BARGAINING IN BAD FAITH CASES

Bradman co. vs. CIR bargaining in bad faith - Bradman Co., Inc. vs. CIR, G.R.
Nos. L-24134-35, July 21, 1977, 78 SCRA 10.pdf
THIRD DIVISION

[G.R. No. 113856. September 7, 1998]

SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING

UNITED WORKERS OF THE PHILIPPINES (SMTFM-UWP), its
officers and members, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP
FORM MANUFACTURING PHIL., INC., respondents.

DECISION
ROMERO, J.:

The issue in this petition for certiorari is whether or not an employer committed an unfair
labor practice by bargaining in bad faith and discriminating against its employees. The charge
arose from the employers refusal to grant across-the-board increases to its employees in
implementing Wage Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity
Board of the National Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact
that prior to the issuance of said wage orders, the employer allegedly promised at the collective
bargaining conferences to implement any government-mandated wage increases on an across-
the-board basis.
Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the
Philippines (SMTFM) was the certified collective bargaining representative of all regular rank
and file employees of private respondent Top Form Manufacturing Philippines, Inc. At the
collective bargaining negotiation held at the Milky Way Restaurant in Makati, Metro Manila on
February 27, 1990, the parties agreed to discuss unresolved economic issues. According to the
minutes of the meeting, Article VII of the collective bargaining agreement was discussed. The
following appear in said Minutes:

ARTICLE VII. Wages

Section 1. Defer

Section 2. Status quo

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

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

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

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

On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of
P17.00 per day in the salary of workers. This was followed by Wage Order No. 02 dated
December 20, 1990 providing for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said wage orders. However, they
demanded that the increase be on an across-the-board basis. Private respondent refused to accede
to that demand.Instead, it implemented a scheme of increases purportedly to avoid wage
distortion. Thus, private respondent granted the P17.00 increase under Wage Order No. 01 to
workers/employees receiving salary of P125.00 per day and below. The P12.00 increase
mandated by Wage Order No. 02 was granted to those receiving the salary of P140.00 per day
and below. For employees receiving salary higher than P125.00 or P140.00 per day, private
respondent granted an escalated increase ranging from P6.99 to P14.30 and from P6.00 to
P10.00, respectively.[3]
On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter
demanding that it should fulfill its pledge of sincerity to the union by granting an across-the-
board wage increases (sic) to all employees under the wage orders. The union reiterated that it
had agreed to retain the old provision of CBA on the strength of private respondents promise and
assurance of an across-the-board salary increase should the government mandate salary
increases.[4] Several conferences between the parties notwithstanding, private respondent
adamantly maintained its position on the salary increases it had granted that were purportedly
designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR NLRC alleging that private
respondents act of reneging on its undertaking/promise clearly constitutes an act of unfair labor
practice through bargaining in bad faith. It charged private respondent with acts of unfair labor
practices or violation of Article 247 of the Labor Code, as amended, specifically bargaining in
bad faith, and prayed that it be awarded actual, moral and exemplary damages. [5] In its position
paper, the union added that it was charging private respondent with violation of Article 100 of
the Labor Code.[6]
Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01
and 02, it had avoided the existence of a wage distortion that would arise from such
implementation. It emphasized that only after a reasonable length of time from the
implementation of the wage orders that the union surprisingly raised the question that the
company should have implemented said wage orders on an across-the-board basis. It asserted
that there was no agreement to the effect that future wage increases mandated by the government
should be implemented on an across-the-board basis. Otherwise, that agreement would have been
incorporated and expressly stipulated in the CBA. It quoted the provision of the CBA that
reflects the parties intention to fully set forth therein all their agreements that had been arrived at
after negotiations that gave the parties unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed by law from the area of collective
bargaining. The same CBA provided that during its effectivity, the parties each voluntarily and
unqualifiedly waives the right, and each agrees that the other shall not be obligated, to bargain
collectively, with respect to any subject or matter not specifically referred to or covered by this
Agreement, even though such subject or matter may not have been within the knowledge or
contemplation of either or both of the parties at the time they negotiated or signed this
Agreement.[7]
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the
complaint for lack of merit.[8] He considered two main issues in the case: (a) whether or not
respondents are guilty of unfair labor practice, and (b) whether or not the respondents are liable
to implement Wage Orders Nos. 01 and 02 on an across-the-board basis. Finding no basis to rule
in the affirmative on both issues, he explained as follows:

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

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

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

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

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

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

THE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT

DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS
OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE
LATTER HAS BARGAINED IN BAD FAITH WITH THE UNION
AND HAS VIOLATED THE CBA WHICH IT EXECUTED WITH
THE HEREIN PETITIONER UNION.
-B-
 THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT
DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS
OF DISCRIMINATION IN THE IMPLEMENTATION OF NCR
WAGE ORDER NOS. 01 AND 02.
-C-

THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT

FINDING THE PRIVATE RESPONDENTS GUILTY OF HAVING
VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING CBA.
-D-

THE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT

DECLARING THE PRIVATE RESPONDENTS GUILTY OF
HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF
THE PHILIPPINES, AS AMENDED.
-E-

ASSUMING, WITHOUT ADMITTING THAT THE PUBLIC

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

THE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO

THE PETITIONERS HEREIN ACTUAL, MORAL, AND
EXEMPLARY DAMAGES AND ATTORNEYS FEES.

As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a)
whether or not private respondent committed an unfair labor practice in its refusal to grant
across-the-board wage increases in implementing Wage Orders Nos. 01 and 02, and (b) whether
or not there was a significant wage distortion of the wage structure in private respondent as a
result of the manner by which said wage orders were implemented.
With respect to the first issue, petitioner union anchors its arguments on the alleged
commitment of private respondent to grant an automatic across-the-board wage increase in the
event that a statutory or legislated wage increase is promulgated. It cites as basis therefor, the
aforequoted portion of the Minutes of the collective bargaining negotiation on February 27, 1990
regarding wages, arguing additionally that said Minutes forms part of the entire agreement
between the parties.
 The basic premise of this argument is definitely untenable. To start with, if there was indeed
a promise or undertaking on the part of private respondent to obligate itself to grant an automatic
across-the-board wage increase, petitioner union should have requested or demanded that such
promise or undertaking be incorporated in the CBA. After all, petitioner union has the means
under the law to compel private respondent to incorporate this specific economic proposal in the
CBA. It could have invoked Article 252 of the Labor Code defining duty to bargain, thus, the
duty includes executing a contract incorporating such agreements if requested by either
party. Petitioner unions assertion that it had insisted on the incorporation of the same proposal
may have a factual basis considering the allegations in the aforementioned joint affidavit of its
members. However, Article 252 also states that the duty to bargain does not compel any party to
agree to a proposal or make any concession. Thus, petitioner union may not validly claim that the
proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally entered
into with private respondent.
The CBA is the law between the contracting parties[10] the collective bargaining
representative and the employer-company. Compliance with a CBA is mandated by the
expressed policy to give protection to labor.[11] In the same vein, CBA provisions should be
construed liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it is negotiated
and purpose which it is intended to serve."[12] This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest.[13] It goes without saying, however, that
only provisions embodied in the CBA should be so interpreted and complied with. Where a
proposal raised by a contracting party does not find print in the CBA,[14]it is not a part thereof and
the proponent has no claim whatsoever to its implementation.
Hence, petitioner unions contention that the Minutes of the collective bargaining negotiation
meeting forms part of the entire agreement is pointless. The Minutes reflects the proceedings and
discussions undertaken in the process of bargaining for worker benefits in the same way that the
minutes of court proceedings show what transpired therein.[15] At the negotiations, it is but
natural for both management and labor to adopt positions or make demands and offer proposals
and counter-proposals. However, nothing is considered final until the parties have reached an
agreement. In fact, one of managements usual negotiation strategies is to x x x agree tentatively
as you go along with the understanding that nothing is binding until the entire agreement is
reached.[16] If indeed private respondent promised to continue with the practice of granting
across-the-board salary increases ordered by the government, such promise could only be
demandable in law if incorporated in the CBA.
Moreover, by making such promise, private respondent may not be considered in bad faith
or at the very least, resorting to the scheme of feigning to undertake the negotiation proceedings
through empty promises. As earlier stated, petitioner union had, under the law, the right and the
opportunity to insist on the foreseeable fulfillment of the private respondents promise by
demanding its incorporation in the CBA. Because the proposal was never embodied in the CBA,
the promise has remained just that, a promise, the implementation of which cannot be validly
demanded under the law.
Petitioners reliance on this Courts pronouncements[17] in Kiok Loy v. NLRC[18] is, therefore,
misplaced. In that case, the employer refused to bargain with the collective bargaining
representative, ignoring all notices for negotiations and requests for counter proposals that the
union had to resort to conciliation proceedings. In that case, the Court opined that (a) Companys
refusal to make counter-proposal, if considered in relation to the entire bargaining process, may
indicate bad faith and this is specially true where the Unions request for a counter-proposal is
left unanswered. Considering the facts of that case, the Court concluded that the company was
unwilling to negotiate and reach an agreement with the Union.[19]
In the case at bench, however, petitioner union does not deny that discussion on its proposal
that all government-mandated salary increases should be on an across-the-board basis was
deferred, purportedly because it relied upon the undertaking of the negotiating panel of private
respondent.[20] Neither does petitioner union deny the fact that there is no provision of the 1990
CBA containing a stipulation that the company will grant across-the-board to its employees the
mandated wage increase. They simply assert that private respondent committed acts of unfair
labor practices by virtue of its contractual commitment made during the collective bargaining
process.[21] The mere fact, however, that the proposal in question was not included in the CBA
indicates that no contractual commitmentthereon was ever made by private respondent as no
agreement had been arrived at by the parties. Thus:

Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a

contract binding on the parties; but the failure to reach an agreement after negotiations continued
for a reasonable period does not establish a lack of good faith. The statutes invite and
contemplate a collective bargaining contract, but they do not compel one. The duty to bargain
does not include the obligation to reach an agreement. x x x.[22]

With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of
the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where private respondent exhibited an
indifferent attitude towards collective bargaining because the negotiations were not the unilateral
activity of petitioner union.The CBA is proof enough that private respondent exerted reasonable
effort at good faith bargaining.[23]
Indeed, the adamant insistence on a bargaining position to the point where the negotiations
reach an impasse does not establish bad faith. Neither can bad faith be inferred from a partys
insistence on the inclusion of a particular substantive provision unless it concerns trivial matters
or is obviously intolerable.[24]

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

On account of the importance of the economic issue proposed by petitioner union, it could
have refused to bargain and to enter into a CBA with private respondent. On the other hand,
private respondents firm stand against the proposal did not mean that it was bargaining in bad
faith. It had the right to insist on (its) position to the point of stalemate. On the part of petitioner
union, the importance of its proposal dawned on it only after the wage orders were
issued after the CBA had been entered into. Indeed, from the facts of this case, the charge of bad
faith bargaining on the part of private respondent was nothing but a belated reaction to the
implementation of the wage orders that private respondent made in accordance with law. In other
words, petitioner union harbored the notion that its members and the other employees could have
had a better deal in terms of wage increases had it relentlessly pursued the incorporation in the
CBA of its proposal. The inevitable conclusion is that private respondent did not commit the
unfair labor practices of bargaining in bad faith and discriminating against its employees for
implementing the wage orders pursuant to law.
The Court likewise finds unmeritorious petitioner unions contention that by its failure to
grant across-the-board wage increases, private respondent violated the provisions of Section 5,
Article VII of the existing CBA[26] as well as Article 100 of the Labor Code. The CBA provision
states:

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

Article 100 of the Labor Code on prohibition against elimination or diminution of benefits
provides that (n)othing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously
enjoyed by petitioner union and the other employees were withdrawn as a result of the manner
by which private respondent implemented the wage orders. Granted that private respondent had
granted an across-the-board increase pursuant to Republic Act No. 6727, that single instance
may not be considered an established company practice. Petitioner unions argument in this
regard is actually tied up with its claim that the implementation of Wage Orders Nos. 01 and 02
by private respondent resulted in wage distortion.
The issue of whether or not a wage distortion exists is a question of fact[27] that is within the
jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative agencies are
accorded respect and even finality in this Court if they are supported by substantial
evidence.[28] Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court said:

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage
increase to certain employees, we agree, is, by and large, a question of fact the determination of
which is the statutory function of the NLRC. Judicial review of labor cases, we may add, does
not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials
findings rest. As such, the factual findings of the NLRC are generally accorded not only respect
but also finality provided that its decisions are supported by substantial evidence and devoid of
any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal
are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be
as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived
therefrom.[29]

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

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

The NLRC then quoted the labor arbiters ruling on wage distortion.
We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It
is apropos to note, moreover, that petitioners contention on the issue of wage distortion and the
resulting allegation of discrimination against the private respondents employees are anchored on
its dubious position that private respondents promise to grant an across-the-board increase in
government-mandated salary benefits reflected in the Minutes of the negotiation is an
enforceable part of the CBA.
In the resolution of labor cases, this Court has always been guided by the State policy
enshrined in the Constitution that the rights of workers and the promotion of their welfare shall
be protected.[31] The Court is likewise guided by the goal of attaining industrial peace by the
proper application of the law. It cannot favor one party, be it labor or management, in arriving at
a just solution to a controversy if the party has no valid support to its claims. It is not within this
Courts power to rule beyond the ambit of the law.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the
questioned Resolutions of the NLRC AFFIRMED. No costs.
SO ORDERED.

[G.R. No. 91915. September 11, 1992.]

DIVINE WORD UNIVERSITY OF TACLOBAN, Petitioner, v. SECRETARY OF LABOR AND

EMPLOYMENT and DIVINE WORD UNIVERSITY EMPLOYEES UNION-ALU, Respondents.

Generosa R. Jacinto for Petitioner.

Joji L. Barrios for Private Respondent.

DECISION

ROMERO, J.:
Assailed in this petition for certiorari for being violative of the "constitutional right of employees to self-
organization which includes the right to form, join or assist labor organizations of their own choosing for
purposes of collective bargaining," 1 are the Orders of May 23, 1989 and January 17, 1990 issued by then
Secretary of Labor and Employment Franklin H. Drilon and Acting Secretary of Labor and Employment
Dionisio D. de la Serna, respectively.cha nrob les vi rtua l lawlib rary

Culled from the records are the following facts which led to the filing of the instant petition: c hanro b1es vi rtua l 1aw li bra ry

On September 6, 1984, Med-Arbiter Bienvenido C. Elorcha certified the Divine Word University Employees
Union (DWUEU) as the sole and exclusive bargaining agent of the Divine Word University (University for
brevity). On March 7, 1985, DWUEU submitted its collective bargaining proposals. On March 26, 1985, the
University replied and requested a preliminary conference to be held on May 28, 1985. However, two days
before the scheduled conference or on May 26, 1985, DWUEUs resigned vice-president Mr. Brigido Urminita
(or Urmeneta) wrote a letter addressed to the University unilaterally withdrawing the CBA proposals.
Consequently, the preliminary conference was cancelled. 2

After almost three years, or on March 11, 1988, DWUEU, which had by then affiliated with the Associated
Labor Union, 3 requested a conference with the University for the purpose of continuing the collective
bargaining negotiations. 4 Not having heard from the University, DWUEU-ALU sent a follow-up letter on
March 23, 1988 reiterating its request for a conference and warning the University against committing acts
of interference through its various meetings with both the academic and non-academic employees regarding
their union affiliation and activities. Despite the letter, the University persisted in maintaining silence.

On April 25, 1988, DWUEU-ALU filed with the National Conciliation and Mediation Board of the Department
of Labor and Employment a notice of strike on the grounds of bargaining deadlock and unfair labor practice
acts, specifically, refusal to bargain, discrimination and coercion on (sic) employees. 5 The conferences
which were held after the filing of the notice of strike led to the conclusion of an agreement between the
University and DWUEU-ALU on May 10, 1888 with the following terms: chan roble s virtual lawlib rary

"1. Union will submit their (sic) CBA proposals on Friday, May 13, 1988 for whatever action management will
take.

2. Union and management agrees (sic) to sit down and determine (sic) the number of employees that will
represent their bargaining unit.

3. Conciliation proceedings is (sic) temporarily suspended until the parties inform this office of further
development.

4. The issues of discrimination: re Ms. Colinayo and Ms. Cinco Flores is settled.

5. Issue (sic) on coercion and refusal to bargain shall be subject of continuing dialogue.

6. Atty. Jacinto shall be given 10 days notice in the next conciliation meeting." 6

However, it turned out that an hour before the May 10, 1988 agreement was concluded, the University had
filed a petition for certification election with the Region VIII office of the Department of Labor and
Employment. 7

On the other hand, on May 19, 1988, DWUEU-ALU, consonant with the agreement, submitted its collective
bargaining proposals. These were ignored by the University. Thereafter, through the National Conciliation
and Mediation Board (NCMB) of Region VIII, marathon conciliation conferences were conducted but to no
avail. Hence, on August 25, 1988, then Secretary of Labor Franklin M. Drilon, exercising his powers under
Art. 263(g) of the Labor Code, issued an Order assuming jurisdiction over the labor dispute and directing all
striking workers to report back to work within twenty-four (24) hours and the management to accept them
back under the same terms and conditions prevailing prior to the work stoppage. The Secretary also
designated the NCMB to hear the case and to submit its report thereon. 8

On the same day, Med-Arbiter Rodolfo S. Milado, acting on the Universitys petition for certification election,
issued an Order directing the conduct of a certification election to be participated in by DWUEU-ALU and "no
union," after he found the petition to be "well-supported in fact and in law." 9

Said Order prompted the DWUEU-ALU to file with the Secretary of Labor an urgent motion seeking to enjoin
Milado from further acting on the matter of the certification election. On September 20, 1988, the Labor
Secretary granted said motion and directed Milado to hold in abeyance any and all certification election
proceedings at the University pending the resolution of the labor dispute. 10 The Labor Secretarys Order,
predicated on his extraordinary powers under Art. 263 (g) of the Labor Code, conformed with this Court s
Resolution of October 29, 1987 in the Bulletin Today cases (G.R. Nos. 79276 and 79883) where the issue of
strong disagreement among the parties on the question of representation was deemed subsumed in the
labor dispute certified for compulsory arbitration. The Secretary added: jgc:chan roble s.com.p h

"Underscoring the necessity to conform with this settled doctrine is the fact that the dispute over which this
Office assumed jurisdiction arose from the alleged continued refusal by the University to negotiate a CBA
with the Union despite the latters certification as exclusive bargaining agent in 1984. Necessarily related
thereto is the representativity issue raised by the University in its certification election petition. The
resolution of these issues in one proceeding is, in the words of the Supreme Court, meet and proper in view
of the very special circumstances obtaining in this case, and will prevent split jurisdiction and that
multiplicity of proceedings which the law abhors (24 December 1987 [should be December 17, 1987]
resolution of the Supreme Court in the Bulletin Today cases, supra). chanroble s virtual lawl ibra ry

Moreover, to allow a certification election to proceed at this point in time might further rupture the already
strained labor-management relations pervading at the University. The assumption order issued by this Office
merely served as a temporary bond to hold together such a fragile relationship. More importantly, the
projected election hastily decreed would preempt the proper resolution of the issues raised and pursued so
zealously by the employees that prompted them to stage their strike." 11

The NCMB of Region VIII conducted hearings on the case from October 17-18, 1988. On October 26, 1988,
the Divine Word University Independent Faculty and Employees Union (DWUIFEU), which was registered
earlier that day, filed a motion for intervention alleging that it had "at least 20% of the rank and file
employees" of the University. 12

Exercising once again his extraordinary powers under Art. 263(g) of the Labor Code, the Secretary
consolidated "the entire labor dispute including all incidents arising therefrom, or necessarily related
thereto" in his Order of May 23, 1989 13 and the following cases were "subsumed or consolidated to the
labor dispute" : the petition for certification election docketed as MED-ARB-Case No. 5-04-88, the DWUEUs
complaint docketed as NLRC Case No. 8-0321-88, and the Universitys complaint docketed as NLRC Case
No. 8-0323-88. Thus, in said Order of May 23, 1989, the Secretary of Labor resolved these issues:" (1)
whether there was refusal to bargain and an impasse in bargaining; (2) whether the complaints for unfair
labor practices against each other filed by both parties, including the legality of the strike with the NLRC,
which later on was subsumed by the assumption Order, are with merits; and, (3) whether or not the
certification election can be passed upon by this Office." cralaw virtua1aw l ibra ry

On the first issue, the Secretary of Labor said: jgc:chanro bles. com.ph

"It is a matter of record that when the Union filed its Notice of Strike (Exh. A) two of the issues it raised
were bargaining deadlock and refusal to bargain. It is also worth mentioning that the CBA proposals by the
Union were submitted on March 7, 1985 (Exh. 9) after Med-Arbiter Bienvenido Elorcha issued a certification
election Order dated September 6, 1984 (Exh. 4). An examination of the CBA proposals submitted by the
Union of the University showed there was (sic) some negotiations that has (sic) taken place as indicated on
the handwritten notations made in the CBA proposal (Exh. F). The said proposals include among others,
union scope, union recognition, union security, union rights, job security, practices and privileges, terms and
conditions of work, leave of absence, hours of work, compensation salary and wages, workers rights and
safety, workers education, retirement longevity pay, strike and lockouts and grievance machinery.

The said CBA proposals were indorsed by DWU President to Atty. Generosa R. Jacinto, Divine Word
University legal counsel together with a copy of the Union CBA proposals. The submission of the CBA
proposals and the reply letter of the DWU counsel, dated March 26, 1985 to the Union indicated that the
CBA negotiations process was set into motion. DWUs counsel even suggested that the preliminary
conference between the union and the university be scheduled on 28 May 1985 at 2:30 P.M. which
unfortunately did not take place due to the alleged withdrawal of the CBA proposals.

Undeniably, the Union and the DWU have not been able to conclude a CBA since its certification on 6
September 1984 by then Med-Arbiter Bienvenido Elorcha. But the non-conclusion of a CBA within one year,
as in this case, does not automatically authorize the holding of a certification election when it appears that a
bargaining deadlock issue has been submitted to conciliation by the certified bargaining agent. The records
show that the Notice of Strike was filed by the Union on 25 April 1988, citing bargaining deadlock as one of
the grounds (Annex 1), while the Petition for Certification Election was filed by the DWU on 10 May 1988.
The filing of the notice of strike was precipitated by the Universitys act of not replying to the Unions letters
of March 11 and March 23, 1988.

This being the case, Section 3, Rule V, Book V of the Rules Implementing the Labor Code applies and we
quote:chan roble s.com:c ralaw:red

Sec. 3. When to file. In the absence of a collective bargaining agreement submitted in accordance with
Article 231 of the Code, a petition for certification election may be filed at any time. However, no
certification election may be held within one year from the date of issuance of declaration of a final
certification election result. Neither may a representation question be entertained it (sic) before the filing of
a petition for certification election, a bargaining deadlock to which an incumbent or certified bargaining
agent is a party has been submitted to conciliation or arbitration or had become the subject of a valid notice
of strike or lockout.

Clearly, a bargaining deadlock exists and as a matter of fact this is being conciliated by the National
Conciliation and Mediation Board at the time the University filed its Petition for Certification Election on 10
May 1988. In fact the deadlock remained unresolved and was in fact mutually agreed upon to be conciliated
further by the NCMB as per items 1 and 5 of the Agreement (Exhibit L).

The aforequoted rule clearly barred the Med-Arbiter from further entertaining the petition for certification
election. Furthermore, the various communications sent to the University by the Union prior to the filing of
the notice of strike was enough opportunity for the former to raise the issue of representation if it really
casts doubt to the majority status of the Union. More importantly, if DWU indeed doubted the status of the
union, how come it entered into an agreement with the latter on May 10, 1988. Apparently, the move to file
the petition on the same day was an afterthought on the part of the University which this Office considers as
fatal." 14

The same Order dismissed not only the case filed by DWUEU-ALU for unfair labor practice on the ground of
the unions failure to prove the commission of the unfair labor practice acts specifically complained of (NLRC
Case No. 8-0321-88) but also the complaint filed by the University for unfair labor practices and illegal strike
for "obvious lack of merit brought about by its utter failure to submit evidence" (NLRC Case No. 8-0323-88).

Citing the Bulletin Today cases, the said Order pronounced as untenable the University s claim that the
assumption Order earlier issued by the Office of the Secretary of Labor merely held in abeyance the holding
of a certification election and that the representation issue was not deemed consolidated by virtue of the
said assumption Order. Accordingly, the Order has this dispositive portion: jgc:c han robles. com.ph

"WHEREFORE, ALL THE FOREGOING PREMISES CONSIDERED, the Divine Word University of Tacloban and
the Divine Word University Employees Union are hereby directed to enter into a collective bargaining
agreement by adopting the Unions CBA proposals sent to the DWU President on 19 May 1988 (Exhibit 6).
DWU is hereby warned that any unwarranted delay in the execution of the collective bargaining agreement
will be construed as an unfair labor practice act. Moreover, the petition for certification election filed by the
University is hereby dismissed for lack of merit and the Order of Med-Arbiter Rodolfo Milado set aside.
Likewise, NLRC CASES Nos. 8-0321-88 and 8-0323 filed by the Union and the DWU, respectively, are hereby
dismissed for lack of merit.

