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Luzon Development Bank vs. Association of Luzon Development Bank Employees

G.R. No. 120319. October 6, 1995.*

LUZON DEVELOPMENT BANK, petitioner, vs. ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES
and ATTY. ESTER S. GARCIA in her capacity as VOLUNTARY ARBITRATOR, respondents.

Labor Law; Arbitration; Words and Phrases; Arbitration, Defined.In labor law context, arbitration is
the reference of a labor dispute to an impartial third person for determination on the basis of evidence
and arguments presented by such parties who have bound themselves to accept the decision of the
arbitrator as final and binding.

Same; Same; Same; Arbitration may be classified as either compulsory or voluntary.Arbitration may be
classified, on the basis of the obligation on which it is based, as either compulsory or voluntary.

Same; Same; Same; Compulsory Arbitration, Explained .Compulsory arbitration is a system whereby
the parties to a dispute are compelled by the government to forego their right to strike and are
compelled to accept the resolution of their dispute through arbitration by a third party. The essence of
arbitration remains since a resolution of a dispute is arrived at by resort to a disinterested third party
whose decision is final and binding on the parties, but in compulsory arbitration, such a third party is
normally appointed by the government.

Same; Same; Same; Voluntary Arbitration, Explained.Under voluntary arbitration, on the other
hand, referral of a dispute by the

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* EN BANC.

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Luzon Development Bank vs. Association of Luzon Development Bank Employees

parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an impartial
third person for a final and binding resolution.

Same; Same; Collective Bargaining Agreements; In the Philippine context, the parties to a Collective
Bargaining Agreement are required to include therein provisions for a machinery for the resolution of
grievances arising from the interpretation or implementation of the CBA or company personnel
policies.In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required
to include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies. For this purpose, parties to
a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National Conciliation and
Mediation Board (NCMB).

Same; Same; Administrative Law; The voluntary arbitrator, whether acting solely or in a panel, enjoys in
law the status of a quasijudicial agency but independent of, and apart from, the NLRC since his decisions
are not appealable to the latter.In Volkschel Labor Union, et al. v. NLRC, et al., on the settled premise
that the judgments of courts and awards of quasi-judicial agencies must become final at some definite
time, this Court ruled that the awards of voluntary arbitrators determine the rights of parties; hence,
their decisions have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v.
Romero, et al., this Court ruled that a voluntary arbitrator by the nature of her functions acts in a quasi-
judicial capacity. Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in
a panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the NLRC
since his decisions are not appealable to the latter.

Same; Same; Same; Words and Phrases; Governmental Agency or Instrumentality, Explained.An
instrumentality is anything used as a means or agency. Thus, the terms governmental agency or
instrumentality are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed. The word instrumentality, with
respect to a state contemplates an authority to which the state delegates governmental power for the
performance of a state function.

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Luzon Development Bank vs. Association of Luzon Development Bank Employees

Same; Same; B.P. 129; Jurisdiction; Appeals; The voluntary arbitrator performs a state function pursuant
to a governmental power delegated to him under the provisions therefor in the Labor Code and he falls,
therefore, within the contemplation of the term instrumentality in Sec. 9 of B.P. 129.The voluntary
arbitrator no less performs a state function pursuant to a governmental power delegated to him under
the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term
instrumentality in the aforequoted Sec 9 of B.P. 129. The fact that his functions and powers are
provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a
quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees
Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is the
forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing rationalization, and this was
later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
Same; Same; Same; Same; Same; The decision or award of the voluntary arbitrator or panel of
arbitrators should be appealed to the Court of Appeals.A fortiori, the decision or award of the
voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line
with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-
judicial agencies, boards and commissions enumerated therein.

Arbitration Law (RA 876); Under the Arbitration Law, the award or decision of the voluntary arbitrator is
equated with that of the Regional Trial Courts.In the same vein, it is worth mentioning that under
Section 22 of Republic Act No. 876, also known as the Arbitration Law, arbitration is deemed a special
proceeding of which the court specified in the contract or submission, or if none be specified, the
Regional Trial Court for the province or city in which one of the parties resides or is doing business, or in
which the arbitration is held, shall have jurisdiction. A party to the controversy may, at any time within
one (1) month after an award is made, apply to the court having jurisdiction for an order confirming the
award and the court must grant such order unless the award is vacated, modified or corrected. In effect,
this equates the award or decision of the voluntary arbitrator with that of the regional trial court.
Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must be
deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court shall
henceforth remand to the Court of Appeals

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Luzon Development Bank vs. Association of Luzon Development Bank Employees

petitions of this nature for proper disposition.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and Prohibition.

The facts are stated in the opinion of the Court.

Eusebio P. Navarro, Jr. and Adolfo R. Fandalian for petitioner.

Ester S. Garcia for and in her own behalf.

Napoleon Banzuela, Jr. for private respondents.

ROMERO, J.:

From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:

Whether or not the company has violated the Collective Bargaining Agreement provision and the
Memorandum of Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on December
1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBEs Position Paper
on January 18, 1995. LDB, on the other hand, failed to submit its Position Paper despite a letter from the
Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had been filed by
LDB.

On May 24, 1995, without LDBs Position Paper, the Voluntary Arbitrator rendered a decision disposing
as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining
Agreement provision nor the Memorandum of Agreement on promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.

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Luzon Development Bank vs. Association of Luzon Development Bank Employees

In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.

Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or
voluntary.

Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government
to forego their right to strike and are compelled to accept the resolution of their dispute through
arbitration by a third party.1 The essence of arbitration remains since a resolution of a dispute is arrived
at by resort to a disinterested third party whose decision is final and binding on the parties, but in
compulsory arbitration, such a third party is normally appointed by the government.

Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to
a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and
binding resolution.2 Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by
both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration
as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to be
bound by said arbitrators decision.

In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include
therein provisions for a machinery for the resolution of grievances arising from the interpretation or
implementation of the CBA or company personnel policies.3 For this purpose, parties to a CBA shall
name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for
their selection, preferably from those

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1 Seide, A Dictionary of Arbitration (1970).

2 Ibid.

3 Art. 260, Labor Code.

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Luzon Development Bank vs. Association of Luzon Development Bank Employees

accredited by the National Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code
accordingly provides for exclusive original jurisdiction of such voluntary arbitrator or panel of arbitrators
over (1) the interpretation or implementation of the CBA and (2) the interpretation or enforcement of
company personnel policies. Article 262 authorizes them, but only upon agreement of the parties, to
exercise jurisdiction over other labor disputes.

On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumerated cases:

x x x. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality
of strikes and lockouts;

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.

xxx xxx x x x

It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commis-

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Luzon Development Bank vs. Association of Luzon Development Bank Employees

sion (NLRC) for that matter.4 The state of our present law relating to voluntary arbitration provides that
(t)he award or decision of the Voluntary Arbitrator x x x shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision by the parties,5 while the (d)ecision,
awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any
or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.6 Hence,
while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is
silent with respect to an appeal from the decision of a voluntary arbitrator.

Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari,7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.

In Volkschel Labor Union, et al. v. NLRC, et al.,8on the settled premise that the judgments of courts and
awards of quasijudicial agencies must become final at some definite time, this Court ruled that the
awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same
legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al.,9 this Court
ruled that a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. Under
these rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law
the status of a quasi-judicial agency but independent of, and apart from, the

_______________

4 Art. 217, Labor Code.

5 Art. 262-A, par. 4, Labor Code.

6 Art. 223, Labor Code.


7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas, Inc. v.
Magsalin, et al., 180 SCRA 177 (1989).

8 98 SCRA 314 (1980).

9 Supra.

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Luzon Development Bank vs. Association of Luzon Development Bank Employees

NLRC since his decisions are not appealable to the latter.10

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:

x x x x x x x x x (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

xxx xxx x x x

Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be
considered as a quasijudicial agency, board or commission, still both he and the panel are
comprehended within the concept of a quasi-judicial instrumentality. It may even be stated that it was
to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators here, as
well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry Arbitration
Commission,11 that the broader term instrumentalities was purposely included in the above-quoted
provision.

An instrumentality is anything used as a means or agency.12 Thus, the terms governmental agency
or instrumentality are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed.13 The word instrumentality, with
re-

_________________

10 Art. 262-A, in relation to Art. 217 (b) and (c), Labor Code, as amended by Sec. 9, R.A. 6715.

11 Executive Order No. 1008.


12 Laurens Federal Sav. And Loan Assn, v. South Carolina Tax Commission, 112 S.E. 2d 716, 719, 236 S.C.
2.

13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334 (1927).

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SUPREME COURT REPORTS ANNOTATED

Luzon Development Bank vs. Association of Luzon Development Bank Employees

spect to a state, contemplates an authority to which the state delegates governmental power for the
performance of a state function.14 An individual person, like an administrator or executor, is a judicial
instrumentality in the settling of an estate,15 in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court,16 and a trustee in bankruptcy of a defunct
corporation is an instrumentality of the state.17

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated
to him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation
of the term instrumentality in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and
powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since
he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the
Employees Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is
the forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing rationalization, and this was
later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.

A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.

This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide
a uniform procedure for the appellate review of adjudications of all quasi-judicial entities18 not
expressly excepted from the coverage of Sec. 9 of

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14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.

15 In re Turncocks Estate, 300 N.W. 155, 156, 238 Wis. 438.

16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.

17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.


18 First Lepanto Ceramics, Inc. v. CA, et al., 231 SCRA 30 (1994).

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B.P. 129 by either the Constitution or another statute. Nor will it run counter to the legislative
intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction
of the NLRC or the labor arbiter.

In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as
the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in which
one of the parties resides or is doing business, or in which the arbitration is held, shall have jurisdiction.
A party to the controversy may, at any time within one (1) month after an award is made, apply to the
court having jurisdiction for an order confirming the award and the court must grant such order unless
the award is vacated, modified or corrected.19

In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must
be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court
shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.

ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.

Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and Hermosisima,
Jr., JJ., concur.

Narvasa (C.J.) and Melo, J., On leave.

Feliciano, J., In the result.

Case referred to the Court of Appeals.

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19 Section 23, R.A. No. 876.

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SUPREME COURT REPORTS ANNOTATED

Cordova vs. Labayen

Notes.Parties to sales contracts and/or bills of lading are bound by arbitration clauses thereat.
(Puromines, Inc. vs. Court of Appeals, 220 SCRA 281 [1993])

Interpretation by arbitrators which is a faithful application of the provisions of the Agreement does not
have the effect of creating a new contract. (Adamson vs. Court of Appeals, 232 SCRA 602 [1994])

o0o

Copyright 2017 Central Book Supply, Inc. All rights reserved. Luzon Development Bank vs. Association
of Luzon Development Bank Employees, 249 SCRA 162, G.R. No. 120319 October 6, 1995

244

SUPREME COURT REPORTS ANNOTATED

The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.

No. L-25291. January 30, 1971.

THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-NATU, FGU INSURANCE GROUP
WORKERS & 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.

Labor law; Collective bargaining; Unfair labor practice; Notifying absent employees individually during
strike by employer.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.

Same; Same; Same; When employer negotiates or attempts to negotiate with his employees individually
in connection with changes in the agreement is unfair labor practice.It is an unfair labor practice for
an employer operating under a collective bargaining agreement to negotiate or 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

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245
The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.

union is on strike, the employer is still under obligation to bargain with the union as the employees
bargaining representative.

Same; Same; When act of company president in writing letters to strikers urging them to return to work
is an interference with the right to collective bargaining; Individual solicitation is also interference.
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 a constituting interference with the exercise of his
employees right to collective bargaining. 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 practices
because they tend to undermine the concerted activity of the employees, an activity to which they are
entitled free from the employers molestation.

Constitutional law; Freedom of speech; When free speech protection under the Constitution is
inapplicable.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. 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, 1952. The free speech protection
under the Constitution is inapplicable where the expression of opinion by the employer of his agent
contains a promise of benefit, or threats, or reprisal.

Labor law; Unfair labor practice; When strike-breaking or union-busting is unfair labor practice.When
the respondent offered reinstatement and attempted to bribe the strikers with comfortable cots,
free coffee and occasional movies, overtime pay for work performed in excess of eight hours, and
arrangements for their families, so they would abandon the strike and return to work, they were
guilty of strike-breaking and/or union-busting and, consequently, of unfair labor practice. It is equivalent
to an attempt to break a strike for an employer to offer reinstatement to striking employees individually,
when they are represented by a union, since the em-

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SUPREME COURT REPORTS ANNOTATED

The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.

ployees thus offered reinstatement are unable to determine what the consequences of returning to
work would be.

Same: Collective bargaining; Labor unions; Acts violative of right to organize, form and join labor
organizations.Violative of the rights 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 employers promises of benefits in return for the strikers abandonment of their
strike in support of the union; and the employers 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.

Same; Unfair labor practice; Employers interference; Test of whether an employer has interfered with
and coerced em-ployees.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 right 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.

Same; Same; The letters should be interpreted according to the totality of conduct doctrine.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. The letter should be interpreted according to
the totality of conduct doctrine, whereby the culpability of an employers 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 employers
labor relations or anti-union bias or because of their connection with an established collateral plan of
coercion or interference.

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The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.

Same; Same; Discrimination practiced by the companies. 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 fiscals 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.
Same; Same; Discrimination in dismissal of employees constitutes waiver of employers right to
dismiss.So is there an unfair labor practice where the employer, although authorized by the Court of
Industrial Relations to dismiss the employees who participated in an illegal strike, dismissed only the
leaders of the strikers, such dismissal being evidence of discrimination against those dismissed and
constituting a waiver of the employers right to dismiss the striking employees and condonation of the
fault committed by them.

Same; Same; Delayed reinstatement of employees constitutes discrimination.Delayed reinstatement


is a form of discrimination, 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.

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

Constitutional law; Freedom of speech; When a statement made is but an expression of free speech
protected by the Constitution.Being a union man and one of the strikers,

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SUPREME COURT REPORTS ANNOTATED

The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.

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.

Labor law; Right to strike; When heated altercations and occasional blows exchanged on the picket line
do not affect or diminish the right to strike.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 Section 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.
Same; Unfair labor practice; Spying of the union activities is unfair labor practice.Under the
circumstances, there is good ground to believe that Encarnacion was made to spy on the activities 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.

Same; Back wages; Strikers are entitled for back pay when strikes arise from unfair labor practice.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 workupon the invitation of the
respondentsthey were discriminatory dismissed. The members and officials of the Unions therefore
are entitled to reinstatement with back pay.

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Same: Reinstatement; The fact that positions of union members were already filled by replacements is
not a defense to reinstatement.Where 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 locked-out employees position has been filled
by replacement. Under such circumstances, if no job sufficiently and satisfactorily comparable to that
previously held by the aggrieved employee can be found, the employer must discharge the replacement
employee, if necessary, to restore the striking or locked-out worker to his old comparable position, x x x
If the employers improper conduct was an initial cause of the strike, all the strikers are entitled to
reinstatement and the dismissal of replacement employees wherever necessary.

Same; Back pay; Computation; 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. 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.

Same; Separation pay; Republic, Act 1052 construed. 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.

Same; Supreme Court decisions and rulings; Duty of courts, judges and lawyers to reproduce or copy the
same word-for-word and punctuation mark-for-punctuation mark.We must articulate our firm view
that in citing this Courts decisions

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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 Tribunals decisions and rulings do all other courts, as well as lawyers
and litigants, take their bearings. This is because the decisions referred to in article 8 of the Civil Code
which reads, Judicial decisions applying or interpreting the laws or the Constitution shall form a part of
the legal system of the Philippines, are only those enunciated by this Court of last resort. We said in no
uncertain terms in Miranda, et al. vs. Imperial, et al. (77 Phil. 1066) that [O]nly the decisions of this
Honorable Court establish jurisprudence or doctrines in this jurisdiction. Thus, ever present is the
danger that if not faithfully and exactly quoted, the decisions and rulings of this Court may lose their
proper and correct meaning, to the detriment of other courts, lawyers and the public who may thereby
be misled. But if inferior courts and members of the bar meticulously discharge their duty to check and
recheck their citations of authorities culled not only from this Courts decisions but from other sources
and make certain that they are verbatim reproductions down to the last word and punctuation mark,
appellate courts will be precluded from acting on misinformation, as well as be saved precious time in
finding out whether the citations are correct.

APPEAL by certiorari to review a decision and a resolution of the Court of Industrial Relations.

The facts are stated in the opinion of the Court.

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

Francisco de los Reyes for respondent Court of Industrial Relations.

