Describing and Delineating Unfair Labor Practice: Revisiting the examine some selected cases and attempt to trace

cases and attempt to trace the inception and

Rule from Royal Interocean Lines to T&H Shopfitters
development of the doctrine that unfair labor practice (ULP) relates to
by the commission of acts that transgress the workers right to organize.
In law school, we learned that a ULP is an unlawful act by the
Francis V. Sobrevinas*
employer or labor union, defined as such under the Labor Code, which
unduly interferes with one anothers rights and prerogatives. As
There is a well-known Latin maxim: Respice, Adspice,
specified in Articles 248 and 2491 of the Labor Code, the prohibited
Prospice (Examine the past, examine the present, examine the
acts must necessarily relate to the workers right to self-organization
future). Guided by this wise saying, the present article will briefly

The author is the Managing Partner of the Sobrevias Hayudini Navarro & San Juan Law Offices. He attended Ateneo de Manila University where he
received his Bachelor of Science degree in Political Science. Upon graduating, he taught history and political science at the Notre Dame of Jolo College in Jolo, Sulu.
He then obtained his Bachelor of Laws from the University of the Philippines (UP). At UP, he was a University Councilor and member of the Student Council and
Chairman of the Editorial Board of the Memorandum, the yearbook of the College of Law. He was also news editor of the Philippine Law Register, the student
publication of the same law school. He earned his Master of Laws degree from Northwestern in Chicago, Illinois and took up post graduate studies at Monash
University in Melbourne, Australia and the University of Tasmania where he received a Post Graduate Research Award.

He joined Angara Abello Concepcion Regala & Cruz in 1974 as assistant attorney and become partner in 1981 until 1986.

Mr. Sobrevias is a Professorial Lecturer at the UP College of Law and UP School of Labor and Industrial Relations (SOLAIR) and a faculty member of the
National Academy of Voluntary Arbitrators and the Human Resource Management Development Center, Personnel Management Association of the Philippines. An
accredited Voluntary Arbitrator, he is past president of the Philippine Association on Voluntary Arbitration (PAVA), the only existing organization of Voluntary
Arbitrators in the country. An active member of the Integrated Bar of the Philippines (IBP), he was formerly president of IBP Manila IV Chapter and editor-in-chief
of the IBP Journal for two (2) terms. At present, he is editor-in-chief of the Journal of the Philippine Association on Voluntary Arbitration. He is also a lecturer at the UP
Law Center Institute of Judicial Administration and the Mandatory Continuing Legal Education (MCLE) Program of the IBP.

He is a member of the Philippine Bar Association, ASEAN Law Association, UP Law Alumni Association and the Ateneo Alumni Association.

1 Although RA 10151, which was approved on June 21, 2011, renumbered the articles of the Labor Code starting from Book Four, Title I, Chapter I of the Code, we
shall use the old numbers for reasons of convenience and familiarity.
and to the observance of a collective bargaining agreement (CBA).2
Without the said vital element, the acts, even if unfair, are not unfair
labor practices.3
On February 26, 2014, our Supreme Court promulgated its
decision in T&H Shopfitters Corp., et al. v. T&H Shopfitters Corp.
Workers Union, et al.,4 holding that the employer committed ULP upon
a showing that the latter perpetrated the following acts during the
pendency of a petition for certification election5 : (i) sponsoring a field
trip to Zambales for its employees, to the exclusion of union members,
before the scheduled certification election; (ii) the active campaign by
the sales officer of the company against the union prevailing as a
bargaining agent during the field trip; (iii) escorting its employees after
the field trip to the polling center; (iv) the continuous hiring of
subcontractors performing the functions of the employees; (v)
assigning union members to the Cabangan site to work as grass
cutters; and (vi) the assignment of work on a rotational basis for union
members. The high tribunal found that these acts, taken together,
reasonably support an inference that such were all orchestrated to
restrict the employees free exercise of their right to self-organization. It
stated that the employers actions prior and immediately before the
scheduled certification election, while seemingly innocuous, unduly
meddled in the affairs of its employees in selecting their exclusive
bargaining representative. It likewise stressed that a certification
election is the sole concern of the workers and, consequently, the
employer had no business persuading and/or assisting its employees
in this legally protected independent process of selecting their
exclusive bargaining representative. In so deciding the T&H Shopfitters
case, the Supreme Court relied on jurisprudence that it had
established more than fifty (50) years ago when it declared, for the first
time, that a complaint for ULP will prosper if, and only if, the act
complained of is related to union activities and directed against the use
of the right to employ or discharge as an instrument of discrimination,
interference or oppression because of ones labor or union activities. 6

2 Tunay na Pagkakaisa sa Asia Brewery v. Asia Brewery, 626 SCRA 376, 388 (2010).

3 General Santos Coca-Cola Plant Workers Union TUPAS v. Coca-Cola Bottlers Phils., Inc., 579 SCRA 414, 419 (2009).

4 G.R. No. 191714, February 26, 2014.

5 A certification election refers to the process of determining through secret ballot the sole and exclusive representative of the employees in an appropriate
bargaining unit for purposes of collective bargaining or negotiation; see Section 1(h), Rule I, Book V, Rules and Regulations Implementing the Labor Code.

6 Royal Interocean Lines v. Court of Industrial Relations, 109 Phil. 900 (1960).

In Royal Interocean Lines v. Court of Industrial Relations,7 the
employee sent a letter to the companys office in Hongkong,
complaining against the latters manager in the Philippine for his
inconsiderate and untactful attitude towards the employees under him
and the clients of the company in the Philippines. The employee was
terminated and she then charged the company and the manager with
ULP under section 4(a) subsection 5 of Republic Act No. 875,
otherwise known as the Industrial Peace Act (IPA).8 Construing the
aforeqouted rule as including all cases where an employee is
dismissed, discharged or otherwise prejudiced or discriminated against
by reason of the filing by the employee with the court or elsewhere of
any charge against her employer, the Court of Industrial Relations
(CIR) found the company and its manager guilty of ULP and ordered
the employees reinstatement, with backwages from the date of her
dismissal.
The case was elevated to the Supreme Court and the issue
squarely presented was whether or not the company committed ULP
for having dismissed the employee because the latter had filed
charges against the manager not connected with or necessarily arising
from union activities.
Relying on American jurisprudence,9 the Supreme Court
exonerated the company from the charge of ULP. Thus said the high
tribunal:
The issue involved is whether or not the
petitioner was guilty of unfair labor practice in having

7 Ibid., see also related case of Mariano v. Royal Interocean Lines, 1 SCRA 567 (1961).

8 The pertinent provision reads as follows:

It shall be unfair labor practice for an employer: x x x (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.

9 In Brent School v. Zamora, 181 SCRA 702 (1990) our Supreme Court took judicial notice of the fact that American law is the source of much of our labor legislation
and that US sources interpreting American federal legislation, upon which Philippine law is patterned, are applicable and may be resorted to in the absence of local
decisions. In Boy Scouts of the Philippines v. Araos, 102 Phil. 1080 (1958), the Supreme Court declared that American authorities interpreting American labor legislation
are applicable and may be considered by us with profit; see also Democratic Labor Association v. Cebu Stevedoring Co., 103 Phil. 1103 (1958). Earlier, in Cerezo v. Atlantic,
Gulf and Pacific Co., Inc., 33 Phil. 425 (1916), it was ruled that the decisions of US courts construing and interpreting American laws, upon which Philippine legislation
is based, should receive the careful attention of our courts in the application of our own laws.
 dismissed the respondent because the latter had filed regulates the subject, has shown the
charges against Kamerling not connected with or need for further safeguards to the rights
necessarily arising from union activities. The pertinent of workers to organize. The attached bill
legal provision is section 4 (a), subsection 5, of Republic seeks to provide these safeguards,
Act No. 875 which reads as follows: Sec. 4 Unfair Labor following the pattern of United States
Practice, (a) It shall be unfair labor practice for an National Labor Relations Act with
employer: . . . (5) To dismiss, discharge, or otherwise suitable modifications demanded by local
prejudice or discriminate against an employee for conditions. (Secs. 4-8.).
having filed charges or for having given or being about
to give testimony under this Act. The bill will prevent unfair labor
practices on the part of the employers
The Court of Industrial relations has construed including not only acts of anti-union
the foregoing as including all cases where an employee discrimination but also those which are
is dismissed, discharged or otherwise prejudiced or involved in the making of company
discriminated against by reason of the filing, by the unions.
latter with the court or elsewhere of any charge against
his employer. The bill protects the workers in
the process of organization and before
Section 4 (a) subsection 5, is part of the Magna- as well as after the union is registered
Charta of Labor which has these underlying purposes:10 with the Department of Labor. Under
Commonwealth Act No. 213, protection
The experience under comes only after such registration.
Commonwealth Act No. 213 which now