SO ORDERED." 15

The University filed a motion for the reconsideration of said Order. It was opposed by the DWUEU-ALU.
However, since on May 5, 1989 the DWUEU-ALU had filed a second notice of strike charging the University
with violation of the return-to-work order of the Secretary of Labor and unfair labor practices such as
dismissal of union officers, coercion of employees and illegal suspension, 16 the Office of the Secretary
called for a series of conciliation and mediation conferences between the parties. At the July 5, 1989
conference, the University agreed to submit its proposals on how to settle amicably the labor dispute on or
before July 17, 1989.

On said date, however, the University failed to appear. Instead, its representative phoned in a request for
the resetting of the conference purportedly because its Board of Directors had failed to muster a quorum.
Hence, after so informing ALUs Eastern Visayas Vice-President, the conference was rescheduled for July 19,
1989. The University once again failed to appear. chanrob les vi rtua lawlib rary chan roble s.com:cha nro bles. com.p h
In view of the Universitys intransigence, the DWUEU-ALU pursued its second notice of strike on November
24, 1989. Four days later, the University filed with the Office of the Secretary of Labor a motion praying that
said Office assume jurisdiction over the dispute or certify the same to the NLRC for compulsory arbitration
on the ground that the strike affected not only the University but also its other academic and non-academic
employees, the students and their parents. On December 4, 1989, the Office of the Secretary of Labor
received a Resolution passed by the students of the University urging said Offices assumption of jurisdiction
over the labor dispute and the earliest resolution of the case.

Consequently, on December 29, 1989, Secretary Drilon issued an Order reiterating the August 28, 1988
Order which assumed jurisdiction over the labor dispute. He ordered all striking workers to return to work
within 24 hours and the University to accept them back under the same terms and conditions of
employment; deemed the issues raised in the May 5, 1989 notice of strike as "subsumed in this case" ;
ordered the Director of Regional Office No. VIII to hear the issues raised in said notice of strike and to
submit his findings and recommendations within ten days from submission of the case by the parties, and
enjoined the parties to cease and desist from any act that may "aggravate the employer-employee
relationship."
cralaw vi rtua 1aw lib rary

On January 17, 1990, Acting Secretary of Labor Dionisio L. de la Serna, "dismissed" for lack of merit the
Universitys motion for reconsideration and affirmed the Order of May 23, 1989. He noted the fact that the
March 7, 1985 collective bargaining proposals of the DWUEU had not been validly withdrawn as the unions
Vice-President had resigned and the withdrawal was signed only by three of the eight members of the
Executive Board of said union. Granting that the withdrawal was valid, the Acting Secretary believed that it
did not "exculpate the University from the duty to bargain with the Union" because the collective bargaining
processes had been "set in motion from the time the CBA proposals was (sic) received by the University
until the impasse took place on account of its failure to reply to the Unions letters pursuing its CBA
Proposals dated March 11 and 23, 1988." cralaw virtua 1aw lib rary

On the Universitys assertion that no negotiations took place insofar as the March 7, 1985 collective
bargaining proposals are concerned, the Acting Secretary found that: jgc:chanrobles. com.ph

". . . The records indicate otherwise Conciliation meetings were conducted precisely to discuss the CBA
proposals the Union submitted to the University on March 7, 1985. As a matter of fact, the University
admitted the existence of the deadlock when a provision was incorporated in the agreement it signed on
May 10, 1988 with the Union which reads: chanrob 1es vi rtua l 1aw lib ra ry

a. That on the matter of Bargaining Deadlock

1. Union will submit their (renewed) CBA proposals on Friday May 13, 1988 for whatever action
management will take.

2. Union and Management agree to sit down and determine the number of employees that will represent
(constitute) their bargaining unit;

x x x

On account of the deadlock regarding the March 7, 1985 CBA proposals, it was agreed that the Union submit
a renewed CBA proposal which it did on May 19, 1988. The records indicate that no response was made by
the University. The uncooperative posture of the University to respond and continue with the negotiations
could very well be explained when one (1) hour prior to the start of the conciliation on May 10, 1988, the
University filed a Petition for Certification with (sic) Regional Office. The surreptitious filing of the petition
and at the same time cunningly entering into an agreement which required the Union to submit a renewed
CBA proposal, is patently negotiating in bad faith. The University should have candidly and timely raised the
issue of representation, if it believed that such issue was valid, not by entering into an agreement. The May
10, 1988 Agreement only served to falsely heighten the expectations of the Union and this Office that a
mutually acceptable settlement of the dispute was in the offing. This Office cannot tolerate such actuations
by the University." 17

The Acting Secretary then concluded that for reneging on the agreement of May 10, 1988 and for its
"reluctance and subscription to legal delay," the University should be "declared in default." He also
maintained that since under the circumstances the University cannot claim deprivation of due process, the
Office of the Secretary of Labor may rightfully impose the Unions May 19, 1988 collective bargaining
agreement proposals motu proprio. On the Universitys contention that the motion for intervention of the
DWU-IFEU was not resolved, the Acting Secretary ruled that said motion was in effect denied when the
petition for certification election filed by the University was dismissed in the Order of May 23, 1989. chanrobles vi rtual lawlib rary

Hence, the University had recourse to instant petition.

In its petition for certiorari and prohibition with preliminary injunction filed on February 9, 1990, the
University raises as grounds therefor the following: j gc:cha nrob les.com .ph

"A. Respondent Secretary committed grave and patent abuse of discretion amounting to lack of jurisdiction
in issuing his order dated 17 January 1990 finally denying petitioners motion for reconsideration in the face
of the order dated 29 December 1989 and subsequent acts of DOLE official subsuming the second notice of
strike with the first notice of strike.

B. In the absence of a certified CBA and there having been no certification election held in petitioner unit for
more than five (5) years, a certification election is mandatory.

C. Respondent Secretary committed grave and patent abuse of discretion in issuing his orders dated 23 May
1989 and 17 January 1990 disregarding evidence on record, provisions of law and established jurisprudence.

D. Petitioner was denied due process." 18

Citing the dispositive portion of the December 29, 1989 Order of the Secretary of Labor which states that
the issues raised in the May 5, 1989 notice of strike "are ordered subsumed in this case" and elaborating on
the meaning of the word "subsume," i.e., "to include within a larger class, group, order, etc.," 19 the
petitioner University argues that the Secretary of Labor "cannot resolve petitioners and (intervenor) DWU-
IFEUs motions for reconsideration (in the NS. 1) of the Order dated 23 May 1989 until the proceedings in
the subsumed NS. 2 are terminated." It opines that since the Regional Director is an extension of the
Secretary of Labor, the latter should have waited for the recommendation of the former on the issues in
notices of strike nos. 1 and 2 before the he issued the Order of January 17, 1990.

We agree with the Acting Secretary of Labors observation that the action for intervention had in effect been
denied by the dismissal of the petition for certification election in the May 23, 1989 Order. The sub silencio
treatment of the motion for intervention in said Order does not mean that the motion was overlooked. It
only means, as shown by the findings of facts in the same Order, that there was no necessity for the holding
of a certification election wherein the DWU-IFEU could participate. In this regard, petitioners undue interest
in the resolution of the DWU-IFEUs motion for intervention becomes significant since a certification election
is the sole concern of employees except where the employer itself has to file a petition for certification
election. But once an employer has filed said petition, as the petitioner did in this case, its active role ceases
and it becomes a mere bystander. Any uncalled-for concern on the part of the employer may give rise to the
suspicion that it is batting for a company union. 20

Petitioners contention that the Acting Secretary of Labor should have deferred the issuance of the Order of
January 17, 1990 until after his receipt of the Regional Directors recommendation on the notices of strike is,
under the circumstances, untenable. Ideally, a single decision or order should settle all controversies
resulting from a labor dispute. This is in consonance with the principle of avoiding multiplicity of suits.
However, the exigencies of a case may also demand that some matters be threshed out and resolved ahead
of the others. Any contrary interpretation of the Secretary of Labors powers under Art. 263(g) of the Labor
Code on this matter would only result in confusion and delay in the resolution of the manageable aspects of
the labor dispute.chan roble s lawli bra ry : rednad

In this case, resolution of the motion for reconsideration at the earliest possible time was urgently needed to
set at rest the issues regarding the first notice of strike, the certification election and the unfair labor
practice cases filed by the University and the DWUEU-ALU. The nature of the business of the University
demanded immediate and effective action on the part of the respondent public officials. Otherwise, not only
the contending parties in the dispute would be adversely affected but more importantly, the studentry and
their parents. It should be emphasized that on January 17, 1990, the second notice of strike could not have
been resolved as yet considering that at that time, Regional Director Teddy S. Cabeltes was still conducting
the conference between the parties in pursuance of the directive in the Order of December 19, 1989. The
Secretary, or for that matter, the Acting Secretary, could not have intended the efforts of the Regional
Director to be inutile or fruitless. Thus, when he set aside the issues raised in the second notice of strike,
the Acting Secretary was acting in accordance with the exigencies of the circumstances of the case. Hardly
can it be said to be an abuse of his discretion.

On the issue of whether or not a certification election should have been ordered by the Secretary of Labor,
pertinent are the following respective provisions of the Labor Code and Rule V, Book V of the Implementing
Rules and Regulations of the same Code: jgc:chanroble s.com. ph

"ART. 258. When an employer may file petition. When requested to bargain collectively, an employer may
petition the Bureau for an election. If there is no existing certified collective bargaining agreement in the
unit, the Bureau shall, after hearing, order a certification election.

All certification cases shall be decided within twenty (20) working days.

The Bureau shall conduct a certification election within twenty (20) days in accordance with the rules and
regulations prescribed by the Secretary of Labor.

Sec. 3. When to file. In the absence of a collective bargaining agreement duly registered in accordance
with Article 231 of the Code, a petition for certification election may be filed at any time. However, no
certification election may be held within one year from the date of issuance of a final certification election
result. Neither may a representation question be entertained if, before the filing of a petition for certification
election, a bargaining deadlock to which an incumbent or certified bargaining agent is a party had been
submitted to conciliation or arbitration or had become the subject of valid notice of strike or lockout.
(Emphasis supplied)

If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a
petition for certification election or a motion for intervention can only be entertained within sixty (60) days
prior to the expiry date of such agreement." cralaw virtua1aw lib rary

These provisions make it plain that in the absence of a collective bargaining agreement, an employer who is
requested to bargain collectively may file a petition for certification election any time except upon a clear
showing that one of these two instances exists: (a) the petition is filed within one year from the date of
issuance of a final certification election result or (b) when a bargaining deadlock had been submitted to
conciliation or arbitration or had become the subject of a valid notice of strike or lockout.

While there is no question that the petition for certification election was filed by the herein petitioner after
almost four years from the time of the certification election and, therefore, there is no question as to the
timeliness of the petition, the problem appears to lie in the fact that the Secretary of Labor had found that a
bargaining deadlock exists. chan roble s l awlibra ry : rednad

A "deadlock" is defined as the "counteraction of things producing entire stoppage: a state of inaction or of
neutralization caused by the opposition of persons or of factions (as in government or a voting body):
standstill." 21 There is a deadlock when there is a "complete blocking or stoppage resulting from the action
of equal and opposed forces; as, the deadlock of a jury or legislature." 22 The word is synonymous with the
word impasse 23 which, within the meaning of the American federal labor laws, "presupposes reasonable
effort at good faith bargaining which, despite noble intentions, does not conclude in agreement between the
parties." 24

A thorough study of the records reveals that there was no "reasonable effort at good faith bargaining"
specially on the part of the University. Its indifferent attitude towards collective bargaining inevitably
resulted in the failure of the parties to arrive at an agreement. As it was evident that unilateral moves were
being undertaken only by the DWUEU-ALU, there was no "counteraction" of forces or an impasse to speak
of. While collective bargaining should be initiated by the union, there is a corresponding responsibility on the
part of the employer to respond in some manner to such acts. This is clear from the provisions of the Labor
Code Art. 250(a) of which states: jgc:chanro bles. com.ph

"ART. 250. Procedure in collective bargaining. The following procedures shall be observed in collective
bargaining: chan rob1e s virtual 1aw lib rary

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

(b) Should differences arise on the basis of such notice and reply, either party may request for a conference
which shall begin not later than ten (10) calendar days from the date of request.

(c) If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its own
initiative and immediately call the parties to conciliation meetings. The Board shall have the power to issue
subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the parties to
participate fully and promptly in the conciliation meetings the Board may call;

(d) During the conciliation proceedings in the Board, the parties are prohibited from doing any act which
may disrupt or impede the early settlement of the disputes; and chanrob les.co m.ph : virtual law lib rary

(e) The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their
case to a voluntary arbitrator." cralaw virtua1aw li bra ry

Considering the procedure outlined above, the Court cannot help but notice that the DWUEU was not entirely
blameless in the matter of the delay in the bargaining process. While it is true that as early as March 7,
1985, said union had submitted its collective bargaining proposals and that, its subsequent withdrawal by
the DWUEU Vice-President being unauthorized and therefore ineffective, the same proposals could be
considered as subsisting, the fact remains that said union remained passive for three years. The records do
not show that during this three-year period, it exerted any effort to pursue collective bargaining as a means
of attaining better terms of employment.

It was only after its affiliation with the ALU that the same union, through the ALU Director for Operations,
requested an "initial conference" for the purpose of collective bargaining. 25 That the DWUEU abandoned its
collective bargaining proposals prior to its affiliation with ALU is further confirmed by the fact that in the
aforequoted May 10, 1988 agreement with the University, said Union bound itself to submit a new set of
proposals on May 13, 1988. Under the circumstances, the agreement of May 10, 1988 may as well be
considered the written notice to bargain referred to in the aforequoted Art. 250(a) of the Labor Code, which
thereby set into motion the machinery for collective bargaining, as in fact, on May 19, 1988, DWUEU-ALU
submitted its collective bargaining proposals.

Be that as it may, the Court is not inclined to rule that there has been a deadlock or an impasse in the
collective bargaining process. As the Court earlier observed, there has not been a "reasonable effort at good
faith bargaining" on the part of the University. While DWUEU-ALU was opening all possible avenues for the
conclusion of an agreement, the record is replete with evidence on the Universitys reluctance and thinly
disguised refusal to bargain with the duly certified bargaining agent, such that the inescapable conclusion is
that the University evidently had no intention of bargaining with it. Thus, while the Court recognizes that
technically, the University has the right to file the petition for certification election as there was no
bargaining deadlock to speak of, to grant its prayer that the herein assailed Orders be annulled would put an
unjustified premium on bad faith bargaining.

Bad faith on the part of the University is further exemplified by the fact that an hour before the start of the
May 10, 1988 conference, it surreptitiously filed the petition for certification election. And yet during said
conference, it committed itself to "sit down" with the Union. Obviously, the University tried to preempt the
conference which would have legally foreclosed its right to file the petition for certification election. In so
doing, the University failed to act in accordance with Art. 252 of the Labor Code which defines the meaning
of the duty to bargain collectively as "the performance of a mutual obligation to meet and convene promptly
and expeditiously in good faith." Moreover, by filing the petition for certification election while agreeing to
confer with the DWUEU-ALU, the University violated the mandate of Art. 19 of the Civil Code that" (e)very
person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith." cralaw virtua 1aw lib rary

Moreover, the Universitys unscrupulous attitude towards the DWUEU-ALU is also betrayed by its belated
questioning of the status of the said union. The communications between them afforded the University
ample opportunity to raise the issue of representation if indeed it was doubtful of the DWUEU-ALUs status
as a majority union, but it failed to do so. On the other hand, in the agreement of May 10, 1988, the
University even agreed "to sit down and determine the number of employees that will represent their
bargaining unit." This clearly indicates that the University recognized the DWUEU-ALU as the bargaining
representative of the employees and is, therefore, estopped from questioning the majority status of the said
union.chanrob les.co m.ph : virtual law lib rary

Hence, petitioners contention that the DWUEU-ALUs proposals may not be unilaterally imposed on it on the
ground that a collective bargaining agreement is a contract wherein the consent of both parties is
indispensable is devoid of merit. A similar argument had already been disregarded in the case of Kiok Loy v.
NLRC, 26 where we upheld the order of the NLRC declaring the unions draft CBA proposal as the collective
agreement which should govern the relationship between the parties. Kiok Loy v. NLRC is applicable in the
instant case considering that the facts therein have also been indubitably established in this case. These
factors are: (a) the union is the duly certified bargaining agent; (b) it made a definite request to bargain
and submitted its collective bargaining proposals, and (c) the University made no counter proposal
whatsoever. As we said in Kiok Loy," [a] companys refusal to make counter proposal if considered in
relation to the entire bargaining process, may indicate bad faith and this is especially true where the Unions
request for a counter proposal is left unanswered." 27 Moreover, the Court added in the same case that "it is
not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the
other. But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures." 28

That being the case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its inaction which bespeak its insincerity, it
has forfeited whatever rights it could have asserted as an employer. We, therefore, find it superfluous to
discuss the two other contentions in its petition.

WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. This decision is immediately
executory. Costs against the petitioner.

SO ORDERED.
UNION OF FILIPRO G.R. No. 158930-31
EMPLOYEES - DRUG, FOOD
AND ALLIED INDUSTRIES
UNIONS - KILUSANG MAYO
UNO (UFE-DFA-KMU),
Petitioner,

- versus -

NESTLE PHILIPPINES,
INCORPORATED,
Respondent.

x-----------------------------------x
G.R. No. 158944-45
NESTL PHILIPPINES,
INCORPORATED
Petitioner,
Present:

- versus - PANGANIBAN, C.J.

Chairperson,
 YNARES - SANTIAGO
AUSTRIA-MARTINEZ,
UNION OF FILIPRO CALLEJO, SR., and
EMPLOYEES - DRUG, FOOD CHICO-NAZARIO, JJ.
AND ALLIED INDUSTRIES
UNIONS - KILUSANG MAYO
UNO (UFE-DFA-KMU), Promulgated:
Respondent.

August 22, 2006

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

DECISION

CHICO-NAZARIO, J.:

The Case

Before the Court are two (2) petitions for review

on certiorari under Rule 45 of the Rules of Court, as amended. Both
seek to annul and set aside the joint: (1) Decision [ 1 ] dated 27 February
2003, and (2) Resolution [ 2 ] dated 27 June 2003, of the Court of
Appeals in CA-G.R. SP No. 69805 [ 3] and No. 71540. [ 4]
G.R. No. 158930-31 was filed by Union of Filipro Employees
Drug, Food and Allied Industries Unions Kilusang Mayo Uno (UFE-
DFA-KMU) against Nestl Philippines, Incorporated (Nestl) seeking
the reverse of the Court of Appeals Decision in so far as the latters
failure to adjudge Nestl guilty of unfair labor practice is concerned, as
well as the Resolution of 27 June 2003 denying its Partial Motion for
Reconsideration; G.R. No. 158944 -45 was instituted by Nestl against
UFE-DFA-KMU similarly seeking to annul and set aside the Decision
and Resolution of the Court of Appeals declaring 1) the Retirement
Plan a valid collective bargaining issue; and 2) the scope of
assumption of jurisdiction power of the Secretary of the DOLE to be
limited to the resolution of questio ns and matters pertaining merely to
the ground rules of the collective bargaining negotiations to be
conducted between the parties.

In as much as the cases involve the same set of parties; arose

from the same set of circumstances, i.e., from several Orders issued by
then Secretary of the Department of Labor and Employment (DOLE),
Hon. Patricia A. Sto. Tomas, respecting her assumption of jurisdiction
over the labor dispute between Nestl and UFE -DFA-KMU, Alabang
and Cabuyao Divisions; [ 5 ] and likewise assail the same Decision and
Resolution of the Court of Appeals, the Court ordered the
consolidation of the two petitions. [ 6]

The Facts

From the record and the pleadings filed by the parties, we cull
the following material facts in this case:

On 4 April 2001, in consideration of the impending expiration of

the existing collective bargaining agreement (CBA) between Nestl and
UFE-DFA-KMU [ 7 ] on 5 June 2001, [ 8 ] in a letter denominated as
a Letter of Intent, the Presidents of
the Alabang and Cabuyao Divisions of UFE-DFA-KMU, Ernesto Pasco
and Diosdado Fortuna, respectively, informed Nestl of their intent to
open our new Collective Bargaining Negotiation for the year 2001 -
2004 x x x as early as June 2001. [ 9]
 In a letter [ 1 0 ] dated 10 April 2001, Nestl acknowledged receipt of
the aforementioned letter. It also i nformed UFE-DFA-KMU that it was
preparing its own counter-proposal and proposed ground rules that
shall govern the conduct of the collective bargaining negotiations.

On 29 May 2001, in another letter addressed to the UFE -DFA-

KMU (Cabuyao Division), Nestl underscored its position
that unilateral grants, one-time company grants, company-initiated
policies and programs, which include, but are not limited to the
Retirement Plan, Incidental Straight Duty Pay and Calling Pay
Premium, are by their very nature no t proper subjects of CBA
negotiations and therefore shall be excluded therefrom. [ 1 1 ] In addition,
it clarified that with the closure of th e Alabang Plant, the CBA
negotiations will only be applicable to the covered employees of
the CabuyaoPlant; hence, the Cabuyao Division of UFE-DFA-KMU
became the sole bargaining unit involved in the subject CBA
negotiations.

Thereafter, dialogue between the company and the union ensued.

In a letter dated 14 August 2001, Nestl, claiming to have reached

an impasse in said dialogue, requested [ 12 ] the National Conciliation
and Mediation Board (NCMB), Regional Office No. IV, Imus, Cavite,
to conduct preventive mediation proceedings between it and UFE -
DFA-KMU. Nestl alleged that despite fifteen (15) meetings between
them, the parties failed to reach any agreement on the proposed CBA.
The request was docketed as NCMB-RBIV-CAB-PM-08-035-01.

Conciliation proceedings nevertheless proved ineffective.

Complaining, in essence, of bargaining deadlock pertaining to
economic issues, i.e., retirement (plan), panel composition, costs and
attendance, and CBA, [ 1 3 ] UFE-DFA-KMU filed a Notice of
Strike [ 1 4] on 31 October 2001 with the NCMB docketed as NCMB-
RBIV-LAG-NS-10-037-01. One week later, or on 07 November 2001,
another Notice of Strike [ 1 5 ] was filed by the UFE-DFA-KMU docketed
as NCMB-RBIV-LAG-NS-11-10-039-01, this time predicated on Nestls
alleged unfair labor practices i.e., bargaining in bad faith in that it
was setting pre-conditions in the ground rules by refusing to include
the issue of the Retirement Plan in the CBA negotiations. A strike vote
was then conducted by UFE-DFA-KMU on 22 November 2001. The
result was an overwhelming approval of the deci sion to hold a
strike. [ 1 6]

On 26 November 2001, in view of the looming strike, Nestl filed

with the DOLE a Petition for Assumption of Ju risdiction, [ 1 7 ] docketed
as OS-AJ-0023-01, fundamentally praying that the Secretary of the
DOLE, Hon. Patricia A. Sto. Tomas, assume jurisdiction over the
current labor dispute as mandated by Article 263 (g) of the Labor
Code, as amended, thereby effectively enjoining any impending strike
at the Nestl Cabuyao Plant in Laguna.

On 29 November 2001, Sec. Sto. Tomas issued an Order [ 1 8] in

OS-AJ-0023-01, NCMB-RBIV-CAV-PM-08-035-01, NCMB-RBIV-
LAG-NS-10-037-01 & NCMB-RBIV-LAG-NS-11-10-039-01 assuming
jurisdiction over the subject labor dispute between the parties,
the fallo thereof stating that:

CONSIDERING THE FOREGOING, this

Office hereby assumes jurisdiction over the labor
dispute at the Nestl Philippines, Inc.
 (Cabuyao Plant) pursuant to Article 263 (g) of the
Labor Code, as amended.

Accordingly, any strike or lockout is hereb y

enjoined. The parties are directed to cease and
desist from committing any act that might lead to
the further deterioration of the current labor
relations situation.

The parties are further directed to meet and

convene for the discussion of the union proposals
and company counter-proposals before the National
Conciliation and Mediation Board (NCMB) who is
hereby designated as the delegate/facilitator of this
Office for this purpose. The NCMB shall report to
this Office the results of this attempt at conciliation
and delimitation of the issues within thirty (30)
days from the parties receipt of this Order, in no
case later than December 31, 2001. If no settlement
of all the issues is reached, t his Office shall
thereafter define the outstanding issues and order
the filing of position papers for a ruling on the
merits.

