law, i.e., strike vote, cooling-off
period and reporting requirements, the strike was therefore illegal; the Union also violated the
provision of the CBA on the grievance machinery; there being a direct violation of the CBA, the
Unions action constituted an unfair labor practice; and the officers who knowingly participated in the
commission of illegal acts during the strike should be declared to have lost their employment status.
The Company prayed that judgment be rendered as follows:

1. Declaring the strike illegal;

2. Declaring the officers of respondent Union or the individual respondents to have lost their
employment status;

3. Declaring respondent Union, its officers and members guilty of unfair labor practice for violation of
the CBA; and

4. Ordering the respondents to pay petitioner the following claims for damages:

a. Actual Damages in the amount of P 4,733,366.29

b. Moral Damages in the amount of Five (5) Million Pesos; and

c. Exemplary Damages in the amount of Two (2) Million Pesos.[10]

The Union filed an Answer with a Motion to Dismiss and/or to Suspend Proceedings[11] alleging
therein that the mass action conducted by its officers and members on September 21, 1999 was not
a strike but just a valid exercise of their right to picket, which is part of the right of free expression as
guaranteed by the Constitution; several thousands of workers nationwide had launched similar mass
protest actions to demonstrate their continuing indignation over the ill effects of martial rule in the
Philippines.[12] It pointed out that even the officers and members of the Alyansa ng mga Unyon sa
Coca-Cola had similarly organized mass protest actions. The Union insisted that officers and
members filed their applications for leave for September 21, 1999 knowing fully well that there were
no bottling operations scheduled on September 21 and 22, 1999; they even secured a Mayors
permit for the purpose. The workers, including the petitioners, merely marched to and fro at the side
of the highway near one of the gates of the Sta. Rosa Plant, the loading bay for public vehicles. After
3 hours, everyone returned to work according to their respective shifting schedules. The Union
averred that the petition filed by the Company was designed to harass and its officers and members
in order to weaken the Unions position in the on-going collective bargaining negotiations.

In a letter to the Union President dated October 26, 1999, the NCMB stated that based on their
allegations, the real issue between the parties was not the proper subject of a strike, and should be
the subject of peaceful and reasonable dialogue. The NCMB recommended that the Notice of Strike
of the Union be converted into a preventive mediation case. After conciliation proceedings failed, the
parties were required to submit their respective position papers.[13] In the meantime, the officers
and directors of the Union remained absent without the requisite approved leaves. On October 11,
1999, they were required to submit their explanations why they should not be declared AWOL.[14]

On November 26, 1999, the Labor Arbiter rendered a Decision[15] granting the petition of the
Company. He declared that the September 21, 1999 mass leave was actually a strike under Article
212 of the Labor Code for the following reasons: based on the reports submitted by the Production
and Engineering Department of the Company, there was a temporary work stoppage/slowdown in
the company;[16] out of the usual three (3) lines for production for the day shift, only one line
operated by probationary employees was functional and there was a cumulative downtime of five (5)
hours attributed to the lack of manning complement and skills requirement. The Labor Arbiter further
declared:

x x x [T]he September 21, 1999 activity of the union and the individual respondents herein fell within
the foregoing definition of a strike. Firstly, the union itself had admitted the fact that on the date in
question, respondent officers, together with their union members and supporters from the Alyansa
ng mga Unyon sa Coca-Cola, did not report for their usual work. Instead, they all assembled in front
of the Sta. Rosa Plant and picketed the premises. Very clearly, there was a concerted action here on
the part of the respondents brought about a temporary stoppage of work at two out of three bottling
lines at the Sta. Rosa Plant. According to Edwin Jaranilla, the Engineering Superintendent (Annex H,
petition), all of his departments 14 engineering personnel did not report for work on September 21,
1999, and that only Line 2 operated on the day shift. Honorio Tacla, the Production Superintendent,
testified (Annex H-1), that 71 production personnel were likewise absent from their respective work
stations on September 21, 1999, and that only Line 2 operated on the day shift. Similarly, Federico
Borja, Physical Distribution Superintendent, stated under oath (Annex H-2) that 12 personnel from
his department did not report for work on September 21, 1999, and that no forklift servicing was
done on Lines 1 and 3. From the foregoing testimonies, it is evident that respondents concerted
activity resulted in a temporary stoppage of work at the Sta. Rosa Plant of the company. Thirdly,
such concerted activity by respondents was by reason of a labor dispute. Earlier, the union had filed
a Notice of Strike against the company on account of a disagreement with the latter regarding CBA
ground rules, i.e., the demand of the Union for Alyansa members from other plants to attend as
observers during the CBA negotiation, and for the members of the negotiating panel to be paid their
wages based on their work shift rate. Moreover, on September 20, 1999, one day before
respondents mass leave from work and concerted action, they had worn red tag cloth materials on
different parts of their uniform which contained the words, YES kami sa strike; Protesta kami; Sahod,
karapatan, manggagawa ipaglaban; and Union busting itigil. (Annexes G, G-1, G-2 & G-3). These
indicated that the concerted action taken by respondents against CCBPI was a result of or on
account of a labor dispute.[17]