Araneta, Mendoza & 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

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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 Unions
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 bargain-

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ing. 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.

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.

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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 yourswhether 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,

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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 Fiscals Office of Manila. During
the pendency of the said cases in the fiscals office, the Companies likewise filed a petition for injunction
with damages with the Court of First Instance of Manila which, on the basis of the pendency of the
various criminal cases against striking members of the Unions, issued on May 31, 1958 an order
restraining the strikers, until further orders of the said court, from stopping, impeding, obstructing, etc.
the free and peaceful use of the Companies gates, entrance and driveway and the free movement of
persons and vehicles to and from, out and in, of the Companies building.

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

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


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

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

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

Before, the decisions was yours to make.

So it is now.

Incidentally, all of the more than 120 criminal charges filed against the members of the Unions, except
three (3),

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were dismissed by the fiscals 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 Fiscals 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 fiscals office. Subsequently, when practically all the strikers had secured
clearances from the fiscals 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 AssociationNATU; 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.
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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 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

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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 individuallyby registered special delivery mail at thatwithout 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

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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 employers molestation.1

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

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

_______________

1 Cf. Chicago Apparatus Company, 12 NLRB 1002; Fruehauf Trailer Co., 1 NLRB 68; Remington Rand, Inc.,
2 NLRB 626; Metropolitan Engineering Co., 4 NLRB 542; Ritzwoller Company, 11 NLRB 79; American Mfg.
Co., 5 NLRB 443; Ralph A. Fruendich, Inc., 2 NLRB 802).

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ployees 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 employers promises of benefits in return for the strikers abandonment of their
strike in support of their union; and the employers 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

_______________

2 See Robert Bros., Inc., 8 NLRB 925; Hercules Campbell Body, Inc., 7 NLRB 431; Aronson Printing Co., 13
NLRB 799; E.A. Laboratories, Inc., 88 NLRB 673; Star Beef Company, 92 NLRB 1018; Jackson Press, Inc.,
96 NLRB 132.

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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,

xxx whereby the culpability of an employers 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 employers 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 counsel of the petitioners, as personnel manager and assistant corporate
secretary, respectively, with attractive compensations. After the notice to strike was served on the
Companies and negotiations were in progress in the Department of Labor, the respondents reclassified
87 employees as supervisors without increase in salary or in responsibility, in effect compelling these
employees to

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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. Then the respondents
brought against the picketers criminal charges, only three of which were not dismissed, and these three
only for slight misdemeanors. As a result of these criminal actions, the respondents were able 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 sentagain individually and by registered
special delivery mailto 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 committeeof which Ramon Garcia was a memberrefused 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 fiscals office, the respondents adamantly refused admission to 34 officials

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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 nonstrikers 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 fiscals 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, exhibits A
and B, yield the clear inference that the said letters formed of the respondents scheme to preclude if
not destroy unionism within them.

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

TO:

BUREAU OF LABOR RELATIONS

DEPARTMENT OF LABOR

MANILA

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

THE INSULAR LIFE ASSURANCE CO., LTD.

Plaza Moraga, Manila

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THE FGU INSURANCE GROUP

Plaza Moraga, Manila

INSULAR LIFE BUILDING ADMINISTRATION

Plaza Moraga, Manila

for the following reason: DEADLOCK IN COLLECTIVE BARGAINING, x x x

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

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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
fiscals 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

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them. It is significant to note in this connection that except for one union official who deserted his union
on the second day of the strike and who later participated in crashing through the picket lines, not a
single union officer was taken back to work. Discrimination undoubtedly exists where the record shows
that the union activity of the rehired strikers has been less prominent than that of the strikers who were
denied reinstatement.

So is there an unfair labor practice where the employer, although authorized by the Court of Industrial
Relations to dismiss the employees who participated in an illegal strike, dismissed only the leaders of the
strikers, such dismissal being evidence of discrimination against those dismissed and constituting a
waiver of the employers 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 Employees Association, L-8197, Oct. 31, 1958.)

It is noteworthy thatperhaps in an anticipatory effort to exculpate themselves from charges of


discrimination in the readmission of strikers returning to workthe 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 employeeshaving been involved in unpleasant
incidents with the picketers during the strikewere 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 re-hiring, 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; italics supplied.)

Equally significant is the fact that while the management and the members of the screening committee
admitted

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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
managements 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 respondentsthrough Ramon Garciatried 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
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respondents in the following stereotyped tenor:

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

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

Kindly acknowledge receipt of the check we are sending herewith.

Very truly yours,

(Sgd.) JOSE M. OLBES

President, Insurance Life

Acting President, FGU.

The respondents, however, admitted that the alleged acts of misconduct attributed to the dismissed
strikers were the same acts with which the said strikers were charged before the fiscals 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 themwhen Olbes refused them an
audienceto Felipe Enage, the Companies personnel manager. He likewise catego-

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rically 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 Enagewho testified anyway as witnesses for the respondents on several occasionsto rebut his
testimony. The respondents did nothing of the kind. Moreover, Tabasondra called on June 21, 1958 the
respondents attention to his non-admission and asked them to inform him of the reasons therefor, but
instead of doing so, the respondents dismissed him by their letter dated July 10, 1958. Elementary
fairness required that before being dismissed for cause, Tabasondra be given his day in court.

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

x x x The Board found, and we cannot say that its finding is unsupported, that, in taking back six union
men, the respondents 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 re-

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fused to grant union demands; hence, he betrayed his trust as an auditor of the Companies. We do not
find this allegation convincing. First, this accusation was emphatically denied by Tongos on the witness
stand. Gonzales, president of one of the respondent Companies and one of the officials referred to, took
a trip abroad in 1958. Exchange controls were then in force, and an outgoing traveller on a combined
business and vacation trip was allowed by the Central Bank, per its Circular 52 (Notification to
Authorized Agent Banks) dated May 9, 1952, an allocation of $1,000 or only P2,000, at the official rate of
two pesos to the dollar, as pocket money; hence, this was the only amount that would appear on the
books of the Companies. It was only on January 21, 1962, per its Circular 133 (Notification to Authorized
Agent Banks), that the Central Bank lifted the exchange controls. Tongos could not therefore have
revealed an amount bigger than the above sum. And his competence in figures could not be doubted
considering that he had passed the board examinations for certified public accountants. But assuming
arguendo that Ton-gos indeed revealed the true expenses of Gonzales tripwhich the respondents
never denied or tried to disprovehis statements clearly fall within the sphere of a unionists 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,

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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 x x x 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. x x x (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 Garcias chest and foreheadacts 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

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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 Bugays 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. 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 fiscals office and applying for injunction from the court of first instance.
Besides, under the circumstances the picketers were not legally bound to yield their grounds and
withdraw from the picket lines. Being where the law expects them to be in the legitimate exercise of
their rights, they had every reason to defend themselves and their rights from any assault or unlawful
transgression. Yet the police blotter, about adverted to, attests that they did not resort to violence.

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

We think it must be conceded that some disorder is unfortunately quite usual in any extensive or long
drawn out strike. A strike is essentially a battle waged with economic weapons. Engaged in it are human
beings whose feelings are stirred to the depths. Rising passions call forth hot words. Hot words lead to
blows on the picket line. The transformation from economic to physical combat by those engaged in the
contest is difficult to prevent even when cool heads direct

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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 and1 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 fiscals 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.)

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Lastly, the lower Court justified the constructive dismissal of Florencio Ibarra allegedly because he
committed acts inimical to the interest of the respondents when, as president of the FGU Workers and
Employees Association-NATU, he advised the strikers that they could use force and violence to have a
successful picket and that picketing was precisely intended to prevent the non-strikers and company
clients and customers from entering the Companies buildings. Even if this were true, the record
discloses that the picket line had been generally peaceful, and that incidents happened only when
management men made incursions into and tried to break the picket line. At any rate, with or without
the advice of Ibarra, picketing is inherently explosive. For, as pointed out by one author, The picket line
is an explosive front, charged with the emotions and fierce loyalties of the union-management dispute.
It may be marked by colorful name-calling, intimidating threats or sporadic fights between the pickets
and those who pass the line. (Mathews, Labor Relations and the Law, p. 752). The picket line being the
natural result of the respondents unfair labor practice, Ibarras misconduct is at most a misdemeanor
which is not a bar to reinstatement. Besides, the only evidence presented by the Companies regarding
Ibarras 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 activities 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 that 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.

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x x x 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 invaluable 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, x x x (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 workupon the invitation of the
respondentsthey were discriminatorily dismissed. The members and officials of the Unions therefore
are entitled to reinstatement with back pay.

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

[A]n employee who has been dismissed in violation of the provisions of the Act is entitled to
reinstatement with back pay upon an adjudication that the discharge was illegal. (Id., citing Waterman
S. S. Corp. v. N. L. R. B., 119 F2d 760; N. L. R. B. v. Richters 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

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

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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

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is not therefore precluded from digging deeper into the factual milieu of the case (Union of Philippine
Education Employees v. Philippine Education Company, 91 Phil. 93; Lu Do & Lu Ym Corporation v.
Philippine-Land-Air-Sea Labor Union, 11 SCRA 134 [1964]).
V. The petitioners (15 of them) ask this Court to cite for contempt the respondent Presiding Judge
Arsenio Martinez of the Court of Industrial Relations and the counsel for the private respondents, on the
ground that the former wrote the following in his decision subject of the instant petition for certiorari,
while the latter quoted the same on pages 90-91 of the respondents brief:

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

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

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

Differently as regard the dismissal of Orlando Aquino and Carmelito Vicente, we are inclined to uphold
the action taken by the employer as proper disciplinary measure. A reading of the article which allegedly
caused their dismissal reveals that it really contains an insinuation albeit subtly of the supposed exertion
of political pressure by the Manila Chronicle

_______________

* As reproduced on pp. 123-127 of the mimeographed and paperbound Supreme Court decisions for
December 1964.

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management upon the City Fiscals Office, resulting in the nonfiling of the case against the employer. In
rejecting the employers theory that the dismissal of Vicente and Aquino was justified, the lower court
considered the article as a report of some acts and omissions of an Assistant Fiscal in the exercise of his
official functions and, therefore, does away with the presumption of malice. This being a proceeding for
unfair labor practice, the matter should not have been viewed or gauged in the light of the doctrine on a
publishers 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 employers
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 employers right
to impose discipline on its employees, should the act upon which the criminal charges was based
constitute nevertheless an activity inimical to the employers 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
employers reputation, can be nothing but an act inimical to the said employers 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.** (Italics 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 Courts 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 Courts decision. Finally, the second and last
un-

_______________

** Id., p. 126. (The entire decision may now be found in printed form in 12 SCRA 699-700.)

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The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.

derlined sentence in the quoted paragraph of the respondent Judges decision, appears not in the same
paragraph of this Courts 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 counsel have the prima facie right to
rely on the quotation as it appears in the respondent Judges 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 Judges decision is substantially the same as, and faithfully reflects, the particular ruling in
this Courts decision, i.e., that [N]ot even the acquittal of an employee, of the criminal charges against
him, is a bar to the employers right to impose discipline on its employees, should the act upon which
the criminal charges were based constitute nevertheless an activity inimical to the employers interest.

Be that as it may, we must articulate our firm view that in citing this Courts 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 Tribunals decisions and rulings do all other courts, as well as lawyers and
litigants, take their bearings. This is because the decisions referred to in article 8 of the Civil Code which
reads, Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines, are only those enunciated by this Court of last resort. We said in no
uncertain terms in Miranda, et al. vs. Imperial, et al (77 Phil. 1066) that [O]nly the

280

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SUPREME COURT REPORTS ANNOTATED

The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life Assurance Co., Ltd.

decisions of this Honorable Court establish jurisprudence or doctrines in this jurisdiction. Thus, ever
present is the danger that if not faithfully and exactly quoted, the decisions and rulings of this Court may
lose their proper and correct meaning, to the detriment of other courts, lawyers and the public who may
thereby be misled. But if inferior courts and members of the bar meticulously discharge their duty to
check and recheck their citations of authorities culled not only from this Courts decisions but from
other sources and make certain that they are verbatim reproductions down to the last word and
punctuation mark, appellate courts will be precluded from acting on misinformation, as well as be saved
precious time in finding out whether the citations are correct.

Happily for the respondent Judge and the respondents counsel there was no substantial change in the
thrust of this Courts particular ruling which they cited. It is our view, nonetheless, that for their mistake,
they should be, as they are hereby, admonished to be more careful when citing jurisprudence in the
future.

ACCORDINGLY, the decision of the Court of Industrial Relations dated August 17, 1965 is reversed and
set aside, and another is entered, ordering the respondents to reinstate the dismissed members of the
petitioning Unions to their former or comparatively similar positions, with backwages from June 2, 1958
up to the dates of their actual reinstatements. Costs against the respondents.

Concepcion, C.J., Reyes, J.B.L., Dizon,, Makalintal, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.

Zaldivar, J., did not take part.

Decision reversed and set aside.


Notes. (a) Case wherein non-reinstatement of striking union members who assaulted fellow workers
who refused to join the strike was held justified.The foregoing case may be compared or contrasted
with Union of Philippine Education Employees vs. Philippine Education Co., L-7161,

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Uy vs. Republic

May 19, 1955, holding that where the evidence showed that three union members were dismissed by
their employer because of assaults on fellow workers who refused to join in a strike, the action of the
Court of Industrial Relations in declining to order their reinstatement was justified.

(b) When discrimination constitutes unfair labor practice.Under Republic Act 875, for discrimination
by reason of union membership to be considered unfair labor practice, the same must have been
committed to encourage or discourage such membership in the union (Rizal Cement Workers Union vs.
Madrigal and Company, L-19767, April 30, 1964, 10 SCRA 831).

_______________ The Insular Life Assurance Co., Ltd., Employees Association-NATU vs. The Insular Life
Assurance Co., Ltd., 37 SCRA 244, No. L-25291 January 30, 1971

174

SUPREME COURT REPORTS ANNOTATED

Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

Nos. L-20667 & L-20669. October 29, 1965.

PHILIPPINE STEAM NAVIGATION Co., petitioner, vs. PHILIPPINE OFFICERS GUILD, ET AL., respondents.

Employer and employee; Unfair labor practice; Right of employer to interrogate its employees as to
their union affiliation.The rule in this jurisdiction is that subjection by the company of Its employees to
a series of questioning regarding their membership in the union or their union activities, in such a way as
to hamper the exercise of free choice on their part, constitutes unfair labor practice (Scoty's Department
Store vs. Micaller, 52 O.G. 5119).

Same; Same; Strikes; Reinstatement of striking employees.The striking employees are entitled to
reinstatement, whether or not the strike was the consequence of the employer's unfair labor practice,
unless, where the strike was not the consequence of any unfair labor practice, the employer has hired
others to take the place of the strikers and has promised them continued employment (Cromwell
Commercial Employees and Laborers Union (PTUG) vs. C.I.R., et al, L-19778. September 30, 1964, citing 2
Teller, LABOR DISPUTES AND COLLECTIVE BARGAINING, Sec. 371, pp. 996-99).
Same; Same; Same; When employer bound to reinstate strikers.Even if the employer hires others to
replace the strikers, thereby avoiding paralysis of his business, if the strike is against an unfair labor
practice on its part, the employer is bound to reinstate the strikers.

Same; Same; Same; Voluntary offer to return to work without any condition, when relevant.A
voluntary offer to return to work without any condition is relevant only to the question of payment of
back wages in addition to reinstatement. Since in these cases no back wages were awarded, and the
union has not appealed, said question is not in point.

APPEAL from a decision and resolution of the Court of Industrial Relations.

The facts are stated in the opinion of the Court.

Lichauco, Picazo & Agcaoili for petitioner.

Beltran & Lacson for respondent Philippine Marine Officers Guild,

Mariano B. Tuason for respondent Court of Industrial Relations.

BENGZON, J.P., J.:

The present century saw in its opening decades the

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Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

struggle of labor to attain equal footing with capital. Statute after statute was passed in the Philippines
to secure this end. The Philippine Constitution, adopted in 1935, made it plain that the State can
regulate the relation between labor and capital to achieve social justice.1 Following the modem trend,
the lndustrial Peace Act was passed by our Congress to effect equality between labor and capital as
partners in industry.2 Special attention from all three branches of the government was required on the
problems arising in their relation, a relation treated as sui generis. Nonetheless, as was to be expected,
it was not infrequent that capital would seek to preserve and labor to advance its position; the
management would fight to retain old practices and the workers cry for progressive measures;
employers would desire superiority and employees equality. Hence, the continuing disputes regarding
the scope and application of social and labor legislations covering the relations of labor and capital. An
instance is the dispute in the three cases at bar.

