[G.R. NO.

178647 : February 13, 2009]

GENERAL SANTOS COCA-COLA PLANT FREE WORKERS UNION-

TUPAS, Petitioner, v. COCA-COLA BOTTLERS PHILS., INC. (GENERAL SANTOS
CITY), THE COURT OF APPEALS and THE NATIONAL LABOR RELATIONS
COMMISSION, Respondents.

RESOLUTION

NACHURA, J.:

In this Petition for Review on Certiorari under Rule 45 of the Revised Rules on Civil
Procedure, petitioner General Santos Coca-Cola Plant Free Workers Union-Tupas (Union) is
seeking the reversal of the April 18, 2006 Decision1 and May 30, 2007 Resolution2 of the
Court of Appeals in CA-G.R. SP No. 80916. The CA affirmed the January 31, 2003 and
August 29, 2003 Resolutions3 of the National Labor Relations Commission (NLRC) in favor
of respondent Coca-Cola Bottlers Phil., Inc. (CCBPI).

Sometime in the late 1990s, CCBPI experienced a significant decline in profitability due
to the Asian economic crisis, decrease in sales, and tougher competition. To curb the
negative effects on the company, it implemented three (3) waves of an Early Retirement
Program.4 Meanwhile, there was an inter-office memorandum sent to all of CCBPI's Plant
Human Resources Managers/Personnel Officers, including those of the CCBPI General
Santos Plant (CCBPI Gen San) mandating them to put on hold "all requests for hiring to
fill in vacancies in both regular and temporary positions in [the] Head Office and in the
Plants." Because several employees availed of the early retirement program, vacancies
were created in some departments, including the production department of CCBPI Gen
San, where members of petitioner Union worked. This prompted petitioner to negotiate
with the Labor Management Committee for filling up the vacancies with permanent
employees. No resolution was reached on the matter.5

Faced with the "freeze hiring" directive, CCBPI Gen San engaged the services of JLBP
Services Corporation (JLBP), a company in the business of providing labor and manpower
services, including janitorial services, messengers, and office workers to various private
and government offices.6

On January 21, 2002, petitioner filed with the National Conciliation and Mediation Board
(NCMB), Regional Branch 12, a Notice of Strike on the ground of alleged unfair labor
practice committed by CCBPI Gen San for contracting-out services regularly performed
by union members ("union busting"). After conciliation and mediation proceedings before
the NCMB, the parties failed to come to an amicable settlement. On July 3, 2002, CCBPI
filed a Petition for Assumption of Jurisdiction with the Office of the Secretary of Labor and
Employment. On July 26, 2002, the Secretary of Labor issued an Order enjoining the
threatened strike and certifying the dispute to the NLRC for compulsory
arbitration.7 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

In a Resolution8 dated January 31, 2003, the NLRC ruled that CCBPI was not guilty of
unfair labor practice for contracting out jobs to JLBP. The NLRC anchored its ruling on the
validity of the "Going-to-the-Market" (GTM) system implemented by the company, which
1|Page
called for restructuring its selling and distribution system, leading to the closure of
certain sales offices and the elimination of conventional sales routes. The NLRC held that
petitioner failed to prove by substantial evidence that the system was meant to curtail
the right to self-organization of petitioner's members. Petitioner filed a motion for
reconsideration, which the NLRC denied in a Resolution9 dated August 29, 2003. Hence,
petitioner filed a Petition for Certiorari before the CA.

The CA issued the assailed Decision10 on April 18, 2006 upholding the NLRC's finding that
CCBPI was not guilty of unfair labor practice. The CA based its decision on the validity of
CCBPI's contracting out of jobs in its production department. It held that the contract
between CCBPI and JLBP did not amount to labor-only contracting. It found that JLBP was
an independent contractor and that the decision to contract out jobs was a valid exercise
of management prerogative to meet exigent circumstances. On the other hand,
petitioner failed to adduce evidence to prove that contracting out of jobs by the
company resulted in the dismissal of petitioner's members, prevented them from
exercising their right to self-organization, led to the Union's demise or that their group
was singled out by the company. Consequently, the CA declared that CCBPI was not
guilty of unfair labor practice.

Its motion for reconsideration having been denied,11 petitioner now comes to this Court
seeking the reversal of the CA Decision.

The petition is bereft of merit. Hence, we deny the Petition.

Under Rule 45 of the Revised Rules on Civil Procedure, only questions of law may be
raised in a Petition for Review on Certiorari.12

There is a question of law if the issue raised is capable of being resolved without need of
reviewing the probative value of the evidence. The resolution of the issue must rest
solely on what the law provides on a given set of circumstances. Once it is clear that the
issue invites a review of the evidence presented, the question posed is one of fact. If the
query requires a re-evaluation of the credibility of witnesses, or the existence or
relevance of surrounding circumstances and their relation to one another, the issue in
that query is factual.13

An examination of the issues raised by petitioner reveals that they are questions of fact.
The issues raised, i.e., whether JLBP is an independent contractor, whether CCBPI's
contracting-out of jobs to JLBP amounted to unfair labor practice, and whether such
action was a valid exercise of management prerogative, call for a re-examination of
evidence, which is not within the ambit of this Court's jurisdiction.

Moreover, factual findings of the NLRC, an administrative agency deemed to have

acquired expertise in matters within its jurisdiction, are generally accorded not only
respect but finality especially when such factual findings are affirmed by the CA. 14

Furthermore, we find no reversible error in the assailed Decision.ςηαñrοblεš νιrâ€

υαl lαω lιbrαrÿ

2|Page
It is true that the NLRC erroneously concluded that the contracting - out of jobs in CCBPI
Gen San was due to the GTM system, which actually affected CCBPI's sales and
marketing departments, and had nothing to do with petitioner's complaint. However, this
does not diminish the NLRC's finding that JLBP was a legitimate, independent contractor
and that CCBPI Gen San engaged the services of JLBP to meet business exigencies
created by the freeze-hiring directive of the CCBPI Head Office.

On the other hand, the CA squarely addressed the issue of job contracting in its assailed
Decision and Resolution. The CA itself examined the facts and evidence of the
parties15 and found that, based on the evidence, CCBPI did not engage in labor-only
contracting and, therefore, was not guilty of unfair labor practice.

The NLRC found - and the same was sustained by the CA - that the company's action to
contract-out the services and functions performed by Union members did not constitute
unfair labor practice as this was not directed at the members' right to self-organization.

Article 248 of the Labor Code provides:

ART. 248. UNFAIR LABOR PRACTICE OF EMPLOYERS. - It shall be unlawful for an employer
to commit any of the following unfair labor practices:

xxx

(c) To contract out services or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their right to self-
organization;

xxx

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. Without that element, the acts, even if unfair, are not unfair labor
practices.16

Both the NLRC and the CA found that petitioner was unable to prove its charge of unfair
labor practice. It was the Union that had the burden of adducing substantial evidence to
support its allegations of unfair labor practice,17 which burden it failed to discharge.

WHEREFORE, the foregoing premises considered, the Petition is DENIED. The assailed
Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 80916 are AFFIRMED.

SO ORDERED.

G.R. No. L-67158, 67159, 67160, 67161, & 67162 May 30, 1988

CLLC E.G. GOCHANGCO WORKERS UNION, CORNELIO L. PANGILINAN, LEO

TROPACIO, OLIMPIO GUMIN, JUANITO SUBA, ROLANDO SANTOS, RUBEN BUELA,
3|Page
ODILON LISING, REYNALDO DAYRIT, ROGELIO MANGUERRA, ORLANDO NACU,
DIOSILINO PERDON, ERNESTO GALANG, ORLANDO PANGILINAN, JESUS
SEMBRANO, RENATO CASTANEDA, EDILBERTO BINGCANG, ERNESTO CAPIO,
RUFO A. BUGAYONG, RICARDO S. DOMINGO, TERESITO CULLARIN, ISRAEL VINO,
ERNESTO RAMIREZ, ROMEO S. GINA, ARNEL CALILUNG, PEDRO A. SANTOS,
RODOLFO CAPITLY, BUENAVENTURA B. PUNO, EDILBERTO QUIAMBAO,
FERNANDO LISING, ERNESTO M. TUAZON, MARCELO LANGUNSAD, MARCELINO
VALERIO, SERAFIN PAWA, JESUS S. DAQUIGAN, and ISMAEL
CAYANAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), and e.g. GOCHANGCO,
INC., respondents.

Navarro, Angeles, Anero & Falcon Law Notice for petitioners.

The Solicitor General, Isagani M. Jungco, and Bernardo P. Fernandez for respondents.

SARMIENTO, J.:

The cases before the Court pit labor against management, in which, on not a few
occasions, it is labor that has cause for complaint.

The Solicitor General states the facts as follows:

xxx xxx xxx

1. Petitioner union is a local chapter of the Central Luzon Labor Congress

(CLLC), a legitimate labor federation duly registered with the Ministry of
Labor and Employment (MOLE), while the individual petitioners are former
employees of private respondent who were officers and members of the
petitioner union.

2. Private respondent is a corporation engaged in packing and crating,

general hauling, warehousing, sea van and freight forwarding,

3. Sometime in January 1980, the majority of the rank and file employees of
respondent firm organized the e.g. Gochangco Workers Union as an affiliate
of the CLLC. On January 23, 1980, the union filed a petition for certification
election under R03-LRD (MA) Case No. 178-80. The MOLE Region 111 office
set the hearing for the petition on February 27,1980.

4. On February 7,1980, the CLLC national president wrote the general

manager of respondent firm informing him of the organization of the union
and requesting for a labor management conference to normalize employer-
employee relations (Annex "D," Case 486-80).

4|Page
 5. On February 26,1980, the, union sent a written notice to respondent firm
requesting permission for certain member officers and members of the union
to attend the hearing of the petition for certification election. The
management refused to acknowledge receipt of said notice (Annex "E," Case
486-80).

6. On February 28, 1980, private respondent preventively suspended the

union officers and members who attended the hearing namely: Cornelio
Pangilinan, president; Leo Tropics, vice- president; Olimpio Gumin, treasurer;
Buenaventura Puno, director; Reynaldo Dayrit, sgt-at-arms; Ernesto Ramirez;
Ernesto Galang; Odilon Lising; Jesus Daquigan; and Edilberto Quiambao. The
common ground alleged by private respondent for its action was
"abandonment of work on February 27, 1980." On the same date, all the gate
passes of all the above-mentioned employees to Clark Air Base were
confiscated by a Base guard.

7. Claiming that private respondent instigated the confiscation of their gate

passes to prevent them from performing their duties and that respondent
firm did not pay them their overtime pay, 13th month pay and other
benefits, petitioner union and its members filed a complaint for constructive
lockout and unfair labor practice against private respondent, docketed as
R03-AB Case No. 486-80 on March 10, 1980.

8. On March 12, 1980, private respondent filed an application for clearance

to dismiss Cornelio Pangilinan, Leo Tropics, Olimpio Gumin, Reynaldo Dayrit,
Odilon Lising, Edilberto Quiambao; Ernesto Ramirez, Ernesto Galang,
Buenaventura Puno, Arnel Calilung, Romeo Guina, docketed as R03-AB Case
No. 556-80. Subsequently private respondent filed another clearance to
dismiss Jesus Daquigan, Serafin Pawa and Rufo Bugayong, docketed as R03-
A-B Case No. 55780.

9. On April 22,1980, petitioner Ricardo Dormingo who was preventively

suspended on April 17, 1980 filed a complaint for unfair labor practice
against the latter, docketed as R03-AB Case No. 55880.

10. On April 30, 1980, the services of nine (9) more union members, namely:
Ernesto Tuason, Israel Vino, Pedro Santos, Juanita Suba, Edilberto Sarmiento,
Diosalino Pandan, Antonio Razon, Benjamin Capiz and Jesus Sembrano, were
terminated by private respondent on the ground that its contract with the
U.S. Air Force had expired. The rune employees filed a complaint for illegal
dismissal against private respondents on June 2, 1980. docketed as R03-AB
Case No. 663-80.

11. On May 9, 1980, private respondent filed with MOLE, Region III, a Notice
of Termination of Contract together with a list of employees affected by the
expiration of the contract, among them, the 39 individual petitioners herein.

12. All the aforementioned cases were consolidated and assigned to Labor
Arbiter Andres Palumbarit.
5|Page
 13. After heating, Labor Arbiter Federico S. Bernardo who took over the cases
from Arbiter Palumbarit rendered a decision dated July 2, 1982, the
dispositive portion of which reads:

WHEREFORE, In view of all the foregoing, the instant complaint of

complainants is hereby granted and the respondent's application for
clearance is hereby denied.

The respondent is hereby ordered:

1. To reinstate all the suspended/dismissed employees to their

former positions without loss of seniority rights and other
privileges, with full backwages including cost of emergency living
allowance from the date of their suspension/dismissal up to the
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2. To restore transportation privilege as being extended before

the filing of the instant case; and

3. If their reinstatement is no longer possible due to closure of

the establishment, in addition to the payment of their full
backwages and cost of living allowance, to pay their respective
separation pay as provided for under the Labor Code.

14. Private respondent appealed to the NLRC which rendered the questioned
decision on May 31, 1983 as follows:

19 | P a g e
 WHEREFORE, in the light of foregoing premises, the appealed decision is
hereby set aside and another one issued dismissing the above-entitled cases
filed by the complainants-appellees for lack of merit and granting the
application for clearance to terminate the services of individual
complainants-appellees filed by respondent-appellant.

15. Petitioners moved for a reconsideration of the above decision on July 12,
1983 which NLRC denied in a resolution dated December 6,1983.

16. Hence, this petition. 1

xxx xxx xxx

The petitioners assign three errors in support of their petition:

I.

THAT PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION AND SERIOUSLY

COMMITTED ERRORS IN LAW IN CONSIDERING PRIVATE RESPONDENTS EVIDENCE
INTRODUCED FOR THE FIRST TIME ON APPEAL, AND PUBLIC RESPONDENT NLRC HAS
SERIOUSLY COMMITTED ERRORS IN GIVING DUE COURSE TO PRIVATE RESPONDENT
APPEAL FROM THE DECISION OF LABOR ARBITER FEDERICO S. BERNARDO, ALTHOUGH
SAID APPEAL WAS NOT VALIDLY PERFECTED ON TIME;

II.

THAT PUBLIC RESPONDENT NLRC COMMITTED SERIOUS ERRORS IN LAW IN RENDERING A

DECISION THAT IS CONTRARY TO THE EVIDENCE ON RECORD(S); and

III.

THAT PUBLIC RESPONDENT NLRC COMMITTED AN ERROR IN NOT AWARDING BACK

WAGES TO THE INDIVIDUAL PETITIONERS FOR REFUSAL OF PRIVATE RESPONDENT TO
REINSTATE THEM AFTER RENDERING OF THE DECISION OF LABOR ARBITER FEDERICO S.
BERNARDO AND AFTER SAID LABOR ARBITER ORDERED PRIVATE RESPONDENT TO
REINSTATE THEM. 2

On the first issue, the petitioners submit that the motion for reconsideration, treated
subsequently as an appeal, 3 of the private respondent had been filed beyond the ten-
day period prescribed by the Labor Code, in the absence of any statement thereon as to
material dates. The respondent Commission ruled that it was, on the strength of receipts
in possession of the Labor Department disclosing such dates and showing that said
appeal had been seasonably filed. As a matter of practice, and in connection with
ordinary civil cases, this Court has assumed a stance of liberality towards the application
of the material data rule, if it in be otherwise verified from other evidence that the
appeal had been perfected within the time prescribed. 4 We see no reason why we should
hold otherwise as far as labor cases are concerned. Accordingly, we yield to the
respondent Commission's finding that the e.g. Gochangco, Inc. had filed its appeal on

20 | P a g e
time. It may be further noted that the petitioners themselves can offer no proof, other
than vague inferences from circumstances, of the belated appeal they allege.

This is not to say, however, that such an appeal has judgment. The Solicitor General
himself urges that we grant that, petition and hence, reverse the respondent
Commission. But apart from such urgings, the records themselves show that a reversal is
in order.

We are convinced that the respondent company is indeed guilty of an unfair labor
practice. It is no coincidence that at the time said respondent issued its suspension and
termination orders, the petitioners were in the midst of a certification election
preliminary to a labor management conference, purportedly, "to normalize employer-
employee relations." 5 It was within the legal right of the petitioners to do so, 6 the
exercise of which was their sole prerogative, 7 and in which management may not as a
rule interfere. 8 In this connection, the respondent company deserves our strongest
condemnation for ignoring the petitioners' request for permission for some time out to
attend to the hearing of their petition before the med-arbiter. It is not only an act of
arrogance, but a brazen interference as well with the employees right to self-
organization, contrary to the prohibition of the Labor Code against unfair labor
practices. 9

But as if to add insult to injury, the company suspended the petitioners on the ground of
"abandonment of work" 10on February 27, 1980, the date on which, apparently, the pre-
election conference had been scheduled. (The petitioners sought permission on February
26, 1980 while the suspension order was issued on February 28, 1980.) What unfolds
here is a clear effort by management to punish the petitioners for their union activities.

As a consequence of such a suspension, the Clark Air Base guards confiscated the
employees' gate passes, and banned them from the base premises. We cannot be
befooled by the company's pretenses that "[t]he subsequent confiscation by the
Americans of the complainants' passes is beyond the powers of management." To start
with, those passes would not have been confiscated had not management ordered the
suspension. As put by the Solicitor General, "the U.S. Air Force authorities could not have
known who were supposed to report for work on February 27, 1980," 12and who were
under suspension. Conversely, in the absence of such a suspension order, there was no
ground to seize such gate passes. Base guards, by themselves, cannot bar legitimate
employees without the 'proper sanction of such employees'employers.

What disturbs us even more, however, is the perplexing gullibility with which the
respondent National Labor Relations Commission would fall for such an indefensible
position. Said the Commission: "So, with their gate passes confiscated, even if
management will reinstate them, without the gate passes, they cannot enter the US
Clark Airforce Base and perform their jobs, for the gate pass is a pre-requisite for their
entrance for employment." 13 For surely, and as we stated, the petitioners were
dispossessed of those gate passes precisely because of the suspension meted out
against them. It is not the other way around, as the Commission would have us behave,
for the confiscation of such passes would not furnish a ground for suspension.
Reinstatement then would have deprived the base gullibility guards any right to hold on

21 | P a g e
to such passes any further. In the absence of superior orders, mere base guards are
bereft of any discretion to act on such matters.

In finding the petitioners' suspension illegal, with more reason do we hold their
subsequent dismissal to be illegal. We are not persuaded by the respondent firm's
argument that final termination should be effected as the contract has expired." 14 What
impresses us is the Solicitor General's submission that the petitioners were regular
employees and as such, their tenure did not end with the expiration of the contract. We
quote:

The records show that petitioners were do so, 6 The ar employees whose
employment did not terminate with the expiration of private respondent's
contract with the U.S. Air Force. In their position paper in the arbitration
proceedings, they averred that been employer employed by private
respondent for six (6) months or more before they were terminated as
follows:

N D P
A A O
M T S
ES E I
T
E I
M O
P N
L
O
Y
E
D

1. J D
C a r
or n i
ne . v
lio 1 e
Pa 9 r
ng 7
ili 6
na
n

2. M D
Le a r
22 | P a g e
 o r i
Tr . v
op 1 e
ic 9 r
o 7
7

3. J D
Ol a r
im n i
pi . v
o 1 e
G 9 r
u 7
mi 7
n

4. J D
Ju u r
an n i
ita e v
Su e
ba l r
9
7
6

5. O D
Ro c r
la t i
nd . v
o 1 e
Sa 9 r
nt 7
os 8

6. J P
Ru a a
be n c
n . k

23 | P a g e
 B 1 e
ue 9 r
la 7
5

7. M P
O a a
dil y c
on k
Li 1 e
si 9 r
ng 7
5

8. M P
Re a a
yn y c
al k
do 1 e
D 9 r
ay 7
rit 6

9. M P
Ro a a
ge r c
lio . k
M 1 e
an 9 r
gu 7
er 7
ra

10 M P
. a a
Or y c
la k
nd 1 e
o 9 r
N 7

24 | P a g e
 ac 7
u

11 M P
. a a
Di y c
os k
ali 1 e
no 9 r
Pe 7
rd 7
on

12 J P
. u a
Er n c
ne e k
st e
o 1 r
G 9
al 7
an 7
g

13 J P
. u a
Or n c
la e k
nd e
o l r
Pa 9
ng 7
ili 7
na
n

14 M P
. a a
Je y c
su k

25 | P a g e
 s 1 e
Se 9 r
m 7
br 7
an
o

15 M P
. a a
Re y c
na k
to 1 e
C 9 r
as 7
ta 6
ne
da

16 A P
. u a
Ed g c
ilb . k
er 1 e
to 9 r
Sa 7
r 7
mi
en
to

17 D P
, e a
Ed c c
ua . k
rd 1 e
o 9 r
Al 7
eg 7
ad
o

26 | P a g e
 18 J P
. u a
B n c
en e k
ja e
mi l r
n 9
C 7
ap 8
iz

19 N P
. o a
A v c
nt . k
on 1 e
io 9 r
Ra 7
zo 8
n

20 M P
. a a
Ed y c
ilb k
er 1 e
to 9 r
Bi 7
ng 8
ca
ng

21 J P
. u a
Er n c
ne e k
st e
o 1 r
Sa 9
nt 7
os 8

27 | P a g e
 22 O P
. c a
B t c
en . k
ed 1 e
ict 9 r
o 7
C 8
ap
io

23 M P
. a a
Ru y c
fo k
B 1 e
ug 9 r
ay 7
on 7
g

24 D P
. e a
Ri c c
ca . k
rd 1 e
o 9 r
S. 7
D 8
o
mi
ng
o

25 M P
. a a
Te r c
re . k
sit 1 e
o 9 r
C 7
ull

28 | P a g e
 ar 8
in

26 M P
. a a
Isr y c
ae k
l 1 e
Vi 9 r
no 7
9

27 M P
. a a
Er r c
ne . k
st 1 e
o 9 r
Ra 7
mi 9
re
z

28 S P
. e a
Ro p c
m t k
eo . e
S. 1 r
Gi 9
na 7
9

29 S P
. e a
Ar p c
ne t k
l . e
C 1 r
al 9

29 | P a g e
 flu 7
ng 9

30 M P
. a a
Pe y c
dr k
o 1 e
A. 9 r
Sa 7
nt 9
os

31 N P
. o a
Ro v c
do . k
lfo 1 e
C 9 r
ap 7
itl 8
y

32 S P
. e a
B p c
ue t k
na . e
ve 1 r
nt 9
ur 7
a 9
B.
Pu
no

33 N P
. o a
Ed v c
ilb . k

30 | P a g e
 er 1 e
to 9 r
Q 7
ui 8
a
m
ba
o

34 J C
. a h
Fe n e
rn . c
an 1 k
do 9 e
Li 7 r
si 5
ng

35 F M
. e e
Er b c
ne . h
st 1 a
o 9 n
M. 7 i
Tu 5 c
az
on

36 J M
. a e
M n c
ar . h
ce 1 a
lo 9 n
La 6 i
ga 3 c
ns
ad

31 | P a g e
 37 M M
. a e
M y c
ar h
ce 1 a
lin 9 n
o 7 i
Va 9 c
le
ri
o

38 F P
. e a
Se b c
ra . k
fin 1 e
Pa 9 r
w 7
a 9

39 M P
. a a
Je y c
su k
s 1 e
S. 9 r
D 7
aq 7
ui
ga
n

40 M P
. a a
Is y c
m k
ae 1 e
l 9 r
C 7
ay 8 1

an

32 | P a g e
 an 5

As regular employees, the petitioners' tenure are secure, and their dismissal must be
premised on a just cause. 16

We find none here. What we find, instead, are flimsy attempts by the respondent
company to discredit the person of the petitioners' counsel, or their officers, and other
resorts to argumenta ad hominem. 17

There is no merit in the claim that the petitioners' terms were coterminous with the
duration of the contract. There is nothing in the records that would show that the
petitioners were parties to that contract. It appears furthermore that the
petitioners 18 were in the employ of the respondent company long before that contract
was concluded. They were not contract workers whose work terms are tied to the
agreement, but were, rather, regular employees of their employer who entered into that
contract.

But even if dismissal were warranted, the same nonetheless faces our disapproval in the
absence of a proper clearance then required under the Labor Code.19 It is true that efforts
were undertaken to seek such a clearance, yet there is no showing that it was issued.
That still taints the dismissal with the vice of illegality.

The Court likewise rejects the claims of an alleged waiver by the petitioners of their
economic demands, in the light of an alleged order issued by Labor Arbiter Luciano
Aquino in connection with another case(s) involving the same parties. (It was Labor
Arbiter Federico Bernardo who penned the unfair labor practice/illegal dismissal case.)
The Honorable Aquino's disposition reads:

The records show that a "Waiver of Claims, Rights and Interest" was filed by
above-named petitioners stating, among other things, that said petitioners
are waiving their claims, rights and interests against the respondents.

ACCORDINGLY, let the above-entitled cases be DISMISSED in view of the

waiver made by the petitioners. 20

Acting on these allegations, the respondent Commission, baring its clear bias
for management, ruled that the petitioners had waived their claims. Thus:

xxx xxx xxx

With respect to the second issue, that is, whether or not the waiver of rights
and interests executed by Fernando do so, 6 The G Lising, Odilon do so, 6
The G Lising, Jose C. Tiamzon, Ernesto Tuazon, Pedro Santos, Ruben Buela,
Eduardo Alegado, Estrael Vino, Rogelio Manguerra, Edilberto Bingcang,
Olimpio Gumin, Leo Tropico, Orlando Nacu, Rodolfo T. Capitly and Juanito
Suba, are valid, the alleged president of complainant-appellee union Benigno

33 | P a g e
 Navarro, Sr., contends that Id Atty. Solomon has no authority to appear floor
and in behalf of individual complainants-appellees who waived their rights
and interests in these cases since there was no authority from him. Records,
however, disclose that said Atty. Solomon had been the attorney of record for
complainants-appellees since the inception of these cases, and, therefore, is
authority to represent them cannot be questioned- not even by Ministry.
Navarro who allegedly took over the presidency of complainant-appellee
union after the disappearance of the former president, Mr. Ficardo Alconga,
Sr. And besides, the waiver of rights and interests were personally executed
by the signatories therein and all that Atty. Solomon did was to assist
them. 21

xxx xxx xxx

We find this puzzling for clearly, Labor Arbiter Aquino's resolution refers to other
cases22 and not the instant unfair labor practice controversy. The Commission cannot
feign simple mistake for such a lapse. Wittingly or unwittingly, it had made itself a Dawn
of the respondent corporation or otherwise had yielded to its influence. The Court
rebukes Atty. Isagani M. Jungco counsel for the respondent company, for his unbecoming
act and the individual members of the Commission itself, for besmirching the integrity of
the Commission.

In any event, we have held that unfair labor practice cases are not, in view of the public
interest involved, subject to compromises. 23 Furthermore, these alleged waivers do not
appear to have been presented in the first instance. They cannot be introduced for the
first time on appeal.

We come, finally, to the respondent company's liability for backwages and for emergency
cost of living allowances (ECOLA). In its appeal, the company denies any liability,
pointing to "[r]epresentative samples of the documents evidencing payment was likewise
submitted due to the voluminous records which cannot be all produced." 24 The
Commission accepted this argument, noting that 'these xerox copies of payment of
allowances, were never spurned by complainants-appellees." 25 The Solicitor General
observes, on the other hand, that these alleged documents were never presented at the
hearing but surfaced only on appeal. 26 Indeed, there is no reference in the Labor
Arbiter's decision to these documents, and apparently, the respondent firm entered the
same in evidence at the appeal level only. As we have declared, a party is barred from
introducing fresh matters at the appellate stage. Besides, and as the Solicitor General
points out, "the ECOLA awarded to petitioners in the decision of the Labor Arbiter include
only those that pertain to them from the time of their dismissal up to July 1, 1982 " 27 the
date the Labor Arbiter ordered their reinstatement. 28 Accordingly, we rule the
respondent corporation liable for such unpaid claims.

Before Batas Blg. 70 29 was enacted into law, unfair labor practices were considered
administrative offenses, 30 and have been held akin to tort, 31 wherein damages are
payable. We therefore not only order herein the reinstatement of the petitioners and the
payment of backwages (including cost-of-living allowances) to them, but impose as well
moral and exemplary damages. With respect to backwages, we hold the respondent e.g.
Gochangco, Inc. liable, in line with the recommendation of the Solicitor General and in
34 | P a g e
accordance with accepted practice, for backwages equivalent to three (3) years without
qualification or deduction. 32

As for moral damages, we hold the said respondent liable therefor under the provisions
of Article 2220 of the Civil Code providing for damages for "breaches of contract where
the defendant acted fraudulently or in bad faith." We deem just and proper the sum of
P5,000.00 each in favor of the terminated workers, in the concept of such damages.

We likewise grant unto said workers another P5,000.00 each to answer for exemplary
damages based on the provisions of Articles 2229 and 2231 and/or 2232 of the Civil
Code. For "act[ing] in gross and evident bad faith in refusing to satisfy the [petitioners']
plainly valid, just and demandable claim[s] " 33 the respondent firm is further condemned
to pay attorney's fees. The Court considers the total sum of P20,000.00 fair and
reasonable.

If only for emphasis, the new Constitution considers "labor as a primary social economic
force." 34 As the conscience of the government, it is this Court's sworn duty to ensure
that none trifles with labor rights.

WHEREFORE, the petition is GRANTED. The decision of the public respondent, the
National Labor Relations Commission, is REVERSED and SET ASIDE. Judgment is hereby
rendered:

1. Ordering the private respondent, e.g. Gochangco, Inc., to REINSTATE the terminated
workers;

2. Ordering the private respondent to PAY them backwages equivalent to three (3) years
without qualification or deduction;

3. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH, as and
for moral damages;

4. Ordering it to PAY them the sum of FIVE THOUSAND (P5,000.00) PESOS EACH, as and
for exemplary damages; and

5. Ordering it to PAY them the sum of TWENTY THOUSAND (P20,000.00) PESOS as and for
attorney's fees.

This Decision is IMMEDIATELY EXECUTORY.

Costs against the private respondent.

IT IS SO ORDERED.

G.R. No. L-39140 & 39145 May 17, 1980

ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION,

INC., petitioner,
vs.
35 | P a g e
ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC.
EMPLOYEES' UNION (AFP-MBAI-EU), LUCIA LAURENTE, EMERENCIANA AGULTO,
LUNINGNING SANTOS, AMPARO VICENTE, FE M. JACINTO, TEODULFA FLORENDO,
CLARITA B. ASPIRAS, EDNA CUBILLO, CESAR SAEZ, MARIETA BERMUDO,
ESTELITA J. SANTOS, PRIMA S.J. NAFRADA, FLORA E. CINCO, JUANITA V.
MONTERO, LYDIA PADIERNOS, and THE COURT OF INDUSTRIAL
RELATIONS, respondents;

ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC.

EMPLOYEES' UNION (AFP-MBAI-EU), VICTORIA I. ALVAREZ, EDILBERTO B.
BALLECER, DELIA B. REBULTAN, WARLITO Q. MADAMBA, ROLANDO O.
SANTIAGO, ALFONSO JOVES, THELMA D. ESPINA, SUSAN MARANON, FELICIANO
C. FERNANDEZ, TERESITA DE LOS REYES, MAGDALENA S. DAZO, DOMINADOR M.
LAMSEN, BALTAZAR, V. VILLARUZ, ROGELIO L. CORDERO, LOURDES R.
POBLADOR, CARMELITA ARAGON, MODESTA CAOILE, JOSEFINA BAUTISTA and
AVELINA E. ANTONIO, petitioners,
vs.
ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC.
(AFP-MBAI) and COURT OF INDUSTRIAL RELATIONS (CIR), respondents.

GUERRERO, J.:ñé+.£ªwph!1

The two petitions before Us assail the validity of the Court of Industrial Relations'
Resolution dated July 16, 1974 denying two motions for partial reconsideration
separately filed by the Armed Forces of the Philippines Mutual Benefit Association, Inc.
(AFP-MB Assn., for short) in G.R. No. L-39140 and the Armed Forces of the Philippines
Mutual Benefit Association, Inc. Employees' Union (Union for short) in G. R. No. L-39145.

In Our Resolution dated November 25, 1974, after giving due course to the petitions, the
two cases were ordered consolidated.

These petitions arose from Case No. 5525-ULP filed in the Court of Industrial Relations on
December 1, 1970 by the Court Prosecutor in behalf of the Union and thirty-four (34) of
its officers members for unfair labor practice against the AFP-MB Assn., its then General
Manager, Maximo Jante and its Assistant General Manager, Esmeraldo Acorda for the
alleged illegal and discriminatory dismissals on June 30, 1970 of the said thirty-four (34)
individual complainants.

The complaint alleges that the individual complainants are employees of the AFP-MB
Assn. and at the same time members of the Union; that some of them became active in
campaigning for more members of the Union and have worked for their benefit by
sending economic demands to the AFP-MB Assn.; that conferences on these demands
were held resulting into a collective bargaining agreement between the Association and
the Union made on June 30, 1970; that on July 1, 1970, all individual complainants were
handed letters of dismissal by respondents for no other reason than their being members
of the Union and active in connection therewith; that only members of the Union were

36 | P a g e
dismissed and that on July 1, 1970, as a result of such unfair labor practice acts,
complainants were compelled to declare a strike.

The AFP-MB Assn. in its Answer alleged that the dismissal of the complainants were due
to lawful and justified causes; that as early as September, 1969, complainants were
already aware of the contemplated reduction of personnel by reason of suspension
and/or abolition of some of its operations; that some of the individual complainants have
already acknowledged or ratified the validity of their dismissals and have waived
whatever rights to reinstatement and/or other benefits that may accrue to them as a
result of the filing of the instant case; that most of the individual complainants have
already obtained substantially the same or equivalent employment in other companies;
that the strike declared by the Union was illegal and that the Court of Industrial Relations
has no jurisdiction over the subject matter of the complaint, considering that the AFP-MB
Assn. is a benevolent association and is not engaged in business or organized for profit.

On August 19, 1971, the AFP-MB Assn. filed a "Motion to Dismiss" the case insofar as the
following complainants are concerned: têñ.£îhqwâ£

1. Victorina Alvarez

2. Edilberto B. Ballecer

3. Delia B. Rebultan

4. Warlito Q. Madamba

5. Rolando O. Santiago

6. Alfonso Joves

7. Thelma D. Espina

8. Susan Maranon

9. Feliciano C. Fernandez

10. Teresita de los Reyes

11. Magdaleno S. Dazo

12. Dominador Lamsen

13. Baltazar V. Villaruz

14. Rogelio L. Cordero

15. Lourdes R. Poblador

16. Carmelita Aragon

37 | P a g e
 17. Modesta Caoile

18. Josefina Bautista

19. Avelina E. Antonio

on the ground that they voluntarily withdrew from this case by freely executing under
oath quitclaim papers.

The Hearing Examiner duly commissioned by the CIR to hear and receive evidence in this
case found that prior to the execution of the bargaining agreement and sometime in
September, 1969 the Office of the Insurance Commissioner recommended to the Board
of Directors of the Association the stoppage of the grant of Home Appliances Loans,
Salary Loans, Car Insurance Loans and Educational Loans as being illegal and unlawful
(Exhs. "2" and "27-A"). The general manager of the Association undertook a feasibility
study of the investment capability of the company and came up with a prepared study
on June 11, 1970 which among others, recommended the retention of seventy (70)
personnel, provided that 26 out of the 70 retained will be phased out within a period of
two years. About a year thereafter or on June 17, 1970, the New Minimum Wage Law
increased the daily wages of industrial workers from P6.00 to P8.00 a day.

Pursuant to the order of the CIR dated March 16, 1971 the Chief of the Examining
Division of that Court examined the books of accounts and other pertinent papers of the
Association. The Examiner submitted a report which showed that the standard current
capital working ratio is 2 to 1 which means that the current assets should be at least two
times the current liabilities; that there should be at least P2.00 worth of current assets
with which to pay P1.00 worth of current debts or obligations. The Association had as of
December 31, 1969 P2.62 worth of current assets to meet or pay P1.00 worth of current
debts. The Association had, therefore, excess assets to meet or pay its debts within the
operating business cycle of one year.

The Examiner also found out that the Association's "Plantilla" for 1971 showed that the
salaries of the officers and other personnel were increased. He also pointed out that the
individual complainants were terminated or dismissed allegedly due to losses incurred by
the Association.

The Hearing Examiner thereupon submitted the following recommendations: têñ.

£îhqwâ£

1. Dismissing this complaint insofar as complainants Victoria Alvarez,

Edilberto B. Ballecer, Delia B. Rebultan, Warlito Q. Madamba, Rolando
Santiago, Alfonso Joves, Thelma D. Espina, Susan Marañ;on, Magdaleno S.
Dazo, Dominador Lamsen, Baltazar V. Villaruz, Carmelita Aragon, Modesta
Caoile, Feliciano C. Fernandez, Teresita de los Reyes, Josefina Bautista and
Avelina E. Antonio are concerned;

2. Declaring respondent Association as within the coverage of the Industrial

Peace Act;

38 | P a g e
 3. Declaring respondents guilty of unfair labor practice for having dismissed
on June 30, 1970 the remaining individual complainants and ordering them
to cease and desist from further committing the same unfair labor practice
acts;

4. Ordering the respondents to reinstate complainants Lucia S. Laurente,

Emerenciana C. Agulto, Luningning Z. Santos, Fe M. Jacinto, Teodulfar R.
Florendo, Clariba B. Aspiras, Edna Cublido, Cesar B. Saez, Marieta P.
Bermudo, Estelita J. Santos, Prima S.J. Nifrada, Flora E. Cinco, Juanita V.
Montero, Lydia Padiernos to their former positions with backwages from July
1, 1970 until actually reinstated, with all the rights and privileges formerly
appertaining thereto, less whatever earnings elsewhere they had during the
period of their dismissal and

5. Ordering respondents to reinstate Amparo Vicente to her former position

with only half of her backwages from the time of her dismissal on June 30,
1970 until she is actually reinstated, with all the rights and privileges
formerly appertaining to her position less her earnings elsewhere if any,
during the period of her dismissal.

In a decision dated April 15, 1974, the Court of Industrial Relations adopted in fun the
recommendation of the Hearing Examiner, the dispositive portion of which reads: têñ.
£îhqwâ£

WHEREFORE, all of the foregoing considered, and as so recommended, the

respondents should be, as they are hereby, declared guilty of having
committed the unfair labor practice acts complained of, for having dismissed
the individual complainants on June 30, 1970 by reason of their union
affiliation and activities and are therefore ordered to cease and desist from
committing the same or similar unfair labor practice acts, and to reinstate
complainants Lucila Laurente, Emerenciana Agulto, Luningning Z. Santos,
Amparo Vicente, Fe M. Jacinto, Teodulfa Florendo, Clarita B. Aspiras, Edna
Cubildo, Cesar B. Saez, Marieta P. Bermudo Estelita J. Santos, Prima S.J.
Nifrada, Flora E. Cinco, Juanita V. Montero, and Lydia Padiernos to their
former or substantially equivalent positions with backwages from July 1,
1970 until actually reinstated, with all the rights and privileges formerly
appertaining thereto, including seniority, less whatever earnings they have
made elsewhere during the period of their dismissal, except in the case of
complainant Amparo Vicente who should be paid by respondents only one-
half of her backwages from the time of her dismissal on June 30, 1970 until
she is actually reinstated.

The above-entitled case should, however, be as it is hereby ordered

dismissed insofar as complainants Victoria Alvarez, Edilberto V. Ballecer,
Delia B. Rebultan, Warlito Q. Madamba, Rolando Santiago, Alfonso Joves,
Thelma D. Espina, Susan Maranon, Magdalena S. Dazo, Dominador Lamsen,
Baltazar, V. Villaruz, Rogelio L. Cordero, Lourdes R. Poblador, Carmelita
Aragon, Modesta Caoile, Feliciano C. Fernandez, Teresita de los Reyes,
Josefina Bautista and Avelina E. Antonio are concerned.
39 | P a g e
 SO ORDERED.

The AFP-MB Assn. and the individual complainants filed separate motions for
reconsideration of the above order. Complainants anchored the motion on the ground
that receipt of separation pay and quitclaims cannot absolve the Association from the
consequences of the unfair labor practice, whereas the Association maintained that
individual complainants are not entitled to reinstatement nor backwages as ordered by
the Court.

The CIR en banc denied both motions, finding no justification in altering or modifying the
questioned decision.

Both parties come to Us on certiorari, assigning the following as errors committed by the
Court of Industrial Relations: têñ.£îhqwâ£

In G. R. No. 39140

1. The Court of Industrial Relations erred in declaring petitioner Association

guilty of unfair labor practice for having dismissed its thirty four (34)
employees on June 30, 1970.

2. The Court of Industrial Relations erred in ordering the reinstatement of the

fifteen (15) individual respondents to their former or substantially equivalent
positions.

3. The Court of Industrial Relations erred in ordering the payment to the

fifteen (15) individual respondents of backwages from the date of their
dismissal until their actual reinstatement.

In G. R. No. 39145

1. Having found their dismissal to be violative both of the collective

bargaining agreement and Section 4 (2) of Republic Act No. 875, it is error for
respondent court to order the dismissal of the complaint with respect to
herein individual petitioners.

2. It is error for the trial court to absolve the respondent Corporation from the
consequences of its unfair labor practice acts by petitioners' execution of
quitclaims in its favor.

These assignments of errors can be capsule into two main issues, namely: têñ.£îhqwâ£

1. Whether or not the AFP-MB Assn. is guilty of unfair labor practice for
dismissing thirty four (34) of its employees by reason of the suspension
and/or abolition of some of its operations; and

2. Whether or not the trial court erred in dismissing the complaint against
individual complainants who executed "Quitclaim and Complete Release.

40 | P a g e
On the first issue, the Association contends that the dismissal of thirty four (34)
employees of petitioner is due to just and legitimate causes and the CIR committed an
error of law in declaring petitioner Association guilty of unfair labor practice since the
cessation of the four (4) major lending operations of the Association granting Home
Appliances Loans, Salary Loans, Car Insurance Loans and Educational Loans was ordered
by the Office of the Insurance Commissioner being in violation of the law and must stop
immediately, thereby rendering the dismissal of the said thirty four (34) employees on
June 30, 1970 as necessary and imperative.

It is quite true, as the Association argues, that the Supreme Court in a number of cases
has recognized and affirmed the right of the employer to lay-off or dismiss employees
because of lack of work caused by a considerable reduction in its business, or that their
continued employment will only result in farther losses in the operation of its business
(Phil. American Embroideries Inc. vs. Embroidery & Garment Workers Union, 26 SCRA
634, 643; Northern Luzon Transportation Co. vs. CIR, 73 Phil. 41), due to lack of work
(Union of Philippine Education Employees vs. Phil. Education Co., Inc. L-7161, May 19,
1955, 97 Phil. 953), and considerable reduction in the volume of his business (Gregorio
Araneta Employees Union vs. Arsenio Roldan, 97 Phil. 304). We have held that such acts
of dismissal do not constitute unfair labor practice. Under the law, an employer may
close his business provided the same is done in good faith and is due to causes beyond
his control. To rule otherwise would be oppressive and inhuman. (Tio Kinh vs. CIR, 90 Phil.
564, 568; LVN Pictures Employees and Workers Association (NLU) vs. LVN Pictures, Inc., L-
23495, Sept. 30, 1970; LVN Pictures Checkers' Union (NLU) vs. LVN Pictures, Inc., L-
26432, September 30, 1970, 35 SCRA 147).

In the case at bar, however, it appears that the books of accounts and other pertinent
papers of the Association were ordered examined by the Chief of the Examining Division
of the Court in order that the latter may be fully informed and guided as to the financial
status of the Association, and his Report submitted on March 31, 1971 shows that the
current or working capital ratio of the respondent Association is more than the standard
or average ratio. The alleged financial losses or poor financial condition as a
consequence of the implementation of the New Minimum Wage Law on June 17,1970 and
the cessation of the four aspects of its operation are belied by the fact that in their
Plantilla for 1971, salaries of the officers and other personnel were increased, which was
implemented thereafter.

While a collective bargaining agreement was entered and executed between the
Association and the Union on June 10, 1970, and signed on June 13, 1970 and ratified or
acknowledged on June 18, 1970 for a term or duration of two (2) years, and providing
among others guaranteed security of tenure of employment, there is evidence which is
substantial that the Association, in entering into said collective bargaining contract, did
not have the honest intention of complying with all the provisions thereof. The Board of
Directors of the Association knew as early as September, 1969 that the Office of the
Insurance Commissioner would stop the grant of the Home Appliances Loans, Salary
Loans, Car Insurance Loans and Educational Loans, said investments being unlawful and
in direct violation of Section 1628-G of the Revised Administrative Code, as amended by
Act No. 3612. Moreover, the feasibility study on the investment capability of the
Association dated June 11, 1970, submitted by the General Manager to the Board of
Directors of the Corporation, which was before the signing of the collective bargaining
41 | P a g e
agreement, recommended among others: "Retain 70 personnel; provided that 26
personnel out of the 70 personnel retained will be phased out within a period of two
years." Upon these facts already known to the Association prior to the signing on June
13, 1970 and acknowledgment of the collective bargaining contract on June 18, 1970,
the conclusion of the trial court which was affirmed by the CIR en banc being fully
supported by substantial evidence is correct in holding that the Association in so
entering into said collective bargaining contract did not have the honest intention of
complying with all the provisions thereof.

The fact that the Association actually terminated the services of the individual
complainants on June 30, 1970 or only 12 days after the acknowledgment of the contract
by the parties without referring the matter of phasing out or lay-off to the proper labor
management committee, as well as the fact that the supposed guidelines containing the
criteria in the selection of those who were to be terminated was not presented to the
court despite requests therefor, are not disputed by the Association.

In the light of the evidence presented and recited above, We find that the termination of
employment of the individual complaints constitutes unfair labor practice as concluded
by the Trial Judge, Associate Judge Alberto S. Veloso and affirmed en banc by the Court of
Industrial Relations, which conclusion is supported by substantial evidence. Hence, We
find no abuse of discretion or excess of jurisdiction on the part of the respondent court.

It needs no further emphasis in re-stating the rule that the factual findings of the Court of
Industrial Relations are conclusive upon the Supreme Court. As the Supreme Court said
in Philippine Engineering Corp. vs. Court of Industrial Relations, 41 SCRA 89 — têñ.
£îhqwâ£

It is a settled doctrine of this Court that matters touching on the weight and
sufficiency of evidence and on the credibility of witnesses involve questions
of fact, and the findings of the CIR on such matters are conclusive upon this
Court. It cannot be said that the CIR abused its discretion when it did not
consider petitioner's evidence credible and sufficient. We find that the
testimonies of the petitioner's witnesses regarding the losses were not given
credit by the CIR because they failed to state specifically the amount of the
alleged losses in 1965 or 1964, and in prior years. The corporation, according
to the CIR, did not present its books of account and its statements of profit
and loss which could clearly demonstrate the alleged financial losses, nor did
petitioner present its accountant or auditor to testify on that matter. The
failure of petitioner to present the best evidence in its possession, concluded
the CIR, gives rise to the presumption that there was suppressing on its part
of evidence unfavorable to its interests. This Court has ruled that the matters
regarding the financial condition of a company to justify the closing of its
business and whether a company is losing in its operations are questions of
fact.

It is not necessary to support a finding that a particular discharge constitutes

an unfair labor practice to demonstrate that the dismissal was entirely and
exclusively motivated by the employee's union activities or affiliations. It is
enough to denounce the discharge if it established that the discrimination
42 | P a g e
 motive was a contributing factor. This Court has also said that if it can be
established that the true and basic inspiration for the employer's act is
derived from the employee's union affiliation or activities, the assignment by
the employer of another reason, whatever its semblance of validity, is
unavailing:

The decision assailed makes special mention of the cases of complainants Amparo
Vicente and Lucia Laurente who, like the other complainants, were dismissed on the "...
result of the implementation of the New Minimum Wage Law and the present financial
condition of the Association, as approved by the Board of Directors reducing the
personnel ..." as alleged by the Association but which complainants deny for they were
dismissed " ... for no other reason that their being members of the Union and active in
connection therewith." (paragraph 8, Complaint).

In the case of Lucia Laurente, she was an accounting clerk in respondent Association
from May 9, 1966, and Auditor of the complainant Union. She was awarded a diploma of
merit as a Model Employee by the respondent Association. In January, 1970, she was
appointed a member of a working committee to study or investigate the financial
conditions of the respondent Association in relation to the economic provisions of the
collective bargaining agreement. During the negotiation for a collective bargaining
agreement, she uttered remarks unfavorable to the management which prompted the
General Manager to demand an explanation from her which was found to be
unsatisfactory. She was dismissed on June 30, 1970 according to the General Manager
because she seemed to be discourteous and had made a statement that the Association
had two sets of books like Chinese business firms and that it was a committee that
decided her lay-off. Her testimony that during the negotiation for a collective bargaining
agreement in 1970, the Assistant Manager of the Association told them that they "better
dissolve the Union, anyway the management can grant benefits to us without the Union"
which is not refuted nor denied, clearly manifests the intent and motive of the
Association in her dismissal and the other members of the Union.

The same is true with complainant Amparo Vicente, who was the Chief of the Credit and
Collection Section of the Association while also a member of the complainant Union's
Board of Directors and from 1968 acted as Treasurer until she was dismissed on June 30,
1970.

She was cited for her exemplary performance as an Outstanding Employee of the
Association and was also the recipient of a letter of commendation by the General
Manager as well as an awardee of a certificate of merit (Second Honorable Mention) in
recognition of her meritorious service as Section Chief in December, 1968. Her alleged
tardiness for three times in March, 1970 and failure to register on the daily time register
book appears to be the reason for her dismissal, notwithstanding the fact that her
explanations for said violations were simply noted by the management. Her Union
activities were, however, known to the management for she had campaigned for
membership in the Union from 1966 to 1970, telling them about the advantage and
disadvantages about labor unions and the benefit of paying Union dues, and considering
that those who resigned from the Union after the signing of the collective bargaining
agreement and during the strike were not terminated from their employment, unlike in
her case where despite her qualifications, competence, aptitude and proven merit, she
43 | P a g e
did not qualify for retention after an appraisal of her records which were not shown or
produced before the court, the ruling of the Court of Industrial Relations that her
dismissal was similarly an unfair labor practice cannot be disturbed, reviewed or
reversed by Us. We, therefore, affirm that the Association is guilty of unfair labor practice
for dismissing thirty four (34) of its employees by reason of the suspension and/or
abolition of some of its operations.

On the second issue, there is no dispute that the 19 complainants, namely Victoria
Alvarez, Edilberto V. Ballecer, Delia B. Rebultan, Warlito Q. Madamba, Rolando Santiago,
Alfonso Joves, Thelma D. Espina, Susan Marañ;on, Magdalena S. Dazo, Dominador
Lamsen, Baltazar V. Villaruz, Rogelio L. Cordero, Lourdes R. Poblador, Carmelita Aragon,
Modesta Caoile, Feliciano C. Fernandez, Teresita de los Reyes, Josefina Bautista and
Avelina E. Antonio executed, signed and subscribed under oath documents entitled
"Quitclaim and Complete Release" (Exhibits "4" to "22") which, among others
provide: têñ.£îhqwâ£

1. I have this____ day of_________ 197___, tendered my irrevocable

resignation as an employee of the AFP Mutual Benefit Association,
Incorporation;

2. I hereby acknowledge receipt of the sum of_________ (check) No.______

dated_______ 197___ to my full and complete satisfaction, representing my
separation/termination pay as an employee of the said MBAI;

3. I hereby acknowledge that I have no other and further money claims from
the said MBAI, and I now release forever the said MBAI, fully and completely
from any and all claims whatsoever arising from my employment therewith;

4. I also hereby withdraw/desist as party litigant in the unfair labor practice

suits brought by the Armed Forces of the Philippines Mutual Benefit
Association, Incorporated Employees Union ... against the AFP-MBAI and/or
any of its officials before the Court of Industrial Relations ...; waiving forever
whatever right to reinstatement and/or other such benefits that may accrue
as a result of the said above-mentioned cases.

Thereafter, the above-enumerated complainants received, in different amounts based on

their length of service, their separation benefits without protest and reservation, as
attested by the respondents' General Vouchers marked as Ex- exhibits "4-A", "5-A", "6-A",
"6-B", "7-A", "8-A", "9-A", "10-A", "11-A", "12-A", "13-A", "13-B", "14-A", "15-A", "16-A",
"17-A", "18-A", "19-A", "20-A", "21-A", "22-A", and "22-B", which were duly signed and
acknowledged by the aforesaid individual complainants.

The Trial Judge, the Honorable Alberto S. Veloso, in his decision dismissing the complaint
against the above-enumerated complainants insofar as they are concerned rationalized
the dismissal this wise: têñ.£îhqwâ£

It should be emphasized that the afore-enumerated complaints irrevocably

resigned from their employment; they likewise received to their full and
complete satisfaction their separation pay without protest and reservation;
44 | P a g e
 they acknowledged that they have no more claims against the respondent
herein and thereby released them forever from any claim arising from their
employment; and above all, they withdrew/desisted as party litigant in this
case. It should further be stressed that none of the said individual
complainants was presented in rebuttal to disprove the free and voluntary
execution of said "Quitclaim and Complete Release" and "General Voucher",
nor was there evidence adduced by the complaints that these were imposed
upon them and that they were compelled by necessity to sign and accept
them. On the other hand, respondents presented evidence that these
complaints voluntarily applied for their separation pay, and likewise freely
accepted their checks without any protest or reservation.

Under this situation, it is believed that the said individual complainants freely
and voluntarily desisted and withdrew their case against the respondents.
And, this being the case, the Court has no other alternative but to dismiss
this complaint against the respondents insofar as they are concerned. [Sec. 5
(c), Republic Act 875]

In labor jurisprudence, it is well-established that quitclaims and/or complete releases

executed by the employees do not estop them from pursuing their claims arising from
the unfair labor practice of the employer. The basic reason for this is that such quitclaims
and/or complete releases are against public policy and, therefore, null and void. The
acceptance of termination pay does not divest a laborer of the right to prosecute his
employer for unfair labor practice acts. (Cariñ;o vs. ACCFA, L-19808, Sept. 29, 1966, 18
SCRA 183; Philippine Sugar Institute, vs. CIR, L-13475, Sept. 29, 1960, 109 Phil. 452;
Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA 694, 704).