10 Explanatory Note of House Bill No. 825 and Senate Bill No. 423, now Republic Act No. 875.
 The bill will prevent unfair labor
practices expeditiously by direct orders
which exercises (sic) a continuing
restraint upon the employers to whom
they are issued. Commonwealth Act No.
103 requires criminal prosecution which
usually involves delay. Under this Act, by
discharge of the penalty, an employer is
free to commit the act again.
Considering the policy behind the enactment of
the statute, it is readily discoverable that the provisions
of sections 1 and 3 are the bases for the protection of
the laborers' right to self-organization, and the
enumeration in section 4 (of unfair labor practices), are
nothing more than a detailed description of an
employer's acts that may interfere with the right to self-
organization and collective bargaining.
The American courts, in interpreting the
provision of the Wagner Act similar to section 4 (a),
subsection 5, said:
The statute goes no further than
to safeguard the right of employees to
self-organization and to select
representatives of their own choosing for
collective bargaining or other mutual
protection without restraint or coercion by
their employer.
That is fundamental right.
Employees have as clear a right to
organize and select their representatives
for lawful purpose as the respondent has
to organize its business and select its
own officers and agents. See Case of
National Relations Board vs. Jones &
Laughlin Steel Corp. 301 U. S. 1.).
Consequently, with the above fundamental
objective, the following judicial pronouncements give
adequate panoply to the rights of the employer.
The protection of workers' right to
self-organization in no way interfere (sic)
with employer's freedom to enforce such
rules and orders as are necessary to
proper conduct of his business, so long
as employer's supervision is not for the
 purpose of intimidating or coercing his
employees with respect to their self-
organization and representation.
(National Labor Relations Board v.
Hudson Motor Car Co. C. C. A., 1942,
123 F. 2d. 528.)
It is the function of the court to
see that the rights of self- organization
and collective bargaining guaranteed by
the Act are amply secured to the
employee, but in its effort to prevent the
prescribed unfair labor practices, the
court must be mindful of the welfare of
the honest employer. (Martel Mills Corp.
vs. M. L.R. L., C. C. A. 1940, 11471 2d
264.).
Despite the employee's right to self-organization,
the employer therefore still retains his inherent right to
discipline his employees, his normal prerogative to hire
or dismiss them. The prohibition is directed only against
the use of the right to employ or discharge as an
instrument of discrimination, interference or oppression
because of one's labor or union activities. (See
Rotenberg on Labor Relations, pp. 398-399.) Even from
a literal and grammatical point of view, the provision in
dispute has to be interpreted in the sense that the
charges, the cause of the dismissal of the employee,
must be related to his right to self-organization, in order
to give rise to unfair labor practice on the part of the
employer. Under subsection 5 of section 4 (a), the
employee's (1) having filed charges or (2) having given
testimony or (3) being about to give testimony, are
modified by "under this Act" appearing after the last
item. In other words, the three acts must have reference
to the employees' right to self-organization and
collective bargaining, because the element of unfair
labor practice is interference in such right. It would be
redundant to repeat under this Act after each
enumeration connected by the disjunctive conjunction
or.
As the respondent's dismissal has no relation to
union activities and the charges filed by her against the
petitioner had nothing to do with or did not arise from
her union activities, the appealed decision is hereby
 reversed and the directive for the respondent's
reinstatement with back pay revoked.11
Subsequently, in a related case, the company was ordered to
pay the employee her salary for six (6) months considering that the
dismissal of the [employee] was without cause, because her
inefficiency as the ground or reason for her dismissal as claimed by the
[company] is belied by the successive increases of her
compensation.12
About three (3) years following promulgation of Royal
Interocean Lines and Mariano, the Supreme Court resolved the case of
Sterling Products International, Inc. v. Sol13 and therein made this
announcement:
The next point at issue is whether or not the
petitioners herein are guilty of unfair labor practice.
Petitioners claim that under the decision rendered by Us
in the case of Royal Interocean Lines, et al. vs. Court of
Industrial Relations, et al., G.R. No. L-11745, Oct. 31,
11 Note 6, supra, at 901-903.
12 Mariano v. Royal Interocean Lines, 1 SCRA 567, 571 (1961).
13 7 SCRA 446, 450-451 (1963), underlining supplied.
1960, as respondent Sol was merely an employee and
was not connected with any labor union, the company
cannot be considered as having committed acts
constituting unfair labor practice as defined in the
Industrial Peace Act, Rep. Act 875. We find this
contention to be well-founded. The term unfair labor
practice has been defined as any of those acts listed in
See. 4 of the Act. The respondent Sol has never been
found to commit any of the acts mentioned in paragraph
(a) of Sec. 4. Respondent Sol was not connected with
any labor organization, nor has she ever attempted to
join a labor organization, or to assist, or contribute to a
labor organization. The company cannot, therefore, be
considered as having committed an unfair labor
practice.
In 1997, a pronouncement was made in one case that a
complaint for ULP is not an ordinary dispute and, therefore, it requires
a more thorough analysis, evaluation and appreciation of the factual
and legal issues involved. This is so because by the very nature of a
ULP, it is not only a violation of the civil rights of both labor and
management but also a criminal offense against the State which is
subject to prosecution and punishment.14
Two (2) years later, in Great Pacific Life Employees Union v.
Great Pacific Life Assurance Corp., 15 the Supreme Court
acknowledged that [w]hile an act or decision of an employer may be
unfair, certainly not every act or decision constitutes unfair labor
practice as defined and enumerated under Article 248 of the Labor
Code.
In 2003, the Supreme Court stated that the act complained of
as ULP must have a direct relationship to the exercise of the
employees right to self-organization and collective bargaining. Without
this connection, the unfair acts will not qualify as ULP.16 The Court
14 Hongkong and Shanghai Banking Corp. Employers Union v. NLRC, 281 SCRA 509, 517 (1997).
15 303 SCRA 113, 124 (1999).
16 Allied Banking Corp. v. Court of Appeals, 416 SCRA 6580 (2003).
17 Philcom Employees Union v. Philippine Global Communication, 495 SCRA 214, 235 (2006); see also Galaxie Steel Workers Union v. NLRC, 504 SCRA 692, 699-700 (2006).
18 569 SCRA 122, 132 (2008).
19 579 SCRA 414, 419 (2009).
likewise clarified that if the prohibited acts bear no relationship to self-
organization and to the observance of a CBA, then the acts, no matter
how unfair, are not unfair labor practices.17 This was followed by Bisig
Manggagawa sa Tryco v. NLRC,18 where it was reiterated that to be
considered as ULP, the act must have been motivated by an intention
to interfere with the workers right to organize. Absent any showing that
the prohibited acts are related to the workers right to self-organization
and to the observance of a CBA, the acts, no matter how unfair, are
not unfair labor practices. In General Santos Coca-Cola Plant Free
Workers Union Tupas v. Coca-Cola Bottlers Phils., Inc.,19 the rule
was reaffirmed that without the presence of a crucial consideration,
namely, that the prohibited acts are related to the workers right to self-
organization and to observance of a CBA, the acts, even if unfair, are
not unfair labor practices.
 The Court was even more forthright in Central Azucarera de
Bais Employees Union NFL v. Central Azucarera de Bais,20 where it
acknowledged that anti-unionism [is] the evil sought to be punished in
cases of unfair labor practices. A year later, in 2011, the high tribunal
remarked in Prince Transport, Inc. v. Garcia,21 that an act sought to be
declared as ULP must be designed as a subterfuge to foil the
[workers] right to organize themselves into a union. Under Article 248
(a) and (e) of the Labor Code, an employer is guilty of unfair labor
practice if it interferes with, restrains or coerces its employees in the
exercise of their right to self-organization or if it discriminates 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. Thereafter, the Court declared illegal in another case the
unceremonious dismissal of the workers by reason of their intent to
form and organize a union even as it quoted with approval the Labor
Arbiters finding that the organizers were terminated to cripple the
union at sight, to frustrate attempts of employees [to join or support it],
20 635 SCR 339, 355 (2010).
21 639 SCRA 312, 331 (2011).
22 Park Hotel v. Soriano, 680 SCRA 328, 339 (2013).
23 G.R. No. 194709, July 31, 2013.
24 Note 4, supra.
preventing them, at all cost and to frustrate the employees bid to
exercise their right to self-organization. 22
The later case of Baptista v. Villanueva,23 once more focused
on the primary concept of ULP insofar as it relates to the commission
of acts that transgress the workers right to organize. Affirming that the
prohibited acts must necessarily relate to the workers right to self-
organization and to the observance of a CBA, the Court concluded by
saying that [a]bsent the said vital elements, the acts complained,
although seemingly unjust, would not constitute ULP.
And so, too, in T&H Shopfitters,24 did the Supreme Court
readily recall the rule that ULP relates to the commission of acts that
transgress the workers right to form a union. As mentioned in Articles
248 and 249 of the Labor Code, the prohibited acts must necessarily
relate to the workers right to self-organization. Reminding us of the
test in determining whether or not the employer has interfered with,
restrained, or coerced the workers in the exercise of their right to self-
organization, the Court contended:
In the case of Insular Life Assurance Co., Ltd.
Employees Association NATU v. Insular Life
Assurance Co., Ltd.,25 this Court had occasion to lay
down the test of whether an employer has interfered
with the coerced employees in the exercise of their right
to self-organization, that is, whether the employer has
engaged in conduct which, it may reasonably be said,
tends to interfere with the free exercise of employees
rights; and that 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 interference that anti-union
conduct of the employer does have an adverse effect on
self-organization and collective bargaining.26
As already seen, because it was convinced that the acts
committed by the employer against the workers all reek of interference
25 147 Phil. 194 (1971).
26 Underlining in the original decision.
27 G.R. No. 179146, July 23, 2013.
on the part of [the employer], the Court did not hesitate to affirm the
lower courts ruling that the employer in T&H Shopfitters committed
ULP. In fact, the Supreme Court emphatically stated that the various
acts committed by the employer were all intended to prevent the
workers free exercise of their right to self-organization. In the Courts
own words:
Indubitably, the various acts of petitioners,
taken together, reasonably support an inference that,
indeed, such were all orchestrated to restrict
respondents free exercise of their right to self-
organization. The Court is of the considered view that
petitioners undisputed actions prior and immediately
before the scheduled certification election, while
seemingly innocuous, unduly meddled in the affairs of
its employees in selecting their exclusive bargaining
representative. In Holy Child Catholic School v. Hon.
Patricia Sto. Tomas, 27 the Court ruled that a certification
election was the sole concern of the workers, save
when the employer itself had to file the petition x x x, but
 even after such filing, its role in the certification process
ceased and became merely a bystander. Thus,
petitioners had no business persuading and/or assisting
its employees in their legally protected independent
process of selecting their exclusive bargaining
representative. The fact and peculiar timing of the field
trip sponsored by petitioners for its employees not
affiliated with THS-GQ Union, although a positive
enticement, was undoubtedly extraneous influence
designed to impede respondents in their quest to be
certified. This cannot be countenanced.
By way of conclusion, there is a common thread that weaves
through and ties the cases that we have just reviewed and it is this: the
Supreme Court has consistently confirmed and applied the doctrine it
had first articulated in the case of Royal Interocean that for an act to be
considered as ULP, it must be inextricably linked to, or connected with,
the workers right to self-organization and the observance of a CBA.
Without this causality, there can be no ULP at all.
INSULAR HOTEL EMPLOYEES UNION V. WATERFRONT HOTEL
DAVAO (2010)
Peralta, J.
- Nov 2000: the Hotel sent DOLE a Notice of Suspension of Operations
for 6 months due to severe and serious business losses.
- During the suspension, Rojas, Pres. of Davao insular Hotel Free
Employees Union (DIHFEU-NFL) the recognized labor org in the Hotel,
sent the Hotel several letters asking it to reconsider its decision. The
Union members wanted to keep their jobs and to help the Hotel, so it
suggested several ideas in its Manifesto to solve the high cost on
payroll, such as: downsize manpower structure to 100 rank-and-file
EEs, a new pay scale, etc.
- DIHFEU-NFL signed a MOA where the Hotel agreed to re-open the
hotel. The retained EEs individually signed a reconfirmation of
Employment. In June 2001, the Hotel resumed its business
operations.
- Aug 2002: Darius Joves and Debbie Planas, local officers of the
National Federation of Labor (NFL), filed a Notice of Mediation before
the NCMB, stating that the Union involved was "DARIUS JOVES/
DEBBIE PLANAS ET. AL, National Federation of Labor." The issue
was the diminution of wages and benefits through unlawful MOA. In
support of his authority to file the complaint, Joves, assisted by Atty.
Cullo, presented several SPAs which were, undated and unnotarized.
- Petitioner and respondent signed a Submission Agreement, where
the union stated was "INSULAR HOTEL EMPLOYEES UNION-NFL."
- The Hotel filed with the NCMB a Manifestation with Motion for a
Second Preliminary Conference, alleging that the persons who filed the
complaint in the name of the Insular Hotel Employees Union-NFL have
no authority to represent the Union.
- Cullo confirmed that the case was filed not by the IHEU-NFL but by
the NFL. When asked to present his authority from NFL, Cullo admitted
that the case was filed by individual employees named in the SPAs.
- The Hotel argued that the persons who signed the complaint were not
the authorized representatives of the Union indicated in the
Submission Agreement nor were they parties to the MOA. It filed a
Motion to Withdraw, which Cullo then filed an Opposition to where the
same was captioned:
NATIONAL FEDERATION OF LABOR And 79 Individual Employees,
Union Members, Complainants,
-versus-
Waterfront Insular Hotel Davao, Respondent.
Cullo reiterated that the complainants were not representing IHEU-
NFL.
- The Accredited Voluntary Arbitrator (AVA) denied the Motion to
Withdraw.
- The Hotel submitted its MR and stressed that the Submission
Agreement was void because the Union did not consent thereto.
- Cullo filed a Comment/Opposition to the Hotel's MR. Again, Cullo
admitted that the case was not initiated by the IHEU-NFL, saying that
the individual complainants are not representing the union but filing the
complaint through their appointed attorneys-in-fact to assert their
individual rights as workers who are entitled to the benefits granted by
law and stipulated in the collective bargaining agreement. There is no
mention there of Insular Hotel Employees Union, but only National
Federation of Labor (NFL). The local union was not included as party-
complainant considering that it was a party to the assailed MOA.
- The AVA denied the MR. He, however, ruled that the Hotel was
correct when it objected to NFL as proper party-complainant, as the
proper one is INSULAR HOTEL EMPLOYEES UNION-NFL. In the
submission agreement, the party complainant written is INSULAR
HOTEL EMPLOYEES UNION-NFL and not the NATIONAL
FEDERATION OF LABOR and 79 other members. However, since the
NFL is the mother federation of the local union, and signatory to the
existing CBA, it can represent the union.
- Cullo, in subsequent documents, started using the caption "Insular
Hotel Employees Union-NFL, Complainant."
- The case was remanded to the NCMB. The Hotel reiterated to the
NCMB that the individual union members have no standing. The Hotel
did not appear before the NCMB to select a new AVA. The new AVA
decided in favor of Cullo, declaring the MOA invalid.
- The Hotel appealed to the CA, questioning among others the
jurisdiction of the NCMB. The CA ruled in favor of the Hotel, declaring
the MOA VALID and ENFORCEABLE.
Issues:
1. Did CA err in finding that the AVA has no jurisdiction over the case
because the notice of mediation does not mention the name of the
local union but only the affiliate federation -- NO.
2. Do the individual members of the Union have the requisite standing
to question the MOA before the NCMB? -- NO.
3. If the individual members of the Union have no authority to file the
case, does the federation to which the local union is affiliated have the
standing to do so? -- NO.
4. (moot issue) W/N IHEU-NFL is a non-entity as DIHEU-NFL is the
only recognized bargaining unit -- YES, but Hotel is estopped from
questioning the same as it did not raise the said issue in the
proceedings before the NCMB and the Voluntary Arbitrators.
Ratio:
1. In the Notice of Mediation filed before the NCMB, it stated that the
union involved was "DARIUS JOVES/DEBBIE PLANAS ET. AL.,
National Federation of Labor." In the Submission Agreement, however,
it stated that the union involved was "INSULAR HOTEL EMPLOYEES
UNION-NFL." Cullo clarified in subsequent documents captioned as
"National Federation of Labor and 79 Individual Employees, Union
Members, Complainants" that the individual complainants are not
representing the union, but filing the complaint through their appointed
attorneys-in-fact.
- While it is undisputed that a submission agreement was signed by
respondent and "IHEU-NFL," then represented by Joves and Cullo,
this Court finds that there are two circumstances which affect its
validity: first, the Notice of Mediation was filed by a party who had no
authority to do so; second, that the Hotel had persistently questioned
the authority of Joves, Cullo and the individual members of the Union
to file the complaint before the NCMB.
- Procedurally, the first step to submit a case for mediation is to file a
notice of preventive mediation with the NCMB. It is only after this step
that a submission agreement may be entered into by the parties
concerned.
Section 3, Rule IV of the NCMB Manual of Procedure provides who
may file a notice of preventive mediation, to wit: Any certified or duly
recognized bargaining representative may file a notice or request for
preventive mediation... In the absence of a certified or duly recognized
bargaining representative, any legitimate labor organization in the
establishment may file a notice, request preventive mediation or
declare a strike, but only on grounds of unfair labor practice.
- It is clear that only a certified or duly recognized bargaining agent
may file a notice or request for preventive mediation. It is curious that
even Cullo himself admitted that the case was filed not by the Union
but by individual members thereof. Clearly, therefore, the NCMB had
no jurisdiction to entertain the notice filed before it.
- Even though the Hotel signed a Submission Agreement, it had
immediately manifested its desire to withdraw from the proceedings
after it became apparent that the Union had no part in the complaint.
Only 4 days had lapsed after the signing of the Submission Agreement
when the Hotel called the attention of the AVA that the persons who
filed the instant complaint in the name of Insular Hotel Employees
Union-NFL had no authority to represent the Union. The Hotel cannot
be estopped in raising the jurisdictional issue, because it is basic that
the issue of jurisdiction may be raised at any stage of the proceedings,
even on appeal, and is not lost by waiver or by estoppel.
2. Petitioners have not been duly authorized to represent the union.
In Atlas Farms v. NLRC:
x x x Pursuant to Art 260, the parties to a CBA shall name or designate
their respective representatives to the grievance machinery and if the
grievance is unsettled in that level, it shall automatically be referred to
the voluntary arbitrators designated in advance by parties to a CBA.
- The CBA recognizes that DIHFEU-NFL is the exclusive bargaining
representative of all permanent employees. The inclusion of the word
"NFL" after the name of the local union merely stresses that the local
union is NFL's affiliate. It does not, however, mean that the local union
cannot stand on its own. The local union owes its creation and
continued existence to the will of its members and not to the federation
to which it belongs.
3. Coastal Subic Bay Terminal v. DOLE:
x x x A local union does not owe its existence to the federation with
which it is affiliated. It is a separate and distinct voluntary association
owing its creation to the will of its members. Mere affiliation does not
divest the local union of its own personality, neither does it give the
mother federation the license to act independently of the local union. It
only gives rise to a contract of agency, where the former acts in
representation of the latter. Hence, local unions are considered
principals while the federation is deemed to be merely their agent. x x x
- The NFL had no authority to file the complaint in behalf of the
individual employees.
4. In its Memorandum, the Hotel contends that IHEU-NFL is a non-
entity. While DOLE states that "IHEU-NFL" is not a registered labor
organization, the Hotel is estopped from questioning the same as it did
not raise the said issue in the proceedings before the NCMB and the
Voluntary Arbitrators. The main theory posed by the Hotel was W/N the
individual employees had the authority to file the complaint
notwithstanding the apparent non-participation of the union. It never
put in issue the fact that DIHFEU-NFL was not the same as IHEU-NFL.
Dispositive: CA AFFIRMED.
********************************************************************************
Elisco Elirol v. Noriel
Elisco-Elirol Labor Union (NAFLU) and its Officers and Members
of the Board of Directors v. Carmelo Noriel, in his capacity as BLR
Director, Elizalde Steel Consolidated, Inc. and National Federation
of Labor Unions (NAFLU)
29 Dec 1977
J. Teehankee | 1st Division
Facts:
Sometime on Feb 1974, Elisco Elirol Labor Union (NAFLU)
negotiated and executed a CBA with Elizalde Steel
Consolidated, Inc. Upon verification at the Registration Division,
Bureau of Labor Relations, the Elisco-Elirol Labor Union
(NAFLU), the contracting party in said CBA, was found to be
not then registered and therefore not entitled to the benefits
and privileges embodied in said CBA; thus, the members said
union in a general membership meeting decided in a resolution
to register their union to protect and preserve the integrity and
inviolability of the collective bargaining agreement between the
Elisco-Elirol Labor Union (NAFLU) and the Elizalde Steel
Consolidated, Inc.
Petitioner union applied for registration with the BLR. On May
28, 1975, Certificate of Registration No. 8511-IP was issued by
said Office. Steps were taken by petitioner to enforce the CBA
as the principal party to the same representing the workers
covered by such agreement immediately after the issuance of
the certificate of registration.
June 10, 1975: at a special meeting called for the purpose, the
general membership of the petitioner union adopted a
resolution to disaffiliate from their mother union, the National
Federation of Labor Unions. The petitioner union informed
respondents of said disaffiliation by means of a letter, and
subsequently requested the Company to recognize petitioner
as the sole and exclusive bargaining representative of the
employees thereof but the Company without any justifiable
reason refused and continues to refuse to recognize petitioner
as the sole and exclusive bargaining representative of its
employees, and, now actually dismissed the petitioner union's
officers and board members. In this connection, a complaint for
unfair labor practice was filed by petitioners against
respondents for the latter's refusal to bargain collectively with
petitioner.
On the basis of said refusal, petitioners filed a petition before
the BLR against respondents Elizalde Steel Consolidated, Inc.
and the National Federation of Labor Unions praying that the
mother union be ordered to stop from presenting itself as the
collective bargaining agent and pursuant thereto, a writ of
preliminary mandatory and prohibitory injunction be issued.
BLR issued an Order dismissing the petition for lack of merit.
On appeal, the BLR Director affirmed said dismissal. Hence
this petition.
Issue: Which of the two unions should be recognized as the sole and
exclusive bargaining representative of the employees and ultimately
recognized to administer and supervise the enforcement of the
collective bargaining agreement? Elico-Elirol Labor Union (NAFLU)
Held:
The union consisting of the members-employees of an employer is the
principal party to the collective bargaining agreement (rather than the
mother union which is merely its agent) and is therefore entitled to be
recognized as the sole and exclusive bargaining representative entitled
to administer and enforce the collective bargaining agreement with the
employer.
Respondent BLR director correctly perceived in his Resolution
that "to grant to the former mother union (NAFLU) the authority
to administer and enforce their collective bargaining agreement
without presumably any members in the bargaining unit is quite
absurd" but fell unto the grave error of holding that "When the
employees disaffiliated from the mother union and formed
themselves into a new union, their status as employees was
also terminated."

The employees and members of the local union did not form a
new union but merely registered the local union as was their
right. Petitioner Elisco-Elirol Labor Union-NAFLU, consisting of
employees and members of the local union was the principal
party to the agreement. NAFLU as the "mother union" in
participation in the execution of the bargaining agreement with
respondent company acted merely as agent of the local union,
which remained the basic unit of the association existing
principally and freely to serve the common interest of all its
members, including the freedom to disaffiliate when the
circumstances so warranted as in the present case. (Liberty
Cotton Mills Workers Union v. Liberty Cotton Mills)
The "substitutionary" doctrine likewise fully supports petitioner's
stand. Petitioner union to whom the employees owe their
allegiance has from the beginning expressly avowed that it
"does not intend to change and/or amend the provisions of the
present collective bargaining agreement but only to be given
the chance to enforce the same since there is a shift of
allegiance in the majority of the employees at respondent
company."
Benguet Consolidated Inc. vs. BCI Employees & Workers
Union-PAFLU: This principle, formulated by the NLRB as its
initial compromise solution to the problem facing it when there
occurs a shift in employees' union allegiance after the
execution of a bargaining contract with their employer, merely
states that even during the effectivity of a collective bargaining
agreement executed between employer and employees thru
their agent, the employees can change said agent but the
contract continues to bind then up to its expiration date. They
may bargain however for the shortening of said expiration date.
In formulating the "substitutionary" doctrine, the only
consideration involved as the employees' interest in the existing
bargaining agreement. The agent's interest never entered the
picture. The justification for said doctrine was that the majority
of the employees, as an entity under the statute, is the true
party in interest to the contract, holding rights through the
agency of the union representative. Thus, any exclusive
interest claimed by the agent is defeasible at the will of the
principal.
What is paramount, as it is expressly and explicitly emphasize
in an exacting language under the New Constitution, is the
security of tenure of the workers, not the security of the union.
To impress, therefore, such "maintenance of membership"
which is intended for the security of the union rather than the
security of tenure of the workers as a bar to employees'
changing their affiliation is not only to infringe on the
constitutional right of freedom of association, but also to
trample upon the constitutional right of workers to security of
tenure and to render meaningless whatever "adequate social
services" the State may establish or maintain in the field of
employment "to guarantee the enjoyment by the people of a
decent standard of living."
Disposition: Petition is granted and the appealed resolution is set
aside. Petitioner local union is declared to be the sole and exclusive
bargaining representative of the employees of respondent corporation
entitled to administer and enforce any subsisting collective bargaining
agreement with said employer corporation.
********************************************************************************
BENGUET CONSOLIDATED, INC. vs. BCI EMPLOYEES &
WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA
OCTOBER 23, 2012
BENGUET CONSOLIDATED, INC. vs. BCI EMPLOYEES &
WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA
G.R. No. L-24711,; Apr 30, 1968
FACTS:
On June 23, 1959, the Benguet-Balatoc Workers Union (BBWU), for
and in behalf of all Benguet Consolidated, Inc (BENGUET) employees
in its mines and milling establishment located at Balatoc, Antamok and
Acupan, Mt. Province, entered into a Collective Bargaining Contract
(CONTRACT) with BENGUET. The CONTRACT was stipulated to be
effective for a period of 4-1/2 years, or from June 23, 1959 to
December 23, 1963. It likewise embodied a No-Strike, No-Lockout
clause.
3 years later, or on April 6, 1962, a certification election was conducted
by the Department of Labor among all the rank and file employees of
BENGUET in the same collective bargaining units. BCI EMPLOYEES
& WORKERS UNION (UNION) obtained more than 50% of the total
number of votes, defeating BBWU. The Court of Industrial Relations
certified the UNION as the sole and exclusive collective bargaining
agent of all BENGUET employees as regards rates of pay, wages,
hours of work and such other terms and conditions of employment
allowed them by law or contract.
Later on, the UNION filed a notice of strike against BENGUET. UNION
members who were BENGUET employees in the mining camps at
Acupan, Antamok and Balatoc, went on strike. The strike was attended
by violence, some of the workers and executives of the BENGUET
were prevented from entering the premises and some of the properties
of the BENGUET were damaged as a result of the strike. Eventually,
the parties agreed to end the dispute. BENGUET and UNION executed
the AGREEMENT. PAFLU placed its conformity thereto. About a year
later or on January 29, 1964, a collective bargaining contract was
finally executed between UNION-PAFLU and BENGUET.
Meanwhile, BENGUET sued UNION, PAFLU and their Presidents to
recover the amount the former incurred for the repair of the damaged
properties resulting from the strike. BENGUET also argued that the
UNION violated the CONTRACT which has a stipulation not to strike
during the effectivity thereof.
Defendants unions and their presidents defended that: (1) they were
not bound by the CONTRACT which BBWU, the defeated union, had
executed with BENGUET; (2) the strike was due, among others, to
unfair labor practices of BENGUET; and (3) the strike was lawful and in
the exercise of the legitimate rights of UNION-PAFLU under Republic
Act 875.
The trial court dismissed the complaint on the ground that the
CONTRACT, particularly the No-Strike clause, did not bind defendants.
BENGUET interposed the present appeal.
ISSUE:
Did the Collective Bargaining Contract executed between Benguet and
BBWU on June 23, 1959 and effective until December 23, 1963
automatically bind UNION-PAFLU upon its certification, on August 18,
1962, as sole bargaining representative of all BENGUET employees

