Republic of the Philippines
Notices
SUPREME COURT
Manila
EN BANC
G.R. No. L-24189 August 30, 1968
ITOGON-SUYOC MINES, INC., petitioner,
vs.
SANGILO-ITOGON WORKERS' UNION in
behalf of BARTOLOME MAYO, BERNARDO
AQUINO, ET AL., respondents.
Reyes and Cabato for petitioner.
Benjamin C. Rillera for respondents.
SANCHEZ, J.:
Petitioner's appeal seeks reversal of the
judgment of the Court of Industrial Relations
(CIR) directing reinstatement of the fifteen
individual respondents "to their former
positions or substantially equivalent
employment in the company, with full back
wages from the time of their dismissal to
their actual reinstatement, without loss of
seniority and other privileges."
The controversy arose because prior to May
28, 1958, Itogon-Suyoc Mines, Inc., through
its general superintendent Claude Fertig, had
been dismissing from its employ members of
respondent Sagilo-Itogon Workers' Union
(Sagilo, for short). Fifty-four members of
Sagilo were already fired when Department
of Labor conciliators conferred with
petitioner's representative to explore the
possibility of their reinstatement. Petitioner
refused reinstatement, alleged that dismissal
of the 54 was for cause.
On May 28, 1958, sensing that its members
were being eased out of employment one by
one, Sagilo called a strike, accompanied by
picketing carried out at or near petitioner's
mine premises in Itogon. Work was paralyzed.
On the fourth or fifth day of the strike,
company policemen drove the strikers out of
petitioner's premises. The strike lasted until
about June 2, 1958.
On that day, June 2, 1958, petitioner filed an
injunction suit against some strikers in the
Court of First Instance of Baguio (Civil Case
No. 774). Nothing clear appears of record as
to the present status of this suit.
On the same day, too, petitioner's officials
conferred with the officers of the other labor
union in the company, the Itogon Labor
Union. They hammered out an agreement
whereby all strikers were given fifteen (15)
days from said date to return to work. Thru a
public address system, strikers were then
urged to go back to their jobs.
addressed to the strikers which read "All of
you are required to report immediately to
your respective work otherwise you will be
considered AWOL [absent without leave] and
will be dropped from the rolls"1 were posted
on the Itogon Labor Union bulletin board, the
Itogon store, and at 1300 checkpoint the
main entrance to the company's mining
premises. These notices did rot contain the
fifteen (15) days' grace period aforesaid.
On November 18, 1958, a CIR prosecutor in
behalf of Sagilo charged petitioner and
Claude Fertig, its general superintendent,
with unfair labor practice for the dismissal of
two company employees A. Manaois and Jose
Baldo on June 9, 1957 and March 5, 1958,
respectively, allegedly because of their
affiliation with Sagilo and for having testified
against petitioner in Certification Case No. 3-
MC-Pang.2 The complaint prayed for
reinstatement and back wages. Petitioner
asserted just cause in defense.
On October 5, 1960, CIR adjudged that the
dismissal of A. Manaois was just and legal,
but that petitioner was guilty of unfair labor
practice in dismissing Jose Baldo. CIR thus
ordered Baldo's reinstatement with back
wages. The CIR judgment for Jose Baldo was
elevated by petitioner to this Court.3 On
December 24, 1964, we affirmed.
Meanwhile, on March 3, 1961, CIR's
prosecutor on Sagilo's charge filed with
CIR on July 12, 1960, lodged an unfair
labor practice complaint against herein
petitioner, its general superintendent Claude
Fertig, and the Itogon Labor Union.4 Averment
was there made of the arbitrary dismissal of
107 of Sagilo's members because of
membership and/or affiliation with said union
and for having testified or about to testify in
Certification Case G.R. No. 3-MC-Pang.; that
Sagilo's president, Bartolome Mayo, was
dismissed also because of his refusal to
dissolve the union; and that said company
and its general superintendent Claude Fertig
"had given aid and support to ... Itogon Labor
Union, another labor organization" existing in
said company "by allowing the officers and
members thereof, to hold meetings inside the
mine premises and the theatre building
owned" by the company and also allowing
them to use the company's light facilities
privileges which were denied Sagilo. The
prayer was for judgment declaring
respondents therein guilty of unfair labor
practice; enjoining them from further
committing unfair labor practice acts;
ordering the dissolution of Itogon Labor
Union, "it being a company dominated
1
union"; and directing reinstatement of the
dismissed 107 employees mentioned in the
complaint, with full back wages from the time
of dismissal up to actual reinstatement.
The mining company and Claude Fertig in
their answer aver that the May 27, 1958
strike was illegal; that thereafter "many of
respondent company's workers left for their
respective home towns, abandoning their
jobs, and never reported for work until the
present; that some of the persons listed in
the complaint are still working; and some of
them left respondent company's employ even
earlier than May 27, 1958 voluntarily or were
discharged for cause." The company's
principal defense is that the action for
reinstatement with back wages is barred by
laches.
Itogon Labor Union's defense is that the
concessions it enjoyed were in pursuance of a
collective bargaining contract between said
union and the company.
Of the 107 dismissed employees, 10
manifested in writing that they had never
been members of Sagilo, were actually
working with the company and not interested
at all in the prosecution of the suit.5 One of
the named dismissed employees, Graciano
Mejia, died on October 26, 1957. 6 Of the
remaining individual complainants, only 15
appeared and testified in court. They were
amongst the strikers.
Came the CIR decision of May 20, 1964.
Associate Judge Jose S. Bautista there
observed that "the picketing was conducted
peacefully, as the strikers did not commit
acts of violence or cause injuries to persons
or damage to property" and that "the union
members staged the strike for the reason
that their fellow members were being eased
out of employment little by little by
respondent company." .
On the charge that the Itogon Labor Union
was company dominated, CIR declared that
"the privilege of respondent union in holding
meetings inside the company's mine
premises and theater building, and in using
the company's light facilities, is one of the
concessions obtained by said union in
accordance with the collective bargaining
agreement entered into by the respondent
Company and the Itogon Labor Union." .
CIR's judgment thus directed "respondent
Itogon-Suyoc Mines, Inc. to reinstate (1)
Bartolome Mayo, (2) Bernardo Aquino, (3)
Florentino Ceralde, (4) Marcelo Datuin, (5)
Antonio Deogracias, (6) Domingo Deray, (7)
Pedro Espiritu, (8) Mariano Idos, (9) Antonio
Laop, (10) Gregorio Laureta, (11) Chayon
Pogay, (12) Roman Quinto, (13) Jose Santos,
(14) Simplicio Tambaoan, and (15) Tomas
Valerio, to their former positions or
substantially equivalent employment in the
company, with full backwages from the time
of their dismissal to their actual
reinstatement, without loss of seniority and
other privileges. The complaint with respect
to the remaining members of complainant
Sagilo-Itogon Workers' Union and with
respect to the company domination charge
against respondent Itogon Labor Union is
hereby DISMISSED."
Its motion to reconsider having been denied
by CIR en banc, petitioner appealed to this
Court.
1. Petitioner's brief 7 challenges Sagilo's
capacity to sue. Sagilo, so petitioner says,
ceased to be a legitimate labor union on
March 31, 1960 when the Department of
Labor cancelled the former's registration
permit for failure to comply with statutory
requirements. Contrariwise Sagilo avers that
at the time the complaint below was filed it
was a legitimate labor organization, and
continues to be so. 1wph1.t
Judicial inquiry was made by CIR on this
issue. A subpoena duces tecum was issued to
the registrar of labor organizations of the
Department of Labor requiring him or his duly
authorized representative "[t]o bring with
[him] the following: (1) the list of
membership of the Sagilo-Itogon Workers'
Union; (2) the revocation, if any, of the
registration permit of the Sagilo-Itogon
Workers' Union dated March 22, 1960; and
(3) the cancellation proceedings of the
Sagilo-Itogon Workers' Union which took
place sometime in 1960."8
Atty. Narciso Fabella, the duly authorized
representative, answered the subpoena. With
the record of the cancellation proceedings of
Sagilo with him, he testified before the CIR
hearing officer that on March 31, 1960,
Sagilo's registration permit [No. 2141-IP
issued on May 21, 1957] was cancelled by
the Department of Labor under Cancellation
Proceedings 1722;9 that his office then
received a motion for reconsideration of said
cancellation; that on April 27, 1960, an order
was issued advising Sagilo to comply with
the requirement it failed to satisfy and which
was the cause of the cancellation of Sagilo's
permit; that on March 9, 1962, Sagilo filed a
manifestation and motion to lift resolution
with the request that it be given fifteen days
within which to present evidence of
compliance; that on March 23, 1962, an order
2
was issued directing the union to submit,
within fifteen days from notice, a copy of its
financial report for the period from May 12,
1957 to May 11, 1958, sworn to by its
treasurer, Ernesto Aragon, pursuant to
Sangilo's constitution and by-laws and
Section 17(k) of Republic Act 875; and that
no financial report had been submitted to the
Department of Labor.
And then, the witness testified as follows:
ATTY. RILLERA [Counsel for Sagilo]:
Q Now, Mr. Fabella, per your records, do you
have the final order cancelling the permit of
the complainant union, or is the proceeding
still going on?
WITNESS
A As far as the record is concerned, it seems
that the proceeding is still going on because
there is no other order pertaining [to] the
non-submittal of the union of the financial
report required within fifteen (15) days.10
So it is, that there is no order final in
character cancelling Sagilo's registration
permit and dropping its name from the roster
of legitimate labor unions. Sangilo's status
does not appear in the record to have
changed. Therefore, Sagilo still enjoys all
the rights accorded by law to a legitimate
labor union. One of those rights is the right to
sue. 1wph1.t
Even assuming that Sagilo later lost its
registration permit in the course of the
present proceedings, still Sagilo may
continue as a party without need of
substitution of parties, "subject however to
the understanding that whatever decision
may be rendered therein will only be binding
upon those members of the union who have
not signified their desire to withdraw from the
case before its trial and decision on the
merits." 11
Really, we perceive of no reason why the
judgment in favor of the fifteen individual
respondent laborers should be overturned
simply because the union of which they were
members ceased to be a legitimate labor
union. It cannot be disputed that CIR's
prosecutor brought this case not merely for
Sagilo; it was also on behalf of the 107
employees enumerated therein. This
accounts for the fact that CIR's judgment for
reinstatement and backpay was rendered in
favor of the fifteen respondent laborers. To
accept petitioner's argument as valid is to
shunt aside substance to give way to form.
Error, if any, was harmless. It does not affect
the substantial rights of the parties in
interest. It is no ground for reversal. 12 At this
stage this Court may even strike out Sagilo-
Itogon Workers' Union and leave the fifteen
individual respondents alone. 13
2. Next to be considered is petitioner's claim
that respondents were guilty of splitting their
cause of action.
Petitioner argues that the first unfair labor
practice suit (CIR Case 50-ULP- Pang.)
heretofore mentioned covers the second
unfair labor practice suit - the case at hand.
And this, because "[a]ll acts of unfair labor
practice allegedly committed by the herein
petitioner [the company] prior to November
18, 1958 [when CIR Case 50-ULP-Pang. was
filed] against the members of respondent
union [Sagilo] constituted one single cause
of action." Petitioner continues onto say that
since CIR Case 50-ULP-Pang, has been finally
decided by this Court in a decision
promulgated on December 24, 1964, said
case is a bar to the present action.
We do not go along with petitioner.
The rule against splitting of a cause of action
applies only where the actions are between
the same parties. 14Here, the parties in the
two cases aforecited are different. The first
case involves only two (2) laborers, namely,
Jose Baldo and A. Manaois the second refers
to the claim of other laborers numbering 107
in all. These two cases, it is true, were
brought in the name of Sagilo. However, the
real parties in interest in both cases are the
dismissed employees. Sagilo merely
represented its members before CIR. 15 CIR
found that the members "are not situated
under similar circumstances", and that their
alleged dismissal "took pace on different
dates". 16 Each one of these employees has a
cause of action arising from his particular
dismissal. And the cause of action of one is
separate and distinct from the
others. 17 Although, of course, they may be
joined and brought in the name of the
union. Res judicata has not attached.
3. Petitioner's averment that it gave out
notices for a return to work would not be of
help to its cause. On this point, the court
said: "The Court is aware of the offer of the
company to the strikers to return to work,
but it is even more cognizant of the fact that
passions and emotions among the striking
employees were running high at the heat of
the strike." 18 The validity of this reasoning
we do not find cause to dispute.
And then, evidence there is that the
individual respondents were driven out of and
3
denied admission into the company's mine
premises because they staged a strike. They
were turned out of the bunkhouses they
rented in the premises as living quarters.
They were virtually locked out. Evidence
there is, too, that because of the strike the
laborers were not allowed to go back to their
jobs. 19
4. Petitioner seeks to nullify individual
respondents' right to reinstatement and
backpay upon the ground that they are guilty
of laches. Really the present case was started
after the lapse of almost two years and two
months after the strike. 1wph1.t
Laches has been defined as "such delay in
enforcing one's rights as works disadvantage
to another" and "in a general sense is the
neglect, for an unreasonable and unexplained
length of time, under circumstances
permitting diligence, to do what in law should
have been done." 20 As we go into the core of
this problem, we are reminded that for the
doctrine of stale demand to apply, four
essential requisites must be present, viz: "(1)
conduct on the part of the defendant, or of
one under whom he claims, giving rise to the
situation of which complaint is made and for
which the complaint seeks a remedy; (2)
delay in asserting the complainant's rights,
the complainant having had knowledge or
notice of the defendant's conduct and having
been afforded an opportunity to institute a
suit; (3) lack of knowledge or notice on the
part of the defendant that the complainant
would assert the right on which he bases his
suit; and (4) injury or prejudice to the
defendant in the event relief is accorded to
the complainant, or the suit is not held
barred." 21
With these as guideposts, let us look at the
facts.
It is true that CIR declared Sagilo and its
members who did not come to court and
testify guilty of laches. 22 But as to the 15
individual respondents, the question of laches
was passed by sub silentio. Clearly implicit
in this is that CIR is of the opinion that laches
is not a bar to reinstatement and recovery of
back wages for these 15 individual
respondents who actually testified in court.
For CIR, despite a categorical finding of
laches on the part of the union and some of
its complaining members, proceeded to order
reinstatement and back wages for the 15
respondents. By and large, appreciation of
laches rests mainly with the trial court.
Absent a clear abuse, we are not to disturb
its ruling thereon.
Indeed, these fifteen respondents showed
sufficient interest in their case. They went to
court and supported their cause by their own
testimony. Delay in the filing of suit should
not hamper their suit. We must not for a
moment forget that these fifteen laborers'
belong to the lower economic stratum of our
society. They are not expected to possess the
intelligence or foresight of those who have
been favored by high formal
education. 23 Individually, they may not be in
a position to file suit; they may not have the
means. Thrown out of job, driven off, and
refused entrance to, the company's premises,
each has to go his own way. They had to
return as most of them did to their
families in the lowlands, far from the mine
site. And yet they were not remiss in their
duty to report the matter to their president.
But the president, respondent Bartolome
Mayo, was then in the Baguio General
Hospital. Mayo lost no time in reporting the
laborers' plight to the union counsel. The
laborers had every right to assume that their
union was doing something for them. They
had done their part. They had to depend on
the action taken by their union leaders. A
labor union certainly would not be of much
use if it does not act for the welfare of its
members.
As to respondent Mayo himself, evidence
appears on record that from the time of his
dismissal, he had personally and by
telephone asked Superintendent Fertig for his
reinstatement. He was brushed off with the
reply: "Your union went on strike". 24 On one
occasion after the strike, when Mayo met
Fertig in Baguio, the former repeated his
request for reinstatement, but received the
same answer: "You are still on strike". 25
Laches, if any, we must say, is not solely to
be laid at the door of respondents. The
company contributed too in the delay of the
filing of the present suit. And this because, as
testified to by the union president in court,
such delay in filing the present ULP case was
due to the fact that the legality of their strike
precisely was being litigated in the Court of
First Instance of Baguio in Injunction Case
774 filed on June 2, 1958 by the very
company itself against some of the strikers.
Naturally, if the strike is there declared
illegal, the strikers including the herein
fifteen respondents would lose their right to
reinstatement and backpay. But as said suit
became apparently dormant, the union, on
behalf of respondents, decided to lodge their
present complaint with the CIR.
Thus it is, that the taint of laches cannot
attach to individual respondents. For the
4
second element required for the defense of
laches to prosper is here absent.
5. The judgment below directs petitioner to
pay individual respondents back wages from
the time of their dismissal to their actual
reinstatement without loss of seniority and
privileges.
Since the dismissal of respondents in 1958,
more than ten years had elapsed. It would
not seem out of place to restate the
guidelines to be observed in the
ascertainment of the total back wages
payable under the judgment below. These
are:.1wph1.t
First. To be deducted from the back wages
accruing to each of the laborers to be
reinstated is the total amount of earnings
obtained by him from other employment(s)
from the date of dismissal to the date of
reinstatement. Should the laborer decide that
it is preferable not to return to work, the
deduction should be made up to the time
judgment becomes final. And these, for the
reason that employees should not be
permitted to enrich themselves at the
expense of their employer. 26 Besides, there is
the "law's abhorrence for double
compensation." 27
Second. Likewise, in mitigation of the
damages that the dismissed respondents are
entitled to, account should be taken of
whether in the exercise of due diligence
respondents might have obtained income
from suitable remunerative
employment. 28 We are prompted to give out
this last reminder because it is really unjust
that a discharged employee should, with
folded arms, remain inactive in the
expectation that a windfall would come to
him. A contrary view would breed idleness; it
is conducive to lack of initiative on the part of
a laborer. Both bear the stamp of
undesirability.
For the reasons given, the judgment under
review is hereby affirmed.
Let the record of this case be returned to the
Court of Industrial Relations with instructions
to forthwith ascertain the amount of back
wages due individual respondents in
accordance with the guidelines herein set
forth. Costs against petitioner. So
ordered. 1wph1.t
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 77231 May 31, 1989
SAN JOSE CITY ELECTRIC SERVICE
COOPERATIVE, INC.
(SAJELCO), petitioner,
vs.
MINISTRY OF LABOR AND EMPLOYMENT
and MAGKAISA-ADLO, respondents.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65
of the Rules of Court. Petitioner San Jose City
Electric Service Cooperative, Inc. (SAJELCO,
for brevity) seeks the reversal of the Order
(pp. 38-40, Rollo) of Pura Ferrer-Calleja,
Director of Bureau of Labor Relations in BLR
Case No. A-10-259-86 which affirmed the
Order of Med-Arbiter Antonio R. Cortez to
conduct a certification election among the
rank-and-file employees of SAJELCO.
The antecedent facts of the instant case are
as follows:
On July 29, 1986, private respondent
Manggagawang Nagkakaisa ng SAJELCO-
Association of Democratic Labor Organization
(MAGKAISA-ADLO) filed a petition (pp. 16-
18, Rollo) for direct certification election with
the Regional Office No. 111 of the
Department of Labor and Employment in San
Fernando, Pampanga. The petition alleged
that MAGKAISA-ADLO is a legitimate labor
organization duly registered with the Ministry
of Labor and Employment; that there are
more or less fifty-four (54) rank and file
employees in SAJELCO; that almost 62% of
the employees sought to be represented
have supported the filing of the petition; that
there has been no valid certification election
held in SAJELCO during the twelve (12) month
period prior to the filing of the petition and
that there is no other union in the bargaining
unit.
In its answer (pp. 19-21, Rollo), SAJELCO
opposed the petition for direct certification
election contending, inter alia, that the
employees who sought to be represented by
private respondent are members-consumers
of the Cooperative itself and at the same
time composed the General Assembly which,
pursuant to the By-laws is also the final
arbiter of any dispute arising in the
Cooperative. Thus:
xxx
5. That some, if not most, of the employees
who sought to be represented by the
petitioner, are member-consumers, and as
5
such are members of the General or Special
Assembly which is the final arbiter on any
dispute which a member and/or the Board, or
the Cooperative may have, and that such
"some"of said alleged supporters, in their
capacity as member-consumers, enjoy two
personalities in that as employees and/or
members of the General Assembly, and
therefore cannot fairly and prudently
represent such opposing personalities that
merge into one juridical or natural person,
and these special and unique status or
personalities of the supposed supporters
cannot qualify to be represented by the
petitioner, without doing injustice, in equity
and unfair status or advantage to those
member-consumers who have not that
destiny or status of becoming employees;
6 No valid and lawful representation can be
obtained by petitioner in behalf of the
supposed supporters, who are also member-
consumer, that are bound by the Article of
Incorporation, By-laws of the respondent
Cooperative and pertinent Decrees and laws,
to support and defend the basic policies of
the Government on Electric Cooperatives;
7. There is no possible legal way by which to
dismantle the personalities of some of the
supporters of the petitioner, as employees,
from their status as consumer-members, who
are, under the By-laws, part and parcels of
the General or Special Assembly that finally
decides any dispute, and no reasonable or
valid scale of justice could be invoked to
divide a person who, in conscience, is also
the other fellow against whom a remedy is
sought for in allowing this to happen is
tantamount to slaughtering a man to his own
ends;
xxx
On September 5, 1986, the Med-Arbiter who
was assigned to the case issued an Order
(pp. 24-26, Rollo) granting the petition for
direct certification election on the basis of the
pleadings filed. The Order said that while
some of the members of petitioner union are
members of the cooperative, it cannot be
denied that they are also employees within
the contemplation of the Labor Code and are
therefore entitled to enjoy all the benefits of
employees, including the right to self-
organization (pp. 25, Rollo). This Order was
appealed by SAJELCO to the Bureau of Labor
Relations.
In its appeal, (pp. 27-36, Rollo) SAJELCO
reiterated its position that:
. . . upon the principle that in electric
cooperative as in the case of respondent,
there is a merger of the consumer-members
that composed of the assembly and that of
the rank-and-file members of the petitioners-
into one person or juridical status thus
rendering the proposed collective bargaining
agent ineffective and/or uncalled for
considering that a grievance machinery for
employees and/or member-consumers of the
cooperative-has been provided for by the By-
laws as a built-in over-all arbiter involving
disputes affecting said cooperative;
Respondent Director of the Bureau of Labor
Relations dismissed the appeal and sustained
the ruling of the Med-Arbiter in an order
dated January 5, 1987.
On February 19, 1987, SAJELCO filed the
instant petition for certiorari praying that the
order of respondent Director be set aside and
another one rendered denying the holding or
conduct of a certification election among the
rank and file employees of SAJELCO.
In a letter dated June 20, 1987, Atty. Ricardo
Soto, Jr., counsel for private respondent
union, manifested that a direct certification
election was conducted in SAJELCO, there
being no restraining order from this Court
enjoining the holding thereof Likewise, Atty.
Soto was of the opinion that in view of the
direct certification election conducted, the
petition brought before this Court by SAJELCO
has become moot and academic (p.
48, Rollo). Attached to his letter is a copy of
the minutes of the certification election held
on April 13, 1987 showing that of forty three
(43) employees who voted, thirty (30) voted
for respondent union and thirteen (13) voted
for "no union."
In the resolution of this court (First Division)
dated September 29, 1987, respondents were
required to comment on the petition. The
Solicitor General filed its comment dated
October 30, 1987 wherein it took a stand
contrary to that of respondent Director. To
support its stand, the Solicitor General
argued firstly, that the union members who
seek to be represented by the union are the
very members of the cooperative, thereby
resulting in a fusion of two personalities.
Thus, it will be inconsistent for the union
members to bargain with themselves.
Secondly, he said that article 243 of the
Labor Code; requires that before one can
form, join or assist a labor union, he must
first be employed and to be an employee one
must be under hire and must have no
involvement in the ownership of the firm. A
labor union is formed for purposes of
collective bargaining. The duty to bargain
exists only between employer and employees
6
and not between an employer and his co-
owners. Thirdly, he also said that under the
National Electrification Decree (P.D. No. 269,
August 6, 1973) members of an electric
cooperative such as petitioner, besides
contributing financially to its establishments
and maintenance, participate in its
management. In the latter aspect, they
possess the powers and prerogatives of
managerial employees who are not eligible to
join, assist or form any labor organization
(pp. 4-6 of Comment; pp 43-45, Rollo).
On November 25, 1987, We required Atty.
Soto, Jr. to comment on the comment of the
Solicitor General (p. 47, Rollo). However, the
notices sent to him were returned and
stamped "moved to an unknown address."
But respondent Director of the Bureau of
Labor Relations filed a comment on the
aforesaid comment of the Solicitor General
reiterating his stand that members of private
respondent union fall under the general
provision of Article 244 of the Code on who
are qualified to form, join or assist in the
formation of unions as they are neither
managerial employees nor persons belonging
to subversive organizations. Thus, on May 25,
1988, we gave due course to the petition (p.
79, Rollo).
The only issue presented for resolution in this
petition is whether or not the employees-
members of an electric cooperative can
organize themselves for purposes of
collective bargaining.
This Court had the occasion to rule on this
issue in the consolidated cases of Batangas I-
Electric Cooperative Labor Union vs. Romeo
Young, et al., G.R. No. 62386, Bulacan II-
Electric Cooperative, Inc., vs. Hon. Eliseo A.
Penaflor, et al., G.R. No. 70880 and Albay
Electric Cooperative vs. Crescencio B. Trajano
et. al., G.R. No. 74560 (November 9, 1988),
citing the case of Cooperative Rural Bank of
Davao City, Inc. vs. Pura Ferrer-Calleja, G.R.
No. 77951, September 26,1988, where it was
held that:
A cooperative, therefore, is by its nature
different from an ordinary business concern
being run either, by persons, partnerships or
corporations. Its owners and/or members are
the ones who run and operate the business
while the others are its employees. As above
stated, irrespective of the name of shares
owned by its members they are entitled to
cast one vote each in deciding upon the affair
of the cooperative. Their share capital earn
limited interests, They enjoy special
privileges as exemption from income tax
and sales taxes, preferential right to supply
their products to State agencies and even
exemption from minimum wage laws.
An employee therefore of such a cooperative
who is a member and co-owner thereof
cannot invoke the right to collective
bargaining for certainly an owner cannot
bargain with himself or his co-owners. In the
opinion of August 14, 1981 of the Solicitor
General, he corectly opined that employees
of cooperatives who are themselves
members of the cooperative have no right to
form or join labor organizations for purposes
of collective bargaining for being themselves
co-owners of the cooperative.
However, in so far as it involves cooperatives
with employees who are not members or co-
owners thereof, certainly such employees are
entitled to exercise the rights of all workers to
organization, collective bargaining,
negotiations and others as are enshrined in
the Constitution and existing laws of the
country.
In this petition, San Jose City Electric Service
Cooperative, Inc. (SAJELCO) claims that its
employees are also members of the
cooperative. It cited Section 17(18) of its By-
laws which declares that:
The Board shall also create positions for
subordinate employees and fix their duties
and remunerations. Only member-consumers
or members of their immediate family shall
be employed by the cooperative (Emphasis
supplied).
The above-cited provision, however,
mentions two types of employees, namely:
the members-consumers and the members of
their immediate families. As regards
employees of SAJELCO who are members-
consumers, the rule is settled that they are
not qualified to form, join or assist labor
organizations for purposes of collective
bargaining. The reason for withholding from
employees of a cooperative who are
members-co-owners the right to collective
bargaining is clear: an owner cannot bargain
with himself. However, employees who are
not members-consumers may form, join or
assist labor organizations for purposes of
collective bargaining notwithstanding the fact
that employees of SAJELCO who are not
members-consumers were employed ONLY
because they are members of the immediate
family of members-consumers. The fact
remains that they are not themselves
members-consumers, and as such, they are
entitled to exercise the rights of all workers to
organization, collective bargaining,
negotiations and others as are enshrined in
7
Section 8, Article III and Section 3, Article XIII
of the 1987 Constitution, Labor Code of the
Philippines and other related laws
(Cooperative Rural Bank of Davao City, Inc.,
supra, p. 10).
ACCORDINGLY, the petition is GRANTED. The
assailed Order of respondent Pura Ferrer-
Calleja, Director of the Bureau of Labor
Relations is hereby MODIFIED to the effect
that only the rank-and-file employees of
petitioner who are not its members-
consumers are entitled to self-organization,
collective bargaining, and negotiations, while
other employees who are members-
consumers thereof cannot enjoy such right.
The direct certification election conducted on
April 13, 1987 is hereby set aside. The
Regional Office III of the Department of Labor
and Employment in San Fernando, Pampanga
is hereby directed: (a) to determine the
number of rank and file employees of
SAJELCO who are not themselves members-
consumers; (b) to resolve whether or not
there is compliance with the requirements set
forth in Article 257 of the Labor Code; and (c)
in the affirmative, to immediately conduct a
direct certification election among the rank
and file employees of SAJELCO who are not
members-consumers.
SO ORDERED.
G.R. No. 77231 May 31, 1989
SAN JOSE CITY ELECTRIC SERVICE
COOPERATIVE, INC. (SAJELCO),petitioner vs
MINISTRY OF LABOR
FACTS: July 29, 1986, private respondent
Manggagawang Nagkakaisa ng SAJELCO-
Association of Democratic Labor Organization
(MAGKAISA-ADLO) filed a petition for direct
certification election with the Regional Office
No. 111 of the Department of Labor and
Employment in San Fernando, Pampanga.
The petition alleged that MAGKAISAADLO is a
legitimate labor organization duly registered
with the Ministry of Labor and Employment;
that there are more or less fifty-four (54) rank
and file employees in SAJELCO; that almost
62% of the employees sought to be
represented have supported the filing of the
petition; that there has been no valid
certification election held in SAJELCO during
the twelve (12) month period prior to the
filing of the petitionand that there is no other
union in the bargaining unit.
SAJELCO opposed the petition for direct
certification election contending,inter alia,
that the employees who sought to be
represented by private respondent are
members-consumers of the Cooperative itself
and at the same time composed the General
Assembly which, pursuant to the By-laws is
also the final arbiter of any dispute arising in
the Cooperative.
Med Arbiter granted the direct certification
election. Reason: while some of the members
of petitioner union are members of the
cooperative, it cannot be denied that they
are also employees within the contemplation
of the Labor Code and are therefore entitled
to enjoy all the benefits of employees,
including the right to self-organization.
Appealed to BLR. Dismissed the appeal and
affirmed the decision of the med arbiter.
manifested that a direct certification election
was conducted in SAJELCO, there being no
restraining order from this Court enjoining
the holding thereof Likewise, Atty. Soto was of
the opinion that in view of the direct
certification election conducted, the petition
brought before this Court by SAJELCO has
become moot and academic. Attached to his
letter is a copy of the minutes of the
certification election held on April 13, 1987
showing that of forty three (43) employees
who voted, thirty (30) voted for respondent
union and thirteen (13) voted for no union
RULING: mentions two types of employees,
namely: the members-consumers and the
members of their immediate families. As
regards employees of SAJELCOwho are
members-consumers, the rule is settled that
they are not qualified to form, join or assist
labor organizations for purposes of collective
bargaining. The reason for withholding from
employees of a cooperative who are
members-co-owners the right tocollective
bargaining is clear: an owner cannot bargain
with himself. However, employees who are
not members-consumers may form, join or
assist labor organizations for purposes of
collective bargaining notwithstanding the fact
that employees of SAJELCO who are not
members-consumers were employed ONLY
because they are members of the immediate
family of membersconsumers. The fact
remains that they are not themselves
members-consumers, and as such, they are
entitled to exercise the rights of all workers to
organization, collective bargaining,
negotiations and others as are enshrined in
Section 8, Article III and Section 3, Article XIII
of the 1987 Constitution, Labor Code of the
Philippines and other related laws.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
8