UFE-DFA-KMU sought reconsideration [ 1 9] of

the abovequoted Assumption of Jurisdiction Order on the assertion
that:

i. Article 263 (g) of the Labor Code, as amended, is invalid

and unconstitutional as it is in derogation of the provisions
dealing on protection to labor, social justice, the bill of
rights, and, generally accepted principle of international law;

ii. compulsory arbitration as a mode of dispute settlement

provided for in the Labor Code and sourced from the 1935
and 1973 constitutions has been discarded and deleted by the
New Charter which instituted in its stead free collective
bargaining;
 iii. that ILO condemns the continuous exercise by the Secretary
of Labor of the power of compulsory arbitration;

iv. granting that the law is valid, the Secretary has

unconstitutionall y applied the law;

v. that the company is a business enterprise not belonging to

an industry indispensable to the national interest considering
that it is onl y one among a number of companies in the
country producing milk and nutritional products; that
the Cabuyao plant is onl y one of the six (6) Nestle plants in
the country and could rel y on its highly
automated Cagayan de Oro plant for buffer stocks;

vi. that the Secretary acted with grave abuse of discretion in

issuing the assailed order without the benefit of a prior notice
and inquiry.

In the interregnum, the union interposed a motion for extension

of time [ 2 0 ] to file its position paper as directed by the Assumption of
Jurisdiction Order of 29 November 2001.

In an Order [ 2 1] dated 14 January 2002, Sec. Sto. Tomas denied

the aforequoted motion for reconsideration in this wise:

This is not the first time t hat this Office had occasion to
resolve the grounds and arguments now being raised x x x. In a
more recent case In re: labor dispute at Toyota Motor Philippines
Corporation x x x this Office ruled:

The constitutionality of the power of the

Secretary of Labor under Article 263 (g) of the Labor
Code to assume jurisdiction over a labor dispute in an
industry indispensable to the national interest has been
upheld as an exercise of police power of the
constitution. x x x.

x x x x

As ruled by the Supreme Court in the Philtread case:

 Article 263 (g) of the Labor Code does not
violate the workers constitutional right to
strike.

x x x x x x

The foregoing article clearl y does not

interfere with the workers right to strike
but merel y regulates it, when in the
exercise of such right, national interests
will be affected.

On 15 January 2002, despite the injunction [ 22 ] contained in

Sec. Sto. Tomas Assumption of Jurisdiction Order and conciliation
efforts by the NCMB, the employee members of UFE -DFA-KMU at
the Nestl Cabuyao Plant went on strike.

On 16 January 2002, in consideration of the above,

Sec. Sto. Tomas issued yet another Order [ 2 3 ] directing: (1) the
members of UFE-DFA-KMU to return-to-work within twenty-four (24)
hours from receipt of such Order; (2) Nestl to accept back all
returning workers under the same terms and conditions existing
preceding to the strike; (3) both parties to cease and desist from
committing acts inimical to the on -going conciliation proceedings
leading to the further deterioration of the situati on; and (4)
the submission of their respective position papers within ten (10) days
from receipt thereof.

Notwithstanding the Return-To-Work Order, the members of

UFE-DFA-KMU continued with their strike and refused to go back to
work as instructed. Thus, Sec. Sto. Tomas sought the assistance of the
Philippine National Police (PNP) for the enforcement of said order.
 At the hearing called on 7 February 2002, Nestl and UFE-DFA-
KMU filed their respective position papers. In its position
paper, [ 2 4 ] Nestl addressed several issues allegedly pertaining to the
current labor dispute, i.e., economic provisions of the CBA as well as
the non-inclusion of the issue of the Retirement Plan in the collective
bargaining negotiations. UFE-DFA-KMU, in contrast, limited itself to
tackling the solitary issue of whether or not the retirement plan was a
mandatory subject in its CBA negotiations with the company o n the
contention that the Order of Assumption of Jurisdiction covers only
the issue of Retirement Plan. [ 2 5 ]

On 8 February 2002, Nestl moved that UFE-DFA-KMU be

declared to have waived its right to present arguments respecting the
other issues raised by the company on the ground that the latter chose
to limit itself to discussing only one (1) issue. Sec. Sto. Tomas, in
an Order [ 2 6 ] dated 11 February 2002, however, did not see fit to grant
said motion. She instead allowed UFE -DFA-KMU the chance to tender
its stand on the other issues raised by Nestl but not covered by its
initial position paper paper by way of a Supplemental Position Paper.

UFE-DFA-KMU afterward filed several pleadings: (1) an Urgent

Motion to File a Reply dated 13 February 2002; (2) a Motion for Time
to File Supplemental Position Paper dated 22 February 2002; and (3)
a Manifestation with Motion for Reconsideration of the Order
dated February 11, 2002dated 27 February 2002. The latter pleading
was an absolute contradiction of the second one praying for ad ditional
time to file the subject supplemental position paper. In
said Manifestation, UFE-DFA-KMU explained that it realized that the
Order of February 11, 2002 appears to be contrary to law and
jurisprudence and is not in conformity with existing laws and the
evidence on record, [ 2 7 ] as the Secretary of the DOLE could only
assume jurisdiction over the issues mentioned in the notice of strike
subject of the current dispute. [ 2 8] UFE-DFA-KMU then went on to
clarify that the Amended Notice of Strike did not cite, as one of the
grounds, the CBA deadlock.
On 8 March 2002, Sec. Sto. Tomas denied the motion for
reconsideration of UFE-DFA-KMU.

Frustrated with the foregoing turn of events, UFE -DFA-KMU

filed a petition for certiorari [ 2 9 ] with application for the issuance of a
temporary restraining order or a writ of preliminary injunction before
the Court of Appeals. The petition was predicated on the question of
whether or not the DOLE Secretary committed grave abuse of
discretion in issuing the Orders of 11 February 2002 and 8 March
2002.

Meanwhile, in an attempt to finally resolve the crippling labor

dispute between the parties, then Acting Secretary of the DOLE, Hon.
Arturo D. Brion, came out with an Order [ 3 0 ] dated 02 April 2002, in
the main, ruling that:

a. we hereby recognize that the present Retirement Plan at the

Nestl Cabuyao Plant is a unilateral grant that the parties have
expressl y so recognized subsequent to the Supreme Courts ruling
in Nestl, Phils. Inc. vs. NLRC, G.R. No. 90231, Februar y 4,
1991, and is therefore not a mandatory subject for bargaining;

b. the Unions charge of unfair labor practice against the

Company is hereby dismissed for lack of merit;

c. the parties are directed to secure the best applicable terms

of the recentl y concluded CBs between Nestl Phils. Inc. and it eight
(8) other bargaining units, and to adopt these as the terms and
conditions of the Nestl Cabuyao Plant CBA;
 d. all union demands that are not covered by the provisions of
the CBAs of the other eight (8 ) bargaining units in the Company are
hereby denied;

e. all existing provisions of the expired Nestl Cabuyao Plant

CBA without any counterpart in the CBAs of the other eight
bargaining units in the Company are hereby ordered maintained as
part of the new Nestl Cabuyao Plant CBA;

f. the parties shall execute their CBA within thirt y (30)

days from receipt of this Order, furnishing this Office a copy of the
signed Agreement;

g. this CBA shall, in so far as representation is concerned, be

for a term of five (5) years; all other provisions shall be
renegotiated not later than three (3) years after its effective date
which shall be December 5, 2001 (or on the first day six months
after the expiration on June 4, 2001 of the superceded CBA).

Not surprisingly, UFE-DFA-KMU moved to reconsider

the aforequoted position of the DOLE.

On 6 May 2002, the Secretary of the DOLE,

Hon. Sto. Tomas, issued the last of the assailed Orders. [ 3 1] This order
resolved to deny the preceding motion for reconsideration of UFE -
DFA-KMU.

Undaunted still, UFE-DFA-KMU, for the second time, went to

the Court of Appeals likewise via a petition for certiorari seeking to
annul, on the ground of grave abuse of discretion, the Orders of 02
April 2002 and 06 May 2002 of the Secretary of the DOLE.

The Court of Appeals, acting on the twin petitions for certiorari,

determined the issues in favor of UFE -DFA-KMU in a joint Decision
dated 27 February 2003. The dispositive part thereof states that:

WHEREFORE, in view of the foregoing, there being

grave abuse on the part of the public respondent in issuing all
 the assailed Orders, both petitions are hereby GRANTED. The
assailed Orders dated February 11, 2001, and March 8, 2001
(CA-G.R. SP No. 69805), as well as the Orders dated April 2,
2002 and May 6, 2002 (CA -G.R. SP No. 71540) of the
Secretary of Labor and Employment in the case entitled: IN
RE: LABOR DISPUTE AT NESTL E PHILIPPINES INC.
(CABUYAO FACTORY) under OS -AJ-0023-01 (NCMB-RBIV-
CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01,
NCMB-RBIV-LAG-NS-11-10-03901) are hereby ANNULLED
and SET ASIDE. Private respondent is hereby directed to
resume the CBA negotiations with the petitioner. [ 3 2 ]

Dissatisfied, both parties separately moved for the

reconsideration of the abovequoted decision with Nestl basically
assailing that part of the decision finding the DOLE Secretary to have
gravely abused her discretion when she ruled that the Retirement Plan
is not a valid issue for collective bargaining negotiations; while UFE -
DFA-KMU questions, in essence, the appellate courts decision in
absolving Nestl of the charge of unfair labor practice.

The parties efforts were all for naught as the Court of Appeals
stood pat in its earlier pronouncements and denied the motions for
reconsideration in a joint Resolution dated 27 June 2003.

Hence, these petitions for review on certiorari separately filed

by the parties. Said petitions were ordered consolidated in a Supreme
Court Resolution dated 29 March 2004.

The Issues

UFE-DFA-KMUs petition for review docketed as G.R. No.

158930-31, is predicated on the following alleged errors:

I.
 THE COURT OF APPEALS COMMITTED A SERIOUS
ERROR OF LAW IN NOT HOLDING THAT
RESPONDENT IS GUILTY OF UNFAIR LABOR
PRACTICE IN REFUSING TO PROCEED WITH THE CBA
NEGOTIATIONS UNLESS PETITIONER FIRS T ADMITS
THAT THE RETIREMENT PLAN IN THE COMPANY IS
A NON-CBA MATTER; and

II.

THE CONTENTION THAT THERE IS NO EVIDENCE OF

UNFAIR LABOR PRACTICE ON RESPONDENT
NESTLS PART AND THAT PETITIONER DID NOT
RAISE THE ISSUE OF ULP IN ITS ARGUMENTS
BEFORE THE COURT OF APPEALS IS GROSSLY
ERRONEOUS. [ 3 3 ]

Whereas in G.R. No. 158944-45, petitioner Nestl challenges the

conclusion of the Court of Appeals on the basis of the following
issues:

I.

WHETHER OR NOT THE COURT OF APPEALS

COMMITTED SERIOUS ERROR IN HOLDING THAT
THE POWERS GRANTED TO THE SECRETARY OF
LABOR TO RESOLVE NATIONAL INTEREST DISPUTES
UNDER ARTICLE 263 (G) OF THE LABOR CODE MAY
BE LIMITED BY A (SECOND) NOTICE OF STRIKE; and

II.

WHETHER OR NOT THE COURT OF APPEALS

COMMITTED SERIOUS ERROR IN ANNULING THE
SECRETARY OF LABORS JUDGMENT ON THE
RETIREMENT PLAN ISSUE WHICH WAS MERELY A
 PART OF THE COMPLETE RESOLUTION OF THE
LABOR DISPUTE. [ 3 4 ]

On the whole, the consolidated cases only raise three (3)

fundamental issues for deliberation by this Court, that is, whethe r or
not the Court of Appeals committed reversible error, first, in finding
the Secretary of Labor and Employment to have gravely abused her
discretion in her pronouncement that the Retirement Plan was not a
proper subject to be included in the CBA negotiations between the
parties; hence, non-negotiable; second, in holding that the assumption
powers of the Secretary of Labor and Employment should have been
limited merely to the grounds alleged in the second Notice of Strike;
and third, in not ruling that Nestl was guilty of unfair labor practice
despite allegedly setting a pre -condition to bargaining the non -
inclusion of the Retirement Plan as an issue in the collective
bargaining negotiations.

The Courts Ruling

Foremost for our resolution is the matter of the non-inclusion of

the Retirement Plan in the CBA negotiations between Nestl and UFE -
DFA-KMU (Cabuyao Division).

In finding the Secretary of the DOLE to have gravely abused her

discretion in holding that the Retirement Plan is not a valid CBA
issue, the Court of Appeals explained that:

Although the Union, thru its President Diosdado

Fortuna, signed a Memorandum of Agreement dated October
8, 1998 together with the private respondent which clearly
states that the Company agree to extend the following
unilateral grants which shall not form part of the CBA
(citation omitted) however, the same document made a
proviso that reference on the Retirement Plan in the CBA
signed on July 4, 1995, shall be maintained, x x x thus, this
Court is of the belief and so holds that the Retirement Plan is
 still a valid CBA issue, hence, it could not be argued that the
true intention of the parties is that the Retirement Plan,
although referred in the CBA, would not in any way form part
of the CBA (citation omitted) as it could be clearly inferred
by this Court that it is to be used as an integral part of the
CBA and to be used as a topic for future bargaining, in
consonance with the ruling of the Supreme Court in the
previous Nestl Case that the Retirement Plan wa s a collective
bargaining issue right from the start. [ 3 5 ]

In filing the present petition, Nestle is of the view that after the
1991 Supreme Court Decision was promulgated, there was obviously
an agreement by the parties to no longer consider the Retirement Plan
as a negotiable item subject to bargaining. Rather, said benefit would
be regarded as a unilateral grant outside the ambit of negotiation.
Nestl justifies such contention by directing the Courts attention to the
Ground Rules for 1998 Alabang/Cabuyao Factories CBA Negotiation
(citation omitted) signed by it and the representatives of UFE -DFA-
KMU where both sides expresslyrecognized Nestls prerogative to
initiate unilateral grants which are not negotiable. It likewise cited the
Memorandum of Agreement [ 3 6 ] entered into by the parties on 08
October 1998, which also categorically referred to the Retirement
Plan as one of the unilateral grants alluded to in the aforementioned
Ground Rules. Nestle then concluded that:

Indeed, the foregoing uncontroverted documents ver y

clearly established the clear agreement of the parties, after
the 1991 Supreme Court Decision, to remove the Retirement
Plan from the scope of bargaining negotiation, and leave the
matter upon the sole initiative and discretion of Nestl. [ 3 7 ]

In contrast, UFE-DFA-KMU posits that there is nothing in either

of the documents aboveclaimed that proves that it agreed to treat the
Retirement Plan as a unilateral grant of the company which is outside
the scope of the CBA and hence, not a proper subject of bargaining. It
explained that the MOA alluded to by Nestl merely speaks of
the improvement [ 3 8 ] or the review for the improvement [ 3 9 ] of the
current Retirement Plan and nothing else. UFE -DFA-KMU rationalizes
that:

Had the objective of the parties been to consider t he

Retirement Plan as not a subject for collective bargaining,
they would have stated so in categorical terms. Or, they could
have deleted the said benefit from the CBA.

Unfortunately for petitioner, the documents relied upon

by it do not state that the Retirement Plan is no longer a
bargainable item. The said benefit was not also removed or
deleted from the CBA.

If ever, what was unilaterally granted by petitioner

company as appearing on the above -stated letter and MOA
were the improvements on the Reti rement Plan. The
Retirement Plan could not have been unilaterally granted by
the said letter and MOA since the said Plan predates the said
letter and MOA by over two decades.

UFE-DFA-KMU concludes that [s]ince the Retirement Plan did

not derive its existence from the letter and MOA x x x, the nature of
the Retirement Plan was not altered or changed by the subsequent
issuance by petitioner company of the said letter and MOA. The
Retirement Plan remained a CBA item which is a proper subject of
collective bargaining pursuant to the 1991 ruling of this Honorable
Court. [ 4 0]

We agree.

The present issue is not one of first impression. In Nestl

Philippines, Inc. v. NLRC, [ 4 1 ] ironically involving the same parties
herein, this Court has had the occasion to affirm that a retire ment plan
is consensual in nature.
 By way of background, the parties therein resorted to a
slowdown and walked out of the factory prompting the management to
shut down its operations. Collective bargaining negotiations were
conducted but a deadlock was s ubsequently declared. The Secretary of
Labor assumed jurisdiction over the labor dispute and issued a return -
to-work order. The NLRC thereafter issued its resolution modifying
Nestls existing non-contributory Retirement Plan. The company filed a
petition for certiorari alleging grave abuse of discretion on the part of
the NLRC as Nestl was arguing that since its Retirement Plan is non -
contributory, it should be a non -issue in CBA negotiations. Nestl had
the sole and exclusive prerogative to define the terms of the plan as
the employees had no vested and demandable rights thereon the grant
of such not being a contractual obligation but simply gratuitous. In a
ruling contrary to Nestls position, this Court, through Madame Justice
Grio-Aquino, declared that:

The companys [Nestl] contention that its retirement

plan is non-negotiable, is not well-taken. The NLRC
correctly observed that the inclusion of the retirem ent plan
in the collective bargaining agreement as part of the
package of economic benefits extended by the company to
its employees to provide them a measure of financial security
after they shall have ceased to be employed in the company,
reward their loyalty, boost their morale and efficiency and
promote industrial peace, gives a consensual character to the
plan so that it may not be terminated or modified at will by
either party (citation omitted).

The fact that the retirement plan is non -contributory,

i.e., that the employees contribute nothing to the operation of
the plan, does not make it a non -issue in the CBA
negotiations. As a matter of fact, almost all of the benefits
that the petitioner has granted to its employees under the
CBA salary increases, rice allowances, midyear bonuses,
13 t h and 14 t h month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation,
sick & other leaves with pay are non -contributory
benefits. Since the retirem ent plan has been an integral part
of the CBA since 1972, the Unions demand to increase the
 benefits due the em ployees under said plan, is a valid CBA
issue. x x x

xxxx

x x x [E]mployees do have a vested and demandable

right over existing benefits voluntarily granted to them by
their employer. The latter may not unilaterally withdraw,
elim inate or dim inish such benefits (Art. 100, Labor Code;
other citation omitted). [Emphases supplied.] [ 4 2 ]

In the case at bar, it cannot be denied that the CBA that was
about to expire at that time contained provisions respecting the
Retirement Plan. As the latter benefit was already subject of the
existing CBA, the members of UFE -DFA-KMU were only exercising
their prerogative to bargain or renegotiate for the improvement of the
terms of the Retirement Plan just like they would for all the other
economic, as well as non-economic benefits previously enjoyed by
them. Precisely, the purpose of collective bargaining is the acquisition
or attainment of the best possible covenants or terms relating to
economic and non-economic benefits granted by employers and due
the employees. The Labor Code has actually imposed as a mutual
obligation of both parties, this duty to bargain collectively. The duty
to bargain collectively is categoricall y prescribed by Article 252 of
the said code. It states:

ART. 252. MEANING OF DUTY TO BARGAIN

COLLECTIVELY. The duty to bargain collectively means the
performance of a mutual obligation to meet and confer
promptly and expeditiously and in good faith for the purpose
of negotiating an agreement with respect to wages, hours of
work, and all other terms and conditions of employment
including proposals for adjusting any grievances or questions
arising under such agreement and executing a contract
incorporating such agreement if requested by either party, but
such duty does not compel any party to agree to a proposal or
to make any concession.
 Further, Article 253, also of the Labor Code, defines the
parameter of said obligation when there already exists a CBA, viz:

ART. 253. DUTY TO BARGAIN COLLECTIVELY WHEN

THERE EXISTS A COLLECTIVE BARGAINING
AGREEMENT. The duty to bargain collectively shall also
mean that either party shall not terminate nor modify such
agreement during its lifetime. However, either pa rty can
serve a written notice to terminate or modify the agreement at
least sixty (60) days prior to its expiration date. It shall be
the duty of both parties to keep the status quo and to continue
in full force and effect the terms and conditions of the
existing agreement during the sixty day period and/or until a
new agreement is reached by the parties.

And, in demanding that the terms of the Retirement Plan be

opened for renegotiation, the members of UFE -DFA-KMU are acting
well within their rights as we have, indeed, declared that the
Retirement Plan is consensual in character; and so, negotiable.

Contrary to the claim of Nestl that the categorical mention of the

terms unilateral agreement in the letter and the MOA signed by the
representatives of UFE-DFA-KMU, had, for all intents and purposes
worked to estop UFE-DFA-KMU from raising it as an issue in the
CBA negotiations, our reading of the same, specifically Paragraph 6
and subparagraph 6.2:

6. Additionally, the COMPANY agree to extend the

following unilateral grants which shall not form part of the
Collective Bargaining Agreement (CBA):

xxxx

6.2. Review for improvement of

the COMPANYs Retirement Plan and the
reference on the Retirement Plan in the Collective
 Bargaining Agreement signed on 4 July 1995 shall
be maintained. [ 4 3 ]

hardly persuades us that the members of UFE-DFA-KMU have agreed

to treat the Retirement Plan as a benefit the terms of which are solely
dependent on the inclination of the Nestl and remove the subject
benefit from the ambit of the CBA. The characterization unilaterally
imposed by Nestl on the Retirement Plan cannot operate to divest the
employees of their vested and demandable right over existing benefits
voluntarily granted by their employer. [ 4 4 ] Besides, the contention that
UFE-DFA-KMU has abandoned or forsaken our earlier pronouncement
vis--vis the consensual nature of a retirement plan is quite inconsistent
with, nay, is negated by its conduct in doggedly asking for a
renegotiation of said benefit.

Worth noting, at this point, is the fact that the aforequoted paragraph 6
and its subparagraphs, particularly subparagraph 6.2, highlights an
undeniable fact that Nestl recognizes that the Retirement Plan is part
of the existing Collective Bargaining Agreement.

Nestl further rationalizes that a ruling declaring the Retirement

Plan a valid CBA negotiation issue will inspire other bargaining units
to demand for greater benefits in accordance with their respective
appetites. Suffice it to say that the consensual nature of the Ret irement
Plan neither gives the union members the unfettered right nor the
unbridled prerogative to demand more than what the company
can viably give.

As regards the scope of the assumption powers of the Secretary

of the DOLE, the appellate court ruled th at Sec. Sto. Tomas
assumption of jurisdiction powers should have been limited to the
disagreement on the ground rules of the collective bargaining
negotiations. The Court of Appeals referred to the minutes of the
meeting held on 30 October 2001. That the representative Nestl was
recorded to have stated that we are still discussing ground rules and
not yet on the CBA negotiations proper, a deadlock cannot be
declared, [ 4 5 ] was a telling fact. The Court of Appeals, thus, declared
that the Secretary should not have ruled on the questions and issues
relative to the substantive aspect of the CBA simply because there was
no conflict on the CBA yet. [ 4 6 ]

UFE-DFA-KMU agrees in the above and contends that the

requisites of judicial inquiry require, first and foremost the presence
of an actual case controversy. It then concludes that [i]f the courts of
law cannot act and decide in the absence of an actual case or
controversy, so should be (sic) also the Honorable DOLE Secretary. [ 4 7 ]

Nestle, however, contradicts the preceding disquisitions on the

ground that such referral to the minutes of the meeting was erroneous
and misleading. It avers that the Court of Appeals failed to consider
the circumstance surrounding said utterance that the statement was
made during the preventive mediation proceedings and the UFE -DFA-
KMU had not yet filed any notice of strike. It further emphasizes that
it was UFE-DFA-KMU who first alleged bargaining deadlock as the
basis for the filing of its Notice of Strike. Finally, Nestl clarifies that
before the first Notice of Strike was filed, several conciliation
conferences had already been undertaken where both parties had
exchanges of their respective CBA proposals.

In this, we agree with Nestl. Declaring the Secretary of the

DOLE to have acted with grave abuse of discretion for ruling on
substantial matters or issues and not restricting itself merely on the
ground rules, the appellate court and UFE -DFA-KMU would have us
treat the subject labor dispute in a piecemeal fashion.

The power granted to the Secretary of the DOLE by Paragraph

(g) of Article 263 of the Labor Code, to wit:

ART. 263. STRIKES, PICKETING, AND LOCKOUTS.

xxxx
 (g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor
and Employment may assume jurisdiction over the dispute
and decide it or certify the s ame to the Commission for
compulsory arbitration. Such assumption or certification
shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the assumption
or certification order. If one has already taken place at the
time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer
shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the
strike or lockout. The Secretary of Labor and Employment or
the Commission may seek the assistance of law enforcement
agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same.

xxxx

authorizes her to assume jurisdiction over a labor dispute, causing or

likely to cause a strike or lockout in an industry indispensable to the
national interest, and correlatively, to decide the same.