According to the Labor Arbiter, the strike conducted by the Union was illegal since there was no
showing that the Union conducted a strike vote, observed the prescribed cooling-off period, much
less, submitted a strike vote to the DOLE within the required time. Consequently, for knowingly
participating in the illegal strike, the individual petitioners were considered to have lost their
employment status.[18]

The Union appealed the decision to the NLRC. On July 31, 2002, the NLRC affirmed the decision of
the Labor Arbiter with the modification that Union Treasurer Charlita M. Abrigo, who was on
bereavement leave at the time, should be excluded from the list of those who participated in the
illegal strike. She was thus ordered reinstated to her former position with full backwages and
benefits.[19]

The Union and its officers, directors and the shop stewards, filed a petition for certiorari in the CA.
The case was docketed as CA-G.R. SP No. 74174. Another petition was filed by Ricky G. Ganarial
and Almira Romo, docketed as CA-G.R. SP No. 74860. The two cases were consolidated in the 6th
Division of the CA.

Petitioners alleged the following in their respective petitions:

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION FOR HAVING DECLARED PETITIONERS TO HAVE LOST THEIR EMPLOYMENT
WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED DUE PROCESS

II
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DECLARING THE PEACEFUL PICKETING CONDUCTED BY THE UNION AS
ILLEGAL STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON THE INTENT TO
CREATE TEMPORARY WORK STOPPAGE

III

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION IN DECLARING THAT PETITIONERS HAVE LOST THEIR EMPLOYMENT FOR
KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE THE FACT THAT
PETITIONERS ARE NOT ELECTED OFFICERS OF THE UNION AND ARE MERE SHOP
STEWARDS AND DESPITE THE FACT THAT THERE WAS NO PROOF THAT THEY
COMMITTED ILLEGAL ACTS.[20]

The petitioners, likewise, raised the following, to wit:

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE
LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS
WHEN HE DECLARED THAT THE STRIKE CONDUCTED BY THE RESPONDENTS ON
SEPTEMBER 21, 1999 IS ILLEGAL.

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE
LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS
WHEN HE DECLARED THAT INDIVIDUAL RESPONDENTS (NOW PETITIONERS), INCLUDING
SIX (6) UNION SHOP STEWARDS, ARE CONSIDERED TO HAVE LOST THEIR EMPLOYMENT
STATUS (EXCEPT CHARLITA ABRIGO) FOR KNOWINGLY PARTICIPATING IN SAID ILLEGAL
STRIKE.[21]

On September 10, 2003, the CA rendered judgment dismissing the petition for lack of merit. It also
declared that petitioners, in CA-G.R. SP No. 74860, were guilty of forum shopping.
Petitioners filed a motion for reconsideration which the appellate court denied; hence, the instant
petition was filed based on the following grounds:

(1) THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS DISCRETION IN
DISMISSING THE PETITION BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR FROM THE
EVIDENCE ON RECORD THAT THE SUBJECT MASS ACTION WAS A VALID EXERCISE OF
THE WORKERS CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE RIGHT TO
FREE EXPRESSION.

(2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE DECISION OF THE
LABOR ARBITER A QUO WHEN IT CONCLUDED THAT AS A CONSEQUENCE OF THE
ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE OFFICERS OF THE UNION IS
JUSTIFIED AND VALID, IS NOT IN ACCORD WITH FACTS AND EVIDENCE ON RECORD.