G.R. No. 106483 May 22, 1995
ERNESTO L. CALLADO, petitioner,
vs.
INTERNATIONAL RICE RESEARCH
INSTITUTE, respondent.
ROMERO, J.:
Did the International Rice Research Institute
(IRRI) waive its immunity from suit in this
dispute which arose from an employer-
employee relationship?
We rule in the negative and vote to dismiss
the petition.
Ernesto Callado, petitioner, was employed as
a driver at the IRRI from April 11, 1983 to
December 14, 1990. On February 11, 1990,
while driving an IRRI vehicle on an official trip
to the Ninoy Aquino International Airport and
back to the IRRI, petitioner figured in an
accident.
Petitioner was informed of the findings of a
preliminary investigation conducted by the
IRRI's Human Resource Development
Department Manager in a Memorandum
dated March 5, 1990. 1 In view of the
aforesaid findings, he was charged with:
(1) Driving an institute vehicle while on
official duty under the influence of liquor;
(2) Serious misconduct consisting of your
failure to report to your supervisors the
failure of your vehicle to start because of a
problem with the car battery which, you
alleged, required you to overstay in Manila
for more than six (6) hours, whereas, had you
reported the matter to IRRI, Los Baos by
telephone, your problem could have been
solved within one or two hours;
(3) Gross and habitual neglect of your
duties. 2
In a Memorandum dated March 9, 1990,
petitioner submitted his answer and defenses
to the charges against him. 3 After evaluating
petitioner's answer, explanations and other
evidence, IRRI issued a Notice of Termination
to petitioner on December 7, 1990. 4
Thereafter, petitioner filed a complaint on
December 19, 1990 before the Labor Arbiter
for illegal dismissal, illegal suspension and
indemnity pay with moral and exemplary
damages and attorney's fees.
On January 2, 1991, private respondent IRRI,
through counsel, wrote the Labor Arbiter to
inform him that the Institute enjoys immunity
from legal process by virtue of Article 3 of
Presidential Decree No. 1620, 5 and that it
invokes such diplomatic immunity and
privileges as an international organization in
the instant case filed by petitioner, not
having waived the same. 6
IRRI likewise wrote in the same tenor to the
Regional Director of the Department of Labor
and Employment. 7
While admitting IRRI's defense of immunity,
the Labor Arbiter, nonetheless, cited an Order
issued by the Institute on August 13, 1991 to
the effect that "in all cases of termination,
respondent IRRI waives its immunity," 8 and,
accordingly, considered the defense of
immunity no longer a legal obstacle in
resolving the case. The dispositive portion of
the Labor arbiter's decision dated October
31, 1991, reads:
WHEREFORE, premises considered, judgment
is hereby rendered ordering respondent to
reinstate complainant to his former position
without loss or (sic) seniority rights and
privileges within five (5) days from receipt
hereof and to pay his full backwages from
March 7, 1990 to October 31, 1991, in the
total amount of P83,048.75 computed on the
basis of his last monthly salary. 9
The NLRC found merit in private respondent'
s appeal and, finding that IRRI did not waive
its immunity, ordered the aforesaid decision
of the Labor Arbiter set aside and the
complaint dismissed. 10
Hence, this petition where it is contended
that the immunity of the IRRI as an
international organization granted by Article
3 of Presidential Decree No. 1620 may not be
invoked in the case at bench inasmuch as it
waived the same by virtue of its
Memorandum on "Guidelines on the handling
of dismissed employees in relation to P.D.
1620." 11
It is also petitioner's position that a dismissal
of his complaint before the Labor Arbiter
leaves him no other remedy through which
he can seek redress. He further states that
since the investigation of his case was not
referred to the Council of IRRI Employees and
Management (CIEM), he was denied his
constitutional right to due process.
We find no merit in petitioner's arguments.
IRRI's immunity from suit is undisputed.
9
Presidential Decree No. 1620, Article 3
provides:
Art. 3. Immunity from Legal Process. The
Institute shall enjoy immunity from any
penal, civil and administrative proceedings,
except insofar as that immunity has been
expressly waived by the Director-General of
the Institute or his authorized
representatives.
In the case of International Catholic Migration
Commission v. Hon. Calleja, et al. and
Kapisanan ng Manggagawa at TAC sa IRRI v.
Secretary of Labor and Employment and
IRRI, 12 the Court upheld the constitutionality
of the aforequoted law. After the Court noted
the letter of the Acting Secretary of Foreign
Affairs to the Secretary of Labor dated June
17, 1987, where the immunity of IRRI from
the jurisdiction of the Department of Labor
and Employment was sustained, the Court
stated that this opinion constituted "a
categorical recognition by the Executive
Branch of the Government that . . . IRRI
enjoy(s) immunities accorded to international
organizations, which determination has been
held to be a political question conclusive
upon the Courts in order not to embarass a
political department of Government. 13 We
cited the Court's earlier pronouncement
in WHO v. Hon. Benjamin Aquino, et al., 14 to
wit:
It is a recognized principle of international
law and under our system of separation of
powers that diplomatic immunity is
essentially a political question and courts
should refuse to look beyond a determination
by the executive branch of the government,
and where the plea of diplomatic immunity is
recognized and affirmed by the executive
branch of the government as in the case at
bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate
suggestion by the principal law officer of the
government . . . or other officer acting under
his direction. Hence, in adherence to the
settled principle that courts may not so
exercise their jurisdiction . . . as to embarass
the executive arm of the government in
conducting foreign relations, it is accepted
doctrine that in such cases the judicial
department of (this) government follows the
action of the political branch and will not
embarrass the latter by assuming an
antagonistic jurisdiction. 15
Further, we held that "(t)he raison d'etre for
these immunities is the assurance of
unimpeded performance of their functions by
the agencies concerned.
The grant of immunity from local jurisdiction
to . . . and IRRI is clearly necessitated by their
international character and respective
purposes. The objective is to avoid the
danger of partiality and interference by the
host country in their internal workings. The
exercise of jurisdiction by the Department of
Labor in these instances would defeat the
very purpose of immunity, which is to shield
the affairs of international organizations, in
accordance with international practice, from
political pressure or control by the host
country to the prejudice of member States of
the organization, and to ensure the
unhampered the performance of their
functions. 16
The grant of immunity to IRRI is clear and
unequivocal and an express waiver by its
Director-General is the only way by which it
may relinquish or abandon this immunity.
On the matter of waiving its immunity from
suit, IRRI had, early on, made its position
clear. Through counsel, the Institute wrote
the Labor Arbiter categorically informing him
that the Institute will not waive its diplomatic
immunity. In the second place, petitioner's
reliance on the Memorandum with
"Guidelines in handling cases of dismissal of
employees in relation to P.D. 1620" dated July
26, 1983, is misplaced. The Memorandum
reads, in part:
Time and again the Institute has reiterated
that it will not use its immunity under P.D.
1620 for the purpose of terminating the
services of any of its employees. Despite
continuing efforts on the part of IRRI to live
up to this undertaking, there appears to be
apprehension in the minds of some IRRI
employees. To help allay these fears the
following guidelines will be followed hereafter
by the Personnel/Legal Office while handling
cases of dismissed employees.
xxx xxx xxx
2. Notification/manifestation to MOLE or labor
arbiter
If and when a dismissed employee files a
complaint against the Institute contesting the
legality of dismissal, IRRI's answer to the
complaint will:
1. Indicate in the identification
of IRRI that it is an
international organization
operating under the laws of
the Philippines including P.D.
1620. and
10
 2. Base the defense on the
merits and facts of the case
as well as the legality of the
cause or causes for
termination.
3) Waiving immunity under P.D. 1620
If the plaintiff's attorney or the arbiter, asks if
IRRI will waive its immunity we may reply
that the Institute will be happy to do so, as it
has in the past in the formal manner required
thereby reaffirming our commitment to abide
by the laws of the Philippines and our full
faith in the integrity and impartially of the
legal system. 17 (Emphasis in this paragraphs
ours)
From the last paragraph of the foregoing
quotation, it is clear that in cases involving
dismissed employees, the Institute may
waive its immunity, signifying that such
waiver is discretionary on its part.
We agree with private respondent IRRI that
this memorandum cannot, by any stretch of
the imagination, be considered the express
waiver by the Director-General. Respondent
Commission has quoted IRRI's reply thus:
The 1983 . . . is an internal memo addressed
to Personnel and Legal Office and was issued
for its guidance in handling those cases
where IRRI opts to waive its immunity. It is
not a declaration of waiver for all cases. This
is apparent from the use of the permissive
term "may" rather than the mandatory term
"shall" in the last paragraph of the memo.
Certainly the memo cannot be considered as
the express waiver by the Director General as
contemplated by P.D. 1620, especially since
the memo was issued by a former Director-
General. At the very least, the express
declaration of the incumbent Director-general
supersedes the 1983 memo and should be
accorded greater respect. It would be equally
important to point out that the Personnel and
Legal Office has been non-existent since
1988 as a result of major reorganization of
the IRRI. Cases of IRRI before DOLE are
handled by an external Legal Counsel as in
this particular
case. 18 (Emphasis supplied)
The memorandum, issued by the former
Director-General to a now-defunct division of
the IRRI, was meant for internal circulation
and not as a pledge of waiver in all cases
arising from dismissal of employees.
Moreover, the IRRI's letter to the Labor
Arbiter in the case at bench made in 1991
declaring that it has no intention of waiving
its immunity, at the very least, supplants any
pronouncement of alleged waiver issued in
previous cases.
Petitioner's allegation that he was denied due
process is unfounded and has no basis.
It is not denied that he was informed of the
findings and charges resulting from an
investigation conducted of his case in
accordance with IRRI policies and procedures.
He had a chance to comment thereon in a
Memorandum he submitted to the Manager
of the Human Resource and Development
Department. Therefore, he was given proper
notice and adequate opportunity to refute the
charges and findings, hereby fulfilling the
basic requirements of due process.
Finally, on the issue of referral to the Council
of IRRI Employees and Management (CIEM),
petitioner similarly fails to persuade the
Court.
The Court, in the Kapisanan ng mga
Manggagawa at TAC sa IRRI case, 19 held:
Neither are the employees of IRRI without
remedy in case of dispute with management
as, in fact, there had been organized a forum
for better management-employee
relationship as evidenced by the formation of
the Council of IRRI Employees and
Management (CIEM) wherein "both
management and employees were and still
are represented for purposes of maintaining
mutual and beneficial cooperation between
IRRI and its employees." The existence of this
Union factually and tellingly belies the
argument that Pres. Decree No. Decree No.
1620, which grants to IRRI the status,
privileges and immunities of an international
organization, deprives its employees of the
right to self-organization.
We have earlier concluded that petitioner
was not denied due process, and this,
notwithstanding the non-referral to the
Council of IRRI Employees and Management.
Private respondent correctly pointed out that
petitioner, having opted not to seek the help
of the CIEM Grievance Committee, prepared
his answer by his own self. 20 He cannot now
fault the Institute for not referring his case to
the CIEM.
IN VIEW OF THE FOREGOING, the petition
for certiorari is DISMISSED. No costs.
SO ORDERED.
ERNESTO CALLADO vs. INTERNATIONAL RICE
RESEARCH INSTITUTE (IRRI)
11
ERNESTO CALLADO vs. INTERNATIONAL
RICE RESEARCH INSTITUTE (IRRI)
G.R. No. 106483 May 22, 1995/
ROMERO, J.:
Facts: Ernesto Callado, petitioner, was
employed as a driver at the IRRI. One day
while driving an IRRI vehicle on an official trip
to the NAIA and back to the IRRI, petitioner
figured in an accident.
Petitioner was informed of the findings of a
preliminary investigation conducted by the
IRRI's Human Resource Development
Department Manager. In view of the findings,
he was charged with:
(1) Driving an institute vehicle while on
official duty under the influence of liquor;
(2) Serious misconduct consisting of failure to
report to supervisors the failure of the vehicle
to start because of a problem with the car
battery, and
(3) Gross and habitual neglect of duties.
Petitioner submitted his answer and defenses
to the charges against him. However, IRRI
issued a Notice of Termination to petitioner.
Thereafter, petitioner filed a complaint before
the Labor Arbiter for illegal dismissal, illegal
suspension and indemnity pay with moral
and exemplary damages and attorney's fees.
IRRI wrote the Labor Arbiter to inform him
that the Institute enjoys immunity from legal
process by virtue of Article 3 of Presidential
Decree No. 1620, 5 and that it invokes such
diplomatic immunity and privileges as an
international organization in the instant case
filed by petitioner, not having waived the
same.
While admitting IRRI's defense of immunity,
the Labor Arbiter, nonetheless, cited an
Order issued by the Institute to the effect
that "in all cases of termination, respondent
IRRI waives its immunity," and, accordingly,
considered the defense of immunity no
longer a legal obstacle in resolving the case.
The NLRC found merit in private
respondent's appeal and, finding that IRRI did
not waive its immunity, ordered the aforesaid
decision of the Labor Arbiter set aside and
the complaint dismissed.
In this petition petitioner contends that the
immunity of the IRRI as an international
organization granted by Article 3 of
Presidential Decree No. 1620 may not be
invoked in the case at bench inasmuch as it
waived the same by virtue of its
Memorandum on "Guidelines on the handling
of dismissed employees in relation to P.D.
1620."
Issue: Did the (IRRI) waive its immunity from
suit in this dispute which arose from an
employer-employee relationship?
Held: No.
P.D. No. 1620, Article 3 provides:
Art. 3. Immunity from Legal Process. The
Institute shall enjoy immunity from any
penal, civil and administrative proceedings,
except insofar as that immunity has been
expressly waived by the Director-General of
the Institute or his authorized
representatives.
The SC upholds the constitutionality of the
aforequoted law. There is in this case "a
categorical recognition by the Executive
Branch of the Government that IRRI enjoys
immunities accorded to international
organizations, which determination has been
held to be a political question conclusive
upon the Courts in order not to embarass a
political department of Government.
It is a recognized principle of international
law and under our system of separation of
powers that diplomatic immunity is
essentially a political question and courts
should refuse to look beyond a determination
by the executive branch of the government,
and where the plea of diplomatic immunity is
recognized and affirmed by the executive
branch of the government as in the case at
12
bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate
suggestion by the principal law officer of the
government or other officer acting under his
direction.
The raison d'etre for these immunities is the
assurance of unimpeded performance of their
functions by the agencies concerned.
The grant of immunity to IRRI is clear and
unequivocal and an express waiver by its
Director-General is the only way by which it
may relinquish or abandon this immunity.
In cases involving dismissed employees, the
Institute may waive its immunity, signifying
that such waiver is discretionary on its part.
CALLADO VS. IRRI
G.R. No. 106483, May 22 1995, 244 SCRA
210
FACTS:
Petitioner Ernesto Callado was employed as a
driver at the International Rice Research
Institute (IRRI). On February 11, 1990, while
driving an IRRI vehicle on an official trip to
the Ninoy Aquino International Airport and
back to the IRRI, petitioner figured in an
accident. After evaluating petitioner's
answer, explanations and other evidence by
IRRI's Human Resource
Development Department Manager, the latter
issued a Notice of Termination to petitioner
on December 7, 1990.
Petitioner then filed a complaint before the
Labor Arbiter for illegal dismissal, illegal
suspension and indemnity pay with moral
and exemplary damages and attorney's fees.
Private respondent likewise informed the
Labor Arbiter, through counsel, that the
Institute enjoys immunity from legal process
by virtue of Article 3 of Presidential Decree
No. 1620, and that it invokes
such diplomatic immunity and privileges as
an international organization in the instant
case filed by petitioner, not having waived
the same.
However, the Labor Arbiter finds private
respondent IRRI to have waived its immunity
considered the defense of immunity no
longer a legal obstacle in resolving the case.
ISSUE:
Whether or not IRRI waived its immunity from
suit in this dispute which arose from an
employer-employee relationship.
HELD:
The Court ruled in the negative and vote to
dismiss the petition. Theres no merit in
petitioner's arguments, thus IRRI's immunity
from suit is undisputed. Presidential Decree
No. 1620, Article 3 provides:
Immunity from Legal Process. The Institute
shall enjoy immunity from any penal, civil
and administrative proceedings, except
insofar as that immunity has been expressly
waived by the Director-General of the
Institute or his authorized representatives.
The grant of immunity to IRRI is clear and
unequivocal and an express waiver by its
Director-General is the only way by which it
may relinquish or abandon this immunity.
On the matter of waiving its immunity from
suit, IRRI had, early on, made its position
clear. Through counsel, the Institute wrote
the Labor Arbiter categorically informing him
that the Institute will not waive
its diplomatic immunity
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-25246 September 12, 1974
BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and
ELIZALDE ROPE FACTORY, INC.,
defendants, ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for
plaintiff-appellee.
Cipriano Cid & Associates for defendant-
appellant.
ZALDIVAR, J.:p
13
Appeal to this Court on purely questions of
law from the decision of the Court of First
Instance of Manila in its Civil Case No. 58894.
The undisputed facts that spawned the
instant case follow:
Benjamin Victoriano (hereinafter referred to
as Appellee), a member of the religious sect
known as the "Iglesia ni Cristo", had been in
the employ of the Elizalde Rope Factory, Inc.
(hereinafter referred to as Company) since
1958. As such employee, he was a member
of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had
with the Company a collective bargaining
agreement containing a closed shop
provision which reads as follows:
Membership in the Union shall be required as
a condition of employment for all permanent
employees workers covered by this
Agreement.
The collective bargaining agreement expired
on March 3, 1964 but was renewed the
following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic
Act No. 875, prior to its amendment by
Republic Act No. 3350, the employer was not
precluded "from making an agreement with a
labor organization to require as a condition of
employment membership therein, if such
labor organization is the representative of the
employees." On June 18, 1961, however,
Republic Act No. 3350 was enacted,
introducing an amendment to paragraph
(4) subsection (a) of section 4 of Republic Act
No. 875, as follows: ... "but such agreement
shall not cover members of any religious
sects which prohibit affiliation of their
members in any such labor organization".
Being a member of a religious sect that
prohibits the affiliation of its members with
any labor organization, Appellee presented
his resignation to appellant Union in 1962,
and when no action was taken thereon, he
reiterated his resignation on September 3,
1974. Thereupon, the Union wrote a formal
letter to the Company asking the latter to
separate Appellee from the service in view of
the fact that he was resigning from the Union
as a member. The management of the
Company in turn notified Appellee and his
counsel that unless the Appellee could
achieve a satisfactory arrangement with the
Union, the Company would be constrained to
dismiss him from the service. This prompted
Appellee to file an action for injunction,
docketed as Civil Case No. 58894 in the Court
of First Instance of Manila to enjoin the
Company and the Union from dismissing
Appellee. 1 In its answer, the Union invoked
the "union security clause" of the collective
bargaining agreement; assailed the
constitutionality of Republic Act No. 3350;
and contended that the Court had no
jurisdiction over the case, pursuant to
Republic Act No. 875, Sections 24 and 9 (d)
and (e). 2 Upon the facts agreed upon by the
parties during the pre-trial conference, the
Court a quo rendered its decision on August
26, 1965, the dispositive portion of which
reads:
IN VIEW OF THE FOREGOING, judgment is
rendered enjoining the defendant Elizalde
Rope Factory, Inc. from dismissing the
plaintiff from his present employment and
sentencing the defendant Elizalde Rope
Workers' Union to pay the plaintiff P500 for
attorney's fees and the costs of this action. 3
From this decision, the Union appealed
directly to this Court on purely questions of
law, assigning the following errors:
I. That the lower court erred when it did not
rule that Republic Act No. 3350 is
unconstitutional.
II. That the lower court erred when it
sentenced appellant herein to pay plaintiff
the sum of P500 as attorney's fees and the
cost thereof.
In support of the alleged unconstitutionality
of Republic Act No. 3350, the Union
contented, firstly, that the Act infringes on
the fundamental right to form lawful
associations; that "the very phraseology of
said Republic Act 3350, that membership in a
labor organization is banned to all those
belonging to such religious sect prohibiting
affiliation with any labor organization" 4 ,
"prohibits all the members of a given
religious sect from joining any labor union if
such sect prohibits affiliations of their
members thereto" 5 ; and, consequently,
deprives said members of their constitutional
right to form or join lawful associations or
organizations guaranteed by the Bill of
Rights, and thus becomes obnoxious to
Article III, Section 1 (6) of the 1935
Constitution. 6
Secondly, the Union contended that Republic
Act No. 3350 is unconstitutional for impairing
the obligation of contracts in that, while the
Union is obliged to comply with its collective
bargaining agreement containing a "closed
shop provision," the Act relieves the
employer from its reciprocal obligation of
cooperating in the maintenance of union
membership as a condition of employment;
and that said Act, furthermore, impairs the
14
Union's rights as it deprives the union of dues
from members who, under the Act, are
relieved from the obligation to continue as
such members. 7
Thirdly, the Union contended that Republic
Act No. 3350 discriminatorily favors those
religious sects which ban their members from
joining labor unions, in violation of Article Ill,
Section 1 (7) of the 1935 Constitution; and
while said Act unduly protects certain
religious sects, it leaves no rights or
protection to labor organizations. 8
Fourthly, Republic Act No. 3350, asserted the
Union, violates the constitutional provision
that "no religious test shall be required for
the exercise of a civil right," in that the
laborer's exercise of his civil right to join
associations for purposes not contrary to law
has to be determined under the Act by his
affiliation with a religious sect; that
conversely, if a worker has to sever his
religious connection with a sect that prohibits
membership in a labor organization in order
to be able to join a labor organization, said
Act would violate religious freedom. 9
Fifthly, the Union contended that Republic Act
No. 3350, violates the "equal protection of
laws" clause of the Constitution, it being a
discriminately legislation, inasmuch as by
exempting from the operation of closed shop
agreement the members of the "Iglesia ni
Cristo", it has granted said members undue
advantages over their fellow workers, for
while the Act exempts them from union
obligation and liability, it nevertheless
entitles them at the same time to the
enjoyment of all concessions, benefits and
other emoluments that the union might
secure from the employer. 10
Sixthly, the Union contended that Republic
Act No. 3350 violates the constitutional
provision regarding the promotion of social
justice. 11
Appellant Union, furthermore, asserted that a
"closed shop provision" in a collective
bargaining agreement cannot be considered
violative of religious freedom, as to call for
the amendment introduced by Republic Act
No. 3350; 12 and that unless Republic Act No.
3350 is declared unconstitutional, trade
unionism in this country would be wiped out
as employers would prefer to hire or employ
members of the Iglesia ni Cristo in order to do
away with labor organizations. 13
Appellee, assailing appellant's arguments,
contended that Republic Act No. 3350 does
not violate the right to form lawful
associations, for the right to join associations
includes the right not to join or to resign from
a labor organization, if one's conscience does
not allow his membership therein, and the
Act has given substance to such right by
prohibiting the compulsion of workers to join
labor organizations; 14 that said Act does not
impair the obligation of contracts for said law
formed part of, and was incorporated into,
the terms of the closed shop
agreement; 15that the Act does not violate
the establishment of religion clause or
separation of Church and State, for Congress,
in enacting said law, merely accommodated
the religious needs of those workers whose
religion prohibits its members from joining
labor unions, and balanced the collective
rights of organized labor with the
constitutional right of an individual to freely
exercise his chosen religion; that the
constitutional right to the free exercise of
one's religion has primacy and preference
over union security measures which are
merely contractual 16 ; that said Act does not
violate the constitutional provision of equal
protection, for the classification of workers
under the Act depending on their religious
tenets is based on substantial distinction, is
germane to the purpose of the law, and
applies to all the members of a given
class; 17 that said Act, finally, does not violate
the social justice policy of the Constitution,
for said Act was enacted precisely to equalize
employment opportunities for all citizens in
the midst of the diversities of their religious
beliefs." 18
I. Before We proceed to the discussion of the
first assigned error, it is necessary to premise
that there are some thoroughly established
principles which must be followed in all cases
where questions of constitutionality as
obtains in the instant case are involved. All
presumptions are indulged in favor of
constitutionality; one who attacks a statute,
alleging unconstitutionality must prove its
invalidity beyond a reasonable doubt, that a
law may work hardship does not render it
unconstitutional; that if any reasonable basis
may be conceived which supports the
statute, it will be upheld, and the challenger
must negate all possible bases; that the
courts are not concerned with the wisdom,
justice, policy, or expediency of a statute;
and that a liberal interpretation of the
constitution in favor of the constitutionality of
legislation should be adopted. 19
1. Appellant Union's contention that Republic
Act No. 3350 prohibits and bans the members
of such religious sects that forbid affiliation of
their members with labor unions from joining
labor unions appears nowhere in the wording
15
of Republic Act No. 3350; neither can the
same be deduced by necessary implication
therefrom. It is not surprising, therefore, that
appellant, having thus misread the Act,
committed the error of contending that said
Act is obnoxious to the constitutional
provision on freedom of association.
Both the Constitution and Republic Act No.
875 recognize freedom of association.
Section 1 (6) of Article III of the Constitution
of 1935, as well as Section 7 of Article IV of
the Constitution of 1973, provide that the
right to form associations or societies for
purposes not contrary to law shall not be
abridged. Section 3 of Republic Act No. 875
provides that employees shall have the right
to self-organization and to form, join of assist
labor organizations of their own choosing for
the purpose of collective bargaining and to
engage in concerted activities for the
purpose of collective bargaining and other
mutual aid or protection. What the
Constitution and the Industrial Peace Act
recognize and guarantee is the "right" to
form or join associations. Notwithstanding the
different theories propounded by the different
schools of jurisprudence regarding the nature
and contents of a "right", it can be safely said
that whatever theory one subscribes to, a
right comprehends at least two broad
notions, namely: first, liberty or freedom, i.e.,
the absence of legal restraint, whereby an
employee may act for himself without being
prevented by law; and second, power,
whereby an employee may, as he pleases,
join or refrain from Joining an association. It
is, therefore, the employee who should
decide for himself whether he should join or
not an association; and should he choose to
join, he himself makes up his mind as to
which association he would join; and even
after he has joined, he still retains the liberty
and the power to leave and cancel his
membership with said organization at any
time. 20 It is clear, therefore, that the right to
join a union includes the right to abstain from
joining any union. 21 Inasmuch as what both
the Constitution and the Industrial Peace Act
have recognized, and guaranteed to the
employee, is the "right" to join associations of
his choice, it would be absurd to say that the
law also imposes, in the same breath, upon
the employee the duty to join associations.
The law does not enjoin an employee to sign
up with any association.
The right to refrain from joining labor
organizations recognized by Section 3 of the
Industrial Peace Act is, however, limited. The
legal protection granted to such right to
refrain from joining is withdrawn by operation
of law, where a labor union and an employer
have agreed on a closed shop, by virtue of
which the employer may employ only
member of the collective bargaining union,
and the employees must continue to be
members of the union for the duration of the
contract in order to keep their jobs. Thus
Section 4 (a) (4) of the Industrial Peace Act,
before its amendment by Republic Act No.
3350, provides that although it would be an
unfair labor practice for an employer "to
discriminate in regard to hire or tenure of
employment or any term or condition of
employment to encourage or discourage
membership in any labor organization" the
employer is, however, not precluded "from
making an agreement with a labor
organization to require as a condition of
employment membership therein, if such
labor organization is the representative of the
employees". By virtue, therefore, of a closed
shop agreement, before the enactment of
Republic Act No. 3350, if any person,
regardless of his religious beliefs, wishes to
be employed or to keep his employment, he
must become a member of the collective
bargaining union. Hence, the right of said
employee not to join the labor union is
curtailed and withdrawn.
To that all-embracing coverage of the closed
shop arrangement, Republic Act No. 3350
introduced an exception, when it added to
Section 4 (a) (4) of the Industrial Peace Act
the following proviso: "but such agreement
shall not cover members of any religious
sects which prohibit affiliation of their
members in any such labor organization".
Republic Act No. 3350 merely excludes ipso
jure from the application and coverage of the
closed shop agreement the employees
belonging to any religious sects which
prohibit affiliation of their members with any
labor organization. What the exception
provides, therefore, is that members of said
religious sects cannot be compelled or
coerced to join labor unions even when said
unions have closed shop agreements with the
employers; that in spite of any closed shop
agreement, members of said religious sects
cannot be refused employment or dismissed
from their jobs on the sole ground that they
are not members of the collective bargaining
union. It is clear, therefore, that the assailed
Act, far from infringing the constitutional
provision on freedom of association, upholds
and reinforces it. It does not prohibit the
members of said religious sects from
affiliating with labor unions. It still leaves to
said members the liberty and the power to
affiliate, or not to affiliate, with labor unions.
If, notwithstanding their religious beliefs, the
16
members of said religious sects prefer to sign
up with the labor union, they can do so. If in
deference and fealty to their religious faith,
they refuse to sign up, they can do so; the
law does not coerce them to join; neither
does the law prohibit them from joining; and
neither may the employer or labor union
compel them to join. Republic Act No. 3350,
therefore, does not violate the constitutional
provision on freedom of association.
2. Appellant Union also contends that the Act
is unconstitutional for impairing the
obligation of its contract, specifically, the
"union security clause" embodied in its
Collective Bargaining Agreement with the
Company, by virtue of which "membership in
the union was required as a condition for
employment for all permanent employees
workers". This agreement was already in
existence at the time Republic Act No. 3350
was enacted on June 18, 1961, and it cannot,
therefore, be deemed to have been
incorporated into the agreement. But by
reason of this amendment, Appellee, as well
as others similarly situated, could no longer
be dismissed from his job even if he should
cease to be a member, or disaffiliate from the
Union, and the Company could continue
employing him notwithstanding his
disaffiliation from the Union. The Act,
therefore, introduced a change into the
express terms of the union security clause;
the Company was partly absolved by law
from the contractual obligation it had with
the Union of employing only Union members
in permanent positions, It cannot be denied,
therefore, that there was indeed an
impairment of said union security clause.
According to Black, any statute which
introduces a change into the express terms of
the contract, or its legal construction, or its
validity, or its discharge, or the remedy for its
enforcement, impairs the contract. The
extent of the change is not material. It is not
a question of degree or manner or cause, but
of encroaching in any respect on its
obligation or dispensing with any part of its
force. There is an impairment of the contract
if either party is absolved by law from its
performance. 22 Impairment has also been
predicated on laws which, without destroying
contracts, derogate from substantial
contractual rights. 23
It should not be overlooked, however, that
the prohibition to impair the obligation of
contracts is not absolute and unqualified. The
prohibition is general, affording a broad
outline and requiring construction to fill in the
details. The prohibition is not to be read with
literal exactness like a mathematical formula,
for it prohibits unreasonable impairment
only. 24 In spite of the constitutional
prohibition, the State continues to possess
authority to safeguard the vital interests of its
people. Legislation appropriate to
safeguarding said interests may modify or
abrogate contracts already in effect. 25 For
not only are existing laws read into contracts
in order to fix the obligations as between the
parties, but the reservation of essential
attributes of sovereign power is also read into
contracts as a postulate of the legal order. All
contracts made with reference to any matter
that is subject to regulation under the police
power must be understood as made in
reference to the possible exercise of that
power. 26 Otherwise, important and valuable
reforms may be precluded by the simple
device of entering into contracts for the
purpose of doing that which otherwise may
be prohibited. The policy of protecting
contracts against impairment presupposes
the maintenance of a government by virtue
of which contractual relations are worthwhile
a government which retains adequate
authority to secure the peace and good order
of society. The contract clause of the
Constitution must, therefore, be not only in
harmony with, but also in subordination to, in
appropriate instances, the reserved power of
the state to safeguard the vital interests of
the people. It follows that not all legislations,
which have the effect of impairing a contract,
are obnoxious to the constitutional
prohibition as to impairment, and a statute
passed in the legitimate exercise of police
power, although it incidentally destroys
existing contract rights, must be upheld by
the courts. This has special application to
contracts regulating relations between capital
and labor which are not merely contractual,
and said labor contracts, for being impressed
with public interest, must yield to the
common good. 27
In several occasions this Court declared that
the prohibition against impairing the
obligations of contracts has no application to
statutes relating to public subjects within the
domain of the general legislative powers of
the state involving public welfare. 28 Thus,
this Court also held that the Blue Sunday Law
was not an infringement of the obligation of a
contract that required the employer to furnish
work on Sundays to his employees, the law
having been enacted to secure the well-being
and happiness of the laboring class, and
being, furthermore, a legitimate exercise of
the police power. 29
In order to determine whether legislation
unconstitutionally impairs contract
17
obligations, no unchanging yardstick,
applicable at all times and under all
circumstances, by which the validity of each
statute may be measured or determined, has
been fashioned, but every case must be
determined upon its own circumstances.
Legislation impairing the obligation of
contracts can be sustained when it is enacted
for the promotion of the general good of the
people, and when the means adopted to
secure that end are reasonable. Both the end
sought and the means adopted must be
legitimate, i.e., within the scope of the
reserved power of the state construed in
harmony with the constitutional limitation of
that power. 30
What then was the purpose sought to be
achieved by Republic Act No. 3350? Its
purpose was to insure freedom of belief and
religion, and to promote the general welfare
by preventing discrimination against those
members of religious sects which prohibit
their members from joining labor unions,
confirming thereby their natural, statutory
and constitutional right to work, the fruits of
which work are usually the only means
whereby they can maintain their own life and
the life of their dependents. It cannot be
gainsaid that said purpose is legitimate.
The questioned Act also provides protection
to members of said religious sects against
two aggregates of group strength from which
the individual needs protection. The
individual employee, at various times in his
working life, is confronted by two aggregates
of power collective labor, directed by a
union, and collective capital, directed by
management. The union, an institution
developed to organize labor into a collective
force and thus protect the individual
employee from the power of collective
capital, is, paradoxically, both the champion
of employee rights, and a new source of their
frustration. Moreover, when the Union
interacts with management, it produces yet a
third aggregate of group strength from which
the individual also needs protection the
collective bargaining relationship. 31
The aforementioned purpose of the
amendatory law is clearly seen in the
Explanatory Note to House Bill No. 5859,
which later became Republic Act No. 3350, as
follows:
It would be unthinkable indeed to refuse
employing a person who, on account of his
religious beliefs and convictions, cannot
accept membership in a labor organization
although he possesses all the qualifications
for the job. This is tantamount to punishing
such person for believing in a doctrine he has
a right under the law to believe in. The law
would not allow discrimination to flourish to
the detriment of those whose religion
discards membership in any labor
organization. Likewise, the law would not
commend the deprivation of their right to
work and pursue a modest means of
livelihood, without in any manner violating
their religious faith and/or belief. 32
It cannot be denied, furthermore, that the
means adopted by the Act to achieve that
purpose exempting the members of said
religious sects from coverage of union
security agreements is reasonable.
It may not be amiss to point out here that the
free exercise of religious profession or belief
is superior to contract rights. In case of
conflict, the latter must, therefore, yield to
the former. The Supreme Court of the United
States has also declared on several occasions
that the rights in the First Amendment, which
include freedom of religion, enjoy a preferred
position in the constitutional
system. 33 Religious freedom, although not
unlimited, is a fundamental personal right
and liberty, 34 and has a preferred position in
the hierarchy of values. Contractual rights,
therefore, must yield to freedom of religion. It
is only where unavoidably necessary to
prevent an immediate and grave danger to
the security and welfare of the community
that infringement of religious freedom may
be justified, and only to the smallest extent
necessary to avoid the danger.
3. In further support of its contention that
Republic Act No. 3350 is unconstitutional,
appellant Union averred that said Act
discriminates in favor of members of said
religious sects in violation of Section 1 (7) of
Article Ill of the 1935 Constitution, and which
is now Section 8 of Article IV of the 1973
Constitution, which provides:
No law shall be made respecting an
establishment of religion, or prohibiting the
free exercise thereof, and the free exercise
and enjoyment of religious profession and
worship, without discrimination and
preference, shall forever be allowed. No
religious test shall be required for the
exercise of civil or political rights.
The constitutional provision into only
prohibits legislation for the support of any
religious tenets or the modes of worship of
any sect, thus forestalling compulsion by law
of the acceptance of any creed or the
practice of any form of worship, 35 but also
assures the free exercise of one's chosen
18
form of religion within limits of utmost
amplitude. It has been said that the religion
clauses of the Constitution are all designed to
protect the broadest possible liberty of
conscience, to allow each man to believe as
his conscience directs, to profess his beliefs,
and to live as he believes he ought to live,
consistent with the liberty of others and with
the common good. 36 Any legislation whose
effect or purpose is to impede the
observance of one or all religions, or to
discriminate invidiously between the
religions, is invalid, even though the burden
may be characterized as being only
indirect. 37 But if the stage regulates conduct
by enacting, within its power, a general law
which has for its purpose and effect to
advance the state's secular goals, the statute
is valid despite its indirect burden on religious
observance, unless the state can accomplish
its purpose without imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion
to state that the government should not be
precluded from pursuing valid objectives
secular in character even if the incidental
result would be favorable to a religion or sect.
It has likewise been held that the statute, in
order to withstand the strictures of
constitutional prohibition, must have a
secular legislative purpose and a primary
effect that neither advances nor inhibits
religion. 40 Assessed by these criteria,
Republic Act No. 3350 cannot be said to
violate the constitutional inhibition of the "no-
establishment" (of religion) clause of the
Constitution.
The purpose of Republic Act No. 3350 is
secular, worldly, and temporal, not spiritual
or religious or holy and eternal. It was
intended to serve the secular purpose of
advancing the constitutional right to the free
exercise of religion, by averting that certain
persons be refused work, or be dismissed
from work, or be dispossessed of their right
to work and of being impeded to pursue a
modest means of livelihood, by reason of
union security agreements. To help its
citizens to find gainful employment whereby
they can make a living to support themselves
and their families is a valid objective of the
state. In fact, the state is enjoined, in the
1935 Constitution, to afford protection to
labor, and regulate the relations between
labor and capital and industry. 41 More so now
in the 1973 Constitution where it is mandated
that "the State shall afford protection to
labor, promote full employment and equality
in employment, ensure equal work
opportunities regardless of sex, race or creed
and regulate the relation between workers
and employers. 42
The primary effects of the exemption from
closed shop agreements in favor of members
of religious sects that prohibit their members
from affiliating with a labor organization, is
the protection of said employees against the
aggregate force of the collective bargaining
agreement, and relieving certain citizens of a
burden on their religious beliefs; and by
eliminating to a certain extent economic
insecurity due to unemployment, which is a
serious menace to the health, morals, and
welfare of the people of the State, the Act
also promotes the well-being of society. It is
our view that the exemption from the effects
of closed shop agreement does not directly
advance, or diminish, the interests of any
particular religion. Although the exemption
may benefit those who are members of
religious sects that prohibit their members
from joining labor unions, the benefit upon
the religious sects is merely incidental and
indirect. The "establishment clause" (of
religion) does not ban regulation on conduct
whose reason or effect merely happens to
coincide or harmonize with the tenets of
some or all religions. 43 The free exercise
clause of the Constitution has been
interpreted to require that religious exercise
be preferentially aided. 44
We believe that in enacting Republic Act No.
3350, Congress acted consistently with the
spirit of the constitutional provision. It acted
merely to relieve the exercise of religion, by
certain persons, of a burden that is imposed
by union security agreements. It was
Congress itself that imposed that burden
when it enacted the Industrial Peace Act
(Republic Act 875), and, certainly, Congress,
if it so deems advisable, could take away the
same burden. It is certain that not every
conscience can be accommodated by all the
laws of the land; but when general laws
conflict with scrupples of conscience,
exemptions ought to be granted unless some
"compelling state interest" intervenes. 45 In
the instant case, We see no such compelling
state interest to withhold exemption.
Appellant bewails that while Republic Act No.
3350 protects members of certain religious
sects, it leaves no right to, and is silent as to
the protection of, labor organizations. The
purpose of Republic Act No. 3350 was not to
grant rights to labor unions. The rights of
labor unions are amply provided for in
Republic Act No. 875 and the new Labor
Code. As to the lamented silence of the Act
regarding the rights and protection of labor
unions, suffice it to say, first, that the validity
19
of a statute is determined by its provisions,
not by its silence 46 ; and, second, the fact
that the law may work hardship does not
render it unconstitutional. 47
It would not be amiss to state, regarding this
matter, that to compel persons to join and
remain members of a union to keep their jobs
in violation of their religious scrupples, would
hurt, rather than help, labor unions, Congress
has seen it fit to exempt religious objectors
lest their resistance spread to other workers,
for religious objections have contagious
potentialities more than political and
philosophic objections.
Furthermore, let it be noted that coerced
unity and loyalty even to the country, and
a fortiori to a labor union assuming that
such unity and loyalty can be attained
through coercion is not a goal that is
constitutionally obtainable at the expense of
religious liberty. 48 A desirable end cannot be
promoted by prohibited means.
4. Appellants' fourth contention, that
Republic Act No. 3350 violates the
constitutional prohibition against requiring a
religious test for the exercise of a civil right or
a political right, is not well taken. The Act
does not require as a qualification, or
condition, for joining any lawful association
membership in any particular religion or in
any religious sect; neither does the Act
require affiliation with a religious sect that
prohibits its members from joining a labor
union as a condition or qualification for
withdrawing from a labor union. Joining or
withdrawing from a labor union requires a
positive act. Republic Act No. 3350 only
exempts members with such religious
affiliation from the coverage of closed shop
agreements. So, under this Act, a religious
objector is not required to do a positive act
to exercise the right to join or to resign from
the union. He is exempted ipso jure without
need of any positive act on his part. A
conscientious religious objector need not
perform a positive act or exercise the right of
resigning from the labor union he is
exempted from the coverage of any closed
shop agreement that a labor union may have
entered into. How then can there be a
religious test required for the exercise of a
right when no right need be exercised?
We have said that it was within the police
power of the State to enact Republic Act No.
3350, and that its purpose was legal and in
consonance with the Constitution. It is never
an illegal evasion of a constitutional provision
or prohibition to accomplish a desired result,
which is lawful in itself, by discovering or
following a legal way to do it. 49
5. Appellant avers as its fifth ground that
Republic Act No. 3350 is a discriminatory
legislation, inasmuch as it grants to the
members of certain religious sects undue
advantages over other workers, thus violating
Section 1 of Article III of the 1935
Constitution which forbids the denial to any
person of the equal protection of the laws. 50
The guaranty of equal protection of the laws
is not a guaranty of equality in the
application of the laws upon all citizens of the
state. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition
against inequality, that every man, woman
and child should be affected alike by a
statute. Equality of operation of statutes does
not mean indiscriminate operation on
persons merely as such, but on persons
according to the circumstances surrounding
them. It guarantees equality, not identity of
rights. The Constitution does not require that
things which are different in fact be treated in
law as though they were the same. The equal
protection clause does not forbid
discrimination as to things that are
different. 51 It does not prohibit legislation
which is limited either in the object to which
it is directed or by the territory within which it
is to operate.
The equal protection of the laws clause of the
Constitution allows classification.
Classification in law, as in the other
departments of knowledge or practice, is the
grouping of things in speculation or practice
because they agree with one another in
certain particulars. A law is not invalid
because of simple inequality. 52 The very idea
of classification is that of inequality, so that it
goes without saying that the mere fact of
inequality in no manner determines the
matter of constitutionality. 53 All that is
required of a valid classification is that it be
reasonable, which means that the
classification should be based on substantial
distinctions which make for real differences;
that it must be germane to the purpose of
the law; that it must not be limited to existing
conditions only; and that it must apply
equally to each member of the class. 54 This
Court has held that the standard is satisfied if
the classification or distinction is based on a
reasonable foundation or rational basis and is
not palpably arbitrary. 55
In the exercise of its power to make
classifications for the purpose of enacting
laws over matters within its jurisdiction, the
state is recognized as enjoying a wide range
20
of discretion. 56 It is not necessary that the
classification be based on scientific or
marked differences of things or in their
relation. 57 Neither is it necessary that the
classification be made with mathematical
nicety. 58 Hence legislative classification may
in many cases properly rest on narrow
distinctions, 59 for the equal protection
guaranty does not preclude the legislature
from recognizing degrees of evil or harm, and
legislation is addressed to evils as they may
appear.
We believe that Republic Act No. 3350
satisfies the aforementioned requirements.
The Act classifies employees and workers, as
to the effect and coverage of union shop
security agreements, into those who by
reason of their religious beliefs and
convictions cannot sign up with a labor union,
and those whose religion does not prohibit
membership in labor unions. Tile
classification rests on real or substantial, not
merely imaginary or whimsical, distinctions.
There is such real distinction in the beliefs,
feelings and sentiments of employees.
Employees do not believe in the same
religious faith and different religions differ in
their dogmas and cannons. Religious beliefs,
manifestations and practices, though they
are found in all places, and in all times, take
so many varied forms as to be almost beyond
imagination. There are many views that
comprise the broad spectrum of religious
beliefs among the people. There are diverse
manners in which beliefs, equally paramount
in the lives of their possessors, may be
articulated. Today the country is far more
heterogenous in religion than before,
differences in religion do exist, and these
differences are important and should not be
ignored.
Even from the phychological point of view,
the classification is based on real and
important differences. Religious beliefs are
not mere beliefs, mere ideas existing only in
the mind, for they carry with them practical
consequences and are the motives of certain
rules. of human conduct and the justification
of certain acts. 60 Religious sentiment makes
a man view things and events in their relation
to his God. It gives to human life its
distinctive character, its tone, its happiness
or unhappiness its enjoyment or
irksomeness. Usually, a strong and
passionate desire is involved in a religious
belief. To certain persons, no single factor of
their experience is more important to them
than their religion, or their not having any
religion. Because of differences in religious
belief and sentiments, a very poor person
may consider himself better than the rich,
and the man who even lacks the necessities
of life may be more cheerful than the one
who has all possible luxuries. Due to their
religious beliefs people, like the martyrs,
became resigned to the inevitable and
accepted cheerfully even the most painful
and excruciating pains. Because of
differences in religious beliefs, the world has
witnessed turmoil, civil strife, persecution,
hatred, bloodshed and war, generated to a
large extent by members of sects who were
intolerant of other religious beliefs. The
classification, introduced by Republic Act No.
3350, therefore, rests on substantial
distinctions.
The classification introduced by said Act is
also germane to its purpose. The purpose of
the law is precisely to avoid those who
cannot, because of their religious belief, join
labor unions, from being deprived of their
right to work and from being dismissed from
their work because of union shop security
agreements.
Republic Act No. 3350, furthermore, is not
limited in its application to conditions existing
at the time of its enactment. The law does
not provide that it is to be effective for a
certain period of time only. It is intended to
apply for all times as long as the conditions
to which the law is applicable exist. As long
as there are closed shop agreements
between an employer and a labor union, and
there are employees who are prohibited by
their religion from affiliating with labor
unions, their exemption from the coverage of
said agreements continues.
Finally, the Act applies equally to all members
of said religious sects; this is evident from its
provision. The fact that the law grants a
privilege to members of said religious sects
cannot by itself render the Act
unconstitutional, for as We have adverted to,
the Act only restores to them their freedom of
association which closed shop agreements
have taken away, and puts them in the same
plane as the other workers who are not
prohibited by their religion from joining labor
unions. The circumstance, that the other
employees, because they are differently
situated, are not granted the same privilege,
does not render the law unconstitutional, for
every classification allowed by the
Constitution by its nature involves inequality.
The mere fact that the legislative
classification may result in actual inequality
is not violative of the right to equal
protection, for every classification of persons
or things for regulation by law produces
21
inequality in some degree, but the law is not
thereby rendered invalid. A classification
otherwise reasonable does not offend the
constitution simply because in practice it
results in some inequality. 61 Anent this
matter, it has been said that whenever it is
apparent from the scope of the law that its
object is for the benefit of the public and the
means by which the benefit is to be obtained
are of public character, the law will be upheld
even though incidental advantage may occur
to individuals beyond those enjoyed by the
general public. 62
6. Appellant's further contention that
Republic Act No. 3350 violates the
constitutional provision on social justice is
also baseless. Social justice is intended to
promote the welfare of all the
people. 63 Republic Act No. 3350 promotes
that welfare insofar as it looks after the
welfare of those who, because of their
religious belief, cannot join labor unions; the
Act prevents their being deprived of work and
of the means of livelihood. In determining
whether any particular measure is for public
advantage, it is not necessary that the entire
state be directly benefited it is sufficient
that a portion of the state be benefited
thereby.
Social justice also means the adoption by the
Government of measures calculated to insure
economic stability of all component elements
of society, through the maintenance of a
proper economic and social equilibrium in the
inter-relations of the members of the
community. 64 Republic Act No. 3350 insures
economic stability to the members of a
religious sect, like the Iglesia ni Cristo, who
are also component elements of society, for it
insures security in their employment,
notwithstanding their failure to join a labor
union having a closed shop agreement with
the employer. The Act also advances the
proper economic and social equilibrium
between labor unions and employees who
cannot join labor unions, for it exempts the
latter from the compelling necessity of joining
labor unions that have closed shop
agreements and equalizes, in so far as
opportunity to work is concerned, those
whose religion prohibits membership in labor
unions with those whose religion does not
prohibit said membership. Social justice does
not imply social equality, because social
inequality will always exist as long as social
relations depend on personal or subjective
proclivities. Social justice does not require
legal equality because legal equality, being a
relative term, is necessarily premised on
differentiations based on personal or natural
conditions. 65 Social justice guarantees
equality of opportunity 66 , and this is
precisely what Republic Act No. 3350
proposes to accomplish it gives laborers,
irrespective of their religious scrupples, equal
opportunity for work.
7. As its last ground, appellant contends that
the amendment introduced by Republic Act
No. 3350 is not called for in other words,
the Act is not proper, necessary or desirable.
Anent this matter, it has been held that a
statute which is not necessary is not, for that
reason, unconstitutional; that in determining
the constitutional validity of legislation, the
courts are unconcerned with issues as to the
necessity for the enactment of the legislation
in question. 67 Courts do inquire into the
wisdom of laws. 68 Moreover, legislatures,
being chosen by the people, are presumed to
understand and correctly appreciate the
needs of the people, and it may change the
laws accordingly. 69 The fear is entertained by
appellant that unless the Act is declared
unconstitutional, employers will prefer
employing members of religious sects that
prohibit their members from joining labor
unions, and thus be a fatal blow to unionism.
We do not agree. The threat to unionism will
depend on the number of employees who are
members of the religious sects that control
the demands of the labor market. But there is
really no occasion now to go further and
anticipate problems We cannot judge with the
material now before Us. At any rate, the
validity of a statute is to be determined from
its general purpose and its efficacy to
accomplish the end desired, not from its
effects on a particular case. 70 The essential
basis for the exercise of power, and not a
mere incidental result arising from its
exertion, is the criterion by which the validity
of a statute is to be measured. 71
II. We now pass on the second assignment of
error, in support of which the Union argued
that the decision of the trial court ordering
the Union to pay P500 for attorney's fees
directly contravenes Section 24 of Republic
Act No. 875, for the instant action involves an
industrial dispute wherein the Union was a
party, and said Union merely acted in the
exercise of its rights under the union shop
provision of its existing collective bargaining
contract with the Company; that said order
also contravenes Article 2208 of the Civil
Code; that, furthermore, Appellee was never
actually dismissed by the defendant
Company and did not therefore suffer any
damage at all . 72
In refuting appellant Union's arguments,
Appellee claimed that in the instant case
22
there was really no industrial dispute
involved in the attempt to compel Appellee to
maintain its membership in the union under
pain of dismissal, and that the Union, by its
act, inflicted intentional harm on Appellee;
that since Appellee was compelled to
institute an action to protect his right to
work, appellant could legally be ordered to
pay attorney's fees under Articles 1704 and
2208 of the Civil Code. 73
The second paragraph of Section 24 of
Republic Act No. 875 which is relied upon by
appellant provides that:
No suit, action or other proceedings shall be
maintainable in any court against a labor
organization or any officer or member thereof
for any act done by or on behalf of such
organization in furtherance of an industrial
dispute to which it is a party, on the ground
only that such act induces some other person
to break a contract of employment or that it
is in restraint of trade or interferes with the
trade, business or employment of some other
person or with the right of some other person
to dispose of his capital or labor. (Emphasis
supplied)
That there was a labor dispute in the instant
case cannot be disputed for appellant sought
the discharge of respondent by virtue of the
closed shop agreement and under Section 2
(j) of Republic Act No. 875 a question
involving tenure of employment is included in
the term "labor dispute". 74 The discharge or
the act of seeking it is the labor dispute itself.
It being the labor dispute itself, that very
same act of the Union in asking the employer
to dismiss Appellee cannot be "an act
done ... in furtherance of an industrial
dispute". The mere fact that appellant is a
labor union does not necessarily mean that
all its acts are in furtherance of an industrial
dispute. 75 Appellant Union, therefore, cannot
invoke in its favor Section 24 of Republic Act
No. 875. This case is not intertwined with any
unfair labor practice case existing at the time
when Appellee filed his complaint before the
lower court.
Neither does Article 2208 of the Civil Code,
invoked by the Union, serve as its shield. The
article provides that attorney's fees and
expenses of litigation may be awarded "when
the defendant's act or omission has
compelled the plaintiff ... to incur expenses
to protect his interest"; and "in any other
case where the court deems it just and
equitable that attorney's fees and expenses
of litigation should be recovered". In the
instant case, it cannot be gainsaid that
appellant Union's act in demanding
Appellee's dismissal caused Appellee to incur
expenses to prevent his being dismissed from
his job. Costs according to Section 1, Rule
142, of the Rules of Court, shall be allowed as
a matter of course to the prevailing party.
WHEREFORE, the instant appeal is dismissed,
and the decision, dated August 26, 1965, of
the Court of First Instance of Manila, in its
Civil Case No. 58894, appealed from is
affirmed, with costs against appellant Union.
It is so ordered.
Victoriano v Elizalde Rope Workers
Union 59 SCRA 54 (1974)
Facts: Plaintiff is a member of the Elizalde
Rope Workers Union who later resigned from
his affiliation to the said union by reason of
the prohibition of his religion for its members
to become affiliated with any labor
organization. The union has subsisting closed
shop agreement in their collective bargaining
agreement with their employer that all
permanent employees of the company must
be a member of the union and later was
amended by Republic Act No. 3350 with the
provision stating "but such agreement shall
not cover members of any religious sects
which prohibit affiliation of their members in
any such labor organization".. By his
resignation, the union wrote a letter to the
company to separate the plaintiff from the
service after which he was informed by the
company that unless he makes a satisfactory
arrangement with the union he will be
dismissed from the service. The union
contends that RA 3350 impairs obligation of
contract stipulated in their CBA and
discriminatorily favors religious sects in
providing exemption to be affiliated with any
labor unions.
Issue: WON RA 3350 impairs the right to
form association.
Held: The court held that what the
Constitution and the Industrial Peace Act
recognize and guarantee is the "right" to
form or join associations which involves two
broad notions, namely: first, liberty or
freedom, i.e., the absence of legal restraint,
whereby an employee may act for himself
without being prevented by law; and second,
power, whereby an employee may join or
refrain from joining an association. Therefore
the right to join a union includes the right to
abstain from joining any union. The
exceptions provided by the assailed Republic
Act is that members of said religious sects
cannot be compelled or coerced to join labor
unions even when said unions have closed
shop agreements with the employers; that in
23
spite of any closed shop agreement,
members of said religious sects cannot be
refused employment or dismissed from their
jobs on the sole ground that they are not
members of the collective bargaining union.
Thus this exception does not infringe upon
the constitutional provision on freedom of
association but instead reinforces it.
Benjamin Victoriano vs Elizalde Rope
Workers Union
Benjamin Victoriano, an Iglesia ni Cristo (INC)
member, has been an employee of the
Elizalde Rope Factory (ERF) since 1958. He
was also a member of the EPWU (Elizalde
Rope Workers Union). Under the collective
bargaining agreement (CBA) between ERF
and EPWU, a close shop agreement is being
enforced which means that employment in
the factory relies on the membership in the
EPWU; that in order to retain employment in
the said factory one must be a member of
the said Union. In 1962, Victoriano tendered
his resignation from EPWU claiming that as
per RA 3350 he is an exemption to the close
shop agreement by virtue of his being a
member of the INC because apparently in the
INC, one is forbidden from being a member of
any labor union. It was only in 1974 that his
resignation from the Union was acted upon
by EPWU which notified ERF about it. ERF
then moved to terminate Victoriano due to
his non-membership from the EPWU. EPWU
and ERF reiterated that he is not exempt from
the close shop agreement because RA 3350,
which provides that close shop agreements
shall not cover members of any religious
sects which prohibit affiliation of their
members in any such labor organization, is
unconstitutional and that said law violates
the EPWUs and ERFs legal/contractual
rights.
ISSUE: Whether or not RA 3350 is
unconstitutional.
HELD: No. The right to religion prevails over
contractual or legal rights. As such, an INC
member may refuse to join a labor union and
despite the fact that there is a close shop
agreement in the factory where he was
employed, his employment could not be
validly terminated for his non-membership in
the majority therein. Further, the right to join
a union includes the right not to join a union.
The law is not unconstitutional. It recognizes
both the rights of unions and employers to
enforce terms of contracts and at the same
time it recognizes the workers right to join or
not to join union. RA 3550 recognizes as well
the primacy of a constitutional right over a
contractual right.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 82914 June 20, 1988
KAPATIRAN SA MEAT AND CANNING
DIVISION (TUPAS Local Chapter No.
1027), petitioner,
vs.
THE HONORABLE BLR DIRECTOR PURA
FERRER CALLEJA, MEAT AND CANNING
DIVISION UNIVERSAL ROBINA
CORPORATION and MEAT AND CANNING
DIVISION NEW EMPLOYEES AND
WORKERS UNITED LABOR
ORGANIZATION, respondents.
Alar, Comia, Manalo and Associates for
petitioner.
Danilo Bolos for respondent Robina
Corporation.
RESOLUTION
GRIO-AQUINO, J.:
The petitioner, Kapatiran sa Meat and
Canning Division TUPAS Local Chapter No.
1027) hereinafter referred to as "TUPAS,"
seeks a review of the resolution dated
January 27, 1988 (Annex D) of public
respondent Pura Ferrer-Calleja, Director of the
Bureau of Labor Relations, dismissing its
appeal from the Order dated November 17,
1987 (Annex C) of the Med-Arbiter Rasidali C.
Abdullah ordering a certification election to
be conducted among the regular daily paid
rank and file employees/workers of Universal
Robina Corporation-Meat and Canning
Division to determine which of the
contending unions:
a) Kapatiran sa Meat and Canning Division
TUPAS Local Chapter No. 1027 (or "TUPAS"
for brevity);
b) Meat and Canning Division New Employees
and Workers United Labor Organization (or
"NEW ULO" for brevity);
c) No union.
shall be the bargaining unit of the daily wage
rank and file employees in the Meat and
Canning Division of the company.
From 1984 to 1987 TUPAS was the sole and
exclusive collective bargaining representative
of the workers in the Meat and Canning
Division of the Universal Robina Corporation,
24
with a 3-year collective bargaining
agreement (CBA) which was to expire on
November 15, 1987.
Within the freedom period of 60 days prior to
the expiration of its CBA, TUPAS filed an
amended notice of strike on September 28,
1987 as a means of pressuring the company
to extend, renew, or negotiate a new CBA
with it.
On October 8, 1987, the NEW ULO, composed
mostly of workers belonging to the IGLESIA NI
KRISTO sect, registered as a labor union.
On October 12, 1987, the TUPAS staged a
strike. ROBINA obtained an injunction against
the strike, resulting in an agreement to return
to work and for the parties to negotiate a
new CBA.
The next day, October 13, 1987, NEW ULO,
claiming that it has "the majority of the daily
wage rank and file employees numbering
191," filed a petition for a certification
election at the Bureau of Labor Relations
(Annex A).
TUPAS moved to dismiss the petition for
being defective in form and that the
members of the NEW ULO were mostly
members of the Iglesia ni Kristo sect which
three (3) years previous refused to affiliate
with any labor union. It also accused the
company of using the NEW ULO to defeat
TUPAS' bargaining rights (Annex B).
On November 17, 1987, the Med-Arbiter
ordered the holding of a certification election
within 20 days (Annex C).
TUPAS appealed to the Bureau of Labor
Relations BLR. In the meantime, it was able to
negotiate a new 3-year CBA with ROBINA,
which was signed on December 3, 1987 and
to expire on November 15, 1990.
On January 27, 1988, respondent BLR
Director Calleja dismissed the appeal (Annex
D).
TUPAS' motion for reconsideration (Annex E)
was denied on March 17, 1988 (Annex F). On
April 30, 1988, it filed this petition alleging
that the public respondent acted in excess of
her jurisdiction and with grave abuse of
discretion in affirming the Med-Arbiter's order
for a certification election.
After deliberating on the petition and the
documents annexed thereto, We find no merit
in the Petition. The public respondent did not
err in dismissing the petitioner's appeal in
BLR Case No. A-12-389-87. This Court's
decision in Victoriano vs. Elizalde Rope
Workers' Union, 59 SCRA 54, upholding the
right of members of the IGLESIA NI KRISTO
sect not to join a labor union for being
contrary to their religious beliefs, does not
bar the members of that sect from forming
their own union. The public respondent
correctly observed that the "recognition of
the tenets of the sect ... should not infringe
on the basic right of self-organization granted
by the constitution to workers, regardless of
religious affiliation."
The fact that TUPAS was able to negotiate a
new CBA with ROBINA within the 60-day
freedom period of the existing CBA, does not
foreclose the right of the rival union, NEW
ULO, to challenge TUPAS' claim to majority
status, by filing a timely petition for
certification election on October 13, 1987
before TUPAS' old CBA expired on November
15, 1987 and before it signed a new CBA with
the company on December 3, 1987. As
pointed out by Med-Arbiter Abdullah, a
"certification election is the best forum in
ascertaining the majority status of the
contending unions wherein the workers
themselves can freely choose their
bargaining representative thru secret ballot."
Since it has not been shown that this order is
tainted with unfairness, this Court will not
thwart the holding of a certification election
(Associated Trade Unions [ATU] vs. Noriel, 88
SCRA 96).
WHEREFORE, the petition for certiorari is
denied, with costs against the petitioner.
SO ORDERED.
KAPATIRAN SA MEAT AND CANNING
DIVISION (TUPAS Local Chapter) v.
CALLEJA
GR No. 82914 June 20, 1988
Grino-Aquino, J.
Doctrine/Subject: RIGHT TO SELF-
ORGANIZATION. Recognition of the tenet of
the sectshould not infringe on the basic of
self-organization granted by the Constitution
to workers, regardless of religious affiliation.
Facts
- From 1984-1987, Petitioner Kapatiran
sa Meat and Canning Division
(TUPAS) was the sole and exclusive
collective bargaining representative
of the workers in the Meat and
Canning Division of the Universal
25
 Robina Corp. (ROBINA) with a 3-year
collective bargaining agreement
(CBA) which was to expire on Nov. 15,
1987.
- Within the freedom period of 60 days
prior to the CBAs expiration, TUPAS
filed an amended notice of strike to
pressure the company, to extend,
renew or negotiate new CBA with it.
- Oct. 8, 1987- NEW ULO, composed
mostly of workers belonging to Iglesia
Ni Cristo (INC) sect registered as a
labor union.
- Oct. 12, 1987- TUPAS staged a strike.
ROBINA obtained an injunction
against the strike, resulting in an
agreement to return to work and for
parties to negotiate a new CBA.
- The next day, NEW ULO filed a
petition for a certification election at
Bureau of Labor Relations (BLR).
- TUPAS moved to dismiss said petition
and contended among others that
NEW ULOs members were from INC
which three years before refused to
affiliate NEW ULO to deprive with any
labor union and accused ROBINA of
using NEW ULO to deprive TUPAS of
its bargaining rights.
- Med-Arbiter ordered the holding of a
certification election. TUPAS appealed
to the BLR. In the meantime, it was
able to negotiate a new 3-year CBA
with ROBINA, signed on Dec. 3, 1987
and expired on Nov. 15, 1990.
- On Jan. 27, 1988, BLR dismissed the
appeal.
- Hence, this petition.
Issue
Whether or not workers who are
members of a sect or religion are allowed to
form their own labor union.
Ruling
Yes. This Courts decision in
Victoriano v. Elizalde Rope Workers Union,
upholding the right of members of the INC
not to join a labor union for being contrary to
their religions beliefs, does not bar the
members of the sect from former their own
union. The public respondent correctly
observed that recognition of the tenet of the
sectshould not infringe on the basic of self-
organization granted by the Constitution to
workers, regardless of religious affiliation.
The fact that TUPAS was able to
negotiate a new CBA with ROBINA within the
60 day freedom period of the existing CBA,
does not foreclose the right of the rival union,
NEW ULO, to challenge TUPAS claim to
majority status by filing a timely petition for
certification election on October 13, 1987
before TUPAS old CBA expired on Nov. 15,
1987 and before it signed a new CBA with the
company on Dec. 3, 1987. As pointed out by
Med-Arbiter Abdullah, a certification election
is the best forum in ascertaining the majority
status of the contending has not been shown
that this order is tainted with unfairness, this
Court will thwart the holding of a certification
election Associated Trade Unions (ATU) v
Noriel, 88 SCRA 96).
EN BANC
[G.R. No. 122226. March 25, 1998]
UNITED PEPSI-COLA SUPERVISORY
UNION (UPSU), petitioner, vs. HON.
BIENVENIDO E. LAGUESMA and PEPSI-
COLA PRODUCTS, PHILIPPINES,
INC. respondents.
DECISION
MENDOZA, J.:
Petitioner is a union of supervisory
employees. It appears that on March 20,
1995 the union filed a petition for
certification election on behalf of the route
managers at Pepsi-Cola Products Philippines,
Inc. However, its petition was denied by the
med-arbiter and, on appeal, by the Secretary
of Labor and Employment, on the ground that
the route managers are managerial
employees and, therefore, ineligible for union
membership under the first sentence of Art.
245 of the Labor Code, which provides:
Ineligibility of managerial employees to join
any labor organization; right of supervisory
employees. Managerial employees are not
eligible to join, assist or form any labor
organization.Supervisory employees shall not
be eligible for membership in a labor
organization of the rank-and-file employees
but may join, assist or form separate labor
organizations of their own.
Petitioner brought this suit challenging the
validity of the order dated August 31, 1995,
as reiterated in the order dated September
26
22, 1995, of the Secretary of Labor and
Employment.Its petition was dismissed by the
Third Division for lack of showing that
respondent committed grave abuse of
discretion. But petitioner filed a motion for
reconsideration, pressing for resolution its
contention that the first sentence of Art. 245
of the Labor Code, so far as it declares
managerial employees to be ineligible to
form, assist or join unions, contravenes Art. III
8 of the Constitution which provides:
The right of the people, including those
employed in the public and private sectors, to
form unions, associations, or societies for the
purposes not contrary to law shall not be
abridged.
For this reason, the petition was referred to
the Court en banc.
The Issues in this Case
Two question are presented by the petition:
(1) whether the route managers at Pepsi-Cola
Products Philippines, Inc. are managerial
employees and (2) whether Art. 245, insofar
as it prohibits managerial employees from
forming, joining or assisting labor unions,
violates Art. III, 8 of the Constitution.
In resolving these issues it would be useful to
begin by defining who are managerial
employees and considering the types of
managerial employees.
Types of Managerial Employees
The term manager generally refers to anyone
who is responsible for subordinates and other
organization resources.[1] As a class,
managers constitute three levels of a
pyramid:
Top Management
_________________
Middle Management
_________________
First Line
Management
(also called Supervisor)
____________________
____________________
Operatives
Or Operating Employees
FIRST-LINE MANAGERS The lowest level in an
organization at which individuals are
responsible for the work of others is
called first-line or first-level
management. First-line managers direct
operating employees only; they do not
supervise other managers. Example of first-
line managers are the foreman or production
supervisor in a manufacturing plant, the
technical supervisor in a research
department, and the clerical supervisor in a
large office. First-level managers are often
called supervisors.
MIDDLE MANAGERS The term middle
management can refer to more than one
level in an organization. Middle managers
direct the activities of other managers and
sometimes also those of operating
employees. Middle managers principal
responsibilities are to direct the activities that
implement their organizations policies and to
balance the demands of their superiors with
the capacities of their subordinates. A plant
manager in an electronics firm is an example
of a middle manager.
TOP MANAGERS Composed of a
comparatively small group of executives, top
management is responsible for the overall
management of the organization. It
establishes operating policies and guides the
organizations interactions with its
environment. Typical titles of top managers
are chief executive officer, president, and
senior vice-president. Actual titles vary from
one organization to another and are not
always a reliable guide to membership in the
highest management classification. [2]
As can be seen from this description, a
distinction exist between those who have the
authority to devise, implement and control
strategic and operational policies (top and
middle managers) and those whose task is
simply to ensure that such polices are carried
out by the rank-and-file employees of an
organization (first-level
managers/supervisors). What distinguishes
them from the rank-and file employees is that
they act in the interest of the employer in
supervising such rank-and-file employees.
Managerial employees may therefore be said
to fall into two distinct categories: the
managers per se, who compose the former
group described above, and the supervisors
who form the latter group. Whether they
belong to the first or second category,
managers, vis--vis employers, are, likewise,
employees.[3]
27
The first question is whether route managers
are managers are managerial employees or
supervisors.
Previous Administrative Determinations of the Question Whether
Route Managers are Managerial Employees
It appears that this question was the subject
of two previous determinations by the
Secretary of Labor and Employment, in
accordance with which this case was decided
by the med-arbiter.
In Case No. OS-MA-10318-91,
entitled Workerss Alliance Trade Union
(WATU) v. Pepsi-Cola Products Philippines,
Inc., decided on November 13, 1991, the
Secretary of Labor found:
We examined carefully the pertinent job
description of the subject employees and
other documentary evidence on record vis--
vis paragraph (m), Article 212 of the Labor
Code, as amended, and we find that only
those employees occupying the position of
route manager and accounting manager are
managerial employees. The rest i.e. quality
control manager, yard/transport manager
and warehouse operations manager are
supervisory employees.
To qualify as managerial employee, there
must be a clear showing of the exercise of
managerial attributes under paragraph (m),
Article 212 of the Labor Code as
amended. Designations or titles of positions
are not controlling. In the instant case,
nothing on record will support the claim that
the quality control manager, yard/transport
manager and warehouse operations manager
are vested with said attributes. The
warehouse operations manager, for example,
merely assists the plant finance manager in
planning, organizing, directing and controlling
all activities relative to development and
implementation of an effective management
control information system at the sale
offices. The exercise of authority of the
quality control manager, on the other hand,
needs the concurrence of the manufacturing
manager
As to the route managers and accounting
manager, we are convinced that they are
managerial employees. Their job descriptions
clearly reveal so.
On July 6, 1992, this finding was reiterated in
Case No. OS-A-3-71-92, entitled In
Re: Petition for Direct Certification and/or
Certification Election-Route
Managers/Supervisory Employees of Pepsi-
Cola Products Phils. Inc., as follows:
The issue brought before us is not of first
impression. At one time, we had the occasion
to rule upon the status of route manager in
the same company vis a vis the issue as to
whether or not it is supervisory employee or
a managerial employee. In the case
of Workers Alliance Trade Unions (NATU) vs.
Pepsi Cola Products, Phils., Inc. (OS-MA-A-10-
318-91), 15 November 1991, we ruled that a
route manager is a managerial employee
within the context of the definition of the law,
and hence, ineligible to join, form or assist a
union. We have once more passed upon the
logic of our Decision aforecited in the light of
the issues raised in the instant appeal, as
well as the available documentary evidence
on hand, and have come to the view that
there is no cogent reason to depart from our
earlier holding. Route Managers are, by the
very nature of their functions and the
authority they wield over their subordinates,
managerial employees.The prescription found
in Art. 245 of the Labor Code, as amended
therefore, clearly applies to them.[4]4
Citing our ruling in Nasipit Lumber Co. v.
National Labor Relations Commission,[5]5
however, petitioner argues that these
previous administrative determinations do
not have the effect of res judicata in this
case, because "labor relations proceedings"
are "non-litigious and summary in nature
without regard to legal
technicalities."[6] Nasipit Lumber Co. involved
a clearance to dismiss an employee issued by
the Department of Labor. The question was
whether in a subsequent proceeding for
illegal dismissal, the clearance was res
judicata. In holding it was not, this Court
made it clear that it was referring to labor
relations proceedings of a non-adversary
character, thus:
The requirement of a clearance to terminate
employment was a creation of the
Department of labor to carry out the Labor
Code provisions on security of tenure and
termination of employment. The proceeding
subsequent to the filing of an application for
clearance to terminate employment was
outlined in Book V, Rule XIV of the Rules and
Regulations Implementing the Labor
Code. The fact that said rule allowed a
procedure for the approval of the clearance
with or without the opposition of the
employee concerned (Secs. 7 & 8),
demonstrates the non-litigious and summary
nature of the proceeding. The clearance
requirement was therefore necessary only as
an expeditious shield against arbitrary
dismissal without the knowledge and
supervision of the Department of
28
Labor. Hence, a duly approved clearance
implied that the dismissal was legal or for
cause (Sec. 2).[7]v. National Labor Relations
Commission, 177 SCRA 93, 100 (1989).7
But the doctrine of res judicata certainly
applies to adversary administrative
proceedings. As early as 1956, in Brillantes v.
Castro,[8]8 we sustained the dismissal of an
action by a trial court on the basis of a prior
administrative determination of the same
case by the Wage Administration Service,
applying the principle of res
judicata. Recently, in Abad v. NLRC[9]9 we
applied the related doctrine of stare decisis in
holding that the prior determination that
certain jobs at the Atlantic Gulf and Pacific
Co. were project employments was binding in
another case involving another group of
employees of the same company. Indeed, in
Nasipit Lumber Co., this Court clarified
toward the end of its opinion that "the
doctrine of res judicata applies . . . to judicial
or quasi judicial proceedings and not to the
exercise of administrative
powers."[10]v. National Labor Relations
Commission, supra note 7.10 Now
proceedings for certification election, such as
those involved in Case No. OS-M-A-10-318-91
and Case No. OS-A-3-71-92, are quasi judicial
in nature and, therefore, decisions rendered
in such proceedings can attain finality.
[11]
v. B.F. Goodrich (Marikina Factory)
Confidential and Salaries Employees Union-
NATU, 49 SCRA 532 (1973).11
Thus, we have in this case an expert's view
that the employees concerned are
managerial employees within the purview of
Art. 212 which provides:
(m) "managerial employee" is one who is
vested with powers or prerogatives to lay
down and execute management policies
and/or to hire, transfer, suspend, lay off,
recall, discharge, assign or discipline
employees. Supervisory employees are those
who, in the interest of the employer,
effectively recommend such managerial
actions if the exercise of such authority is not
merely routinary or clerical in nature but
requires the use of independent judgment. All
employees not falling within any of the above
definitions are considered rank-and-file
employees for purposes of this Book.
At the very least, the principle of finality of
administrative determination compels
respect for the finding of the Secretary of
Labor that route managers are managerial
employees as defined by law in the absence
of anything to show that such determination
is without substantial evidence to support it.
Nonetheless, the Court, concerned that
employees who are otherwise supervisors
may wittingly or unwittingly be classified as
managerial personnel and thus denied the
right of self- organization, has decided to
review the record of this case.
DOLE's Finding that Route Managers are Managerial Employees
Supported by Substantial Evidence in the Record
The Court now finds that the job evaluation
made by the Secretary of Labor is indeed
supported by substantial evidence. The
nature of the job of route managers is given
in a four-page pamphlet, prepared by the
company, called "Route Manager Position
Description," the pertinent parts of which
read:
A. BASIC PURPOSE
A Manager achieves objectives through
others.
As a Route Manager, your purpose is to meet
the sales plan; and you achieve this objective
through the skillful MANAGEMENT OF YOUR
JOB AND THE MANAGEMENT OF YOUR
PEOPLE.
These then are your functions as Pepsi-Cola
Route Manager. Within these functions -
managing your job and managing your
people - you are accountable to your District
Manager for the execution and completion of
various tasks and activities which will make it
possible for you to achieve your sales
objectives.
B. PRINCIPAL ACCOUNTABILITIES
1.0 MANAGING YOUR JOB
The Route Manager is accountable for the
following:
1.1 SALES DEVELOPMENT
1.1.1 Achieve the sales plan.
1.1.2 Achieve all distribution and new
account objectives.
1.1.3 Develop new business opportunities
thru personal contacts with dealers.
1.1.4 Inspect and ensure that all
merchandizing [sic] objectives are achieved
in all outlets.
1.1.5 maintain and improve productivity of all
cooling equipment and kiosks.
1.1.6 Execute and control all authorized
promotions.
1.1.7 Develop and maintain dealer goodwill.
29
1.1.8 Ensure all accounts comply with
company suggested retail pricing.
1.1.9 Study from time to time individual route
coverage and productivity for possible
adjustments to maximize utilization of
resources.
1.2 Administration
1.2.1 Ensure the proper loading of route
trucks before check-out and the proper
sorting of bottles before check-in.
1.2.2 Ensure the upkeep of all route sales
reports and all other related reports and
forms required on an accurate and timely
basis.
1.2.3 Ensure proper implementation of the
various company policies and procedures
incl. but not limited to shakedown; route
shortage; progressive discipline; sorting;
spoilages; credit/collection; accident;
attendance.
1.2.4 Ensure collection of receivables and
delinquent accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the
following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate
and develop all assigned route salesmen and
helpers at least 3 days a week, to be
supported by required route ride
documents/reports & back check/spot check
at least 2 days a week to be supported by
required documents/reports.
2.1.2 Conduct sales meetings and morning
huddles. Training should focus on the
enhancement of effective sales and
merchandizing [sic] techniques of the
salesmen and helpers. Conduct group
training at least 1 hour each week on a
designated day and of specific topic.
2.2 Code of Conduct
2.2.1 Maintain the company's reputation
through strict adherence to PCPPI's code of
conduct and the universal standards of
unquestioned business ethics.[12]12
Earlier in this opinion, reference was made to
the distinction between managers per se (top
managers and middle managers) and
supervisors (first-line managers). That
distinction is evident in the work of the route
managers which sets them apart from
supervisors in general. Unlike supervisors
who basically merely direct operating
employees in line with set tasks assigned to
them, route managers are responsible for the
success of the company's main line of
business through management of their
respective sales teams. Such management
necessarily involves the planning, direction,
operation and evaluation of their individual
teams and areas which the work of
supervisors does not entail.
The route managers cannot thus possibly be
classified as mere supervisors because their
work does not only involve, but goes far
beyond, the simple direction or supervision of
operating employees to accomplish
objectives set by those above them. They are
not mere functionaries with simple oversight
functions but business administrators in their
own right. An idea of the role of route
managers as managers per se can be gotten
from a memo sent by the director of metro
sales operations of respondent company to
one of the route managers. It reads:[13]
03 April 1995
To : CESAR T. REOLADA
From : REGGIE M. SANTOS
Subj : SALARY INCREASE
Effective 01 April 1995, your basic
monthly salary of P11,710 will be
increased to P12,881 or an increase of
10%. This represents the added managerial
responsibilities you will assume due to the
recent restructuring and streamlining of
Metro Sales Operations brought about by the
continuous losses for the last nine (9)
months.
Let me remind you that for our operations to
be profitable, we have to sustain the intensity
and momentum that your group and yourself
have shown last March. You just have
to deliver the desired volume targets,
better negotiated concessions,
rationalized sustaining deals, eliminate
or reduced overdues, improved
collections, more cash accounts,
controlled operating expenses, etc. Also,
based on the agreed set targets, your
monthly performance will be closely
monitored.
You have proven in the past that your
capable of achieving your targets thru
better planning, managing your group
as a fighting team, and thru aggressive
selling. I am looking forward to your
success and I expect that you just have
to exert your doubly best in turning
30
around our operations from a losing to a
profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers,
quoted in the separate opinion of Justice
Vitug, although entitled "RM's Job
Description," is only a summary of
performance standards. It does not show
whether route managers are managers per
se or supervisors. Obviously, these
performance standards have to be related to
the specific tasks given to route managers in
the four-page "Route Manager Position
Description," and, when this is done, the
managerial nature of their jobs is fully
revealed. Indeed, if any, the card indicates
the great latitude and discretion given to
route managers - from servicing and
enhancing company goodwill to supervising
and auditing accounts, from trade (new
business) development to the discipline,
training and monitoring of performance of
their respective sales teams, and so forth, - if
they are to fulfill the company's expectations
in the "key result areas."
Article 212(m) says that "supervisory
employees are those who, in the interest of
the employer, effectively recommend such
managerial actions if the exercise of such
authority is not merely routinary or clerical in
nature but requires the use of independent
judgment." Thus, their only power is to
recommend. Certainly, the route managers in
this case more than merely recommend
effective management action. They perform
operational, human resource, financial and
marketing functions for the company, all of
which involve the laying down of operating
policies for themselves and their teams. For
example, with respect to marketing, route
managers, in accordance with B.1.1.1 to
B.1.1.9 of the Route Managers Job
Description, are charged, among other
things, with expanding the dealership base of
their respective sales areas, maintaining the
goodwill of current dealers, and distributing
the company's various promotional items as
they see fit. It is difficult to see how
supervisors can be given such responsibility
when this involves not just the routine
supervision of operating employees but the
protection and expansion of the company's
business vis-a-vis its competitors.
While route managers do not appear to have
the power to hire and fire people (the
evidence shows that they only
"recommended" or "endorsed" the taking of
disciplinary action against certain
employees), this is because this is a function
of the Human Resources or Personnel
Department of the company.[14]14 And neither
should it be presumed that just because they
are given set benchmarks to observe, they
are ipso facto supervisors. Adequate control
methods (as embodied in such concepts as
"Management by Objectives [MBO]" and
"performance appraisals") which require
a delineation of the functions and
responsibilities of managers by means of
ready reference cards as here, have long
been recognized in management as effective
tools for keeping businesses competitive.
This brings us to the second question,
whether the first sentence of Art. 245 of the
Labor Code, prohibiting managerial
employees from forming, assisting or joining
any labor organization, is constitutional in
light of Art. III, 8 of the Constitution which
provides:
The right of the people, including those
employed in the public and private sectors, to
form unions, associations, or societies for
purposes not contrary to law shall not be
abridged.
As already stated, whether they belong to the
first category (managers per se) or the
second category (supervisors), managers are
employees. Nonetheless, in the United
States, as Justice Puno's separate opinion
notes, supervisors have no right to form
unions. They are excluded from the definition
of the term "employee" in 2(3) of the Labor-
Management Relations Act of 1947.[15]v. Bell
Aerospace Co., 416 U.S. 281, n 11, 40 L.Ed.2d
134, 147, n. 11 (1974), thus:
Supervisors are management people. They
have distinguished themselves in their
work. They have demonstrated their ability to
take care of themselves without depending
upon the pressure of collective action. No one
forced them to become supervisors. They
abandoned the "collective security" of the
rank and file voluntarily, because they
believed the opportunities thus opened to
them to be more valuable to them than such
"security". It seems wrong, and it is wrong, to
subject people of this kind, who have
demonstrated their initiative, their ambition
and their ability to get ahead, to the leveling
processes of seniority, uniformity and
standardization that the Supreme Court
recognizes as being fundamental principles of
unionism. (J.I. Case Co. v. National Labor
Relations Board, 321 U.S. 332, 88 L.Ed. 762,
64 S. Ct. 576 (1994). It is wrong for the
foremen, for it discourages the things in them
31
that made them foremen in the first
place. For the same reason, that it
discourages those best qualified to get
ahead, it is wrong for industry, and
particularly for the future strength and
productivity of our country.15 In the
Philippines, the question whether managerial
employees have a right of self-organization
has arisen with respect to first-level
managers or supervisors, as shown by a
review of the course of labor legislation in
this country.
Right of Self-Organization of Managerial Employees under Pre-Labor
Code Laws
Before the promulgation of the Labor Code in
1974, the field of labor relations was
governed by the Industrial Peace Act (R.A. No.
875).
In accordance with the general definition
above, this law defined "supervisor" as
follows:
SECTION 2. . . .
(k) "Supervisor" means any person having
authority in the interest of an employer, to
hire, transfer, suspend, lay-off, recall,
discharge, assign, recommend, or discipline
other employees, or responsibly to direct
them, and to adjust their grievances, or
effectively to recommend such acts, if, in
connection with the foregoing, the exercise of
such authority is not of a merely routinary or
clerical nature but requires the use of
independent judgment.[16]16
The right of supervisors to form their own
organizations was affirmed:
SEC. 3. Employees' Right to Self-
Organization. -- Employees shall have the
right to self-organization and to form, join or
assist labor organizations of their own
choosing for the purpose of collective
bargaining through representatives of their
own choosing and to engage in concerted
activities for the purpose of collective
bargaining and other mutual aid and
protection. Individuals employed as
supervisors shall not be eligible for
membership in a labor organization of
employees under their supervision but may
form separate organizations of their own.[17]
For its part, the Supreme Court upheld in
several of its decisions the right of
supervisors to organize for purposes of labor
relations.[18]v. Filoil Supervisory and
Confidential Employees Association, 6 SCRA
522 (1972); Kapisanan ng mga Manggagawa
sa Manila Railroad Co. v. CIR, 106 Phil 607
(1959).18
Although it had a definition of the term
"supervisor," the Industrial Peace Act did not
define the term "manager." But, using the
commonly-understood concept of "manager,"
as above stated, it is apparent that the law
used the term "supervisors" to refer to the
sub-group of "managerial employees" known
as front-line managers. The other sub-group
of "managerial employees," known as
managers per se, was not covered.
However, in Caltex Filipino Managers and
Supervisors Association v. Court of Industrial
Relations,[19]J.)19 the right of all managerial
employees to self-organization was upheld as
a general proposition, thus:
It would be going too far to dismiss
summarily the point raised by respondent
Company - that of the alleged identity of
interest between the managerial staff and
the employing firm. That should ordinarily be
the case, especially so where the dispute is
between management and the rank and
file. It does not necessarily follow though that
what binds the managerial staff to the
corporation forecloses the possibility of
conflict between them. There could be a real
difference between what the welfare of such
group requires and the concessions the firm
is willing to grant. Their needs might not be
attended to then in the absence of any
organization of their own. Nor is this to
indulge in empty theorizing. The record of
respondent Company, even the very case
cited by it, is proof enough of their uneasy
and troubled relationship. Certainly the
impression is difficult to erase that an alien
firm failed to manifest sympathy for the
claims of its Filipino executives. To predicate
under such circumstances that agreement
inevitably marks their relationship, ignoring
that discord would not be unusual, is to fly in
the face of reality.
. . . The basic question is whether the
managerial personnel can organize. What
respondent Company failed to take into
account is that the right to self-organization
is not merely a statutory creation. It is
fortified by our Constitution. All are free to
exercise such right unless their purpose is
contrary to law. Certainly it would be to
attach unorthodoxy to, not to say an
emasculation of, the concept of law if
managers as such were precluded from
organizing. Having done so and having been
duly registered, as did occur in this case,
their union is entitled to all the rights under
Republic Act No. 875. Considering what is
32
denominated as unfair labor practice under Sr. Opers. Supvr.
Section 4 of such Act and the facts set forth
in our decision, there can be only one answer Credit Supervisor A
to the objection raised that no unfair labor
Asst. Stores Supvr. A
practice could be committed by respondent
Company insofar as managerial personnel is Ref. Supervisory Draftsman
concerned. It is, as is quite obvious, in the
negative.[20]20 Refinery Shift Supvr. B