In the Cariñ;o case, supra, the Supreme Court, speaking thru Justice Sanchez, said: têñ.
£îhqwâ£

Acceptance of those benefits would not amount to estoppel. The reason is

plain. Employer and employee, obviously, do not stand on the same footing.
The employer drove the employee to the wall. The latter must have to get
hold of money. Because, out of job, he had to face the harsh necessities of
life. He thus found himself in no position to resist money proffered. His, then,
is a case of adherence, not of choice. One thing sure, however, is that
petitioners did not relent their claim. They pressed it. They are deemed not
to have waived any of their rights. Renuntiatio non praesumitur.

Likewise, in Firestone Filipinas Employees Association vs. Firestone Tire and Rubber Co.
of the Philippines, L-37952, December 10, 1974, 61 SCRA 340, 345, where petitioners
therein were given separation pay in consideration of which they executed releases and
quitclaims releasing the respondent company, the Supreme Court, in the words of then
Justice now Chief Justice Enrique M. Fernando, held: têñ.£îhqwâ£

... What weakens the case for private respondent even more is that as a
matter of law the acceptance of the terms of the alleged compromise
including the benefits attributed to it did not automatically negate the
assertion of whatever rights may be possessed by virtue of the Industrial
45 | P a g e
 Peace Act. Mention has just been made on the length of time that had
elapsed since the strike began. The financial plight of the petitioner is thus
obvious. They are the people who without work would find it difficult to know
how their basic needs can be met. They are likely to be family men, appalled
by the thought that they cannot even provide sufficiently for their young
ones. It is precisely the reaction of their lot is far from enviable that led to
this highly relevant excerpt from the opinion announced in Philippine Sugar
Institute vs. Court of Industrial Relations (109 Phil. 452), "By accepting the
benefits of their separation the petitioner argues that they are in estoppel.
The separation thrust upon them and the acceptance of benefits thereof
cannot constitute estoppel." So was it made clear in the opinion of Justice
Padilla, a jurist with the solid reputation for soundness and competence, who
was ever careful never to go further than the law allows in the recognition of
the claims of the workingman. The then Justice, now Chief Justice Makalintal
had occasion to reiterate such doctrine in Urgelio vs. Osmeñ;a (L-14908,
February 28, 1964, 10 SCRA 253) in these words: "Contrary to respondents'
theory, the fact that petitioners received their terminal pay cannot be
considered as a waiver of the right to question the termination of their
services." That was so under the 1935 Constitution. The present Constitution
as already noted, is much more liberal in its recognition of labor's
dependence on governmental efforts to assure that its welfare be truly
promoted. It would be to blunt the force then of the decision referred to
earlier, promulgated after the approval of the Charter now in force, if the
defense of the petitioners having executed releases and quitclaims will be
given the seal of approval. This Court is not disposed to take that step.

The Association's argument that it is not the receipt of separation pay and the execution
of quitclaim documents by the individual petitioners which compelled the Court of
Industrial Relations to dismiss the complaint insofar as they are concerned but rather
their voluntary desistance and withdrawal from the case as party litigants which gave
the Court of Industrial Relations no other alternative but to dismiss the complaint, is
untenable. In the first place, the finding of the Court of Industrial Relations that the
Association was guilty of unfair labor practice for having dismissed on June 30, 1970 the
thirty-four (34) individual complainants from their employment by reason of their Union
activities is correct, as well as its Order for the reinstatement of the fifteen (15)
complainants who did not execute quitclaims and/or complete releases, which We affirm.
But the dismissal of the complaint insofar as the other nineteen (19) complainants are
concerned on the ground that they have voluntarily desisted and withdrawn from the
case is not warranted because their desistance or withdrawal is not only voluntary but
also illegal, being contrary to public policy. And since the dismissal of the employees
constitutes an unfair labor practice, it is immaterial whether some have executed
quitclaims and releases or not.

Secondly, under Section 5 (2) of the Industrial Peace Act, Republic Act 875, which
provides: têñ.£îhqwâ£

(a) The Court shall have jurisdiction over the prevention of unfair labor
practices and is empowered to prevent any person from engaging in any
unfair labor practice. This power shall be exclusive and shall not be affected
46 | P a g e
 by any other means of adjustment or prevention that has been or may be
established by an agreement, code, law, or otherwise,

We can clearly and positively declare, without hesitancy or doubt, that unfair labor
practice acts are beyond and outside the sphere of compromises such as quitclaims,
release and settlements.

All the individual complainants are entitled to reinstatement to their former employment
at current rates paid by the Association to employees occupying the same or similar
position without loss of seniority and privileges. They are furthermore entitled to three
years backpay following the rule laid down in the case of Mercury Drug Co. vs. CIR, L-
23357, April 30, 1974, 56 SCRA 694, and reiterated in Feati University Faculty Club vs.
Feati University, L-31503, August 15, 1974, 58 SCRA 395; Luzon Stevedoring Corporation
and B. H. Tenefrancia vs. CIR, L-34300, November 22, 1974, 61 SCRA 154; Insular Life
Assurance Co., Ltd Employees' Association-NATU vs. Insular Life Assurance Company, L-
25291, March 10, 1977, 76 SCRA 50; Liberty Cotton Mills Workers Union vs. Liberty
Cotton Mills Inc.,L-33987, May 31, 1979, 90 SCRA 391, without requiring the parties to
submit proof of compensation received from other sources from the time of the illegal
dismissal on June 30, 1970 until actual reinstatement.

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the decision of the Court of Industrial
Relations is hereby modified. The Armed Forces of the Philippines Mutual Benefit
Association, Inc. is hereby ordered:

a. To immediately reinstate all the individual complainants to their former employment at

current rates paid by said Armed Forces of the Philippines Mutual Benefit Association Inc.
to employees occupying the same or similar positions, without loss of seniority and
privileges, within thirty (30) days from notice of this decision; and

b. To pay complainants the equivalent of three (3) years backwages at the rates actually
received by them before their dismissal on June 30, 1970 without deduction or
qualification.

Costs against the Armed Forces of the Philippines Mutual Benefit Association, Inc.

In view of the length of time that complainants' right to reinstatement during the
pendency of the dispute and to accrued backwages has been pending enforcement, this
decision shall be immediately executory upon its promulgation.

SO ORDERED.

[G.R. No. 120482. January 27, 1997]

REFORMIST UNION OF R. B. LINER, INC., HEVER DETROS, ET AL., petitioners,

vs. NATIONAL LABOR RELATIONS COMMISSION, R.B. LINER, INC., BERNITA

47 | P a g e
 DEJERO, FELIPE DEJERO, RODELIO DEJERO, ANA TERESA DEJERO, and RODELIO
RYAN DEJERO, respondents.

DECISION
DAVIDE, JR., J.:

This is a special civil action for certiorari under Rule 65 of the Rules of Court seeking
to set aside the decision [1] of the National Labor Relations Commission (NLRC) in NLRC
NCR CA No. 004115-92, which affirmed the decision [2] of the Labor Arbiter in the
consolidated cases NLRC NCR Case Nos. 00-03-01392-90 and 00-04-02088-90, and the
resolution of the former denying the motion for the reconsideration of its decision. [3]
Petitioner Reformist Union of R.B. Liner, Inc. (hereinafter Reformist) with Hever Detros
as its president, is composed of drivers, conductors, and mechanics of private
respondent R.B. Liner, Inc. Private respondents Bernita, Felipe, Rodelio, Ana Teresa, and
Rodelio Ryan, all surnamed Dejero, are the incorporators of R.B. Liner, Inc.
From the record and the pleadings filed by the parties, we cull the following material
facts in this case:

Petitioner union was organized in May 1989 "by affiliating itself with Lakas Manggagawa
sa Pilipinas (hereinafter Lakas)." [4] Lakas filed a notice of strike on 13 November 1989
because of alleged acts of unfair labor practice committed by the private
respondents. [5] Despite conciliation hearings held on 4 and 6 December 1989, the
parties failed to reach an agreement. Later, another act of unfair labor practice allegedly
committed by the private respondents impelled Reformist, with the authorization
of Lakas, to go on strike on 13 December 1989 even as conciliation proceedings
continued. [6]

On 21 December 1989, R.B. Liner, Inc. petitioned then Secretary Fanklin Drilon of the
Department of Labor and Employment (DOLE) to assume jurisdiction over the ongoing
dispute or certify it to the NLRC. [7] Secretary Drilon determined that "[t]he ongoing work
stoppage in the company . . . . adversely affects an industry indispensable to the
national interest;" thus on 28 December 1989, he certified the dispute to the NLRC for
compulsory arbitration and issued a return-to-work order. [8]

The certified case (NLRC Certified case No. 0542, entitled In Re: Labor Dispute at RB
Liner, Inc.) was dismissed on 13 February 1990 [9] after the union and the company
reached all agreement [10] on 19 January 1990 providing, among other matters, for the
holding of a certification election.

On 31 January 1990, a certification election was held where Lakas won as the collective
bargaining agent of the rank-and-file employees. [11] On 13 February
1990, Lakas presented a proposal for a collective bargaining agreement to Bernita and
Rodelia Dejero, [12] but they refused to bargain. [13] Meanwhile, as admitted by private
respondents' witness Arcile Tanjuatco, Jr., eight R.B. Liner buses were "converted" to
Sultran Lines, one "became MCL," and another "became SST Liner." [14]

48 | P a g e
The petitioners filed NLRC NCR Case No. NCR 00-03-01392-90 charging the private
respondents with unfair labor practice, i.e., illegal lock out. The private respondents
countered with NLRC Case No. NCR-00-04-02088-90, which sought to declare as illegal
the union's 13 December 1989 strike, as well as other "work stoppages/boycotts" staged
by the petitioners. The two cases were consolidated and simultaneously tried. [15]

In his decision of 27 October 1992, Labor Arbiter Ricardo Nora ruled that the
evidence, e.g., the private respondents' proof of payment of percentage taxes for 1990
and Conductors/Inspectors Daily Reports, "indicate[d] against an illegal lockout," while
finding that Reformist staged an illegal strike for the following reasons:

1. The Reformist failed to show that they observed the legal requirements of a legal
strike, like the following:

First, the Reformist failed to show and present evidence that the approval of
majority vote of its members were obtained by secret ballot before the
strike; Second, they failed to show that they submitted the strike vote to the
department of Labor at least seven (7) days prior to the intended strike; and Third,
all members of the Reformist Union struck even before the certification election?
when there was no definitive bargaining unit duly recognized and while the
conciliation process was still on-going and in progress. Exh. 7-D is clear which
states the following: "The Union object[s] with [sic] the position of Management
for the reason that considering that they are on strike such election is moot and
academic. All employees as per union allegation participate[d] in that concertedac
tion."

2. The Reformist engaged in illegal, prohibited activities by obstructing the free

ingress and egress to and from the R.B. Liner's garage premises where the trucks
were Parked; (Exhs. "8", "8-A" to "8-D").

3. The Reformist failed to present clear evidence . . . rebutting respondents' claim

that the Reformist, blatantly defied the Secretary's return-to-work Order dated
December 28, 1989. The evidence adduced particularly Exhibit "12" (the minutes
of the conference on January 19, 1990 in Office of the NLRC Commissioner Diokno)
includes the following: "That the Union assured to cause the return within five (5)
days or January 24, of all employees who have not reported for work and
management agreed to accept them." This clearly indicates an admission by the
Reformist that its members did not comply with the Return-to-work order of the
Secretary of Labor. It may be noted though that some members complied with the
Order as per testimony of respondents' witness, however, the same workers had
earlier participated in prohibited and illegal activities like illegal picketing that
characterized an illegal strike. [16]

The Labor Arbiter then disposed as follows:

IN VIEW OF THE FOREGOING, judgment is hereby rendered:

1. Dismissing the complaint of Reformist in NLRC-NCR-Case No. 00-03-01392-

90 for Unfair Labor Practice (Illegal Lockout) for lack of merit;
49 | P a g e
 2. Declaring the December 13, 1989 Strike by the Reformist as ILLEGAL in
NLRC-NCR-Case No. 00-04-02088-90;

3. Declaring all the Officers and Members of the Reformist to have lost their
employment status for participating in an Illegal Strike. They are named as
follows:

xxx

All other issues are Dismissed for lack of merit. [17]

On appeal, the NLRC affirmed the Labor Arbiter's finding that Reformist held an illegal
strike, reasoning as follows:

It [Reformist] disputes the holding that an illegal strike was staged on December 13,
1989 on the ground that previous thereto, conciliation and mediation conferences
were conducted and which thus constituted . . . evidence that there was a notice of
strike filed consequent to a strike vote had among the members of the union. This,
assuming for the sake of argument is true, did not outrightly put a stamp of validity
for such concerted action as the fact remains that no certification election was
conducted previous to the strike. Hence, the union could not have validly claimed
that it was the exclusive bargaining agent of the workers in petitioners' premises
when it staged the subject strike. Nevertheless, such flaw, as correctly assumed by
the appellants, could have been corrected by the Return to Work Order of then
Secretary of Labor Franklin Drilon. The finding that this Order was defied is
contested by the appellants alleging that the logbook which contains an entry of all
those who reported for work was never presented by management, this constituting
suppression of evidence. This could have been true had the said logbook constituted
as the sole evidence in support of petitioners' assertion as to appellants' failure to
comply with the return to work order. However, the minutes of the January 19, 1990
conference before then Commissioner Diokno establishes such fact on the strength of
the Union's admission when it undertook to assure "the return within five (5) days or
January 24 of all employees who have not reported for work . . ." [18] Further it was
also established that the strikers were guilty of committing illegal activities,
particularly the obstruction of free ingress and egress to and from the Liner's garage
premises as shown by the pictures taken thereat. All told, the foregoing established
circumstances yield no other conclusion except to declare the strike staged by the
union as illegal. [19]

Anent the illegal lockout, the NLRC deemed R.B. Liner, Inc.'s conversion of some of its
buses into those of other bus companies as sufficient reason for the petitioners to
believe, in good faith, that the private respondents were committing an act of unfair
labor practice. The NLRC ruled that this circumstance:

[M]itigate[d] the liability of the striking union as well as its members not only in
considering the propriety of administering the avowed principle of equity in labor
case[s] but likewise on the strength of the pronouncements of the Supreme Court in
a line of cases where it was held that a strike undertaken on account of what the
workers perceived to be unfair labor practices Acts on the part of the employer
50 | P a g e
 should not be outrightly taken as illegal even if the allegations of unfair labor practice
acts are subsequently found to be untrue. [20]

Thus, the NLRC affirmed the decision of the Labor Arbiter but allowed reinstatement of
the dismissed employees:

Accordingly, as a measure of social justice, resumption of employment relations between

the parties shall be decreed without however granting any monetary relief considering
that both parties had, to a certain extent, engaged in the commission of acts which
rendered them undeserving of their prayer for damages and other concomitant reliefs
akin to their causes of action. [21]

Reformist and its members moved to reconsider the NLRC decision, which was,
however, denied on 31 March 1995. [22] The petitioners then came to us with this special
civil action for certiorari, citing the following in support thereof :

1. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF

JURISDICTION IN FAILING TO GIVE WEIGHT TO THE OVERWHELMING EVIDENCE OF
THE PETITIONERS SHOWING [AN] ILLEGAL LOCKOUT COMMITTED BY THE
RESPONDENTS.

2. RESPONDENT NLRC DENIED SUBSTANTIAL JUSTICE TO THE PETITIONERS BY NOT

AWARDING THEM THE MONETARY RELIEFS PRAYED FOR.

3. RESPONDENT NLRC ERRONEOUSLY INTERPRETED THE LAW ENUNCIATED BY THE

HON. SUPREME COURT GIVING SEPARATION PAY PLUS BACKWAGES TO EMPLOYEES
WHOSE REINSTATEMENT TO THEIR FORMER POSITIONS HAVE BEEN RENDERED
IMPOSSIBLE BY THE RESPONDENTS.

The private respondents insist that the petitioners-employees were validly dismissed
for serious misconduct and violations of labor laws and lawful orders of the Labor
Secretary, hence not entitled to reinstatement nor separation pay in lieu of
reinstatement.
This petition must be granted, albeit not on the grounds advocated by the
petitioners.
The private respondents can no longer contest the legality of the strike held by the
petitioners on 13 December 1989, as the private respondents themselves sought
compulsory arbitration in order to resolve that very issue, hence their letter to the Labor
Secretary read, in part:

This is to request your good office to certify for compulsory arbitration or to assume
jurisdiction over the labor dispute (strike continuing) between R.B. Liner Inc . . . . and the
Lakas Manggagawa sa Pilipinas . . .

The current strike by Lakas which started on December 13, 1989 even before
Certification Election could be held could not be resolved by the NCR Conciliation-
Mediation Division after six meetings/conferences between the parties. [23]

51 | P a g e
 The dispute or strike was settled when the company and the union entered into an
agreement on 19 January 1990 where the private respondents agreed to accept all
employees who by then, had not yet returned to work. By acceding to the peaceful
settlement brokered by the NLRC, the private respondents waived the issue of the
illegality of the strike.
The very nature of compulsory arbitration makes the settlement binding upon the
private respondents, for compulsory arbitration has been defined both as "the process of
settlement of labor disputes by a government agency which has the authority to
investigate and to make an award which is binding on all the parties," [24] and as a mode
of arbitration where the parties are "compelled to accept the resolution of their dispute
through arbitration by a third party." [25] Clearly then, the legality of the strike could no
longer be reviewed by the Labor Arbiter, much less by the NLRC, as this had already
been resolved. It was the sole issue submitted for compulsory arbitration by the private
respondents, as is obvious from the portion of their letter quoted above. The case
certified by the Labor Secretary to the NLRC was dismissed after the union and the
company drew up the agreement mentioned earlier. This conclusively disposed of the
strike issue.
The Labor Code provides that the decision in compulsory arbitration proceedings
"shall be final and executory ten (10) calendar days after receipt thereof by the
parties." [26] The parties were informed of the dismissal of the case in a letter dated 14
February 1990, and while nothing in the record indicates when the said letter was
received by the parties, it is reasonable to infer that more than ten days elapsed - -
hence, the NLRC decision had already become final and executory - - before the private
respondents filed their complaint with the Labor Arbiter on 13 July 1990. [27] A final
judgment is no longer susceptible to change, revision, amendment, or
reversal. [28] Neither the Labor Arbiter nor the NLRC, therefore, could review the same
issue passed upon in NLRC Certified Case No. 0542, and their decisions to the contrary
have been rendered in grave abuse of discretion amounting to excess of jurisdiction.
The agreement entered into by the company and the union, moreover, was in the
nature of a compromise agreement, i.e., "an agreement between two or more persons,
who for preventing or putting an end to a lawsuit, adjust their difficulties by mutual
consent in the manner which they agree on, and which everyone of them prefers to the
hope of gaining, balanced by the danger of losing." [29] Thus, in the agreement, each
party made concessions in favor of the other to avoid a protracted litigation. While we do
not abandon the rule that "unfair labor practice acts are beyond and outside the sphere
of compromises," [30] the agreement herein was voluntarily entered into and represents a
reasonable settlement, thus it binds the parties. [31] On this score, the Labor Code
bestows finality to unvitiated compromise agreements:

Art. 227. Compromise agreements. - - Any compromise settlement, including those

involving labor standard laws, voluntarily agreed upon by the parties with the assistance
of the Bureau or the regional office of the Department of Labor, shall be final and binding
upon the parties. The National Labor Relations Commission or any court shall not
assume jurisdiction over issues involved therein except in case of non-compliance
thereof or if there is prima facie evidence that the settlement was obtained through
fraud, misrepresentation or coercion.

52 | P a g e
 The agreement in this case complies with the above requisites, forged as it was
under authority of the Labor Secretary, with representatives from both the union and the
company signing the handwritten agreement to signify their consent thereto. The
private respondents never. alleged in their answer [32] to the petitioners' complaint before
the Labor Arbiter, nor in their complaint, [33] that the petitioners did: not comply with the
agreement. The binding effect of the agreement on the private respondents is thus
unimpaired.
The private respondents' cause likewise fails in light of Article 2037 of the Civil Code,
which gives compromise agreements "the effect and authority of res judicata" upon the
parties to the same, even when effected without judicial approval. [34] The Labor Arbiter
and the NLRC therefore erroneously reviewed an issue which had already been laid to
rest by the parties themselves and which, applying the principle of res judicata they
could no longer re-litigate. [35]
The only barrier then to the petitioners employees' reinstatement is their defiance of
the Labor Secretary's .return to work order, which the private respondents claim as one
reason to validly dismiss the petitioners employees. We disagree, however, with the
finding that Lakas Reformist violated the said order.
It is upon the private respondents to substantiate the aforesaid defiance, as the
burden of proving just and valid cause for dismissing employees from employment rests
on the employer, and the latter's failure to do so results in a finding that the dismissal
was unfounded. [36] The private respondents fell short of discharging this burden.
Contrary to the Labor Arbiter's and the NLRC's view, the union's undertaking to cause
absentee employees to return to work was not an admission that its members defied the
Labor Secretary's order. Those who did not report for work after the issuance of the
Labor Secretary's order may not have been informed of such order, or they may have
been too few so as to conclude that they deliberately defied the order. The private
respondents ailed to eliminate these probabilities.
The most conclusive piece of evidence that the union members did not report for
work would be the company's logbook which records the employees' attendance. [37] The
private respondents' own witness, Administrative Manager Rita Erni, admitted that the
logbook would show who among the employees reported for work. [38] The logbook was
supposed to be marked as Exhibit "14" for the private respondents, but was
withdrawn, [39] then the private respondents' counsel, Atty. Godofredo Q. Asuncion, later
intimated that the said logbook was "stolen or lost." [40]
We are not prepared to conclude that the private respondents willfully suppressed
this particular piece of evidence, in which case the same would be presumed adverse to
them if produced. [41] However, other evidence indicate that the petitioners-employees
complied with the Labor Secretary's return to work order, namely, the private
respondents' Exhibits "11" to "11-E." [42] These are Conductors/Inspectors Daily Reports
which detail the bus trips made by a particular conductor-driver tandem, as well as the
numbers of the bus tickets used during each trip, and these reports are all dated 30
December 1989 merely two days after Secretary Drilon issued his order indicating that a
number of employees did report for work in compliance with the Secretary's order.
Moreover, the said exhibits were executed by some of the employees ordered dismissed
by the Labor Arbiter. [43]

53 | P a g e
 The private respondents intended the exhibits to prove that only a handful of
employees reported for work following the issuance of the Labor Secretary's order, but
they never established that these exhibits were the only reports filed on 30 December
1989, thus, there may have been employees Other than those named in the said exhibits
who reported for work in obeisance to the Labor Secretary. Certainly, the Daily Reports
accomplished by drivers and conductors would not reflect the attendance of mechanics.
Besides, it was not shown by the private respondents that their employees were required
to file the Conductors/Inspectors Daily Reports such that those who did not file would be
instantly deemed absent.
The private respondents thus failed to satisfactorily establish any violation of the
Labor Secretary's return-to-work order, and consequently, the Labor Arbiter's and the
NLRC's contrary finding is not anchored on substantial evidence. Grave abuse of
discretion was thus committed once more.
As regards the illegal lockout-alleged by the petitioners, we agree with the NLRC's
finding that the petitioners had sufficient basis to believe in good faith that the private
respondents were culpable. The NLRC found this circumstance to justify the petitioners-
employees' reinstatement; we add that since there was, in fact, no defiance of the Labor
Secretary's return-to-work order, and no cause to decree the petitioners employees'
dismissal in the first instance, reinstatement of the dismissed employees can be the only
outcome in this case.
The possibility of reinstatement is a question of fact, and where a factual
determination is indispensable to the complete resolution of the case, this Court usually
remands the case to the NLRC. [44] In view, however, of both parties' assertion that
reinstatement has become impossible because, as claimed by the petitioners, "the buses
were already disposed of"; or as claimed by the private respondents, R.B. Liner, Inc., had
"ceased operations" because "its Certificate of Public Convenience had expired and was
denied renewal," and further, of "closure of the company" due to "lack of operational
trucks and buses and high costs of units, " [45] there is no need to remand this case to the
NLRC. Due to the infeasibility of reinstatement, the petitioners' prayer for separation pay
must be granted. Separation pay, equivalent to one month's salary for every year of
service, is awarded as an alternative to reinstatement when the latter is no longer an
option, [46] and is computed from the commencement of employment up to the time of
termination, including the period of imputed service for which the employee is entitled to
back wages. The salary rate prevailing at the end of the period of putative service
should be the basis for computation. [47]
The petitioners are also entitled to back wages. The payment of back wages "is a
form of relief that restores the income that was lost by reason of unlawful
dismissal." [48] The petitioners' dismissal being unwarranted as aforestated, with the
employees dismissed after R.A. No. 6715 [49] took effect, then, pursuant to the said law
and the latest rule on the matter laid down in the Resolution of 28 November 1996 of
this Court, sitting en banc, in Bustamante vs. National Labor Relations
Commission, [50] the petitioners-employees are entitled to payment of full back wages
from the date of their dismissal up to the time when reinstatement was still possible, i.e.,
in this instance, up to the expiration of the franchise of R.B. Liner, Inc.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National
Labor Relations Commission in NLRC NCR CA No. 004115-92, as well as that of the Labor

54 | P a g e
Arbiter in the consolidated cases of NLRC NCR Case Nos. 00-03-01392-90 and 00-04-
02088-90 are SET ASIDE. Petitioners-employees are hereby awarded full back wages
and separation pay to be determined by the Labor Arbiter as prescribed above within
thirty (30) days from notice of this judgment.
SO ORDERED.

[G.R. No. L-18334. August 31, 1963.]

FILEMON DIONELA, ANACLETO CANDELARIA, ANGEL BALICAO, RAMON

CARTOJANO, ELISEO TERANTE, AMADO MACATO, MARIANO MADRONA, JOSE
VALENCIA, FELIX TRINIDAD, PEDRO TUGON, ELEUTERIO RIOJA, JULIO
LUMONTAD, PEDRO BAKARIL, CRESENCIO CORTE, JOSE BACAOCO, ROMEO DE
JESUS, ANASTACIO AVILES, PILAR QUEVEDO, ESPERANZA RELOS, MARCIANO
MAGALONG, JESUS REFAREAL, ANGEL LEBRUN, MONICO LUCAS, AND DEMETRIO
BALAURO, Petitioners, v. THE COURT OF INDUSTRIAL RELATIONS, E. R. SQUIBB
AND SONS (PHIL.) AND CARLETON ASHLEY, Respondents.

Cipriano Cid and Israel Bocobo, for Petitioners.

Salvador H. Laurel for respondent E. R. Squibb & Sons (Phil.) .

Pascual Reyes for respondent Court of Industrial Relations.

SYLLABUS

1. LABOR LAWS; UNFAIR LABOR PRACTICE; COMPROMISE AGREEMENT RESULTING IN

WITHDRAWAL AND DISMISSAL OF CASE; BINDING UPON MINORITY MEMBERS OF UNION.
— A compromise agreement between the Union and the Company, pursuant to which the
complaint in an unfair labor practice case had been withdrawn and dismissed, is binding
upon the minority members of the union, and the action taken by said minority members
in disauthorizing the counsel of record and filing another unfair labor practice case
against the company is contrary to the policy of the Magna Carta of Labor, which
promotes the settlement of the differences between management and labor by mutual
agreement, and, if said action were tolerated, no employer would ever enter into any
compromise agreement for the minority members of the union will always dishonor the
terms of the agreement and demand for better terms.

2. ID.; ID.; ID.; CHARGES DEEMED TO INCLUDE ALL ACTS OF UNFAIR LABOR PRACTICE
DURING SAME PERIOD OF TIME. — When a labor union accuses an employer of acts of
unfair labor practice allegedly committed during a given period of time, the charges
should include all acts of unfair labor practice committed against any and all members of
the union during that period; and it should not, upon dismissal of the charges first
preferred, be allowed to split its cause of action and harass the employer with
subsequent charges, based upon acts committed during the same period of time.

55 | P a g e
 DECISION

CONCEPCION, J.:

Appeal by certiorari from a decision of the Court of Industrial Relations dismissing this
case and directing respondent E. R. Squibb and Sons (Phil.) — hereafter referred to as the
corporation — "to pay the agreed three (3) months separation pay to all claimants herein
who have not as yet receive the same."cralaw virtua1aw library

Prior to the institution of the case at bar, or on February 2, 1955, the Gas and Chemical
Free Workers — a labor organization affiliated with the Federation of Free Workers and
hereafter referred to as the Union — and its members, Mariano Argamusa, Bienvenido
Jose and Benigno Sabas, filed, with the Court of Industrial Relations, a pleading, which
was docketed as Case No. 598-ULP thereof, charging the Corporation and its vice-
president and general manager, Carleton Ashley, with unfair labor practices allegedly
committed against its employees and members of the Union, said Mariano Argamusa,
Bienvenido Jose and Benigno Sabas, by interfering, restraining and coercing them in the
exercise of their rights to self-organization, and by discriminating against them by reason
of their union activities. Soon thereafter, or on February 21, 1955, the corresponding
complaint for unfair labor practice was filed by an acting prosecutor of said court, who,
likewise filed, on March 18, 1955, a supplemental complaint, alleging that respondents
had dismissed its above-named employees owing to the aforementioned charges
preferred by them, thereby committing an additional act of unfair labor practice, and
praying, accordingly, that said employees be reinstated, with back pay.

While said Case No. 598-ULP was pending, or on March 22, 1955, the Union — including
petitioners herein, who were members thereof — declared a strike against the
aforementioned Corporation. On March 31, 1955, the same filed with said Court a
verified complaint — with supporting affidavits — which was docketed as Case No. 6-Inj.,
praying for an injunction against the Union owing to the violence allegedly resorted to by
its members in connection with said strike. After a preliminary hearing, held on the same
date, the Court issued on April 2, 1955, a temporary restraining order, which, after
appropriate proceedings, was, on December 21, 1955, made permanent, upon the
ground that the strikers had committed "acts of violence, threats of violence and/or
intimidation" and used "abusive language" in "the pickets." Soon thereafter, the Union
and the Corporation reached an agreement for the "amicable settlement of all
differences, disputes and/or controversies between them," subject to the condition,
among others, that the Corporation "should pay the sum equivalent to three months
separation pay to each striking Squibb employee."cralaw virtua1aw library

Not satisfied with the terms of this agreement, on December 28, 1955, Filomeno Dionela,
vice-president of the Union, and twenty seven (27) other employees of the company and
members of the Union — hereinafter referred to as "Dionela Et. Al." — filed in Case No.
598-ULP a "Motion to Disauthorize" its counsel of record and the Union to act, represent
and/or prosecute the case, insofar as said movants were concerned, on account of
56 | P a g e
alleged loss of faith and confidence in both. However, a motion to withdraw the
complaints in said case, signed by the president of the Union and the three employees
against whom the acts of unfair labor practice charged in the aforementioned complaints
had allegedly been committed (Mariano Argamusa, Bienvenido Jose and Benigno Sabas),
as well as by their common counsel, was filed on January 17, 1956. Moreover, the Acting
Prosecutor who had subscribed said complaints expressed his conformity to this motion.
Accordingly, by an order dated February 13, 1956, the Court dismissed said complaints.
"Dionela Et. Al." moved for a reconsideration of this order, but the motion was dismissed
on account of the movants’ failure to file their arguments in support thereof.

Hence, on February 17, 1956, Dionela and 23 of his former 27 co-movants in the
aforementioned Motion to Withdraw — hereafter referred to as petitioners — instituted
the present proceedings, Case No. 895-ULP of the Court of Industrial Relations, for unfair
labor practice of the Corporation and its general manager, Carleton Ashley, both of
whom are hereafter referred to as respondents. On May 9, 1956, an Acting Prosecutor of
the Court of Industrial Relations filed the corresponding complaint for unfair labor
practices allegedly committed by respondents. It is alleged in the complaint, as amended
on July 11, 1956, that petitioners and other members of the Union went on strike on
March 22, 1955, because of discriminatory acts committed by respondents against the
aforementioned Mariano Argamusa, Bienvenido Jose and Benigno Sabas due to their
union activities; that when the members of the Union were on December 28, 1955,
advised of the compromise agreement proposed by respondents, herein petitioners
objected thereto and moved to disauthorize their counsel of record and the Union from
representing them in Case No. 598 ULP; that said objection and motion were overruled
by the Union; that after the dismissal of said case No. 598-ULP, owing to the withdrawal
of the complaints therein, petitioners herein requested the corporation to reinstate them,
but the corporation refused and still refuses to do so despite repeated demands; and
that such refusal to reinstate the petitioners constitutes an unfair labor practice.

In a suppletory complaint filed on February 7, 1957, it was alleged, moreover, that, from
October 1954 to April 1955, respondents had inquired from petitioners herein about their
union membership and asked them to resign from the Union; that petitioners herein had
taken part in the strike called on March 22, 1955, on account of discriminatory acts of
said respondents against them; that respondents had "resorted to coercion, threats and
employed strike breakers to put down the strike" ; that Monico Lucas and Demetrio
Balauro were dismissed by respondents on March 22, 1955 and March 22, 1956,
respectively, without any justifiable cause and because of union membership and
activities; and that said Monico Lucas and Demetrio Balauro had not so far found any
substantial or equivalent employment for themselves.

In due course, the lower court rendered the decision above mentioned. Motions for
reconsideration filed by both parties having been denied by a majority of the Court
sitting en banc, petitioners interposed the present appeal by certiorari.

The main question for determination in this case is whether the compromise agreement
pursuant to which the complaint in Case No. 598-ULP had, inter alia, been withdrawn and
then dismissed is binding upon petitioners herein. The latter maintain that it is not, but
the lower court held otherwise, upon the ground that "it is an accepted rule under our
laws that the will of the majority should prevail over the minority" citing Betting Ushers
57 | P a g e
Union (PLUM) v. Jai Alai, L-9330, June 29, 1957 and Jesalva, Et. Al. v. Bautista, L-11928 to
L-11930, March 24, 1959 — and that the action taken by petitioners herein as minority
members of the Union "is contrary to the policy of the Magna Carta of Labor, which
promotes the settlement of differences between management and labor by mutual
agreement," and that if said action were tolerated, "no employer would ever enter into
any compromise agreement for the minority members of the Union will always dishonor
the terms of the agreement and demand for better terms." The view thus taken by the
lower court is correct. Indeed, otherwise, even collective bargaining agreement would
cease to promote industrial peace and the purpose of Republic Act No. 875 would thus
be defeated.

It is urged that the complaints filed at the behest of petitioners herein involved additional
acts allegedly constituting unfair labor practice against them and against Monico Lucas
and Demetrio Balauro, which were not included in the charges preferred in Case No. 598-
ULP, and should not be deemed covered by the order of dismissal therein issued. Upon a
review of the record we find, however, that petitioners herein have not introduced any
evidence in support of their new allegations in the suppletory complaint. Moreover, said
new allegations — except the alleged dismissal of Demetrio Balauro — refer to events
that are said to have taken place before the compromise agreement above mentioned
and should be deemed included, therefore, in the settlement therein stipulated. Then,
too, when a labor union accuses an employer of acts of unfair labor practice allegedly
committed during a given period of time, the charges should include all acts of unfair
labor practice committed against any and all members of the Union during that period.
The Union should not, upon the dismissal of the charges first preferred, be allowed to
split its cause of action and harass the employer with subsequent charges, based upon
acts committed during the same period of time.

WHEREFORE, the decision appealed from is hereby affirmed, with the costs of this
instance against petitioners herein.

G.R. No. L-25291 January 30, 1971

THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-NATU, FGU

INSURANCE GROUP WORKERS and EMPLOYEES ASSOCIATION-NATU, and
INSULAR LIFE BUILDING EMPLOYEES ASSOCIATION-NATU, petitioners,
vs.
THE INSULAR LIFE ASSURANCE CO., LTD., FGU INSURANCE GROUP, JOSE M.
OLBES and COURT OF INDUSTRIAL RELATIONS, respondents.

Lacsina, Lontok and Perez and Luis F. Aquino for petitioners.

Francisco de los Reyes for respondent Court of Industrial Relations.

Araneta, Mendoza and Papa for other respondents.

CASTRO, J.:
58 | P a g e
Appeal, by certiorari to review a decision and a resolution en banc of the Court of
Industrial Relations dated August 17, 1965 and October 20, 1965, respectively, in Case
1698-ULP.

The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group
Workers & Employees Association-NATU, and Insular Life Building Employees Association-
NATU (hereinafter referred to as the Unions), while still members of the Federation of
Free Workers (FFW), entered into separate collective bargaining agreements with the
Insular Life Assurance Co., Ltd. and the FGU Insurance Group (hereinafter referred to as
the Companies).

Two of the lawyers of the Unions then were Felipe Enaje and Ramon Garcia; the latter
was formerly the secretary-treasurer of the FFW and acting president of the Insular
Life/FGU unions and the Insular Life Building Employees Association. Garcia, as such
acting president, in a circular issued in his name and signed by him, tried to dissuade the
members of the Unions from disaffiliating with the FFW and joining the National
Association of Trade Unions (NATU), to no avail.

Enaje and Garcia soon left the FFW and secured employment with the Anti-Dummy Board
of the Department of Justice. Thereafter, the Companies hired Garcia in the latter part of
1956 as assistant corporate secretary and legal assistant in their Legal Department, and
he was soon receiving P900 a month, or P600 more than he was receiving from the FFW.
Enaje was hired on or about February 19, 1957 as personnel manager of the Companies,
and was likewise made chairman of the negotiating panel for the Companies in the
collective bargaining with the Unions.

In a letter dated September 16, 1957, the Unions jointly submitted proposals to the
Companies for a modified renewal of their respective collective bargaining contracts
which were then due to expire on September 30, 1957. The parties mutually agreed and
to make whatever benefits could be agreed upon retroactively effective October 1, 1957.

Thereafter, in the months of September and October 1957 negotiations were conducted
on the Union's proposals, but these were snagged by a deadlock on the issue of union
shop, as a result of which the Unions filed on January 27, 1958 a notice of strike for
"deadlock on collective bargaining." Several conciliation conferences were held under
the auspices of the Department of Labor wherein the conciliators urged the Companies
to make reply to the Unions' proposals en toto so that the said Unions might consider the
feasibility of dropping their demand for union security in exchange for other benefits.
However, the Companies did not make any counter-proposals but, instead, insisted that
the Unions first drop their demand for union security, promising money benefits if this
was done. Thereupon, and prior to April 15, 1958, the petitioner Insular Life Building
Employees Association-NATU dropped this particular demand, and requested the
Companies to answer its demands, point by point, en toto. But the respondent Insular
Life Assurance Co. still refused to make any counter-proposals. In a letter addressed to
the two other Unions by the joint management of the Companies, the former were also
asked to drop their union security demand, otherwise the Companies "would no longer
consider themselves bound by the commitment to make money benefits retroactive to
October 1, 1957." By a letter dated April 17, 1958, the remaining two petitioner unions

59 | P a g e
likewise dropped their demand for union shop. April 25, 1958 then was set by the parties
to meet and discuss the remaining demands.

From April 25 to May 6, 1958, the parties negotiated on the labor demands but with no
satisfactory result due to a stalemate on the matter of salary increases. On May 13, 1958
the Unions demanded from the Companies final counter-proposals on their economic
demands, particularly on salary increases. Instead of giving counter-proposals, the
Companies on May 15, 1958 presented facts and figures and requested the Unions to
submit a workable formula which would justify their own proposals, taking into account
the financial position of the former. Forthwith the Unions voted to declare a strike in
protest against what they considered the Companies' unfair labor practices.

Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without increase

in salary nor in responsibility while negotiations were going on in the Department of
Labor after the notice to strike was served on the Companies. These employees resigned
from the Unions.

On May 20, 1958 the Unions went on strike and picketed the offices of the Insular Life
Building at Plaza Moraga.

On May 21, 1958 the Companies through their acting manager and president, the
respondent Jose M. Olbes (hereinafter referred to as the respondent Olbes), sent to each
of the strikers a letter (exhibit A) quoted verbatim as follows:

We recognize it is your privilege both to strike and to conduct picketing.

However, if any of you would like to come back to work voluntarily, you may:

1. Advise the nearest police officer or security guard of your intention to do

so.

2. Take your meals within the office.

3. Make a choice whether to go home at the end of the day or to sleep nights
at the office where comfortable cots have been prepared.

4. Enjoy free coffee and occasional movies.

5. Be paid overtime for work performed in excess of eight hours.

6. Be sure arrangements will be made for your families.

The decision to make is yours — whether you still believe in the motives of
the strike or in the fairness of the Management.

The Unions, however, continued on strike, with the exception of a few unionists who were
convinced to desist by the aforesaid letter of May 21, 1958.

60 | P a g e
From the date the strike was called on May 21, 1958, until it was called off on May 31,
1958, some management men tried to break thru the Unions' picket lines. Thus, on May
21, 1958 Garcia, assistant corporate secretary, and Vicente Abella, chief of the personnel
records section, respectively of the Companies, tried to penetrate the picket lines in front
of the Insular Life Building. Garcia, upon approaching the picket line, tossed aside the
placard of a picketer, one Paulino Bugay; a fight ensued between them, in which both
suffered injuries. The Companies organized three bus-loads of employees, including a
photographer, who with the said respondent Olbes, succeeded in penetrating the picket
lines in front of the Insular Life Building, thus causing injuries to the picketers and also to
the strike-breakers due to the resistance offered by some picketers.

Alleging that some non-strikers were injured and with the use of photographs as
evidence, the Companies then filed criminal charges against the strikers with the City
Fiscal's Office of Manila. During the pendency of the said cases in the fiscal's office, the
Companies likewise filed a petition for injunction with damages with the Court of First
Instance of Manila which, on the basis of the pendency of the various criminal cases
against striking members of the Unions, issued on May 31, 1958 an order restraining the
strikers, until further orders of the said court, from stopping, impeding, obstructing, etc.
the free and peaceful use of the Companies' gates, entrance and driveway and the free
movement of persons and vehicles to and from, out and in, of the Companies' building.

On the same date, the Companies, again through the respondent Olbes, sent individually
to the strikers a letter (exhibit B), quoted hereunder in its entirety:

The first day of the strike was last 21 May 1958.

Our position remains unchanged and the strike has made us even more
convinced of our decision.

We do not know how long you intend to stay out, but we cannot hold your
positions open for long. We have continued to operate and will continue to do
so with or without you.

If you are still interested in continuing in the employ of the Group

Companies, and if there are no criminal charges pending against you, we are
giving you until 2 June 1958 to report for work at the home office. If by this
date you have not yet reported, we may be forced to obtain your
replacement.

Before, the decisions was yours to make.

So it is now.

Incidentally, all of the more than 120 criminal charges filed against the members of the
Unions, except three (3), were dismissed by the fiscal's office and by the courts. These
three cases involved "slight physical injuries" against one striker and "light coercion"
against two others.

61 | P a g e
At any rate, because of the issuance of the writ of preliminary injunction against them as
well as the ultimatum of the Companies giving them until June 2, 1958 to return to their
jobs or else be replaced, the striking employees decided to call off their strike and to
report back to work on June 2, 1958.

However, before readmitting the strikers, the Companies required them not only to
secure clearances from the City Fiscal's Office of Manila but also to be screened by a
management committee among the members of which were Enage and Garcia. The
screening committee initially rejected 83 strikers with pending criminal charges.
However, all non-strikers with pending criminal charges which arose from the
breakthrough incident were readmitted immediately by the Companies without being
required to secure clearances from the fiscal's office. Subsequently, when practically all
the strikers had secured clearances from the fiscal's office, the Companies readmitted
only some but adamantly refused readmission to 34 officials and members of the Unions
who were most active in the strike, on the ground that they committed "acts inimical to
the interest of the respondents," without however stating the specific acts allegedly
committed. Among those who were refused readmission are Emiliano Tabasondra, vice
president of the Insular Life Building Employees' Association-NATU; Florencio Ibarra,
president of the FGU Insurance Group Workers & Employees Association-NATU; and
Isagani Du Timbol, acting president of the Insular Life Assurance Co., Ltd. Employees
Association-NATU. Some 24 of the above number were ultimately notified months later
that they were being dismissed retroactively as of June 2, 1958 and given separation pay
checks computed under Rep. Act 1787, while others (ten in number) up to now have not
been readmitted although there have been no formal dismissal notices given to them.

On July 29, 1958 the CIR prosecutor filed a complaint for unfair labor practice against the
Companies under Republic Act 875. The complaint specifically charged the Companies
with (1) interfering with the members of the Unions in the exercise of their right to
concerted action, by sending out individual letters to them urging them to abandon their
strike and return to work, with a promise of comfortable cots, free coffee and movies,
and paid overtime, and, subsequently, by warning them that if they did not return to
work on or before June 2, 1958, they might be replaced; and (2) discriminating against
the members of the Unions as regards readmission to work after the strike on the basis
of their union membership and degree of participation in the strike.

On August 4, 1958 the Companies filed their answer denying all the material allegations
of the complaint, stating special defenses therein, and asking for the dismissal of the
complaint.

After trial on the merits, the Court of Industrial Relations, through Presiding Judge Arsenio
Martinez, rendered on August 17, 1965 a decision dismissing the Unions' complaint for
lack of merit. On August 31, 1965 the Unions seasonably filed their motion for
reconsideration of the said decision, and their supporting memorandum on September
10, 1965. This was denied by the Court of Industrial Relations en banc in a resolution
promulgated on October 20, 1965.

Hence, this petition for review, the Unions contending that the lower court erred:

62 | P a g e
 1. In not finding the Companies guilty of unfair labor practice in sending out
individually to the strikers the letters marked Exhibits A and B;

2. In not finding the Companies guilty of unfair labor practice for

discriminating against the striking members of the Unions in the matter of
readmission of employees after the strike;

3. In not finding the Companies guilty of unfair labor practice for dismissing
officials and members of the Unions without giving them the benefit of
investigation and the opportunity to present their side in regard to activities
undertaken by them in the legitimate exercise of their right to strike; and

4. In not ordering the reinstatement of officials and members of the Unions,

with full back wages, from June 2, 1958 to the date of their actual
reinstatement to their usual employment.

I. The respondents contend that the sending of the letters, exhibits A and B, constituted
a legitimate exercise of their freedom of speech. We do not agree. The said letters were
directed to the striking employees individually — by registered special delivery mail at
that — without being coursed through the Unions which were representing the
employees in the collective bargaining.

The act of an employer in notifying absent employees individually during a

strike following unproductive efforts at collective bargaining that the plant
would be operated the next day and that their jobs were open for them
should they want to come in has been held to be an unfair labor practice, as
an active interference with the right of collective bargaining through dealing
with the employees individually instead of through their collective bargaining
representatives. (31 Am. Jur. 563, citing NLRB v. Montgomery Ward & Co. [CA
9th] 133 F2d 676, 146 ALR 1045)

Indeed, it is an unfair labor practice for an employer operating under a collective

bargaining agreement to negotiate or to attempt to negotiate with his employees
individually in connection with changes in the agreement. And the basis of the
prohibition regarding individual bargaining with the strikers is that although the union is
on strike, the employer is still under obligation to bargain with the union as the
employees' bargaining representative (Melo Photo Supply Corporation vs. National Labor
Relations Board, 321 U.S. 332).

Indeed, some such similar actions are illegal as constituting unwarranted acts of
interference. Thus, the act of a company president in writing letters to the strikers,
urging their return to work on terms inconsistent with their union membership, was
adjudged as constituting interference with the exercise of his employees' right to
collective bargaining (Lighter Publishing, CCA 7th, 133 F2d 621). It is likewise an act of
interference for the employer to send a letter to all employees notifying them to return
to work at a time specified therein, otherwise new employees would be engaged to
perform their jobs. Individual solicitation of the employees or visiting their homes, with
the employer or his representative urging the employees to cease union activity or cease
striking, constitutes unfair labor practice. All the above-detailed activities are unfair labor
63 | P a g e
practices because they tend to undermine the concerted activity of the employees, an
activity to which they are entitled free from the employer's molestation.1

Moreover, since exhibit A is a letter containing promises of benefits to the employees in

order to entice them to return to work, it is not protected by the free speech provisions of
the Constitution (NLRB v. Clearfield Cheese Co., Inc., 213 F2d 70). The same is true with
exhibit B since it contained threats to obtain replacements for the striking employees in
the event they did not report for work on June 2, 1958. The free speech protection under
the Constitution is inapplicable where the expression of opinion by the employer or his
agent contains a promise of benefit, or threats, or reprisal (31 Am. Jur. 544; NLRB vs.
Clearfield Cheese Co., Inc., 213 F2d 70; NLRB vs. Goigy Co., 211 F2d 533, 35 ALR 2d
422).

Indeed, when the respondents offered reinstatement and attempted to "bribe" the
strikers with "comfortable cots," "free coffee and occasional movies," "overtime" pay for
"work performed in excess of eight hours," and "arrangements" for their families, so they
would abandon the strike and return to work, they were guilty of strike-breaking and/or
union-busting and, consequently, of unfair labor practice. It is equivalent to an attempt
to break a strike for an employer to offer reinstatement to striking employees
individually, when they are represented by a union, since the employees thus offered
reinstatement are unable to determine what the consequences of returning to work
would be.

Likewise violative of the right to organize, form and join labor organizations are the
following acts: the offer of a Christmas bonus to all "loyal" employees of a company
shortly after the making of a request by the union to bargain; wage increases given for
the purpose of mollifying employees after the employer has refused to bargain with the
union, or for the purpose of inducing striking employees to return to work; the
employer's promises of benefits in return for the strikers' abandonment of their strike in
support of their union; and the employer's statement, made about 6 weeks after the
strike started, to a group of strikers in a restaurant to the effect that if the strikers
returned to work, they would receive new benefits in the form of hospitalization, accident
insurance, profit-sharing, and a new building to work in.2

Citing paragraph 5 of the complaint filed by the acting prosecutor of the lower court
which states that "the officers and members of the complainant unions decided to call off
the strike and return to work on June 2, 1958 by reason of the injunction issued by the
Manila Court of First Instance," the respondents contend that this was the main cause
why the strikers returned to work and not the letters, exhibits A and B. This assertion is
without merit. The circumstance that the strikers later decided to return to work
ostensibly on account of the injunctive writ issued by the Court of First Instance of Manila
cannot alter the intrinsic quality of the letters, which were calculated, or which tended, to
interfere with the employees' right to engage in lawful concerted activity in the form of a
strike. Interference constituting unfair labor practice will not cease to be such simply
because it was susceptible of being thwarted or resisted, or that it did not proximately
cause the result intended. For success of purpose is not, and should not, be the criterion
in determining whether or not a prohibited act constitutes unfair labor practice.

64 | P a g e
 The test of whether an employer has interfered with and coerced employees
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, and 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. (Francisco,
Labor Laws 1956, Vol. II, p. 323, citing NLRB v. Ford, C.A., 1948, 170 F2d
735).

Besides, the letters, exhibits A and B, should not be considered by themselves alone but
should be read in the light of the preceding and subsequent circumstances surrounding
them. The letters should be interpreted according to the "totality of conduct doctrine,"

... whereby the culpability of an employer's remarks were to be evaluated

not only on the basis of their implicit implications, but were to be appraised
against the background of and in conjunction with collateral circumstances.
Under this "doctrine" expressions of opinion by an employer which, though
innocent in themselves, frequently were held to be culpable because of the
circumstances under which they were uttered, the history of the particular
employer's labor relations or anti-union bias or because of their connection
with an established collateral plan of coercion or interference. (Rothenberg
on Relations, p. 374, and cases cited therein.)

It must be recalled that previous to the petitioners' submission of proposals for an

amended renewal of their respective collective bargaining agreements to the
respondents, the latter hired Felipe Enage and Ramon Garcia, former legal counsels of
the petitioners, as personnel manager and assistant corporate secretary, respectively,
with attractive compensations. After the notice to strike was served on the Companies
and negotiations were in progress in the Department of Labor, the respondents
reclassified 87 employees as supervisors without increase in salary or in responsibility, in
effect compelling these employees to resign from their unions. And during the
negotiations in the Department of Labor, despite the fact that the petitioners granted the
respondents' demand that the former drop their demand for union shop and in spite of
urgings by the conciliators of the Department of Labor, the respondents adamantly
refused to answer the Unions' demands en toto. Incidentally, Enage was the chairman of
the negotiating panel for the Companies in the collective bargaining between the former
and the Unions. After the petitioners went to strike, the strikers were individually sent
copies of exhibit A, enticing them to abandon their strike by inducing them to return to
work upon promise of special privileges. Two days later, the respondents, thru their
president and manager, respondent Jose M. Olbes, brought three truckloads of non-
strikers and others, escorted by armed men, who, despite the presence of eight
entrances to the three buildings occupied by the Companies, entered thru only one gate
less than two meters wide and in the process, crashed thru the picket line posted in front
of the premises of the Insular Life Building. This resulted in injuries on the part of the
picketers and the strike-breakers.lâwphî1.ñèt Then the respondents brought against the
picketers criminal charges, only three of which were not dismissed, and these three only
for slight misdemeanors. As a result of these criminal actions, the respondents were able
65 | P a g e
to obtain an injunction from the court of first instance restraining the strikers from
stopping, impeding, obstructing, etc. the free and peaceful use of the Companies' gates,
entrance and driveway and the free movement of persons and vehicles to and from, out
and in, of the Companies' buildings. On the same day that the injunction was issued, the
letter, Exhibit B, was sent — again individually and by registered special delivery mail —
to the strikers, threatening them with dismissal if they did not report for work on or
before June 2, 1958. But when most of the petitioners reported for work, the respondents
thru a screening committee — of which Ramon Garcia was a member — refused to admit
63 members of the Unions on the ground of "pending criminal charges." However, when
almost all were cleared of criminal charges by the fiscal's office, the respondents
adamantly refused admission to 34 officials and union members. It is not, however,
disputed that all-non-strikers with pending criminal charges which arose from the
breakthrough incident of May 23, 1958 were readmitted immediately by the
respondents. Among the non-strikers with pending criminal charges who were
readmitted were Generoso Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo,
Federico Barretto, Manuel Chuidian and Nestor Cipriano. And despite the fact that the
fiscal's office found no probable cause against the petitioning strikers, the Companies
adamantly refused admission to them on the pretext that they committed "acts inimical
to the interest of the respondents," without stating specifically the inimical acts allegedly
committed. They were soon to admit, however, that these alleged inimical acts were the
same criminal charges which were dismissed by the fiscal and by the courts..

Verily, the above actuations of the respondents before and after the issuance of the
letters, exhibit A and B, yield the clear inference that the said letters formed of the
respondents scheme to preclude if not destroy unionism within them.

To justify the respondents' threat to dismiss the strikers and secure replacements for
them in order to protect and continue their business, the CIR held the petitioners' strike
to be an economic strike on the basis of exhibit 4 (Notice of Strike) which states that
there was a "deadlock in collective bargaining" and on the strength of the supposed
testimonies of some union men who did not actually know the very reason for the strike.
It should be noted that exhibit 4, which was filed on January 27, 1958, states, inter alia:

TO: BUREAU OF LABOR RELATIONS

DEPARTMENT OF LABOR
MANILA

Thirty (30) days from receipt of this notice by the Office, this [sic] unions
intends to go on strike against

THE INSULAR LIFE ASSURANCE CO., LTD.