The Philippine Steam Navigation Co., Inc., hereafter referred to as PHILSTEAM, is a domestic
corporation, with head offices in Cebu City, engaged in inter-island shipping. In the year 1954 it had 16
vessels, with 8 officers to a vessel, or a total of 128 officers.
Philippine Marine Officers Guild, herein otherwise called PMOG, is a labor union affiliated with the
Federation of Free Workers (FFW), representing, and which represented in 1954, some of PHILSTEAM's
officers.

The Cebu Seamen's Association, CSA for short, is another labor union that represents and likewise
represented in 1954 some of PHILSTEAM's officers.

On June 15, 1954 PMOG sent PHILSTEAM a set of demands with a request for collective bargaining,
PHILSTEAM received the letter embodying the same on June 18, 1954, Subsequently, or on June 29,
1954, PHILSTEAM transmitted its answer to PMOG, requiring the

_______________

1 Art. II, Sec, 5; Art. XIV, Sec. 6, Phil. Constitution.

2 Republic Act 875, effective June 17, 1953.

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SUPREME COURT REPORTS ANNOTATED

Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

latter to first prove its representation of a majority of PHILSTEAM's employees before its demands will
be considered as requested. PHILSTEAM, on the same date, started interrogating and investigating" its
captains, deck officers, and engineers, to find out directly from them if they had joined PMOG or
authorised PMOG to represent them.

A reply was sent by PMOG to the answer of PHILSTEAM, insisting that PHILSTEAM consider its requests
and demands first before requiring' proof of majority representation. This reply was received by
PHILSTEAM 011 July 6, 1954.

PMOG thereafter filed on July 17, 1954 a notice of intention to strike stating as reasons therefor
PHILSTEAM's alleged refusal to bargain and unspecified unfair labor practices. The Department of Labor
brought PHILSTEAM and PMOG to a conference 011 July 30, 1954, without any success.

The CSA had meanwhile also transmitted its own set of demands to PHILSTEAM. On August 16, 1954
PHIL STEAM and CSA met PHILSTEAM therein recognized CSA as representing the majority of its
employees and proceeded to consider CSA's demands.

Another PHILSTEAM-PMOG conference at the Department of Labor was held on August 17, 1954,
likewise to no avail.

Subsequently. on August 24, 1954, PHILSTEAM and CSA signed a collective bargaining agreement. On
the same date, PMOG declared a strike against PHILSTEAM, Although not the subject of the present
appeal, it should also be mentioned that the dispute included two other shipping' companies, namely,
Compaia Maritima and Madrigal Shipping, and that PMOG simultaneously struck against all three
companies.

Around 46 officers of PHILSTEAM joined PMOG's strike; 15 of these later returned to work, leaving 31
PHILSTEAM officers on strike. Pier 4 of the North Harbor of the Port of Manila, where PHILSTEAM ves-

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Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

sels docked, was among the areas picketed during the strike,

A final conference at the Department of Labor between PHILSTEAM and PMOG on October 7, 1954 still
failed to bring the parties to an agreement

The President of the Philippines, on January 14, 1955, certified the dispute among the aforementioned
shipping companies and their employees to the Court of Industrial Relations, as involving national
interest, pursuant to Section 10 of Republic Act 875,

The Court of Industrial Relations held preliminary conferences and on January 18, 1955 issued a return-
to-work order. The same, however, was not enforced in view of an injunction issued by this Court in
another case.3

Several formal complaints were accordingly docketed in the Court of Industrial Relations, as follows:

(1) Case 6-IPA, the dispute certified to the CIR by the President;

(2) Case 617-ULP filed on February 25, 1955 by PMOG against Maritima, et al., for unfair labor practice;

"(3) Case 618-ULP filed on February 25, 1955 by PMOG against PHILSTEAM and CSA, for unfair labor
practice;

(4) Case 646-ULP filed on March 29, 1955 by PMOG against Madrigal Shipping, for unfair labor practice;

(5) Case 672-ULP filed on April 30, 1955 by the Marine Off icers Association of the Philippines4 against
PMOG, for unfair labor practice;

(6) Case 1002-ULP filed on July 6, 1956 by PHILSTEAM against PMOG, for unfair labor practice.

A joint trial was held of all the cases and on December 23, 1962 the Court of Industrial Relations
rendered thereon a single decision, finding in the cases pertinent to this appeal, i.e., where PHILSTEAM
is a party, as follows:

_________________
3 See Resolutions of February 24, 1955 and March 25, 1956, in Cebu Seamen's Association vs. Castillo, et
al., L-8802.

4 A labor union in Compania Maritima.

178

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SUPREME COURT REPORTS ANNOTATED

Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

(1) Case 618-ULP, PHILSTEAM committed unfair labor practice in having interfered with, restrained and
coerced employees in the exercise of their rights to self-organization;

(2) Case 1002-ULP, PMOG has not been shown to have committed unfair labor practice; and,

(3) Case 6-IPA, the strike of PMOG against PHILSTEAM was justified and lawfully carried out.

Accordingly, it stated in the dispositive portion relative to the above-mentioned cases:

"IN VIEW OF ALL THE FOREGOING, the Court hereby orders;

"2. Philippine Steam Navigation Company, its agents, successors and assigns, to cease and desist from
interrogating and investigating their employees to determine whether they have authorized Philippine
Marine Officers Guild or my other labor organization to represent them for the purpose of collective
bargaining, discouraging or trying to discourage any of such employees from remaining as a member of
Philippine Marine Officers Guild or any other labor organization, and encouraging or trying to encourage
any of such employees to' join Cebu Seamen's Association or any other labor organization, and, in any
manner, interfering with, restraining, or coercing their employees in the exercise of their right to self-
organization and other rights guaranteed in Section 3 of this Act; and offer all of their striking employees
immediate and full reinstatement to their former or substantially equivalent positions, without back
salaries and without prejudice to their seniority or other rights and privileges, unless they have found
substaintially equivalent employment elsewhere during the pendency of this case."

PHILSTEAM moved for reconsideration but the motion was denied on May 18, 1962 by resolution of the
Court of Industrial Relations in banc. The present appeal by PHILSTEAM is from the decision and
resolution en banc in Case 6-IPA, Case 618-ULP and Case 1002-ULP.

Petitioner would contend that the respondent court erred in ordering it to reinstate the PMOG strikers.
In support of this it advances the argument that, first, PHILSTEAM did not commit acts constituting
unfair labor practice; and, second, PMOG's strike was illegal.

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179

Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

The finding of respondent court in Case 618-ULP, as stated, is that PHlLSTEAM interfered with, coerced,
and restrained employees in their rights to self-organization. The same, if true, is unfair labor practice
(Section 4[a] [1], Republic Act 875).

The acts found by respondent court constituting the foregoing unfair labor practice are: (1) the
interrogation and investigation by PHILSTEAM's supervisory officials of its captains, deck officers and
engineers, to determine whether they had authorized PMOG to act as their bargaining agent; (2) the
subjection of PMOG to vilification; and (3) the participation of PHILSTEAM's pier superintendent in
soliciting membership for a competing union.

PHILSTEAM admits that it initiated and carried out an investigation of its officers as to their membership
in PMOG and whether they had given PMOG authority to represent them in collective bargaining. The
reason for this, PHILSTEAM would, however, aver, was merely to ascertain for itself the existence of a
duty to bargain collectively with PMOG, a step allegedly justified by PMOG's refusal to furnish proof of
majority representation.

The asserted reason for the investigation cannot be sustained. The record discloses that such
investigation was started by PHILSTEAM even before it received PMOG's reply stating a refusal to submit
proof of majority representation. Specifically, the investigation was put under way on June 29, 1954
the same day PHILSTEAM sent its request that PMOG submit proof of majority representation
whereas, PHILSTEAM knew of PMOG's refusal to furnish said proof only on July 6, 1954, when it received
PMOG's reply letter. The respondent court, therefore, aptly concluded that PMOG's refusal to submit
evidence showing it represented a majority had nothing to do with PHILSTEAM's decision to carry out
the investigation.

An employer is not denied the privilege of interrogating its employees as to their union affiliation,
provided the same is for a legitimate purpose and assurance is given

180

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SUPREME COURT REPORTS ANNOTATED

Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

by the employer that no reprisals would be taken against unionists. Nonetheless, any employer who
engages in interrogation does so with notice that he risks a finding of unfair labor practice if the
circumstances are such that his interrogation restrains or interferes with employees in the exercise of
their rights to self-organization. (Blue Flash Express Co., Inc., 109 NLRB 591.)

The respondent court has found that PHILSTEAM's interrogation of its employees bad in fact interfered
with, restrained and coerced the employees in the exercise of their rights to self-organization (Petition,
Annex A, p. 81). Such finding being; upon questions of fact, the same cannot be reversed herein,
because it is fully supported by substantial evidence.

The rule in this jurisdiction is that subjection by the company of its employees to a series of questionings
regarding their membership in the union or their union activities, in such a way as to hamper the
exercise of free choice on their part, constitutes unfair labor practice (Scoty's Department Store vs.
Micaller, 52 O.G. 5119). PHILSTEAM's aforestated interrogation squarely falls under this rule.

PMOG's subjection to vilification is likewise borne out by substantial evidence. Santiago Beliso,
PHILSTEAM's purchasing agent, told Luis Feliciano, on August 6, 1954, that PMOG was a "money-asking
union," that "all the members of the FFW are low people" and that CSA "is a good union." Fernando
Guerrero, PHILSTEAM's interisland manager, had authorized Beliso to assist him in his investigation of
PMOG membership. The statement of Beliso was made in the presence of PHILSTEAM office manager
Ernesto Maeru and PHILSTEAM pier superintendent Jose Perez, and these supervisory officials did
nothing to disavow Beliso's conduct as not intended to represent PHILSTEAM's opinion. PHILSTEAM,
through its supervisory officials, obviously made it appear to Feliciano that Beliso was speaking for or on
behalf of the company, when he made the remarks derogatory to PMOG and favorable to CSA.
PHILSTEAM thereby interfered with Feliciano's right to self-organization.

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Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

Appellant would, however, assert an inconsistency on the part of respondent court in finding that Beliso
was made to appear by PHILSTEAM supervisory officials as acting for them, as testified to by Feliciano,
when said court elsewhere rejected a testimony to this effect by Eugenio Obispo.

Appellant refers to the testimony of Obispo, an engine officer, that he signed up with CSA because
sometime in July 1954 he was intimidated by Santiago Beliso, Obispo's testimony, however, referred to
a different incident, wherein there was no showing that Beliso acted in the presence and with the
apparent approval of high supervisory officials of PHILSTEAM. Furthermore, Obispo's credibility, unlike
that of Feliciano, was put in doubt because he falsely stated that Beliso was an Assistant Manager of
PHILSTEAM. We find no inconsistency or discrimination in the appreciation of the evidence by
respondent court in giving credence to Feliciano, as to one incident, while disbelieving Obispo, as to
another.

Finally, of record also stands the fact that PHILSTEAM pier superintendent Valeriano Teves helped bring:
about the affiliation of Diosdado CapiIitan, a PMOG member, with CSA, by telling him that his joining
with CSA would not affect his PMOG affiliation. This incident was testified to by PHILSTEAM witnesses
themselves. While such a statement, if considered as an isolated remark, may be a harmless expression
of opinion, it in reality amounted to support of CSA's membership solicitation drive, in the light of the
circumstances in which it was made. For it in effect encouraged membership in the competing union
and indorsed CSA's solicitation, at least with respect to Capilitan.
The respondent court absolved PMOG from the charge of unfair labor practice in Case 1002-ULP. The
alleged threats and violence on the part of PMOG strikers were found not sufficiently established by the
evidence. And PHILSTEAM in this appeal no longer argues that said threats and violence were
committed.

182

182

SUPREME COURT REPORTS ANNOTATED

Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild

Nonetheless, PHILSTEAM would contend that PMOG's strike was illegal, for the reason that the purpose
of the strike was illegal. It is argued that PMOG staged a strike so as to compel PHILSTEAM to bargain
collectively with it notwithstanding that it was a minority union. First of all, the statement that PMOG is
a minority union is not accurate. Respondent court precisely found that there has been no proof as to
which union, PMOG, CSA or any other, represented the majority of PHILSTEAM employees. For lack of
showing that CSA represented the majority it declared the PHILSTEAM-CSA collective bargaining
agreement null and void. It stated that the parties to the dispute were welcomed to file a petition for
certification election to decide this point.

Secondly, PMOG's strike was in retaliation to PHILSTEAM's unfair labor practice rather than, as
PHILSTEAM would picture it, an attempt to undermine the PHILSTEAM-CSA agreement. For said
agreement was signed only on August 24, 1954 but PMOG filed its notice of strike as early as July 17,
1954. PHILSTEAM's unfair labor practice, consisting in its interference with the employees, rights to self-
organization started on June 29, 1954. It was because of said unlawful act of the employer that the
union struck. The notice of strike in fact mentioned company unfair labor practices as reason for the
intended strike.

From the foregoing it follows that PMOG's strike was for a lawful purpose and, therefore, justified.

As to the question of reinstatement, we have already ruled, in Cromwell Commercial Employees and
Laborers Union (PTUG) vs, C.I.R., et al., L-19778, September 30, 1964, that striking employees are
entitled to reinstatement, whether or not the strike was the consequence of the employer's unfair labor
practice, unless, where the strike was not the consequence of any unfair labor prac tice, the employer
has hired others to take the place of the strikers and has promised them continued employment (2
Teller, LABOR DISPUTES AND COLLECTIVE BARGAINING, Sec. 371, pp. 996-997).

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Diaz vs. Arca


The present strike was the consequence of PHILSTEAM's unfair labor practice, Reinstatement of the
strikers, who have not found substantially equivalent employment elsewhere, therefore follows as a
matter of right, notwithstanding that the employer has hired others to take the place of the strikers for
the purpose of continuing the operation of the plant or the business of the industry (2 Teller, op. cit.,
Sec. 277, p. 754).

Petitioner finally argues that reinstatement was forfeited due to the failure of the strike to paralyze the
company's business or the failure of the employees to offer to return to work voluntarily and without
any condition. As adverted to above, even if the employer hires others to replace the strikers, thereby
avoiding paralysis of his business, if the strike is against an unfair labor practice on its part, the employer
is bound to reinstate the strikers. As to the matter of a voluntary offer to return to work without any
condition the same is relevant only to the question of payment of back wages in addition to
reinstatement. Since in these cases no back wages were awarded and the union has not appealed, said
question is not in point.

WHEREFORE, the decision and resolution appealed from are hereby affirmed, with costs against
petitioner. So ordered.

Bengzon, C.J., Bautista, Angelo, Concepcion, Dizon, Regala, Makalintal and Zaldivar, JJ., concur.

Reyes, J.B.L., J., is on leave.

Decision and resolution affirmed.

______________ Phil. Steam Navigation Co. vs. Phil. Marine Officers Guild, 15 SCRA 174, Nos. L-20667 &
L-20669 October 29, 1965

VOL. 14, MAY 19, 1965

Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union

No. L-19997. May 19, 1965.

VISAYAN BICYCLE MANUFACTURING CO., INC., petitioner, vs. NATIONAL LABOR UNION and COURT OF
INDUSTRIAL RELATIONS, respondents.

Court of Industrial Relations; Denial of motion to extend period to file arguments not abuse of
discretion.The denial by the Court of Industrial Relations of a motion to extend the 10-day period to
file arguments in support of a motion for reconsideration, pursuant to its standing rule against such
extension, does not constitute abuse of discretion.

Labor relations; Unfair labor practice; Dismissal due to union activities.Facts: Two employees were
dismissed for violation of a company rule against fights in the premises or during working hours. It
appears, however, that said employees, who were union officers, were provoked into a prearranged
fight by two recently hired employees pursuant to a strategy of the company designed to provide an
apparently lawful cause for their dismissal, and said dismissed employees had not figured in similar
incidents before or violated company rules in their many years with the company. Held: That this is
unfair labor practice.

PETITION for review of a decision and resolutions of the Court of Industrial Relations.

The facts are stated in the opinion of the Court.

Mascardo, Mintu & Lazaro Law Offices for petitioner.

Eulogio R. Lerum for respondent National Labor Union.

Mariano B. Tuason for respondent Court of Industrial Relations.