In the case at bar, the Secretary of the DOLE simply relied on

the Notices of Strike that were filed by UFE -DFA-KMU as stated in
her Order of 08 March 2002, to wit:

x x x The records disclose that the Union filed two Notices of

Strike. The First is dated October 31, 2001 whose grounds are cited
verbatim hereunder:

A. Bargaining Deadlock
1. Economic issues (specify)
1. Retirement
2. Panel Composition
3. Costs and Attendance
4. CBA

The second Notice of Strike is dated November 7, 2001 and the

cited ground is like quoted verbatim below:
 B. Unfair Labor Practices (s pecify)
Bargaining in bad faith
Setting pre-condition in the ground rules (Retirement
issue)

Nowhere in the second Notice of Strike is it indicated that this

Notice is an amendment to and took the place of the first Notice of
Strike. In fact, our Assumpt ion of Jurisdiction Order dated
November 29, 2001 specificall y cited the two (2) Notices of Strike
without any objection on the part of the Union x x x. [ 4 8 ]

Thus, based on the Notices of Strike filed by UFE -DFA-KMU, the

Secretary of the DOLE rightly decided on matters of substance.
Further, it is a fact that during the conciliation meetings before the
NCMB, but prior to the filing of the notices of strike, the parties had
already delved into matters affecting the meat of the collective
bargaining agreement. The appellate courts reliance on the
statement [ 4 9] of the representative of Nestl in ruling that the labor
dispute had yet to progress from the discussion of the ground rules of
the CBA negotiations is clearly misleading; hence, erroneous.

Nevertheless, granting for the sake of argument that the meetings

undertaken by the parties had not gone beyond the discussion of the
ground rules, the issue of whether or not the Secretary of the
DOLE could decide issues incidental to the subject labor dispute had
already been answered in the affirmative. The Secretarys assumption
of jurisdiction power necessarily includes matters incidental to the
labor dispute, that is, issues that are necessarily involved in the
dispute itself, not just to those ascribed in the Notice of Strike; or,
otherwise submitted to him for resolution. As held in the case
of International Pharmaceuticals, Inc. v. Sec. of Labor and
Employment, [ 5 0 ] x x x [t]he Secretary was explicitly granted by Article
263 (g) of the Labor Code the authority to assume jurisdiction over a
labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, and decide the same
accordingly. Necessarily, this authority to assume jurisdiction over
the said labor dispute must include and extend to all questions and
controversies arising therefrom, including cases over which the Labor
Arbiter has exclusive jurisdictio n. [ 51] Accordingly, even if not exactly
on the ground upon which the Notice of Strike is based, the fact that
the issue is incidental to t he resolution of the subject labor dispute or
that a specific issue had been submitted to the Secretary of the DOLE
for her resolution, validly empowers the latter to take cognizance of
and resolve the same.

Secretary Sto. Tomas correctly assumed jurisdi ction over the

questions incidental to the current labor dispute and those matters
raised by the parties. In any event, the query as to whether or not the
Retirement Plan is to be included in the CBA negotiations between the
parties ineluctably dictates up on the Secretary of the DOLE to go into
the substantive matter of the CBA negotiations.

Lastly, the third issue pertains to the alleged reversible error

committed by the Court of Appeals in holding, albeit impliedly, Nestl
free and clear from any unfair labor practice. UFE-DFA-KMU argues
that Nestls refusal to bargain on a very important CBA economic
provision constitutes unfair labor practice. [ 5 2 ] It explained that Nestl
set as a precondition for the holding of collective bargaining
negotiations the non-inclusion of the issue of Retirement Plan. In its
words, respondent Nestl Phils., Inc. insisted that the Union should
first agree that the retirement plan is not a bargaining issue before
respondent Nestl would agree to discuss other issues in the CBA. [ 5 3 ] It
then concluded that the Court of Appeals committed a legal error in
not ruling that respondent company is guilty of unfair labor practice.
It also committed a legal error in failing to award damages to the
petitioner for the ULP committed by the respondent. [ 54 ]

Nestl refutes the above argument and asserts that it was only
before the Court of Appeals, and in the second Petition
for Certiorari at that, did UFE-DFA-KMU raise the matter of unfair
labor practice. It reasoned that the subject of unfair labor practice
should have been threshed out with the appropriate labor tribunal. In
justifying the failure of the Court of Appeals to find it guilty of unfair
labor practice, it stated that:

Under the circumstances, therefore, there was no way

for the Court of Appeals to make a ruling on the issues of
unfair labor practice and damages, simply because there was
nothing to support or justify such action. Although petitioner
was afforded by the Secretary the opportunity to be heard and
more, it simply chose to omit the said issues in the
proceedings below. [ 5 5 ]

We are persuaded.

The concept of unfair labor practice is defined by the Labor

Code as:

ART. 247. CONCEPT OF UNFAIR LABOR

PRACTICE AND PROCEDURE FOR PROSECUTION
THEREOF. Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are
inimical to the legitimate interests of both labor and
management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom
and mutual respect, disrupt industrial p eace and hinder the
promotion of healthy and stable labor -management relations.

x x x x.

The same code likewise provides the acts constituting unfair

labor practices committed by employers, to wit:

ART. 248. UNFAIR LABOR PRACTICES OF

EMPLOYERS. It shall be unlawful for an employer to
commit any of the following unfair labor practices:
 (a) To interfere with, restrain or coerce employees
in the exercise of their right to self -organization;

(b) To require as a condition of employment that a

person or an employee shall not join a labor organization or
shall withdraw from one to which he belongs;

(c) To contract out services or functions being

performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their right to
self-organization;

(d) To initiate, dominate, assist or otherwise

interfere with the formation or administration of any labor
organization, including the giving of financial or other
support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of

work, and other terms and conditions of employment in order
to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall
stop the parties from requiring membership in a recognized
collective bargaining agent as a condition for employment,
except those employees who are already members of another
union at the time of the signing of the collective bargaining
agreement.

Employees of an appropriate collective bargaining unit

who are not members of the recognized collective bargaining
agent may be assessed a reasonable fee equivalent to the dues
and other fees paid by members of the recognized collective
bargaining agent, if such non-union members accept the
benefits under the collective agreement. Provided, That the
individual authorization required under Article 242,
paragraph (o) of this Code shall not apply to the nonmembers
of the recognized collective bargaining a gent; [The article
referred to is 241, not 242. CAA]

(f) To dismiss, discharge, or otherwise prejudice or

discriminate against an employee for having given or being
about to give testimony under this Code;
 (g) To violate the duty to bargain collectively as
prescribed by this Code;

(h) To pay negotiation or attorneys fees to the union

or its officers or agents as part of the settlement of any issue
in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph

notwithstanding, only the officers and agents of corporations
associations or partnerships who have actually participated,
authorized or ratified unfair labor practices shall be held
criminally liable. [Emphasis supplied.]

Herein, Nestl is accused of violating its duty to bargain

collectively when it purportedly imposed a pre -condition to its
agreement to discuss and engage in collective bargaining negotiations
with UFE-DFA-KMU.

A meticulous review of the record and pleadings of the cases at

bar shows that, of the two notices of strike filed by UFE -DFA-KMU
before the NCMB, it was only on the second that the ground of unfair
labor practice was alleged. Worse, the 7 November 2001 Notice of
Strike merely contained a general allegation that Nestl committed
unfair labor practice by bargaining in bad faith for supposedly setting
pre-condition in the ground rules (Retirement issue). [ 5 6] On the
contrary, Nestl, in its Position Paper, did not confine itself to the issue
of the non-inclusion of the Retirement Plan but extensively discussed
its stance on other economic matters pertaining to the CBA.

Basic is the principle that good faith is presumed and he who

alleges bad faith has the duty to prove the same. [ 5 7 ] By imputing bad
faith unto the actuations of Nestl, it was UFE -DFA-KMU, therefore,
who had the burden of proof to present substantial evidence to support
the allegation of unfair labor practice. A perusal of the allegations and
arguments raised by UFE-DFA-KMU in the Memorandum (in G.R.
Nos. 158930-31) will readily disclose that it failed to discharge
said onus probandi as there is still a need for the presentation of
evidence other than its bare contention of unfair labor practice in
order to make certain the propriety or impropriety of the unfair labor
practice charge hurled against Nestl. Under Rule XIII, Sec. 4, Book V
of the Implementing Rules of the Labor Code:

x x x. In cases of unfair labor practices, the notice of

strike shall as far as practicable, state the acts complained
of and the efforts to resolve the dispute amicably. [Emphasis
supplied.]

Except for the assertion put forth by UFE -DFA-KMU, neither the
second Notice of Strike nor the records of these cases substantiate a
finding of unfair labor practice. It is not enough that the union
believed that the employer committed acts of unfair labor practice
when the circumstances clearly negate even a prima facie showing to
warrant such a belief. [ 5 8 ] In its letter [ 5 9] to UFE-DFA-KMU of 29 May
2001, though Nestl underscored its position that unilateral grants,
one-time company grants, company-initiated policies and programs,
which include, but are not limited to the Retirement Plan, Incidental
Straight Duty Pay and Calling Pay Premium, are by their v ery nature
not proper subjects of CBA negotiations and therefore shall be
excluded therefrom, such attitude is not tantamount to refusal to
bargain. This is especially true when it is viewed in the light of the
fact that eight out of nine bargaining units have allegedly agreed to
treat the Retirement Plan as a unilateral grant. Nestl, therefore, cannot
be faulted for considering the same benefit as unilaterally granted.
To be sure, it must be shown that Nestl was motivated by ill will, bad
faith, or fraud, or was oppressive to labor, or done in a manner
contrary to morals, good customs, or public policy, and, of course,
that social humiliation, wounded feelings, or grave anxiety resulted
x x x [ 6 0] in disclaiming unilateral grants as proper subjects in their
collective bargaining negotiations.
 There is no per se test of good faith in bargaining. [ 6 1 ] Good faith
or bad faith is an inference to be drawn from the facts, [ 6 2 ] to
be precise, the crucial question of whether or not a party has met his
statutory duty to bargain in good faith typically turns on the facts of
the individual case. Necessarily, a determination of the validity of the
Nestls proposition involves an appraisal of the exercise of its
management prerogative.

Employers are accorded rights and privileges to assure their self -

determination and independence and reasonable return of
capital. [ 6 3] This mass of privileges comprises the so -called
management prerogatives. [ 6 4 ] In this connection, the rule is that good
faith is always presumed. As long as the companys exercise of the
same is in good faith to advance its interest and not for purpose of
defeating or circumventing the ri ghts of employees under the law or a
valid agreement, such exercise will be upheld. [ 65 ]

Construing arguendo that the content of the aforequoted letter

of 29 May 2001 laid down a pre-condition to its agreement to bargain
with UFE-DFA-KMU, Nestls inclusion in its Position Paper of its
proposals affecting other matters covered by the CBA contradicts the
claim of refusal to bargain or bargaini ng in bad faith. Accordingly,
since UFE-DFA-KMU failed to proffer substantial evidence that would
overcome the legal presumption of good faith on the part of Nestl, the
award of moral and exemplary damages is unavailing.

It must be remembered at all time s that the Philippine

Constitution, while inexorably committed towards the protection of
the working class from exploitation and unfair treatment, nevertheless
mandates the policy of social justice so as to strike a balance between
an avowed predilection for labor, on the one hand, and the
maintenance of the legal rights of capital, the proverbial hen that lays
the golden egg, on the other. Indeed, we should not be unmindful of
the legal norm that justice is in every case for the deserving, to be
dispensed with in the light of established facts, the applicable law, and
existing jurisprudence. [ 6 6 ]
 In sum, from the facts and evidence extant i n the records of these
consolidated petitions, this Court finds that 1) the Retirement Plan is
still a valid issue for herein parties collective bargaining negotiations;
2) the Court of Appeals committed reversible error in limiting to the
issue of the ground rules the scope of the power of the Secretary of
Labor to assume jurisdiction over the subject labor dispute; and 3)
Nestl is not guilty of unfair labor practice. As no other issues are
availing, this ponencia writes finis to the protracted labor dispute
between Nestl and UFE-DFA-KMU (CabuyaoDivision).

WHEREFORE, in view of the foregoing, the Petition in G.R. No.

158930-31 seeking that Nestl be declared to have committed unfair
labor practice in allegedly setting a precondition to bargaining is
DENIED. The Petition in G.R. No. 158944 -45, however, is PARTLY
GRANTED in that we REVERSE the ruling of the Court of Appeals in
CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the
DOLE gravely abused her discretion in failing to confine he r
assumption of jurisdiction power over the ground rules of the CBA
negotiations; but the ruling of the Court of Appeals on the inclusion of
the Retirement Plan as a valid issue in the collective bargaining
negotiations between UFE-DFA-KMU and Nestl is AFFIRMED. The
parties are directed to resume negotiations respecting the Retirement
Plan and to take action consistent with the discussions hereinabove set
forth. No costs.
SO ORDERED.
 REFUSAL TO BARGAIN CASES

G.R. Nos. L-10095 and L-10115 October 31, 1957

THE PHILIPPINE MARINE RADIO OFFICERS' ASSOCIATION, petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS, COMPAIA MARITIMA, PHILIPPINE STEAM
NAVIGATION CO., MADRIGAL SHIPPING CO., NORTH CAMARINES LUMBER SHIPPING CO.,
PAN ORIENTAL SHIPPING CO., HIJOS DE F. ESCAO, INC., VISAYAN TRANSPORTATION
CO., ROYAL LINES, INC., CARLOS A. GOTHONG SHIPPING CO. and BISAYA LAND
TRANSPORTATION CO., respondents.

COMPAIA MARITIMA, PHILIPPINE STEAM NAVIGATION and MADRIGAL SHIPPING CO.,

INC., petitioners,
vs.
PHILIPPINE MARINE RADIO OFFICERS' ASSOCIATION and COURT OF INDUSTRIAL
RELATIONS, ET AL.,respondents.

Villaluz, Viola and Associates for the PHILMAROA.

Florencio L. Albino and Pedro L. Albino for the Visayan Transportation Co., Inc., Carlos A. Go Thong
and Co., Inc., and Royal Line, Inc.
Ozaeta, Lichauco and Picazo for the PSNCO.
Rafael Dinglasan and Mariano H. Laurel for the compania Maritima.
Mariano B. Tuason and Silverio Q. Cornejo for the respondent CIR.
Bausa and Ampil for the Madrigal Shipping Co., Inc.
Manuel V. San Jose for the North Camarines Lumber Co., Inc.
Vicente L. Faelnar and Emilio R. Rosal for respondent Hijos de F. Escano, Inc.
Nicolas Belmonte & Silverio B. Bay for respondent BLTCO, Inc.
Jose Raval for the intervenor Radio Operators Association of the Philippines.

LABRADOR, J.:

In the above-entitled cases petitioners seek the annulment and or revision of an order of the Court of
Industrial Relations concurred in by Judges Lanting, Jimenez Yanson and Martinez, the main
provisions of which: (1) direct the return of the strikers, members of the Philippine Marine Radio
Operators Association and the different shipping companies parties to the action, (2) but refuse the
grant of backpay to them during the period of the strike.

The facts that led to the promulgation of the order in question may be briefly stated as follows: On
August 28, 1953, the Philippine Marine Radio Officers Association (PHILMAROA) presented a list of
demand to the Association de Navieros, the Philippine Shipowners' Association and the Luzon
Stevedoring Company, the most important of which are: (1) the standardization and increase of
salaries; (2) sick and vacation leave; (3) hospitalization and sick leave; and (4) a closed shop
agreement. On September 25, 1953, the Associacion de Navieros informed the Philmaroa that the
matter of their petition was referred to the members of the Association, the most important of which
were the Compania Maritima and the Philippine Steam Navigation Company. On October 22, 1953,
the Philippine Shipowners' Association, the most important members of which are the Madrigal
Shipping Company, the Visayan Transportation Company and the Bisaya Land Transportation,
informed the Philmaroa that it could not deal with the latter and requested that the demands be
made on the member companies. On September 26, 1953, the Philmaroa also presented the
demands with the Bisaya Land Transportation Company and the Royal Steamship Lines. As none of
the companies were willing to consider its demands the Philmaroa gave notice of its intention to
strike to the different shipping companies and to the Chief, Conciliation Service Division, Department
of Labor. This notice to strike was sent on October 17 and October 24. On October 31, 1953 the
Chief of the Conciliation Service called the parties for conference. At this conference the Associacion
de Navieros and the Philippine Shipowners' Association gave the information that they hold no
authority or power to bargain collectively and suggested that the members of the said association be
notified, so the union sent notices to the different companies. After being notified, the respondent
companies, on November 7 and November 13, answered, questioning the authority of the Philmaroa
to act as representative of the radio operators and demanding that the list of the members employed
who belong to the Philmaroa be furnished them. But the Philmaroa refused to do so for fear of
reprisal against its members.

The respondent companies also averred that some of them had given salaries over and above that
demanded in the standardization, some have given sick and vacation leave and hospitalization, etc.
At a conference held on November 13,1953 before the Conciliation Service Division of the
Department of Labor, it was agreed that the respondents be allowed six days of grace within which
to act upon or answer the demands made by the Philmaroa. But without the period of six days
having expired the Philmaroa declared a strike on November 16, against the Compania Maritima, on
November 19, against the Philippine Steam Navigation Company.

On February 22, 1954, the President of the Philippines certified the case to the Court of Industrial
Relations in accordance with section 10 of Republic Act No. 875. The case was then heard by the
Court of Industrial Relations with Hon. Jose S. Bautista, presiding. After trial he rendered a decision
ordering the respondent companies to reinstate the radio operators on strike, with backpay to their
former positions on the vessels under the terms and conditions on August 28, 1953. The judge also
granted demand (c) or free hospitalization and sick leave of 15 days every year with pay. All the
other demands were denied. Standardization was denied because the cost of operation of the
vessels cannot be controlled and not all of the companies are of the same level and the work and of
living vary among the different vessels. Vacation leave with pay was denied because the court found
that many of the respondents did not have the ability to pay. The closed shop agreement was denied
because there was no need for it as the nature of the work of radio operators did not need to be the
subject of bargaining. Against this decision all the parties appealed the court in banc. Judge V.
Jimenez Yanson voted to allow the strikers to go back to their respective positions, but without
backpay. He voted to affirm the other portions of the decision denying standardization, vacation
leave and closed shop agreement, but granting sick leave, free hospitalization with pay. Judge
Martinez concurred in this opinion of Judge Vicente Jimenez Yanson. Judge Lanting concurred also
with this decision of Judge Jimenez Yanson, giving the grounds for his concurrence. All the parties
to the action have appealed to Us by certiorari from the order of the court in banc. Their appeals
shall be considered separately.

APPEAL OF THE PHILIPPINE MARINE RADIO OFFICERS ASSOCIATION (G.R. No. L-10095).

The first error claimed to have been committed by the court a quo in its resolution is in finding that
there was no allegation or issue of unfair labor practice before the court, and in concluding that the
latter could not, therefore, grant backpay to the employees who were ordered to return back to their
work. It is argued by the petitioner that the existence of unfair labor practice was an issue in the case
because the Philippine Steam Navigation Company and the other steam companies, in their
pleadings and allegations, claim that the strike was illegal because of acts of the union amounting to
unfair labor practice, and that under such allegations and pleadings the court had the power and
jurisdiction to find it was the respondents who committed unfair labor practice, as a result of which
the strike could not have been illegal. It is argued as a consequence that the finding of the trial judge
that the respondents were guilty of unfair labor practice because they delayed passing upon the
demands of petitioners union should be sustained by Us.

We agree with the finding of the majority of the court below that there was no unreasonable delay by
the respondents in the consideration of the union demands. The demands were quite many and
varied, involving very fundamental questions that could affect the life of the business of each of the
respondents, like increased salaries, vacation leave with pay, closed shop agreement. It is
unreasonable to require the respondents, therefore, to answer the demands in the very short period
of time that the case was before the Conciliation Service Division of the Department of Labor.
Furthermore, it was agreed at the conference that respondent companies were to be granted six
days after November 13, within which to present their answer to the list of demands; but the
petitioner union began calling the strikes before the expiration of said period. it is possible under
certain circumstances that delay in consideration of demands of a labor union may amount to a
refusal to bargain collectively, within the meaning of Section 4, par. 6 of the Industrial Peace Act, but
we find that under the circumstances of the case there was no unreasonable delay which would
amount to a refusal to bargain within the meaning of said provision.
With this holding, it becomes unnecessary to consider the correctness of the resolution appealed
from insofar as it declares that the employer may be declared guilty of unfair labor practice without
allegation to that effect in the pleadings and opportunity on the part of the employer to deny the
same, to contest the charge, and submit evidence in the support of the denial.

It is also argued before Us that the respondent companies were not guilty of unfair labor practice
because while the strike was in progress, Case No. 161-ULP was instituted against the Compania
Maritima for having removed or dismissed employee Manuel C. Romero, whom the Court of
Industrial Relations ordered returned to his former position. This contention is without merit. The
case of Romero was never mentioned as a cause of the strike, and neither is it mentioned as a
cause of finding said respondent company or any one of respondents guilty of unfair labor practice.
As a matter of fact, the trial judge had not considered the incident of Romero as a cause of unfair
labor practice against the Compania Maritima; it was the supposed delaying tactics that were found
by the trial judge to constitute the act of unfair labor practice. Furthermore, the decision of the Court
of Industrial Relations in the case of Romero did not result in anything except in the reinstatement of
Romero. No other matter was decided in that case, hence the petitioner union cannot claim it to be a
cause or reason for declaring respondent companies guilty of unfair labor practice in the case now at
bar.

The second important error assigned in this appeal is the refusal of the majority of the court below to
grant the backpay. The alleged labor practice imputed to their respondent companies is again used
as a ground for granting backpay to the members of the petitioner union, but as we have found
above that there was no act on the part of respondent companies amounting to unfair labor practice,
this ground for the demand must be rejected.

This brings us to a consideration of that part of the decision that has a relation to the right to
backpay. The basic facts are stated in the opinion of the three judges who denied the backpay claim:

On February 25, 1954, this court issued an order setting the hearing of the case on March 1,
1954. at the hearing, Atty. Cipriano Cid, then counsel for the petitioner, was asked several
times by the trial Court and by counsel of Compania Maritima whether he wanted the strikers
to be ordered back to work, and his reply was: 'We have not asked that yet. (p. 15-19
hearing on March 1, 1954). And when counsel for PSNCO directly asked him if he wanted
the strikers to go back to work, his answer in effect was, if ordered by the Court. . . (p. 5,
Annex F-1 to Petition.).

It is clear from the above that the petitioner union never demanded the privilege to have its members
reinstated to their positions immediately, but that they left this matter of their return to the discretion
of the court. The court, on the other hand, did not order the return of the strikers, it did so only in its
decision after the hearing and termination of the case.

Under the circumstances as above indicated it is apparent that the strikers never expressed a desire
or willingness return back to work, leaving that to the court's discretion. The denial of backpay to the
strikers is clearly justified in accordance with previous decision of this Court.

It must be taken into account that neither the pleadings, nor the evidence, nor the judgment disclose
the existence of any act amounting to discrimination or unfair labor practice. The strike was resorted
to be members of the petitioner union as an economic weapon to compel the respondent companies
to grant improvement in the pay of the members of the union and in the conditions of their
employment.
As a matter of fact they expressly wanted to close shop, standardization and increase of salaries as
well as vacation leave with pay. At the hearing of the case before the court a quo, counsel for the
petitioner union, when asked if the strikers wanted to return back to work, did not say so, but instead
expressly declared that the strike was adopted as a weapon to enforce their demands. The strike
was by all means, therefore, a voluntary act on the part of the strikers, not one to which they were
compelled by reason of any act of discrimination, or unfair labor practice, or refusal of the
respondent companies to admit them back to work. The strike may have been legal because it was
used as a weapon in the interest of labor; but it was not caused by any illegal or unfair act on the
part of the employers, and the strikers should not be entitled to pay during the period they voluntarily
absented themselves from work. What we stated in the case of J.P. Heilbrown Company vs.
National Labor Union, (92 Phil., 575, 49 Off. Gaz., [2] 547) are exactly applicable:

. . . The age-old rule governing the relation between labor and capital or management and
employee is that of a 'fair day's wage for a fair day's labor.' If there is no work performed by
the employee there can be no wage or pay, unless of course, the laborer was able, willing
and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or
just for an employee or laborer to fight or litigate against his employer on the employer's
time.

No commission of ally unfair labor practice is involved in the case. The grant of backpay is,
therefore, to be governed by the general principle of "fair day's wage for a fair day's labor." If even in
cases of unfair labor practices the court may be justified in denying backpay (See section 5 (c) of
industrial Peace Act), there is absolutely no reason for granting backpay if there has not been any
unfair labor practice on the part of the respondent companies at all.

For the foregoing considerations the appeal should be denied.

APPEAL OF COMPAIA MARITIMA, ET AL. (G. R. No. L-10115) This appeal involves the
interpretation of Section 10 of the Industrial Peace Act, which is its follows:

Labor Disputes in Industries indispensable to the National Interest. When in the opinion of
the President of the Philippines there exists a labor dispute in an industry indispensable to
the national interest and when such labor dispute is certified by the President to the Court of
Industrial Relations, said Court may cause to be issued a restraining order forbidding the
employees to strike or the employer to lockout the employees, pending an investigation by
the Court, and if no other solution to the dispute is found, the Court may issue an order fixing
the terms and conditions of employment.