Actually, the case involved front-line Asst. Supvr. A - Operations (Refinery)

managers or supervisors only, as the plantilla
Refinery Shift Supvr. B
of employees, quoted in the main opinion,
[21]
J.) (emphasis added).21 clearly indicates: Asst. Lab. Supvr. A (Refinery)
CAFIMSA members holding the following St. Process Engineer B (Refinery)
Supervisory Payroll Position Title are
Recognized by the Company Asst. Supvr. A - Maintenance (Refinery)

Payroll Position Title Asst. Supvr. B - Maintenance (Refinery)

Assistant to Mgr. - National Acct. Sales Supervisory Accountant (Refinery)

Jr. Sales Engineer Communications Supervisor (Refinery)

Retail Development Asst. Finally, also deemed included are all other
employees excluded from the rank and file
Staff Asst. - 0 Marketing unions but not classified as managerial or
otherwise excludable by law or applicable
Sales Supervisor
judicial precedents.
Supervisory Assistant Right of Self-Organization of Managerial Employees under the Labor

Code
Jr. Supervisory Assistant

Credit Assistant Thus, the dictum in the Caltex case which

allowed at least for the theoretical
Lab. Supvr. - Pandacan unionization of top and middle managers by
assimilating them with the supervisory group
Jr. Sales Engineer B
under the broad phrase "managerial
Operations Assistant B personnel," provided the lynchpin for later
laws denying the right of self-organization not
Field Engineer only to top and middle management
employees but to front line managers or
Sr. Opers. Supvr. - MIA A/S supervisors as well. Following the Caltex
case, the Labor Code, promulgated in 1974
Purchasing Assistant
under martial law, dropped the distinction
Jr. Construction Engineer between the first and second sub-groups of
managerial employees. Instead of treating
St. Sales Supervisor the terms "supervisor" and "manager"
separately, the law lumped them together
Deport Supervisor A
and called them "managerial employees," as
Terminal Accountant B follows:

Merchandiser ART. 212. Definitions . . . .

Dist. Sales Prom. Supvr. (k) "Managerial Employee" is one who is

vested with powers or prerogatives to lay
Instr. - Merchandising down and execute management policies
and/or to hire, transfer, suspend, lay off,
Asst. Dist. Accountant B recall, discharge, assign or discipline
employees, or to effectively recommend such
Sr. Opers. Supervisor
managerial actions. All employees not falling
Jr. Sales Engineer A within this definition are considered rank and
file employees for purposes of this Book.[22]22
Asst. Bulk Ter. Supt.

33
The definition shows that it is actually a
combination of the commonly understood
definitions of both groups of managerial
employees, grammatically joined by the
phrase "and/or."
This general definition was perhaps legally
necessary at that time for two reasons. First,
the 1974 Code denied supervisors their right
to self-organize as theretofore guaranteed to
them by the Industrial Peace Act. Second, it
stood the dictum in the Caltex case on its
head by prohibiting all types of managers
from forming unions. The explicit general
prohibition was contained in the then Art. 246
of the Labor Code.
The practical effect of this synthesis of legal
concepts was made apparent in the Omnibus
Rules Implementing the Labor Code which
the Department of Labor promulgated on
January 19, 1975. Book V, Rule II, 11 of the
Rules provided:
Supervisory unions and unions of security
guards to cease operation. - All existing
supervisory unions and unions of security
guards shall, upon the effectivity of the Code,
cease to operate as such and their
registration certificates shall be deemed
automatically cancelled. However, existing
collective agreements with such unions, the
life of which extends beyond the date of
effectivity of the Code, shall be respected
until their expiry date insofar as the
economic benefits granted therein are
concerned.
Members of supervisory unions who do not
fall within the definition of managerial
employees shall become eligible to join or
assist the rank and file labor organization,
and if none exists, to form or assist in the
forming of such rank and file
organization. The determination of who are
managerial employees and who are not shall
be the subject of negotiation between
representatives of the supervisory union and
the employer. If no agreement is reached
between the parties, either or both of them
may bring the issue to the nearest Regional
Office for determination.
The Department of Labor continued to use
the term "supervisory unions" despite the
demise of the legal definition of "supervisor"
apparently because these were the unions of
front line managers which were then allowed
as a result of the statutory grant of the right
of self-organization under the Industrial Peace
Act. Had the Department of Labor seen fit to
similarly ban unions of top and middle
managers which may have been formed
following the dictum in Caltex, it obviously
would have done so. Yet it did not, apparently
because no such unions of top and middle
managers really then existed.
Real Intent of the 1986 Constitutional Commission
This was the law as it stood at the time the
Constitutional Commission considered the
draft of Art. III, 8. Commissioner Lerum
sought to amend the draft of what was later
to become Art. III, 8 of the present
Constitution:
MR. LERUM. My amendment is on Section 7,
page 2, line 19, which is to insert between
the words "people" and "to" the
following: WHETHER EMPLOYED BY THE STATE
OR PRIVATE ESTABLISHMENTS. In other
words, the section will now read as
follows: "The right of the people WHETHER
EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations,
unions, or societies for purposes not contrary
to law shall not be abridged."[23]23
Explaining his proposed amendment, he
stated:
MR. LERUM. Under the 1935 Bill of Rights, the
right to form associations is granted to all
persons whether or not they are employed in
the government. Under that provision, we
allow unions in the government, in
government-owned and controlled
corporations and in other industries in the
private sector, such as the Philippine
Government Employees' Association, unions
in the GSIS, the SSS, the DBP and other
government-owned and controlled
corporations. Also, we have unions of
supervisory employees and of security
guards. But what is tragic about this is that
after the 1973 Constitution was approved and
in spite of an express recognition of the right
to organize in P.D. No. 442, known as the
Labor Code, the right of government workers,
supervisory employees and security guards
to form unions was abolished.
And we have been fighting against this
abolition. In every tripartite conference
attended by the government, management
and workers, we have always been insisting
on the return of these rights. However, both
the government and employers opposed our
proposal, so nothing came out of this until
this week when we approved a provision
which states:
Notwithstanding any provision of this article,
the right to self-organization shall not be
denied to government employees.
34
We are afraid that without any corresponding
provision covering the private sector, the
security guards, the supervisory employees
or majority employees [sic] will still be
excluded, and that is the purpose of this
amendment.
I will be very glad to accept any kind of
wording as long as it will amount to absolute
recognition of private sector employees,
without exception, to organize.
THE PRESIDENT. What does the Committee
say?
FR. BERNAS. Certainly, the sense is very
acceptable, but the point raised by
Commissioner Rodrigo is well-taken. Perhaps,
we can lengthen this a little bit more to
read: "The right of the people WHETHER
UNEMPLOYED OR EMPLOYED BY STATE OR
PRIVATE ESTABLISHMENTS."
I want to avoid also the possibility of having
this interpreted as applicable only to the
employed.
MR. DE LOS REYES. Will the proponent accept
an amendment to the amendment, Madam
President?
MR. LERUM. Yes, as long as it will carry the
idea that the right of the employees in the
private sector is recognized.[24]
Lerum thus anchored his proposal on the fact
that (1) government employees, supervisory
employees, and security guards, who had the
right to organize under the Industrial Peace
Act, had been denied this right by the Labor
Code, and (2) there was a need to reinstate
the right of these employees. In consonance
with his objective to reinstate the right of
government, security, and supervisory
employees to organize, Lerum then made his
proposal:
MR. LERUM. Mr. Presiding Officer, after a
consultation with several Members of this
Commission, my amendment will now read as
follows: "The right of the people INCLUDING
THOSE EMPLOYED IN THE PUBLIC AND
PRIVATE SECTORS to form associations,
unions, or societies for purposes not contrary
to law shall not be abridged. In proposing
that amendment I ask to make of record that
I want the following provisions of the Labor
Code to be automatically abolished, which
read:
ART. 245. Security guards and other
personnel employed for the protection and
security of the person, properties and
premises of the employers shall not be
eligible for membership in a labor
organization.
ART. 246. Managerial employees are not
eligible to join, assist, and form any labor
organization.
THE PRESIDING OFFICER (Mr. Bengzon). What
does the Committee say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The
Committee has accepted the amendment, as
amended.
Is there any objection? (Silence) The Chair
hears none; the amendment, as amended, is
approved.[25]
The question is what Commissioner Lerum
meant in seeking to "automatically abolish"
the then Art. 246 of the Labor Code. Did he
simply want "any kind of wording as long as it
will amount to absolute recognition of private
sector employees, without exception, to
organize"?[26] Or, did he instead intend to
have his words taken in the context of the
cause which moved him to propose the
amendment in the first place, namely, the
denial of the right of supervisory employees
to organize, because he said, "We are afraid
that without any corresponding provision
covering the private sector, security guards,
supervisory employees or majority [of]
employees will still be excluded, and that is
the purpose of this amendment"?[27]
It would seem that Commissioner Lerum
simply meant to restore the right of
supervisory employees to organize. For even
though he spoke of the need to "abolish" Art.
246 of the Labor Code which, as already
stated, prohibited "managerial employees" in
general from forming unions, the fact was
that in explaining his proposal, he repeatedly
referred to "supervisory employees" whose
right under the Industrial Peace Act to
organize had been taken away by Art. 246. It
is noteworthy that Commissioner Lerum
never referred to the then definition of
"managerial employees" in Art. 212(m) of the
Labor Code which put together, under the
broad phrase "managerial employees," top
and middle managers and
supervisors. Instead, his repeated use of the
term "supervisory employees," when such
term then was no longer in the statute books,
suggests a frame of mind that remained
grounded in the language of the Industrial
Peace Act.
Nor did Lerum ever refer to the dictum in
Caltex recognizing the right of all managerial
35
employees to organize, despite the fact that
the Industrial Peace Act did not expressly
provide for the right of top and middle
managers to organize. If Lerum was aware of
the Caltex dictum, then his insistence on the
use of the term "supervisory employees"
could only mean that he was excluding other
managerial employees from his proposal. If,
on the other hand, he was not aware of the
Caltex statement sustaining the right to
organize to top and middle managers, then
the more should his repeated use of the term
"supervisory employees" be taken at face
value, as it had been defined in the then
Industrial Peace Act.
At all events, that the rest of the
Commissioners understood his proposal to
refer solely to supervisors and not to other
managerial employees is clear from the
following account of Commissioner Joaquin G.
Bernas, who writes:
In presenting the modification on the 1935
and 1973 texts, Commissioner Eulogio R.
Lerum explained that the modification
included three categories of workers: (1)
government employees, (2) supervisory
employees, and (3) security guards. Lerum
made of record the explicit intent to repeal
provisions of P.D. 442, the Labor Code. The
provisions referred to were:
ART. 245. Security guards and other
personnel employed for the protection and
security of the person, properties and
premises of the employers shall not be
eligible for membership in a labor
organization.
ART. 246. Managerial employees are not
eligible to join, assist, and form any labor
organization.[28]28
Implications of the Lerum Proposal
In sum, Lerum's proposal to amend Art. III, 8
of the draft Constitution by including labor
unions in the guarantee of organizational
right should be taken in the context of
statements that his aim was the removal of
the statutory ban against security guards and
supervisory employees joining labor
organizations. The approval by the
Constitutional Commission of his proposal
can only mean, therefore, that the
Commission intended the absolute right to
organize of government workers, supervisory
employees, and security guards to be
constitutionally guaranteed. By implication,
no similar absolute constitutional right to
organize for labor purposes should be
deemed to have been granted to top-level
and middle managers. As to them the right of
self-organization may be regulated and even
abridged conformably to Art. III, 8.
Constitutionality of Art. 245
Finally, the question is whether the present
ban against managerial employees, as
embodied in Art. 245 (which superseded Art.
246) of the Labor Code, is valid. This
provision reads:
ART. 245. Ineligibility of managerial
employees to join any labor organization;
right of supervisory employees. - Managerial
employees are not eligible to join, assist or
form any labor organization. Supervisory
employees shall not be eligible for
membership in a labor organization of the
rank-and-file employees but may join, assist
or form separate labor organizations of their
own.[29]29
This provision is the result of the amendment
of the Labor Code in 1989 by R.A. No. 6715,
otherwise known as the Herrera-Veloso
Law. Unlike the Industrial Peace Act or the
provisions of the Labor Code which it
superseded, R.A. No. 6715 provides separate
definitions of the terms "managerial" and
"supervisory employees," as follows:
ART. 212. Definitions. . . .
(m) "managerial employee" is one who is
vested with powers or prerogatives to lay
down and execute management policies
and/or to hire transfer, suspend, lay off,
recall, discharge, assign or discipline
employees. Supervisory employees are those
who, in the interest of the employer,
effectively recommend such managerial
actions if the exercise of such authority is not
merely routinary or clerical in nature but
requires the use of independent judgment. All
employees not falling within any of the above
definitions are considered rank-and-file
employees for purposes of this Book.
Although the definition of "supervisory
employees" seems to have been unduly
restricted to the last phrase of the definition
in the Industrial Peace Act, the legal
significance given to the phrase "effectively
recommends" remains the same. In fact, the
distinction between top and middle
managers, who set management policy, and
front-line supervisors, who are merely
responsible for ensuring that such policies
are carried out by the rank and file, is
articulated in the present definition.
[30]
30 When read in relation to this definition
in Art. 212(m), it will be seen that Art. 245
faithfully carries out the intent of the
36
Constitutional Commission in framing Art. III, SO ORDERED.
8 of the fundamental law.
UNITED PEPSI-COLA VS. LAGUESMA
Nor is the guarantee of organizational right in
Art. III, 8 infringed by a ban against NOVEMBER 17, 2013 ~ VBDIAZ
managerial employees forming a union. The
G.R. No. 122226 March 25, 1998
right guaranteed in Art. III, 8 is subject to the
UNITED PEPSI-COLA SUPERVISORY
condition that its exercise should be for
UNION (UPSU), petitioner,
purposes "not contrary to law." In the case of
vs.
Art. 245, there is a rational basis for
HON. BIENVENIDO E. LAGUESMA and
prohibiting managerial employees from
PEPSI-COLA PRODUCTS, PHILIPPINES,
forming or joining labor organizations. As
INC. respondents.
Justice Davide, Jr., himself a constitutional
commissioner, said in his ponencia in Philips
FACTS: Petitioner is a union of supervisory
Industrial Development, Inc. v. NLRC:[31]31
employees. It appears that on March 20,
In the first place, all these employees, with 1995 the union filed a petition for
the exception of the service engineers and certification election on behalf of the route
the sales force personnel, are confidential managers at Pepsi-Cola Products Philippines,
employees. Their classification as such is not Inc. However, its petition was denied by the
seriously disputed by PEO-FFW; the five (5) med-arbiter and, on appeal, by the Secretary
previous CBAs between PIDI and PEO-FFW of Labor and Employment, on the ground that
explicitly considered them as confidential the route managers are managerial
employees. By the very nature of their employees and, therefore, ineligible for union
functions, they assist and act in a confidential membership under the first sentence of Art.
capacity to, or have access to confidential 245 of the Labor Code, which provides:
matters of, persons who exercise managerial
Ineligibility of managerial employees to join
functions in the field of labor relations. As
any labor organization; right of supervisory
such, the rationale behind the ineligibility of
employees. Managerial employees are not
managerial employees to form, assist or joint
eligible to join, assist or form any labor
a labor union equally applies to them.
organization. Supervisory employees shall
In Bulletin Publishing Co., Inc. v. Hon. not be eligible for membership in a labor
Augusto Sanchez, this Court elaborated on organization of the rank-and-file employees
this rationale, thus: but may join, assist or form separate labor
organizations of their own.
". . . The rationale for this inhibition has been
stated to be, because if these managerial Petitioner brought this suit challenging the
employees would belong to or be affiliated validity of the order, dismissed.
with a Union, the latter might not be assured
Hence, this petition. Pressing for resolution its
of their loyalty to the Union in view of evident
contention that the first sentence of Art. 245
conflict of interests. The Union can also
of the Labor Code, so far as it declares
become company-dominated with the
managerial employees to be ineligible to
presence of managerial employees in Union
form, assist or join unions, contravenes Art.
membership."[32]
III, 8 of the Constitution which provides:
To be sure, the Court in Philips Industrial was
The right of the people, including those
dealing with the right of confidential
employed in the public and private sectors, to
employees to organize. But the same reason
form unions, associations, or societies for
for denying them the right to organize
purposes not contrary to law shall not be
justifies even more the ban on managerial
abridged.
employees from forming unions. After all,
those who qualify as top or middle managers ISSUES:
are executives who receive from their
employers information that not only is (1) whether the route managers at Pepsi-Cola
confidential but also is not generally available Products Philippines, Inc. are managerial
to the public, or to their competitors, or to employees and
other employees. It is hardly necessary to
(2) whether Art. 245, insofar as it prohibits
point out that to say that the first sentence of
managerial employees from forming, joining
Art. 245 is unconstitutional would be to
or assisting labor unions, violates Art. III, 8
contradict the decision in that case.
of the Constitution.
WHEREFORE, the petition is DISMISSED.
HELD: YES and NO