Plaza Moraga, Manila

THE FGU INSURANCE GROUP

Plaza Moraga, Manila

INSULAR LIFE BUILDING ADMINISTRATION

Plaza Moraga, Manila .

66 | P a g e
 for the following reason: DEADLOCK IN COLLECTIVE BARGAINING...

However, the employees did not stage the strike after the thirty-day period, reckoned
from January 27, 1958. This simply proves that the reason for the strike was not the
deadlock on collective bargaining nor any lack of economic concessions. By letter dated
April 15, 1958, the respondents categorically stated what they thought was the cause of
the "Notice of Strike," which so far as material, reads:

3. Because you did not see fit to agree with our position on the union shop,
you filed a notice of strike with the Bureau of Labor Relations on 27 January
1958, citing `deadlock in collective bargaining' which could have been for no
other issue than the union shop." (exhibit 8, letter dated April 15, 1958.)

The strike took place nearly four months from the date the said notice of strike was filed.
And the actual and main reason for the strike was, "When it became crystal clear the
management double crossed or will not negotiate in good faith, it is tantamount to
refusal collectively and considering the unfair labor practice in the meantime being
committed by the management such as the sudden resignation of some unionists and
[who] became supervisors without increase in salary or change in responsibility, such as
the coercion of employees, decided to declare the strike." (tsn., Oct. 14, 1958, p. 14.)
The truth of this assertion is amply proved by the following circumstances: (1) it took the
respondents six (6) months to consider the petitioners' proposals, their only excuse
being that they could not go on with the negotiations if the petitioners did not drop the
demand for union shop (exh. 7, respondents' letter dated April 7, 1958); (2) when the
petitioners dropped the demand for union shop, the respondents did not have a counter-
offer to the petitioners' demands. Sec. 14 of Rep. Act 875 required the respondents to
make a reply to the petitioners' demands within ten days from receipt thereof, but
instead they asked the petitioners to give a "well reasoned, workable formula which
takes into account the financial position of the group companies." (tsn., Sept. 8, 1958, p.
62; tsn., Feb. 26, 1969, p. 49.)

II. Exhibit H imposed three conditions for readmission of the strikers, namely: (1) the
employee must be interested in continuing his work with the group companies; (2) there
must be no criminal charges against him; and (3) he must report for work on June 2,
1958, otherwise he would be replaced. Since the evidence shows that all the employees
reported back to work at the respondents' head office on June 2, 1953, they must be
considered as having complied with the first and third conditions.

Our point of inquiry should therefore be directed at whether they also complied with the
second condition. It is not denied that when the strikers reported for work on June 2,
1958, 63 members of the Unions were refused readmission because they had pending
criminal charges. However, despite the fact that they were able to secure their
respective clearances 34 officials and union members were still refused readmission on
the alleged ground that they committed acts inimical to the Companies. It is beyond
dispute, however, that non-strikers who also had criminal charges pending against them
in the fiscal's office, arising from the same incidents whence the criminal charges against
the strikers evolved, were readily readmitted and were not required to secure clearances.
This is a clear act of discrimination practiced by the Companies in the process of rehiring
and is therefore a violation of sec. 4(a) (4) of the Industrial Peace Act.
67 | P a g e
The respondents did not merely discriminate against all the strikers in general. They
separated the active from the less active unionists on the basis of their militancy, or lack
of it, on the picket lines. Unionists belonging to the first category were refused
readmission even after they were able to secure clearances from the competent
authorities with respect to the criminal charges filed against them. It is significant to note
in this connection that except for one union official who deserted his union on the second
day of the strike and who later participated in crashing through the picket lines, not a
single union officer was taken back to work. Discrimination undoubtedly exists where the
record shows that the union activity of the rehired strikers has been less prominent than
that of the strikers who were denied reinstatement.

So is there an unfair labor practice where the employer, although authorized

by the Court of Industrial Relations to dismiss the employees who
participated in an illegal strike, dismissed only the leaders of the strikers,
such dismissal being evidence of discrimination against those dismissed and
constituting a waiver of the employer's right to dismiss the striking
employees and a condonation of the fault committed by them." (Carlos and
Fernando, Labor and Social Legislation, p. 62, citing Phil. Air Lines, Inc. v. Phil.
Air Lines Emloyees Association, L-8197, Oct. 31, 1958.)

It is noteworthy that — perhaps in an anticipatory effort to exculpate themselves from

charges of discrimination in the readmission of strikers returning to work — the
respondents delegated the power to readmit to a committee. But the respondent Olbes
had chosen Vicente Abella, chief of the personnel records section, and Ramon Garcia,
assistant corporate secretary, to screen the unionists reporting back to work. It is not
difficult to imagine that these two employees — having been involved in unpleasant
incidents with the picketers during the strike — were hostile to the strikers. Needless to
say, the mere act of placing in the hands of employees hostile to the strikers the power
of reinstatement, is a form of discrimination in rehiring.

Delayed reinstatement is a form of discrimination in rehiring, as is having the

machinery of reinstatement in the hands of employees hostile to the strikers,
and reinstating a union official who formerly worked in a unionized plant, to a
job in another mill, which was imperfectly organized. (Morabe, The Law on
Strikes, p. 473, citing Sunshine Mining Co., 7 NLRB 1252; Cleveland Worsted
Mills, 43 NLRB 545; emphasis supplied.)

Equally significant is the fact that while the management and the members of the
screening committee admitted the discrimination committed against the strikers, they
tossed back and around to each other the responsibility for the discrimination. Thus,
Garcia admitted that in exercising for the management the authority to screen the
returning employees, the committee admitted the non-strikers but refused readmission
to the strikers (tsn., Feb. 6, 1962, pp. 15-19, 23-29). Vicente Abella, chairman of the
management's screening committee, while admitting the discrimination, placed the
blame therefor squarely on the management (tsn., Sept. 20, 1960, pp. 7-8, 14-18). But
the management, speaking through the respondent Olbes, head of the Companies,
disclaimed responsibility for the discrimination. He testified that "The decision whether to
accept or not an employee was left in the hands of that committee that had been
empowered to look into all cases of the strikers." (tsn., Sept. 6, 1962, p. 19.)
68 | P a g e
Of course, the respondents — through Ramon Garcia — tried to explain the basis for such
discrimination by testifying that strikers whose participation in any alleged misconduct
during the picketing was not serious in nature were readmissible, while those whose
participation was serious were not. (tsn., Aug. 4, 1961, pp. 48-49, 56). But even this
distinction between acts of slight misconduct and acts of serious misconduct which the
respondents contend was the basis for either reinstatement or discharge, is completely
shattered upon a cursory examination of the evidence on record. For with the exception
of Pascual Esquillo whose dismissal sent to the other strikers cited the alleged
commission by them of simple "acts of misconduct."

III. Anent the third assignment of error, the record shows that not a single dismissed
striker was given the opportunity to defend himself against the supposed charges
against him. As earlier mentioned, when the striking employees reported back for work
on June 2, 1958, the respondents refused to readmit them unless they first secured the
necessary clearances; but when all, except three, were able to secure and subsequently
present the required clearances, the respondents still refused to take them back.
Instead, several of them later received letters from the respondents in the following
stereotyped tenor:

This will confirm the termination of your employment with the Insular Life-
FGU Insurance Group as of 2 June 1958.

The termination of your employment was due to the fact that you committed
acts of misconduct while picketing during the last strike. Because this may
not constitute sufficient cause under the law to terminate your employment
without pay, we are giving you the amount of P1,930.32 corresponding to
one-half month pay for every year of your service in the Group Company.

Kindly acknowledge receipt of the check we are sending herewith.

Very truly yours,

(Sgd.) JOSE M. OLBES

President, Insurance Life
Acting President, FGU.

The respondents, however, admitted that the alleged "acts of misconduct" attributed to
the dismissed strikers were the same acts with which the said strikers were charged
before the fiscal's office and the courts. But all these charges except three were dropped
or dismissed.

Indeed, the individual cases of dismissed officers and members of the striking unions do
not indicate sufficient basis for dismissal.

Emiliano Tabasondra, vice-president of the petitioner FGU Insurance Group Workers &
Employees Association-NATU, was refused reinstatement allegedly because he did not
report for duty on June 2, 1958 and, hence, had abandoned his office. But the
overwhelming evidence adduced at the trial and which the respondents failed to rebut,
negates the respondents' charge that he had abandoned his job. In his testimony,
69 | P a g e
corroborated by many others, Tabasondra particularly identified the management men to
whom he and his group presented themselves on June 2, 1958. He mentioned the
respondent Olbes' secretary, De Asis, as the one who received them and later directed
them — when Olbes refused them an audience — to Felipe Enage, the Companies'
personnel manager. He likewise categorically stated that he and his group went to see
Enage as directed by Olbes' secretary. If Tabasondra were not telling the truth, it would
have been an easy matter for the respondents to produce De Asis and Enage — who
testified anyway as witnesses for the respondents on several occasions — to rebut his
testimony. The respondents did nothing of the kind. Moreover, Tabasondra called on June
21, 1958 the respondents' attention to his non-admission and asked them to inform him
of the reasons therefor, but instead of doing so, the respondents dismissed him by their
letter dated July 10, 1958. Elementary fairness required that before being dismissed for
cause, Tabasondra be given "his day in court."

At any rate, it has been held that mere failure to report for work after notice to return,
does not constitute abandonment nor bar reinstatement. In one case, the U.S. Supreme
Court held that the taking back of six of eleven men constituted discrimination although
the five strikers who were not reinstated, all of whom were prominent in the union and in
the strike, reported for work at various times during the next three days, but were told
that there were no openings. Said the Court:

... The Board found, and we cannot say that its finding is unsupported, that,
in taking back six union men, the respondent's officials discriminated against
the latter on account of their union activities and that the excuse given that
they did not apply until after the quota was full was an afterthought and not
the true reason for the discrimination against them. (NLRB v. Mackay Radio &
Telegraph Co., 304 U.S. 333, 58 Sup. Ct. 904, 82 L. Ed. 1381) (Mathews,
Labor Relations and the Law, p. 725, 728)

The respondents' allegation that Tabasondra should have returned after being refused
readmission on June 2, 1958, is not persuasive. When the employer puts off
reinstatement when an employee reports for work at the time agreed, we consider the
employee relieved from the duty of returning further.

Sixto Tongos was dismissed allegedly because he revealed that despite the fact that the
Companies spent more than P80,000 for the vacation trips of officials, they refused to
grant union demands; hence, he betrayed his trust as an auditor of the Companies. We
do not find this allegation convincing. First, this accusation was emphatically denied by
Tongos on the witness stand. Gonzales, president of one of the respondent Companies
and one of the officials referred to, took a trip abroad in 1958. Exchange controls were
then in force, and an outgoing traveller on a combined business and vacation trip was
allowed by the Central Bank, per its Circular 52 (Notification to Authorized Agent Banks)
dated May 9, 1952, an allocation of $1,000 or only P2,000, at the official rate of two
pesos to the dollar, as pocket money; hence, this was the only amount that would appear
on the books of the Companies. It was only on January 21, 1962, per its Circular 133
(Notification to Authorized Agent Banks), that the Central Bank lifted the exchange
controls. Tongos could not therefore have revealed an amount bigger than the above
sum. And his competence in figures could not be doubted considering that he had
passed the board examinations for certified public accountants. But
70 | P a g e
assuming arguendo that Tongos indeed revealed the true expenses of Gonzales' trip —
which the respondents never denied or tried to
disprove — his statements clearly fall within the sphere of a unionist's right to discuss
and advertise the facts involved in a labor dispute, in accordance with section 9(a)(5) of
Republic Act 875 which guarantees the untramelled exercise by striking employees of
the right to give "publicity to the existence of, or the fact involved in any labor dispute,
whether by advertising, speaking, patrolling or by any method not involving fraud or
violence." Indeed, it is not only the right, it is as well the duty, of every unionist to
advertise the facts of a dispute for the purpose of informing all those affected thereby. In
labor disputes, the combatants are expected to expose the truth before the public to
justify their respective demands. Being a union man and one of the strikers, Tongos was
expected to reveal the whole truth on whether or not the respondent Companies were
justified in refusing to accede to union demands. After all, not being one of the
supervisors, he was not a part of management. And his statement, if indeed made, is but
an expression of free speech protected by the Constitution.

Free speech on both sides and for every faction on any side of the labor
relation is to me a constitutional and useful right. Labor is free ... to turn its
publicity on any labor oppression, substandard wages, employer unfairness,
or objectionable working conditions. The employer, too, should be free to
answer and to turn publicity on the records of the leaders of the unions
which seek the confidence of his men ... (Concurring opinion of Justice
Jackson in Thomas v. Collins, 323 U.S. 516, 547, 65 Sup. Ct. 315, 89 L. Ed.
430.) (Mathews, Labor Relations and the Law, p. 591.)

The respondents also allege that in revealing certain confidential information, Tongos
committed not only a betrayal of trust but also a violation of the moral principles and
ethics of accountancy. But nowhere in the Code of Ethics for Certified Public Accountants
under the Revised Rules and Regulations of the Board of Accountancy formulated in
1954, is this stated. Moreover, the relationship of the Companies with Tongos was that of
an employer and not a client. And with regard to the testimonies of Juan Raymundo and
Antolin Carillo, both vice-presidents of the Trust Insurance Agencies, Inc. about the
alleged utterances made by Tongos, the lower court should not have given them much
weight. The firm of these witnesses was newly established at that time and was still a
"general agency" of the Companies. It is not therefore amiss to conclude that they were
more inclined to favor the respondents rather than Tongos.

Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Daño, Vicente Alsol and Hermenigildo
Ramirez, opined the lower court, were constructively dismissed by non-readmission
allegedly because they not only prevented Ramon Garcia, assistant corporate secretary,
and Vicente Abella, chief of the personnel records section of the Companies, from
entering the Companies' premises on May 21, 1958, but they also caused bruises and
abrasions on Garcia's chest and forehead — acts considered inimical to the interest of
the respondents. The Unions, upon the other hand, insist that there is complete lack of
evidence that Ner took part in pushing Garcia; that it was Garcia who elbowed his way
through the picket lines and therefore Ner shouted "Close up," which the picketers did;
and that Garcia tossed Paulino Bugay's placard and a fight ensued between them in
which both suffered injuries. But despite these conflicting versions of what actually
happened on May 21, 1958, there are grounds to believe that the picketers are not
71 | P a g e
responsible for what happened.lâwphî1.ñèt The picketing on May 21, 1958, as reported
in the police blotter, was peaceful (see Police blotter report, exh. 3 in CA-G.R. No. 25991-
R of the Court of Appeals, where Ner was acquitted). Moreover, although the Companies
during the strike were holding offices at the Botica Boie building at Escolta, Manila;
Tuason Building at San Vicente Street, Manila; and Ayala, Inc. offices at Makati, Rizal,
Garcia, the assistant corporate secretary, and Abella, the chief of the personnel records
section, reported for work at the Insular Life Building. There is therefore a reasonable
suggestion that they were sent to work at the latter building to create such an incident
and have a basis for filing criminal charges against the petitioners in the fiscal's office
and applying for injunction from the court of first instance. Besides, under the
circumstances the picketers were not legally bound to yield their grounds and withdraw
from the picket lines. Being where the law expects them to be in the legitimate exercise
of their rights, they had every reason to defend themselves and their rights from any
assault or unlawful transgression. Yet the police blotter, about adverted to, attests that
they did not resort to violence.

The heated altercations and occasional blows exchanged on the picket line do not affect
or diminish the right to strike. Persuasive on this point is the following commentary: .

We think it must be conceded that some disorder is unfortunately quite usual

in any extensive or long drawn out strike. A strike is essentially a battle
waged with economic weapons. Engaged in it are human beings whose
feelings are stirred to the depths. Rising passions call forth hot words. Hot
words lead to blows on the picket line. The transformation from economic to
physical combat by those engaged in the contest is difficult to prevent even
when cool heads direct the fight. Violence of this nature, however much it is
to be regretted, must have been in the contemplation of the Congress when
it provided in Sec. 13 of Act 29 USCA Sec. 163, that nothing therein should
be construed so as to interfere with or impede or diminish in any way the
right to strike. If this were not so, the rights afforded to employees by the Act
would indeed be illusory. We accordingly recently held that it was not
intended by the Act that minor disorders of this nature would deprive a
striker of the possibility of reinstatement. (Republic Steel Corp. v. N. L. R. B.,
107 F2d 472, cited in Mathews, Labor Relations and the Law, p. 378)

Hence the incident that occurred between Ner, et al. and Ramon Garcia was but a
necessary incident of the strike and should not be considered as a bar to reinstatement.
Thus it has been held that:

Fist-fighting between union and non-union employees in the midst of a strike is no bar to
reinstatement. (Teller, Labor Disputes and Collective Bargaining, Vol. II, p.
855 citing Stackpole Carbon, Co. 6 NLRB 171, enforced 105 F2d 167.)

Furthermore, assuming that the acts committed by the strikers were transgressions of
law, they amount only to mere ordinary misdemeanors and are not a bar to
reinstatement.

72 | P a g e
In cases involving misdemeanors the board has generally held that unlawful acts are not
bar to reinstatement. (Teller, Labor Disputes and Collective Bargaining, Id., p.
854, citing Ford Motor Company, 23 NLRB No. 28.)

Finally, it is not disputed that despite the pendency of criminal charges against non-
striking employees before the fiscal's office, they were readily admitted, but those
strikers who had pending charges in the same office were refused readmission. The
reinstatement of the strikers is thus in order.

[W]here the misconduct, whether in reinstating persons equally guilty with

those whose reinstatement is opposed, or in other ways, gives rise to the
inference that union activities rather than misconduct is the basis of his
[employer] objection, the Board has usually required reinstatement."
(Teller, supra, p. 853, citing the Third Annual Report of NLRB [1938], p. 211.)

Lastly, the lower Court justified the constructive dismissal of Florencio Ibarra allegedly
because he committed acts inimical to the interest of the respondents when, as
president of the FGU Workers and Employees Association-NATU, he advised the strikers
that they could use force and violence to have a successful picket and that picketing was
precisely intended to prevent the non-strikers and company clients and customers from
entering the Companies' buildings. Even if this were true, the record discloses that the
picket line had been generally peaceful, and that incidents happened only when
management men made incursions into and tried to break the picket line. At any rate,
with or without the advice of Ibarra, picketing is inherently explosive. For, as pointed out
by one author, "The picket line is an explosive front, charged with the emotions and
fierce loyalties of the union-management dispute. It may be marked by colorful name-
calling, intimidating threats or sporadic fights between the pickets and those who pass
the line." (Mathews, Labor Relations and the Law, p. 752). The picket line being the
natural result of the respondents' unfair labor practice, Ibarra's misconduct is at most a
misdemeanor which is not a bar to reinstatement. Besides, the only evidence presented
by the Companies regarding Ibarra's participation in the strike was the testimony of one
Rodolfo Encarnacion, a former member of the board of directors of the petitioner FGU
Insurance Group Workers and Employees Union-NATU, who became a "turncoat" and who
likewise testified as to the union activities of Atty. Lacsina, Ricardo Villaruel and others
(annex C, Decision, p. 27) — another matter which emphasizes the respondents' unfair
labor practice. For under the circumstances, there is good ground to believe that
Encarnacion was made to spy on the actvities of the union members. This act of the
respondents is considered unjustifiable interference in the union activities of the
petitioners and is unfair labor practice.

It has been held in a great number of decisions at espionage by an employer

of union activities, or surveillance thereof, are such instances of interference,
restraint or coercion of employees in connection with their right to organize,
form and join unions as to constitute unfair labor practice.

... "Nothing is more calculated to interfere with, restrain and coerce

employees in the exercise of their right to self-organization than such activity
even where no discharges result. The information obtained by means of
espionage is in valuable to the employer and can be used in a variety of
73 | P a g e
 cases to break a union." The unfair labor practice is committed whether the
espionage is carried on by a professional labor spy or detective, by officials
or supervisory employees of the employer, or by fellow employees acting at
the request or direction of the employer, or an ex-employee..." (Teller, Labor
Disputes and Collective Bargaining, Vol. II, pp. 765-766, and cases cited.) .

IV. The lower court should have ordered the reinstatement of the officials and members
of the Unions, with full back wages from June 2, 1958 to the date of their actual
reinstatement to their usual employment. Because all too clear from the factual and
environmental milieu of this case, coupled with settled decisional law, is that the Unions
went on strike because of the unfair labor practices committed by the respondents, and
that when the strikers reported back for work — upon the invitation of the respondents —
they were discriminatorily dismissed. The members and officials of the Unions therefore
are entitled to reinstatement with back pay.

[W]here the strike was induced and provoked by improper conduct on the
part of an employer amounting to an 'unfair labor practice,' the strikers are
entitled to reinstatement with back pay. (Rothenberg on Labor Relations, p.
418.)

[A]n employee who has been dismissed in violation of the provisions of the
Act is entitled to reinstatement with back pay upon an adjudication that the
discharge was illegal." (Id., citing Waterman S. S. Corp. v. N. L. R. B., 119 F2d
760; N. L. R. B. v. Richter's Bakery, 140 F2d 870; N. L. R. B. v. Southern Wood
Preserving Co., 135 F. 2d 606; C. G. Conn, Ltd. v. N. L. R. B., 108 F2d 390; N.
L. R. B. v. American Mfg. Co., 106 F2d 61; N. L. R. B. v. Kentucky Fire Brick
Co., 99 F2d 99.)

And it is not a defense to reinstatement for the respondents to allege that the positions
of these union members have already been filled by replacements.

[W]here the employers' "unfair labor practice" caused or contributed to the

strike or where the 'lock-out' by the employer constitutes an "unfair labor
practice," the employer cannot successfully urge as a defense that the
striking or lock-out employees position has been filled by replacement. Under
such circumstances, if no job sufficiently and satisfactorily comparable to
that previously held by the aggrieved employee can be found, the employer
must discharge the replacement employee, if necessary, to restore the
striking or locked-out worker to his old or comparable position ... If the
employer's improper conduct was an initial cause of the strike, all the strikers
are entitled to reinstatement and the dismissal of replacement employees
wherever necessary; ... . (Id., p. 422 and cases cited.)

A corollary issue to which we now address ourselves is, from what date should the
backpay payable to the unionists be computed? It is now a settled doctrine that strikers
who are entitled to reinstatement are not entitled to back pay during the period of the
strike, even though it is caused by an unfair labor practice. However, if they offer to
return to work under the same conditions just before the strike, the refusal to re-employ
or the imposition of conditions amounting to unfair labor practice is a violation of section
74 | P a g e
4(a) (4) of the Industrial Peace Act and the employer is liable for backpay from the date
of the offer (Cromwell Commercial Employees and Laborers Union vs. Court of Industrial
Relations, L-19778, Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on motion for
reconsideration, 13 SCRA 258; see also Mathews, Labor Relations and the Law, p. 730
and the cited cases). We have likewise ruled that discriminatorily dismissed employees
must receive backpay from the date of the act of discrimination, that is, from the date of
their discharge (Cromwell Commercial Employees and Laborers Union vs. Court of
Industrial Relations, supra).

The respondents notified the petitioner strikers to report back for work on June 2, 1958,
which the latter did. A great number of them, however, were refused readmission
because they had criminal charges against them pending before the fiscal's office,
although non-strikers who were also facing criminal indictments were readily readmitted.
These strikers who were refused readmission on June 2, 1958 can thus be categorized as
discriminatorily dismissed employees and are entitled to backpay from said date. This is
true even with respect to the petitioners Jose Pilapil, Paulino Bugay, Jr. and Jose Garcia, Jr.
who were found guilty only of misdemeanors which are not considered sufficient to bar
reinstatement (Teller, Labor Disputes and Collective Bargaining, p. 854), especially so
because their unlawful acts arose during incidents which were provoked by the
respondents' men. However, since the employees who were denied readmission have
been out of the service of the Companies (for more than ten years) during which they
may have found other employment or other means of livelihood, it is only just and
equitable that whatever they may have earned during that period should be deducted
from their back wages to mitigate somewhat the liability of the company, pursuant to the
equitable principle that no one is allowed to enrich himself at the expense of another
(Macleod & Co. of the Philippines v. Progressive Federation of Labor, 97 Phil. 205 [1955]).

The lower court gave inordinate significance to the payment to and acceptance by the
dismissed employees of separation pay. This Court has ruled that while employers may
be authorized under Republic Act 1052 to terminate employment of employees by
serving the required notice, or, in the absence thereof, by paying the required
compensation, the said Act may not be invoked to justify a dismissal prohibited by law,
e.g., dismissal for union activities.

... While Republic Act No. 1052 authorizes a commercial establishment to

terminate the employment of its employee by serving notice on him one
month in advance, or, in the absence thereof, by paying him one month
compensation from the date of the termination of his employment, such Act
does not give to the employer a blanket authority to terminate the
employment regardless of the cause or purpose behind such termination.
Certainly, it cannot be made use of as a cloak to circumvent a final order of
the court or a scheme to trample upon the right of an employee who has
been the victim of an unfair labor practice. (Yu Ki Lam, et al. v. Nena Micaller,
et al., 99 Phil. 904 [1956].)

Finally, we do not share the respondents' view that the findings of fact of the Court of
Industrial Relations are supported by substantial and credible proof. This Court is not
therefore precluded from digging deeper into the factual milieu of the case (Union of

75 | P a g e
Philippine Education Employees v. Philippine Education Company, 91 Phil. 93; Lu Do & Lu
Ym Corporation v. Philippine-Land-Air-Sea Labor Union, 11 SCRA 134 [1964]).

V. The petitioners (15 of them) ask this Court to cite for contempt the respondent
Presiding Judge Arsenio Martinez of the Court of Industrial Relations and the counsels for
the private respondents, on the ground that the former wrote the following in his
decision subject of the instant petition for certiorari, while the latter quoted the same on
pages 90-91 of the respondents' brief: .

... Says the Supreme Court in the following decisions:

In a proceeding for unfair labor practice, involving a

determination as to whether or not the acts of the employees
concerned justified the adoption of the employer of disciplinary
measures against them, the mere fact that the employees may
be able to put up a valid defense in a criminal prosecution for the
same acts, does not erase or neutralize the employer's right to
impose discipline on said employees. For it is settled that not
even the acquittal of an employee of the criminal charge against
him is a bar to the employer's right to impose discipline on its
employees, should the act upon which the criminal charged was
based constitute nevertheless an activity inimical to the
employer's interest... The act of the employees now under
consideration may be considered as a misconduct which is a just
cause for dismissal. (Lopez, Sr., et al. vs. Chronicle Publication
Employees Ass'n. et al., G.R. No. L-20179-81, December 28,
1964.) (emphasis supplied)

The two pertinent paragraphs in the above-cited decision * which contained the
underscored portions of the above citation read however as follows:

Differently as regard the dismissal of Orlando Aquino and Carmelito Vicente,

we are inclined to uphold the action taken by the employer as proper
disciplinary measure. A reading of the article which allegedly caused their
dismissal reveals that it really contains an insinuation albeit subtly of the
supposed exertion of political pressure by the Manila Chronicle management
upon the City Fiscal's Office, resulting in the non-filing of the case against the
employer. In rejecting the employer's theory that the dismissal of Vicente
and Aquino was justified, the lower court considered the article as "a report
of some acts and omissions of an Assistant Fiscal in the exercise of his official
functions" and, therefore, does away with the presumption of malice. This
being a proceeding for unfair labor practice, the matter should not have been
viewed or gauged in the light of the doctrine on a publisher's culpability
under the Penal Code. We are not here to determine whether the employees'
act could stand criminal prosecution, but only to find out whether the
aforesaid act justifies the adoption by the employer of disciplinary measure
against them. This is not sustaining the ruling that the publication in
question is qualified privileged, but even on the assumption that this is so,
the exempting character thereof under the Penal Code does not necessarily
76 | P a g e
 erase or neutralize its effect on the employer's interest which may warrant
employment of disciplinary measure. For it must be remembered that not
even the acquittal of an employee, of the criminal charges against him, is a
bar to the employer's right to impose discipline on its employees, should the
act upon which the criminal charges was based constitute nevertheless an
activity inimical to the employer's interest.

In the herein case, it appears to us that for an employee to publish his

"suspicion," which actually amounts to a public accusation, that his employer
is exerting political pressure on a public official to thwart some legitimate
activities on the employees, which charge, in the least, would sully the
employer's reputation, can be nothing but an act inimical to the said
employer's interest. And the fact that the same was made in the union
newspaper does not alter its deleterious character nor shield or protect a
reprehensible act on the ground that it is a union activity, because such end
can be achieved without resort to improper conduct or behavior. The act of
the employees now under consideration may be considered as a misconduct
which is a just cause for dismissal.** (Emphasis ours)

It is plain to the naked eye that the 60 un-underscored words of the paragraph quoted by
the respondent Judge do not appear in the pertinent paragraph of this Court's decision in
L-20179-81. Moreover, the first underscored sentence in the quoted paragraph starts
with "For it is settled ..." whereas it reads, "For it must be remembered ...," in this Court's
decision. Finally, the second and last underlined sentence in the quoted paragraph of the
respondent Judge's decision, appears not in the same paragraph of this Court's decision
where the other sentence is, but in the immediately succeeding paragraph.

This apparent error, however, does not seem to warrant an indictment for contempt
against the respondent Judge and the respondents' counsels. We are inclined to believe
that the misquotation is more a result of clerical ineptitude than a deliberate attempt on
the part of the respondent Judge to mislead. We fully realize how saddled with many
pending cases are the courts of the land, and it is not difficult to imagine that because of
the pressure of their varied and multifarious work, clerical errors may escape their
notice. Upon the other hand, the respondents' counsels have the prima facie right to rely
on the quotation as it appears in the respondent Judge's decision, to copy it verbatim,
and to incorporate it in their brief. Anyway, the import of the underscored sentences of
the quotation in the respondent Judge's decision is substantially the same as, and
faithfully reflects, the particular ruling in this Court's decision, i.e., that "[N]ot even the
acquittal of an employee, of the criminal charges against him, is a bar to the employer's
right to impose discipline on its employees, should the act upon which the criminal
charges were based constitute nevertheless an activity inimical to the employer's
interest."

Be that as it may, we must articulate our firm view that in citing this Court's decisions
and rulings, it is the bounden duty of courts, judges and lawyers to reproduce or copy
the same word-for-word and punctuation mark-for-punctuation mark. Indeed, there is a
salient and salutary reason why they should do this. Only from this Tribunal's decisions
and rulings do all other courts, as well as lawyers and litigants, take their bearings. This
is because the decisions referred to in article 8 of the Civil Code which reads, "Judicial
77 | P a g e
decisions applying or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines," are only those enunciated by this Court of last resort.
We said in no uncertain terms in Miranda, et al. vs. Imperial, et al. (77 Phil. 1066) that
"[O]nly the decisions of this Honorable Court establish jurisprudence or doctrines in this
jurisdiction." Thus, ever present is the danger that if not faithfully and exactly quoted,
the decisions and rulings of this Court may lose their proper and correct meaning, to the
detriment of other courts, lawyers and the public who may thereby be misled. But if
inferior courts and members of the bar meticulously discharge their duty to check and
recheck their citations of authorities culled not only from this Court's decisions but from
other sources and make certain that they are verbatim reproductions down to the last
word and punctuation mark, appellate courts will be precluded from acting on
misinformation, as well as be saved precious time in finding out whether the citations are
correct.

Happily for the respondent Judge and the respondents' counsels, there was no
substantial change in the thrust of this Court's particular ruling which they cited. It is our
view, nonetheless, that for their mistake, they should be, as they are hereby,
admonished to be more careful when citing jurisprudence in the future. ACCORDINGLY,
the decision of the Court of Industrial Relations dated August 17, 1965 is reversed and
set aside, and another is entered, ordering the respondents to reinstate the dismissed
members of the petitioning Unions to their former or comparatively similar positions,
with backwages from June 2, 1958 up to the dates of their actual reinstatements. Costs
against the respondents.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Fernando, Teehankee, Barredo,

Villamor and Makasiar, JJ., concur.

[G.R. No. 149440. January 28, 2003]

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and

CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF
SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents.

DECISION
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

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 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 x x x 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.

79 | P a g e
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.)
80 | P a g e
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 petitioners argument that it
was the workers themselves who refused to or were choosy in their work. As found by
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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 NLRCs finding that petitioners were guilty of
unfair labor practice.
Hence this Petition.[7]

Issues

Petitioners raise the following issues for the Courts 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,
xxx, and relying instead on rulings which are not directly applicable to the case
at bench, viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, xxx.
C. Whether or not the Court of Appeals committed grave abuse of discretion in
upholding the NLRCs 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 Courts 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.

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 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.

xxxxxxxxx

x x x [T]he fact that [respondents] do not work continuously for one whole year but only
for the duration of the x x x season does not detract from considering them in regular
employment since in a litany of cases this Court has already settled that seasonal

83 | P a g e
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 latters 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 CAs 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
haciendaa clear interference in the right of the workers to self-organization. [17]

We uphold the CAs 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

84 | P a g e
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.

[G.R. No. 125195. July 17, 1997]

SAMAHAN NG MGA MANGGAGAWA SA BANDOLINO-LMLC (represented by Lauro

de Leon, President) and ROMEO REYES, LAURO DE LEON, JAIME SIBUG,
ROLANDO RAMOS, FREDDIE ACAMPADO, REYNALDO DE LA PAZ, ELIAS
CABRIA, JOHNNY FLORENCIO, EMELITA BATOON, CORAZON REYES, DANIEL
MARISCOTES, REGOLITO BANAGA, JOSELITO TAPAR, JOSE TUGAY, MARCIAL
B. FRANCO, SALVADOR LLABRES, LIGAYA FRANCO, AUREA B. BONON,
ADORACION C. BROZO, CAMILA TUGA, ROMULO G. ALMONITE, JACINTO
RODRIGUEZ, JR., ROSALINDA FLORENCIO, and EMMA BROZO, petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION, BANDOLINO SHOE
CORPORATION and/or GERMAN ALCANTARA, AIDA ALCANTARA, and MIMI
ALCANTARA, respondents.

DECISION
MENDOZA, J.:

This is a petition for certiorari to set aside the decision of the National Labor Relations
Commission (NLRC), dated May 31, 1995, which reversed the decision of the labor
arbiter, dated July 22, 1992, finding petitioners to have been illegally dismissed and
consequently ordering their reinstatement and the payment to them of their monetary
claims.
The facts are as follows:
Petitioners are former employees of private respondent Bandolino Shoe Corporation
and members of petitioner union, Samahan ng Manggagawa sa Bandolino-LMLC. Private
respondents German Alcantara, Aida Alcantara, and Mimi Alcantara are the owners and
officers of Bandolino Shoe Corporation.
On June 4, 1990, petitioners Marcial Franco, Johnny Florencio, and Romeo Reyes were
directed to take a two-week leave because of a strike at the Shoemart, Bandolinos
biggest customer. Apparently, the strike adversely affected private respondents
business. Petitioners were told by management that, should the circumstances improve,
they would be recalled to work after two weeks.

85 | P a g e
 Later that day, petitioner Marcial Franco and his wife were called to the personnel
managers office and told that Ligaya Franco had been dismissed. Marcial Franco pleaded
with German Alcantara not to terminate his wife from employment, but his entreaties
were rejected, allegedly because of his refusal to divulge the names of the organizers
and members of the petitioner union. Three other relatives, namely Emma Brozo,
Adoracion Brozo, and Aurea Bonon, were subsequently dismissed.
On June 9, 1990, the other petitioners were likewise informed by the personnel
manager of the termination of their employment and asked to turn in their identification
cards.
The petitioners tried to return to work after two weeks on June 11, 1990, but they
were refused entry into the company premises. Subsequent efforts to return to work
were likewise thwarted. The management refused to allow them to return to work
allegedly to prevent any untoward incident between the petitioner union and the
Bandolino Shoes Independent Labor Union.
On June 11, 1990, petitioners filed a notice of strike. A conciliation conference was
held but it was unsuccessful. Although petitioners did not strike, they staged a picket for
one hour each on two successive Saturdays to protest their dismissal.
On August 22, 1990, they filed a complaint for illegal dismissal, unfair labor practice,
underpayment, overtime pay, and holiday pay. At the initial conference, the labor arbiter
issued a return to work order to the private respondents based on the private
respondents claim that they had not dismissed petitioners. But petitioners were not
allowed to work by private respondents. The labor arbiters efforts to get the parties to
settle their dispute amicably proved unavailing, as the private respondents imposed
conditions unacceptable to petitioners. As private respondents themselves stated in their
position paper dated November 27, 1990, management was willing to allow
complainants to report for work immediately . . . if complainants were willing to forego
their strike and Petition for Certification and to recognize the majority representation
status of the existing Union (then uncertified), but they were not.
On July 22, 1992, the Labor Arbiter, Potenciao S. Caizares, Jr., decided the case in
favor of petitioners. He found that petitioners had been illegally dismissed because of
their union activities and that private respondents had committed unfair labor
practice. Although private respondents claimed to have merely placed petitioners on
rotation because of the Shoemart strike, the labor arbiter found that even after the end
of the strike, petitioners were still not allowed to return to work. Referring to private
respondents position paper, the labor arbiter found that private respondents had
imposed illegal conditions on petitioners reinstatement by requiring them to forego their
intended strike, withdraw their petition for certification election, and instead recognize
the existing union. On this basis and noting that during the hearings private respondents
counsel subjected the petitioners to a barrage of questioning regarding their union
activities, the labor arbiter concluded that private respondents were guilty of unfair labor
practice for having restrained the petitioners exercise of the right to self-
organization.Accordingly, the labor arbiter ordered:

WHEREFORE, judgment is hereby rendered:

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1. Declaring the respondents guilty of unfair labor practice and ordering the respondents
to cease and desist from further committing the ULP acts as charged;

2. Ordering the respondents to reinstate the complainants in their previous jobs and to
pay them backwages for one (1) year without qualifications or deductions for earning
elsewhere during their illegal dismissal.

The aspect of reinstatement, either in the job or payroll at the option of the respondents,
pursuant to Article 223 of the Labor Code, being immediately executory, the respondents
are hereby directed to reinstate the complainants either way upon their presentation of
themselves for work.

3. Ordering the respondents to pay the complainants salary differential and legal holiday
pay.

The following are the monetary awards as computed by Ma. Cristina T. Paraoan of the
Commissions Research and Information Unit:

1. ROMULO ALMONTE P43,087.76

2. REGOLITO BAAGA 53,953.93

3. EMELITA BATOON 43,533.46

4. ELIAS ECABRIA 42,229.72

5. LAURO DE LEON 45,499.32

6. NILDA DELGADO 32,625.72

7. JOHNNY FLORENCIO 45,499.72

8. MARCIAL FRANCO 43,147.72

9. SALVADOR LLABRES 44,915.32

10.ROSALINA FLORENCIO 37,564.85

11.DANIEL MARISCOTES 44,639.72

12.ROLANDO MATRE 44,713.52

13.VIRGINIA PEDRACIO 54,498.96

14.ROLANDO RAMOS 44,772.60

15.CORAZON REYES 58,868.46

16.ROMEO REYES 56,779.27

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17.JACINTO RODRIGUEZ, JR. 37,674.12

18.CAROLINA SANTIAGO 35,257.14

19.JAIME SIBUG 32,453.72

20.MARITA SORIANO 37,900.72

21.CAMILA TUGAY 39,046.68

The claim for overtime pay is hereby dismissed for lack of sufficient evidence.

Pursuant to the decision of the labor arbiter, private respondents sent telegrams,
dated August 29, 1992, to the petitioners ordering them to -

REPORT TO WORK IMMEDIATELY AT 131 LOPEZ JAENA ST. JESUS DELA PEA,
MARIKINA. FAILURE TO DO SO WITHIN TEN (10) DAYS SHALL BE INTERPRETED THAT YOU
ARE NO LONGER INTERESTED TO WORK HERE.[1]

In a letter dated September 3, 1992, petitioners responded, thus:

While all the complainants are ready and willing to return to work at the soonest time
possible and while we do not in any way reject the scheduled reinstatement, it may not
be possible within the time frame stated by you in the telegram.

Inasmuch as there are more than four members of the union, in fact more than twenty
(20), who are entitled to reinstatement; and inasmuch as there are other aspects of the
decision of the labor arbiter covering the above-stated case which have to be discussed,
we hereby propose that a conference be held between the arbiter, the union leaders and
managements representatives in order that all concerned will be able to thresh out these
matters and prepare for a smooth and amicable implementation of the decision in the
above-mentioned case.

In this connection, a motion for immediate execution of the decision of the arbiter has
been filed in behalf of the complainant and a conference on the basis of this motion will
be set by Arbiter Caizares to be held before him at the NLRC. A copy of the motion has
been sent you and your office will be notified of the date of the conference.[2]

In response, private respondents wrote:

We are of the considered opinion that, since you have already admitted in behalf of the
complainants that they are ready and willing to report for work and do not reject the
scheduled reinstatement, there is no justifiable reason why they should not immediately
return to work and cause unnecessary delay.

....

Considering that both parties have already appealed the decision and that respondent
has already posted a surety bond, nothing is left then to be done but to follow the
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legitimate order of Bandolinos management for the return of the complainants. The
request for a conference, to be mediated by the Honorable Arbiter Caizares is not
necessary since once an order has been appealed, the Honorable Arbiter loses his
jurisdiction.

And, considering further, that two (2) months have already lapsed from the time the
decision was promulgated and more than a month from the time the telegram was sent
individually, the interest and desire to return to work by your clients is surely doubtful
and highly questionable.[3]

Private respondents appealed to the NLRC, contending that the rotation of petitioners
was not a termination of employment; that petitioners did not report for work although
they had been reinstated; and that the labor arbiters finding that the company imposed
illegal conditions was based upon an off the record offer which was privileged in nature
and therefore could not be used in evidence against private respondents. According to
private respondents, petitioners lay off because of the rotation scheme could not be
considered union busting because it was adopted in 1989, before the registration of
petitioner union as an affiliate of Lakas ng Manggagawa Labor Center (LMLC) on
November 7, 1990. They contended that the monetary awards had no basis.
In its decision dated May 31, 1995, the NLRC reversed the labor arbiter. It ruled that
except for Jaime Sibug, petitioners were all piece-rate workers entitled only to 13th
month pay for three years. It held further that there was no evidence showing specific
instances of coercion or restraint committed by the private respondents to justify a
finding of ULP. The NLRC gave credence instead to private respondents claim that, at the
time the rotation scheme was implemented, they did not know that petitioner union was
registered or that the petitioners were the organizers; and that petitioners
misrepresented that their union was a member of the LMLC, when in fact it was only on
November 7, 1990 that they affiliated with the LMLC. The NLRC found that petitioners
organized a union only after the implementation of the 1990 rotation scheme. The NLRC
agreed with the private respondents claim that the off the record offer made by them
constitutes privileged communication and that under Art. 233 of the Labor Code it
cannot be taken in evidence against them. The NLRC therefore ruled that There being no
other evidence to support the claim of ULP, such finding must be overturned. Hence, this
petition.
Petitioners contend that the NLRC acted with grave abuse of discretion in reversing
the labor arbiters findings. They contend that the labor arbiters decision finding that they
had been illegally dismissed is supported by other evidence and not only the conditions
attached to the offer, namely (1) that petitioners non-reinstatement even after the end
of the Shoemart strike contradicts the claim of private respondents that petitioners were
merely put on rotation because business was poor on account of the Shoemart strike and
(2) that the order to petitioners to turn in their ID cards implied termination of their
employment. Petitioners also maintain that the offer of reinstatement made by private
respondents at the hearing was properly used as evidence of ULP because private
respondents themselves adverted to the offer in their position paper and therefore took
the conditions attached to their offer out of the ambit of privileged communication. They
contend finally that it was error for the NLRC to rule that private respondents did not
commit unfair labor practice because, at that time, there was yet no union of

89 | P a g e
petitioners. Petitioners contend that under the ruling in Judric Canning Corp. v. Inciong,
[4]
restraint or coercion may be employed even prior to the registration of a union.
While generally speaking factual findings of administrative agencies are not subject
to review by this Court, it is equally established that the Court will not uphold erroneous
conclusions which are contrary to the evidence because then the agency would be guilty
of a grave abuse of discretion. Nor is this Court bound by conclusions which are not
supported by substantial evidence.[5]
The substantial evidence rule does not authorize any finding to be made just as long
as there is any evidence to support it. It does not excuse administrative agencies from
considering contrary evidence which fairly detracts from the evidence supporting a
finding. In this case, the labor arbiters finding of illegal dismissal was based not only
upon the private respondents off the record offer containing illegal conditions but also on
facts of record found by the arbiter which the NLRC disregarded. These are: (1) that
following the order for rotation, some of the petitioners were made to surrender their IDs
and (2) that although the rotation scheme was ostensibly implemented because of the
Shoemart strike, even after the strike had ended, petitioners attempts to return to work
were thwarted. In truth, private respondents claim that petitioners, who were regular
employees, were put on rotation while the casual workers were not because petitioners
were skilled and it was much easier for them to find new jobs only succeeds in revealing
their real intention. Would it be necessary for petitioners to look for new jobs if the
rotation was merely temporary? The NLRC plainly ignored these facts which amply
supported the labor arbiters decision.
It is untenable for the Solicitor General to contend, [6] that petitioners were dismissed
for their refusal to return to work. Petitioners did not refuse to work. They responded
promptly to private respondents telegrams and expressed their intention to resume work
immediately. This is clear from their letter to the management on September 3,
1992[7] as quoted above.Moreover, it has been ruled that mere failure to report for work
after notice to return does not constitute abandonment or bar reinstatement. [8] Thus,
petitioners may even be considered dismissed without cause as a result of private
respondents refusal to accept them, in addition to having been earlier dismissed by
being put on rotation.
To repeat, even disregarding evidence of the illegal conditions imposed by private
respondents for petitioners return to work, there was substantial evidence remaining in
the record to sustain the labor arbiters decision that private respondents were guilty of
ULP. There was evidence to the effect that Marcial Franco had been asked to disclose the
names of the members of the union and that the management had shown interest in the
unionizing activities of the petitioners. This evidence has remained unchallenged. [9] What
is more, it appears that only alleged members of the petitioner union were put on
rotation.[10] The labor arbiters observation during the hearing that the private
respondents had shown hostility towards petitioners for their union activities is a
determination of fact which is based on the totality of private respondents conduct,
indicating anti-union bias.[11] Nor is it disputed that private respondents opposed
petitioners petition for certification election when this matter should be the sole concern
of the workers.[12] Private respondents interest belies their claim that they were not
aware of petitioners organizational and union activities prior to the unions registration.
An employer may be guilty of ULP in interfering with the right to self-organization even
before the union has been registered.[13]
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 We therefore proceed to petitioners prayer for monetary awards. Petitioners do not
dispute the NLRCs finding that, except for Jaime Sibug, the rest of petitioners are piece-
rate workers. Consequently, all petitioners are entitled to minimum wage and 13th-
month pay, but only Jaime Sibug is entitled to an additional award of holiday pay. All of
the petitioners are entitled to salary differentials, as found by the labor arbiter, and to
13th-month pay, as ruled by the NLRC. Pursuant to Art. 279 of the Labor Code, as
amended by Republic Act No. 6715, and our ruling in Bustamante v. National Labor
Relations Commission,[14] the petitioners are entitled to full backwages from the time
their compensation was withheld up to the time of their actual reinstatement or, where
reinstatement is no longer possible, to full backwages up to the time of finality of this
decision.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated May 31, 1995
is set aside and the decision of the labor arbiter dated July 22, 1992 is reinstated, with
the modification that only Jaime Sibug should be given holiday pay, while all petitioners
should be given 13th-month pay and full backwages.
SO ORDERED.

[G.R. No. 75704. July 19, 1989.]

RUBBERWORLD (PHILS.), INC. and ELPIDIO HIDALGO, Petitioners, v. THE

NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and NESTOR
MALABANAN, Respondents.

SYLLABUS

1. REMEDIAL LAW; APPEAL; FACTUAL FINDINGS OF ADMINISTRATIVE AGENCY ARE

CONCLUSIVE AND BINDING IF SUPPORTED BY SUBSTANTIAL EVIDENCE. — The question of
whether an employee was dismissed because of his union activities is essentially a
question of fact as to which the findings of the administrative agency concerned are
conclusive and binding if supported by substantial evidence.

2. ID.; EVIDENCE; SUBSTANTIAL EVIDENCE; MEANING OF, EXPLAINED. — Substantial

evidence has been defined as such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion. It means such evidence which affords a substantial
basis from which the fact in issue can be reasonably inferred (Philippine Metal Foundries,
Inc. v. Court of Industrial Relations, et. al., No. L-34948-49, May 15, 1979, 90 SCRA 135).

3. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; UNFAIR LABOR PRACTICE; NO

COMMISSION THEREOF BY PETITIONER COMPANY IN CASE AT BAR; REASON. — The
findings of the Labor Arbiter on the non-existence of unfair labor practice on the part of
the company are more in accord and supported by the evidence submitted by the parties
in the instant case. Nowhere in the records can We find that the company actually
performed positive acts to restrain the union participation of private Respondent. For
one, it is doubtful whether Malabanan was really engaged in the organization of a labor
union affiliated with the federation TUPAS. The only evidence presented by him to prove
91 | P a g e
this contention is his affidavit and that of his father. It is therefore, not in accordance with
ordinary experience and common practice that the private respondent pursued his battle
alone, without the aid and support of his co-members in the union and his federation
especially in a case of serious nature as this one involving company intervention with
union activity. We are compelled to agree with the latter that the petitioner company did
not commit any unfair labor practice in transferring and thereafter dismissing
private Respondent.

4. ID.; ID.; ID.; ID.; PREROGATIVE OF COMPANY TO PROMOTE, TRANSFER OR EVEN

DEMOTE ITS EMPLOYEE TO OTHER POSITIONS WHEN INTERESTS OF COMPANY
REASONABLY DEMAND. — As a rule, it is the prerogative of the company to promote,
transfer or even demote its employees to other positions when the interests of the
company reasonably demand it. Unless there are instances which directly point to
interference by the company with the employees’ right to self-organization, the transfer
of private respondent should be considered as within the bounds allowed by law.
Furthermore, although private respondent was transferred to a lower position, his original
rank and salary remained undiminished, which fact was not refuted or questioned by
private Respondent.

5. ID.; TERMINATION OF EMPLOYMENT; PENALTY OF DISMISSAL CRUEL AND UNJUST IF

NOT PROPORTIONATE TO GRAVITY OF MISDEED. — It does not appear that private
respondent Malabanan is an incorrigible offender or that what he did inflicted serious
damage to the company so much so that his continuance in the service would be
patently inimical to the employer’s interest. Assuming, in gratia argumenti that the
private respondent had indeed committed the said mistakes in the posting of accurate
data, this was only his first infraction with regard to his duties. It would thus be cruel and
unjust to mete out the drastic penalty of dismissal, for it is not proportionate to the
gravity of the misdeed.

6. ID.; ID.; FAIR AND REASONABLE CRITERIA USED IN SELECTING EMPLOYERS TO BE

DISMISSED. — The promotion of the private respondent from the position of ordinary
clerk to production scheduler establishes the presumption that his performance of his
work is acceptable to the company. The petitioner even admitted that it was due to
heavy financial and business reverses that the company assigned the private respondent
to the position of Stock Clerk and not because of his unsatisfactory performance as
production scheduler (p. 6, Rollo). It has been held that there must be fair and
reasonable criteria to be used in selecting employees to be dismissed (Asiaworld
Publishing House, Inc. v. Ople, No. L-56398, July 23, 1987, 152 SCRA 219).

7. ID.; ID.; PREROGATIVE OF MANAGEMENT TO DISMISS OR LAY-OFF AN EMPLOYEE MUST

BE WITHOUT ABUSE OF DISCRETION; REASON. — It is worthy to note that the prerogative
of management to dismiss or lay-off an employee must be done without abuse of
discretion, for what is at stake is not only petitioner’s position, but also his means of
livelihood. This is so because the preservation of the lives of the citizens is a basic duty
of the State, more vital than the preservation of corporate profits (Euro-Linea, Phils., Inc.
v. NLRC, L-75782, December 1, 1987, 156 SCRA 79).

8. ID.; CONSTRUCTION IN FAVOR OF LABOR; LABOR DETERMINATIONS SHOULD NOT ONLY

BE SECUNDUM RATIONEM BUT ALSO SECUNDUM CARITATEM. — The law regards the
92 | P a g e
worker with compassion. Our society is a compassionate one. Where a penalty less
punitive would suffice, whatever missteps may be committed by the worker should not
be visited by the supreme penalty of dismissal. This is not only because of the law’s
concern for the working man. There is in addition, his family to consider. After all, labor
determinations should not only be secundum caritatem but also secundum caritatem
(Almira, Et Al., v. BF Goodrich Philippines, Inc., Et Al., G.R. No. L-34974, July 25, 1974, 58
SCRA 120).

9. ID.; ID.; REINSTATEMENT OF PRIVATE RESPONDENT TO FORMER OF SUBSTANTIALLY

EQUIVALENT POSITION WITH BACKWAGES; PAYMENT OF SEPARATION PAY IF
REINSTATEMENT IS NOT POSSIBLE. — The decision of the public respondent is hereby
MODIFIED to the effect that petitioner company is ordered to reinstate private
respondent Nestor Malabanan to the position of stock clerk or substantially equivalent
position, with the same rank and salary he is enjoying at the time of his termination, with
three years backwages and without loss of seniority rights and benefits appurtenant
thereto. Should the reinstatement of the private respondent as herein ordered be
rendered impossible by the supervention of circumstances which prevent the same, the
petitioner is further ordered to pay private respondent separation pay equivalent to one
(1) month’s salary for every year of service rendered, computed at his last rate of salary.

DECISION

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment
of the decision of the respondent National Labor Relations Commission dated June 17,
1986 (p. 23, Rollo) in NLRC NCR Case No. 6-2158-84 entitled "Nestor Malabanan and
Jonathan Transmil, Complainants, versus Rubberworld (Phils.), Inc. and Elpidio Hidalgo,
Respondents," reversing the decision of the Labor Arbiter which dismissed the complaint
for illegal dismissal for lack of merit.chanrobles lawlibrary : rednad

The antecedent facts are as follows:chanrob1es virtual 1aw library

Respondent Malabanan was employed by petitioner Rubberworld (Phils.), Inc. on

September 25, 1978 as an ordinary clerk. In May, 1980, he was promoted to the position
of production scheduler with a corresponding salary increase. He was again transferred
to the Inventory Control Section as stock clerk on September 1, 1983.