It is contended that under the above-quoted provision the Court of Industrial Relations, in a case
certified to it by the President of the Philippines under the provisions of the above-quoted section,
has no power to order the reinstatement of employees and to grant them backpay. It is argued that
the Industrial Peace Act does not prohibit the replacement of strikers, and if this is so the employer
has the right to make replacements during the strike, which replacements may not be by a
subsequent order of the Court of Industrial Relations for the return of the strikers.

We cannot subscribe to the above contention. We agree with counsel for the Philippine Marine
Radio Officers Association that upon certification by the President under Section 10 of Republic Act
875, the case comes under the operation of Commonwealth Act 103, which enforces compulsory
arbitration in cases of labor disputes in industries indispensable to the national interest when the
President certifies the case to the Court of Industrial Relations. The evident intention of the law is to
empower the Court of Industrial Relations to act in such cases, not only in the manner prescribed
under Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that Act.
If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and
such solution consists in the ordering of employees to return back to work, it cannot be contended
that the Court of Industrial Relations does not have the power of jurisdiction to carry that solution into
effect. And of what use is its power and jurisdiction to carry into effect the solution it has adopted.
Lastly, if the said court has the power to fix the terms and conditions of employment, it certainly can
order the return of the workers with without backpay as a term or condition of the employment.

The appeal is, therefore,, without merit.

For the foregoing considerations, the appeals in the aforesaid cases are hereby dismissed, with
costs against the petitioner in G.R. No. L-10095. and the petitioners in G.R. No. L-10115.

G.R. No. L-54334 January 22, 1986

KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG
PAGGAWA (KILUSAN), respondents.

Ablan and Associates for petitioner.

Abdulcadir T. Ibrahim for private respondent.

CUEVAS, J.:

Petition for certiorari to annul the decision 1 of the National Labor Relations Commission (NLRC)
dated July 20, 1979 which found petitioner Sweden Ice Cream guilty of unfair labor practice for
unjustified refusal to bargain, in violation of par. (g) of Article 2492 of the New Labor Code, 3 and
declared the draft proposal of the Union for a collective bargaining agreement as the governing
collective bargaining agreement between the employees and the management.

The pertinent background facts are as follows:

In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union for
short), a legitimate late labor federation, won and was subsequently certified in a resolution dated
November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of
the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company's
motion for reconsideration of the said resolution was denied on January 25, 1978.

Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with two
copies of its proposed collective bargaining agreement. At the same time, it requested the Company
for its counter proposals. Eliciting no response to the aforesaid request, the Union again wrote the
Company reiterating its request for collective bargaining negotiations and for the Company to furnish
them with its counter proposals. Both requests were ignored and remained unacted upon by the
Company.
Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union,
on February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground
of unresolved economic issues in collective bargaining. 5

Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all
attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to certify
the case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to
Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was
assigned, set the initial hearing for April 29, 1979. For failure however, of the parties to submit their
respective position papers as required, the said hearing was cancelled and reset to another date.
Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for
a resetting which was granted. The Company was directed anew to submit its financial statements
for the years 1976, 1977, and 1978.

The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of
record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered his
appearance as counsel for the Company only to request for another postponement allegedly for the
purpose of acquainting himself with the case. Meanwhile, the Company submitted its position paper
on May 28, 1979.

When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative,
Mr. Ching, who was supposed to be examined, failed to appear. Atty. Panganiban then requested for
another postponement which the labor arbiter denied. He also ruled that the Company has waived
its right to present further evidence and, therefore, considered the case submitted for resolution.

On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations
Commission. On July 20, 1979, the National Labor Relations Commission rendered its decision, the
dispositive portion of which reads as follows:

WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of

unjustified refusal to bargain, in violation of Section (g) Article 248 (now Article 249),
of P.D. 442, as amended. Further, the draft proposal for a collective bargaining
agreement (Exh. "E ") hereto attached and made an integral part of this decision,
sent by the Union (Private respondent) to the respondent (petitioner herein) and
which is hereby found to be reasonable under the premises, is hereby declared to be
the collective agreement which should govern the relationship between the parties
herein.

SO ORDERED. (Emphasis supplied)

Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor
Relations Commission acted without or in excess of its jurisdiction or with grave abuse of discretion
amounting to lack of jurisdiction in rendering the challenged decision. On August 4, 1980, this Court
dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of
dismissal was reconsidered and the petition was given due course in a Resolution dated April 1,
1981.

Petitioner Company now maintains that its right to procedural due process has been violated when it
was precluded from presenting further evidence in support of its stand and when its request for
further postponement was denied. Petitioner further contends that the National Labor Relations
Commission's finding of unfair labor practice for refusal to bargain is not supported by law and the
evidence considering that it was only on May 24, 1979 when the Union furnished them with a copy of
the proposed Collective Bargaining Agreement and it was only then that they came to know of the
Union's demands; and finally, that the Collective Bargaining Agreement approved and adopted by
the National Labor Relations Commission is unreasonable and lacks legal basis.

The petition lacks merit. Consequently, its dismissal is in order.

Collective bargaining which is defined as negotiations towards a collective agreement,6 is one of the
democratic frameworks under the New Labor Code, designed to stabilize the relation between labor
and management and to create a climate of sound and stable industrial peace. It is a mutual
responsibility of the employer and the Union and is characterized as a legal obligation. So much so
that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to
refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement with respect to wages, hours of work, and all other terms and conditions of
employment including proposals for adjusting any grievance or question arising under such an
agreement and executing a contract incorporating such agreement, if requested by either party.

While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal
duty to initiate contract negotiation.7 The mechanics of collective bargaining is set in motion only
when the following jurisdictional preconditions are present, namely, (1) possession of the status of
majority representation of the employees' representative in accordance with any of the means of
selection or designation provided for by the Labor Code; (2) proof of majority representation; and (3)
a demand to bargain under Article 251, par. (a) of the New Labor Code . ... all of which preconditions
are undisputedly present in the instant case.

From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no
doubt that the Union has a valid cause to complain against its (Company's) attitude, the totality of
which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by the Labor
Code to bargain in good faith.

We are in total conformity with respondent NLRC's pronouncement that petitioner Company is
GUILTY of unfair labor practice. It has been indubitably established that (1) respondent Union was a
duly certified bargaining agent; (2) it made a definite request to bargain, accompanied with a copy of
the proposed Collective Bargaining Agreement, to the Company not only once but twice which were
left unanswered and unacted upon; and (3) the Company made no counter proposal whatsoever all
of which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's refusal to make
counter proposal if considered in relation to the entire bargaining process, may indicate bad faith and
this is specially true where the Union's request for a counter proposal is left unanswered. 9 Even
during the period of compulsory arbitration before the NLRC, petitioner Company's approach and
attitude-stalling the negotiation by a series of postponements, non-appearance at the hearing
conducted, and undue delay in submitting its financial statements, lead to no other conclusion
except that it is unwilling to negotiate and reach an agreement with the Union. Petitioner has not at
any instance, evinced good faith or willingness to discuss freely and fully the claims and demands
set forth by the Union much less justify its opposition thereto. 10

The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union (PAFLU)
vs. Herald Publications 11 the rule had been laid down that "unfair labor practice is committed when it
is shown that the respondent employer, after having been served with a written bargaining proposal
by the petitioning Union, did not even bother to submit an answer or reply to the said proposal This
doctrine was reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it was further
ruled that "while the law does not compel the parties to reach an agreement, it does contemplate
that both parties will approach the negotiation with an open mind and make a reasonable effort to
reach a common ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner
capitalizes on the issue of due process claiming, that it was denied the right to be heard and present
its side when the Labor Arbiter denied the Company's motion for further postponement.

Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements granted
in its behalf, the claimed denial of due process appeared totally bereft of any legal and factual
support. As herein earlier stated, petitioner had not even honored respondent Union with any reply to
the latter's successive letters, all geared towards bringing the Company to the bargaining table. It did
not even bother to furnish or serve the Union with its counter proposal despite persistent requests
made therefor. Certainly, the moves and overall behavior of petitioner-company were in total
derogation of the policy enshrined in the New Labor Code which is aimed towards expediting
settlement of economic disputes. Hence, this Court is not prepared to affix its imprimatur to such an
illegal scheme and dubious maneuvers.

Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement
which was approved and adopted by the NLRC is a total nullity for it lacks the company's consent,
much less its argument that once the Collective Bargaining Agreement is implemented, the
Company will face the prospect of closing down because it has to pay a staggering amount of
economic benefits to the Union that will equal if not exceed its capital. Such a stand and the
evidence in support thereof should have been presented before the Labor Arbiter which is the proper
forum for the purpose.

We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be tolerated
and allowed with impunity to resort to schemes feigning negotiations by going through empty
gestures.13 More so, as in the instant case, where the intervention of the National Labor Relations
Commission was properly sought for after conciliation efforts undertaken by the BLR failed. The
instant case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D.
873, as amended, which authorizes the said body to determine the reasonableness of the terms and
conditions of employment embodied in any Collective Bargaining Agreement. To that extent, utmost
deference to its findings of reasonableness of any Collective Bargaining Agreement as the governing
agreement by the employees and management must be accorded due respect by this Court.

WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on August
27, 1980, is LIFTED and SET ASIDE.

No pronouncement as to costs.

SO ORDERED.

Bradman case: bargaining in bad faith - Bradman Co., Inc. vs. CIR, G.R. Nos. L-24134-35, July 21,
1977, 78 SCRA 10.pdf

[G.R. No. 146728. February 11, 2004]

GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF
APPEALS, GENERAL MILLING CORPORATION INDEPENDENT
LABOR UNION (GMC-ILU), and RITO MANGUBAT, respondents.

DECISION
QUISUMBING, J.:

Before us is a petition for certiorari assailing the decision dated July 19,
[1]

2000, of the Court of Appeals in CA-G.R. SP No. 50383, which earlier

reversed the decision dated January 30, 1998 of the National Labor
[2]

Relations Commission (NLRC) in NLRC Case No. V-0112-94.

The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner
General Milling Corporation (GMC) employed 190 workers. They were all
members of private respondent General Milling Corporation Independent
Labor Union (union, for brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining
agreement (CBA) which included the issue of representation effective for a
term of three years. The CBA was effective for three years retroactive to
December 1, 1988. Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union
sent GMC a proposed CBA, with a request that a counter-proposal be
submitted within ten (10) days.
As early as October 1991, however, GMC had received collective and
individual letters from workers who stated that they had withdrawn from their
union membership, on grounds of religious affiliation and personal
differences. Believing that the union no longer had standing to negotiate a
CBA, GMC did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions officers, Rito
Mangubat and Victor Lastimoso. The letter stated that it felt there was no
basis to negotiate with a union which no longer existed, but that management
was nonetheless always willing to dialogue with them on matters of common
concern and was open to suggestions on how the company may improve its
operations.
In answer, the union officers wrote a letter dated December 19, 1991
disclaiming any massive disaffiliation or resignation from the union and
submitted a manifesto, signed by its members, stating that they had not
withdrawn from the union.
 On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member,
on the ground of incompetence. The union protested and requested GMC to
submit the matter to the grievance procedure provided in the CBA. GMC,
however, advised the union to refer to our letter dated December 16, 1991. [3]

Thus, the union filed, on July 2, 1992, a complaint against GMC with the
NLRC, Arbitration Division, Cebu City. The complaint alleged unfair labor
practice on the part of GMC for: (1) refusal to bargain collectively; (2)
interference with the right to self-organization; and (3) discrimination. The
labor arbiter dismissed the case with the recommendation that a petition for
certification election be held to determine if the union still enjoyed the support
of the workers.
The union appealed to the NLRC.
On January 30, 1998, the NLRC set aside the labor arbiters
decision. Citing Article 253-A of the Labor Code, as amended by Rep. Act No.
6715, which fixed the terms of a collective bargaining agreement, the NLRC
[4]

ordered GMC to abide by the CBA draft that the union proposed for a period
of two (2) years beginning December 1, 1991, the date when the original CBA
ended, to November 30, 1993. The NLRC also ordered GMC to pay the
attorneys fees.[5]

In its decision, the NLRC pointed out that upon the effectivity of Rep. Act
No. 6715, the duration of a CBA, insofar as the representation aspect is
concerned, is five (5) years which, in the case of GMC-Independent Labor
Union was from December 1, 1988 to November 30, 1993. All other provisions
of the CBA are to be renegotiated not later than three (3) years after its
execution. Thus, the NLRC held that respondent union remained as the
exclusive bargaining agent with the right to renegotiate the economic
provisions of the CBA. Consequently, it was unfair labor practice for GMC not
to enter into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the
union submitted by 13 of its members from February to June 1993 confirmed
the pressure exerted by GMC on its employees to resign from the union.
Thus, the NLRC also found GMC guilty of unfair labor practice for interfering
with the right of its employees to self-organization.
With respect to the unions claim of discrimination, the NLRC found the
claim unsupported by substantial evidence.
On GMCs motion for reconsideration, the NLRC set aside its decision of
January 30, 1998, through a resolution dated October 6, 1998. It found GMCs
doubts as to the status of the union justified and the allegation of coercion
exerted by GMC on the unions members to resign unfounded. Hence, the
union filed a petition for certiorari before the Court of Appeals. For failure of
the union to attach the required copies of pleadings and other documents and
material portions of the record to support the allegations in its petition, the CA
dismissed the petition on February 9, 1999. The same petition was
subsequently filed by the union, this time with the necessary documents. In its
resolution dated April 26, 1999, the appellate court treated the refiled petition
as a motion for reconsideration and gave the petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive
portion of which reads:

WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October

6, 1998 is hereby SET ASIDE, and its decision of January 30, 1998 is, except with
respect to the award of attorneys fees which is hereby deleted, REINSTATED.[6]

A motion for reconsideration was seasonably filed by GMC, but in a

resolution dated October 26, 2000, the CA denied it for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE
THAT NO DECISION SHALL BE RENDERED BY ANY COURT WITHOUT
EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS AND THE LAW
ON WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION IN THE ABSENCE OF ANY FINDING OF SUBSTANTIAL ERROR OR
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT
APPRECIATING THAT THE NLRC HAS NO JURISDICTION TO DETERMINE THE
TERMS AND CONDITIONS OF A COLLECTIVE BARGAINING AGREEMENT.[7]

Thus, in the instant case, the principal issue for our determination is
whether or not the Court of Appeals acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in (1) finding GMC guilty of unfair
labor practice for violating the duty to bargain collectively and/or interfering
with the right of its employees to self-organization, and (2) imposing upon
GMC the draft CBA proposed by the union for two years to begin from the
expiration of the original CBA.
 On the first issue, Article 253-A of the Labor Code, as amended by Rep.
Act No. 6715, states:

ART. 253-A. Terms of a collective bargaining agreement. Any Collective

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

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

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

...

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

...

Article 252 of the Labor Code elucidates the meaning of the phrase duty to
bargain collectively, thus:
ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively
means the performance of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement....

We have held that the crucial question whether or not a party has met his
statutory duty to bargain in good faith typically turn$ on the facts of the
individual case. There is no per setest of good faith in bargaining. Good faith
[8] [9]

or bad faith is an inference to be drawn from the facts. The effect of an

[10]

employers or a unions actions individually is not the test of good-faith

bargaining, but the impact of all such occasions or actions, considered as a
whole. [11]

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

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

observed in collective bargaining:

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

GMCs failure to make a timely reply to the proposals presented by the

union is indicative of its utter lack of interest in bargaining with the union. Its
excuse that it felt the union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless.
We hold that GMCs refusal to make a counter-proposal to the unions
proposal for CBA negotiation is an indication of its bad faith. Where the
employer did not even bother to submit an answer to the bargaining proposals
of the union, there is a clear evasion of the duty to bargain collectively. [12]
 Failing to comply with the mandatory obligation to submit a reply to the
unions proposals, GMC violated its duty to bargain collectively, making it liable
for unfair labor practice. Perforce, the Court of Appeals did not commit grave
abuse of discretion amounting to lack or excess of jurisdiction in finding that
GMC is, under the circumstances, guilty of unfair labor practice.
Did GMC interfere with the employees right to self-organization? The CA
found that the letters between February to June 1993 by 13 union members
signifying their resignation from the union clearly indicated that GMC exerted
pressure on its employees. The records show that GMC presented these
letters to prove that the union no longer enjoyed the support of the workers.
The fact that the resignations of the union members occurred during the
pendency of the case before the labor arbiter shows GMCs desperate
attempts to cast doubt on the legitimate status of the union. We agree with the
CAs conclusion that the ill-timed letters of resignation from the union members
indicate that GMC had interfered with the right of its employees to self-
organization. Thus, we hold that the appellate court did not commit grave
abuse of discretion in finding GMC guilty of unfair labor practice for interfering
with the right of its employees to self-organization.
Finally, did the CA gravely abuse its discretion when it imposed on GMC
the draft CBA proposed by the union for two years commencing from the
expiration of the original CBA?
The Code provides:

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

The provision mandates the parties to keep the status quo while they are
still in the process of working out their respective proposal and counter
proposal. The general rule is that when a CBA already exists, its provision
shall continue to govern the relationship between the parties, until a new one
is agreed upon. The rule necessarily presupposes that all other things are
equal. That is, that neither party is guilty of bad faith. However, when one of
the parties abuses this grace period by purposely delaying the bargaining
process, a departure from the general rule is warranted.
In Kiok Loy vs. NLRC, we found that petitioner therein, Sweden Ice
[13]

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

petitioner Companys approach and attitude stalling the negotiation by a series of

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

Likewise, in Divine Word University of Tacloban vs. Secretary of Labor

and Employment, petitioner therein, Divine Word University of Tacloban,
[15]

refused to perform its duty to bargain collectively. Thus, we upheld the

unilateral imposition on the university of the CBA proposed by the Divine
Word University Employees Union. We said further:

That being the said case, the petitioner may not validly assert that its consent should
be a primordial consideration in the bargaining process. By its acts, no less than its
action which bespeak its insincerity, it has forfeited whatever rights it could have
asserted as an employer. [16]

Applying the principle in the foregoing cases to the instant case, it would
be unfair to the union and its members if the terms and conditions contained
in the old CBA would continue to be imposed on GMCs employees for the
remaining two (2) years of the CBAs duration. We are not inclined to gratify
GMC with an extended term of the old CBA after it resorted to delaying tactics
to prevent negotiations. Since it was GMC which violated the duty to bargain
collectively, based on Kiok Loy and Divine Word University of Tacloban, it had
lost its statutory right to negotiate or renegotiate the terms and conditions of
the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of
this case, there was no pre-existing CBA between the parties in Kiok
Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper
to apply in this case the rationale of the doctrine in the said two cases. To rule
otherwise would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a
labor controversy to precipitately accept or agree to the proposals of the other.
But an erring party should not be allowed to resort with impunity to schemes
feigning negotiations by going through empty gestures. Thus, by imposing
[17]
on GMC the provisions of the draft CBA proposed by the union, in our view,
the interests of equity and fair play were properly served and both parties
regained equal footing, which was lost when GMC thwarted the negotiations
for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the
reasonableness of the draft CBA proposed by the union should not be
disturbed since they are supported by substantial evidence. On this score, we
see no cogent reason to rule otherwise. Hence, we hold that the Court of
Appeals did not commit grave abuse of discretion amounting to lack or excess
of jurisdiction when it imposed on GMC, after it had committed unfair labor
practice, the draft CBA proposed by the union for the remaining two (2) years
of the duration of the original CBA. Fairness, equity, and social justice are
best served in this case by sustaining the appellate courts decision on this
issue.
WHEREFORE, the petition is DISMISSED and the assailed decision dated
July 19, 2000, and the resolution dated October 26, 2000, of the Court of
Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against petitioner.
SO ORDERED.

[G.R. No. 141471. September 18, 2000]

COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION

OF EMPLOYEES AND FACULTY OF LETRAN and ELEONOR
AMBAS, respondents.

DECISION
KAPUNAN, J.:

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

"On December 1992, Salvador Abtria, then President of respondent union,

Association of Employees and Faculty of Letran, initiated the renegotiation of its
Collective Bargaining Agreement with petitionerColegio de San Juan de Letran for
the last two (2) years of the CBA's five (5) year lifetime from 1989-1994. On the same
year, the union elected a new set of officers wherein private respondent Eleanor
Ambas emerged as the newly elected President (Secretary of Labor and Employment's
Order dated December 2, 1996, p. 12).

Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr.
Edwin Lao, claimed that the CBA was already prepared for signing by the parties. The
parties submitted the disputed CBA to a referendum by the union members, who
eventually rejected the said CBA (Ibid, p. 2).

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

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

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

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

On April 20, 1996, both parties again discussed the ground rules for the CBA
renegotiation. However, petitioner stopped the negotiations after it purportedly
received information that a new group of employees had filed a petition for
certification election (Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the
Secretary of Labor and Employment assumed jurisdiction and ordered all striking
employees including the union president to return to work and for petitioner to accept
them back under the same terms and conditions before the actual strike. Petitioner
readmitted the striking members except Ambas. The parties then submitted their
pleadings including their position papers which were filed on July 17, 1996 ( Ibid, pp.
2-3).

On December 2, 1996, public respondent issued an order declaring petitioner guilty of

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

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

WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for

being without merit in fact and in law.

With cost to petitioner.

SO ORDERED.[2]

Hence, petitioner comes to this Court for redress.