RULING:
NO. BENGUET erroneously invokes the so-called Doctrine of
Substitution referred to in General Maritime Stevedores Union v.
South Sea Shipping Lines where it was ruled that:
We also hold that where the bargaining contract is to run for more
than two years, the principle of substitution may well be adopted and
enforced by the CIR to the effect that after two years of the life of a
bargaining agreement, a certification election may be allowed by the
CIR, that if a bargaining agent other than the union or organization that
executed the contract, is elected, said new agent would have to
respect said contract, but that it may bargain with the management for
the shortening of the life of the contract if it considers it too long, or
refuse to renew the contract pursuant to an automatic renewal clause.
BENGUETs reliance upon the Principle of Substitution is totally
misplaced. This principle, formulated by the NLRB as its initial
compromise solution to the problem facing it when there occurs a shift
in employees union allegiance after the execution of a bargaining
contract with their employer, merely states that even during the
effectivity of a collective bargaining agreement executed between
employer and employees thru their agent, the employees can change
said agent but the contract continues to bind them up to its expiration
date. They may bargain however for the shortening of said expiration
date.
In formulating the substitutionary doctrine, the only consideration
involved was the employees (principal) interest in the existing
bargaining agreement. The agents (union) interest never entered the
picture. The majority of the employees, as an entity under the statute,
is the true party in interest to the contract, holding rights through the
agency of the union representative. Thus, any exclusive interest
claimed by the agent is defeasible at the will of the principal. The
substitutionary doctrine only provides that the employees cannot
revoke the validly executed collective bargaining contract with their
employer by the simple expedient of changing their bargaining agent.
And it is in the light of this that the phrase said new agent would have
to respect said contract must be understood. It only means that the
employees, thru their new bargaining agent, cannot renege on their
collective bargaining contract, except of course to negotiate with
management for the shortening thereof.
The substitutionary doctrine cannot be invoked to support the
contention that a newly certified collective bargaining agent
automatically assumes all the personal undertakings like the no-
strike stipulation here in the collective bargaining agreement made
by the deposed union. When BBWU bound itself and its officers not to
strike, it could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the
employees, not of the other unions which possess distinct
personalities.
UNION, as the newly certified bargaining agent, could always
voluntarily assume all the personal undertakings made by the
displaced agent. But as the lower court found, there was no showing at
all that, prior to the strike, UNION formally adopted the existing
CONTRACT as its own and assumed all the liabilities imposed by the
same upon BBWU. Defendants were neither signatories nor
participants in the CONTRACT.
Everything binding on a duly authorized agent, acting as such, is
binding on the principal; not vice-versa, unless there is mutual agency,
or unless the agent expressly binds himself to the party with whom he
contracts. Here, it was the previous agent who expressly bound itself
to the other party, BENGUET. UNION, the new agent, did not assume
this undertaking of BBWU.
Since defendants were not contractually bound by the no-strike clause
in the CONTRACT, for the simple reason that they were not parties
thereto, they could not be liable for breach of contract to plaintiff.
WHEREFORE, the judgment of the lower court appealed from is
hereby affirmed.
********************************************************************************
G.R. No. 74841 December 20, 1991
ASSOCIATED LABOR UNIONS-VIMCONTU, THE CEBU OIL
EMPLOYEES ASSOCIATION, represented by its Acting President,
MIGUEL C. ALIVIADO, and THE MOBIL DAVAO/ COTABATO
CHAPTER-ALU, represented by its President, DAVID C.
ONDEVILLA, petitioners, vs. THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC), MOBIL OIL PHILIPPINES, INC., JEAN
PIERRE BAILLEUX, CALTEX PHILIPPINES, INC., and MOBIL
PHILIPPINES, INC.,
respondents.
FACTS:
A collective bargaining agreement was entered into between the
complainants and the respondent Mobil Oil Philippines, Inc. for a
period of three years starting from April 1, 1982 to March 31, 1985. On
August 5, 1983, respondent J.P. Bailiux, President of Mobil Oil
Philippines, Inc. sent letters to the employees, notifying of the
termination of their services effective August 31, 1983 because of the
sale of the respondent firm. On September 13, 1983, complainant
employee accepted their checks for separation pay and signed quit-
claims under protest and subject to the outcome of this case. Caltex
Philippines, Inc. was impleaded as additional respondent because of
its acquisition of the entire marketing and distribution assets of Mobil
Oil Philippines. Mobil Philippines, Inc. was also made a respondent in
view of a metropolitan daily newspaper announcement that Mobil Oil
Philippines, Inc. will continue to do business under the corporate name
of Mobil Philippines, Inc. and that this newly formed company will
market chemicals and special products such as solvents, process
products, waxes and industrial asphalt, fuels and lubricants for the
international marine and aviation industries. Complainants charge
respondent Mobil Oil Philippines, Inc. and J.P. Bailiux with unfair labor
practice for violating their collective bargaining agreement which,
among others, states that "this Agreement shall be binding upon the
parties hereto and their successors and assigns, and may be assigned
by the company without the previous approval of the Union. However,
the latter will be notified of such assignment when it occurs." In this
case, the complainant unions were not notified officially of such
assignment to Caltex Philippines and respondent Mobil Oil Philippines
made announcement in major dailies that the company shall continue
to operate its business.
ISSUE:
Whether or not respondents Caltex and MOPI bound by the provisions
of the CBA.
RULING:
Yes, the Commission finds that although Caltex is bound by the said
agreement under Section I thereof, the rights and interests or benefits
that may have been earned during the remaining term of the CBA have
been satisfied by MOPI when herein complainants accepted their
respective checks and executed quitclaim from and in favor of the firm.
In G.R. No. 74841, petitioners assail the above decision and contend
that the NLRC committed serious errors of law and grave abuse of
discretion when it ruled to justify the termination that : (a) petitioners
had knowledge of the impending sale to Caltex and closure of the
company in a series of negotiations/meetings by considering it as a
sufficient notice of termination; (b) the situation was one of closure and
not redundancy; (c) the rights and interests or benefits that may have
been earned during the remaining term of the CBA have been satisfied
by MOPI when complainants accepted their respective checks and
executed quitclaim from and in favor of the firm; (d) the benefits
granted by respondent MOPI were far above the benefits provided by
law; and (e) as regards the liability of Mobil Philippines, Inc., there is no
concrete evidence to establish or prove complainants' allegation that
MOPI will continue its business.
********************************************************************************
SAN MIGUEL CORP EMPLOYEES UNION-PTGWO vs. CONFESOR
OCTOBER 25, 2012
G.R. No. 111262 September 19, 1996
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO,
represented by its President RAYMUNDO HIPOLITO, JR. vs. HON.
MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor &
Employment, SAN MIGUEL CORPORATION, MAGNOLIA
CORPORATION (Formerly, Magnolia Plant) and SAN MIGUEL
FOODS, INC. (Formerly, B-Meg Plant)
FACTS: On June 28, 1990, petitioner-union San Miguel Corporation
Employees Union PTGWO entered into a CBA with private
respondent San Miguel Corporation (SMC) to take effect upon the
expiration of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT
Sec. 1. This Agreement which shall be binding upon the parties hereto
and their respective successors-in-interest, shall become effective and
shall remain in force and effect until June 30, 1992.
Sec. 2. In accordance with Article 253-A of the Labor Code as
amended, the term of this Agreement insofar as the representation
aspect is concerned, shall be for five (5) years from July 1, 1989 to
June 30, 1994. Hence, the freedom period for purposes of such
representation shall be sixty (60) days prior to June 30, 1994.
Sec. 3. Sixty (60) days prior to June 30, 1992 either party may initiate
negotiations of all provisions of this Agreement, except insofar as the
representation aspect is concerned. If no agreement is reached in such
negotiations, this Agreement shall nevertheless remain in force up to
the time a subsequent agreement is reached by the parties.
Meanwhile, effective October 1, 1991, Magnolia and Feeds and
Livestock Division were spun-off and became two separate and distinct
corporations: Magnolia Corporation (Magnolia) and San Miguel Foods,
Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force
and effect.
After June 30, 1992, the CBA was renegotiated in accordance with the
terms of the CBA and Article 253-A of the Labor Code. Negotiations
started sometime in July, 1992 with the two parties submitting their
respective proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the
bargaining unit of SMC should still include the employees of the spun-
off corporations: Magnolia and SMFI; and that the renegotiated terms
of the CBA shall be effective only for the remaining period of two years
or until June 30, 1994.
SMC, on the other hand, contended that the members/employees who
had moved to Magnolia and SMFI, automatically ceased to be part of
the bargaining unit at the SMC. Furthermore, the CBA should be
effective for three years in accordance with Art. 253-A of the Labor
Code.
Unable to agree on these issues with respect to the bargaining unit
and duration of the CBA, petitioner-union declared a deadlock on
September 29, 1990.
(Notice of strikeSecretary assumed jurisdiction)
Secretarys decision: the CBA shall be effective for the period of 3
years from June 30, 1992; and that such CBA shall cover only the
employees of SMC and not of Magnolia and SMFI.
ISSUES: 1) Whether or not the duration of the renegotiated terms of
the CBA is to be effective for three years of for only two years; and 2)
Whether or not the bargaining unit of SMC includes also the
employees of the Magnolia and SMFI.
HELD: We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as amended
which reads:
Art. 253-A. Terms of a CBA. Any CBA that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a term
of 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 CBA. All other provisions of the CBA shall be
renegotiated not later than 3 years after its execution. Any agreement
on such other provisions of the CBA entered into within 6 months from
the date of expiry of the term of such other provisions as fixed in such
CBA, shall retroact to the day immediately following such date. If any
such agreement is entered into beyond six months, the parties shall
agree on the duration of retroactivity thereof. In case of a deadlock in
the renegotiation of the CBA, the parties may exercise their rights
under this Code. (Emphasis supplied.)
The representation aspect refers to the identity and majority status of
the union that negotiated the CBA as the exclusive bargaining
representative of the appropriate bargaining unit concerned. All other
provisions simply refers to the rest of the CBA, economic as well as
non-economic provisions, except representation.
The law is clear and definite on the duration of the CBA insofar as the
representation aspect is concerned, but is quite ambiguous with the
terms of the other provisions of the CBA. It is a cardinal principle of
statutory construction that the Court must ascertain the legislative
intent for the purpose of giving effect to any statute.
(as usual mahabang conversation ng mga framers)
Obviously, the framers of the law wanted to maintain industrial peace
and stability by having both management and labor work harmoniously
together without any disturbance. Thus, no outside union can enter the
establishment within 5 years and challenge the status of the incumbent
union as the exclusive bargaining agent. Likewise, the terms and
conditions of employment (economic and non-economic) can not be
questioned by the employers or employees during the period of
effectivity of the CBA. The CBA is a contract between the parties and
the parties must respect the terms and conditions of the agreement.
Notably, the framers of the law did not give a fixed term as to the
effectivity of the terms and conditions of employment. It can be
gleaned from their discussions that it was left to the parties to fix the
period.
The issue as to the term of the non-representation provisions of the
CBA need not belaboured. The parties, by mutual agreement, enter
into a renegotiated contract with a term of three (3) years or one which
does not coincide with the said 5-year term, and said agreement is
ratified by majority of the members in the bargaining unit, the subject
contract is valid and legal and therefore, binds the contracting parties.
Thus, we do not find any grave abuse of discretion on the part of the
Secretary of Labor in ruling that the effectivity of the renegotiated terms
of the CBA shall be for 3 years.
II. Undeniably, the transformation of the companies was a
management prerogative and business judgment which the courts can
not look into unless it is contrary to law, public policy or morals. Neither
can we impute any bad faith on the part of SMC so as to justify the
application of the doctrine of piercing the corporate veil.18 Ever mindful
of the employees interests, management has assured the concerned
employees that they will be absorbed by the new corporations without
loss of tenure and retaining their present pay and benefits according to
the existing CBAs. 19 They were advised that upon the expiration of
the CBAs, new agreements will be negotiated between the
management of the new corporations and the bargaining
representatives of the employees concerned.
Indubitably, therefore, Magnolia and SMFI became distinct entities with
separate juridical personalities. Thus, they can not belong to a single
bargaining unit.
Moreover, in determining an appropriate bargaining unit, the test of
grouping is mutuality or commonality of interests. The employees
sought to be represented by the collective bargaining agent must have
substantial mutual interests in terms of employment and working
conditions as evinced by the type of work they performed. 22
Considering the spin-offs, the companies would consequently have
their respective and distinctive concerns in terms of the nature of work,
wages, hours of work and other conditions of employment. Interests of
employees in the different companies perforce differ. The nature of
their products and scales of business may require different skills which
must necessarily be commensurated by different compensation
packages. The different companies may have different volumes of
work and different working conditions. For such reason, the employees
of the different companies see the need to group themselves together
and organize themselves into distinctive and different groups. It would
then be best to have separate bargaining units for the different
companies where the employees can bargain separately according to
their needs and according to their own working conditions.
WHEREFORE, the petition is DISMISSED for lack of merit.
University of the Immaculate Conceptionv. Secretary of Labor &
Employment, UIC Teaching & Non-Teaching Employees Union-
FFW, et al., G.R. NOS. 178085 - 178086, September 14, 2015
Doctrine:
1. Confidential employees should be excluded from the bargaining
unit and disqualified from joining any union: employees should
not be placed in a position involving a potential conflict of
interests.
2. In the case at bar, the secretaries, registrars, accounting
personnel and guidance counselors of UIC were considered as
confidential employees and were validly terminated due to their
refusal to resign from the Union.
Facts:
1. UIC is an educational institution with campuses at Fr. Selga
and Bonifacio Sts., Davao City. Private respondent [Union] is
the certified sole bargaining agent of UIC's rank and file
employees.
2. Union filed a notice of strike on the grounds of bargaining
deadlock and unfair labor practice.
3. On the same occasion, the UIC demanded the exclusion of
secretaries, registrars, accounting personnel and guidance
counselors [Respondent employees] from the bargaining unit,
on account of them being confidential employees.
4. Arbitration Panel: The parties agreed to submit this issue to
voluntary arbitration, the arbitration panel sustained the UIC
and ruled that the respondent employees are confidential
employees
5. UIC gave the affected respondent employees the option to
choose between keeping their positions or resigning from the
Union. When they elected to keep both their positions and their
union membership, UIC sent them notices of termination, which
led into a notice of strike.
6. Secretary: Ordered UIC to reinstate the respondent employees.
This Order was later modified by directing the payroll
reinstatement of the respondent employees, instead of physical
reinstatement. Secretary ruled that the respondent employees
were illegally dismissed.
7. CA: Upheld the Secretary's conclusion of illegal dismissal on
the ground that UIC could not validly prevent them from joining
the Union since they did not perform managerial functions.
a. The appellate court opined that notwithstanding the
confidential nature of Respondent Employees' position,
they were not prohibited from joining the Union; hence,
their dismissal by UIC was not legally justified.
b. The Court of Appeals subsequently denied UIC's
motions for reconsideration
8. In a separate comment filed by the respondent employees, they
claim that they have the right to maintain their union
membership not for the purpose of collective bargaining, but for
legal representation in dealing with the employer; thus, there is
no legal justification for their dismissal.
Issue: Whether a confidential employee's refusal to vacate his / her
union membership is a valid ground for dismissal.
Held: YES. The Secretary and CA believe it is not. We reverse.
1. Arbitration panel settled that respondent employees are
confidential employees:
a. As a preliminary matter, we clarify that the issue of
whether or not the respondent employees are
confidential employees has long been settled and its
reexamination is already barred byres judicata.
b. The panel of voluntary arbitrators had already
determined that the respondent employees are
confidential employees who must be excluded from
the bargaining unit.The Arbitration Case having
attained finality, the issues resolved may no longer
be disturbed or modified.
2. UIC informed them of the loss of confidence:
a. UIC cites willful disobedience and "loss of
confidence" as the grounds for dismissing the
respondent employees.
b. In its termination letters, UIC informed them that
because of their continued union membership
notwithstanding the voluntary arbitration decision,
"management no longer has any trust and
confidence in you in the delicate, sensitive and
confidential position you hold."
c. Generally, employers are given wide latitude in
terminating the services of employees who perform
functions which by their nature require the
employer's full trust and confidence. Nonetheless,
employers do not have unbridled authority to
dismiss employees by simply invoking Article 282(c).
The loss of confidence must be genuine and cannot
be used as a subterfuge for causes which are
illegal.
3. Requisites of loss of confidence: In determining whether
loss of confidence is a just cause for dismissal under Article
282(c), we laid down the following requisites in the 2008
case ofBristol Myers Squibb (Phils.), Inc. v. Baban:
a. The employee must hold a position of trust and
confidence.
b. There must be awillfulact that would justify the loss
of trust and confidence.
st
4. 1 requisite present respondent employees hold position of
trust and confidence: As a rule, loss of confidence may only
be invoked by the employer against an employee occupying
a position of responsibility, trust and confidence hence,
the first requisite. Ordinarily, this would require us to make a
determination with regard to the true nature of the
respondent employees' positions.
a. HERE: But given the facts of this case, noting in
particular the final and executory decision in the
Arbitration Case which deemed respondent
employees as confidential employees, we only now
n e e d t o d e t e r m i n e w h e t h e r c o n fi d e n t i a l
employeeshold positions of trust and confidence.
5. Respondent employees are fiduciary rank and file
employees: Bristol Myers and subsequent cases
essentially follow the same formula by subdividing
 positions of trust and confidence into two classes: (1)
managerial employees and (2) fiduciary rank-and-file
employees.
a. HERE: Respondent employees fall under the latter
category.
nd
6. 2 requisite present respondent employees refusal is a
willful act: The essence of the second requisite is that the
loss of confidence must be based on a willful breach of trust
founded on clearly established facts.
a. HERE: It is not disputed that the respondent
employees refused to resign from the Union,
notwithstanding the decision in the Arbitration Case.
Respondent Employees do not claim that they were
coerced into retaining their union membership; in
fact, they even insist upon their right to join the
Union.
b. HERE: The voluntariness of respondent employees'
refusal to vacate their union membership which
constitutes the "willful act" is therefore
unequivocally established.
7. We hold that the willful act of refusing to leave the Union is
sufficient basis for UIC to lose its trust and confidence on
respondent employees.
a. There was just cause for dismissing the respondent
employees.
b. In this regard, CA erred in holding that they are
allowed to join the Union.If Respondent Employees
were allowed to retain their union membership, UIC
would not be assured of their loyalty because of the
apparent conflict between the employees' personal
interests and their duty as confidential employees.
WHEREFORE, the petition is PARTIALLY GRANTED and
the appealed Decision are MODIFIED as follows: (1)
petitioner's dismissal of respondent employees is hereby
declared valid for just cause and petitioner is therefore
authorized to remove the aforementioned employees from
its payroll upon finality of this decision; and (2) petitioner is
ordered to pay each of the Respondent-Employees the sum
of Thirty Thousand Pesos (Php30,000.00) as nominal
damages for non-compliance with the mandatory
procedural due process requirements. The Decision and
Resolution areAFFIRMEDin all other respects.
********************************************************************
SAN MIGUEL FOODS, INC., - versus - SAN
MIGUELCORPORATION EMPLOYEES UNION-PTWGO,
Oct 5, 2007
DOCTRINE
ULP case to be cognizable by the LA, and the NLRC to
exercise its appellate jurisdiction, the allegations in the
complaint should 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.
The Union charges SMFI to have violated the grievance machinery
provision in the CBA. The grievance machinery provision in the
CBA is not an ECONOMIC PROVISION, however, hence, the
second requirement for a LA to exercise jurisdiction of a ULP is
not present.
FACTS:
San Miguel Corporation Employees Union PTWGO
(the Union), was the sole bargaining agent of all the monthly
paid employees of petitioner San Miguel Foods, Incorporated
(SMFI).
STEP 1
 On November 9, 1992, some employees of SMFIs Finance
Department, through the Union represented by Edgar Moraleda,
brought a grievance against Finance Manager GideonMontesa,
for discrimination, favoritism, ULPs harassment, promoting
divisiveness and sectarianism, etc.,before SMFI Plant Operations
Manager George Nava in accordance with Step 1 of the
grievance machinery adopted in the CBA forged by SMFI and the
Union.
STEP 2
The Union sought the evaluation and upgrading off all Finance
staff and promotion of Montesato other SMC affiliates.
At the grievance meeting held on Jan 14, 1993, SMFI informed
the Union that it planned to address the grievance through a
work management review which would be completed by March
1993.
The work management review was not completed by March
1993, however, prompting the Union to, on March 26,
1993,elevate the grievance to Step 2.
Almost nine months after the grievance meeting was held or onOct
6, 1993, SMFI rendered a Decision on Step 1 Grievance stating
that it was still in the process of completing the work
management review, hence, the Unions requests could not be
granted.
The Union filed a complaint on Oct 20, 1993 before the NLRC
against SMFI, its President, and Montesa for ULP, and unjust
discrimination in matters of promotion. It prayed that SMFI be
ordered to promote the named employees and to cease and desist
from committing the same unjust discrimination in matters of
promotion.
SMFI et al. filed a MTD contending that the issues raised in the
complaint were GRIEVANCE ISSUES and, therefore, should be
resolved in the GRIEVANCE MACHINERY in CBA or in the
mandated provision of voluntary arbitration which is also provided
in the CBA.
Union specified acts of ULP of SMFI et al. under Article 248,
paragraphs (e) and (i) of the Labor Code:
o (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. xxx
o (i) To violate a CBA.
LA granted SMFI et al.s MTD and ordered the remand of the
case to the grievance machinery for completion of the
proceedings.
Union appealed the said order to the NLRC by MR which was
granted and ordered the LA to continue the proceedings on
theUnions complaint.
SMFI et al. filed a MR of the NLRC order but it was denied, hence,
they filed a petition for certiorari with this Court.
SC referred the case to the CA. [St. Martin Funeral Homes v.
NLRC]
CA: LA has jurisdiction over the complaint of theUnion, they having
violated the seniority rule under the CBA by appointing and
promoting certain employees which amounted to a ULP.
SMFI lodged the present petition for review on certiorari.
ISSUES:
WON THE LA HAS JURISDICTION OVER THE COMPLAINT
OF RESPONDENTUNION. YES.
 The jurisdiction of LAs, enumerated in Article 217 of the Labor WON SMFIS COMMITTED VIOLATION OF THE CBA THAT
Code, includes complaints for ULP.
CONSTITUTES ULP.