On April 6, 1984, Elpidio Hidalgo, the Plant I General Manager of petitioner company,
received a copy of the Financial Audit Report from the Internal Audit Department of the
company showing a significant material variance between the year-end actual inventory
and that of the Cards (SC)/EDP Control Records. As a result thereof, Noel Santiago,
Section Head of the Inventory Control Section, where respondent Malabanan was
assigned, conducted an investigation of the reported discrepancies in the stock cards
upon the request of the Plant General Manager. Santiago then submitted his report to the
general manager recommending the dismissal of respondent Malabanan.
93 | P a g e
Consequently, Malabanan’s case was endorsed to the Human Resources Division of
petitioner company, which conducted a reinvestigation on the matter and which affirmed
the recommendation of the Inventory Control Section Head for the termination of
employment of respondent Malabanan.

On June 6, 1984, respondent Malabanan was dismissed by petitioner company.

On June 16, 1984, respondent Malabanan, along with another complainant named
Jonathan Transmil, filed a complaint for unfair labor practice and illegal dismissal against
petitioner company alleging that they (respondent Malabanan and complainant Transmil)
were members of the monthly salaried employees’ union affiliated with TUPAS; that
petitioner company forced them to disaffiliate from the union; and that due to their
refusal to resign from the union, they were ultimately dismissed from employment by
petitioner company.

Petitioner company on the other hand, denied complainants’ allegations and averred that
respondent Malabanan’s dismissal was due to gross and habitual neglect of his duty and
not due to his union affiliation.

During the hearing of the case, the other complainant, Jonathan Transmil withdrew from
the case since he already found another employment abroad.

On January 30, 1985, the Labor Arbiter rendered a decision (pp. 17-22, Rollo), the
dispositive portion of which reads:jgc:chanrobles.com.ph

"WHEREFORE, premises considered, this case should be, as it is hereby, DISMISSED, for
lack of merit.

"SO ORDERED."cralaw virtua1aw library

Respondent Malabanan appealed from the adverse decision to the respondent

Commission. On June 17, 1986, respondent Commission reversed the appealed decision
of the Labor Arbiter and stated, inter alia:jgc:chanrobles.com.ph

"Confronted with this factual backgrounds, we find ourselves inclined to the view that the
appealed decision merits a reversal.

x x x

"WHEREFORE, premises considered, the appealed decision should be, as it is hereby

REVERSED. Consequently, the respondents are directed to reinstate complainant Nestor
Malabanan to his former position as production scheduler, with full backwages from the
time he was illegally terminated up to actual reinstatement, without loss of seniority
rights and benefits appurtenant thereto.

"SO ORDERED." (pp. 23-27, Rollo)

94 | P a g e
The petitioner company moved for a reconsideration on the ground that the respondent
Commission’s decision is not in accordance with facts and evidence on record. On July
23, 1986, the said motion for reconsideration was denied.

On September 3, 1986, petitioner filed the instant petition contending that the
respondent Commission committed grave abuse of discretion amounting to lack of
jurisdiction in reversing the Labor Arbiter’s decision.

The two issues to be resolved in the instant case are: (1) whether or not the dismissal of
respondent Malabanan is tainted with unfair labor practice; and (2) whether or not a just
and valid cause exists for the dismissal of private respondent Malabanan.

Petitioner alleges that the National Labor Relations Commission gravely erred in
concluding that the demotion of Malabanan from production scheduler to a stock clerk at
the Stock and Inventory Section was intended to discourage Malabanan from union
membership. It argued that the Labor Arbiter was correct in finding that the private
respondent had not shown ample proof to the effect that he was a member of a labor
organization prior to his transfer to another position.

We believe that the foregoing contentions are impressed with merit. Art. 248 of the Labor
Code, PD No. 442, as amended, provides:jgc:chanrobles.com.ph

"Art. 248. Unfair labor practices of employers. — It shall be unlawful for an employer to
commit any of the following unfair labor practices:chanrob1es virtual 1aw library

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;

"x x x"

The question of whether an employee was dismissed because of his union activities is
essentially a question of fact as to which the findings of the administrative agency
concerned are conclusive and binding if supported by substantial evidence. Substantial
evidence has been defined as such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion. It means such evidence which affords a substantial
basis from which the fact in issue can be reasonably inferred (Philippine Metal Foundries,
Inc. v. Court of Industrial Relations, et. al., No. L-34948-49, May 15, 1979, 90 SCRA 135).
The findings of the Labor Arbiter on the non-existence of unfair labor practice on the part
of the company are more in accord and supported by the evidence submitted by the
parties in the instant case, to wit:jgc:chanrobles.com.ph

"Complainant had stated that he was a member of the monthly salaried employees
union affiliated with TUPAS. He, however, offered no proof to support his allegation. In
fact, no evidence was presented to prove the existence of such union. We [note] from
the records that, as the usual practice, in cases like this one, complainant is usually
supported by the union of which he is a member. And ordinarily, the union itself is
impleaded as a co-complainant. Such circumstances, surprisingly, [are not present in this
case. In fact, complainant categorically alleged that he had solicited the services of the
PAFLU Labor Union in filing this case. It is, indeed, surprising that complainant had to
95 | P a g e
solicit the help of a labor union (PAFLU) of which he was not a member instead of
soliciting the aid of the labor union (TUPAS) of which he was allegedly a member. These
circumstances alone [destroy] the credibility of complainant’s allegations." (p. 21, Rollo).

Nowhere in the records can We find that the company actually performed positive acts to
restrain the union participation of private Respondent. For one, it is doubtful whether
Malabanan was really engaged in the organization of a labor union affiliated with the
federation TUPAS. The only evidence presented by him to prove this contention is his
affidavit and that of his father. It is therefore, not in accordance with ordinary experience
and common practice that the private respondent pursued his battle alone, without the
aid and support of his co-members in the union and his federation especially in a case of
serious nature as this one involving company intervention with union activity.

As a rule, it is the prerogative of the company to promote, transfer or even demote its
employees to other positions when the interests of the company reasonably demand it.
Unless there are instances which directly point to interference by the company with the
employees’ right to self-organization, the transfer of private respondent should be
considered as within the bounds allowed by law. Furthermore, although private
respondent was transferred to a lower position, his original rank and salary remained
undiminished, which fact was not refuted or questioned by private Respondent.

In view of the foregoing conclusions of the Labor Arbiter, We are compelled to agree with
the latter that the petitioner company did not commit any unfair labor practice in
transferring and thereafter dismissing private Respondent.

The remaining issue to be resolved on this point is whether the dismissal of respondent
Malabanan was for a just and lawful cause. Article 282 of the Labor Code, as amended,
provides:jgc:chanrobles.com.ph

"Article 282. Termination by employer. An employer may terminate an employment for

any of the following just causes:chanrob1es virtual 1aw library

x x x

b) Gross and habitual neglect by the employee of his duties;

x x x"

Petitioner contends that private respondent Malabanan was guilty of gross negligence
when he caused the posting of incorrect entries in the stock card without counter
checking the actual movement status of the items at the warehouse, thereby resulting
into unmanageable inaccuracies in the data posted in the stock cards. The respondent
Commission correctly ruled:jgc:chanrobles.com.ph

"Penultimately, even assuming for the sake of argument that herein complainant "posted
entries in the stock card without counter checking the actual movement status of the
items at the warehouse, thereby resulting in an inaccurate posting of data on the stock
cards," to our impression does not constitute as a just cause for dismissal. Records show
96 | P a g e
that he was only transferred to the Inventory Control Section on September 1, 1983 and
was not so familiar and experienced as a stock clerk, and prior to his transfer, the record
shows no derogatory records in terms of his performance. His failure to carry out
efficiently his duties as a stock clerk is not so gross and habitual. In other words he was
not notoriously negligent to warrant his severance from the service. Considering that
there is nothing on record that shows that he wilfully defied instructions of his superior
with regards to his duties and that he gained personal benefit of the discrepancy, his
dismissal is unwarranted" (p. 26, Rollo).

It does not appear that private respondent Malabanan is an incorrigible offender or that
what he did inflicted serious damage to the company so much so that his continuance in
the service would be patently inimical to the employer’s interest. Assuming, in gratia
argumenti that the private respondent had indeed committed the said mistakes in the
posting of accurate data, this was only his first infraction with regard to his duties. It
would thus be cruel and unjust to mete out the drastic penalty of dismissal, for it is not
proportionate to the gravity of the misdeed.

In fact, the promotion of the private respondent from the position of ordinary clerk to
production scheduler establishes the presumption that his performance of his work is
acceptable to the company. The petitioner even admitted that it was due to heavy
financial and business reverses that the company assigned the private respondent to the
position of Stock Clerk and not because of his unsatisfactory performance as production
scheduler (p. 6, Rollo). It has been held that there must be fair and reasonable criteria to
be used in selecting employees to be dismissed (Asiaworld Publishing House, Inc. v. Ople,
No. L-56398, July 23, 1987, 152 SCRA 219).chanrobles virtual lawlibrary

It is worthy to note that the prerogative of management to dismiss or lay-off an

employee must be done without abuse of discretion, for what is at stake is not only
petitioner’s position, but also his means of livelihood. This is so because the preservation
of the lives of the citizens is a basic duty of the State, more vital than the preservation of
corporate profits (Euro-Linea, Phils., Inc. v. NLRC, L-75782, December 1, 1987, 156 SCRA
79).

The law regards the worker with compassion. Our society is a compassionate one. Where
a penalty less punitive would suffice, whatever missteps may be committed by the
worker should not be visited by the supreme penalty of dismissal. This is not only
because of the law’s concern for the working man. There is in addition, his family to
consider. After all, labor determinations should not only be secundum caritatem but also
secundum caritatem (Almira, Et Al., v. BF Goodrich Philippines, Inc., Et Al., G.R. No. L-
34974, July 25, 1974, 58 SCRA 120).

ACCORDINGLY, the petition is DISMISSED for lack of merit. However, the decision of the
public respondent is hereby MODIFIED to the effect that petitioner company is ordered to
reinstate private respondent Nestor Malabanan to the position of stock clerk or
substantially equivalent position, with the same rank and salary he is enjoying at the
time of his termination, with three years backwages and without loss of seniority rights
and benefits appurtenant thereto.

Should the reinstatement of the private respondent as herein ordered be rendered

97 | P a g e
impossible by the supervention of circumstances which prevent the same, the petitioner
is further ordered to pay private respondent separation pay equivalent to one (1)
month’s salary for every year of service rendered, computed at his last rate of
salary.chanrobles lawlibrary : rednad

SO ORDERED.

G.R. NO. 171664 : March 6, 2013

BANKARD, INC., Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION- FIRST

DIVISION, PAULO BUENCONSEJO,BANKARD EMPLOYEES UNION-
AWATU, Respondents.

DECISION

MENDOZA, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to review,
reverse and set aside the October 20, 2005 Decision1 and the February 21, 2006
Resolution2 of the Court of Appeals {CA), in CA-G.R. SP No. 68303, which affirmed the
May 31, 2001 Resolution3 and the September 24, 2001 Order4 of the National Labor
Relations Commission (NLRC) in Certified Cases No. 000-185-00 and 000-191-00.

The Facts

On June 26, 2000, respondent Bankard Employees Union-AWATU (Union) filed before the
National Conciliation and Mediation Board (NCMB) its first Notice of Strike (NOS),
docketed as NS-06-225-00,5alleging commission of unfair labor practices by petitioner
Bankard, Inc. (Bankard), to wit: 1) job contractualization; 2) outsourcing/contracting-out
jobs; 3) manpower rationalizing program; and 4) discrimination.

On July 3, 2000, the initial conference was held where the Union clarified the issues cited
in the NOS. On July 5, 2000, the Union held its strike vote balloting where the members
voted in favor of a strike. On July 10, 2000, Bankard asked the Office of the Secretary of
Labor to assume jurisdiction over the labor dispute or to certify the same to the NLRC for
compulsory arbitration. On July 12, 2000, Secretary Bienvenido Laguesma (Labor
Secretary) of the Department of Labor and Employment (DOLE) issued the order
certifying the labor dispute to the NLRC.6chanroblesvirtualawlibrary

On July 25, 2000, the Union declared a CBA bargaining deadlock. The following day, the
Union filed its second NOS, docketed as NS-07-265-00,7 alleging bargaining in bad faith
on the part of Bankard. Bankard then again asked the Office of the Secretary of Labor to
assume jurisdiction, which was granted. Thus, the Order, dated August 9, 2000,
certifying the labor dispute to the NLRC, was issued.8chanroblesvirtualawlibrary

The Union, despite the two certification orders issued by the Labor Secretary enjoining
them from conducting a strike or lockout and from committing any act that would
exacerbate the situation, went on strike on August 11, 2000.9chanroblesvirtualawlibrary
98 | P a g e
During the conciliatory conferences, the parties failed to amicably settle their dispute.
Consequently, they were asked to submit their respective position papers. Both agreed
to the following issues:chanroblesvirtualawlibrary

1. Whether job contractualization or outsourcing or contracting-out is an unfair labor

practice on the part of the management.

2. Whether there was bad faith on the part of the management when it bargained with
the Union.10chanroblesvirtualawlibrary

As regards the first issue, it was Bankard's position that job contractualization or
outsourcing or contracting-out of jobs was a legitimate exercise of management
prerogative and did not constitute unfair labor practice. It had to implement new policies
and programs, one of which was the Manpower Rationalization Program (MRP) in
December 1999, to further enhance its efficiency and be more competitive in the credit
card industry. The MRP was an invitation to the employees to tender their voluntary
resignation, with entitlement to separation pay equivalent to at least two (2) months
salary for every year of service. Those eligible under the company's retirement plan
would still receive additional pay. Thereafter, majority of the Phone Center and the
Service Fulfilment Division availed of the MRP. Thus, Bankard contracted an independent
agency to handle its call center needs.11chanroblesvirtualawlibrary

As to the second issue, Bankard denied that there was bad faith on its part in bargaining
with the Union. It came up with counter-offers to the Union's proposals, but the latter's
demands were far beyond what management could give. Nonetheless, Bankard
continued to negotiate in good faith until the Memorandum of Agreement (MOA) re-
negotiating the provisions of the 1997-2002, Collective Bargaining Agreement (CBA) was
entered into between Bankard and the Union. The CBA was overwhelmingly ratified by
the Union members. For said reason, Bankard contended that the issue of bad faith in
bargaining had become moot and academic.12chanroblesvirtualawlibrary

On the other hand, the Union alleged that contractualization started in Bankard in 1995
in the Records Communications Management Division, particularly in the mailing unit,
which was composed of two (2) employees and fourteen (14) messengers. They were
hired as contractual workers to perform the functions of the regular employees who had
earlier resigned and availed of the MRP.13 According to the Union, there were other
departments in Bankard utilizing messengers to perform work load considered for regular
employees, like the Marketing Department, Voice Authorizational Department, Computer
Services Department, and Records Retention Department. The Union contended that the
number of regular employees had been reduced substantially through the management
scheme of freeze-hiring policy on positions vacated by regular employees on the basis of
cost-cutting measures and the introduction of a more drastic formula of streamlining its
regular employees through the MRP.14chanroblesvirtualawlibrary

With regard to the second issue, the Union averred that Bankard's proposals were way
below their demands, showing that the management had no intention of reaching an
agreement. It was a scheme calculated to force the Union to declare a bargaining
deadlock.15chanroblesvirtualawlibrary

99 | P a g e
On May 31, 2001, the NLRC issued its Resolution16 declaring that the management
committed acts considered as unfair labor practice (ULP) under Article 248(c) of the
Labor Code. It ruled that:chanroblesvirtualawlibrary

The act of management of reducing its number of employees thru application of the
Manpower Rationalization Program and subsequently contracting the same to other
contractual employees defeats the purpose or reason for streamlining the employees.
The ultimate effect is to reduce the number of union members and increasing the
number of contractual employees who could never be members of the union for lack of
qualification. Consequently, the union was effectively restrained in their movements as a
union on their rights to self-organization. Management had successfully limited and
prevented the growth of the Union and the acts are clear violation of the provisions of
the Labor Code and could be considered as Unfair Labor Practice in the light of the
provisions of Article 248 paragraph (c) of the Labor Code.17chanroblesvirtualawlibrary

The NLRC, however, agreed with Bankard that the issue of bargaining in bad faith was
rendered moot and academic by virtue of the finalization and signing of the CBA
between the management and the Union.18chanroblesvirtualawlibrary

Unsatisfied, both parties filed their respective motions for partial reconsideration.
Bankard assailed the NLRC's finding of acts of ULP on its part. The Union, on the other
hand, assailed the NLRC ruling on the issue of bad faith bargaining.

On September 24, 2001, the NLRC issued the Order19 denying both parties' motions for
lack of merit.

On December 28, 2001, Bankard filed a petition for certiorari under Rule 65 with the CA
arguing that the NLRC gravely abused its discretion amounting to lack or excess of
jurisdiction when:chanroblesvirtualawlibrary

1. It issued the Resolution, dated May 31, 2001, particularly in finding that Bankard
committed acts of unfair labor practice; and,

2. It issued the Order dated September 24, 2001 denying Bankard's partial motion for
reconsideration.20chanroblesvirtualawlibrary

The Union filed two (2) comments, dated January 22, 2002, through its NCR Director,
Cornelio Santiago, and another, dated February 6, 2002, through its President, Paulo
Buenconsejo, both praying for the dismissal of the petition and insisting that Bankard's
resort to contractualization or outsourcing of contracts constituted ULP. It further alleged
that Bankard committed ULP when it conducted CBA negotiations in bad faith with the
Union.

Ruling of the Court of Appeals

The CA dismissed the petition, finding that the NLRC ruling was supported by substantial
evidence.

100 | P a g e
The CA agreed with Bankard that job contracting, outsourcing and/or contracting out of
jobs did not per se constitute ULP, especially when made in good faith and for valid
purposes. Despite Bankard's claim of good faith in resorting to job contractualization for
purposes of cost-efficient operations and its non-interference with the employees' right
to self-organization, the CA agreed with the NLRC that Bankard's acts impaired the
employees right to self-organization and should be struck down as illegal and invalid
pursuant to Article 248(c)21 of the Labor Code. The CA thus, ruled in this
wise:chanroblesvirtualawlibrary

We cannot agree more with public respondent. Incontrovertible is the fact that
petitioner's acts, particularly its promotion of the program enticing employees to tender
their voluntary resignation in exchange for financial packages, resulted to a union
dramatically reduced in numbers. Coupled with the management's policy of "freeze-
hiring" of regular employees and contracting out jobs to contractual workers, petitioner
was able to limit and prevent the growth of the Union, an act that clearly constituted
unfair labor practice.22chanroblesvirtualawlibrary

In its assailed decision, the CA affirmed the May 31, 2001 Resolution and the September
24, 2001 Order of the NLRC.

Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently denied it for
being a mere repetition of the grounds previously raised. Hence, the present petition
bringing up this lone issue:chanroblesvirtualawlibrary

THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER BANKARD, INC.

COMMITTED ACTS OF UNFAIR LABOR PRACTICE WHEN IT DISMISSED THE PETITION FOR
CERTIORARI AND DENIED THE MOTION FOR RECONSIDERATION FILED BY
PETITIONER.23chanroblesvirtualawlibrary

Ruling of the Court

The Court finds merit in the petition.

Well-settled is the rule that "factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded not only
respect but even finality by the courts when supported by substantial
evidence."24 Furthermore, the factual findings of the NLRC, when affirmed by the CA, are
generally conclusive on this Court.25 When the petitioner, however, persuasively alleges
that there is insufficient or insubstantial evidence on record to support the factual
findings of the tribunal or court a quo, then the Court, exceptionally, may review factual
issues raised in a petition under Rule 45 in the exercise of its discretionary appellate
jurisdiction.26chanroblesvirtualawlibrary

This case involves determination of whether or not Bankard committed acts considered
as ULP. The underlying concept of ULP is found in Article 247 of the Labor Code, to
wit:chanroblesvirtualawlibrary

Article 247. Concept of unfair labor practice and procedure for prosecution thereof. --
Unfair labor practices violate the constitutional right of workers and employees to self-
101 | P a g e
organization, are inimical to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. x x x

The Court has ruled that the prohibited acts considered as ULP relate to the workers'
right to self-organization and to the observance of a CBA. It refers to "acts that violate
the workers' right to organize."27 Without that element, the acts, even if unfair, are not
ULP.28 Thus, an employer may only be held liable for unfair labor practice if it can be
shown that his acts affect in whatever manner the right of his employees to self-
organize.29chanroblesvirtualawlibrary

In this case, the Union claims that Bankard, in implementing its MRP which eventually
reduced the number of employees, clearly violated Article 248(c) of the Labor Code
which states that:chanroblesvirtualawlibrary

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

xxx

(c) To contract out services or functions being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their rights to self-
organization;

xxx

Because of said reduction, Bankard subsequently contracted out the jobs held by former
employees to other contractual employees. The Union specifically alleges that there
were other departments in Bankard, Inc. which utilized messengers to perform work load
considered for regular employees like the Marketing Department, Voice Authorizational
Department, Computer Services Department, and Records Retention Department. 30 As a
result, the number of union members was reduced, and the number of contractual
employees, who were never eligible for union membership for lack of qualification,
increased.

The general principle is that the one who makes an allegation has the burden of proving
it. While there are exceptions to this general rule, in ULP cases, the alleging party has
the burden of proving the ULP;31and in order to show that the employer committed ULP
under the Labor Code, substantial evidence is required to support the claim. 32 Such
principle finds justification in the fact that ULP is punishable with both civil and/or
criminal sanctions.33chanroblesvirtualawlibrary

Aside from the bare allegations of the Union, nothing in the records strongly proves that
Bankard intended its program, the MRP, as a tool to drastically and deliberately reduce
union membership. Contrary to the findings and conclusions of both the NLRC and the
CA, there was no proof that the program was meant to encourage the employees to
disassociate themselves from the Union or to restrain them from joining any union or
organization. There was no showing that it was intentionally implemented to stunt the
102 | P a g e
growth of the Union or that Bankard discriminated, or in any way singled out the union
members who had availed of the retirement package under the MRP. True, the program
might have affected the number of union membership because of the employees'
voluntary resignation and availment of the package, but it does not necessarily follow
that Bankard indeed purposely sought such result. It must be recalled that the MRP was
implemented as a valid cost-cutting measure, well within the ambit of the so-called
management prerogatives. Bankard contracted an independent agency to meet business
exigencies. In the absence of any showing that Bankard was motivated by ill will, bad
faith or malice, or that it was aimed at interfering with its employees' right to self-
organize, it cannot be said to have committed an act of unfair labor
practice.34chanroblesvirtualawlibrary

"Substantial evidence is more than a mere scintilla of evidence. It means such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even
if other minds equally reasonable might conceivably opine otherwise."35 Unfortunately,
the Union, which had the burden of adducing substantial evidence to support its
allegations of ULP, failed to discharge such burden.36chanroblesvirtualawlibrary

The employer's right to conduct the affairs of its business, according to its own discretion
and judgment, is well-recognized.37 Management has a wide latitude to conduct its own
affairs in accordance with the necessities of its business.38 As the Court once
said:chanroblesvirtualawlibrary

The Court has always respected a company's exercise of its prerogative to devise means
to improve its operations. Thus, we have held that management is free to regulate,
according to its own discretion and judgment, all aspects of employment, including
hiring, work assignments, supervision and transfer of employees, working methods, time,
place and manner of work.

This is so because the law on unfair labor practices is not intended to deprive employers
of their fundamental right to prescribe and enforce such rules as they honestly believe to
be necessary to the proper, productive and profitable operation of their
business.39chanroblesvirtualawlibrary

Contracting out of services is an exercise of business judgment or management

prerogative. Absent any proof that management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an
employer.40Furthermore, bear in mind that ULP is punishable with both civil and/or
criminal sanctions.41 As such, the party so alleging must necessarily prove it by
substantial evidence. The Union, as earlier noted, failed to do this. Bankard merely
validly exercised its management prerogative. Not shown to have acted maliciously or
arbitrarily, no act of ULP can be imputed against it.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R.
SP No. 68303, dated October 20, 2005, and its Resolution, dated February 21, 2006, are
REVERSED and SET ASIDE. Petitioner Bankard, Inc. is hereby declared as not having
committed any act constituting Unfair Labor Practice under Article 248 of the Labor
Code.

103 | P a g e
SO ORDERED.

G.R. No. 127598 February 22, 2000

MANILA ELECTRIC COMPANY, petitioner,

vs.
Hon. SECRETARY OF LABOR LEONARDO QUISUMBING and MERALCO EMPLOYEES
and WORKERS ASSOCIATION (MEWA), respondent.

RESOLUTION

YNARES-SANTIAGO, J.:

In the Decision promulgated on January 27, 1999, the Court disposed of the case as
follows:

WHEREFORE, the petition is granted and the orders of public respondent Secretary
of Labor dated August 19, 1996 and December 28, 1996 are set aside to the extent
set forth above. The parties are directed to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained in the unaffected
portions of the Secretary of Labor's orders of August 19, 1996 and December 28,
1996, and the modifications set forth above. The retirement fund issue is
remanded to the Secretary of Labor for reception of evidence and determination of
the legal personality of the MERALCO retirement fund.1

The modifications of the public respondent's resolutions include the following:

Secretary's
January 27, 1999 decision
resolution
Wages - P1,900.00 for 1995-96 P2,200.00
X'mas bonus - modified to one month 2 months
Retirees - remanded to the Secretary granted
Loan to coops - denied granted
GHSIP, HMP and
Housing loans - granted up to P60,000.00 granted
Signing bonus - denied granted
Union leave - 40 days (typo error) 30 days
High voltage/pole - not apply to those who are members of a team
not exposed to the risk
Collectors - no need for cash bond, no
need to reduce quota and MAPL

104 | P a g e
 CBU - exclude confidential employees include
Union security - maintenance of membership closed shop
Contracting out - no need to consult union consult first
All benefits - existing terms and conditions all terms
Retroactivity - Dec. 28, 1996-Dec. 27, 199(9) from Dec. 1, 1995

Dissatisfied with the Decision, some alleged members of private respondent union (Union
for brevity) filed a motion for intervention and a motion for reconsideration of the said
Decision. A separate intervention was likewise made by the supervisor's union (FLAMES2)
of petitioner corporation alleging that it has bona fide legal interest in the outcome of the
case.3 The Court required the "proper parties" to file a comment to the three motions for
reconsideration but the Solicitor-General asked that he be excused from filing the
comment because the "petition filed in the instant case was granted" by the
Court.4 Consequently, petitioner filed its own consolidated comment. An "Appeal Seeking
Immediate Reconsideration" was also filed by the alleged newly elected president of the
Union.5 Other subsequent pleadings were filed by the parties and intervenors.

The issues raised in the motions for reconsideration had already been passed upon by
the Court in the January 27, 1999 decision. No new arguments were presented for
consideration of the Court. Nonetheless, certain matters will be considered herein,
particularly those involving the amount of wages and the retroactivity of the Collective
Bargaining Agreement (CBA) arbitral awards.

Petitioner warns that if the wage increase of P2,200.00 per month as ordered by the
Secretary is allowed, it would simply pass the cost covering such increase to the
consumers through an increase in the rate of electricity. This is a non sequitur. The Court
cannot be threatened with such a misleading argument. An increase in the prices of
electric current needs the approval of the appropriate regulatory government agency
and does not automatically result from a mere increase in the wages of petitioner's
employees. Besides, this argument presupposes that petitioner is capable of meeting a
wage increase. The All Asia Capital report upon which the Union relies to support its
position regarding the wage issue cannot be an accurate basis and conclusive
determinant of the rate of wage increase. Section 45 of Rule 130 Rules of Evidence
provides:

Commercial lists and the like. — Evidence of statements of matters of interest to

persons engaged in an occupation contained in a list, register, periodical, or other
published compilation is admissible as tending to prove the truth of any relevant
matter so stated if that compilation is published for use by persons engaged in that
occupation and is generally used and relied upon by them therein.

Under the afore-quoted rule, statement of matters contained in a periodical, may be

admitted only "if that compilation is published for use by persons engaged in that
occupation and is generally used and relied upon by them therein." As correctly held in
our Decision dated January 27, 1999, the cited report is a mere newspaper account and
not even a commercial list. At most, it is but an analysis or opinion which carries no

105 | P a g e
persuasive weight for purposes of this case as no sufficient figures to support it were
presented. Neither did anybody testify to its accuracy. It cannot be said that
businessmen generally rely on news items such as this in their occupation. Besides, no
evidence was presented that the publication was regularly prepared by a person in touch
with the market and that it is generally regarded as trustworthy and reliable. Absent
extrinsic proof of their accuracy, these reports are not admissible. 6 In the same manner,
newspapers containing stock quotations are not admissible in evidence when the source
of the reports is available.7 With more reason, mere analyses or projections of such
reports cannot be admitted. In particular, the source of the report in this case can be
easily made available considering that the same is necessary for compliance with certain
governmental requirements.

Nonetheless, by petitioner's own allegations, its actual total net income for 1996 was
P5.1 billion.8 An estimate by the All Asia financial analyst stated that petitioner's net
operating income for the same year was about P5.7 billion, a figure which the Union
relies on to support its claim. Assuming without admitting the truth thereof, the figure is
higher than the P4.171 billion allegedly suggested by petitioner as its projected net
operating income. The P5.7 billion which was the Secretary's basis for granting the
P2,200.00 is higher than the actual net income of P5.1 billion admitted by petitioner. It
would be proper then to increase this Court's award of P1,900.00 to P2,000.00 for the
two years of the CBA award. For 1992, the agreed CBA wage increase for rank-and-file
was P1,400.00 and was reduced to P1,350.00; for 1993; further reduced to P1,150.00 for
1994. For supervisory employees, the agreed wage increase for the years 1992-1994 are
P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the foregoing figures, the
P2,000.00 increase for the two-year period awarded to the rank-and-file is much higher
than the highest increase granted to supervisory employees.9 As mentioned in the
January 27, 1999 Decision, the Court does "not seek to enumerate in this decision the
factors that should affect wage determination" because collective bargaining disputes
particularly those affecting the national interest and public service "requires due
consideration and proper balancing of the interests of the parties to the dispute and of
those who might be affected by the dispute."10 The Court takes judicial notice that the
new amounts granted herein are significantly higher than the weighted average salary
currently enjoyed by other rank-and-file employees within the community. It should be
noted that the relations between labor and capital is impressed with public interest
which must yield to the common good.11 Neither party should act oppressively against
the other or impair the interest or convenience of the public.12Besides, matters of salary
increases are part of management prerogative.13

On the retroactivity of the CBA arbitral award, it is well to recall that this petition had its
origin in the renegotiation of the parties' 1992-1997 CBA insofar as the last two-year
period thereof is concerned. When the Secretary of Labor assumed jurisdiction and
granted the arbitral awards, there was no question that these arbitral awards were to be
given retroactive effect. However, the parties dispute the reckoning period when
retroaction shall commence. Petitioner claims that the award should retroact only from
such time that the Secretary of Labor rendered the award, invoking the 1995 decision in
Pier 8 case14 where the Court, citing Union of Filipino Employees v. NLRC,15 said:

The assailed resolution which incorporated the CBA to be signed by the parties was
promulgated on June 5, 1989, the expiry date of the past CBA. Based on the
106 | P a g e
 provision of Section 253-A, its retroactivity should be agreed upon by the parties.
But since no agreement to that effect was made, public respondent did not abuse
its discretion in giving the said CBA a prospective effect. The action of the public
respondent is within the ambit of its authority vested by existing law.

On the other hand, the Union argues that the award should retroact to such time granted
by the Secretary, citing the 1993 decision of St. Luke's.16

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of
the expiration of the previous CBA, contrary to the position of petitioner. Under the
circumstances of the case, Article 253-A cannot be properly applied to herein case.
As correctly stated by public respondent in his assailed Order of April 12, 1991
dismissing petitioner's Motion for Reconsideration —

Anent the alleged lack of basis for the retroactivity provisions awarded; we
would stress that the provision of law invoked by the Hospital, Article 253-A
of the Labor Code, speaks of agreements by and between the parties, and
not arbitral awards . . .

Therefore, in the absence of a specific provision of law prohibiting retroactivity of

the effectivity of arbitral awards issued by the Secretary of Labor pursuant to
Article 263(g) of the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to determine the effectivity
thereof.

In the 1997 case of Mindanao Terminal,17 the Court applied the St. Luke's doctrine and
ruled that:

In St. Luke's Medical Center v. Torres, a deadlock also developed during the CBA
negotiations between management and the union. The Secretary of Labor
assumed jurisdiction and ordered the retroaction of the CBA to the date of
expiration of the previous CBA. As in this case, it was alleged that the Secretary of
Labor gravely abused its discretion in making his award retroactive. In dismissing
this contention this Court held:

Therefore, in the absence of a specific provision of law prohibiting retroactive

of the effectivity of arbitral awards issued by the Secretary of Labor pursuant
to Article 263(g) of the Labor Code, such as herein involved, public
respondent is deemed vested with plenary and discretionary powers to
determine the effectivity thereof.

The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective for a
period of 2 years counted from December 28, 1996 up to December 27, 1999."
Parenthetically, this actually covers a three-year period. Labor laws are silent as to when
an arbitral award in a labor dispute where the Secretary had assumed jurisdiction by
virtue of Article 263 (g) of the Labor Code shall retroact. In general, a CBA negotiated
within six months after the expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter, the effectivity depends on the
agreement of the parties.18 On the other hand, the law is silent as to the retroactivity of a
107 | P a g e
CBA arbitral award or that granted not by virtue of the mutual agreement of the parties
but by intervention of the government. Despite the silence of the law, the Court rules
herein that CBA arbitral awards granted after six months from the expiration of the last
CBA shall retroact to such time agreed upon by both employer and the employees or
their union. Absent such an agreement as to retroactivity, the award shall retroact to the
first day after the six-month period following the expiration of the last day of the CBA
should there be one. In the absence of a CBA, the Secretary's determination of the date
of retroactivity as part of his discretionary powers over arbitral awards shall control.

It is true that an arbitral award cannot per se be categorized as an agreement voluntarily

entered into by the parties because it requires the interference and imposing power of
the State thru the Secretary of Labor when he assumes jurisdiction. However, the arbitral
award can be considered as an approximation of a collective bargaining agreement
which would otherwise have been entered into by the parties.19 The terms or periods set
forth in Article 253-A pertains explicitly to a CBA. But there is nothing that would prevent
its application by analogy to an arbitral award by the Secretary considering the absence
of an applicable law. Under Article 253-A: "(I)f any such agreement is entered into
beyond six months, the parties shall agree on the duration of retroactivity thereof." In
other words, the law contemplates retroactivity whether the agreement be entered into
before or after the said six-month period. The agreement of the parties need not be
categorically stated for their acts may be considered in determining the duration of
retroactivity. In this connection, the Court considers the letter of petitioner's Chairman of
the Board and its President addressed to their stockholders, which states that the CBA
"for the rank-and-file employees covering the period December 1, 1995 to November 30,
1997 is still with the Supreme Court,"20 as indicative of petitioner's recognition that the
CBA award covers the said period. Earlier, petitioner's negotiating panel transmitted to
the Union a copy of its proposed CBA covering the same period inclusive.21 In addition,
petitioner does not dispute the allegation that in the past CBA arbitral awards, the
Secretary granted retroactivity commencing from the period immediately following the
last day of the expired CBA. Thus, by petitioner's own actions, the Court sees no reason
to retroact the subject CBA awards to a different date. The period is herein set at two (2)
years from December 1, 1995 to November 30, 1997.

On the allegation concerning the grant of loan to a cooperative, there is no merit in the
union's claim that it is no different from housing loans granted by the employer. The
award of loans for housing is justified because it pertains to a basic necessity of life. It is
part of a privilege recognized by the employer and allowed by law. In contrast, providing
seed money for the establishment of the employee's cooperative is a matter in which the
employer has no business interest or legal obligation. Courts should not be utilized as a
tool to compel any person to grant loans to another nor to force parties to undertake an
obligation without justification. On the contrary, it is the government that has the
obligation to render financial assistance to cooperatives and the Cooperative Code does
not make it an obligation of the employer or any private individual. 22

Anent the 40-day union leave, the Court finds that the same is a typographical error. In
order to avoid any confusion, it is herein declared that the union leave is only thirty (30)
days as granted by the Secretary of Labor and affirmed in the Decision of this Court.

108 | P a g e
The added requirement of consultation imposed by the Secretary in cases of contracting
out for six (6) months or more has been rejected by the Court. Suffice it to say that the
employer is allowed to contract out services for six months or more. However, a line
must be drawn between management prerogatives regarding business operationsper
se and those which affect the rights of employees, and in treating the latter, the
employer should see to it that its employees are at least properly informed of its decision
or modes of action in order to attain a harmonious labor-management relationship and
enlighten the workers concerning their rights.23 Hiring of workers is within the employer's
inherent freedom to regulate and is a valid exercise of its management prerogative
subject only to special laws and agreements on the matter and the fair standards of
justice.24 The management cannot be denied the faculty of promoting efficiency and
attaining economy by a study of what units are essential for its operation. It has the
ultimate determination of whether services should be performed by its personnel or
contracted to outside agencies. While there should be mutual consultation, eventually
deference is to be paid to what management decides.25 Contracting out of services is an
exercise of business judgment or management prerogative.26 Absent proof that
management acted in a malicious or arbitrary manner, the Court will not interfere with
the exercise of judgment by an employer.27 As mentioned in the January 27, 1999
Decision, the law already sufficiently regulates this matter.28 Jurisprudence also provides
adequate limitations, such that the employer must be motivated by good faith and the
contracting out should not be resorted to circumvent the law or must not have been the
result of malicious or arbitrary actions.29 These are matters that may be categorically
determined only when an actual suit on the matter arises.

WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed
Decision is MODIFIED as follows: (1) the arbitral award shall retroact from December 1,
1995 to November 30, 1997; and (2) the award of wage is increased from the original
amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos
(P2,000.00) for the years 1995 and 1996. This Resolution is subject to the monetary
advances granted by petitioner to its rank-and-file employees during the pendency of
this case assuming such advances had actually been distributed to them. The assailed
Decision is AFFIRMED in all other respects.1âwphi1.nêt

SO ORDERED.

G.R. No. L-18364 February 28, 1963

PHILIPPINE AMERICAN CIGAR & CIGARETTE FACTORY WORKERS INDEPENDENT

UNION (NLU), petitioner,
vs.
PHILIPPINE AMERICAN CIGAR & CIGARETTE MANUFACTURING CO.,
INC., respondent.

Eulogio R. Lerum for petitioner.

E. B. Garcia Law Office for respondent.

CONCEPCION, J.:

109 | P a g e
Appeal by certiorari of petitioner Philippine American Cigar & Cigarette Workers
Independent Union (NLU), from a decision of the Court of Industrial Relations dismissing a
complaint of said petitioner for unfair labor practice, and ordering respondent Philippine
American Cigar & Cigarette Manufacturing Co., Inc. to reinstate Apolonio San Jose, within
five (5) days from notice of said decision, without backpay.

The pertinent facts are set forth in said decision from which we quote:

Paragraph 3, sub-paragraph (a) of the complaint states:—

a. That sometime on October 23, 1958, Apolonio San Jose's brother, Francisco San
Jose, who is also a regular worker of the respondent and a member of the
complainant union, filed a charge for unfair labor practice against herein
respondent docketed as Case No. 1857-ULP of this Court, which case is still
pending.

b. That subsequent to the filing of the said charge, or on about November 29, 1958
and also on or about December 11, 1958, the respondent herein, by its manager
Chua Yiong, summoned and advised union president Lazaro Peralta that if
Francisco San Jose will not withdraw his charge against the company (Case No.
1857-ULP), the company will also dismiss his brother Apolonio San Jose, to which
the union president replied that that should not be the attitude of the company
because Apolonio has nothing to do with his brother's case.

c. That on or about January 24, 1959, respondent, by its officers and agents, did
dismiss Apolonio San Jose without just and valid cause and in gross violation of the
operative collective bargaining agreement between the complainant union and
respondent corporation.

The allegations in said sub-paragraphs (a), (b) and (c) of the complaint were
substantiated by the oral testimony of complainant's witnesses, but the Court finds
that such allegations do not constitute unfair labor practice acts on the part of
respondent. In sub-paragraphs (a) and (b), the Court finds no interference,
coercion and restraint against the employees in the exercise of their guaranteed
rights to self-organization and discrimination against complainant Apolonio San
Jose in regard to hire or tenure of his employment. In short, the complainants'
charge is that if Francisco San Jose would not withdraw his unfair labor practice
charge against respondent company, the manager of the latter would dismiss
Apolonio San Jose, the brother of Francisco. In fact, said manager dismissed
Apolonio San Jose. This may be an illegal or improper dismissal, but certainly, it
does not constitute an unfair labor practice.

The Court further finds that in sub-paragraph (c), complainants allege that the
dismissal of Apolonio San Jose was in gross violation of the collective bargaining
agreement between complainant union and respondent corporation.

The Court of Industrial Relations found "that the moving cause of Apolonio's dismissal
was the refusal of his brother Francisco San Jose, to withdraw his charge of unfair labor
practice against the company. But" — it added — "be that as it may, it cannot constitute
110 | P a g e
an actionable offense under the Act". Seemingly believing that, since the one dismissed
by reason of said charge of unfair labor practice was, not the complainant therein,
Francisco San Jose, but his brother Apolonio San Jose, the latter's dismissal does not
constitute another unfair labor practice under Section 4 (a) (5) of Republic Act No. 875,
which provides that:

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

xxx xxx xxx

(5) To dismiss, discharge, or otherwise prejudice or discriminate against an

employee for having filed charges or for having given or being about to give
testimony under this Act.

the lower court concluded that it had no jurisdiction to entertain the claim of petitioner
herein. This conclusion is untenable.

Although subdivision (5) of paragraph (a) of said Section 4 would seem to refer only to
the discharge of the one who preferred charges against the company as constituting
unfair labor practice, the aforementioned subdivision (5) should be construed in line with
the spirit and purpose of said Section 4 and of the legislation of which forms part —
namely, to assure absolute freedom of the employees and laborers to establish labor
organizations and unions, as well as to prefer charges before the proper organs of the
Government for violation of our labor laws. Now, then, if the dismissal of an employee
due to the filing by him of said charges would be and is an undue restraint upon said
freedom, the dismissal of his brother owing to the non-withdrawal of the charges of the
former, would be and constitute as much a restraint upon the same freedom. In fact, it
may be a greater and more effective restraint thereto. Indeed, a complainant may be
willing to risk the hazards of a possible and even probable retaliatory action by the
employer in the form of a dismissal or another discriminatory act against him personally,
considering that nobody is perfect, that everybody commits mistakes and that there is
always a possibility that the employer may find in the records of any employee,
particularly if he has long been in the service, some act or omission constituting a fault
or negligence which may be an excuse for such dismissal or discrimination. Yet, such
complainant may not withstand the pressure that would result if his brother or another
member of his immediate family were threatened with such action unless the charges in
question were withdrawn.

In fact, it is a well settled rule of law that what is prohibited to be done directly shall not
be allowed to be accomplished indirectly. Thus in the Matter of Quidnick Dye Works, Inc.
and Federation of Dyers, Finishers, Printers and Bleachers of America (2 NLRB 963) it was
held that the dismissal of a laborer on account of union activities of his brother
constituted an unfair labor practice. To the same effect, substantially, are the decisions in
the Matter of the Fashion Piece Dye Works, Inc. and Federation of Silk and Rayon Dyers
and Finishers of American, 6 NLRB p. 274; In the Matter of Ford Motor Company and H.C.
McGarity, 26 NLRB, p. 322 (which refers to the union activities of the wife of the
discharged employee), and Union Asbestos & Rubber Co. and United Textile Workers of
America, AFL, 98 NLRB p. 1055 (involving the dismissal of a female employee, due to the

111 | P a g e
union activities of her husband). Hence, Teller in his work on Labor Disputes and
Collective Bargaining (Vol. 2, p. 859), says:

The discharge of relatives of an employee who was himself been discriminately

discharged, for no other reason than the relation, is itself of a discriminatory
discharge, in violation of Sec. 8(3) of the Act. An illustration is Memphis Furniture
Co. (3 NLRB 26 [1937], enforced 2 F2d 1018 [CCA 6, 1938], cert. den. 305 US 627,
59 S Ct 91, 83 L. Ed. 402 [CCA 6, 1938])where the evidence indicated that the sole
reason for the dismissal of a female employee was that she was the wife of an
employee who has been discharged. It was held that the discharge under the
circumstances was discriminatory and a violation of the Act, even though
discharged female employee was not herself a member of any union. The Board
said: "The respondent thus made union membership and activities a bar to the
employment not only of the union member himself but of members of his family as
well. A more effective mode of discouragement of union affiliation could hardly be
found than the knowledge that such activities put not merely the union member's
employment but that of those closely related to him in jeopardy. The direct cause
of Mrs. Barmer's discharge was the fact that her husband had been discharged, but
the indirect and antecedent cause was discrimination against union members in
regard to hire and tenure of employment with intent to discourage membership in
the Union." So also the Board has held that the discharge of discriminatingly
discharged employees' wives for the reason that the employer did not desire the
employees to continue to live in the employer's houses, which they would do so
long as their wives remained employed, is itself a discriminating discharge in
violation of the Act. (Mexis Textile Mills, 11 NLRB 1167 [1939], enforced 110 F2d
565 [CCA 5, 1940].) In Mansfield Mills, Inc. (3 NLRB 901 [1937] ), the respondent
alleged that the wife of an employee who had been discharged allegedly in
violation of the Act was herself discharged in consequence of a company rule
requiring the dismissal of all members of the family when the head of the family is
discharged. The Board said: "Assuming this as the reason for Mrs. Sutton's
discharge, we would necessarily find that she was the victim of discrimination in
violation of the Act, if we determined that Sutton was discharged as the result of
his union affiliation."

In the usual case, it is the wife who is the sufferer because of the husband's union
affiliation. In I. Youlin and Company (22 NLRB No. 65 [1940]),the husband was
discharged for failure to secure his wife's resignation from the union this was held
violative of Section 8(3) of the Act.

In addition to violating Section 4(a) (5) of Republic Act No. 875, the discharge of Apolonio
San Jose is, therefore, an unfair labor practice under subdivision (4) of said Section 4(a),
which is the counterpart of Section 8(3)of the National Labor Relations Act (Wagner Act)
of the United States.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1äwphï1.ñët

112 | P a g e
WHEREFORE, the decision appealed from is hereby reversed, insofar as it dismisses the
complaint of petitioner herein, and another one shall be entered finding respondent
Philippine American Cigar & Cigarette Manufacturing Co., Inc. guilty of unfair labor
practice and ordering said respondent to reinstate Apolonio San Jose, immediately after
his decision shall have become final, with backpay. It is so ordered..

ALABANG COUNTRY CLUB, INC., G.R. No. 170287

Petitioner,
Present:
- versus -
QUISUMBING, J., Chairperson,
CARPIO MORALES,
NATIONAL LABOR RELATIONS AZCUNA,*
COMMISSION, ALABANG TINGA, and
COUNTRY CLUB INDEPENDENT VELASCO, JR., JJ.
EMPLOYEES UNION,
CHRISTOPHER PIZARRO,
MICHAEL BRAZA, and Promulgated:
NOLASCO CASTUERAS,
Respondents. February 14, 2008
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit corporation with
principal office at Country Club Drive, Ayala Alabang, Muntinlupa City. Respondent
Alabang Country Club Independent Employees Union (Union) is the exclusive bargaining
agent of the Clubs rank-and-file employees. In April 1996, respondents Christopher
Pizarro, Michael Braza, and Nolasco Castueras were elected Union President, Vice-
President, and Treasurer, respectively.

On June 21, 1999, the Club and the Union entered into a Collective Bargaining
Agreement (CBA), which provided for a Union shop and maintenance of membership
shop.

The pertinent parts of the CBA included in Article II on Union Security read, as
follows:
ARTICLE II
UNION SECURITY

SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-file

employees, who are members or subsequently become members of the
UNION shall maintain their membership in good standing as a condition for

113 | P a g e
 their continued employment by the CLUB during the lifetime of this
Agreement or any extension thereof.

SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW REGULAR

RANK-AND-FILE EMPLOYEES

a) New regular rank-and-file employees of the Club shall join

the UNION within five (5) days from the date of their appointment as
regular employees as a condition for their continued employment during
the lifetime of this Agreement, otherwise, their failure to do so shall be a
ground for dismissal from the CLUB upon demand by the UNION.
b) The Club agrees to furnish the UNION the names of all new
probationary and regular employees covered by this Agreement not later
than three (3) days from the date of regular appointment showing the
positions and dates of hiring.

xxxx

SECTION 4. TERMINATION UPON UNION DEMAND. Upon written

demand of the UNION and after observing due process, the Club shall dismiss
a regular rank-and-file employee on any of the following grounds:

(a) Failure to join the UNION within five (5) days from the time
of regularization;
(b) Resignation from the UNION, except within the period
allowed by law;
(c) Conviction of a crime involving moral turpitude;
(d) Non-payment of UNION dues, fees, and assessments;
(e) Joining another UNION except within the period allowed by
law;
(f) Malversation of union funds;
(g) Actively campaigning to discourage membership in
the UNION; and
(h) Inflicting harm or injury to any member or officer of
the UNION.

It is understood that the UNION shall hold the CLUB free and harmless
[sic] from any liability or damage whatsoever which may be imposed upon it
by any competent judicial or quasi-judicial authority as a result of such
dismissal and the UNION shall reimburse the CLUB for any and all liability or
damage it may be adjudged.[1] (Emphasis supplied.)

Subsequently, in July 2001, an election was held and a new set of officers was
elected. Soon thereafter, the new officers conducted an audit of the Union funds. They
discovered some irregularly recorded entries, unaccounted expenses and disbursements,
and uncollected loans from the Union funds. The Union notified respondents Pizarro,

114 | P a g e
Braza, and Castueras of the audit results and asked them to explain the discrepancies in
writing.[2]

Thereafter, on October 6, 2001, in a meeting called by the Union, respondents

Pizarro, Braza, and Castueras explained their side. Braza denied any wrongdoing and
instead asked that the investigation be addressed to Castueras, who was the Union
Treasurer at that time. With regard to his unpaid loans, Braza claimed he had been
paying through monthly salary deductions and said the Union could continue to deduct
from his salary until full payment of his loans, provided he would be reimbursed should
the result of the initial audit be proven wrong by a licensed auditor. With regard to the
Union expenses which were without receipts, Braza explained that these were legitimate
expenses for which receipts were not issued, e.g. transportation fares, food purchases
from small eateries, and food and transportation allowances given to Union members
with pending complaints with the Department of Labor and Employment, the National
Labor Relations Commission (NLRC), and the fiscals office. He explained that though
there were no receipts for these expenses, these were supported by vouchers and
itemized as expenses. Regarding his unpaid and unliquidated cash advances amounting
to almost PhP 20,000, Braza explained that these were not actual cash advances but
payments to a certain Ricardo Ricafrente who had loaned PhP 200,000 to the Union.[3]

Pizarro, for his part, blamed Castueras for his unpaid and uncollected loan and
cash advances. He claimed his salaries were regularly deducted to pay his loan and he
did not know why these remained unpaid in the records. Nonetheless, he likewise agreed
to continuous salary deductions until all his accountabilities were paid. [4]

Castueras also denied any wrongdoing and claimed that the irregular entries in the
records were unintentional and were due to inadvertence because of his voluminous
work load. He offered that his unpaid personal loan of PhP 27,500 also be deducted from
his salary until the loans were fully paid. Without admitting any fault on his part,
Castueras suggested that his salary be deducted until the unaccounted difference
between the loans and the amount collected amounting to a total of PhP 22,000 is paid.
[5]

Despite their explanations, respondents Pizarro, Braza, and Castueras were

expelled from the Union, and, on October 16, 2001, were furnished individual letters of
expulsion for malversation of Union funds. [6] Attached to the letters were copies of
the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63 Union members and
officers, and a Board of Directors Resolution[7] expelling them from the Union.
115 | P a g e
In a letter dated October 18, 2001, the Union, invoking the Security Clause of the CBA,
demanded that the Club dismiss respondents Pizarro, Braza, and Castueras in view of
their expulsion from the Union.[8] The Club required the three respondents to show cause
in writing within 48 hours from notice why they should not be dismissed. Pizarro and
Castueras submitted their respective written explanations on October 20, 2001, while
Braza submitted his explanation the following day.

During the last week of October 2001, the Clubs general manager called respondents
Pizarro, Braza, and Castueras for an informal conference inquiring about the charges
against them. Said respondents gave their explanation and asserted that the Union
funds allegedly malversed by them were even over the total amount collected during
their tenure as Union officersPhP 120,000 for Braza, PhP 57,000 for Castueras, and PhP
10,840 for Pizarro, as against the total collection from April 1996 to December 2001 of
only PhP 102,000. They claimed the charges are baseless. The general manager
announced he would conduct a formal investigation.

Nonetheless, after weighing the verbal and written explanations of the three
respondents, the Club concluded that said respondents failed to refute the validity of
their expulsion from the Union. Thus, it was constrained to terminate the employment of
said respondents. On December 26, 2001, said respondents received their notices of
termination from the Club.[9]

Respondents Pizarro, Braza, and Castueras challenged their dismissal from the Club in an
illegal dismissal complaint docketed as NLRC-NCR Case No. 30-01-00130-02 filed with
the NLRC, National Capital Region Arbitration Branch. In his January 27, 2003 Decision,
[10]
the Labor Arbiter ruled in favor of the Club, and found that there was justifiable cause
in terminating said respondents. He dismissed the complaint for lack of merit.

On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an Appeal
docketed as NLRC NCR CA No. 034601-03 with the NLRC.

On February 26, 2004, the NLRC rendered a Decision [11] granting the appeal,
the fallo of which reads:

WHEREFORE, finding merit in the Appeal, judgment is hereby rendered

declaring the dismissal of the complainants illegal. x x x Alabang Country
Club, Inc. and Alabang Country Club Independent Union are hereby ordered
116 | P a g e
 to reinstate complainants Christopher Pizarro, Nolasco Castueras and Michael
Braza to their former positions without loss of seniority rights and other
privileges with full backwages from the time they were dismissed up to their
actual reinstatement.

SO ORDERED.

The NLRC ruled that there was no justifiable cause for the termination of respondents
Pizarro, Braza, and Castueras. The commissioners relied heavily on Section 2, Rule XVIII
of the Rules Implementing Book V of the Labor Code. Sec. 2 provides:

SEC. 2. Actions arising from Article 241 of the Code. Any action arising
from the administration or accounting of union funds shall be filed and
disposed of as an intra-union dispute in accordance with Rule XIV of this
Book.