37
As a class, managers constitute three levels
of a pyramid: (1) Top management; (2)
Middle Management; and (3) First-line
Management [also called supervisors].
FIRST-LINE MANAGERS The lowest level in
an organization at which individuals are
responsible for the work of others is called
first-line or first-level management. First-line
managers direct operating employees only;
they do not supervise other managers.
Examples of first-line managers are the
foreman or production supervisor in a
manufacturing plant, the technical supervisor
in a research department, and the clerical
supervisor in a large office. First-level
managers are often called supervisors.
MIDDLE MANAGERS The term middle
management can refer to more than one
level in an organization. Middle managers
direct the activities of other managers and
sometimes also those of operating
employees. Middle managers principal
responsibilities are to direct the activities that
implement their organizations policies and to
balance the demands of their superiors with
the capacities of their subordinates. A plant
manager in an electronics firm is an example
of a middle manager.
TOP MANAGERS Composed of a
comparatively small group of executives, top
management is responsible for the overall
management of the organization. It
establishes operating policies and guides the
organizations interactions with its
environment. Typical titles of top managers
are chief executive officer, president, and
senior vice-president. Actual titles vary
from one organization to another and are not
always a reliable guide to membership in the
highest management classification.
A distinction exists between those who have
the authority to devise, implement and
control strategic and operational policies (top
and middle managers) and those whose task
is simply to ensure that such policies are
carried out by the rank-and-file employees of
an organization (first-level
managers/supervisors). What distinguishes
them from the rank-and-file employees is
that they act in the interest of the employer
in supervising such rank-and-file employees.
Managerial employees may therefore be
said to fall into two distinct categories: the
managers per se, who compose the former
group described above, and the supervisors
who form the latter group.
#1: It appears that this question was the
subject of two previous determinations by the
Secretary of Labor and Employment, in
accordance with which this case was decided
by the med-arbiter.
To qualify as managerial employee, there
must be a clear showing of the exercise of
managerial attributes under paragraph (m),
Article 212 of the Labor Code as amended.
Designations or titles of positions are not
controlling. As to the route managers and
accounting manager, we are convinced that
they are managerial employees. Their job
descriptions clearly reveal so (Workers
Alliance Trade Union (WATU) v. Pepsi-Cola
Products Philippines, Inc., Nov. 13, 1991)
This finding was reiterated in Case No. OS-A-
3-71-92. entitled In Re: Petition for Direct
Certification and/or Certification Election-
Route Managers/Supervisory Employees of
Pepsi-Cola Products Phils.Inc.
* doctrine of res judicata certainly applies to
adversary administrative proceedings
Thus, we have in this case an experts view
that the employees concerned are
managerial employees within the purview of
Art. 212.
At the very least, the principle of finality of
administrative determination compels
respect for the finding of the Secretary of
Labor that route managers are managerial
employees as defined by law in the absence
of anything to show that such determination
is without substantial evidence to support it.
The Court now finds that the job evaluation
made by the Secretary of Labor is indeed
supported by substantial evidence. The
nature of the job of route managers is given
in a four-page pamphlet, prepared by the
company, called Route Manager Position
Description, the pertinent parts of which
read:
A. BASIC PURPOSE
A Manager achieves objectives through
others.
As a Route Manager, your purpose is to meet
the sales plan; and you achieve this objective
through the skillful MANAGEMENT OF YOUR
JOB AND THE MANAGEMENT OF YOUR
PEOPLE.
These then are your functions as Pepsi-Cola
Route Manager. Within these functions
managing your job and managing your
people you are accountable to your District
Manager for the execution and completion of
various tasks and activities which will make it
possible for you to achieve your sales
objectives.
Xxxx
Distinction is evident in the work of the route
managers which sets them apart from
38
supervisors in general. Unlike supervisors
who basically merely direct operating
employees in line with set tasks assigned to
them, route managers are responsible for the
success of the companys main line of
business through management of their
respective sales teams. Such management
necessarily involves the planning, direction,
operation and evaluation of their individual
teams and areas which the work of
supervisors does not entail.
The route managers cannot thus possibly be
classified as mere supervisors because their
work does not only involve, but goes far
beyond, the simple direction or supervision of
operating employees to accomplish
objectives set by those above them.
While route managers do not appear to have
the power to hire and fire people (the
evidence shows that they only
recommended or endorsed the taking of
disciplinary action against certain
employees), this is because thisis a function
of the Human Resources or Personnel
Department of the company.
# 2: Constitutionality of Art. 245
Art.245 is the result of the amendment of the
Labor Code in 1989 by R.A. No. 6715,
otherwise known as the Herrera-Veloso Law.
Unlike the Industrial Peace Act or the
provisions of the Labor Code which it
superseded, R.A. No. 6715 provides separate
definitions of the terms managerial and
supervisory employees, as follows:
Art. 212. Definitions. . . .
(m) managerial employee is one who is
vested with powers or prerogatives to lay
down and execute management policies
and/or to hire transfer, suspend, lay off,
recall, discharge, assign or discipline
employees. Supervisory employees are those
who, in the interest of the employer,
effectively recommend such managerial
actions if the exercise of such authority is not
merely routinary or clerical in nature but
requires the use of independent judgment. All
employees not falling within any of the above
definitions are considered rank-and-file
employees for purposes of this Book.
The distinction between top and middle
managers, who set management policy, and
front-line supervisors, who are merely
responsible for ensuring that such policies
are carried out by the rank and file, is
articulated in the present definition. 30 When
read in relation to this definition in Art.
212(m), it will be seen that Art. 245 faithfully
carries out the intent of the Constitutional
Commission in framing Art. III, 8 of the
fundamental law.
*Framers Intent: MR. LERUM. My amendment
is on Section 7, page 2, line 19, which is to
insert between the words people and to
the following: WHETHER EMPLOYED BY THE
STATE OR PRIVATE ESTABLISHMENTS. In other
words, the section will now read as follows:
The right of the people WHETHER EMPLOYED
BY THE STATE OR PRIVATE ESTABLISHMENTS
to form associations, unions, or societies for
purposes not contrary to law shall not be
abridged.
Nor is the guarantee of organizational right in
Art. III, 8 infringed by a ban against
managerial employees forming a union. The
right guaranteed in Art. III, 8 is subject to
the condition that its exercise should be for
purposes not contrary to law. In the case of
Art. 245, there is a rational basis for
prohibiting managerial employees from
forming or joining labor organizations.
PETITION is DISMISSED.
[G.R. No. 108855. February 28, 1996]
METROLAB INDUSTRIES, INC., petitioner,
vs. HONORABLE MA. NIEVES ROLDAN-
CONFESOR, in her capacity as Secretary
of the Department of Labor and
Employment and METRO DRUG
CORPORATION EMPLOYEES
ASSOCIATION-FEDERATION OF FREE
WORKERS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS
OF FACT OF ADMINISTRATIVE AGENCIES;
RULE; CASE AT BAR. - We reaffirm the
doctrine that considering their expertise in
their respective fields, factual findings of
administrative agencies supported by
substantial evidence are accorded great
respect and binds this Court. The Secretary of
Labor ruled, thus: x x x Any act committed
during the pendency of the dispute that
tends to give rise to further contentious
issues or increase the tensions between the
parties should be considered an act of
exacerbation. One must look at the act itself,
not on speculative reactions. A misplaced
recourse is not needed to prove that a
dispute has been exacerbated. For instance,
the Union could not be expected to file
another notice of strike. For this would depart
from its theory of the case that the layoff is
subsumed under the instant dispute, for
which a notice of strike had already been
filed. On the other hand, to expect violent
39
reactions, unruly behavior, and any other
chaotic or drastic action from the Union is to
expect it to commit acts disruptive of public
order or acts that may be illegal. Under a
regime of laws, legal remedies take the place
of violent ones. x xx Protest against the
subject layoffs need not be in the form of
violent action or any other drastic
measure. In the instant case the Union
registered their dissent by swiftly filing a
motion for a cease and desist order. Contrary
to petitioners allegations, the Union strongly
condemned the layoffs and threatened mass
action if the Secretary of Labor fails to timely
intervene: x x x 3. This unilateral action of
management is a blatant violation of the
injunction of this Office against committing
acts which would exacerbate the
dispute. Unless such act is enjoined the Union
will be compelled to resort to its legal right to
mass actions and concerted activities to
protest and stop the said management
action. This mass layoff is clearly one which
would result in a very serious dispute unless
this Office swiftly intervenes. x x x Metrolab
and the Union were still in the process of
resolving their CBA deadlock when petitioner
implemented the subject layoffs. As a result,
motions and oppositions were filed diverting
the parties attention, delaying resolution of
the bargaining deadlock and postponing the
signing of their new CBA, thereby
aggravating the whole conflict.
2. LABOR AND SOCIAL LEGISLATION;
TERMINATION OF EMPLOYMENT;
EXERCISE OF MANAGEMENT
PREROGATIVES; NOT ABSOLUTE;
SUBJECT TO EXCEPTIONS IMPOSED BY
LAW. - This Court recognizes the exercise of
management prerogatives and often declines
to interfere with the legitimate business
decisions of the employer. However, this
privilege is not absolute but subject to
limitations imposed by law. In PAL vs. NLRC,
(225 SCRA 301 [1993]), we issued this
reminder: ... the exercise of management
prerogatives was never considered
boundless. Thus, in Cruz vs. Medina (177
SCRA 565 [1989]), it was held that
managements prerogatives must be without
abuse of discretion ...All this points to the
conclusion that the exercise of managerial
prerogatives is not unlimited. It is
circumscribed by limi(ations found in law, a
collective bargaining agreement, or the
general principles of fair play and justice
(University of Sto. Tomas v. NLRC, 190 SCRA
758 [1990]).
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN
EXCEPTION. - The case at bench constitutes
one of the exceptions. The Secretary of Labor
is expressly given the power under the Labor
Code to assume jurisdiction and resolve labor
disputes involving industries indispensable to
national interest. The disputed injunction is
subsumed under this special grant of
authority. Art. 263 (g) of the Labor Code
specifically provides that: x x x (g) When, in
his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout
in an industry indispensable to the national
interest, the Secretary of Labor and
Employment may assume jurisdiction over
the dispute and decide it or certify the same
to the Commission for compulsory
arbitration. Such assumption or certification
shall have the effect of automatically
enjoining the intended or impending strike or
lockout as specified in the assumption or
certification order. If one has already taken
place at the time of assumption or
certification, all striking or locked out
employees shall immediately return to work
and the employer shall immediately resume
operations and readmit all workers under the
same terms and conditions prevailing before
the strike or lockout. The Secretary of Labor
and Employment or the Commission may
seek the assistance of law enforcement
agencies to ensure compliance with this
provision as well as with such orders as he
may issue to enforce the same. . . . That
Metrolabs business is of national interest is
not disputed. Metrolab is one of the leading
manufacturers and suppliers of medical and
pharmaceutical products to the country.
Metrolabs management prerogatives,
therefore, are not being unjustly curtailed but
duly balanced with and tempered by the
limitations set by law, taking into account its
special character and the particular
circumstances in the case at bench.
4. ID.; LABOR RELATIONS; INELIGIBILITY
OF MANAGERIAL EMPLOYEES TO JOIN,
FORM AND ASSIST ANY LABOR
ORGANIZATION; PROHIBITION
EXTENDED TO CONFIDENTIAL
EMPLOYEES. - Although Article 245 of the
Labor Code limits the ineligibility to join, form
and assist any labor organization to
managerial employees, jurisprudence has
extended this prohibition to confidential
employees or those who by reason of their
positions or nature of work are required to
assist or act in a fiduciary manner to
managerial employees and hence, are
likewise privy to sensitive and highly
confidential records.
5. ID.; ID.; EXCLUSION OF CONFIDENTIAL
EMPLOYEES FROM THE RANK AND FILE
40
BARGAINING UNIT; NOT TANTAMOUNT
TO DISCRIMINATION. - Confidential
employees cannot be classified as rank and
file. As previously discussed, the nature of
employment of confidential employees is
quite distinct from the rank and file, thus,
warranting a separate category. Excluding
confidential employees from the rank and file
bargaining unit, therefore, is not tantamount
to discrimination.
APPEARANCES OF COUNSEL
Bautista Picazo Buyco Tan & Fider for
petitioner.
The Solicitor General for public respondent.
Perfecto V. Fernandez, Jose P. Fernandez &
Cristobal P. Fernandez for Metro Drug
Corporation.
DECISION
KAPUNAN, J.:
This is a petition for certiorari under Rule 65
of the Revised Rules of Court seeking the
annulment of the Resolution and Omnibus
Resolution of the Secretary of Labor and
Employment dated 14 April 1992 and 25
January 1993, respectively, in OS-AJ-04491-11
(NCMB-NCR-NS-08-595-9 1; NCMB-NCR-NS-
09-678-91) on grounds that these were
issued with grave abuse of discretion and in
excess of jurisdiction.
Private respondent Metro Drug Corporation
Employees Association-Federation of Free
Workers (hereinafter referred to as the Union)
is a labor organization representing the rank
and file employees of petitioner Metrolab
Industries, Inc. (hereinafter referred to as
Metrolab/MII) and also of Metro Drug, Inc.
On 31 December 1990, the Collective
Bargaining Agreement (CBA) between
Metrolab and the Union expired. The
negotiations for a new CBA, however, ended
in a deadlock.
Consequently, on 23 August 1991, the Union
filed a notice of strike against Metrolab and
Metro Drug Inc. The parties failed to settle
their dispute despite the conciliation efforts
of the National Conciliation and Mediation
Board.
To contain the escalating dispute, the then
Secretary of Labor and Employment, Ruben
D. Torres, issued an assumption order dated
20 September 1991, the dispositive portion of
which reads, thus:
WHEREFORE, PREMISES CONSIDERED, and
pursuant to Article 263 (g) of the Labor Code,
as amended, this Office hereby assumes
jurisdiction over the entire labor dispute at
Metro Drug, Inc. - Metro Drug Distribution
Division and Metrolab Industries Inc.
Accordingly, any strike or lockout is hereby
strictly enjoined. The Companies and the
Metro Drug Corp. Employees Association -
FFW are likewise directed to cease and desist
from committing any and all acts that might
exacerbate the situation.
Finally, the parties are directed to submit
their position papers and evidence on the
aforequoted deadlocked issues to this office
within twenty (20) days from receipt hereof.
SO ORDERED.[1] (Italics ours.)
On 27 December 1991, then Labor Secretary
Torres issued an order resolving all the
disputed items in the CBA and ordered the
parties involved to execute a new CBA.
Thereafter, the Union filed a motion for
reconsideration.
On 27 January 1992, during the pendency of
the abovementioned motion for
reconsideration, Metrolab laid off 94 of its
rank and file employees.
On the same date, the Union filed a motion
for a cease and desist order to enjoin
Metrolab from implementing the mass layoff,
alleging that such act violated the prohibition
against committing acts that would
exacerbate the dispute as specifically
directed in the assumption order.[2]
On the other hand, Metrolab contended that
the layoff was temporary and in the exercise
of its management prerogative. It maintained
that the company would suffer a yearly gross
revenue loss of approximately sixty-six (66)
million pesos due to the withdrawal of its
principals in the Toll and Contract
Manufacturing Department. Metrolab further
asserted that with the automation of the
manufacture of its product Eskinol, the
number of workers required its production is
significantly reduced.[3]
Thereafter, on various dates, Metrolab
recalled some of the laid off workers on a
temporary basis due to availability of work in
the production lines.
On 14 April 1992, Acting Labor Secretary
Nieves Confesor issued a resolution declaring
the layoff of Metrolabs 94 rank and file
workers illegal and ordered their
41
reinstatement with full backwages. The
dispositive portion reads as follows:
WHEREFORE, the Unions motion for
reconsideration is granted in part, and our
order of 28 December 1991 is affirmed
subject to the modifications in allowances
and in the close shop provision. The layoff of
the 94 employees at MII is hereby declared
illegal for the failure of the latter to comply
with our injunction against committing any
act which may exacerbate the dispute and
with the 30-day notice
requirement. Accordingly, MII is hereby
ordered to reinstate the 94 employees,
except those who have already been recalled,
to their former positions or substantially
equivalent, positions with full backwages
from the date they were illegally laid off on
27 January 1992 until actually reinstated
without loss of seniority rights and other
benefits. Issues relative to the CBA agreed
upon by the parties and not embodied in our
earlier order are hereby ordered adopted for
incorporation in the CBA. Further, the
dispositions and directives contained in all
previous orders and resolutions relative to
the instant dispute, insofar as not
inconsistent herein, are reiterated. Finally,
the parties are enjoined to cease and desist
from committing any act which may tend to
circumvent this resolution.
SO RESOLVED.[4]
On 6 March 1992, Metrolab filed a Partial
Motion for Reconsideration alleging that the
layoff did not aggravate the dispute since no
untoward incident occurred as a result
thereof. It, likewise, filed a motion for
clarification regarding the constitution of the
bargaining unit covered by the CBA.
On 29 June 1992, after exhaustive
negotiations, the parties entered into a new
CBA. The execution, however, was without
prejudice to the outcome of the issues raised
in the reconsideration and clarification
motions submitted for decision to the
Secretary of Labor.[5]
Pending the resolution of the aforestated
motions, on 2 October 1992, Metrolab laid off
73 of its employees on grounds of
redundancy due to lack of work which the
Union again promptly opposed on 5 October
1992.
On 15 October 1992, Labor Secretary
Confesor again issued a cease and desist
order. Metrolab moved for a reconsideration.
[6]
On 25 January 1993, Labor Secretary
Confesor issued the assailed Omnibus
Resolution containing the following orders:
xxx xxx xxx.
1. MIIs motion for partial reconsideration of
our 14 April 1992 resolution specifically that
portion thereof assailing our ruling that the
layoff of the 94 employees is illegal, is hereby
denied. MII is hereby ordered to pay such
employees their full backwages computed
from the time of actual layoff to the time of
actual recall;
2. For the parties to incorporate in their
respective collective bargaining agreements
the clarifications herein contained; and
3. MIIs motion for reconsideration with
respect to the consequences of the second
wave of layoff affecting 73 employees, to the
extent of assailing our ruling that such layoff
tended to exacerbate the dispute, is hereby
denied. But inasmuch as the legality of the
layoff was not submitted for our resolution
and no evidence had been adduced upon
which a categorical finding thereon can be
based, the same is hereby referred to the
NLRC for its appropriate action.
Finally, all prohibitory injunctions issued as a
result of our assumption of jurisdiction over
this dispute are hereby lifted.
SO RESOLVED.[7]
Labor Secretary Confesor also ruled that
executive secretaries are excluded from the
closed-shop provision of the CBA, not from
the bargaining unit.
On 4 February 1993, the Union filed a motion
for execution. Metrolab opposed. Hence, the
present petition for certiorari with application
for issuance of a Temporary Restraining
Order.
On 4 March 1993, we issued a Temporary
Restraining Order enjoining the Secretary of
Labor from enforcing and implementing the
assailed Resolution and Omnibus Resolution
dated 14 April 1992 and 25 January 1993,
respectively.
In its petition, Metrolab assigns the following
errors:
A
THE PUBLIC RESPONDENT HON. SECRETARY
OF LABOR AND EMPLOYMENT COMMITTED
GRAVE ABUSE OF DISCRETION AND
EXCEEDED HER JURISDICTION IN DECLARING
THE TEMPORARY LAYOFF ILLEGAL AND
42
ORDERING THE REINSTATEMENT AND
PAYMENT OF BACKWAGES TO THE AFFECTED
EMPLOYEES.*
B disputes involving industries indispensable to
THE PUBLIC RESPONDENT HON. SECRETARY
OF LABOR AND EMPLOYMENT GRAVELY
ABUSED HER DISCRETION IN INCLUDING
EXECUTIVE SECRETARIES AS PART OF THE
BARGAINING UNIT OF RANK AND FILE
EMPLOYEES.[8]
Anent the first issue, we are asked to
determine whether or not public respondent
Labor Secretary committed grave abuse of
discretion and exceeded her jurisdiction in
declaring the subject layoffs instituted by
Metrolab illegal on grounds that these
unilateral actions aggravated the conflict
between Metrolab and the Union who were,
then, locked in a stalemate in CBA
negotiations.
Metrolab argues that the Labor Secretarys
order enjoining the parties from committing
any act that might exacerbate the dispute is
overly broad, sweeping and vague and
should not be used to curtail the employers
right to manage his business and ensure its
viability.
We cannot give credence to Metrolabs
contention.
This Court recognizes the exercise of
management prerogatives and often declines
to interfere with the legitimate business
decisions of the employer. However, this
privilege is not absolute but subject to
limitations imposed by law.[9]
In PAL v. NLRC, [10]
we issued this reminder:
xxx xxx xxx
. . .the exercise of management prerogatives
was never considered boundless. Thus,
in Cruz vs. Medina ( 177 SCRA 565 [1989]), it
was held that managements prerogatives
must be without abuse of discretion....
xxx xxx xxx
All this points to the conclusion that the
exercise of managerial prerogatives is not
unlimited. It is circumscribed by limitations
found in law, a collective bargaining
agreement, or the general principles of fair
play and justice (University of Sto. Tomas v.
NLRC, 190 SCRA 758 [1990]). . . . (Italics
ours.)
xxx xxx xxx.
The case at bench constitutes one of the
exceptions. The Secretary of Labor is
expressly given the power under the Labor
Code to assume jurisdiction and resolve labor
national interest. The disputed injunction is
subsumed under this special grant of
authority. Art. 263 (g) of the Labor Code
specifically provides that:
xxx xxx xxx
(g) When, in his opinion, there exists a labor
dispute causing or likely to cause a strike or
lockout in an industry indispensable to the
national interest, the Secretary of Labor and
Employment may assume jurisdiction over
the dispute and decide it or certify the same
to the Commission for compulsory
arbitration. Such assumption or certification
shall have the effect of automatically
enjoining the intended or impending strike or
lockout as specified in the assumption or
certification order. If one has already taken
place at the time of assumption or
certification, all striking or locked out
employees shall immediately return to work
and the employer shall immediately resume
operations and readmit all workers under the
same terms and conditions prevailing before
the strike or lockout. The Secretary of Labor
and Employment or the Commission may
seek the assistance of law enforcement
agencies to ensure compliance with this
provision as well as with such orders as he
may issue to enforce the same. . . (Italics
ours.)
xxx xxx xxx.
That Metrolabs business is of national interest
is not disputed. Metrolab is one of the leading
manufacturers and suppliers of medical and
pharmaceutical products to the country.
Metro labs management prerogatives,
therefore, are not being unjustly curtailed but
duly balanced with and tempered by the
limitations set by law, taking into account its
special character and the particular
circumstances in the case at bench.
As aptly declared by public respondent
Secretary of Labor in its assailed resolution:
xxx xxx xxx.
MII is right to the extent that as a rule, we
may not interfere with the legitimate exercise
of management prerogatives such as
layoffs. But it may nevertheless be
appropriate to mention here that one of the
substantive evils which Article 263 (g) of the
Labor Code seeks to curb is the exacerbation
43
of a labor dispute to the further detriment of
the national interest. When a labor dispute
has in fact occurred and a general injunction
has been issued restraining the commission
of disruptive acts, management prerogatives
must always be exercised consistently with
the statutory objective.[11]
xxx xxx xxx.
Metrolab insists that the subject layoffs did
not exacerbate their dispute with the Union
since no untoward incident occurred after the
layoffs were implemented. There were no
work disruptions or stoppages and no mass
actions were threatened or
undertaken. Instead, petitioner asserts, the
affected employees calmly accepted their
fate as this was a matter which they had
been previously advised would be inevitable.
[12]
After a judicious review of the record, we find
no compelling reason to overturn the findings
of the Secretary of Labor.
We reaffirm the doctrine that considering
their expertise in their respective fields,
factual findings of administrative agencies
supported by substantial evidence are
accorded great respect and binds this Court.
[13]
The Secretary of Labor ruled, thus:
xxx xxx xxx.
Any act committed during the pendency of
the dispute that tends to give rise to further
contentious issues or increase the tensions
between the parties should be considered an
act of exacerbation. One must look at the act
itself, not on speculative reactions. A
misplaced recourse is not needed to prove
that a dispute has been exacerbated. For
instance, the Union could not be expected to
file another notice of strike. For this would
depart from its theory of the case that the
layoff is subsumed under the instant dispute,
for which a notice of strike had already been
filed. On the other hand, to expect violent
reactions, unruly behavior, and any other
chaotic or drastic action from the Union is to
expect it to commit acts disruptive of public
order or acts that may be illegal. Under a
regime of laws, legal remedies take the place
of violent ones.[14]
xxx xxx xxx.
Protest against the subject layoffs need not
be in the form of violent action or any other
drastic measure. In the instant case the
Union registered their dissent by swiftly filing
a motion for a cease and desist
order. Contrary to petitioners allegations, the
Union strongly condemned the layoffs and
threatened mass action if the Secretary of
Labor fails to timely intervene:
xxx xxx xxx.
3. This unilateral action of management is a
blatant violation of the injunction of this
Office against committing acts which would
exacerbate the dispute. Unless such act is
enjoined the Union will be compelled to resort
to its legal right to mass actions and
concerted activities to protest and stop the
said management action. This mass layoff is
clearly one which would result in a very
serious labor dispute unless this Office swiftly
intervenes.[15]
xxx xxx xxx.
Metrolab and the Union were still in the
process of resolving their CBA deadlock when
petitioner implemented the subject
layoffs. As a result, motions and oppositions
were filed diverting the parties attention,
delaying resolution of the bargaining
deadlock and postponing the signing of their
new CBA, thereby aggravating the whole
conflict.
We, likewise, find untenable Metrolabs
contention that the layoff of the 94 rank-and-
file employees was temporary, despite the
recall of some of the laid off workers.
If Metrolab intended the layoff of the 94
workers to be temporary, it should have
plainly stated so in the notices it sent to the
affected employees and the Department of
Labor and Employment. Consider the tenor of
the pertinent portions of the layoff notice to
the affected employees:
xxx xxx xxx.
Dahil sa mga bagay na ito, napilitan ang
ating kumpanya na magsagawa ng lay-off ng
mga empleyado sa Rank & File dahil
nabawasan ang trabaho at puwesto para sa
kanila. Marami sa atin ang kasama sa lay-
off dahil wala nang trabaho para sa
kanila. Mahirap tanggapin ang mga bagay na
ito subalit kailangan nating gawin dahil hindi
kaya ng kumpanya ang magbayad ng
suweldo kung ang empleyado ay walang
trabaho. Kung tayo ay patuloy na
magbabayad ng suweldo, mas hihina ang
ating kumpanya at mas marami ang maaring
maapektuhan.
Sa pagpapatupad ng lay-off susundin natin
ang LAST IN-FIRST OUT policy. Ang mga
44
empleyadong may pinakamaikling serbisyo
sa kumpanya ang unang maaapektuhan. Ito
ay batay na rin sa nakasaad sa ating CBA na
ang mga huling pumasok sa kumpanya ang
unang masasama sa lay-off kapag nagkaroon
ng ganitong mga kalagayan.
Ang mga empleyado na kasama sa lay-off ay
nakalista sa sulat na ito. Ang umpisa ng lay-
off ay sa Lunes, Enero 27. Hindi na muna sila
papasok sa kumpanya. Makukuha nila ang
suweldo nila sa Enero 30, 1992.
Hindi po natin matitiyak kung gaano katagal
ang lay-off ngunit ang aming tingin ay
matatagalan bago magkaroon ng dagdag na
trabaho. Dahil dito, sinimulan na namin ang
isang Redundancy Program sa mga
supervisors. Nabawasan ang mga puwesto
para sa kanila, kaya sila ay mawawalan ng
trabaho at bibigyan na ng redundancy pay.
[16]
(Italics ours.)
xxx xxx xxx.
We agree with the ruling of the Secretary of
Labor, thus:
xxx xxx xxx.
. . .MII insists that the layoff in question is
temporary not permanent. It then
cites International Hardware, Inc. vs.
NLRC, 176 SCRA 256, in which the Supreme
Court held that the 30-day notice required
under Article 283 of the Labor Code need not
be complied with if the employer has no
intention to permanently severe (sic) the
employment relationship.
We are not convinced by this
argument. International Hardware involves a
case where there had been a reduction of
workload. Precisely to avoid laying off the
employees, the employer therein opted to
give them work on a rotating basis. Though
on a limited scale, work was available. This
was the Supreme Courts basis for holding
that there was no intention to permanently
severe (sic) the employment relationship.
Here, there is no circumstance at all from
which we can infer an intention from MII not
to sever the employment relationship
permanently. If there was such an intention,
MII could have made it very clear in the
notices of layoff. But as it were, the notices
are couched in a language so uncertain that
the only conclusion possible is the permanent
termination, not the continuation, of the
employment relationship.
MII also seeks to excuse itself from
compliance with the 30-day notice with a
tautology. While insisting that there is really
no best time to announce a bad news, (sic) it
also claims that it broke the bad news only on
27 January 1992 because had it complied
with the 30-day notice, it could have broken
the bad news on 02 January 1992, the first
working day of the year. If there is really no
best time to announce a bad news (sic), it
wouldnt have mattered if the same was
announced at the first working day of the
year. That way, MII could have at least
complied with the requirement of the law.[17]
The second issue raised by petitioner merits
our consideration.
In the assailed Omnibus Resolution, Labor
Secretary Confesor clarified the CBA
provisions on closed-shop and the scope of
the bargaining unit in this wise:
xxx xxx xxx.
Appropriateness of the bargaining unit.
xxx xxx xxx.
Exclusions. In our 14 April 1992 resolution,
we ruled on the issue of exclusion as follows:
These aside, we reconsider our denial of the
modifications which the Union proposes to
introduce on the close shop provision. While
we note that the provision as presently
worded has served the relationship of the
parties well under previous CBAs, the shift in
constitutional policy toward expanding the
right of all workers to self-organization
should now be formally recognized by the
parties, subject to the following exclusions
only:
1. Managerial employees; and
2. The executive secretaries of the President,
Executive Vice-President, Vice-President, Vice
President for Sales, Personnel Manager, and
Director for Corporate Planning who may
have access to vital labor relations
information or who may otherwise act in a
confidential capacity to persons who
determine or formulate management policies.
The provisions of Article I (b) and Attachment
I of the 1988-1990 CBA shall thus be modified
consistently with the foregoing.
Article I (b) of the 1988-1990 CBA provides:
b)Close Shop. - All Qualified Employees must
join the Association immediately upon
regularization as a condition for continued
employment. This provision shall not apply
to: (i) managerial employees who are
excluded from the scope of the bargaining
45
unit; (ii) the auditors and executive
secretaries of senior executive officers, such
as, the President, Executive Vice-President,
Vice-President for Finance, Head of Legal,
Vice-President for Sales, who are excluded
from membership in the Association; and (iii)
those employees who are referred to in
Attachment I hereof, subject, however, to the
application of the provision of Article II, par.
(b) hereof. Consequently, the above-specified
employees are not required to join the
Association as a condition for their continued
employment.
On the other hand, Attachment I provides:
Exclusion from the Scope of the Close Shop
Provision
The following positions in the Bargaining Unit
are not covered by the Close Shop provision
of the CBA (Article I, par. b):
1. Executive Secretaries of Vice-Presidents, or
equivalent positions.
2. Executive Secretary of the Personnel
Manager, or equivalent positions.
3. Executive Secretary of the Director for
Corporate Planning, or equivalent positions.
4. Some personnel in the Personnel
Department, EDP Staff at Head Office, Payroll
Staff at Head Office, Accounting Department
at Head Office, and Budget Staff, who
because of the nature of their duties and
responsibilities need not join the Association
as a condition for their employment.
5. Newly-hired secretaries of Branch
Managers and Regional Managers.
Both MDD and MII read the exclusion of
managerial employees and executive
secretaries in our 14 April 1992 resolution as
exclusion from the bargaining unit. They
point out that managerial employees are
lumped under one classification with
executive secretaries, so that since the
former are excluded from the bargaining unit,
so must the latter be likewise excluded.
This reading is obviously contrary to the
intent of our 14 April 1992 resolution. By
recognizing the expanded scope of the right
to self-organization, our intent was to delimit
the types of employees excluded from the
close shop provision, not from the bargaining
unit, to executive secretaries only. Otherwise,
the conversion of the exclusionary provision
to one that refers to the bargaining unit from
one that merely refers to the close shop
provision would effectively curtail all the
organizational rights of executive secretaries.
The exclusion of managerial employees, in
accordance with law, must therefore still
carry the qualifying phrase from the
bargaining unit in Article I (b)(i) of the 1988-
1990 CBA. In the same manner, the exclusion
of executive secretaries should be read
together with the qualifying phrase are
excluded from membership in the Association
of the same Article and with the heading of
Attachment I. The latter refers to Exclusions
from Scope of Close Shop Provision and
provides that [t]he following positions in
Bargaining Unit are not covered by the close
shop provision of the CBA.
The issue of exclusion has different
dimension in the case of MII. In an earlier
motion for clarification, MII points out that it
has done away with the positions of
Executive Vice-President, Vice-President for
Sales, and Director for Corporate
Planning. Thus, the foregoing group of
exclusions is no longer appropriate in its
present organizational structure.
Nevertheless, there remain MII officer
positions for which there may be executive
secretaries. These include the General
Manager and members of the Management
Committee, specifically i) the Quality
Assurance Manager; ii) the Product
Development Manager; iii) the Finance
Director; iv) the Management System
Manager; v) the Human Resources Manager;
vi) the Marketing Director; vii) the
Engineering Manager; viii) the Materials
Manager; and ix) the Production Manager.
xxx xxx xxx
The basis for the questioned exclusions, it
should be noted, is no other than the
previous CBA between MII and the Union. If
MII had undergone an organizational
restructuring since then, this is a fact to
which we have never been made privy. In any
event, had this been otherwise the result
would have been the same. To repeat, we
limited the exclusions to recognize the
expanded scope of the right to self-
organization as embodied in the Constitution.
[18]
Metrolab, however, maintains that executive
secretaries of the General Manager and the
executive secretaries of the Quality
Assurance Manager, Product Development
Manager, Finance Director, Management
System Manager, Human Resources
Manager, Marketing Director, Engineering
Manager, Materials Manager and Production
Manager, who are all members of the
companys Management Committee should
not only be exempted from the closed-shop
46
provision but should be excluded from
membership in the bargaining unit of the
rank and file employees as well on grounds
that their executive secretaries are
confidential employees, having access to
vital labor information.[19]
We concur with Metrolab.
Although Article 245 of the Labor
Code[20] limits the ineligibility to join, form
and assist any labor organization to
managerial employees, jurisprudence has
extended this prohibition to confidential
employees or those who by reason of their
positions or nature of work are required to
assist or act in a fiduciary manner to
managerial employees and hence, are
likewise privy to sensitive and highly
confidential records.
The rationale behind the exclusion of
confidential employees from the bargaining
unit of the rank and file employees and their
disqualification to join any labor organization
was succinctly discussed in Philips Industrial
Development v. NLRC:[21]
xxx xxx xxx.
On the main issue raised before Us, it is quite
obvious that respondent NLRC committed
grave abuse of discretion in reversing the
decision of the Executive Labor Arbiter and in
decreeing that PIDIs Service Engineers, Sales
Force, division secretaries, all Staff of General
Management, Personnel and Industrial
Relations Department, Secretaries of Audit,
EDP and Financial Systems are included
within the rank and file bargaining unit.
In the first place, all these employees, with
the exception of the service engineers and
the sales force personnel, are confidential
employees. Their classification as such is not
seriously disputed by PEO-FFW; the five (5)
previous CBAs between PIDI and PEO-FFW
explicitly considered them as confidential
employees. By the very nature of their
functions, they assist and act in a confidential
capacity to, or have access to confidential
matters of, persons who exercise managerial
functions in the field of labor relations. As
such, the rationale behind the ineligibility of
managerial employees to form, assist or join
a labor union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon.
Augusto Sanchez, this Court elaborated on
this rationale, thus:
x x x The rationale for this inhibition has been
stated to be, because if these managerial
employees would belong to or be affiliated
with a Union, the latter might not be assured
of their loyalty to the Union in view of evident
conflict of interests. The Union can also
become company-dominated with the
presence of managerial employees in Union
membership.
In Golden Farms, Inc. vs. Ferrer-Calleja, this
Court explicitly made this rationale applicable
to confidential employees:
This rationale holds true also for confidential
employees such as accounting personnel,
radio and telegraph operators, who having
access to confidential information, may
become the source of undue advantage. Said
employee(s) may act as a spy or spies of
either party to a collective bargaining
agreement. This is specially true in the
present case where the petitioning Union is
already the bargaining agent of the rank-and-
file employees in the establishment. To allow
the confidential employees to join the
existing Union of the rank-and-file would be
in violation of the terms of the Collective
Bargaining Agreement wherein this kind of
employees by the nature of their
functions/positions are expressly excluded.
xxx xxx xxx.
Similarly, in National Association of Trade
Union - Republic Planters Bank Supervisors
Chapter v. Torres[22] we declared:
xxx xxx xxx.
. . . As regards the other claim of respondent
Bank that Branch Managers/OICs, Cashiers
and Controllers are confidential employees,
having control, custody and/ or access to
confidential matters, e.g., the branchs cash
position, statements of financial condition,
vault combination, cash codes for telegraphic
transfers, demand drafts and other
negotiable instruments, pursuant to Sec.
1166.4 of the Central Bank Manual regarding
joint custody, this claim is not even disputed
by petitioner. A confidential employee is one
entrusted with confidence on delicate
matters, or with the custody, handling, or
care and protection of the employers
property. While Art. 245 of the Labor Code
singles out managerial employees as
ineligible to join, assist or form any labor
organization, under the doctrine of
necessary, implication, confidential
employees are similarly disqualified. . . .
xxx xxx xxx.
. . .(I)n the collective bargaining process,
managerial employees are supposed to be on
the side of the employer, to act as its
47
representatives, and to see to it that its
interest are well protected. The employer is
not assured of such protection if these
employees themselves are union
members. Collective bargaining in such a
situation can become one-sided. It is the
same reason that impelled this Court to
consider the position of confidential
employees as included in the disqualification
found in Art. 245 as if the disqualification of
confidential employees were written in the
provision. If confidential employees could
unionize in order to bargain for advantages
for themselves, then they could be governed
by their own motives rather than the interest
of the employers. Moreover, unionization of
confidential employees for the purpose of
collective bargaining would mean the
extension of the law to persons or individuals
who are supposed to act in the interest of the
employers. It is not farfetched that in the
course of collective bargaining, they might
jeopardize that interest which they are duty-
bound to protect. . . .
xxx xxx xxx.
And in the latest case of Pier 8 Arrastre &
Stevedoring Services, Inc. vs. Roldan-
Confesor,[23] we ruled that:
xxx xxx xxx.
Upon the other hand, legal secretaries are
neither managers nor supervisors. Their work
is basically routinary and clerical. However,
they should be differentiated from rank-and-
file employees because they are tasked with,
among others, the typing of legal documents,
memoranda and correspondence, the
keeping of records and files, the giving of and
receiving notices, and such other duties as
required by the legal personnel of the
corporation. Legal secretaries therefore fall
under the category of confidential
employees. . . .
xxx xxx xxx.
We thus hold that public respondent acted
with grave abuse of discretion in not
excluding the four foremen and legal
secretary from the bargaining unit composed
of rank-and-file employees.
xxx xxx xxx.
In the case at bench, the Union does not
disagree with petitioner that the executive
secretaries are confidential employees. It
however, makes the following contentions:
xxx xxx xxx.
There would be no danger of company
domination of the Union since the
confidential employees would not be
members of and would not participate in the
decision making processes of the Union.
Neither would there be a danger of espionage
since the confidential employees would not
have any conflict of interest, not being
members of the Union. In any case, there is
always the danger that any employee would
leak management secrets to the Union out of
sympathy for his fellow rank and filer even if
he were not a member of the union nor the
bargaining unit.
Confidential employees are rank and file
employees and they, like all the other rank
and file employees, should be granted the
benefits of the Collective Bargaining
Agreement. There is no valid basis for
discriminating against them. The mandate of
the Constitution and the Labor Code,
primarily of protection to Labor, compels
such conclusion.[24]
xxx xxx xxx.
The Unions assurances fail to convince. The
dangers sought to be prevented, particularly
the threat of conflict of interest and
espionage, are not eliminated by non-
membership of Metrolabs executive
secretaries or confidential employees in the
Union. Forming part of the bargaining unit,
the executive secretaries stand to benefit
from any agreement executed between the
Union and Metrolab. Such a scenario, thus,
gives rise to a potential conflict between
personal interests and their duty as
confidential employees to act for and in
behalf of Metrolab. They do not have to be
union members to affect or influence either
side.
Finally, confidential employees cannot be
classified as rank and file. As previously
discussed, the nature of employment of
confidential employees is quite distinct from
the rank and file, thus, warranting a separate
category. Excluding confidential employees
from the rank and file bargaining unit,
therefore, is not tantamount to
discrimination.
WHEREFORE, premises considered, the
petition is partially GRANTED. The resolutions
of public respondent Secretary of Labor dated
14 April 1992 and 25 January 1993 are
hereby MODIFIED to the extent that executive
secretaries of petitioner Metrolabs General
Manager and the executive secretaries of the
members of its Management Committee are
48
excluded from the bargaining unit of
petitioners rank and file employees.
SO ORDERED.
Metrolab Industries Inc. vs. Roldan
Confesor
FACTS: Herein petitioner Metrolab Industries
represented by the private respondent Metro
Drug Corp. a labor organization representing
the petitioners employees. After the CBA
between the parties expired, negotiations for
new CBA ended into deadlock. Both parties
failed to settle their dispute hence the order
issued by the Secretary of Labor and
Employment that any strike or acts that
might exacerbate the situation is ceased and
ordered the parties to execute a new CBA.
Later, the petitioner moved two lay-off acts to
its rank and file employees and was opposed
by the union. Petitioner assailed that the
move was temporary and exercise of its
management prerogative. Herein public
respondent declared that the petitioners act
illegal and issued two resolution of cease and
desist stating that the move exacerbate and
caused conflict to the case at bar. Included
on the last resolution issued by the public
respondent which states that executive
secretaries are excluded from the closed-
shop provision of the CBA, not from the
bargaining unit. A petition for certiorari
seeking the annulment of the Resolution and
Omnibus Resolution of Roldan-Confesor on
grounds that they were issued with grave
abuse of discretion and excess of jurisdiction.
ISSUE: WON executive secretaries must be
included as part of the bargaining unit of rank
and file employees.
RULING: NO. By recognizing the expanded
scope of the right to self-organization, the
intent of the court was to delimit the types of
employees excluded from the close shop
provisions, not from the bargaining unit. The
executive secretaries of General Manager
and the Management Committees should not
only be exempted from the closed-shop
provision but should not be permitted to join
in the bargaining unit of the rank and file
employees as well as on the grounds that the
executive secretaries are confidential
employees , having access to vital labor
information. As stated in several cases,
confidential employees are prohibited and
disqualified to join any bargaining unit since
the very nature of the functions are to assist
and act in a confidential capacity, or to have
access to confidential matters of, persons
who exercise managerial functions in the field
of labor relations. Finally, confidential
employees cannot be classified as rank and
file from the very nature of their work.
Excluding confidential employees from the
rank and file of bargaining unit, therefore, is
not tantamount to discrimination. Therefore,
executive secretaries of petitioners General
Manager and its Management Committee are
permanently excluded from the bargaining
unit of petitioners rank and file employees.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-45402 April 30, 1987
ROMEO DABUET, GAMIK BARTOLOME,
SALVADOR ABESAMIS and MARIANO
MALONZO, and ROCHE PRODUCTS
LABOR UNION, petitioners,
vs.
ROCHE PHARMACEUTICALS, INC., ERIC
MENTHA, REYNALDO FORMELOZA, and
the OFFICE OF THE
PRESIDENT, respondents.
PADILLA, J.:
This is a petition for review of the decision of
the Office of the President in NLRC Case No.
C-5190, ordering the respondent Roche
Pharmaceuticals, Inc. to pay the individual
petitioners separation pay, in lieu of
reinstatement with back wages.
The facts of the case which led to the filing of
this petition are, as follows:
On 1 March 1973, herein individual
petitioners who were an officers of the Roche
Products Labor Union, the labor organization
existing in the firm, and with whom the
respondent company had a collective
bargaining agreement which was due for re-
negotiation that month, wrote the respondent
company expressing the grievances of the
union and seeking a formal conference with
management regarding the previous
dismissal of the union's president and vice-
president. A meeting was, accordingly,
arranged and set for 12 March 1973. At said
meeting, however, instead of discussing the
problems affecting the labor union and
management, Mr. Eric Mentha, the company's
general manager, allegedly berated the
petitioners for writing said letter and called
the letter and the person who prepared it as
"stupid."
49
Feeling that he was the one alluded to, since
he had prepared the letter, counsel for the
labor union filed a case for grave slander
against Mr. Mentha. The charge was based on
the affidavit executed by the petitioners. The
company and Mentha, in turn, filed a
complaint for perjury against petitioners
alleging that their affidavit contained false
statements.
The respondent company, furthermore,
construed the execution by petitioners of the
affidavit as an act of breach of trust and
confidence and inimical to the interest of the
company, for which they were suspended.
Subsequently, the respondent company filed
with the NLRC a petition for clearance to
terminate their employment. The petitioners
filed an opposition thereto and, at the same
time, filed charges of unfair labor practice,
union busting, and harassment against the
company, Eric Mentha, and Reynaldo
Formeloza, the company's
Finance/Administrative Manager. 1
After due proceedings, the compulsory
arbitrator found that the petitioners'
dismissal was without justifiable cause, but
that there was no unfair labor practice
committed and directed that petitioners be
paid separation pay. 2
Petitioners filed a motion for reconsideration
and/or appeal to the NLRC which agreed with
the findings of the arbitrator that the
petitioners' dismissal was without just and
valid cause. However, it disagreed with the
arbitrator on the relief granted. The NLRC
ordered the reinstatement of the petitioners
with two (2) months salary as back wages. 3
Both parties appealed to the Secretary of
Labor who set aside the decision of the NLRC
and entered another one ordering the
payment of severance pay only. 4
The petitioners appealed to the Office of the
President, and on 27 April 1976, the latter
rendered a decision finding the respondents
guilty of unfair labor practice and directing
the reinstatement of the petitioners with back
wages from the time of their suspension until
actually reinstated, without loss of seniority
rights. The respondent company was,
likewise, ordered to extend to the petitioners
all fringe benefits to which they are entitled
had they not been dismissed. 5 The
respondent company filed a motion for
reconsideration of the decision, and on 16
November 1976, the Office of the President
granted the motion and reversed its previous
decision of 27 April 1976. It ruled that, while
the petitioners' dismissal was not for just and
valid cause, no unfair labor practice had been
committed. Consequently, it directed that
petitioners be paid only separation pay in an
amount double those awarded by the
compulsory arbitrator and Secretary of
Labor. 6
Hence, the present recourse to this Court.
The determinative issue raised in the petition
is whether or not the respondent company, in
terminating the employment of the
petitioners without just and lawful cause,
committed an unfair labor practice.
We have carefully examined the records of
the case and we are convinced that the
respondent company had committed unfair
labor practice in dismissing the petitioners
without just and valid cause.
In Republic Savings Bank vs. CIR, 7 where the
dismissed employees had written a letter
decried by the Bank as patently libelous for
alleging immorality, nepotism and favoritism
on the part of the Bank president, thus
amounting to behavior necessitating their
dismissal, the Court declared:
... Assuming that the workers
acted in their individual
capacities when they wrote
the letter-charge they were
nonetheless protected for
they were engaged in
concerted activity, in the
exercise of their right to self-
organization that includes
concerted activity for mutual
aid and protection,
interference with which
constitutes an unfair labor
practice under section 4(a)
(1). This is the view of some
members of this Court. For,
as has been aptly stated, the
joining in protests or
demands, even by a small
group of employees, if in
furtherance of their interests
as such, is a concerted
activity protected by the
Industrial Peace Act. It is not
necessary that union activity
be involved or that collective
bargaining be contemplated.
Where, as in this case, the letter written by
and for the union addressed to management
referred to employee grievances and/or,
labor-management issues and the employees
concerned were all officers of the union, then
seeking a renegotiation of the collective
bargaining agreement, a fact which
respondent company does not deny, there
50
should, all the more, be a recognition of such
letter as an act for the mutual aid, protection
and benefit of the employees concerned. This
recognition, in turn, should extend to
petitioners' execution of an affidavit in
support of the charge of slander against
private respondent, Eric Mentha, for calling
the union's lawyer, who prepared the letter,
and the contents thereof as "stupid."
Breach of trust and confidence, the grounds
alleged for herein petitioners' dismissal,
"must not be indiscriminately used as a
shield to dismiss an employee arbitrarily. For
who can stop the employer from filing an the
charges in the books for the simple exercise
of it, and then hide behind the pretext of loss
of confidence which can be proved by mere
preponderance of evidence." 8 Besides, there
is nothing in the record to show that the
charge of perjury filed by private respondents
against the petitioners has prospered in any
conclusive manner.
We, thus, hold that respondent company's act
in dismissing the Petitioners, who then
constituted the remaining and entire
officialdom of the Roche Products Labor
Union, after the union's president and vice-
president had been earlier dismiss and when
the collective bargaining agreement in the
company was about to be renegotiated, was
an unfair labor practice under Sec. 4(a) (1) of
the Industrial Peace Act. Their dismissal,
under the circumstances, amounted to
interference with, and restraint or coercion
of, the petitioners in the exercise of their
right to engage in concerted activities for
their mutual aid and protection
As the respondent company was guilty of
unfair labor practice, reinstatement of the
dismissed employees should follow as a
matter of right. It is an established rule that
an employer who commits an unfair labor
practice may be required to reinstate, with
full back wages, the workers affected by such
act, the amount not to exceed back wages for
three (3) years. 9
The respondents claim however, that the
Supreme Court has no jurisdiction to take
cognizance of the instant petition. They
contend that pursuant to Art. 222, (should be
Art. 223) of the Labor Code. the Office of the
President is the final appellate authority
within the adjudicative machinery for
handling labor disputes and no law, order or
regulation provides for any appeal therefrom
to the Supreme Court.
To be sure, Art. 223 of the Labor Code. while
providing ex.pressly that decisions of the
Secretary of Labor may be appealed to the
Office of the president, does not provide for
review of the decisions Of the Office of the
President by the Supreme Court. This does
not mean, however, that the power Of judicial
review does not extend to decisions of the
Office of the President. In San Miguel Corp.
vs. Secretary of Labor, 10 where the same
issue was the Court categorically decisive
that there is an underlying power in the
courts to scrutinize the acts of agencies
exercising quasi-judicial or legislative power
on questions of law and jurisdiction even
though no right of review is given by the
statute. The Court therein said:
Yanglay raised a jurisdictional
question which was not
brought up by respondent
public officials. He contends
that this Court has no
jurisdiction to review the
decisions of the NLRC and the
Secretary of labor 'under the
principle of separation of
powers' and that judicial
review is not provided for in
Presidential Decree No. 21.
That contention is a flagrant
error. "It is generally
understood that as to
administrative agencies
exercising quasi-judicial or
legislative power there is an
underlying power in the
courts to scrutinize the acts
of such agencies on
questions of law and
jurisdiction even though no
right of review is given by
statute" (73 C.J.S. 506, note
56).
The purpose of judicial review
is to keep the administrative
agency within its jurisdiction
and protect substantial rights
of parties affected by its
decisions' (73 C.J.S. 504, Sec.
166). It is part of the system
of checks and balances which
restricts the separation of
powers and forestalls
arbitrary and unjust
adjudications.
Judicial review is proper in
case of lack of jurisdiction,
grave abuse of discretion,
error of law, fraud or collusion
(Timbancaya vs. Vicente, 62
O.G. 9424; Macatangay vs.
Secretary of Public Works and
Communications, 63 O.G.
51
 11236; Ortua vs. Singson
Encarnacion, 59 Phil. 440).
In Macailing vs. Andrada, 11 the Court also
ruled that judicial review of administrative
decisions is available even if the statute does
not provide for judicial review. The Court said:
In the matter of judicial
review of administrative
decisions, some statutes
especially provide for such
judicial review; others are
silent. Mere silence, however,
does not necessarily imply
that judicial review is
unavailable. Modes of judicial
review vary according to the
statutes; appeal petition for
review or a writ of certiorari
No general rule applies to all
the various administrative
agencies. Where the law
stands mute, the accepted
view is that the extraordinary
remedies in the Rules of
Court are still available.
Accordingly, we restate that this Court, in the
exercise of its power of judicial review, may
review decisions of the Office of the President
on questions of law and jurisdiction, when
properly raised. This does not mean judicial
supremacy over the Office of the President
but the performance by this Court of a duty
specifically enjoined upon it by the
Constitution, 12 as part of a system of
checks and balances.
The checkered circumstances under which
the decisions in this case were made,
notably, that two varying rulings were
rendered by different officials of the Office of
the President, within a short period of time,
also constrained us to review the case on a
question of law.
WHEREFORE, the judgment appealed from
should be, as it is, hereby reversed and set
aside and another one entered, ordering the
respondent company to reinstate the
petitioners to their former positions, with
three (3) years back wages and without loss
of seniority rights. The respondent company
is further directed to extend to said
petitioners fringe benefits they are entitled to
had they not been dismissed. In the event
that reinstatement is no longer feasible, the
respondent company should pay, in addition,
severance pay of one (1) month for every
year of service based upon the highest salary
eceived.
SO ORDERED.
DABUET vs. ROCHE PHARMACEUTICALS
(1987)
FACTS:
The petitioners, all officers of the
Roche Products Labor Union, wrote the
respondent company expressing their
grievances and seeking formal
conference with management regarding
the previous dismissal of the unions
president and vice-president.
At the meeting, instead of discussing
the problems affecting the labor union
and management, the companys general
manager allegedly berated the
petitioners for writing the said letter and
called the letter and the person who
prepared it stupid.
Feeling that he was the one alluded
to, since he had prepared the letter, the
counsel for the labor union filed a case
for Grave Slander against the general
manager. The charge was based on the
affidavit executed by the petitioners.
In turn, the company and the
manager filed a complaint for Perjury
against petitioners alleging that their
affidavit contained false statements
The company construed the
execution by petitioners of the affidavit
as an act of breach of trust and
confidence. Hence, they were
suspended and later on dismissed.
Issue: Whether respondent company, in
terminating the employment of the
petitioners without just and lawful cause,
committed an unfair labor practice.
Held: YES. Petition Granted
Respondent company had committed unfair
labor practice in dismissing the petitioners
without just and valid cause. Their dismissal,
under the circumstances, amounted to
interference with, and restraint or coercion
of, the petitioners in the exercise of their
right to engage in concerted activities for
their mutual aid and protection
Breach of trust and confidence, the grounds
alleged for petitioners' dismissal, "must not
be indiscriminately used as a shield to
dismiss an employee arbitrarily.
52
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25291 January 30, 1971
THE INSULAR LIFE ASSURANCE CO., LTD.,
EMPLOYEES ASSOCIATION-NATU, FGU
INSURANCE GROUP WORKERS and
EMPLOYEES ASSOCIATION-NATU, and
INSULAR LIFE BUILDING EMPLOYEES
ASSOCIATION-NATU, petitioners,
vs.
THE INSULAR LIFE ASSURANCE CO., LTD.,
FGU INSURANCE GROUP, JOSE M. OLBES
and COURT OF INDUSTRIAL
RELATIONS, respondents.
Lacsina, Lontok and Perez and Luis F. Aquino
for petitioners.
Francisco de los Reyes for respondent Court
of Industrial Relations.
Araneta, Mendoza and Papa for other
respondents.
CASTRO, J.:
Appeal, by certiorari to review a decision and
a resolution en banc of the Court of Industrial
Relations dated August 17, 1965 and October
20, 1965, respectively, in Case 1698-ULP.
The Insular Life Assurance Co., Ltd.,
Employees Association-NATU, FGU Insurance
Group Workers & Employees Association-
NATU, and Insular Life Building Employees
Association-NATU (hereinafter referred to as
the Unions), while still members of the
Federation of Free Workers (FFW), entered
into separate collective bargaining
agreements with the Insular Life Assurance
Co., Ltd. and the FGU Insurance Group
(hereinafter referred to as the Companies).
Two of the lawyers of the Unions then were
Felipe Enaje and Ramon Garcia; the latter
was formerly the secretary-treasurer of the
FFW and acting president of the Insular
Life/FGU unions and the Insular Life Building
Employees Association. Garcia, as such
acting president, in a circular issued in his
name and signed by him, tried to dissuade
the members of the Unions from disaffiliating
with the FFW and joining the National
Association of Trade Unions (NATU), to no
avail.
Enaje and Garcia soon left the FFW and
secured employment with the Anti-Dummy
Board of the Department of Justice.
Thereafter, the Companies hired Garcia in the
latter part of 1956 as assistant corporate
secretary and legal assistant in their Legal
Department, and he was soon receiving P900
a month, or P600 more than he was receiving
from the FFW. Enaje was hired on or about
February 19, 1957 as personnel manager of
the Companies, and was likewise made
chairman of the negotiating panel for the
Companies in the collective bargaining with
the Unions.
In a letter dated September 16, 1957, the
Unions jointly submitted proposals to the
Companies for a modified renewal of their
respective collective bargaining contracts
which were then due to expire on September
30, 1957. The parties mutually agreed and to
make whatever benefits could be agreed
upon retroactively effective October 1, 1957.
Thereafter, in the months of September and
October 1957 negotiations were conducted
on the Union's proposals, but these were
snagged by a deadlock on the issue of union
shop, as a result of which the Unions filed on
January 27, 1958 a notice of strike for
"deadlock on collective bargaining." Several
conciliation conferences were held under the
auspices of the Department of Labor wherein
the conciliators urged the Companies to
make reply to the Unions' proposals en
toto so that the said Unions might consider
the feasibility of dropping their demand for
union security in exchange for other benefits.
However, the Companies did not make any
counter-proposals but, instead, insisted that
the Unions first drop their demand for union
security, promising money benefits if this was
done. Thereupon, and prior to April 15, 1958,
the petitioner Insular Life Building Employees
Association-NATU dropped this particular
demand, and requested the Companies to
answer its demands, point by point, en toto.
But the respondent Insular Life Assurance Co.
still refused to make any counter-proposals.
In a letter addressed to the two other Unions
by the joint management of the Companies,
the former were also asked to drop their
union security demand, otherwise the
Companies "would no longer consider
themselves bound by the commitment to
make money benefits retroactive to October
1, 1957." By a letter dated April 17, 1958, the
remaining two petitioner unions likewise
dropped their demand for union shop. April
25, 1958 then was set by the parties to meet
and discuss the remaining demands.
53
From April 25 to May 6, 1958, the parties
negotiated on the labor demands but with no
satisfactory result due to a stalemate on the
matter of salary increases. On May 13, 1958
the Unions demanded from the Companies
final counter-proposals on their economic
demands, particularly on salary increases.
Instead of giving counter-proposals, the
Companies on May 15, 1958 presented facts
and figures and requested the Unions to
submit a workable formula which would
justify their own proposals, taking into
account the financial position of the former.
Forthwith the Unions voted to declare a strike
in protest against what they considered the
Companies' unfair labor practices.
Meanwhile, eighty-seven (87) unionists were
reclassified as supervisors without increase in
salary nor in responsibility while negotiations
were going on in the Department of Labor
after the notice to strike was served on the
Companies. These employees resigned from
the Unions.
On May 20, 1958 the Unions went on strike
and picketed the offices of the Insular Life
Building at Plaza Moraga.
On May 21, 1958 the Companies through
their acting manager and president, the
respondent Jose M. Olbes (hereinafter
referred to as the respondent Olbes), sent to
each of the strikers a letter (exhibit A) quoted
verbatim as follows:
We recognize it is your
privilege both to strike and to
conduct picketing.
However, if any of you would
like to come back to work
voluntarily, you may:
1. Advise the nearest police
officer or security guard of
your intention to do so.
2. Take your meals within the
office.
3. Make a choice whether to
go home at the end of the
day or to sleep nights at the
office where comfortable cots
have been prepared.
4. Enjoy free coffee and
occasional movies.
5. Be paid overtime for work
performed in excess of eight
hours.
6. Be sure arrangements will
be made for your families.
The decision to make is yours
whether you still believe in
the motives of the strike or in
the fairness of the
Management.
The Unions, however, continued on strike,
with the exception of a few unionists who
were convinced to desist by the aforesaid
letter of May 21, 1958.
From the date the strike was called on May
21, 1958, until it was called off on May 31,
1958, some management men tried to break
thru the Unions' picket lines. Thus, on May
21, 1958 Garcia, assistant corporate
secretary, and Vicente Abella, chief of the
personnel records section, respectively of the
Companies, tried to penetrate the picket lines
in front of the Insular Life Building. Garcia,
upon approaching the picket line, tossed
aside the placard of a picketer, one Paulino
Bugay; a fight ensued between them, in
which both suffered injuries. The Companies
organized three bus-loads of employees,
including a photographer, who with the said
respondent Olbes, succeeded in penetrating
the picket lines in front of the Insular Life
Building, thus causing injuries to the
picketers and also to the strike-breakers due
to the resistance offered by some picketers.
Alleging that some non-strikers were injured
and with the use of photographs as evidence,
the Companies then filed criminal charges
against the strikers with the City Fiscal's
Office of Manila. During the pendency of the
said cases in the fiscal's office, the
Companies likewise filed a petition for
injunction with damages with the Court of
First Instance of Manila which, on the basis of
the pendency of the various criminal cases
against striking members of the Unions,
issued on May 31, 1958 an order restraining
the strikers, until further orders of the said
court, from stopping, impeding, obstructing,
etc. the free and peaceful use of the
Companies' gates, entrance and driveway
and the free movement of persons and
vehicles to and from, out and in, of the
Companies' building.
On the same date, the Companies, again
through the respondent Olbes, sent
individually to the strikers a letter (exhibit B),
quoted hereunder in its entirety:
The first day of the strike was
last 21 May 1958.
54
 Our position remains
unchanged and the strike has
made us even more
convinced of our decision.
We do not know how long you
intend to stay out, but we
cannot hold your positions
open for long. We have
continued to operate and will
continue to do so with or
without you.
If you are still interested in
continuing in the employ of
the Group Companies, and if
there are no criminal charges
pending against you, we are
giving you until 2 June 1958
to report for work at the
home office. If by this date
you have not yet reported,
we may be forced to obtain
your replacement.
Before, the decisions was
yours to make.
So it is now.
Incidentally, all of the more than 120 criminal
charges filed against the members of the
Unions, except three (3), were dismissed by
the fiscal's office and by the courts. These
three cases involved "slight physical injuries"
against one striker and "light coercion"
against two others.
At any rate, because of the issuance of the
writ of preliminary injunction against them as
well as the ultimatum of the Companies
giving them until June 2, 1958 to return to
their jobs or else be replaced, the striking
employees decided to call off their strike and
to report back to work on June 2, 1958.
However, before readmitting the strikers, the
Companies required them not only to secure
clearances from the City Fiscal's Office of
Manila but also to be screened by a
management committee among the
members of which were Enage and Garcia.
The screening committee initially rejected 83
strikers with pending criminal charges.
However, all non-strikers with pending
criminal charges which arose from the
breakthrough incident were readmitted
immediately by the Companies without being
required to secure clearances from the
fiscal's office. Subsequently, when practically
all the strikers had secured clearances from
the fiscal's office, the Companies readmitted
only some but adamantly refused
readmission to 34 officials and members of
the Unions who were most active in the
strike, on the ground that they committed
"acts inimical to the interest of the
respondents," without however stating the
specific acts allegedly committed. Among
those who were refused readmission are
Emiliano Tabasondra, vice president of the
Insular Life Building Employees' Association-
NATU; Florencio Ibarra, president of the FGU
Insurance Group Workers & Employees
Association-NATU; and Isagani Du Timbol,
acting president of the Insular Life Assurance
Co., Ltd. Employees Association-NATU. Some
24 of the above number were ultimately
notified months later that they were being
dismissed retroactively as of June 2, 1958
and given separation pay checks computed
under Rep. Act 1787, while others (ten in
number) up to now have not been readmitted
although there have been no formal dismissal
notices given to them.
On July 29, 1958 the CIR prosecutor filed a
complaint for unfair labor practice against the
Companies under Republic Act 875. The
complaint specifically charged the Companies
with (1) interfering with the members of the
Unions in the exercise of their right to
concerted action, by sending out individual
letters to them urging them to abandon their
strike and return to work, with a promise of
comfortable cots, free coffee and movies, and
paid overtime, and, subsequently, by warning
them that if they did not return to work on or
before June 2, 1958, they might be replaced;
and (2) discriminating against the members
of the Unions as regards readmission to work
after the strike on the basis of their union
membership and degree of participation in
the strike.
On August 4, 1958 the Companies filed their
answer denying all the material allegations of
the complaint, stating special defenses
therein, and asking for the dismissal of the
complaint.
After trial on the merits, the Court of
Industrial Relations, through Presiding Judge
Arsenio Martinez, rendered on August 17,
1965 a decision dismissing the Unions'
complaint for lack of merit. On August 31,
1965 the Unions seasonably filed their
motion for reconsideration of the said
decision, and their supporting memorandum
on September 10, 1965. This was denied by
the Court of Industrial Relations en banc in a
resolution promulgated on October 20, 1965.
Hence, this petition for review, the Unions
contending that the lower court erred:
1. In not finding the
Companies guilty of unfair
55
 labor practice in sending out
individually to the strikers the
letters marked Exhibits A and
B;
2. In not finding the
Companies guilty of unfair
labor practice for
discriminating against the
striking members of the
Unions in the matter of
readmission of employees
after the strike;
3. In not finding the
Companies guilty of unfair
labor practice for dismissing
officials and members of the
Unions without giving them
the benefit of investigation
and the opportunity to
present their side in regard to
activities undertaken by them
in the legitimate exercise of
their right to strike; and
4. In not ordering the
reinstatement of officials and
members of the Unions, with
full back wages, from June 2,
1958 to the date of their
actual reinstatement to their
usual employment.
I. The respondents contend that the sending
of the letters, exhibits A and B, constituted a
legitimate exercise of their freedom of
speech. We do not agree. The said letters
were directed to the striking employees
individually by registered special delivery
mail at that without being coursed through
the Unions which were representing the
employees in the collective bargaining.
The act of an employer in
notifying absent employees
individually during a strike
following unproductive efforts
at collective bargaining that
the plant would be operated
the next day and that their
jobs were open for them
should they want to come in
has been held to be an unfair
labor practice, as an active
interference with the right of
collective bargaining through
dealing with the employees
individually instead of
through their collective
bargaining representatives.
(31 Am. Jur. 563, citing NLRB
v. Montgomery Ward & Co.
[CA 9th] 133 F2d 676, 146
ALR 1045)
Indeed, it is an unfair labor practice for an
employer operating under a collective
bargaining agreement to negotiate or to
attempt to negotiate with his employees
individually in connection with changes in the
agreement. And the basis of the prohibition
regarding individual bargaining with the
strikers is that although the union is on strike,
the employer is still under obligation to
bargain with the union as the employees'
bargaining representative (Melo Photo Supply
Corporation vs. National Labor Relations
Board, 321 U.S. 332).
Indeed, some such similar actions are illegal
as constituting unwarranted acts of
interference. Thus, the act of a company
president in writing letters to the strikers,
urging their return to work on terms
inconsistent with their union membership,
was adjudged as constituting interference
with the exercise of his employees' right to
collective bargaining (Lighter Publishing, CCA
7th, 133 F2d 621). It is likewise an act of
interference for the employer to send a letter
to all employees notifying them to return to
work at a time specified therein, otherwise
new employees would be engaged to perform
their jobs. Individual solicitation of the
employees or visiting their homes, with the
employer or his representative urging the
employees to cease union activity or cease
striking, constitutes unfair labor practice. All
the above-detailed activities are unfair labor
practices because they tend to undermine
the concerted activity of the employees, an
activity to which they are entitled free from
the employer's molestation.1
Moreover, since exhibit A is a letter
containing promises of benefits to the
employees in order to entice them to return
to work, it is not protected by the free speech
provisions of the Constitution (NLRB v.
Clearfield Cheese Co., Inc., 213 F2d 70). The
same is true with exhibit B since it contained
threats to obtain replacements for the
striking employees in the event they did not
report for work on June 2, 1958. The free
speech protection under the Constitution is
inapplicable where the expression of opinion
by the employer or his agent contains a
promise of benefit, or threats, or reprisal (31
Am. Jur. 544; NLRB vs. Clearfield Cheese Co.,
Inc., 213 F2d 70; NLRB vs. Goigy Co., 211 F2d
533, 35 ALR 2d 422).
Indeed, when the respondents offered
reinstatement and attempted to "bribe" the
strikers with "comfortable cots," "free coffee
and occasional movies," "overtime" pay for
"work performed in excess of eight hours,"
56
and "arrangements" for their families, so they
would abandon the strike and return to work,
they were guilty of strike-breaking and/or
union-busting and, consequently, of unfair
labor practice. It is equivalent to an attempt
to break a strike for an employer to offer
reinstatement to striking employees
individually, when they are represented by a
union, since the employees thus offered
reinstatement are unable to determine what
the consequences of returning to work would
be.
Likewise violative of the right to organize,
form and join labor organizations are the
following acts: the offer of a Christmas bonus
to all "loyal" employees of a company shortly
after the making of a request by the union to
bargain; wage increases given for the
purpose of mollifying employees after the
employer has refused to bargain with the
union, or for the purpose of inducing striking
employees to return to work; the employer's
promises of benefits in return for the strikers'
abandonment of their strike in support of
their union; and the employer's statement,
made about 6 weeks after the strike started,
to a group of strikers in a restaurant to the
effect that if the strikers returned to work,
they would receive new benefits in the form
of hospitalization, accident insurance, profit-
sharing, and a new building to work in.2
Citing paragraph 5 of the complaint filed by
the acting prosecutor of the lower court
which states that "the officers and members
of the complainant unions decided to call off
the strike and return to work on June 2, 1958
by reason of the injunction issued by the
Manila Court of First Instance," the
respondents contend that this was the main
cause why the strikers returned to work and
not the letters, exhibits A and B. This
assertion is without merit. The circumstance
that the strikers later decided to return to
work ostensibly on account of the injunctive
writ issued by the Court of First Instance of
Manila cannot alter the intrinsic quality of the
letters, which were calculated, or which
tended, to interfere with the employees' right
to engage in lawful concerted activity in the
form of a strike. Interference constituting
unfair labor practice will not cease to be such
simply because it was susceptible of being
thwarted or resisted, or that it did not
proximately cause the result intended. For
success of purpose is not, and should not, be
the criterion in determining whether or not a
prohibited act constitutes unfair labor
practice.
The test of whether an
employer has interfered with
and coerced employees
within the meaning of
subsection (a) (1) is whether
the employer has engaged in
conduct which it may
reasonably be said tends to
interfere with the free
exercise of employees' rights
under section 3 of the Act,
and it is not necessary that
there be direct evidence that
any employee was in fact
intimidated or coerced by
statements of threats of the
employer if there is a
reasonable inference that
anti-union conduct of the
employer does have an
adverse effect on self-
organization and collective
bargaining. (Francisco, Labor
Laws 1956, Vol. II, p.
323, citing NLRB v. Ford, C.A.,
1948, 170 F2d 735).
Besides, the letters, exhibits A and B, should
not be considered by themselves alone but
should be read in the light of the preceding
and subsequent circumstances surrounding
them. The letters should be interpreted
according to the "totality of conduct
doctrine,"
... whereby the culpability of
an employer's remarks were
to be evaluated not only on
the basis of their implicit
implications, but were to be
appraised against the
background of and in
conjunction with collateral
circumstances. Under this
"doctrine" expressions of
opinion by an employer
which, though innocent in
themselves, frequently were
held to be culpable because
of the circumstances under
which they were uttered, the
history of the particular
employer's labor relations or
anti-union bias or because of
their connection with an
established collateral plan of
coercion or interference.
(Rothenberg on Relations, p.
374, and cases cited therein.)
It must be recalled that previous to the
petitioners' submission of proposals for an
amended renewal of their respective
collective bargaining agreements to the
respondents, the latter hired Felipe Enage
and Ramon Garcia, former legal counsels of
the petitioners, as personnel manager and
assistant corporate secretary, respectively,
with attractive compensations. After the
57
notice to strike was served on the Companies
and negotiations were in progress in the
Department of Labor, the respondents
reclassified 87 employees as supervisors
without increase in salary or in responsibility,
in effect compelling these employees to
resign from their unions. And during the
negotiations in the Department of Labor,
despite the fact that the petitioners granted
the respondents' demand that the former
drop their demand for union shop and in spite
of urgings by the conciliators of the
Department of Labor, the respondents
adamantly refused to answer the Unions'
demands en toto. Incidentally, Enage was the
chairman of the negotiating panel for the
Companies in the collective bargaining
between the former and the Unions. After the
petitioners went to strike, the strikers were
individually sent copies of exhibit A, enticing
them to abandon their strike by inducing
them to return to work upon promise of
special privileges. Two days later, the
respondents, thru their president and
manager, respondent Jose M. Olbes, brought
three truckloads of non-strikers and others,
escorted by armed men, who, despite the
presence of eight entrances to the three
buildings occupied by the Companies,
entered thru only one gate less than two
meters wide and in the process, crashed thru
the picket line posted in front of the premises
of the Insular Life Building. This resulted in
injuries on the part of the picketers and the
strike-breakers.lwph1.t Then the supposed testimonies of some union men
respondents brought against the picketers
criminal charges, only three of which were
not dismissed, and these three only for slight
misdemeanors. As a result of these criminal
actions, the respondents were able to obtain
an injunction from the court of first instance
restraining the strikers from stopping,
impeding, obstructing, etc. the free and
peaceful use of the Companies' gates,
entrance and driveway and the free
movement of persons and vehicles to and
from, out and in, of the Companies' buildings.
On the same day that the injunction was
issued, the letter, Exhibit B, was sent again
individually and by registered special delivery
mail to the strikers, threatening them with
dismissal if they did not report for work on or
before June 2, 1958. But when most of the
petitioners reported for work, the
respondents thru a screening committee of
which Ramon Garcia was a member
refused to admit 63 members of the Unions
on the ground of "pending criminal charges."
However, when almost all were cleared of
criminal charges by the fiscal's office, the
respondents adamantly refused admission to
34 officials and union members. It is not,
however, disputed that all-non-strikers with
pending criminal charges which arose from
the breakthrough incident of May 23, 1958
were readmitted immediately by the
respondents. Among the non-strikers with
pending criminal charges who were
readmitted were Generoso Abella, Enrique
Guidote, Emilio Carreon, Antonio Castillo,
Federico Barretto, Manuel Chuidian and
Nestor Cipriano. And despite the fact that the
fiscal's office found no probable cause
against the petitioning strikers, the
Companies adamantly refused admission to
them on the pretext that they committed
"acts inimical to the interest of the
respondents," without stating specifically the
inimical acts allegedly committed. They were
soon to admit, however, that these alleged
inimical acts were the same criminal charges
which were dismissed by the fiscal and by the
courts..
Verily, the above actuations of the
respondents before and after the issuance of
the letters, exhibit A and B, yield the clear
inference that the said letters formed of the
respondents scheme to preclude if not
destroy unionism within them.
To justify the respondents' threat to dismiss
the strikers and secure replacements for
them in order to protect and continue their
business, the CIR held the petitioners' strike
to be an economic strike on the basis of
exhibit 4 (Notice of Strike) which states that
there was a "deadlock in collective
bargaining" and on the strength of the
who did not actually know the very reason for
the strike. It should be noted that exhibit 4,
which was filed on January 27, 1958,
states, inter alia:
TO: BUREAU
OF LABOR
RELATIONS
DEPARTMENT
OF LABOR
MANILA
Thirty (30) days from receipt
of this notice by the Office,
this [sic] unions intends to go
on strike against
THE INSULAR
LIFE
ASSURANCE
CO., LTD.
Plaza Moraga,
Manila
THE FGU
INSURANCE
GROUP
Plaza Moraga,
Manila
58
 INSULAR LIFE
BUILDING
ADMINISTRATI
ON
Plaza Moraga,
Manila .
for the following reason:
DEADLOCK IN COLLECTIVE
BARGAINING...
However, the employees did not stage the
strike after the thirty-day period, reckoned
from January 27, 1958. This simply proves
that the reason for the strike was not the
deadlock on collective bargaining nor any
lack of economic concessions. By letter dated
April 15, 1958, the respondents categorically
stated what they thought was the cause of
the "Notice of Strike," which so far as
material, reads:
3. Because you did not see fit
to agree with our position on
the union shop, you filed a
notice of strike with the
Bureau of Labor Relations on
27 January 1958, citing
`deadlock in collective
bargaining' which could have
been for no other issue than
the union shop." (exhibit 8,
letter dated April 15, 1958.)
The strike took place nearly four months from
the date the said notice of strike was filed.
And the actual and main reason for the strike
was, "When it became crystal clear the
management double crossed or will not
negotiate in good faith, it is tantamount to
refusal collectively and considering the unfair
labor practice in the meantime being
committed by the management such as the
sudden resignation of some unionists and
[who] became supervisors without increase in
salary or change in responsibility, such as the
coercion of employees, decided to declare
the strike." (tsn., Oct. 14, 1958, p. 14.) The
truth of this assertion is amply proved by the
following circumstances: (1) it took the
respondents six (6) months to consider the
petitioners' proposals, their only excuse
being that they could not go on with the
negotiations if the petitioners did not drop
the demand for union shop (exh. 7,
respondents' letter dated April 7, 1958); (2)
when the petitioners dropped the demand for
union shop, the respondents did not have a
counter-offer to the petitioners' demands.
Sec. 14 of Rep. Act 875 required the
respondents to make a reply to the
petitioners' demands within ten days from
receipt thereof, but instead they asked the
petitioners to give a "well reasoned, workable
formula which takes into account the
financial position of the group companies."
(tsn., Sept. 8, 1958, p. 62; tsn., Feb. 26,
1969, p. 49.)
II. Exhibit H imposed three conditions for
readmission of the strikers, namely: (1) the
employee must be interested in continuing
his work with the group companies; (2) there
must be no criminal charges against him; and
(3) he must report for work on June 2, 1958,
otherwise he would be replaced. Since the
evidence shows that all the employees
reported back to work at the respondents'
head office on June 2, 1953, they must be
considered as having complied with the first
and third conditions.
Our point of inquiry should therefore be
directed at whether they also complied with
the second condition. It is not denied that
when the strikers reported for work on June 2,
1958, 63 members of the Unions were
refused readmission because they had
pending criminal charges. However, despite
the fact that they were able to secure their
respective clearances 34 officials and union
members were still refused readmission on
the alleged ground that they committed acts
inimical to the Companies. It is beyond
dispute, however, that non-strikers who also
had criminal charges pending against them in
the fiscal's office, arising from the same
incidents whence the criminal charges
against the strikers evolved, were readily
readmitted and were not required to secure
clearances. This is a clear act of
discrimination practiced by the Companies in
the process of rehiring and is therefore a
violation of sec. 4(a) (4) of the Industrial
Peace Act.
The respondents did not merely discriminate
against all the strikers in general. They
separated the active from the less active
unionists on the basis of their militancy, or
lack of it, on the picket lines. Unionists
belonging to the first category were refused
readmission even after they were able to
secure clearances from the competent
authorities with respect to the criminal
charges filed against them. It is significant to
note in this connection that except for one
union official who deserted his union on the
second day of the strike and who later
participated in crashing through the picket
lines, not a single union officer was taken
back to work. Discrimination undoubtedly
exists where the record shows that the union
activity of the rehired strikers has been less
prominent than that of the strikers who were
denied reinstatement.
So is there an unfair labor
practice where the employer,
although authorized by the
59
 Court of Industrial Relations
to dismiss the employees
who participated in an illegal
strike, dismissed only the
leaders of the strikers, such
dismissal being evidence of
discrimination against those
dismissed and constituting a
waiver of the employer's right
to dismiss the striking
employees and a
condonation of the fault
committed by them." (Carlos
and Fernando, Labor and
Social Legislation, p.
62, citing Phil. Air Lines, Inc.
v. Phil. Air Lines Emloyees
Association, L-8197, Oct. 31,
1958.)
It is noteworthy that perhaps in an
anticipatory effort to exculpate themselves
from charges of discrimination in the
readmission of strikers returning to work
the respondents delegated the power to
readmit to a committee. But the respondent
Olbes had chosen Vicente Abella, chief of the
personnel records section, and Ramon Garcia,
assistant corporate secretary, to screen the
unionists reporting back to work. It is not
difficult to imagine that these two employees
having been involved in unpleasant
incidents with the picketers during the strike
were hostile to the strikers. Needless to
say, the mere act of placing in the hands of
employees hostile to the strikers the power of
reinstatement, is a form of discrimination in
rehiring.
Delayed reinstatement is a
form of discrimination in
rehiring, as is having the
machinery of reinstatement
in the hands of employees
hostile to the strikers, and
reinstating a union official
who formerly worked in a
unionized plant, to a job in
another mill, which was
imperfectly organized.
(Morabe, The Law on Strikes,
p. 473, citing Sunshine
Mining Co., 7 NLRB 1252;
Cleveland Worsted Mills, 43
NLRB 545; emphasis
supplied.)
Equally significant is the fact that while the
management and the members of the
screening committee admitted the
discrimination committed against the
strikers, they tossed back and around to each
other the responsibility for the discrimination.
Thus, Garcia admitted that in exercising for
the management the authority to screen the
returning employees, the committee
admitted the non-strikers but refused
readmission to the strikers (tsn., Feb. 6, 1962,
pp. 15-19, 23-29). Vicente Abella, chairman
of the management's screening committee,
while admitting the discrimination, placed the
blame therefor squarely on the management
(tsn., Sept. 20, 1960, pp. 7-8, 14-18). But the
management, speaking through the
respondent Olbes, head of the Companies,
disclaimed responsibility for the
discrimination. He testified that "The decision
whether to accept or not an employee was
left in the hands of that committee that had
been empowered to look into all cases of the
strikers." (tsn., Sept. 6, 1962, p. 19.)
Of course, the respondents through Ramon
Garcia tried to explain the basis for such
discrimination by testifying that strikers
whose participation in any alleged
misconduct during the picketing was not
serious in nature were readmissible, while
those whose participation was serious were
not. (tsn., Aug. 4, 1961, pp. 48-49, 56). But
even this distinction between acts of slight
misconduct and acts of serious misconduct
which the respondents contend was the basis
for either reinstatement or discharge, is
completely shattered upon a cursory
examination of the evidence on record. For
with the exception of Pascual Esquillo whose
dismissal sent to the other strikers cited the
alleged commission by them of simple "acts
of misconduct."
III. Anent the third assignment of error, the
record shows that not a single dismissed
striker was given the opportunity to defend
himself against the supposed charges against
him. As earlier mentioned, when the striking
employees reported back for work on June 2,
1958, the respondents refused to readmit
them unless they first secured the necessary
clearances; but when all, except three, were
able to secure and subsequently present the
required clearances, the respondents still
refused to take them back. Instead, several of
them later received letters from the
respondents in the following stereotyped
tenor:
This will confirm the
termination of your
employment with the Insular
Life-FGU Insurance Group as
of 2 June 1958.
The termination of your
employment was due to the
fact that you committed acts
of misconduct while picketing
during the last strike.
Because this may not
constitute sufficient cause
60
 under the law to terminate
your employment without
pay, we are giving you the
amount of P1,930.32
corresponding to one-half
month pay for every year of
your service in the Group
Company.
Kindly acknowledge receipt of
the check we are sending
herewith.
Very truly yours,times during the next three days, but
(Sgd.) JOSE M. OLBES
President, Insurance Life
Acting President, FGU. ... The Board found, and we
The respondents, however, admitted that the
alleged "acts of misconduct" attributed to the
dismissed strikers were the same acts with
which the said strikers were charged before
the fiscal's office and the courts. But all these
charges except three were dropped or
dismissed.
Indeed, the individual cases of dismissed
officers and members of the striking unions
do not indicate sufficient basis for dismissal.
Emiliano Tabasondra, vice-president of the
petitioner FGU Insurance Group Workers &
Employees Association-NATU, was refused
reinstatement allegedly because he did not
report for duty on June 2, 1958 and, hence,
had abandoned his office. But the
overwhelming evidence adduced at the trial
and which the respondents failed to rebut,
negates the respondents' charge that he had
abandoned his job. In his testimony,
corroborated by many others, Tabasondra
particularly identified the management men
to whom he and his group presented
themselves on June 2, 1958. He mentioned
the respondent Olbes' secretary, De Asis, as
the one who received them and later directed
them when Olbes refused them an
audience to Felipe Enage, the Companies'
personnel manager. He likewise categorically
stated that he and his group went to see
Enage as directed by Olbes' secretary. If
Tabasondra were not telling the truth, it
would have been an easy matter for the
respondents to produce De Asis and Enage
who testified anyway as witnesses for the
respondents on several occasions to rebut
his testimony. The respondents did nothing of
the kind. Moreover, Tabasondra called on
June 21, 1958 the respondents' attention to
his non-admission and asked them to inform
him of the reasons therefor, but instead of
doing so, the respondents dismissed him by
their letter dated July 10, 1958. Elementary
fairness required that before being dismissed
for cause, Tabasondra be given "his day in
court."
At any rate, it has been held that mere failure
to report for work after notice to return, does
not constitute abandonment nor bar
reinstatement. In one case, the U.S. Supreme
Court held that the taking back of six of
eleven men constituted discrimination
although the five strikers who were not
reinstated, all of whom were prominent in the
union and in the strike, reported for work at
various
were told that there were no openings. Said
the Court:
cannot say that its finding is
unsupported, that, in taking
back six union men, the
respondent's officials
discriminated against the
latter on account of their
union activities and that the
excuse given that they did
not apply until after the quota
was full was an afterthought
and not the true reason for
the discrimination against
them. (NLRB v. Mackay Radio
& Telegraph Co., 304 U.S.
333, 58 Sup. Ct. 904, 82 L.
Ed. 1381) (Mathews, Labor
Relations and the Law, p.
725, 728)
The respondents' allegation that Tabasondra
should have returned after being refused
readmission on June 2, 1958, is not
persuasive. When the employer puts off
reinstatement when an employee reports for
work at the time agreed, we consider the
employee relieved from the duty of returning
further.
Sixto Tongos was dismissed allegedly
because he revealed that despite the fact
that the Companies spent more than P80,000
for the vacation trips of officials, they refused
to grant union demands; hence, he betrayed
his trust as an auditor of the Companies. We
do not find this allegation convincing. First,
this accusation was emphatically denied by
Tongos on the witness stand. Gonzales,
president of one of the respondent
Companies and one of the officials referred
to, took a trip abroad in 1958. Exchange
controls were then in force, and an outgoing
traveller on a combined business and
vacation trip was allowed by the Central
Bank, per its Circular 52 (Notification to
Authorized Agent Banks) dated May 9, 1952,
an allocation of $1,000 or only P2,000, at the
official rate of two pesos to the dollar, as
61
pocket money; hence, this was the only
amount that would appear on the books of
the Companies. It was only on January 21,
1962, per its Circular 133 (Notification to
Authorized Agent Banks), that the Central
Bank lifted the exchange controls. Tongos
could not therefore have revealed an amount
bigger than the above sum. And his
competence in figures could not be doubted
considering that he had passed the board
examinations for certified public accountants.
But assuming arguendo that Tongos indeed
revealed the true expenses of Gonzales' trip
which the respondents never denied or
tried to
disprove his statements clearly fall within
the sphere of a unionist's right to discuss and
advertise the facts involved in a labor
dispute, in accordance with section 9(a)(5) of
Republic Act 875 which guarantees the
untramelled exercise by striking employees
of the right to give "publicity to the existence
of, or the fact involved in any labor dispute,
whether by advertising, speaking, patrolling
or by any method not involving fraud or
violence." Indeed, it is not only the right, it is
as well the duty, of every unionist to
advertise the facts of a dispute for the
purpose of informing all those affected
thereby. In labor disputes, the combatants
are expected to expose the truth before the
public to justify their respective demands.
Being a union man and one of the strikers,
Tongos was expected to reveal the whole
truth on whether or not the respondent
Companies were justified in refusing to
accede to union demands. After all, not being
one of the supervisors, he was not a part of
management. And his statement, if indeed
made, is but an expression of free speech
protected by the Constitution.
Free speech on both sides
and for every faction on any
side of the labor relation is to
me a constitutional and
useful right. Labor is free ...
to turn its publicity on any
labor oppression,
substandard wages,
employer unfairness, or
objectionable working
conditions. The employer,
too, should be free to answer
and to turn publicity on the
records of the leaders of the
unions which seek the
confidence of his men ...
(Concurring opinion of Justice
Jackson in Thomas v. Collins,
323 U.S. 516, 547, 65 Sup.
Ct. 315, 89 L. Ed. 430.)
(Mathews, Labor Relations
and the Law, p. 591.)
The respondents also allege that in revealing
certain confidential information, Tongos
committed not only a betrayal of trust but
also a violation of the moral principles and
ethics of accountancy. But nowhere in the
Code of Ethics for Certified Public
Accountants under the Revised Rules and
Regulations of the Board of Accountancy
formulated in 1954, is this stated. Moreover,
the relationship of the Companies with
Tongos was that of an employer and not a
client. And with regard to the testimonies of
Juan Raymundo and Antolin Carillo, both vice-
presidents of the Trust Insurance Agencies,
Inc. about the alleged utterances made by
Tongos, the lower court should not have
given them much weight. The firm of these
witnesses was newly established at that time
and was still a "general agency" of the
Companies. It is not therefore amiss to
conclude that they were more inclined to
favor the respondents rather than Tongos.
Pacifico Ner, Paulino Bugay, Jose Garcia,
Narciso Dao, Vicente Alsol and Hermenigildo
Ramirez, opined the lower court, were
constructively dismissed by non-readmission
allegedly because they not only prevented
Ramon Garcia, assistant corporate secretary,
and Vicente Abella, chief of the personnel
records section of the Companies, from
entering the Companies' premises on May 21,
1958, but they also caused bruises and
abrasions on Garcia's chest and forehead
acts considered inimical to the interest of the
respondents. The Unions, upon the other
hand, insist that there is complete lack of
evidence that Ner took part in pushing
Garcia; that it was Garcia who elbowed his
way through the picket lines and therefore
Ner shouted "Close up," which the picketers
did; and that Garcia tossed Paulino Bugay's
placard and a fight ensued between them in
which both suffered injuries. But despite
these conflicting versions of what actually
happened on May 21, 1958, there are
grounds to believe that the picketers are not
responsible for what
happened.lwph1.t The picketing on May
21, 1958, as reported in the police blotter,
was peaceful (see Police blotter report, exh. 3
in CA-G.R. No. 25991-R of the Court of
Appeals, where Ner was acquitted).
Moreover, although the Companies during
the strike were holding offices at the Botica
Boie building at Escolta, Manila; Tuason
Building at San Vicente Street, Manila; and
Ayala, Inc. offices at Makati, Rizal, Garcia, the
assistant corporate secretary, and Abella, the
chief of the personnel records section,
reported for work at the Insular Life Building.
There is therefore a reasonable suggestion
that they were sent to work at the latter
building to create such an incident and have
a basis for filing criminal charges against the
petitioners in the fiscal's office and applying
62
for injunction from the court of first instance.
Besides, under the circumstances the
picketers were not legally bound to yield their
grounds and withdraw from the picket lines.
Being where the law expects them to be in
the legitimate exercise of their rights, they
had every reason to defend themselves and
their rights from any assault or unlawful
transgression. Yet the police blotter, about
adverted to, attests that they did not resort
to violence.
The heated altercations and occasional blows
exchanged on the picket line do not affect or
diminish the right to strike. Persuasive on this
point is the following commentary: .
We think it must be conceded
that some disorder is
unfortunately quite usual in
any extensive or long drawn
out strike. A strike is
essentially a battle waged
with economic weapons.
Engaged in it are human
beings whose feelings are
stirred to the depths. Rising
passions call forth hot words.
Hot words lead to blows on
the picket line. The
transformation from
economic to physical combat
by those engaged in the
contest is difficult to prevent
even when cool heads direct
the fight. Violence of this
nature, however much it is to
be regretted, must have been
in the contemplation of the
Congress when it provided in
Sec. 13 of Act 29 USCA Sec.
163, that nothing therein
should be construed so as to
interfere with or impede or
diminish in any way the right
to strike. If this were not so,
the rights afforded to
employees by the Act would
indeed be illusory. We
accordingly recently held that
it was not intended by the Act
that minor disorders of this
nature would deprive a striker
of the possibility of
reinstatement. (Republic
Steel Corp. v. N. L. R. B., 107
F2d 472, cited in Mathews,
Labor Relations and the Law,
p. 378)
Hence the incident that occurred between
Ner, et al. and Ramon Garcia was but a
necessary incident of the strike and should
not be considered as a bar to reinstatement.
Thus it has been held that:
Fist-fighting between union and non-union
employees in the midst of a strike is no bar to
reinstatement. (Teller, Labor Disputes and
Collective Bargaining, Vol. II, p.
855 citing Stackpole Carbon, Co. 6 NLRB 171,
enforced 105 F2d 167.)
Furthermore, assuming that the acts
committed by the strikers were
transgressions of law, they amount only to
mere ordinary misdemeanors and are not a
bar to reinstatement.
In cases involving misdemeanors the board
has generally held that unlawful acts are not
bar to reinstatement. (Teller, Labor Disputes
and Collective Bargaining, Id., p.
854, citing Ford Motor Company, 23 NLRB No.
28.)
Finally, it is not disputed that despite the
pendency of criminal charges against non-
striking employees before the fiscal's office,
they were readily admitted, but those strikers
who had pending charges in the same office
were refused readmission. The reinstatement
of the strikers is thus in order.
[W]here the misconduct,
whether in reinstating
persons equally guilty with
those whose reinstatement is
opposed, or in other ways,
gives rise to the inference
that union activities rather
than misconduct is the basis
of his [employer] objection,
the Board has usually
required reinstatement."
(Teller, supra, p.
853, citing the Third Annual
Report of NLRB [1938], p.
211.)
Lastly, the lower Court justified the
constructive dismissal of Florencio Ibarra
allegedly because he committed acts inimical
to the interest of the respondents when, as
president of the FGU Workers and Employees
Association-NATU, he advised the strikers
that they could use force and violence to
have a successful picket and that picketing
was precisely intended to prevent the non-
strikers and company clients and customers
from entering the Companies' buildings. Even
if this were true, the record discloses that the
picket line had been generally peaceful, and
that incidents happened only when
management men made incursions into and
tried to break the picket line. At any rate,
with or without the advice of Ibarra, picketing
is inherently explosive. For, as pointed out by
one author, "The picket line is an explosive
front, charged with the emotions and fierce
63
loyalties of the union-management dispute. It
may be marked by colorful name-calling,
intimidating threats or sporadic fights
between the pickets and those who pass the
line." (Mathews, Labor Relations and the Law,
p. 752). The picket line being the natural
result of the respondents' unfair labor
practice, Ibarra's misconduct is at most a
misdemeanor which is not a bar to
reinstatement. Besides, the only evidence
presented by the Companies regarding
Ibarra's participation in the strike was the
testimony of one Rodolfo Encarnacion, a
former member of the board of directors of
the petitioner FGU Insurance Group Workers
and Employees Union-NATU, who became a
"turncoat" and who likewise testified as to
the union activities of Atty. Lacsina, Ricardo
Villaruel and others (annex C, Decision, p. 27)
another matter which emphasizes the
respondents' unfair labor practice. For under
the circumstances, there is good ground to
believe that Encarnacion was made to spy on
the actvities of the union members. This act
of the respondents is considered unjustifiable
interference in the union activities of the
petitioners and is unfair labor practice.
It has been held in a great
number of decisions at
espionage by an employer of
union activities, or
surveillance thereof, are such
instances of interference,
restraint or coercion of
employees in connection with
their right to organize, form
and join unions as to
constitute unfair labor
practice.
... "Nothing is more
calculated to interfere with,
restrain and coerce
employees in the exercise of
their right to self-organization
than such activity even where
no discharges result. The
information obtained by
means of espionage is in
valuable to the employer and
can be used in a variety of
cases to break a union." The
unfair labor practice is
committed whether the
espionage is carried on by a
professional labor spy or
detective, by officials or
supervisory employees of the
employer, or by fellow
employees acting at the
request or direction of the
employer, or an ex-
employee..." (Teller, Labor
Disputes and Collective
Bargaining, Vol. II, pp. 765-
766, and cases cited.) .
IV. The lower court should have ordered the
reinstatement of the officials and members of
the Unions, with full back wages from June 2,
1958 to the date of their actual reinstatement
to their usual employment. Because all too
clear from the factual and environmental
milieu of this case, coupled with settled
decisional law, is that the Unions went on
strike because of the unfair labor practices
committed by the respondents, and that
when the strikers reported back for work
upon the invitation of the respondents
they were discriminatorily dismissed. The
members and officials of the Unions therefore
are entitled to reinstatement with back pay.
[W]here the strike was
induced and provoked by
improper conduct on the part
of an employer amounting to
an 'unfair labor practice,' the
strikers are entitled to
reinstatement with back pay.
(Rothenberg on Labor
Relations, p. 418.)
[A]n employee who has been
dismissed in violation of the
provisions of the Act is
entitled to reinstatement with
back pay upon an
adjudication that the
discharge was illegal."
(Id., citingWaterman S. S.
Corp. v. N. L. R. B., 119 F2d
760; N. L. R. B. v. Richter's
Bakery, 140 F2d 870; N. L. R.
B. v. Southern Wood
Preserving Co., 135 F. 2d 606;
C. G. Conn, Ltd. v. N. L. R. B.,
108 F2d 390; N. L. R. B. v.
American Mfg. Co., 106 F2d
61; N. L. R. B. v. Kentucky Fire
Brick Co., 99 F2d 99.)
And it is not a defense to reinstatement for
the respondents to allege that the positions
of these union members have already been
filled by replacements.
[W]here the employers'
"unfair labor practice" caused
or contributed to the strike or
where the 'lock-out' by the
employer constitutes an
"unfair labor practice," the
employer cannot successfully
urge as a defense that the
striking or lock-out
employees position has been
filled by replacement. Under
64
 such circumstances, if no job
sufficiently and satisfactorily
comparable to that previously
held by the aggrieved
employee can be found, the
employer must discharge the
replacement employee, if
necessary, to restore the
striking or locked-out worker
to his old or comparable
position ... If the employer's
improper conduct was an
initial cause of the strike, all
the strikers are entitled to
reinstatement and the
dismissal of replacement
employees wherever
necessary; ... . (Id., p. 422
and cases cited.)
A corollary issue to which we now address
ourselves is, from what date should the
backpay payable to the unionists be
computed? It is now a settled doctrine that
strikers who are entitled to reinstatement are
not entitled to back pay during the period of
the strike, even though it is caused by an
unfair labor practice. However, if they offer to
return to work under the same conditions just
before the strike, the refusal to re-employ or
the imposition of conditions amounting to
unfair labor practice is a violation of section
4(a) (4) of the Industrial Peace Act and the
employer is liable for backpay from the date
of the offer (Cromwell Commercial Employees
and Laborers Union vs. Court of Industrial
Relations, L-19778, Decision, Sept. 30, 1964,
12 SCRA 124; Id., Resolution on motion for
reconsideration, 13 SCRA 258; see
also Mathews, Labor Relations and the Law,
p. 730 and the cited cases). We have likewise
ruled that discriminatorily dismissed
employees must receive backpay from the
date of the act of discrimination, that is, from
the date of their discharge (Cromwell
Commercial Employees and Laborers Union
vs. Court of Industrial Relations, supra).
The respondents notified the petitioner
strikers to report back for work on June 2,
1958, which the latter did. A great number of
them, however, were refused readmission
because they had criminal charges against
them pending before the fiscal's office,
although non-strikers who were also facing
criminal indictments were readily readmitted.
These strikers who were refused readmission
on June 2, 1958 can thus be categorized as
discriminatorily dismissed employees and are
entitled to backpay from said date. This is
true even with respect to the petitioners Jose
Pilapil, Paulino Bugay, Jr. and Jose Garcia, Jr.
who were found guilty only of misdemeanors
which are not considered sufficient to bar
reinstatement (Teller, Labor Disputes and
Collective Bargaining, p. 854), especially so
because their unlawful acts arose during
incidents which were provoked by the
respondents' men. However, since the
employees who were denied readmission
have been out of the service of the
Companies (for more than ten years) during
which they may have found other
employment or other means of livelihood, it
is only just and equitable that whatever they
may have earned during that period should
be deducted from their back wages to
mitigate somewhat the liability of the
company, pursuant to the equitable principle
that no one is allowed to enrich himself at the
expense of another (Macleod & Co. of the
Philippines v. Progressive Federation of Labor,
97 Phil. 205 [1955]).
The lower court gave inordinate significance
to the payment to and acceptance by the
dismissed employees of separation pay. This
Court has ruled that while employers may be
authorized under Republic Act 1052 to
terminate employment of employees by
serving the required notice, or, in the
absence thereof, by paying the required
compensation, the said Act may not be
invoked to justify a dismissal prohibited by
law, e.g., dismissal for union activities.
... While Republic Act No.
1052 authorizes a
commercial establishment to
terminate the employment of
its employee by serving
notice on him one month in
advance, or, in the absence
thereof, by paying him one
month compensation from
the date of the termination of
his employment, such Act
does not give to the employer
a blanket authority to
terminate the employment
regardless of the cause or
purpose behind such
termination. Certainly, it
cannot be made use of as a
cloak to circumvent a final
order of the court or a
scheme to trample upon the
right of an employee who has
been the victim of an unfair
labor practice. (Yu Ki Lam, et
al. v. Nena Micaller, et al., 99
Phil. 904 [1956].)
Finally, we do not share the respondents'
view that the findings of fact of the Court of
Industrial Relations are supported by
substantial and credible proof. This Court is
not therefore precluded from digging deeper
into the factual milieu of the case (Union of
Philippine Education Employees v. Philippine
65
Education Company, 91 Phil. 93; Lu Do & Lu discipline on
Ym Corporation v. Philippine-Land-Air-Sea its
Labor Union, 11 SCRA 134 [1964]). employees,
should the
V. The petitioners (15 of them) ask this Court act upon
to cite for contempt the respondent Presiding which the
Judge Arsenio Martinez of the Court of criminal
Industrial Relations and the counsels for the charged was
private respondents, on the ground that the based
former wrote the following in his decision constitute
subject of the instant petition for certiorari, nevertheless
while the latter quoted the same on pages an activity
90-91 of the respondents' brief: . inimical to
the
employer's
... Says the Supreme Court in interest... The
the following decisions: act of the
employees
In a now under
proceeding consideration
for unfair may be
labor considered as
practice, a misconduct
involving a which is a
determination just cause for
as to whether dismissal.
or not the (Lopez, Sr., et
acts of the al. vs.
employees Chronicle
concerned Publication
justified the Employees
adoption of Ass'n. et al.,
the employer G.R. No. L-
of disciplinary 20179-81,
measures December 28,
against them, 1964.)
the mere fact (emphasis
that the supplied)
employees
may be able The two pertinent paragraphs in the above-
to put up a cited decision * which contained the
valid defense underscored portions of the above citation
in a criminal read however as follows:
prosecution
for the same
acts, does not Differently as regard the
erase or dismissal of Orlando Aquino
neutralize the and Carmelito Vicente, we
employer's are inclined to uphold the
right to action taken by the employer
impose as proper disciplinary
discipline on measure. A reading of the
said article which allegedly
employees. F caused their dismissal reveals
or it is settled that it really contains an
that not even insinuation albeit subtly of
the acquittal the supposed exertion of
of an political pressure by the
employee of Manila Chronicle
the criminal management upon the City
charge Fiscal's Office, resulting in the
against him is non-filing of the case against
a bar to the the employer. In rejecting the
employer's employer's theory that the
right to dismissal of Vicente and
impose Aquino was justified, the