SUB-ISSUE: ALLEGATIONS IN THE COMPLAINT.
SMFI: allegations in the Unions complaint do not establish a cause
of action, the Union having merely contended that SMFI was
guilty thereof without specifying the ultimate facts upon which
it was based.(Rule 8.1 of the ROC).
Alleging that the Union failed to comply with this Rule, SMFI
concludes that the LA has no jurisdiction over its complaint.
Although the particular acts of ULP were not specified. In its
Position Paper28 , however, the Union detailed the particular acts
of ULP attributed to SMFI and the ultimate facts in support thereof.
Section 7, Rule V of the New Rules of Procedure of the NLRC
provides: Nature of Proceedings. The proceedings before the
LA shall be non-litigious in nature. Subject to the requirements
of due process,the technicalities of law and procedure andthe
rules obtaining in the courts of law shall not strictly apply
thereto.
On the questioned promotions, the Union did not allege that they
were done to encourage or discourage membership in a labor
organization. In fact, those promoted were members of the
complaining Union. The promotions do not thus amount to ULP
under Article 248(e) of the Labor Code.
As for the alleged ULP committed under Article 248(i), for violation
of a CBA, this Article is qualified by Article 261 of the Labor Code,
the pertinent portion of which latter Article reads:
o xxxviolations of a CBA,except those which are
gross in character, shall no longer be treated as
ULP andshall be resolved as grievances under the
CBA. For purposes of this article, gross
violations of CBA shall mean flagrant and/or
malicious refusal to comply with
theeconomicprovisions of such agreement.
o Silva v. NLRCinstructs that for a
o ULP case to be cognizable by the LA, and the NLRC
to exercise its appellate jurisdiction, the allegations