(3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS ACTION STAGED BY
PETITIONERS ON SEPTEMBER 21, 1999 CONSTITUTES A STRIKE, THE NLRC SERIOUSLY
ERRED WHEN IT AFFIRMED THE LABOR ARBITERS DECISION DECLARING THE
FORFEITURE OF EMPLOYMENT STATUS OF UNION OFFICERS AND SHOP STEWARDS (WHO
HAVE NOT COMMITTED ANY ILLEGAL ACT DURING THE CONDUCT OF THE SAID MASS
ACTION) FOR HAVING KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE.[22]

The threshold issues in these cases are: (a) whether the September 21, 1999 mass action staged by
the Union was a strike; (b) if, in the affirmative, whether it was legal; and (c) whether the individual
officers and shop stewards of petitioner Union should be dismissed from their employment.

On the first and second issues, petitioners maintain that the September 21, 1999 mass protest
action was not a strike but a picket, a valid exercise of their constitutional right to free expression
and assembly.[23] It was a peaceful mass protest action to dramatize their legitimate grievances
against respondent. They did not intend to have a work stoppage since they knew beforehand that
no bottling operations were scheduled on September 21, 1999 pursuant to the Logistics Planning
Services Mega Manila Production Plan dated September 15, 1999.[24] Thus, they applied for leaves
of absences for September 21, 1999 which, however, were not approved. They also obtained a
mayors permit to hold the picket near the highway, and they faithfully complied with the conditions
set therein. The protesting workers were merely marching to and fro at the side of the highway or the
loading bay near one of the gates of the Company plant, certainly not blocking in any way the
ingress or egress from the Companys premises. Their request to hold their activity was for four (4)
hours, which was reduced to three (3) hours. Thereafter, they all went back to work. The bottling
operations of the Company was not stopped, even temporarily. Since petitioner Union did not intend
to go on strike, there was no need to observe the mandatory legal requirements for the conduct of a
strike.

Petitioners also point out that members belonging to the IBM-KMU at the San Fernando Coca-Cola
bottling plant staged simultaneous walkout from their work assignments for two consecutive days, on
October 7 and 8, 1999. However, the Secretary of Labor and Employment (SOLE) declared that the
walkout was considered a mass action, not a strike, and the officers of the IBM-KMU were only
meted a three-day suspension. Respondent accepted the decision of the SOLE and no longer
appealed the decision. Petitioners insist that this should, likewise, apply in the resolution of the issue
of whether petitioners staged a strike or not, and whether the penalty of dismissal from the
employment with the respondent is just and equitable.

Petitioners also insist that they were denied the right to due process because the decision of the
Labor Arbiter was implemented even while their appeal was pending in the NLRC. The decision of
the Labor Arbiter against them was to become final and executory only until after the NLRC shall
have resolved their appeal with finality.

On the third issue, petitioners aver that even assuming that they had indeed staged a strike, the
penalty of dismissal is too harsh. They insist that they acted in good faith. Besides, under Article 264
of the Labor Code, the dismissal of the Union officers who participated in an illegal strike is
discretionary on the employer. Moreover, six (6) of the petitioners were shop stewards who were
mere members of the Union and not officers thereof.

In its comment on the petition, respondent avers that the issues raised by petitioners are factual;
hence, inappropriate in a petition for review on certiorari. Besides, the findings of the Labor Arbiter
had been affirmed by the NLRC and the CA, and are, thus, conclusive on this Court.

Respondent further avers that the law offers no discretion as to the proper penalty that should be
imposed against a Union official participating in an illegal strike. Contrary to the contention of
petitioners, shop stewards are also Union officers. To support its claim, respondent cited Samahan
ng Manggagawa sa Moldex Products, Inc. v. National Labor Relations Commission,[25] International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. Hoffa;[26] and
Coleman v. Brotherhood of Railway and Steamship Clerks, etc.[27]

The petition is denied for lack of merit.

The ruling of the CA that petitioners staged a strike on September 21, 1999, and not merely a picket
is correct.