In case of violation, the Regional or Bureau Director shall order the

responsible officer to render an accounting of funds before the general
membership and may, where circumstances warrant, mete the appropriate
penalty to the erring officer/s, including suspension or expulsion from the
union.[12]

According to the NLRC, said respondents expulsion from the Union was illegal since the
DOLE had not yet made any definitive ruling on their liability regarding the
administration of the Unions funds.

The Club then filed a motion for reconsideration which the NLRC denied in its June 20,
2004 Resolution.[13]

Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition for
Certiorari which was docketed as CA-G.R. SP No. 86171 with the Court of Appeals (CA).
The CA Upheld the NLRC Ruling
that the Three Respondents were Deprived Due Process
On July 5, 2005, the appellate court rendered a Decision, [14] denying the petition and
upholding the Decision of the NLRC. The CAs Decision focused mainly on the Clubs
perceived failure to afford due process to the three respondents. It found that said
respondents were not given the opportunity to be heard in a separate hearing as
required by Sec. 2(b), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor
Code, as follows:

117 | P a g e
 SEC. 2. Standards of due process; requirements of notice.In all cases
of termination of employment, the following standards of due process shall
be substantially observed:

For termination of employment based on just causes as defined in Article 282

of the Code:

xxxx

(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented
against him.

The CA also said the dismissal of the three respondents was contrary to the doctrine laid
down in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos (Malayang
Samahan), where this Court ruled that even on the assumption that the union had valid
grounds to expel the local union officers, due process requires that the union officers be
accorded a separate hearing by the employer company.[15]

In a Resolution[16] dated October 20, 2005, the CA denied the Clubs motion for
reconsideration.

The Club now comes before this Court with these issues for our resolution, summarized
as follows:
1. Whether there was just cause to dismiss private respondents,
and whether they were afforded due process in accordance with the
standards provided for by the Labor Code and its Implementing Rules.

2. Whether or not the CA erred in not finding that the NLRC

committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it ruled that respondents Pizarro, Braza, and
Castueras were illegally expelled from the Union.

3. Whether the case of Agabon vs. NLRC[17] should be applied to

this case.

4. Whether that in the absence of bad faith and malice on the part
of the Club, the Union is solely liable for the termination from
employment of said respondents.

The main issue is whether the three respondents were illegally dismissed and whether
they were afforded due process.

118 | P a g e
The Club avers that the dismissal of the three respondents was in accordance with the
Union security provisions in their CBA. The Club also claims that the three respondents
were afforded due process, since the Club conducted an investigation separate and
independent from that conducted by the Union.

Respondents Pizarro, Braza, and Castueras, on the other hand, contend that the Club
failed to conduct a separate hearing as prescribed by Sec. 2(b), Rule XXIII, Book V of the
implementing rules of the Code.

First, we resolve the legality of the three respondents dismissal from the Club.

Valid Grounds for Termination

Under the Labor Code, an employee may be validly terminated on the following grounds:
(1) just causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due
to disease under Art. 284; and (4) termination by the employee or resignation under Art.
285.

Another cause for termination is dismissal from employment due to the

enforcement of the union security clause in the CBA. Here, Art. II of the CBA on Union
security contains the provisions on the Union shop and maintenance of membership
shop. There is union shop when all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There is
maintenance of membership shop when employees who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain
union membership as a condition for continued employment until they are promoted or
transferred out of the bargaining unit or the agreement is terminated. [18] Termination of
employment by virtue of a union security clause embodied in a CBA is recognized and
accepted in our jurisdiction.[19] This practice strengthens the union and prevents disunity
in the bargaining unit within the duration of the CBA. By preventing member disaffiliation
with the threat of expulsion from the union and the consequent termination of
employment, the authorized bargaining representative gains more numbers and
strengthens its position as against other unions which may want to claim majority
representation.

119 | P a g e
 In terminating the employment of an employee by enforcing the union security
clause, the employer needs only to determine and prove that: (1) the union security
clause is applicable; (2) the union is requesting for the enforcement of the union security
provision in the CBA; and (3) there is sufficient evidence to support the unions decision
to expel the employee from the union. These requisites constitute just cause for
terminating an employee based on the CBAs union security provision.

The language of Art. II of the CBA that the Union members must maintain their
membership in good standing as a condition sine qua non for their continued
employment with the Club is unequivocal. It is also clear that upon demand by
the Union and after due process, the Club shall terminate the employment of a regular
rank-and-file employee who may be found liable for a number of offenses, one of which
is malversation of Union funds.[20]

Below is the letter sent to respondents Pizarro, Braza, and Castueras, informing
them of their termination:

On October 18, 2001, the Club received a letter from the Board of
Directors of the Alabang Country Club Independent Employees Union (Union)
demanding your dismissal from service by reason of your alleged
commission of act of dishonesty, specifically malversation of union funds. In
support thereof, the Club was furnished copies of the following documents:

1. A letter under the subject Result of Audit dated September 14,

2001 (receipt of which was duly acknowledged from your end),
which required you to explain in writing the charges against you
(copy attached);

2. The Unions Board of Directors Resolution dated October 2, 2001,

which explained that the Union afforded you an opportunity to
explain your side to the charges;

3. Minutes of the meeting of the Unions Board of Directors wherein

an administrative investigation of the case was conducted last
October 6, 2001; and

4. The Unions Board of Directors Resolution dated October 15, 2001

which resolved your expulsion from the Union for acts of dishonesty
and malversation of union funds, which was duly approved by the
general membership.

After a careful evaluation of the evidence on hand vis--vis a thorough

assessment of your defenses presented in your letter-explanation dated
October 6, 2001 of which you also expressed that you waived your right to
120 | P a g e
 be present during the administrative investigation conducted by the Unions
Board of Directors on October 6, 2001, Management has reached the
conclusion that there are overwhelming reasons to consider that you have
violated Section 4(f) of the CBA, particularly on the grounds of
malversation of union funds. The Club has determined that you were
sufficiently afforded due process under the circumstances.

Inasmuch as the Club is duty-bound to comply with its obligation

under Section 4(f) of the CBA, it is unfortunate that Management is left
with no other recourse but to consider your termination from service
effective upon your receipt thereof. We wish to thank you for your services
during your employment with the Company. It would be more prudent that
we just move on independently if only to maintain industrial peace in the
workplace.

Be guided accordingly.[21]

Gleaned from the above, the three respondents were expelled from and by
the Union after due investigation for acts of dishonesty and malversation of Union funds.
In accordance with the CBA, the Union properly requested the Club, through the October
18, 2001 letter[22] signed by Mario Orense, the Union President, and addressed to Cynthia
Figueroa, the Clubs HRD Manager, to enforce the Union security provision in their CBA
and terminate said respondents. Then, in compliance with the Unions request, the Club
reviewed the documents submitted by the Union, requested said respondents to submit
written explanations, and thereafter afforded them reasonable opportunity to present
their side. After it had determined that there was sufficient evidence that said
respondents malversed Union funds, the Club dismissed them from their employment
conformably with Sec. 4(f) of the CBA.

Considering the foregoing circumstances, we are constrained to rule that there is

sufficient cause for the three respondents termination from employment.

Were respondents Pizarro, Braza, and Castueras accorded due process before their
employments were terminated?

We rule that the Club substantially complied with the due process requirements
before it dismissed the three respondents.

The three respondents aver that the Club violated their rights to due process as
enunciated in Malayang Samahan,[23] when it failed to conduct an independent and
separate hearing before they were dismissed from service.
121 | P a g e
The CA, in dismissing the Clubs petition and affirming the Decision of the NLRC, also
relied on the same case. We explained in Malayang Samahan:

x x x Although this Court has ruled that union security clauses

embodied in the collective bargaining agreement may be validly enforced
and that dismissals pursuant thereto may likewise be valid, this does not
erode the fundamental requirements of due process. The reason behind the
enforcement of union security clauses which is the sanctity and inviolability
of contracts cannot override ones right to due process.[24]

In the above case, we pronounced that while the company, under a maintenance
of membership provision of the CBA, is bound to dismiss any employee expelled by the
union for disloyalty upon its written request, this undertaking should not be done hastily
and summarily. The company acts in bad faith in dismissing a worker without giving him
the benefit of a hearing.[25] We cautioned in the same case that the power to dismiss is a
normal prerogative of the employer; however, this power has a limitation. The employer
is bound to exercise caution in terminating the services of the employees especially so
when it is made upon the request of a labor union pursuant to the CBA. Dismissals must
not be arbitrary and capricious. Due process must be observed in dismissing employees
because the dismissal affects not only their positions but also their means of livelihood.
Employers should respect and protect the rights of their employees, which include the
right to labor.[26]

The CA and the three respondents err in relying on Malayang Samahan, as its
ruling has no application to this case. In Malayang Samahan, the union members were
expelled from the union and were immediately dismissed from the company without any
semblance of due process. Both the union and the company did not conduct
administrative hearings to give the employees a chance to explain themselves. In the
present case, the Club has substantially complied with due process. The three
respondents were notified that their dismissal was being requested by the Union, and
their explanations were heard. Then, the Club, through its President, conferred with said
respondents during the last week of October 2001. The three respondents were
dismissed only after the Club reviewed and considered the documents submitted by the
Union vis--vis the written explanations submitted by said respondents. Under these
circumstances, we find that the Club had afforded the three respondents a reasonable
opportunity to be heard and defend themselves.

122 | P a g e
 On the applicability of Agabon, the Club points out that the CA ruled that the three
respondents were illegally dismissed primarily because they were not afforded due
process. We are not unaware of the doctrine enunciated in Agabon that when there is
just cause for the dismissal of an employee, the lack of statutory due process should not
nullify the dismissal, or render it illegal or ineffectual, and the employer should indemnify
the employee for the violation of his statutory rights. [27] However, we find that we could
not apply Agabon to this case as we have found that the three respondents were validly
dismissed and were actually afforded due process.

Finally, the issue that since there was no bad faith on the part of the Club,
the Union is solely liable for the termination from employment of the three respondents,
has been mooted by our finding that their dismissal is valid.

WHEREFORE, premises considered, the Decision dated July 5, 2005 of the CA and
the Decision dated February 26, 2004 of the NLRC are hereby REVERSED andSET
ASIDE. The Decision dated January 27, 2003 of the Labor Arbiter in NLRC-NCR Case No.
30-01-00130-02 is hereby REINSTATED.

No costs.

SO ORDERED.

Malayang Samahan ng mga Manggagawa sa M. Greenfield, v. Ramos et. al., G.R. No.
113907, February 28, 2000

DECISION

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the
decision of the National Labor Relations Commission in an unfair labor practice case
instituted by a local union against its employer company and the officers of its national
federation.

The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B)

(MSMG), hereinafter referred to as the "local union", is an affiliate of the private
respondent, United Lumber and General Workers of the Philippines (ULGWP), referred to
as the "federation". The collective bargaining agreement between MSMG and M.
Greenfield, Inc. names the parties as follows:

"This agreement made and entered into by and between:

123 | P a g e
 M. GREENFIELD, INC. (B) a corporation duly organized in accordance
with the laws of the Republic of the Philippines with office address at
Km. 14, Merville Road, Paraaque, Metro Manila, represented in this act
by its General manager, Mr. Carlos T. Javelosa, hereinafter referred to
as the Company;

-and-

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B)

(MSMG)/UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES
(ULGWP), a legitimate labor organization with address at Suite 404,
Trinity Building, T.M. Kalaw Street, Manila, represented in this act by a
Negotiating Committee headed by its National President, Mr. Godofredo
Paceno, Sr., referred to in this Agreement as the UNION."[1]

The CBA includes, among others, the following pertinent provisions:

Article II-Union Security

Section 1. Coverage and Scope. All employees who are covered by this
Agreement and presently members of the UNION shall remain members of
the UNION for the duration of this Agreement as a condition precedent to
continued employment with the COMPANY.

xxxxxx

xxxxxx

Section 4. Dismissal. Any such employee mentioned in Section 2 hereof, who

fails to maintain his membership in the UNION for non-payment of UNION
dues, for resignation and for violation of UNIONs Constitution and By-Laws
and any new employee as defined in Section 2 of this Article shall upon
written notice of such failure to join or to maintain membership in the UNION
and upon written recommendation to the COMPANY by the UNION, be
dismissed from the employment by the COMPANY; provided, however, that
the UNION shall hold the COMPANY free and blameless from any and all
liabilities that may arise should the dismissed employee question, in any
manner, his dismissal; provided, further that the matter of the employees
dismissal under this Article may be submitted as a grievance under Article
XIII and, provided, finally, that no such written recommendation shall be
made upon the COMPANY nor shall COMPANY be compelled to act upon any
such recommendation within the period of sixty (60) days prior to the expiry
date of this Agreement conformably to law."

Article IX

Section 4. Program Fund - The Company shall provide the amount of P10,
000.00 a month for a continuing labor education program which shall be
remitted to the Federation x x x."[2]
124 | P a g e
On September 12, 1986, a local union election was held under the auspices of the
ULGWP wherein the herein petitioner, Beda Magdalena Villanueva, and the other union
officers were proclaimed as winners. Minutes of the said election were duly filed with the
Bureau of Labor Relations on September 29, 1986.

On March 21, 1987, a Petition for Impeachment was filed with the national federation
ULGWP by the defeated candidates in the aforementioned election.

On June 16, 1987, the federation conducted an audit of the local union funds. The
investigation did not yield any unfavorable result and the local union officers were
cleared of the charges of anomaly in the custody, handling and disposition of the union
funds.

The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local union
officers with the DOLE NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87.
However, the same was dismissed on March 2, 1988, by Med-Arbiter Renato Parungo for
failure to substantiate the charges and to present evidence in support of the allegations.

On April 17, 1988, the local union held a general membership meeting at the Caruncho
Complex in Pasig. Several union members failed to attend the meeting, prompting the
Executive Board to create a committee tasked to investigate the non-attendance of
several union members in the said assembly, pursuant to Sections 4 and 5, Article V of
the Constitution and By-Laws of the union, which read:

"Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng

hakbangin ng unyon ng sinumang kasapi o pinuno ay maaaring maging sanhi
ng pagtitiwalag o pagpapataw ng multa ng hindi hihigit sa P50.00 sa bawat
araw na nagkulang.

Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong

ay ituturing na pagliban at maparusahan ito ng alinsunod sa Article V,
Seksyong 4 ng Saligang Batas na ito. Sino mang kasapi o pisyales na mahuli
and dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng
P25.00 at babawasin sa sahod sa pamamagitan ng salary deduction at higit
sa isang oras ng pagdating ng huli ay ituturing na pagliban.[3]

On June 27, 1988, the local union wrote respondent company a letter requesting it to
deduct the union fines from the wages/salaries of those union members who failed to
attend the general membership meeting. A portion of the said letter stated:

"xxx xxx xxx

In connection with Section 4 Article II of our existing Collective Bargaining

Agreement, please deduct the amount of P50.00 from each of the union
members named in said annexes on the payroll of July 2-8, 1988 as fine for
their failure to attend said general membership meeting."[4]

In a Memorandum dated July 3, 1988, the Secretary General of the national federation,
Godofredo Paceo, Jr. disapproved the resolution of the local union imposing the P50.00
125 | P a g e
fine. The union officers protested such action by the Federation in a Reply dated July 4,
1988.

On July 11, 1988, the Federation wrote respondent company a letter advising the latter
not to deduct the fifty-peso fine from the salaries of the union members requesting that:

" x x x any and all future representations by MSMG affecting a number of

members be first cleared from the federation before corresponding action by
the Company."[5]

The following day, respondent company sent a reply to petitioner unions request in a
letter, stating that it cannot deduct fines from the employees salary without going
against certain laws. The company suggested that the union refer the matter to the
proper government office for resolution in order to avoid placing the company in the
middle of the issue.

The imposition of P50.00 fine became the subject of bitter disagreement between the
Federation and the local union culminating in the latters declaration of general autonomy
from the former through Resolution No. 10 passed by the local executive board and
ratified by the general membership on July 16, 1988.

In retaliation, the national federation asked respondent company to stop the remittance
of the local unions share in the education funds effective August 1988. This was objected
to by the local union which demanded that the education fund be remitted to it in full.

The company was thus constrained to file a Complaint for Interpleader with a Petition for
Declaratory Relief with the Med-Arbitration Branch of the Department of Labor and
Employment, docketed as Case No. OD-M-8-435-88. This was resolved on October 28,
1988, by Med-Arbiter Anastacio Bactin in an Order, disposing thus:

"WHEREFORE, premises considered, it is hereby ordered:

1. That the United Lumber and General Workers of the Philippines (ULGWP)
through its local union officers shall administer the collective bargaining
agreement (CBA).

2. That petitioner company shall remit the P10,000.00 monthly labor

education program fund to the ULGWP subject to the condition that it shall
use the said amount for its intended purpose.

3. That the Treasurer of the MSMG shall be authorized to collect from the 356
union members the amount of P50.00 as penalty for their failure to attend
the general membership assembly on April 17, 1988.

However, if the MSMG Officers could present the individual written

authorizations of the 356 union members, then the company is obliged to
deduct from the salaries of the 356 union members the P50.00 fine."[6]

126 | P a g e
On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which
modified in part the earlier disposition, to wit:

"WHEREFORE, premises considered, the appealed portion is hereby modified

to the extent that the company should remit the amount of five thousand
pesos (P5,000.00) of the P10,000.00 monthly labor education program fund
to ULGWP and the other P5,000.00 to MSMG, both unions to use the same for
its intended purpose."[7]

Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby,
Triumph International, General Milling, and Vander Hons chapters) filed a Petition for
Audit and Examination of the federation and education funds of ULGWP which was
granted by Med-Arbiter Rasidali Abdullah on December 25, 1988 in an Order which
directed the audit and examination of the books of account of ULGWP.

On September 30, 1988, the officials of ULGWP called a Special National Executive Board
Meeting at Nasipit, Agusan del Norte where a Resolution was passed placing the MSMG
under trusteeship and appointing respondent Cesar Clarete as administrator.

On October 27, 1988, the said administrator wrote the respondent company informing
the latter of its designation of a certain Alfredo Kalingking as local union president and
"disauthorizing" the incumbent union officers from representing the employees. This
action by the national federation was protested by the petitioners in a letter to
respondent company dated November 11, 1988.

On November 13, 1988, the petitioner union officers received identical letters from the
administrator requiring them to explain within 72 hours why they should not be removed
from their office and expelled from union membership.

On November 26, 1988, petitioners replied:

(a) Questioning the validity of the alleged National Executive Board

Resolution placing their union under trusteeship;

(b) Justifying the action of their union in declaring a general autonomy from
ULGWP due to the latters inability to give proper educational, organizational
and legal services to its affiliates and the pendency of the audit of the
federation funds;

(c) Advising that their union did not commit any act of disloyalty as it has
remained an affiliate of ULGWP;

(d) Giving ULGWP a period of five (5) days to cease and desist from further
committing acts of coercion, intimidation and harrassment.[8]

However, as early as November 21, 1988, the officers were expelled from the ULGWP.
The termination letter read:

127 | P a g e
 "Effective today, November 21, 1988, you are hereby expelled from UNITED
LUMBER AND GENERAL WORKERS OF THE PHILIPPINES (ULGWP) for
committing acts of disloyalty and/or acts inimical to the interest and violative
to the Constitution and by-laws of your federation.

You failed and/or refused to offer an explanation inspite of the time granted
to you.

Since you are no longer a member of good standing, ULGWP is constrained

to recommend for your termination from your employment, and provided in
Article II Section 4, known as UNION SECURITY, in the Collective Bargaining
agreement."[9]

On the same day, the federation advised respondent company of the expulsion of the 30
union officers and demanded their separation from employment pursuant to the Union
Security Clause in their collective bargaining agreement. This demand was reiterated
twice, through letters dated February 21 and March 4, 1989, respectively, to respondent
company.

Thereafter, the Federation filed a Notice of Strike with the National Conciliation and
Mediation Board to compel the company to effect the immediate termination of the
expelled union officers.

On March 7, 1989, under the pressure of a threatened strike, respondent company

terminated the 30 union officers from employment, serving them identical copies of the
termination letter reproduced below:

We received a demand letter dated 21 November 1988 from the United

Lumber and General Workers of the Philippines (ULGWP) demanding for your
dismissal from employment pursuant to the provisions of Article II, Section 4
of the existing Collective Bargaining Agreement (CBA). In the said demand
letter, ULGWP informed us that as of November 21, 1988, you were expelled
from the said federation "for committing acts of disloyalty and/or acts
inimical to the interest of ULGWP and violative to its Constitution and By-laws
particularly Article V, Section 6, 9, and 12, Article XIII, Section 8."

In subsequent letters dated 21 February and 4 March 1989, the ULGWP

reiterated its demand for your dismissal, pointing out that notwithstanding
your expulsion from the federation, you have continued in your employment
with the company in violation of Sec. 1 and 4 of Article II of our CBA, and of
existing provisions of law.

In view thereof, we are left with no alternative but to comply with the
provisions of the Union Security Clause of our CBA. Accordingly, we hereby
serve notice upon you that we are dismissing you from your employment
with M. Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA
effective immediately."[10]

128 | P a g e
On that same day, the expelled union officers assigned in the first shift were physically
or bodily brought out of the company premises by the companys security guards.
Likewise, those assigned to the second shift were not allowed to report for work. This
provoked some of the members of the local union to demonstrate their protest for the
dismissal of the said union officers. Some union members left their work posts and
walked out of the company premises.

On the other hand, the Federation, having achieved its objective, withdrew the Notice of
Strike filed with the NCMB.

On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila,
docketed as Case No. NCMB-NCR-NS-03-216-89, alleging the following grounds for the
strike:

(a) Discrimination

(b) Interference in union activities

(c) Mass dismissal of union officers and shop stewards

(d) Threats, coercion and intimidation

(e) Union busting

The following day, March 9, 1989, a strike vote referendum was conducted and out of 2,
103 union members who cast their votes, 2,086 members voted to declare a strike.

On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition,
docketed as Case No. NCMB-NCR-NS-03-216-89, with the Offfice of the Secretary of the
Department of Labor and Employment praying for the suspension of the effects of their
termination from employment. However, the petition was dismissed by then Secretary
Franklin Drilon on April 11, 1989, the pertinent portion of which stated as follows:

"At this point in time, it is clear that the dispute at M. Greenfield is purely an
intra-union matter. No mass lay-off is evident as the terminations have been
limited to those allegedly leading the secessionist group leaving MSMG-
ULGWP to form a union under the KMU. xxx

xxx xxx xxx

WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of our

extraordinary authority under Article 277 (b) of the Labor Code, as amended,
the instant Petition is hereby DISMISSED for lack of merit.

SO ORDERED."[11]

On March 13 and 14, 1989, a total of 78 union shop stewards were placed under
preventive suspension by respondent company. This prompted the union members to
again stage a walk-out and resulted in the official declaration of strike at around 3:30 in
129 | P a g e
the afternoon of March 14, 1989. The strike was attended with violence, force and
intimidation on both sides resulting to physical injuries to several employees, both
striking and non-striking, and damage to company properties.

The employees who participated in the strike and allegedly figured in the violent incident
were placed under preventive suspension by respondent company. The company also
sent return-to-work notices to the home addresses of the striking employees thrice
successively, on March 27, April 8 and April 31, 1989, respectively. However, respondent
company admitted that only 261 employees were eventually accepted back to work.
Those who did not respond to the return-to-work notice were sent termination letters
dated May 17, 1989, reproduced below:

M. Greenfield Inc., (B)

Km. 14, Merville Rd., Paraaque, M.M.

May 17, 1989

xxx

On March 14, 1989, without justifiable cause and without due notice, you left
your work assignment at the prejudice of the Companys operations. On
March 27, April 11, and April 21, 1989, we sent you notices to report to the
Company. Inspite of your receipt of said notices, we have not heard from you
up to this date.

Accordingly, for your failure to report, it is construed that you have

effectively abandoned your employment and the Company is, therefore,
constrained to dismiss you for said cause.

Very truly yours,

M. GREENFIELD, INC., (B)

By:

WENZEL STEPHEN LIGOT

Asst. HRD Manager"[12]

On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch,
National Capital Region, DOLE, Manila, docketed as Case No. NCR-00-09-04199-89,
charging private respondents of unfair labor practice which consists of union busting,
illegal dismissal, illegal suspension, interference in union activities, discrimination,
threats, intimidation, coercion, violence, and oppresion.

After the filing of the complaint, the lease contracts on the respondent companys office
and factory at Merville Subdivision, Paraaque expired and were not renewed. Upon

130 | P a g e
demand of the owners of the premises, the company was compelled to vacate its office
and factory.

Thereafter, the company transferred its administration and account/client servicing

department at AFP-RSBS Industrial Park in Taguig, Metro Manila. For failure to find a
suitable place in Metro Manila for relocation of its factory and manufacturing operations,
the company was constrained to move the said departments to Tacloban, Leyte. Hence,
on April 16, 1990, respondent company accordingly notified its employees of a
temporary shutdown. in operations. Employees who were interested in relocating to
Tacloban were advised to enlist on or before April 23, 1990.

The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion
but was thereafter reassigned to Labor Arbiter Cresencio Ramos when respondents
moved to inhibit him from acting on the case.

On December 15, 1992, finding the termination to be valid in compliance with the union
security clause of the collective bargaining agreement, Labor Arbiter Cresencio Ramos
dismissed the complaint.

Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo
Putong retired from the service, leaving only two commissioners, Commissioner Vicente
Veloso III and Hon. Chairman Bartolome Carale in the First Division. When Commissioner
Veloso inhibited himself from the case, Commissioner Joaquin Tanodra of the Third
Division was temporarily designated to sit in the First Division for the proper disposition
of the case.

The First Division affirmed the Labor Arbiters disposition. With the denial of their motion
for reconsideration on January 28, 1994, petitioners elevated the case to this Court,
attributing grave abuse of discretion to public respondent NLRC in:

I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT

COMPANY AS VALID;

II. HOLDING THAT THE STRIKE STAGED BYTHE PETITIONERS AS ILLEGAL;

III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE

ABANDONED THEIR WORK AND HENCE, VALIDLY DISMISSED BY RESPONDENT
COMPANY; AND

IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION

OFFICERS GUILTY OF ACTS OF UNFAIR LABOR PRACTICE.

Notwithstanding the several issues raised by the petitioners and respondents in the
voluminous pleadings presented before the NLRC and this Court, they revolve around
and proceed from the issue of whether or not respondent company was justified in
dismissing petitioner employees merely upon the labor federations demand for the
enforcement of the union security clause embodied in their collective bargaining
agreement.

131 | P a g e
Before delving into the main issue, the procedural flaw pointed out by the petitioners
should first be resolved.

Petitioners contend that the decision rendered by the First Division of the NLRC is not
valid because Commissioner Tanodra, who is from the Third Division, did not have any
lawful authority to sit, much less write the ponencia, on a case pending before the First
Division. It is claimed that a commissioner from one division of the NLRC cannot be
assigned or temporarily designated to another division because each division is assigned
a particular territorial jurisdiction. Thus, the decision rendered did not have any legal
effect at all for being irregularly issued.

Petitioners argument is misplaced. Article 213 of the Labor Code in enumerating the
powers of the Chairman of the National Labor Relations Commission provides that:

"The concurrence of two (2) Commissioners of a division shall be necessary

for the pronouncement of a judgment or resolution. Whenever the required
membership in a division is not complete and the concurrence of two (2)
commissioners to arrive at a judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional Commissioners from the
other divisions as may be necessary."

It must be remembered that during the pendency of the case in the First Division of the
NLRC, one of the three commissioners, Commissioner Romeo Putong, retired, leaving
Chairman Bartolome Carale and Commissioner Vicente Veloso III. Subsequently,
Commissioner Veloso inhibited himself from the case because the counsel for the
petitioners was his former classmate in law school. The First Division was thus left with
only one commissioner. Since the law requires the concurrence of two commisioners to
arrive at a judgment or resolution, the Commission was constrained to temporarily
designate a commissioner from another division to complete the First Division. There is
nothing irregular at all in such a temporary designation for the law empowers the
Chairman to make temporary assignments whenever the required concurrence is not
met. The law does not say that a commissioner from the first division cannot be
temporarily assigned to the second or third division to fill the gap or vice versa. The
territorial divisions do not confer exclusive jurisdiction to each division and are merely
designed for administrative efficiency.

Going into the merits of the case, the court finds that the Complaint for unfair labor
practice filed by the petitioners against respondent company which charges union
busting, illegal dismissal, illegal suspension, interference in union activities,
discrimination, threats, intimidation, coercion, violence, and oppression actually
proceeds from one main issue which is the termination of several employees by
respondent company upon the demand of the labor federation pursuant to the union
security clause embodied in their collective bargaining agreement.

Petitioners contend that their dismissal from work was effected in an arbitrary, hasty,
capricious and illegal manner because it was undertaken by the respondent company
without any prior administrative investigation; that, had respondent company conducted
prior independent investigation it would have found that their expulsion from the union
was unlawful similarly for lack of prior administrative investigation; that the federation
132 | P a g e
cannot recommend the dismissal of the union officers because it was not a principal
party to the collective bargaining agreement between the company and the union; that
public respondents acted with grave abuse of discretion when they declared petitioners
dismissals as valid and the union strike as illegal and in not declaring that respondents
were guilty of unfair labor practice.

Private respondents, on the other hand, maintain that the thirty dismissed employees
who were former officers of the federation have no cause of action against the company,
the termination of their employment having been made upon the demand of the
federation pursuant to the union security clause of the CBA; the expelled officers of the
local union were accorded due process of law prior to their expulsion from their
federation; that the strike conducted by the petitioners was illegal for noncompliance
with the requirements; that the employees who participated in the illegal strike and in
the commission of violence thereof were validly terminated from work; that petitioners
were deemed to have abandoned their employment when they did not respond to the
three return to work notices sent to them; that petitioner labor union has no legal
personality to file and prosecute the case for and on behalf of the individual employees
as the right to do so is personal to the latter; and that, the officers of respondent
company cannot be liable because as mere corporate officers, they acted within the
scope of their authority.

Public respondent, through the Labor Arbiter, ruled that the dismissed union officers
were validly and legally terminated because the dismissal was effected in compliance
with the union security clause of the CBA which is the law between the parties. And this
was affimed by the Commission on appeal. Moreover, the Labor Arbiter declared that
notwithstanding the lack of a prior administrative investigation by respondent company,
under the union security clause provision in the CBA, the company cannot look into the
legality or illegality of the recommendation to dismiss by the union nd the obligation to
dismiss is ministerial on the part of the company.[13]

This ruling of the NLRC is erroneous. Although this Court has ruled that union security
clauses embodied in the collective bargaining agreement may be validly enforced and
that dismissals pursuant thereto may likewise be valid, this does not erode the
fundamental requirement of due process. The reason behind the enforcement of union
security clauses which is the sanctity and inviolability of contracts [14] cannot override
ones right to due process.

In the case of Cario vs. National Labor Relations Commission,[15] this Court pronounced
that while the company, under a maintenance of membership provision of the collective
bargaining agreement, is bound to dismiss any employee expelled by the union for
disloyalty upon its written request, this undertaking should not be done hastily and
summarily. The company acts in bad faith in dismissing a worker without giving him the
benefit of a hearing.

"The power to dismiss is a normal prerogative of the employer. However, this

is not without limitation. The employer is bound to exercise caution in
terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining
Agreement, xxx. Dismissals must not be arbitrary and capricious. Due
133 | P a g e
 process must be observed in dismissing an employee because it affects not
only his position but also his means of livelihood. Employers should respect
and protect the rights of their employees, which include the right to labor."

In the case under scrutiny, petitioner union officers were expelled by the federation for
allegedly commiting acts of disloyalty and/or inimical to the interest of ULGWP and in
violation of its Constitution and By-laws. Upon demand of the federation, the company
terminated the petitioners without conducting a separate and independent investigation.
Respondent company did not inquire into the cause of the expulsion and whether or not
the federation had sufficient grounds to effect the same. Relying merely upon the
federations allegations, respondent company terminated petitioners from employment
when a separate inquiry could have revealed if the federation had acted arbitrarily and
capriciously in expelling the union officers. Respondent companys allegation that
petitioners were accorded due process is belied by the termination letters received by
the petitioners which state that the dismissal shall be immediately effective.

As held in the aforecited case of Cario, "the right 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 is not wiped away by a union security clause or
a union shop clause in a collective bargaining agreement. An employee is entitled to be
protected not only from a company which disregards his rights but also from his own
union the leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and mere dismissal from his job."

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.[16] Even on the assumption that the federation had valid grounds to expell the
union officers, due process requires that these union officers be accorded a separate
hearing by respondent company.

In its decision, public respondent also declared that if complainants (herein petitioners)
have any recourse in law, their right of action is against the federation and not against
the company or its officers, relying on the findings of the Labor Secretary that the issue
of expulsion of petitioner union officers by the federation is a purely intra-union matter.

Again, such a contention is untenable. While it is true that the issue of expulsion of the
local union officers is originally between the local union and the federation, hence, intra-
union in character, the issue was later on converted into a termination dispute when the
company dismissed the petitioners from work without the benefit of a separate notice
and hearing. As a matter of fact, the records reveal that the the termination was
effective on the same day that the the termination notice was served on the petitioners.

In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. [17], the
Court held the company liable for the payment of backwages for having acted in bad
faith in effecting the dismissal of the employees.
134 | P a g e
 "xxx Bad faith on the part of the respondent company may be gleaned from
the fact that the petitioner workers were dismissed hastily and summarily. At
best, it was guilty of a tortious act, for which it must assume solidary liability,
since it apparently chose to summarily dismiss the workers at the unions
instance secure in the unions contractual undertaking that the union would
hold it free from any liability arising from such dismissal."

Thus, notwithstanding the fact that the dismissal was at the instance of the federation
and that it undertook to hold the company free from any liability resulting from such a
dismissal, the company may still be held liable if it was remiss in its duty to accord the
would-be dismissed employees their right to be heard on the matter.

Anent petitioners contention that the federation was not a principal party to the
collective bargaining agreement between the company and the union, suffice it to say
that the matter was already ruled upon in the Interpleader case filed by respondent
company. Med-Arbiter Anastacio Bactin thus ruled:

After a careful examination of the facts and evidences presented by the

parties, this Officer hereby renders its decision as follows:

1.) It appears on record that in the Collective Bargaining Agreement (CBA)

which took effect on July 1, 1986, the contracting parties are M. Greenfield,
Inc. (B) and Malayang Samahan ng Mga Manggagawa sa M. Greenfield, Inc.
(B) (MSMG)/United Lumber and General Workers of the Philippines (ULGWP).
However, MSMG was not yet a registered labor organization at the time of
the signing of the CBA. Hence, the union referred to in the CBA is the
ULGWP."[18]

Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:

It is undisputed that ULGWP is the certified sole and exclusive collective

bargaining agent of all the regular rank-and-file workers of the company, M.
Greenfield, Inc. (pages 31-32 of the records).

It has been established also that the company and ULGWP signed a 3-year
collective bargaining agreement effective July 1, 1986 up to June 30, 1989.[19]

Although the issue of whether or not the federation had reasonable grounds to expel the
petitioner union officers is properly within the original and exclusive jurisdiction of the
Bureau of Labor Relations, being an intra-union conflict, this Court deems it justifiable
that such issue be nonetheless ruled upon, as the Labor Arbiter did, for to remand the
same to the Bureau of Labor Relations would be to intolerably delay the case.

The Labor Arbiter found that petitioner union officers were justifiably expelled from the
federation for committing acts of disloyalty when it "undertook to disaffiliate from the
federation by charging ULGWP with failure to provide any legal, educational or
organizational support to the local. x x x and declared autonomy, wherein they prohibit
the federation from interfering in any internal and external affairs of the local union."[20]

135 | P a g e
It is well-settled that findings of facts of the NLRC are entitled to great respect and are
generally binding on this Court, but it is equally well-settled that the Court will not
uphold erroneous conclusions of the NLRC as when the Court finds insufficient or
insubstantial evidence on record to support those factual findings. The same holds true
when it is perceived that far too much is concluded, inferred or deduced from the bare or
incomplete facts appearing of record.[21]

In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of
autonomy by the local union was part of its "plan to take over the respondent
federation." This is purely conjecture and speculation on the part of public respondent,
totally unsupported by the evidence.

A local union has the right to disaffiliate from its mother union or declare its autonomy. A
local union, being a separate and voluntary association, is free to serve the interests of
all its members including the freedom to disaffiliate or declare its autonomy from the
federation to which it belongs when circumstances warrant, in accordance with the
constitutional guarantee of freedom of association.[22]

The purpose of affiliation by a local union with a mother union or a federation

"xxx is to increase by collective action the bargaining power in respect of the

terms and conditions of labor. Yet the locals remained the basic units of
association, free to serve their own and the common interest of all, subject to
the restraints imposed by the Constitution and By-Laws of the Association,
and free also to renounce the affiliation for mutual welfare upon the terms
laid down in the agreement which brought it into existence."[23]

Thus, a local union which has affiliated itself with a federation is free to sever such
affiliation anytime and such disaffiliation cannot be considered disloyalty. In the absence
of specific provisions in the federations constitution prohibiting disaffiliation or the
declaration of autonomy of a local union, a local may dissociate with its parent union. [24]

The evidence on hand does not show that there is such a provision in ULGWPs
constitution. Respondents reliance upon Article V, Section 6, of the federations
constitution is not right because said section, in fact, bolsters the petitioner unions claim
of its right to declare autonomy:

Section 6. The autonomy of a local union affiliated with ULGWP shall be

respected insofar as it pertains to its internal affairs, except as provided
elsewhere in this Constitution.

There is no disloyalty to speak of, neither is there any violation of the federations
constitution because there is nothing in the said constitution which specifically prohibits
disaffiliation or declaration of autonomy. Hence, there cannot be any valid dismissal
because Article II, Section 4 of the union security clause in the CBA limits the dismissal to
only three (3) grounds, to wit: failure to maintain membership in the union (1) for non-
payment of union dues, (2) for resignation; and (3) for violation of the unions
Constitution and By-Laws.

136 | P a g e
To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on
February 26, 1989, the petitioners declared as vacant all the responsible positions of
ULGWP, filled these vacancies through an election and filed a petition for the registration
of UWP as a national federation. It should be pointed out, however, that these occurred
after the federation had already expelled the union officers. The expulsion was effective
November 21, 1988. Therefore, the act of establishing a different federation, entirely
separate from the federation which expelled them, is but a normal retaliatory reaction to
their expulsion.

With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held
that the strike was illegal for the following reasons: (1) it was based on an intra-union
dispute which cannot properly be the subject of a strike, the right to strike being limited
to cases of bargaining deadlocks and unfair labor practice (2) it was made in violation of
the "no strike, no lock-out" clause in the CBA, and (3) it was attended with violence, force
and intimidation upon the persons of the company officials, other employees reporting
for work and third persons having legitimate business with the company, resulting to
serious physical injuries to several employees and damage to company property.

On the submission that the strike was illegal for being grounded on a non-strikeable
issue, that is, the intra-union conflict between the federation and the local union, it bears
reiterating that when respondent company dismissed the union officers, the issue was
transformed into a termination dispute and brought respondent company into the
picture. Petitioners believed in good faith that in dismissing them upon request by the
federation, respondent company was guilty of unfair labor pratice in that it violated the
petitioners right to self-organization. The strike was staged to protest respondent
companys act of dismissing the union officers. Even if the allegations of unfair labor
practice are subsequently found out to be untrue, the presumption of legality of the
strike prevails.[25]

Another reason why the Labor Arbiter declared the strike illegal is due to the existence of
a no strike no lockout provision in the CBA. Again, such a ruling is erroneous. A no strike,
no lock out provision can only be invoked when the strike is economic in nature, i.e. to
force wage or other concessions from the employer which he is not required by law to
grant.[26] Such a provision cannot be used to assail the legality of a strike which is
grounded on unfair labor practice, as was the honest belief of herein petitioners. Again,
whether or not there was indeed unfair labor practice does not affect the strike.

On the allegation of violence committed in the course of the strike, it must be

remembered that the Labor Arbiter and the Commission found that "the parties are
agreed that there were violent incidents x x x resulting to injuries to both sides, the
union and management."[27] The evidence on record show that the violence cannot be
attributed to the striking employees alone for the company itself employed hired men to
pacify the strikers. With violence committed on both sides, the management and the
employees, such violence cannot be a ground for declaring the strike as illegal.

With respect to the dismissal of individual petitioners, the Labor Arbiter declared that
their refusal to heed respondents recall to work notice is a clear indication that they were
no longer interested in continuing their employment and is deemed abandonment. It is
admitted that three return to work notices were sent by respondent company to the
137 | P a g e
striking employees on March 27, April 11, and April 21, 1989 and that 261 employees
who responded to the notice were admittted back to work.

However, jurisprudence holds that for abandonment of work to exist, it is essential (1)
that the employee must have failed to report for work or must have been absent without
valid or justifiable reason; and (2) that there must have been a clear intention to sever
the employer-employee relationship manifested by some overt acts.[28] Deliberate and
unjustified refusal on the part of the employee to go back to his work post amd resume
his employment must be established. Absence must be accompanied by overt acts
unerringly pointing to the fact that the employee simply does not want to work anymore.
[29]
And the burden of proof to show that there was unjustified refusal to go back to work
rests on the employer.

In the present case, respondents failed to prove that there was a clear intention on the
part of the striking employees to sever their employer-employee relationship. Although
admittedly the company sent three return to work notices to them, it has not been
substantially proven that these notices were actually sent and received by the
employees. As a matter of fact, some employees deny that they ever received such
notices. Others alleged that they were refused entry to the company premises by the
security guards and were advised to secure a clearance from ULGWP and to sign a
waiver. Some employees who responded to the notice were allegedly told to wait for
further notice from respondent company as there was lack of work.

Furthermore, this Court has ruled that an employee who took steps to protest his lay-off
cannot be said to have abandoned his work.[30] The filing of a complaint for illegal
dismissal is inconsistent with the allegation of abandonment. In the case under
consideration, the petitioners did, in fact, file a complaint when they were refused
reinstatement by respondent company.

Anent public respondents finding that there was no unfair labor practice on the part of
respondent company and federation officers, the Court sustains the same. As earlier
discussed, union security clauses in collective bargaining agreements, if freely and
voluntarily entered into, are valid and binding. Corrolarily, dismissals pursuant to union
security clauses are valid and legal subject only to the requirement of due process, that
is, notice and hearing prior to dismissal. Thus, the dismissal of an employee by the
company pursuant to a labor unions demand in accordance with a union security
agreement does not constitute unfair labor practice.[31]

However, the dismissal was invalidated in this case because of respondent companys
failure to accord petitioners with due process, that is, notice and hearing prior to their
termination. Also, said dismissal was invalidated because the reason relied upon by
respondent Federation was not valid. Nonetheless, the dismissal still does not constitute
unfair labor practice.

Lastly, the Court is of the opinion, and so holds, that respondent company officials
cannot be held personally liable for damages on account of the employees dismissal
because the employer corporation has a personality separate and distinct from its
officers who merely acted as its agents.

138 | P a g e
It has come to the attention of this Court that the 30-day prior notice requirement for the
dismissal of employees has been repeatedly violated and the sanction imposed for such
violation enunciated in Wenphil Corporation vs. NLRC[32] has become an ineffective
deterrent. Thus, the Court recently promulgated a decision to reinforce and make more
effective the requirement of notice and hearing, a procedure that must be observed
before termination of employment can be legally effected.

In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040, January 27,
2000), the Court ruled that an employee who is dismissed, whether or not for just or
authorized cause but without prior notice of his termination, is entitled to full backwages
from the time he was terminated until the decision in his case becomes final, when the
dismissal was for cause; and in case the dismissal was without just or valid cause, the
backwages shall be computed from the time of his dismissal until his actual
reinstatement. In the case at bar, where the requirement of notice and hearing was not
complied with, the aforecited doctrine laid down in the Serrano case applies.

WHEREFORE, the Petition is GRANTED; the decision of the National Labor Relations
Commission in case No. NCR-00-09-04199-89 is REVERSED and SET ASIDE; and the
respondent company is hereby ordered to immediately reinstate the petitioners to their
respective positions. Should reinstatement be not feasible, respondent company shall
pay separation pay of one month salary for every year of service. Since petitioners were
terminated without the requisite written notice at least 30 days prior to their termination,
following the recent ruling in the case of Ruben Serrano vs. National Labor Relations
Commission and Isetann Department Store, the respondent company is hereby ordered
to pay full backwages to petitioner-employees while the Federation is also ordered to pay
full backwages to petitioner-union officers who were dismissed upon its instigation. Since
the dismissal of petitioners was without cause, backwages shall be computed from the
time the herein petitioner employees and union officers were dismissed until their actual
reinstatement. Should reinstatement be not feasible, their backwages shall be computed
from the time petitioners were terminated until the finality of this decision. Costs against
the respondent company.

SO ORDERED.

[G.R. No. 118506. April 18, 1997]

NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,

PETER NG/HOTEL SUPREME, respondents.

DECISION
KAPUNAN, J.:

139 | P a g e
 This petition seeking the nullification of a resolution of public respondent National
Labor Relations Commission dated April 28, 1994 vividly illustrates why courts should be
ever vigilant in the preservation of the constitutionally enshrined rights of the working
class. Without the protection accorded by our laws and the tempering of courts, the
natural and historical inclination of capital to ride roughshod over the rights of labor
would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner and
private respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991, she and
her co-employees at the Hotel Supreme in Baguio City were asked by the hotel's
management to sign an instrument attesting to the latter's compliance with minimum
wage and other labor standard provisions of law.[1] The instrument provides:[2]

JOINT AFFIDAVIT

We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA,

ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of
legal ages (sic), Filipinos and residents of Baguio City, under oath, depose and
say:

1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416
Magsaysay Ave., Baguio City;

2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;

3. That we are all (8) employees in the hotel and assigned in each respective shifts;

4. That we have no complaints against the management of the Hotel Supreme as we are
paid accordingly and that we are treated well.

5. That we are executing this affidavit voluntarily without any force or intimidation and
for the purpose of informing the authorities concerned and to dispute the alleged report
of the Labor Inspector of the Department of Labor and Employment conducted on the
said establishment on February 2, 1991.

IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991
at Baguio City, Philippines.
(Sgd.) (Sgd.) (Sgd.)
SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
(Sgd) (Sgd.) (Sgd.)
MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA
(Sgd) (Sgd.)
JONATHAN PICART JOSE DIZON
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City,
Philippines.

140 | P a g e
 Asst. City Prosecutor

Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to
swear to the veracity and contents of the affidavit as instructed by management. The
affidavit was nevertheless submitted on the same day to the Regional Office of the
Department of Labor and Employment in Baguio City.
As gleaned from the affidavit, the same was drawn by management for the sole
purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of
respondent's establishment on February 2, 1991) apparently adverse to the private
respondent.[3]
After she refused to proceed to the City Prosecutor's Office - on the same day the
affidavit was submitted to the Cordillera Regional Office of DOLE - petitioner avers that
she was ordered by the hotel management to turn over the keys to her living quarters
and to remove her belongings from the hotel premises. [4] According to her, respondent
strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the
affidavit.[5] She thereafter reluctantly filed a leave of absence from her job which was
denied by management. When she attempted to return to work on May 10, 1991, the
hotel's cashier, Margarita Choy, informed her that she should not report to work and,
instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991,
three days after her attempt to return to work, petitioner filed a complaint for illegal
dismissal before the Arbitration Branch of the National Labor Relations Commission - CAR
Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment
of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay,
night differential and other benefits. The complaint was docketed as NLRC Case No. RAB-
CAR-05-0198-91 and assigned to Labor Arbiter Felipe P. Pati.
Responding to the allegations made in support of petitioner's complaint for illegal
dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner
"surreptitiously left (her job) without notice to the management" [6] and that she actually
abandoned her work. He maintained that there was no basis for the money claims for
underpayment and other benefits as these were paid in the form of facilities to petitioner
and the hotel's other employees.[7] Pointing to the Affidavit of May 7, 1991, the private
respondent asserted that his employees actually have no problems with management. In
a supplemental answer submitted eleven (11) months after the original complaint for
illegal dismissal was filed, private respondent raised a new ground, loss of confidence,
which was supported by a criminal complaint for Qualified Theft he filed before the
prosecutor's office of the City of Baguio against petitioner on July 4, 1991. [8]
On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's
complaint on the ground of loss of confidence. His disquisitions in support of his
conclusion read as follows:
It appears from the evidence of respondent that complainant carted away or stole
one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits '9', '9-
A,' '9-B,' '9-C' and '10' pages 12-14 TSN, December 1, 1992).
In fact, this was the reason why respondent Peter Ng lodged a criminal complaint
against complainant for qualified theft and perjury. The fiscal's office finding
a prima facie evidence that complainant committed the crime of qualified theft
issued a resolution for its filing in court but dismissing the charge of perjury
141 | P a g e
 (Exhibit '4' for respondent and Exhibit 'B-7' for complainant). As a consequence,
complainant was charged in court for the said crime (Exhibit '5' for respondent
and Exhibit 'B-6' for the complainant).
With these pieces of evidence, complainant committed serious misconduct
against her employer which is one of the just and valid grounds for an employer to
terminate an employee (Article 282 of the Labor Code as amended).[9]
On April 28, 1994, respondent NLRC promulgated its assailed Resolution [10] affirming
the Labor Arbiter's decision. The resolution substantially incorporated the findings of the
Labor Arbiter.[11] Unsatisfied, petitioner instituted the instant special civil action
for certiorari under Rule 65 of the Rules of Court on the following grounds:[12]
1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING
TO GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE
ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN
AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO
JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL OF THE COMPLAINANT FROM
HER EMPLOYMENT;
2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING
TO GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE
LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND
BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF
COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL
ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO
PROVE PAYMENT OF WAGES AND BENEFITS;
3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING
TO GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE
EVIDENCE ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING
UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT.
The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995
rejects private respondent's principal claims and defenses and urges this Court to set
aside the public respondent's assailed resolution.[13]
We agree.
It is settled that in termination cases the employer bears the burden of proof to show
that the dismissal is for just cause, the failure of which would mean that the dismissal is
not justified and the employee is entitled to reinstatement.[14]
In the case at bar, the private respondent initially claimed that petitioner abandoned
her job when she failed to return to work on May 8, 1991. Additionally, in order to
strengthen his contention that there existed sufficient cause for the termination of
petitioner, he belatedly included a complaint for loss of confidence, supporting this with
charges that petitioner had stolen a blanket, a bedsheet and two towels from the hotel.
[15]
Appended to his last complaint was a suit for qualified theft filed with the Baguio City
prosecutor's office.