28

1. large scale and wanton unjust discrimination in matters of promotion, particularly upon the following members of complainant: Ellen Ventura, Julie Geronimo,
Ronnie Cruz, Rita Calasin, Romy de Peralta, Malou Alano, And E. M. Moraleda, all assigned with the Finance Department or respondent SMFI.
2. gross and blatant violations by respondent SMFI of Section 5, Article III (Job Security) and Section 4, Article VIII (Grievance Machinery) of the current CBA
between complainant and SMFI.
 i n t h e c o m p l a i n t s h o u l d s h o w p r i m a
facietheconcurrence of two things, namely:
(1) gross violation of the CBA; AND
(2) the violation pertains to the
economic provisions of the CBA.
RELEVANT PART: GREIVANCE MACHINERY IS NOT AN
ECONOMIC PROVISION
TheUnioncharges SMFI to have violated the grievance machinery
provision in the CBA.The grievance machinery provision in the
CBA is not an economic provision, however, hence, the
second requirement for a LA to exercise jurisdiction of a ULP
is not present.
The Union likewise charges SMFI, however, to have violated the
Job Security provision in the CBA, specifically the SENIORITY
RULE, in that SMFI appointed less senior employees to positions
at its Finance Department, consequently intentionally by-passing
more senior employees who are deserving of said appointment.
Since the seniority rule in the promotion of employees has a
bearing on salary and benefits, it may, following a liberal
construction of Article 261 of the Labor Code, be considered an
economic provision of the CBA.
As above-stated, the Union charges SMFI to have promoted less
senior employees, thus bypassing others who were more senior
and equally or more qualified.It may not be seriously disputed that
this charge is a gross or flagrant violation of the seniority rule under
the CBA, a ULP over which the LA has jurisdiction.
SMFI, at all events, questions why the CA came out with a finding
that it (SMFI) disregarded the seniority rule under the CBA when its
petition before said court merely raised a question of
jurisdiction.The CA having affirmed the NLRC decision finding that
the LA has jurisdiction over the Unions complaint and thus
remanding it to the LA for continuation of proceedings thereon, the
appellate courts said finding may be taken to have been made
only for the purpose of determining jurisdiction.
WHEREFORE, the Petition isDENIED.
********************************************************************
237. Sundowner Development Corporation v. Drilon (Millena)
Private Respondent: National Union of Workers in Hotel,
Restaurant, and Allied Industries (NUWHRAIN), Hotel Mabuhay
Chapter
Facts:
1. Hotel Mabuhay Inc., leased the premises belonging to Santiago
Syjuco, Inc. Due to non-payment of rentals, Syjuco filed a
complaint against Mabuhay in the MTC. Mabuhay offered to
amicably settle the case surrendering the premises to Syjuco
and to sell its assets and personal property to any interested
party.
2. Syjuco offered the said premises to Sundowner. The
negotiation resulted in a contract to commence in 1987 until
1992.
3. Mabuhay offered to sell its assets and personal properties to
petitioner to which petitioner agreed. A deed of assignment was
executed by Mabuhay in favor of Sundowner.
4. On May 1987, NUWHRAIN picketed the leased premises,
barricaded the entrance to the leased premises and denied
petitioners officers, employees and guests free access to and
 egress from said premises. Thus, Sundowner complained to
Syjuco.
5. A complaint for damages and preliminary injunction and/or TRO
was filed by Sundowner. The judge issued a TRO but
NUHWRAIN maintained their strike.
6. On May 14, 1987, Drilon issued an order assuming jurisdiction
over the labor dispute pursuant to Article 263g of the labor code
and required to employees to return to work and for Mabuhay
to accept the employees pending final determination of the
issue on absorption of the former employees of Mabuhay.
7. Mabuhay, in its answer alleged that it sold all its assets and
personal properties to Sundowner and there was no sale or
transfer of its shares and that Mabuhay completely ceased
operation effective April 28, 1987.
8. June 26, 1987 Sundowner signed a tri-partite agreement with
Mabuhan and NUHWRAIN whereby Mabuhay paid to
NUHWRAIN the sum of P638,000.00 in addition to the first
payment of P386,447 for which reason NUWHRAIN agreed to
lift the picket.
9. NUWHRAIN alleges that connivance between Mabuhay and
petitioner in selling the assets and closing the hotel to escape
its obligations to the employees of Mabuhay.
10. Drilon issued an order requiring Sundowner to absorb the
members of the union and to pay backwages.
ISSUE:
WON the purchaser of the assets of an employer corporation can be
considered a successor-employer of the latters employees.
HELD:
NO.
General rule: Labor contracts and collective bargaining agreements
are not enforceable against third party transferee of an enterprise,
labor contracts being in personam, thus binding only between the
parties. A labor contract merely creates an action in personam and
does not create any real right which should be respected by third
parties. This conclusion draws its force from the right of an
employer to select his employees and to decide when to engage
them as protected under the Constitution.
Exceptions:
1. Unless expressly assumed.
2. If the transfer of enterprise is colored or clothed with bad faith.
In this case, Sundowner did not assume the obligation to absorb the
employees. Neither was ther bad faith. Mabuhay surrendered the
leased premises to Syjuco who found petitioner and persuaded
petitioner to lease the said premises. It was only when Mabuhay
offered to sell its assets and personal properties in the premises to
petitioner that they came to deal with each other. Petitioner agreed to
purchase said assets to enable Mabuhay to pay its obligations to
Syjuco and its striking employees.
********************************************************************************
MANLIMOS vs. NLRC
FACTS:
Petitioners were regular EEs of the Super Mahogany Plywood
Corporation.
1991 - a new owner/management group headed by Alfredo
Roxas acquired complete ownership of the corporation. Petitioners
continued to work for the new owner until in Dec., 1991 they were
terminated (with their consent), for which they received separation pay
and executed Quitclaims/Waivers.
New owner started to hire new EEs but accepted some of the
separated EEs on a probationary basis and paid on piece rate/task
basis.
Some time after, however, two were dismissed for abandoning
their work, while the rest were dismissed for acts prejudicial to the new
management. Illegal termination complaints were thus filed against
management.
LA ruled in favor of EEs, saying they remained regular EEs and
could not be validly terminated without just cause.
NLRC reversed, ruling that the change of ownership was made
in good faith. That being so, it further underscored: The sale or
disposition of a business enterprise which has been motivated by good
faith is "an element of exemption from liability." Thus, "an innocent
transferee of a business has no liability to the employees of the
transfer or to continue employing them. Nor is the transferee liable for
past unfair labor practices of the previous owner, except, when the
liability is assumed by the new employer under the contract of sale, or
when liability arises because the new owners participated in thwarting
or defeating the rights of the employees."
ISSUE:
WON the termination by new management was valid
HELD/RATIO:
SC upheld the NLRCs ruling and ratiocination as correct, albeit
with modification.
Court reiterated: Where such transfer of ownership is in good
faith, the transferee is under no legal duty to absorb the transferor
employees as there is no law compelling such absorption.
Moreover, the hiring of employees on a probationary basis is an
exclusive management prerogative. The employer has the right or
privilege to choose who will be hired and who will be denied
employment. It is within the exercise of this right that the employers
may set or fix a probationary period within which it may test and
observe the employee's conduct before hiring him permanently.
In the instant case, only the termination of the two who were
alleged to have abandoned their work can be deemed invalid, as it was
not adequately proven by the ER. Considering, however, that their
probationary employment would have expired soon anyway,
reinstatement is no longer feasible. Thus, the company is ordered to
pay them backwages up to the time their employment would have
expired.
********************************************************************************
SME BANK INC., ABELARDO P. SAMSON, OLGA SAMSON and
AURELIO VILLAFLOR, JR., Petitioners, vs.
PEREGRIN T. DE GUZMAN,EDUARDO M. AGUSTIN, JR.,
ELICERIO GASPAR, , RICARDO GASPAR JR., EUFEMIA
ROSETE, FIDEL ESPIRITU, SIMEONESPIRITU, JR., and LIBERATO
MANGOBA, Respondents.
SME BANK INC., ABELARDO P. SAMSON, OLGA SAMSON and
AURELIO VILLAFLOR, JR., Petitioners, vs.
ELICERIO GASPAR, RICARDO GASPAR, JR., EUFEMIA ROSETE,
FIDEL ESPIRITU, SIMEONESPIRITU, JR., and
LIBERATO MANGOBA, Respondents.
J. Gonzaga-Reyes October 8, 1999 G.R. No. 108472
Doctrine: Security of tenure is a constitutionally guaranteed right.
Employees may not be terminated from their regular employment
except for just or authorized causes under the Labor Code and other
pertinent laws. A mere change in the equity composition of a
corporation is neither a just nor an authorized cause that would legally
permit the dismissal of the corporations employees en masse.
Summary: As a result of the sale of SME bank to one Abelardo
Samson, the respondents were asked to submit their resignation
letters with the promise that they would be rehired upon application.
However, when respondents followed up on their application they were
refused so they filed a complaint for illegal dismissal. The Court ruled
that the sale merely involved the stocks of the company and not the
assets, hence does not involve a change of management. As a result,
the respondents were dismissed in bad faith because of the desire of
SME to sell its stocks without regard to due process in terminating
employment of the respondents.
Facts Respondent employees Elicerio Gaspar (Elicerio), Ricardo
Gaspar, Jr.(Ricardo), Eufemia Rosete (Eufemia),
Fidel Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and Liberato
Mangoba (Liberato) were employees of
Small and Medium Enterprise Bank, Incorporated (SME Bank).
In June 2001, SME Bank experienced financial difficulties. To
remedy the situation, the bank officials proposed its sale to Abelardo
Samson(Samson).
The general manager held a meeting with all the employees and
persuaded them to tender their resignations, with the promise that they
would be rehired upon reapplication. Relying on this assurance,
respondents tendered their resignation and subsequently reapplied.
Respondent-employees demanded the payment of their respective
separation pays, but their requests were denied so they filed a case for
illegal dismissal with the NLRC.
The labor arbiter ruled that the buyer of an enterprise is not bound
to absorb its employees, unless there is an express stipulation to the
contrary. However, he also found that respondent employees were
illegally dismissed, because they had involuntarily executed their
resignation letters after relying on representations that they would be
given their separation benefits and rehired by the new management.
The NLRC found that there was only a mere transfer of shares
and therefore, a mere change of management which was not a valid
ground to terminate respondent bank employees so the NLRC ruled
that they had indeed been illegally dismissed. The CA affirmed the
NLRC.
Ratio/Issues: Whether respondent employees were illegally dismissed
(YES)
Resignation Letters:
While resignation letters containing words of gratitude may indicate
that the employees were not coerced into resignation, which SME
claims was in their letters, this fact alone is not conclusive proof that
they intelligently, freely and voluntarily resigned. One must take into
consideration the totality of circumstances in each particular case.
Their reliance on the representation that they would be reemployed
gives credence to their argument that they merely submitted courtesy
resignation letters because it was demanded of them, and that they
had no real intention of leaving their posts.
 One of them submitted a retirement letter but again, the fact that
she retired and did not resign, however, does not change the
conclusion that illegal dismissal took place.
Retirement, like resignation, should be an act completely voluntary
on the part of the employee. If the intent to retire is not clearly
established or if the retirement is involuntary, it is to be treated as a
discharge.
Serious business losses:
Samson further argued that, assuming the employees were
dismissed, the dismissal is legal because cessation of operations due
to serious business losses is one of the authorized causes of
termination under Article 283 of the Labor Code.
In this case, the records do not support the contention of SME Bank
that it intended to close the business establishment. On the contrary,
the intention of the parties to keep it in operation is confirmed by the
provisions of the Letter Agreements requiring Agustin and De Guzman
to guarantee the "peaceful transition of management of the bank" and
to appoint "a manager of [the Samson Groups] choice to oversee bank
operations."
There was also no transfer of the business establishment to speak
of, but merely a change in the new majority shareholders of the
corporation.
Asset sales vs. Stock sales:
Asset sales Stock sales- The corporate entity sells all or substantially
all of its assets to another entity. The individual or corporate
shareholders sell a controlling block of stock to new or existing
sshareholders. The seller in good faith is authorized to dismiss the
affected employees, but is liable for the payment of separation pay
under the law. The transaction takes place at the shareholder level. A
shift in the composition of its shareholders will not affect its existence
and continuity. The buyer in good faith is not obliged to absorb the
employees affected by the sale, nor is it liable for the payment of their
claims.
The corporation continues to be the employer of its people and
continues to be liable for the payment of their just claims. The
corporation or its new majority share holders are not entitled to lawfully
dismiss corporate employees absent a just or authorized cause.
In this case, the documents examined show that their main object is
the acquisition of 86.365% of the shares of stock of SME Bank. Hence,
this case involved a stock sale, where the transferee acquires the
controlling shares of stock of the corporation.
It is within the employers legitimate sphere of management control
of the business to adopt economic policies or make some changes or
adjustments in their organization or operations that would insure profit
to itself or protect the investment of its stockholders.
HOWEVER, the transfer only involved a change in the equity
composition of the corporation hence, employees are not transferred to
a new employer, but remain with the original corporate employer, a
shift in its majority shareholders.
It is thus erroneous on the part of the corporation to consider the
employees as terminated from their employment when the sole reason
for so doing is a change of management by reason of the stock sale.
SME and De Guzmans liability:
 The settled rule is that an employer who terminates the
employment of its employees without lawful cause or due process of
law is liable for illegal dismissal.
SME Bank continued to be the employer of respondent employees
despite the equity change in the corporation. The rule is that a
corporation has a personality separate and distinct from that of its
individual shareholders or members, such that a change in the
composition of its shareholders or members would not
affect its corporate liabilities.
As the employer of the illegally dismissed employees before and
after the equity transfer, petitioner SME
Bank is liable for the satisfaction of their claims.
Unless they have exceeded their authority, corporate officers are,
as a general rule, not personally liable for their official acts, because a
corporation, by legal fiction, has a personality separate and distinct
from its officers, stockholders and members.
The fictional veil may however be pierced whenever the corporate
personality is used as a means of perpetuating a fraud or an illegal act,
evading an existing obligation, or confusing a legitimate issue. In cases
of illegal dismissal, corporate directors and officers are solidarily liable
with the corporation, where terminations of employment are done with
malice or in bad faith.
As Samson was neither a corporate officer nor director at the time
the illegal dismissal took place, he cannot be held solidarily liable with
SME Bank for illegally dismissing respondent employees.
As to De Guzman and the bank manager, the Court found that they
were motivated by their desire to dispose of their shares of stock to
Samson because instead of going through the proper procedure, they
induced respondent employees to resign or retire from their respective
employments, while promising that they would be rehired by the new
management.
Respondent employees are entitled to separation pay, full
backwages, moral damages, exemplary damages and attorneys fees.
The rule is that illegally dismissed employees are entitled to (1)
either reinstatement, if viable, or separation pay if reinstatement is no
longer viable; and (2) backwages.
Held Petitions for Review are PARTIALLY GRANTED.
Prepared by: Tippy Oracion [Labor | Daway]
********************************************************************************
Faculty Association of Mapua Institute of Technology (FAMIT) v.
CA and Mapua Institute of Technology (MIT) (June 15, 2007)
QUISUMBING
Petition: To reverse the CA decision which reversed the decision of
Voluntary Arbitrators and instead held that the incorporation of the new
faculty ranking to the 2001 CBA between the parties was their true
intention.
Facts:
1. In 2000, MIT hired Arthur Andersen to develop a faculty ranking
and compensation system.
2. Said system was presented to and accepted by FAMIT during
negotiations to renew the CBA, with reservation: no diminution
in rank and pay of the faculty members.
3. New CBA was entered into effective June 2001 which
contained:
a. Description of the new system with annexes (rate
sheets and point ranges)
b. Statement that there should be no diminution in rank
and pay as agreed upon
4. MIT instructed its deans to evaluate and re-rank the faculty.
Criteria included: (1) educational attainment; (2) professional
honors received; (3) relevant training; (4) relevant professional
experience; (5) scholarly work and creative efforts; (6) award
winning works; (7) officership in relevant technical and
professional organizations; and (8) administrative positions held
at MIT.
5. One month later, MIT tried to amend the annexes in the CBA,
citing errors in the data that were not germane and that there
was a Faculty Ranking Point Range sheet that was not
attached.
6. FAMIT rejected the proposal to amend because:
a. Violation of the ratified 2001 CBA
b. Result in the diminution of rank and benefits of FAMIT
college faculty.
c. Proposed amendment would revise point ranges agreed
upon and expand faculty ranks to 23.
7. MIT also instituted changes in curriculum and adopted a new
formula for calculating pay rates.
8. FAMIT opposed the formula and averred that MIT had not been
implementing the provisions of the 2001 CBA, in particular the
agreed upon rate per load.
9. MIT maintained that it was within its right to change the pay
formula used.
10. FAMIT brought the issue to the National Conciliation and
Mediation Board (NCMB) for mediation.
11. Decision of Panel of Voluntary Arbitrators in favor of FAMIT
a. Implement agreed upon point range system with 19
faculty ranks, along with the corresponding pay levels
for the college faculty, consistent with the provisions and
annexes of the CBA,
b. Comply with the CBA, using past practices or formula in
computing the pay based on rate per load
c. Both actions should be concurrent with effectivity of
current CBA.
12. CA reversed.
Issues:
(1) WON MITs proposal regarding faculty ranking and evaluation is
consistent with the ratified CBA? (NO)
(2) WON MITs development of a new pay formula, without the
knowledge of FAMIT, is consistent with CBA? (NO)
MIT defense: Made in good faith and in the exercise of its inherent
prerogative to freely regulate according to its own discretion and
judgment all aspects of employment.
SC Held:
1. The new point range system proposed by MIT is an
unauthorized modification of Annex "C" of the 2001 CBA. It is
made up of a faculty classification that is substantially different
from the one originally incorporated in the current CBA between
the parties.
2. Neither party can terminate nor modify such agreement during
its lifetime as provided in LC 253.
3. There is no exception nor qualification as to which economic
provisions of the existing agreement are to retain its force and
effect. Therefore, it must be understood as encompassing all
the terms and conditions in the said agreement. (citing New
Pacific Timber & Supply Company, Inc. v. NLRC, 2000)
4. SC further describes the nature of a CBA:
a. CBA during its lifetime binds all the parties. The CBA
constitute the law between the parties. In the event
that an obligation therein imposed is not fulfilled, the
 aggrieved party has the right to go to court and ask
redress. (citing Holy Cross of Davao College, Inc. v.
Holy Cross of Davao Faculty Union-KAMAPI)
b. CBA is the norm of conduct between petitioner and
private respondent and compliance therewith is
mandated by the express policy of the law.
5. On the second issue, MIT cannot adopt its unilateral
interpretation of terms in the CBA. The CBA is clear that salary
of a high school faculty member is based on a rate per load and
not on a rate per hour basis.
6. No room for unilateral change of the formula by MIT.
7. In case of doubt in the interpretation of any law or provision
affecting labor, such should be interpreted in favor of labor.
8. Dispositive: Petition granted, CA decision reversed and
decision of Voluntary Arbitrators reinstated. MITs amendments
and formulas declared null and void.
REFERENCE:
LC 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 and conditions of
the existing agreement during the 60-day period and/or until a new
agreement is reached by the parties.
********************************************************************************
NEW PACIFIC TIMBER V. NLRC (DIGESTED BY LA CELEBRADO)
TOPIC: Contract Beneficiaries [Art. 255; 212(f)]