SUPREME COURT REPORTS ANNOTATED

Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union

BENGZON, J.P., J.:

On November 3, 1958, workers in the Visayan Bicycle Manufacturing Co., Inc. formed the Visayan
Bicycle Employees and Workers Union (VIBEMWU). Pedro Evangelista was its president. On November
14, 1958, VIBEMWU and the company signed a collective bargaining agreement. Among other things it
provided for union security, checkoff, wage increases, fifteen days vacation leave and fifteen days sick
leave.

On February 21, 1959, Pedro Evangelista was again elected president, for 1959. Felicisimo Rodiel was
elected board member.

For the year 1960 VIBEMWU, on December 12, 1959, re-elected Pedro Evangelista president and elected
Fulgencio Besana and Felicisimo Rodiel, vice-president and secretary, respectively.

On February 27, 1960, through its executive board headed by Besana, acting as president, VlBEMWU
affiliated with the National Labor Union (NLU). Subsequently, on March 4, 1960, the Constitution and
By-laws of VIBEMWU were amended. On March 9, 1960, another election was held and Besana was
chosen president thereby replacing Evangelista.

On March 17, 1960, the national secretary of NLU, by a letter, informed the company of VIBEMWUs
affiliation to NLU, and demanded enforcement of the collective bargaining agreement. The company,
however, did not accede to the demand. Consequently, on April 5, 1960, VIBEMWU filed a notice to
strike.

The Department of Labors Conciliation Service held several hearings on the unions demands and strike
notice, but the company still refused.
On April 25, 1960, the company dismissed Besana and Rodiel after they figured, on the same day, in a
fight with two other employees, within the premises and during working hours. Alleging unfair labor
practice, NLU, on behalf of VIBEMWU, as well as of Besana and Rodiel, filed on May 6, 1960 a complaint
against the company in the Court of industrial Relations. The company answered it on

VOL. 14, MAY 19, 1965

Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union

May 23, 1960. It stated that the dismissal of Besana and Rodiel was due to violation of a company rule
that penalizes Inciting or provoking a fight or fighting during working hours or on company premises.

The Presiding Judge of the Court of Industrial Relations, after trying the case, rendered a decision on
March 3, 1962 in favor of the complainant union. An unfair labor practice, according to said decision,
was committed by the company in dismissing Besana and Rodiel due to their union activities. The
dispositive portion reads:

This Court finds substantial evidence to sustain the charge against respondent Company in violation of
Section 4(a), paragraphs 1 and 4 of the Industrial Peace Act, and, therefore, orders respondent
Company, its official and/or agents to:

(1) Cease and desist from interfering, restraining or coercing its employees, in the exercise of their
rights guaranteed by Section 3 of the Act;

(2) Cease and desist from discriminating against employees in regard to hire or tenure of employment
or any term or condition of employment to encourage or discourage membership in any labor
organization;

(3) Reinstate Fulgencio Besana and Felicisimo Rodiel to their former or equivalent positions in
respondent Company with backwages from the time of their dismissal on April 25, 1960, up to the time
of their actual reinstatement and with the rights and privileges formerly appertaining thereto, including
seniority;

To facilitate the proper payment of backwages due them, the Chief of the Examining Division of this
Court and or his; duly designated assistant is hereby directed to examine the payrolls, daily time records
and other pertinent documents relative to complainants Besanas and Rodiels services with respondent
Company, and to submit a corresponding report for further disposition.

SO ORDERED.

After receipt of copy of the decision on March 13, 1962, the company filed on March 15, 1962 a motion
for reconsideration. It contained no argument but reserved the right to file supporting memorandum
within ten days from March 18, 1962. A motion, however, was filed on March 27, 1962, requesting for
15-day extension of time to file the memorandum.
8

SUPREME COURT REPORTS ANNOTATED

Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union.

Adhering to a no-extension policy thereon, the Court of Industrial Relations in banc denied, on March
28, 1962, the aforesaid motion for extension to file memorandum. Accordingly, on April 6, 1962, it
further denied the motion for reconsideration.

Following its receipt on July 6, 1962 of the last resolution, the company filed this petition for review on
July 16, 1962.

Petitioner has raised two issues: First, did the Court of Industrial Relations abuse its discretion in denying
the motion for extension of time to file memorandum in support of the motion for reconsideration?
Second, did the companys dismissal of Besana and Rodiel constitute unfair labor practice?

The first issue has already been settled. The denial by the Court of Industrial Relations of a motion to
extend the 10-day period to file arguments in support of a motion for reconsideration, pursuant to its
standing rule against such extension, does not constitute abuse of discretion.1

Regarding the second issue, the record shows that on April 25, 1960, Besana and Rodiel were provoked
by Saturnino Reyes and Silvestre Pacia into a pre-arranged fight pursuant to a strategy of the company
designed to provide an apparently lawful cause for their dismissal. Reyes and Pacia were hired only
within that week.2 Besana and Rodiel were not shown to have previously figured in similar incidents
before or to have violated company rules and regulations in their many years with the company.3 The
company did not investigate the incident, and its manager, Co Hing, admitted that Besana was dismissed
because he was a hard-headed leader of the union. It was this manager who had warned VIBEMWUs
officers responsible for the affiliation that if they will not withdraw

____________

1 Luzon Stevedoring Co., Inc. vs. CIR, L-16682, July 26, 1963; Manila Metal Caps and Tin Cans
Manufacturing Co. vs. CIR, L-17578. July 31, 1963.

2 April 19, 1960 and Aprl 18, 1960, respectively.

3 Bosana was employed since October 4, 1956; Rodiel, since November, 1957.

VOL. 14, MAY 19, 1965

9
Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union

VIBEMWU from the NLU, he would take steps in order to dismiss them from work.

The findings of the Court of Industrial Relations to the foregoing effect are supported by substantial
evidence. No reason obtains to alter the conclusion that Besana and Rodiel were in reality dismissed
because of their union activities and not because of their violation of a company rule against fights in
the premises or during working hours. Furthermore, the so-called violation of company rules having
been brought about by the company itself, thru the recent employment of Saturnino Reyes and Silvestre
Pacia who provoked the fight as above indicated, the same cannot be regarded as a ground to punish
the aforementioned employees.

Such being the case, the dismissal of Besana and Rodiel constituted unfair labor practice under Section
4(a) (1) and (4) of Republic Act 875:

SEC. 4. Unfair Labor Practices.(a) It shall be unfair labor practice for an employer:

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

(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in section
three ;4

xxx

(4) To discriminate in regard to hire or tenure of employment or any term or condition of employment
to encourage or discourage membership in any labor organization: xxx.

Rothenberg has this to say:

x x x it can be established that the true and basic inspiration for the employers act is derived from the
employees union affiliations or activities, the assignment by the employer or another reason, whatever
its semblance of validity, is unavailing. Thus, it has been held that the facts disclosed that the employers
acts in discharging employees were actually prompted by the employers improper interest in the
affected employees union

___________

4 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 or protection, xxx.

10

10

SUPREME COURT REPORTS ANNOTATED


People vs. Marquez

affiliations and activities, even though the employer urged that his acts were predicated on economic
necessity, desire to give employment to more needy persons, lack of work, cessation of operations,
refusal to work overtime, refusal of non-union employees to work with union employees, seasonal lay-
off, libelous remarks against management, violation of company rules. (Rothenberg on Labor Relations,
pp. 400-401; italics supplied.)

Since the only reason or basis for Besana and Rodiels dismissal was in fact their actuation as officers of
VIBEMWU, the dismissal is clearly discriminatory.

It is this inconsiderate act of power that makes a subordinate a rebel; it is this malicious tactic that
forces labor to dislike management; this unjustifiable conduct that creates a gap between management
and labor; and this attitude that makes the laborer hate the officials of the company to the detriment of
all efforts to harmonize management and labor for the benefit of both as envisioned by the Industrial
Peace Act. So plain from the record is the bad faith that attended the companys deliberate and
calculated act of unfair labor practice that we find in the present appeal an obvious attempt to delay
and carry on a pretense which this Court can ill afford to let go without stern disapproval.

WHEREFORE, the decision and resolutions appealed from are hereby affirmed, with treble costs against
peti tioner. So ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, Makalintal and Zaldivar,
JJ., concur.

Concepcion, J., took no part.

Decision and resolutions affirmed.

o0o Visayan Bicycle Manufacturing Co., Inc. vs. National Labor Union, 14 SCRA 5, No. L-
19997 May 19, 1965

VOL. 115, AUGUST 19, 1982

887

Judric Canning Corporation vs. Inciong

No. L-51494. August 19, 1982.*

JUDRIC CANNING CORPORATION, petitioner, vs. THE HONORABLE AMADO G. INCIONG, in his capacity as
Deputy Minister of Labor, THE HONORABLE FRANCISCO L. ESTRELLA, in his capacity as Director of Region
IV, Ministry of Labor, UNITED LUMBER & GENERAL WORKERS OF THE PHILIPPINES (ULGWP), NORMA
PINEDA, LEONILA MORALES, TERESITA BALMACEDA, VICKY PEALOSA, ADELINA VALENZUELA and
JUANITA REPOSAR, respondents.

Labor Law; Unfair Labor Practice; Illegal Dismissal; Abandonment of work by employees inconsistent
with their immediate filing of a complaint for illegal dismissal; Dismissal of employees not for
abandonment from work but due to union activities.The record shows that after the parties had
submitted their respective position papers, a hearing was held, at the conclusion of which, the
respondent Regional Director found that the private respondents did not abandon their jobs but were
dismissed because of their union activities. This is a finding of fact which may not now be disturbed.
Besides, the private respondents immediately filed a complaint for illegal dismissal, seeking their
reinstatement, on August 24, 1978, soon after their services were terminated on August 19, 1978. It
would be illogical for the private respondents to abandon their work and then immediately file an action
seeking their reinstatement.

Same; Same; Same; Dismissal of employees for soliciting signatures to form a union within the company
constitutes unfair labor practice; Interference with formation of a labor union violative of employees
right to self-organization.In this particular case, the private respondents were dismissed, or their
services were terminated, because they were soliciting signatures in order to form a union within the
plant. x x x For sure, the petitioner corporation is guilty of unfair labor practice in interfering with the
formation of a labor union and retaliating against the employees exercise of their right to self-
organization.

Same; Same; Same; Prior clearance with Ministry of Labor for termination of employment not required
for employees with less than one year of service.Indeed, prior clearance with the Ministry of

_______________

* SECOND DIVISION

888

888

SUPREME COURT REPORTS ANNOTATED

Judric Canning Corporation vs. Inciong

Labor for the termination of the private respondents is not necessary in this case since the private
respondents have been employed with the petitioner corporation for less than one (1) year.

PETITION to review the order of the Ministry of Labor.

The facts are stated in the opinion of the Court.

Florante A. Bautista for petitioner.

The Solicitor General for respondent Deputy Minister.

Eduardo G. Araulo for private respondents.

CONCEPCION JR., J.:


Petition for certiorari, with a prayer for the issuance of a writ of preliminary injunction or restraining
order, to annul and set aside the Order issued by the Regional Director of the Ministry of Labor on
November 15, 1978 in Case No. R4-STF5515-78, entitled: United Lumber and General Workers of the
Philippines (ULGWP), et al., complainants, versus Judric Canning Corporation, respondents, which
ordered the herein petitioner to reinstate immediately herein private respondents Norma Pineda, Vicky
Pealosa, Leonila Morales, Teresita Balmaceda, Adelina Valenzuela, and Juanita Reposar to their former
positions with full backwages from the date of their dismissal up to their actual reinstatement; the
Order issued by the respondent Amado G. Inciong on August 3, 1979, which affirmed the aforestated
order of the Regional Director and dismissed the appeal of the herein petitioner; and the Writ of
Execution issued in said case on September 24, 1979.

The records show that the herein private respondents Norma Pineda, Vicky Pealosa, Leonila Morales,
Teresita Balmaceda, Adelina Valenzuela, and Juanita Reposar are employees of the petitioner
corporation and are members of the United Lumber and General Workers of the Philippines (ULGWP).
On August 19, 1978, the said complainants were allegedly not allowed to report for work due to their
union activities in soliciting membership in a union yet to be organized in the company and their time
cards were removed from the rack. As a result, the said complainants and their labor union

889

VOL. 115, AUGUST 19, 1982

889

Judric Canning Corporation vs. Inciong

filed a complaint for unfair labor practice against the petitioner with Region IV of the Ministry of Labor,
seeking the reinstatement of the complainants with full backwages.1

The herein petitioner denied having locked out the complainants and claims that the said complainants
failed to report for work and abandoned their positions. The petitioner also denied having knowledge of
the union activities of the complainants until August 30, 1978, when it was served notice of a petition
for direct certification filed by the complainant union.2

After hearing the parties, or on November 15, 1978, the Regional Director of Region IV of the Ministry of
Labor, after finding that the petitioner had dismissed the complainants without valid cause, ordered the
petitioner to immediately reinstate the complainants to their former positions with full backwages from
the date of their dismissal up to their actual reinstatement.3

The petitioner corporation appealed to the Ministry of Labor,4 but its appeal was dismissed for lack of
merit on August 3, 1979.5 Thereafter, a writ of execution was issued on September 24, 1979.6

Hence, the present recourse. As prayed for, a temporary restraining order, restraining the respondents
from enforcing, implementing and/or carrying out the writ of execution dated September 24, 1979, was
issued on November 12, 1979.7

1. The petitioner contends that the Regional Directors finding, which was affirmed by the respondent
Deputy Minister of Labor, that the petitioner is guilty of unfair labor practice for terminating the services
of the respondent union members due to their alleged union activities, is not supported by the evidence
of record.

_______________

1 Rollo, pp. 39, 41, 43.

2 Id., p. 50.

3 Id., p. 57.

4 Id., p. 59.

5 Id., p. 80.

6 Id, p. 81.

7 Id., p. 107.

890

890

SUPREME COURT REPORTS ANNOTATED

Judric Canning Corporation vs. Inciong

This contention is untenable. The record shows that after the parties had submitted their respective
position papers, a hearing was held, at the conclusion of which, the respondent Regional Director found
that the private respondents did not abandon their jobs but were dismissed because of their union
activities. This is a finding of fact which may not now be disturbed.

Besides, the private respondents immediately filed a complaint for illegal dismissal, seeking their
reinstatement, on August 24, 1978, soon after their services were terminated on August 19, 1978. It
would be illogical for the private respondents to abandon their work and then immediately file an action
seeking their reinstatement.

Moreover, there was no reason at all and none has been suggested by the petitioner, for the private
respondents to abandon their work. No employee with a family to support, like the private respondents,
would abandon their work knowing fully well of the acute unemployment and underemployment
problem and the difficulty of looking for a means of livelihood. As the Solicitor General stated: To get a
job is difficult; to run from it is foolhardy.

But, most of all, the petitioner stated that in spite of its position that the private respondents had
abandoned their jobs, it offered to pay respondent union members severance pay of one (1) month.8
This is a clear admission of the charge of arbitrary dismissal, for why should the petitioner offer to pay
what it calls severance pay if the private respondents were not, indeed, dismissed, or if the petitioner
sincerely believed in the righteousness of its stance?
2. The petitioner further claims that it could not have committed the unfair labor practice charge for
dismissing some of its employees due to their alleged union activities because the alleged dismissal took
place more than four (4) months before the organizational meeting of the union and more than one (1)
year before actual registration of said union with the Labor Organization Division of the Bureau of Labor
Relations.

The contention is without merit. Under Article 248(a) of the Labor Code of the Philippines, to interfere
with, restrain, or

_______________

8 Id., p. 29; par. 10(f) of Petition.

891

VOL. 115, AUGUST 19, 1982

891

Judric Canning Corporation vs. Inciong

coerce employees in their exercise of the right to self-organization is an unfair labor practice on the
part of the employer. Paragraph (d) of said Article also considers it an unfair labor practice for an
employer to initiate, dominate, assist or otherwise interfere with the formation or administration of
any labor organization, including the giving of financial or other support to it. In this particular case, the
private respondents were dismissed, or their services were terminated, because they were soliciting
signatures in order to form a union within the plant. In their affidavit, executed on September 19,
1978,9 the private respondents stated:

Na kami ay nagkampanya upang papirmahin namin sa membership form ng ULGWP ang nakakarami
(majority) sa mga empleyeado at nagharap kami ng petisyon sa Ministri ng Paggawa upang masertify
ang aming unyon sa Case No. R4-LRD-M-8-403-78;

Na dahil sa aming pagreklamo sa Pangasiwaan na ibigay sa amin ang mga biyaya sa ilalim ng Kodigo ng
Paggawa at dahil sa pagtayo at pagkampaniya namin sa mga empleyeado na sumapi sa unyon ay kami ay
pinag-initan at tinanggal sa trabaho ng Pangasiwaan.