142 | P a g e
 From the evidence on record, it is crystal clear that the circumstances upon which
private respondent anchored his claim that petitioner "abandoned" her job were not
enough to constitute just cause to sanction the termination of her services under Article
283 of the Labor Code. For abandonment to arise, there must be concurrence of two
things: 1) lack of intention to work; [16] and 2) the presence of overt acts signifying the
employee's intention not to work.[17]
In the instant case, respondent does not dispute the fact that petitioner tried to file a
leave of absence when she learned that the hotel management was displeased with her
refusal to attest to the affidavit. The fact that she made this attempt clearly indicates not
an intention to abandon but an intention to return to work after the period of her leave of
absence, had it been granted, shall have expired.
Furthermore, while absence from work for a prolonged period may suggest
abandonment in certain instances, mere absence of one or two days would not be
enough to sustain such a claim. The overt act (absence) ought to unerringly point to the
fact that the employee has no intention to return to work,[18] which is patently not the
case here. In fact, several days after she had been advised to take an informal leave,
petitioner tried to resume working with the hotel, to no avail. It was only after she had
been repeatedly rebuffed that she filed a case for illegal dismissal. These acts militate
against the private respondent's claim that petitioner abandoned her job. As the Solicitor
General in his manifestation observed:
Petitioner's absence on that day should not be construed as abandonment of her
job. She did not report because the cashier told her not to report anymore, and
that private respondent Ng did not want to see her in the hotel premises. But two
days later or on the 10th of May, after realizing that she had to clarify her
employment status, she again reported for work. However, she was prevented
from working by private respondents.[19]
We now come to the second cause raised by private respondent to support his
contention that petitioner was validly dismissed from her job.
Loss of confidence as a just cause for dismissal was never intended to provide
employers with a blank check for terminating their employees. Such a vague, all-
encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by
this Court, could readily reduce to barren form the words of the constitutional guarantee
of security of tenure. Having this in mind, loss of confidence should ideally apply only to
cases involving employees occupying positions of trust and confidence or to those
situations where the employee is routinely charged with the care and custody of the
employer's money or property. To the first class belong managerial employees, i.e., those
vested with the powers or prerogatives to lay down management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions; and to the second class belong cashiers, auditors,
property custodians, etc., or those who, in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property. Evidently, an
ordinary chambermaid who has to sign out for linen and other hotel property from the
property custodian each day and who has to account for each and every towel or
bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of
these two classes of employees for which loss of confidence, if ably supported by

143 | P a g e
evidence, would normally apply.Illustrating this distinction, this Court, in Marina Port
Services, Inc. vs. NLRC,[20] has stated that:
To be sure, every employee must enjoy some degree of trust and confidence from
the employer as that is one reason why he was employed in the first place. One
certainly does not employ a person he distrusts. Indeed, even the lowly janitor
must enjoy that trust and confidence in some measure if only because he is the
one who opens the office in the morning and closes it at night and in this sense is
entrusted with the care or protection of the employer's property. The keys he
holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the
trust and confidence of his employer, whose property he is safeguarding. Like the
janitor, he has access to this property.He too, is charged with its care and
protection.
Notably, however, and like the janitor again, he is entrusted only with
the physical task of protecting that property. The employer's trust and confidence
in him is limited to that ministerial function.He is not entrusted, in the Labor
Arbiter's words, 'with the duties of safekeeping and safeguarding company
policies, management instructions, and company secrets such as operation
devices.' He is not privy to these confidential matters, which are shared only in
the higher echelons of management. It is the persons on such levels who, because
they discharge these sensitive duties, may be considered holding positions of
trust and confidence. The security guard does not belong in such category.[21]
More importantly, we have repeatedly held that loss of confidence should not be
simulated in order to justify what would otherwise be, under the provisions of law, an
illegal dismissal."It should not be used as a subterfuge for causes which are illegal,
improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier
action taken in bad faith."[22]
In the case at bar, the suspicious delay in private respondent's filing of qualified theft
charges against petitioner long after the latter exposed the hotel's scheme (to avoid its
obligations as employer under the Labor Code) by her act of filing illegal dismissal
charges against the private respondent would hardly warrant serious consideration of
loss of confidence as a valid ground for dismissal. Notably, the Solicitor General has
himself taken a position opposite the public respondent and has observed that:
If petitioner had really committed the acts charged against her by private
respondents (stealing supplies of respondent hotel), private respondents should
have confronted her before dismissing her on that ground. Private respondents did
not do so. In fact, private respondent Ng did not raise the matter when petitioner
went to see him on May 9, 1991, and handed him her application for leave. It took
private respondents 52 days or up to July 4, 1991 before finally deciding to file a
criminal complaint against petitioner, in an obvious attempt to build a case
against her.
The manipulations of private respondents should not be countenanced.[23]
Clearly, the efforts to justify petitioner's dismissal - on top of the private respondent's
scheme of inducing his employees to sign an affidavit absolving him from possible

144 | P a g e
violations of the Labor Code - taints with evident bad faith and deliberate malice
petitioner's summary termination from employment.
Having said this, we turn to the important question of whether or not the dismissal by
the private respondent of petitioner constitutes an unfair labor practice.
The answer in this case must inevitably be in the affirmative.
The pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in the form of
restraint, interference or coercion, against his employee's right to institute concerted
action for better terms and conditions of employment. Without doubt, the act of
compelling employees to sign an instrument indicating that the employer observed labor
standards provisions of law when he might have not, together with the act of terminating
or coercing those who refuse to cooperate with the employer's scheme constitutes unfair
labor practice. The first act clearly preempts the right of the hotel's workers to seek
better terms and conditions of employment through concerted action.
We agree with the Solicitor General's observation in his manifestation that "[t]his
actuation... is analogous to the situation envisaged in paragraph (f) of Article 248 of the
Labor Code"[24]which distinctly makes it an unfair labor practice "to dismiss, discharge or
otherwise prejudice or discriminate against an employee for having given or being about
to give testimony"[25]under the Labor Code. For in not giving positive testimony in favor
of her employer, petitioner had reserved not only her right to dispute the claim and
proffer evidence in support thereof but also to work for better terms and conditions of
employment.
For refusing to cooperate with the private respondent's scheme, petitioner was
obviously held up as an example to all of the hotel's employees, that they could only
cause trouble to management at great personal inconvenience. Implicit in the act of
petitioner's termination and the subsequent filing of charges against her was the warning
that they would not only be deprived of their means of livelihood, but also possibly, their
personal liberty.
This Court does not normally overturn findings and conclusions of quasi-judicial
agencies when the same are ably supported by the evidence on record. However, where
such conclusions are based on a misperception of facts or where they patently fly in the
face of reason and logic, we will not hesitate to set aside those conclusions. Going into
the issue of petitioner's money claims, we find one more salient reason in this case to set
things right: the labor arbiter's evaluation of the money claims in this case incredibly
ignores existing law and jurisprudence on the matter. Its blatant one-sidedness simply
raises the suspicion that something more than the facts, the law and jurisprudence may
have influenced the decision at the level of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim
that the reason the monetary benefits received by petitioner between 1981 to 1987 were
less than minimum wage was because petitioner did not factor in the meals, lodging,
electric consumption and water she received during the period in her computations.
[26]
Granting that meals and lodging were provided and indeed constituted facilities, such
facilities could not be deducted without the employer complying first with certain legal
requirements. Without satisfying these requirements, the employer simply cannot deduct
the value from the employee's wages. First, proof must be shown that such facilities are

145 | P a g e
customarily furnished by the trade. Second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair
and reasonable value.[27]
These requirements were not met in the instant case. Private respondent "failed to
present any company policy or guideline to show that the meal and lodging . . . (are) part
of the salary;"[28] he failed to provide proof of the employee's written authorization; and,
he failed to show how he arrived at the valuations.[29]
Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in
his decision were figures furnished by the private respondent's own accountant, without
corroborative evidence. On the pretext that records prior to the July 16, 1990 earthquake
were lost or destroyed, respondent failed to produce payroll records, receipts and other
relevant documents, where he could have, as has been pointed out in the Solicitor
General's manifestation, "secured certified copies thereof from the nearest regional
office of the Department of Labor, the SSS or the BIR."[30]
More significantly, the food and lodging, or the electricity and water consumed by the
petitioner were not facilities but supplements. A benefit or privilege granted to an
employee for the convenience of the employer is not a facility. The criterion in making a
distinction between the two not so much lies in the kind (food, lodging) but the purpose.
[31]
Considering, therefore, that hotel workers are required to work different shifts and are
expected to be available at various odd hours, their ready availability is a necessary
matter in the operations of a small hotel, such as the private respondent's hotel.
It is therefore evident that petitioner is entitled to the payment of the deficiency in
her wages equivalent to the full wage applicable from May 13, 1988 up to the date of her
illegal dismissal.
Additionally, petitioner is entitled to payment of service incentive leave pay,
emergency cost of living allowance, night differential pay, and 13th month pay for the
periods alleged by the petitioner as the private respondent has never been able to
adduce proof that petitioner was paid the aforestated benefits.
However, the claims covering the period of October 1987 up to the time of filing the
case on May 13, 1988 are barred by prescription as P.D. 442 (as amended) and its
implementing rules limit all money claims arising out of employer-employee relationship
to three (3) years from the time the cause of action accrues.[32]
We depart from the settled rule that an employee who is unjustly dismissed from
work normally should be reinstated without loss of seniority rights and other
privileges. Owing to the strained relations between petitioner and private respondent,
allowing the former to return to her job would only subject her to possible harassment
and future embarrassment. In the instant case, separation pay equivalent to one month's
salary for every year of continuous service with the private respondent would be proper,
starting with her job at the Belfront Hotel.
In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our
decision in Osmalik Bustamante, et al. vs. National Labor Relations Commission,
[33]
petitioner is entitled to full backwages from the time of her illegal dismissal up to the
date of promulgation of this decision without qualification or deduction.

146 | P a g e
 Finally, in dismissal cases, the law requires that the employer must furnish the
employee sought to be terminated from employment with two written notices before the
same may be legally effected. The first is a written notice containing a statement of the
cause(s) for dismissal; the second is a notice informing the employee of the employer's
decision to terminate him stating the basis of the dismissal. During the process leading
to the second notice, the employer must give the employee ample opportunity to be
heard and defend himself, with the assistance of counsel if he so desires.
Given the seriousness of the second cause (qualified theft) of the petitioner's
dismissal, it is noteworthy that the private respondent never even bothered to inform
petitioner of the charges against her. Neither was petitioner given the opportunity to
explain the loss of the articles. It was only almost two months after petitioner had filed a
complaint for illegal dismissal, as an afterthought, that the loss was reported to the
police and added as a supplemental answer to petitioner's complaint. Clearly, the
dismissal of petitioner without the benefit of notice and hearing prior to her termination
violated her constitutional right to due process. Under the circumstances, an award of
One Thousand Pesos (P1,000.00) on top of payment of the deficiency in wages and
benefits for the period aforestated would be proper.
WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations
Commission dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the
economic benefits due the petitioner are hereby summarized as follows:
1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date
of petitioner's illegal dismissal;
2) Service incentive leave pay; night differential pay and 13th month pay for the
same period;
3) Separation pay equal to one month's salary for every year of petitioner's
continuous service with the private respondent starting with her job at the
Belfront Hotel;
4) Full backwages, without qualification or deduction, from the date of petitioner's
illegal dismissal up to the date of promulgation of this decision pursuant to our
ruling in Bustamante vs. NLRC.[34]
5) P1.000.00.
SO ORDERED.

G.R. No. 144315 July 17, 2006

PHILCOM EMPLOYEES UNION, petitioner,

vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM
CORPORATION, respondents.

DECISION

CARPIO, J.:
147 | P a g e
 The Case

This is a petition for review1 to annul the Decision2 dated 31 July 2000 of the Court of
Appeals in CA-G.R. SP No. 53989. The Court of Appeals affirmed the assailed portions of
the 2 October 1998 and 27 November 1998 Orders of the Secretary of Labor and
Employment in OS-AJ-0022-97.

The Facts

The facts, as summarized by the Court of Appeals, are as follows:

Upon the expiration of the Collective Bargaining Agreement (CBA) between

petitioner Philcom Employees Union (PEU or union, for brevity) and private
respondent Philippine Global Communications, Inc. (Philcom, Inc.) on June 30,
1997, the parties started negotiations for the renewal of their CBA in July 1997.
While negotiations were ongoing, PEU filed on October 21, 1997 with the National
Conciliation and Mediation Board (NCMB) – National Capital Region, a Notice of
Strike, docketed as NCMB-NCR-NS No. 10-435-97, due to perceived unfair labor
practice committed by the company (Annex "1", Comment, p. 565, ibid.). In view of
the filing of the Notice of Strike, the company suspended negotiations on the CBA
which moved the union to file on November 4, 1997 another Notice of Strike,
docketed as NCMB-NCR-NS No. 11-465-97, on the ground of bargaining deadlock
(Annex "2", Comment, p. 566, ibid.)

On November 11, 1997, at a conciliation conference held at the NCMB-NCR office,

the parties agreed to consolidate the two (2) Notices of Strike filed by the union
and to maintain the status quo during the pendency of the proceedings (Annex "3",
Comment, p. 567, ibid.).

On November 17, 1997, however, while the union and the company officers and
representatives were meeting, the remaining union officers and members staged a
strike at the company premises, barricading the entrances and egresses thereof
and setting up a stationary picket at the main entrance of the building. The
following day, the company immediately filed a petition for the Secretary of Labor
and Employment to assume jurisdiction over the labor dispute in accordance with
Article 263(g) of the Labor Code.

On November 19, 1997, then Acting Labor Secretary Cresenciano B. Trajano issued
an Order assuming jurisdiction over the dispute, enjoining any strike or lockout,
whether threatened or actual, directing the parties to cease and desist from
committing any act that may exacerbate the situation, directing the striking
workers to return to work within twenty-four (24) hours from receipt of the
Secretary's Order and for management to resume normal operations, as well as
accept the workers back under the same terms and conditions prior to the strike.
The parties were likewise required to submit their respective position papers and
evidence within ten (10) days from receipt of said order (Annex "4", Comment, pp.
610-611, ibid.). On November 28, 1997, a second order was issued reiterating the
previous directive to all striking employees to return to work immediately.

148 | P a g e
 On November 27, 1997, the union filed a Motion for Reconsideration assailing,
among others, the authority of then Acting Secretary Trajano to assume jurisdiction
over the labor dispute. Said motion was denied in an Order dated January 7, 1998.

As directed, the parties submitted their respective position papers. In its position
paper, the union raised the issue of the alleged unfair labor practice of the
company hereunder enumerated as follows:

"(a) PABX transfer and contractualization of PABX service and position;

"(b) Massive contractualization;

"(c) Flexible labor and additional work/function;

"(d) Disallowance of union leave intended for union seminar;

"(e) Misimplementation and/or non-implementation of employees' benefits

like shoe allowance, rainboots, raincoats, OIC shift allowance, P450.00
monthly allowance, driving allowance, motorcycle award and full-time
physician;

"(f) Non-payment, discrimination and/or deprivation of overtime, restday

work, waiting/stand by time and staff meetings;

"(g) Economic inducement by promotion during CBA negotiation;

"(h) Disinformation scheme, surveillance and interference with union affairs;

"(i) Issuance of memorandum/notice to employees without giving copy to

union, change in work schedule at Traffic Records Section and ITTO policies;
and

"(j) Inadequate transportation allowance, water and facilities."

(Annex A, Petition; pp. 110-182, ibid.)

The company, on the other hand, raised in its position paper the sole issue of the
illegality of the strike staged by the union (Annex B, Petition; pp. 302-320, ibid.).

On the premise that public respondent Labor Secretary cannot rule on the issue of
the strike since there was no petition to declare the same illegal, petitioner union
filed on March 4, 1998 a Manifestation/Motion to Strike Out Portions of &
Attachments in Philcom's Position Paper for being irrelevant, immaterial and
impertinent to the issues assumed for resolution (Annex C, Petition; pp. 330-
333, ibid.).

In opposition to PEU's Manifestation/Motion, the company argued that it was

precisely due to the strike suddenly staged by the union on November 17, 1997
that the dispute was assumed by the Labor Secretary. Hence, the case would
149 | P a g e
 necessarily include the issue of the legality of the strike (Opposition to PEU'S
Motion to Strike Out; Annex F, Petition; pp. 389-393, ibid.).3

On 2 October 1998, the Secretary of Labor and Employment ("Secretary") issued the first
assailed order. The pertinent parts of the Order read:

Going now to the first issue at hand, a reading of the complaints charged by the
Union as unfair labor practices would reveal that these are not so within the legal
connotation of Article 248 of the Labor Code. On the contrary, these complaints are
actually mere grievances which should have been processed through the grievance
machinery or voluntary arbitration outlined under the CBA. The issues of flexible
labor and additional functions, misimplementation or non-implementation of
employee benefits, non-payment of overtime and other monetary claims and
inadequate transportation allowance, are all a matter of implementation or
interpretation of the economic provisions of the CBA subject to the grievance
procedure.

Neither do these complaints amount to gross violations which, thus, may be

treated as unfair labor practices outside of the coverage of Article 261. The Union
failed to convincingly show that there is flagrant and/or malicious refusal by the
Company to comply with the economic provisions stipulated in the CBA.

With respect to the charges of contractualization and economic inducement, this

Office is convinced that the acts of said company qualify as a valid exercise of
management prerogative. The act of the Company in contracting out work or
certain services being performed by Union members should not be seen as an
unfair labor practice act per se. First, the charge of massive contractualization has
not been substantiated while the contractualization of the position of PABX
operator is an isolated instance. Secondly, in the latter case, there was no proof
that such contracting out interfered with, restrained or coerced the employees in
the exercise of their right to self-organization. Thus, it is not unfair labor practice to
contract out work for reason of reduction of labor cost through the acquisition of
automatic machines.

Likewise, the promotion of certain employees, who are incidentally members of the
Union, to managerial positions is a prerogative of management. A promotion which
is manifestly beneficial to an employee should not give rise to a gratuitous
speculation that such a promotion was made simply to deprive the union of the
membership of the promoted employee (Bulletin Publishing Co. v. Sanchez, et. al.,
G.R. No. 74425, October 7, 1986).

There remains the issue on bargaining deadlock. The Company has denied the
existence of any impasse in its CBA negotiations with the Union and instead
maintains that it has been negotiating with the latter in good faith until the strike
was initiated. The Union, on the other hand, contends otherwise and further prays
that the remaining CBA proposals of the Union be declared reasonable and
equitable and thus be ordered incorporated in the new CBA to be executed.

150 | P a g e
 As pointed out by the Union, there are already thirty-seven (37) items agreed upon
by the parties during the CBA negotiations even before these were suspended.
Prior to this Office's assumption over the case, the Company furnished the Union
its improved CBA counter-proposal on the matter of promotional and wage
increases which however was rejected by the Union as divisive. Even as the Union
has submitted its remaining CBA proposals for resolution, the Company remains
silent on the matter. In the absence of any basis, other than the Union's position
paper, on which this Office may make its determination of the reasonableness and
equitableness of these remaining CBA proposals, this Office finds it proper to defer
deciding on the matter and first allow the Company to submit its position thereon.

We now come to the question of whether or not the strike staged by the Union on
November 17, 1997 is illegal. The Company claims it is, having been held on
grounds which are non-strikeable, during the pendency of preventive mediation
proceedings in the NCMB, after this Office has assumed jurisdiction over the
dispute, and with the strikers committing prohibited and illegal acts. The Company
further prays for the termination of some 20 Union officers who were positively
identified to have initiated the alleged illegal strike. The Union, on the other hand,
refuses to submit this issue for resolution.

Considering the precipitous nature of the sanctions sought by the Company, i.e.,
declaration of illegality of the strike and the corresponding termination of the
errant Union officers, this Office deems it wise to defer the summary resolution of
the same until both parties have been afforded due process. The non-compliance
of the strikers with the return-to-work orders, while it may warrant dismissal, is not
by itself conclusive to hold the strikers liable. Moreover, the Union's position on the
alleged commission of illegal acts by the strikers during the strike is still to be
heard. Only after a full-blown hearing may the respective liabilities of Union officers
and members be determined. The case of Telefunken Semiconductors Employees
Union-FFW v. Secretary of Labor and Employment and Temic Telefunken Micro-
Electronics (Phils.), Inc. (G.R. No. 122743 and 127215, December 12, 1997) is
instructive on this point:

It may be true that the workers struck after the Secretary of Labor and
Employment had assumed jurisdiction over the case and that they may have
failed to immediately return to work even after the issuance of a return-to-
work order, making their continued strike illegal. For, a return-to-work order
is immediately effective and executory notwithstanding the filing of a motion
for reconsideration. But, the liability of each of the union officers and the
workers, if any, has yet to be determined. xxx xxx xxx.4

The dispositive portion of the Order reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:

The Union's Manifestation/Motion to Implead Philcom Corporation is hereby

granted. Let summons be issued to respondent Philcom Corporation to appear
before any hearing that may hereafter be scheduled and to submit its position
paper as may be required.
151 | P a g e
 The Union's Manifestation/Motion to Strike Out Portions of and Attachments in
Philcom's Position Paper is hereby denied for lack of merit.

The Union's charges of unfair labor practice against the Company are hereby
dismissed.

Pending resolution of the issues of illegal strike and bargaining deadlock which are
yet to be heard, all the striking workers are directed to return to work within
twenty-four (24) hours from receipt of this Order and Philcom and/or Philcom
Corporation are hereby directed to unconditionally accept back to work all striking
Union officers and members under the same terms and conditions prior to the
strike. The parties are directed to cease and desist from committing any acts that
may aggravate the situation.

Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this Department is

hereby designated as the Hearing Officer to hear and receive evidence on all
matters and issues arising from the present labor dispute and, thereafter, to
submit a report/recommendation within twenty (20) days from the termination of
the proceedings.

The parties are further directed to file their respective position papers with Atty.
Lita V. Aglibut within ten (10) days from receipt of this Order.

SO ORDERED.5

Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom prayed for
reconsideration of the Order impleading it as party-litigant in the present case and
directing it to accept back to work unconditionally all the officers and members of the
union who participated in the strike.6 Philcom also filed a Motion to Certify Labor Dispute
to the National Labor Relations Commission for Compulsory Arbitration.7

For its part, Philcom Employees Union (PEU) filed a Motion for Partial Reconsideration.
PEU asked the Secretary to "partially reconsider" the 2 October 1998 Order insofar as it
dismissed the unfair labor practices charges against Philcom and included the illegal
strike issue in the labor dispute.8

The Secretary denied both motions for reconsideration of Philcom and PEU in its assailed
Order of 27 November 1998. The pertinent parts of the Order read:

The question of whether or not Philcom Corporation should be impleaded has been
properly disposed of in the assailed Order. We reiterate that neither the Company
herein nor its predecessor was able to convincingly establish that each is a
separate entity in the absence of any proof that there was indeed an actual closure
and cessation of the operations of the predecessor-company. We would have
accommodated the Company for a hearing on the matter had it been willing and
prepared to submit evidence to controvert the finding that there was a mere
merger. As it now stands, nothing on record would prove that the two (2)
companies are separate and distinct from each other.

152 | P a g e
 Having established that what took place was a mere merger, we correspondingly
conclude that the employer-employee relations between the Company and the
Union officers and members was never severed. And in merger, the employees of
the merged companies or entities are deemed absorbed by the new company
(Filipinas Port Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16, 1991).
Considering that the Company failed miserably to adduce any evidence to provide
a basis for a contrary ruling, allegations to the effect that employer-employee
relations and positions previously occupied by the workers no longer exist remain
just that — mere allegations. Consequently, the Company cannot now exempt
itself from compliance with the Order. Neither can it successfully argue that the
employees were validly dismissed. As held in Telefunken Semiconductor Employees
Union-FFW v. Secretary of Labor and Employment (G.R. Nos. 122743 and 122715,
December 12, 1997), to exclude the workers without first ascertaining the extent
of their individual participation in the strike or non-compliance with the return-to-
work orders will be tantamount to dismissal without due process of law.

With respect to the unfair labor practice charges against the Company, we have
carefully reviewed the records and found no reason to depart from the findings
previously rendered. The issues now being raised by the Union are the same issues
discussed and passed upon in our earlier Order.

Finally, it is our determination that the issue of the legality of the strike is well
within the jurisdiction of this Office. The same has been properly submitted and
assumed jurisdiction by the Office for resolution.9

The dispositive portion of the Order reads:

WHEREFORE, there being no merit in the remaining Motions for Reconsideration

filed by both parties, the same are hereby DENIED. Our 2 October 1998 Order
STANDS. To expedite the resolution of the Motion to Certify Labor Dispute to the
NLRC for Compulsory Arbitration, Philcom Employees Union is hereby directed to
submit its Opposition thereto within ten (10) days from receipt of the copy of this
Order.

SO ORDERED.10

PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of the
Rules of Court assailing the Secretary's Orders of 2 October 1998 and 27 November
1998. This Court, in accordance with its Decision of 10 March 1999 in G.R. No. 123426
entitled National Federation of Labor (NFL) vs. Hon. Bienvenido E. Laguesma,
Undersecretary of the Department of Labor and Employment, and Alliance of Nationalist
Genuine Labor Organization, Kilusang Mayo Uno (ANGLO-KMU),11 referred the case to the
Court of Appeals.12

The Ruling of the Court of Appeals

On 31 July 2000, the Court of Appeals rendered judgment as follows:

153 | P a g e
 WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED. The assailed
portions of the Orders of the Secretary of Labor and Employment dated October 2,
1998 and November 27, 1998 are AFFIRMED.

SO ORDERED.13

The Court of Appeals ruled that, contrary to PEU's view, the Secretary could take
cognizance of an issue, even only incidental to the labor dispute, provided the issue
must be involved in the labor dispute itself or otherwise submitted to him for resolution.

The Court of Appeals pointed out that the Secretary assumed jurisdiction over the labor
dispute upon Philcom's petition as a consequence of the strike that PEU had declared
and not because of the notices of strike that PEU filed with the National Conciliation and
Mediation Board (NCMB).

The Court of Appeals stated that the reason of the Secretary's assumption of jurisdiction
over the labor dispute was the staging of the strike. Consequently, any issue regarding
the strike is not merely incidental to the labor dispute between PEU and Philcom, but also
part of the labor dispute itself. Thus, the Court of Appeals held that it was proper for the
Secretary to take cognizance of the issue on the legality of the strike.

The Court of Appeals also ruled that for an employee to claim an unfair labor practice by
the employer, the employee must show that the act charged as unfair labor practice falls
under Article 248 of the Labor Code. The Court of Appeals held that the acts enumerated
in Article 248 relate to the workers' right to self-organization. The Court of Appeals stated
that if the act complained of has nothing to do with the acts enumerated in Article 248,
there is no unfair labor practice.

The Court of Appeals held that Philcom's acts, which PEU complained of as unfair labor
practices, were not in any way related to the workers' right to self-organization under
Article 248 of the Labor Code. The Court of Appeals held that PEU's complaint constitutes
an enumeration of mere grievances which should have been threshed out through the
grievance machinery or voluntary arbitration outlined in the Collective Bargaining
Agreement (CBA).

The Court of Appeals also held that even if by Philcom's acts, Philcom had violated the
provisions of the CBA, still those acts do not constitute unfair labor practices under
Article 248 of the Labor Code. The Court of Appeals held that PEU failed to show that
those violations were gross or that there was flagrant or malicious refusal on the part of
Philcom to comply with the economic provisions of the CBA.

The Court of Appeals stated that as of 21 March 1989, as held in PAL vs.
NLRC,14 violations of CBAs will no longer be deemed unfair labor practices, except those
gross in character. Violations of CBAs, except those gross in character, are mere
grievances resolvable through the appropriate grievance machinery or voluntary
arbitration as provided in the CBAs.

Hence, this petition.

154 | P a g e
 The Issues

In assailing the Decision of the Court of Appeals, petitioner contends that:

1. The Honorable Court of Appeals has failed to faithfully adhere with the decisions
of the Supreme Court when it affirmed the order/resolution of the Secretary of
Labor denying the Union's Manifestation/Motion to Strike Out Portions of &
Attachments in Philcom's Position Paper and including the issue of illegal strike
notwithstanding the absence of any petition to declare the strike illegal.

2. The Honorable Court of Appeals has decided a question of substance in a way

not in accord with law and jurisprudence when it affirmed the order/resolution of
the Secretary of Labor dismissing the Union's charges of unfair labor practices.

3. The Honorable Court of Appeals has departed from the edict of applicable law
and jurisprudence when it failed to issue such order mandating/directing the
issuance of a writ of execution directing the Company to unconditionally accept
back to work the Union officers and members under the same terms and conditions
prior to the strike and as well as to pay their salaries/backwages and the monetary
equivalent of their other benefits from October 6, 1998 to date.15

The Ruling of the Court

The petition must fail.

PEU contends that the Secretary should not have taken cognizance of the issue on the
alleged illegal strike because it was not properly submitted to the Secretary for
resolution. PEU asserts that after Philcom submitted its position paper where it raised the
issue of the legality of the strike, PEU immediately opposed the same by filing
its Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position
Paper. PEU asserts that it stated in its Manifestation/Motion that certain portions of
Philcom's position paper and some of its attachments were "irrelevant, immaterial and
impertinent to the issues assumed for resolution." Thus, PEU asserts that the Court of
Appeals should not have affirmed the Secretary's order denying PEU's
Manifestation/Motion.

PEU also contends that, contrary to the findings of the Court of Appeals, the Secretary's
assumption of jurisdiction over the labor dispute was based on the two notices of strike
that PEU filed with the NCMB. PEU asserts that only the issues on unfair labor practice
and bargaining deadlock should be resolved in the present case.

PEU insists that to include the issue on the legality of the strike despite its opposition
would convert the case into a petition to declare the strike illegal.

PEU's contentions are untenable.

The Secretary properly took cognizance of the issue on the legality of the strike. As the
Court of Appeals correctly pointed out, since the very reason of the Secretary's

155 | P a g e
assumption of jurisdiction was PEU's declaration of the strike, any issue regarding the
strike is not merely incidental to, but is essentially involved in, the labor dispute itself.

Article 263(g) of the Labor Code provides:

When, in his opinion, there exists a labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to the national interest, the Secretary of
Labor and Employment may 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 Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement
agencies to ensure the compliance with this provision as well as with such orders
as he may issue to enforce the same.

x x x x.

The powers granted to the Secretary under Article 263(g) of the Labor Code have been
characterized as an exercise of the police power of the State, with the aim of promoting
public good.16 When the Secretary exercises these powers, he is granted "great
breadth of discretion" in order to find a solution to a labor dispute. The most
obvious of these powers is the automatic enjoining of an impending strike or lockout or
its lifting if one has already taken place.17

In this case, the Secretary assumed jurisdiction over the dispute because it falls in an
industry indispensable to the national interest. As noted by the Secretary.

[T]he Company has been a vital part of the telecommunications industry for 73
years. It is particularly noted for its expertise and dominance in the area of
international telecommunications. Thus, it performs a vital role in providing critical
services indispensable to the national interest. It is for this very reason that this
Office strongly opines that any concerted action, particularly a prolonged work
stoppage is fraught with dire consequences. Surely, the on-going strike will
adversely affect not only the livelihood of workers and their dependents, but also
the company's suppliers and dealers, both in the public and private sectors who
depend on the company's facilities in the day-to-day operations of their businesses
and commercial transactions. The operational viability of the company is likewise
adversely affected, especially its expansion program for which it has incurred debts
in the approximate amount of P2 Billion. Any prolonged work stoppage will also
bring about substantial losses in terms of lost tax revenue for the government and
would surely pose a serious set back in the company's modernization program.

At this critical time when government is working to sustain the economic gains
already achieved, it is the paramount concern of this Office to avert any
unnecessary work stoppage and, if one has already occurred, to minimize its
156 | P a g e
 deleterious effect on the workers, the company, the industry and national economy
as a whole.18

It is of no moment that PEU never acquiesced to the submission for resolution of the
issue on the legality of the strike. PEU cannot prevent resolution of the legality of the
strike by merely refusing to submit the issue for resolution. It is also immaterial that this
issue, as PEU asserts, was not properly submitted for resolution of the Secretary.

The authority of the Secretary to assume jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to national
interest includes and extends to all questions and controversies arising from
such labor dispute. The power is plenary and discretionary in nature to enable
him to effectively and efficiently dispose of the dispute.19

Besides, it was upon Philcom's petition that the Secretary immediately assumed
jurisdiction over the labor dispute on 19 November 1997.20 If petitioner's notices of strike
filed on 21 October and 4 November 1997 were what prompted the assumption of
jurisdiction, the Secretary would have issued the assumption order as early as those
dates.

Moreover, after an examination of the position paper21 Philcom submitted to the

Secretary, we see no reason to strike out those portions which PEU seek to expunge from
the records. A careful study of all the facts alleged, issues raised, and arguments
presented in the position paper leads us to hold that the portions PEU seek to expunge
are necessary in the resolution of the present case.

On the documents attached to Philcom's position paper, except for Annexes MM-2 to MM-
22 inclusive22 which deal with the supposed consolidation of Philippine Global
Communications, Inc. and Philcom Corporation, we find the other annexes relevant and
material in the resolution of the issues that have emerged in this case.

PEU also claims that Philcom has committed several unfair labor practices. PEU asserts
that there are "factual and evidentiary bases" for the charge of unfair labor practices
against Philcom.

On unfair labor practices of employers, Article 248 of the Labor Code provides:

Unfair labor practices of employers. - It shall be unlawful for an employer to

commit any of the following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right to
self-organization;

(b) To require as a condition of employment that a person or an employee shall not

join a labor organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their rights
to self-organization;
157 | P a g e
 (d) To initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in any
labor organization. x x x

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an

employee for having given or being about to give testimony under this Code;

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

(h) To pay negotiation or attorney's fees to the union or its officers or agents as
part of the settlement of any issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

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. Without that element, the acts, no matter how unfair, are not
unfair labor practices.23 The only exception is Article 248(f), which in any case is not one
of the acts specified in PEU's charge of unfair labor practice.

A review of the acts complained of as unfair labor practices of Philcom convinces us that
they do not fall under any of the prohibited acts defined and enumerated in Article 248
of the Labor Code. The issues of misimplementation or non-implementation of employee
benefits, non-payment of overtime and other monetary claims, inadequate
transportation allowance, water, and other facilities, are all a matter of implementation
or interpretation of the economic provisions of the CBA between Philcom and PEU subject
to the grievance procedure.

We find it pertinent to quote certain portions of the assailed Decision, thus —

A reading of private respondent's justification for the acts complained of would

reveal that they were actually legitimate reasons and not in anyway related to
union busting. Hence, as to compelling employees to render flexible labor and
additional work without additional compensation, it is the company's explanation
that the employees themselves voluntarily took on work pertaining to other
assignments but closely related to their job description when there was slack in the
business which caused them to be idle. This was the case of the International
Telephone Operators who tried telemarketing when they found themselves with so
much free time due to the slowdown in the demand for international line services.
With respect to the Senior Combination Technician at the Cebu branch who was
allegedly made to do all around work, the same happened only once when the
lineman was absent and the lineman's duty was his ultimate concern. Moreover,
the new assignment of the technicians at CTSS who were promoted to QCE were
based on the job description of QCE, while those of the other technicians were

158 | P a g e
 merely temporary due to the promotion of several technicians to QCE (pars. 9-12,
Philcom's Reply to PEU's Position Paper; Annex "E", Petition; pp. 350-351, ibid.).

On the alleged misimplementation and/or non-implementation of employees'

benefits, such as shoe allowance, rainboots, raincoats, OIC shift
allowance, P450.00 monthly allowance, driving allowance, motorcycle award and
full-time physician, the company gave the following explanation which this Court
finds plausible, to wit:

16. The employees at CTSS were given One Thousand Pesos (P1,000.00)
cash or its equivalent in purchase orders because it was their own demand
that they be given the option to buy the pair of leather boots they want. For
the Cebu branch, the employees themselves failed to include these benefits
in the list of their demands during the preparation of the budget for the year
1997 despite the instruction given to them by the branch manager.
According to the employees, they were not aware that they were entitled to
these benefits. They thought that because they have been provided with two
vans to get to their respective assignments, these benefits are available only
to collectors, messengers and technicians in motorcycles.

17. The P450.00 monthly allowance was provided by the CBA to be given to
counter clerks. However, the position of counter clerks had been abolished in
accordance with the reorganization plan undertaken by the company in April
1995, with the full knowledge of the Union membership. As a result of the
abolition of the position of counter clerks, there was no more reason for
granting the subject allowance.

18. The company more than satisfied the provision in the CBA to engage the
services of a physician and provided adequate medical services. Aside from a
part time physician who reports for duty everyday, the company has secured
the services of Prolab Diagnostics, which has complete medical facilities and
personnel, to serve the medical needs of the employees. x x x

19. The Union demands that a full-time physician to be assigned at the Head
Office. This practice, is not provided in the CBA and, moreover is too costly to
maintain. The medical services offered by Prolab [D]iagnostics are even
better and more comprehensive than any full time physician can give. It
places at the employees' disposal numerous specialists in various fields of
medicine. It is beyond understanding why the Union would insist on having a
full-time physician when they could avail of better services from Prolab
Diagnostics.

(Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.)

On the issue of non-payment, discrimination and/or deprivation of overtime,

restday work, waiting/stand by time and staff meeting allowance, suffice it to state
that there is nothing on record to prove the same. Petitioner did not present
evidence substantial enough to support its claim.

159 | P a g e
 As to the alleged inadequate transportation allowance and facilities, the company
posits that:

30. The transportation allowances given to the Dasmarinas and Pinugay

employees are more than adequate to defray their daily transportation cost.
Hence, there is absolutely no justification for an increase in the said
allowance. In fact, said employees at Dasmarinas and Pinugay, who are only
residing in areas near their place of work, are more privileged as they receive
transportation expenses while the rest of the company workers do not.

31. As to the demand for clean drinking water, the company has installed
sufficient and potable water inside the Head Office even before the strike
was staged by the Union. Any person who visits the Makati Head Office can
attest to this fact.

(Philcom's Reply to PEU's Position Paper, p. 357, ibid.)

Anent the allegation of PABX transfer and contractualization of PABX service and
position, these were done in anticipation of the company to switch to an automatic
PABX machine which requires no operator. This cannot be treated as ULP since
management is at liberty, absent any malice on its part, to abolish positions which
it deems no longer necessary (Arrieta vs. National Labor Relations Commission,
279 SCRA 326, 332). Besides, at the time the company hired a temporary
employee to man the machine during daytime, the subject position was vacant
while the assumption of the function by the company guard during nighttime was
only for a brief period.

With respect to the perceived massive contractualization of the company, said

charge cannot be considered as ULP since the hiring of contractual workers did not
threaten the security of tenure of regular employees or union members. That only
160 employees out of 400 employees in the company's payroll were considered
rank and file does not of itself indicate unfair labor practice since this is but a
company prerogative in connection with its business concerns.

Likewise, the offer or promotions to a few union members is neither unlawful nor
an economic inducement. These offers were made in accordance with the
legitimate need of the company for the services of these employees to fill positions
left vacant by either retirement or resignation of other employees. Besides, a
promotion is part of the career growth of employees found competent in their
work. Thus, in Bulletin Publishing Corporation vs. Sanchez (144 SCRA 628, 641),
the Supreme Court held that "(T)he promotion of employees to managerial or
executive positions rests upon the discretion of management. Managerial positions
are offices which can only be held by persons who have the trust of the corporation
and its officers. It is the prerogative of management to promote any individual
working within the company to a higher position. It should not be inhibited or
prevented from doing so. A promotion which is manifestly beneficial to an
employee should not give rise to a gratuitous speculation that such a promotion
was made simply to deprive the union of the membership of the promoted
employee, who after all appears to have accepted his promotion."
160 | P a g e
 That the promotions were made near or around the time when CBA negotiations
were about to be held does not make the company's action an unfair labor
practice. As explained by the company, these promotions were based on the
availability of the position and the qualification of the employees promoted (p. 6,
Annex "4", Philcom's Reply to PEU's Position Paper; p. 380, ibid.)

On the union's charge that management disallowed leave of union officers and
members to attend union seminar, this is belied by the evidence submitted by the
union itself. In a letter to PEU's President, the company granted the leave of
several union officers and members to attend a seminar notwithstanding that its
request to be given more details about the affair was left unheeded by the union
(Annex "Y", PEU's Position Paper; p. 222, ibid.). Those who were denied leave were
urgently needed for the operation of the company.

On the ULP issue of disinformation scheme, surveillance and interference with

union affairs, these are mere allegations unsupported by facts. The charge of
"black propaganda" allegedly committed by the company when it supposedly
posted two (2) letters addressed to the Union President is totally baseless.
Petitioner presents no proof that it was the company which was behind the
incident. On the purported disallowance of union members to observe the July 27,
1997 CBA meeting, the company explained that it only allowed one (1) employee
from ITTO, instead of two (2), as it would adversely affect the operation of the
group. It also took into consideration the fact that ITTO members represent only
20% of the union. Other union members from other departments of the company
should have equal representation (Annex "L", Position Paper for the Union; pp. 205-
206, ibid.). As to the alleged surveillance of the company guards during a union
seminar, We find the idea of sending guards to spy on a mere union seminar quite
preposterous. It is thus not likely for the company which can gain nothing from it to
waste its resources in such a scheme.

On the issuance of memorandum/notice to employees without giving copy to

union, change in work schedule at Traffic Records Section and ITTO policies, the
company has sufficiently rebutted the same, thus:

27. The Union also whines about the failure of the company to furnish copies
of memoranda or notices sent to employees and change of work schedules
at the Traffic Records Section and ITTO policies. The CBA, however, does not
obligate the Company to give the Union a copy of each and every
memorandum or notice sent to employees. This would be unreasonable and
impractical. Neither did the Union demand that they be furnished copies of
the same. This is clearly a non-issue as copies of all memoranda or notices
issued by management are readily available upon request by any employee
or the Union.

28. Contrary to the allegations of the Union, the rationale and mechanics for
the abolishment of the midnight schedule at the Traffic Record Services had
been thoroughly and adequately discussed with the Union's President, Robert
Benosa, and the staff of Traffic Record Services in the meeting held on May 9,
1997. The midnight services were abolished for purely economic reasons.
161 | P a g e
 The company realized that the midnight work can be handled in the morning
without hampering normal operations. At the same time, the company will be
able to save on cost. For this objective, the employees concerned agreed to
create a manning and shifting schedule starting at 6:00 a.m. up to 10:00
p.m., with each employee rendering only eight hours of work every day
without violating any provision of the labor laws or the CBA.24

The Court has always respected a company's exercise of its prerogative to devise means
to improve its operations. Thus, we have held that management is free to regulate,
according to its own discretion and judgment, all aspects of employment, including
hiring, work assignments, supervision and transfer of employees, working methods, time,
place and manner of work.25

This is so because the law on unfair labor practices is not intended to deprive employers
of their fundamental right to prescribe and enforce such rules as they honestly believe to
be necessary to the proper, productive and profitable operation of their business.26

Even assuming arguendo that Philcom had violated some provisions in the CBA, there
was no showing that the same was a flagrant or malicious refusal to comply with its
economic provisions. The law mandates that such violations should not be treated as
unfair labor practices.27

PEU also asserts that the Court of Appeals should have issued an order directing the
issuance of a writ of execution ordering Philcom to accept back to work unconditionally
the striking union officers and members under the same terms and conditions prevailing
before the strike. PEU asserts that the union officers and members should be paid their
salaries or backwages and monetary equivalent of other benefits beginning 6 October
1998 when PEU received a copy of the Secretary's 2 October 1998 return-to-work order.

PEU claims that even if the "issue of illegal strike can be included in the assailed orders
and that the union officers and members have been terminated as a result of the alleged
illegal strike, still, the Secretary has to rule on the illegality of the strike and the liability
of each striker." PEU asserts that the union officers and members should first be
accepted back to work because a return-to-work order is immediately executory.28

We rule on the legality of the strike if only to put an end to this protracted labor dispute.
The facts necessary to resolve the legality of the strike are not in dispute.

The strike and the strike activities that PEU had undertaken were patently illegal for the
following reasons:

1. Philcom is engaged in a vital industry protected by Presidential Decree No. 823 (PD
823), as amended by Presidential Decree No. 849, from strikes and lockouts. PD 823, as
amended, provides:

Sec. 1. It is the policy of the State to encourage free trade unionism and free
collective bargaining within the framework of compulsory and voluntary
arbitration. Therefore, all forms of strikes, picketings and lockouts are hereby

162 | P a g e
 strictly prohibited in vital industries, such as in public utilities, including
transportation and communications, x x x. (Emphasis supplied)

Enumerating the industries considered as vital, Letter of Instruction No. 368 provides:

For the guidance of workers and employers, some of whom have been led into
filing notices of strikes and lockouts even in vital industries, you are hereby
instructed to consider the following as vital industries and companies or firms
under PD 823 as amended:

1. Public Utilities:

xxxx

B. Communications:

1) Wire or wireless telecommunications such as telephone,

telegraph, telex, and cable companies or firms; (Emphasis
supplied)

xxxx

It is therefore clear that the striking employees violated the no-strike policy of the State
in regard to vital industries.

2. The Secretary had already assumed jurisdiction over the dispute. Despite the
issuance of the return-to-work orders dated 19 November and 28 November
1997, the striking employees failed to return to work and continued with their
strike.

Regardless of their motives, or the validity of their claims, the striking employees should
have ceased or desisted from all acts that would undermine the authority given the
Secretary under Article 263(g) of the Labor Code. They could not defy the return-to-work
orders by citing Philcom's alleged unfair labor practices to justify such defiance. 29

PEU could not have validly anchored its defiance to the return-to-work orders on the
motion for reconsideration that it had filed on the assumption of jurisdiction order. A
return-to-work order is immediately effective and executory despite the filing
of a motion for reconsideration. It must be strictly complied with even during
the pendency of any petition questioning its validity.30

The records show that on 22 November 1997, Philcom published in the Philippine Daily
Inquirer a notice to striking employees to return to work.31 These employees did not
report back to work but continued their mass action. In fact, they lifted their picket lines
only on 22 December 1997.32 Philcom formally notified twice these employees to explain
in writing why they should not be dismissed for defying the return-to-work
order.33 Philcom held administrative hearings on these disciplinary cases.34 Thereafter,
Philcom dismissed these employees for abandonment of work in defiance of the return-
to-work order.35
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A return-to-work order imposes a duty that must be discharged more than it confers a
right that may be waived. While the workers may choose not to obey, they do so at the
risk of severing their relationship with their employer.36

The following provision of the Labor Code governs the effects of defying a return-to-work
order:

ART. 264. Prohibited activities. ─ (a) x x x x

No strike or lockout shall be declared after assumption of jurisdiction by

the President or the Ministeror 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 x x x x

Any union officer who knowingly participates in 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. (Emphasis
supplied)

A strike undertaken despite the Secretary's issuance of an assumption or certification

order becomes a prohibited activity, and thus, illegal, under Article 264(a) of the
Labor Code. The union officers who knowingly participate in the illegal strike are
deemed to have lost their employment status. The union members, including union
officers, who commit specific illegal acts or who knowingly defy a return-to-work order
are also deemed to have lost their employment status.37 Otherwise, the workers will
simply refuse to return to their work and cause a standstill in the company operations
while retaining the positions they refuse to discharge and preventing management to fill
up their positions.38

Hence, the failure of PEU's officers and members to comply immediately with the return-
to-work orders dated 19 November and 28 November 1997 cannot be
condoned. Defiance of the return-to-work orders of the Secretary constitutes a
valid ground for dismissal.39

3. PEU staged the strike using unlawful means and methods.

Even if the strike in the present case was not illegal per se, the strike activities that PEU
had undertaken, especially the establishment of human barricades at all entrances to
and egresses from the company premises and the use of coercive methods to prevent
company officials and other personnel from leaving the company premises, were
definitely illegal.40 PEU is deemed to have admitted that its officers and members had
committed these illegal acts, as it never disputed Philcom's assertions of PEU's unlawful
strike activities in all the pleadings that PEU submitted to the Secretary and to this Court.

PEU's picketing officers and members prohibited other tenants at the Philcom building
from entering and leaving the premises. Leonida S. Rabe, Country Manager of Societe
164 | P a g e
Internationale De Telecommunications Aeronautiques(SITA), a tenant at the Philcom
building, wrote two letters addressed to PEU President Roberto B. Benosa. She told
Benosa that PEU's act of obstructing the free ingress to and egress from the company
premises "has badly disrupted normal operations of their organization."41

The right to strike, while constitutionally recognized, is not without legal constrictions.
Article 264(e) of the Labor Code, on prohibited activities, provides:

No person engaged in picketing shall commit any act of violence, coercion or

intimidation or obstruct the free ingress to or egress from the employer's premises
for lawful purposes, or obstruct public thoroughfares.

The Labor Code is emphatic against the use of violence, coercion, and intimidation
during a strike and to this end prohibits the obstruction of free passage to and from the
employer's premises for lawful purposes. A picketing labor union has no right to prevent
employees of another company from getting in and out of its rented premises, otherwise,
it will be held liable for damages for its acts against an innocent by-stander.42

The sanction provided in Article 264(a) is so severe that 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.43

By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to
prevent the resumption of company operations, the striking employees have forfeited
their right to be readmitted.44

4. PEU declared the strike during the pendency of preventive mediation proceedings at
the NCMB.

On 17 November 1997, while a conciliation meeting was being held at the NCMB in
NCMB-NCR-NS 10-435-97, PEU went on strike. It should be noted that in their meeting on
11 November 1997, both Philcom and PEU were even "advised to maintain the status
quo."45 Such disregard of the mediation proceedings was a blatant violation of Section 6,
Book V, Rule XXII of the Omnibus Rules Implementing the Labor Code, which explicitly
obliges the parties to bargain collectively in good faith and prohibits them from impeding
or disrupting the proceedings.46 The relevant provision of the Implementing Rules
provides:

Section 6. Conciliation. ─ x x x x

During the proceedings, the parties shall not do any act which may disrupt or
impede the early settlement of dispute. They are obliged, as part of their duty, to
bargain collectively in good faith, to participate fully and promptly in the
conciliation meetings called by the regional branch of the Board. x x x x

Article 264(a) of the Labor Code also considers it a prohibited activity to declare a strike
"during the pendency of cases involving the same grounds for the same strike."

165 | P a g e
Lamentably, PEU defiantly proceeded with their strike during the pendency of the
conciliation proceedings.

5. PEU staged the strike in utter disregard of the grievance procedure established in the
CBA.

By PEU's own admission, "the Union's complaints to the management began in June
1997 even before the start of the 1997 CBA renegotiations."47 Their CBA expired on 30
June 1997.48 PEU could have just taken up their grievances in their negotiations for the
new CBA. This is what a Philcom officer had suggested to the Dasmariñas staff when the
latter requested on 16 June 1997 for an increase in transportation allowance.49 In fact,
when PEU declared the strike, Philcom and PEU had already agreed on 37 items in their
negotiations for the new CBA.50

The bottom line is that PEU should have immediately resorted to the grievance
machinery provided for in the CBA.51 In disregarding this procedure, the union leaders
who knowingly participated in the strike have acted unreasonably. The law cannot
interpose its hand to protect them from the consequences of their illegal acts.52

A strike declared on the basis of grievances which have not been submitted to the
grievance committee as stipulated in the CBA of the parties is premature and illegal. 53

Having held the strike illegal and having found that PEU's officers and members have
committed illegal acts during the strike, we hold that no writ of execution should issue
for the return to work of PEU officers who participated in the illegal strike, and PEU
members who committed illegal acts or who defied the return-to-work orders that the
Secretary issued on 19 November 1997 and 28 November 1997. The issue of who
participated in the illegal strike, committed illegal acts, or defied the return-to-work
orders is a question of fact that must be resolved in the appropriate proceedings before
the Secretary of Labor.

WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of
Appeals in CA-G.R. SP No. 53989, with the MODIFICATION that the Secretary of Labor is
directed to determine who among the Philcom Employees Union officers participated in
the illegal strike, and who among the union members committed illegal acts or defied
the return-to-work orders of 19 November 1997 and 28 November 1997. No
pronouncement as to costs.

SO ORDERED.

[G.R. No. 121315. July 19, 1999]

COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA) represented by its

union president CECILIA TALAVERA, GEORGE ARSOLA, MARIO DIAGO AND
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 SOCORRO BONCAYAO, petitioners, vs. THE NATIONAL LABOR RELATIONS
COMMISSION, COMPLEX ELECTRONICS CORPORATION, IONICS CIRCUIT,
INC., LAWRENCE QUA, REMEDIOS DE JESUS, MANUEL GONZAGA, ROMY
DELA ROSA, TERESITA ANDINO, ARMAN CABACUNGAN,GERRY GABANA,
EUSEBIA MARANAN and BERNADETH GACAD, respondents.

[G.R. No. 122136 July 19, 1999]

COMPLEX ELECTRONICS CORPORATION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, COMPLEX ELECTRONICS EMPLOYEES
ASSOCIATION (CEEA), represented by Union President, CECILIA
TALAVERA, respondents.

DECISION
KAPUNAN, J.:

These consolidated cases filed by Complex Electronics Employees Association (G.R.

No. 121315) and Complex Electronics Corporation (G.R. No. 122136) assail the Decision
of the NLRC dated March 10, 1995 which set aside the Decision of the Labor Arbiter
dated April 30, 1993.
The antecedents of the present petitions are as follows:
Complex Electronics Corporation (Complex) was engaged in the manufacture of
electronic products. It was actually a subcontractor of electronic products where its
customers gave their job orders, sent their own materials and consigned their equipment
to it. The customers were foreign-based companies with different product lines and
specifications requiring the employment of workers with specific skills for each product
line. Thus, there was the AMS Line for the Adaptive Micro System, Inc., the Heril Line for
Heril Co., Ltd., the Lite-On Line for the Lite-On Philippines Electronics Co., etc.
The rank and file workers of Complex were organized into a union known as the
Complex Electronics Employees Association, herein referred to as the Union.
On March 4, 1992, Complex received a facsimile message from Lite-On Philippines
Electronics Co., requiring it to lower its price by 10%. The full text reads as follows:

This is to inform your office that Taiwan required you to reduce your assembly cost since
it is higher by 50 % and no longer competitive with that of mainland China. It is further
instructed that Complex Price be patterned with that of other sources, which is 10%
lower.

Please consider and give us your revised rates soon.[1]

Consequently, on March 9, 1992, a meeting was held between Complex and the
personnel of the Lite-On Production Line. Complex informed its Lite-On personnel that
such request of lowering their selling price by 10% was not feasible as they were already
167 | P a g e
incurring losses at the present prices of their products. Under such circumstances,
Complex regretfully informed the employees that it was left with no alternative but to
close down the operations of the Lite-On Line. The company, however, promised that:
1) Complex will follow the law by giving the people to be retrenched the
necessary 1 month notice. Hence, retrenchment will not take place until after
1) month from March 09, 1992.
2) The Company will try to prolong the work for as many people as possible for as
long as it can by looking for job slots for them in another line if workload so
allows and if their skills are compatible with the line requirement.
3) The company will give the employees to be retrenched a retrenchment pay as
provided for by law i.e. half a month for every year of service in accordance
with Article 283 of the Labor Code of Philippines.[2]
The Union, on the other hand, pushed for a retrenchment pay equivalent to one (1)
month salary for every year of service, which Complex refused.
On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the
Department of Labor and Employment (DOLE) and the retrenchment of the ninety-seven
(97) affected employees.[3]
On March 25, 1993, the Union filed a notice of strike with the National Conciliation
and Mediation Board (NCMB).
Two days thereafter, or on March 27, 1993, the Union conducted a strike vote which
resulted in a "yes" vote.
In the evening of April 6, 1992, the machinery, equipment and materials being used
for production at Complex were pulled-out from the company premises and transferred
to the premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna. The following day, a
total closure of company operation was effected at Complex.
A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for
unfair labor practice, illegal closure/illegal lockout, money claims for vacation leave, sick
leave, unpaid wages, 13th month pay, damages and attorney's fees. The Union alleged
that the pull-out of the machinery, equipment and materials from the company premises,
which resulted to the sudden closure of the company was in violation of Section 3 and 8,
Rule XIII, Book V of the Labor Code of the Philippines [4] and the existing CBA. Ionics was
impleaded as a party defendant because the officers and management personnel of
Complex were also holding office at Ionics with Lawrence Qua as the President of both
companies.
Complex, on the other hand, averred that since the time the Union filed its notice of
strike, there was a significant decline in the quantity and quality of the products in all of
the production lines. The delivery schedules were not met prompting the customers to
lodge complaints against them. Fearful that the machinery, equipment and materials
would be rendered inoperative and unproductive due to the impending strike of the
workers, the customers ordered their pull-out and transfer to Ionics. Thus, Complex was
compelled to cease operations.
Ionics contended that it was an entity separate and distinct from Complex and had
been in existence since July 5, 1984 or eight (8) years before the labor dispute arose at

168 | P a g e
Complex. Like Complex, it was also engaged in the semi-conductor business where the
machinery, equipment and materials were consigned to them by their customers. While
admitting that Lawrence Qua, the President of Complex was also the President of Ionics,
the latter denied having Qua as their owner since he had no recorded subscription
of P1,200,000.00 in Ionics as claimed by the Union. Ionics further argued that the hiring
of some displaced workers of Complex was an exercise of management
prerogatives. Likewise, the transfer of the machinery, equipment and materials from
Complex was the decision of the owners who were common customers of Complex and
Ionics.
On April 30, 1993, the Labor Arbiter rendered a decision the dispositive portion of
which reads:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
ordering the respondent Complex Electronics Corporation and/or Ionics Circuit
Incorporated and/or Lawrence Qua, to reinstate the 531 above-listed employees to their
former position with all the rights, privileges and benefits appertaining thereto, and to
pay said complainants-employees the aggregate backwages amounting P26,949,891.80
as of April 6, 1993 and to such further backwages until their actual reinstatement. In the
event reinstatement is no longer feasible for reasons not attributable to the
complainants, said respondents are also liable to pay complainants-employees their
separation pay to be computed at the rate of one (1) month pay for every year of
service, a fraction of at least six (6) months to be considered as one whole year.

Further, the aforenamed three (3) respondents are hereby ordered to pay jointly and
solidarily the complainants-employees an aggregate moral damages in the amount
of P1,062,000.00 and exemplary damages in the aggregate sum of P531,000.00.

And finally, said respondents are ordered to pay attorney's fees equivalent to ten percent
(10%) of whatever has been adjudicated herein in favor of the complainants.

The charge of slowdown strike filed by respondent Complex against the union is hereby
dismissed for lack of merit.

SO ORDERED.[5]

Separate appeals were filed by Complex, Ionics and Lawrence Qua before the
respondent NLRC which rendered the questioned decision on March 10, 1995, the
decretal portion of which states:

WHEREFORE, premises considered, the assailed decision is hereby ordered vacated and
set aside, and a new one entered ordering respondent Complex Electronics Corporation
to pay 531 complainants equivalent to one month pay in lieu of notice and separation
pay equivalent to one month pay for every year of service and a fraction of six months
considered as one whole year.