NEW PACIFIC TIMBER SUPPLY COMPANY, CO., INC., petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION, MUSIB M.
BUAT, LEON G. GONZAGA, JR., ET AL., NATIONAL FEDERATION
OF LABOR, MARIANO AKILIT and 350 OTHERS, respondents.
G.R. No. 124224 | March 17, 2000 | 1st Division | Kapunan, J.
FACTS:
The National Federation of Labor (NFL) is the sole and exclusive
bargaining representative of all the regular rank-and-file employees of
New Pacific Timber & Supply Co., Inc. (Company). NFL started to
negotiate for better terms and conditions of employment. However, it
was allegedly met with stiff resistance by Company, so it prompted to
file a complaint for ULP against the latter on the ground of refusal to
bargain collectively.
LA issued an order declaring (a) Company guilty of ULP; and (b) the
CBA proposals submitted by the NFL as approved. NLRC affirmed. SC
also affirmed so the records of the case were remanded, granting
monetary benefits consisting of wage increases, housing allowances,
bonuses, etc. to the regular rank-and-file employees.
Then, LA issued another Order directing Company to pay employees
entitled to the aforesaid benefits the respective amounts due them
under the CBA. Petitioner Company complied; and the corresponding
quitclaims were executed. The case was considered closed following
NFLs manifestation that it will no longer appeal.
HOWEVER, several excluded employees filed for petition for relief
and was treated as an appeal by the NLRC. NLRC granted it, forcing
the Company to file a motion for reconsideration.
ISSUES:
1) WON the the excluded employees are not entitled to the benefits
under the CBA because employees hired AFTER the term of a CBA
are not parties to the agreement, and therefore, may not claim benefits
thereunder, even if they subsequently become members of the
bargaining unit? (No)
2) WON Article 253 of the Labor Code refers to the continuation in full
force and effect of the previous CBAs terms and conditions? (Yes)
HELD: It is clear from the above provision of law that until a new CBA has
been executed by and between the parties, they are duty-bound to
1) NO. When a collective bargaining contract is entered into by the
keep the status quo and to continue in full force and effect the terms
union representing the employees and the employer, even the non-
and conditions of the EXISTING agreement. The law does not provide
member employees are entitled to the benefits of the contract. To
for any exception nor qualification as to which of the economic
accord its benefits only to members of the union without any valid
provisions of the existing agreement are to retain force and effect,
reason would constitute undue discrimination against nonmembers.
therefore, it must be understood as encompassing all the terms and
The benefits under the CBA in the instant case should be extended to conditions in the said agreement.
those employees who only became such after the year 1984. To
In the case at bar, no new agreement was entered into by and
exclude them would constitute undue discrimination and deprive them
between petitioner Company and NFL; nor were any of the economic
of monetary benefits they would otherwise be entitled to under a new
provisions and/or terms and conditions pertaining to monetary benefits
collective bargaining contract to which they would have been parties.
in the existing agreement modified or altered. Therefore, the existing
Since in this particular case, no new agreement had been entered into
CBA in its entirety, continues to have legal effect.
after the CBAs stipulated term, it is only fair and just that the
employees hired thereafter be included in the existing CBA. This is in
consonance with our ruling that the terms and conditions of a collective
********************************************************************************
bargaining agreement continue to have force and effect even beyond
the stipulated term when no new agreement is executed by and
MERALCO vs Quisumbing
between the parties to avoid or prevent the situation where no
collective bargaining agreement at all would govern between the (NOTE: Digest only contains syllabus issue relevant to 253-A, other
employer company and its employees. issues about the economic awards are excluded)
2) Yes. The issue of whether or not the term of an existing CBA,
particularly as to its economic provisions, can be extended beyond the Facts:
period stipulated therein, and even beyond the three-year (five in
present LC) period prescribed by law, in the absence of a new * MEWA is the duly recognized labor organization of the rank-and-file
agreement, Article 253 of the Labor Code explicitly provides: employees of MERALCO.
Art. 253. Duty to bargain collectively when there exists a collective
bargaining agreement. When there is a collective bargaining * On September 7, 1995, MEWA informed MERALCO of its intention to
agreement, the duty to bargain collectively shall also mean that neither re-negotiate the terms and conditions of their existing 1992-7 CBA
party shall terminate nor modify such agreement during its lifetime. covering the remaining period of two years from December 1, 1995 to
However, either party can serve a written notice to terminate or modify
November 30, 1997. MERALCO signified its willingness to re-negotiate
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 through a letter dated October 17, 1995, and formed a CBA negotiating
in full force and effect the terms and conditions of the existing panel for the purpose.
agreement during the 60-day period and/or until a new agreement is
reached by the parties.
* MEWA submitted its proposal to MERALCO on November 10, 1995
to which MERALCO presented a counter-proposal. However, the
parties failed to arrive at terms and conditions acceptable to both of
them.
* MEWA filed a notice of strike with the NCMB on April 23, 1996 on the
grounds of bargaining deadlock and ULP. The NCMB then conducted a
series of conciliation meetings but still the parties were not able to
reach an amicable settlement. Face with the impending strike,
MERALCO filed a petition on May 2, 1996 praying the SOLE make an
assumption order over the labor dispute which was thereafter granted
on May 8, 1996. Thereafter, the parties submitted their respective
memoranda and the SOLE resolved the labor dispute ordering a lot of
awards. MERALCO filed an MR challenging the awards made by the
SOLE. MEWA also filed a motion for more awards.
* In its order dated December 28, 1996, the SOLE held that the
effectivity of the new CBA shall retroact to December 1, 1995, the date
of the commencement of the last two years of the effectivity of the
existing CBA.
Issue:
W/N the CBA should be given retroactive effect? NO
Ratio:
* Finally, MERALCO also assails the Secretarys order that the
effectivity of the new CBA shall retroact to December 1, 1995, the date
of the commencement of the last two years of the effectivity of the
existing CBA. This retroactive date, MERALCO argues, is contrary to
the ruling of this Court in Pier 8 Arrastre and Stevedoring Services, Inc.
vs. Roldan-Confessor which mandates that the effective date of the
new CBA should be the date the Secretary of Labor has resolved the
labor disputes.
* On the other hand, MEWA supports the ruling of the Secretary on the
theory that he has plenary power and discretion to fix the date of
effectivity of his arbitral award citing our ruling in St. Lukes Medical
Center, Inc. vs. Torres. MEWA also contends that if the arbitral award
takes effect on the date of the Secretary Labors ruling on the parties
motion for reconsideration (i.e., on December 28, 1996), an anomaly
situation will result when CBA would be more than the 5-year term
mandated by Article 253-A of the Labor Code.
* However, neither party took into account the factors necessary for a
proper resolution of this aspect. Pier 8, for instance, does not involve a
mid-term negotiation similar to this case, while St. Lukes does not take
the hold over principle into account, i.e., the rule that although a CBA
has expired, it continues to have legal effects as between the parties
until a new CBA has been entered into.
* The SC here used 253-A as a guide in determining when the
effectivity of the CBA at bar is to take effect.
* Under the law, it is clear that the 5-year term requirement is specific
to the representation aspect. What the law additionally requires is that
a CBA must be re-negotiated within 3 years after its execution. It is in
this re-negotiation that gives rise to the present CBA deadlock.
* If no agreement is reached within 6 months from the expiry date of
the 3 years that follow the CBA execution, the law expressly gives the
parties - not anybody else - the discretion to fix the effectivity of the
agreement.
* Significantly, the law does not specifically cover the situation where 6
months have elapsed but no agreement has been reached with
respect to effectivity. In this eventuality, we hold that any provision of
law should then apply for the law abhors a vacuum.
* One such provision is the principle of hold over, i.e., that in the
absence of a new CBA, the parties must maintain the status quo and
must continue in full force and effect the terms and conditions of the
existing agreement until a new agreement is reached. In this manner,
the law prevents the existence of a gap in the relationship between the
collective bargaining parties. Another legal principle that should apply
is that in the absence of an agreement between the parties, then, an
arbitrated CBA takes on the nature of any judicial or quasi-judicial
award; it operates and may be executed only respectively unless there
are legal justifications for its retroactive application.
* Consequently, the SC finds no sufficient legal ground on the other
justification for the retroactive application of the disputed CBA, and
therefore has held that the CBA should be effective for a term of 2
years counted from December 28, 1996 (the date of the Secretary of
Labors disputed order on the parties motion for reconsideration) up
to December 27, 1999.
********************************************************************************
186 CITIZENS LABOR UNION V. CIR
Topic: Premature Contract
GR L-24320; L-24421
CASTRO; November 12, 1966
FACTS
The Malayang Manggagawa sa Esso (MME) filed a petition for
certification election with the CIR, alleging:
That it is a labor union organized among the employees of
Esso Standard Eastern, Inc. (ESSO) Pandacan Terminal,
Manila;
that it represents the majority of the non-supervisory
employees of the said terminal unit;
that there exists a collective bargaining agreement between
the Citizens Labor Union (CLU) and the ESSO, of a
duration of three (3) years and three (3) months; and
that its aim in asking for a certification election is merely to
determine which union will administer the contract during
the remainder of the term thereof.
MME claims that the CLU can no longer be considered as the
representative of the rank and file of the employees and laborers of
ESSO at its Pandacan Terminal unit, because it has lost its majority
status inasmuch as the overwhelming majority of its members have
given up their membership therein.
CLU and the ESSO filed motions to dismiss the petition on the
ground that an existing CBA is a bar to the holding of a certification
election. CIR denied such MTDs.
The Department of Labor proceeded with the election and the
result thereof shows that the MME obtained votes of more than
one-half of the rank and file employees and laborers of the ESSO.
The CIR certified the MME as the sole and exclusive bargaining
agent.
ISSUE
WON the Court could determine which of the competing unions is the
appropriate bargaining unit
HELD
NO
This Court in numerous cases has reaffirmed its attitude that it is a
sound and unassailable labor practice for labor and management to
conclude a new contract before the expiry date of any collective
bargaining agreement in order to avoid a hiatus in management-labor
relations.
The passage of time has removed all meaning and validity from the
positions taken by the 2 competing unions. All the pleadings extant in
the record are dated and were filed prior to the date when the CBA in
question expired; the positions of the 2 unions have therefore become
academic. The CLU claims that it is the sole and exclusive bargaining
agent on the strength of its prior collective bargaining history; the MME
claims that it is the one that should be recognized on the basis of the
will of the employees manifested in the secret ballot election in favor of
the MME. Like the CLU, the MME claims that its majority status should
be presumed to continue up to the present time and for as long as the
question has not been finally resolved. Against the presumption of
continued majority status, however, is the rule that such majority
status does not continue forever "especially in face of an
assertion and offer of proof to the contrary", or "in view of altered
circumstances which have likely occurred in the interim", or "by a
change in the conditions which demonstrates that a shift in
sentiment actually exists among the employees, and is caused by
other factors than the employer's refusal to bargain collectively".
The burden of coming forward with proof of majority status is upon the
union asserting it. Against the claim of the MME that it represents the
will of the majority of the rank and file employees at the Pandacan
Terminal unit, is the manifestation, advanced with vehemence, of both
the CLU and the ESSO that after the secret ballot election, the
employee composition has substantially changed because a great
number of the employees and laborers in the Pandacan Terminal unit
have left their employment, retired, or been compulsorily laid off with
the approval of the CIR. Precisely because the record is barren of
evidence upon which this Court may properly reach a definitive
determination as to which of the 2 unions should be upheld, at this
time, as the sole and exclusive bargaining agent, this Court will not
even begin to attempt to resolve the problem in favor of one or the
other labor union.
DISPOSITION
Case remanded to the CIR with instructions to take such action and
issue such orders as circumstances may warrant.
********************************************************************************
SECOND DIVISION
[G.R. No. 125038. November 6, 1997]
THE HONGKONG AND SHANGHAI BANKING CORPORATION
EMPLOYEES UNION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION AND THE HONGKONG AND
SHANGHAI BANKING CORPORATION, LTD., respondents.
DECISION
REGALADO, J.:
In an Order dated November 27, 1995,[1] respondent National Labor
Relations Commission (NLRC) reversed and set aside the order issued
by Labor Arbiter Felipe T. Garduque II which dismissed and remanded
for further proceedings the case for unfair labor practice filed by private
respondent Hongkong and Shanghai Banking Corporation, Ltd. (the
Bank) against petitioner Hongkong and Shanghai Banking Corporation
Employees Union (the Union), the recognized bargaining
representative of the Banks regular rank and file employees. This
petition for certiorari impugns the aforesaid Order of respondent
commission.
The case at bar arose from the issuance of a non-executive job
evaluation program (JEP) lowering the starting salaries of future
employees, resulting from the changes made in the job grades and
structures, which was unilaterally implemented by the Bank retroactive
to January 1, 1993. The program in question was announced by the
Bank on January 18, 1993.
In a letter dated January 20, 1993,[2] the Union, through its President,
Peter Paul Gamelo, reiterated its previous verbal objections to the
Banks unilateral decision to devise and put into effect the said program
because it allegedly was in violation of the existing collective
bargaining agreement (CBA) between the parties and thus constituted
unfair labor practice. The Union demanded the suspension of the
implementation of the JEP and proposed that the same be instead
taken up or included in their upcoming CBA negotiations.
The Bank replied in a letter dated January 25, 1993[3] that the JEP
was issued in compliance with its obligation under the CBA, apparently
referring to Article III, Section 18 thereof which provides that:
Within the lifetime of this Agreement the BANK shall conduct a job
evaluation of employee positions. The implementation timetable of the
said exercise shall be furnished the UNION by the BANK within two (2)
months from the signing of this Agreement.
This prompted the Union to undertake concerted activities to protest
the implementation of the JEP, such as whistle blowing during office
hours starting on March 15, 1993 up to the 23rd day, and writing to
clients of the Bank allegedly to inform them of the real situation then
obtaining and of an imminent disastrous showdown between the Bank
and the Union.
The Union engaged in said activities despite the fact that as early as
February 11, 1993,[4] it had already initiated the renegotiation of the
non-representational provisions of the CBA by submitting their
proposal to the Bank, to which the latter submitted a reply. As a matter
of fact, negotiations on the CBA commenced on March 5, 1993 and
continued through March 24, 1993 when the Bank was forced to
declare a recess to last for as long as the Union kept up with its
concerted activities. The Union refused to concede to the demand of
the Bank unless the latter agreed to suspend the implementation of the
JEP.
Instead of acquiescing thereto, the Bank filed on April 5, 1993[5] with
the Arbitration Branch of the NLRC a complaint for unfair labor practice
against the Union allegedly for engaging in the contrived activities
against the ongoing CBA negotiations between the Bank and the
Union in an attempt to unduly coerce and pressure the Bank into
agreeing to the Unions demand for the suspension of the
implementation of the JEP. It averred that such concerted activities,
despite the ongoing CBA negotiations, constitute unfair labor practice
(ULP) and a violation of the Unions duty to bargain collectively under
Articles 249 (c) and 252 of the Labor Code.
The Union filed a Motion to Dismiss[6] on the ground that the complaint
states no cause of action. It alleged that its united activities were
actually being waged to protest the Banks arbitrary imposition of a job
evaluation program and its unjustifiable refusal to suspend the
implementation thereof. It further claimed that the unilateral
implementation of the JEP was in violation of Article I, Section 3 of the
CBA which prohibits a diminution of existing rights, privileges and
benefits already granted and enjoyed by the employees. To be sure, so
the Union contended, the object of the Bank in downgrading existing
CBA salary scales, despite its sanctimonious claim that the reduced
rates will apply only to future employees, is to torpedo the salary
structure built by the Union through three long decades of periodic
hard bargaining with the Bank and to thereafter replace the relatively
higher-paid unionized employees with cheap newly hired personnel. In
light of these circumstances, the Union insists that the right to engage
in these concerted activities is protected under Article 246 of the Labor
Code regarding non-abridgment of the right to self-organization and,
hence, is not actionable in law.
In its Opposition,[7] the Bank stated that the Union was actually
challenging merely that portion of the JEP providing for a lower rate of
salaries for future employees. Contrary to the Unions allegations in its
motion to dismiss that the JEP had resulted in diminution of existing
rights, privileges and benefits, the program has actually granted salary
increases to, and in fact is already being availed of by, the rank and file
staff. The Unions objections are premised on the erroneous belief that
the salary rates for future employees is a matter which must be subject
of collective bargaining negotiation. The Bank believes that the
implementation of the JEP and the resultant lowering of the starting
salaries of future employees, as long as there is no diminution of
existing benefits and privileges being accorded to existing rank and file
staff, is entirely a management prerogative.
In an Order dated July 29, 1993,[8] the labor arbiter dismissed the
complaint with prejudice and ordered the parties to continue with the
collective bargaining negotiations, there having been no showing that
the Union acted with criminal intent in refusing to comply with its duty
to bargain but was motivated by the refusal of management to
suspend the implementation of its job evaluation program, and that it is
not evident that the concerted activities caused damage to the Bank. It
concluded that, at any rate, the Bank is not left without recourse, in
case more aggressive and serious acts be committed in the future by
the Union, since it could institute a petition to declare illegal such acts
which may constitute a strike or picketing.
On appeal, respondent NLRC declared that based on the facts
obtaining in this case, it becomes necessary to resolve whether or not
the Unions objections to the implementation of the JEP are valid and, if
it is without basis, whether or not the concerted activities conducted by
the Union constitute unfair labor practice. It held that the labor arbiter
exceeded his authority when he ordered the parties to return to the
bargaining table and continue with CBA negotiations, considering that
his jurisdiction is limited only to labor disputes arising from those cases
provided for under Article 217 of the Labor Code, and that the labor
arbiters participation in this instance only begins when the appropriate
complaint for unfair labor practice due to a partys refusal to bargain
collectively is filed. Consequently, the case was ordered remanded to
the arbitration branch of origin for further proceedings in accordance
with the guidelines provided for therein.
Hence, this petition.
The Union asserts that respondent NLRC committed grave abuse of
discretion in failing to decide that it is not guilty of unfair labor practice
considering that the concerted activities were actually directed against
the implementation of the JEP and not at the ongoing CBA
negotiations since the same were launched even before the start of
negotiations. Hence, it cannot be deemed to have engaged in bad-faith
bargaining. It claims that respondent NLRC gravely erred in remanding
the case for further proceedings to determine whether the objections
raised by the Union against the implementation of the JEP are valid or
not, for the simple reason that such is not the issue involved in the
complaint for ULP filed by the Bank but rather whether the Union is
guilty of bargaining in bad faith in violation of the Labor Code. It is
likewise averred that Labor Arbiter Garduque cannot be considered to
have exceeded his authority in ordering the parties to proceed with the
CBA negotiations because it was precisely a complaint for ULP which
the Bank filed against the Union.