Petitioner ascribes the following errors to the Court of Appeals:
I

THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE

ABUSE OF DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY
OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF REFUSAL TO BARGAIN (UNFAIR LABOR PRACTICE) FOR
SUSPENDING THE COLLECTIVE BARGAINING NEGOTIATIONS WITH
RESPONDENT AEFL, DESPITE THE FACT THAT THE SUSPENSION OF THE
NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A PETITION
FOR CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED TO
COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE
BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE
ABUSE OF DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY
OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF UNFAIR LABOR PRACTICE FOR DISMISSING RESPONDENT
AMBAS, DESPITE THE FACT THAT HER DISMISSAL WAS CAUSED BY HER
INSUBORDINATE ATTITUDE, SPECIFICALLY, HER REFUSAL TO FOLLOW
THE PRESCRIBED WORK SCHEDULE.[3]

The twin questions of law before this Court are the following: (1) whether petitioner
is guilty of unfair labor practice by refusing to bargain with the union when it unilaterally
suspended the ongoing negotiations for a new Collective Bargaining Agreement (CBA)
upon mere information that a petition for certification has been filed by another
legitimate labor organization? (2) whether the termination of the union president
amounts to an interference of the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner
has not shown any compelling reason sufficient to overturn the ruling of the Court of
Appeals affirming the findings of the Secretary of Labor and Employment. It is axiomatic
that the findings of fact of the Court of Appeals are conclusive and binding on the
Supreme Court and will not be reviewed or disturbed on appeal. In this case, the
petitioner failed to show any extraordinary circumstance justifying a departure from this
established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the meaning of the
phrase "duty to bargain collectively," as follows:

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

Noteworthy in the above definition is the requirement on both parties of the

performance of the mutual obligation to meet and convene promptly and expeditiously
in good faith for the purpose of negotiating an agreement. Undoubtedly, respondent
Association of Employees and Faculty of Letran (AEFL) (hereinafter, "union") lived up to
this requisite when it presented its proposals for the CBA to petitioner on February 7,
1996. On the other hand, petitioner devised ways and means in order to prevent the
negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure
to make a timely reply to the proposals presented by the latter. More than a month after
the proposals were submitted by the union, petitioner still had not made any counter-
proposals. This inaction on the part of petitioner prompted the union to file its second
notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that
the Board of Trustees had not yet convened to discuss the matter as its excuse for
failing to file its reply. This is a clear violation of Article 250 of the Labor Code governing
the procedure in collective bargaining, to wit:

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

observed in collective bargaining:

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

xxx
As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make
counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the
employer did not even bother to submit an answer to the bargaining proposals of the union,
there is a clear evasion of the duty to bargain collectively.[6] In the case at bar, petitioner's
actuation show a lack of sincere desire to negotiate rendering it guilty of unfair labor practice.
Moreover, the series of events that transpired after the filing of the first notice of
strike in January 1996 show petitioner's resort to delaying tactics to ensure that
negotiation would not push through. Thus, on February 15, 1996, or barely a few days
after the union proposals for the new CBA were submitted, the union president was
informed by her superior that her work schedule was being changed from Mondays to
Fridays to Tuesdays to Saturdays. A request from the union president that the issue be
submitted to a grievance machinery was subsequently denied. Thereafter, the petitioner
and the union met on March 27, 1996 to discuss the ground rules for
negotiation. However, just two days later, or on March 29, 1996, petitioner dismissed
the union president for alleged insubordination. In its final attempt to
thwart the bargaining process, petitioner suspended the negotiation on the ground that it
allegedly received information that a new group of employees called the Association of
Concerned Employees of Colegio (ACEC) had filed a petition for certification election.
Clearly, petitioner tried to evade its duty to bargain collectively.
Petitioner, however, argues that since it has already submitted the union's
proposals to the Board of Trustees and that a series of conferences had already been
undertaken to discuss the ground rules for negotiation such should already be
considered as acts indicative of its intention to bargain. As pointed out earlier, the
evidence on record belie the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper since by
the filing of the petition for certification election the issue on majority representation of
the employees has arose. According to petitioner, the authority of the union to negotiate
on behalf of the employees was challenged when a rival union filed a petition for
certification election. Citing the case of Lakas Ng Manggagawang Makabayan v.
Marcelo Enterprises,[7] petitioner asserts that in view of the pendency of the petition for
certification election, it had no duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the bargaining
process there must be a valid petition for certification election raising a legitimate
representation issue. Hence, the mere filing of a petition for certification election does
not ipso facto justify the suspension of negotiation by the employer. The petition must
first comply with the provisions of the Labor Code and its Implementing Rules. Foremost
is that a petition for certification election must be filed during the sixty-day freedom
period. The "Contract Bar Rule" under Section 3, Rule XI, Book V, of the Omnibus
Rules Implementing the Labor Code, provides that: " . If a collective bargaining
agreement has been duly registered in accordance with Article 231 of the Code, a
petition for certification election or a motion for intervention can only be entertained
within sixty (60) days prior to the expiry date of such agreement." The rule is based on
Article 232,[8] in relation to Articles 253, 253-A and 256 of the Labor Code. No petition for
certification election for any representation issue may be filed after the lapse of the sixty-day
freedom period. The old CBA is extended until a new one is signed. The rule is that despite the
lapse of the formal effectivity of the CBA the law still considers the same as continuing in force
and effect until a new CBA shall have been validly executed.[9] Hence, the contract bar rule still
applies.[10] The purpose is to ensure stability in the relationship of the workers and the company
by preventing frequent modifications of any CBA earlier entered into by them in good faith and
for the stipulated original period.[11]
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The
petition for certification election by ACEC, allegedly a legitimate labor organization, was
filed with the Department of Labor and Employment (DOLE) only on May 26,
1996. Clearly, the petition was filed outside the sixty-day freedom period. Hence, the
filing thereof was barred by the existence of a valid and existing collective bargaining
agreement. Consequently, there is no legitimate representation issue and, as such, the
filing of the petition for certification election did not constitute a bar to the ongoing
negotiation. Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang
Makabayan v. Marcelo Enterprises[12] is misplaced since that case involved a legitimate
representation issue which is not present in the case at bar.
Significantly, the same petition for certification election was dismissed by the
Secretary of Labor on October 25, 1996. The dismissal was upheld by this Court in a
Resolution, dated April 21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice
by its stern refusal to bargain in good faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we
hold that the dismissal was effected in violation of the employees' right to self-
organization.
To justify the dismissal, petitioner asserts that the union president was terminated
for cause, allegedly for insubordination for her failure to comply with the new working
schedule assigned to her, and pursuant to its managerial prerogative to discipline
and/or dismiss its employees. While we recognize the right of the employer to terminate
the services of an employee for a just or authorized cause, nevertheless, the dismissal
of employees must be made within the parameters of law and pursuant to the tenets of
equity and fair play.[14] The employer's right to terminate the services of an employee for
just or authorized cause must be exercised in good faith. [15] More importantly, it must not
amount to interfering with, restraining or coercing employees in the exercise of their
right to self-organization because it would amount to, as in this case, unlawful labor
practice under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other
conclusion that she was dismissed in order to strip the union of a leader who would fight
for the right of her co-workers at the bargaining table. Ms. Ambas, at the time of her
dismissal, had been working for the petitioner for ten (10) years already. In fact, she
was a recipient of a loyalty award.Moreover, for the past ten (10) years her working
schedule was from Monday to Friday. However, things began to change when she was
elected as union president and when she started negotiating for a new CBA. Thus, it
was when she was the union president and during the period of tense and difficult
negotiations when her work schedule was altered from Mondays to Fridays to Tuesdays
to Saturdays. When she did not budge, although her schedule was changed, she was
outrightly dismissed for alleged insubordination.[16] We quote with approval the following
findings of the Secretary of Labor on this matter, to wit:

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

Admittedly, management has the prerogative to discipline its employees for

insubordination. But when the exercise of such management right tends to interfere
with the employees' right to self-organization, it amounts to union-busting and is
therefore a prohibited act. The dismissal of Ms. Ambas was clearly designed to
frustrate the Union in its desire to forge a new CBA with the College that is reflective
of the true wishes and aspirations of the Union members. Her dismissal was merely a
subterfuge to get rid of her, which smacks of a pre-conceived plan to oust her from the
premises of the College. It has the effect of busting the Union, stripping it of its
strong-willed leadership. When management refused to treat the charge of
insubordination as a grievance within the scope of the Grievance Machinery, the
action of the College in finally dismissing her from the service became arbitrary,
capricious and whimsical, and therefore violated Ms. Ambas' right to due process."[17]
 In this regard, we find no cogent reason to disturb the findings of the Court of
Appeals affirming the findings of the Secretary of Labor and Employment. The right to
self-organization of employees must not be interfered with by the employer on the
pretext of exercising management prerogative of disciplining its employees. In this case,
the totality of conduct of the employer shows an evident attempt to restrain the
employees from fully exercising their rights under the law. This cannot be done under
the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.

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

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

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

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

Francisco de los Reyes for respondent Court of Industrial Relations.

Araneta, Mendoza and Papa for other respondents.

CASTRO, J.:

Appeal, by certiorari to review a decision and a resolution en banc of the Court of Industrial
Relations dated August 17, 1965 and October 20, 1965, respectively, in Case 1698-ULP.

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

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

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

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

Thereafter, in the months of September and October 1957 negotiations were conducted on the
Union's proposals, but these were snagged by a deadlock on the issue of union shop, as a result of
which the Unions filed on January 27, 1958 a notice of strike for "deadlock on collective bargaining."
Several conciliation conferences were held under the auspices of the Department of Labor wherein
the conciliators urged the Companies to make reply to the Unions' proposals en toto so that the said
Unions might consider the feasibility of dropping their demand for union security in exchange for
other benefits. However, the Companies did not make any counter-proposals but, instead, insisted
that the Unions first drop their demand for union security, promising money benefits if this was done.
Thereupon, and prior to April 15, 1958, the petitioner Insular Life Building Employees Association-
NATU dropped this particular demand, and requested the Companies to answer its demands, point
by point, en toto. But the respondent Insular Life Assurance Co. still refused to make any counter-
proposals. In a letter addressed to the two other Unions by the joint management of the Companies,
the former were also asked to drop their union security demand, otherwise the Companies "would no
longer consider themselves bound by the commitment to make money benefits retroactive to
October 1, 1957." By a letter dated April 17, 1958, the remaining two petitioner unions likewise
dropped their demand for union shop. April 25, 1958 then was set by the parties to meet and discuss
the remaining demands.

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

Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without increase in salary
nor in responsibility while negotiations were going on in the Department of Labor after the notice to
strike was served on the Companies. These employees resigned from the Unions.

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

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

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

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

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

2. Take your meals within the office.

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

4. Enjoy free coffee and occasional movies.

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

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

The decision to make is yours whether you still believe in the motives of the strike
or in the fairness of the Management.
The Unions, however, continued on strike, with the exception of a few unionists who were convinced
to desist by the aforesaid letter of May 21, 1958.

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

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

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

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

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

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

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

Before, the decisions was yours to make.

So it is now.

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

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

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

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

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

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

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

2. In not finding the Companies guilty of unfair labor practice for discriminating
against the striking members of the Unions in the matter of readmission of
employees after the strike;

3. In not finding the Companies guilty of unfair labor practice for dismissing officials
and members of the Unions without giving them the benefit of investigation and the
opportunity to present their side in regard to activities undertaken by them in the
legitimate exercise of their right to strike; and
 4. In not ordering the reinstatement of officials and members of the Unions, with full
back wages, from June 2, 1958 to the date of their actual reinstatement to their usual
employment.

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

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

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

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

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

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

Indeed, when the respondents offered reinstatement and attempted to "bribe" the strikers with
"comfortable cots," "free coffee and occasional movies," "overtime" pay for "work performed in
excess of eight hours," and "arrangements" for their families, so they would abandon the strike and
return to work, they were guilty of strike-breaking and/or union-busting and, consequently, of unfair
labor practice. It is equivalent to an attempt to break a strike for an employer to offer reinstatement to
striking employees individually, when they are represented by a union, since the employees thus
offered reinstatement are unable to determine what the consequences of returning to work would be.
Likewise violative of the right to organize, form and join labor organizations are the following acts:
the offer of a Christmas bonus to all "loyal" employees of a company shortly after the making of a
request by the union to bargain; wage increases given for the purpose of mollifying employees after
the employer has refused to bargain with the union, or for the purpose of inducing striking
employees to return to work; the employer's promises of benefits in return for the strikers'
abandonment of their strike in support of their union; and the employer's statement, made about 6
weeks after the strike started, to a group of strikers in a restaurant to the effect that if the strikers
returned to work, they would receive new benefits in the form of hospitalization, accident insurance,
profit-sharing, and a new building to work in.2

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

The test of whether an employer has interfered with and coerced employees within
the meaning of subsection (a) (1) is whether the employer has engaged in conduct
which it may reasonably be said tends to interfere with the free exercise of
employees' rights under section 3 of the Act, and it is not necessary that there be
direct evidence that any employee was in fact intimidated or coerced by statements
of threats of the employer if there is a reasonable inference that anti-union conduct of
the employer does have an adverse effect on self-organization and collective
bargaining. (Francisco, Labor Laws 1956, Vol. II, p. 323, citing NLRB v. Ford, C.A.,
1948, 170 F2d 735).

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

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

It must be recalled that previous to the petitioners' submission of proposals for an amended renewal
of their respective collective bargaining agreements to the respondents, the latter hired Felipe Enage
and Ramon Garcia, former legal counsels of the petitioners, as personnel manager and assistant
corporate secretary, respectively, with attractive compensations. After the notice to strike was served
on the Companies and negotiations were in progress in the Department of Labor, the respondents
reclassified 87 employees as supervisors without increase in salary or in responsibility, in effect
compelling these employees to resign from their unions. And during the negotiations in the
Department of Labor, despite the fact that the petitioners granted the respondents' demand that the
former drop their demand for union shop and in spite of urgings by the conciliators of the Department
of Labor, the respondents adamantly refused to answer the Unions' demands en toto. Incidentally,
Enage was the chairman of the negotiating panel for the Companies in the collective bargaining
between the former and the Unions. After the petitioners went to strike, the strikers were individually
sent copies of exhibit A, enticing them to abandon their strike by inducing them to return to work
upon promise of special privileges. Two days later, the respondents, thru their president and
manager, respondent Jose M. Olbes, brought three truckloads of non-strikers and others, escorted
by armed men, who, despite the presence of eight entrances to the three buildings occupied by the
Companies, entered thru only one gate less than two meters wide and in the process, crashed thru
the picket line posted in front of the premises of the Insular Life Building. This resulted in injuries on
the part of the picketers and the strike-breakers. Then the respondents brought against the
lwph1.t

picketers criminal charges, only three of which were not dismissed, and these three only for slight
misdemeanors. As a result of these criminal actions, the respondents were able to obtain an
injunction from the court of first instance restraining the strikers from stopping, impeding, obstructing,
etc. the free and peaceful use of the Companies' gates, entrance and driveway and the free
movement of persons and vehicles to and from, out and in, of the Companies' buildings. On the
same day that the injunction was issued, the letter, Exhibit B, was sent again individually and by
registered special delivery mail to the strikers, threatening them with dismissal if they did not
report for work on or before June 2, 1958. But when most of the petitioners reported for work, the
respondents thru a screening committee of which Ramon Garcia was a member refused to
admit 63 members of the Unions on the ground of "pending criminal charges." However, when
almost all were cleared of criminal charges by the fiscal's office, the respondents adamantly refused
admission to 34 officials and union members. It is not, however, disputed that all-non-strikers with
pending criminal charges which arose from the breakthrough incident of May 23, 1958 were
readmitted immediately by the respondents. Among the non-strikers with pending criminal charges
who were readmitted were Generoso Abella, Enrique Guidote, Emilio Carreon, Antonio Castillo,
Federico Barretto, Manuel Chuidian and Nestor Cipriano. And despite the fact that the fiscal's office
found no probable cause against the petitioning strikers, the Companies adamantly refused
admission to them on the pretext that they committed "acts inimical to the interest of the
respondents," without stating specifically the inimical acts allegedly committed. They were soon to
admit, however, that these alleged inimical acts were the same criminal charges which were
dismissed by the fiscal and by the courts..

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

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

TO: BUREAU OF LABOR RELATIONS

DEPARTMENT OF LABOR
MANILA

Thirty (30) days from receipt of this notice by the Office, this [sic] unions intends to go
on strike against
 THE INSULAR LIFE ASSURANCE CO., LTD.
Plaza Moraga, Manila

THE FGU INSURANCE GROUP

Plaza Moraga, Manila

INSULAR LIFE BUILDING ADMINISTRATION

Plaza Moraga, Manila .

for the following reason: DEADLOCK IN COLLECTIVE BARGAINING...

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

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

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

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

Our point of inquiry should therefore be directed at whether they also complied with the second
condition. It is not denied that when the strikers reported for work on June 2, 1958, 63 members of
the Unions were refused readmission because they had pending criminal charges. However, despite
the fact that they were able to secure their respective clearances 34 officials and union members
were still refused readmission on the alleged ground that they committed acts inimical to the
Companies. It is beyond dispute, however, that non-strikers who also had criminal charges pending
against them in the fiscal's office, arising from the same incidents whence the criminal charges
against the strikers evolved, were readily readmitted and were not required to secure clearances.
This is a clear act of discrimination practiced by the Companies in the process of rehiring and is
therefore a violation of sec. 4(a) (4) of the Industrial Peace Act.

The respondents did not merely discriminate against all the strikers in general. They separated the
active from the less active unionists on the basis of their militancy, or lack of it, on the picket lines.
Unionists belonging to the first category were refused readmission even after they were able to
secure clearances from the competent authorities with respect to the criminal charges filed against
them. It is significant to note in this connection that except for one union official who deserted his
union on the second day of the strike and who later participated in crashing through the picket lines,
not a single union officer was taken back to work. Discrimination undoubtedly exists where the
record shows that the union activity of the rehired strikers has been less prominent than that of the
strikers who were denied reinstatement.

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

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

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

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

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

Equally significant is the fact that while the management and the members of the screening
committee admitted the discrimination committed against the strikers, they tossed back and around
to each other the responsibility for the discrimination. Thus, Garcia admitted that in exercising for the
management the authority to screen the returning employees, the committee admitted the non-
strikers but refused readmission to the strikers (tsn., Feb. 6, 1962, pp. 15-19, 23-29). Vicente Abella,
chairman of the management's screening committee, while admitting the discrimination, placed the
blame therefor squarely on the management (tsn., Sept. 20, 1960, pp. 7-8, 14-18). But the
management, speaking through the respondent Olbes, head of the Companies, disclaimed
responsibility for the discrimination. He testified that "The decision whether to accept or not an
employee was left in the hands of that committee that had been empowered to look into all cases of
the strikers." (tsn., Sept. 6, 1962, p. 19.)

Of course, the respondents through Ramon Garcia tried to explain the basis for such
discrimination by testifying that strikers whose participation in any alleged misconduct during the
picketing was not serious in nature were readmissible, while those whose participation was serious
were not. (tsn., Aug. 4, 1961, pp. 48-49, 56). But even this distinction between acts of slight
misconduct and acts of serious misconduct which the respondents contend was the basis for either
reinstatement or discharge, is completely shattered upon a cursory examination of the evidence on
record. For with the exception of Pascual Esquillo whose dismissal sent to the other strikers cited the
alleged commission by them of simple "acts of misconduct."

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

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

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

Kindly acknowledge receipt of the check we are sending herewith.

Very truly yours,

(Sgd.) JOSE M.
OLBES
President, Insurance
Life
Acting President, FGU.

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

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

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

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

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

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

Sixto Tongos was dismissed allegedly because he revealed that despite the fact that the Companies
spent more than P80,000 for the vacation trips of officials, they refused to grant union demands;
hence, he betrayed his trust as an auditor of the Companies. We do not find this allegation
convincing. First, this accusation was emphatically denied by Tongos on the witness stand.
Gonzales, president of one of the respondent Companies and one of the officials referred to, took a
trip abroad in 1958. Exchange controls were then in force, and an outgoing traveller on a combined
business and vacation trip was allowed by the Central Bank, per its Circular 52 (Notification to
Authorized Agent Banks) dated May 9, 1952, an allocation of $1,000 or only P2,000, at the official
rate of two pesos to the dollar, as pocket money; hence, this was the only amount that would appear
on the books of the Companies. It was only on January 21, 1962, per its Circular 133 (Notification to
Authorized Agent Banks), that the Central Bank lifted the exchange controls. Tongos could not
therefore have revealed an amount bigger than the above sum. And his competence in figures could
not be doubted considering that he had passed the board examinations for certified public
accountants. But assuming arguendo that Tongos indeed revealed the true expenses of Gonzales'
trip which the respondents never denied or tried to
disprove his statements clearly fall within the sphere of a unionist's right to discuss and advertise
the facts involved in a labor dispute, in accordance with section 9(a)(5) of Republic Act 875 which
guarantees the untramelled exercise by striking employees of the right to give "publicity to the
existence of, or the fact involved in any labor dispute, whether by advertising, speaking, patrolling or
by any method not involving fraud or violence." Indeed, it is not only the right, it is as well the duty, of
every unionist to advertise the facts of a dispute for the purpose of informing all those affected
thereby. In labor disputes, the combatants are expected to expose the truth before the public to
justify their respective demands. Being a union man and one of the strikers, Tongos was expected to
reveal the whole truth on whether or not the respondent Companies were justified in refusing to
accede to union demands. After all, not being one of the supervisors, he was not a part of
management. And his statement, if indeed made, is but an expression of free speech protected by
the Constitution.
 Free speech on both sides and for every faction on any side of the labor relation is to
me a constitutional and useful right. Labor is free ... to turn its publicity on any labor
oppression, substandard wages, employer unfairness, or objectionable working
conditions. The employer, too, should be free to answer and to turn publicity on the
records of the leaders of the unions which seek the confidence of his men ...
(Concurring opinion of Justice Jackson in Thomas v. Collins, 323 U.S. 516, 547, 65
Sup. Ct. 315, 89 L. Ed. 430.) (Mathews, Labor Relations and the Law, p. 591.)

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

Pacifico Ner, Paulino Bugay, Jose Garcia, Narciso Dao, Vicente Alsol and Hermenigildo Ramirez,
opined the lower court, were constructively dismissed by non-readmission allegedly because they
not only prevented Ramon Garcia, assistant corporate secretary, and Vicente Abella, chief of the
personnel records section of the Companies, from entering the Companies' premises on May 21,
1958, but they also caused bruises and abrasions on Garcia's chest and forehead acts
considered inimical to the interest of the respondents. The Unions, upon the other hand, insist that
there is complete lack of evidence that Ner took part in pushing Garcia; that it was Garcia who
elbowed his way through the picket lines and therefore Ner shouted "Close up," which the picketers
did; and that Garcia tossed Paulino Bugay's placard and a fight ensued between them in which both
suffered injuries. But despite these conflicting versions of what actually happened on May 21, 1958,
there are grounds to believe that the picketers are not responsible for what happened. Thelwph1.t

picketing on May 21, 1958, as reported in the police blotter, was peaceful (see Police blotter report,
exh. 3 in CA-G.R. No. 25991-R of the Court of Appeals, where Ner was acquitted). Moreover,
although the Companies during the strike were holding offices at the Botica Boie building at Escolta,
Manila; Tuason Building at San Vicente Street, Manila; and Ayala, Inc. offices at Makati, Rizal,
Garcia, the assistant corporate secretary, and Abella, the chief of the personnel records section,
reported for work at the Insular Life Building. There is therefore a reasonable suggestion that they
were sent to work at the latter building to create such an incident and have a basis for filing criminal
charges against the petitioners in the fiscal's office and applying for injunction from the court of first
instance. Besides, under the circumstances the picketers were not legally bound to yield their
grounds and withdraw from the picket lines. Being where the law expects them to be in the legitimate
exercise of their rights, they had every reason to defend themselves and their rights from any assault
or unlawful transgression. Yet the police blotter, about adverted to, attests that they did not resort to
violence.

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

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

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

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

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

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

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

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

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

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

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

... "Nothing is more calculated to interfere with, restrain and coerce employees in the
exercise of their right to self-organization than such activity even where no
discharges result. The information obtained by means of espionage is in valuable to
the employer and can be used in a variety of cases to break a union." The unfair
labor practice is committed whether the espionage is carried on by a professional
labor spy or detective, by officials or supervisory employees of the employer, or by
fellow employees acting at the request or direction of the employer, or an ex-
employee..." (Teller, Labor Disputes and Collective Bargaining, Vol. II, pp. 765-766,
and cases cited.) .

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

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

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

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

[W]here the employers' "unfair labor practice" caused or contributed to the strike or
where the 'lock-out' by the employer constitutes an "unfair labor practice," the
employer cannot successfully urge as a defense that the striking or lock-out
employees position has been filled by replacement. Under such circumstances, if no
job sufficiently and satisfactorily comparable to that previously held by the aggrieved
employee can be found, the employer must discharge the replacement employee, if
necessary, to restore the striking or locked-out worker to his old or comparable
position ... If the employer's improper conduct was an initial cause of the strike, all
the strikers are entitled to reinstatement and the dismissal of replacement employees
wherever necessary; ... . (Id., p. 422 and cases cited.)
A corollary issue to which we now address ourselves is, from what date should the backpay payable
to the unionists be computed? It is now a settled doctrine that strikers who are entitled to
reinstatement are not entitled to back pay during the period of the strike, even though it is caused by
an unfair labor practice. However, if they offer to return to work under the same conditions just
before the strike, the refusal to re-employ or the imposition of conditions amounting to unfair labor
practice is a violation of section 4(a) (4) of the Industrial Peace Act and the employer is liable for
backpay from the date of the offer (Cromwell Commercial Employees and Laborers Union vs. Court
of Industrial Relations, L-19778, Decision, Sept. 30, 1964, 12 SCRA 124; Id., Resolution on motion
for reconsideration, 13 SCRA 258; see also Mathews, Labor Relations and the Law, p. 730 and the
cited cases). We have likewise ruled that discriminatorily dismissed employees must receive
backpay from the date of the act of discrimination, that is, from the date of their discharge (Cromwell
Commercial Employees and Laborers Union vs. Court of Industrial Relations, supra).

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

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

... While Republic Act No. 1052 authorizes a commercial establishment to terminate
the employment of its employee by serving notice on him one month in advance, or,
in the absence thereof, by paying him one month compensation from the date of the
termination of his employment, such Act does not give to the employer a blanket
authority to terminate the employment regardless of the cause or purpose behind
such termination. Certainly, it cannot be made use of as a cloak to circumvent a final
order of the court or a scheme to trample upon the right of an employee who has
been the victim of an unfair labor practice. (Yu Ki Lam, et al. v. Nena Micaller, et al.,
99 Phil. 904 [1956].)

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

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

In a proceeding for unfair labor practice, involving a determination as

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

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

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

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

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

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

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

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

PHILIPPINE DIAMOND HOTEL G.R. No. 158075

AND RESORT, INC. (MANILA
DIAMOND HOTEL), Present:
Petitioner,
QUISUMBING, Chairperson,
CARPIO,
CARPIO MORALES, and
-versus- TINGA
VELASCO, JR., JJ.

MANILA DIAMOND HOTEL Promulgated:

EMPLOYEES UNION,
Respondent. June 30, 2006
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - x

DECISION

CARPIO MORALES, J.:

The Court of Appeals, by the assailed decision of November 21, 2002,[1] declared
the strike staged by respondent, Manila Diamond Hotel Employees Union (the
union), illegal and its officers to have lost their employment status. It ordered,
however, among other things, the reinstatement and payment of backwages to
its members.

On November 11, 1996, the union, which was registered on August 19,
1996 before the Department of Labor and Employment (DOLE),[2] filed a Petition
for Certification Election[3] before the DOLE-National Capital Region (NCR)
seeking certification as the exclusive bargaining representative of its members.[4]

The DOLE-NCR denied the unions petition as it failed to comply with legal
requirements, specifically Section 2, Rule V, Book V of the Rules and Regulations
Implementing the Labor Code, and was seen to fragment the employees of
petitioner.[5]
On June 2, 1997, Francis Mendoza (Mendoza), one of the Hotels outlet cashiers,
was discovered to have failed to remit to the Hotel the amount of P71,692.50 at the
end of his May 31, 1997 duty.[6] On being directed to explain such
failure, Mendoza claimed that after accomplishing his daily cash remittance report,
the union president Jose Leonardo B. Kimpo (Kimpo) also an outlet cashier, who
signed the same and dropped his remittances.[7]

Kimpo, who was thus directed to explain why no administrative sanction should be
imposed on him for violating the standard procedure for remitting cash collections,
informed that he was not aware of any such procedure.