For sure, the petitioner corporation is guilty of unfair labor practice in interfering with the formation of a
labor union and retaliating against the employees exercise of their right to self-organization.

3. Finally, the petitioner claims that the respondent Regional Directors finding, which was affirmed by
respondent Deputy Minister of Labor, that the dismissal of respondent union members is conclusively
presumed to be without a valid cause because petitioner failed to apply for clearance is contrary to the
applicable Rules and Regulations Implementing the Labor Code and is at variance with jurisprudence on
the matter.
The petitioner obviously refers to the following portion of the Order of the Regional Director dated
November 15, 1978:

The record shows that complainants Norma Pineda, Vicky Pealosa, Leonila Morales, Teresita
Balmaceda, Adelina Valenzuela

_______________

9 Id., p. 48.

892

892

SUPREME COURT REPORTS ANNOTATED

Judric Canning Corporation vs. Inciong

and Juanita Reposar were employed by respondent in January, 1978, up to August, 1978. They worked
continuously up to the time that their services were terminated by respondent on the ground of
abandonment. However, respondent did not apply for clearance with this Office to terminate the
services of complainants. Hence, their dismissal is conclusively presumed to be without a valid cause.

Indeed, prior clearance with the Ministry of Labor for the termination of the private respondents is not
necessary in this case since the private respondents have been employed with the petitioner
corporation for less than one (1) year. Section 1, Rule XIV, Book V of the Implementing Rules and
Regulations provides as follows:

Section 1. Requirement for shutdown or dismissal.No employer may shut down his establishment or
dismiss any of his employees with at least one year during the last two years, whether the service is
broken or continuous, without prior clearance issued therefor in accordance with this Rule. Any
provision in a collective agreement dispensing with the clearance requirement shall be null and void.

However, the questioned order finding the dismissal of the private respondents to be without just cause
is not based upon such absence of prior clearance alone. The respondent Regional Director also found
that the private respondents were dismissed because of their union activities and for the failure of the
petitioners to file a report in lieu of prior clearance, as provided for in Section 11, Rule XIV, Book V of the
Implementing Rules and Regulations. The questioned order further reads, as follows:

Moreover, we find that complainants did not abandon their job. They were terminated due to the fact
that they actively campaigned and assisted in the organization of their union.

Therefore, the dismissal of complainants is without valid cause, considering that respondent failed to
justify their action and also have not filed the necessary report as required under the Labor Code.

The error of the Regional Director in stating that the dismissal of the private respondents was without
just cause in view of the absence of prior clearance from the Ministry of Labor is,
893

VOL. 115, AUGUST 19, 1982

893

Judric Canning Corporation vs. Inciong

thus, not sufficient to warrant a reversal of the questioned order.

WHEREFORE, the petition should be, as it is hereby, DISMISSED. The temporary restraining order
heretofore issued is hereby LIFTED and set ASIDE. With costs against the petitioner.

SO ORDERED.

Barredo (Chairman), Aquino, Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.

Petition dismissed. Order lifted and set aside.

Notes.Constitutional guarantee of security of tenure applied to dismissals without cause even if


ordered prior to the New Labor Code. (Pepito vs. Secretary of Labor, 96 SCRA 454.)

Proof of illegal dismissal devolved upon claimant himself seeking reinstatement, and for failure to show
proof, the Court of Industrial Relations cannot order his reinstatement. (William Lines, Inc. vs. Lopez, 96
SCRA 593.)

Testimony of a witness which is biased cannot prevail over a disapproved application for indefinite leave
of absence. (Sandoval Shipyards, Inc. vs. Clave, 94 SCRA 472.)

The statutory remedy requiring reinstatement of employees dismissal due to the unfair labor practice of
the employer is not unconstitutional. (Bradman Company, Inc. vs. Court of Appeals, 78 SCRA 10.)

o0o

894 Judric Canning Corporation vs. Inciong, 115 SCRA 887, No. L-51494 August 19, 1982

88

SUPREME COURT REPORTS ANNOTATED

Manila Hotel Company vs. Court of Industrial Relations

No. L-30139. September 28, 1972.

MANILA HOTEL COMPANY, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and PINES HOTEL
EMPLOYEES ASS'N. (CUGCO), respondents.

No. L-30755. September 28, 1972.


MANILA HOTEL COMPANY and SOFRONIO G. RIVERA, petitioners, vs. COURT OF INDUSTRIAL RELATIONS
and PINES HOTEL EMPLOYEES ASSOCIATION (CUGCO), respondents.

No. L-30818. September 28, 1972.

MANILA HOTEL COMPANY, petitioner, vs. PINES HOTEL EMPLOYEES ASS'N. (CUGCO) and COURT OF
INDUSTRIAL RELATIONS, respondents.

Labor Law; Circumstances showing unfair discrimination of union members.Where a company


contrary to previous practice of dividing equally to all employees a certain percentage of its net profits
as Christmas bonus allocated 50% thereof only to its Manila Hotel employees, some of whom were
granted yearend bonus, while its Pines Hotel employees where there exists a labor union did not receive
any year-end bonus; where only 25% of said percentage of net profits was distributed to its Pines Hotel
employees and 25% to its Taal Vista Lodge employees, these circumstances constitute a clear case of
discrim. ination, it appearing that there is no union at the Manila Hotel or the Taal Vista Lodge and
considering further that the company had been besieged with demands for better living conditions from
the union as well as strikes of said union.

89

VOL. 47, SEPTEMBER 28, 1972

89

Manila Hotel Company vs. Court of Industrial Relations

Same; Same; Court may grant affirmative relief,There being unfair discrimination found in the
distribution of bonuses to its employees, the industrial court's order that the company distribute said
bonus pro rata among all its employees regardless of their place of work, as was consistently done in
previous years, does not constitute reversible error. It is- a proper exercise of its power under section 5
of R.A. 875 to grant affirmative relief whenever it has adjudged the existence of an unfair labor practice.

Same; Same.There is unfair and unjust discrimination in the granting of salary adjustments where the
evidence shows that(a) the management of a hotel company paid the employees of one of its branch
hotels where there is a union the minimum monthly salary for daily workers when said employees are
paid on a monthly basis; (b) where salary adjustments were granted to employees of one of its branch
hotels which was always losing in its operations and where there is no labor organization in a manner
not in accordance with the Interpretative Bulletin of the Bureau of Labor Standards of the Department
of Labor; and (c) the total salary adjustments given every ten of its Pines Hotel employees where there is
a labor union would not even equal the salary adjustments given one single Manila office employee.

Same; Jurisdiction of industrial court on incidental ques-tions.Where the industrial court properly
assumed jurisdiction over the dispute between the parties and sanctioned the settlement thereof
offered by the petitioner itself, said court certainly had jurisdiction in all incidents relating to the
implementation and carrying out of the settlement.

Same; Equivalent of preliminary investigation in filing of unfair labor practice charge.Assuming that a
prior preliminary investigation was necessary to determine the merit of the union's complaint for unfair
labor practice, it cannot be gainsaid that in effect respondent court undertook such preliminary
investigation on its own when it immediately called the parties to a conference and no prejudice could
be said to have been caused to petitioner (company) thereby for the merit of the union complaint is
borne out by the fact that the parties

90

90

SUPREME COURT REPORTS ANNOTATED

Manila Hotel Company vs. Court of Industrial Relations

promptly arrived at a satisfactory settlement thereof upon petitioner's undertaking to pay retirement
gratuity to all eighty-six affected employees.

Same; Court should take account of employees' accountability before authorizing payment.It is to be
expected that the court will take the necessary safeguard measures to provide payment of some
accountabilities and outstanding obligations of employees before making payment of the retirement
gratuity pay to the affected employees out of the fund the employer had deposited with the court for
said purpose.

APPEALS by certiorari from the decision, orders and resolutions of the Court of Industrial Relations,

The facts are stated in the opinion of the Court.

Government Corporate Counsel Leopoldo M. Abellera and Trial Attorney Vicente M. Constantino, Jr.
for petitioners.

J. C. Espinas, B. C. Pineda & Associates and Ramon R. Buenaventura for respondent Union.

TEEHANKEE, J.:

These three appeals by certiorari filed on various dates in 1969 involve the same parties and various
incidents between them, commencing from an unfair labor practice charge originally filed by respondent
union against petitioner company and culminating in supplemental proceedings to enjoin the abrupt
dismissal and termination of employment of all eighty-six employees at the Pines Hotel with its sudden
sale on March 28, 1968 to a third party.

Petitioner-employer has appealed from the cease-and-desist order of respondent court of industrial
relations in its decision in the original unfair labor case as well as from the orders issued by it to enforce
the settlement of the supplemental dispute arising from the sudden sale of the Pines Hotel and the
abrupt dismissal of all its eighty-six employees with the award and payment to them of gratuities as
agreed to by the company itself and embodied in a formal resolution of its board of directors, and from

91
VOL. 47, SEPTEMBER 28, 1972

91

Manila Hotel Company vs. Court of Industrial Relations

the court's en banc resolutions denying reconsideration thereof.

Hence, the Court in giving due course to the last appeal filed by petitioner-employer on August 26, 1969,
and docketed as Case L-30818, ordered per its resolution therein of August 28, 1969 that all the three
cases at bar be jointly taken up and decided, in view of their related nature.

In L-30755, upon proper complaint filed by respondent court's prosecutor at the instance of the union
and after preliminary investigation, an unfair labor practice on six (6) counts was filed against herein
petitioner Manila Hotel Company then engaged in the operation of the Pines Hotel in Baguio City and its
co-petitioner Sofronio G. Rivera as the hotel's then general manager.1 After due hearing, respondent
court dismissed four (4) counts and found said petitioners guilty of unfair labor practice on two (2)
counts, viz, (1) the charge of discrimination in the granting of the 1965 Christmas bonus and (2) the
charge of discrimination in the granting of salary adjustments pursuant to the then newly enacted
Minimum Wage Law, Republic Act 4180, passed on April 21, 1965, and decreeing a two-peso increase in
the daily minimum wage for workers in industrial and commercial establishments from four pesos
(P4.00) to six pesos (P6.00). Respondent court in its decision dated December 16, 1968, accordingly
ordered respondents

"(1) To cease and desist from further committing such unfair labor practice acts;

"(2) To distribute the 1965 Christmas bonus on a 'prorata' basis as having been done in the previous
years; and

"(3) To implement the salary adjustments of all the employees, except the assistant manager of the
Pines Hotel, in accordance with their salary scale in consonance with the minimum monthly salary of
P180.00 as provided for in the New

_______________

1 Docketed as Case No. 4506-ULP of the industrial court, entitled "Pines Hotel Employees Ass'n. (Cugco),
complainant, vs. Manila Hotel Co. and Sofronio G. Rivera, respondents" and filed on May 16, 1966.

92

92

SUPREME COURT REPORTS ANNOTATED

Manila Hotel Company vs. Court of Industrial Relations

Minimum Wage Law, effective July 1, 1965 until the sale of the Pines Hotel to the Resort Hotels
Corporation."
Their motion for reconsideration having been denied by respondent court's en banc resolution of May
20, 1969, petitioners filed their present appeal on August 11, 1969.

Re L-30139During the pendency of the unfair labor practice case in the court below (subject of L-
30755, supra), the eighty-six employees of Pines Hotel were stunned when they abruptly received on
March 28, 1968 written notices that the National Development Company as owner of the Pines Hotel
had sold it to the Resort Hotels Corporation on that same date, March 28, 1968, and that since
petitioner Manila Hotel Company's operation of the hotel would cease effective the next day, "(their)
services are hereby terminated as of the close of business hours of March 28, 1968."'

Since the unfair labor practice case, No. 4506-ULP, was still pending before the industrial court,
respondent union forthwith filed with said court on the same date, March 28, 1968, an "Urgent Petition
with prayer for a temporary restraining order"3 complaining of petitioner's actions in bad faith in
abruptly giving them their termination papers (during the very pendency of their case for other unfair
labor practices on its part) in violation of the guarantee of their tenure of employment in their subsisting
collective bargaining agreement while disclaiming at their latest conciliation conference held only twelve
(12) days earlier on March 16, 1968 any knowledge of a reported plan to sell the Pines Hotel.

The union accordingly prayed inter alia that "this case be consolidated with CIR Case No. 4506-ULP" and
that pending consideration of the merits, an ex-parte restraining order be issued against their abrupt
dismissal or termination of services until further orders of respondent court. The union also promptly
established picket lines in protest of the termination of their members without due notice and despite
their pending urgent petition for an injunction or restraining order against such termination.

_______________

2 Annex D of Annex B, petition in L-30139.

3 Annex E, petition in L-30139.

93

VOL. 47, SEPTEMBER 28, 1972

93

Manila Hotel Company vs. Court of Industrial Relations

Respondent court took cognizance of the union's petition which was docketed with the same number as
the original unfair labor practice case as "No. 4506-ULP (1)" and called the parties immediately to a
conference which it set on March 29, and April 2, 1968.4 At the conference and hearing of the union's
urgent petition for injunction, petitioner-employer expressly manifested that it was willing to grant
retirement gratuity to all the employees, and its board of directors met and deliberated on April 4, and
April 8, 1968 to approve the corresponding resolutions.

Hence, petitioner's board expressly approved the payment of such gratuity to "those who have served
for 20 years or more (who) shall be paid in accordance with law" and "(T)hat the basis of computing the
gratuity pay shall be the basic salary as of the day of separation."5 This expressly refers and applies to
the sixteen (16) [out of 86] employees who have twenty years or more of service with petitioner
company and whose gratuity pay has been ordered paid as per respondent court's order of December 5,
1968 in the amounts therein computed.

Notwithstanding petitioner's having deposited with respondent court pursuant to its own offer the sum
of P100, 000.00 through its check on which was written "for payment of gratuity and/or separation pay
and other money claims of the petitioner union," and the union in turn having withdrawn its picket line,
petitioner nevertheless questioned the issuance of said order on grounds of alleged lack of jurisdiction
and impropriety thereof. Its motion for reconsideration having been denied per respondent court's en
banc resolution of January 9, 1969, it filed on February 22, 1969 its appeal, which was docketed as L-
30139.

_______________

4 The General Manager of the National Development Company as owner of the Pines Hotel was called
to the second conference of April 2, 1968, although said company was actually formally impleaded as
party respondent in the Amended Urgent Petition filed by the union on April 3, 1968.

5 Paragraphs 2 and 3 of petitioner's board's deliberations of April 8, 1968, cited in respondent court's
questioned order of December 5, 1968, Annex A, petitioner's brief in L-30139.

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Re L-30818In connection with the same sale on March 28, 1968 of the Pines Hotel and the abrupt
termination of all its employees as of the same date, petitioner's board of directors had likewise
approved on April 8, 1968 the payment of retirement gratuity to the greater remainder of seventy (70)
[of a total 86] employees who had not completed 20 years of service and were not qualified under the
Retirement Law, R.A. No. 186, at the rate of "one month salary for every year of service, but not
exceeding twelve months"6

Citing the various manifestations in the record of petitioner's willingness to pay such gratuity,
respondent court issued its order of February 27, 1969 for the payment of such gratuity not exceeding
12 months to the remaining seventy (70) employees who have rendered one year to nineteen years of
service to petitioner company. Nevertheless, as in L-30139, petitioner raised the same questions of
jurisdiction and propriety of the industrial court's issuance of said payment order. Its motion for
reconsideration having been denied by respondent court's en banc resolution of May 8,1969, petitioner
filed on August 26, 1969 its herein appeal, docketed as L-30818.

I Re L-30755
1. In the original unfair labor practice case, respondent court found petitioner guilty of discrimination
and unfairness in the distribution of the 1965 Christmas bonus in that it radically departed from its
adopted procedure of distributing pro-rata among all the employees of the Manila Hotel, Taal Vista
Lodge and the Pines Hotel the traditional Christmas bonus (7% of the net profit of the company) as
approved by the Office of the Economic Coordinator which it had followed for the past six or seven
years prior to 1965.