We find no merit in the petition.
The main issue involved in the present case is whether or not the labor
arbiter correctly ordered the dismissal with prejudice of the complaint
for unfair labor practice on the bases merely of the Complaint, the
Motion to Dismiss as well as the Opposition thereto, filed by the
parties. We agree with respondent NLRC that there are several
questions that need to be threshed out before there can be an
intelligent and complete determination of the propriety of the charges
made by the Bank against the Union.
A perusal of the allegations and arguments raised by the parties in the
Motion to Dismiss and the Opposition thereto will readily reveal that
there are several issues that must preliminarily be resolved and which
will require the presentation of evidence other than the bare allegations
in the pleadings which have been filed, in order to ascertain the
propriety or impropriety of the ULP charge against the Union.
Foremost among the issues requiring resolution are:
1. Whether or not the unilateral implementation of the JEP constitutes
a violation of the CBA provisions requiring the Bank to furnish the
Union with the job evaluation implementation timetable within two
months from the signing of the CBA on July 30, 1990,[9] and
prohibiting the diminution of existing rights, privileges and benefits
already granted and enjoyed by the employees;[10]
2. Whether or not the concerted acts committed by the Union were
done with just cause and in good faith in the lawful exercise of their
alleged right under Article 246 of the Labor Code on non-abridgment of
the right to self-organization; and
3. Whether or not the fixing of salaries of future employees pursuant to
a job evaluation program is an exclusive management prerogative or
should be subject of collective bargaining negotiation.
It does not fare petitioner any better that it had, wittingly or unwittingly,
alleged in its Consolidated Reply[11] that the concerted actions began
on January 22, 1993 even before the commencement of CBA
negotiations which started in March, 1993. Apparently that was an
attempt on the part of the Union to rectify the incriminating
pronouncement of the labor arbiter in his questioned order to the effect
that the challenged activities occurred from March 15 to 23, 1993
during the CBA negotiations. This seemingly conflicting factual
allegations are crucial in resolving the issue of whether or not the
concerted activities were committed in violation of the Unions duty to
bargain collectively and would therefore constitute unfair labor practice.
Likewise, the labor arbiter, in finding that the Union was not motivated
by any criminal intent in resorting to said concerted activities, merely
gave a sweeping statement without bothering to explain the factual
and evidentiary bases therefor. The declaration that there was no
damage caused to the Bank by reason of such Union activities remains
unsubstantiated. Nowhere is there any showing in the labor arbiters
order of dismissal from which it can be fairly inferred that such a
statement is supported by even a preponderance of evidence. What
purportedly is an adjudication on the merits is in truth and in fact a
short discourse devoid of evidentiary value but very liberal with
generalities and hasty conclusions.
The fact that there is an alternative remedy available to the Bank, as
the labor arbiter would suggest, will not justify an otherwise erroneous
order. It bears emphasizing that by the very nature of an unfair labor
practice, it is not only a violation of the civil rights of both labor and
management but is also a criminal offense against the State which is
subject to prosecution and punishment.[12] Essentially, a complaint for
unfair labor practice is no ordinary labor dispute and therefore requires
a more thorough analysis, evaluation and appreciation of the factual
and legal issues involved.
One further point. The need for a more than cursory disposition on the
unfair labor practice issue is made doubly exigent in view of the Banks
allegation in its Comment[13] that a strike has been launched by the
Union specifically to protest the implementation of the JEP. Although
the strike incident is not an issue in this case, this supervening event
bespeaks the worsening situation between the parties that calls for a
more circumspect assessment of the actual issues herein involved.
Necessarily, a determination of the validity of the Banks unilateral
implementation of the JEP or the Unions act of engaging in concerted
activities involves an appraisal of their motives. In cases of this nature,
motivations are seldom expressly avowed, and avowals are not always
candid. There must thus be a measure of reliance on the
administrative agency. It was incumbent upon the labor arbiter, in the
first instance, to weigh such expressed motives in determining the
effect of an otherwise equivocal act. The Labor Code does not
undertake the impossible task of specifying in precise and
unmistakable language each incident which constitutes an unfair labor
practice. Rather, it leaves to the court the work of applying the laws
general prohibitory language in light of infinite combinations of events
which may be charged as violative of its terms.[14]
It has been held that the crucial question whether or not a party has
met his statutory duty to bargain in good faith typically turns on the
facts of the individual case. 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 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, and the inferences fairly
drawn therefrom collectively may offer a basis for the finding of the
NLRC.[15]
This, the court or the quasi-judicial agency concerned can do only after
it has made a comprehensive review of the allegations made in the
pleadings filed and the evidence presented in support thereof by the
parties, but definitely not where, as in the present case, the accusation
of unfair labor practice was negated and subsequently discharged on a
mere motion to dismiss.
It is a well-settled rule that labor laws do not authorize interference with
the employers judgment in the conduct of his business. The Labor
Code and its implementing rules do not vest in the labor arbiters nor in
the different divisions of the NLRC nor in the courts managerial
authority.[16] The hiring, firing, transfer, demotion, and promotion of
employees has been traditionally identified as a management
prerogative subject to limitations found in the law, a collective
bargaining agreement, or in general principles of fair play and justice.
This is a function associated with the employers inherent right to
control and manage effectively its enterprise. Even as the law is
solicitous of the welfare of employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives.
The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.[17]
Accordingly, this Court, in a number of cases, has recognized and
affirmed the prerogative of management to implement a job evaluation
program or a reorganization for as long as it is not contrary to law,
morals or public policy.
Thus, in Batongbacal vs. Associated Bank, et al.,[18] involving the
dismissal of an assistant vice-president for refusing to tender his
courtesy resignation which the bank required in line with its
reorganization plan, the Court held, among others, that it is not
prepared to preempt the employers prerogative to grant salary
increases to its employees by virtue of the implementation of the
reorganization plan which thereby caused a distortion in salaries,
notwithstanding that there is a semblance of discrimination in this
aspect of the banks organizational setup.
In the case of National Sugar Refineries Corporation vs. National
Labor Relations Commission, et al.,[19] the petitioner implemented a
job evaluation program affecting all employees, from rank and file to
department heads. The JEP was designed to rationalize the duties and
functions of all positions, reestablish levels of responsibility, and
reorganize both wage and operational structures. Jobs were ranked
according to effort, responsibility, training and working conditions and
relative worth of the job. As a result, all positions were re-evaluated,
and all employees were granted salary adjustments and increases in
benefits commensurate to their actual duties and functions. With the
JEP, the supervisory employees, who were members of the
respondent Union therein and were formerly treated in the same
manner as rank and file employees, were considered no longer entitled
to overtime, rest day and holiday pay but their basic salaries increased
by 50%. The respondents therein sued for recovery of those benefits.
In upholding managements prerogative to implement the JEP, the
Court held therein that:
In the case at bar, private respondent union has miserably failed to
convince this Court that the petitioner acted in bad faith in
implementing the JE Program. There is no showing that the JE
Program was intended to circumvent the law and deprive the members
of respondent union of the benefits they used to receive.
x x x It is the prerogative of management to regulate, according to its
discretion and judgment, all aspects of employment. This flows from
the established rule that labor law does not authorize the substitution
of the judgment of the employer in the conduct of its business. Such
management prerogative may be availed of without fear of any liability
so long as it is exercised in good faith for the advancement of the
employers interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or valid
agreement and are not exercised in a malicious, harsh, oppressive,
vindictive or wanton manner or out of malice or spite.
Just recently, this Court had the occasion to reiterate and uphold the
established and unequivocal right of an employer to implement a
reorganization in the valid exercise of its management prerogative,
thus:
Being a regular employee, petitioner is of the view that she had
already acquired a vested right to the position of Executive Secretary,
together with its corresponding grade, rank and salary, which cannot
be impaired by the 1991 reorganization of CENECO.
xxx
In Aurelio vs. National Labor Relations Commission, et al., we upheld
the power of the board of directors of a corporation to implement a
reorganization, including the abolition of various positions, as implied
or incidental to its power to conduct the regular business affairs of the
corporation. In recognition of the right of management to conduct its
own business affairs in achieving its purpose, we declared that
management is at liberty, absent any malice on its part, to abolish
positions which it deems no longer necessary.
This Court, absent any finding of bad faith on the part of management,
will not deny it the right to such initiative simply to protect the person
holding that office. In other words, where there is nothing that would
indicate that an employees position was abolished to ease him out of
employment, the deletion of that position should be accepted as a valid
exercise of management prerogative.
xxx
No ill will can be ascribed to private respondents as all the positions
specified in the old plantilla were abolished and all other employees
were given new appointments. In short, petitioner was not singled out.
She was not the only employee affected by the reorganization. The
reorganization was fair to petitioner, if not to all of the employees of
CENECO.
It should be remembered that petitioners new appointment was made
as a result of valid organizational changes. A thorough review of both
the indispensable and the unessential positions was undertaken by a
committee, specifically formed for this purpose, before the Board of
Directors abolished all the positions. Based on the qualifications and
aptitude of petitioner, the committee and, subsequently, private
respondents, deemed it best to appoint petitioner as Secretary of the
Engineering Department. We cannot meddle in such a decision lest we
interfere with the private respondents right to independently control
and manage their operations absent any unfair or inequitable acts.
If the purpose of a reorganization is to be achieved, changes in
positions and ranking of employees should be expected. To insist on
ones old position and ranking after a reorganization would render such
endeavor ineffectual. Here, to compel private respondents to give
petitioner her old ranking would deprive them of their right to adopt
changes in the cooperatives personnel structure as proposed by the
Steering Committee.
xxx
x x x As we have held, security of tenure, while constitutionally
guaranteed, cannot be used to deprive an employer of its prerogatives
under the law. Even if the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise
what are clearly management prerogatives.[20]
Notwithstanding the relevance of the foregoing disquisition,
considering however the factual antecedents in this case, or the lack of
a complete presentation thereof, we are constrained to refrain from
ruling outright in favor of the Bank. While it would appear that
remanding the case would mean a further delay in its disposition, we
are not inclined to sacrifice equity and justice for procedural
technicalities or expediency. The order dismissing the complaint for
ULP with prejudice, to say the least, leaves much to be desired.
Anent the question on whether or not the labor arbiter has jurisdiction
to order the parties to return to and continue with the collective
bargaining negotiations, there is a commentary to the effect that, as
one of the reliefs which may be granted in ULP cases, the Court may,
in addition to the usual cease and desist orders, issue an affirmative
order to the employer to bargain with the bargaining agent, as the
exclusive representative of its employees, with respect to the rate of
pay, hours of work, and other conditions of employment.[21] On this
aspect, respondent NLRC stands to be reversed. Nevertheless, its
directive on this point is deemed vacated and ineffectual by our
decision to remand the case for further proceedings.
WHEREFORE, subject to the foregoing observation, the challenged
disposition of respondent National Labor Relations Commission is
hereby AFFIRMED.
********************************************************************************
REPUBLIC SAVINGS BANK v. CIR
DOCTRINE: To be sure, the right of self-organization of employees is
not unlimited, as the right of an employer to discharge for cause is
undenied. The Industrial Peace Act does not touch the normal exercise
of the right of an employer to select his employees or to discharge
them. It is directed solely against the abuse of that right by interfering
with the countervailing right of self-organization. But the difficulty arises
in determining whether in fact the discharges are made because of
such a separable cause or because of some other activities engaged
in by employees for the purpose of collective bargaining. It is for the
CIR, in the first instance, to make the determination, "to weigh the
employer's expressed motive in determining the effect on the
employees of management's otherwise equivocal act.
FACTS:
Respondents were discharged for having written and published
a patently libelous letter addressed to the Bank President,
demanding his resignation on the grounds of immorality,
nepotism in the appointment, favoritism, and discrimination in
the promotion of bank employees. The letter-charge alleged
that Mr. President: 1) tolerated and practiced immorality when
he promoted women of questionable character, one with whom
he has illicit relationship, 2) practiced nepotism when he
employed his relatives and gave them good positions at the
expense of the more capable employees, 3) when the Bank
advocated sending pensionados to the United States, he chose
his niece, nephews, and querida to avail of such opportunity;
that there was no point sending them to the US to study
advanced banking, a very simple subject, 4) tolerated grave
dishonesty by allowing his nephews, nieces to embezzle bank
funds
At the instance of respondents, prosecutor Tirona filed a
complaint in the CIR charging the bank of unfair labor practice
for violating section 4(a) 5 of the Industrial Peace Act. This
section makes it a ULP 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 Bank moved to dismiss the complaint alleging that the
respondents were discharged for writing a libelous letter against
the president and not for union activities. However, this was
denied by the court reiterating that Section 4(a) 5 applies to
 cases in which an employee is dismissed or discriminated
against for having filed any charges against his employer.
Meanwhile, the Court overruled the decision in the case of
Royal Interocean and interpreted Section 4(a)5 to cover only
charges related to right to self-organization in order to give rise
to unfair labor practice on the part of the employer.
Thereafter, the Bank renewed its motion to dismiss, but the
court held it in abeyance and proceeded with the hearing.
The court found the Bank guilty of ULP and ordered
reinstatement of respondents with full backwages and without
loss of seniority and other privileges affirmed by the court en
banc
Hence, this petition.
RATIO/ISSUES:
I. Whether Petitioner Bank committed an unfair labor
practice in terminating the respondents for writing and
publishing the letter-charge [YES]
(1) Petitioner Bank: The complaint should have been dismissed
because the discharge of the respondents had nothing to
do with their union activities as the latter admitted at the
hearing that the letter-charge was not a union action but
merely their individual act.
(2) Court: When respondents wrote the letter, they were
engaged in a concerted activity for mutual aid and
protection in the exercise of their right of self-organization.
Interference of such constitutes a ULP under the Industrial
Peace Act, which protects concerted activities such as the
joining in protests or demands even by a small group of
employees if done in furtherance of the unions interests. In
this case, the complaint of respondents against nepotism,
favoritism, etc is a proper subject of collective bargaining as
contemplated by the Act.
(3) NLRC v Phoenix Mutual Life Insurance Co: employees shall
have the right to engage in concerted activities for their
mutual aid or protection even though no union activity is
involved for collective bargaining to be contemplated.
(4) The Court opined that the Bank should have referred the
matter to the grievance committee to allow respondents to
air their grievances. As part of the continuous process of
collective bargaining, the grievance committee would have
been an appropriate forum for such negotiation.
(5) Petitioner Bank: It has a right to discipline its employees for
having written and publicized such libelous letter-charge.
(6) Court: Although the right to self-organization is not absolute
as the right of an employer to discharge for cause is
undeniable, the Industrial Peace Act considers as ULP
those acts directed solely for abusing the right of an
employer to select his employees and discharge them by
interfering with the right to self-organization. See
DOCTRINE.
(7) Contrary to the contention of the petitioner, the present
case is different from the two cases below which the Court
did not find to have arisen from union activities. In the
present case, there was an express finding that the
respondents were dismissed on account of the letter
wherein they demanded the resignation of the bank
president for a number of reasons touching labor-
management relations. Even if it were true that the letter
was libelous in nature, this should not be an excuse for
petitioner to resort to summary discharges in disregard of
its duty to bargain collectively.
a. Royal Interocean v CIR: the employees letter was
about the local managers inconsiderate and untactful
attitude
b. Lakas ng Pagkakaisa sa Peter Paul v CIR: the
employee wrote a letter denouncing the wastage of
company funds
CONCURRING, FERNANDO:
 Collective bargaining presupposes a give-and-take discussion,
which is not present in this case because the respondents, as
evidenced by their letter-charge, have been adamant in wanting
to terminate the President of the Bank.
Hence, J. Fernando does not fully agree that their dismissal
could be construed as a refusal to bargain collectively. As
pointed out by the majority, respondents did not follow the
procedure for adjusting grievances. Also, they had admitted
that the letter-charge was not a union action but merely their
individual act.
Nonetheless, he concurs with the majority in view of the
respondents mass dismissal as the supervisors union, the
Banks union, the security guards union (basically, the unions
in the Bank) were left leaderless, hence, representation would
be impossible. For collective bargaining to be meaningful there
must be two parties: the management representative and the
union representative. For J. Fernando, it is in this context that
the dismissal amounted to interference, restraint, coercion as
prohibited by the Industrial Peace Act.
FERNANDO, J., concurring:
The opinion of the Court in this highly significant unfair labor practice
case, one of first impression, easily commends itself for approval. The
relevant facts are set forth in all fullness and with due care. The
position of the Court united as it is on an unfair labor practice having
been committed, but not quite fully agreed as to which particular
subsection of the legal provision was violated, is delineated with
precision. With the explicit acknowledgement there made that some
members of the Court are of the belief that what was done by the
Republic Bank here amounted to "interference" and with the writer
being of the persuasion that it could be categorized in line with the
statute as "interference, restraint or coercion," a few words as to why
this view is entertained may not be inappropriate.
No one can doubt that we are in the process of evolving an indigenous
labor jurisprudence. Notwithstanding the clearly American background
of the Industrial Peace Act, based as it is mainly on the Wagner Act,1
labor relations in the Philippines with their peculiar problems and the
ingenuity of Filipino lawyers have resulted in a growing body of
decisions notable for their suitability to local condition and their
distinctly local flavor. This is as it should be.
The present case affords one such instance. The wealth of
adjudication by both judicial and administrative agencies in the United
States notwithstanding the diligent and earnest search for a ruling
based on a similar fact-situation yielded no case precisely in point.
What does it signify? At the very least, it may indicate that while the
problem posed could have arisen there, this particular response of
labor was quite unique. On the assumption which I have here
hypothetically made that there was indeed a valid cause for grievance,
a more diplomatic approach could have been attempted. Or at the very
least the procedure indicated for the adjustment of a grievance could
have been followed. That was not done. What respondents did was to
issue an ultimatum.
Collective bargaining whether in its formative stage preparatory to a
labor contract or in the adjustment of a labor problem in accordance
with the procedure set forth in an existing agreement presupposes the
give-and-take of discussion. No party adopts, at least in its initial
stages, a hard-line position, from which there can be no retreat. That
was not the situation here. Respondents as labor leaders appeared
adamantine in their attitude to terminate the services of the then
president of the Republic Savings Bank. Nor did they mince words in
describing his alleged misdeeds. They were quite certain that he had
offended most grievously. They wanted him out. There was no room for
discussion.