Respondents Ionics Circuit Incorporated and Lawrence Qua are hereby ordered excluded
as parties solidarily liable with Complex Electronics Corporation.

169 | P a g e
The award of moral damages is likewise deleted for lack of merit.

Respondent Complex, however, is hereby ordered to pay attorney's fees equivalent to

ten (10%) percent of the total amount of award granted the complainants.

SO ORDERED.[6]

Complex, Ionics and the Union filed their motions for reconsideration of the above
decision which were denied by the respondent NLRC in an Order dated July 11, 1995.[7]
Hence these petitions.
In G.R. No. 121315, petitioner Complex Electronics Employees Association
asseverates that the respondent NLRC erred when it:
I

SET ASIDE THE DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER
JOSE DE VERA.

II

EXCLUDED PRIVATE RESPONDENTS IONICS CIRCUITS, INCORPORATED AND LAWRENCE

QUA AS PARTIES SOLIDARILY LIABLE WITH COMPLEX ELECTRONICS CORPORATION.

III

FOUND THAT COMPLEX ELECTRONICS CORPORATION WAS NOT GUILTY OF ILLEGAL

CLOSURE AND ILLEGAL DISMISSAL OF THE PETITIONERS.

IV

REMOVED THE AWARD FOR BACKWAGES, REINSTATEMENT AND DAMAGES IN THE

DECISION DATED APRIL 30, 1993 ISSUED BY THE HON. LABOR ARBITER JOSE DE VERA.[8]

On the other hand, in G.R. No. 122136, petitioner Complex Electronics Corporation
raised the following issues, to wit:
I

PUBLIC RESPONDENT NLRC ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OF OR IN EXCESS OF JURISDICTION IN PROMULGATING ITS DECISION AND ORDER
DATED 10 MARCH 1995, AND 11 JULY 1995, RESPECTIVELY, THE SAME BEING IN
CONTRAVENTION OF THE EXPRESS MANDATE OF THE LAW GOVERNING THE PAYMENT OF
ONE MONTH PAY IN LIEU OF NOTICE, SEPARATION PAY AND ATTORNEY'S FEES.

II

THERE IS NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
ORDINARY COURSE OF LAW.[9]

170 | P a g e
 On December 23, 1996, the Union filed a motion for consolidation of G.R. No. 122136
with G.R. No. 121315.[10] The motion was granted by this Court in a Resolution dated June
23, 1997.[11]
On November 10, 1997, the Union presented additional documentary evidence which
consisted of a newspaper clipping in the Manila Bulletin, dated August 18, 1997 bearing
the picture of Lawrence Qua with the following inscription:

RECERTIFICATION. The Cabuyao (Laguna) operation of Ionic Circuits, Inc. consisting of

plants 2, 3, 4 and 5 was recertified to ISO 9002 as electronics contract manufacturer by
the TUV, a rating firm with headquarters in Munich, Germany. Lawrence Qua, Ionics
president and chief executive officer, holds the plaque of recertification presented by
Gunther Theisz (3rd from left), regional manager of TUV Products Services Asia during
ceremonies held at Sta. Elena Golf Club. This is the first of its kind in the country that
four plants were certified at the same time.[12]

The Union claimed that the said clipping showed that both corporations, Ionics and
Complex are one and the same.
In answer to this allegation, Ionics explained that the photo which appeared at the
Manila Bulletin issue of August 18, 1997 pertained only to respondent Ionics
recertification of ISO 9002. There was no mention about Complex Electronics
Corporation. Ionics claimed that a mere photo is insufficient to conclude that Ionics and
Complex are one and the same.[13]
We shall first delve on the issues raised by the petitioner Union.
The Union anchors its position on the fact that Lawrence Qua is both the president of
Complex and Ionics and that both companies have the same set of Board of Directors. It
claims that business has not ceased at Complex but was merely transferred to Ionics, a
runaway shop. To prove that Ionics was just a runaway shop, petitioner asserts that out
of the 80,000 shares comprising the increased capital stock of Ionics, it was Complex
that owns majority of said shares with P1,200,000.00 as its capital subscription and
P448,000.00 as its paid up investment, compared to P800,000.00 subscription
and P324,560.00 paid-up owing to the other stockholders, combined. Thus, according to
the Union, there is a clear ground to pierce the veil of corporate fiction.
The Union further posits that there was an illegal lockout/illegal dismissal considering
that as of March 11, 1992, the company had a gross sales of P61,967,559 from a
capitalization of P1,500,000.00. It even ranked number thirty among the top fifty
corporations in Muntinlupa. Complex, therefore, cannot claim that it was losing in its
business which necessitated its closure.
With regards to Lawrence Qua, petitioner maintains that he should be made
personally liable to the Union since he was the principal player in the closure of the
company, not to mention the clandestine and surreptitious manner in which such closure
was carried out, without regard to their right to due process.
The Union's contentions are untenable.
A runaway shop is defined as an industrial plant moved by its owners from one
location to another to escape union labor regulations or state laws, but the term is also
used to describe a plant removed to a new location in order to discriminate against
171 | P a g e
employees at the old plant because of their union activities. [14] It is one wherein the
employer moves its business to another location or it temporarily closes its business for
anti-union purposes.[15] A runaway shop in this sense, is a relocation motivated by anti-
union animus rather than for business reasons. In this case, however, Ionics was not set
up merely for the purpose of transferring the business of Complex. At the time the labor
dispute arose at Complex, Ionics was already existing as an independent company. As
earlier mentioned, it has been in existence since July 5, 1984. It cannot, therefore, be
said that the temporary closure in Complex and its subsequent transfer of business to
Ionics was for anti-union purposes. The Union failed to show that the primary reason for
the closure of the establishment was due to the union activities of the employees.
The mere fact that one or more corporations are owned or controlled by the same or
single stockholder is not a sufficient ground for disregarding separate corporate
personalities. Thus, in Indophil Textile Mill Workers Union vs. Calica,[16] we ruled that:

[I]n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic,
alleging that the creation of the corporation is a devise to evade the application of the
CBA between petitioner Union and private respondent company. While we do not
discount the possibility of the similarities of the businesses of private respondent and
Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the
relief sought. The fact that the businesses of private respondent and Acrylic are related,
that some of the employees of the private respondent are the same persons manning
and providing for auxiliary services to the units of Acrylic, and that the physical plants,
offices and facilities are situated in the same compound, it is our considered opinion that
these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.

Likewise, in Del Rosario vs. National Labor Relations Commission,[17] the Court stated
that substantial identity of the incorporators of two corporations does not necessarily
imply that there was fraud committed to justify piercing the veil of corporate fiction.
In the recent case of Santos vs. National Labor Relations Commission, [18] we also
ruled that:

The basic rule is still that which can be deduced from the Courts pronouncement in Sunio
vs. National Labor Relations Commission, thus:

xxx.. Mere ownership by a single stockholder or by another corporation of all or nearly all
of the capital stock of a corporation is not of itself sufficient ground for disregarding the
separate corporate personality.

Ionics may be engaged in the same business as that of Complex, but this fact alone is
not enough reason to pierce the veil of corporate fiction of the corporation. Well-settled
is the rule that a corporation has a personality separate and distinct from that of its
officers and stockholders. This fiction of corporate entity can only be disregarded in
certain cases such as when it is used to defeat public convenience, justify wrong, protect
fraud, or defend crime.[19] To disregard said separate juridical personality of a
corporation, the wrongdoing must be clearly and convincingly established. [20]
As to the additional documentary evidence which consisted of a newspaper clipping
filed by petitioner Union, we agree with respondent Ionics that the photo/newspaper

172 | P a g e
clipping itself does not prove that Ionics and Complex are one and the same entity. The
photo/newspaper clipping merely showed that some plants of Ionics were recertified to
ISO 9002 and does not show that there is a relation between Complex and Ionics except
for the fact that Lawrence Qua was also the president of Ionics. However, as we have
stated above, the mere fact that both of the corporations have the same president is not
in itself sufficient to pierce the veil of corporate fiction of the two corporations.
We, likewise, disagree with the Union that there was in this case an illegal
lockout/illegal dismissal. Lockout is the temporary refusal of employer to furnish work as
a result of an industrial or labor dispute.[21] It may be manifested by the employer's act of
excluding employees who are union members.[22] In the present case, there was a
complete cessation of the business operations at Complex not because of the labor
dispute. It should be recalled that, before the labor dispute, Complex had already
informed the employees that they would be closing the Lite-On Line. The employees,
however, demanded for a separation pay equivalent to one (1) month salary for every
year of service which Complex refused to give. When Complex filed a notice of closure of
its Lite-On Line, the employees filed a notice of strike which greatly alarmed the
customers of Complex and this led to the pull-out of their equipment, machinery and
materials from Complex. Thus, without the much needed equipment, Complex was
unable to continue its business. It was left with no other choice except to shut down the
entire business. The closure, therefore, was not motivated by the union activities of the
employees, but rather by necessity since it can no longer engage in production without
the much needed materials, equipment and machinery. We quote with approval the
findings of the respondent NLRC on this matter:

At first glance after reading the decision a quo, it would seem that the closure of
respondent's operation is not justified. However, a deeper examination of the records
along with the evidence, would show that the closure, although it was done abruptly as
there was no compliance with the 30-day prior notice requirement, said closure was not
intended to circumvent the provisions of the Labor Code on termination of
employment. The closure of operation by Complex on April 7, 1992 was not without valid
reasons. Customers of respondent alarmed by the pending labor dispute and the
imminent strike to be foisted by the union, as shown by their strike vote, directed
respondent Complex to pull-out its equipment, machinery and materials to other safe
bonded warehouse. Respondent being mere consignees of the equipment, machinery
and materials were without any recourse but to oblige the customers' directive. The pull-
out was effected on April 6, 1992. We can see here that Complex's action, standing
alone, will not result in illegal closure that would cause the illegal dismissal of the
complainant workers. Hence, the Labor Arbiter's conclusion that since there were only
two (2) of respondent's customers who have expressed pull-out of business from
respondent Complex while most of the customer's have not and, therefore, it is not
justified to close operation cannot be upheld. The determination to cease operation is a
prerogative of management that is usually not interfered with by the State as no
employer can be required to continue operating at a loss simply to maintain the workers
in employment. That would be taking of property without due process of law which the
employer has the right to resist. (Columbia Development Corp. vs. Minister of Labor and
Employment, 146 SCRA 42)

173 | P a g e
 As to the claim of petitioner Union that Complex was gaining profit, the financial
statements for the years 1990, 1991 and 1992 issued by the auditing and accounting
firm Sycip, Gorres and Velayo readily show that Complex was indeed continuously
experiencing deficit and losses.[23] Nonetheless, whether or not Complex was incurring
great losses, it is still one of the managements prerogative to close down its business as
long as it is done in good faith. Thus, in Catatista et al., vs. NLRC and Victorias Milling
Co., Inc.[24] we ruled:

In any case, Article 283 of the Labor Code is clear that an employer may close or cease
his business operations or undertaking even if he is not suffering from serious business
losses or financial reverses, as long as he pays his employees their termination pay in
the amount corresponding to their length of service. It would indeed, be stretching the
intent and spirit of the law if we were to unjustly interfere in managements prerogative
to close or cease its business operations just because said business operations or
undertaking is not suffering from any loss.

Going now to the issue of personal liability of Lawrence Qua, it is settled that in the
absence of malice or bad faith, a stockholder or an officer of a corporation cannot be
made personally liable for corporate liabilities. [25] In the present case, while it may be
true that the equipment, materials and machinery were pulled-out of Complex and
transferred to Ionics during the night, their action was sufficiently explained by Lawrence
Qua in his Comment to the petition filed by the Union. We quote:

The fact that the pull-out of the machinery, equipment and materials was effected during
nighttime is not per se an indicia of bad faith on the part of respondent Qua since he had
no other recourse, and the same was dictated by the prevailing mood of unrest as the
laborers were already vandalizing the equipment, bent on picketing the company
premises and threats to lock out the company officers were being made. Such acts of
respondent Qua were, in fact, made pursuant to the demands of Complex's customers
who were already alarmed by the pending labor dispute and imminent strike to be stage
by the laborers, to have their equipment, machinery and materials pull out of
Complex. As such, these acts were merely done pursuant to his official functions and
were not, in any way, made with evident bad faith.[26]

We perceive no intention on the part of Lawrence Qua and the other officers of
Complex to defraud the employees and the Union. They were compelled to act upon the
instructions of their customers who were the real owners of the equipment, materials
and machinery. The prevailing labor unrest permeating within the premises of Complex
left the officers with no other choice but to pull them out of Complex at night to prevent
their destruction. Thus, we see no reason to declare Lawrence Qua personally liable to
the Union.
Anent the award of damages, we are inclined to agree with the NLRC that there is no
basis for such award. We again quote the respondent NLRC with favor:

By and large, we cannot hold respondents guilty of unfair labor practice as found by the
Labor Arbiter since the closure of operation of Complex was not established by strong
evidence that the purpose of said closure was to interfere with the employees' right to
self-organization and collective bargaining. As very clearly established, the closure was

174 | P a g e
triggered by the customers' pull-out of their equipment, machinery and materials, who
were alarmed by the pending labor dispute and the imminent strike by the union, and as
a protection to their interest pulled-out of business from Complex who had no recourse
but to cease operation to prevent further losses. The indiscretion committed by the
Union in filing the notice of strike, which to our mind is not the proper remedy to
question the amount of benefits due the complainants who will be retrenched at the
closure of the Lite-On Line, gave a wrong signal to customers of Complex, which
consequently resulted in the loss of employment of not only a few but to all the of the
workers. It may be worth saying that the right to strike should only be a remedy of last
resort and must not be used as a show of force against the employer.[27]

We shall now go to the issues raised by Complex in G.R. No. 122136.

Complex claims that the respondent NLRC erred in ordering them to pay the Union
one (1) month pay as indemnity for failure to give notice to its employees at least thirty
(30) days before such closure since it was quite clear that the employees were notified of
the impending closure of the Lite-On Line as early as March 9, 1992. Moreover, the
abrupt cessation of operations was brought about by the sudden pull-out of the
customers which rendered it impossible for Complex to observe the required thirty (30)
days notice.
Article 283 of the Labor Code provides that:

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. x x x. (Underlining ours.)

The purpose of the notice requirement is to enable the proper authorities to

determine after hearing whether such closure is being done in good faith, i.e., for bona
fide business reasons, or whether, to the contrary, the closure is being resorted to as a
means of evading compliance with the just obligations of the employer to the employees
affected.[28]
While the law acknowledges the management prerogative of closing the business, it
does not, however, allow the business establishment to disregard the requirements of
the law. The case of Magnolia Dairy Products v. NLRC[29] is quite emphatic about this:

The law authorizes an employer, like the herein petitioners, to terminate the
employment of any employee due to the installation of labor saving devices. The
installation of these devices is a management prerogative, and the courts will not
interfere with its exercise in the absence of abuse of discretion, arbitrariness, or
maliciousness on the part of management, as in this case. Nonetheless, this did not
excuse petitioner from complying with the required written notice to the employee and
to the Department of Labor and Employment (DOLE) at least one month before the
intended date of termination. This procedure enables an employee to contest the reality

175 | P a g e
or good faith character of the asserted ground for the termination of his services before
the DOLE.

The failure of petitioner to serve the written notice to private respondent and to the
DOLE, however, does not ipso facto make private respondent's termination from service
illegal so as to entitle her to reinstatement and payment of backwages. If at all, her
termination from service is merely defective because it was not tainted with bad faith or
arbitrariness and was due to a valid cause.

The well settled rule is that the employer shall be sanctioned for non-compliance with
the requirements of, or for failure to observe due process in terminating from service its
employee. In Wenphil Corp. v. NLRC, we sanctioned the employer for this failure by
ordering it to indemnify the employee the amount of P1,000.00. Similarly, we imposed
the same amount as indemnification in Rubberworld (Phils.), Inc. v. NLRC, and, Aurelio v.
NLRC and Alhambra Industries, Inc. v. NLRC. Subsequently, the sum of P5,000.00 was
awarded to an employee in Worldwide Papermills, Inc. v. NLRC, and P2,000.00
in Sebuguero, et al., v. NLRC, et al. Recently, the sum of P5,000.00 was again imposed as
indemnify against the employer. We see no valid and cogent reason why petitioner
should not be likewise sanctioned for its failure to serve the mandatory written
notice. Under the attendant facts, we find the amount of P5,000.00, to be just and
reasonable.

We, therefore, find no grave abuse of discretion on the part of the NLRC in ordering
Complex to pay one (1) month salary by way of indemnity. It must be borne in mind that
what is at stake is the means of livelihood of the workers so they are at least entitled to
be formally informed of the management decisions regarding their employment.[30]
Complex, likewise, maintains that it is not liable for the payment of separation pay
since Article 283 of the Labor Code awards separation pay only in cases of closure not
due to serious business reversals. In this case, the closure of Complex was brought about
by the losses being suffered by the corporation.
We disagree.
Article 283 further provides:

x x x. 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 case of
cessation of operations of establishment or undertaking 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.

It is settled that in case of closures or cessation of operation of business

establishments not due to serious business losses or financial reverses, [31] the employees
are always given separation benefits.
In the instant case, notwithstanding the financial losses suffered by Complex, such
was, however, not the main reason for its closure. Complex admitted in its petition that
176 | P a g e
the main reason for the cessation of the operations was the pull-out of the materials,
equipment and machinery from the premises of the corporation as dictated by its
customers. It was actually still capable of continuing the business but opted to close
down to prevent further losses. Under the facts and circumstances of the case, we find
no grave abuse of discretion on the part of the public respondent in awarding the
employees one (1) month pay for every year of service as termination pay.
WHEREFORE, premises considered, the assailed decision of the NLRC is AFFIRMED.
SO ORDERED.

[G.R. No. 114974. June 16, 2004]

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
177 | P a g e
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

178 | P a g e
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
179 | P a g e
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 Uniondeclared 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:

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 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.

181 | P a g e
 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.

182 | P a g e
 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

183 | P a g e
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]

184 | P a g e
 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.
185 | P a g e
 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

186 | P a g e
(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

187 | P a g e
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.

[G.R. No. 146728. February 11, 2004]

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.

188 | P a g e
 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.

189 | P a g e
 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:
I
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

190 | P a g e
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 setest of good faith in bargaining.[9] Good faith or bad faith is an inference to be

191 | P a g e
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

192 | P a g e
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

193 | P a g e
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.

G.R. Nos. 158930-31 March 3, 2008

UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS

- KILUSANG MAYO UNO (UFE-DFA-KMU), petitioner,
vs.
NESTLÉ PHILIPPINES, INCORPORATED, respondent.

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

G.R. Nos. 158944-45 March 3, 2008

NESTLÉ PHILIPPINES, INCORPORATED, petitioner,

vs.

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UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS
- KILUSANG MAYO UNO (UFE-DFA-KMU), respondent.

RESOLUTION

CHICO-NAZARIO, J.:

On 22 August 2006, this Court promulgated its Decision1 in the above-entitled cases, the
dispositive part of which reads –

WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking
that Nestlé be declared to have committed unfair labor practice in allegedly setting
a precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45,
however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of
Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE
gravely abused her discretion in failing to confine her assumption of jurisdiction
power over the ground rules of the CBA negotiations; but the ruling of the Court of
Appeals on the inclusion of the Retirement Plan as a valid issue in the collective
bargaining negotiations between UFE-DFA-KMU and Nestlé is AFFIRMED. The
parties are directed to resume negotiations respecting the Retirement Plan and to
take action consistent with the discussions hereinabove set forth. No costs.

Subsequent thereto, Nestlé Philippines, Incorporated (Nestlé) filed a Motion for

Clarification2 on 20 September 2006; while Union of Filipro Employees – Drug, Food and
Allied Industries Union – Kilusang Mayo Uno (UFE-DFA-KMU), on 21 September 2006, filed
a Motion for Partial Reconsideration3 of the foregoing Decision.

The material facts of the case, as determined by this Court in its Decision, may be
summarized as follows:

UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file
employees of Nestlé belonging to the latter’s Alabang and Cabuyao plants. On 4 April
2001, as the existing collective bargaining agreement (CBA) between Nestlé and UFE-
DFA-KMU4 was to end on 5 June 2001,5 the Presidents of the Alabang and Cabuyao
Divisions of UFE-DFA-KMU informed Nestlé of their intent to "open [our] new Collective
Bargaining Negotiation for the year 2001-2004 x x x as early as June 2001." 6 In response
thereto, Nestlé informed them that it was also preparing its own counter-proposal and
proposed ground rules to govern the impending conduct of the CBA negotiations.

On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only)7, Nestlé
reiterated its stance that "unilateral grants, one-time company grants, company-initiated
policies and programs, which include, but are not limited to the Retirement Plan,
Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not
proper subjects of CBA negotiations and therefore shall be excluded therefrom."8

Dialogue between the company and the union thereafter ensued.

On 14 August 2001, however, Nestlé requested9 the National Conciliation and Mediation
Board (NCMB), Regional Office No. IV, Imus, Cavite, to conduct preventive mediation
195 | P a g e
proceedings between it and UFE-DFA-KMU owing to an alleged impasse in said
dialogue; i.e., that despite fifteen (15) meetings between them, the parties failed to
reach any agreement on the proposed CBA.

Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU filed a Notice
of Strike10 on 31 October 2001 with the NCMB, complaining, in essence, of a bargaining
deadlock pertaining to economic issues, i.e., "retirement (plan), panel composition, costs
and attendance, and CBA".11 On 07 November 2001, another Notice of Strike12 was filed
by the union, this time predicated on Nestlé’s alleged unfair labor practices, that is,
bargaining in bad faith by setting pre-conditions in the ground rules and/or refusing to
include the issue of the Retirement Plan in the CBA negotiations. The result of a strike
vote conducted by the members of UFE-DFA-KMU yielded an overwhelming approval of
the decision to hold a strike.13

On 26 November 2001, prior to holding the strike, Nestlé filed with the DOLE a Petition
for Assumption of Jurisdiction,14 praying for the Secretary of the DOLE, Hon. Patricia A.
Sto. Tomas, to assume jurisdiction over the current labor dispute in order to effectively
enjoin any impending strike by the members of the UFE-DFA-KMU at the Nestlé’s
Cabuyao Plant in Laguna.

On 29 November 2001, Sec. Sto. Tomas issued an Order15 assuming jurisdiction over the
subject labor dispute. The fallo of said Order states that:

CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the
labor dispute at the Nestlé Philippines, Inc. (Cabuyao Plant) pursuant to Article 263
(g) of the Labor Code, as amended.

Accordingly, any strike or lockout is hereby enjoined. The parties are directed to
cease and desist from committing any act that might lead to the further
deterioration of the current labor relations situation.

The parties are further directed to meet and convene for the discussion of the
union proposals and company counter-proposals before the National Conciliation
and Mediation Board (NCMB) who is hereby designated as the delegate/facilitator
of this Office for this purpose. The NCMB shall report to this Office the results of
this attempt at conciliation and delimitation of the issues within thirty (30) days
from the parties’ receipt of this Order, in no case later than December 31, 2001. If
no settlement of all the issues is reached, this Office shall thereafter define the
outstanding issues and order the filing of position papers for a ruling on the merits.

UFE-DFA-KMU sought reconsideration16 of the above but nonetheless moved for

additional time to file its position paper as directed by the Assumption of Jurisdiction
Order.

On 14 January 2002, Sec. Sto. Tomas denied said motion for reconsideration.

On 15 January 2002, despite the order enjoining the conduct of any strike or lockout and
conciliation efforts by the NCMB, the employee members of UFE-DFA-KMU at Nestlé’s
Cabuyao Plant went on strike.
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In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas directed: (1)
the members of UFE-DFA-KMU to return-to-work within twenty-four (24) hours from
receipt of such Order; (2) Nestlé to accept back all returning workers under the same
terms and conditions existing preceding to the strike; (3) both parties to cease and
desist from committing acts inimical to the on-going conciliation proceedings leading to
the further deterioration of the situation; and (4) the submission of their respective
position papers within ten (10) days from receipt thereof. But notwithstanding
the Return-to-Work Order, the members of UFE-DFA-KMU continued with their strike,
thus, prompting Sec. Sto. Tomas to seek the assistance of the Philippine National Police
(PNP) for the enforcement of said order.

On 7 February 2002, Nestlé and UFE-DFA-KMU filed their respective position papers.
Nestlé addressed several issues concerning economic provisions of the CBA as well as
the non-inclusion of the issue of the Retirement Plan in the collective bargaining
negotiations. On the other hand, UFE-DFA-KMU limited itself to the issue of whether or
not the retirement plan was a mandatory subject in its CBA negotiations.

On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender its
stand on the other issues raised by Nestlé but not covered by its initial position paper by
way of a Supplemental Position Paper.

UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several pleadings,

one of which was a Manifestation with Motion for Reconsideration of the Order dated
February 11, 2002 assailing the Order of February 11, 2002 for supposedly being
contrary to law, jurisprudence and the evidence on record. The union posited that Sec.
Sto. Tomas "could only assume jurisdiction over the issues mentioned in the notice of
strike subject of the current dispute,"17 and that the Amended Notice of Strike it filed did
not cite, as one of the grounds, the CBA deadlock.

On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFE-DFA-
KMU.

Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before the Court of Appeals,
alleging that Sec. Sto. Tomas committed grave abuse of discretion amounting to lack or
excess of jurisdiction when she issued the Orders of 11 February 2002 and 8 March 2002.

In the interim, in an attempt to finally resolve the crippling labor dispute between the
parties, then Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with
an Order19 dated 02 April 2002, ruling that:

a. we hereby recognize that the present Retirement Plan at the Nestlé Cabuyao
Plant is a unilateral grant that the parties have expressly so recognized subsequent
to the Supreme Court’s ruling in Nestlé, Phils. Inc. vs. NLRC, G.R. No. 90231,
February 4, 1991, and is therefore not a mandatory subject for bargaining;

b. the Union’s charge of unfair labor practice against the Company is hereby
dismissed for lack of merit;

197 | P a g e
 c. the parties are directed to secure the best applicable terms of the recently
concluded CBSs between Nestlé Phils. Inc. and it eight (8) other bargaining units,
and to adopt these as the terms and conditions of the Nestlé Cabuyao Plant CBA;

d. all union demands that are not covered by the provisions of the CBAs of the
other eight (8) bargaining units in the Company are hereby denied;

e. all existing provisions of the expired Nestlé Cabuyao Plant CBA without any
counterpart in the CBAs of the other eight bargaining units in the Company are
hereby ordered maintained as part of the new Nestlé Cabuyao Plant CBA;

f. the parties shall execute their CBA within thirty (30) days from receipt of this
Order, furnishing this Office a copy of the signed Agreement;

g. this CBA shall, in so far as representation is concerned, be for a term of five (5)
years; all other provisions shall be renegotiated not later than three (3) years after
its effective date which shall be December 5, 2001 (or on the first day six months
after the expiration on June 4, 2001 of the superceded CBA).

UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was subsequently
denied on 6 May 2002.

For the second time, UFE-DFA-KMU went to the Court of Appeals via another Petition
for Certiorari seeking to annul the Orders of 02 April 2002 and 06 May 2002 of the
Secretary of the DOLE, having been issued in grave abuse of discretion amounting to
lack or excess of jurisdiction.

On 27 February 2003, the appellate court promulgated its Decision on the twin petitions
for certiorari, ruling entirely in favor of UFE-DFA-KMU, the dispositive part thereof stating
–

WHEREFORE, in view of the foregoing, there being grave abuse on the part of the
public respondent in issuing all the assailed Orders, both petitions are hereby
GRANTED. The assailed Orders dated February 11, 2001, and March 8, 2001 (CA-
G.R. SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CA-
G.R. SP No. 71540) of the Secretary of Labor and Employment in the case entitled:
"IN RE: LABOR DISPUTE AT NESTLE PHILIPPINES INC. (CABUYAO FACTORY)" under
OS-AJ-0023-01 (NCMB-RBIV-CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01,
NCMB-RBIV-LAG-NS-11-10-039—01) are hereby ANNULLED and SET ASIDE. Private
respondent is hereby directed to resume the CBA negotiations with the petitioner. 20

Both parties appealed the aforequoted ruling. Nestlé essentially assailed that part of the
decision finding the DOLE Secretary to have gravely abused her discretion amounting to
lack or excess of jurisdiction when she ruled that the Retirement Plan was not a valid
issue to be tackled during the CBA negotiations; UFE-DFA-KMU, in contrast, questioned
the appellate court’s decision finding Nestlé free and clear of any unfair labor practice.

Since the motions for reconsideration of both parties were denied by the Court of
Appeals in a joint Resolution dated 27 June 2003, UFE-DFA-KMU and Nestlé separately
198 | P a g e
filed the instant Petitions for Review on Certiorari under Rule 45 of the Rules of Court, as
amended.

G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestlé seeking to reverse the
Court of Appeals Decision insofar as the appellate court’s failure to find Nestlé guilty of
unfair labor practice was concerned; while G.R. No. 158944-45 was instituted by Nestlé
against UFE-DFA-KMU likewise looking to annul and set aside the part of the Court of
Appeals Decision declaring that: 1) the Retirement Plan was a valid collective bargaining
issue; and 2) the scope of the power of the Secretary of the Department of Labor and
Employment (DOLE) to assume jurisdiction over the labor dispute between UFE-DFA-KMU
and Nestlé was limited to the resolution of questions and matters pertaining merely to
the ground rules of the collective bargaining negotiations to be conducted between the
parties.

On 29 March 2004, this Court resolved21 to consolidate the two petitions inasmuch as
they (1) involved the same set of parties; (2) arose from the same set of
circumstances, i.e., from several Orders issued by then DOLE Secretary, Hon. Patricia A.
Sto. Tomas, respecting her assumption of jurisdiction over the labor dispute between
Nestlé and UFE-DFA-KMU, Alabang and Cabuyao Divisions;22 and (3) similarly assailed the
same Decision and Resolution of the Court of Appeals.

After giving due course to the instant consolidated petitions, this Court promulgated on
22 August 2006 its Decision, now subject of UFE-DFA-KMU’s Motion for Partial
Reconsideration and Nestlé’s Motion for Clarification.

In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this Court address and
discuss anew points or arguments that have basically been passed upon in this Court’s
22 August 2006 Decision. Firstly, it questions this Court’s finding that Nestlé was not
guilty of unfair labor practice, considering that the transaction speaks for itself, i.e, res
ipsa loquitor. And made an issue again is the question of whether or not the DOLE
Secretary can take cognizance of matters beyond the amended Notice of Strike.

As to Nestlé’s prayer for clarification, the corporation seeks elucidation respecting the
dispositive part of this Court’s Decision directing herein parties to resume negotiations
on the retirement compensation package of the concerned employees. It posits that "[i]n
directing the parties to negotiate the Retirement Plan, the Honorable Court x x x might
have overlooked the fact that here, the Secretary of Labor had already assumed
jurisdiction over the entire 2001-2004 CBA controversy x x x."

As to the charge of unfair labor practice:

The motion does not put forward new arguments to substantiate the prayer for
reconsideration of this Court’s Decision except for the sole contention that the
transaction speaks for itself, i.e., res ipsa loquitor. Nonetheless, even a perusal of the
arguments of UFE-DFA-KMU in its petition and memorandum in consideration of the point
heretofore raised will not convince us to change our disposition of the question of unfair
labor practice. UFE-DFA-KMU argues therein that Nestlé’s "refusal to bargain on a very
important CBA economic provision constitutes unfair labor practice."23 It explains that
Nestlé set as a precondition for the holding of collective bargaining negotiations the non-
199 | P a g e
inclusion of the issue of Retirement Plan. In its words, "respondent Nestlé Phils., Inc.
insisted that the Union should first agree that the retirement plan is not a bargaining
issue before respondent Nestlé would agree to discuss other issues in the CBA." 24 It then
concluded that "the Court of Appeals committed a legal error in not ruling that
respondent company is guilty of unfair labor practice. It also committed a legal error in
failing to award damages to the petitioner for the ULP committed by the respondent."25

We are unconvinced still.

The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor Code,
as amended, which state –

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.

ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. – When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms of conditions of the existing agreement during the
60-day period and/or until a new agreement is reached by the parties.

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 have 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.

The crucial question, therefore, of whether or not a party has met his statutory duty to
bargain in good faith typically turns on the facts of the individual case. As we have said,
there is no per se test of good faith in bargaining. Good faith or bad faith is an inference
to be drawn from the facts. To some degree, the question of good faith may be a
question of credibility. The effect of an employer’s or a union’s individual actions is not
the test of good-faith bargaining, but the impact of all such occasions or actions,
considered as a whole, and the inferences fairly drawn therefrom collectively may offer a
basis for the finding of the NLRC.26

For a charge of unfair labor practice to prosper, it must be shown that Nestlé 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
200 | P a g e
humiliation, wounded feelings, or grave anxiety resulted x x x"27 in disclaiming unilateral
grants as proper subjects in their collective bargaining negotiations. While the law makes
it an obligation for the employer and the employees to bargain collectively with each
other, such compulsion does not include the commitment to precipitately accept or
agree to the proposals of the other. All it contemplates is that both parties should
approach the negotiation with an open mind and make reasonable effort to reach a
common ground of agreement.

Herein, the union merely bases its claim of refusal to bargain on a letter28 dated 29 May
2001 written by Nestlé where the latter laid down its position that "unilateral grants,
one-time company grants, company-initiated policies and programs, which include, but
are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay
Premium, are by their very nature not proper subjects of CBA negotiations and therefore
shall be excluded therefrom." But as we have stated in this Court’s Decision, said letter
is not tantamount to refusal to bargain. In thinking to exclude the issue of Retirement
Plan from the CBA negotiations, Nestlé, cannot be faulted for considering the same
benefit as unilaterally granted, considering that eight out of nine bargaining units have
allegedly agreed to treat the Retirement Plan as a unilaterally granted benefit. This is not
a case where the employer exhibited an indifferent attitude towards collective
bargaining, because the negotiations were not the unilateral activity of the bargaining
representative. Nestlé’s desire to settle the dispute and proceed with the negotiation
being evident in its cry for compulsory arbitration is proof enough of its exertion of
reasonable effort at good-faith bargaining.

In the case at bar, Nestle never refused to bargain collectively with UFE-DFA-KMU. The
corporation simply wanted to exclude the Retirement Plan from the issues to be taken up
during CBA negotiations, on the postulation that such was in the nature of a unilaterally
granted benefit. An employer’s steadfast insistence to exclude a particular substantive
provision is no different from a bargaining representative’s perseverance to include one
that they deem of absolute necessity. Indeed, an adamant insistence on a bargaining
position to the point where the negotiations reach an impasse does not establish bad
faith.[fn24 p.10] It is but natural that at negotiations, management and labor adopt
positions or make demands and offer proposals and counter-proposals. On account of the
importance of the economic issue proposed by UFE-DFA-KMU, Nestle could have refused
to bargain with the former – but it did not. And the management’s firm stand against the
issue of the Retirement Plan did not mean that it was bargaining in bad faith. It had a
right to insist on its position to the point of stalemate.

The foregoing things considered, this Court replicates below its clear disposition of the
issue:

The concept of "unfair labor practice" is defined by the Labor Code as:

ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR

PROSECUTION THEREOF. – Unfair labor practices violate the constitutional right
of workers and employees to self-organization, are inimical to the legitimate
interests of both labor and management, including their right to bargain
collectively and otherwise deal with each other in an atmosphere of freedom and

201 | P a g e
 mutual respect, disrupt industrial peace and hinder the promotion of healthy and
stable labor-management relations.

x x x x.

The same code likewise provides the acts constituting unfair labor practices
committed by employers, to wit:

ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. – It shall be unlawful for

an employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their

right to self-organization;

(b) To require as a condition of employment that a person or an employee

shall not join a labor organization or shall withdraw from one to which he
belongs;

(c) To contract out services or functions being performed by union members

when such will interfere with, restrain or coerce employees in the exercise of
their right to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or
other support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership
in any labor organization. Nothing in this Code or in any other law shall stop
the parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees who are
already members of another union at the time of the signing of the collective
bargaining agreement.

Employees of an appropriate collective bargaining unit who are not members

of the recognized collective bargaining agent may be assessed a reasonable
fee equivalent to the dues and other fees paid by members of the recognized
collective bargaining agent, if such non-union members accept the benefits
under the collective agreement. Provided, That the individual authorization
required under Article 242, paragraph (o) of this Code shall not apply to the
nonmembers of the recognized collective bargaining agent; [The article
referred to is 241, not 242. – CAA]

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an

employee for having given or being about to give testimony under this Code;

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

Code;

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 (h) To pay negotiation or attorney’s fees to the union or its officers or agents
as part of the settlement of any issue in collective bargaining or any other
dispute; or

(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers

and agents of corporations associations or partnerships who have actually
participated, authorized or ratified unfair labor practices shall be held
criminally liable. (Emphasis supplied.)

Herein, Nestlé is accused of violating its duty to bargain collectively when it

purportedly imposed a pre-condition to its agreement to discuss and engage in
collective bargaining negotiations with UFE-DFA-KMU.

A meticulous review of the record and pleadings of the cases at bar shows that, of
the two notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on the
second that the ground of unfair labor practice was alleged. Worse, the 7
November 2001 Notice of Strike merely contained a general allegation that Nestlé
committed unfair labor practice by bargaining in bad faith for supposedly "setting
pre-condition in the ground rules (Retirement issue)." (Notice of Strike of 7
November 2001; Annex "C" of UFE-DFA-KMU Position Paper; DOLE original records,
p. 146.) In contrast, Nestlé, in its Position Paper, did not confine itself to the issue
of the non-inclusion of the Retirement Plan but extensively discussed its stance on
other economic matters pertaining to the CBA. It is UFE-DFA-KMU, therefore, who
had the burden of proof to present substantial evidence to support the allegation
of unfair labor practice.

A perusal of the allegations and arguments raised by UFE-DFA-KMU in the

Memorandum (in G.R. Nos. 158930-31) will readily disclose the need for the
presentation of evidence other than its bare contention of unfair labor practice in
order to make certain the propriety or impropriety of the ULP charge hurled against
Nestlé. Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor
Code:

x x x. In cases of unfair labor practices, the notice of strike shall as far

as practicable, state the acts complained of and the efforts to resolve
the dispute amicably." (Emphasis supplied.)

In the case at bar, except for the assertion put forth by UFE-DFA-KMU, neither the
second Notice of Strike nor the records of these cases substantiate a finding of
unfair labor practice. It is not enough that the union believed that the employer
committed acts of unfair labor practice when the circumstances clearly negate
even a prima facie showing to warrant such a belief. (Tiu v. National Labor
Relations Commission, G.R. No. 123276, 18 August 1997, 277 SCRA 681, 688.)

Employers are accorded rights and privileges to assure their self-determination and
independence and reasonable return of capital. (Capitol Medical Center, Inc. v.
Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) This mass of
203 | P a g e
 privileges comprises the so-called management prerogatives. (Capitol Medical
Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) In
this connection, the rule is that good faith is always presumed. As long as the
company’s exercise of the same is in good faith to advance its interest and not for
purpose of defeating or circumventing the rights of employees under the law or a
valid agreement, such exercise will be upheld. (Capitol Medical Center, Inc. v.
Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.)

There is no per se test of good faith in bargaining. (Hongkong Shanghai Banking

Corporation Employees Union v. National Labor Relations Commission, G.R. No.
125038, 6 November 1997, 281 SCRA 509, 518.) Good faith or bad faith is an
inference to be drawn from the facts. (Hongkong Shanghai Banking Corporation
Employees Union v. National Labor Relations Commission, G.R. No. 125038, 6
November 1997, 281 SCRA 509, 518.) Herein, no proof was presented to exemplify
bad faith on the part of Nestlé apart from mere allegation. Construing arguendo
that the content of the aforequoted letter of 29 May 2001 laid down a pre-condition
to its agreement to bargain with UFE-DFA-KMU, Nestlé’s inclusion in its Position
Paper of its proposals affecting other matters covered by the CBA negates the
claim of refusal to bargain or bargaining in bad faith. Accordingly, since UFE-DFA-
KMU failed to proffer substantial evidence that would overcome the legal
presumption of good faith on the part of Nestlé, the award of moral and exemplary
damages is unavailing.

As to the jurisdiction of the DOLE Secretary under the amended Notice of

Strike:

This Court is not convinced by the argument raised by UFE-DFA-KMU that the DOLE
Secretary should not have gone beyond the disagreement on the ground rules of the
CBA negotiations. The union doggedly asserts that the entire labor dispute between
herein parties concerns only the ground rules.

Lest it be forgotten, it was UFE-DFA-KMU which first alleged a bargaining deadlock as the
basis for the filing of its Notice of Strike; and at the time of the filing of the first Notice of
Strike, several conciliation conferences had already been undertaken where both parties
had already exchanged with each other their respective CBA proposals. In fact, during
the conciliation meetings before the NCMB, but prior to the filing of the notices of strike,
the parties had already delved into matters affecting the meat of the collective
bargaining agreement.

The Secretary of the DOLE simply relied on the Notices of Strike that were filed by UFE-
DFA-KMU as stated in her Order of 08 March 2002, to wit:

x x x The records disclose that the Union filed two Notices of Strike. The First is
dated October 31, 2001 whose grounds are cited verbatim hereunder:

"A. Bargaining Deadlock

1. Economic issues (specify)

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 1. Retirement

2. Panel Composition

3. Costs and Attendance

4. CBA"

The second Notice of Strike is dated November 7, 2001 and the cited ground is like
quoted verbatim below:

"B. Unfair Labor Practices (specify)

Bargaining in bad faith –

Setting pre-condition in the ground rules (Retirement issue)"

Nowhere in the second Notice of Strike is it indicated that this Notice is an amendment to
and took the place of the first Notice of Strike. In fact, our Assumption of Jurisdiction
Order dated November 29, 2001 specifically cited the two (2) Notices of Strike without
any objection on the part of the Union x x x.29

Had the parties not been at the stage where the substantive provisions of the proposed
CBA had been put in issue, the union would not have based thereon its initial notice to
strike. This Court maintains its original position in the Decision that, based on the Notices
of Strike filed by UFE-DFA-KMU, the Secretary of the DOLE rightly decided on matters of
substance. That the union later on changed its mind is of no moment because to give
premium to such would make the legally mandated discretionary power of the Dole
Secretary subservient to the whims of the parties.

As to the point of clarification on the resumption of negotiations respecting

the Retirement Plan:

As for the supposed confusion or uncertainty of the dispositive part of this Court’s
Decision, Nestle moves for clarification of the statement – "The parties are directed to
resume negotiations respecting the Retirement Plan and to take action consistent with
the discussion hereinabove set forth. No costs." The entire fallo of this Court’s Decision
reads:

WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking
that Nestlé be declared to have committed unfair labor practice in allegedly setting
a precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45,
however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of
Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE
gravely abused her discretion in failing to confine her assumption of jurisdiction
power over the ground rules of the CBA negotiations; but the ruling of the Court of
Appeals on the inclusion of the Retirement Plan as a valid issue in the collective
bargaining negotiations between UFE-DFA-KMU and Nestlé is AFFIRMED. The

205 | P a g e
 parties are directed to resume negotiations respecting the Retirement Plan and to
take action consistent with the discussions hereinabove set forth. No costs.

Nestle interprets the foregoing as an order for the parties to resume negotiations
by themselves respecting the issue of retirement benefits due the employees of the
Cabuyao Plant. Otherwise stated, Nestle posits that the dispositive part of the Decision
directs the parties to submit to a voluntary mode of dispute settlement.

A read-through of this Court’s Decision reveals that the ambiguity is more ostensible
than real. This Court’s Decision of 22 August 2006 designated marked boundaries as to
the implications of the assailed Orders of the Secretary of the DOLE. We said therein that
1) the Retirement Plan is still a valid issue for herein parties’ collective bargaining
negotiations; 2) the Court of Appeals committed reversible error in limiting to the issue of
the ground rules the scope of the power of the Secretary of Labor to assume jurisdiction
over the subject labor dispute; and 3) Nestlé is not guilty of unfair labor practice.
Nowhere in our Decision did we require parties to submit to negotiate by themselves the
tenor of the retirement benefits of the concerned employees of Nestlé, precisely because
the Secretary of the DOLE had already assumed jurisdiction over the labor dispute
subject of herein petitions. Again, we spell out what encompass the Secretary’s
assumption of jurisdiction power. The Secretary of the DOLE has been explicitly granted
by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor
dispute causing or likely to cause a strike or lockout in an industry indispensable to the
national interest, and decide the same accordingly. And, as a matter of necessity, it
includes questions incidental to the labor dispute; that is, issues that are necessarily
involved in the dispute itself, and not just to that ascribed in the Notice of Strike or
otherwise submitted to him for resolution. In the case at bar, the issue of retirement
benefits was specifically what was presented before the Secretary of the DOLE; hence,
We reject Nestlé’s interpretation. Our decision is crystal and cannot be interpreted any
other way. The Secretary having already assumed jurisdiction over the labor dispute
subject of these consolidated petitions, the issue concerning the retirement benefits of
the concerned employees must be remanded back to him for proper disposition.

All told, in consideration of the points afore-discussed and the fact that no substantial
arguments have been raised by either party, this Court remains unconvinced that it
should modify or reverse in any way its disposition of herein cases in its earlier Decision.
The labor dispute between the Nestle and UFE-DFA-KMU has dragged on long enough. As
no other issues are availing, let this Resolution write an ending to the protracted labor
dispute between Nestlé and UFE-DFA-KMU (Cabuyao Division).

WHEREFORE, premises considered, the basic issues of the case having been passed
upon and there being no new arguments availing, the Motion for Partial Reconsideration
is hereby DENIED WITH FINALITY for lack of merit. Let these cases be remanded to the
Secretary of the Department of Labor and Employment for proper disposition, consistent
with the discussions in this Court’s Decision of 22 August 2006 and as hereinabove set
forth. No costs.

SO ORDERED.

G.R. No. 79255 January 20, 1992

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UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ
PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.

Jose C. Espinas for petitioner.

Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel from the holiday pay
award and the change of the divisor in the computation of benefits from 251 to 261
days.

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a
ruling on its rights and obligations respecting claims of its monthly paid employees for
holiday pay in the light of the Court's decision in Chartered Bank Employees Association
v. Ople (138 SCRA 273 [1985]).

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for
voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.

On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:

pay its monthly paid employees holiday pay pursuant to Article 94 of the
Code, subject only to the exclusions and limitations specified in Article 82
and such other legal restrictions as are provided for in the Code. (Rollo,
p. 31)

Filipro filed a motion for clarification seeking (1) the limitation of the award to three
years, (2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers
and medical representatives (hereinafter referred to as sales personnel) from the award
of the holiday pay, and (3) deduction from the holiday pay award of overpayment for
overtime, night differential, vacation and sick leave benefits due to the use of 251
divisor. (Rollo, pp. 138-145)

Petitioner UFE answered that the award should be made effective from the date of
effectivity of the Labor Code, that their sales personnel are not field personnel and are
therefore entitled to holiday pay, and that the use of 251 as divisor is an established
employee benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the
effectivity of the holiday pay award shall retroact to November 1, 1974, the date of
effectivity of the Labor Code. He adjudged, however, that the company's sales personnel
are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that
207 | P a g e
with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261
and ordered the reimbursement of overpayment for overtime, night differential, vacation
and sick leave pay due to the use of 251 days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration.
Respondent Arbitrator treated the two motions as appeals and forwarded the case to the
NLRC which issued a resolution dated May 25, 1987 remanding the case to the
respondent arbitrator on the ground that it has no jurisdiction to review decisions in
voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by
Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules
implementing B.P. Blg. 130.

However, in a letter dated July 6, 1987, the respondent arbitrator refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as
arbitrator because he had resigned from service effective May 1, 1986.

Hence, this petition.

The petitioner union raises the following issues:

1) Whether or not Nestle's sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should be
changed from 251 to 261 days and whether or not the previous use of 251 as divisor
resulted in overpayment for overtime, night differential, vacation and sick leave pay.

The petitioner insists that respondent's sales personnel are not field personnel under
Article 82 of the Labor Code. The respondent company controverts this assertion.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agritultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable certainty."

The controversy centers on the interpretation of the clause "whose actual hours of work
in the field cannot be determined with reasonable certainty."

It is undisputed that these sales personnel start their field work at 8:00 a.m. after having
reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are
Makati-based.

The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel's working hours which can be determined with reasonable
certainty.

The Court does not agree. The law requires that the actual hours of work in the field be
reasonably ascertained. The company has no way of determining whether or not these
sales personnel, even if they report to the office before 8:00 a.m. prior to field work and
come back at 4:30 p.m, really spend the hours in between in actual field work.
208 | P a g e
We concur with the following disquisition by the respondent arbitrator:

The requirement for the salesmen and other similarly situated employees to
report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is
not within the realm of work in the field as defined in the Code but an
exercise of purely management prerogative of providing administrative
control over such personnel. This does not in any manner provide a
reasonable level of determination on the actual field work of the employees
which can be reasonably ascertained. The theoretical analysis that salesmen
and other similarly-situated workers regularly report for work at 8:00 a.m.
and return to their home station at 4:00 or 4:30 p.m., creating the
assumption that their field work is supervised, is surface projection. Actual
field work begins after 8:00 a.m., when the sales personnel follow their field
itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report
back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m.
comprises their hours of work in the field, the extent or scope and result of
which are subject to their individual capacity and industry and which "cannot
be determined with reasonable certainty." This is the reason why effective
supervision over field work of salesmen and medical representatives, truck
drivers and merchandisers is practically a physical impossibility.
Consequently, they are excluded from the ten holidays with pay award.
(Rollo, pp. 36-37)

Moreover, the requirement that "actual hours of work in the field cannot be determined
with reasonable certainty" must be read in conjunction with Rule IV, Book III of the
Implementing Rules which provides:

Rule IV Holidays with Pay

Sec. 1. Coverage — This rule shall apply to all employees except:

xxx xxx xxx

(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)

While contending that such rule added another element not found in the law (Rollo, p.
13), the petitioner nevertheless attempted to show that its affected members are not
covered by the abovementioned rule. The petitioner asserts that the company's sales
personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule
and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).

Contrary to the contention of the petitioner, the Court finds that the aforementioned rule
did not add another element to the Labor Code definition of field personnel. The clause
"whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty." The former clause is still within the
scope and purview of Article 82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours in the field can be determined with
209 | P a g e
reasonable certainty, query must be made as to whether or not such employee's time
and performance is constantly supervised by the employer.

The SOD schedule adverted to by the petitioner does not in the least signify that these
sales personnel's time and performance are supervised. The purpose of this schedule is
merely to ensure that the sales personnel are out of the office not later than 8:00 a.m.
and are back in the office not earlier than 4:00 p.m.

Likewise, the Court fails to see how the company can monitor the number of actual hours
spent in field work by an employee through the imposition of sanctions on absenteeism
contained in the company circular of March 15, 1984.

The petitioner claims that the fact that these sales personnel are given incentive bonus
every quarter based on their performance is proof that their actual hours of work in the
field can be determined with reasonable certainty.

The Court thinks otherwise.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume
based on sales target; (2) good collection performance; (3) proper compliance with good
market hygiene; (4) good merchandising work; (5) minimal market returns; and (6)
proper truck maintenance. (Rollo, p. 190).

The above criteria indicate that these sales personnel are given incentive bonuses
precisely because of the difficulty in measuring their actual hours of field work. These
employees are evaluated by the result of their work and not by the actual hours of field
work which are hardly susceptible to determination.

In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the
Court had occasion to discuss the nature of the job of a salesman. Citing the case
of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:

The reasons for excluding an outside salesman are fairly apparent. Such a
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little, within
the range of his ability, as his ambition dictates. In lieu of overtime he
ordinarily receives commissions as extra compensation. He works away from
his employer's place of business, is not subject to the personal supervision of
his employer, and his employer has no way of knowing the number of hours
he works per day.

While in that case the issue was whether or not salesmen were entitled to overtime pay,
the same rationale for their exclusion as field personnel from holiday pay benefits also
applies.

The petitioner union also assails the respondent arbitrator's ruling that, concomitant with
the award of holiday pay, the divisor should be changed from 251 to 261 days to include
the additional 10 holidays and the employees should reimburse the amounts overpaid by
Filipro due to the use of 251 days' divisor.
210 | P a g e
Arbitrator Vivar's rationale for his decision is as follows:

. . . The new doctrinal policy established which ordered payment of ten

holidays certainly adds to or accelerates the basis of conversion and
computation by ten days. With the inclusion of ten holidays as paid days, the
divisor is no longer 251 but 261 or 262 if election day is counted. This is
indeed an extremely difficult legal question of interpretation which accounts
for what is claimed as falling within the concept of "solutio indebti."

When the claim of the Union for payment of ten holidays was granted, there
was a consequent need to abandon that 251 divisor. To maintain it would
create an impossible situation where the employees would benefit with
additional ten days with pay but would simultaneously enjoy higher benefits
by discarding the same ten days for purposes of computing overtime and
night time services and considering sick and vacation leave credits.
Therefore, reimbursement of such overpayment with the use of 251 as
divisor arises concomitant with the award of ten holidays with pay. (Rollo, p.
34)

The divisor assumes an important role in determining whether or not holiday pay is
already included in the monthly paid employee's salary and in the computation of his
daily rate. This is the thrust of our pronouncement in Chartered Bank Employees
Association v. Ople (supra). In that case, We held:

It is argued that even without the presumption found in the rules and in the
policy instruction, the company practice indicates that the monthly salaries
of the employees are so computed as to include the holiday pay provided by
law. The petitioner contends otherwise.

One strong argument in favor of the petitioner's stand is the fact that the
Chartered Bank, in computing overtime compensation for its employees,
employs a "divisor" of 251 days. The 251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten (10) legal holidays from the
total number of calendar days in a year. If the employees are already paid for
all non-working days, the divisor should be 365 and not 251.

In the petitioner's case, its computation of daily ratio since September 1, 1980, is as
follows:

monthly rate x 12 months

———————————

251 days

Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor
by respondent Filipro indicates that holiday pay is not yet included in the employee's
salary, otherwise the divisor should have been 261.

211 | P a g e
It must be stressed that the daily rate, assuming there are no intervening salary
increases, is a constant figure for the purpose of computing overtime and night
differential pay and commutation of sick and vacation leave credits. Necessarily, the
daily rate should also be the same basis for computing the 10 unpaid holidays.