_______________

6 Paragraph 1 of petitioner's board's deliberation of April 8, 1968, cited in respondent court's


questioned order of Feb 27 1969, Annex A, petitioner's brief in L-30818

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The industrial court found that instead 'in the year 1965, the Manila Hotel Company, thru its general
manager, distributed the 7% from the net profit as Christmas bonus in a way that 50% was allotted to
the Manila Hotel employees, 25% to the Taal Vista Lodge employees and the remaining 25% to the Pines
Hotel employees. With this way of distributing the 7% of the net profit amounting to P8,239.73, the
share of the Manila Hotel amounting to P4,119.63, when divided equally among its eight employees,
each will receive P500.00 more or less; the share of the Taal Vista, Lodge amounting to P2,060.05, when
divided equally among its thirty employees, each will receive P 70.00, more or less; while the share of
the Pines Hotel amounting to P2,060.05, when divided equally among its one hundred twenty
employees, each will receive P20.00, as their respective bonus."7

The industrial court stressed that the Pines Hotel employees who were the most numerous "would
receive a lesser bonus than the employees of the Manila Hotel and Taal Vista Lodge where neither is
there any existing labor organization nor the complainant union has any member" and that "(T)wo
employees of the Manila Hotel, namely, Modesto Hilario and Margarita Reyes, were granted a yearend
bonus in the amount of P2,011.55 and P1,645.82, respectively, despite the fact that the latter had been
employed by the company for over a year only, that is in September, 1964."

Petitioner's contention that the giving of the lion's share of the 1965 Christmas bonus to the eight
administrative employees at its Manila office was a valid exercise of discretion on the pretext that "the
head office of the petitioner Manila Hotel realized a net profit for the year 1965 in the amount of
P226,055.42 while the Pines Hotel and the Taal Vista Lodge incurred heavy losses for the same period."8
is shown by the record to be bereft of factual basis. The record clearly shows that the only income from
petitioner's Manila Hotel is derived from the lease of its

_______________
7 Italics supplied.

8 Petitioner's brief in L-30755, pp. 16-17.

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hotel building and facilities to a third party (Mrs. Esperanza Zamora) with the earning of which
petitioner's eight administrative employees at the head office in Manila had nothing to do, whereas the
Pines Hotel and the Taal Vista Lodge were actually operated as such by petitioner company, with the
Pines Hotel at times making actual profits from operations in contrast to the Taal Vista Lodge which
always showed operational losses.

Respondent court thus correctly held that: "(T)o the mind of the Court, whether or not the Pines Hotel
incurred losses is of no moment. The fact that management granted Christmas bonus to its employees,
the same should have been divided equally as it has been done before. Aside from the Christmas bonus
of 50% that was allocated to the Manila Hotel employees, some of them were granted yearend bonus
while the employees of the Pines Hotel did not receive any year-end bonus. This is a clear case of
discrimination, it appearing that there is no union at the Manila Hotel or the Taal Vista Lodge and
considering further that lately respondents had always been beset with demands for better living
conditions from the complainant union as well as strikes being staged by the union."

The Court finds that petitioner has failed to show any error in respondent court's decision that
petitioner distribute the bonus pro rata, among all its employees regardless of their place of work, as
was consistently done in the previous years, and that respondent court's order was but a proper
exercise of its power under section 5 of Republic Act 875 to grant affirmative relief whenever it has
adjudged the existence of an unfair labor practice.

2. Respondent court also found petitioner guilty on a second count in the granting of salary adjustments
pursuant to the two-peso increase in the daily minimum wage ordained by the then newly enacted
Republic Act 4180.

On this point, petitioner's contention is that it could not be held guilty of unfair labor practice because
"it is not the herein petitioners who are not agreeable to paying the respondent union members a
minimum salary of P180.00, but the Office of the Economic Coordination for the

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Manila Hotel Company vs. Court of Industrial Relations

reason that the minimum monthly salary for said employees, as prescribed by the Interpretative Bulletin
of the Bureau of Labor Standards of the Department of Labor, is P157. 00."9

The Court finds no error in respondent court's rejection of petitioner's claims, when it held that it
"cannot agree to the contentions of respondents that their failure to implement the New Minimum
Wage Law was due to the interpretative bulletin of the Bureau of Labor Standards of the Department of
Labor, which in the opinion of the Office of the Economic Coordinator should apply to the employees of
the Pines Hotel because the said interpretative bulletin refers to daily wage employees (prescribing a
new minimum monthly salary of P157.00 for daily workers) and not to monthly paid ones (such as the
Pines Hotel employees) and, besides that, this is a mere opinion. Likewise, the contention that the
company finances do not warrant the revision of the salary scales of the Pines Hotel employees is
untenable considering that the employees of the Manila Hotel and some employees of the Taal Vista
Lodge where there is no existing labor organization were given salary adjustments beginning the fiscal
period July 1, 1965, and that despite the alleged financial reverses suffered by the company, the latter
was able to grant year-end bonus to two of its employees, which in effect belies the contention of the
company that they are in a financial strait, Furthermore, the Taal Vista Lodge had always been losing in
its operation while the Pines Hotel makes profits at times. Yet, despite all these, the respondent
company granted salary adjustments to some employees of the former without strictly adhering to the
aforesaid interpretative bulletin, which in the Court's opinion was purposely done to discourage the
members of the complainant union."10

Respondent court's finding of unfair and unjust discrimi-nation in the granting of salary adjustments
pursuant to the two-peso increase ordained by the then new Minimum

_______________

9 Petitioner's brief in L-30755, p. 9.

10 Notes in parentheses supplied.

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Wage Law is amply borne out by the record, with the eight (8) employees at the Manila office being
granted a total of P18,000.00 in salary adjustments for the fiscal year July 1, 1965 to June 30, 1966,
whereas eighty (80) regular employees of Pines Hotel received only an aggregate salary adjustment in
the lesser amount of P15,000.00. Stated in another way, the total salary adjustments given every ten
Pines Hotel employees would not even equal the salary adjustment given one single Manila office
employee.

Hence, without in any way turning down or modifying the increases and high salary adjustments which
petitioner saw fit to grant to its Manila office employees, respondent court correctly removed the unfair
discrimination by granting the corresponding affirmative relief to the Pines Hotel employees through
ordering the payment to them by petitioner of the new minimum monthly salary of P180.00 for
monthly-paid employees to which they were entitled under Republic Act 4180.11

II Re L-30139

As above stated, upon filing on March 28, 1968 by the union of its urgent petition with prayer to restrain
their abrupt separation from employment without prior notice by virtue of the sale 011 that same date
of the Pines Hotel to the Resort Hotels Corporation, respondent court took cognizance thereof,
permitted its docketing as a supplemental case of the original unfair labor practice case as "No. 4506-
ULP (1)" and forthwith called the parties to a conference on March 29, and April 2, 1968.

A settlement of such dispute was worked out at such conference with petitioner agreeing to pay
retirement gratuities to all 86 Pines Hotel employees as above mentioned and the union in turn
withdrawing its picket line. Petitioner deposited with respondent court the amount of P100,

_______________

11 Cf. Automotive Parts & Equipment Co, Inc. vs. Lingad, 30 SCRA 248 (Oct. 31, 1969),

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000.00 (per NDC-issued check dated April 5, 1968)12 on account of such gratuity and/or separation pay
and other money claims of the union. An advance equivalent to one month's salary chargeable to any
amount that may be due the employees was given them therefrom in April, 1968. Much later, on
September 5, 1968, respondent court further issued in the same case its order for the payment out of
said deposit to the employees of their accrued leaves. Such order was never questioned or challenged
by petitioner.

On December 5, 1968, respondent court issued its order for the payment of the full gratuity of the
sixteen (16) Pines Hotel employees with twenty (20) years or more of service, stating the premises
thereof as follows:

"After the order dated September 5, 1968 in the aboveentitled case had been satisfied with the actual
payment of the accrued leaves of absences of the members of the complainant union, the other matter
deemed by the Court as the issue to be resolved is the subject of gratuity. This order particularly refers
to those employees with twenty (20) years or above of service.

"The facts on this matter are quite clear and to the point. After the termination of employment of
individual claimants on March 28, 1968, the Board of Directors of the Manila Hotel Company, on April 4,
1968, met, deliberated and decided to extend some monetary benefits to the terminated employees.
The deliberation was formally reduced to writing in a subsequent meeting of the same Board on April 8,
1968. Pertinent portion of the deliberation reads:

'Paragraph 2:

Those who have served for 20 years or more shall be paid in accordance with law.

'Paragraph 3:

That the basis of computing the gratuity pay shall be the basic salary as of the day of separation.'
(Exhibit '1-B')

_________________

12 Annex C, Rollo, in L-30139, p. 141.

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"The records are also rich with manifestations of the Company's counsel reiterating willingness to pay
gratuity in accordance with law. x x x x

Indeed, the records as well as the evidence is replete with the willingness of the Company to pay
gratuity to the members of the complainant union.

"The records also show that individual claimants herein were extended sometime in April, 1968 an
advance equivalent to one month's salary chargeable against any amount that may be due them (Exhibit
'5')"

As to outstanding hotel bills totalling P1,847.23 which respondent court held to be definitely deductible
against the individual employees who incurred the same, respondent court ruled that it would hold in its
custody the corresponding amount thereof, thus: "(A) s a condition of the payment of the claims of
complainant members, it was resolved by the Board of Directors of the Company that 'a) any amount
due to the Company from any employees shall be deducted before payments including their personal
accounts with the Company/ (Exhibit 'A'). The Company submitted a list of hotel bills which
unfortunately were unsupported with the very evidence of indebtedness. Hence, said hotel bills, though
definitely a deduction from the claims of individual claimant, for very obvious reasons, will not be
disposed of in this order but will be held in abeyance until after sufficient facts are in the Court's
possession for it to treat later on. Meanwhile, the Court will hold in its custody the total amount of hotel
bills."

Accordingly, respondent court ordered as follows:

"IN VIEW OF ALL THE FOREGOING, as manifested and agreed upon by the respondents' counsel, the
Cashier of the Court is hereby ordered to issue, subject to the usual accounting and auditing rules and
regulations, a check in favor of the Pines Hotel Employees Association (CUGCO), complainant herein,
thru its counsel, Atty. Benjamin C. Pineda, in the amount of P75,714,77 representing the net gratuity of
the hereunder

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named employees who have to their credit twenty years of service or above and another check in favor
of J. C. Espinas & B. C. Pineda & Associates, thru Atty. Benjamin C. Pineda, in the amount of P27,139.00
as attorney's fees.

"For the proper guidance of the union president and Atty. Pineda, who are authorized to make
individual distributions of the claims of the employees and who must submit a report or accounting
thereafter within fifteen (15) days from receipt of the total gratuity for those with twenty (20) years of
service or above, less twenty-five per cent attorney's fees and one month advance gratuity, the
individual distribution is as stated hereunder, to wit:

(Note: Follows a list of the names of the sixteen (16) employees, with five (5) columns, giving the total
gratuity due each of them, the 25% attorney's fee deductible therefrom, hotel bills deductible from five
(5) employees accountable therefor, amount of one month's advance gratuity deductible from each
employee, and the net gratuity due each of them.)

"The total hotel bills of P1,847.23 shall remain with the custody of the Court until its further disposition.
There is still a balance of P78,415.57 remaining with the Court out of the initial deposits. And so an
additional amount of P26,285.43 must still be deposited with the Court in order that the full gratuity of
those with twenty years of service or above could be paid. The Company is therefore ordered to deposit
the said amount of TWENTY-SIX THOUSAND TWO HUNDRED EIGHTY-FIVE PESOS AND FORTY-THREE
CENTAVOS (P26.285.43) plus the amount of SIXTY-TWO PESOS AND EIGHTY-SIX CENTAVOS (P62.86)
representing the Court's deposit fee."

Petitioner bases its present appeal from respondent court's order on the strength of the "Opposition
and/or Motion to Dismiss" dated April 28, 1968 that it filed with respondent court on May 2, 1968,13
after the union had filed on April 3, 1968 its "Amended Urgent Petition" of the same date14 formally
impleading the National Development

_________________

13 Annex H, petition in L-30139.

14 Annex G, petition in L-30139.

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Manila Hotel Company vs. Court of Industrial Relations

Company, owner-seller of Pines Hotel, as party respondent.15

Four grounds were stated by petitioner in said "opposition and/or motion to dismiss," as follows:

(1) that the urgent petition states no valid cause of action;

(2) that the respondent Court has no jurisdiction over the subject matter of the petition and over the
respondent;

(3) that the claim set forth in the petition has been paid, waived, abandoned or otherwise extinguished;
and

(4) that the injunction prayed for does not lie against the Company.

The first two grounds are now re-assigned by petitioner as errors on appeal, claiming that respondent
court had no jurisdiction over the case below because "there exists no longer employer-employee
relationship notwithstanding that the case refers to acts of unfair labor practice where no reinstatement
is sought" and that "the lawyer of the respondent union cannot file charge for unfair labor practices
directly with the court, because it is only the prosecutor of the respondent CIR that can file the same
pursuant to sec. 5(b) of Republic Act 875" and that "respondent CIR cannot just issue an order granting
awards without first resolving a motion to dismiss for lack of jurisdiction and/or granting (petitioner) its
right to file its answer to a complaint."16

These alleged errors assigned now by petitioner are actually moot and academic, f or even as of the time
petitioner had filed the same with respondent court on May 2, 1968, it had already recognized
respondent court's valid jurisdiction over the unfair labor complaint raised by the union over the abrupt
termination of services of the Pines Hotel employees and had come to a settlement of the dispute as

________________
15 See fn. 4, supra.

16 Petitioner's brief in L-30139, pp. 3-4.

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early as April, 1968 with its agreement to pay retirement gratuity to the employees in two categories
(those with 20 years of service and above, and those with 1 to 19 years of service, supra) and had
deposited with respondent court the sum of P100,000.00 for the purpose. On the other hand, the union,
accepting the settlement, had lifted their picket line and no longer insisted on its members' guarantee of
tenure of employment under their subsisting collective bargaining agreement.

Since the employees' claims had been settled with petitioner's agreement to pay them retirement
gratuity, respondent court certainly had jurisdiction to issue its questioned payment order of December
5, 1968 to implement the very agreement and settlement arrived at by the parties in the case before it.

As a matter of fact, the third-stated ground of petitioner's formal opposition belowwhich it


completely ignores in the present appealwas that the union's claim or demand has been paid, waived,
abandoned or otherwise extinguished, citing precisely the policy adopted as early as April 5, 1968 by
petitioner "regarding the payment of gratuity and/or termination pay to said employees," submitting
photostat copy of the board's resolution thereon, recording petitioner's "good faith and earnest desire"
and resolution to deposit P200,000.00 for the purpose and citing union's counsel's conformity to the
settlement and to the proviso "that all pending cases in relation to the present dispute against MHCo,
NDC and Resort Hotels Corporation and its officials shall be withdrawn by the Pines Hotel Employees
Association (Cugco) and its members and to lift the picket lines at the Pines Hotel."17

Such withdrawal of the case could not of course be literally implemented, as petitioner would insinuate.
The union did withdraw its complaint for continued employment of its members despite the sale of the
Pines Hotel and it did lift the picket line, leaving the new owner to go freely about its business. The case
itself had to remain for implemen-

_________________

17 Petitioner's brief in L-30139, Annex C, pp. ix and x.

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Manila Hotel Company vs. Court of Industrial Relations

tation in turn of petitioner's undertaking to pay retirement gratuity to all the 86 Pines Hotel employees
who had lost their jobs, and this is exactly what respondent court has done through its December 5,
1968 payment order. Respondent court having properly assumed jurisdiction over the dispute and
sanctioned the settlement thereof offered by petitioner itself, certainly had unquestioned jurisdiction in
all incidents relating to the implementation and carrying out of the settlement.

Prescinding from the foregoing nevertheless and dealing with the alleged errors which-petitioner has
assigned on appeal, it is obvious that its claim that the union members sought no reinstatement has no
factual basis in the record. The union precisely sought an injunction against the abrupt termination of its
members and claimed that they were entitled to continued employment as guaranteed by their
collective bargaining agreement.

Petitioner's claim that the union counsel could not file an unfair labor practice charge directly with
respondent court may be correct as far as it goes. What the union had actually filed on March 28, 1968
was a separate "urgent petition with prayer for a restraining order." Respondent court however in effect
granted the union's alternative prayer for consolidation of the new unfair labor practice charge with the
union's pending case No. 4506-ULP. Assuming that a prior preliminary investigation was necessary to
determine the merit of the complaint, it cannot be gainsaid that in effect respondent court undertook
such preliminary investigation on its own when it immediately called the parties to a conference on the
next day, March 29, 1968 and April 2, 1968. No prejudice could be said to have been caused to
petitioner thereby, for the very merit of the union complaint is borne out by the fact that the parties
promptly arrived at a satisfactory settlement thereof upon petitioner's undertaking to pay retirement
gratuity to all eighty-six affected employees. By the same token, respondent court no longer had to
formally rule on petitioner's "opposition and/or motion to dismiss" of May 2, 1968 by virtue of the
earlier settlement reached by the parties in April, 1968, as already shown above.