Mendoza was subsequently suspended for one week, it being the responsibility of
the cashier to personally drop-off his remittances in the presence of a witness.[8] In
the meantime or on July 14, 1997,[9] he was re-assigned to the Hotels Cost Control
Department.[10]

Through its president Kimpo, the union later notified petitioner of its intention to
negotiate, by Notice to Bargain,[11] a Collective Bargaining Agreement (CBA) for
its members.

Acting on the notice, the Hotel, through its Human Resource Development
Manager Mary Anne Mangalindan, advised the union that since it was not certified
by the DOLE as the exclusive bargaining agent, it could not be recognized as
such.[12]

The union clarified that it sought to bargain for its members only, and declared that
[the Hotels] refusal to bargain [would prompt] the union to engage in concerted
activities to protect and assert its rights under the Labor Code.[13]

By Notice[14] to its members dated September 18, 1997, the union announced that
its executive officers as well as its directors decided to go on strike in view of the
managements refusal to bargain collectively, and thus called for the taking of strike
vote.

Petitioner thereupon issued a Final Reminder and Warning[15] to respondent against

continuing misinformation campaign and activities which confused the Hotel
employees and disturbed their work performance.

The union went on to file a Notice of Strike[16] on September 29, 1997 with the
National Conciliation and Mediation Board (NCMB) due to unfair labor practice
(ULP) in that the Hotel refused to bargain with it and the rank-and-file employees
were being harassed and prevented from joining it.[17]

Conciliation conferences were immediately conducted by the NCMB on October 6,

13, and 20, 1997 during which the union insisted on the adoption of a CBA for its
members.[18]

In the meantime, or on or about November 7, 1997, Kimpo filed before the

Arbitration Branch a complaint for ULP against petitioner.[19]

More conferences took place between petitioner and the union before the NCMB.

In the conference held on November 20, 1997, the union demanded the holding of
a consent election to which the Hotel interposed no objection, provided the union
followed the procedure under the law. Petitioner then requested that the election be
held in January 1998.[20]

The parties agreed to meet again on December 1, 1997.[21]

In the early morning of November 29, 1997, however, the union suddenly went on
strike. The following day, the National Union of Workers in the Hotel, Restaurant
and Allied Industries (NUWHRAIN) joined the strike and openly extended its
support to the union.[22] At about this time, Hotel supervisors Vicente T. Agustin
(Agustin) and Rowena Junio (Rowena) failed to report for work and were, along
with another supervisor, Mary Grace U. de Leon (Mary Grace), seen participating
in and supporting the strike.[23]

Petitioner thus filed on December 1, 1997 a petition for injunction before the
National Labor Relations Commission (NLRC) to enjoin further commission of
illegal acts by the strikers.[24]

Mary Grace, who was directed to explain her participation in the strike, alleged
that she was merely trying to pacify the group.[25] Petitioner, finding her
explanation arrogant and unsatisfactory as her active participation in the strike was
confirmed by an eye witness, terminated her services, by communication sent
on December 9, 1997, drawing her to file a complaint for illegal dismissal against
petitioner.[26] Agustin, who was also terminated, filed a similar complaint against
the Hotel.[27]
An NLRC representative who conducted an ocular inspection of the Hotel
premises confirmed in his Report that the strikers obstructed the free ingress to and
egress from the Hotel.[28]

By Order of December 8, 1998, the NLRC thus issued a Temporary Restraining

Order (TRO) directing the strikers to immediately cease and desist from
obstructing the free ingress and egress from the Hotel premises.[29]

The service upon the strikers of the TRO notwithstanding, they refused to
dismantle the tent they put up at the employees entrance to the Hotel, prompting
the Hotels security guards to, on December 10, 1997, dismantle the same during
which the strikers as well as the guards were hit by rocks coming from the
direction of the construction site at the nearby Land Bank Plaza, resulting to
physical injuries to some of them.[30]

Despite the efforts of the NCMB, which was joined by the Department of Tourism,
to conciliate the parties, the same proved futile.

On January 14, 1998, Rowena, whose services were terminated, also filed a
complaint against petitioner for illegal dismissal.

For its part, petitioner filed on January 28, 1998 a petition to declare the strike
illegal.

As then DOLE Secretary Cresenciano Trajanos attempts to conciliate the parties

failed, he, acting on the unions Petition for Assumption of Jurisdiction, issued on
April 15, 1998 an order certifying the dispute to the NLRC for compulsory
arbitration, and directing the striking officers and members to return to work within
24 hours and the Hotel to accept them back under the same terms and conditions
prevailing before the strike.[31]

On petitioners motion for reconsideration, then DOLE Acting Secretary Jose

Espaol, Jr., by Order of April 30, 1998, modified the April 15, 1998 Order of
Secretary Trajano by directing the Hotel to just reinstate the strikers to its payroll,
and ordering that all cases between the parties arising out of the labor disputes
which were pending before different Labor Arbiters be consolidated with the case
earlier certified to the NLRC for compulsory arbitration.[32] It appears that the said
order of the Acting Secretary directing the reinstatement of the strikers to the
Hotels payroll was carried out.
By Resolution of November 19, 1999, the NLRC declared that the strike was
illegal and that the union officers and members who were reinstated to the Hotels
payroll were deemed to have lost their employment status. And it dismissed the
complaints filed by Mary Grace, Agustin, and Rowena as well as the unions
complaint for ULP.[33]

On appeal by the union, the Court of Appeals affirmed the NLRC Resolution
dismissing the complaints of Mary Grace, Agustin and Rowena and of the union. It
modified the NLRC Resolution, however, by ordering the reinstatement with back
wages of union members. Thus it disposed:

WHEREFORE, in view of the foregoing, the petition is granted only insofar as

the dismissal of the union members is concerned. Consequently, the ruling of the
public respondent NLRC to the effect that the union members lost their
employment status with the Hotel is hereby reversed and set aside. Private
respondent Hotel is hereby ordered
to immediately reinstate the memberswith backwages from the time they were
terminated. The Court finds no grave abuse of discretion on the part of the NLRC,
and therefore affirms the ruling of the NLRC as follows:

(1) that the strike is illegal;

(2) that the union officers lost their employment status when they formed the
illegal strike; and

(3) That the dismissal of Ms. Mary Grace U. de Leon, Vicente C. Agustin and
Rowena Junio is valid.

SO ORDERED.[34] (Underscoring supplied)

In so ruling, the appellate court noted that petitioner failed to establish by

convincing and substantial evidence that the union members who participated in
the illegal strike committed illegal acts, and although petitioner presented
photographs of the striking employees, the strikers who allegedly committed illegal
acts were not named or identified.[35]

Hence, the present appeal by petitioner faulting the appellate court:

I
IN ORDERING THE REINSTATEMENT AND THE PAYMENT OF
BACKWAGES OF THE INDIVIDUAL RESPONDENTS WHOSE
EMPLOYMENT STATUS WERE PREVIOUSLY DECLARED TO HAVE
 BEEN LOST BY THE NATIONAL LABOR RELATIONS COMMISSION,
THE COURT OF APPEALS HAS IN EFFECT DECIDED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW WHICH HAS NOT YET
BEFORE BEEN DETERMINED BY THIS HONORABLE COURT, [AND]

II

IN [THUS] DEVIAT[ING] FROM ESTABLISHED DOCTRINES LONG

SETTLED BY CONSISTENT JURISPRUDENCE ENUNCIATED BY THIS
HONORABLE COURT.[36](Underscoring supplied)

Petitioner argues that:

IT WAS THE NLRC WHICH DECLARED THAT THE UNION OFFICERS

AND MEMBERS HAVE LOST THEIR EMPLOYMENT AS A
CONSEQUENCE OF THEIR STRIKE WHICH IT ALSO DECLARED AND
FOUND TO BE ILLEGAL.

SUCH BEING THE CASE, IN THE EVENT THE NLRCs DECISION IS NOT
UPHELD AS FAR AS THE UNION MEMBERS LOSING THEIR
EMPLOYMENT IS CONCERNED, PETITIONER SHOULD NOT BE HELD
LIABLE TO PAY THEIR BACKWAGES.

UNDER THE CIRCUMSTANCES, NEITHER CAN PETITIONER BE

VALIDLY DIRECTED TO REINSTATE THEM.[37] (Emphasis and underscoring
supplied)

Respondents, upon the other hand, pray for the dismissal of the petition, they
arguing that:

A. Respondent [union members] must be reinstated and paid full backwages

because their strike was legal and done in good faith.

B. Even assuming arguendo, that the strike started as an illegal strike, the
unions unconditional offer to return to work, coupled with the hotels unfair
labor practices during the strike, transformed the strike into a legal strike.

C. Even assuming arguendo, that the strike is illegal, the reinstatement of the
strikers and the payment of full backwages is consistent with the ruling in
Telefunken Semiconductors Employees Union-FFW v. Secretary, 283
SCRA 145 which states that the individual liability of each of the union
officers and members determines whether or not strikers should be
reinstated.
 D. Even assuming arguendo, that the strike is illegal, Article 264 of the Labor
Code directs the reinstatement of and payment of full backwages to the
respondents.[38] (Underscoring supplied)

As did the NLRC and the Court of Appeals, this Court finds the strike illegal.

Article 255 of the Labor Code provides:

ART. 255. EXCLUSIVE BARGAINING REPRESENTATION AND

WORKERS PARTICIPATION IN POLICY AND DECISION-MAKING

The labor organization designated or selected by the majority of the

employees in an appropriate collective bargaining unit shall be
the exclusive representative of the employees in such unit for the purpose of
collective bargaining. However, an individual employee or group of employees
shall have the right at any time to present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the
right, subject to such rules and regulations as the Secretary of Labor and
Employment may promulgate, to participate in policy and decision-making
process of the establishment where they are employed insofar as said processes
will directly affect their rights, benefits and welfare. For this purpose, workers
and employers may form labor-management councils: Provided, That the
representatives of the workers in such labor management councils shall be elected
by at least the majority of all employees in said establishment. (Emphasis and
underscoring supplied)

As the immediately quoted provision declares, only the labor organization

designated or selected by the majority of the employees in an appropriate
collective bargaining unit is the exclusive representative of the employees in such
unit for the purpose of collective bargaining.

The union (hereafter referred to as respondent) is admittedly not the exclusive

representative of the majority of the employees of petitioner, hence, it could not
demand from petitioner the right to bargain collectively in their behalf.

Respondent insists, however, that it could validly bargain in behalf of its members,
relying on Article 242 of the Labor Code.[39] Respondents reliance on said article, a
general provision on the rights of legitimate labor organizations, is misplaced, for
not every legitimate labor organization possesses the rights mentioned
therein.[40] Article 242 (a) must be read in relation to above-quoted Article 255.
On respondents contention that it was bargaining in behalf only of its members, the
appellate court, affirming the NLRCs observation that the same would only
fragment the employees of petitioner,[41] held that what [respondent] will be
achieving is to divide the employees, more particularly, the rank-and-file
employees of [petitioner] . . . the other workers who are not members are at a
serious disadvantage, because if the same shall be allowed, employees who are
non-union members will be economically impaired and will not be able to
negotiate their terms and conditions of work, thus defeating the very essence and
reason of collective bargaining, which is an effective safeguard against the evil
schemes of employers in terms and conditions of work.[42] This Court finds the
observation well-taken.

It bears noting that the goal of the DOLE is geered towards a single employer wide
unit which is more to the broader and greater benefit of the employees working
force.[43] The philosophy is to avoid fragmentation of the bargaining unit so as to
strengthen the employees bargaining power with the management. To veer away
from such goal would be contrary, inimical and repugnant to the objectives of a
strong and dynamic unionism.[44]

Petitioners refusal to bargain then with respondent can not be considered a ULP to
justify the staging of the strike.

The second ground alleged by respondent to justify the staging of the strike that
petitioner prevented or intimidated some workers from joining the union before,
during or after the strike was correctly discredited by the appellate court in this
wise:

. . . a careful study of the allegations of petitioners in their petition reveals that it

contained general allegations that the Management of the Hotel committed unfair
labor practices by refusing to bargain with the union and by alleged acts of union
interference, coercion and discrimination tantamount to union-busting. Since it is
the union who alleges that unfair labor practices were committed by the Hotel, the
burden of proof is on the union to prove its allegations by substantial evidence.

Moreover, while petitioner Union continues to accuse the private respondent

Hotel of violating their constitutional right to organize by busting the Union, this
Court cannot overlook the events that transpired prior to the strike that
the Union staged on November 29, 1997. It is beyond argument that a conciliatory
meeting was still scheduled to be held on December 1, 1997 before the NCMB. In
this conciliatory meeting, petitioner Union could have substantiated and presented
 additional evidences. Thus, as held by the Supreme Court in the case of Tiu vs.
National Labor Relations Commission:

The Court is not unmindful of this rule, but in the case at bar the facts
and the evidence did not establish events [sic] least a rational basis why
the union would [wield] a strike based on alleged unfair labor practices it
did not even bother to substantiate during the conciliation proceedings. It
is not enough that the union believed that the employer committed acts
of unfair labor practice when the circumstances clearly negate even
a prima facie [showing to] warrant [such a] belief.

It is also evident from the records of the instant petition, specifically from the
Notice of Strike, that their principal ground for the strike was the refusal of the
Hotel Management to bargain collectively with the Union for the benefit of the
latters members. In the instant case, it is not disputed that the petitioner UNION is
not a certified bargaining unit to negotiate a collective bargaining agreement
(CBA) with private respondent Hotel . . . [45] (Underscoring supplied)

On top of the foregoing observations, this Court notes that respondent violated
Article 264 which proscribes the staging of a strike on the ground of ULP during
the pendency of cases involving the same grounds for the strike.

Further, the photographs taken during the strike, as well as the Ocular Inspection
Report of the NLRC representative, show that the strikers, with the use of ropes
and footed placards, blockaded the driveway to the Hotels points of entrance and
exit,[46] making it burdensome for guests and prospective guests to enter the Hotel,
thus violating Article 264 (e) of the Labor Code which provides:

ART. 264 (e) No person engaged in picketing shall commit any act of violence,
coercion or intimidation or obstruct the free ingress to or egress from the
employers premises for lawful purposes, or obstruct public thoroughfares.
(Emphasis supplied)

Furthermore, the photographs indicate that indeed the strikers held noise
barrage[47] and threatened guests with bodily harm.[48]

Finally, the police reports mention about the strikers exploding of firecrackers,
causing the guests to panic and transfer to other areas of the Hotel.[49]
It is doctrinal that the exercise of the right of private sector employees to strike is
not absolute. Thus Section 3 of Article XIII of the Constitution, provides:
 SECTION 3. x x x

It shall guarantee the rights of all workers to self-organization, collective

bargaining and negotiations and peaceful concerted activities, including the right
to strike in accordance withlaw. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in
policy and decision-making processes affecting their rights and benefits as may be
provided by law. (Emphasis and underscoring supplied)

Even if the purpose of a strike is valid, the strike may still be held illegal where the
means employed are illegal. Thus, the employment of violence, intimidation,
restraint or coercion in carrying out concerted activities which are injurious to the
rights to property renders a strike illegal. And so is picketing or the obstruction to
the free use of property or the comfortable enjoyment of life or property, when
accompanied by intimidation, threats, violence, and coercion as to constitute
nuisance.[50]

As the appellate court correctly held, the union officers should be dismissed for
staging and participating in the illegal strike, following paragraph 3, Article 264(a)
of the Labor Code which provides that . . .[a]ny union officer who knowingly
participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during strike may be declared to have
lost his employment status . . .

An ordinary striking worker cannot, thus be dismissed for mere participation in an

illegal strike. There must be proof that he committed illegal acts during a strike,
unlike a union officer who may be dismissed by mere knowingly participating in
an illegal strike and/or committing an illegal act during a strike.[51]

The appellate court found no convincing and substantial proof, however, that the
strikers-members of respondent who participated in the illegal strike committed
illegal acts.

In the present case, private respondent Hotel failed to established [sic] by

convincing and substantial evidence that these union members who participated in
the illegal strike committed illegal acts. Consequently, they cannot be terminated
from service for their participation in an illegal strike. Moreover, private
respondent Hotel presented as evidence photographs of the striking employees,
the question that comes to our mind is: why were these strikers who allegedly
participated in illegal acts not identified or named? Instead the arbitral tribunal
 found it worthy of credence to summarily dismiss all the union members without
them being named or identified . . . [52]

This Court finds otherwise. As reflected above, the photographs show that some of
the workers-strikers who joined the strike indeed committed illegal acts blocking
the free ingress to and egress from the Hotel, holding noise barrage, threatening
guests, and the like. The strikers were, in a list[53] attached to petitioners Position
Paper[54] filed with the NLRC, named.

The list failed to specifically identify the ones who actually committed illegal acts,
however. Such being the case, a remand of the case to the Labor Arbiter, through
the NLRC, is in order for the purpose only of determining the respective liabilities
of the strikers listed by petitioner. Those proven to have committed illegal acts
during the course of the strike are deemed to have lost their employment, unless
they have been readmitted by the Hotel, whereas those not clearly shown to have
committed illegal acts should be reinstated.

Whether those ordered reinstated are entitled to backwages is, however, another
matter.

For the general rule is that backwages shall not be awarded in an economic strike
on the principle that a fair days wage accrues only for a fair days labor.[55] Even in
cases of ULP strikes, award of backwages rests on the courts discretion and only in
exceptional instances.[56]

Thus, J.P. Heilbronn Co. v. National Labor Union,[57] instructs:

When in case of strikes, and according to the C[ourt of] I[ndustrial]

R[elations] even if the strike is legal, strikers may not collect their wages
during the days they did not go to work, for the same reasons if not more,
laborers who voluntarily absent themselves from work to attend the hearing of a
case in which they seek to prove and establish their demands against the
company, the legality and propriety of which demands is not yet known, should
lose their pay during the period of such absence from work. The age-old rule
governing the relation between labor and capital or management and employee is
that of a fair days wage for a fair days labor. If there is no work performed by the
employee there can be no wage or pay, unless of course, the laborer was able,
willing and ready to work but was illegally locked out, dismissed or suspended. It
is hardly fair or just for an employee or laborer to fight or litigate against his
employer on the employers time. (Emphasis and underscoring supplied)
This Court must thus hearken to its policy that when employees voluntarily go on
strike, even if in protest against unfair labor practices, no backwages during the
strike is awarded.
In Cromwell Commercial Employees and Laborers Union (PTUC) v. Court of
Industrial Relations,[58] this Court made a distinction between two types of
employees involved in a ULP: those who are discriminatorily dismissed for union
activities, and those who voluntarily go on strike even if it is in protest of an
ULP. Discriminatorily dismissed employees were ordered entitled to backpay from
the date of the act of discrimination, that is, from the day of their discharge,
whereas employees who struck as a voluntary act of protest against what they
considered a ULP of their employer were held generally not entitled to backpay.[59]

Jurisprudential law, however, recognizes several exceptions to the no backwages

rule, to wit: when the employees were illegally locked to thus compel them to stage
a strike;[60]when the employer is guilty of the grossest form of ULP; [61] when the
employer committed discrimination in the rehiring of strikers refusing to readmit
those against whom there were pending criminal cases while admitting nonstrikers
who were also criminally charged in court;[62] or when the workers who staged a
voluntary ULP strike offered to return to work unconditionally but the employer
refused to reinstate them.[63] Not any of these or analogous instances is, however,
present in the instant case.

Respondent urges this Court to apply the exceptional rule enunciated in Philippine
Marine Officers Guild v. Compaia Maritima[64] and similar cases where the
employees unconditionally offered to return to work, it arguing that there was such
an offer on its part to return to work but the Hotel screened the returning strikers
and refused to readmit those whom it found to have perpetrated prohibited acts
during the strike.

It must be stressed, however, that for the exception in Philippine Marine Officers
Guild to apply, it is required that the strike must be legal.[65]

Reinstatement without backwages of striking members of respondent who did not

commit illegal acts would thus suffice under the circumstances of the case. If
reinstatement is no longer possible, given the lapse of considerable time from the
occurrence of the strike, the award of separation pay of one (1) month salary for
each year of service, in lieu of reinstatement, is in order.[66]
WHEREFORE, the Decision dated November 21, 2002 of the Court of Appeals
is, in light of the foregoing ratiocinations, AFFIRMED with
MODIFICATION in that only those members of the union who did not commit
illegal acts during the course of the illegal strike should be reinstated but without
backwages. The case is, therefore, REMANDED to the Labor Arbiter, through the
NLRC, which is hereby directed to, with dispatch, identify said members and to
thereafter order petitioner to reinstate them, without backwages or, in the
alternative, if reinstatement is no longer feasible, that they be given separation pay
at the rate of One (1) Month pay for every year of service.

SO ORDERED.
 BLUE SKY BARGAINING CASES

[G.R. No. 114974. June 16, 2004]

STANDARD CHARTERED BANK EMPLOYEES UNION

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

DECISION
CALLEJO, SR., J.:

This is a petition for certiorari under Rule 65 of the Rules of Court filed by
the Standard Chartered Bank Employees Union, seeking the nullification of
the October 29, 1993 Order of then Secretary of Labor and Employment
[1]

Nieves R. Confesor and her resolutions dated December 16,

1993 and February 10, 1994.

The Antecedents

Standard Chartered Bank (the Bank, for brevity) is a foreign banking

corporation doing business in the Philippines. The exclusive bargaining agent
of the rank and file employees of the Bank is the Standard Chartered Bank
Employees Union (the Union, for brevity).
In August of 1990, the Bank and the Union signed a five-year collective
bargaining agreement (CBA) with a provision to renegotiate the terms thereof
on the third year. Prior to the expiration of the three-year period but within the
[2]

sixty-day freedom period, the Union initiated the negotiations. On February

18, 1993, the Union, through its President, Eddie L. Divinagracia, sent a
letter containing its proposals covering political provisions and thirty-four
[3] [4] [5]

(34) economic provisions. Included therein was a list of the names of the
[6]

members of the Unions negotiating panel. [7]

 In a Letter dated February 24, 1993, the Bank, through its Country
Manager Peter H. Harris, took note of the Unions proposals. The Bank
attached its counter-proposal to the non-economic provisions proposed by
the Union. The Bank posited that it would be in a better position to present its
[8]

counter-proposals on the economic items after the Union had presented its
justifications for the economic proposals. The Bank, likewise, listed the
[9]

members of its negotiating panel. The parties agreed to set meetings to

[10]

settle their differences on the proposed CBA.