66
lower court considered the
article as "a report of some
acts and omissions of an
Assistant Fiscal in the
exercise of his official
functions" and, therefore,
does away with the
presumption of malice. This
being a proceeding for unfair
labor practice, the matter
should not have been viewed
or gauged in the light of the
doctrine on a publisher's
culpability under the Penal
Code. We are not here to
determine whether the
employees' act could stand
criminal prosecution, but only
to find out whether the
aforesaid act justifies the
adoption by the employer of
disciplinary measure against
them. This is not sustaining
the ruling that the publication
in question is qualified
privileged, but even on the
assumption that this is so,
the exempting character
thereof under the Penal Code
does not necessarily erase or
neutralize its effect on the
employer's interest which
may warrant employment of
disciplinary measure. For it
must be remembered that
not even the acquittal of an
employee, of the criminal
charges against him, is a bar
to the employer's right to
impose discipline on its
employees, should the act
upon which the criminal
charges was based constitute
nevertheless an activity
inimical to the employer's
interest.
In the herein case, it appears
to us that for an employee to
publish his "suspicion," which
actually amounts to a public
accusation, that his employer
is exerting political pressure
on a public official to thwart
some legitimate activities on
the employees, which charge,
in the least, would sully the
employer's reputation, can be
nothing but an act inimical to
the said employer's interest.
And the fact that the same
was made in the union
newspaper does not alter its
deleterious character nor
shield or protect a
reprehensible act on the
ground that it is a union
activity, because such end
can be achieved without
resort to improper conduct or
behavior. The act of the
employees now under
consideration may be
considered as a misconduct
which is a just cause for
dismissal.** (Emphasis ours)
It is plain to the naked eye that the 60 un-
underscored words of the paragraph quoted
by the respondent Judge do not appear in the
pertinent paragraph of this Court's decision in
L-20179-81. Moreover, the first underscored
sentence in the quoted paragraph starts with
"For it is settled ..." whereas it reads, "For it
must be remembered ...," in this Court's
decision. Finally, the second and last
underlined sentence in the quoted paragraph
of the respondent Judge's decision, appears
not in the same paragraph of this Court's
decision where the other sentence is, but in
the immediately succeeding paragraph.
This apparent error, however, does not seem
to warrant an indictment for contempt
against the respondent Judge and the
respondents' counsels. We are inclined to
believe that the misquotation is more a result
of clerical ineptitude than a deliberate
attempt on the part of the respondent Judge
to mislead. We fully realize how saddled with
many pending cases are the courts of the
land, and it is not difficult to imagine that
because of the pressure of their varied and
multifarious work, clerical errors may escape
their notice. Upon the other hand, the
respondents' counsels have the prima
facie right to rely on the quotation as it
appears in the respondent Judge's decision,
to copy it verbatim, and to incorporate it in
their brief. Anyway, the import of the
underscored sentences of the quotation in
the respondent Judge's decision is
substantially the same as, and faithfully
reflects, the particular ruling in this Court's
decision, i.e., that "[N]ot even the acquittal of
an employee, of the criminal charges against
him, is a bar to the employer's right to
impose discipline on its employees, should
the act upon which the criminal charges were
based constitute nevertheless an activity
inimical to the employer's interest."
Be that as it may, we must articulate our firm
view that in citing this Court's decisions and
rulings, it is the bounden duty of courts,
judges and lawyers to reproduce or copy the
same word-for-word and punctuation mark-
for-punctuation mark. Indeed, there is a
salient and salutary reason why they should
do this. Only from this Tribunal's decisions
and rulings do all other courts, as well as
67
lawyers and litigants, take their bearings.
This is because the decisions referred to in G.R. No. L-25291 January 30, 1971
article 8 of the Civil Code which reads,
"Judicial decisions applying or interpreting
the laws or the Constitution shall form a part
of the legal system of the Philippines," are THE INSULAR LIFE ASSURANCE CO., LTD.,
only those enunciated by this Court of last
resort. We said in no uncertain terms EMPLOYEES ASSOCIATION-NATU, FGU
in Miranda, et al. vs. Imperial, et al. (77 Phil.
1066) that "[O]nly the decisions of this INSURANCE GROUP WORKERS and
Honorable Court establish jurisprudence or
doctrines in this jurisdiction." Thus, ever EMPLOYEES ASSOCIATION-NATU, and
present is the danger that if not faithfully and
exactly quoted, the decisions and rulings of INSULAR LIFE BUILDING EMPLOYEES
this Court may lose their proper and correct
ASSOCIATION-NATU
meaning, to the detriment of other courts,
lawyers and the public who may thereby be
vs.
misled. But if inferior courts and members of
the bar meticulously discharge their duty to THE INSULAR LIFE ASSURANCE CO., LTD.,
check and recheck their citations of
authorities culled not only from this Court's FGU INSURANCE GROUP, JOSE M. OLBES
decisions but from other sources and make
certain that they are verbatim reproductions and COURT OF INDUSTRIAL RELATIONS
down to the last word and punctuation mark,
appellate courts will be precluded from acting
on misinformation, as well as be saved
precious time in finding out whether the FACTS: The Insular Life Assurance Co., Ltd.,
citations are correct.
Employees Association-NATU, FGU Insurance
Happily for the respondent Judge and the
respondents' counsels, there was no Group Workers & Employees Association-
substantial change in the thrust of this
Court's particular ruling which they cited. It is NATU, and Insular Life Building Employees
our view, nonetheless, that for their mistake,
they should be, as they are hereby, Association-NATU (hereinafter referred to as
admonished to be more careful when citing
the Unions), while still members of the
jurisprudence in the future. ACCORDINGLY,
the decision of the Court of Industrial
Federation of Free Workers (FFW), entered
Relations dated August 17, 1965 is reversed
and set aside, and another is entered,
into separate CBAs with the Insular Life
ordering the respondents to reinstate the
dismissed members of the petitioning Unions Assurance Co., Ltd. and the FGU Insurance
to their former or comparatively similar
positions, with backwages from June 2, 1958 Group (hereinafter referred to as the
up to the dates of their actual
reinstatements. Costs against the Companies).
respondents.