The respondent arbitrator's order to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the prohibition on non-diminution of
benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the
divisor is adjusted to 261 days, then the dividend, which represents the employee's
annual salary, should correspondingly be increased to incorporate the holiday pay. To
illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100,
then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10
days' holiday pay, his annual salary already includes holiday pay and totals P26,100
(P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus
no merit in respondent Nestle's claim of overpayment of overtime and night differential
pay and sick and vacation leave benefits, the computation of which are all based on the
daily rate, since the daily rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use
of 251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September
1, 1980, when the company was on a 6-day working schedule, the divisor used by the
company was 303, indicating that the 10 holidays were likewise not paid. When Filipro
shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify
its error, if ever there was one but did not do so. It is now too late to allege payment by
mistake.

Nestle also questions the voluntary arbitrator's ruling that holiday pay should be
computed from November 1, 1974. This ruling was not questioned by the petitioner
union as obviously said decision was favorable to it. Technically, therefore, respondent
Nestle should have filed a separate petition raising the issue of effectivity of the holiday
pay award. This Court has ruled that an appellee who is not an appellant may assign
errors in his brief where his purpose is to maintain the judgment on other grounds, but
he cannot seek modification or reversal of the judgment or affirmative relief unless he
has also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing
La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA
394 [1986]). Nevertheless, in order to fully settle the issues so that the execution of the
Court's decision in this case may not be needlessly delayed by another petition, the
Court resolved to take up the matter of effectivity of the holiday pay award raised by
Nestle.

Nestle insists that the reckoning period for the application of the holiday pay award is
1985 when the Chartered Bank decision, promulgated on August 28, 1985, became final
and executory, and not from the date of effectivity of the Labor Code. Although the Court
does not entirely agree with Nestle, we find its claim meritorious.

In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663
[1984], hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule
212 | P a g e
IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the then
Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which
excluded monthly paid employees from holiday pay benefits, are null and void. The Court
therein reasoned that, in the guise of clarifying the Labor Code's provisions on holiday
pay, the aforementioned implementing rule and policy instruction amended them by
enlarging the scope of their exclusion. The Chartered Bank case reiterated the above
ruling and added the "divisor" test.

However, prior to their being declared null and void, the implementing rule and policy
instruction enjoyed the presumption of validity and hence, Nestle's non-payment of the
holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was in
compliance with these presumably valid rule and policy instruction.

In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court
discussed the effect to be given to a legislative or executive act subsequently declared
invalid:

xxx xxx xxx

. . . It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to
be complied with. This is so as until after the judiciary, in an appropriate
case, declares its invalidity, it is entitled to obedience and respect. Parties
may have acted under it and may have changed their positions. What could
be more fitting than that in a subsequent litigation regard be had to what has
been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that
prior to its being nullified, its existence as a fact must be reckoned with. This
is merely to reflect awareness that precisely because the judiciary is the
government organ which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have elapsed before it can
exercise the power of judicial review that may lead to a declaration of nullity.
It would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual

existence of a statute, prior to such a determination of [unconstitutionality],
is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The
effect of the subsequent ruling as to invalidity may have to be considered in
various aspects, — with respect to particular relations, individual and
corporate, and particular conduct, private and official." (Chicot County
Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language
has been quoted with approval in a resolution in Araneta v. Hill (93 Phil. 1002
[1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738
[1956]). An even more recent instance is the opinion of Justice Zaldivar
speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095
[1967]. (At pp. 434-435)

213 | P a g e
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue
harshness and resulting unfairness must be avoided. It is now almost the end of 1991. To
require various companies to reach back to 1975 now and nullify acts done in good faith
is unduly harsh. 1984 is a fairer reckoning period under the facts of this case.

Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle,
relying on the implicit validity of the implementing rule and policy instruction before this
Court nullified them, and thinking that it was not obliged to give holiday pay benefits to
its monthly paid employees, may have been moved to grant other concessions to its
employees, especially in the collective bargaining agreement. This possibility is bolstered
by the fact that respondent Nestle's employees are among the highest paid in the
industry. With this consideration, it would be unfair to impose additional burdens on
Nestle when the non-payment of the holiday benefits up to 1984 was not in any way
attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the date
of promulgation of the Chartered Bank case nor from the date of effectivity of the Labor
Code, but from October 23, 1984, the date of promulgation of the IBAA case.

WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be
used in computing holiday pay shall be 251 days. The holiday pay as above directed
shall be computed from October 23, 1984. In all other respects, the order of the
respondent arbitrator is hereby AFFIRMED.

SO ORDERED.

[G.R. No. 146728. February 11, 2004]

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.

214 | P a g e
 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.

215 | P a g e
 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:
I
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

216 | P a g e
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 setest of good faith in bargaining.[9] Good faith or bad faith is an inference to be

217 | P a g e
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

218 | P a g e
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

219 | P a g e
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.

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

220 | P a g e
 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.

221 | P a g e
 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.

222 | P a g e
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] onFebruary 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

223 | P a g e
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

224 | P a g e
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,
225 | P a g e
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
226 | P a g e
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
227 | P a g e
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
228 | P a g e
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.

229 | P a g e
 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.

230 | P a g e
 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.

231 | P a g e
 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

232 | P a g e
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.

EMPLOYEES UNION OF BAYER G.R. No. 162943

PHILS., FFW and JUANITO S. Present:
FACUNDO, in his capacity as
President, CARPIO MORALES, J.,
Petitioners, Chairperson,
BRION,
BERSAMIN,
- versus - VILLARAMA, JR., and
SERENO, JJ.

BAYER PHILIPPINES, INC.,

DIETER J. LONISHEN Promulgated:
(President), ASUNCION AMISTO
SO (HRD Manager), AVELINA December 6, 2010
REMIGIO AND ANASTACIA
VILLAREAL,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

This petition for review on certiorari assails the Decision[1] dated December 15, 2003 and
Resolution[2] dated March 23, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 73813.

Petitioner Employees Union of Bayer Philippines [3] (EUBP) is the exclusive bargaining
agent of all rank-and-file employees of Bayer Philippines (Bayer), and is an affiliate of the

233 | P a g e
Federation of Free Workers (FFW). In 1997, EUBP, headed by its president Juanito S.
Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining
agreement (CBA). During the negotiations, EUBP rejected Bayers 9.9% wage-increase
proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a strike,
prompting the Secretary of the Department of Labor and Employment (DOLE) to assume
jurisdiction over the dispute.

In November 1997, pending the resolution of the dispute, respondent Avelina Remigio
(Remigio) and 27 other union members, without any authority from their union leaders,
accepted Bayers wage-increase proposal. EUBPs grievance committee questioned
Remigios action and reprimanded Remigio and her allies. On January 7, 1998, the DOLE
Secretary issued an arbitral award ordering EUBP and Bayer to execute a CBA retroactive
to January 1, 1997 and to be made effective until December 31, 2001. The said
CBA[4] was registered on July 8, 1998 with the Industrial Relations Division of the DOLE-
National Capital Region (NCR).[5]

Meanwhile, the rift between Facundos leadership and Remigios group broadened. On
August 3, 1998, barely six months from the signing of the new CBA, during a company-
sponsored seminar,[6] Remigio solicited signatures from union members in support of a
resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2)
rename the union as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt
a new constitution and by-laws for the union, (4) abolish all existing officer positions in
the union and elect a new set of interim officers, and (5) authorize REUBP to administer
the CBA between EUBP and Bayer. [7] The said resolution was signed by 147 of the 257
local union members. A subsequent resolution was also issued affirming the first
resolution.[8]

A tug-of-war then ensued between the two rival groups, with both seeking recognition
from Bayer and demanding remittance of the union dues collected from its rank-and-file
members. On September 8, 1998, Remigios splinter group wrote Facundo, FFW and
Bayer informing them of the decision of the majority of the union members to disaffiliate
from FFW.[9] This was followed by another letter informing Facundo, FFW and Bayer that
an interim set of REUBP executive officers and board of directors had been appointed,
and demanding the remittance of all union dues to REUBP. Remigio also asked Bayer to
desist from further transacting with EUBP. Facundo, meanwhile, sent similar requests to
Bayer[10] requesting for the remittance of union dues in favor of EUBP and accusing the
company of interfering with purely union matters. [11] Bayer responded by deciding not to

234 | P a g e
deal with either of the two groups, and by placing the union dues collected in a trust
account until the conflict between the two groups is resolved.[12]

On September 15, 1998, EUBP filed a complaint for unfair labor practice (first ULP
complaint) against Bayer for non-remittance of union dues. The case was docketed as
NLRC-NCR-Case No. 00-09-07564-98.[13]

EUBP later sent a letter dated November 5, 1998 to Bayer asking for a grievance
conference.[14] The meeting was conducted by the management on November 11, 1998,
with all REUBP officers including their lawyers present. Facundo did not attend the
meeting, but sent two EUBP officers to inform REUBP and the management that a
preventive mediation conference between the two groups has been scheduled
on November 12, 1998 before the National Conciliation and Mediation Board (NCMB).[15]

Apparently, the two groups failed to settle their issues as Facundo again sent respondent
Dieter J. Lonishen two more letters, dated January 14, 1999[16] and September 2, 1999,
[17]
asking for a grievance meeting with the management to discuss the failure of the
latter to comply with the terms of their CBA. Both requests remained unheeded.

On February 9, 1999, while the first ULP case was still pending and despite EUBPs
repeated request for a grievance conference, Bayer decided to turn over the collected
union dues amounting to P254,857.15 to respondent Anastacia Villareal, Treasurer of
REUBP.

Aggrieved by the said development, EUBP lodged a complaint [18] on March 4,

1999 against Remigios group before the Industrial Relations Division of the DOLE praying
for their expulsion from EUBP for commission of acts that threaten the life of the union.

On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint
for lack of jurisdiction.[19] The Arbiter explained that the root cause for Bayers failure to
remit the collected union dues can be traced to the intra-union conflict between EUBP
and Remigios group[20] and that the charges imputed against Bayer should have been
submitted instead to voluntary arbitration.[21] EUBP did not appeal the said decision.[22]

On December 14, 1999, petitioners filed a second ULP complaint against herein
respondents docketed as NLRC-RAB-IV Case No. 12-11813-99-L. Three days later,
petitioners amended the complaint charging the respondents with unfair labor practice
committed by organizing a company union, gross violation of the CBA and violation of
235 | P a g e
their duty to bargain.[23] Petitioners complained that Bayer refused to remit the collected
union dues to EUBP despite several demands sent to the management. [24] They also
alleged that notwithstanding the requests sent to Bayer for a renegotiation of the last
two years of the 1997-2001 CBA between EUBP and Bayer, the latter opted to negotiate
instead with Remigios group.[25]

On even date, REUBP and Bayer agreed to sign a new CBA. Remigio immediately
informed her allies of the managements decision.[26]

In response, petitioners immediately filed an urgent motion for the issuance of a

restraining order/injunction[27] before the National Labor Relations Commission (NLRC)
and the Labor Arbiter against respondents. Petitioners asserted their authority as the
exclusive bargaining representative of all rank-and-file employees of Bayer and asked
that a temporary restraining order be issued against Remigios group and Bayer to
prevent the employees from ratifying the new CBA. Later, petitioners filed a second
amended complaint[28] to include in its complaint the issue of gross violation of the CBA
for violation of the contract bar rule following Bayers decision to negotiate and sign a
new CBA with Remigios group.

Meanwhile, on January 26, 2000, the Regional Director of the Industrial Relations Division
of DOLE issued a decision dismissing the issue on expulsion filed by EUBP against
Remigio and her allies for failure to exhaust reliefs within the union and ordering the
conduct of a referendum to determine which of the two groups should be recognized as
union officers.[29] EUBP seasonably appealed the said decision to the Bureau of Labor
Relations (BLR).[30] On June 16, 2000, the BLR reversed the Regional Directors ruling and
ordered the management of Bayer to respect the authority of the duly-elected officers of
EUBP in the administration of the prevailing CBA.[31]

Unfortunately, the said BLR ruling came late since Bayer had already signed a new
CBA[32] with REUBP on February 21, 2000. The said CBA was eventually ratified by
majority of the bargaining unit.[33]

On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs second ULP
complaint for lack of jurisdiction.[34] The Labor Arbiter explained the dismissal as follows:
All told, were it not for the fact that there were two (2) [groups] of
employees, the Union led by its President Juanito Facundo and the members
who decided to disaffiliate led by Ms. Avelina Remigio, claiming to be the
rightful representative of the rank and file employees, the Company would

236 | P a g e
 not have acted the way it did and the Union would not have filed the instant
case.

Clearly then, as the case involves intra-union disputes, this Office is bereft of
any jurisdiction pursuant to Article 226 of the Labor Code, as amended,
which provides pertinently in part, thus:

Bureau of Labor Relations The Bureau of Labor Relations and the

Labor Relations Divisions in the regional offices of the
Department of Labor and Employment shall have original and
exclusive authority to act, at their own initiative or upon request
of either or both parties, on all inter-union and intra-union
conflicts, and all disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces whether
agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance procedure
and/or voluntary arbitration.
Specifically, with respect to the union dues, the authority is the case of Cebu
Seamens Association[,] Inc. vs. Ferrer-Calleja, (212 SCRA 51), where the
Supreme Court held that when the issue calls for the determination of which
between the two groups within a union is entitled to the union dues, the
same cannot be taken cognizance of by the NLRC.

xxxx

WHEREFORE, premises considered, the instant complaint is hereby

DISMISSED on the ground of lack of jurisdiction.

SO ORDERED.[35]

On June 28, 2000, the NLRC resolved to dismiss [36] petitioners motion for a restraining
order and/or injunction stating that the subject matter involved an intra-union dispute,
over which the said Commission has no jurisdiction.[37]

Aggrieved by the Labor Arbiters decision to dismiss the second ULP complaint,
petitioners appealed the said decision, but the NLRC denied the appeal. [38] EUBPs motion
for reconsideration was likewise denied.[39]

Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003, the CA
sustained both the Labor Arbiter and the NLRCs rulings. The appellate court explained,

A cursory reading of the three pleadings, to wit: the Complaint (Vol. I, Rollo,
p[p]. 166-167); the Amended Complaint (Vol. I, Rollo[,] pp. 168-172) and
the Second Amended Complaint dated March 8, 2000 (Vol. II, Rollo, pp. 219-
225) will readily show that the instant case was brought about by the action

237 | P a g e
 of the Group of REM[I]GIO to disaffiliate from FFW and to organized (sic)
REUBP under the tutelage of REM[I]GIO and VILLAREAL. At first glance of the
case at bar, it involves purely an (sic) inter-union and intra-union conflicts or
disputes between EUBP-FFW and REUBP which issue should have been
resolved by the Bureau of Labor Relations under Article 226 of the Labor
Code. However, since no less than petitioners who admitted that
respondents committed gross violations of the CBA, then the BLR is divested
of jurisdiction over the case and the issue should have been referred to the
Grievance Machinery and Voluntary Arbitrator and not to the Labor Arbiter as
what petitioners did in the case at bar. x x x

xxxx

Furthermore, the CBA entered between BAYER and EUBP-FFW [has] a life
span of only five years and after the said period, the employees have all the
right to change their bargaining unit who will represent them. If there exist[s]
two opposing unions in the same company, the remedy is not to declare that
such act is considered unfair labor practice but rather they should conduct a
certification election provided [that] it should be conducted within 60 days of
the so[-]called freedom period before the expiration of the CBA.

WHEREFORE, premises considered, this Petition is DENIED and the assailed

Decision dated September 27, 2001 as well as the Order dated June 21,
2002, denying the motion for reconsideration, by the National Labor
Relations Commission, First Division, in NLRC Case No. RAB-IV-12-11813-
99-L, are hereby AFFIRMED in toto. Costs against petitioners.

SO ORDERED.[40]

Undaunted, petitioners filed this Rule 45 petition before this Court. Initially, the said
petition was denied for having been filed out of time and for failure to comply with the
requirements provided in the 1997 Rules of Civil Procedure, as amended.[41] Upon
petitioners motion, however, we decided to reinstate their appeal.

The following are the issues raised by petitioners, to wit:

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT

THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND
RESOLUTION PROMULGATED ON 23 MARCH 2004, DECIDED THE CASE IN
ACCORDANCE WITH LAW AND JURISPRUDENCE; AND

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT

THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND
RESOLUTION PROMULGATED ON 23 MARCH 2004, GRAVELY ABUSE[D]
ITS DISCRETION IN ITS FINDINGS AND CONCLUSION THAT:

THE ACTS OF ABETTING OR ASSISTING IN THE CREATION OF

ANOTHER UNION, NEGOTIATING OR BARGAINING WITH SUCH
238 | P a g e
 UNION, WHICH IS NOT THE SOLE AND EXCLUSIVE BARGAINING
AGENT, VIOLATING THE DUTY TO BARGAIN COLLECTIVELY,
REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE GRIEVANCE
MACHINERY AND/OR REFUSAL TO DEAL WITH THE SOLE AND
EXCLUSIVE BARGAINING AGENT ARE ACTS CONSTITUTING OR
TANTAMOUNT TO UNFAIR LABOR PRACTICE.[42]

Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues as follows:

I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF APPEALS,

THE NLRC AND THE LABOR ARBITER ARE BINDING ON THIS HONORABLE
COURT;

II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE
JURISDICTION OVER THE INSTANT CASE;

III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION

DISPUTE;

IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND AMISTOSO

COMMITTED AN ACT OF UNFAIR LABOR PRACTICE; AND

V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND

ACADEMIC.[43]

Essentially, the issue in this petition is whether the act of the management of Bayer in
dealing and negotiating with Remigios splinter group despite its validly existing CBA with
EUBP can be considered unfair labor practice and, if so, whether EUBP is entitled to any
relief.

Petitioners argue that the subject matter of their complaint, as well as the subsequent
amendments thereto, pertain to the unfair labor practice act of respondents Bayer,
Lonishen and Amistoso in dealing with Remigios splinter union. They contend that (1) the
acts of abetting or assisting in the creation of another union is among those considered
by the Labor Code, as amended, specifically under Article 248 (d) [44] thereof, as unfair
labor practice; (2) the act of negotiating with such union constitutes a violation of Bayers
duty to bargain collectively; and (3) Bayers unjustified refusal to process EUBPs
grievances and to recognize the said union as the sole and exclusive bargaining agent
are tantamount to unfair labor practice.[45]

Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that there can
be no unfair labor practice on their part since the requisites for unfair labor practice i.e.,
that the violation of the CBA should be gross, and that it should involve violation in the

239 | P a g e
economic provisions of the CBA were not satisfied. Moreover, they cite the ruling of the
Labor Arbiter that the issues raised in the complaint should have been ventilated and
threshed out before the voluntary arbitrators as provided in Article 261 of the Labor
Code, as amended.[46] Respondents Remigio and Villareal, meanwhile, point out that the
case should be dismissed as against them since they are not real parties in interest in
the ULP complaint against Bayer,[47] and since there are no specific or material acts
imputed against them in the complaint.[48]

The petition is partly meritorious.

An intra-union dispute refers to any conflict between and among union members,
including grievances arising from any violation of the rights and conditions of
membership, violation of or disagreement over any provision of the unions constitution
and by-laws, or disputes arising from chartering or disaffiliation of the union. [49] Sections
1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate
the following circumstances as inter/intra-union disputes, viz:

RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES

SECTION 1. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its
members or by another labor organization;
(b) conduct of election of union and workers association
officers/nullification of election of union and workers association
officers;
(c) audit/accounts examination of union or workers association
funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union
membership;
(g) validity/invalidity of impeachment/expulsion of union and
workers association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or
workers association constitution and by-laws;

240 | P a g e
 (k) disagreements over chartering or registration of labor
organizations and collective bargaining agreements;
(l) violations of the rights and conditions of union or workers
association membership;
(m) violations of the rights of legitimate labor organizations, except
interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to self-
organization, union membership and collective bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers
association.

SECTION 2. Coverage. Other related labor relations disputes shall

include any conflict between a labor union and the employer or any
individual, entity or group that is not a labor organization or workers
association. This includes: (1) cancellation of registration of unions and
workers associations; and (2) a petition for interpleader.

It is clear from the foregoing that the issues raised by petitioners do not fall under
any of the aforementioned circumstances constituting an intra-union dispute. More
importantly, the petitioners do not seek a determination of whether it is the Facundo
group (EUBP) or the Remigio group (REUBP) which is the true set of union officers.
Instead, the issue raised pertained only to the validity of the acts of management in light
of the fact that it still has an existing CBA with EUBP. Thus as to Bayer, Lonishen and
Amistoso the question was whether they were liable for unfair labor practice, which issue
was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was
therefore erroneous.

However, as to respondents Remigio and Villareal, we find that petitioners

complaint was validly dismissed.

Petitioners ULP complaint cannot prosper as against respondents Remigio and

Villareal because the issue, as against them, essentially involves an intra-union dispute
based on Section 1 (n) of DOLE Department Order No. 40-03. To rule on the validity or
illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the issues
respecting the propriety of their disaffiliation and the legality of the establishment of
REUBP issues that are outside the scope of their jurisdiction. Accordingly, the dismissal of
the complaint was validly made, but only with respect to these two respondents.

241 | P a g e
 But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score,
we find that the evidence supports an answer in the affirmative.

It must be remembered that a CBA is entered into in order to foster stability and
mutual cooperation between labor and capital. An employer should not be allowed to
rescind unilaterally its CBA with the duly certified bargaining agent it had previously
contracted with, and decide to bargain anew with a different group if there is no
legitimate reason for doing so and without first following the proper procedure. If such
behavior would be tolerated, bargaining and negotiations between the employer and the
union will never be truthful and meaningful, and no CBA forged after arduous
negotiations will ever be honored or be relied upon. Article 253 of the Labor Code, as
amended, plainly provides:

ART. 253. Duty to bargain collectively when there exists a collective

bargaining agreement. Where there is a collective bargaining
agreement, the duty to bargain collectively shall also mean that
neither party shall terminate or modify such agreement during its
lifetime. However, either party can serve a written notice to terminate or
modify the agreement at least sixty (60) days prior to its expiration date. 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 and/or until a new agreement is reached by the parties.
(Emphasis supplied.)

This is the reason why it is axiomatic in labor relations that a CBA entered into by a
legitimate labor organization that has been duly certified as the exclusive bargaining
representative and the employer becomes the law between them. Additionally, in the
Certificate of Registration[50] issued by the DOLE, it is specified that the registered CBA
serves as the covenant between the parties and has the force and effect of law between
them during the period of its duration. Compliance with the terms and conditions of the
CBA is mandated by express policy of the law primarily to afford protection to
labor[51] and to promote industrial peace. Thus, when a valid and binding CBA had been
entered into by the workers and the employer, the latter is behooved to observe the
terms and conditions thereof bearing on union dues and representation. [52] If the
employer grossly violates its CBA with the duly recognized union, the former may be held
administratively and criminally liable for unfair labor practice.[53]

Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot constitute
unfair labor practice as the same did not involve gross violations in the economic

242 | P a g e
provisions of the CBA, citing the provisions of Articles 248 (1) and 261 [54] of the Labor
Code, as amended.[55] Their argument is, however, misplaced.

Indeed, in Silva v. National Labor Relations Commission,[56] we explained the

correlations of Article 248 (1) and Article 261 of the Labor Code to mean that for a ULP
case to be cognizable by the Labor Arbiter, and for the NLRC to exercise appellate
jurisdiction thereon, the allegations in the complaint must show prima facie the
concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation
pertains to the economic provisions of the CBA.[57]

This pronouncement in Silva, however, should not be construed to apply to

violations of the CBA which can be considered as gross violations per se, such as utter
disregard of the very existence of the CBA itself, similar to what happened in this case.
When an employer proceeds to negotiate with a splinter union despite the existence of
its valid CBA with the duly certified and exclusive bargaining agent, the former
indubitably abandons its recognition of the latter and terminates the entire CBA.

Respondents cannot claim good faith to justify their acts. They knew that Facundos group
represented the duly-elected officers of EUBP. Moreover, they were cognizant of the fact
that even the DOLE Secretary himself had recognized the legitimacy of EUBPs mandate
by rendering an arbitral award ordering the signing of the 1997-2001 CBA between Bayer
and EUBP. Respondents were likewise well-aware of the pendency of the intra-union
dispute case, yet they still proceeded to turn over the collected union dues to REUBP and
to effusively deal with Remigio. The totality of respondents conduct, therefore, reeks with
anti-EUBP animus.

Bayer, Lonishen and Amistoso argue that the case is already moot and academic
following the lapse of the 1997-2001 CBA and their renegotiation with EUBP for the 2006-
2007 CBA. They also reason that the act of the company in negotiating with EUBP for the
2006-2007 CBA is an obvious recognition on their part that EUBP is now the certified
collective bargaining agent of its rank-and-file employees.[58]

We do not agree. First, a legitimate labor organization cannot be construed to have

abandoned its pending claim against the management/employer by returning to the
negotiating table to fulfill its duty to represent the interest of its members, except when
the pending claim has been expressly waived or compromised in its subsequent
negotiations with the management. To hold otherwise would be tantamount to subjecting
industrial peace to the precondition that previous claims that labor may have against
capital must first be waived or abandoned before negotiations between them may
243 | P a g e
resume. Undoubtedly, this would be against public policy of affording protection to labor
and will encourage scheming employers to commit unlawful acts without fear of being
sanctioned in the future.

Second, that the management of Bayer decided to recognize EUBP as the certified
collective bargaining agent of its rank-and-file employees for purposes of its 2006-2007
CBA negotiations is of no moment. It did not obliterate the fact that the management of
Bayer had withdrawn its recognition of EUBP and supported REUBP during the
tumultuous implementation of the 1997-2001 CBA. Such act of interference which is
violative of the existing CBA with EUBP led to the filing of the subject complaint.

On the matter of damages prayed for by the petitioners, we have held that as a
general rule, a corporation cannot suffer nor be entitled to moral damages. A
corporation, and by analogy a labor organization, being an artificial person and having
existence only in legal contemplation, has no feelings, no emotions, no senses; therefore,
it cannot experience physical suffering and mental anguish. Mental suffering can be
experienced only by one having a nervous system and it flows from real ills, sorrows, and
griefs of life all of which cannot be suffered by an artificial, juridical person. [59] A fortiori,
the prayer for exemplary damages must also be denied. [60] Nevertheless, we find it in
order to award (1) nominal damages in the amount of P250,000.00 on the basis of our
ruling in De La Salle University v. De La Salle University Employees Association (DLSUEA-
NAFTEU)[61] and Article 2221,[62] and (2) attorneys fees equivalent to 10% of the
monetary award. The remittance to petitioners of the collected union dues previously
turned over to Remigio and Villareal is likewise in order.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The

Decision dated December 15, 2003 and the Resolution dated March 23, 2004 of the
Court of Appeals in CA-G.R. SP No. 73813 are MODIFIED as follows:

1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are

found LIABLE for Unfair Labor Practice, and are hereby ORDERED to remit to
petitioners the amount of P254,857.15 representing the collected union dues
previously turned over to Avelina Remigio and Anastacia Villareal. They are
likewise ORDERED to pay petitioners nominal damages in the amount
of P250,000.00 and attorneys fees equivalent to 10% of the monetary award;
and

244 | P a g e
 2) The complaint, as against respondents Remigio and Villareal.
is DISMISSED due to the lack of jurisdiction of the Labor Arbiter and the
NLRC, the complaint being in the nature of an intra-union dispute.

No pronouncement as to costs.

SO ORDERED.

UST FACULTY UNION, G.R. No. 180892

Petitioner,
Present:
QUISUMBING, J., Chairperson,
- versus - CARPIO-MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
UNIVERSITY OF SANTO TOMAS,
REV. FR. ROLANDO DE LA ROSA,
REV. FR. RODELIO ALIGAN, Promulgated:
DOMINGO LEGASPI, and
MERCEDES HINAYON,
Respondents. April 7, 2009
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks the reversal of the June
14, 2007 Decision[1] and November 26, 2007 Resolution[2] of the Court of Appeals (CA) in
CA-G.R. SP No. 92236. The CA Decision affirmed the November 28, 2003 [3] and July 29,
2005[4] Resolutions of the Third Division of the National Labor Relations Commission
(NLRC) in NLRC CA No. 037320-03. These Resolutions, in turn, affirmed the August 15,
2003 Decision of Labor Arbiter Edgardo M. Madriaga in NLRC NCR Case No. 10-06255-96.
Entitled University of Santo Tomas Faculty Union v. University of Santo Tomas, Rev. Fr.
Rolando De La Rosa, Rev. Fr. Rodelio Aligan, Domingo Legaspi, and Mercedes Hinayon,
these decisions and resolutions were all in favor of respondents that were found not
guilty of Unfair Labor Practice (ULP).

The Facts
245 | P a g e
 On September 21, 1996, the University of Santo Tomas Faculty Union (USTFU)
wrote a letter[5] to all its members informing them of a General Assembly (GA) that was
to be held on October 5, 1996. The letter contained an agenda for the GA which included
an election of officers. The then incumbent president of the USTFU was Atty. Eduardo J.
Mario, Jr.
On October 2, 1996, Fr. Rodel Aligan, O.P., Secretary General of the UST, issued a
Memorandum[6] allowing the request of the Faculty Clubs of the university to hold a
convocation on October 4, 1996.
Members of the faculties of the university attended the convocation, including
members of the USTFU, without the participation of the members of the UST
administration. Also during the convocation, an election for the officers of the USTFU was
conducted by a group called the Reformist Alliance. Upon learning that the convocation
was intended to be an election, members of the USTFU walked out. Meanwhile, an
election was conducted among those present, and Gil Gamilla and other faculty
members (Gamilla Group) were elected as the president and officers, respectively, of the
union. Such election was communicated to the UST administration in a letter dated
October 4, 1996.[7] Thus, there were two (2) groups claiming to be the USTFU: the
Gamilla Group and the group led by Atty. Mario, Jr. (Mario Group).
On October 8, 1996, the Mario Group filed a complaint for ULP against the UST
with the Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 10-06255-96. It
also filed on October 11, 1996 a complaint with the Office of the Med-Arbiter of the
Department of Labor and Employment (DOLE), praying for the nullification of the election
of the Gamilla Group as officers of the USTFU. The complaint was docketed as Case No.
NCR-OD-M-9610-016 and entitled UST Faulty Union, Gil Y. Gamilla, Corazon Qui, et al., v.
Eduardo J. Mario, Jr., Ma. Melvyn Alamis, Norma Collantes, et al.
On December 3, 1996, a Collective Bargaining Agreement [8] (CBA) was entered
into by the Gamilla Group and the UST. The CBA superseded an existing CBA entered into
by the UST and USTFU which was intended for the period of June 1, 1993 to May 31,
1998.[9]
On January 27, 1997, Gamilla, accompanied by the barangay captain in the area,
Dupont E. Aseron, and Justino Cardenas, Chief Security Officer of the UST, padlocked the
office of the USTFU. Afterwards, an armed security guard of the UST was posted in front
of the USTFU office.
On February 11, 1997, the med-arbiter issued a Resolution, declaring the election
of the Gamilla group as null and void and ordering that this group cease and desist from
performing the duties and responsibilities of USTFU officers. This Resolution was
appealed to the Director of the Bureau of Labor Relations (BLR), docketed as BLR Case
246 | P a g e
No. A-8-49-97 and entitled UST Faulty Union, Gil Y. Gamilla, Corazon Qui, et al. v. Med-
Arbiter Tomas F. Falconitin of the National Capital Region, Department of Labor and
Employment (DOLE), Eduardo J. Mario, Jr., et al. Later, the director issued a Resolution
dated August 15, 1997 affirming the Resolution of the med-arbiter. His Resolution was
then appealed to this Court which rendered its November 16, 1999 Decision[10] in G.R. No.
131235 upholding the ruling of the BLR.

Thus, on January 21, 2000, USTFU filed a Manifestation [11] with the Arbitration
Branch of the NLRC in NLRC Case No. 10-06255-96, informing it of the Decision of the
Court. Thereafter, on August 15, 2003, the Arbitration Branch of the NLRC issued a
Decision[12] dismissing the complaint for lack of merit.

The complaint was dismissed on the ground that USTFU failed to establish with
clear and convincing evidence that indeed UST was guilty of ULP. The acts of UST which
USTFU complained of as ULP were the following: (1) allegedly calling for a convocation of
faculty members which turned out to be an election of officers for the faculty union; (2)
subsequently dealing with the Gamilla Group in establishing a new CBA; and (3) the
assistance to the Gamilla Group in padlocking the USTFU office.

In his Decision, the labor arbiter explained that the alleged Memorandum dated
October 2, 1996 merely granted the request of faculty members to hold such
convocation. Moreover, by USTFUs own admission, no member of the UST administration
attended or participated in the convocation.

As to the CBA, the labor arbiter ruled that when the new CBA was entered into, (1)
the Gamilla Group presented more than sufficient evidence to establish that they had
been duly elected as officers of the USTFU; and (2) the ruling of the med-arbiter that the
election of the Gamilla Group was null and void was not yet final and executory. Thus,
UST was justified in dealing with and entering into a CBA with the Gamilla Group,
including helping the Gamilla Group in securing the USTFU office.
The USTFU appealed the labor arbiters Decision to the Third Division of the NLRC
which rendered a Resolution dated November 28, 2003 affirming the Decision of the
labor arbiter. USTFUs Motion for Reconsideration of the NLRCs November 28, 2003
Resolution was denied in a Resolution dated July 29, 2005.
The case was then elevated to the CA which rendered the assailed Decision
affirming the Resolutions of the NLRC. The CA also denied the Motion for Reconsideration
of USTFU in the assailed resolution.

247 | P a g e
 Hence, we have this petition.

The Issues

1. The Honorable Court of Appeals committed serious and

reversible error when it dismissed the Petition for Certiorari in CA-G.R. SP No.
92236 and sustained the National Labor Relations Commissions ruling that
the herein respondents are not guilty of Unfair Labor Practice despite
abundance of evidence showing that Unfair Labor Practices were indeed
committed.

2. The Honorable Court of Appeals committed serious and

reversible error when it manifestly overlooked relevant facts not disputed by
the parties which, if properly considered, would justify a different conclusion
and in rendering a judgment that is based on a misapprehension of facts.[13]

The Courts Ruling

The petition must be denied.

UST Is Not Guilty of ULP

Petitioner claims that given the factual circumstances attendant to the instant
case, the labor arbiter, NLRC, and CA should have found that UST is guilty of ULP.
Petitioner enumerates the acts constituting ULP as follows: (1) Atty. Domingo Legaspi,
the legal counsel for the UST, conducted a faculty meeting in his office, supplying
derogatory information about the Mario Group; (2) respondents provided the Gamilla
Group with the facilities and forum to conduct elections, in the guise of a convocation;
and (3) respondents transacted business with the Gamilla Group such as the processing
of educational and hospital benefits, deducting USTFU dues from the faculty members
without turning over the dues to the Mario Group, and entering into a CBA with them.
Additionally, petitioner claims that the CA, NLRC, and labor arbiter ignored vital
pieces of evidence. These were the Affidavit dated January 21, 2000 of Edgar Yu, the
Certification dated January 27, 1997 of Alexander Sibug, and the picture of a security
guard posted outside the USTFU office purportedly to prevent entry into and exit from
the union office.

The concept of ULP is contained in Article 247 of the Labor Code which states:

Article 247. Concept of unfair labor practice and procedure for

prosecution thereof.Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are inimical to

248 | P a g e
 the legitimate interests of both labor and management, including their right
to bargain collectively and otherwise deal with each other in an atmosphere
of freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. (Emphasis
supplied.)

Notably, petitioner claims that respondents violated paragraphs (a) and (d) of Art.
248 of the Code which provide:

Article 248. Unfair labor practices of employers.It shall be unlawful for

an employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of

their right to self-organization;

xxxx

(d) To initiate, dominate, assist or otherwise interfere with the

formation or administration of any labor organization, including the giving of
financial or other support to it or its organizers or supporters.

The general principle is that one who makes an allegation has the burden of
proving it. While there are exceptions to this general rule, in the case of ULP, the alleging
party has the burden of proving such ULP.
Thus, we ruled in De Paul/King Philip Customs Tailor v. NLRC that a party alleging a
critical fact must support his allegation with substantial evidence. Any decision based on
unsubstantiated allegation cannot stand as it will offend due process.[14]
While in the more recent and more apt case of Standard Chartered Bank
Employees Union (NUBE) v. Confesor, this Court enunciated:
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.[15] (Emphasis supplied.)
In other words, whether the employee or employer alleges that the other party
committed ULP, it is the burden of the alleging party to prove such allegation with
substantial evidence. Such principle finds justification in the fact that ULP is punishable
with both civil and/or criminal sanctions.[16]
Given the above rulings of this Court, we shall now examine the acts of
respondents which allegedly constitute ULP.
With regard to the alleged derogatory remarks of Atty. Legaspi, the three tribunals
correctly ruled that there was no evidence to support such allegation. The alleged

249 | P a g e
evidence to support petitioners claim, the Affidavit dated January 21, 2000 of Yu, is
unacceptable. In the Affidavit it is stated that: 6. That in the said meeting, Atty. Legaspi
gave the participants information that are derogatory to the officers of the UST Faculty
Union.[17]

It may be observed that the information allegedly provided during the meeting as
derogatory is a conclusion of law and not of fact. What may be derogatory to Yu may not
be punishable under the law. There was, therefore, no fact that was established by the
Affidavit. Hence, petitioner failed to present evidence in support of its claim that
respondents committed ULP through alleged remarks of Atty. Legaspi.
As to the convocation, petitioner avers that: Indeed, Respondents, under the guise
of a faculty convocation, ordered the suspension of classes and required the faculty
members to attend the supposed faculty convocation which was to be held at the
Education Auditorium of the University of Santo Tomas.[18] An examination of the
Memorandum dated October 2, 1996[19] would, however, rebut such allegation. It stated:

MEMORANDUM TO

THE DEANS, REGENTS, PRINCIPALS

AND HEADS OF DEPARTMENTS

Re: Convocation of Faculty Club

As per request of the Faculty Clubs of the different Faculties, Colleges,

Schools and Institutes in the University through their Presidents, we are
allowing them to hold a convocation on Friday, October 4, 1996 at 9:00 in the
morning to 12:00 noon at the Education Auditorium.

The officers and members of said faculty clubs are, therefore, excused
from their classes on Friday from 9:00 to 12:00 noon to allow them to attend.
Regular classes shall resume at 1:00 in the afternoon. Please be guided
accordingly.

Thank you.
FR. RODEL ALIGAN, O.P. (Sgd.)
Secretary General
In no way can the contents of this memorandum be interpreted to mean that
faculty members were required to attend the convocation. Not one coercive term was
used in the memorandum to show that the faculty club members were compelled to
attend such convocation. And the phrase we are allowing them to hold a convocation
negates any idea that the UST would participate in the proceedings.
Moreover, the CA ruled properly:

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 More importantly, USTFU itself even admitted that during the October [4], 1996
convocation/election, not a single University Official was present. And the Faculty
Convocation was held without the overt participation of any UST Administrator or Official.
[20]

In other words, the Memorandum dated October 2, 1996 does not support a claim
that UST organized the convocation in connivance with the Gamilla Group.
Anent USTs dealing with the Gamilla Group, including the processing of faculty
members educational and hospitalization benefits, the labor arbiter ruled that:

Neither are We persuaded by complainants stand that respondents

acquiescence to bargain with USTFU, through Gamillas group, constitutes
unfair labor practice. x x x Such conduct alone, uncorroborated by other
overt acts leading to the commission of ULP, does not conclusively show and
establish the commission of such unlawful acts.[21]
The fact of the matter is, the Gamilla Group represented itself to respondents as
the duly elected officials of the USTFU. [22] As such, respondents were bound to deal with
them.

Art. 248(g) of the Labor Code 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:

xxxx

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

Code.

Correlatively, Art. 250(a) of the Code provides:

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;

Moreover, Art. 252 of the Code defines the duty to bargain collectively as:

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

251 | P a g e
 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. (Emphasis ours.)

In the instant case, until our Decision in G.R. No. 131235 that the Gamilla Group
was not validly elected into office, there was no reason to believe that the members of
the Gamilla Group were not the validly elected officers and directors of USTFU. To
reiterate, the Gamilla Group submitted a Letter dated October 4, 1996 whereby it
informed Fr. Rolando De La Rosa that its members were the newly elected officers and
directors of USTFU. In the Letter, every officer allegedly elected was identified with the
Letter signed by the alleged newly elected Secretary General and President, Ma. Lourdes
Medina and Gamilla, respectively.
More important though is the fact that the records are bereft of any evidence to
show that the Mario Group informed the UST of their objections to the election of the
Gamilla Group. In fact, there is even no evidence to show that the scheduled elections on
October 5, 1996 that was supposed to be presided over by the Mario Group ever pushed
through. Instead, petitioner filed a complaint with the med-arbiter on October 11, 1996
praying for the nullification of the election of the Gamilla Group.
As such, there was no reason not to recognize the Gamilla Group as the new
officers and directors of USTFU. And as stated in the above-quoted provisions of the
Labor Code, the UST was obligated to deal with the USTFU, as the recognized
representative of the bargaining unit, through the Gamilla Group. USTs failure to
negotiate with the USTFU would have constituted ULP.
It is not the duty or obligation of respondents to inquire into the validity of the
election of the Gamilla Group. Such issue is properly an intra-union controversy subject
to the jurisdiction of the med-arbiter of the DOLE. Respondents could not have been
expected to stop dealing with the Gamilla Group on the mere accusation of the Mario
Group that the former was not validly elected into office.
The subsequent ruling of this Court in G.R. No. 131235 that the Gamilla Group was
not validly elected into office cannot support petitioners allegation of ULP. Had
respondents dealt with the Gamilla Group after our ruling in G.R. No. 131235 had
become final and executory, it would have been a different story. As the CA ruled
correctly, until the validity of the election of the Gamilla Group is resolved with finality,
respondents could not be faulted for negotiating with said group.
Petitioner further alleges that respondents are guilty of ULP when on January 27,
1997, Justino Cardenas, Detachment Commander of the security agency contracted by
the UST to provide security services to the university, led a group of persons, including

252 | P a g e
Dr. Gil Gamilla, who padlocked the door leading to the USTFU. [23] Petitioner claims that
Gamilla who was and is still being favored by the employer, had no right whatsoever to
padlock the union office. And, yet the Administrators of the University of Santo
Tomas aided him in performing an unlawful act. Petitioner adds that an armed security
guard was posted at the USTFU office in order to prevent the Mario Group from
performing its duties.[24] To support such contention, petitioner provides as evidence a
Certification dated January 27, 1997[25] of Sibug, a messenger of the USTFU, and a
photograph[26] of a security guard standing before the USTFU office.
These pieces of evidence fail to support petitioners conclusions.
As to the padlocking of the USTFU office, it must be emphasized that based on the
Certification of Sibug, Cardenas was merely present, with Brgy. Captain Aseron of Brgy.
470, Zone 46, at the padlocking of the USTFU office. The Certification also stated that
Sibug himself also padlocked the USTFU office and that he was neither harassed nor
coerced by the padlocking group. Clearly, Cardenas mere presence cannot be equated to
a positive act of aiding the Gamilla Group in securing the USTFU office.
With regard to the photograph, while it evidences that there was indeed a guard
posted at the USTFU office, such cannot be used to claim that the guard prevented the
Mario Group from performing its duties.
Petitioner again failed to present evidence to support its contention that UST
committed acts amounting to ULP.
In any event, it bears stressing that at the time of these events, the legitimacy of
the Gamilla Group as the valid officers and directors of the USTFU was already submitted
to the med-arbiter and no decision had yet been reached on the matter. Having been
shown evidence to support the legitimacy of the Gamilla Group with no counter-evidence
from the Mario Group, UST had to recognize the Gamilla Group and negotiate with it.
Thus, the acts of UST in support of the USTFU as the legitimate representative of the
bargaining unit, albeit through the Gamilla Group, cannot be considered as ULP.
Finally, petitioner claims that despite the ruling of this Honorable Court,
the University of Santo Tomas still entertains the interlopers whose claim to the
leadership of the USTFU has been rejected by the [DOLE] and the Highest Tribunal.
[27]
Petitioner, however, fails to enumerate such objectionable actions of the UST. Again,
petitioner fails to present substantial evidence in support of its claim.
In sum, petitioner makes several allegations that UST committed ULP. The onus
probandi falls on the shoulders of petitioner to establish or substantiate such claims by
the requisite quantum of evidence. In labor cases as in other administrative proceedings,
substantial evidence or such relevant evidence as a reasonable mind might accept as
sufficient to support a conclusion is required. In the petition at bar, petitioner miserably
failed to adduce substantial evidence as basis for the grant of relief.
253 | P a g e
 WHEREFORE, the petition is hereby DENIED. The June 14, 2007 Decision and
November 26, 2007 Resolution of the CA in CA-G.R. SP No. 92236 are
hereby AFFIRMED.

No costs.

SO ORDERED.

[G.R. No. 76989. September 29, 1987.]

MANILA MANDARIN EMPLOYEES UNION, Petitioners, v. NATIONAL LABOR

RELATIONS COMMISSION, and MELBA C. BELONCIO, Respondents.

DECISION

GUTIERREZ, JR., J.:

This is a petition to review on certiorari the National Labor Relations Commission’s

(NLRC) decision which modified the Labor Arbiter’s decision and ordered the Manila
Mandarin Employees Union to pay the wages and fringe benefits of Melba C. Beloncio
from the time she was placed on forced leave until she is actually reinstated, plus ten
percent (10%) thereof as attorney’s fees. Manila Mandarin Hotel was ordered to reinstate
Beloncio and to pay her whatever service charges may be due her during that period,
which amount would be held in escrow by the hotel.chanrobles virtual lawlibrary

The petition was filed on January 19, 1987. The private respondent filed her comment on
March 7, 1987 while the Solicitor General filed a comment on June 1, 1987 followed by
the petitioner’s reply on August 22, 1987. We treat the comment as answer and decide
the case on its merits.

The facts of the case are undisputed.

Herein private respondent, Melba C. Beloncio, an employee of Manila Mandarin Hotel

since 1976 and at the time of her dismissal, assistant head waitress at the hotel’s coffee
shop, was expelled from the petitioner Manila Mandarin Employees Union for acts
allegedly inimical to the interests of the union. The union demanded the dismissal from
employment of Beloncio on the basis of the union security clause of their collective
bargaining agreement and the Hotel acceded by placing Beloncio on forced leave
effective August 10, 1984.chanrobles.com:cralaw:red

The union security clause of the collective bargaining agreement

provides:jgc:chanrobles.com.ph

"Section 2. Dismissals.

254 | P a g e
 x x x

b) Members of the Union who cease to be such members and/or who fail to maintain
their membership in good standing therein by reason of their resignation from the Union,
and/or by reason of their expulsion from the Union, in accordance with the Constitution
and By-Laws of the Union, for non-payment of union dues and other assessment, for
organizing, joining or forming another labor organization shall, upon written notice of
such cessation of membership or failure to maintain membership in the Union and upon
written demand to the company by the Union, be dismissed from employment by the
Company after complying with the requisite due process requirement; . . ." (Emphasis
supplied)" (Rollo, p. 114)

Two days before the effective date of her forced leave or on August 8, 1984, Beloncio
filed a complaint for unfair labor practice and illegal dismissal against herein petitioner-
union and Manila Mandarin Hotel, Inc. before the NLRC, Arbitration Branch.

Petitioner-union filed a motion to dismiss on grounds that the complainant had no cause
of action against it and the NLRC had no jurisdiction over the subject matter of the
complaint.

This motion was denied by the Labor Arbiter.

After the hearings that ensued and the submission of the parties’ respective position
papers, the Labor Arbiter held that the union was guilty of unfair labor practice when it
demanded the separation of Beloncio. The union was then ordered to pay all the wages
and fringe benefits due to Beloncio from the time she was on forced leave until actual
reinstatement, and to pay P30,000.00 as exemplary damages and P10,000.00 as
attorney’s fees. The charge against the hotel was dismissed.

The Union then appealed to the respondent NLRC which modified the Labor Arbiter’s
decision as earlier stated.

A subsequent motion for reconsideration and a second motion for reconsideration were
denied.

Hence, this present petition.

The petitioner raises the following assignment of errors:chanrob1es virtual 1aw library
I.

"THAT RESPONDENT NLRC ERRED IN NOT DECLARING THAT THE PRESENT CONTROVERSY
INVOLVED INTRA-UNION CONFLICTS AND THEREFOR IT HAS NO JURISDICTION OVER THE
SUBJECT-MATTER THEREOF.

II.

"THAT RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING PETITIONER LIABLE FOR THE
PAYMENT OF PRIVATE RESPONDENT’S SALARY AND FRINGE BENEFITS, AND AWARD OF
10% ATTORNEY’S FEES, AFTER FINDING AS UNMERITORIOUS HER PRETENDED CLAIMS
255 | P a g e
 OR COMPLAINTS FOR UNFAIR LABOR PRACTICE, ILLEGAL DISMISSAL, AND DAMAGES."
(Rollo, pp. 6-9)

On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse of
discretion in the NLRC conclusion that the dispute is not purely intra-union but involves
an interpretation of the collective bargaining agreement (CBA) provisions and whether or
not there was an illegal dismissal. Under the CBA, membership in the union may be lost
through expulsion only if there is non-payment of dues or a member organizes, joins, or
forms another labor organization. The charge of disloyalty against Beloncio arose from
her emotional remark to a waitress who happened to be a union steward, "Wala akong
tiwala sa Union ninyo." The remark was made in the course of a heated discussion
regarding Beloncio’s efforts to make a lazy and recalcitrant waiter adopt a better attitude
towards his work.chanroblesvirtualawlibrary

We agree with the Solicitor General when he noted that:jgc:chanrobles.com.ph

". . . The Labor Arbiter explained correctly that ‘(I)f the only question is the legality of the
expulsion of Beloncio from the Union undoubtedly, the question is one cognizable by the
BLR (Bureau of Labor Relations). But, the question extended to the dismissal of Beloncio
or steps leading thereto. Necessarily, when the hotel decides the recommended
dismissal, its acts would be subject to scrutiny. Particularly, it will be asked whether it
violates or not the existing CBA. Certainly, violations of the CBA would be unfair labor
practice.’

"Article 250 of the Labor Code provides the following:jgc:chanrobles.com.ph

"‘Art. 250. Unfair labor practices of labor organizations. — It shall be unfair labor practice
for a labor organization, its officers, agents or representatives:chanrob1es virtual 1aw
library
x x x

"‘(b) To cause or attempt to cause an employer to discriminate against an employee,

including discrimination against an employee with respect to whom membership in such
organization has been denied or to terminate an employee on any ground other than the
usual terms and conditions under which membership or continuation of membership is
made available to other members.’ (Emphasis supplied)

Article 217 of the Labor Code also provides:jgc:chanrobles.com.ph

"‘Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor Arbiters
shall have the original and exclusive jurisdiction to hear and decide xxx the following
cases involving all workers, whether agricultural or non-agricultural;

"‘(1) Unfair labor practice cases;

x x x

"‘(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by
256 | P a g e
 Labor Arbiters.’" (Rollo, pp. 155-157.)

The petitioner also questions the factual findings of the public respondent on the reasons
for Beloncio’s dismissal and, especially, on the argument that she was on forced leave;
she was never dismissed; and not having worked, she deserved no pay.

The Court finds nothing in the records that indicates reversible error, much less grave
abuse of discretion, in the NLRC’s findings of facts.

It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC,
which have acquired expertise because their jurisdiction is confined to specific matters,
are generally accorded not only respect but at times even finality if such findings are
supported by substantial evidence. (Akay Printing Press v. Minister of Labor and
Employment, 140 SCRA 381; Alba Patio de Makati v. Alba Patio de Makati Employees
Association, 128 SCRA 253; Dangan v. National Labor Relations Commission, 127 SCRA
706; De la Concepcion v. Mindanao Portland Cement Corporation, 127 SCRA 647).

The petitioner now questions the decision of the National Labor Relations Commission
ordering the reinstatement of the private respondent and directing the Union to pay the
wages and fringe benefits which she failed to receive as a result of her forced leave and
to pay attorney’s fees.

We find no error in the questioned decision.

The Hotel would not have compelled Beloncio to go on forced leave were it not for the
union’s insistence and demand to the extent that because of the failure of the hotel to
dismiss Beloncio as requested, the union filed a notice of strike with the Ministry of Labor
and Employment on August 17, 1984 on the issue of unfair labor practice. The hotel was
then compelled to put Beloncio on forced leave and to stop payment of her salary from
September 1, 1984.cralawnad

Furthermore, as provided for in the collective bargaining agreement between the

petitioner — the Union and the Manila Mandarin Hotel, "the Union shall hold the
Company free and blameless from any and all liabilities that may arise" should the
employee question the dismissal, as has happened in the case at bar.

It is natural for a union to desire that all workers in a particular company should be its
dues-paying members. Since it would be difficult to insure 100 percent membership on a
purely voluntary basis and practically impossible that such total membership would
continuously be maintained purely on the merits of belonging to the union, the labor
movement has evolved the system whereby the employer is asked, on the strength of
collective action, to enter into what are now familiarly known us "union security"
agreements.

The collective bargaining agreement in this case contains a union security clause — a
closed-shop agreement.

A closed-shop agreement is an agreement whereby an employer binds himself to hire

only members of the contracting union who must continue to remain members in good
257 | P a g e
 standing to keep their jobs. It is "the most prized achievement of unionism." It adds
membership and compulsory dues. By holding out to loyal members a promise of
employment in the closed-shop, it welds group solidarity. (National Labor Union v.
Aguinaldo’s Echague, Inc., 97 Phil. 184). It is a very effective form of union security
agreement.

This Court has held that a closed-shop is a valid form of union security, and such a
provision in a collective bargaining agreement is not a restriction of the right of freedom
of association guaranteed by the Constitution. (Lirag Textile Mills, Inc. v. Blanco, 109
SCRA 87; Manalang v. Artex Development Company, Inc., 21 SCRA 561).

The Court stresses, however, that union security clauses are also governed by law and
by principles of justice, fair play, and legality. Union security clauses cannot be used by
union officials against an employer, much less their own members, except with a high
sense of responsibility, fairness, prudence, and judiciousness.

A union member may not be expelled from her union, and consequently from her job, for
personal or impetuous reasons or for causes foreign to the closed-shop agreement and in
a manner characterized by arbitrariness and whimsicality.

This is particularly true in this case where Ms. Beloncio was trying her best to make a
hotel bus boy do his work promptly and courteously so as to serve hotel customers in the
coffee shop expeditiously and cheerfully. Union membership does not entitle waiters,
janitors, and other workers to be sloppy in their work, inattentive to customers, and
disrespectful to supervisors. The Union should have disciplined its erring and
troublesome members instead of causing so much hardship to a member who was only
doing her work for the best interests of the employer, all its employees, and the general
public whom they serve.

WHEREFORE, the petition is hereby DISMISSED. The questioned decision of the National
Labor Relations Commission is AFFIRMED. Costs against the petitioner.

SO ORDERED.

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