That for me is not bargaining as traditionally and commonly
understood. It is for that reason that I find it difficult to agree fully with
the view that their dismissal could be construed as a refusal to bargain
collectively. Moreover, they did not as adverted to in the opinion of the
Court, follow the procedure set forth for adjusting grievances. Nor
considering the explicit language of the Industrial Peace Act may such
dismissal fall within the prohibition against dismissing employees for
having filed charges or about to give testimony "under the Act." As a
matter of fact, if the letter were indeed libelous, their dismissal would
not have been unjustified. There was an admission as noted in the
opinion "that the writing of the letter charged was not a 'union' action
but merely their 'individual' act."
Nonetheless, concurrence with the decision arrived at by the Court is
called for in view of their mass dismissal. Under the circumstances, the
supervisors union, the Republic Savings Bank employees union, the
Republic Savings Bank security guards union, and the Republic
Savings Bank supervisors union were left leaderless. For collective
bargaining to be meaningful, there must be two parties, one
representing management and the other representing the union. Nor
could management select who would represent the latter or with whom
to deal, otherwise in effect there would be only one party. Obviously
there would then be no bargaining.1awphl.nt
It is my view therefore that the dismissal amounted to "interference,
restraint or coercion" as prohibited in the Industrial Peace Act. To
repeat, this Section 4(a), with the exception of subsection (2), was
taken from the Wagner Act. There is as stated by Bufford in his treatise
for the Wagner Act "an overlap" as this particular subsection deals
"with additional labor practice besides containing incidental provisions
concerning related matters."2 As noted further by such commentator:
"As expressed by the Senate Committee: 'The four succeeding unfair
labor practices are designed not to impose limitations or restrictions
upon the general guarantees of the first, but rather to spell out with
particularity some of the practices that have been most prevalent and
most troublesome.'"
Teller is in agreement. This subsection according to him "involves the
widest varieties of activities." The other unfair labor practices
condemned fall within its terms. Thus: "That the Board has taken this
position is evidenced both by the Board decisions and by express
statement to such effect contained in its first annual report, the
language of which in this connection is as follows: 'At the outset it
should be explained that the Board has held that a violation by an
employer of any of the other four subdivisions of Section 8 of the act is,
by the same token, a violation of Section 8(1). Such a conclusion is too
obvious to require explanation. In fact, almost all of the cases in which
the Board has found a violation of Section 8(1) are cases in which the
principal offense charged fell within some other subdivision of Section
8. The explanation for this is, apparently, that even though an employer
may be engaging in anti-union activities in violation of Section 8(1),
unions do not seek protection of the act until such activities take such
drastic form as bring them within the provisions of some other
subdivisions, as, for example, the discriminatory discharge of union
members (which comes within subdivision [3]), the domination of or
interference with the formation or administration of a labor organization
(which comes within subdivision [2]). or a refusal to bargain collectively
(which comes within subdivision [5]."3
In the Philippines as in the United States then, the first subsection on
"interference, restraint or coercion" covering as it does such a broad
range of undesirable practices on the part of employers could easily be
seized upon, where a borderline case, inimical to the right of self-
organization or to collective bargaining, presents itself as justifying a
finding of an unfair labor practice.
********************************************************************************
E-SHURN CORPORATION v. ME-SHURN WORKERS UNION
J. PANGANIBAN; January 11, 2005
Facts:
The regular rank and file employees of Me-Shurn Corporation
organized Me-Shurn Workers Union-FSM, an affiliate of the
February Six Movement (FSM).
Respondent union had a pending application for registration
with the BLR. Ten days later, Petitioner Corporation started
placing on forced leave all the rank and file employees who
were members of the unions bargaining unit.
Respondent union filed a Petition for Certification Election with
the Med-Arbitration Unit of the DOLE. The corporation filed a
comment stating that it would temporarily lay off employees and
cease operations, on account of its alleged inability to meet the
export quota required by the Board of Investment.
While the Petition was pending, 184 union members allegedly
submitted a retraction/withdrawal thereof. The med-arbiter
dismissed the Petition.
DOLE Undersecretary granted the unions appeal and ordered
the holding of a certification election among the rank and file
employees of the corporation.
Issue:
Respondent union filed a Notice of Strike against petitioner
corporation on the ground of unfair labor practice (illegal
lockout and union busting). - Chou Fang Kuen (alias Sammy
Chou, the other petitioner herein) and Raquel Lamayra (the
Filipino administrative manager of the corporation) imposed a
precondition for the resumption of operation and the rehiring of
laid off workers. He allegedly required the remaining union
officers to sign an Agreement containing a guarantee that upon
their return to work, no union or labor organization would be
organized. Instead, the union officers were to serve as
mediators between labor and management.
The union reorganized and elected a new set of officers.
Respondent Rosalina Cruz was elected president. Thereafter, it
filed two Complaints charging petitioner corporation with unfair
labor practice, illegal dismissal, underpayment of wages and
deficiency in separation pay, for which they prayed for damages
and attorneys fees.
The corporation countered that because of economic reversals,
it was compelled to close and cease its operations to prevent
serious business losses; that under Article 283 of the Labor
Code, it had the right to do so; that in August 1998, it had paid
its 342 laid off employees separation pay and benefits in the
total amount of P1,682,863.88; and that by virtue of these
payments, the cases had already become moot and academic.
It also averred that its resumption of operations in September
1998 had been announced and posted at the Bataan Export
Processing Zone, and that some of the former employees had
reapplied.
 1. WON the dismissal of the employees of petitioner Meshurn
Corporation is for an authorized cause.
2. WON the respondents can maintain a suit against petitioners.
Held:
1. NO. The reason invoked by petitioners to justify the cessation
of corporate operations was alleged business losses. Yet, other
than generally referring to the financial crisis in 1998 and to
their supposed difficulty in obtaining an export quota,
interestingly, they never presented any report on the financial
operations of the corporation during the period before its
shutdown. Neither did they submit any credible evidence to
substantiate their allegation of business losses. - Basic is the
rule in termination cases that the employer bears the burden of
showing that the dismissal was for a just or authorized cause.
Otherwise, the dismissal is deemed unjustified.
Apropos this responsibility, petitioner corporation should have
presented clear and convincing evidence of imminent economic
or business reversals as a form of affirmative defense in the
proceedings before the labor arbiter or, under justifiable
circumstances, even on appeal with the NLRC.
2. YES. The DOLE would not have entertained the Petition if the
union were not a legitimate labor organization within the
meaning of the Labor Code. Under this Code, in an
unorganized establishment, only a legitimate union may file a
petition for certification election.
Hence, while it is not clear from the record whether respondent
union is a legitimate organization, we are not readily inclined to
believe otherwise, especially in the light of the pro-labor policies
enshrined in the Constitution and the Labor Code.
Verily, the union has the requisite personality to sue in its own
name in order to challenge the unfair labor practice committed
by petitioners against it and its members.
It would be an unwarranted impairment of the right to self-
organization through formation of labor associations if
thereafter such collective entities would be barred from
instituting action in their representative capacity.
Finally, in view of the discriminatory acts committed by
petitioners against respondent union prior to the holding of the
certification election-- acts that included their immediate grant
of exclusive recognition to another union as a bargaining agent
despite the pending Petition for certification election -- the
results of that election cannot be said to constitute a
repudiation by the affected employees of the unions right to
represent them in the present case.
********************************************************************************
ROYAL INTEROCEAN LINES v CIR (1960)
FACTS: Royal Interocean Lines is a foreign corp licensed to do
business in PH with head office in Hongkong.
Royal Manila Branch EE Ermidia Mariano and Manila Branch Manager
Kamerling developed strained relations. Mariano thus filed a complaint
vs Kamerling with the Managing Director in HK. Kamerling, with
approval of HK head office, dismissed Mariano.
Mariano charged Royal and Kamerling with ULP under RA 875 Sec
4(a)(5) in CIR. CIR held Royal and Kamerling guilty and ordered
reinstatement with backpay. Royal appealed by way of certiorari.
ISSUE & RULING:
WON Royal is guilty of ULP
NO. Under RA 875:
Sec. 4 Unfair Labor Practice, (a) It shall be unfair practice for an
employer: . . . (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 policy behind RA 875 is only to further protect the right to self-
organization of workers beyond the protections then provided under
CA 213. HENCE, the charges filed by the EE should have been related
to union activities for the dismissal to qualify as ULP. In this case, the
charges filed by Mariano were not related to union activities. Dismissal
by Royal was therefore NOT ULP.
On what management functions are covered by ULP:
Despite the employee's right to self-organization, the employer
therefore still retains his inherent right to discipline his employees, his
normal prerogative to hire or dismiss them. The prohibition is directed
only against the use of the right to employ or discharge as an
instrument of discrimination, interference or oppression because of
one's labor or union activities. Even from a literal and grammatical
point of view, the provision in dispute has to be interpreted in the same
that the charges, the viling of which is the cause of the dismissal of the
employee, must be related to his right to self-organization, in order to
give rise to unfair labor practice on the part of the employer. Under
subsection 5 of section 4 (a), the employee's (1) having filed charges
or (2) having given testimony or (3) being about to give testimony, are
modified by "under this Act" appearing after the last item. In other
words, the three acts must have reference to the employees' right to
self-organization and collective bargaining, because the element of
unfair labor practice is interference in such right. It would be redundant
to repeat "under this Act" after each enumeration connected by the
disjunctive conjunction "or."
FOR REFERENCE, since baka wala kang hard copy ng case:
From the explanatory note of RA 875, when it was still a bill:
The experience under Commonwealth Act No. 213 which now
regulates the subject, has shown the need for further
safeguards to the rights of workers to organize. The attached
bill seeks to provide these safeguards, following the pattern of
United States 7 3 National Labor Relations Act with suitable
modifications demanded by local conditions. (Secs. 4-8.).
The bill will prevent unfair labor practices on the part of the
employers including not only acts of anti-union discrimination
but also those which are involved in the making of company
unions.
The bill protects the workers in the process of organization and
before as well as after the union is registered with the
Department of Labor. Under Commonwealth Act No. 213,
protection comes only after such registration.
The bill will prevent unfair labor practices expeditiously by direct
orders which exercises a continuing restraint upon the
employers to whom they are issued. Commonwealth Act No.
103 requires Criminal prosecution which usually involves delay.
Under this Act, by discharge of the penalty, an employer is free
to commit the act again.
The American courts, in interpreting the provision of the Wagner Act
similar to section 4 (a), subsection 5, said:
 The statute goes no further than to safeguard the right of
employees to self-organization and to select representatives of
their own choosing for collective bargaining or other mutual
protection without restraint or coercion by their employer.
That is fundamental right. Employees have as clear a right to
organize and select their representatives for lawful purpose as
the respondent has to organize its business and select its own
officers and agents. See Case of National Relations Board vs.
Jones & Laughlin Steel Corp. 301 U. S. 1.).
Consequently, with the above fundamental objective, the following
judicial pronouncements give adequate panoply to the rights of the
employer.
The protection of workers' right to self-organization in no way
interfere with employer's freedom to enforce such rules and
orders as are necessary to proper conduct of his business, so
long as employer's supervision is not for the purpose of
intimidating or coercing his employees with respect to their self-
organization and representation. (National Labor Relations
Board v. Hudson Motor Car Co. C. C. A., 1942, 123 F. 2d. 528.)
It is the function of the court to see that the rights of self-
organization and collective bargaining guaranteed by the Act
are amply secured to the employee, but in its effort to prevent
the prescribed unfair labor practices, the court must be mindful
of the welfare of the honest employer. (Martel Mills Corp. vs. M.
L.R. L., C. C. A. 1940, 11471 2d 264.).
********************************************************************************
EN BANC
[G.R. No. L-12429. July 21, 1961.]
ERMIDIA A. MARIANO, Plaintiff-Appellee, v. THE ROYAL
INTEROCEAN LINES (Keninkijke Java-China-Fakitvaart Lijnen N.
V. Amsterdam) and J. V. KAMERLING, Defendants-Appellants.
RESOLUTION*
PADILLA, J.:
This is a motion for reconsideration of the judgment rendered by this
Court in this case on 27 February 1961.
On 23 October 1953, the date of the appellees dismissal from the
appellants service, the new Civil Code, that took effect on 30 August
1950, 1 had repealed article 302 of the Code of Commerce, which
authorized the dismissal of an employee, with or without case, whose
service had been engaged not for a definite or fixed period of time,
upon 30 days notice or payment of one month salary (mesada). It was
only on 12 June 1954 when Republic Act No. 1052 2 was revived.
Hence on 23 October 1953, the appellee, who had been employed by
the appellant company not for a definite or fixed period of time could
be dismissed even without cause and would not be entitled to 30 days
previous notice or payment of one month salary (mesada). 3
In her motion for reconsideration the appellee contends that the
provisions of the regulations regarding allowance to the "Local Staff" of
the appellant company (Annex H-Stipulation, pp. 62-75, rec. on appl.) ,
which had been made known to all its employees including her, formed
part of their contract and she was entitled to the benefits thereof. Even
if this Court were inclined to adopt the appellees view that the "Local
Staff Allowances" (Annex H-Stipulation) amounted to, constituted or
converted her employment into one of fixed period of time, or that she
could not be deprived of the benefit granted by appellant and earned
by her, still this Court could not take such view because the trial court
found and held that it "can not grant plaintiffs (appellees) claim for
retirement and old age allowance for the reason that she has not
complied with one of the conditions thereof, to wit, she has not
completed ten successive years in permanent service from March 1,
1948 up to her retirement on August 21, 1955." From this finding and
pronouncement she attempted to appeal but failed because her record
on appeal was filed beyond the reglementary period. Twice on 18 July
1957 and 22 November 1957 in this Court the appellee sought to
compel the trial court to allow the record on appeal but both petitions
for mandamus were dismissed for lack of merit (G.R. Nos. L-12557
and L-13160). Such being the case that part of the judgment from
which the appellee attempted to appeal but failed is final insofar as it
concerns her. She cannot be allowed to raise it again for it is res
judicata.
The motion for reconsideration is, therefore, denied.
Bengzon, C.J., Labrador, Reyes, J.B.L., Paredes and Dizon, JJ.,
concur.
Concepcion and Barrera, JJ., took no part.
********************************************************************************
GREAT PACIFIC LIFE EMPLOYEES UNION vs. GREAT PACIFIC
LIFE ASSURANCE
Syllabus topic: ULP and Management Functions
Facts:
1. petitioner and respondent entered into a CBA, upon expiration
of which they entered into negotiations which led to a deadlock.
Mediation at the NCMB level proved futile, and a strike was
conducted.
2. Petitioner stopped cars and people at the gates and searched
for business documents. People with business papers were not
allowed to enter. This was seen by two guards.
3. Respondent corporation asked the strikers to submit
explanation as to why they should not be dismissed. Eventually,
corporation dismissed two union officials, Domingo and dela
Rosa, for either not filing the sought after explanation, or filing
explanations which resondent corporation deemed insufficient.
4. New negotiations were entered into. A CBA was eventually
signed, one condition of which is that dismissed employees
(including petitioners) resign. After their resignation, they shall
be re-employed.
5. Petitioner union officials tendered their resignation, which was
not acted on.
6. Petitioner union officials filed a case for illegal dismissal. LA
ruled in their favor, but was reversed by the NLRC.
ISSUE: WON the dismissal was valid? Petitioners argue that there was
illegal dismissal because the basis for his dismissal was not
adequately established and that he was forced to resign by
management.
HELD: Dismissal was valid.
1. The right to strike, while constitutionally recognized, is not
without legal constrictions. 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. The
sanction provided in par. (a) of Art. 264 thereof 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."
2. in this case, Grepa was able to establish adequately the basis
for the dismissal. GREPALIFE submitted before the Labor
Arbiter several affidavits of its employees which de la Rosa did
not refute. These are the affidavits showing that petitioners
stopped and searched vehicles and people entering company
premises.
3. It is true that the draft Agreement submitted by respondent
company before the NCMB expressly proposed that the
reinstatement of its dismissed employees should be
conditioned on the voluntary resignations of Domingo and de la
Rosa upon the signing of the Agreement. It is also true that
petitioner UNION was amenable to this proposition. But the
unalterable fact is that the MOA that was subsequently
finalized and executed did not carry this conditionality.
4. Significantly, the joint letter of resignation submitted by
Domingo and de la Rosa a day after the MOA was executed
was never acted upon by respondent company. And rightly so
for, having been earlier dismissed (i.e., on 16 November 1993),
these two (2) union officers had no more employment to resign
from.
5. While an act or decision of an employer may be unfair, certainly
not every unfair act or decision constitutes unfair labor practice
(ULP) as defined and enumerated under Art. 248 of the Labor
Code.
6. There should be no dispute that all the prohibited acts
constituting unfair labor practice in essence relate to the
workers' right to self-organization. However, the decision of
respondent GREPALIFE to consider the top officers of
petitioner UNION as unfit for reinstatement is not essentially
discriminatory and constitutive of an unlawful labor practice of
employers under the above-cited provision. Discriminating in
the context of the Code involves either encouraging
membership in any labor organization or is made on account of
the employee's having given or being about to give testimony
under the Labor Code. These have not been proved in the
case at bar.
7. A union officer has larger and heavier responsibilities than a
union member. By committing prohibited activities during the
strike, de la Rosa as Vice President of petitioner UNION
demonstrated a high degree of imprudence and
irresponsibility.
8. (Syllabus Topic) It bears emphasis that the employer is free to
regulate all aspects of employment according to his own
discretion and judgment. This prerogative flows from the
established rule that labor laws do not authorize substitution of
judgment of the employer in the conduct of his
business. Recall of workers clearly falls within the ambit of
management prerogative. The employer can exercise this
prerogative without fear of liability so long as it is done in good
faith for the advancement of his interest and not for the purpose
of defeating or circumventing the rights of the employees under
special laws or valid agreements.It is valid as long as it is not
performed in a malicious, harsh, oppressive, vindictive or
wanton manner or out of malice or spite.
T&H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION
v. T&H SHOPFITTERS CORPORATION/GIN QUEEN WORKERS
UNION
DOCTRINE: Concept of ULPs: Violations of the constitutional right of
workers and employees to self-organize and 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. (Art. 256, LC)
SUMMARY: Petitioner company didnt want the respondents to form
their own union so they did acts (relocated employees, retrenched
workers, threatened union members, etc) that would discourage the
workers to self-organize. The Court held that such acts were
reprehensible because it violated the employees constitutional right to
self-organization.
FACTS:
In their desire to improve their working conditions, respondents
held their first formal meeting to discuss the formation of a
union. The next day, 17 employees were barred from entering
petitioners factory and transferred to the warehouse
purportedly because it was expanding. Afterwards, the 17
employees were repeatedly ordered to go on forced leave citing
unavailability of work as reason.
The DOLE issued a certificate of registration in favour of the
union.
Respondents contended that the affected employees were not
given regular work assignments, while subcontractors were
continuously hired to perform their functions. Thus, they sought
the assistance of the NCMB. An agreement was eventually
reached where petitioners agreed to give priority to regular
employees in the distribution of work requirements, which
respondents said petitioners never complied with.
While this was happening, a certification election was
scheduled after the union filed a PCE.
Other things happened: One of the petitioners, Ben Huang,
director of Gin Queen, informed the employees that the lease
contract between Gin Queen and its lessor has expired and
thus, the office must be relocated to Zambales. Some of the
respondents, who visited the site, discovered that the relocation
area was a talahiban. They were later made to work as
grasscutters. Due to this, they did not report for work. Some of
them were suspended. Also, it sponsored a field trip before
the certification election, warned the employees of dire
consequences should the union prevail, and escorted them
to the polling centre Thus, with all these pressure from
petitioners happening, the votes for no union prevailed.
Respondents filed a protest alleging that there was a massive
retrenchment of the union officers and members and that the
work weeks of those employees were drastically reduced to
only 3 days/month.
Petitioner Gin Queen said that it was a corporation separate
and distinct from T&H Shopfitters, and that the retrenchment
was valid because it was a cost cutting measure to avoid
anticipated financial losses. Also, Gin Queen explained that its
transfer was a result of the expiration of the lease agreement,
and that it offered work to employees who opted to stay, on
rotation.
Respondents filed a complaint for ULP by way of union busting
and illegal lockout, which the LA dismissed, saying that (1) the
complaint was of illegal lockout, but none of those who were
allegedly locked out is a complainant, (2) the transfer of the 17
workers was effected long before the union was organized, (3)
complainants failed miserably to controvert the documentary
evidence adduced by Gin Queen that the lease contract had
expired, and (4) complainants failed to show that the rotation of
work was a ULP, among others.
The NLRC reversed the LA decision and ruled in favour of
respondents, reasoning that petitioners committed ULP when it
sponsored a field trip before the certification election,
warned the employees of dire consequences should the
union prevail, and escorted them to the polling centre.
NLRC denied the MR.
The CA sustained the NLRC.
RATIO/ISSUES:
 I. W/N ULP acts were committed by petitioners against
respondents. (Yes)

In the case at bar, petitioners are being accused of the

following acts of ULP: (a) interference with the exercise to self-
organize, (b) contracting out services when such will interfere
with their right to self-organize, and (c) discriminating in regard
to wages, hours of work, and other T&C of employment to
discourage membership in any labor organization.
Test of W/N an employer has interfered with an coerced
employees in their exercise to organize: w/n the employer has
engaged in conduct which tends to interfere with the
employees rights. (See Doctrine)
The questioned acts of petitioners, taken together, reasonably
support an inference that such were all orchestrated to restrict
respondents free exercise of their right to self-organize.
Not content with achieving a "no union" vote in the certification
election, petitioners launched a vindictive campaign against
union members by assigning work on a rotational basis while
subcontractors performed the latters functions regularly.
Worse, some of the respondents were made to work as grass
cutters in an effort to dissuade them from further collective
action. Again, this cannot be countenanced.
Also, the bare denial of petitioners were mere afterthought at
best.

CA decision affirmed.