THE INSULAR LIFE ASSURANCE CO., LTD., Two of the lawyers of the Unions then
EMPLOYEES ASSOCIATION-NATU, FGU
INSURANCE GROUP WORKERS and were Felipe Enaje and Ramon Garcia; the

EMPLOYEES ASSOCIATION-NATU, and latter was formerly the secretary-treasurer of

INSULAR LIFE BUILDING EMPLOYEES
the FFW and acting president of the Insular
ASSOCIATION-NATU vs. THE INSULAR
LIFE ASSURANCE CO., LTD., FGU Life/FGU unions and the Insular Life Building
INSURANCE GROUP, JOSE M. OLBES and Employees Association. Garcia, as such
COURT OF INDUSTRIAL RELATIONS
acting president, in a circular issued in his

OCTOBER 23, 2012 ~ VBDIAZ name and signed by him, tried to dissuade

the members of the Unions from disaffiliating

68
with the FFW and joining the National These employees resigned from the

Association of Trade Unions (NATU), to no Unions.

avail. On May 21, 1958 the Companies through

Enaje and Garcia soon left the FFW and their acting manager and president,

secured employment with the Anti-Dummy sent to each of the strikers a

Board of the Department of Justice. letter (exhibit A) quoted verbatim as follows:

Thereafter, the Companies hired Garcia in the We recognize it is your privilege both to strike

latter part of 1956 as assistant corporate and to conduct picketing.

secretary and legal assistant in their Legal

Department. Enaje was hired as personnel However, if any of you would like to come

manager of the Companies, and was likewise back to work voluntarily, you may:

made chairman of the negotiating panel for

the Companies in the collective bargaining 1. Advise the nearest police officer or

with the Unions. security guard of your intention to do so.

Unions jointly submitted proposals to the 2. Take your meals within the office.

Companies; negotiations were conducted on 3. Make a choice whether to go home at

the Unions proposals, but these were the end of the day or to sleep nights at

snagged by a deadlock on the issue of union the office where comfortable cots have

shop, as a result of which the Unions filed on been prepared.

January 27, 1958 a notice of strike for 4. Enjoy free coffee and occasional

deadlock on collective bargaining. The movies.

issue was dropped subsequently (in short, 5. Be paid overtime for work performed

nagkasundo). But, the parties negotiated on in excess of eight hours.

the labor demands but with no satisfactory 6. Be sure arrangements will be made

result due to a stalemate on the matter of for your families.

salary increases. 7. The decision to make is yours

whether you still believe in the motives

Meanwhile, 87 unionists were of the strike or in the fairness of the

reclassified as supervisors without Management.

increase in salary nor in responsibility

while negotiations were going on in the

Department of Labor after the notice to Unions, however, continued on strike, with

strike was served on the Companies. the exception of a few unionists who were

convinced to desist by the aforesaid letter

69
From the date the strike was called on May we are giving you until 2 June 1958 to report

21, 1958, until it was called off on May 31, for work at the home office. If by this date

1958, some management men tried to you have not yet reported, we may be forced

break thru the Unions picket lines xxx to obtain your replacement.

succeeded in penetrating the picket

lines in front of the Insular Life Building, Before, the decisions was yours to make.

thus causing injuries to the picketers

and also to the strike-breakers due to So it is now.

the resistance offered by some

picketers. Incidentally, all of the more than 120

Alleging that some non-strikers were criminal charges filed against the

injured and with the use of photographs members of the Unions, except 3, were

as evidence, the Companies then filed dismissed by the fiscals office and by

criminal charges against the the courts. These three cases involved

strikers with the City Fiscals Office slight physical injuries against one striker

of Manila.xxx and light coercion against two others.

Another letter was sent by the company to At any rate, because of the issuance of the

the individual strikers: writ of preliminary injunction against them as

well as the ultimatum of the Companies

The first day of the strike was last 21 May giving them until June 2, 1958 to return to

1958. their jobs or else be replaced, the striking

employees decided to call off their strike and

Our position remains unchanged and the to report back to work on June 2, 1958.

strike has made us even more convinced of

our decision. * However, before readmitting the strikers,

the Companies required them not only to

We do not know how long you intend to stay secure clearances from the City Fiscals Office

out, but we cannot hold your positions open of Manila but also to be screened by a

for long. We have continued to operate and management committee among the

will continue to do so with or without you. members of which were Enage and Garcia.

The screening committee initially rejected 83

If you are still interested in continuing in the strikers with pending criminal charges.

employ of the Group Companies, and if there However, all non-strikers with pending

are no criminal charges pending against you, criminal charges which arose from the

70
breakthrough incident were readmitted did not return to work on or before June 2,

immediately by the Companies without being 1958, they might be replaced; and (2)

required to secure clearances from the discriminating against the members of the

fiscals office. Subsequently, when Unions as regards readmission to work after

practically all the strikers had secured the strike on the basis of their union

clearances from the fiscals office, the membership and degree of participation in

Companies readmitted only some but the strike.

adamantly refused readmission to 34

officials and members of the Unions who ISSUE: Whether or not respondent company

were most active in the strike, on the is guilty of ULP

ground that they committed acts

inimical to the interest of the HELD: YES

respondents, without however stating

the specific acts allegedly The act of an employer in notifying absent

committed. Some 24 of the above number employees individually during a strike

were ultimately notified months later that following unproductive efforts at collective

they were being dismissed retroactively as of bargaining that the plant would be operated

June 2, 1958 and given separation pay the next day and that their jobs were open

checks computed under Rep. Act 1787, while for them should they want to come in has

others (ten in number) up to now have not been held to be an unfair labor practice, as

been readmitted although there have been an active interference with the right of

no formal dismissal notices given to them. collective bargaining through dealing

with the employees individually instead

CIR prosecutor filed a complaint for unfair of through their collective bargaining

labor practice against the Companies under representatives.

Republic Act 875. The complaint specifically Although the union is on strike, the employer

charged the Companies with (1) interfering is still under obligation to bargain with the

with the members of the Unions in the union as the employees bargaining

exercise of their right to concerted action, by representative.

sending out individual letters to them urging

them to abandon their strike and return to Individual solicitation of the employees or

work, with a promise of comfortable cots, free visiting their homes, with the employer or his

coffee and movies, and paid overtime, and, representative urging the employees to

subsequently, by warning them that if they cease union activity or cease striking,

71
constitutes unfair labor practice. All the escorted by armed men, who, despite the

above-detailed activities are unfair labor presence of eight entrances to the three

practices because they tend to undermine buildings occupied by the Companies,

the concerted activity of the employees, an entered thru only one gate less than two

activity to which they are entitled free from meters wide and in the process, crashed thru

the employers molestation. the picket line posted in front of the premises

of the Insular Life Building. This resulted in

Indeed, when the respondents offered injuries on the part of the picketers and the

reinstatement and attempted to bribe the strike-breakers; respondents brought against

strikers with comfortable cots, free coffee the picketers criminal charges, only three of

and occasional movies, overtime pay for which were not dismissed, and these three

work performed in excess of eight hours, only for slight misdemeanors. As a result of

and arrangements for their families, so these criminal actions, the respondents were

they would abandon the strike and return to able to obtain an injunction from the court of

work, they were guilty of strike-breaking first instance restraining the strikers from

and/or union-busting and, consequently, of stopping, impeding, obstructing, etc. the free

unfair labor practice. It is equivalent to an and peaceful use of the Companies gates,

attempt to break a strike for an employer to entrance and driveway and the free

offer reinstatement to striking employees movement of persons and vehicles to and

individually, when they are represented by a from, out and in, of the Companies buildings.

union, since the employees thus offered Verily, the above actuations of the

reinstatement are unable to determine what respondents before and after the issuance of

the consequences of returning to work would the letters, exhibit A and B, yield the clear

be. inference that the said letters formed of the

respondents scheme to preclude if not

ULP also: (super short cut na to) Hiring of destroy unionism within them.

Enage and Garcia with attractive

compensations; respondents reclassified 87 II. The respondents did not merely

employees as supervisors without increase in discriminate against all the strikers in

salary or in responsibility, in effect compelling general. They separated the active from the

these employees to resign from their unions; less active unionists on the basis of their

respondents, thru their president and militancy, or lack of it, on the picket lines.

manager, respondent Jose M. Olbes, brought Unionists belonging to the first category were

three truckloads of non-strikers and others, refused readmission even after they were

72
able to secure clearances from the
competent authorities with respect to the
criminal charges filed against them.
It is noteworthy that perhaps in an
anticipatory effort to exculpate themselves
from charges of discrimination in the
readmission of strikers returning to work
the respondents delegated the power to
readmit to a committee.
III. Anent the third assignment of error, the
record shows that not a single dismissed
striker was given the opportunity to defend
himself against the supposed charges against
him. As earlier mentioned, when the striking
employees reported back for work on June 2,
1958, the respondents refused to readmit
them unless they first secured the necessary
clearances; but when all, except three, were
able to secure and subsequently present the
required clearances, the respondents still
refused to take them back.
Indeed, the individual cases of dismissed
officers and members of the striking unions
do not indicate sufficient basis for dismissal.
The Insular Life Assurance Co., Ltd.,
Employees Association - NATU, FGU
Insurance Group Workers and
Employees Association - NATU, and
Insular Life Building Employees
Association - NATU, petitioners
vs.
The Insular Life Assurance Co., Ltd., FGU
Insurance Group, Jose M. Olbes, and
Court of Industrial Relations,
respondents.
G.R. No. L-25291, January 20, 1971
FACTS:
The Insular Life Assurance Co., Ltd.,
Employees Association - NATU, FGU
Insurance Group Workers and Employees
Association - NATU, and Insular Life Building
Employees Association - NATU (herein
referred to as the Unions), while still
members of the Federation of Free Workers
(FFW), entered into separate collective
bargaining agreements with the Insular Life
Assurance Co., Ltd., and the FGU Insurance
Group (herein referred to as the Companies).
Two of the lawyers and officers of the Unions
namely Felipe Enaje and Ramon Garcia, tried
to dissuade the Unions from disaffiliating with
the FFW and joining the National Association
of Trade Unions (NATU), to no avail. Enaje and
Garcia soon left the FFW and secured
employment with the Anti-Dummy Board of
the Department of Justice and were
thereafter hired by the companies - Garcia as
assistant corporate secretary and legal
assistant, and Enaje as personnel manager
and chairman of the negotiating panel for the
Companies in the collective bargaining with
the Unions.
On October 1957, negotiations for the
collective bargaining was conducted but
resulted to a deadlock. From April 25 to May
6, 1958, the parties negotiated on the labor
demands but with no satisfactory results due
to the stalemate on the matter of salary
increases. This prompted the Unions to
declare a strike in protest against what they
considered the Companies unfair labor
practices. On May 20, 1958, the Unions went
on strike and picketed the offices of the
Insular Life Building at Plaza Moraga.
On May 21, Jose M. Olbes, the acting
manager and president, sent individual
letters to the striking employees urging them
to abandon their strike with a promise of free
coffee, movies, overtime pay, and
accommodations. He also warned the strikers
if they fail to return to work by a certain date,
they might be replaced in their jobs. Further,
the Companies hired men to break into the
picket lines resulting in violence, and the
filing of criminal charges against some union
officers and members. When eventually, the
strikers called off their strike to return to their
jobs, they were subjected to a screening
process by a management committee,
among the members were Garcia and Enaje.
After screening, eighty-three (83) strikers
were rejected due to pending criminal
charges, and adamantly refused readmission
of thirty-four (34) officials and members of
the Unions who were most active in the
strike.
73
The CIR prosecutor filed a complaint for
unfair labor practice against the Companies,
specifically (1) interfering with the members
of the Unions in the exercise of their right to
concerted action; and (2) discriminating
against the members of the Unions as
regards readmission to work after the strike
on the basis of their union membership and
degree of participation in the strike. After the
trial, the Court of Industrial Relations
dismissed the Unions complaint for lack of
merit.
ISSUES:
I. Whether or not the Companies
are guilty of unfair labor practice
when they sent individual letters
to the strikers with the promise of
additional benefits, and notifying
them to either return to work, or
lose their jobs; and
II. Whether or not the Companies
are guilty of unfair labor practice
for discriminating against the
striking members of the Unions in
readmission of employees after
the strike.
HELD:
First issue.The Companies contended that by
sending those letters, it constituted a
legitimate exercise of their freedom of
expression. That contention is untenable. The
Companies are guilty of unfair labor practice
when they sent individual letters to the
strikers.It is an act of interference with the
right to collective bargaining through dealing
with the strikers individually instead of
through their collective bargaining
representatives. Although the Unions are on
strike, the employer is still obligated to
bargain with the union as the employees
bargaining representative. Further, it is also
an act of interference for the employer to
send individual letters to the employees
notifying them to return to their jobs,
otherwise, they would be replaced. Individual
solicitation of the employees urging them to
cease union activity or cease striking consists
of unfair labor practice. Furthermore, when
the Companies offered to bribe the strikers
with comfortable cots, free coffee, and
movies, overtime work pay so they would
abandon their strike and return to work, it
was guilty of strike-breaking and/or union
busting which constitute unfair labor practice.
Second Issue.Some of the members of the
Unions were refused readmission because
they had pending criminal charges. However,
despite the fact they were able to secure
clearances, 34 officials and members were
still refused readmission on the alleged
ground that they committed acts inimical to
the Companies. It should be noted, however,
that non-strikers who also had criminal
charges pending against them in the fiscals
office, arising from the same incidents
whence against the criminal charges against
the strikers are involved, were readily
readmitted and were not required to secure
clearances. This is an act of discrimination
practiced by the Companies in the process of
rehiring and is therefore a violation of Sec.
4(a)(4) of the Industrial Peace Act.
The respondent Companies did not merely
discriminate against all strikers in general
since they separated the active rom the less
active unionists on the basis of their
militancy, or lack of it, on the picket lines.
Discrimination exists where the record shows
that the union activity of the rehired strikers
has been less prominent than that of the
strikers who were denied reinstatement.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-28607 May 31, 1971
SHELL OIL WORKERS' UNION, petitioner,
vs.
SHELL COMPANY OF THE PHILIPPINES,
LTD., and THE COURT OF INDUSTRIAL
RELATIONS, respondents.
J.C. Espinas, B. C. Pineda, J. J. de la Rosa &
Associates for petitioner.
Siguion Reyna, Montecillo, Belo & Ongsiako
for respondent Company.
FERNANDO, J.:
The insistence on the part of respondent
Shell Company of the Philippines to dissolve
its security guard section, stationed at its
Pandacan Installation notwithstanding its
being embraced in, and its continuance as
such thus assured by an existing collective
bargaining contract, resulted in a strike called
by petitioner Shell Oil Workers' Union,
hereinafter to be designated as the Union,
certified a month later on June 27, 1967 by
the President to respondent Court of
Industrial Relations. Against its decision
declaring the strike illegal primarily on the
ground that such dissolution was a valid
74
exercise of a management prerogative, this
appeal is taken. With due Recognition that
the system of industrial democracy fostered
in the regime of unionization and collective
bargaining leaves room for the free exercise
of management rights, but unable to close
our eyes to the violation of a contract still in
force implicit in such dissolution thus giving
rise to an unfair labor practice, we cannot
sustain respondent Court of Industrial
Relations. Consequently, the harsh and
unwarranted sanction imposed, the dismissal
of the security guards and the officers of the
Union, cannot stand. Insofar, however, as
individual liability is deemed incurred for
serious acts of violence, whether committed
by a leader or member of the Union, we leave
things as adjudged.
The deep-rooted differences between the
parties that led to the subsequent strike were
made clear in the presidential certification.
As set forth in the opening paragraph of the
decision now on appeal: "Before this Court for
resolution is the labor dispute between the
petitioner Shell Oil Workers' Union, Union for
brevity, and the respondent Shell Company of
the Philippines Limited, Company for short,
which was certified to this Court on June 27,
1967 by the Office of the President of the
Republic of the Philippines pursuant to the
provision of Section 10 of Republic Act No.
875. Said dispute ... 'was a result of the
transfer by the Company of the eighteen (18)
security guards to its other department and
the consequent hiring of a private security
agency to undertake the work of said security
guards.'" 1
The respective contentions of the parties
were then taken up. Petitioner "filed the
petition on July 7, 1967 alleging, among
others, that the eighteen (18) security guards
affected are part of the bargaining unit and
covered by the existing collective bargaining
contract, and as such, their transfers and
eventual dismissals are illegal being done in
violation of the existing contract. It,
therefore, prayed that said security guards be
reinstated with full back wages from the time
of their dismissal up to the time of their
actual reinstatement." 2 Then came a
summary of the stand Of Shell Company: "For
hours hereafter, respondent Company filed
its Answer [to] the material allegations in the
Union's petition and adverted that the issues
in this case are: (1) whether or not the
Company commits unfair labor practice in
contracting out its security service to an
independent professional security agency
and assigning the 18 guards to other sections
of the Company; (2) whether or not the
dismissal of the 18 security guards are
justified; and (3) whether or not (the strike
called by the Union on May 25, 1967 is legal.
As special and affirmative defenses, the
Company maintained that in contracting out
the security service and redeploying the 18
security guards affected, it was merely
performing its legitimate prerogative to adopt
the most efficient and economical method of
operation; that said guards were transferred
to other sections with increase, except for
four (4) guards, in rates of pay and with
transfer bonus; the said action was motivated
by business consideration in line with past
established practice and made after notice to
and discussion with the Union; that the 18
guards concerned were dismiss for wilfully
refusing to obey the transfer order; and that
the strike staged by the Union on May 25,
1967 is illegal. Primarily, Company prayed,
among others, for the dismissal of the
Union's petition and the said Union's strike be
declared illegal followed by the termination of
the employee status of those responsible and
who participated in said illegal strike." 3
The move for the dissolution of the security
section by reassigning the guards to other
positions and contracting out such service to
an outside security agency had its origins as
far back as 1964. A study made by the Shell
Company for the purpose of improving the
productivity, organization and efficiency of its
Pandacan Installation recommended its
dissolution. If an outside agency to perform
such service were to be hired, there would be
a savings of P96,000.00 annually in addition
to further economy consequent on the
elimination to overtime an administration
expenses. Its implementation was scheduled
for 1965. 4 There was then, in July 1966, a
joint consultation by the Union and
management on the matter. At that stage, it
would appear that there was no serious
opposition to such a move provided it be
done gradually and in close consultation with
the Union. There was even an offer if
cooperation as long as a scheme for
retirement of the security guards affected or
their redeployment would be followed. 5
The tentative character of such proposed
dissolution was made evident by the fact
however that on August 26, 1966, a
collective bargaining contract was executed
between the Union and the Shell Company
effective from the first of the month of that
year to December 31, 1969. It contained the
usual grievance procedure and no strike
clauses. 6 More relevant to the case before
this Court, however, was the inclusion of the
category of the security guards in such
collective bargaining contract. This was
stressed in the brief for the petitioner where
specific mention is made of the agreement
covering rank and file personnel regularly
employed by the Company, included in which
is the work area covered by the Pandacan
75
Installation. 7 There was likewise specific
reference to such positions in the wage
schedule for hourly-rated categories
appearing in an appendix thereof. 8 Mention
was expressly made in another appendix of
the regular remuneration as well as premium
pay and night compensation. 9 Nonetheless,
Shell Company was bent on doing away with
the security guard section, to be replaced by
an outside security agency. That was
communicated to the Union in a panel to
panel meeting on May 3, 1967. A counter-
offer on the part of the Union to reduce the
working days per week of the guards from six
to five was rejected by Shell Company on the
ground of its being unusual and
impracticable. Two days later, there was a
meeting of the Union where a majority of the
members made clear that should there be
such a replacement of the company guards
by a private security agency, there would be
a strike. It was noted in the decision that
when the strike vote was taken, of 243
members, 226 were for the approval of a
motion to that effect. 10 On the afternoon of
May 24, 1967, a notice of reassignment
effective at 8:00 o'clock the next morning
was handed to the guards affected. At 10:00
o'clock that evening, there was a meeting by
the Union attended by ten officers and a
majority of the members wherein it was
agreed viva voce that if there would be an
implementation of the circular dissolving the
security section to be replaced by guards
from an outside agency, the Union would go
on strike immediately. 11 The strike was
declared at half-past 7:00 o'clock in the
morning of May 25, 1967 when security
guards from an outside agency were trying to
pass the main gate of the Shell Company to
their work. With the picket line established,
they were unable to enter. Efforts were made
by the Conciliation Service of the Department
of Labor to settle the matter, but they were
unsuccessful. 12 It was not until June 27,
1967, however, that the Presidential
certification came. 13 There was a return to
work order on July 6, 1967 by respondent
Court, by virtue of which pending the
resolution of the case, the Shell Company
was not to lockout the employees involved
and the employees in turn were not to strike.
The decision of respondent Court was
rendered on August 5, 1967. It declared that
no unfair labor practice was committed by
Shell Company in dissolving its security
guards from an outside agency, as such a
step was well within management
prerogative. Hence for it, the strike was
illegal, there being no compliance with the
statutory requisites before an economic strike
could be staged. Respondent Court sought to
reinforce such a conclusion by a finding that
its purpose was not justifiable and that it was
moreover carried out with violence. There
was thus a failure on its part to accord due
weight to the terms of an existing collective
bargaining agreement. Accordingly as was
made clear in the opening paragraph of this
opinion we view matters differently. The
strike cannot be declared illegal, there being
a violation of the collective bargaining
agreement by Shell Company. Even if it were
otherwise, however, this Court cannot lend
sanction of its approval to the outright
dismissal of all union officers, a move that
certainly would have the effect of
considerably weakening a labor organization,
and thus in effect frustrate the policy of the
Industrial Peace Act to encourage
unionization. To the extent, however, that the
serious acts of violence occurring in the
course of the strike could be made the basis
for holding responsible a leader or a member
of the Union guilty of their commission, what
was decided by respondent Court should not
be disturbed.
1. It is the contention of Shell Company,
sustained by respondent Court, that the
dissolution of the security guard section to be
replaced by an outside agency is a
management prerogative. The Union argues
otherwise, relying on the assurance of the
continued existence of a security guard
section at least during the lifetime of the
collective bargaining agreement. The second,
third and fourth assignment of errors, while
they could have been more felicitously
worded, did attack the conclusion reached by
respondent Court as contrary to and in
violation of the existing contract. It is to be
admitted that the stand of Shell Company as
to the scope of management prerogative is
not devoid of plausibility if it were not bound
by what was stipulated. The growth of
industrial democracy fostered by the
institution of collective bargaining with the
workers entitled to be represented by a union
of their choice, has no doubt contracted the
sphere of what appertains solely to the
employer. It would be going too far to assert,
however, that a decision on each and every
aspect of the productive process must be
reached jointly by an agreement between
labor and management. Essentially, the
freedom to manage the business remains
with management. It still has plenty of elbow
room for making its wishes prevail. In much
the same way that labor unions may be
expected to resist to the utmost what they
consider to be an unwelcome intrusion into
their exclusive domain, they cannot justly
object to management equally being jealous
of its prerogatives.
More specifically, it cannot be denied the
faculty of promoting efficiency and attaining
economy by a study of what units are
essential for its operation. To it belongs the
76
ultimate determination of whether services
should be performed by its personnel or
contracted to outside agencies. it is the
opinion of the Court, that while management
has the final say on such matter, the labor
union is not to be completely left out. What
was done by Shell Company in informing the
Union as to the step it was intending to take
on the proposed dissolution of the security
guard section to be replaced by an outside
agency is praise-worthy. There should be
mutual consultation eventually deference is
to be paid to what management decides.
Thereby, in the words of Chief Justice Warren,
there is likely to be achieved "peaceful
accommodation of conflicting interest." 14 In
this particular case though, what was
stipulated in an existing collective bargaining
contract certainly precluded Shell Company
from carrying out what otherwise would have
been within its prerogative if to do so would
be violative thereof.
2. The crucial question thus is whether the
then existing collective bargaining contract
running for three years from August 1, 1966
to December 31, 1969 constituted a bar to
such a decision reached by management?
The answer must be in the affirmative. As
correctly stressed in the brief for the
petitioner, there was specific coverage
concerning the security guard section in the
collective bargaining contract. It is found not
only in the body thereof but in the two
appendices concerning the wage schedules
as well as the premium pay and the night
compensation to which the personnel in such
section were entitled. 15 It was thus an
assurance of security of tenure, at least,
during the lifetime of the agreement. Nor is it
a sufficient answer, as set forth in the
decision of respondent Court, that while such
a section would be abolished, the guards
would not be unemployed as they would be
transferred to another position with an
increase in pay and with a transfer bonus. For
what is involved is the integrity of the
agreement reached, the terms of which
should be binding of both parties. One of
them may be released, but only with the
consent of the other. The right to object
belongs to the latter, and if exercised, must
be respected. Such a state of affairs should
continue during the existence of the contract.
Only thus may there be compliance with and
fulfillment of the covenants in a valid
subsisting agreement.
What renders the stand of Shell Company
even more vulnerable is the fact that as set
forth in its brief and as found by respondent
Court as far back as 1964, it had already
been studying the matter of dissolving the
security guard section and contracting out
such service to an outside agency.
Apparently, it had reached a decision to that
effect for implementation the next year. In
July 1966, there was a joint consultation
between it and the Union on the matter.
Nonetheless on August 26, 1966, a collective
bargaining contract was entered into which,
as indicated above, did assure the continued
existence of the security guard section. The
Shell Company did not have to agree to such
a stipulation. Or it could have reserved the
right to effect a dissolution and reassign the
guards. It did not do so. Instead, when it
decided to take such a step resulting in the
strike, it would rely primarily on provisions in
the collective bargaining contract couched in
general terms, merely declaratory of certain
management prerogatives. Considering the
circumstances of record, there can be no
justification then for Shell Company's
insistence on pushing through its project of
such dissolution without thereby incurring a
violation of the collective bargaining
agreement.
3. The Shell Company, in failing to manifest
fealty to what was stipulated in an existing
collective bargaining contract, was thus
guilty of an unfair labor practice. Such a
doctrine first found expression in Republic
Savings Bank v. Court of Industrial
Relations, 16 the opinion of the Court being
penned by Justice Castro. There was a
reiteration of such a view in Security Bank
Employees Union v. Security Bank and Trust
Company. 17 Thus: "It being expressly
provided in the industrial Peace Act that [an]
unfair labor practice is committed by a labor
union or its agent by its refusal 'to bargain
collectively with the employer' and this Court
having decided in the Republic Savings Bank
case that collective bargaining does not end
with the execution of an agreement, being a
continuous process, the duty to bargain
necessarily imposing on the parties the
obligation to live up to the terms of such a
collective bargaining agreement if entered
into, it is undeniable that non-compliance
therewith constitutes an unfair labor
practice." 18
4. Accordingly, the unfair labor practice strike
called by the Union did have the impress of
validity. Rightly labor is justified in making
use of such a weapon in its arsenal to
counteract what is clearly outlawed by the
Industrial Peace Act. That would be one way
to assure that the objectives of unionization
and collective bargaining would not be
thwarted. It could, of course, file an unfair
labor practice case before the Court of
Industrial Relations. It is not precluded,
however, from relying on its own resources to
frustrate such an effort on the part of
employer. So we have consistently held
and for the soundest of reasons. 19
77
There is this categorial pronouncement from
the present Chief Justice: "Again, the legality
of the strike follows as a corollary to the
finding of fact, made in the decision appealed
from which is supported by substantial
evidence to the effect that the strike had
triggered by the Company's failure to abide
by the terms and conditions of its collective
bargaining agreement with the Union, by the
discrimination, resorted to by the company,
with regard to hire and tenure of
employment, and the dismissal of employees
due to union activities, as well as the refusal
of the company to bargain collectively in
good faith." 20 As a matter of fact, this Court
has gone even further. It is not even required
that there be in fact an unfair labor practice
committed by the employer. It suffices, if
such a belief in good faith is entertained by
labor, as the inducing factor for staging a
strike. So it was clearly stated by the present
Chief Justice while still an Associate Justice of
this Court: "As a consequence, we hold that
the strike in question had been called to
offset what petitioners were warranted in
believing in good faith to be unfair labor
practices on the part of Management, that
petitioners were not bound, therefore, to wait
for the expiration of thirty (30) days from
notice of strike before staging the same, that
said strike was not, accordingly, illegal and
that the strikers had not thereby lost their
status as employees of respondents
herein." 21
5. It would thus appear that the decision now
on appeal did not reflect sufficient awareness
of authoritative pronouncements coming
from this Court. What is worse, certain
portions thereof yield the impression that an
attitude decidedly unsympathetic to labors
resort to strike is evident. Such should not be
the case. The right to self-organization so
sedulously guarded by the Industrial Peace
Act explicitly includes the right "to engage in
concerted activities for the purpose of
collective bargaining and to the mutual aid or
protection." 22 From and after June 17, 1953
then, there cannot be the least doubt that a
strike as form of concerted activity has the
stamp of legitimacy. As a matter of law, even
under the regime of compulsary arbitration
under the Court of Industrial Relations
Act, 23 a strike was by no means a forbidden
weapon. Such is the thought embodied in the
opinion of Justice Laurel in Rex Taxicab
Company v. Court of Industrial
Relations. 24 Thus: "In other words, the
employee, tenant or laborer is inhibited from
striking or walking out of his employment
only when so enjoined by the Court of
Industrial Relations and after a dispute has
been submitted thereto and pending award
or decision by the court of such dispute. It
follows that, as in the present case, the
employees or laborers may strike before
being ordered not to do so and before an
industrial dispute is submitted to the Court of
Industrial Relations, subject to the power of
the latter, after hearing when public interest
so requires or when the dispute cannot, in its
opinion, be promptly decided or settled, to
order them to return, with the consequence
that if the strikers fail to return to work, when
so ordered, the court may authorize the
employer to accept other employees or
laborers." 25 Former Chief Justice Paras, in a
case not too long before enactment of the
Industrial Peace Act, had occasion to repeat
such a view. Thus: "As a matter of fact, a
strike may not be staged only when, during
the pendency of an industrial dispute, the
Court of industrial Relations has issued the
proper injunction against the laborers
(section 19, Commonwealth Act No. 103, as
amended). Capital need not, however, be
apprehensive about the recurrence of strikes
in view of the system of compulsory
arbitration by the Court of Industrial
Relations." 26
A strike then, in the apt phrase of Justice
J.B.L. Reyes, is "an institutionalized factor of
democratic growth." 27 This is to foster
industrial democracy. Implicit in such a
concept is the recognization that concerning
the ends which labor considers worth while,
its wishes are ordinarily entitled to respect.
Necessarily so, the choice as to when such an
objective may be attained by striking likewise
belongs to it. There is the rejection of the
concept that an outside authority, even if
governmental, should make the decisions for
it as to ends which are desirable and how
they may be achieved. The assumption is
that labor can be trusted to determine for
itself when the right to strike may be availed
of in order to attain a successful fruition in
their disputes with management. It is true
that there is a requirement, in the Act that
before the employees may do so, they must
file with the Conciliation Service of the
Department of Labor a notice of their
intention to strike. 28 Such a requisite
however, as has been repeatedly declared by
this Court, does not have to be complied with
in case of unfair labor practice strike, which
certainly is entitled to greater judicial
protection if the Industrial Peace Act is to be
rendered meaningful. What has been said
thus far would demonstrate the unwarranted
deviation of the decision now on appeal from
what is indicated by the law and authoritative
decisions.
6. Respondent Court was likewise impelled to
consider the strike illegal because of the
violence that attended it. What is clearly
within the law is the concerted activity of
cessation of work in order that a union's
economic demands may be granted or that
78
an employer cease and desist from an unfair
labor practice. That the law recognizes as a
right. There is though a disapproval of the
utilization of force to attain such an objective.
For implicit in the very concept of a legal
order is the maintenance of peaceful ways. A
strike otherwise valid, if violent in character
may be placed beyond the pale. Care is to be
taken, however, especially where an unfair
labor practice is involved, to avoid stamping
it with illegality just because it is tainted by
such acts. To avoid rendering illusory the
recognition of the right to strike,
responsibility in such a case should be
individual and not collective. A different
conclusion would be called for, of course, if
the existence of force while the strike lasts is
pervasive and widespread, consistently and
deliberately resorted to as a matter of policy.
It could be reasonably concluded then that
even if justified as to ends it becomes illegal
because of the means employed.
Respondent Court must have unduly
impressed by the evidence submitted by the
Shell Company to the effect that the strike
was marred by acts of force, intimidation and
violence on the evening of June 14 and twice
in the mornings of June 15 and 16, 1967 in
Manila. Attention was likewise called to the
fact that even on the following day, with
police officials stationed at the strike-bound
area, molotov bombs did explode and the
streets were obstructed with wooden planks
containing protruding nails. Moreover, in the
branches of the Shell Company in Iloilo City
as well as in Bacolod, on dates unspecified,
physical injuries appeared to have been
inflicted on management personnel.
Respondent Court in the appealed decision
did penalize with loss of employment the ten
individuals responsible for such acts. Nor is it
to be lost sight of that before the certification
on June 27, 1967, one month had elapsed
during which the Union was on strike. Except
on those few days specified then, the Shell
Company could not allege that the strike was
conducted in a manner other than peaceful.
Under the circumstances, it would be going
too far to consider that it thereby became
illegal. This is not by any means to condone
the utilization of force by labor to attain its
objectives. It is only to show awareness that
is labor conflicts, the tension that fills the air
as well as the feeling of frustration and
bitterness could break out in sporadic acts of
violence. If there be in this case a weighing of
interests in the balance, the ban the law
imposes on unfair labor practices by
management that could provoke a strike and
its requirement that it be conducted
peaceably, it would be, to repeat, unjustified,
considering all the facts disclosed, to stamp
the strike with illegality. It is enough that
individual liability be incurred by those guilty
of such acts of violence that call for loss of
employee status.
Such an approach is reflected in our recent
decisions. As was realistically observed by
the present Chief Justice, it is usually
attended by "the excitement, the heat and
the passion of the direct participants in the
labor dispute, at the peak
thereof ...." 29 Barely four months ago,
in Insular Life Assurance Co., Ltd. Employees
Association v. Insular life Assurance Co.,
Ltd., 30 there is the recognition by this Court,
speaking through Justice Castro, of picketing
as such being "inherently explosive." 31 It is
thus clear that not every form of violence
suffices to affix the seal of illegality on a
strike or to cause the loss of employment by
the guilty party.
7. In the light of the foregoing, there being a
valid unfair labor practice strike, the loss of
employment decreed by respondent Court on
all the Union officers cannot stand. The
premise on which such penalty was decreed
was the illegality of the strike. We rule
differently. Hence, its imposition is
unwarranted. It is to be made clear, however,
that because of the commission of specific
serious acts of violence, the Union's
President, Gregorio Bacsa, as well as its
Assistant Auditor, Conrado Pea, did incur
such a
penalty. 32
On this point, it may be observed further that
even if there was a mistake in good faith by
the Union that an unfair labor practice was
committed by the Shell Company when such
was not the case, still the wholesale
termination of employee status of all the
officers of the Union, decreed by respondent
Court, hardly commends itself for approval.
Such a drastic blow to a labor organization,
leaving it leaderless, has serious
repercussions. The immediate effect is to
weaken the Union. New leaders may of
course emerge. It would not be unlikely,
under the circumstances, that they would be
less than vigorous in the prosecution of
labor's claims. They may be prove to fall
victims to counsels of timidity and
apprehension. At the forefront of their
consciousness must be an awareness that a
mistaken move could well mean their
discharge from employment. That would be
to render the right to self-organization
illusory. The plain and unqualified
constitutional command of protection to labor
should not be lost sight of. 33 The State is
thus under obligation to lend its aid and its
succor to the efforts of its labor elements to
improve their economic condition. It is now
generally accepted that unionization is a
means to such an end. It should be
79
encouraged. Thereby, labor's strength, what Concepcion, C.J., Zaldivar, Teehankee,
there is of it, becomes solidified. It can Villamor and Makasiar, JJ., concur.
bargain as a collectivity. Management then
will not always have the upper hand nor be in Castro, J., took no part.
a position to ignore its just demands. That, at
any rate, is the policy behind the Industrial
Peace Act. The judiciary and administrative SHELL OIL WORKERS UNION vs. SHELL
agencies in consrtruing it must ever be
COMPANY OF THE PHILIPPINES, LTD., and THE
conscious of its implications. Only thus may
there be fidelity to what is ordained by the COURT OF INDUSTRIAL RELATIONS
fundamental law. For if it were otherwise,
instead of protection, there would be neglect
or disregard. That is ito negate the OCTOBER 23, 2012 ~ VBDIAZ
fundamental principle that the Constitution is
the supreme law. SHELL OIL WORKERS UNION vs. SHELL

WHEREFORE, the decision of respondent COMPANY OF THE PHILIPPINES, LTD.,

Court of Industrial Relations of August 5,
1967 is reversed, the finding of illegality of and THE COURT OF INDUSTRIAL
the strike declared by the Shell Oil Workers'
Union on May 25, 1967 not being in RELATIONS
accordance with law. Accordingly, the
dismissal by the Shell Company on May 27,
1967 of the eighteen security guards, 34 with
the exception of Ernesto Crisostomo, who G.R. No. L-28607, May 31, 1971.
was found guilty of committing a serious act
of violence is set aside and they are declared
reinstated. The continuance of their status
such is, however, dependent on whether or
not a security guard section is provided for in
the collective bargaining contract entered
into after the expiration of the contract that
FACTS:
expired on December 31, 1969. The loss of
employee status of the officers of the
Union, 35 decreed by respondent Court in its
decision, is likewise set aside, except as to Respondent Shell Company of the Philippines
Gregorio Bacsa and Conrado Pena, both of
whom did commit serious acts of violence. (COMPANY) dissolved its security guard
The termination of the employment status of
Nestor Samson, Jose Rey, Romeo Rosales, section stationed at its Pandacan Installation,
Antonio Labrador and Sesinando Romero,
who committed acts of violence not serious in notwithstanding its (guard section)
character, is also set aside, but while allowed
to be reinstated, they are not entitled to back continuance and that such is assured by an
pay. Ricardo Pagsibigan and Daniel Barraquel,
along with the aforesaid Gregorio Baesa, existing collective bargaining contract. The
Conrado Pea and Ernesto Crisostomo, were
legally penalized with dismissal because of respondent company transferred 18 security
the serious acts of violence committed by
them in the course of the strike. The rest of guards to its other department and
the employees laid off should be reinstated
with back pay to be counted from the date consequently hired a private security agency
they were separated by virtue of the
appealed decision, from which should be to undertake the work of said security
deducted whatever earnings may have been
received by such employees during such guards. This resulted in a strike called by
period. The case is hereby remanded to
respondent Court for the implementation of petitioner Shell Oil Workers Union (UNION),
this decision. In ascertaining the back wages
to which the security guards are entitled, it The President certified it to respondent Court
must likewise be ascertained whether or not
the security guard section is continued after of Industrial Relations (CIR). CIR declared the
December 31, 1969. Without costs.
strike illegal on the ground that such

dissolution was a valid exercise of a

80
management prerogative. Thus this appeal is RULING:

taken.

YES. The strike was legal because there was

Petitioner argued that the 18 security guards a violation of the collective bargaining

affected are part of the bargaining unit and agreement by Company. It was part of the

covered by the existing collective bargaining CBA that the Security Guard Section will

contract, as such, their transfers and remain. Yet, the Company did not comply

eventual dismissals are illegal being done in with the stipulation in CBA. It was thus an

violation of the existing contract. The assurance of security of tenure, at least,

Company maintained that in contracting out during the lifetime of the agreement. For

the security service and redeploying the 18 what is involved is the integrity of the

security guards affected, it was merely agreement reached, the terms of which

performing its legitimate prerogative to adopt should be binding on both parties

the most efficient and economical method of

operation, that said action was motivated by The stand of Shell Company as to the scope

business consideration in line with past of management prerogative is not devoid of

established practice and made after notice to plausibility, management prerogative of the

and discussion with the Union, that the 18 Company would have been valid if it were not

guards concerned were dismissed for wilfully bound by what was stipulated in CBA. The

refusing to obey the transfer order, and that freedom to manage the business remains

the strike staged by the Union is illegal. with management. It cannot be denied the

faculty of promoting efficiency and attaining

economy by a study of what units are

essential for its operation. To it belongs the

ISSUE: ultimate determination of whether services

should be performed by its personnel or

Whether the existing collective bargaining contracted to outside agencies. However,

contract on maintaining security guard while management has the final say on such

section, among others, constitute a bar to the matter, the labor union is not to be

decision of the management to contract out completely left out.

security guards.