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Only one point apparently not raised by petitioner in its opposition-motion below merits mention, and it
is that payment of the retirement gratuity to the employees directly through the respondent court from
the amount therein deposited by petitioner (and not through the Government Service Insurance System
in accordance with the usual practice) might disregard and not take into account "some
accountabilities" and "outstanding obligations" of said employees.18 It is to be expected that
respondent court will take the necessary safeguard measures to avoid such contingency, by properly
calling in a GSIS representative in charge of the GSIS accounts of said sixteen (16) employees to make
the proper verification before authorizing final payment of the amounts due to them.

III Re L-30818
This appeal involves the last order issued on February 27, 1969 by respondent court for the payment to
the greater remainder of seventy (70) Pines Hotel employees with less than twenty (20) years of service
(and therefore not qualified for gratuity under the Retirement Act, R.A. No. 186) of retirement gratuity
of "one month salary for every year of service, but not exceeding twelve months" as offered and agreed
to by petitioner itself, pursuant to its past practice.

In said order, respondent court, after noting the previous payment of the accrued leaves and one
month's salary advance, and the manifestations of record evidencing petitioner's reiterations of its
willingness to pay such gratuity, as in the case of the sixteen other employees with 20 years or over of
service (in Case L-30139), noted that:

"After the order dated September 5, 1968 in the aboveentitled case had been satisfied with the actual
payments of the accrued leaves of absences of the members of complainant union, the remaining issue
to be determined is the subject of gratuity for those with services ranging from one year to nine

_______________

18 Petitioner's brief in L-30139, p. 23.

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teen years. Those with twenty or above years of service were treated in a separate order.

"It appears that the facts are quite clear and not controverted. After the termination of employment of
the individual complainants on March 28, 1968, the Board of Directors of the Manila Hotel Company, on
April 4, 1968 met, deliberated and decided to extend some monetary benefits to the terminated
employees who are incidentally members of complainant union. This deliberation was formally reduced
to writing in a subsequent meeting on April 8, 1968. Pertinent portions of the deliberation reads:

'Paragraph 1Employees who have rendered one year to nineteen years of services with the Manila
Hotel Company should be paid one month salary for every year of service, but not exceeding 12 months'
(Exh. 1-B)

x x x x x x x

"Finally the company admitted that former employees of the Manila Hotel Company in Manila were
given one month pay for every year of service but not exceeding twelve (12) months when their services
were terminated as a result of the relief of Mr. Zamora in 1954, June 30, 1954, except those employees
who were transferred to the Pines Hotel. (t.s.n., page 122, Aug. 9, 1968)"
Respondent court, as in L-30139, made the same reservation of holding in abeyance settlement of
outstanding hotel bills in the total amount of P2,921.94 against the individual employees liable therefor
until after presentation by petitioner of the necessary evidence.

Respondent court accordingly ordered the following:

"From the evidence, testimonial and documentary, attached herewith is a statement of the claims of the
individual workers including hotel bills, one-month advance pay, and 25% attorney's fees. (Exh. B-2, B-
3)19

__________________

19 The statement attached to this order in L-30818 actually lists, besides the seventy (70) regular
employees (with less than 20 years of service) twenty-two (22) additional "extra regular employees."

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Manila Hotel Company vs. Court of Industrial Relations

"In view of the foregoing, the respondent, Manila Hotel Company, is hereby ordered to deposit with the
Court the amount of P103;856.30 in order to meet the total claims of the workers less their one-month
advance pay."

As already adverted to above, petitioner assigns in this appeal the very same identical errors assigned by
it in Case L-30139, based on its "opposition and/or motion to dismiss" filed on May 2, 1968 with
respondent court.

Accordingly, petitioner's appeal must perforce be rejected for the very same grounds already stated
above with reference to Case L-30139. As in said case L-30139, petitioner has in no manner questioned
or disputed the factual bases and findings of respondent court as to its undertaking and agreement in
the record to pay the retirement gratuity to the employees, by way of settlement of their dispute arising
from the protested abrupt termination of their employment with the sudden sale of the Pines Hotel to a
third party.

Respondent court in issuing the appealed payment order was but acting within its jurisdiction properly
assumed of implementing the very agreement and settlement for payment of retirement gratuity
arrived at by the parties in the case before it.

ACCORDINGLY, the decision, orders and resolutions appealed from are hereby af firmed. With reference
to Case L-30139 involving payment of retirement gratuity to the sixteen (16) qualified employees therein
named, respondent court is directed to make the corresponding verification that their accountabilities
to the Government Service Insurance System as such members-employees are fully discharged before
final payment of the amounts found due to them under the appealed order, herein affirmed, is made.
No costs.

Concepcion, C.J., Zaldivar, Castro, Makasiar, Antonio and Esguerra, JJ., concur.

Makalintal, J., is on official leave.

Fernando, J., concurs except as to the last paragraph in IIre L-30139.

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Barredo, J., concurs in separate opinion.

BARREDO, J.: Concurring

I agree fully with the judgment in this case. The only purpose of this separate concurrence is to
emphasize the fact that the appeals in G.R. Nos. L-30139 and 30818 are completely devoid of merit and
should be declared as frivolous and dilatory. The attack against the decision and orders of the Court of
Industrial Relations involved in said appeals for want of jurisdiction has absolutely no basis.

The record shows that on March 28, 1968, when respondent union filed with the Industrial Court its
"Urgent Petition, with prayer for a temporary restraining order" to enjoin the implementation of the
abrupt termination of the services of its members working at the Pines Hotel, there was pending with
said court an unfair labor practice case, No. 4506-ULP, in which the matter involved was discrimination
in the payment of Christmas bonus and salary adjustments. While it may be true that such abrupt
termination of the services of said union members could be considered independently of the then
pending unfair labor practice case, the developments that swiftly took place after the filing of the
union's petition on March 28, 1968 made resort to the usual procedure in unfair labor practice cases
unnecessary insofar as the matter of such abrupt termination of services was concerned, f or the simple
reason that when the court tried to look into the union's grievance in the conferences of March 29 and
April 2, 1968, the question of whether or not petitioner had committed an unfair labor practice in
relation to the termination of services just mentioned had become moot and academic, considering that
by resolving to grant gratuities to the members concerned, and the latter agreeing thereto, it is as if the
said abrupt termination of services were admitted to be improper and unjustified without granting the
said gratuities. Accordingly, there was no reason anymore for the court to proceed any further.

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The pertinent provision of the Industrial Peace Act, Section 5, Paragraphs (a) and (b) read as follows:

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

"(b) The Court shall observe the following procedure without resort to mediation and conciliation as
provided in section four of Commonwealth Act Numbered One hundred and three, as amended, or to
any pre-trial procedure. Whenever it is charged by an offended party or his representative that any
person has engaged or is engaging in any such unfair labor practice, the Court or any agency or agent
designated by the Court must investigate such charge and shall have the power to issue and cause to be
served upon such person a complaint stating the charges in that respect and containing a notice of
hearing before the Court or a member thereof, or before a designated Hearing Examiner at the time and
place fixed therein not less than five nor more than ten days after serving the said complaint. The
person complained of shall have the right to file an answer to the complaint and to appear in person
otherwise (but if the Court shall so request, the appearance shall be personal) and give testimony at the
place and time fixed in the complaint. In the discretion of the Court, a member thereof or a Hearing
Examiner, any other person may be allowed to intervene in the said proceeding and to present
testimony. In any such proceeding, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Act that the Court and its members and Hearing
Examiners shall use every and all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or procedure. In rendering its decisions, the Court
shall not be bound solely by the evidence presented during the hearing but may avail itself of all other
means such as (but not limited to) ocular inspections and questioning of well-informed persons which
results must be made a part of the record. In the proceeding before the Court or a Hearing Examiner
thereof, the

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parties shall not be required to be represented by legal counsel and it shall be the duty and obligation of
the Court or Hearing Examiner to examine and cross-examine witnesses on behalf of the parties and to
assist in the orderly presentation of the evidence."

It is true that under these provisions, there is an indication that mediation and conciliation as well as
pre-trial procedure need not be resorted to in unfair labor practice cases, but this is because such
procedures may unnecessarily delay the prevention of the unfair labor practice complained of, contrary
to the spirit of the law. I take it, however, that the very provisions of the section aforequoted to the
effect that "In any such proceeding, the rules of evidence prevailing in courts of law or equity shall not
be controlling and it is the spirit and intention of this Act that the Court and its members and Hearing
Examiners shall use all reasonable means to ascertain the facts in each case speedily and objectively
without regard to technicalities of law or procedure" even to the extent of allowing the Court to base its
decision on matters beyond those presented during the hearing and parties who are non-lawyers to
appear without counsel, viewed properly, do not enjoin the immediate termination of unfair labor
practice case if, for one reason or another, all the parties concerned happen to be before the Court and
after an exchange of views agree on how to fairly settle the case without further proceedings, when by
doing so, as in these cases, the unfair labor practice charged is practically assumed to be true and the
complainants are granted relief which appears to the Court just and consistent with the objective of the
law, under the circumstances obtaining. In other words, my view is that the procedure for unfair labor
practice cases outlined in Paragraph (b) above should be generally followed, but it is not violative of the
law and subversive of the broad jurisdiction of the Industrial Court conferred in Paragraph (a) above for
said Court to adopt in any given case a speedier and more prac-

111

VOL. 47, SEPTEMBER 28, 1972

111

Manila Hotel Company vs. Court of Industrial Relations

tical procedure for accomplishing the purpose of the law and rendering justice to the parties.

Decision, orders and resolutions affirmed.

Notes.While the management of a business enterprise is normally free to choose whom to employ
and retain within its complement, for purposes of efficiency and greater productivity, employees, on the
other hand, are statutorily protected against any form of unlawful discrimination in the exercise of their
rights to join a union and engage in union activity. Thus, where it is shown or indubitably appears that
the employer's motivation in discharging an employee is due to the latter's union affiliation or concerted
activities, the employer's use of another excuse for such discharge, such as economic retrenchment, lack
of work, violation of company rules, etc. will be unavailing. (See Visayan Bicycle Mfg. Co., Inc. vs.
National Labor Union, L-19997, May 19, 1965). In Talisay-Silay Milling Co., Inc. vs. Court of Industrial
Relations (L-14023 and L-14135, Jan. 30, 1960), it was thus held that the conduct of an employer in
dismissing strikers who were ordered reinstated by the Court of Industrial Relations, allegedly because
of a retrenchment policy adopted by the company and after complying with the 30-day notice of
separation, may be considered discriminatory where the records disclosed that those who were laid off
were precisely the reinstated strikers and the employer never adopted a reasonable basis for
determining the persons to be so separated from the service. Likewise, in National Rice & Corn Corp. vs.
NARIC Workers Union (L-18058, Aug. 30, 1962), it was held that where the employer adjusted the wages
of its employees except those who were the organizers and leaders of the union, the former is guilty of
unfair labor practice under section 4 (a) (4) of the Industrial Peace Act. Unfair discrimination may,
however, exist also where the employer grants the benefits of a collective bargaining agreement only to
union members without any valid reason. In such a case, the employer's acts would constitute undue
discrimination against non-members. (See International Oil Factory Workers Union vs. Judge Martinez,
L-15560, Dec. 31, 1960).

112

Copyright 2017 Central Book Supply, Manila Hotel Company vs. Court of Industrial Relations, 47 SCRA
88, No. L-30139, No. L-30755, No. L-30818 September 28, 1972

536

SUPREME COURT REPORTS ANNOTATED

Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union

G.R. No. 87672. October 13, 1989.*

WISE AND CO., INC., petitioner, vs. WISE & CO., INC. EMPLOYEES UNION-NATU AND HONORABLE
BIENVENIDO G. LAGUESMA, in his capacity as voluntary Arbitrator, respondents.

Labor Law; Unfair Labor Practice; There can be no discrimination where the employees concerned are
not similarly situated.There can be no discrimination committed by petitioner thereby as the situation
of the union employees are different and distinct from the non-union employees. Indeed, discrimination
per se is not unlawful. There can be no discrimination where the employees concerned are not similarly
situated.

Same; Same; Same; Rule that labor law does not authorize the substitution of judgment of the employer
in the conduct of its business, established.The Court holds that it is the prerogative of management to
regulate, according to its discretion and judgment, all aspects of employment. This flows from the
established rule that labor law does not authorize the substitution of the judgment of the employer in
the conduct of its business. Such management prerogative may be availed of without fear of any liability
so long as it is exercised in good faith for the advancement of the employers interest and not for the
purpose of defeating or circumventing the rights of employees under special laws or valid agreement
and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or
spite.

Same; Same; Same; Same; Grant by petitioner of profit sharing benefits to the employees outside the
bargaining unit falls under the ambit of its managerial prerogative.The grant by petitioner of profit
sharing benefits to the employees outside the bargaining unit falls under the ambit of its managerial
prerogative. It appears to have been done in good faith and without ulterior motive. More so when as in
this case there is a clause in the CBA where the employees are classified into those who are members of
the union and those who are not. In the case of the union members, they derive their benefits from the
terms and conditions of the CBA contract which constitute the law between the contracting parties.
Both the employer and the union members are bound by such agreement.

_______________
* FIRST DIVISION.

537

VOL. 178, OCTOBER 13, 1989

537

Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union

PETITION to review the decision of the Voluntary Arbiter, National Conciliation and Mediation Board.

The facts are stated in the opinion of the Court.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

GANCAYCO, J.:

The center of controversy in this petition is whether the grant by management of profit sharing benefits
to its non-union member employees is discriminatory against its workers who are union members.

The facts are undisputed. On April 3, 1987 the management issued a memorandum circular introducing
a profit sharing scheme for its managers and supervisors the initial distribution of which was to take
effect March 31, 1988.

On July 3, 1987 the respondent union wrote petitioner through its president asking for participation in
this scheme. This was denied by petitioner on the ground that it had to adhere strictly to the Collective
Bargaining Agreement (CBA).

In the meantime, talks were underway for early negotiation by the parties of the CBA which was due to
expire on April 30, 1988. The negotiation thus begun earlier than the freedom period. On November 11,
1987 petitioner wrote respondent union advising the latter that they were prepared to consider
including the employees covered by the CBA in the profit sharing scheme beginning the year 1987
provided that the ongoing negotiations were concluded prior to December 1987. However, the
collective bargaining negotiations reached a deadlock on the issue of the scope of the bargaining unit.
Conciliation efforts to settle the dispute on 29 March 1988 were made but no settlement was reached.

On March 30, 1988, petitioner distributed the profit sharing benefit not only to managers and
supervisors but also to all other rank and file employees not covered by the CBA. This caused the
respondent union to file a notice of strike alleging that petitioner was guilty of unfair labor practice
because the union members were discriminated against in the grant of the profit sharing benefits.
Consequently, management refused to proceed with the CBA negotiations unless the last notice of
strike was first resolved. The union agreed to postpone discus-
538

538

SUPREME COURT REPORTS ANNOTATED

Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union

sions on the profit sharing demand until a new CBA was concluded. After a series of conciliation
conferences, the parties agreed to settle the dispute through voluntary arbitration. After the parties
submitted their position papers, a rejoinder and reply, on March 20, 1989 the voluntary arbitrator
issued an award ordering petitioner to likewise extend the benefits of the 1987 profit sharing scheme to
the members of respondent union.1 Hence, this petition wherein petitioner alleged the following
grounds in support thereof

THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION WHEN HE ORDERED THE EXTENSION OF PROFIT SHARING
BENEFITS TO THOSE EMPLOYEES COVERED BY THE CBA DESPITE PATENT LACK OF FACTUAL AND LEGAL
BASIS THEREFOR IN THAT

1. DISCRIMINATION PER SE IS NOT UNLAWFUL ESPECIALLY WHEN THE EMPLOYEES ARE NOT SIMILARLY
SITUATED.

2. THE TERMS AND CONDITIONS STIPULATED IN THE CBA HAVE THE FORCE AND EFFECT OF A LAW
BETWEEN THE PARTIES. PRIVATE RESPONDENT, THEREFORE CANNOT DEMAND, AS A MATTER OF RIGHT,
WHAT IS NOT STIPULATED IN THE CBA.