It bears stressing that this is a finding made by the Labor Arbiter which was affirmed by the
NLRC[28] and the CA.[29] The settled rule is that the factual findings and conclusions of tribunals,
as long as they are based on substantial evidence, are conclusive on this Court.[30] The raison
detre is that quasi-judicial agencies, like the Labor Arbiter and the NLRC, have acquired a unique
expertise since their jurisdictions are confined to specific matters. Besides, under Rule 45 of the
Rules of Court, the factual issues raised by the petitioner are inappropriate in a petition for review on
certiorari. Whether petitioners staged a strike or not is a factual issue.

Petitioners failed to establish that the NLRC committed grave abuse of its discretion amounting to
excess or lack of jurisdiction in affirming the findings of the Labor Arbiter that petitioners had indeed
staged a strike.

Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the concerted
action of employees as a result of an industrial or labor dispute. In Bangalisan v. Court of
Appeals,[31] the Court ruled that the fact that the conventional term strike was not used by the
striking employees to describe their common course of action is inconsequential, since the
substance of the situation, and not its appearance, will be deemed to be controlling.[32] The term
strike encompasses not only concerted work stoppages, but also slowdowns, mass leaves, sit-
downs, attempts to damage, destroy or sabotage plant equipment and facilities, and similar
activities.[33]

Picketing involves merely the marching to and fro at the premises of the employer, usually
accompanied by the display of placards and other signs making known the facts involved in a labor
dispute.[34] As applied to a labor dispute, to picket means the stationing of one or more persons to
observe and attempt to observe. The purpose of pickets is said to be a means of peaceable
persuasion.[35]

A labor dispute includes any controversy or matter concerning terms or conditions of employment or
the association or representation of persons in negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment, regardless of whether the disputants stand in the proximate
relation of employer and employee.[36]
That there was a labor dispute between the parties, in this case, is not an issue. Petitioners notified
the respondent of their intention to stage a strike, and not merely to picket. Petitioners insistence to
stage a strike is

evident in the fact that an amended notice to strike was filed even as respondent moved to dismiss
the first notice. The basic elements of a strike are present in this case: 106 members of petitioner
Union, whose respective applications for leave of absence on September 21, 1999 were
disapproved, opted not to report for work on said date, and gathered in front of the company
premises to hold a mass protest action. Petitioners deliberately absented themselves and instead
wore red ribbons, carried placards with slogans such as: YES KAMI SA STRIKE, PROTESTA KAMI,
SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN, CBA-WAG BABOYIN, STOP UNION
BUSTING. They marched to and fro in front of the companys premises during working hours. Thus,
petitioners engaged in a concerted activity which already affected the companys operations. The
mass concerted activity constituted a strike.

The bare fact that petitioners were given a Mayors permit is not conclusive evidence that their
action/activity did not amount to a strike. The Mayors description of what activities petitioners were
allowed to conduct is inconsequential. To repeat, what is definitive of whether the action staged by
petitioners is a strike and not merely a picket is the totality of the circumstances surrounding the
situation.

A strike is the most powerful of the economic weapons of workers which they unsheathe to force
management to agree to an equitable sharing of the joint product of labor and capital. It is a weapon
that can either breathe life to or destroy the Union and its members in their struggle with
management for a more equitable due to their labors.[37] The decision to declare a strike must
therefore rest on a rational basis, free from emotionalism, envisaged by the tempers and tantrums of
a few hot heads, and finally focused on the legitimate interests of the Union which should not,
however, be antithetical to the public welfare, and, to be valid, a strike must be pursued within legal
bounds. The right to strike as a means of attainment of social justice is never meant to oppress or
destroy the employer.[38]

Since strikes cause disparity effects not only on the relationship between labor and management but
also on the general peace and progress of society, the law has provided limitations on the right to
strike. For a strike to be valid, the following procedural requisites provided by Art. 263 of the Labor
Code must be observed: (a) a notice of strike filed with the DOLE 30 days before the intended date
thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by a majority of the total
union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for
that purpose, (c) notice given to the DOLE of the results of the voting at least seven days before the
intended strike. These requirements are mandatory and the failure of a union to comply therewith
renders the strike illegal.[39] It is clear in this case that petitioners totally ignored the statutory
requirements and embarked on their illegal strike. We quote, with approval, the ruling of the CA
which affirmed the decisions of the NLRC and of the Labor Arbiter:

Since it becomes undisputed that the mass action was indeed a strike, the next issue is to determine
whether the same was legal or not. Records reveal that the said strike did not comply with the
requirements of Article 263 (F) in relation to Article 264 of the Labor Code, which specifically
provides, thus:

ART. 263. STRIKES, PICKETING, AND LOCKOUTS

xxx xxx xxx xxx

(f) A decision to declare a strike must be approved by a majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose.
A decision to declare a lockout must be approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting
called for that purpose. The decision shall be valid for the duration of the dispute based on
substantially the same grounds considered when the strike or lockout vote was taken. The Ministry
may at its own initiative or upon the request of any affected party, supervise the conduct of the
secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the
voting at least seven days before the intended strike or lockout, subject to the cooling-off period
herein provided.

ART. 264. PROHIBITED ACTIVITIES

(a) No labor organization or employer shall declare a strike or lockout without first having bargained
collectively in accordance with Title VII of this Book or without first having filed the notice required in
the preceding article or without the necessary strike or lockout vote first having been obtained and
reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister
or after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or lockout.

Any worker whose employment has been terminated as a consequence or an unlawful lockout shall
be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an
illegal strike and any worker or union officer who knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his employment status: Provided, That mere
participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such lawful strike.

xxx xxx xxx xxx

Applying the aforecited mandatory requirements to the case at bench, the Labor Arbiter found, thus:

In the present case, there is no evidence on record to show that respondents had complied with the
above mandatory requirements of law for a valid strike. Particularly, there is no showing that
respondents had observed the prescribed cooling-off period, conducted a strike vote, much less
submitted a strike vote report to the Department of Labor within the required time. This being the
case, respondents strike on September 21, 1999 is illegal. In the recent case of CCBPI Postmix
Workers Union vs. NLRC, 2999 (sic) SCRA 410, the Supreme Court had said: It bears stressing that
the strike requirements under Article 264 and 265 of the Labor Code are mandatory requisites,
without which, the strike will be considered illegal. The evidence (sic) intention of the law in requiring
the strike notice and strike-vote report as mandatory requirements is to reasonably regulate the right
to strike which is essential to the attainment of legitimate policy objectives embodied in the law.
Verily, substantial compliance with a mandatory provision will not suffice. Strict adherence to the
mandate of the law is required.

Aside from the above infirmity, the strike staged by respondents was, further, in violation of the CBA
which stipulated under Section 1, Article VI, thereof that,

SECTION 1. The UNION agrees that there shall be no strike, walkout, stoppage or slowdown of
work, boycott, secondary boycott, refusal to handle any merchandise, picketing, sitdown strikes of
any kind, sympathetic or general strike, or any other interference with any of the operations of the
COMPANY during the term of this Agreement, so long as the grievance procedure for which
provision is made herein is followed by the COMPANY.

Here, it is not disputed that respondents had not referred their issues to the grievance machinery as
a prior step. Instead, they chose to go on strike right away, thereby bypassing the required grievance
procedure dictated by the CBA.[40]
On the second and third issues, the ruling of the CA affirming the decisions of the NLRC and the
Labor Arbiter ordering the dismissal of the petitioners-officers, directors and shop stewards of
petitioner Union is correct.

It bears stressing, however, that the law makes a distinction between union members and union
officers. A worker merely participating in an illegal strike may not be terminated from employment. It
is only when he commits illegal acts during a strike that he may be declared to have lost employment
status.[41] For knowingly participating in an illegal strike or participates in the commission of illegal
acts during a strike, the law provides that a union officer may be terminated from employment.[42]
The law grants the employer the option of declaring a union officer who participated in an illegal
strike as having lost his employment. It possesses the right and prerogative to terminate the union
officers from service.[43]

We quote, with approval, the following ruling of the Court of Appeals:

As to the imposition of the penalty provided for should an illegal strike be declared as such, We find
no legal or factual reason to digress from the following disquisition of the Labor Arbiter, to wit:

No doubt, the strike conducted by respondents on September 21, 1999 is illegal. Under Article
264(a) of the Labor Code, it is stated that, Any union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status. xxx.
In the present case, CCBPI had already promptly notified respondents and their members of the
disapproval of their leave. In fact, in the company notice (of the disapproval of their leave), CCBPI
emphasized that operations will come to a complete stop on September 21, 1999 if all the
applications are approved. They were further informed that, there are no sufficiently trained
contractual employees who can take over as replacements on that day (Annexes C, C-1 to C-18). In
other words, respondents had known beforehand that their planned mass leave would definitely
result in a stoppage of the operations of the company for September 21, 1999. Still, respondents
knowingly and deliberately proceeded with their mass action, unmindful of the ill effects thereof on
the business operations of the company. In the case of Association of Independent Unions in the
Philippines v. NLRC, 305 SCRA 219, the Supreme Court had ruled that,

Union officers are duty-bound to guide their members to respect the law. If instead of doing so, the
officers urge the members to violate the law and defy the duly constituted authorities, their dismissal
from the service is just penalty or sanction for their unlawful acts. The officers responsibility is
greater than that of the members.
Here, the law required respondents to follow a set of mandatory procedures before they could go on
with their strike. But obviously, rather than call on their members to comply therewith, respondents
were the first ones to violate the same.[44]

Petitioners cannot find solace in the Order of the Secretary of Labor and Employment (SOLE) in OS-
A-J-0033-99, NCMB-RB 111-NS-10-44-99 and 11-51-99 involving the labor dispute between the
Company and the Union therein (the Ilaw at Buklod ng Manggagawa Local No. 1, representing the
daily paid rank and file members of the respondent, as well as the plant-based route helpers and
drivers at its San Fernando Plant). In said case, the SOLE found that the simultaneous walkout
staged on October 7 and 8, 1999 was indeed a mass action, initiated by the Union leaders. The acts
of the Union leaders were, however, found to be illegal which warranted their dismissal, were it not
for the presence of mitigating factors,

i.e., the walkout was staged in support of their leaders in the course of the CBA negotiation which
was pending for more than nine (9) months; the Plant was not fully disrupted as the Company was
able to operate despite the severe action of the Union members, with the employment of casual and
contractual workers; the Union had complied with the requirements of a strike and refrained from
staging an actual strike.[45]

Neither can the petitioners find refuge in the rulings of this Court in Panay Electric Company v.
NLRC[46] or in Lapanday Workers Union v. NLRC.[47] In the Panay case, the Court meted the
suspension of the union officers, instead of terminating their employment status since the NLRC
found no sufficient proof of bad faith on the part of the union officers who took part in the strike to
protest the dismissal of their fellow worker, Enrique Huyan which was found to be illegal. In
Lapanday, the Court actually affirmed the dismissal of the union officers who could not claim good
faith to exculpate themselves. The officers, in fact, admitted knowledge of the law on strike, including
its procedure in conducting the same. The Court held that the officers cannot violate the law which
was designed to promote their interests.

Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie Labayani, Ricky Ganarial,
Efren Galan and Jun Carmelito Santos who were appointed as shop stewards of the Union that they
were mere members and not the officers of petitioner Union is barren of merit.

We agree with the observation of respondent that under Section 501(a) and (b) of the Landrum
Griffin Act of 1959,[48] shop stewards are officers of the Union:

Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a labor organization
occupy positions of trust in relation to such organization and its members as a group. It is, therefore,
the duty of each such person, taking into account the special problems and functions of a labor
organization, to hold its money and property solely for the benefit of the organization and its
members and to manage, invest, and expend the same in accordance with its constitution and
bylaws and any resolutions of the governing bodies adopted thereunder, to refrain from dealing with
such organization as an adverse party in any matter connected with his duties and from holding or
acquiring any pecuniary or personal interest which conflicts with the interest of such organization,
and to account to the organization for any profit received by him in whatever capacity in connection
with transactions conducted by him or under his direction on behalf of the organization. A general
exculpatory resolution of a governing body purporting to relieve any such person of liability for
breach of the duties declared by this section shall be void as against public policy.