An unfair labor practice is committed by a

labor union or its agent by its refusal to

bargain collectively with the employer.

81
Collective bargaining does not end with the has issued the proper injunction against the

execution of an agreement, being a laborers (section 19, Commonwealth Act No.

continuous process, the duty to bargain 103, as amended).

necessarily imposing on the parties the

obligation to live up to the terms of such a WHEREFORE, the decision of respondent

collective bargaining agreement if entered Court of Industrial Relations of August 5,

into, it is undeniable that non-compliance 1967 is reversed.

therewith constitutes an unfair labor practice.

The right to self-organization guarded by the

Industrial Peace Act explicitly includes the **NOTE:

right to engage in concerted activities for

the purpose of collective bargaining and to BELIEF IN GOOD FAITH THAT EMPLOYER

the mutual aid or protection. The employee, COMMITTED UNFAIR LABOR PRACTICE

tenant or laborer is inhibited from striking or RENDERS STRIKE LEGAL:

walking out of his employment only when so

enjoined by the CIR and after a dispute has It is not even required that there be in fact an

been submitted thereto and pending award unfair labor practice committed by the

or decision by the court of such dispute. employer. It suffices, if such a belief in good

faith is entertained by labor, as the inducing

In the present case, the employees or factor for staging a strike. So it was declared:

laborers may strike before being ordered not As a consequence, we hold that the strike in

to do so and before an industrial dispute is question had been called to offset what

submitted to the CIR, subject to the power of petitioners were wanted in believing in good

the latter, after hearing when public interest faith to be unfair labor practices on the part

so requires or when the dispute cannot, in its of Management, that petitioners were not

opinion, be promptly decided or settled, to bound, therefore, to wait for the expiration of

order them to return to work, with the thirty (30) days from notice of strike before

consequence that if the strikers fail to return staging the same, that said strike was not,

to work, when so ordered, the court may accordingly, illegal and that the strikers had

authorize the employer to accept other not thereby lost their status as employees of

employees or laborers. Thus a strike may respondents herein.

not be staged only when, during the

pendency of an industrial dispute, the CIR

82
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22456 September 27,
1967
FRANCISCO SALUNGA, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS; SAN
MIGUEL BREWERY, INC. and MIGUEL
NOEL; NATIONAL BREWERY & ALLIED
INDUSTRIES LABOR UNION OF THE
PHILIPPINES (NABAILUP-PAFLU); JOHN
DE CATILLO and CIPRIANO
CID, respondents.
C. Magat & Associates for petitioner.
Cipriano Cid & Associates and Ponce Enrile,
S. Reyna, Montecillo & Belo for respondents.
CONCEPCION, C.J.:
Appeal by petitioner Francisco Salunga from
a resolution of the Court of Industrial
Relations, sitting en banc, dismissing unfair
labor practice charges against the National
Brewery and Allied Industries Labor Union of
the Philippines (PAFLU) hereinafter referred
to as the Union John de Castillo, Cipriano
Cid, San Miguel Brewery, Inc. hereinafter
referred to as the Company and Miguel
Noel.
Petitioner had, since 1948, been an employee
of the Company, which, on October 2, 1959,
entered with the Union, of which respondent
John de Castillo is the president, into a
collective bargaining agreement, effective up
to June 30, 1962. Section 3 thereof reads:
The company agrees to require as a
condition of employment of those
workers covered by this agreement
who either are members of the
UNION on the date of the signing of
this agreement, or may join the
UNION during the effectivity of this
agreement, that they shall not
voluntarily resign from the UNION
earlier than thirty (30) days before
the expiry date of this agreement as
provided in Article XIII hereof,
provided, however, that nothing
herein contained shall be construed
to require the company to enforce
any sanction whatsoever against any
employee or worker who fails to
retain his membership in the UNION
as hereinbefore stated, for any cause
other than voluntary resignation or
non-payment of regular union dues
on the part of said employee or
worker. (Exh. 4-A-Union.) .
Petitioner was a member of the Union since
1953. For reasons later to be stated, on
August 18, 1961, he tendered his resignation
from the Union, which accepted it on August
26, 1961, and transmitted it to the Company
on August 29, 1961, with a request for the
immediate implementation of said section 3.
The Company having informed him that his
aforementioned resignation would result in
the termination of his employment, in view of
said section, petitioner wrote to the Union, on
August 31, 1961, a letter withdrawing or
revoking his resignation and advising the
Union to continue deducting his monthly
union dues. He, moreover, furnished a copy
of this communication to the Company. The
latter, in turn, notified the Union of the
receipt of said copy and that "in view thereof,
we shall not take any action on this case and
shall consider Mr. Francisco Salunga still a
member of your union and continue
deducting his union dues." On September 8,
1961, the Union told the Company that
petitioner's membership could not be
reinstated and insisted on his separation from
the service, conformably with the stipulation
above-quoted. The Company replied, on
September 12, 1961, stating:
. . . We asked Mr. Salunga if he
realized that by resigning from the
Union he would in effect be forfeiting
his position in the company. When he
answered in the negative, we showed
him a copy of our Collective
Bargaining Agreement and called his
attention to Sec. 3, Art. II thereof. He
then told us that he did not realize
that he would be losing his job if he
were to resign from the Union. We did
not at any time ask or urge him to
withdraw his resignation; neither are
we now asking or insisting that you
readmit him into your membership.
We thought that informing him of the
consequences of his resignation from
the Union, was the only humane
thing to do under the circumstances.
Nevertheless, if notwithstanding our
foregoing clarification you still
consider him as having actually
resigned from your organization, and
you insist that we dismiss him from
the service in accordance with Sec. 3,
Article II of our agreement, we will
have no alternative but to do so.
(Exh. E)
83
In a letter to the Company, dated September
20, 1961, the Union reiterated its request for
implementation of said section 3, for which
reason, on September 22, 1961, the
Company notified petitioner that, in view of
said letter and the aforementioned section,
"we regret we have to terminate your
employment for cause. You are, therefore,
hereby notified of your dismissal from the
service effective as of the close of business
hours, September 30, 1961."
Meanwhile, petitioner had sought the
intervention of PAFLU's National President,
respondent Cipriano Cid, to which the Union
was affiliated, for a review of the latter's
action. The PAFLU gave due course to
petitioner's request for review and asked the
Company, on September 29, 1961, to defer
his dismissal, for at least two (2) weeks, so
that its (PAFLU's) Executive Board could act
on his appeal. On October 6, 1961,
respondent Cid advised petitioner that the
PAFLU had found no ground to review the
action taken by the Union and that, on the
expiration of the 15-day grace granted to him
by the Company, the decision thereof to
terminate his services would take effect.
Thereupon, or on October 11, 1961,
petitioner notified the PAFLU that he was
appealing to its supreme authority the
PAFLU National Convention and requested
that action on his case be deferred until such
time as the Convention shall have acted on
his appeal. A letter of the same date and
tenor was sent, also, by the petitioner to the
Union. Furthermore, he asked the Company
to maintain the status quo, in the meantime.
This notwithstanding, at the close of the
business hours, on October 15, 1961,
petitioner was discharged from the
employment of the Company, through its
assistant-secretary and vice-president, herein
respondent Miguel Noel.
At petitioner's behest, on or about December
7, 1961, a prosecutor of the Court of
Industrial Relations commenced, therefore,
the present proceedings, for unfair labor
practice, against the Union, its president,
respondent John de Castillo, respondent
Cipriano Cid, as PAFLU president, the
Company, and its aforementioned Vice-
President Miguel Noel. In due course,
thereafter, the trial Judge rendered a decision
the dispositive part of which reads:
IN VIEW OF ALL THE FOREGOING, the
San Miguel Brewery, Inc. and Miguel
Noel and National Brewery & Allied
Industrial Labor Union of the
Philippines (PAFLU), John de Castillo,
and Cipriano Cid, are hereby declared
guilty of unfair labor practices as
charged, and ordered to cease and
desist from further committing such
unfair labor practice acts complained
of; and as affirmative reliefs:
(a) The National Brewery & Allied
Industries Labor Union of the
Philippines (PAFLU), John de Castillo
and Cipriano Cid, their officers and
agents, are hereby directed to
readmit and to continue the
membership of Francisco Salunga in
the membership rolls of the union
after paying all union dues, with all
the rights and privileges being
enjoyed by bonafide members;
(b) The San Miguel Brewery, Inc., and
Miguel Noel, their officers and agents
are hereby directed to immediately
reinstate Francisco Salunga to his
former or substantially equivalent
position with one-half back wages,
without prejudice, however, to his
seniority and/or other rights and
privileges; and
(c) Respondents Union and Company,
their respective officers and agents,
are likewise directed to post two
copies of this decision in conspicuous
places in their respective offices or
plants for a period of one month,
furnishing this Court with certificate
of compliance after the expiration of
said period.
On motion for reconsideration of the
respondents, this decision was reversed by
the Court of Industrial Relations sitting en
banc with two (2) judges concurring in the
result and the trial judge dissenting which
dismissed the case. Hence, this appeal by the
petitioner.
The appeal is well taken, for, although
petitioner had resigned from the Union and
the latter had accepted the resignation, the
former had, soon later upon learning that
his withdrawal from the Union would result in
his separation from the Company, owing to
the closed-shop provision above referred to
revoked or withdrawn said resignation, and
the Union refused to consent thereto without
any just cause therefor. The Union had not
only acted arbitrarily in not allowing
petitioner to continue his membership. The
trial Judge found said refusal of the Union
officers to be due to his critical attitude
towards certain measures taken or
sanctioned by them. As set forth in the
decision of the trial Judge:
84
. . . Prior to August, 1961, he had
been criticizing and objecting to what
he believed were illegal or irregular
disbursements of union funds, i.e.,
allowing Florencio Tirad, a union
official, to receive six months
advanced salaries when Tirad went to
the United States, which objection he
openly manifested in a meeting of
the board of directors and stewards,
but instead of receiving favorable
response, he (Salunga) was twitted
and felt insulted by the laughter of
those present that he would be the
next man to be sent to America;
second, granting Ricardo Garcia,
union secretary, two months
advanced salaries when preparing for
the bar examinations, which
objection he broached to union officer
Efren Meneses; third, the union's
additional monthly expense for the
salary of a counsel when the PAFLU,
their mother union is well staffed with
a number of lawyers who could
attend to and handle their cases and
other legal matters, and to which
mother union the NABAILUP has been
paying a monthly assessment of
more than P1,000.00; and fourth,
giving salary to Charles Mitschek who
was dismissed by the company but
denying the same privilege to other
similarly situated member-
employees. Salunga was later
removed by the union from his
position as steward without his
knowledge. It also appears that the
power of attorney executed in his
favor by co-worker Alejandro Miranda
for the collection of Miranda's
indebtedness of P60.00 to him (the
latter has certain amount in
possession of the Union) was not
honored by the union.1awphl.nt
xxx xxx xxx
The record is clear that feeling
dejected by the inaction of the union
officials on his grievances and
objections to what he believed were
illegal disbursements of union funds,
coupled with the fact that he was
later removed from his position as a
union steward without his knowledge,
as well as the fact that the union did
not honor the power of attorney
executed in his favor by Alejandro
Miranda, a co-worker, for the
collection of Miranda's indebtedness
of P60.00 to him, he submitted his
letter of resignation from the union
on August 18, 1961. It must be stated
here that no evidence was adduced
by the respondent union to overcome
complainant's testimonies about his
objections to the disbursements of
union funds but only tried to elicit
from him, on cross examination, that
the funds of the union are only
disbursed upon authority of the
Executive Board of the union. . . .
It should be noted that the Court of Industrial
Relations en banc did not reverse these
findings of fact or even question the accuracy
thereof. What is more, the officers of the
Union have, in effect, confirmed the fact that
their refusal to allow the withdrawal of
petitioner's resignation had been due to his
aforementioned criticisms. Indeed said
officers tried to justify themselves by
characterizing said criticisms as acts of
disloyalty to the Union, which, of course, is
not true, not only because the criticism
assailed, not the Union, but certain acts of its
officers, and, indirectly, the officers
themselves, but also because the constitution
and by-laws of the Union explicitly recognize
the right of its members to give their views
on "all transactions made by the Union." As a
consequence, the resolution appealed from
cannot be affirmed without, in effect,
nullifying said right which, independently of
the constitution and by-laws of the Union, is
part and parcel of the freedom of speech
guaranteed in the Constitution of our
Republic, as a condition sine qua non to the
sound growth and development of labor
organizations and democratic institutions.
Although, generally, a state may not compel
ordinary voluntary associations to admit
thereto any given individual, because
membership therein may be accorded or
withheld as a matter of privilege, 1 the rule is
qualified in respect of labor unions holding a
monopoly in the supply of labor, either in a
given locality, or as regards a particular
employer with which it has a closed-shop
agreement.2 The reason is that
. . . The closed shop and the union
shop cause the admission
requirements of trade union to
becomeaffected with the public
interest. Likewise, a closed shop, a
union shop, or maintenance of
membership clauses cause the
administration of discipline by unions
to be affected with the public
interest.3
Consequently, it is well settled that such
unions are not entitled to arbitrarily exclude
qualified applicants for membership, and a
closed-shop provision would not justify the
employer in discharging, or a union in
insisting upon the discharge of, an employee
85
whom the union thus refuses to admit to
membership, without any reasonable ground
therefor.4 Needless to say, if said unions may
be compelled to admit new members, who
have the requisite qualifications, with more
reason may the law and the courts exercise
the coercive power when the employee
involved is a long standing union member,
who, owing to provocations of union officers,
was impelled to tender his resignation, which
he forthwith withdrew or revoked. Surely, he
may, at least, invoke the rights of those who
seek admission for the first time, and can not
arbitrarily he denied readmission.
We cannot agree, however, with the finding
of the trial Judge to the effect that the
Company was guilty of unfair labor practice.
The Company was reluctant if not unwilling
to discharge the petitioner. When the
Union first informed the Company of
petitioner's resignation and urged
implementation of section 3 of the bargaining
contract, the Company advised petitioner of
the provision thereof, thereby intimating that
he had to withdraw his resignation in order to
keep his employment. Besides, the Company
notified the Union that it (the Company)
would not take any action on the case and
would consider the petitioner, "still a
member" of the Union. When the latter,
thereafter, insisted on petitioner's discharge,
the Company still demurred and explained it
was not taking sides and that its stand was
prompted merely by "humane"
considerations, springing from the belief that
petitioner had resigned from the Union
without realizing its effect upon his
employment. And, as the Union reiterated its
demand, the Company notified petitioner that
it had no other alternative but to terminate
his employment, and dismissed him from the
service, although with "regret".
Under these circumstances, the Company
was not "unfair" to the petitioner. On the
contrary, it did not merely show a
commendable understanding of and
sympathy for his plight. It even tried to help
him, although to such extent only as was
consistent with its obligation to refrain from
interfering in purely internal affairs of the
Union. At the same time, the Company could
not safely inquire into the motives of the
Union officers, in refusing to allow the
petitioner to withdraw his resignation.
Inasmuch as the true motives were not
manifest, without such inquiry, and petitioner
had concededly tendered his resignation of
his own free will, the arbitrary nature of the
decision of said officers was not such as to be
apparent and to justify the company in
regarding said decision unreasonable. Upon
the other hand, the Company can not be
blamed for assuming the contrary, for
petitioner had appealed to the National
Officers of the PAFLU and the latter had
sustained the Union. The Company was
justified in presuming that the PAFLU had
inquired into all relevant circumstances,
including the motives of the Union Officers.
In finding, this notwithstanding, that the
Company is guilty of unfair labor practice, the
trial Judge seemed to have been unduly
influenced by the fact that the former had
dismissed the petitioner despite his
announced intention to appeal from the
decision of the Union and that of the Officers
of PAFLU to its "Supreme authority", namely,
the PAFLU's "National Convention". In other
words, said Judge felt that the Company
should have waited for the action of the
national convention before issuing the notice
of dismissal.
There is no evidence, however, that
petitioner had really brought this matter to
said "Convention". Much less is there any
proof that the latter had sustained him and
reversed the PAFLU officers and the Union.
Thus, the record does not show that
petitioner was prejudiced by the Company's
failure to maintain the status quo, after the
Union had been sustained by said officers. In
fact, petitioner did not even try to establish
that he had submitted to the Company as
he has not introduced in the lower court
satisfactory proof that an appeal had really
been taken by him to the aforementioned
Convention. In short, it was error to hold the
Company guilty of unfair labor practice.
Just the same, having been denied
readmission into the Union and having been
dismissed from the service owing to an unfair
labor practice on the part of the Union,
petitioner is entitled to reinstatement as
member of the Union and to his former or
substantially equivalent position in the
Company, without prejudice to his seniority
and/or rights and privileges, and with back
pay, which back pay shall be borne
exclusively by the Union. In the exercise of its
sound judgment and discretion, the lower
court may, however, take such measures as
it may deem best, including the power to
authorize the Company to make deductions,
for petitioner's benefit, from the sums due to
the Union, by way of check off or otherwise,
with a view to executing this decision, and, at
the same time, effectuating the purposes of
the Industrial Peace Act.
With this modification, the aforementioned
decision of the trial Judge is hereby affirmed
in all other respects, and the appealed
resolution of the Court of Industrial
Relations en banc is reversed, with costs
against respondents, except the Company.
86
 Salunga v. CIR
Date: September 27, 1967
Ponente: Concepcion, J.
Digest Maker: John Michael Vida
SUMMARY:
Salunga resigned from the Union but was
advised by SMB that Section 3 of the CBA
with NBAILUP-PAFLU (a closed shop
agreement) existed. Salunga revoked his
resignation in order to keep his job but the
Union did not allow his membership to be
reinstated, hence his termination from his
job which was regretfully made by SMB. The
Court held for Salunga, stating that the
Union was guilty of ULP as unions
are not entitled to arbitrarily exclude
qualified applicants for membership, and a
closed-shop provision would not justify the
employer in discharging, or a union in
insisting upon the discharge of, an employee
whom the union thus refuses to admit to
membership, without any reasonable ground
therefor.
DOCTRINE:
ULP - a closed-shop provision would not
justify the employer in discharging, or a
union in insisting upon the discharge of, an
employee whom the union thus refuses to
admit to membership, without any
reasonable ground therefor.
FACTS:
[NOTE: taken and derived from earlier Labor
2 digests from last years pool]
San Miguel Brewery (SMB) entered into a CBA
with the National Brewery and Allied
Industries Labor Union of the Philippines
(NBAILUP-PAFLU, otherwise known as the
Union). Section 3 of the CBA (a Closed Shop
Agreement) reads:
The company agrees to require as a
condition of employment of those workers
covered by this agreement who either are
members of the UNION on the date of the
signing of this agreement, or may join the
UNION during the effectivity of this
agreement, that they shall not voluntarily
resign from the UNION earlier than thirty (30)
days before the expiry date of this agreement
as provided in Article XIII hereof, provided,
however, that nothing herein contained shall
be construed to require the company to
enforce any sanction whatsoever against any
employee or worker who fails to retain his
membership in the UNION as hereinbefore
stated, for any cause other than voluntary
resignation or non-payment of regular union
dues on the part of said employee or worker.
Petitioner Francisco Salunga was a member
of the Union since 1953. Due to a falling out
with the Union, he tendered his resignation
from the Union, which accepted it and
transmitted it to the Company with a request
for the immediate implementation of said
section 3. SMB informed Salunga that his
aforementioned resignation would result in
the termination of his employment, and in
view of said section, Salunga wrote a letter to
the Union withdrawing or revoking his
resignation and advising the Union to
continue deducting his monthly union dues.
He, moreover, furnished a copy of this
communication to SMB. The latter, in turn,
notified the Union of the receipt of said copy
and that "in view thereof, we shall not take
any action on this case and shall consider Mr.
Francisco Salunga still a member of your
union and continue deducting his union
dues."
However, on September 8, 1961, the Union
told SMB that Salungas membership could
not be reinstated and insisted on his
separation from the service, conformably
with the stipulation above-quoted. SMB sent
a reply clarifying the instructions of the Union
to terminate the employment of Salunga. The
Union reiterated its request for
implementation of said section 3, for which
reason, SMB notified Salunga that, in view of
said letter and the aforementioned section,
they have to terminate his employment,
although with regret.
Meanwhile, Salunga sought the intervention
of PAFLU's National President, Cipriano Cid, to
which the Union was affiliated, for a review of
the latter's action. PAFLU gave due course to
petitioner's request for review.
On October 6, 1961, Cid advised Salunga that
PAFLU had found no ground to review the
action taken by the Union and that, on the
expiration of the 15-day grace granted to him
by the Company, the decision thereof to
terminate his services would take effect.
Salunga then notified the PAFLU that he was
appealing to its supreme authority the
PAFLU National Convention and requested
that action on his case be deferred until such
time as the Convention shall have acted on
his appeal. Furthermore, he asked SMB to
maintain the status quo, in the meantime.
This notwithstanding, at the close of the
business hours, on October 15, 1961,
Salunga was discharged from the
employment of the Company, through its
assistant-secretary and vice-president, herein
respondent Miguel Noel. Hence, the
complaint in the CIR.
CIR decided in favor of Salunga. Defendants
(including SMB) all guilty of ULP. Ordered
Union to readmit petitioner as member, and
Company to reinstate him with backwages.
87
ON Motion for Reconsideration, CIR reversed
its earlier decision. Hence, this appeal by the
petitioner.
ISSUES/HELD:
1. WON the Union is guilty of ULP. YES.
2. WON SMB (the employer) is guilty of ULP.
NO.
RATIO:
1. In the case of the Union, it was found that
NBAILUP-PAFLU acted arbitrarily. Although
Salunga had resigned from the Union and the
latter had accepted the resignation, Salunga
had, soon later upon learning that his
withdrawal from the Union would result in his
separation from the Company, owing to the
closed-shop provision above referred to
revoked or withdrawn said resignation, and
the Union refused to consent thereto without
any just cause therefor. The Union had not
only acted arbitrarily in not allowing
petitioner to continue his membership but
the trial Judge also found said refusal of the
Union officers to be due to his critical attitude
towards certain measures taken or
sanctioned by them.
The record is clear that, feeling dejected by
the inaction of the union officials on his
grievances and objections to what he
believed were illegal disbursements of union
funds, coupled with the fact that he was later
removed from his position as a union steward
without his knowledge, as well as the fact
that the union did not honor the power of
attorney executed in his favor by Alejandro
Miranda, a co-worker, for the collection of
Miranda's indebtedness of P60.00 to him, he
submitted his letter of resignation from the
union on August 18, 1961.
Indeed said officers tried to justify
themselves by characterizing said criticisms
as acts of disloyalty to the Union, which, of
course, is not true, not only because the
criticism assailed, not the Union, but certain
acts of its officers, and, indirectly, the officers
themselves, but also because the constitution
and by-laws of the Union explicitly recognize
the right of its members to give their views
on "all transactions made by the Union." As a
consequence, the resolution appealed from
cannot be affirmed without, in effect,
nullifying said right which, independently of
the constitution and by-laws of the Union, is
part and parcel of the freedom of speech
guaranteed in the Constitution of our
Republic, as a condition sine qua non to the
sound growth and development of labor
organizations and democratic institutions.
Although, generally, a state may not compel
ordinary voluntary associations to admit
thereto any given individual, because
membership therein may be accorded or
withheld as a matter of privilege, the rule is
qualified in respect of labor unions holding a
monopoly in the supply of labor, either in a
given locality, or as regards a particular
employer with which it has a closed-shop
agreement. The reason is that:
The closed shop and the union shop
cause the admission requirements of trade
union to become affected with the public
interest. Likewise, a closed shop, a union
shop, or maintenance of membership
clauses cause the administration of
discipline by unions to be affected with
the public interest.
Consequently, it is well settled that such
unions are not entitled to arbitrarily exclude
qualified applicants for membership, and a
closed-shop provision would not justify the
employer in discharging, or a union in
insisting upon the discharge of, an employee
whom the union thus refuses to admit to
membership, without any reasonable ground
therefor.
Needless to say, if said unions may be
compelled to admit new members, who have
the requisite qualifications, with more reason
may the law and the courts exercise the
coercive power when the employee involved
is a long standing union member, who, owing
to provocations of union officers, was
impelled to tender his resignation, which he
forthwith withdrew or revoked. Surely, he
may, at least, invoke the rights of those who
seek admission for the first time, and cannot
arbitrarily be denied readmission.
2. For SMB, however, it was held that it did
not engage in ULP. It was shown that SMB
itself was even reluctant if not unwilling
to discharge the petitioner. When the Union
first informed SMB of Salungas resignation
and urged implementation of section 3 of the
bargaining contract, SMB advised Salunga of
the provision, thereby intimating that he had
to withdraw his resignation in order to keep
his employment. Besides, SMB notified the
Union that it (SMB) would not take any action
on the case and would consider Salunga "still
a member" of the Union. When the latter,
thereafter, insisted on petitioner's discharge,
SMB still demurred and explained it was not
taking sides and that its stand was prompted
merely by "humane" considerations,
springing from the belief that petitioner had
resigned from the Union without realizing its
effect upon his employment. And, as the
Union reiterated its demand, SMB notified
petitioner that it had no other alternative but
to terminate his employment, and dismissed
him from the service, although with "regret".
88
Under these circumstances, SMB was not
"unfair" to the petitioner. On the contrary, it
did not merely show a commendable
understanding of and sympathy for his plight.
It even tried to help him, although to such
extent only as was consistent with its
obligation to refrain from interfering in purely
internal affairs of the Union. At the same
time, SMB could not safely inquire into the
motives of the Union officers, in refusing to
allow Salunga to withdraw his resignation.
Inasmuch as the true motives were not
manifest, without such inquiry, and Salunga
had concededly tendered his resignation of
his own free will, the arbitrary nature of the
decision of said officers was not such as to be
apparent and to justify the company in
regarding said decision unreasonable. Upon
the other hand, SMB cannot be blamed for
assuming the contrary, for Salunga had
appealed to the National Officers of the
PAFLU and the latter had sustained the Union.
SMB was therefore justified in presuming that
the PAFLU had inquired into all relevant
circumstances, including the motives of the
Union Officers.
In finding the company guilty of ULP, the trial
Judge felt that San Miguel should have waited
for the action of the national convention
before issuing the notice of dismissal.
However, the record does not show that
petitioner was prejudiced by San Miguels
failure to maintain the status quo, after the
Union had been sustained by said officers. In
fact, petitioner did not even try to establish
that he had submitted to San Miguel as he
has not introduced in the lower court
satisfactory proof that an appeal had really
been taken by him to the aforementioned
Convention.
epublic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 76989 September 29, 1987
MANILA MANDARIN EMPLOYEES
UNION, petitioners,
vs.
NATIONAL LABOR RELATIONS
COMMISSION, and MELBA C.
BELONCIO, respondents.
GUTIERREZ, JR., J.:
This is a petition to review on certiorari the
National Labor Relations Commission's
(NLRC) decision which modified the Labor
Arbiter's decision and ordered the Manila
Mandarin Employees Union to pay the wages
and fringe benefits of Melba C. Beloncio from
the time she was placed on forced leave until
she is actually reinstated, plus ten percent
(10%) thereof as attorney's fees. Manila
Mandarin Hotel was ordered to reinstate
Beloncio and to pay her whatever service
charges may be due her during that period,
which amount would be held in escrow by the
hotel.
The petition was filed on January 19, 1987.
The private respondent filed her comment on
March 7, 1987 while the Solicitor General
filed a comment on June 1, 1987 followed by
the petitioner's reply on August 22, 1987. We
treat the comment as answer and decide the
case on its merits.
The facts of the case are undisputed.
Herein private respondent, Melba C. Beloncio,
an employee of Manila Mandarin Hotel since
1976 and at the time of her dismissal,
assistant head waitress at the hotel's coffee
shop, was expelled from the petitioner Manila
Mandarin Employees Union for acts allegedly
inimical to the interests of the union. The
union demanded the dismissal from
employment of Beloncio on the basis of the
union security clause of their collective
bargaining agreement and the Hotel acceded
by placing Beloncio on forced leave effective
August 10, 1984.
The union security clause of the collective
bargaining agreement provides:
Section 2. Dismissals.
xxx xxx xxx
b) Members of the Union who cease to be
such members and/or who fail to maintain
their membership in good standing therein by
reason of their resignation from the Union
and/or by reason of their expulsion from the
Union in accordance with the Constitution
and By-Laws of the Union, for non-payment
of union dues and other assessment for
organizing, joining or forming another labor
organization shall, upon written notice of
such cessation of membership or failure to
maintain membership in the Union and upon
written demand to the company by the
Union, be dismissed from employment by the
Company after complying with the requisite
due process requirement; ... (Emphasis
supplied) (Rollo, p. 114)
89
Two days before the effective date of her
forced leave or on August 8, 1984, Beloncio
filed a complaint for unfair labor practice and
illegal dismissal against herein petitioner-
union and Manila Mandarin Hotel Inc. before
the NLRC, Arbitration Branch.
Petitioner-union filed a motion to dismiss on
grounds that the complainant had no cause
of action against it and the NLRC had no
jurisdiction over the subject matter of the
complaint.
This motion was denied by the Labor Arbiter.
After the hearings that ensued and the
submission of the parties' respective position
papers, the Labor Arbiter held that the union
was guilty of unfair labor practice when it
demanded the separation of Beloncio. The
union was then ordered to pay all the wages
and fringe benefits due to Beloncio from the
time she was on forced leave until actual
reinstatement, and to pay P30,000.00 as
exemplary damages and P10,000.00 as
attorney's fees. The charge against the hotel
was dismissed.
The Union then appealed to the respondent
NLRC which modified the Labor Arbiter's
decision as earlier stated.
A subsequent motion for reconsideration and
a second motion for reconsideration were
denied.
Hence, this present petition.
The petitioner raises the following
assignment of errors:
I practice for a labor organization, its officers,
THAT RESPONDENT NLRC ERRED IN NOT
DECLARING THAT THE PRESENT
CONTROVERSY INVOLVED INTRA-UNION
CONFLICTS AND THEREFOR IT HAS NO
JURISDICTION OVER THE SUBJECT-MATTER
THEREOF.
II
THAT RESPONDENT NLRC SERIOUSLY ERRED
IN HOLDING PETITIONER LIABLE FOR THE
PAYMENT OF PRIVATE RESPONDENT'S SALARY
AND FRINGE BENEFITS, AND AWARD OF 10%
ATTORNEY'S FEES, AFTER FINDING AS
UNMERITORIOUS HER PRETENDED CLAIMS
OR COMPLAINTS FOR UNFAIR LABOR
PRACTICE, ILLEGAL DISMISSAL, AND
DAMAGES. (Rollo, pp. 6-9)
On the issue of the NLRC jurisdiction over the
case, the Court finds no grave abuse of
discretion in the NLRC conclusion that the
dispute is not purely intra-union but involves
an interpretation of the collective bargaining
agreement (CBA) provisions and whether or
not there was an illegal dismissal. Under the
CBA, membership in the union may be lost
through expulsion only if there is non-
payment of dues or a member organizes,
joins, or forms another labor organization.
The charge of disloyalty against Beloncio
arose from her emotional remark to a
waitress who happened to be a union
steward, "Wala akong tiwala sa Union ninyo."
The remark was made in the course of a
heated discussion regarding Beloncio's efforts
to make a lazy and recalcitrant waiter adopt
a better attitude towards his work.
We agree with the Solicitor General when he
noted that:
... The Labor Arbiter explained correctly that
"(I)f the only question is the legality of the
expulsion of Beloncio from the Union
undoubtedly, the question is one cognizable
by the BLR (Bureau of Labor Relations). But,
the question extended to the dismissal of
Beloncio or steps leading thereto.
Necessarily, when the hotel decides the
recommended dismissal, its acts would be
subject to scrutiny. Particularly, it will be
asked whether it violates or not the existing
CBA. Certainly, violations of the CBA would
be unfair labor practice."
Article 250 of the Labor Code provides the
following:
Art. 250. Unfair labor practices of labor
organizations. It shall be unfair labor
agents or representatives:
xxx xxx xxx
(b) To cause or attempt to cause an
employer to discriminate against an
employee, including discrimination against
an employee with respect to whom
membership in such organization has been
denied or to terminate an employee on any
ground other than the usual terms and
conditions under which membership or
continuation of membership is made
available to other members. (Emphasis
supplied)
Article 217 of the Labor Code also provides:
Art. 217. Jurisdiction of Labor Arbiters and
the Commission (a) The Labor Arbiters
90
 shall have the original and exclusive
jurisdiction to hear and decide ... the
following cases involving all workers,
whether agricultural or nonagricultural;
(1) Unfair labor practice cases;
xxx xxx xxx
(b) The Commission shall have exclusive
appellate jurisdiction over all cases decided
by Labor Arbiters. (Rollo, pp. 155-157.)
The petitioner also questions the factual
findings of the public respondent on the
reasons for Beloncio's dismissal and,
especially, on the argument that she was on
forced leave; she was never dismissed; and
not having worked, she deserved no pay.
The Court finds nothing in the records that
indicates reversible error, much less grave
abuse of discretion, in the NLRC's findings of
facts.
It is a well-settled principle that findings of
facts quasi-judicial agencies like the NLRC,
which have acquired expertise because their
jurisdiction is confined to specific matters,
are generally accorded not only respect but
at times even finality if such findings are
supported by substantial evidence. (Akay
Printing Press vs. Minister of Labor and
Employment, 140 SCRA 381; Alba Patio de
Makati vs. Alba Patio de Makati Employees
Association, 128 SCRA 253; Dangan vs.
National Labor Relations Commission, 127
SCRA 706; De la Concepcion vs. Mindanao
Portland Cement Corporation, 127 SCRA 647).
The petitioner now questions the decision of
the National Labor Relations Commission
ordering the reinstatement of the private
respondent and directing the Union to pay
the wages and fringe benefits which she
failed to receive as a result of her forced
leave and to pay attorney's fees.
We find no error in the questioned decision.
The Hotel would not have compelled Beloncio
to go on forced leave were it not for the
union's insistence and demand to the extent
that because of the failure of the hotel to
dismiss Beloncio as requested, the union filed
a notice of strike with the Ministry of Labor
and Employment on August 17, 1984 on the
issue of unfair labor practice. The hotel was
then compelled to put Beloncio on forced
leave and to stop payment of her salary from
September 1, 1984.
Furthermore, as provided for in the collective
bargaining agreement between the
petitioner-the Union and the Manila Mandarin
Hotel "the Union shall hold the Company free
and blameless from any and all liabilities that
may arise" should the employee question the
dismissal, as has happened in the case at
bar.
It is natural for a union to desire that all
workers in a particular company should be its
dues-paying members. Since it would be
difficult to insure 100 percent membership on
a purely voluntary basis and practically
impossible that such total membership would
continuously be maintained purely on the
merits of belonging to the union, the labor
movement has evolved the system whereby
the employer is asked, on the strength of
collective action, to enter into what are now
familiarly known as "union security"
agreements.
The collective bargaining agreement in this
case contains a union security clause a
closed-shop agreement.
A closed-shop agreement is an agreement
whereby an employer binds himself to hire
only members of the contracting union who
must continue to remain members in good
standing to keep their jobs. It is "the most
prized achievement of unionism." It adds
membership and compulsory dues. By
holding out to loyal members a promise of
employment in the closed-shop, it welds
group solidarity. (National Labor Union vs.
Aguinaldo's Echague, Inc., 97 Phil. 184). It is
a very effective form of union security
agreement.
This Court has held that a closed-shop is a
valid form of union security, and such a
provision in a collective bargaining
agreement is not a restriction of the right of
freedom of association guaranteed by the
Constitution. (Lirag Textile Mills, Inc. vs.
Blanco, 109 SCRA 87; Manalang vs. Artex
Development Company, Inc., 21 SCRA 561).
The Court stresses, however, that union
security clauses are also governed by law
and by principles of justice, fair play, and
legality. Union security clauses cannot be
used by union officials against an employer,
much less their own members, except with a
high sense of responsibility, fairness,
prudence, and judiciousness.
A union member may not be expelled from
her union, and consequently from her job, for
personal or impetuous reasons or for causes
foreign to the closed-shop agreement and in
91
a manner characterized by arbitrariness and
whimsicality.
This is particularly true in this case where Ms.
Beloncio was trying her best to make a hotel
bus boy do his work promptly and
courteously so as to serve hotel customers in
the coffee shop expeditiously and cheerfully.
Union membership does not entitle waiters,
janitors, and other workers to be sloppy in
their work, inattentive to customers, and
disrespectful to supervisors. The Union
should have disciplined its erring and
troublesome members instead of causing so
much hardship to a member who was only
doing her work for the best interests of the
employer, all its employees, and the general
public whom they serve.
WHEREFORE, the petition is hereby
DISMISSED. The questioned decision of the
National Labor Relations Commission is
AFFIRMED. Costs against the petitioner.
SO ORDERED.
Manila Mandarin EU vs. NLRC & Beloncio
Facts
Melba Beloncio was Asst. head waitress of
Manila Mandarins coffee shop.
She got the ire of the Union when she made
taray to a lazy busboy and retorted to a co-
employee, wala akong tiwala sa Union
ninyo.
The Union filed a Notice of Strike this
compelled Manila Mandarin to have
Beloncio on forced leave without pay
Closed-shop agreement, a union security
clause, i.e., Er to only hire Union members
this is valid under the law
However, Union security clauses cannot be
used by union officials against an employer,
much less their own members, except with
a high sense of responsibility, fairness,
prudence, and judiciousness.
The NLRC settled the case in favor of
Beloncio
Ratio: Where the dispute is not purely intra-
union but involves an interpretation of
the collective bargaining agreement
and whether or not there was an illegal
dismissal, the NLRC has jurisdiction
- Case Fact: (1) Under the CBA,
membership in the union may be lost
through expulsion only if there is non-
payment of dues or a member organizes,
joins, or forms another labor organization;
(2) Resolution of the case necessitates
interpretation of the CBA, i.e., falls under
the jurisdiction of the NLRC
Conclusion: NLRC has jurisdiction.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-54334 January 22, 1986
KIOK LOY, doing business under the
name and style SWEDEN ICE CREAM
PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS
COMMISSION (NLRC) and PAMBANSANG
KILUSAN NG PAGGAWA
(KILUSAN), respondents.
Ablan and Associates for petitioner.
Abdulcadir T. Ibrahim for private respondent.
CUEVAS, J.:
Petition for certiorari to annul the
decision 1 of the National Labor Relations
Commission (NLRC) dated July 20, 1979
which found petitioner Sweden Ice Cream
guilty of unfair labor practice for unjustified
refusal to bargain, in violation of par. (g) of
Article 249 2 of the New Labor Code, 3 and
declared the draft proposal of the Union for a
collective bargaining agreement as the
governing collective bargaining agreement
between the employees and the
management.
The pertinent background facts are as
follows:
In a certification election held on October 3,
1978, the Pambansang Kilusang Paggawa
(Union for short), a legitimate late labor
federation, won and was subsequently
certified in a resolution dated November 29,
1978 by the Bureau of Labor Relations as the
sole and exclusive bargaining agent of the
rank-and-file employees of Sweden Ice Cream
Plant (Company for short). The Company's
motion for reconsideration of the said
resolution was denied on January 25, 1978.
Thereafter, and more specifically on
December 7, 1978, the Union furnished 4 the
Company with two copies of its proposed
collective bargaining agreement. At the same
time, it requested the Company for its
counter proposals. Eliciting no response to
the aforesaid request, the Union again wrote
92
the Company reiterating its request for
collective bargaining negotiations and for the
Company to furnish them with its counter
proposals. Both requests were ignored and
remained unacted upon by the Company.
Left with no other alternative in its attempt to
bring the Company to the bargaining table,
the Union, on February 14, 1979, filed a
"Notice of Strike", with the Bureau of Labor
Relations (BLR) on ground of unresolved
economic issues in collective bargaining. 5
Conciliation proceedings then followed during
the thirty-day statutory cooling-off period.
But all attempts towards an amicable
settlement failed, prompting the Bureau of
Labor Relations to certify the case to the
National Labor Relations Commission (NLRC)
for compulsory arbitration pursuant to
Presidential Decree No. 823, as amended.
The labor arbiter, Andres Fidelino, to whom
the case was assigned, set the initial hearing
for April 29, 1979. For failure however, of the
parties to submit their respective position
papers as required, the said hearing was
cancelled and reset to another date.
Meanwhile, the Union submitted its position
paper. The Company did not, and instead
requested for a resetting which was granted.
The Company was directed anew to submit
its financial statements for the years 1976,
1977, and 1978.
The case was further reset to May 11, 1979
due to the withdrawal of the Company's
counsel of record, Atty. Rodolfo dela Cruz. On
May 24, 1978, Atty. Fortunato Panganiban
formally entered his appearance as counsel
for the Company only to request for another
postponement allegedly for the purpose of
acquainting himself with the case.
Meanwhile, the Company submitted its
position paper on May 28, 1979.
When the case was called for hearing on June
4, 1979 as scheduled, the Company's
representative, Mr. Ching, who was supposed
to be examined, failed to appear. Atty.
Panganiban then requested for another
postponement which the labor arbiter denied.
He also ruled that the Company has waived
its right to present further evidence and,
therefore, considered the case submitted for
resolution.
On July 18, 1979, labor arbiter Andres
Fidelino submitted its report to the National
Labor Relations Commission. On July 20,
1979, the National Labor Relations
Commission rendered its decision, the
dispositive portion of which reads as follows:
WHEREFORE, the respondent
Sweden Ice Cream is hereby
declared guilty of unjustified
refusal to bargain, in violation
of Section (g) Article 248
(now Article 249), of P.D. 442,
as amended. Further, the
draft proposal for a collective
bargaining agreement (Exh.
"E ") hereto attached and
made an integral part of this
decision, sent by the Union
(Private respondent) to the
respondent (petitioner
herein) and which is hereby
found to be reasonable under
the premises, is hereby
declared to be the collective
agreement which should
govern the relationship
between the parties herein.
SO ORDERED. (Emphasis
supplied)
Petitioner now comes before Us assailing the
aforesaid decision contending that the
National Labor Relations Commission acted
without or in excess of its jurisdiction or with
grave abuse of discretion amounting to lack
of jurisdiction in rendering the challenged
decision. On August 4, 1980, this Court
dismissed the petition for lack of merit. Upon
motion of the petitioner, however, the
Resolution of dismissal was reconsidered and
the petition was given due course in a
Resolution dated April 1, 1981.
Petitioner Company now maintains that its
right to procedural due process has been
violated when it was precluded from
presenting further evidence in support of its
stand and when its request for further
postponement was denied. Petitioner further
contends that the National Labor Relations
Commission's finding of unfair labor practice
for refusal to bargain is not supported by law
and the evidence considering that it was only
on May 24, 1979 when the Union furnished
them with a copy of the proposed Collective
Bargaining Agreement and it was only then
that they came to know of the Union's
demands; and finally, that the Collective
Bargaining Agreement approved and adopted
by the National Labor Relations Commission
is unreasonable and lacks legal basis.
The petition lacks merit. Consequently, its
dismissal is in order.
Collective bargaining which is defined as
negotiations towards a collective
agreement, 6 is one of the democratic
frameworks under the New Labor Code,
93
designed to stabilize the relation between
labor and management and to create a
climate of sound and stable industrial peace.
It is a mutual responsibility of the employer
and the Union and is characterized as a legal
obligation. So much so that Article 249, par.
(g) of the Labor Code makes it an unfair labor
practice for an employer to refuse "to meet
and convene promptly and expeditiously in
good faith for the purpose of negotiating an
agreement with respect to wages, hours of
work, and all other terms and conditions of
employment including proposals for adjusting
any grievance or question arising under such
an agreement and executing a contract
incorporating such agreement, if requested
by either party.
While it is a mutual obligation of the parties
to bargain, the employer, however, is not
under any legal duty to initiate contract
negotiation. 7 The mechanics of collective
bargaining is set in motion only when the
following jurisdictional preconditions are
present, namely, (1) possession of the status
of majority representation of the employees'
representative in accordance with any of the
means of selection or designation provided
for by the Labor Code; (2) proof of majority
representation; and (3) a demand to bargain
under Article 251, par. (a) of the New Labor
Code . ... all of which preconditions are
undisputedly present in the instant case.
From the over-all conduct of petitioner
company in relation to the task of
negotiation, there can be no doubt that the
Union has a valid cause to complain against
its (Company's) attitude, the totality of which
is indicative of the latter's disregard of, and
failure to live up to, what is enjoined by the
Labor Code to bargain in good faith.
We are in total conformity with respondent
NLRC's pronouncement that petitioner
Company is GUILTY of unfair labor practice. It
has been indubitably established that (1)
respondent Union was a duly certified
bargaining agent; (2) it made a definite
request to bargain, accompanied with a copy
of the proposed Collective Bargaining
Agreement, to the Company not only once
but twice which were left unanswered and
unacted upon; and (3) the Company made no
counter proposal whatsoever all of which
conclusively indicate lack of a sincere desire
to negotiate. 8 A Company's refusal to make
counter proposal if considered in relation to
the entire bargaining process, may indicate
bad faith and this is specially true where the
Union's request for a counter proposal is left
unanswered. 9 Even during the period of
compulsory arbitration before the NLRC,
petitioner Company's approach and attitude-
stalling the negotiation by a series of
postponements, non-appearance at the
hearing conducted, and undue delay in
submitting its financial statements, lead to no
other conclusion except that it is unwilling to
negotiate and reach an agreement with the
Union. Petitioner has not at any instance,
evinced good faith or willingness to discuss
freely and fully the claims and demands set
forth by the Union much less justify its
opposition thereto. 10
The case at bar is not a case of first
impression, for in the Herald Delivery
Carriers Union (PAFLU) vs. Herald
Publications 11the rule had been laid down
that "unfair labor practice is committed when
it is shown that the respondent employer,
after having been served with a written
bargaining proposal by the petitioning Union,
did not even bother to submit an answer or
reply to the said proposal This doctrine was
reiterated anew in Bradman vs. Court of
Industrial Relations 12 wherein it was further
ruled that "while the law does not compel the
parties to reach an agreement, it does
contemplate that both parties will approach
the negotiation with an open mind and make
a reasonable effort to reach a common
ground of agreement
As a last-ditch attempt to effect a reversal of
the decision sought to be reviewed, petitioner
capitalizes on the issue of due process
claiming, that it was denied the right to be
heard and present its side when the Labor
Arbiter denied the Company's motion for
further postponement.
Petitioner's aforesaid submittal failed to
impress Us. Considering the various
postponements granted in its behalf, the
claimed denial of due process appeared
totally bereft of any legal and factual support.
As herein earlier stated, petitioner had not
even honored respondent Union with any
reply to the latter's successive letters, all
geared towards bringing the Company to the
bargaining table. It did not even bother to
furnish or serve the Union with its counter
proposal despite persistent requests made
therefor. Certainly, the moves and overall
behavior of petitioner-company were in total
derogation of the policy enshrined in the New
Labor Code which is aimed towards
expediting settlement of economic disputes.
Hence, this Court is not prepared to affix its
imprimatur to such an illegal scheme and
dubious maneuvers.
Neither are WE persuaded by petitioner-
company's stand that the Collective
Bargaining Agreement which was approved
and adopted by the NLRC is a total nullity for
it lacks the company's consent, much less its
argument that once the Collective Bargaining
94
Agreement is implemented, the Company will
face the prospect of closing down because it BLR as the sole and exclusive bargaining
has to pay a staggering amount of economic
benefits to the Union that will equal if not agent of the rank-and-file employees of
exceed its capital. Such a stand and the
evidence in support thereof should have been Sweden Ice Cream Plant (Company).
presented before the Labor Arbiter which is
the proper forum for the purpose. Thereafter, the Union furnished the Company

with copies of its proposed CBA. At the same

We agree with the pronouncement that it is
not obligatory upon either side of a labor time, it requested the Company for its
controversy to precipitately accept or agree
to the proposals of the other. But an erring counter proposals. The request were ignored
party should not be tolerated and allowed
with impunity to resort to schemes feigning and remained unacted upon by the Company.
negotiations by going through empty
gestures. 13 More so, as in the instant case, Left with no other alternative in its attempt to
where the intervention of the National Labor
Relations Commission was properly sought bring the Company to the bargaining table,
for after conciliation efforts undertaken by
the BLR failed. The instant case being a the Union filed a Notice of Strike, with the
certified one, it must be resolved by the NLRC
pursuant to the mandate of P.D. 873, as BLR on ground of unresolved economic issues
amended, which authorizes the said body to
determine the reasonableness of the terms in collective bargaining.
and conditions of employment embodied in
any Collective Bargaining Agreement. To that The NLRC rendered its decision, the
extent, utmost deference to its findings of
reasonableness of any Collective Bargaining dispositive portion of which reads as follows:
Agreement as the governing agreement by
the employees and management must be WHEREFORE, the respondent [company] is
accorded due respect by this Court.
hereby declared guilty of unjustified refusal
WHEREFORE, the instant petition is to bargain, in violation of Section (g) Article
DISMISSED. The temporary restraining order
issued on August 27, 1980, is LIFTED and SET 248 (now Article 249), of P.D. 442, as
ASIDE.
amended. xx
No pronouncement as to costs.
ISSUE: Did the NLRC act with grave abuse of

KIOK LOY vs. NLRC and KILUSAN DIGEST discretion?