3. THE ACT OF THE UNION IN NEGOTIATING FOR THE INCLUSION OF THE PROFIT SHARING BENEFIT IN
THE PRESENT CBA IS AN IMPLIED ADMISSION THAT THEY WERE NOT ENTITLED TO IT IN 1987.

II

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING


TO LACK OR EXCESS OF JURISDICTION WHEN HE MADE THE CLEARLY BASELESS CONCLUSION THAT THE
PETITIONER WAS MOTIVATED BY ITS DESIRE TO DEFEAT OR OTHERWISE PREJUDICE THE BASIC RIGHTS
OF ITS EMPLOYEES.2

_______________

1 Pages 32-34, Rollo.

2 Pages 11-12, Rollo.


539

VOL. 178, OCTOBER 13, 1989

539

Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union

The petition is impressed with merit.

Under the CBA between the parties that was in force and effect from May 1, 1985 to April 30, 1988 it
was agreed that the bargaining unit covered by the CBA consists of all regular or permanent
employees, below the rank of assistant supervisor.3 Also expressly excluded from the term
appropriate bargaining unit are all regular rank and file employees in the office of the president, vice-
president, and the other offices of the companypersonnel office, security office, corporate affairs
office, accounting and treasury department.4

It is to this class of employees who were excluded in the bargaining unit and who do not derive
benefits from the CBA that the profit sharing privilege was extended by petitioner.

There can be no discrimination committed by petitioner thereby as the situation of the union employees
are different and distinct from the non-union employees.5 Indeed, discri-mination per se is not
unlawful. There can be no discrimination where the employees concerned are not similarly situated.

Respondent union can not claim that there is grave abuse of discretion by the petitioner in extending
the benefits of profit sharing to the non-union employees as they are two (2) groups not similarly
situated. These non-union employees are not covered by the CBA. They do not derive and enjoy the
benefits under the CBA.

The contention of the respondent union that the grant to the non-union employees of the profit sharing
benefits was made at a time when there was a deadlock in the CBA negotiation so that apparently the
motive thereby was to discourage such non-union employees from joining the union is not borne by the
record. Petitioner denies this accusation and instead points out that inspite of this benefit extended to
them, some non-union workers actually joined the respondent union thereafter.

Respondent union also decries that no less than the president of the petitioner agreed to include its
members in the coverage of the 1987 profit sharing benefit provided that they would

_______________

3 Article 1, Section 1, CBA; page 4, Rollo.

4 Pages 4-5, Rollo.

5 Caltex Phils. vs. Phil. Labor Organization, Caltex Chapter, 92 Phil. 1014, 1018 (1953).

540
540

SUPREME COURT REPORTS ANNOTATED

Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union

agree to an earlier negotiation for the renewal of the CBA which expired in 1988. Be this as it may, since
there was actually a deadlock in the negotiation and it was not resolved and consummated on the
period expected, private respondent can not now claim that petitioner has a duty to extend the profit
sharing benefit to the union members.

The Court holds that it is the prerogative of management to regulate, according to its discretion and
judgment, all aspects of employment. This flows from the established rule that labor law does not
authorize the substitution of the judgment of the employer in the conduct of its business.6 Such
management prerogative may be availed of without fear of any liability so long as it is exercised in good
faith for the advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or valid agreement and are not exercised in a
malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.7

The grant by petitioner of profit sharing benefits to the employees outside the bargaining unit falls
under the ambit of its managerial prerogative. It appears to have been done in good faith and without
ulterior motive. More so when as in this case there is a clause in the CBA where the employees are
classified into those who are members of the union and those who are not. In the case of the union
members, they derive their benefits from the terms and conditions of the CBA contract which constitute
the law between the contracting parties.8 Both the employer and the union members are bound by
such agreement.

However, the court serves notice that it will not hesitate to strike down any act of the employer that
tends to be discriminatory against union members. It is only because of the peculiar circumstances of
this case showing there is no such intention that this court ruled otherwise.

_______________

6 NLU vs. Insular-Yebana Tobacco Corporation, 2 SCRA 924, 931 (1961); Republic Savings Bank vs. CIR, 21
SCRA 226, 235-236 (1967).

7 PRC vs. Garcia, 18 SCRA 107, 110 (1966); and LVN vs. LVN Employees Association, 35 SCRA 147, 156
(1970).

8 Mactan Workers Union vs. Aboitiz, 45 SCRA 577, 581-582 (1977).

541

VOL. 178, OCTOBER 13, 1989


541

Impao vs. Makilala

WHEREFORE, the petition is GRANTED and the award of respondent Voluntary Arbitrator dated March
20, 1989 is hereby REVERSED AND SET ASIDE being null and void, without pronouncement as to costs.

SO ORDERED.

Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

Petition granted; award reversed and set aside.

Note.The benefits of an award can be extended to all workers involved in a dispute, unionists or not
even though not parties to the case, because it is presumed that other workers are also interested in
any increase in salary and other benefits. (National Marketing Corporation vs. Court of Industrial
Relations, L-17804, January 31, 1963, 7 SCRA 125; Manila Railroad Company vs. Court of Industrial
Relations, L-18389, January 31, 1963, 7 SCRA 174.)

o0o Wise and Co., Inc. vs. Wise & Co., Inc. Employees Union, 178 SCRA 536, G.R. No. 87672
October 13, 1989

86

SUPREME COURT REPORTS ANNOTATED

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)

G.R. No. 119205. April 15, 1998.*

SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION)
and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.

Labor Law; Management Prerogatives; Work Schedules; The right to fix the work schedules of the
employees rests principally on their employer.We agree, hence, we sustain petitioner. The right to fix
the work schedules of the employees rests principally on their employer. In the instant case petitioner,
as the employer, cites as reason for the adjustment the efficient conduct of its business operations and
its improved production. It rationalizes that while the old work schedule included a 30-minute paid
lunch break, the employees could be called upon to do jobs during that period as they were on call.
Even if denominated as lunch break, this period could very well be considered as working time because
the factory employees were required to work if necessary and were paid accordingly for working. With
the new work schedule, the employees are now given a one-hour lunch break without any interruption
from their employer. For a full one-hour undisturbed lunch break, the employees can freely and
effectively use this hour not only for eating but also for their rest and comfort which are conducive to
more efficiency and better performance in their work. Since the employees are no longer required to
work during this one-hour lunch break, there is no more need for them to be compensated for this
period. We agree with the

_______________
* FIRST DIVISION.

87

VOL. 289, APRIL 15, 1998

87

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)

Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours
without violating the Labor Code. Besides, the new schedule applies to all employees in the factory
similarly situated whether they are union members or not.

Same; Same; Same; Right to Self-Organization; Where the change effected by management with regard
to working time is made to apply to all factory employees engaged in the same line of work whether or
not they are members of the union, it cannot be said that the new scheme adopted by management
prejudices the right of the union to self-organization.The case before us does not pertain to any
controversy involving discrimination of employees but only the issue of whether the change of work
schedule, which management deems necessary to increase production, constitutes unfair labor practice.
As shown by the records, the change effected by management with regard to working time is made to
apply to all factory employees engaged in the same line of work whether or not they are members of
private respondent union. Hence, it cannot be said that the new scheme adopted by management
prejudices the right of private respondent to self-organization.

Same; Same; Even as the law is solicitous of the welfare of the employees, it must also protect the right
of an employer to exercise what are clearly management prerogatives; Management retains the
prerogative, whenever exigencies of the service so require, to change the working hours of its
employees.Every business enterprise endeavors to increase its profits. In the process, it may devise
means to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are clearly management prerogatives. Thus,
management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers. Further, management
retains the prerogative, whenever exigencies of the service so require, to change the working hours of
its employees. So long as such prerogative is exercised in good faith for the advancement of the
employers 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 such exercise.

88

88
SUPREME COURT REPORTS ANNOTATED

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)

Same; Same; Social Justice; Although the Supreme Court has inclined more often than not toward the
worker and has upheld his cause in his conflicts with the employer, such favoritism has not blinded the
Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine.While the Constitution is committed to the
policy of social justice and the protection of the working class, it should not be supposed that every
dispute will be automatically decided in favor of labor. Management also has rights which, as such, are
entitled to respect and enforcement in the interest of simple fair play. Although this Court has inclined
more often than not toward the worker and has upheld his cause in his conflicts with the employer, such
favoritism has not blinded the Court to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and the applicable law and doctrine.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

Ronaldo E. Javier for petitioner.

Seno, Mendoza and Associates for ALU-TUCP.

BELLOSILLO, J.:

Is the act of management in revising the work schedule of its employees and discarding their paid lunch
break constitutive of unfair labor practice?

Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other
rubber products. Sime Darby Salaried Employees Association (ALUTUCP), private respondent, is an
association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid on call lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its
monthly salaried

89

VOL. 289, APRIL 15, 1998

89

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)


employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department
working on shifts, a change in work schedule effective 14 September 1992 thus

TO: ALL FACTORY-BASED EMPLOYEES

RE: NEW WORK SCHEDULE

Effective Monday, September 14, 1992, the new work schedule of the factory office will be as follows:

7:45 A.M. - 4:45 P.M. (Monday to Friday)

7:45 A.M. - 11:45 A.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

9:30 A.M. - 10:30 A.M. and

2:30 P.M. - 3:30 P.M.

Lunch break will be between:

12:00 NN - 1:00 P.M. (Monday to Friday).

Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their
work and break time schedules will be maintained as it is now.1

Since private respondent felt affected adversely by the change in the work schedule and discontinuance
of the 30-minute paid on call lunch break, it filed on behalf of its members a complaint with the Labor
Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this
Court in Sime Darby International Tire Co, Inc. v. NLRC.2 However, the Labor Arbiter dismissed the
complaint on the ground that the change in the work schedule and the elimination of the 30-minute
paid lunch break of the factory workers constituted a valid exercise of management prerogative and that
the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the
benefits granted to factory workers as the working time did not exceed eight (8) hours.

_______________

1 Rollo, p. 34.

2 G.R. No. 87838, 26 February 1990.

90

90

SUPREME COURT REPORTS ANNOTATED


Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)

The Labor Arbiter further held that the factory workers would be unjustly enriched if they continued to
be paid during their lunch break even if they were no longer on call or required to work during the
break. He also ruled that the decision in the earlier Sime Darby case3 was not applicable to the instant
case because the former involved discrimination of certain employees who were not paid for their 30-
minute lunch break while the rest of the factory workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional compensation for their lunch break.

Private respondent appealed to respondent National Labor Relations Commission (NLRC) which
sustained the Labor Arbiter and dismissed the appeal.4 However, upon motion for reconsideration by
private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier
retired, reversed its earlier decision of 20 April 1994 as well as the decision of the Labor Arbiter.5 The
NLRC considered the decision of this Court in the Sime Darby case of 1990 as the law of the case
wherein petitioner was ordered to pay the money value of these covered employees deprived of lunch
and/or working time breaks. The public respondent declared that the new work schedule deprived the
employees of the benefits of a time-honored company practice of providing its employees a 30-minute
paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the
Labor Code, as amended. Hence, this petition alleging that public respondent committed grave abuse of
discretion amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor
practice in the implementation of the change in the work schedule of its employees from 7:45 a.m.-3:45
p.m. to 7:45 a.m.-4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding that
there was diminution of benefits when the 30-minute paid lunch break

_______________

3 Id.

4 Rollo, p. 70.

5 Rollo, p. 26.

91

VOL. 289, APRIL 15, 1998

91

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)

was eliminated; (c) in failing to consider that in the earlier Sime Darby case affirming the decision of the
NLRC, petitioner was authorized to discontinue the practice of having a 30-minute paid lunch break
should it decide to do so; and, (d) in ignoring petitioners inherent management prerogative of
determining and fixing the work schedule of its employees which is expressly recognized in the collective
bargaining agreement between petitioner and private respondent.
The Office of the Solicitor General filed in lieu of comment a manifestation and motion recommending
that the petition be granted, alleging that the 14 August 1992 memorandum which contained the new
work schedule was not discriminatory of the union members nor did it constitute unfair labor practice
on the part of petitioner.

We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees rests
principally on their employer. In the instant case petitioner, as the employer, cites as reason for the
adjustment the efficient conduct of its business operations and its improved production.6 It rationalizes
that while the old work schedule included a 30-minute paid lunch break, the employees could be called
upon to do jobs during that period as they were on call. Even if denominated as lunch break, this
period could very well be considered as working time because the factory employees were required to
work if necessary and were paid accordingly for working. With the new work schedule, the employees
are now given a one-hour lunch break without any interruption from their employer. For a full one-hour
undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but
also for their rest and comfort which are conducive to more efficiency and better performance in their
work. Since the employees are no longer required to work during this one-hour lunch break, there is no
more need for them to be compensated for this period. We agree with the Labor Arbiter that the new
work schedule fully complies with the daily work period of eight (8) hours without violating the Labor

_______________

6 Rollo, p. 11.

92

92

SUPREME COURT REPORTS ANNOTATED

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)

Code.7 Besides, the new schedule applies to all employees in the factory similarly situated whether they
are union members or not.8

Consequently, it was grave abuse of discretion for public respondent to equate the earlier Sime Darby
case9 with the facts obtaining in this case. That ruling in the former case is not applicable here. The issue
in that case involved the matter of granting lunch breaks to certain employees while depriving the other
employees of such breaks. This Court affirmed in that case the NLRCs finding that such act of
management was discriminatory and constituted unfair labor practice.

The case before us does not pertain to any controversy involving discrimination of employees but only
the issue of whether the change of work schedule, which management deems necessary to increase
production, constitutes unfair labor practice. As shown by the records, the change effected by
management with regard to working time is made to apply to all factory employees engaged in the
same line of work whether or not they are members of private respondent union. Hence, it cannot be
said that the new scheme adopted by management prejudices the right of private respondent to self-
organization.

Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain
that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives.10 Thus, management is free to
regulate, according to its own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work, processes to be followed,
supervision of workers, working regulations,

______________

7 Rollo, p. 36.

8 Rollo, p. 42.

9 See Note 2.

10 San Miguel Brewery Sales Force v. Ople, G.R. No. 53515, 8 February 1989, 170 SCRA 25; Abbot
Laboratories v. NLRC, 154 SCRA 713.

93

VOL. 289, APRIL 15, 1998

93

Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division)

transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of
workers.11 Further, management retains the prerogative, whenever exigencies of the service so require,
to change the working hours of its employees. So long as such prerogative is exercised in good faith for
the advancement of the employers 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 such
exercise.12

While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every dispute will be automatically decided in favor of labor.
Management also has rights which, as such, are entitled to respect and enforcement in the interest of
simple fair play. Although this Court has inclined more often than not toward the worker and has upheld
his cause in his conflicts with the employer, such favoritism has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.13

WHEREFORE, the petition is GRANTED. The Resolution of the National Labor Relations Commission
dated 29 November 1994 is SET ASIDE and the decision of the Labor Arbiter dated 26 November 1993
dismissing the complaint against petitioner for unfair labor practice is AFFIRMED.
SO ORDERED.

Davide, Jr. (Chairman), Vitug, Panganiban and Quisumbing, JJ., concur.

Petition granted.

_______________

11 NLU v. Insular Yebana Co., L-15363, 31 July 1961, 2 SCRA 924.

12 Union Carbide Labor Union v. Union Carbide Phils., Inc., G.R. No. 41314, 13 November 1992, 215
SCRA 554.

13 Cruz v. Medina, G.R. No. 73053, 15 September 1989, 177 SCRA 565.

94

94

SUPREME COURT REPORTS ANNOTATED

People vs. Ferras

Notes.The prerogative of the employer to transfer an employee from one work station to another is
not unlimited. (Gonpu Services Corporation vs. National Labor Relations Commission, 266 SCRA 657
[1997])

While the employer is not precluded from prescribing rules and regulations to govern the conduct of his
employees, these rules and their implementation must be fair, just and reasonable. (Brew Master
International, Inc. vs. National Federation of Labor Unions [NAFLU], 271 SCRA 275 [1997])

It is not the function of the law nor its intent to supplant the prerogative of management in running its
business, such as, to compel the latter to operate at a continuing loss. (Reahs Corporation vs. National
Labor Relations Commission, 271 SCRA 247 [1997])

o0o

Copyright 2017 Central Book S Sime Darby Pilipinas, Inc. vs. NLRC (2nd Division), 289 SCRA 86, G.R.
No. 119205 April 15, 1998