(b) When any officer, agent, shop steward, or representative of any labor organization is alleged to
have violated the duties declared in subsection (a) of this section and the labor organization or its
governing board or officers refuse or fail to sue or recover damages or secure an accounting or other
appropriate relief within a reasonable time after being requested to do so by any member of the
labor organization, such member may sue such officer, agent, shop steward, or representative in
any district court of the United States or in any State court of competent jurisdiction to recover
damages or secure an accounting or other appropriate relief for the benefit of the labor
organization.[49]

Under said Act, Section 3(q) thereof provides, as follows:

(q) Officer, agent, shop steward, or other representative, when used with respect to a labor
organization, includes elected officials and key administrative personnel, whether elected or
appointed (such as business agents, heads of departments or major units, and organizers who
exercise substantial independent authority), but does not include salaried non-supervisory
professional staff, stenographic, and service personnel.[50]

Admittedly, there is no similar provision in the Labor Code of the Philippines; nonetheless,
petitioners who are shop stewards are considered union officers.

Officers normally mean those who hold defined offices. An officer is any person occupying a position
identified as an office. An office may be provided in the constitution of a labor union or by the union
itself in its CBA with the employer. An office is a word of familiar usage and should be construed
according to the sense of the thing.[51]
Irrefragably, under its Constitution and By-Laws, petitioner Union has principal officers and
subordinate officers, who are either elected by its members, or appointed by its president, including
the standing committees each to be headed by a member of the Board of Directors. Thus, under
Section 1, Article VI of petitioner Unions Constitution and By-Laws, the principal officers and other
officers, as well as their functions/duties and terms of office, are as follows:

ARTICLE VI

PRINCIPAL OFFICERS

SECTION 1. The governing body of the UNION shall be the following officers who shall be elected
through secret ballot by the general membership:

President Auditor

Vice-President two (2) Public Relations Officer

Secretary Sergeant-at-Arms

Treasurer Board of Directors nine (9)

SECTION 2. The above officers shall administer Unions affairs, formulate policies and implement
programs to effectively carry out the objectives of the UNION and the Labor Code of the Philippines
and manage all the monies and property of the UNION.

SECTION 3. The officers of the UNION and the members of the Board of Directors shall hold office
for a period of five (5) years from the date of their election until their successors shall have been duly
elected and qualified; provided that they remain members of the UNION in good standing.[52]

Section 6, Article II of the CBA of petitioner Union and respondent defines the position of shop
steward, thus:

SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop stewards and shall
inform management of the distribution of these stewards among the departments concerned.
Shop Stewards, union officers and members or employees shall not lose pay for attending Union-
Management Labor dialogues, investigations and grievance meetings with management.[53]

Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code mentions the functions
and duties of shop stewards, as follows:

Section 2. Procedures in handling grievances. In the absence of a specific provision in the collective
bargaining agreement prescribing for the procedures in handling grievance, the following shall apply:

(a) An employee shall present this grievance or complaint orally or in writing to the shop steward.
Upon receipt thereof, the shop steward shall verify the facts and determine whether or not the
grievance is valid.

(b) If the grievance is valid, the shop steward shall immediately bring the complaint to the employees
immediate supervisor. The shop steward, the employee and his immediate supervisor shall exert
efforts to settle the grievance at their level.

(c) If no settlement is reached, the grievance shall be referred to the grievance committee which
shall have ten (10) days to decide the case.

Where the issue involves or arises from the interpretation or implementation of a provision in the
collective bargaining agreement, or from any order, memorandum, circular or assignment issued by
the appropriate authority in the establishment, and such issue cannot be resolved at the level of the
shop steward or the supervisor, the same may be referred immediately to the grievance committee.

All grievance unsettled or unresolved within seven (7) calendar days from the date of its submission
to the last step in the grievance machinery shall automatically be referred to a voluntary arbitrator
chosen in accordance with the provisions of the collective bargaining agreement, or in the absence
of such provisions, by mutual agreement of the parties.[54]

Thus, a shop steward is appointed by the Union in a shop, department, or plant serves as
representative of the Union, charged with negotiating and adjustment of grievances of employees
with the supervisor of the employer.[55] He is the representative of the Union members in a building
or other workplace. Blacks Law Dictionary defines a shop steward as a union official who represents
members in a particular department. His duties include the conduct of initial negotiations for
settlement of grievances.[56] He

is to help other members when they have concerns with the employer or other work-related issues.
He is the first person that workers turn to for assistance or information. If someone has a problem at
work, the steward will help them sort it out or, if necessary, help them file a complaint.[57] In the
performance of his duties, he has to take cognizance of and resolve, in the first instance, the
grievances of the members of the Union. He is empowered to decide for himself whether the
grievance or complaint of a member of the petitioner Union is valid, and if valid, to resolve the same
with the supervisor failing which, the matter would be elevated to the Grievance Committee.