HELD: NO
DECEMBER 19, 2016 ~ VBDIAZ

KIOK LOY vs. NLRC and PAMBANSANG Collective bargaining which is defined as
KILUSAN NG PAGGAWA (KILUSAN) negotiations towards a collective agreement,

is one of the democratic frameworks under

G.R. No. L-54334 the New Labor Code, designed to stabilize the

relation between labor and management and

January 22, 1986 to create a climate of sound and stable

industrial peace. It is a mutual responsibility

FACTS: In a certification election, KILUSAN, a of the employer and the Union and is
legitimate late labor federation, won and was characterized as a legal obligation. So much
subsequently certified in a resolution by the so that Article 249, par. (g) of the Labor Code

95
makes it anunfair labor practice for an hearing conducted, and undue delay in

employer to refuse to meet and convene submitting its financial statements, lead to no

promptly and expeditiously in good faith for other conclusion except that it is unwilling to

the purpose of negotiating an agreement negotiate and reach an agreement with the

with respect to wages, hours of work, and all Union.

other terms and conditions of employment From the over-all conduct of petitioner

including proposals for adjusting any company in relation to the task of

grievance or question arising under such an negotiation, there can be no doubt that the

agreement and executing a contract Union has a valid cause to complain against

incorporating such agreement, if requested its (Companys) attitude, the totality of which

by either party. is indicative of the latters disregard of, and

We are in total conformity with respondent failure to live up to, what is enjoined by the

NLRCs pronouncement that petitioner Labor Code to bargain in good faith.

Company is GUILTY of unfair labor practice. NOTES: While it is a mutual obligation of the

It has been indubitably established that (1) parties to bargain, the employer, however, is

respondent Union was a duly certified not under any legal duty to initiate contract

bargaining agent; (2) it made a definite negotiation. The mechanics of collective

request to bargain, accompanied with a copy bargaining is set in motion only when the

of the proposed CBA, to the Company not following jurisdictional preconditions are

only once but twice which were left present, namely,

unanswered and unacted upon; and (3) the (1) possession of the status of majority

Company made no counter proposal representation of the employees

whatsoever all of which conclusively indicate representative in accordance with any of the

lack of a sincere desire to negotiate. A means of selection or designation provided

Companys refusal to make counter proposal for by the Labor Code;

if considered in relation to the entire (2) proof of majority representation; and

bargaining process, may indicate bad faith (3) a demand to bargain under Article 251,

and this is specially true where the Unions par. (a) of the New Labor Code . all of

request for a counter proposal is left which preconditions are undisputedly present

unanswered. Even during the period of in the instant case.

Republic of the Philippines
compulsory arbitration before the NLRC, SUPREME COURT
Manila
petitioner Companys approach and attitude-

stalling the negotiation by a series of EN BANC

postponements, non-appearance at the

96
G.R. No. L-21378 November 28,
1966
REPUBLIC FLOUR MILLS WORKERS
ASSOCIATION and PAFLU, petitioners,
vs.
THE HONORABLE JUDGE ANDRES REYES
and AIA FEED MILLS, INC., respondents.
C. Cia for petitioners.
C. R. Ayayao for respondents.
ZALDIVAR, J.:
This is a petition for certiorari with
preliminary injunction, filed by petitioners
Republic Flour Mills Workers Association and
PAFLU to set aside an order, dated June 10,
1963, issued by the Honorable Judge Andres
Reyes of the Court of First Instance of Rizal in
Civil Case No. 7710 of said court, entitled AIA
Feed Mills, Inc. vs. Republic Flour Mills
Laborers Association and PAFLU, providing for
a writ of preliminary injunction "ordering and
commanding the defendants to desist from
preventing the petitioner's employees from
entering its premises."1
Before the lower court, herein respondent AIA
Feed Mills, Inc. filed a petition for injunction
alleging, among others, that on June 1, 1963
the members of the herein petitioner unions
declared a strike against their employer, the
Republic Flour Mills, Inc., and picket lines
were formed around the premises of the
company preventing the peaceful passing of
other persons not connected with said
employer; that herein respondent is a lessee
occupying a parcel of land owned by the
Republic Flour Mills, Inc., it being a
completely different corporation from the
Republic Flour Mills, Inc. with a different set
of officers and employees, and there was no
employer-employee relation between the
striking employees and herein respondent;
and that due to the picket lines formed by the
striking unions the employees of herein
respondent could not enter and leave its
premises "thereby causing the same to stop
its operation which constitute an invasion of
its property rights and therefore causing
irreparable and substantial damages."2
The herein petitioners, Republic Flour Mills
Workers Association and PAFLU, as
respondent in the court below, filed a motion
to dismiss, arguing that the injunction prayed
for by herein respondent is a "labor
injunction" and because the petition for
injunction failed to allege the jurisdictional
requisites provided for in Section 9 (b) of
Republic Act 875 it is fatally defective and,
therefore, should be dismissed.
The respondent Judge, after hearing, found
that the herein respondent AIA Feed Mills,
Inc. is a distinct and separate entity from the
Republic Flour Mills, Inc., that it has a distinct
personnel of its own, that it was engaged in a
different business, and that herein petitioner
unions' picketing had no connection
whatsoever with herein respondent. Based on
said findings, the respondent Judge issued
the writ of preliminary injunction which is
now being questioned in the proceedings
before this Court.
In the petition for certiorari before this Court,
petitioners contend that the respondent AIA
Feed Mills, Inc. is a subsidiary corporation of
Republic Flour Mills, Inc., that it is located at
the very site and compound of the latter, the
entrance to, and the walls of, the compound
being common to both entities; that the
operations of the former and of the latter
were intermingled and complementary,
including an interchange of employees; thus
the picketing of one necessarily is extended
to both; that the petition filed before the
lower court was fatally defective because it
failed to allege the strict jurisdictional
requirements of Section 9(b) of Republic Act
875; that the respondent Judge acted without
jurisdiction or with grave abuse of discretion
in entertaining and granting the petition of
the respondent AIA Feed Mills, Inc. in spite of
the failure of said respondent to comply with
the strict procedure outlined in Section 9(b)
of Republic Act 875, and in granting the
injunction before the hearing of the main
issue; that as a result of the issuance of the
injunction in question even the picketing
against the Republic Flour Mills is for practical
purposes enjoined.
In its answer to the petition for certiorari,
respondent AIA Feed Mills, Inc. alleges that it
is a business entity distinct and separate
from the Republic Flour Mills, Inc., that there
is no employer-employee relation between it
and the striking members of the petitioner
labor unions and no labor dispute exist
between it and the striking and picketing
employees; that the picketing was not a
peaceful one because the picketing members
of petitioners unions were employing
violence against the employees of herein
respondent; and that the respondent Judge
had jurisdiction to issue the writ of
preliminary injunction in question because
the injunction sought is one that is provided
for in Rule 60 of the Rules of Court (now Rule
58 of the Revised Rules of Court) and not the
one provided for in Section 9, paragraph (b),
of Republic Act 875.
This Court did not issue the preliminary
injunction prayed for in the petition
for certiorari. This case was submitted by the
97
parties without oral argument and without Moreover, the writ of preliminary injunction
memorandum. issued by the respondent Judge did not in any
way curtail the right of petitioner unions to
After a careful study of the pleadings in the picket, because the writ simply and clearly
present case, We find that the grounds relied ordered and commanded the petitioner
upon in the petition forcertiorari have no unions "to desist from preventing petitioner's
merit. (herein respondent AIA Feed Mills, Inc.)
employees from entering its premises." The
writ did not prevent petitioner unions from
The main question to be resolved in the picketing against their employer, the
present proceedings is whether or not the Republic Flour Mills, Inc. The record shows
respondent Judge of the Court of First that the respondent Judge issued the writ of
Instance of Rizal had jurisdiction to issue the preliminary injunction after a hearing. The
writ of preliminary injunction in question, or respondent Judge, therefore, had not acted in
whether or not it had acted with abuse of a manner that was in violation of the law or
discretion in issuing said injunction. with grave abuse of discretion when he
issued the writ of preliminary injunction in
We agree with the findings of the lower court question.
that respondent AIA Feed Mills, Inc. is a
distinct and separate entity from, the WHEREFORE, the petition for certiorari in the
Republic Flour Mills, Inc., with distinct present case is denied, with costs against the
personality of its own from the latter petitioners.
corporation, including the business in which it
is engaged, and the picketing by the
petitioner unions has no connection G.R. No. L-21378 November 28,
whatsoever with respondent AIA Feed Mills,
Inc. We find that there is no labor dispute 1966
between the petitioners and respondent AIA
Feed Mills, Inc., and neither is there an
employer-employee relation between them. REPUBLIC FLOUR MILLS WORKERS
We declare, therefore, that the writ of
preliminary injunction issued by the ASSOCIATION & PAFLU vs. THE
respondent Judge is not a labor injunction
HONORABLE JUDGE ANDRES REYES and
that is provided for in Section 9, paragraph
(d) of Republic Act 875. The court may issue AIA FEED MILLS, INC.
an injunction, whether temporary or
permanent, as provided in said section of
Republic Act 875, only in a case involving or
growing out of a labor dispute. As we have
stated, we find that no labor dispute existed
between the petitioner unions and the
respondent AIA Feed Mills, Inc. The FACTS:
preliminary injunction issued by the
respondent Judge was, therefore, one that
was within its jurisdiction to issue pursuant to
the provisions of Rule 60 of the Rules of Court Respondent AIA Feed Mills, Inc. filed a
(now Rule 58 of the Revised Rules of Court.) petition for injunction before the CFI of Rizal,
In the case of Associated Watchmen and
Security Union (PTOW), et al. vs. United alleging, among others, that petitioner unions
States Lines, et al., 101 Phil. 896, 901, this declared a strike against their employer, RFM
Court made the following pronouncement:
and picket lines were formed around the
. . . If a labor dispute exists then the premises of the company preventing the
provisions of the Magna Charta of
Labor (R.A. No. 875) should be strictly peaceful passing of other persons not
followed, as ruled by Us in various connected with said employer.
decisions (PAFLU, et al. vs. Tan, et al.,
L-9115, prom. August 31, 1956;
PAFLU, et al. vs. Barot, et al., L-9281,
prom. Sept. 28, 1956); and on the Respondent is a lessee occupying a parcel of
other hand, if no labor dispute exists land owned by RFM.
then the court may issue an ordinary
injunction in accordance with the
Rules of Court.

98
It claimed that it is a completely different
corporation from RFM with a different set of
officers and employees; and there was no
employer-employee relation between the
striking employees and respondent; and that
due to the picket lines formed by the striking
unions the employees of herein respondent
could not enter and leave its premises
thereby causing the same to stop its
operation which constitute an invasion of its
property rights and therefore causing
irreparable and substantial damages.
Petitioners, Republic Flour Mills Workers
Association and PAFLU, filed a motion to
dismiss, arguing that the injunction prayed
for by herein respondent is a labor
injunction and because the petition for
injunction failed to allege the jurisdictional
requisites provided for in Section 9 (b) of
Republic Act 875 it is fatally defective and,
therefore, should be dismissed.
The respondent Judge found that AIA Feed
Mills, Inc. is a distinct and separate entity
from the RFM., that it has a distinct personnel
of its own, that it was engaged in a different
business, and that petitioner unions
picketing had no connection whatsoever with
herein respondent. Based on said findings,
the respondent Judge issued the writ of
preliminary injunction.
Petitioners then filed a petition
for certiorari with the SC, with preliminary
injunction, seeking to set aside the order of
the respondent Judge Andres Reyes of the
Court of First Instance of in issuing a writ of
preliminary injunction ordering and
commanding the defendants to desist from
preventing the petitioners employees from
entering its premises.
Petitioners contend that the respondent AIA
Feed Mills, Inc. is a subsidiary corporation of
RFM; that it is located at the very site and
compound of the latter, the entrance to, and
the walls of, the compound being common to
both entities; that the operations of the
former and of the latter were intermingled
and complementary, including an
interchange of employees; thus the picketing
of one necessarily is extended to both.
AIA Feed Mills, Inc. alleged that it is a
business entity distinct and separate RFM,
Inc., that there is no employer-employee
relation between it and the striking members
of the petitioner labor unions and no labor
dispute exist between it and the striking and
picketing employees; that the picketing was
not a peaceful one because the picketing
members of petitioners unions were
employing violence against the employees of
respondent.
ISSUE:
Whether or not the respondent Judge of the
Court of First Instance of Rizal had jurisdiction
to issue the writ of preliminary injunction in
question, or whether or not it had acted with
abuse of discretion in issuing said injunction.
HELD:
No. Respondent AIA Feed Mills, Inc. is a
distinct and separate entity from, the
Republic Flour Mills, Inc., with distinct
personality of its own from the latter
corporation, including the business in which it
is engaged, and the picketing by the
petitioner unions has no connection
whatsoever with respondent AIA Feed Mills,
Inc.
99

There is no labor dispute between the
petitioners and respondent AIA Feed Mills,
Inc., and neither is there an employer-
employee relation between them.
The Court declared that the writ of
preliminary injunction issued by the
respondent Judge is not a labor injunction
that is provided for in Section 9, paragraph
(d) of Republic Act 875. The court may issue
an injunction, whether temporary or
permanent, as provided in said section of
Republic Act 875, only in a case involving or
growing out of a labor dispute.
No labor dispute existed between the
petitioner unions and the respondent AIA
Feed Mills, Inc. The preliminary injunction
issued by the respondent Judge was,
therefore, one that was within its jurisdiction
to issue pursuant to the provisions of Rule 60
of the Rules of Court (now Rule 58 of the
Revised Rules of Court.)
The writ of preliminary injunction issued by
the respondent Judge did not in any way
curtail the right of petitioner unions to picket,
because the writ simply and clearly ordered
and commanded the petitioner unions to
desist from preventing AIA Feed Mills;
employees from entering its premises.
The writ did not prevent petitioner unions
from picketing against their employer, the
Republic Flour Mills, Inc. The record shows
that the respondent Judge issued the writ of
preliminary injunction after a hearing. The
respondent Judge, therefore, had not acted in
a manner that was in violation of the law or
with grave abuse of discretion when he
issued the writ of preliminary injunction in
question.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25878 March 28,
1969
PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS (PAFLU), petitioner,
vs.
JUDGE GAUDENCIO CLORIBEL OF THE
COURT OF FIRST INSTANCE OF MANILA;
WELLINGTON INVESTMENT and
MANUFACTURING CORPORATION; and
METROPOLITAN BANK and TRUST
COMPANY,respondents.
Cipriano Cid and Associates and Israel
Bocobo for petitioner.
Angel C. Sepidoza for respondent Willington
Investment and Manufacturing Corporation.
Taada, Carreon and Taada for respondent
Metropolitan Bank and Trust Company.
REYES, J.B.L., J.:
Petition for certiorari with preliminary
injunction to annul, and in the meantime
check, enforcement of two identical orders
issued ex parte by former Judge Gaudencio
Cloribel of the Court of First Instance of
Manila directing the Philippine Association of
Free Labor Unions, otherwise known as
PAFLU, and its members to cease and desist,
among other acts, from demonstrating or
picketing in front or along the common
passageway of the six-storey Wellington
Building in Plaza Calderon, Binondo, Manila,
owned by the Wellington Investment and
Manufacturing Corporation, hereinafter
referred to as Wellington, and tenanted by
different persons and business firms.
Picketed by PAFLU was Metropolitan Bank
and Trust Company, METBANK for short,
located at the ground floor of the Wellington
Building. Wellington complained, however,
that the picketers were annoyingly blocking
the common passageway of the building, the
only ingress and egress being used by the
occupants of the second to the sixth floors
thereof as well as by their respective
employees, clients and customers; that
besides giving the disconcerting impression
that a strike had been declared against it or
any of the aforementioned occupants of the
second to the sixth floors of the building, the
picketing of the passageway in question
placed it in an embarrassing position as the
same occupants, mostly affected business
firms, demanded protection of their peaceful
enjoyment of and free access to and from,
100
the premises respectively leased by them;
and that by reason of the picket it sustained
damages in the amount of P15,000.00, plus
P2,000.00 attorney's fees, and would
continue to sustain damages unless the
picketers were restrained from carrying on
their harassing acts. Thus this litigation
started with Wellington charging in court the
picketing PAFLU and some twenty-four named
individuals and twenty-five John Does, who
were employees of neither the corporation
nor any of its tenants occupying the second
to the sixth floors of the building, of undue
interference not only with its enjoyment of its
property and business of leasing and
administering the same but also with the
businesses of said neutral tenants.
And as prayed for by Wellington, then Vice
Executive Judge Cloribel of the Court of First
Instance of Manila issued ex parte the
following order:1
This is a complaint for injunction
with a prayer for the issuance of a
writ of preliminary injunction filed by
plaintiff against the defendants.
Pending the assignment of this case
to the corresponding branch of this
Court in accordance with the New
Rules of Court which may take some
time and, in order to prevent further
injury or damage to the plaintiff
and/or its tenants, defendants, their
agents, representatives and others
acting for them and/or their behalf,
are directed to cease and desist from
perpetrating their nuisance activities,
from demonstrating and/or picketing
in front of and/or along that
passageway known as "624 Plaza
Calderon, Binondo, Manila" and/or
from resorting to disorderly conduct
in and about plaintiff's premises and
from leaving their signs and placards
unattended along the side of
plaintiff's premises.
This order shall be without prejudice
to whatever action or disposition the
Presiding Judge of the branch to
which this case may be assigned and
may take on the matter.
SO ORDERED.
Immediately thereafter, PAFLU filed the
present petition in the Supreme Court,
alleging that respondent Judge Cloribel acted
without jurisdiction and with grave abuse of
discretion in issuing the foregoing order, in
violation of the strict jurisdictional
requirements of section 9 (d) on labor
injunctions of Republic Act No. 875, also
known as the Industrial Peace Act, as well as
of Section 9 (a) of the same Act. Nowhere in
the complaint, PAFLU pointed out, were there
allegations of, much less testimony proving,
the matters prescribed by subsections 1 to 5
of said section 9 (d). Neither was there an
allegation nor a showing by testimony under
oath of the unavoidable, substantial, and
irreparable injury to complainant Wellington's
property as would justify the issuance of the
temporary restraining order without notice.
And neither was there a bond filed by
Wellington sufficient to recompense those
enjoined for any loss, expense, or damage
caused by the improvident or erroneous
issuance of the same order. Such omissions,
coupled with the grave injustice occasioned
by said restraining order allegedly
prohibiting, in effect, the union's right to
picket METBANK's premises, place of work of
its members who were striking employees of
said bank against which, incidentally, a case
for unfair labor practice had already been
filed in the Court of Industrial Relations,
purportedly divested respondent Judge of his
jurisdiction. Hence, PAFLU's claim to a right to
the writ of certiorari with preliminary
injunction previously intimated, there being,
it further avouched, no appeal nor any plain,
speedy and adequate remedy in the ordinary
course of law.
In a resolution dated 30 March 1966, the
Supreme Court granted the temporary
restraining order but limited its effectivity
until 12 April 1966.
In compliance with the same resolution,
Judge CloribeI's co-respondents Wellington
and METBANK filed their answers to the
petition, separately but actually advancing
the same defenses, to wit: That since Civil
Case No. 64831 of the Court of First Instance
of Manila did not involve nor arise out of a
labor dispute between the parties thereto,
namely, Wellington, alone as plaintiff, and
PAFLU, et al., as defendants, conformance
with the provisions of section 9 of Republic
Act No. 875 was not necessary, that since the
same case was primarily for an injunction
with damages, as shown by the averments in
Wellington's complaint, said lower court had
the jurisdiction; that the mere inclusion of
METBANK as one of the present respondents,
although it was not an original party below,
did not convert the case into a labor
injunction suit; and that for the foregoing
reasons, in addition to the failure of PAFLU to
first seek reconsideration of the order in
question, the petition should be dismissed
and respondent Judge's injunction made
permanent or, at least, according to
METBANK it should be dropped as a
101
respondent for having been improperly
included as such. 2
In another resolution dated 11 April 1966,
the Supreme Court extended "until further
notice" the time limit of its restraining order.
This time, however, it restricted the operation
thereof to only such extent as respondent
judge's injunction prohibited the
demonstration or the picketing in front of the
common passageway identified as "624 Plaza
Calderon, Binondo, Manila". In all other
respects, said respondent judge's injunction
remained unaffected.
Subsequently, PAFLU filed a supplemental
petition for certiorari in the Supreme Court
protesting the issuance on 31 March 1966, in
a different case 3 but by the same respondent
judge, of another injunction couched in
exactly the same words as the first. Allegedly
requested by PAFLU to withhold enforcement
thereof, Judge Cloribel issued instead, on 1
April 1966, an order clarifying that said
injunction covered only the common
passageway and did not in any manner seek
to restrain picketing or similar activities
outside of its area. PAFLU thus prayed for a
second restraining order believing that it has
a right to picket even said passageway to
give publicity and enlist sympathy to its stake
and that said injunction was similarly issued
not only without jurisdiction and with grave
abuse of discretion but also in defiance of the
first restraining order of the Supreme Court.
On 25 April 1966, the Supreme Court issued
its third resolution admitting the
supplemental petition. PAFLU's prayer for
issuance of a writ of preliminary injunction
was, however, denied.
Answering the supplemental petition,
Emmanuel T. Galang, the person in whose
favor the second injunction was issued,
interposed defenses not different from those
of Wellington and METBANK. He warded off
PAFLU's accusation that the second injunction
transgressed the Supreme Court's restraining
order of 30 March 1966 by arguing that the
same was no longer effective, it having been
superseded by said Court's resolutions dated
11 and 25 April 1966; and that, assuming
that said restraining order was still effective,
it would not bar respondent judge from
issuing in Civil Case No. 64909 his orders
dated 30 March and 1 April 1966, subject
matter of the supplemental petition, as said
restraining order was issued in connection
with Civil Case No. 64831, a different and
separate case. He also contended that
neutral employers or persons not involved in
a labor dispute should not be made to suffer
the adverse effects of a picket directed
against another.
The first question that strikes us to be of
determinative significance to this controversy
is whether the two cases below involve, or
grow out of, a labor dispute. If they do, then,
certainly, section 9 of Republic Act No. 875
applies; otherwise, the converse is true. 4
A cursory examination of the record before
us reveals that there exists no labor dispute
between petitioner PAFLU and either of the
two complainants in the court a quo namely,
Wellington in Civil Case No. 64831 and
Galang in Civil Case No. 64909. It is an
admitted fact that the strike and the picket
are directed against METBANK, an entirely
different and separate entity without
connection whatsoever with WeIlington and
Galang other than the incidental fact that
they are the bank's landlord and co-lessee in
the Wellington Building, respectively. Their
relationship is so remote that we fail to
discern any indicium of said complainants'
interests in the labor dispute between the
union and METBANK as to make the two
cases below fall within the purview of section
2 of Republic Act No. 975 which provides that
a labor dispute exists "regardless of whether
the disputants stand in the proximate relation
of employer and employee". In the case of
Associated Watchmen and Security Union
(PTWO), et al. vs. United States Lines, et al.
(supra), for example, we found a "labor
dispute" between the striking watchmen and
the steamship agency although the former
(who were assigned to guard the latter's
ships) were contracted for by a watchmen
agency because, in the last analysis, their
services were availed of and their
compensation paid by the steamship agency.
We find no analogous nexus between the
parties in the instant case. And the
convenient inclusion of METBANK as one of
the present respondents does not, to our
mind, provide the necessary link between
said parties as to transform this into a labor
dispute case.
The applicable law, therefore, is Rule 58 of
the Rules of Court on injunction. Section 4
thereof reads:
SEC. 4. Verified complaint and bond
for preliminary injunction. A
preliminary injunction may
be granted only when:
(a) The complaint in the action
is verified, and shows facts entitling
the plaintiff to the relief
demanded; and
(b) The plaintiff files with the clerk or
judge of the court in which the action
is pending a bond executed to the
102
 party enjoined, in an amount to be
fixed by the court, to the effect that
the plaintiff will pay to such party all
damages which he may sustain by
the reason of the injunction if the
court should finally decide that the
plaintiff was not entitled thereto.
(Emphasis supplied)
We have also examined the complaints filed
in the lower court and found the same as
both verified and showing facts entitled
plaintiffs to the relief demanded.
The right to picket as a means of
communicating the facts of a labor dispute is
a phase of the freedom of speech guaranteed
by the constitution. 6 If peacefully carried out,
it can not be curtailed even in the absence of
employer-employee relationship. 7
The right is, however, not an absolute one.
While peaceful picketing is entitled to
protection as an exercise of free speech, we
believe that courts are not without power to
confine or localize the sphere of
communication or the demonstration to the
parties to the labor dispute, including those
with related interest, and to insulate
establishments or persons with no industrial
connection or having interest totally foreign
to the context of the dispute. 8 Thus the right
may be regulated at the instance of third
parties or "innocent bystanders" if it appears
that the inevitable result of its exercise is to
create an impression that a labor dispute
with which they have no connection or
interest exists between them and the
picketing union 9 or constitute an invasion of
their rights. 10 In one case 11 decided by this
Court, we upheld a trial court's injunction
prohibiting the union from blocking the
entrance to a feed mill located within the
compound of a flour mill with which the union
had a dispute. Although sustained on a
different ground, no connection was found
between the two mills owned by two different
corporations other than their being situated
in the same premises. It is to be noted that in
the instances cited, peaceful picketing has
not been totally banned but merely
regulated. And in one American case, 12 a
picket by a labor union in front of a motion
picture theater with which the union had a
labor dispute was enjoined by the court from
being extended in front of the main entrance
of the building housing the theater wherein
other stores operated by third persons were
located.lwphi1.et
The present case squarely fits into the
foregoing legal setting. Wellington and
Galang are mere "innocent bystanders". They
are entitled to seek protection of their rights
from the courts and the courts may,
accordingly, legally extend the same.
Moreover, PAFLU's right to peacefully picket
METBANK is not curtailed by the injunctions
issued by respondent judge. The picket is
merely regulated to protect the rights of third
parties. And the reason for this is not
farfetched. If the law fails to afford said
protection, men will endeavor to safeguard
their rights by their own might, take the law
in their own hands, and commit acts which
lead to breaches of peace, bloodshed, and
ultimately the final subversion of the law. This
should not be allowed to happen.
In Thornhill vs. Alabama, 36 L. Ed. 1143, the
United States Supreme Court had occasion to
rule on this question:
It is true that by peaceful picketing
workingmen communicate their
grievances. As a means of
communicating the facts of a labor
dispute may be a phase of the
constitutional right of free
utterance. But recognition of
peaceful picketing as an exercise of
free speech does not imply that the
states must be without power to
confine the sphere of communication
to that directly related to the dispute.
Restriction of picketing to the area of
the industry within which a labor
dispute arises leaves open to the
disputants other traditional modes of
communication. To deny to the states
the power to draw the line is to write
into the constitution the notion that
every instance of peaceful picketing
anywhere and under any
circumstances is necessarily a
phase of the controversy which
provoked the picketing. Such a view
of the due process clause would
compel the states to allow the
disputants in a particular industrial
episode to conscript neutrals having
no relation to either the dispute or
the industry in which it arose.
In forbidding such conscription of
neutrals in the circumstances of the
case before us, Texas represents the
prevailing, and probably the
unanimous policy of the
states. 13 We hold that the
constitution does not forbid Texas to
draw the line which has been drawn
here. To hold otherwise would be to
transmute vital constitution liberties
into doctrinal dogma. We must be
mindful that "the rights of employers
and employees to conduct their
economic affairs and to compete with
others for a share in the products of
industry are subject to modification
103
 or qualification in the interests of the disruption of the business of Wellington as
society in which they exist. This is but
an instance of the power of the State well as the other lessors in the building.
to set the limits of permissible
contest open to industrial ISSUE: Does the court have the power to
combatants." Thornhill v. Alabama,
310 U.S. 88, 103, 84 L. ed. 1093, enjoin the picket, despite being peaceful?
1102, 1103, 60 S. Ct. 736. [315 U.S.
722, at 727-728, 86 L. ed. 1143, at
HELD: Yes. The courts are vested with the
1147-1148, (1942)] (Emphasis ours)
power to limit the exercise of the right of
While we concede, however, that Wellington peaceful picketing to parties involved in the
and Galang are entitled to injunctions, we are labor dispute, or having a direct interest to
constrained to annul the same. There is no
question that the Court of First Instance of the context of this issue. Wellington is a mere
Manila has jurisdiction over Civil Cases Nos. "innocent bystander" who is not involved in
64831 and 64909 because they are purely the labor dispute. Thus, they are entitled to
injunction suits and outside the scope of
Republic Act No. 875. But the issuance of the seek protection of their rights from the courts
injunctions is attended by irregularity and, as and the courts may, accordingly, legally
far as the second injunction is concerned, by extend the same.
violation of our restraining order dated 30
March 1966.

There is a failure on the part of respondent

judge to require Wellington and Galang to file Republic of the Philippines
the necessary bonds before issuing the two SUPREME COURT
preliminary injunctions. The filing of said Manila
bonds is a mandatory requirement. 14 This is
evident in section 4 of Rule 58 elsewhere THIRD DIVISION
quoted. It provides that "(a) preliminary
injunction may be granted only when: (a) the
complaint ... is verified, and shows facts
entitling the plaintiff to the relief demanded;
and (b) the plaintiff files ... a bond executed G.R. No. 85985 August 13, 1993
to the party enjoined ...." Such failure, being
a disregard of plain legal mandate, amounts PHILIPPINE AIRLINES, INC.
to a grave abuse of discretion. (PAL), petitioner,
vs.
IN VIEW OF THE FOREGOING, certiorari is NATIONAL LABOR RELATIONS
hereby granted annulling the two preliminary COMMISSION, LABOR ARBITER ISABEL P.
injunctions issued below, without prejudice to ORTIGUERRA and PHILIPPINE AIRLINES
the right of respondents Wellington and EMPLOYEES ASSOCIATION
Galang to secure other ones after filing the (PALEA), respondents.
necessary bonds. Costs against respondents.
So ordered. Solon Garcia for petitioner.

PAFLU v. CLORIBEL, 27 SCRA 465 Adolpho M. Guerzon for respondent PALEA.

FACTS: Petitioner labor union picketed against

Metrobank, which is occupying an office
MELO, J.:
space in the Wellington building. Wellington
complained that the picketers were In the instant petition for certiorari, the Court
annoyingly blocking the common is presented the issue of whether or not the
formulation of a Code of Discipline among
passageway of the building, the only ingress
employees is a shared responsibility of the
and egress being used by the occupants of employer and the employees.
the second to the sixth floors thereof as well
as by their respective employees, clients and On March 15, 1985, the Philippine Airlines,
Inc. (PAL) completely revised its 1966 Code of
customers, so that the picket has caused a
Discipline. The Code was circulated among
the employees and was immediately

104
implemented, and some employees were
forthwith subjected to the disciplinary
measures embodied therein.
Thus, on August 20, 1985, the Philippine
Airlines Employees Association (PALEA) filed a
complaint before the National Labor Relations
Commission (NLRC) for unfair labor practice
(Case No. NCR-7-2051-85) with the following
remarks: "ULP with arbitrary implementation
of PAL's Code of Discipline without notice and
prior discussion with Union by Management"
(Rollo, p. 41). In its position paper, PALEA
contended that PAL, by its unilateral
implementation of the Code, was guilty of
unfair labor practice, specifically Paragraphs
E and G of Article 249 and Article 253 of the
Labor Code. PALEA alleged that copies of the
Code had been circulated in limited numbers;
that being penal in nature the Code must
conform with the requirements of sufficient
publication, and that the Code was arbitrary,
oppressive, and prejudicial to the rights of
the employees. It prayed that
implementation of the Code be held in
abeyance; that PAL should discuss the
substance of the Code with PALEA; that
employees dismissed under the Code be
reinstated and their cases subjected to
further hearing; and that PAL be declared
guilty of unfair labor practice and be ordered
to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint,
asserting its prerogative as an employer to
prescibe rules and regulations regarding
employess' conduct in carrying out their
duties and functions, and alleging that by
implementing the Code, it had not violated
the collective bargaining agreement (CBA) or
any provision of the Labor Code. Assailing the
complaint as unsupported by evidence, PAL
maintained that Article 253 of the Labor Code
cited by PALEA reffered to the requirements
for negotiating a CBA which was inapplicable
as indeed the current CBA had been
negotiated.
In its reply to PAL's position paper, PALEA
maintained that Article 249 (E) of the Labor
Code was violated when PAL unilaterally
implemented the Code, and cited provisions
of Articles IV and I of Chapter II of the Code
as defective for, respectively, running
counter to the construction of penal laws and
making punishable any offense within PAL's
contemplation. These provisions are the
following:
Sec. 2. Non-exclusivity. This Code does not
contain the entirety of the rules and
regulations of the company. Every employee is
bound to comply with all applicable rules,
regulations, policies, procedures and
standards, including standards of quality,
productivity and behaviour, as issued and
promulgated by the company through its duly
authorized officials. Any violations thereof
shall be punishable with a penalty to be
determined by the gravity and/or frequency of
the offense.
Sec. 7. Cumulative Record. An employee's
record of offenses shall be cumulative. The
penalty for an offense shall be determined on
the basis of his past record of offenses of any
nature or the absence thereof. The more
habitual an offender has been, the greater
shall be the penalty for the latest offense.
Thus, an employee may be dismissed if the
number of his past offenses warrants such
penalty in the judgment of management
even if each offense considered separately
may not warrant dismissal. Habitual
offenders or recidivists have no place in PAL.
On the other hand, due regard shall be given
to the length of time between commission of
individual offenses to determine whether the
employee's conduct may indicate occasional
lapses (which may nevertheless require
sterner disciplinary action) or a pattern of
incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the
case called the parties to a conference but
they failed to appear at the scheduled date.
Interpreting such failure as a waiver of the
parties' right to present evidence, the labor
arbiter considered the case submitted for
decision. On November 7, 1986, a decision
was rendered finding no bad faith on the part
of PAL in adopting the Code and ruling that
no unfair labor practice had been committed.
However, the arbiter held that PAL was "not
totally fault free" considering that while the
issuance of rules and regulations governing
the conduct of employees is a "legitimate
management prerogative" such rules and
regulations must meet the test of
"reasonableness, propriety and fairness." She
found Section 1 of the Code aforequoted as
"an all embracing and all encompassing
provision that makes punishable any offense
one can think of in the company"; while
Section 7, likewise quoted above, is
"objectionable for it violates the rule against
double jeopardy thereby ushering in two or
more punishment for the same
misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed
to prove that the new Code was amply
circulated." Noting that PAL's assertion that it
had furnished all its employees copies of the
Code is unsupported by documentary
evidence, she stated that such "failure" on
the part of PAL resulted in the imposition of
penalties on employees who thought all the
while that the 1966 Code was still being
followed. Thus, the arbiter concluded that
105
 "(t)he phrase ignorance of the law excuses no
one from compliance . . . finds application
only after it has been conclusively shown that
the law was circulated to all the parties
concerned and efforts to disseminate
information regarding the new law have been
exerted. (p. 39, Rollo.) She thereupon
disposed:
WHEREFORE, premises considered,
respondent PAL is hereby ordered as follows:
1. Furnish all employees with the new Code of
Discipline;
2. Reconsider the cases of employees meted
with penalties under the New Code of
Discipline and remand the same for further
hearing; and
3. Discuss with PALEA the objectionable
provisions specifically tackled in the body
of the decision.
All other claims of the complainant union (is)
[are] hereby, dismissed for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19,
1988, the NLRC through Commissioner
Encarnacion, with Presiding Commissioner
Bonto-Perez and Commissioner Maglaya
concurring, found no evidence of unfair labor
practice committed by PAL and affirmed the
dismissal of PALEA's charge. Nonetheless, the
NLRC made the following observations:
Indeed, failure of management to discuss the
provisions of a contemplated code of discipline
which shall govern the conduct of its
employees would result in the erosion and
deterioration of an otherwise harmonious and
smooth relationship between them as did
happen in the instant case. There is no dispute
that adoption of rules of conduct or discipline
is a prerogative of management and is
imperative and essential if an industry, has to
survive in a competitive world. But labor
climate has progressed, too. In the Philippine
scene, at no time in our contemporary history
is the need for a cooperative, supportive and
smooth relationship between labor and
management more keenly felt if we are to
survive economically. Management can no
longer exclude labor in the deliberation and
adoption of rules and regulations that will
affect them.
The complainant union in this case has the right to
feel isolated in the adoption of the New
Code of Discipline. The Code of Discipline
involves security of tenure and loss of
employment a property right! It is time
that management realizes that to attain
effectiveness in its conduct rules, there
should be candidness and openness by
Management and participation by the union,
representing its members. In fact, our
Constitution has recognized the principle of
"shared responsibility" between employers
and workers and has likewise recognized the
right of workers to participate in "policy and
decision-making process affecting their
rights . . ." The latter provision was
interpreted by the Constitutional
Commissioners to mean participation in
"management"' (Record of the Constitutional
Commission, Vol. II).
In a sense, participation by
the union in the adoption of
the code if conduct could
have accelerated and
enhanced their feelings of
belonging and would have
resulted in cooperation rather
than resistance to the Code.
In fact, labor-management
cooperation is now "the
thing." (pp. 3-4, NLRC
Decision ff. p. 149, Original
Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises
considered, we modify the
appealed decision in the
sense that the New Code of
Discipline should be reviewed
and discussed with
complainant union,
particularly the disputed
provisions [.] (T)hereafter,
respondent is directed to
furnish each employee with a
copy of the appealed Code of
Discipline. The pending cases
adverted to in the appealed
decision if still in the arbitral
level, should be reconsidered
by the respondent Philippine
Air Lines. Other dispositions
of the Labor Arbiter are
sustained.
SO ORDERED. (p. 5, NLRC
Decision.)
PAL then filed the instant petition
for certiorari charging public respondents
with grave abuse of discretion in: (a)
directing PAL "to share its management
prerogative of formulating a Code of
Discipline"; (b) engaging in quasi-judicial
legislation in ordering PAL to share said
106
prerogative with the union; (c) deciding
beyond the issue of unfair labor practice, and
(d) requiring PAL to reconsider pending cases
still in the arbitral level (p. 7, Petition; p.
8,Rollo.)
As stated above, the Principal issue
submitted for resolution in the instant
petition is whether management may be
compelled to share with the union or its
employees its prerogative of formulating a
code of discipline.
PAL asserts that when it revised its Code on
March 15, 1985, there was no law which
mandated the sharing of responsibility
therefor between employer and employee.
Indeed, it was only on March 2, 1989, with
the approval of Republic Act No. 6715,
amending Article 211 of the Labor Code, that
the law explicitly considered it a State policy
"(t)o ensure the participation of workers in
decision and policy-making processes
affecting the rights, duties and welfare."
However, even in the absence of said clear
provision of law, the exercise of management
prerogatives was never considered
boundless. Thus, in Cruz vs. Medina (177
SCRA 565 [1989]) it was held that
management's prerogatives must be without
abuse of discretion.
In San Miguel Brewery Sales Force Union
(PTGWO) vs. Ople (170 SCRA 25 [1989]), we
upheld the company's right to implement a
new system of distributing its products, but
gave the following caveat:
So long as a company's management
prerogatives are exercised in good faith for
the advancement of the employer's interest
and not for the purpose of defeating or
circumventing the rights of the employees
under special laws or under valid
agreements, this Court will uphold them.
(at p. 28.)
All this points to the conclusion that the
exercise of managerial prerogatives
is not unlimited. It is circumscribed by
limitations found in law, a collective
bargaining agreement, or the general
principles of fair play and justice (University
of Sto. Tomas vs. NLRC, 190 SCRA 758
[1990]). Moreover, as enunciated in Abbott
Laboratories (Phil.), vs. NLRC (154 713
[1987]), it must be duly established that the
prerogative being invoked is clearly a
managerial one.
A close scrutiny of the objectionable
provisions of the Code reveals that they are
not purely business-oriented nor do they
concern the management aspect of the
business of the company as in the San
Miguel case. The provisions of the Code
clearly have repercusions on the employee's
right to security of tenure. The
implementation of the provisions may result
in the deprivation of an employee's means of
livelihood which, as correctly pointed out by
the NLRC, is a property right (Callanta, vs
Carnation Philippines, Inc., 145 SCRA 268
[1986]). In view of these aspects of the case
which border on infringement of
constitutional rights, we must uphold the
constitutional requirements for the protection
of labor and the promotion of social justice,
for these factors, according to Justice Isagani
Cruz, tilt "the scales of justice when there is
doubt, in favor of the worker" (Employees
Association of the Philippine American Life
Insurance Company vs. NLRC, 199 SCRA 628
[1991] 635).
Verily, a line must be drawn between
management prerogatives regarding
business operations per se and those which
affect the rights of the employees. In treating
the latter, management should see to it that
its employees are at least properly informed
of its decisions or modes action. PAL asserts
that all its employees have been furnished
copies of the Code. Public respondents found
to the contrary, which finding, to say the
least is entitled to great respect.
PAL posits the view that by signing the 1989-
1991 collective bargaining agreement, on
June 27, 1990, PALEA in effect, recognized
PAL's "exclusive right to make and enforce
company rules and regulations to carry out
the functions of management without having
to discuss the same with PALEA and much
less, obtain the latter'sconformity thereto"
(pp. 11-12, Petitioner's Memorandum; pp
180-181, Rollo.) Petitioner's view is based on
the following provision of the agreement:
The Association recognizes the right of the
Company to determine matters of
management it policy and Company
operations and to direct its manpower.
Management of the Company includes the
right to organize, plan, direct and control
operations, to hire, assign employees to
work, transfer employees from one
department, to another, to promote, demote,
discipline, suspend or discharge employees
for just cause; to lay-off employees for valid
and legal causes, to introduce new or
improved methods or facilities or to change
existing methods or facilities and the right to
make and enforce Company rules and
regulations to carry out the functions of
management.
107
The exercise by management of its
prerogative shall be done in a just
reasonable, humane and/or lawful manner.
Such provision in the collective bargaining
agreement may not be interpreted as cession
of employees' rights to participate in the
deliberation of matters which may affect their
rights and the formulation of policies relative
thereto. And one such mater is the
formulation of a code of discipline.
Indeed, industrial peace cannot be achieved
if the employees are denied their just
participation in the discussion of matters
affecting their rights. Thus, even before
Article 211 of the labor Code (P.D. 442) was
amended by Republic Act No. 6715, it was
already declared a policy of the State, "(d) To
promote the enlightenment of workers
concerning their rights and obligations . . . as
employees." This was, of course, amplified by
Republic Act No 6715 when it decreed the
"participation of workers in decision and
policy making processes affecting their
rights, duties and welfare." PAL's position that
it cannot be saddled with the "obligation" of
sharing management prerogatives as during
the formulation of the Code, Republic Act No.
6715 had not yet been enacted (Petitioner's
Memorandum, p. 44; Rollo, p. 212), cannot
thus be sustained. While such "obligation"
was not yet founded in law when the Code
was formulated, the attainment of a
harmonious labor-management relationship
and the then already existing state policy of
enlightening workers concerning their rights
as employees demand no less than the
observance of transparency in managerial
moves affecting employees' rights.
Petitioner's assertion that it needed the
implementation of a new Code of Discipline
considering the nature of its business cannot
be overemphasized. In fact, its being a local
monopoly in the business demands the most
stringent of measures to attain safe travel for
its patrons. Nonetheless, whatever
disciplinary measures are adopted cannot be
properly implemented in the absence of full
cooperation of the employees. Such
cooperation cannot be attained if the
employees are restive on account, of their
being left out in the determination of cardinal
and fundamental matters affecting their
employment.
WHEREFORE, the petition is DISMISSED and
the questioned decision AFFIRMED. No
special pronouncement is made as to costs.
SO ORDERED.
PAL v. NLRCG.R. No. 85985August 13,
1993
Facts:PAL completely revised its 1966 Code of
Discipline. The Code was circulated among
the employees and was immediately
implemented, and some employees were
forthwith subjected to the disciplinary
measures embodied therein.The Philippine
Airlines Employees Association (PALEA) filed a
complaint before the National Labor Relations
Commission (NLRC). PALEA contended that
PAL, by itsunilateral implementation of the
Code, was guilty of unfair labor practice,
specifically Paragraphs E and G of Article 249
and Article 253 of the Labor Code. PALEA
alleged that copies of the Code had been
circulated in limited numbers; thatbeing
penal in nature the Code must conform with
the requirements of sufficientpublication, and
that the Code was arbitrary, oppressive, and
prejudicial to the rights of the employees.It
prayed that implementation of the Code be
held in abeyance; that PAL should discuss the
substance of the Code with PALEA; that
employees dismissed under theCode be
reinstated and their cases subjected to
further hearing; and that PAL bedeclared
guilty of unfair labor practice and be ordered
to pay damagesPAL asserted its prerogative
as an employer to prescibe rules and
regulations regarding employess' conduct in
carrying out their duties and functions, and
alleging that by implementing the Code, it
had not violated the collective
bargainingagreement (CBA) or any provision
of the Labor Code. Assailing the complaint
asunsupported by evidence, PAL maintained
that Article 253 of the Labor Code citedby
PALEA reffered to the requirements for
negotiating a CBA which was inapplicable as
indeed the current CBA had been negotiated.
Issue:W/N the formulation of a Code
of Discipline among employees is a shared
responsibility of the employer and the
employees.
Ruling:Petitioner's assertion that it needed
the implementation of a new Code
of Discipline considering the nature of its
business cannot be overemphasized. In fact,
its being a local monopoly in the business
demands the most stringent of measuresto
attain safe travel for its patrons. Nonetheless,
whatever disciplinary measures are adopted
cannot be properly implemented in the
absence of full cooperation of the employees.
Such cooperation cannot be attained if
the employees are restive on account, of
their being left out in the determination of
cardinal and fundamental matters affecting
their employment
108
109