Before the commencement of the negotiation, the Union, through
Divinagracia, suggested to the Banks Human Resource Manager and head of
the negotiating panel, Cielito Diokno, that the bank lawyers should be
excluded from the negotiating team. The Bank acceded. Meanwhile, Diokno
[11]

suggested to Divinagracia that Jose P. Umali, Jr., the President of the

National Union of Bank Employees (NUBE), the federation to which
the Union was affiliated, be excluded from the Unions negotiating
panel. However, Umali was retained as a member thereof.
[12]

On March 12, 1993, the parties met and set the ground rules for the
negotiation. Diokno suggested that the negotiation be kept a family affair. The
proposed non-economic provisions of the CBA were discussed first. Even [13]

during the final reading of the non-economic provisions on May 4, 1993, there
were still provisions on which the Union and the Bank could not agree.
Temporarily, the notation DEFERRED was placed therein. Towards the end of
the meeting, the Union manifested that the same should be changed to
DEADLOCKED to indicate that such items remained unresolved. Both parties
agreed to place the notation DEFERRED/DEADLOCKED. [14]

On May 18, 1993, the negotiation for economic provisions commenced. A

presentation of the basis of the Unions economic proposals was made. The
next meeting, the Bank made a similar presentation. Towards the end of the
Banks presentation, Umali requested the Bank to validate
the Unions guestimates, especially the figures for the rank and file staff. In [15]

the succeeding meetings, Umali chided the Bank for the insufficiency of its
counter-proposal on the provisions on salary increase, group hospitalization,
death assistance and dental benefits. He reminded the Bank, how
the Union got what it wanted in 1987, and stated that if need be,
the Union would go through the same route to get what it wanted. [16]

Upon the Banks insistence, the parties agreed to tackle the economic
package item by item. Upon the Unions suggestion, the Bank indicated which
provisions it would accept, reject, retain and agree to discuss. The Bank
[17]

suggested that the Union prioritize its economic proposals, considering that
many of such economic provisions remained unresolved. The Union,
however, demanded that the Bank make a revised itemized proposal.
In the succeeding meetings, the Union made the following proposals:

Wage Increase:
1st Year Reduced from 45% to 40%
2nd Year - Retain at 20%
Total = 60%

Group Hospitalization Insurance:

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

Death Assistance:
For the employee -- Reduced from P50,000.00 to P45,000.00
For Immediate Family Member -- Reduced from P30,000.00 to P25,000.00

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

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

presented its revised counter-proposal as follows:

[20]

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

2nd Year P800.00 no change

Group Hospitalization Insurance

From: P35,000.00 per illness
To : P35,000.00 per illness per year

Death Assistance For employee

From: P20,000.00
To : P25,000.00

Dental Retainer Original offer remains the same [21]

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

Wage Increase: 1st Year - 40%

2nd Year - 19.5%
Group Hospitalization Insurance
From: P60,000.00 per year
To : P50,000.00 per year

Dental:
Temporary Filling/ P150.00
Tooth Extraction
Permanent Filling 200.00
Prophylaxis 250.00
Root Canal From P2,000 per tooth
To: 1,800.00 per tooth

Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For Immediate Family Member: From P25,000.00 to P20,000.00. [22]

The Unions original proposals, aside from the above-quoted, remained the
same.
Another set of counter-offer followed:

Management Union
Wage Increase
1st Year P1,050.00 40%
2nd Year - 850.00 19.0%[23]

Diokno stated that, in order for the Bank to make a better offer,
the Union should clearly identify what it wanted to be included in the total
economic package. Umali replied that it was impossible to do so because the
Banks counter-proposal was unacceptable. He furthered asserted that it
would have been easier to bargain if the atmosphere was the same as before,
where both panels trusted each other. Diokno requested the Union panel to
refrain from involving personalities and to instead focus on the
negotiations. He suggested that in order to break the impasse,
[24]

the Union should prioritize the items it wanted to iron out. Divinagracia stated
that the Bank should make the first move and make a list of items it wanted to
be included in the economic package. Except for the provisions on signing
bonus and uniforms, the Union and the Bank failed to agree on the remaining
economic provisions of the CBA. The Uniondeclared a deadlock and filed a
[25]

Notice of Strike before the National Conciliation and Mediation Board (NCMB)
on June 21, 1993, docketed as NCMB-NCR-NS-06-380-93. [26]
 On the other hand, the Bank filed a complaint for Unfair Labor Practice
(ULP) and Damages before the Arbitration Branch of the National Labor
Relations Commission (NLRC) in Manila, docketed as NLRC Case No. 00-06-
04191-93 against the Union on June 28, 1993. The Bank alleged that
the Union violated its duty to bargain, as it did not bargain in good faith. It
contended that the Union demanded sky high economic demands, indicative
of blue-sky bargaining. Further, the Union violated its no strike- no lockout
[27]

clause by filing a notice of strike before the NCMB. Considering that the filing
of notice of strike was an illegal act, the Union officers should be
dismissed. Finally, the Bank alleged that as a consequence of the illegal act,
the Bank suffered nominal and actual damages and was forced to litigate and
hire the services of the lawyer. [28]

On July 21, 1993, then Secretary of Labor and Employment (SOLE)

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

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

The Banks charge for unfair labor practice which it originally filed with the NLRC as
NLRC-NCR Case No. 00-06-04191-93 but which is deemed consolidated herein, is
dismissed for lack of merit. On the other hand, the Unions charge for unfair labor
practice is similarly dismissed.

Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR
Case No. 00-06-04191-93 is pending for his guidance and appropriate action. [29]

The SOLE gave the following economic awards:

1. Wage Increase:
a) To be incorporated to present salary rates:
 Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based on the 4th year adjusted
salary

b) Additional fixed amount:

Fourth year : P600.00 per month
Fifth year : P400.00 per month

2. Group Insurance
a) Hospitalization : P45,000.00
b) Life : P130,000.00
c) Accident : P130,000.00

3. Medicine Allowance
Fourth year : P5,500.00
Fifth year : P6,000.00

4. Dental Benefits
Provision of dental retainer as proposed by the Bank, but without
diminishing existing benefits

5. Optical Allowance
Fourth year: P2,000.00
Fifth year : P2,500.00

6. Death Assistance
a) Employee : P30,000.00
b) Immediate Family Member : P5,000.00

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

8. Loans
a) Car Loan : P200,000.00
b) Housing Loan : It cannot be denied that the costs attendant to having
ones own home have tremendously gone up. The need, therefore, to
improve on this benefit cannot be overemphasized.Thus, the
management is urged to increase the existing and allowable housing
loan that the Bank extends to its employees to an amount that will
give meaning and substance to this CBA benefit. [30]

The SOLE dismissed the charges of ULP of both the Union and the Bank,
explaining that both parties failed to substantiate their claims. Citing National
Labor Union v. Insular-Yebana Tobacco Corporation, the SOLE stated that
[31]
ULP charges would prosper only if shown to have directly prejudiced the
public interest.
Dissatisfied, the Union filed a motion for reconsideration with clarification,
while the Bank filed a motion for reconsideration. On December 16, 1993, the
SOLE issued a Resolution denying the motions. The Union filed a second
motion for reconsideration, which was, likewise, denied on February 10, 1994.
On March 22, 1994, the Bank and the Union signed the
CBA. Immediately thereafter, the wage increase was effected and the
[32]

signing bonuses based on the increased wage were distributed to the

employees covered by the CBA.

The Present Petition

On April 28, 1994, the Union filed this petition for certiorari under Rule 65
of the Rules of Procedure alleging as follows:
A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING
THE UNIONS CHARGE OF UNFAIR LABOR PRACTICE IN VIEW OF THE CLEAR
EVIDENCE OF RECORD AND ADMISSIONS PROVING THE UNFAIR LABOR
PRACTICES CHARGED.[33]
B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE
ON OTHER UNFAIR LABOR PRACTICES CHARGED.[34]
C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE
CHARGES OF UNFAIR LABOR PRACTICES ON THE GROUND THAT NO
PROOF OF INJURY TO THE PUBLIC INTEREST WAS PRESENTED.[35]

The Union alleges that the SOLE acted with grave abuse of discretion
amounting to lack or excess of jurisdiction when it found that the Bank did not
commit unfair labor practice when it interfered with the Unions choice of
negotiator. It argued that, Dioknos suggestion that the negotiation be limited
as a family affair was tantamount to suggesting that Federation President
Jose Umali, Jr. be excluded from the Unions negotiating panel. It further
argued that contrary to the ruling of the public respondent, damage or injury to
the public interest need not be present in order for unfair labor practice to
prosper.
The Union, likewise, pointed out that the public respondent failed to rule
on the ULP charges arising from the Banks surface
bargaining. The Union contended that the Bank merely went through the
motions of collective bargaining without the intent to reach an agreement, and
made bad faith proposals when it announced that the parties should begin
from a clean slate. It argued that the Bank opened the political provisions up
for grabs, which had the effect of diminishing or obliterating the gains that
the Union had made.
The Union also accused the Bank of refusing to disclose material and
necessary data, even after a request was made by the Union to validate
its guestimates.
In its Comment, the Bank prayed that the petition be dismissed as
the Union was estopped, considering that it signed the Collective Bargaining
Agreement (CBA) on April 22, 1994. It asserted that contrary to the Unions
allegations, it was the Union that committed ULP when negotiator Jose Umali,
Jr. hurled invectives at the Banks head negotiator, Cielito Diokno, and
demanded that she be excluded from the Banks negotiating team. Moreover,
the Union engaged in blue-sky bargaining and isolated the no strike-no
lockout clause of the existing CBA.
The Office of the Solicitor General, in representation of the public
respondent, prayed that the petition be dismissed. It asserted that
the Union failed to prove its ULP charges and that the public respondent did
not commit any grave abuse of discretion in issuing the assailed order and
resolutions.

The Issues

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

The Courts Ruling

The petition is bereft of merit.

Interference under Article
248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e.,
interference in the selection of the Unions negotiating panel, when Cielito
Diokno, the Banks Human Resource Manager, suggested to the Unions
President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the
NUBE, be excluded from the Unions negotiating panel. In support of its claim,
Divinagracia executed an affidavit, stating that prior to the commencement of
the negotiation, Diokno approached him and suggested the exclusion of Umali
from the Unions negotiating panel, and that during the first meeting, Diokno
stated that the negotiation be kept a family affair.
Citing the cases of U.S. Postal Service and Harley Davidson Motor Co.,
[36]

Inc., AMF, the Union claims that interference in the choice of the Unions
[37]

bargaining panel is tantamount to ULP.

In the aforecited cases, the alleged ULP was based on the employers
violation of Section 8(a)(1) and (5) of the National Labor Relations Act
(NLRA), which pertain to the interference, restraint or coercion of the
[38]

employer in the employees exercise of their rights to self-organization and to

bargain collectively through representatives of their own choosing; and the
refusal of the employer to bargain collectively with the employees
representatives. In both cases, the National Labor Relations Board held that
upon the employers refusal to engage in negotiations with the Union for
collective-bargaining contract when the Union includes a person who is not an
employee, or one who is a member or an official of other labor organizations,
such employer is engaged in unfair labor practice under Section 8(a)(1) and
(5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd.
Employees Association NATU vs. Insular Life Assurance Co., Ltd., wherein
[39]

this Court said that the test of whether an employer has interfered with and
coerced employees in the exercise of their right to self-organization within the
meaning of subsection (a)(1) is whether the employer has engaged in conduct
which it may reasonably be said, tends to interfere with the free exercise of
employees rights under Section 3 of the Act. Further, it is not necessary that
[40]

there be direct evidence that any employee was in fact intimidated or coerced
by statements of threats of the employer if there is a reasonable inference that
anti-union conduct of the employer does have an adverse effect on self-
organization and collective bargaining.[41]

Under the International Labor Organization Convention (ILO) No. 87

FREEDOM OF ASSOCIATION AND PROTECTION OF THE RIGHT TO
ORGANIZE to which the Philippines is a signatory, workers and employers,
without distinction whatsoever, shall have the right to establish and, subject
only to the rules of the organization concerned, to job organizations of their
own choosing without previous authorization. Workers and employers
[42]

organizations shall have the right to draw up their constitutions and rules, to
elect their representatives in full freedom to organize their administration and
activities and to formulate their programs. Article 2 of ILO Convention No. 98
[43]

pertaining to the Right to Organize and Collective Bargaining, provides:

Article 2

1. Workers and employers organizations shall enjoy adequate protection against any
acts or interference by each other or each others agents or members in their
establishment, functioning or administration.
2. In particular, acts which are designed to promote the establishment of workers
organizations under the domination of employers or employers organizations or to
support workers organizations by financial or other means, with the object of placing
such organizations under the control of employers or employers organizations within
the meaning of this Article.

The aforcited ILO Conventions are incorporated in our Labor Code,

particularly in Article 243 thereof, which provides:

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

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

and Articles 248 and 249 respecting ULP of employers and labor
organizations.
The said ILO Conventions were ratified on December 29, 1953. However,
even as early as the 1935 Constitution, the State had already expressly
[44]

bestowed protection to labor as part of the general provisions. The 1973

Constitution, on the other hand, declared it as a policy of the state to afford
[45]

protection to labor, specifying that the workers rights to self-organization,

collective bargaining, security of tenure, and just and humane conditions of
work would be assured. For its part, the 1987 Constitution, aside from making
it a policy to protect the rights of workers and promote their welfare, devotes [46]

an entire section, emphasizing its mandate to afford protection to labor, and

highlights the principle of shared responsibility between workers and
employers to promote industrial peace. [47]

Article 248(a) of the Labor Code, considers it an unfair labor practice when
an employer interferes, restrains or coerces employees in the exercise of their
right to self-organization or the right to form association. The right to self-
organization necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators
or coerces the Union to exclude from its panel of negotiators a representative
of the Union, and if it can be inferred that the employer adopted the said act to
yield adverse effects on the free exercise to right to self-organization or on the
right to collective bargaining of the employees, ULP under Article 248(a) in
connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence
has been defined as such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. In the case at bar, the Union
[48]

bases its claim of interference on the alleged suggestions of Diokno to

exclude Umali from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not show that
the suggestion made by Diokno to Divinagracia is an anti-union conduct from
which it can be inferred that the Bank consciously adopted such act to yield
adverse effects on the free exercise of the right to self-organization and
collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and
simultaneously with Divinagracias suggestion that the bank lawyers be
excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining
process, with the inclusion of Umali in the Unions negotiating panel, the
negotiations pushed through. The complaint was made only on August 16,
1993 after a deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The
accusation occurred after the arguments and differences over the economic
provisions became heated and the parties had become frustrated. It
happened after the parties started to involve personalities. As the public
respondent noted, passions may rise, and as a result, suggestions given
under less adversarial situations may be colored with unintended
meanings. Such is what appears to have happened in this case.
[49]

The Duty to Bargain

Collectively
If at all, the suggestion made by Diokno to Divinagracia should be
construed as part of the normal relations and innocent communications, which
are all part of the friendly relations between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain; hence,
committed ULP under Article 248(g) when it engaged in surface bargaining. It
alleged that the Bank just went through the motions of bargaining without any
intent of reaching an agreement, as evident in the Banks counter-proposals. It
explained that of the 34 economic provisions it made, the Bank only made 6
economic counterproposals. Further, as borne by the minutes of the meetings,
the Bank, after indicating the economic provisions it had rejected, accepted,
retained or were open for discussion, refused to make a list of items it agreed
to include in the economic package.
Surface bargaining is defined as going through the motions of negotiating
without any legal intent to reach an agreement. The resolution of surface
[50]

bargaining allegations never presents an easy issue. The determination of

whether a party has engaged in unlawful surface bargaining is usually a
difficult one because it involves, at bottom, a question of the intent of the party
in question, and usually such intent can only be inferred from the totality of the
challenged partys conduct both at and away from the bargaining table. It [51]

involves the question of whether an employers conduct demonstrates an

unwillingness to bargain in good faith or is merely hard bargaining. [52]

The minutes of meetings from March 12, 1993 to June 15, 1993 do not
show that the Bank had any intention of violating its duty to bargain with
the Union. Records show that after the Union sent its proposal to the Bank
on February 17, 1993, the latter replied with a list of its counter-proposals
on February 24, 1993. Thereafter, meetings were set for the settlement of
their differences. The minutes of the meetings show that both the Bank and
the Union exchanged economic and non-economic proposals and counter-
proposals.
The Union has not been able to show that the Bank had done acts, both at
and away from the bargaining table, which tend to show that it did not want to
reach an agreement with the Union or to settle the differences between it and
the Union. Admittedly, the parties were not able to agree and reached a
deadlock. However, it is herein emphasized that the duty to bargain does not
compel either party to agree to a proposal or require the making of a
concession. Hence, the parties failure to agree did not amount to ULP under
[53]

Article 248(g) for violation of the duty to bargain.

We can hardly dispute this finding, for it finds support in the evidence. The inference
that respondents did not refuse to bargain collectively with the complaining union
because they accepted some of the demands while they refused the others even
leaving open other demands for future discussion is correct, especially so when those
demands were discussed at a meeting called by respondents themselves precisely in
view of the letter sent by the union on April 29, 1960 [54]

In view of the finding of lack of ULP based on Article 248(g), the

accusation that the Bank made bad faith provisions has no leg to stand
on. The records show that the Banks counter-proposals on the non-economic
provisions or political provisions did not put up for grabs the entire work of
the Union and its predecessors. As can be gleaned from the Banks counter-
proposal, there were many provisions which it proposed to be retained. The
revisions on the other provisions were made after the parties had come to an
agreement. Far from buttressing the Unions claim that the Bank made bad-
faith proposals on the non-economic provisions, all these, on the contrary,
disprove such allegations.
We, likewise, find that the Union failed to substantiate its claim that the
Bank refused to furnish the information it needed.
While the refusal to furnish requested information is in itself an unfair labor
practice, and also supports the inference of surface bargaining, in the case
[55]

at bar, Umali, in a meeting dated May 18, 1993, requested the Bank to
validate its guestimates on the data of the rank and file. However, Umali failed
to put his request in writing as provided for in Article 242(c) of the Labor Code:

Article 242. Rights of Legitimate Labor Organization

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

The Union, did not, as the Labor Code requires, send a written request for
the issuance of a copy of the data about the Banks rank and file
employees. Moreover, as alleged by the Union, the fact that the Bank made
use of the aforesaid guestimates, amounts to a validation of the data it had
used in its presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal,
board, or officer exercising judicial or quasi-judicial functions has acted
without or in excess of jurisdiction and there is no appeal or any plain, speedy,
and adequate remedy in the ordinary course of law for the purpose of
annulling the proceeding. Grave abuse of discretion implies such capricious
[56]

and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or

where the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility which must be so patent and gross as to amount
to an invasion of positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law. Mere abuse of discretion is
not enough. [57]

While it is true that a showing of prejudice to public interest is not a

requisite for ULP charges to prosper, it cannot be said that the public
respondent acted in capricious and whimsical exercise of judgment,
equivalent to lack of jurisdiction or excess thereof. Neither was it shown that
the public respondent exercised its power in an arbitrary and despotic manner
by reason of passion or personal hostility.
Estoppel not Applicable
In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising
the issue of ULP when it signed the new CBA.
Article 1431 of the Civil Code provides:

Through estoppel an admission or representation is rendered conclusive upon the

person making it, and cannot be denied or disproved as against the person relying
thereon.

A person, who by his deed or conduct has induced another to act in a

particular manner, is barred from adopting an inconsistent position, attitude or
course of conduct that thereby causes loss or injury to another. [58]

In the case, however, the approval of the CBA and the release of signing
bonus do not necessarily mean that the Union waived its ULP claim against
the Bank during the past negotiations. After all, the conclusion of the CBA was
included in the order of the SOLE, while the signing bonus was included in the
CBA itself. Moreover, the Union twice filed a motion for reconsideration
respecting its ULP charges against the Bank before the SOLE.
The Union Did Not Engage
In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in
blue-sky bargaining or making exaggerated or unreasonable proposals. The [59]

Bank failed to show that the economic demands made by the Union were
exaggerated or unreasonable. The minutes of the meeting show that the
Union based its economic proposals on data of rank and file employees and
the prevailing economic benefits received by bank employees from other
foreign banks doing business in the Philippines and other branches of the
Bank in the Asian region.
In sum, we find that the public respondent did not act with grave abuse of
discretion amounting to lack or excess of jurisdiction when it issued the
questioned order and resolutions.While the approval of the CBA and the
release of the signing bonus did not estop the Union from pursuing its claims
of ULP against the Bank, we find that the latter did not engage in ULP.We,
likewise, hold that the Union is not guilty of ULP.
IN LIGHT OF THE FOREGOING, the October 29, 1993 Order
and December 16, 1993 and February 10, 1994 Resolutions of then Secretary
of Labor Nieves R. Confesor are AFFIRMED. The Petition is hereby
DISMISSED.
SO ORDERED.
G.R. No. L-20044 April 30, 1964

NATIONAL UNION OF RESTAURANT WORKERS (PTUC), petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.

Alejandro C. Villavieja for petitioner.

Padilla Law Office for respondents.

BAUTISTA ANGELO, J.:

On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres
Hermanas Restaurant, particularly Mrs. Felisa Herrera, on the ground, among others, that
respondents refused to bargain collectively with the complaining union; respondents made a
counter-proposal in the sense that they would bargain with said union and would accept its demands
if the same would become a company union, and one Martin Briones, an employee, was separated
from the service because he was found to be the organizer and adviser of the complaining union.

After respondents had filed their answer, wherein they denied the charges of unfair labor practice
filed against them, Judge Emiliano C. Tabigne, who was assigned to act on the complaint, received
the evidence, and on July 28, 1961, rendered decision exonerating respondents. He found that the
charges were not proven and dismissed the complaint.
The case was taken to the court en banc, where in a split decision the court affirmed the decision of
Judge Tabigne. The case is now before us on a petition for review.

The important findings of the court a quo which are now disputed by the union are: (1) respondents
did not refuse to bargain collectively with the union as in fact they met its members with the only
particularity that they were not able to accept all the demands of the union; (2) respondents did not
interfere, coerce or restrain their employees in the exercise of their right to join the complaining
union; and (3) the dismissal of Martin Briones was due to the concern of Mrs. Herrera for her life on
account of the hatred that Briones had entertained against her, she being always with him in the car
he used to drive during their business routine. It is claimed that Judge Tabigne committed a grave
abuse of discretion in making the above findings.

Anent the first issue, the court a quo found that in the letter sent by the union to respondents
containing its demands marked in the case as Exhibit 1, there appears certain marks, opposite each
demand, such as a check for those demands to which Mrs. Felisa Herrera was agreeable, a cross
signifying the disapproval of Mrs. Herrera, and a circle regarding those demands which were left
open for discussion on some future occasion that the parties may deem convenient. Such markings
were made during the discussion of the demands in the meeting called by respondents on May 3,
1960 at their restaurant in Quezon City. The court a quo concluded that the fact that respondent
Herrera had agreed to some of the demands shows that she did not refuse to bargain collectively
with the complaining union.

We can hardly dispute this finding, for it finds support in the evidence. The inference that
respondents did not refuse to bargain collectively with the complaining union because they accepted
some of the demands while they refused the others even leaving open other demands for future
discussion is correct, especially so when those demands were discussed at a meeting called by
respondents themselves precisely in view of the letter sent by the union on April 29, 1960. It is true
that under Section 14 of Republic Act 875 whenever a party serves a written notice upon the
employer making some demands the latter shall reply thereto not later than 10 days from receipt
thereof, but this rendition is merely procedural and as such its non-compliance cannot be deemed to
be an act of unfair labor practice. The fact is that respondents did not ignore the letter sent by the
union so much so that they called a meeting to discuss its demands, as already stated elsewhere.

It is contended that respondents refused to bargain with the complaining union as such even if they
called a meeting of its officers and employees thereby concluding that they did not desire to enter
into a bargaining agreement with said union. This conclusion has no rational relation with the main
premise of the union for it is belied by the fact that respondents did actually agree and bargain with
the representatives of the union. While it is true that respondents denied the capacity of the
complaining union to bargain collectively with the respondents this is because they were of the
impression that before a union could have that capacity it must first be certified by the Court of
Industrial Relations as the duly authorized bargaining unit, in fact this is what they stated in their
answer to the petition for certification filed by said union before the Court of Industrial Relations (See
Case No. 763-MC). In said case, another union known as the International Labor and Marine Union
of the Philippines claimed to represent the majority of the employees of respondent restaurant, and
this is what it alleged in a letter sent to the manager of respondents dated May 25, 1962.

Anent the second issue, the claim of the complaining union has also no basis. This is premised on a
document marked Exhibit C which contains certain alleged counter-proposals tendered to
complainant union the nature of which would apparently indicate that respondents made use of
coercion which interferes with the right of the employees to self-organization. On this document
certain notations were made by one Ernesto Tan which are indeed derogatory and which were
allegedly made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent notation
on which the union relies is one which states that respondent Herrera would be willing to recognize
the union "if union would be willing to recognize the union", which would indeed show that Mrs.
Herrera interfered with the employees' right to self-organization. But respondents denied that they
ever authorized Ernesto Tan to make such notation or to represent them in the negotiations, for he
was merely a bookkeeper whose duties were confined to the keeping and examination of their books
of accounts and sales invoices. It appears that he was not even invited to the meeting but merely
volunteered to be present and made those notations on his own account and initiative. The court a
quo gave credence to this stand of respondents, as can be seen in the following finding: "There is no
evidence to show that Ernesto Tan was authorized to represent management in the meeting held on
May 3, 1960, and that Ernesto Tan, being a mere bookkeeper of respondents, he is not a part of
management although he is the nephew of Mrs. Herrera." We are not prepared to disturb this finding
of the court a quo.

Finally, it is alleged in connection with the third issue that respondent Herrera dismissed Martin
Briones without sufficient cause other than his being the organizer and adviser of the complaining
union. It however appears from the very testimony of Martin Briones that he is not the only one who
organized the complaining union but together with Galicano Apiz, Pablo Cabreros and Juan Morales,
with the particularity that, as Briones himself had intimated, Apiz, Cabreros and Morales were more
active than himself in organizing the union so much so that they were appointed officers of that
union. And yet, Apiz, Cabreros and Morales were never touched and continued to be employed in
respondents' restaurant. For this reason, the court a quo discredited the claim that Briones was
dismissed because of union activities but rather because of the threats he made on Mrs. Herrera, as
communicated to her by her sister Aureata. The following is the finding made by the court a quo on
this point: "If it is the union activities of complainant's members that Mrs. Herrera did not like, Apiz,
Cabreros and Morales should have been dismissed by her also, because said persons were more
active than Briones in the organization of the union. Verily, it was not the union activities of Martin
Briones that prompted Mrs. Herrera to dismiss him, but her fear for the safety of her life on account
of the smouldering members of hatred that the former had against the latter, the said persons being
always together in her car driven by Briones, during business routine." This finding finds support in
the evidence.

On the strength of the foregoing considerations, we find no justification for disturbing the findings of
the court a quo which led to the dismissal of the complaint under consideration. 1wph1.t

WHEREFORE, the decision appealed from is affirmed. No costs.