It is quite clear that the jurisdiction of shop stewards and the supervisors includes the determination
of the issues arising from the interpretation or even implementation of a provision of the CBA, or
from any order or memorandum, circular or assignments issued by the appropriate authority in the
establishment. In fine, they are part and parcel of the continuous process of grievance resolution
designed to preserve and maintain peace among the employees and their employer. They occupy
positions of trust and laden with awesome responsibilities.

In this case, instead of playing the role of peacemakers and grievance solvers, the petitioners-shop
stewards participated in the strike. Thus, like the officers and directors of petitioner Union who joined
the strike, petitioners-shop stewards also deserve the penalty of dismissal from their employment.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of the
Court of Appeals is AFFIRMED. No costs.

SO ORDERED.

Santa Rosa Coca Cola Plant Employee Union vs Coca Cola Bottlers Phil

OCTOBER 23, 2012 ~ VBDIAZ

Santa Rosa Coca Cola Plant Employee Union vs Coca Cola Bottlers Phil

GR 164302-03
Facts:

The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive bargaining
representative of the regular daily paid workers and the monthly paid non-commission-earning
employees of the Coca-Cola Bottlers Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant.

Upon the expiration of the CBA, the Union informed the Company of its desire to renegotiate its
terms. The CBA meetings commenced on July 26, 1999, where the Union and the Company
discussed the ground rules of the negotiations. The Union insisted that representatives from the
Alyansa ng mga Unyon sa Coca-Cola be allowed to sit down as observers in the

CBA meetings. The Union officers and members also insisted that their wages be based on their
work shift rates. For its part, the Company was of the view that the members of the Alyansa were not
members of the bargaining unit. The Alyansa was a mere aggregate of employees of the Company
in its various plants; and is not a registered labor organization. Thus, an impasse ensued.

On August 30, 1999, the Union, its officers, directors and six shop stewards filed a “Notice of Strike”
with the NCMB.

The Union decided to participate in a mass action organized by the Alyansa in front of the
Company’s premises. Thus, the Union officers and members held a picket along the front perimeter
of the plant on September 21, 1999. As a result, all of the 14 personnel of the Engineering Section of
the Company did not report for work, and 71 production personnel were also absent. As a result,
only one of the three bottling lines operated during the day shift. All the three lines were operated
during the night shift with cumulative downtime of five (5) hours due

to lack of manning, complement and skills requirement. The volume of production for the day was
short by 60,000 physical cases versus budget.

On October 13, 1999, the Company filed a “Petition to Declare Strike Illegal”

Issue: WON the strike, dubbed by petitioner as picketing, is illegal.

Held:
Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the concerted
action of employees as a result of an industrial or labor dispute. In Bangalisan v. CA, the Court ruled
that “the fact that the conventional term ‘strike’ was not used by the striking employees to describe
their common course of action is inconsequential, since the substance of the situation, and not its
appearance, will be deemed to be controlling.”

Picketing involves merely the marching to and fro at the premises of the employer, usually
accompanied by the display of placards and other signs making known the facts involved in a labor
dispute. As applied to a labor dispute, to picket means the stationing of one or more

persons to observe and attempt to observe. The purpose of pickets is said to be a means of
peaceable persuasion.

The basic elements of a strike are present in this case. They marched to and fro in front of the
company’s premises during working hours. Thus, petitioners engaged in a concerted activity which
already affected the company’s operations. The mass concerted activity constituted a

strike.

For a strike to be valid, the following procedural requisites provided by Art 263 of the Labor Code
must be observed: (a) a notice of strike filed with the DOLE 30 days before the intended date
thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by a majority of the total
union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for
that purpose, (c) notice given to the DOLE of the results of the voting at least seven days before the
intended strike. These requirements are mandatory and the failure of a union to comply therewith
renders the strike illegal. It is clear in this case that petitioners totally ignored the statutory
requirements and embarked on their illegal strike.

Petition denied.